‘Sahara Energy Resources Limited V Mrs. Olawunmi Oyebola’: The Measure of Damages in ‘Master-Servant’ Employment Disputes Revisited

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By Folabi Kuti

Employers have reveled in the uneven equilibrium of power in the world of work, which allows for willful determination of employment without consequence; save for minimally fixed quantum of damages. Even where the aggrieved employee, after a long-gestating hearing, manages to secure a court verdict declaring that the termination, or dismissal suffered is wrongful, the standard quantum of damages awarded is merely the amount he would have earned had employment been properly determined. Avant-garde sentiments like securing a measure of damages that actually reflects present day commercial realities, bore no place within strict common law prescriptions. The narrowly confined thickets of the common law employment relationship have come to be summarized thus: ‘an employer can hire, and fire’, ‘where there has been wrongful/unlawful termination or dismissal, the measure of damages is payment of what the employee would have earned over the period of notice’.

Once upon a time, this approach exemplified the judicial trend up to the highest court in the land. When a few matters dared extend their arguments beyond the common law stipulations, the Supreme Court, rationalizing that this was a settled matter, frowned at such ‘mis-adventures’. On at least one such occasion, the Supreme Court issued Counsel a stern warning against attempts to push the frontier beyond the seemingly settled position. For instance, this is what the court, per Honourable Justice Ogbuagu JSC said at page 587, para. F of the reported case of Kunle Osisanya v Afribank: I wish to say  with the greatest respect and humility, that if in future, any learned counsel who is aware or ought to know about these firmly established laws on Master and Servant relationship (especially where the contract of employment is in writing) and who brings this type of frivolous appeal up to this Court, may, expose himself, to the Court, awarding costs personally against such counsel. … The damages will be the amount he would have earned if his employment were properly and validly determined. Nigerian Produce Marketing Board v. Adewunmi (1972) 11 S.C. 111 at 117 and International Drilling Co. v. Ajijola (1976) 2S.C. 115 at 119 – 120 decided by this Court decades ago.

Against this background, the 2011 Third Alteration to the Constitution of the Federal Republic of Nigeria, 1999 was greeted with a great deal of interest, and aspirations for the future of our labour jurisprudence. A revolutionary section 254C, coupled with a community reading of select provisions of the establishment law, the National Industrial Court Act 2006[1] heralded a new wave of judicial thinking on the measure of damages.

Indeed, the National Industrial Court of Nigeria soon rose to the occasion in awarding appropriate compensatory damages, in deserving cases, even as a few of those decisions were reversed on appeal. Commendably enough, the National Industrial Court of Nigeria (NICN) has nonetheless continued to intervene within the permissible latitude of its establishment act, the Third Alteration to the Constitution and its rules of practice and procedure in expounding on the position of the law on sundry matters and has continued to make policy statements with regard to matters affecting or pertaining to labour, employment and industrial relations.

It is however telling though that in many of the recent decisions of the NICN, that is, rendered post-Court of Appeal decision in Oak’s Pensions and those line of cases, the Court appears to have had its discretion fettered by the stifling effect of the Court of Appeal’s pronouncements. It is perhaps in this context that one can perhaps situate the decision of the NICN in Suit No. NICN/LA/30/2011 Clement Onitiju v Lekki Concession Company Ltd, decision rendered on December 11, 2018 where the NICN, made a finding that the defendant (that is, the employer) ‘unilaterally investigated the claimant for forgery and fraud, found him guilty and dismissed him from work without as much as a hearing’ but nonetheless felt suffocated by the Oak Pensions’ line of cases in restricting the award of damages to a meagrely Seven Hundred and Forty-Two Thousand, Six Hundred and Twenty-Five Naira (742,625.00) only; being one month’s salary in lieu of notice. This, unfortunately, is an understandable hangover of appellate decisions which, by the binding principle of stare decisis the NICN had no choice but to abide by.

Irked by the seeming reluctance of the Court of Appeal to affirm the statutory power given to the National Industrial Court of Nigeria, this commentator had cause to intone thus[2]:

With the landmark decision handed down in Skye Bank Plc v Iwu and the unintended consequence of a floodgate of appeals arising from the decisions of the NICN to the Court of Appeal, the overburdened dockets of the various divisions of the Court of Appeal of Nigeria have been saddled with a number of appeals and applications seeking leave to appeal against decisions of the NICN. Expectedly, the principal complaint has often been against the award of damages made by the NICN in favour of many an aggrieved employee upon a successful outcome on the action brought against the employer. In more specific terms, the quarrel here is that the NICN is attempting to re-write labour law from a fairly settled prism of masterservant relationship wherein quantum of damages appeared more specific and damages are limited to the amount equivalent to the period of notice that the worker ought to have been given as stipulated by the contract; which in many cases was a meagerly one-month salary. 

The Court of Appeal, with all due respect, has not been of great help in resolving this tension. It is, with respect, far from clear whether some of these decisions had cognizance of the significant shift in the strict application of common law principles as regards employee-employer relations which the amendment to the 1999 Constitution to the Federal Republic of Nigeria, and the National Industrial Court Act have now enabled. In many of these appeals emanating from the NICN, perhaps due in part to the deluge of matters travelling up the appellate ladder, the decisions of the Court can best be described as dealing a blow to the stable gains in labour jurisprudence from the NICN[3]. The Court of Appeal’s approach to dealing with cases from the NICN, with respect, has been neither consistent nor clear. In Oak Pensions Ltd v. Olayinka[4] the appeal turned on the propriety of an award of two (2) years’ salary as compensation on a finding of wrongful termination of employment. Instructively, the Court of Appeal made a fine distinction as to when a Court, in the exercise of constitutional or statutory powers conferred on it, may nevertheless not be imbued with the power to grant a relief that was not pleaded. In setting aside the two (2) years’ salary as compensation for the termination of the Respondent’s employment; as of 11 not being supported and/or justified by the peculiar facts, circumstances and evidence placed before the trial Court, the Court went on to take a critical look at the statutory power conferred on the NICN under Section 19 (d) of the National Industrial Court Act and gave a prescription of how same is to be exercisedRoundabout the same time as the decision of the Court of Appeal in Oak’s, the selfsame Lagos Division of the Court of Appeal also had an opportunity to examine the quantum of damages in case of a wrongful dismissal as made out in Coca-Cola Nigeria Ltd & 2 ors v. Mrs.Titilayo Akisanya[5]. Here, however, oddly enough, the Court of Appeal appeared not to have fully and correctly appraised the peculiar facts, circumstances and evidence placed before the trial Court justifying the judicial and judicious exercise of discretion placed on the trial Court in making recourse to Section 19(d) of the National Industrial Court Act, as the Court had enjoined in the Oak’s case; which was a decision handed down just two months prior.

Not done, this commentator had also recommended a way, charting a forward course:

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In the final analysis, the Court of Appeal is the final court for labour and employment matters. As the final Court; it is imbued with the power to make policy statements with regard to matters affecting or pertaining to labour, employment and industrial relations, it is desirable that the Court is guided by the constitutional and statutory interventions that now avail the NICN. These vest the NICN with the judicial power to look beyond the common law and apply both common law and equity concurrently when the need arises, and award damages in appropriate circumstances. It is perhaps when the appellate court finally makes its peace with this necessary evolution of the historical “master-servant” relationship that the golden era of labour relations in this country will be permanently ushered in.[6]

Fast forward to the present day. In what, unarguably, is the latest, but in all likelihood the final word on the matter, the Court of Appeal on Thursday, December 3 2020 issued a policy statement affirming the latitude, within set parameters, of the National Industrial Court of Nigeria to depart from orthodoxy common law restrictive prescriptions on quantum of damages. This significant shift was handed down in the unreported decision of the Court of Appeal, Lagos Division in Appeal No. CA/L/1091/2016 Sahara Energy Resources Limited v Mrs. Olawunmi Oyebola, the judgment of which was delivered on December 3, 2020. A brief on the background facts is worthy of rehashing here.

The respondent’s action (as the claimant) at the lower court had succeeded in part, howbeit on significant reliefs. The National Industrial Court of Nigeria, sitting in Lagos, per Peters J., whilst declining reliefs declaring the summary dismissal of the claimant/respondent from the employ of Sahara Energy (defendant/appellant) as being null and void had, on a finding of fact, held that the dismissal was nevertheless in contravention of the conditions of the service and Code of Conduct of the defendant company. Consequently, the lower court granted the relief for general damages for unlawful dismissal and breach of contract and awarded the sum of =N=1.7million, being the equivalent of two years’ salary of the claimant.

Sahara Energy proceeded on appeal, inter alia, against the award of damages. Two main issues were considered on appeal. The first, the principal complaint, was on the propriety of the judex awarding the sum of N7,129,636.36 as general damages to the Respondent for unlawful dismissal. The second issue, similarly, formulated from the grounds of appeal, turned on the complaint of not affording the appellant a fair trial.

Referentially, the first issue is of great moment to the discourse here. For completeness however, let us quickly consider the second issue. This latter issue arose from the appellant’s twofold complaint that its reply on point of law was not considered by the lower court, and that some of the issues raised on its address were not even considered. A fortiori, the lower court was accused of raising and determining an issue suo motu (that is, without availing parties’ the opportunity to address on same). The issue under reference was easily resolved against the appellant on appeal. Ogakwu JCA (in the lead, with whom Ikyegh, Kolawole JJCA concurred) sank deep into the records of appeal to fish out the following nuggets: (i) the lower Court’s position on the appellant’s reply on points of law as being a rehash of the main address; (ii) the lower court indeed pronounced on all the ‘crucial, substantial, vital and properly’ placed issues before the court; and, (iii) the lower court, in applying the law in justification of its award of damages, cannot be lightly accused of raising an issue suo motu. 

Sahara Energy Resources Limited v Oyebola is a decision which is remarkable for more reasons than one. It is thus important to now consider the first/main issue.  In evaluating the ratio decidendi, it is important to note that the Court of Appeal, in a flowing lucid tome of a judgment; specifically between pages 15 and 29, exhaustively considered the minutest details of the main issue submitted for determination. Starting from the complaint of the appellant that the respondent admitted the allegation against her and as such was availed a hearing. Here, the court noted that by the Disciplinary Procedure & Code of Conduct, the proceedings at such hearing were to be recorded in writing and tape-recorded. In the instant case, there was nothing before the court to show that such was done as the transcript of the proceedings at the hearing was rejected in evidence; and there was no appeal against the rejection of the otherwise vital evidence. In the premises, the lower Court’s finding that having not complied with the established procedure for ascertainment of (fair) hearing, there was nothing before it to evince the correctness of the summary dismissal, was properly made.

Now to the meat of the discussion. As for  the consequential (general) damages attending upon wrongful dismissal, my Lord Ogakwu JCA, in a striking and valuable exposition of the law on the point (decisions, in the contextual background from which they are issued establish a principle, not a rule), conceded, as a takeoff point, the seeming difficulty in coming to terms with a new legal regime that demands a departure from the principle as it existed…in our corpus juris in employment and labour related litigations. Thankfully, my Lord did not yield to the temptation which his Lordship, at page 30 of the judgment, admitted having mulled over; that is, whether to state a case to the apex court on the point. The corpus on the point is now a lot richer for it. The Court of Appeal next did a thorough and thoughtful examination of the potential width of the emerging principle of measure of damages to be awarded in cases of unlawful termination or dismissal  and, wait for it, the certainty as to its limits. Two marked (policy) statements of the court bear restating here.

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In a well-argued passage of the judgment, the Court, at pages 31-34, perceptively situated the National Industrial Court of Nigeria’s firm footing in departing from the stipulation of the contract of employment and/or the common law prescription on the matter of measure of damages for the aggrieved worker, in deserving cases. The lengthy passage, per Ogakwu JCA, is reproduced here for emphasis:

“Now, Section 254C (1) (f) of the 1999 Constitution as amended stipulates as

follows:

“254C (1) Notwithstanding the provisions of Sections 251, 257, 272 and anything contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the National Industrial Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters-

(f) relating to or connected with unfair labour practice or international best practices in labour employment and industrial relation matters;”

Then Section 7 (6) of the National Industrial Act stipulates as follows:

“(6) The Court shall, in exercising its jurisdiction or any of the powers conferred upon it by this Act or any other enactment or law, have due regard to good or international best practice in labour or industrial relations and what amounts to good or international best practice in labour or industrial relations shall be a question of fact.”

The above provisions enjoin the National Industrial Court in the exercise of its jurisdiction, to “have due regard to good or international best practices in labour or industrial relations”. The importance of this novel provision, in my deferential view, is that the National Industrial Court, in considering the measure or quantum of damages is to do so in accordance with “good or international best practices in labour or industrial relations”, which shall be a question of fact. It will be stating the obvious to say that prior to the Third Alteration, when employment and labour matters were handled by the High Courts, there was no obligation to apply and follow good or international best practices. It is an innovative provision which seems to be directed at enthroning an entirely new employment and labour jurisprudence. It will be disregarding this innovation if we continue to deal with the measure of damages in total disregard of the changes wrought to the law by legislation. The proper attitude of the court when confronted with an innovation introduced by way of an amendment to an existing law or a new statute simpliciter (in this case, the Third Alteration to the 1999 Constitution and the National Industrial Court Act of 2006) was enunciated in the case of BANK OF ENGLAND vs. VAGLIANO BROTHERS (1891) A. C. 107 at 144-145 (per Lord Herschell) as follows:

“I think the proper course in the first instance is to examine the language of the statute and to ask what is the natural meaning, uninfluenced by any considerations derived from the previous state of the law, and not to start by enquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if the words of the enactment will bear an interpretation in conformity with this view.”

The above passage was quoted with approval by the Supreme Court in NDIC vs. OKEM ENTERPRISES (2004) 10 NWLR (PT 880) 107. Indeed, the note of caution sounded by this Court in NASARAWA STATE SPECIALIST HOSPITAL MANAGEMENT BOARD vs. MOHAMMED (2018) LPELR (44551) 1 at 20-21 on the imperative of treating or applying older case law authorities that pre-date the Third Alteration Act with extreme circumspection, bears re-echoing here.

            Let me iterate that by the doctrine of stare decisis, this court is bound by the decisions of the apex court as well as the decisions of this court. However, as I have demonstrated and stated above, the principle laid down in the said cases did not reckon with and take into consideration the obligation on the lower court to now apply good or international best practices in adjudication. The hitherto existing principle, which merely form a starting point, entrenched the common law orthodoxy on the quantum or measure of damages in labour matters. I am aware of the position of this Court which has maintained the common law orthodoxy, one of such cases being the decision in OAK PENSIONS LTD vs. OLAYINKA (2017) LPELR (43207) 1 [a panel I was privileged to be part of]. In the lead judgment of Garba, JCA [now JSC] in the said case, which I concurred with, the two years’ salary awarded as damages was set aside. It has to be stated post-haste that no such relief was claimed at the lower court in the said case, so it was ab initio wrong for the lower court to have awarded a relief not claimed; unlike in this matter, where the Respondent had specifically claimed N10million general damages for unlawful dismissal and breach of contract, which the lower court is empowered to award under Section 19 (d) of the National Industrial Court Act.

In the OAK PENSION case at pages 45-46, my Lord, Garba, JCA (now JSC) set out the reasoning that informed the decision of the Court in the following words:

“It should be noted that the primary duty of a Court of law is to do justice, at least substantial, in all matters and causes that come before them, for adjudication by a dispassionate appraisal of peculiar facts, evaluation of the material evidence and application of the relevant laws and rules of equity. In the determination of the justice of a case and the entitlement of the parties in equity, the facts and material evidence… placed before a Court, are sine qua non. The decision to make any order in a case, whether sought for or not by any of the parties, must be predicated on such facts and evidence, taking the rights, obligations and interests of both parties into account or consideration. That was not done by the trial Court before and in the award of compensation to the Respondent.

In the above premises of the law, the award of two (2) years’ salary as compensation for the termination of the Respondent’s employment cannot be supported and/or justified by the peculiar facts, circumstances and evidence placed before the trial Court and so wrong in law. It was a relief not claimed by the Respondent, it was not a consequential relief to give effect to the decision by the trial Court that the Respondent’s master-servant employment was wrongfully but effectively terminated by the 1st Appellant…, but a distinct and substantive relief which was gratuitously awarded the Respondent to which he was/is not entitled to, in law.”

                 (Emphasis supplied)

In considering and applying international best practices as a question of fact, it is the facts of the given matter that would form the base from which to consider how the law has been applied in line with international best practices in other jurisdictions. In the circumstances of this matter, where the dismissal of the Respondent was predicated on allegations bordering on dishonesty and bribery, which no doubt carries a stigma, it is what will form the base in considering the measure of damages to award in tune with international best practices. In this wise, there is the progressive decision of this Court in BRITISH AIRWAYS vs. MAKANJUOLA (1993) 8 NWLR (PT 311) 276 at 288 (per Ubaezonu, JCA), delivered way back in 1993, which affirmed the award of two years’ salary as damages by the trial court. In the said case, it was held that the quantum of damages recoverable by an employee depends on whether the wrongful termination of employment was as a result of the failure to give the required notice or as a result of an alleged malpractice (and if the former, the quantum of damages may be the employee’s salary in lieu of notice, but if the latter then since such a termination carries with it some stigma on the character of the employee, he shall be entitled to substantial damages far beyond the payment of salary in lieu of notice).”[7]

The Court also ‘deferred’ to the expertise of the specialist Judges of the National Industrial Court on labour and employment matters. Referencing, with admirable lucidity, foreign decisions and tertiary sources on the leaning of a specialist court on matters peculiarly within its province or area of specialist adjudication, the Court of Appeal rightly intoned that employment judges have a good knowledge of the world of work and a sense, derived from experience, of what is real there and what is window-dressing.

All said, concern has been expressed in many quarters that this affirmation, or nod from the Court of Appeal, may well give employers of labour some concern, or loss of sleep – as it were, as it appears the decision in Sahara Energy v Oyebola  has now secured an ’unbridled’ license for the  Industrial Court to make ‘indiscriminate award of damages ‘to punish employers’. The concern, however, appears misplaced. For one, even the Court of Appeal in this judgment[8] reiterated the position that in deserving cases, the quantum of damages, even though at the discretion of the trial Court, and a stipulation of the peculiar fact circumstance of each case, would be interfered with, and reviewed downward where, for instance, the court acted under wrong principles of law, or in misapprehension of the facts. The concluding part of the judgment (on Issue No. 1) obviates any confusion that might arise on the issue of marked lack of a reliable principle.

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What’s the final word? This is a landmark decision. It resonates well with the evolving labour jurisprudence that is not necessarily within strict common law prescriptions, but rather cognisant of the immensely important and immeasurably great influence of statutory interventions in measuring permissible standards and best practices in today’s world of work. Now, the stage is truly set for a sustained and measured development of our modern labour jurisprudence. So that perhaps soon, when models of international best practices in labour relations are sought, the NICN will need look no further than its own law reports and the judicial guidance of the appellate court in Sahara Energy Resources Limited v Mrs. Olawunmi Oyebola.

Folabi Kuti is a Partner in the law offices of Perchstone & Graeys LP. Can be reached at folabikuti@perchstoneandgraeys.com

Footnote:

[1] Specifically, sections 7(6), 13, 14 and 19 thereof

[2] Chapter contribution titled ‘’Revisiting the Measure of Damages in ‘Master-Servant’ Employment Disputes’ by Folabi Kuti, in ‘The National Industrial Court of Nigeria and Progressive Development of Labour and Employment Law in Nigeria’, Essays in Honour of Hon. Justice Babatunde Adeniran Adejumo, OFR, Ed. by Prof. O. Amucheazi SAN & Bimbo Atilola, Hybrid Consult, 2019 , p. 656

[3] See, for instance, Batelitwin Global Services Ltd v. Mr John Muir unreported Appeal Number CA/L/566/2013 which was decided on 3rd November 2016 by the Lagos Division of the Court of Appeal. The Court of Appeal granted only USD 24,750, instead of USD193,050, being one month’s salary in lieu of notice on a finding of wrongful termination.

[4] [2017] LEPLR-43207(CA); judgment delivered on Friday, the 27th day of October, 2017.

[5] Unreported Appeal Number CA/L/661/2016; judgment dated 17th of November 2017.

[6] Pg. 691

[7] The rationale for the new regime of high watermark compensatory damages for wrongfully dismissed or unlawfully terminated workers in the labour court, aptly captured in the paragraphs of the judgment reproduced here  bear close resemblance to similar sentiments expressed by my Lord, Kanyip J. (as he then was, now, President of the National Industrial Court of Nigeria) in Olufemi Amodu v Epesok Paper Mill Ltd, Unreported suit No. NICN/LA/304/2013; judgment delivered on 21 June 2016;  a seminal judgment in which the NICN pointed out that the old dispensation of cases which insist on the measure of damages in termination/dismissal being restricted to only payment in lieu of notice, typifies the stance of common law on the matter which is not necessarily the case today.

[8] Pp. 38-39

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