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C.I. Olaniyan & Ors. v. University Of Lagos & Anor. (1985) – SC

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➥ CASE SUMMARY OF:
C.I. Olaniyan & Ors. v. University Of Lagos & Anor. (1985) – SC

by “PipAr” Branham-Paul C. Chima.

➥ COURT:
Supreme Court – SC.53/1985

➥ JUDGEMENT DELIVERED ON:
Friday, the 12th day of July, 1985

➥ AREA(S) OF LAW
Contract of employment/service;
Fair hearing;
Contract with statutory flavour.

➥ PRINCIPLES OF LAW
⦿ TERMINATION OF SERVICE – MASTER & SERVANT
The law regarding master and servant is not in doubt. There is also no doubt that the contract of master and servant is subject to both statutory and common law rules. By and large, the master can terminate the contract with his servant at any time and for any reason or for no reason at all. But if he does so in a manner not warranted by the particular contract under review, he must pay damages for breach. — A. Oputa, JSC.

⦿ WHERE OFFICER HOLDS HIS OFFICE “AT PLEASURE”
Where an officer holds his office “at pleasure,” like was the case in Brown v. Dagenham Urban District Council (1929) 1 K.B. 737 at p.742 he can be dismissed at will in complete disregard of any purported contract whether verbal, or written or even under seal, because such contract will be incompatible with his status and therefore destitute of legal value. Thus Servants of the Crown, civil as well as military, except in special cases, where it is otherwise provided by law, hold their office only during the pleasure of the Crown and can be dismissed at any time in spite of a contract for a period of Service:- Dunn v. Reginam (1896)1 Q.B. 116. In fact the employing authority will lack the power, the vires to “enter into a contract” inconsistent with the wording of the Statute which gave it power in the public interest to remove the Servant at its pleasure:- Nicholson v. Whitstable Urban District Council (1925) 89 J. P. Newsp 480 at p.508. An officer holding his office at pleasure has also no right to be heard before he is removed because there need not be anything against him to warrant his removal. If there is nothing against him, no reason need be given for there is nothing to defend since he held his office durante bene placito:-See Reg v. Dartington School Governors (1844) 6 Q.B.682. — A. Oputa, JSC.

⦿ SERVICE OF EMPLOYMENT GOVERNED BY CONTRACT
The second class of cases will cover the ordinary master and servant relationship governed by a written contract not subject to any statutory restrictions or limitations. Here the duty of the court will be to construe and apply the terms, conditions and provisions of the contract. — A. Oputa, JSC.

⦿ EMPLOYMENT REGULATED BY STATUTE
There may be cases where the body employing the servant is under some statutory or other restrictions as to the kind of contract or the grounds on which it can remove or dismiss him. In such contracts, if the servant is removed on grounds other than those specified in the contract or allowed by Statute, his removal will be held to be unjustified or ultra vires, null and void as the case may be:- see McChelland v. Northern Ireland General Health Service Board (1957) 1 W.L.R. 549. — A. Oputa, JSC.

⦿ REMOVING SERVANT REGULATED BY STATUTE, MUST GIVE ETERNAL JUSTICE
When the employing authority wants to remove its servant on grounds permitted by Statute, then as Lord Campbell, C. J., observed in Exparte Ramshay (1852) 18 Q.B. 173 at p.190 “the principles of eternal justice” will dictate that the servant cannot be lawfully dismissed without first telling him what is alleged against him and hearing his defence or explanation. Even where the servant had, aliunde, personal knowledge of the offence or reason for his removal that was held to be no substitute for hearing the officer’s explanation:- Reg v. Smith (1844) 5 Q.B. 614. — A. Oputa, JSC.

⦿ FEDERAL CIVIL SERVICE EMPLOYMENT ARE NOT AT PLEASURE OF FEDERAL GOVERNMENT
I will hasten to say that it will be a contradiction in terms for a citizen of a Republic, such as Nigeria, to hold his office at the pleasure of the Crown. Which Crown We have no Crown here and public Servants in the established and pensionable cadre of the Federal Government Service are not regarded as employed at the pleasure of the Federal Government. This point was first made in Bashir Alade Shitta-Bey v. The Federal Public Service Commission (1981) 1 SC. 40 at pp. 57/58. — A. Oputa, JSC.

⦿ UNIVERSITY OF LAGOS IS A CREATURE OF STATUTE, AND MUST ACT WITHIN THE FOUR WALLS
The University of Lagos is a creature of Statute and it must act within the four walls of the Statute creating it. Any contract the University makes contrary to the letter or spirit (or both) of Section 17(1) will not, as I mentioned earlier on, be intra vires, see Baroness Wenlock v. Dee River Company (supra). It will be ultra vires the powers of the Council and will be declared null and void and of no legal effect. The Respondents have no power to treat the Appellants more favourably or less favourably than is prescribed by Clause 7 of the Agreement and S.17(1) of the Act. Any such treatment that adds to or substracts from S.17(1) will be destitute of legal value. — A. Oputa, JSC.

⦿ CONTRACT OF SERVICE AT COMMON LAW VS IN STATUTORY FLAVOUR
It is important to recognise the distinction between a contract of personal service and a contract of service. There is also the distinction between a contract of service at common law, and a contract with statutory favour. Whereas at common law a contract of personal service is determinable by the master at will without cause a contract of service is determinable by the master on reasonable notice or on the notice stipulated in the contract of the parties. A strict compliance with the statutory requirements for determination is required in contracts re-enforced by Statute or created by statute. — A.G. Karibe-Whyte, JSC.

⦿ CONTRACT OF SERVICE COMES TO AN END WHERE EMPLOYEE ACCEPTS REPUDIATION
The contract of service comes to an end after the unilateral repudiation only if the employee accepts the repudiation expressly or by implication. – See Gunton v. Richmond-upon-Thames London Borough Council (1981) AC. at p. 464 and Decro-Wall International S.A. v. Practitioners in Marketing Ltd. (1971) 1 WLR. at pp. 369-370 per Salmon L. J. — A.G. Karibe-Whyte, JSC.

⦿ EMPLOYMENT: THERE WILL BE AN ACTION FOR REINSTATEMENT WHERE THERE IS UNILATERAL REPUDIATION
In Vitarelli v. Seaton 359 US. 335, the Supreme Court of the United States of America granted a declaration in the case of a civil servant even in a case involving State Security, because the proper procedure was not adopted. An analysis of the decided cases leads to the conclusions that an action for reinstatement is only possible where there is a unilateral repudiation of the contract of service by the Master (the Employer) which has not been accepted by the (employee) Servant. See Denmark Productions Ltd. v. Bascobol Productions Ltd. (1961) 3 All E.R. 583. In that situation the contract is still in existence having not been discharged by the acceptance of the repudiation. It is therefore not the same as where the contract has been discharged and the dismissed employee is entitled only to damages. — A.G. Karibe-Whyte, JSC.

⦿ WHERE TERMINATION CONTRAVENES STATUTORY PROVISION OR CONTRACT, PARTY WILL BE REINSTATED
It is clear from the facts which are not disputed in this appeal, that respondents unilaterally repudiated the contract with the appellants in the letter of termination dated 31st December, 1980. They were in my opinion trying to evade or avoid compliance with the conditions in para. 15 and the procedure in s.17(1). Hill v. CA. Parsons & Co. Ltd. (supra) will definitely apply to such a case as this one. Similarly each of the appellants refused to accept the repudiation, and in letter written the same day clearly so stated. – Exh. P. 16, P.19. In their claim they actually asked for a declaration that the contract was still in existence and that they were still occupying their respective positions in the 1st respondent University. I have no doubts in my mind that this is a situation where it is appropriate for the application of the rule of specific performance. The law has arrived at the stage where the principle should be adopted that the right to a job is analogous to right to property. Accordingly, where a man is entitled to a particular job, I cannot conceive of any juridical or logical reason against the view that where the termination of appointment is invalid and consequently alters nothing as reinstatement of the employee barring legal obstacles intervening between the period of purported dismissal and the date of judgment is the only just remedy. Normally damages are rarely adequate remedies for wrongful dismissal, and where the act relied upon for the dismissal is a contravention of an enabling statutory provision, I have no hesitation in restoring the judgment of the learned trial judge. — A.G. Karibe-Whyte, JSC.

Available:  CHIEF ADEBAYO BASHORUN OLUFOSOYE & ORS. v. JOHNSON O. OLORUNFEMI (1989)

➥ LEAD JUDGEMENT DELIVERED BY:
A. Oputa, J.S.C.

➥ APPEARANCES
⦿ FOR THE APPELLANT
Mr. Ajayi, S.A.N.

⦿ FOR THE RESPONDENT
Chief Williams. S.A.N.

➥ CASE FACT/HISTORY
The 1st Appellant was by letter ADM/REG/360 dated 13th September, 1965, offered appointment as a Professor of Zoology in the Faculty of Science with effect from 1st September, 1965. The letter conveying this offer was tendered as Ex. “P2”. The offer Ex. “P2” was accepted by the 1st Appellant and the Memorandum as to the Terms and Conditions of the Appointment of 1st Appellant was tendered as Ex. “P1”. The Regulations Governing Service in the University of Lagos Senior Staff which accompanied the offer, Ex.”P2″, was tendered as Ex. “P3”.

The letter terminating the appointment of 1st Appellant and paying him six months’ salary in lieu of notice was tendered as Ex. “P4”. The 1st Appellant replied, returning the Respondents’ cheque issued to him for N5,901.00 (Five thousand, nine hundred and one naira) representing six months’ salary in lieu of notice to the Respondents. His letter (1st Appellant’s) was tendered as Ex. “P5”. The same process was repeated in respect of the 2nd and 3rd Appellants who were offered appointments as Professor of Law and Professor of Educational Psychology respectively.

In each case, there was an offer of Appointment by the University, an acceptance of that offer, a Memorandum of Appointment, a Copy of the Regulations Governing Service in the University, a Termination of Appointment, a Rejection of the purported Termination of Appointment and a return of the cheque for six months’ salary in lieu of notice. In each case also, the Appellants regarded the “purported termination” of their respective appointments as “ultra vires, null and void and of no effect whatsoever”.

In the result the Plaintiffs’ claims succeed and the trial court granted the following reliefs in the indorsement in their respective Amended Statements of Claim namely: “1. Declaration that – (a) the 1st, 2nd and 3rd Plaintiffs are still (i) Professor of Zoology (ii) Professor of Law and Dean of the Faculty of Law and (iii) Deputy Vice-Chancellor and Professor of Educational Psychology respectively in the University of Lagos (b) the purported termination of the appointment of each of the Plaintiffs as contained in the letter REG/23A of 30th December, 1980 is ultra vires of the Defendants contrary to the provisions of Section 17 of the University of Lagos Act 1967 as amended. 2. The defendants, their servants and or agents are hereby restrained from preventing any of the Plaintiffs from performing any of the functions and duties of his office or offices or interfering with the enjoyment of the rights, privileges and benefits attached to his office or offices. 3. The Defendants are hereby ordered to restore each of the Plaintiffs to his post and office or offices and to all rights and privileges attached thereto.”

The above was the judgment of the trial court. The Defendants, now Respondents, aggrieved by the above judgment of the court of first instance then appealed to the Court of Appeal, Lagos Division, on 3 grounds alleging Errors in Law and Misdirections. The Court of Appeal held, allowing the appeal to it from the judgment of Bada J., that the contract of the Plaintiffs/Appellants were validly determined and that “the judgment and orders made by the Lagos High Court in the consolidated suits delivered on the 23rd June, 1981, are hereby set aside and a judgment dismissing the said suits substituted”. Ademola and Nnaemeka-Agu, JJ.C.A., both concurred. The Plaintiffs/Appellants have now appealed to this Court.

➥ ISSUE(S) & RESOLUTION(S)
[APPEAL ALLOWED]

🆕I. What was the relationship between the Respondents and the Appellants?

RULING:
A. THAT THE APPELLANT FALLS UNDER PUBLIC SERVICE OF THE FEDERATION
The Court of Appeal lead judgment thus: “I am in agreement with learned counsel for both parties that the Respondents fall within the definition under section 277 of the 1979 Constitution of officers in the “public Service of the Federation”. We are not concerned as such with the status of the Respondents as “public officers”. We are concerned with the procedure to be followed to bring them into the Public Service and the procedure to be followed to take them out of it. Service in the University is not identical with Service in the Civil Service of the Federation. Each is governed by its own conditions of service including, as the basic beginning, the contract of Service between the employer and the employee. It is this contract of Service and the power to enter into the said contract and the conditions of such contract that are in issue. The statutory provisions relevant to such contracts must be complied with.”

I cannot agree more with the portion of the lead judgment in Italics above.
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🆕II. Were there any terms and conditions of these contracts?

RULING: Yes.
“The answer is again “yes”. Each Appellant was offered his appointment subject to the Memorandum As To The Terms Of Appointment which he signed. These were all tendered in evidence as Exs. P1, P12 and P18. In fact the Respondents purported to remove each Appellant under Clause 6 of this said Memorandum of Appointment.”
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🆕III. Were there any Statutory provisions relevant to the contract between the University and the Appellants?

“The answer is again yes. These provisions are contained in Section 17 of Act No.3 of 1967.”
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🆕IV. Were the contracts of Service of the Appellants validly determined; The trial court said No, the court below says yes. Which court is right?

RULING: IN APPELLANT’S FAVOUR.
A. THAT THE APPELLANTS EMPLOYMENT IS REGULATED BY STATUTE AND A CONTRACT OF EMPLOYMENT
“Item 17 of the Exclusive Legislative Lists in part 1 of the Schedule to the 1963 Constitution (page A167) deals with Higher Educational Institutions and mentioned the University of Lagos by name as one of those institutions Parliament may make laws for. The University of Lagos Act No.3 of 1967 was thereafter made pursuant to Section 69(1)(b) of the 1963 Constitution. Section 4 of Act No.3 of 1967 gave the University of Lagos and the University Council – the Respondents – the power, the vires, to engage academic staff. Acting under Section 4 of the Act creating them, the Respondents issued Regulations Governing Service in The University of Lagos: Senior Staff, tendered as Ex. P3. The paragraph of EX.P3 relevant to this appeal is paragraph 15 Subnomen Termination by the University. The Appellants also signed Memoranda (Ex.P1, P18 and Ex.P12A) issued to them by the Respondents pursuant to the powers conferred on the University under Section 4 of Act No.3 of 1967 to engage Senior Staff. Clauses 6 and 7 of each Memorandum as to the terms of appointment gave the conditions under which the Respondents can lawfully terminate the appointments of the Appellants. Finally and as if to seal and set beyond doubt, the provisions for termination of appointment of Senior Staff contained in paragraph 15 of the Regulations and Clauses 6 and 7 of the Memoranda of terms of Appointment, Section 17 of the Lagos University Act No.3 of 1967 reiterated the terms and conditions for termination of appointment of Senior Staff contained in the Regulations and Memoranda of Appointment and thus elevated them to the status of statutory provisions There is no doubt that in this case, the Regulations Ex.P3, the Memoranda of Appointments (Exs. P1, P18 and P12A) and Section 17 of the University of Lagos Act No. 3 of 1967 all derived from Section 69(1)(b) of the 1963 Constitution, Act No. 20 of 1963. That being so they “all have constitutional force and they invest, the Appellants over whom they prevail a legal status which make their relationship with the Respondents although one of master and servant certainly beyond the ordinary or mere master and servant relationship” – Shitta-Bey supra at p.56. The relationship of the Respondents and the Appellants was thus a relationship of master and servant but with a big difference. The difference being that the Respondents can legally terminate the Appellants’ contracts of Service only by complying strictly with (a) Paragraph 15 of The Regulations Governing Service in University. (b) Clauses 6 and 7 of the memoranda as to the terms of appointment; and (c) Section 17 of the University of Lagos Act No. 3 of 1967. This is one way of looking at the facts and circumstances of this case … This case must therefore, of necessity, revolve around Section 17 of the Act and cannot be determined without reference to S.17 which is the only section that can give life and validity to the Regulations and the Agreements EXS.P1, P15 and P12A. It is therefore a very material error in law to decide the termination of the appointments of the Appellants without reference to Section 17 of the Act No.3 of 1967.”

Available:  Senator Abraham Ade Adesanya v. President Of The Federal Republic of Nigeria & Anor. (1981)

B. THAT CLAUSE 7 OF THE AGREEMENT WHICH REQUIRED FAIR HEARING BE GIVEN TO THE APPELLANT WAS NOT COMPLIED WITH
“With regard to Clause 6 of the Agreement, the University cannot in the face of the findings of fact of the trial court that the Appellants were removed on the ground of misconduct, terminate their appointments by merely paying them six months’ salary in lieu of notice. I will to that extent say that Clause 6 of the Agreement has been in this case, superseded by Clause 7 of the Agreement and Section 17(1) of the Act. The giving of six months’ notice or payment of six months’ salary in lieu of notice, as contained in Clause 6 of the Agreement, each does not apply to the facts and surrounding circumstances of this case since the University’s power to remove the Appellants by paying them six month’s salary in lieu of notice under Clause 6 was subject to Clause 7, which clearly and explicitly stipulated: “7. Should the Appointee be found guilty of misconduct … then the period of notice necessary to terminate his appointment shall be at the discretion of the Council. Before any removal of the Appointee is made, the Appointee shall have an opportunity of replying to the grounds alleged against him.” In this case, there is no evidence that the Visitation Panel’s findings of misconduct were communicated to the Appellants and that they had an opportunity of replying to those allegations before they were hastily removed.”

“If there was no finding that the Appointee is being removed on the ground of misconduct, then the employment of the Appointee is terminable by six months’ notice or six months’ salary in lieu of notice according to Clause 6 of the Agreement. But where as in this case, there was an allegation “that each and everyone of the officers mentioned above (the Appellants were among the officers mentioned above) has rendered himself unfit for any position of leadership or responsibility in the University of Lagos” and a recommendation “that each be considered unfit for so long as the Visitor may instruct” followed by a finding by the trial Court “that the above recommendation of the Visitation Panel against the Plaintiffs in my view amounts to misconduct cognisable us such under Section 17 of the University of Lagos Act 1967 and Clause 7 of the Memorandum of Appointment of each Plaintiff’ then my answer to Question No.2 will be that “the provision contained in that Agreement aforesaid enables the University to terminate the employment of ach Appellant” validly if, and only if, each Appellant has had an opportunity of replying to the growths alleged against him as stipulated in Clause 7 of their contract.”

“Given the background of the removal of the Appellants on the ground of misconduct, could the Respondents have removed the Appellants under the common law rules regulating the ordinary master and servant relationship The answer is No. It is here that the concept of vires comes in. If the powers of a Corporation are given or acquired at common law or by custom or by charter, the corporation is a person at common law and may do anything which an ordinary person can do, see: Wenlock (Baroness) v. River Dee Co. (1885) 10 App. Cas. 354: see also British South Africa Co. v. De Beers Consolidated Mines (1910) 1 Ch. 354. On the other hand, a Corporation or Company which is created by or under a Statute cannot do anything at all, unless authorised expressly or impliedly by the Statute or instrument defining its powers. It simply has not got the vires or the powers or authority to act outside the Statute. If it so acts, the act will be held to be ultra vires and declared null and void.”

“On the authority of Ridge v. Baldwin supra which was considered by the court below, I hold mutatis mutandis, as Lord Reid held at p.79 and p.80 that the power to dismiss or remove or terminate the appointments of the Appellants either under Clause 7 of their Agreements or under Section 17(1) of the Act cannot be exercised until the University Council have informed the Appellants of the grounds on which they propose to proceed and have given them a proper opportunity to present their case in defence. Dismissing or terminating the contract of a University Professor who has not been convicted of any criminal offence is not a thing to be done lightly. It seems to me very necessary that there should be such inquiry as the Regulations and S.17(1) of the Act require and such right to be heard in defence as “the principles of eternal justice” prescribe. The Respondents in this case the University of Lagos and the University Council- did not exist at common law, or by any common law usage, or even by any common law fiction. The Respondents were created by Statute – the University of Lagos Act No.3 of 1967. Therefore every act of the Respondents like engagement or removal of staff must be done within the Statute – Act No.3 of 1967 to render such acts intra vires and right. Even at the risk of repetition, I will strongly emphasize that the relationship that existed between the University and the Appellant was not the simple common law relationship of master and servant, No. It was rather a relationship created by, conditioned by, and subject to the express provisions of the University of Lagos Act, investing the Respondents with powers (as they relate to this appeal) to appoint or remove staff. Thus Section 4 of the Act gave the Respondents the power to enter into contracts of service. Acting under that section, the Appellants were appointed Professors with their terms and conditions of service spelt out in their various Service Agreements, each containing Clause 6 and Clause 7 dealing with Termination of Appointment.”

Available:  Musa Iyaji v. Sule Eyigebe (1987)

C. THAT WHEN MISCONDUCT IS RAISED AGAINST THE APPELLANT, IT MUST COMPLY WITH CLAUSE 7 OF THE AGREEMENT
“With the greatest respect to the very learned Justices of the Court of Appeal, I do not agree that the Respondents had an option in this matter. Once the Council acted on the Visitation Panel’s Report which alleged serious misconduct against the Appellants, they lost the right to proceed under Clause 6 of the Agreement and terminate the Appellants’ services by notice and were forced to proceed under Clause 7 of the Service Agreement and Section 17(1) of the Act of 1967 and set in motion the processes for removal spelt out in Clause 7 of the Agreement and Section 17(1) of the Act. It is the difference between a Rule and a Principle. A Rule determines the outcome of a dispute in one particular way, while a Principle merely inclines the outcome one way or the other. Clause 7 of the Agreement and Section 17(1) of the Act each operates in the same way as a Rule. A Rule makes certain legal results depend upon the establishment of certain factual situations stipulated in the antecedent part of the Rule. This means that once the factual situation is proved to exist, the Rule will apply in its entirety. Rules therefore apply in an all or nothing dimension. Either the case falls within the ambit of the antecedent portion of the rule in which case it must be dealt with as the rule dictates or it does not, in which case it is not affected by the Rule. Once there was a finding of misconduct and a conclusion that the removal was a consequence of that misconduct, it was imperative and incumbent on the Respondents to proceed strictly according to the procedure for removal set forth in Clause 7 of the Agreement and Section 17(1) of the Act.”
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🆕V. Whether the Appellants are entitled to reinstatement or damages?

RULING:
A. THAT THE APPELLANTS ARE ENTITLED TO BE REINSTATED
“Fortunately in the case on appeal, one is not dealing with a master who is an ordinary human being with pride, feelings etc. The Respondents are creatures of the law and the self same law will not find it difficult to compel their performance of the contract. Also by S.4 of Act No.3 of 1967, the Respondents were given the power to appoint Senior Staff like the Appellants, and by S.11(1)(c)(i) of the Interpretation Act No.1 of 1964, the power to appoint includes the power to reappoint or reinstate. A new Visitor has been appointed and I suppose there is now a new University Council. In Shitta-Bey’s case performance was ordered by a Writ of Mandamus and the heavens did not fall. In this case, I do not think the heavens will fall if the orders for injunction made by the court of first instance are restored. In Hill v. CA. Parsons & Co. Ltd. (1971) 3 All. E.R. 1345 Lord Denning M.R. after observing that generally “a servant cannot claim specific performance of the contract of employment” ontinued at p.1350: “I would emphasise, however that, that is the consequence in the ordinary course of things. The rule is not inflexible. It permits exceptions. The court can in a proper case grant a declaration that the relationship still subsists and an injunction to stop the master treating it as at an end”. In my view, the case on appeal is a proper case to grant a declaration and order an injunction as was done by the trial court whose judgment I hereby restore.”
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✓ DECISION:
“In the final result and for all the reasons given above, this appeal succeeds. The judgment and orders of the Court of Appeal, Lagos Division dated 9th January, 1985 are hereby set aside and the judgment and orders of the Lagos High Court in the consolidated suit delivered on 23rd June, 1981 are hereby restored. Each Appellant is entitled to cost which I assess at N300.00 in this Court and N250.00 each in the court below.”

➥ MISCELLANEOUS POINTS

➥ REFERENCED (STATUTE)

➥ REFERENCED (CASE)
⦿ AN EMPLOYMENT WHERE NATURAL JUSTICE IS BEEN EXCLUDED IS PURE MASTER AND SERVANT
Lord Wilberforce in the case of Malloch v Aberdeen Corporation (1971) 2 All ER 1278 at 1294 said: “One may accept that if there are relationships in which all the requirements of the observance of rules of natural justice are excluded (and I do not wish to assume that this is inevitably so), these must be confined to what has been called “pure master and servant” case, which I take to mean cases in which there is no element of public employment.or service, no support by statute, nothing in the nature of an office or a status which is capable of protection. If any of these elements exist, then in my opinion, whatever the terminology used, and even though in some interpartes aspect the relationship may be called that of master and servant, there may be essential procedural requirements to be observed and failure to observe them may result in a dismissal being declared to be void.”

⦿ REPUDIATION BY ONE PARTY DOES NOT TERMINATE THE CONTRACT EXCEPT WHERE ACCEPTED
In Heyman v. Darwins Ltd. (1949) AC. 356, 361 Viscount Simon L.C. said, “But repudiation by one party standing alone does not terminate the contract. It takes two to end it, by repudiation on the one side, and acceptance of the repudiation on the other.” The proposition is founded on the elementary principles of the formation and discharge of contractual obligations. Where there is a unilateral repudiation of a contract, this is treated as an officer by the guilty part to the innocent party of the termination of the contract. It is the acceptance of the officer by the innocent party which acts as a discharge of the contract. – See Hochster H v. De La Tour (1853) 2 F& B. 678; Johnstone v. Milling (1886) 16 QBD 460. It is then open to the innocent party to sue only for damages since by his acceptance of the repudiation the contract comes to an end. Hence where the innocent party refuses to accept the repudiation the contract remains in existence.

➥ REFERENCED (OTHERS)

End

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