E. E. OFFIONG (APPELLANT)
AFRICAN DEVELOPMENT CORPORATION LIMITED (RESPONDENT)
(1964) All N.L.R. 498
Division: High Court, Lagos
Date of Judgment: 29th May, 1964
Case Number: LD/30A/64
Before: De Lestang, C.J.
The terms of employment of the appellant as the Secretary of the company entitled the appellant to a loan of £600 for the purchase of a private car repayable over a period of five years by monthly instalments; instead of receiving the loan, the appellant was given a car belonging to the company's chairman and the appellant's account was debited with the sum of £646. 13. 4d representing the alleged value of the car; the appellant accepted the arrangement because he needed transport. Three years later, the appellant resigned his appointment with the company; he stated in his letter of resignation that the car which was forced on him was grossly over estimated at £600 after it had been used by the General Manager for nearly two years; that he has spent over £270 in repairing the car in addition to about £300 paid back by him on the car; the appellant requested the company to review the whole transaction and allow him to "leave the establishment with the car without having to make further payments on it;" the exact amount of the appellant's indebtedness to the company in respect of the car was then £360. 13. 4d.
The company, which at that time had no manager, was managed by a committee, consisting of three directors, empowered to administer the company subject to the directions of the Board. The committee met, considered the appellant's letter of resignation, and approved the request that the appellant should leave the establishment with the car without having to make further repayment on it; the appellant was present and acted as the secretary to the committee meeting which decided to waive his indebtedness on the car; acting on the committee's decision the appellant took the car away and ceased to make any further payments thereon; the company brought this action in the magistrates' court, eighteen months thereafter, claiming payment of the balance of £360. 13. 4d. against the appellant; the appellant disputed liability and pleaded that he had been released by the company from his obligation to pay the balance. The magistrate gave judgment for the company and the appellant appealed against the decision.
It was contended on behalf of the company that the committee of management had no authority to waive the payment; that the release is not binding on the company because the appellant agave no consideration for it; and that the release was not communicated to the appellant.
(1) It is clear from the terms of reference of the Committee that they were given full powers of management subject to the direction of the Board, and since there is no evidence to suggest that there was in existence any direction from the Board affecting the exercise of these powers in relation to the matter under consideration, the committee acted within their authority.
(2) Although the appellant gave no consideration for the release, the company is estopped from bringing the action after the appellant had acted upon the decision of its committee which was, in fact, intended to be acted upon.
(3) Since the decision of the committee was taken in the presence of the appellant who recorded it, it is deemed to have been communicated to the appellant, although not in writing.
Appeal allowed: Judgment with order set aside.
Cases referred to:-
Central London Property Trust Limited v. High Trees House, Limited (1947) K.B. 130.
Combe v. Combe (1951) 2 K.B. 215.
Agunbiade, for the Appellant.
Enwere, for the Respondent.
De Lestang, C.J. of Lagos: This appeal arises in the following circumstances. The appellant was employed by the Respondent Company as its Secretary in 1957. It was a term of his contract of employment that the Company should give him a loan of £600 for the purchase of a car, the loan to be payable by monthly instalments over a period of years. Instead of receiving a loan however the appellant was given a car belonging to the Company's Chairman and his account was debited with the alleged value of the car, namely £646. 13. 4d. Being in need of transport he accepted this arrangement. In October 1960 the appellant resigned his appointment and his letter of resignation contains the following paragraph:-
"It will be recalled that the Consul Car I am using now was transferred to me three years ago by the former General Manager of the Company on the instruction of the then Chairman after the General Manager had used it for nearly two years. The car was grossly over estimated at £600 and I was asked to be paying back £11 a month to the Company on the vehicle. In the first place, the Board gave approval for a loan of £600 to be given to me for car purchase, but this was denied me and I was rather presented with a car said to be worth £600. So far, however, aside from the fact that I have paid back about £300 on the car, I have spent over £270 repairing it, licences and Insurances excluded. I am herewith now appealing to the Committee to take into consideration the conditions under which I came to be connected with the car and also how much I have already spent on it and therefore allow me to leave the establishment with the car without having to make further payment on it."
At that time the Company had no manager and it was managed by two Committee consisting of three directors. That Committee was appointed by a meeting of the Board of Directors of the Company held on the 28th March, 1960. The Minute dealing with the appointment of the Committee reads:-
"A Committee made up of Mr Mgbakor, Dr Ijoma and Mr Oputa-Otutu was to commence taking over from Chief Obaseki as from 4th April, 1960 and to complete taking over by April 11th, 1960. The Terms of reference of the Committee were:-
(i) To take over the administration and all the properties of the Company and to ensure that all the the inventory are properly recorded.
(ii) Until Chief Obaseki finishes up finally with the Company on the administrative side, to run the Company hand in hand with him.
(iii) After taking over from Chief Obaseki to continue managing the Company until the Board appoints new management, and during this interim period the administration of the Committee was to be subject to the directions of the Board."
The appellant's letter of resignation was considered by the Committee at a meeting held on the 12th October, 1960, at which the appellant was present as Secretary. The decision is recorded in the Minutes thus:-
"8. Resignation of Secretary: Dr Ijoma read the Secretary's letter of resignation from the Corporation with effect from 7th October, 1960. In the letter the Secretary expressed his regret at the fact that he was forced by circumstances much beyond his control to resign from the Corporation after three years service. He gave one month's notice of resignation to terminate on the 6th November, 1960. In the letter the Secretary appealed to the Committee to:-
1. Allow him to leave the establishment with the old Consul car without having to make further repayments on it. He explained that the car was grossly over-estimated at £600 and somewhat forced on him three years ago. The Board, he explained, approved a loan of £600 to be given to him but instead he was given a car said to be worth £600. He mentioned that he had so far repaid about £300 to the Company on the car and had spent over £270 on repairs, Insurances and licences excluded. The Company expressed deep regret at the fact that the Secretary had decided to resign his appointment. He was spoken of as a good and capable worker who will undoubtedly be missed. It was even wondered if the Secretary wanted an increment in salary even though he had never applied for it. However, when it was realised that he could not be convinced to reconsider the issue, his resignation was accepted.
In connection with the Secretary's requests, it was decided that he should leave the establishment with the Consul Car without having to make further repayments on it. Also he was granted two months' leave which he is in actual fact entitled to since he has only been on leave once in his three years service, The Secretary thanked the Committee for the kind concessions they had made to him and once more expressed his deep regret at the fact that he was going to sever his direct connections with the Corporation, but expressed that he will always watch the progress of the Corporation with interest and sympathy.
The exact amount of the appellant's indebtedness to the Company in respect of the car was at that time £360. 13. 4d. Acting on the Committee's decision the appellant when he left took the car away and ceased to make any further payments. Eighteen months later the Company brought an action in the Chief Magistrate's Court, Lagos, wherein they claimed payment of this amount. The appellant's defence was that he had been released from his obligation to pay the balance due at the time of his resignation. The learned Chief Magistrate gave judgment for the Company and the appellant appeals. The short point for decision in the appeal is whether the appellant was in law released from his obligation to pay the balance of the purchase price of the car or not. To decide that point it is necessary to consider first whether the Committee had authority to waive payment and secondly whether the release is binding on the Company. As regards (1), I have set out above the "Terms of reference" of the Committee and it is clear that they are given full powers of management "subject to the directions of the Board." It seems to me that what they did comes within their powers of management and since there was no evidence to suggest that there was in existence any direction from the Board affecting the exercise of these powers in relation to the matter under consideration, I consider that they acted within their authority. As regards (2), it is contended that the release is not legally binding because the appellant gave no consideration for it. In my view this case falls squarely within the principles established by Central London Property Trust Limited v. High Trees House Limited, (1947) KB. 130 as explained in Combe v. Combe (1951) 2 K.B. 215. That principle is that where a promise is given without consideration but is intended by the promisor to affect an existing contract between him and the promisee, and is intended to be acted upon by the promisee, and is in fact so acted upon, such a promise may be set up as a defence by the promisee in an action by the promisor to enforce the original contract; but it cannot be sued on as a separate cause of action by the promisee. It is also contended that the release was not communicated to the appellant. In my view, it was, since it was taken in his presence and it was he who recorded it. It is true that it was not communicated to him in writing but neither was the acceptance of his resignation. There can be no doubt that it was agreed upon. This appeal accordingly succeeds. The decision of the lower court is set aside together with the order for costs. It is ordered that the Suit be dismissed with costs in the lower court assessed at £7. 7. 0. The appellant will have the costs of this appeal which are assessed at £25. 0. 0.