Dr. Pius Apere v. Linkage Assurance Plc
19/7/2024- Justice (Prof.) E. A. Oji
Main issues of law
a). Termination of appointment of a Managing Director
b). The implication of international best practices on the dichotomy between termination and dismissal in Nigeria
Summary of facts
The Claimant was appointed as Managing Director/CEO of the Defendant by the Defendant. Following allegations of misconduct and investigation, his employment was terminated. The Claimant claimed that the termination was not due to misconduct because he was paid salaries after suspension and that the termination was not in accordance with the Companies and Allied Maters Act (CAMA). And further that the termination letter did not state it was due to misconduct. The Defendant’s defence was that there was no need for compliance with the CAMA as the Claimant was not a director and not removed as such but that the termination was as a result of cross misconduct. The Defendant countered for the book value of the 2 status cars that were in the Defendant’s possession.
Decision
The court held that the claimant did not prove that he was a director entitled to enjoy the procedure for removal of directors under the Companies and Allied Matters Act. The court held that the facts show that the Claimant’s termination as managing director was as a result of the allegations of misconduct in respect of which proper procedure was followed, even though not expressly stated in the letter of termination. The court dismissed the Claimant’s claims and granted the counter claim ordering him to pay the sum of N55,312,500 (Fifty Five Million, Three Hundred and Twelve Thousand, Five Hundred Naira Only) being the total Net Book Value of the two official vehicles in his possession.
Termination of the appointment of a Managing Director
a). A claimant who wishes to challenge his removal as director under the Companies and Allied Matters Act must prove that he was a Director to be subject to the removal procedure of a Director stipulated in the Act.
b). While it is possible for a Director to also be a Managing Director, it is also possible for a Managing Director not to be a Director.
SUIT NO: NICN/LA/92/2021. Full judgment is available at https://nicnadr.gov.ng/judgement/judgement.php?id=9091
c). A managing director’s appointment can be terminated based on the contract for the appointment and there is no provision in CAMA to be followed for the termination.
d). An employer has the inherent power to commute summary dismissal to termination.
The implication of international best practices on the dichotomy between termination and dismissal in Nigeria
e). By virtue of the ILO’s Convention 158 i.e. the Termination of Employment Convention 1982 No. 158 (C.158) and its accompanying Recommendation No. 166 (R.166) and section 254C(1)(f) of the Constitution which empowers the NICN to apply international best practices, there is no legal justification to continue to maintain the termination/dismissal distinction as we presently do in Nigeria.
Review
This decision cannot be faulted on the facts, however, there are important pronouncements made in the judgment that appears inconsistent with the CAMA. While is conceded that there was no direct proof that the Claimant was formally appointed a director and that the appointment of a Managing Director may be terminated based on the agreement for the appointment, section 88 of CAMA 2020 which is similar to section 64 of 1990 CAMA and other relevant provisions suggests that only a director may be appointed as a Managing Director. The Articles of Association of a company may provide for the appointment of Managing Director but it does not seem that a person who is not a director can be appointed as Managing Director under CAMA.
There is also the rather casual manner with which the court invoked IBP to invalidate the substance of the difference between termination and dismissal under our law. Apart from the fact that this issue did not arise from the facts and arguments placed before the court, the application of unratified IBP should not be treated the way it was treated in this case. It is important for the court to allow a proper interrogation of the application of unratified IBP before placing reliance on them. On a proper introspection, there is considerable doubt whether the contextual distinction between termination and dismissal under our law does conflict with IBP.
