THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(CIVIL DIVISION)

CIVIL SUIT NO. 78 OF 2012

ALEX METHODIOUS BWAYO ::::::::::::::::::::::::::::::::::PLAINTIFF

VERSUS

DFCU BANK LIMITED :::::::::::::::::::::::::::::::::::::::::::DEFENDANT

BEFORE: THE HON. LADY JUSTICE ELIZABETH MUSOKE

JUDGMENT

The plaintiff was employed by the defendant as a Business Support Executive from
5th April 2006 until his employment was terminated on 28th December 2011. At the
time of the termination, he was employed as Recoveries Manager. Following a
loan recovery saga, which is stated to have involved the plaintiff, he was subjected
to investigations which later culminated into the plaintiff’s suspension on 5 th
December 2011, and later a disciplinary hearing on 8 th December 2011. After the
disciplinary hearing, the defendant decided to terminate the plaintiff’s
employment. The defendant also withheld some of the plaintiff’s terminal benefits
and used some to offset his outstanding mortgage liabilities. The plaintiff filed this
suit challenging the termination as unlawful and sought for special damages,
aggravated damages, general damages, punitive damages, interest and costs of the
suit.

At the scheduling conference, the following issues were agreed by the parties:
 1) Whether the plaintiff’s termination was wrongful.

2) Whether the defendant lawfully withheld the plaintiff’s benefits.

3) Whether the plaintiff is entitled to the remedies sought.

Issue 1: Whether the Plaintiff’s termination was wrongful;

It was the case for the plaintiff that his employment was wrongfully terminated.
Counsel for the plaintiff referred court to the termination letter marked Exhibit P2,
jointly signed by Juma Kisaame, the defendant’s Managing Director, and Isa
Nsereko, the defendant’s Head of Human Resource; and contended that although
through the letter of termination, the defendant purported to invoke Clause 6 of the
plaintiff’s Employment Contract to terminate the contract by giving one month’s
notice, the same Isa Nsereko, DW1 had testified that the defendant terminated the
plaintiff’s employment due to his poor performance, yet this allegation was not
included in the letter of termination. The internal audit investigations
commissioned by the defendant’s management did not find the plaintiff culpable.
Even the disciplinary hearing failed to implicate the plaintiff. And to date 3 years
later there is no verdict against the plaintiff as required by the defendant’s Human
Resource Manual (HRM) (Exhibit 14). After the disciplinary hearing, the only
communication to the plaintiff was the termination letter. The defendant had
thereby decided to take the law in its hands by pretending to exercise its
contractual right to terminate.

Counsel relied on Isaac Nsereko Vs MTN Uganda Limited HCCS No. 156 of
2012 and Juma & Others Vs Attorney General [2003] 2 EA, 461 which laid down
the basic necessities for a due process in a disciplinary hearing. He contended
further that the reason alluded to in the termination letter was the Elizabeth
Lugudde’s recovery matter, despite the defendant later trying to change the said
reason to poor performance. This was clearly unlawful because the plaintiff was
not accorded any hearing as regards poor performance contrary to the principle of
audi alteram partem. In any case, poor performance was not disclosed in the
termination letter. Further, DW2, testified that the termination was as a result of
the employer exercising their right to terminate because there was mutual mistrust.
This confirmed the plaintiff was dismissed on unproven allegations, whose
disciplinary process had never led to a verdict. Either version, that is to say, that of
DW1 and DW2, was conclusive evidence of an unlawful termination. Both
witnesses confirmed that the investigations into the Lugudde transaction were still
ongoing, three years after the plaintiff’s employment was terminated for the same
reason, leading to the conclusion that the termination of the plaintiff’s employment
was premature, prejudicial and unlawful.

Counsel relied on Isaac Nsereko Vs MTN Uganda (Supra) to state that the
defendant had used the provisions in the Human Resource Manual of giving 3
month’s salary in lieu of notice, to cover up for their unlawful termination of the
plaintiff’s employment.

Counsel submitted further that the letter inviting the plaintiff for a disciplinary
hearing. It only stated that the plaintiff would give answers in regard to the
foreclosure process of “a Client’s Mortgage”. The plaintiff’s testimony was that
he handled hundreds of recoveries in a year; hence there is no way he would
prepare his defence for a recovery which was not stated in the summons. Further,
the summon (Exhibit 3) did not show any dates or particulars of the offences that
the plaintiff was meant to respond to; nor did the defendant provide the plaintiff
with the Internal Audit Investigation Report in advance to enable him prepare his
defence, despite the fact that it was signed on 2 nd December 2011, therefore it
existed by the time the plaintiff was summoned on the 5 th of December 2011.
Further still, the plaintiff’s suspension letter did not state the reasons for the
plaintiff’s suspension.

Counsel relied on Okurut Vincent Vs MTN Uganda Ltd HCCS No. 169 of 2008,
where reliance was placed on Ridge Vs Baldwin [1964] AC 90 for the proposition
that a decision reached in violation of the principles of natural justice like the right
to a fair hearing was no decision at all. He also relied on Section 66 of the
Employment Act 2006, which obliged an employer prior to dismissal of an
employee on grounds of misconduct or poor performance, to explain to the
employee the reason for which the employee is considering dismissal and to give
the employee reasonable time within which to prepare his representations. In the
present case, reasonable time and disclosure were not accorded to the plaintiff to
prepare representations, and defence in the absence of the investigation report.

Counsel contended further that the participation in the disciplinary hearing by

DW2, Mrs. Agnes Isharaza (the Head, Legal and Company Secretary of the
defendant, was wrongful, in light of her role in the fraudulent sale of the Lungujja
property. It rendered the whole process a nullity since she was biased or perceived
to be biased. Further, all the witnesses who were interviewed during the
investigations were never produced at the hearing, therefore the plaintiff could not
cross-examine them on their evidence.

Counsel relied on Rosemary Nalwadda Vs Uganda Aids Commission Misc. Cause

No. 45 of 2010, and Cooper Vs Wilson & Others [1937] 2 K. B. 309 for the
proposition that the risk that a respondent may influence the court is so abhorrent
to notions of justice that the possibility of it or even the appearance of such
possibility was sufficient to deprive the decision of judicial force and to render it a
nullity. DW2 had contravened the principle of nemo judex in sua causa, that is to
say, no man shall be a judge in his/her own case, or the rule against bias. He
further relied on Asaba Christine Vs British American Tobacco (U) Ltd HCCS
No. 100 of 2009 to state that it is immaterial that a bias had affected the decision
made, it is enough that the plaintiff reasonably apprehended that a bias attributable
to the initiator operated against her on the final decision.

Counsel concluded that since the plaintiff’s suspension was illegal for want of
notice as to the reason for suspension; the summons to the plaintiff were illegal for
want of particulars of the charges that would have enabled him to prepare for his
defence; and the hearing itself was void for inter alia, bias; therefore, a termination
letter written as a consequence of a chain of illegalities was equally a nullity. He
relied on Lord Denning MR. in Macfoy Vs United Africa Co. Ltd [1961] 3 ALL
ER 1169 where it was held that;

“……. If an act is void, there it is in law a nullity. It is not only bad but
incurably bad. There is no need for an order to set it aside. It is
automatically null and void without more ado, though it is sometimes
convenient to have the court to declare it to be so. And every proceeding
which is founded on it is also bad and incurably bad. You cannot put
something and expect it to stay there. It will collapse.”

The termination letter was therefore a nullity for as it arose out of illegal
proceedings. See also Isaac Nsereko Vs MTN Uganda Ltd (Supra).

He prayed that the termination letter dated 28 th December 2011 be declared null
and void.

Counsel for the defendant was of a different view. On whether the termination was
wrongful, he submitted that the Plaintiff was wrong in his criticism of the reason of
poor performance of the plaintiff as the reason for termination as per testimony of
DW1 for the following reasons;

1) There was no legal requirement for the employer to state the reasons for the
dismissal in the termination letter, unless the employee requested for them,
which was not the case here. (See Section 61 (1) (f) of the Employment
Act.)
2) On re-examination, DW1 clarified that the Defendant terminated the
plaintiff’s employment basing on its right under Clause 5 of the Contract of
Employment (Exhibit 1), and that the poor performance was one of the
considerations in reaching that decision; as confirmed by DW2 (Agnes
Tibayeita Isharaza) in her testimony. An employer retained the right to
terminate the employee’s service at anytime. (See Patel Vs Madhivan
International Ltd (1992-93) HCB 189). Further Section 65 (1) of the
employment Act also provided that a termination of a contract is deemed to
have come to an end where the employer ends it with notice.

Counsel sought to distinguish Isaac Nsereko Vs MTN Uganda HCCS NO.156 of

2012, from the present case, in that in the MTN case that the employee had been
forced to resign, a resignation which he later revoked before its acceptance, and it
was that purported resignation which was used to terminate the employment.
Hence the comment by the Judge that the resignation was used as a cover. There
was nothing to cover in the present case. The Defendant explicitly stated in the
letter of termination that it was invoking its contractual clause to terminate, a
position which it was legally entitled to take. Further, in the MTN case, it was
found that there had been no prior notice of the meeting, given to the employee to
challenge the allegations against him; and generally no hearing had been granted to
the employee, which could not be said of the Defendant in the present case.

On the allegation that the letter summoning the Plaintiff for a disciplinary hearing
did not indicate which charges the plaintiff was meant to answer and that it only
stated that plaintiff would give answers in regard to the foreclosure process of a
client’s mortgage; and that the summons show any dates or particulars of the
offences that the Plaintiff was meant to respond, Counsel responded that there was
no legal requirement that a notice of hearing should state the dates and particulars
of the offences that an employee was meant to respond to. These requirements are
a preserve of criminal proceedings and are inapplicable to administrative
proceedings like disciplinary proceedings.

Secondly, it was clear from the evidence that the Plaintiff was aware of the charges
against him and the purpose of the hearing, and which client it was, as in cross
examination, the Plaintiff had stated that he was aware of the mortgage transaction
between the Bank and Elizabeth Lugudde, which was problematic, and that the
bank had lost money, and at the time he was not aware of any other problematic
transaction; and that one Pious Olaki had also informed him to be prepared as
Managing Director had instructed Chris to investigate the issue. (See Exhibit 6 at
page 4 number 12.) The Plaintiff was therefore aware of why the meeting had
been called and especially so which client in respect of which it had been called
and it was immaterial as to how he obtained that notice; since also as testified by
DW2, the Plaintiff did not protest to being unready when the matter came up for
hearing. Further, there was no legal requirement that the employee should be
informed in writing always. Thus, regulation 2 (2) (a) of Schedule 1 to the
Employment Act is to the effect that the employee shall be informed “preferably in
writing” but not always in writing.

Counsel relied on Dr. E. B Mwesigwa Vs The East African Development Bank

and Anor M.A 639 of 2003 (Arising out of C.S 625 of 2003), to state that once the
plaintiff got in possession of the information, it was immaterial how he had
obtained it. As long as the Plaintiff was aware of the accusations against him, he
could not seek to vitiate that by saying that the letter never mentioned expressly
which client was involved. And, as a general rule, it was not appropriate for the
courts to intervene to remedy minor irregularities in the course of disciplinary
proceedings between employer and employee. (Kulkarni Vs Milton Keynes
Hospital NHS Foundation Trust (2010) ICR 101, para 22 cited in West London
Mental Health NHS Trust v Chabra (2013) UKSC 80 at para 39.)

On the allegation of bias on the part of the defendant, because of the presence of
Agnes Tibayeita as a member of the disciplinary committee, who is alleged to have
had an interest in the case as she would have no job in case the case did not go
against the Plaintiff, hence being a judge in her own case, Counsel submitted that
bias was a very serious allegation that should not be made lightly.

On actual and perceived bias, Counsel relied on Porter Vs Magill 2001 UKHL 67
and (2002) 2 AC 357, to state that a claim of actual bias required clear and direct
evidence that the decision maker was in fact biased; and should not be made out by
suspicions, possibilities or such other equivocal evidence. In the present case, the
“incidents of bias” alluded to by the Plaintiff were all mere suspicions since every
member of the committee was part of Management, and that according to the
Plaintiff’s, such proceedings would only be valid if conducted by non bank staff.
Although DW2 is stated to have signed the instrument that appointed Micheal
Agaba as auctioneer, who later committed the fraud, DW2 testified that it was her
duty as head legal to sign the document. There is no direct evidence that she made
the error or that she had an interest in the matter. The Plaintiff’s submission that
she would have lost her job is mere conjecture. The Plaintiff has, therefore, failed
to prove actual bias.

On whether bias could have been apprehended on Ms. Agnes Tibayeita, (perceived
bias), Counsel contended that when the plaintiff came up to attend the hearing, he
did not object to the presence of Ms. Agnes Tibayeita, or anyone else for that
matter on the committee. On the contrary, according to the minutes, he stated that
he had been given a fair hearing. See Exhibit 9 page 4, (minutes of the hearing).
He could not, therefore, claim now that there was perceived bias on the part of Ms.
Agnes Tibayeita. He relied on Blue lines Enterprises Limited Vs East African
Development Bank, (Civil Application No. 21 of 2012) Court of Appeal
Tanzania, to state that if the plaintiff honestly never believed in the impartiality of
the composition of the panel, he did not have to wait until the outcome of the
disciplinary proceedings.

Counsel sought to distinguish Rosemary Nalwadda Vs Uganda Aids Commission,

(supra) from the present case because in Nalwadda, an objection had been made at
the hearing as to the presence of Dr. Kihumuro Apuuli. And in Asaba Christine
Vs British American Tobacco, (supra) the issue of bias had been raised during the
hearing but was ignored by the panel. So was Cooper Vs Wilson (supra).

It was the defendant’s further case that the bank had lawfully withheld the
Plaintiff’s money on the basis of contract as the plaintiff had obtained a mortgage
from the Defendant, which had to be repaid by deducting the Plaintiff’s salary at
source (Exhibit 12, the Mortgage Deed). Under Clause 1.3 thereof, the Plaintiff
agreed to assign his rights and benefits under the Staff Provident Fund to the
Defendant until repayment in full of borrowed sums. Under Clause 1.4 thereof, the
Plaintiff undertook to ensure that his contribution to the Provident Fund was to be
continuous until full repayment of the borrowed money. Under Clause 4.2.5
thereof, in case of an event of default, the Defendant would be entitled to exercise
a right of set off at any time on all monies lying to the borrower’s credit within the
Defendant’s group.

Counsel contended that when the Plaintiff’s employment was terminated, it was no
longer possible for the Defendant to deduct his money at source. As such, he
made no payments towards the settlement of his mortgage. In addition, at the time
of the termination, he never made any alternative arrangements to pay. These
constituted events of default. It followed therefore that the Defendant was entitled
to trigger the set-off clause under the mortgage deed and retain the Plaintiff’s
money under, among others, the Provident Fund.

I have considered the submissions of learned Counsel on either side together with
the law and authorities relied on.

The events preceding the termination of the plaintiff’s employment commenced

with a suspension letter dated 5th December 2011, (Exhibit P.7). It states thus:

“Our Ref: STAFF/SUS/AB

PRIVATE AND CONFIDENTIAL

Alex Bwayo
DFCU Bank
 Kampala

Dear Alex,

SUSPENSION FROM WORK

This is to advise that you have been suspended from work with immediate
effect on half pay, to allow further investigations into the foreclosure
process of a client’s mortgage.

You will be contacted by the HR Department as soon as this investigation

is completed.

Please arrange to hand over any Bank property in your possession

including keys, nametag, and identification card to the Head of Credit.

Please sign the attached copy as acknowledgement of receipt of this letter.

Yours faithfully

……..sign……… ……….sign……….
Juma Kisaame Isa Nsereko
Managing Director Head – Human Resource

Acknowledgement

….Bwayo Alex M……..

Signature
Date”

Then the plaintiff received a letter dated 28th December, 2011 (Exhibit 2)
terminating his services. It reads:

“PRIVATE & CONFIDENTIAL

Alex Bwayo
DFCU Bank
Kampala
 Dear Alex,

TERMINATION OF YOUR EMPLOYMENT WITH DFCU BANK

LIMITED

We make reference to your contract of employment dated April 25, 2003,

under which you have served to date.

Clause 6 of the said contract of employment provides that “either party

may terminate the contract by giving one month’s notice in writing or by
payment of one month’s gross salary in lieu of notice.

We write, in accordance to the above clause, to terminate your

employment with dfcu Bank. This termination shall take immediate effect.

The following terms and conditions will apply;

 You received your half salary for the month of December and the
balance amounting to UGX 1,680,000= (Uganda Shillings One
Million Six Hundred Eighty Thousand only), subject to statutory
deductions will be paid to you.

 You will be paid a sum of UGX 10,080,000= (Uganda Shillings Ten

Million Eighty Thousand only), being the value of Three (3) months
in lieu of notice, subject to statutory deductions.

 You will be paid a sum of UGX 3,360,000= (Uganda Shillings Three

Million Three Hundred Sixty Thousand only), being the value of
your 22 outstanding leave days, subject to statutory deductions.

 You are indebted to the Bank to the tune of UGX 86,542,156=

(Uganda Shillings Eighty Six Million Five Hundred Forty Two
Thousand One Hundred Fifty Six only) as at December 20, 2011,
for a mortgage facility extended to you respectively.

 In August 2009, you accessed part of your personal contribution

amounting to UGX 11,470,765= for real estate investment. You will
therefore be entitled to the remaining balance of 100% of your
 personal contribution to the provident fund amounting to UGX
6,685,268= (Uganda Shillings Six Million Six Hundred Eighty Five
Thousand Two Hundred Sixty Eight only). The employer’s
contribution to your Provident Fund totaling to UGX 22,653,457=
(Uganda Shillings Twenty Two Million Six Hundred Fifty Three
Thousand Four Hundred Fifty Seven only) will be withheld pending
conclusion of the investigation into the Elizabeth Lugudde’s
recovery matter that you are familiar with.

 Your total entitlements for Provident Fund, outstanding leave and

payment in lieu of notice amounting to UGX 15,498,768= (Uganda
Shillings Fifteen Million Four Hundred Ninety Eight Thousand
Seven Hundred Sixty Eight only) will go towards reducing your
mortgage facility as per the Provident Fund Deed, and the balance
amounting to UGX 71,043,388= (Uganda Shillings Seventy One
Million Forty Three Thousand Three Hundred Eighty Eight only)
will attract a commercial rate effective December 29, 2011. Please
arrange to meet with the Head of Business Support and agree on a
payment plan for this remaining balance.

Please arrange to hand over any Bank property in your possession

including keys, medical cards and identification card to the Human
Resources Officer.

Kindly acknowledge receipt of this communication and confirm

acceptance of the terms contained herein by signing and returning a
copy of this letter.

Yours sincerely

……sign……. ……sign……….
Juma Kisaame Isa Nsereko
Managing Director Head – Human Resources.”

A perusal of the above two letters reveals that the suspension letter did not mention
which client’s foreclosure process the plaintiff was being suspended for.
Suspension, and indeed termination of employment, is a very serious matter which
an employer should take seriously and be very sensitive about, as it renders an
employee jobless with reduced, or no income at all. A lot more people are affected
especially the employees immediate defendants, and they end up suffering greatly
when termination is effected, rightly or wrongly. The employer ought, therefore,
to put on a human face while dealing with such matters that have an adverse effect
on an individual.

The plaintiff stated in his evidence that in a year he handled hundreds of clients’
mortgages in which case he would not be clear which client was referred to in
Exhibit P7. Surely a whole Managing Director and Head, Human Resource of a
Bank could do better than sign a letter as Exhibit P7 which does not portray the
seriousness of what it is supposed to communicate.

The termination letter itself did not make reference to the investigations referred to
in the suspension letter; that is to say, whether they had been completed and hence
the decision to dismiss. The reason given in the termination letter (Exhibit P2) is
that the bank was exercising its right to terminate the plaintiff’s employment
allegedly vide clause 6 of the Contract of Employment. Mention is, however,
made of Elizabeth Lugudde’s recovery matter in the termination letter, which
means that the termination was related to that lady’s dealings with the bank.
I note that DW1, Issa Nsereko, in his testimony as to why the plaintiff was
terminated, stated that it was due to poor performance by the plaintiff. However, in
his clarification during re-examination, he mentioned the reason given in the
termination letter, that is to say, the bank was exercising its right to terminate the
contract, according to the contract.

DW2, Agnes Tibayeita, Head, Legal and Company Secretary, on the other hand
stated that the bank exercised their right to terminate due to mutual mistrust after
the matter of Lugudde, and that plaintiff had offered a letter of resignation. This
alleged letter of purported resignation, was however, not presented to court.

So far it is a total of 3 allegations/reasons for termination, that is to say;

1) Poor performance
2) The Bank (defendant) exercising the right to terminate the contract.
3) The plaintiff’s role in the Lugudde recovery process leading to mutual
mistrust.

The employer, that is to say the defendant, however appears to want to rely more
on the reason that the bank exercised its right to terminate the contract.

Whatever reason the Bank may have used to terminate, the Employment Act, 2006
Section 66, now provides for a mandatory right to be heard in such dismissals as
the present one.

Section 66 states;
(1) Notwithstanding any other provision of this Part, an employer shall,
before reaching a decision to dismiss an employee, on the grounds
of misconduct or poor performance, explain to the employee, in a
language the employee may be reasonably expected to understand,
the reason for which the employer is considering dismissal and the
employee is entitled to have another person of his or her choice
present during this explanation.

(2) Notwithstanding any other provision of this Part, an employer shall,

before reaching any decision to dismiss an employee, hear and
 consider any representations which the employee on the grounds of
misconduct or poor performance, and the person, if any chosen by
the employee under subsection (1) may make.

(3) The employer shall give the employee and the person, if any, chosen
under subsection (1) a reasonable time within which to prepare the
representations referred to in subsection (2).

Section 68 states:
“Proof of reason for termination
(1) In any claim arising out of termination the employer shall prove the
reason or reasons for the dismissal, and where the employer fails to
do so, the dismissal shall be deemed to have been unfair within the
meaning of section 71.

(2) The reason or reasons for dismissal shall be matters, which the
employer, at the time of dismissal, genuinely believed to exist and
which caused him or her to dismiss the employee.”

The question here would be whether the plaintiff was accorded such rights as are
spelt out in the above provisions prior to his dismissal. There is a summon to
appear for a disciplinary hearing calling the plaintiff to the hearing. (See Exhibit
8). It states as follows:

“Our Ref: HR/STAFF/DISC-11

Alex Bwayo
DFCU Bank
Kampala, Uganda
 Dear Alex,

SUMMON TO APPEAR FOR A DISCIPLINARY HEARING

In reference to the above, this serves as a summon to you to appear before

a Disciplinary Panel on Thursday 8th December 2011 at 9.00 a.m. at Plot 2,
Jinja Road, Boardroom. You shall at the said hearing be expected to
provide explanations/answers in regard to the foreclosure process of a
client’s mortgage.

The panel shall be constituted of the Head of Credit, a representative from

the Legal Department, a representative from the Internal Audit
Department, and a representative from the Human Resources Department
as per the Staff Hand Book – page 47, and a member of the staff
consultative forum, who will be there as an employee representative.

Please acknowledge receipt of this summon by signing and returning a

copy hereof.

Yours sincerely,

…..sign………
Isa Nsereko
Head – Human Resources

c.c. Head of Legal

c.c. Head of Audit
c.c. Head of Credit.”

Again, like the suspension letter, this letter also refers to a client’s mortgage. No
client’s name is given; neither are the particulars of the offence; or the dates when
the alleged offences were committed. Counsel for the defendant states that there
was no legal requirement to state in the notice, the dates and particulars of the
offence, which he states is a requirement only in criminal matters, inapplicable to
civil proceedings. I don’t agree with Counsel, and this shows how insensitive the
defendant and Counsel are in handling matters that affect/impact the livelihood of
their employees and his dependants.

In court’s view, the basics of a right to be heard must of necessity include;

1) Notice of allegations against the employee to be served on him within

reasonable time to allow him prepare his defence.

2) The notice has to set out clearly what allegations against the plaintiff are and
what his rights are at the oral hearing. Such rights would include the right to
respond to the allegations against him orally or in writing; the right to be
accompanied at the hearing and the right to cross-examine the defendant’s
witnesses or call witnesses of his own.

In this case there was no detailed account or any account of the allegations
against the plaintiff provided by the defendant in the letter inviting him for the
disciplinary hearing. And, unlike what DW2 stated, a disciplinary hearing
presupposes that an employee is suspected to have breached the rules of
discipline of the employer or engaged in misconduct, or did not perform in
accordance to the expectations of the employer.

I entirely agree with the principles laid down in Juma & Others Vs Attorney
General [2003] EA 461, which was relied on with approval in Isaac Nsereko
Vs MTN HCCS No. 156 of 2012; that;

“……. It is an elementary principle in our system of the administration of

justice that a fair hearing, within a reasonable time, is ordinarily a judicial
 investigation and listening to evidence and arguments, conducted
impartially in accordance with the fundamental principles of justice and
due process of law of which a party has had reasonable motion as to the
time, place, and issues or charges, for which he has had a reasonable
opportunity to prepare, at which he is permitted to have the assistance of a
Lawyer of his choice as he may afford and during which he has a right to
present his witnesses and evidence in his favour, a right to cross-examine
his adversary’s witnesses, a right to be appraised of the evidence against
him in the matter, so that he will be fully aware of the basis of the adverse
view of him for the judgment, a right to argue that a decision be made in
accordance with the law and evidence.”

Further, although there was an Internal Audit Investigation report dated

02/12/2011, (Exhibit 6), it was not availed to the plaintiff to put him on notice of
all the allegations so as to enable him to prepare adequately to respond at the
hearing. In any case the recommendations in the report did not find the plaintiff
guilty of any offence in the matter of Lugudde’s recovery. It appears that’s why
the defendant had to look for all sorts of excuses to get rid of the plaintiff. And
though there is mention of resignation, the alleged resignation letter was not
availed in evidence.

As already stated, whatever reason the bank would choose the plaintiff had to be
given a hearing.

The right to a hearing is now constitutional. Article 42 of the Constitution

provides;
“42. Right to just and fair treatment in administrative decisions.
 Any person appearing before any administrative official or body has
a right to be treated justly and fairly and shall have a right to apply
to a court of law in respect of any administrative decision taken
against him or her.”

Article 44(c) also makes the right to a fair hearing non-derogable. The above
provisions are buttressed by those of the Employment Act, 2006 (S. 66) (supra).

I have already found that the basics of a fair hearing were not adhered to by the
employer (bank) during the processes that led to the termination of the plaintiff’s
employment. Counsel for the defendant contended that the plaintiff knew which
client was referred to in the letter of suspension and that of notice of a disciplinary
hearing, but the evidence does not bear this out. It is true that when asked in cross-
examination whether he knew of the mortgage transaction between the bank and
Ms. Lugudde Elizabeth which was problematic, the plaintiff said he did; and that
one Pious had told plaintiff to be prepared as there were investigations commenced
in the matter. Clearly, during cross-examination, the plaintiff was not asked
whether he knew of “a client’s mortgage transaction.” The question was clear;
whether he knew of a mortgage transaction between the bank and Lugudde. The
client’s name was disclosed, so he answered as he did. But in the letters referred to
above the client was not mentioned as the plaintiff was probably left to await to
hear of which client would be mentioned during the hearing. That made him be on
the loosing side as he did not have sufficient information to enable him to defend
himself adequately. But if as the defendant says, the plaintiff was dismissed based
on the right of the defendant to terminate, resulting from poor performance, it is
clear that the plaintiff was not given any hearing relating to the above grounds.
The poor performance was never a ground cited in any disciplinary proceedings.
I, therefore, find that basing on the events that led to the dismissal, the plaintiff was
not accorded the right to a fair hearing.

The first issue is answered in the affirmative.

Issue 2; Whether the defendant lawfully withheld the plaintiff’s money;

Counsel for the plaintiff reiterated their submission on the first issue and submitted
that the defendant withheld the plaintiff’s money on the basis of its illegal
termination proceedings. He prayed that in case court finds the termination of the
plaintiff’s employment was unlawful, the only logical conclusion would be that the
subsequent withholding of the plaintiff’s money was unlawful.

He relied on Ridge Vs Baldwin [1964] AC 90 at page 80, where it is held;

“………. a decision reached in violation of the principles of natural justice
like the right to a fair hearing is no decision at all. It is void and unlawful.
If the principles of natural justice are violated, it matters not that the same
decision would have been arrived at if there was no violation. A person in
a cause cannot be condemned unheard – audi alteram partem ….. under
S. 66 of the Employment Act 2006, an employer is obliged, prior to
dismissal of an employment on grounds of misconduct or poor
performance, to explain to the employee the reason for which the
employee is considering dismissal and give the employee reasonable time
within which to prepare the representations. The defendant contravened
this provision in its entirety; see Desouza Vs Tanga Town Council [1961]
EA 377.”
Counsel concluded that although in this case the defendant tried to camouflage
their actions by seeking to rely on a provision empowering the defendant to
terminate on giving of notice or payment in lieu, this attempt had made matters
worse because the evidence on record was clear that there was a reason for
termination, resulting from the Lugudde recovery matter.

Counsel for the defendant on the other hand submitted that the defendant lawfully
withheld the plaintiff’s money on the basis of contract. He contended that plaintiff
obtained a mortgage from the defendant, which was to be repaid by deducting the
plaintiff’s salary at source. Under Clause 1.3 thereof, the plaintiff had agreed to
assign his rights and benefits under the Staff Provident Fund to the defendant until
repayment in full of borrowed money. Under Clause 4.2.5 thereof, in case of an
event of default, the defendant would be entitled to exercise a right to set off at any
time on all monies lying to the borrower’s credit within the defendant’s group.

Counsel further submitted that when the plaintiff’s employment was terminated, it
was no longer possible for the defendant to deduct his money at source. As such,
he made no payments towards the settlement of his mortgage. In addition, at the
time of the termination, he never made any alternative arrangements to pay. These
constituted events of default. It follows, therefore, that the defendant was entitled
to trigger the set-off clause under the mortgage deed and retain the plaintiff’s
money under, among others, the provident fund.

I note that the plaintiff in his witness statement stated that the defendant unlawfully
withheld his terminal benefits amounting to Ug. Shs. 42,778,725= yet there was no
default in repayment of the loan; it amounted to a breach of the Mortgage
Agreement between the plaintiff and the defendant. It is, however, not indicated
how the amount withheld builds up to Shs. 42,778,725=.

According to the termination letter, Shs. 15,498,768= (Uganda Shillings Fifteen

Million, Four Hundred Ninety Eight Thousand Seven Hundred Sixty Eight only)
constituting the personal contribution to the Provident Fund, outstanding leave
days, and payment in lieu of notice, were applied towards the plaintiff’s mortgage
facility as per the Provident Fund Deed. Shs. 22,653,457= which was the
defendant’s contribution to the Provident Fund was to be withheld till the
investigations into the Elizabeth Lugudde’s recovery matter were concluded.

However, Issa Nsereko, during cross-examination by the plaintiff’s Counsel, when

questioned about the amount stated to have been withheld as stated in Exhibit P2,
he stated that “This money has already been paid”. I find that the plaintiff is
entitled to the amount so withheld, since according to DW1, after the Disciplinary
Committee hearing regarding the same matter of Lugudde there was no verdict of
guilty or not guilty; and that it was in light of performance related issues that the
employer decided to invoke the termination clause. “The grounds were more than
sufficient. We did not wait for further investigations,” said DW1.

I therefore find that unless the plaintiff has already been paid this sum, as alleged
but not proved by DW1, he should be paid the said sum.

As the amount of Shs. 15,498,768= (Fifteen Million Four Hundred Ninety Eight
Thousand Seven Hundred Sixty Eight only) which was due to the plaintiff but
which was applied to the repayment of his mortgage, the court is not able to order
that it be repaid to the plaintiff since he does not deny that it was applied for that
purpose. All the court can do is consider the inconvenience caused to him, if any,
when awarding general damages.

Issue 3: Whether the plaintiff is entitled to the remedies sought;

General and aggravated damages
On the prayer for general damages and aggravated damages, Counsel for the
plaintiff submitted that the plaintiff testified on the fact that his dismissal was
unlawful; there was a deliberate contravention of the provisions of the
Employment Act by the defendant. The plaintiff suffered grave humiliation,
psychological torture; he had worked for 8 years in DFCU bank without any
scandal whatsoever and his position as Recoveries Manager would demand better
treatment from the defendant. He relied on Bank of Uganda Vs Betty
Tinkamanyire SCCA No. 12 of 2007, where the Supreme Court awarded
aggravated damages to the employee for the arrogance and highhandedness of the
defendant in terminating the employee’s contract; and on Isaac Nsereko Vs MTN
Uganda Ltd where court granted a total sum of Shs. 304,000,000= as both
aggravated and general damages for the humiliation that the plaintiff underwent;
and Okurut Vincent Vs MTN Uganda (supra), where court granted a sum of Shs.
120,000,000= as general damages.

Counsel contended that in the instant case, the defendant acted maliciously, with
bias and lacked compassion, callousness and was indifferent. The defendant stage
managed a disciplinary hearing, to cover its injustices with the view of defeating
justice. He is unable to pay his mortgage and the defendant has commenced
recovery proceedings to evict him from his house. All the above arrogant actions
by the defendant aggravate the plaintiff’s loss. He prayed for a sum of Shs.
100,000,000= in aggravated damages, a sum of Shs. 50,000,000= in general
damages; and also prayed for interest at the rate of 24% per annum from the date
of termination until payment in full, plus costs of the suit.

On the prayer for aggravated damages, the principles governing this kind of
damages were well stated by Counsel for the defendant, and in Uganda Revenue
Authority Vs Wanume David Kitamirike, Civil Appeal No. 43 of 2010 (pages 20),
thus;

“Aggravated damages are compensatory in nature, but they are enhanced

as damages because of the aggravating conduct of the defendant. They
reflect the exceptional harm done to the plaintiff by reason of the
defendant’s actions/omissions. Both general and aggravated damages
focus on the conduct of the defendant in causing the injury to the plaintiff
that is being compensated for.”

The defendant’s Counsel stated that the plaintiff was not entitled to aggravated
damages for the reason that he had led no evidence to show any egregious and high
handed behavior by the defendant. As seen in the preceding paragraphs, the
plaintiff was subject to a lawful disciplinary hearing. He was given adequate
notice. At the end of the hearing he stated that he had been given a fair hearing.
Indeed in the cross-examination, the plaintiff stated that the Bank people were his
friends and were friendly during the entire process. The plaintiff did not show how
the defendant was malicious and callous. It is not automatic that every termination
makes the defendant’s conduct high handed. And as conceded by the plaintiff in
the cross-examination, given his appraisal history, he could not say that he gave
good service to the Bank.
Counsel further distinguished the present case from the cases cited by the
defendant in that in those cases, high handedness of the defendant was so clear to
see; the forced resignation in Isaac Nsereko Vs MTN, the public notice labeling
the plaintiff incompetent in Bank of Uganda Vs Betty Tinkamanyire.

I have followed the checkered history of the events leading to the termination of
the plaintiff and the way the proceedings were carelessly handled. From his
suspension letter, which did not disclose any reason for suspension, to the Notice
of disciplinary proceedings and the disciplinary proceedings themselves; all
culminating into the evidence brought to court by the defendant through its
witnesses, one could see that the defendant was all bent to get evidence geared
towards getting rid of the plaintiff at whatever cost.

The defendant’s witnesses knew very well that the investigations that were carried
out by the Audit Department did not put any blame on the plaintiff in their
recommendations, so they decided to try other charges. DW1 stated on page 17 of
the proceedings that the Lungujja property was part of the reason for the dismissal.

Then he stated on page 21 “There was no verdict of guilty or not guilty.” Then in
light of performance related issued, the employer decided to invoke the
termination clause. The grounds were more than sufficient. We did not await
further investigations.”

If the reasons were sufficient, why were they not put to the plaintiff to defend
himself on this aspect of poor performance.
The defendant went ahead to terminate the employee’s employment and even
recalled the mortgage. The defendant states the plaintiff did not show that he
would have alternative means to pay but there is no indication that he was asked to
show that he had alternative means to pay. On his part the plaintiff stated that the
mortgage was recalled before he defaulted.

The act of dismissal was unlawful as I have already found. The defendant is not
remorseful at all but up to submission time he is trying to justify the bank’s
unlawful actions, which caused so much inconvenience and embarrassment to the
plaintiff. He did not deserve to be treated that way. I find that Shs. 110,000,000=
will be sufficient as both general and aggravated damages.

Special damages
The plaintiff prays for Shs. 1,680,000= being the half salary withheld during the
time of his suspension. According to the defendant, the bank was legally allowed
to deduct the half pay during a suspension to allow for an inquiry, as per Section
63 (1) of the Employment Act 2006. It does not matter how the investigation ends.
As such, the Shs. 1,680,000= was lawfully withheld and cannot be claimed back.

I must say that I am surprised by Counsel’s contention that the amounts withheld
on half pay cannot be claimed back, even if the investigations don’t find him
guilty. It is trite that where the plaintiff is not found guilty by investigations as in
this case, he is entitled to get his withheld half pay. This is therefore granted.

The plaintiff also claims Shs. 3,360,000= as one month’s salary for failure by the
defendant to notify the plaintiff the valid reasons for termination. However, there
is no basis in law for this kind of claim. What the law provides for under Section
66 of the Employment Act is failure to give notification and a hearing before
termination. It does not concern anything after termination. The plaintiff’s prayer
for failure to notify reasons for termination is evidently after the termination and is
therefore not caught by Section 66 (4) which provides for compensation in case of
non-compliance with the section 66.

I agree with defendant’s Counsel that failure to notify the plaintiff of the reasons
for termination did not attract special penalties as he claims. The general damages
would cover any shortcomings caused by this.

As for the Shs. 4,000,000= for transport, Counsel for the defendant submitted that
the plaintiff did not prove it but during the cross-examination, he stated that he
went to the Bank twice during the investigations; and that he lived in Namugongo.
He submitted that transport to and from Namugongo to Jinja Road Kampala on two
occasions could not be Shs. 4,000,000=. I would also agree here that the claim has
been exaggerated moreover without specific proof. Shs. 100,000= would suffice.

In conclusion the case against the defendant succeeds in the respects stated above.
The plaintiff is awarded the following:

1. The defendant’s contribution to the plaintiff’s Provident Fund amounting to

Shs. 22,653,457= (Twenty Two Million Six Hundred Fifty Three Thousand
Four Hundred Fifty Seven only), if not yet paid to him.
2. Shs. 1,680,000= (One Million Six Hundred Eighty Thousand only) being ½
salary withheld during suspension.
3. Shs. 100,000= (One Hundred Thousand only) for transport.
 4. Shs. 110,000,000= (One Hundred Ten Million only) for general and
aggravated damages.
5. Interest on the awards in (1) and (2) above at 20% per annum from date of
termination till payment in full.
6. Interest on awards in (3) and (4) above at court rate from date of judgment
till payment in full.
7. The plaintiff is awarded costs of this suit.

It is so ordered.

Elizabeth Musoke
JUDGE
3/03/2015