Civil Appeal C of A/21/99
IN THE COURT OF APPEAL OF LESOTHO
In the matter between:
HELD AT MASERU
LESOTHO BANK Appellant
and
MAHLOMOLA KHABO Respondent
JUDGMENT
7,10,13 April 2000
Coram: Steyn P
Gauntlett JA
Ramodibedi JA
Gauntlett, JA:
This is an appeal and cross-appeal against an award of damages in an action instituted by the respondent (as the plaintiff) against the appellant (the defendant) in the court below.
The delay in the prosecution by the respondent of his claim is unexplained on the record. He was dismissed from the employ of the appellant almost thirteen years ago. His combined summons seeking damages for unlawful dismissal was issued
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on 24 July 1987. This was then amended twice. Pleadings ultimately closed on 6 May 1997 (thus ten years later). A pre-trial conference was only convened a further six months later. The minutes of the conference took another two months to produce. An interlocutory application was launched by the respondent to compel the appellant to furnish reasons for the dismissal (instead of simply requesting, and if needs be compelling, trial particulars). This was heard after yet further delay. Some three years later the then Chief Justice (Cullinan CJ) delivered judgment. The reasons for the delay in giving that judgment are regrettably not disclosed in the judgment; it is not readily apparent what could have justified a delay of this magnitude (cf. Goose v Wilson Sandford and Co The Times Law Reports 19.2.98, in which the Court of Appeal described a delay of 20 months in giving judgment as "inexcusable"; and Namex (Edms) Bpk v KBI1994 (2) SA 265 (A) in which a delay of 40 months was said to bring the Bench and the administration of justice into disrepute (2931-J)). That application was dismissed. It appears to have been premised on a suggestion that the general duty of a functionary to give reasons in public law extends in some way to a purely private law relationship which arises in contract between two nonstatutory bodies such as the appellant and the respondent. That issue is not on appeal before us.
Judgment in the principal matter was thereafter apparently granted by default. The record does not disclose the date. Thereafter it was rescinded by agreement, but in relation to the issue of quantum only. The matter was then enrolled for hearing.
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By agreement, the trial court (Kheola, CJ) in terms of Rule 30 (2)) heard argument in relation to two issues which the parties requested
be determined at the outset: whether the law of damages to be applied was that in force at the date of dismissal or at the date of trial; and whether the respondent was entitled to damages from the date of his dismissal to the date of his projected retirement at the age of 60 years, or whether he was entitled to damages for a lesser period.
On 12 August 1998, the court ruled in favour of the appellant on both issues. It held that the respondent "would only be entitled to damages for a reasonable period after dismissal", and that the law to be applied was that in force as at the date of dismissal. (As a result, the claim falls to be determined on a purely contractual basis, and without reference to subsequent statutory provisions).
Again, these two issues are not on appeal before us. Only the issue of quantum proceeded to trial, and is the subject of this appeal.
In his amended particulars of claim, the respondent claimed benefits which he alleged he would have received had he remained in employment until he reached retirement age. These comprised:
"1. (a) Payment of Plaintiffs salary for the period 1987 to 2008 at the rate of M2 850,00 per month increasing at the rate of M50,00 per month per year and in the form of re-adjustments related to the inflation rate of 20% every 3 years.
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Payment of Plaintiff's annual thirteenth monthly cheque for the period 1987 to 2008 increasing at the rate of M50,00 per month per year and re-adjusted for inflation at the rate of 20% every 3 years.
Payment of Plaintiff's housing allowance for the period 1987 to 2008 at the rate of M650,00 per month increasing at the rate of 10% per annum.
Payment of the loss of the benefit of the use of an official car by Plaintiff calculated at M300,00 per month and escalating as follows:
M300,00 per month for the period 1989 to 1990;
M600,00 per month for the period 1991 to 1995;
M1200,00 per month for the period 1996 to 2000;
M2 400,00 per month for the period 2001 to 2005; and
M14 800,00 per month for the period 2006 to 2008.
Payment of the loss of the benefit of the use of a free telephone and sewerage charges at the rate of M 180,00 per month increasing at the rate of 20% per annum from the year 1989 to the year 2008.
Payment of Plaintiff rs gratuity payable every 10 years for 3 periods of 10 years at the rate of 25% of earnings for every 10 year period.
Payment of the proceeds from a certain life insurance policy the premiums of which Defendant was contributing towards amounting at maturity to a minimum of M60 000,00.
Payment of the proceeds from Defendant group insurance policy in favour of its employees amounting at maturity to a minimum of M160 000,00.
Payment of Plaintiff's pension payable monthly on retirement at age 60 years calculated at 2% or such percentage as shall then be found to be payable of Plaintiff's final average salary multiplied by the number of Plaintiff's pensionable years of service divided by 12 months.
Costs of suit.
Further and/or alternative relief".
Page 5 A single order was made by the trial court. It is this:
"In the result the plaintiff is awarded damages for a period of twelve (12) years after his dismissal in terms of claims 1 (a), (b), (c), (f), (g), (h) and 2".
In other words, the respondent was awarded (without quantification) the full relief he claimed, save in respect of his alleged loss of the benefits of the use of an official car, telephone and sewerage charges but restricted period of twelve years after his dismissal.
The court held in the latter regard simply:
"Taking into account all the particular circumstances of this case I have come to the conclusion that a reasonable period after his dismissal during which the plaintiff is entitled to damages is twelve (12) years".
In my respectful view, this order by the learned trial court cannot stand, for a number of reasons.
In the first place, the trial court was faced in a trial action with a claim for damages. It was not asked to grant a declaratory order. What was explicitly sought was an order of damages, and damages must be expressed in money (see Broome v Cassell & Co [1972] AC 1027 at 1070E, per Lord Hailsham LC, adopting the definition by McGregor on Damages (now to be found at 7th ed (1997) para 1 p 3); Santam Versekeringsmaatskappy Beperk v Byleveldt 1973 (2) SA 146 (A) at 150; Joubert (ed) Law of South Africa (first re-issue 1995) vol 7 para 26). This the trial court failed to do.
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In the second place, the trial court overlooked the fact that no evidence at all was adduced in support of any of the claims encompassed by the particulars of claim other than the claim arising for lost salary. What the respondent was claiming was explicitly patrimonial loss which he had actually incurred. A claimant in delict is entitled to the difference or interesse (defined by Voet Comm ad Pand. 45.1.9) calculated in pecuniary terms between his patrimony as a result of the wrongful act and the position he would have been in had it not happened. In contractual matters the measure is generally the difference between his patrimony after the breach, and the situation in which he would have been had the contractual obligation in question been duly performed (although this distinction is not an absolute one: see McLennan Positive and Negative Damages for Breach of Contract (1999) 116 SALJ 521). It is only in relation to non-patrimonial loss that a court applies other principles, recognising that what is to be awarded by the court is essentially of the nature of a solatium (see in particular the analysis by Innes, JA in Union Government (Minister of Railways and Harbours) v Warneke 1911 AD 657 at 665-6).
Even in relation to the claim for loss of salary, there was no evidence before the court relating to the projected annual increments. This is so both as regards the question whether this particular employer is likely to have effected the suggested increments (because it was contractually obliged to do so or otherwise), and as regards the separate "readjustments" which the respondent asserted would occur triennially, and these in turn in relation to a particular inflation rate alleged by the
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respondent.
The rule in this regard is trite, and was perhaps most comprehensively restated in Esso Standard SA (Pty) Ltd v Katz 1981 (1) SA 964 (A) at 970D-H in these terms:
"Whether or not a plaintiff should be non-suited depends on whether he has adduced all the evidence reasonably available to him at the trial and is a problem which has engaged the attention of the Courts from time to time. Thus in Hersman v Shapiro & Co 1926 TPD 367 at 379 Stratford J is reported as stating:
"Monetary damage having been suffered, it is necessary for the Court to assess the amount and make the best use it can of the evidence before it. There are cases where the assessment by the Court is very little more than an estimate; but even so, if it is certain that pecuniary damage has been suffered, the Court is bound to award damages. It is not so bound in the case where evidence is available to the plaintiff which he has not produced; in those circumstances the Court is Justified in giving, and does give, absolution from the instance. But where the best evidence available has been produced, though it is not entirely of a conclusive character and does not permit of a mathematical calculation of the damages suffered, still, if it is the best evidence available, the Court must use it and arrive at a conclusion based upon it'.
See too, a more recent decision given in this Court in Mkwanazi v Van der Merwe and Another 1970 (1) SA 609 (A) where Van Winsen AJA sets out in detail at 632 the reasons for granting absolution where the plaintiff has failed to place before the Court evidence he is in a position to lead.
The critical question then is whether the plaintiff, having successfully proved that he has suffered damage through loss of petrol and that that damage was caused by the defendant, has produced all the evidence that he could reasonably have produced to enable the Court to assess the quantum of damage".
This is not an instance in which it is clear that in the respects I have indicated, the respondent did as a fact suffer loss, but that circumstances prevented him from quantifying it. In such a case the court must do the best it can in the
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circumstances to quantify the loss (cf. Caxton Ltd and Others v Reeva Forman (Pty) Ltd 1990 (3) SA 547 (A) at 573G-J; Hushon SA (Pty) Ltd v Pictech (Pty) Ltd 1997 (4) SA 399 (SCA) at 412G-H)). The whole substratum of fact in relation to the claims encompassed by items 1 (b), (c), (f), (g), (h), and (a) as regards the projected increments, is missing.
What then remains is the order by the court relating to the payment of the respondent's basic salary for a period of twelve years following the date of his dismissal. The evidence in this regard does establish (save in relation to the annual increments) that he did suffer a loss; the problem is how this particular claim should properly have been quantified by the trial court. In such a case, as Stratford J held in Hersmann v Shapiro & Co Ltd 1926 TPD 367 at 379, ".....if it is certain that pecuniary damage has been suffered, the Court is bound to award damages ".
In this regard, it is necessary at the outset to dispose of a contention advanced in the heads of argument for the respondent (in defending the appeal and advancing the cross-appeal) that his cause of action was delictual and not contractual. This is manifestly not so. Throughout its various amendments, the particulars of claim starkly asserted an unlawful dismissal. A contractual measure of damages was claimed. There was no express allegation (such as would be necessary to found a claim in delict) of fault in the form of either dolus or culpa. The dicta in the judgment relating to possible malice on the part of the respondent in dismissing him
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(upon which this contention evidently fastens) hardly assist: the court at that stage was not dealing with the question of liability, but only that of quantification. The respondent cannot, post hoc propter hoc, seize upon dicta in the judgment to assert a case he himself has never pleaded. Besides, the issue of liability had long been removed from the case by the time the trial court delivered itself of these remarks --and this on the basis, as I have indicated, that by virtue of the appellant's unlawful termination of the contract, it was liable (necessarily ex contractu) to the respondent.
To what measure of damages is the respondent then entitled, on the evidence adduced, as regards his loss of salary ?
Before us the appellant asserted in the first place that it was liable to the respondent only for one month's salary (being the contractual notice period specified by clause 13 of the contract of service), and this it had already paid.
The appellant's argument proceeded in this way. Mr Woker (for the appellant) pointed first to the fact that in terms of the contract in the present case, the employment was terminable by either party on one month's notice. He then called in aid this passage from Wallis Labour and Employment Law (1992) 6-14 (para 40):
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"The basic measure of damages in such cases is the sum which the employee would have earned from the date of the wrongful dismissal to the earliest date after that upon which the employment could lawfully have been terminated, less such amounts as were in fact earned from employment during that period" (emphasis supplied).
In a footnote to this passage, five authorities are cited in its support (one under an erroneous reference). None pertinently supports the proposition underlined. (Interestingly, a leading Canadian text, Waddams The Law of Damages (1983) 363-4, to which we were not referred, suffers from the same defect).
Mr Woker wisely did not persist in this submission before us. He did however contend that our approach should be to assess the period during which the respondent would have continued to work for the appellant as not exceeding two years.
This argument was not premised on the evidence, but on legal policy. It was namely contended that a period of more than two years would encourage claimants in a similar position to advance exaggerated claims, and would furthermore ignore the fact that in South Africa, a statutory limit of two years in respect of compensation in such circumstances has been in operation (since 1995).
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Neither premise is compelling. This case falls to be determined on its own facts, and our assessment of damages is confined to it. A reference to the South African statute (itself enacted some eight years after the date in relation to which damages must be assessed) is no guide to the prevailing common law of Lesotho at the relevant time (the more so in that the Lesotho Labour Code, 1992 eschewed any such statutory capping).
It seems to me that the correct approach, applying the usual measure for damages ex contractu, is that the claimant is in principle entitled to the difference between what he has received from employment following his dismissal and the sum to which he would have been entitled had the contract been fulfilled. (See in this regard McGregor op cit para 1230). It is then a matter of inquiry as to how long, on the facts of each case, the contract is likely to have endured. In the case of a fixed term contract, it is to the end of the contractual period. In a case such as the present, it is until the date which, on the fact found by the court, the contract is likely to have terminated.
As already indicated, the present case proceeds on the premise that the dismissal in 1987 was unlawful. Merely to say that the respondent
could have been dismissed upon good notice a month later is not to say that on the evidence he would probably have been so dismissed.
This is particularly so where the evidence
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does not establish that the purported dismissal, although itself unlawful, was prompted by some substantive issue likely to have led to a lawful dismissal immediately thereafter. The question accordingly remains: if the respondent was not entitled as a matter of law to be employed by the appellant until his retirement age, how long is his contract likely to have subsisted ?
As an element necessary to prove his loss, the onus was upon the respondent to establish this. His whole case appears to have been predicated upon the erroneous premise that, notwithstanding the explicit terms of clause 13 of the contract of employment (which provides reciprocally for termination on a month's notice), he would have been employed until his retirement age. This is not so: his contract was not for a fixed term, but indefinite (with a retirement age of 60, and subject to the reciprocal right of termination conferred by clause 13). Distracted in this way, the respondent did little to establish the likely period for which his employment would have continued.
What is a court to do in these unsatisfactory (and entirely avoidable) circumstances? The answer is that it must do its best with the facts which are available. As was held in Stolte v Tietze 1928 SWA 51 at 52:
[1]f there is evidence that some damages have been sustained, but it is difficult or almost impossible to arrive at an exact estimate
thereof, the court must endeavour with such material as is available, to arrive at some amount, which in the opinion of the court will meet the justice of the case".
Page 12 But this does not mean that it is competent for the court
"To embark upon conjecture in assessing damages where there is no factual basis in evidence, or an inadequate factual basis, for an assessment, and it is not competent to award an arbitrary approximation of damages to a plaintiff who has failed to produce
available evidence upon which a proper assessment of the loss could have been made"
(Monument Art Co v Kenston Pharmacy (Pty) Ltd 1976 (2) SA 111 (C) at 118E).
A plaintiff, it has to be stressed, has the onus of establishing the loss he claims: he cannot demand an enquiry into damages with the object of obliging the defendant to produce evidence which the plaintiff believes would prove his damages (Victor Products (SA) Ltd v Lateulere Manufaturing Ltd 1975 (1) SA 961 (W) at 963A-964B).
To the extent that a plaintiff fails to adduce evidence readily available to him (either directly or through the procedural aids of discovery and subpoenas), the inevitable result is the application of the maxim semper in obscuris quod minimum est sequimur (always in doubtful matters the court applies the minimum) "or, failing all else awarding a sum that appears to the court fair and reasonable in the circumstances" (Christie Law of Contract (3rd ed 1966) 604; McGregor op cit paras 357-358).
The facts before us show that the respondent had been employed by the appellant for a considerable period: some (11) years. His basic qualifications were lowly, his
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initial employment essentially clerical in nature, and his effective transfer from the Post Office to the appellant on its establishment
essentially fortuitous. On the other hand, while employed by the appellant, he had progressed to a senior managerial position, and had obtained a Bachelor's Degree in Commerce and certain postgraduate certificates relating to short courses attended by him in relation to banking matters. There is no evidence that, while an employee of the appellant, he had been guilty of misconduct, demoted, reprimanded or that his employment had otherwise been at risk.
What however is to be made of his employment record since his dismissal ? For some two and a half years he was employed by Caltex. While the circumstances of that employment were the subject of protracted evidence, discursive cross-examination and considerable controversy, it is at least clear that in that managerial position, his conduct gave rise to considerable dissatisfaction. It is also not immaterial that since then, the respondent has not held down other comparable employment, and that a venture into business on his own - involving commercial and financial skills - ended in financial disaster.
In these circumstances, it is to my mind not established on the evidence that the respondent was likely to remain for a lengthy period in the employ of the appellant. The facts suggest that it is far more likely that his period of employment would not have exceeded five years. This is not a period I am able to determine with anything
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approaching certainty. It represents however an endeavour on the woefully inadequate evidence adduced by the respondent, to make a reasonable estimation, applying the principles outlined above.
I turn now to the question of mitigation. This was a matter squarely pleaded {as it had to be) by the appellant, and much of the evidence (as already indicated) related to the endeavours by the respondent to secure employment after his dismissal by the appellant. In this regard, too, it is my respectful view that the trial court erred. It approached the matter on the basis that the employment of a depot manager at Caltex was not reasonably comparable to that of his previous position as an assistant bank manager with the appellant. In my view, the evidence does not establish that. It is correct that the respondent's initial position as a trainee depot manager initially involved just that: training, and management of a depot which, in the nature of the petroleum industry, involved (even at managerial level) a literal dirtying of the hands. But the evidence to my mind shows that the position was a senior and truly managerial one, and that - whatever the discriminatory constraints which (I accept in favour of the respondent) may still have operated at the time in question (the late 1980's) against the promotion of black employees of a multi-national corporation in South Africa, it cannot be said that the positions were not broadly comparable. That is the requirement in relation to the duty to mitigate, not an exact equivalence. There is, moreover, the evidence that other opportunities existed within the
same company in other divisions, perhaps better
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suited to the respondent's interests, but it seems clear that he did not pursue these with any tenacity. There is also the fact that he voluntarily resigned thereafter from his subsequent employment as a personnel manager with Mustang Shoes.
In these circumstances, it seems to me that the proper approach to the measure of the respondent's loss is as follows. He is entitled to damages in relation to the loss of his annual salary (net of deductions and tax) for a period of five years from date of dismissal, less the net total of his income derived from employment in that period (net of deductions and tax), together with some allowance for his failure to mitigate his loss through other employment when it was reasonably possible for him to do so.
In the ordinary course we would have been inclined to remit the matter to the trial court for this quantification to be performed. Neither party had adduced before the trial court evidence of an actuary, or itself in the court below adequately grappled with issues of calculation like the incidence of tax, allowance for the accelerated value of a lump sum, mortality and the like. In view however of the appalling delays in the litigation since its inception, and with the co operation of the parties' legal representatives, we have ourselves performed this task. The parties agreed that we should do so.
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From the agreed figures placed before us, the following appears. Had the respondent remained in the appellant's employ for a further five years (as I have estimated on the facts to have been probable), he would have earned a net total income (rounded off) of some M167 000,00. In fact, during that period he earned net about M61 700,00 from Caltex, M9 200,00 from Mustang Shoes and net about M13 000,00 as managing director of his own venture, Eastern Highlands Catering (Pty) Ltd. The total is M83 900,00.
That sum represents the extent to which the respondent actually mitigated his loss. Further allowance however must in my view be made for the fact that the respondent failed to mitigate his loss to the extent that he could reasonably have done so, for instance by securing through satisfactory work performance any of the several increments which fully 65% of his co-employees at Caltex obtained during the relevant period; by diligently pursuing available prospects in other divisions in Caltex better suited to his experience; by holding down his employment with Mustang Shoes; by making a success of the catering business (or some other business) when he could reasonably have done so (his counsel readily ascribed the failure to the respondent himself).
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On the other hand, it would not be fair to ascribe too large a monetary value to this failure reasonably to mitigate over and beyond the sum actually earned. I am mindful of the fact that broadly comparable managerial positions to that held by the respondent with the appellant were not, on the evidence, abundant in Lesotho at the time.
I think an estimate of M20 000,00 represents a fair allowance for this further factor.
The result is that, on the evidence available, I would estimate the respondent's net loss as of the order of M63 100,00. Given the nature of the calculation, and in particular the short time period involved, it is inappropriate to make further allowance for factors such as the accelerated value of a lump sum benefit and contingencies (which, it has to be remembered, can be positive as well as negative: Southern Insurance Association v Bailey No. 1984 (1) SA 98 (A) at 117B -D)).
What remains is the issue of costs. On the approach I have adopted, the respondent was substantially successful in obtaining an award of damages in the court below, in terms of the order I shortly propose be made. But on appeal the appellant has been substantially
successful: the cross-appeal, it is evident, is wholly without substance and was not pressed on behalf of the respondent, while the orders made by the court a quo cannot, for the reasons I have given, stand. The result in practical terms is a very substantial reduction of the relief the court a quo granted.
The following order is made:
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The appeal is upheld and the cross-appeal is dismissed.
The judgment and orders of the court a quo are set aside, and substituted with the following order:
"2.1 The defendant is ordered to pay the plaintiff damages in the sum of M63 100,00.
2.2 The defendant is directed to pay the plaintiffs costs of the action".
The respondent is directed to pay the appellant's costs of the appeal and cross-appeal.
GAUNTLETT JA
Steyn P:
I agree
STEYN P
RAMODIBEDI JA
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appellant: Mr H. Woker
(Instructed by Webbers)
respondent/cross-
at: Mr Sello
