IN THE NATIONAL INDUSTRIAL COURT OF NIGERIA
IN THE LAGOS JUDICIAL DIVISION
HOLDEN AT LAGOS
BEFORE HIS LORDSHIP HON. JUSTICE J. D. PETERS
DATE: 12TH NOVEMBER 2020
SUIT NO: NICN/LA/169/2015
iROKOtv.com LIMITED - Claimant
MICHAEL UGWU - Defendant
Shehu Mustapha with Adeola Kembi for the Claimant.
Johnpaul Okwoli for the Defendant.
1. Introduction & Claims
1. By his General Form of Complaint and statement of fact filed on 8 May 2015, Claimant sought the following reliefs against the Defendant –
1. A declaration that the act of the defendant, in organizing the businesses known as africagent ltd. and freemedigital, to conduct the business of digital music distribution and rendering other entertainment promotional services, constitutes a breach of the non-compete and confidentiality obligations of the Defendant as set out in the employee non-disclosure agreement dated 1 December 2011.
2. A declaration that the act of the defendant in openly soliciting the clients of the claimant (whom defendant got to know of by virtue of his position in claimant company) constitutes a breach of their employee non-disclosure agreement.
3. An order restraining the defendant (whether acting directly, or through other persons, be they natural or corporate) from further breaches of the non-compete and confidentiality obligations set out in the employee non-disclosure agreement dated 1 December 2011 for the duration of two (2) years from the date of the termination of the defendant’s contract of employment with the claimant.
4. An order restraining the defendant from further contacting the clients of the claimant (whom defendant got to know of by virtue of his position in claimant (company) or the duration of one (1 year from the date of the termination of the defendant’s contract of employment with the claimant
5. An order directing the defendant to render a true and complete account of all the profits made by the defendant from his breach of the non-compete and confidentiality obligations set out in the employee non- disclosure agreement dated 1 December 2011.
6. Damages in the sum disclosed by the defendant as profits made from the defendant’s breach of the employee non-disclosure agreement dated 1 December 2011, which has resulted in unquantifiable financial loss to the claimant.
7. Cost of the action in the sum of =N=2,000,000.00 (Two Million Naira) only.
2. Defence & Counterclaims
2. The Defendant, in defence of the claimant’s claim, filed his Memorandum of Appearance, Statement of Defence/counterclaim and other frontloaded processes on 18 August 2016. The Defendant counter claimed as follows –
2. The sum =N=628,404(Six Hundred and Twenty-Eight Thousand, Four Hundred and Four Naira) only as salary in lieu of notice of termination of his employment.
3. Interests on the unpaid salary for the month of October 2013 and salary in lieu of notice at the rate of 21% (Twenty One percent) per annum until same is finally paid.
4. The sum of =N=5,000,000 (Five Million Naira) only as damages for wrongful termination of employment.
5. The costs of this action.
3. Case of the Claimant
3. The Claimant opened its case against the Defendant on 8/5/18 and called one Jason Njoku as its lone witness. The witness adopted his witness statements on oath of 8/5/15 and 2/11/16 as is evidence in chief and tendered 26 documents as exhibits. The documents were admitted in evidence and marked as Exh.JN1-Exh. JN26 respectively.
4. The case of the Claimant as revealed from its witness depositions and exhibits tendered and admitted is that it employed the Defendant from October 2011 to October 2013; that the Defendant breached the terms of the Employee Non-Disclosure Agreement dated 1 December 2011, which forms part of the employment contract between the Claimant and Defendant; that by the Employee Non-Disclosure Agreement, it was agreed by the parties that the Defendant would not set-up competing businesses while still in employment, misuse the Claimant’s confidential information, documentation and junior staff in a manner detrimental to the interest of the claimant and that the Defendant breached this Agreement while still in the employment of the Claimant.
5. Under cross examination CW1 testified that Claimant company is a well-structured and organized; that Claimant commenced payment of salary to Defendant about September or October 2011; that Claimant won’t have paid salary to defendant if he were not a staff of the claimant; that staff of claimant are allowed some break period during work hours; that Defendant’s official e-mail address while with the claimant are michealUgwu@irokopartners.com and email@example.com; that defendant was given opportunities to defend himself before Exh. JN9 was issued; that he could not recall the clamant paying defendant money in lieu of notice of termination and that Claimant did not contemplate winding document on its music division.
6. Witness added that Mr. Bastian Gotter was his co-founder and was at the time the Chief Financial Officer; that the Defendant solicited clients of the claimant whom he got to know by virtue of working for the claimant; that Claimant have no proof that defendant did know any of those clients of claimant before the stated working for the claimant; that the License Acquisition Agreement was prepared for claimant by a UK Law Firm –Pinsent Mason; that the law firm has other clients it serviced; that the law firm produced the agreement exclusively for the claimant; that he knew how the law firm came about the template for the Agreement and that the firm drafted the Agreement based on instructions.
4. Case of the Defendant
7. The Defendant opened his defence on 17/6/19 called 2 witnesses. DW1 adopted his witness deposition dated 18/8/16 as his evidence in chief and tendered 2 documents as exhibits. Both documents were admitted in evidence and marked as Exh. D1 & Exh. D2 respectively.
8. The case of the Defendant is that the Claimants’ claims are based primarily on rights purportedly conferred upon it pursuant to the Employee Non-Disclosure Agreement (ENDA) dated 1 December, 2011 executed by the Claimant and the Defendant; that part of the terms of the ENDA are such that “The employee shall not until the expiration of 2 (Two) years after the termination of the employment relationship between the employer and the employee, engage directly or indirectly, or through any corporation or association in a any business, enterprise or employment which is directly competitive with that of the employer; that he does not owe the Claimant any “non-compete” or “non-solicitation” obligation and that no consideration was furnished towards the execution of the ENDA; that the circumstance of the execution of the Agreement is an unfair labour practice; that he was not in an equal bargaining position with the claimant with regards to executing the ENDA; that he had executed the ENDA under duress; that the ENDA is illegal, did not form part of the employment contract between the parties and that the ENDA clauses pertaining to restraint of trade are illegal, invalid and unenforceable.
9. The evidence of the DW1 under cross examination is that he is a music Executive; that he makes music available on online platforms; that the Defendant in this case is his employer; that he holds a Diploma in Computer Engineering by Charity Computer – a computer institution; that he was employed by the Claimant for about a year; that the Defendant employed him in November 2013; that while with the Claimant, the usual mode of communication is via e-mails, that he did not work in the music business of the Claimant; that he was not reporting to anybody in the music business is the claimant; that he was not reporting to Defendant also; that he knew know Dominic Eze who was a former staff of the Claimant. I don’t know where he works now; that Loius Eke used to work with the Claimant; that he knew know Adebowale Benson who was also working with Claimant and that he and Ugochukwu Okezie are the only former staff of the Claimant working for Defendant now.
10. The Defendant testified as DW2, adopted his witness deposition of 22/6/17 as his evidence in chief and tendered 7 documents as exhibits. The documents were admitted in evidence and marked as Exh.D3-Exh. D9 respectively.
11. DW2 testified under cross examination to the effect that he stands by his witness statement on oath; that he was fully involved in its preparation; that he did not apply for the position of Senior Manager offered him in 2011 by the Defendant; that the offer was in an informal discussion; that the terms were communicated to him in writing of the first time on 10/10/11 by the offer letter; that he studied Politics and History and a postgraduate in Economics; that he worked in a Bank in the United Kingdom; that he was an Analyst working on banking project, how to grow the revenue base of the Bank etc; that I relocated to Nigeria in 2007 and worked with FutureViews Securities Limited closely with the MD of that company; that his role was primarily strategic at the Bank.
12. According to witness, in that role he had no involvement with any Artists; that he stopped work with FutureViews Securities Limited around 2009; that he also worked with CBO Capital; that he was not involved with any artist or entertainment at CBO Capital, that from Royal Bank of Scotland through to CBO Capital he was rendering financial services as his day job; that it is correct to say that he has skills to earn a livelihood outside of entertainment; that outside his 9am – 5pm, he ran a Fish Farm which was a successful business; that he closed the farm; that in 2011 he contested for the State House of Assembly membership; that the election held at about April or May 2011; that he relocated to Nigeria at about October 2011; that after he lost election he went to Houston, Texas USA to meet his pregnant wife; that from there he relocated to the UK; that when he resumed with the claimant, the mode of communication was e-mails and phone calls; that he was promoted to the position of Executive from Senior Manager; that then his remuneration changed though he had the same responsibility; that there was no fixed lunch time at the Claimant; that he did not respond to the whatsapp message – Exh. D8; that he attended the Future Music Forum in Barcelona in 2019 and was a Speaker at the event; that he did not provide his profile to the organizers who same from the internet and that he did not correct the organisers as regards his profile used at the event.
5. Submissions of Learned Counsel
13. The 14-page final written address of the Defendant was filed on 20/3/2020. It was dated 7/3/2020. In it learned Counsel set down 3 issues for determination as follows –
1. Whether the Employee Non- Disclosure Agreement dated 1 December, 2011 executed by the Claimant and the Defendant is valid and binding upon the parties, and the Claimant is entitled to the reliefs sought.
2. Whether by the documentary and oral evidence given by the parties in the matter, the Claimant has discharged the burden of proof in this case.
3. Whether Defendant is entitled to his claims in the counter-claim.
14. On issue 1, learned Counsel submitted that the ENDA executed by the parties is invalid and unenforceable; that there is no consideration for the Agreement dated 1/12/11 since Defendant had already started work with the Claimant as far back as October of 2011 and was already paid salaries for both months before the said Agreement citing Taura v. Chukwu (2018) LPELR-45990; that it is inconceivable that Claimant would pay the Defendant salary for months of October and November 2011 if the Defendant had not been employed at the time; that the ENDA was intended to be executed prior to Defendant’s employment and not after; that although the Defendant specifically pleaded the issue of payment of his salaries for October and November 2011, Claimant did not specifically controvert the issue or cross examine the Defendant on it at trial and must be deemed to have admitted same citing Amayo v. Erinmwingbovo (2006) LPELR-458(SC); that as the employment of the Defendant has been proved to have commenced by 1/10/11 (Exh. D8) rather than 1/12/2011 the date of execution of ENDA, the consideration of the employment of the Defendant with regards to ENDA is in law a past consideration.
15. Counsel submitted further Clauses 3 & 7 of ENDA are non-compete clauses and clauses in restraint of trade which form the basis of Claimant’s clams and are generally void and unenforceable citing Koumoulis v. Leventis Motors Limited (1973) LPELR-1710(SC); that Claimant’s under an obligation to prove that restraining the Defendant from his trade is reasonable in the circumstances before the onus would shift to the Defendant; that Claimant has not discharged that obligation; that the way and manner in which the ENDA was executed was an unfair labour practice and contrary to public policy; that the Defendant who was based in the UK when he was employed to work for the Claimant moved back to Nigeria and had worked for 2 months before Claimant issued letters of employment and ENDA for acceptance and execution by the Defendant; that the Defendant was pressurized to sign ENDA after he had altered his finances and relocated to Nigeria based on employment agreement made prior to 1/10/11; that the terms of ENDA are clear as it seeks only to prohibit the issue of direct competition between the Claimant and the Defendant and that Claimant has failed to discharge the burden of proving that the Defendant’s businesses are in competition with its businesses. Learned Counsel prayed the Court to resolve this issue in favor of the Defendant.
16. Respecting issue 2, learned Counsel submitted that there is no probability that the Defendant engaged in a business that competed with that of the Claimant when the Claimant did not provide any evidence of the nature of Music business; that there is no probability that the Defendant engaged in a business that competed with that of the Claimant when Claimant did not provide any evidence of a particular business transaction of the Defendant that competed with its specific business transaction and that Claimant did not specify a single client of the Claimant which the Defendant had unlawfully transacted with. Counsel urged the Court to resolve this issue in favor of the Defendant.
17. On issue 3, learned Counsel submitted evidence was led to the effect that the Defendant was prevented from carrying out his duties or having access to his office on 17/10/13 and that his salary of =N=628,404 for the month of October was not paid; that the evidence of DW1 supported the position of the Defendant; that the averments of the witness remained unchallenged and must be deemed admitted; that by Exh. JN1, the Defendant was entitled to a month written notice of termination or a month’s salary in lieu of the same; that the Defendant who was not given a written notice of termination was also not paid a month salary in lieu of notice as contained in his offer letter. Counsel added that the Defendant was not afforded opportunity to explain his side respecting the reasons given for the termination of his employment and the pasting of the photograph of the Defendant amongst other staff on the Claimant’s office gate with instructions to security personnel not to allow him to enter the office premises damaged his reputation. Counsel urged the Court to award damages to assuage the reputation of the Defendant that was so damaged by the act of the Claimant. Finally, learned Counsel prayed the Court to dismiss the case of the Claimant and grant all the counter claims as sought.
18. On 10/6/2020, the 33-page final written address dated 1/6/2020 was filed on behalf of the Claimant. In it learned Counsel set down these two issues for determination –
1. Having regard to the evidence led at trial, whether the defendant is liable to the claimant for breached of the agreement not to misuse the claimant’s confidential information and not to compete with the claimant’s business for a period of two years after the termination if his employment?
2. Whether the defendant is entitled to the reliefs sought vide his counterclaim.
19. On the first issue, learned Counsel submitted that the relationship between an employer and an employee is regulated solely by the terms and conditions of the contract of employment between the parties which is sacrosanct and binding citing Olaniyan v. University of Lagos (1985) NWLR (Pt. 9) 599; that it is agreed by both parties in this case that the documents embodying and regulating the employment relationship between the parties are as contained in Exh. JN1/Exh. D4 and other written policies; that Exh. JN1 & Exh. JN2 were executed on the same date and formed the bedrock of this case; that there is no evidence to the effect that the Defendant was under duress when he executed the documents; that contents of the documents did not violate any written law in Nigeria; that Clauses 3 & 7 of Exh. JN2 by which the Defendant undertook to not compete with the Clamant within 2 years of leaving its employment and to keep and not misuse the Claimant’s confidential information are reasonable to afford the Claimant some protection considering the peculiarity of Claimant’s business and the Defendant’s role as a top executive with access to the Claimant’s trade citing Koumoulis v. Leventis Motors Limited (1973) All NLR 789; that the Defendant as a Director in the Claimant had unrestricted access to the trade secrets, confidential documentation and customer connection of the Claimant; that the nature of Claimant’s business required preservation of sensitive and confidential information of Claimant’s bsiness and its clients and the restriction imposed on the Defendant were reasonable having regard to the term of duration and scope of business.
20. Learned Counsel submitted that sufficient consideration was furnished in respect of the Employee Non-Disclosure Agreement – Exh. JN2; that the consideration was the periodic and continuous disclosure to the Defendant of the Claimant’s trade secrets, knowledge and confidential information which had come and which was to come to the knowledge of the Defendant by virtue of his employment with the Claimant citing BFI Group Corporation v. Bureau of Public Enterprises (2012)18 NWLR (Pt. 1332) 209. Counsel prayed the Court to find that the Claimant had furnished sufficient consideration under Exh. JN2 which created the rights which the Claimant seeks to be protected by this suit.
21. According to Counsel, DW1 had admitted that at the material time when the Defendant incorporated Africagent Limited and Freemedigital, the Defendant was still in the employment of the Claimant; that the nature of the business of the Claimant – engagement in the music and entertainment industry is the same with the business undertaken by the entities created by the Defendant and that through these entities the Defendant had been actively involved in dealings with artists in the same industry in which the Claimant was operating and in respect of which the Defendant was employed by the Claimant. Learned Counsel urged the Court to hold that Claimant is entitled to all the reliefs sough and to grant the same accordingly.
22. On issue 2, learned Counsel submitted that the Defendant’s employment was properly terminated without notice as per the provisions of Clause 10.3 of Exh. JN1; that the termination of the Defendant’s employment by the Claimant pursuant to Clause 10.3 of Exh. JN1 is tantamount to a dismissal which disentitles the Defendant to any benefit, citing Union Bank Plc v. Soares (2012)11 NWLR (Pt. 1312 550 at 572 & Adeko v. Ijebu-Ode District Council (1962)1 SCNLR 349; that the Defendant did not earn the salary for October 2013 as he did not report for work during the period; that having been dismissed pursuant to Clause 10.3 of Exh. JN1, the Defendant is not entitled to any salary in lieu of notice of termination; that the Defendant is not entitled to any interest whether pre or post judgment citing Ekwunife v. Wayne West Africa Limited (!989)5 NWLR (Pt. 122) 422, Hausa v. FBN Plc (2000)9 NWLR (Pt. 671) 64 & UBA Plc v. Lawal (2008)7 NWLR (Pt. 1087) 613 at 634 and that the Defendant is neither entitled to damages not to cost of action. Counsel prayed the Court to grant the reliefs of the Claimant and dismiss all the counter claims of the Defendant.
23. On 23/6/2020, the Defendant filed a reply to the Claimant’s final written address.
24. I read carefully and understood all the processes filed by the parties on either side. I listened attentively and patiently heard the oral testimonies of al the witnesses called as well as watched their demeanor. In addition, I patiently reviewed and evaluated all the exhibits tendered and admitted just as I heard the oral argument canvassed by learned Counsel on either side. Having done all these, I narrow the issues for the just determination of this case to the following –
3. Whether the Defendant is entitled to any of his counter-claims.
25. The law remains trite that the burden of proof is always on he who approaches the Court for judicial intervention. That burden is discharged by adducing cogent, credible and admissible evidence. Such evidence may be either oral or documentary or both bearing in mind that documentary evidence is usually preferred. See Royyork Nigeria Limited v. A. G, CJ Sokoto State & Anor. (2017) LEPELR – 42506 (CA). It is also trite where there is an admission a material fact, the need for proof of same is dispensed with. For, admitted facts need no further proof.
26. The first issue for determination is Whether Clauses 3(e) and 7 of Exh. JN2 – Employee Non-Disclosure Agreement is valid and enforceable. The facts of this case appear to be simple and straightforward. I deduce from the pleadings and evidence led that Claimant once employed the Defendant to work for it. That employment relationship was backed up by an Offer of Employment dated 10/10/11 (Exh. JN1). In addition to the offer letter is an Employee Non-Disclosure Agreement (Exh. JN2) dated 1/12/11 duly executed by both parties. Claimant alleged a breach of this latter Agreement and hence this action. Clauses 3(e) & 7 of the Employee Non-Disclosure Agreement were allegedly breached by the Defendant. The Defendant on the other hand contended that Exh. JN2 is invalid and unenforceable and claimed some rights and entitlements resulting from the termination of his employment by the Claimant.
27. The resolution of issue 1 rests squarely on the enforceability or otherwise of Clauses 3(e) and 7 of Exh. JN2. That exhibit is the contract document alleged to have been voluntarily signed by both the Claimant and the Defendant. Simply put that clause restricted how, in what manner and the extent to which the Defendant may seek employment elsewhere upon leaving the services of the Claimant. Clause 3(e) deals with Non-Disclosure. It states thus –
‘The Employee shall not take up job with any of the Employer’s clients, vendors and partners without the written permission of the Management of the Employer’.
28. Clause 7 of Exh. JN2 on the other hand deals with The Employer’s Clients. The Clause states that –
‘The Employee agrees that if his employment with the Employer terminates for any reason, the Employee shall not for a period of one year from the date of termination, have any business dealings whatsoever, either directly or indirectly or through corporate entities or associates with any customer or Client of the Employer or its subsidiaries; or any person or firm which has contacted or been contacted by the Employer, a potential customer or client of the Employer, and the Employer shall keep in strictest confidence both during the period of employment or thereafter not disclose or divulge to any person, firm or corporation or use directly or indirectly for my own benefit (sic) of others, any information which in good faith and good conscience ought to be treated as confidential information including without limitation information relating to the software developed by the Employer, information as to sources of and arrangements for the Employer, dealings with movie producers, actors, actresses, artists, etc customer or contact lists or any other confidential information’.
29. Clauses as the one in the instant case are not unusual. They have found their ways into employment contract from time immemorial. They are often referred to as covenant in restraint of trade. Generally speaking, covenant as this is referred to or described as one in which a covenantor agrees with another party to restrict his liberty in the future to carry on trade, business, profession or calling with other persons not parties to the contract in such a manner as he chooses. It is simply some kind of agreed provision that is designed to restrain another's trade. See Petrofina Great Britain v. Martin (1966) Ch. 146 & Tanksale v. Rubee Medical Centre Limited (2013)12 NWLR (Pt. 1369. Restraint of trade is a common law doctrine relating to enforceability of contractual restrictions on freedom to conduct business. It is said to be a precursor of modern competition law. Generally speaking, such a restraint is unenforceable as being contrary to the public policy of promoting trade and business unless the restraint of trade is reasonable to protect the interest of the purchaser of a business and hence void ab initio. If both parties to it agree to and did perform same, that is the end of it. But the Court will not assist either party to provide a platform for its enforcement. In an old English leading case of Mitchel v. Reynolds (1711), Lord Smith L.C said thus -
''... it is the privilege of a trader in a free country, in all matters not contrary to law, to regulate his own mode of carrying it on according to his own discretion and choice. If the law has regulated or restrained his mode of doing this, the law must be obeyed. But no power short of the general law ought to restrain his free discretion''.
30. In Nordenfelt v. Maxim, Nordenfelt Guns and Ammunition Co. (1894) A.C 535., a Swedish arms inventor promised on sale of his business to an American gun maker that he ''would not make guns or ammunition anywhere in the world, and would not compete with Maxim in any way''. Lord Macnaughten in that case stated inter alia that such a restriction is justified only if it is reasonable, that is, in reference to the interest of the parties concerned and reasonable in reference to the interest of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public. This was the Common Law position and which was prevalent until the decision in Herbert Morris Limited v. Saxelby (1916)1 A.C 688 where the Court for the first time held that there could exist certain circumstances where contract in restraint of trade are enforceable. Such circumstances are said to include (i) where such contracts were necessary to protect an employer's legitimate competitive interest; (ii) where the enforcement of such contract was neither unreasonably burdensome to the employee nor harmful to the public interest; and (iii) where the time and geographical scope of the restriction is reasonable.
31. The Common Law position in relation to contract in restraint of trade would seem to have been followed even by Courts of other jurisdictions. For instance, in most States in the United States of America no-compete covenants are viewed with suspicion by most Courts and will sparingly be enforced. Thus in BDO Seidman v. Hirsh Berg 690 N.Y. 2nd 854 (Ct. App.1999), the Court held that a no-compete covenant would be enforced provided it is reasonable and that a restraint is reasonable if it (i) is not greater than is required for the protection of the legitimate interest of the employer; (ii) does not impose undue hardship on the employee and (iii) is not injurious to the public. In India, any agreement which restrains anyone from carrying on a lawful profession, trade or business is void to that extent. See Indian Contract Act, 1872. Thus, in Taprogge Gesellschaft MBH v. IAEC India Limited (1988) AIR Bomm, the Court held that a restraint operating after termination of the contract to secure freedom from competition from a person who no longer worked within the contract, was void, even if such a covenant was valid under German law and that it could not be enforced in India. See also Gujarat Bottling Company Limited v. Coca Cola Co. (1995)5 S.C 545 & Anoop Narayanan; Validity of Non-Compete Covenants in India, www.majmudarindia.com. visited on 25/2/16.
32. Under the Nigerian law, the position is a reflection of the Common Law heritage of the country. It is as stated by the Supreme Court in Andreas I. Koumoulis v. Leventis Motors Limited (1973) 11 S.C 100, (1973) All NLR 789 that all covenants in restraint of trade are prima facie unenforceable and that they are only enforceable if they are reasonable with reference to the interest of the parties concerned and the public at large. See also C.F.A.O. v. George Luba (1918)3 N.L.R 67, Dr. Shirish Tanksale v. Rubee Medical Centre Limited (2013) LPELR-21445 (CA), Afropim Engineering Construction Nigeria Limited v. Jacques Bigouret (2012) FWLR (Pt. 622) 170, Hygeia HMO v. Simbo Ukiri Unreported: NICN/LA/454/2013 and see my Judgment in The La Casera Company v. Mr. Prahlad Kottappurath Gangadharan Suit No: NICN/LA/533/2013 delivered on 17/3/16 a case on all furs as the present case. See also Uko, E.J; The Validity of the Doctrine of Restraint of Trade Under the Nigeria Labour Law, International Journal of Advanced Legal Studies and Governance, Vol. 4 No. 2 August 2013 p. 34 and Bimbo Atilola; “Restrictive Covenants and Expatriate Employment in Nigeria” in Bombo Atilola Ed. Managing Expatiates In Employment, Hybrid Consult, 2016.
33. From the foregoing state of the law therefore, for the Claimant to succeed and be entitled to its claims, it must discharge the burden of proof placed on it. It is for the Claimant to prove its case by adducing credible, cogent and admissible evidence. See Health Care Product Nigeria Limited v. Bazza (2004)3 NWLR (Pt. 861) 582 at 605-606. Within the context of this case, the Claimant is obliged to prove that it has an interest which is capable of being protected; that the restraint on the Defendant is reasonable and that it is not contrary to public policy or interest.
34. In proof of its case, the Claimant called one witness and tendered 26 exhibits. I start off with consideration of Exh. JN1 & Exh. JN2 vis-à-vis the available facts. By the facts and evidence led, Claimant employed the Defendant in the United Kingdom but with a mandate to work in its Nigerian office. Exh. JN1 was the instrument offering employment to the Defendant. It was dated 10/10/11 and executed on 1/12/11. It was the testimony of the Defendant that he relocated from the United Kingdom to Nigeria to commence work with the Claimant on 1/10/11. That testimony is further supported by Exh. D3 which showed payment of salary to the Defendant by the Claimant for the months of October and November, 2011. These findings were not in any way or manner challenged by the Claimant. I find Exh. JN1 a detailed document. It appears to me to contain almost all the terms and conditions of employment of the Defendant. Exh. JN2 is dated 1/12/11. Claimant suddenly realized the need for it some two months into the Defendant’s employment with it. That was also two months after the Defendant had altered his position in relocating to Nigeria from his base in the United Kingdom along with his family. I dare say that by its conduct, Claimant intended to put the Defendant in a difficult position of a faith accompli in which the Defendant would have no choice than to dance to whatever the dictates of the Claimant might be.
35. Question is what were the options available to the Defendant who relocated with his family from the United Kingdom to Nigeria on the basis of an employment agreement only to be confronted with a scenario least expected? Such a practice amounts to changing the rule in the middle of a game. It is not a fair practice. It is not a fair labour practice. It is an unfair labour practice which this Court is by the Constitution empowered to pronounce upon. What then is an unfair labour practice? An unfair labour practice means any unfair act or omission that arises between an employer and an employee involving unfair conduct of an employer. It is any discriminating or deceitful act or omission that occurs between an employer and an employee. It is unfair treatment by an employer of an employee or job applicant. https://www.ccma.org.za/Services/Resources/Token/ViewInfo/ItemId/8 visited on 27/10/2020. The conduct of the Claimant in attempting to change the terms of employment of the Defendant to the detriment of the Defendant after the latter had commenced work is unfair because it finds no support in good conscience. It is also unfair because it is against public policy.
36. In Statoil Nigeria Limited v. Inducon (Nig.) Limited & Anor. (2012) LPELR-7955 the Court of Appeal following the decision of the Supreme Court in Okonkwo v. Okagbue (1994) 9 NWLR Pt. 368 Pg. 301, defined public policy as
‘the ideals which for the time being prevail in any community as to the conditions necessary to ensure its welfare, so that anything is treated as against public policy if it is generally injurious to the public interest. Public policy holds that no subject can lawfully do that which has a tendency to be injurious to the public, or against public good, which may be termed, as it sometimes has been, the policy of the law, or policy in relation to administration of the law’.
37. I thus hold on the foregoing that Exh JN2 in general and its Clauses 3(e) & 7 in particular and the manner of execution of the same by the Claimant amounts to an unfair labour practice and contrary to public policy.
38. The Constitution of the Federal Republic of Nigeria, 1999, (Third Alteration) Act, 2010 confers on this Court in Section 254C (1) jurisdiction to the exclusion of any other Court in civil causes and matters –
(f) relating to, or connected with, unfair labour practice or international best practices in labour, employment and industrial relations matters’’.
39. The International Covenant on Economic, Social and Cultural Rights (G.A. Res. 21/2000A, G.A.O.R, 21st Session, Supp., p.49, UN Doc. A/6316 (1966), 993 U.N.T.S. 3, entered into force January 3, 1976) recognised the right to work as imperative to the enjoyment of not just economic, social and cultural rights but also civil and political rights. Under Article 6(1) of the Covenant, the right to work includes ''the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts...''. See Rebecca M.M. Wallace & Kenneth Dale-Risk; International Human Rights, Text and Materials, Sweet & Maxwell, 2001, 625. It thus appears to me to be trite to hold and I so do that Clauses 3(e) & 7 of Exh. JN2 are in violation of the International Covenant on Economic, Social and Cultural Rights which this Court is empowered to take cognizance of. The imperative of work is necessarily tied to the salaries and allowances payable. For, the essence of taking up an employment is to enable an individual meet financial obligation.
40. On this ground, I resolve the first issue in favour of the Defendant. I hold that Exh. JN2 amounts to an unfair labour practice and contrary to public policy. I declare its Clauses 3(e) & 7 as invalid and unenforceable.
41. Now, the law is settled that even at Common Law a party has the right to protect a legitimate interest. What then are the interests which the Claimant seeks to protect? It was part of the argument of the Claimant that the Defendant had unrestricted access to all the trade secrets, future plans as well as sensitive and confidential information. I have carefully and patiently read the pleadings of the Claimant and the evidence led. A question keeps coming back to me and seeking an answer. That question is: what are the secrets which the Claimant seeks to protect and which the Defendant has revealed or made use of? I have difficulty in finding an answer to this important question. In paragraph 8 of his statement of defence, the Defendant in response to paragraphs 7 & 8 of the statement of facts averred that the Claimant did not have any written policy, procedures or regulation for its employees and in paragraph 9 that –
‘… the HR Manager had discussed with him (as an Executive of the Company), that the Company would be working on producing a Company policy/regulation document but that this document was never concluded nor issued to any staff of the Claimant during his employment with the Claimant. The Defendant further avers that any further agreement between the Claimant and himself (or any of its employees for that matter) other than employment contract was a separate and distinct agreement’.
42. Claimant’s response in paragraph 5 of its Reply to Statement of Defence filed on 24/11/16 did not contradict the position averred by the Defendant. Rather the Claimant only referred to an Employee Handbook allegedly given to staff in 2012. From the pleadings and evidence, it is safe for me to agree with the Defendant that Claimant had virtually nothing in place at the time the Defendant joined it and that it assisted in putting the Claimant in shape. I find no interest of the Claimant or its legitimate interest which is capable of being protected by Clauses 3(e) & 7 of Exh. JN2.
43. Notwithstanding the finding and the holding above, even if the existence of any legitimate interest had been found in favour of the Claimant, is the restraint in the instant case reasonable? A restraint as in the instant case will be held reasonable when considered against the interest of the parties on the one hand and interest of the larger public on the other hand. In other words, the reasonability test must satisfy three main conditions, viz- (a) the interest of the Claimant; (b) the interest of the Defendant and (c) the interest of the public. Within the context of the Judgment of Lord Macnaughten in Nordenfelt v. Maxim, Nordenfelt Guns and Ammunitions Co. these three conditions would seem imperative. But see the decision of the Supreme Court in Koumoulis v. Leventis Motors (1973) All NLR 789. I have already found and held in this Judgment that the Claimant did not prove the existence of any enforceable legitimate interest which the Court may find in its favour.
44. Respecting the Defendant, it is sufficed for the Court to hold that his interest is to continue to be employable, employed and able to put his skill to optimal use in contributing to his immediate environment. In other words, an employee has a continued interest in ability to continue to earn a living. In some jurisdictions, individual right to work, apart from its international dimension, has been raised to the level of right to life. This should be understood against the backdrop of some of the Holy Books to the effect that he who does not work should not eat.
45. Respecting the interest of the public it is sufficient to simply state that it is not in the interest of the public for a citizen or resident of a country to be disallowed from legitimate use of his skill and being gainfully employed. Consequences of such are better imagined. Quite apart from the social vices and criminal tendencies that may result from that, the State will no doubt be denied of revenues from taxation on incomes which will come to individuals concerned. I have no hesitation in holding that there is no ground to hold the Clauses 3(e) & 7 of Exh. JN2 reasonable. I find it to be unreasonable and contrary to public policy. A contract that is contrary to public policy cannot find support for its enforcement through the judicial process. When a contract is held to be contrary to public policy, it means it negatively affects the very foundation of the public. The attitude of the Courts to such contract is reflected in the Judgment of Dongbam-Memsen, J.C.A in Dr. Shirish Tanksale v. Rubee Medical Centre Limited (2013) LPELR-21445(CA). In that case His lordship, referring to the case of Nnadozie v. Mbabwu (2008) ALL FWLR (Pt. 405) 1613 at 1639 held thus -
"A contract or an agreement rooted in illegality must not be pleaded and if pleaded, it cannot be enforced by any court of law. An agreement is illegal if the consideration or the promise involves doing something illegal or contrary to public policy. In the instant case, the plaintiff's evidence of proclamation of ownership of the land by an oracle was wrong in law and the trial court erred to have given it any legal recognition which was rightly set aside on appeal" See also Onyiuke v. Okeke (1976) 10 NSCC 146, Onwuchekwa v. N.D.I.C (2002) FWLR (Pt. 101) 1615. (2002) 5 NWLR (Pt. 760) 371, Olaniyan v. Aroyechun (1991) 5 NWLR (Pt.194) 652 @ 656. Enigwe v. Akaigwe (1992) 2 NWLR (Pt. 225) 505 @ 535.''
46. The success or otherwise of the case of the Claimant rests on its ability to prove the reasonableness of the Clauses 3(e) & 7 of Exh. JN2 and that they are not contrary to public policy. That burden is not discharged. I find and hold that the said restraining clause is unreasonable, contrary to public policy and therefore an illegal and invalid contract which the Court will not and cannot enforce. Issue 1 is thus resolved against the Claimant.
47. The second issue for determination is whether the Claimant has proved its case to be entitled to any or all of the reliefs sought. The foundation of all the reliefs sought by the Claimant is the alleged breach of Exh. JN2 by the Defendant. Particular emphasis here is Clauses 3(e) & 7 of Exh. JN2. I have resolved issue 1 which is whether Clauses 3(e) & 7 of Exh. JN2 are valid and enforceable in favor of the Defendant and against the Claimant. By that resolution, this Court found and held that those clauses are invalid and unenforceable. I have no reason to deviate from that position. That being the case the foundation of the reliefs of the Claimant has collapsed. There is therefore no basis upon which the reliefs sought by the Claimant could be based. I hold that the Claimant has not proved its case to be entitled to any of the relief sought. Issue 2 is therefore resolved in favor of the Defendant and against the Claimant.
48. The third issue set down for determination is whether the Defendant is entitled to any of his counter-claims. The Defendant sought 5 main counter claims from the Claimant. The law relating to counter claim is that it is akin to a fresh and independent action of its own. Thus, the onus is on the Counter claimant to adduce sufficiently cogent and credible evidence in support of the counter claims otherwise same will be dismissed. See Hassan v. Bunu & Anor. (2019) LPELR-47716 (CA).
49. The first counter claim by the Defendant is for the sum of =N=628,404 (Six Hundred and Twenty-Eight Thousand, Four Hundred and Four Naira) only as his unpaid salary for the month of October 2013. The employment of the Defendant was terminated by Exh. JN9. That exhibit was dated 30/10/13. The termination was with immediate effect. It was the argument of the Defendant that he was not paid his salary for the month of October and in support he exhibited Exh. D3 being his Bank statement of account into which his salary was always paid by the Claimant. Claimant did not deny not paying Defendant’s salary for the month of October. The counter argument of the Claimant is that the Defendant is not entitled to the salary for October as he was only intermittently at work and subsequently did not come to work. Throughout the trial, I find no evidence of any query issued to the Defendant for absence from work. I also find no evidence of interdiction or complaint by the Claimant against the Defendant. I hold that the Defendant is entitled to this head of counter claim. I grant same. The Claimant is ordered to pay to the Defendant the sum of =N=628,404 (Six Hundred and Twenty-Eight Thousand, Four Hundred and Four Naira) only being Defendant’s unpaid salary for the month of October 2013.
50. The second head of counter claim is for the sum =N=628,404 (Six Hundred and Twenty-Eight Thousand, Four Hundred and Four Naira) only as salary in lieu of notice of termination of his employment. The letter of termination of employment served on the Defendant dated 30/10/13 was effective immediately. By paragraph 10.1 of Exh. JN1 the Defendant is entitled to a month written notice of termination of employment or payment of one-month salary in lieu. It is my finding that the Defendant was neither given a month written notice of termination nor paid a month salary in lieu. It is also my finding that the Defendant is entitled to a month salary in lieu of notice of termination. I order the Claimant to pay to the Defendant/counter claimant the sum =N=628,404 (Six Hundred and Twenty-Eight Thousand, Four Hundred and Four Naira) only as salary in lieu of notice of termination of his employment.
51. The third head of counter claim is for interests on the unpaid salary for the month of October 2013 and salary in lieu of notice at the rate of 21% (Twenty One percent) per annum until some is finally paid. I heard and read the argument canvassed by the Claimant against award of any form of interest in favour of the Defendant/Counter claimant. The money ordered to be paid back to the Defendant/Counter claimant was due to him as far back as 2013. It is a legitimate entitlement. I hold that Claimant not having paid back the money legitimately due to the Defendant/Counter claimant at the time it ought to have done so, Defendant/Counter claimant is entitled to interest on the said sum. It was Rhodes-Vivour JCA (as he then was) relying on Ekwunife v. Wayne (W.A) Ltd (1989) 5 NWLR (Pt. 122) 422; Texaco v. Pedmar (Nig). Ltd. (2002) 13 NWLR (Pt. 785) 526; Harbutt's Plasticine Ltd. v. Wayne Tank and Pump Co. Ltd. (1970) 1 All E.R 225 and A.B. Kemp Ltd. & Ors v. Tolland (1956) 2 Lloyds List Report 681 in P.T.F. v. W.P.C. Ltd. (2007) 14 NWLR (Pt. 1055) 478 at 500 who took time out to espouse on the position of the law on the vexed issue of pre-judgment interest in the following words –
''When actions are brought on Commercial matters, the courts usually find that money ought to have been paid sometimes ago. In such cases, it ought to carry interest and that is pre-judgment interest. The time, pre-judgment, when it would start to run depends on evidence. The basis of such an award is that the defendant had kept the plaintiff out of his money, and the defendant has had the use of it for himself, so he ought to compensate the plaintiff accordingly''.
52. I hold that the Defendant/Counter claimant is entitled to interest on the sum due to him from the Claimant. Defendant/Counter claimant has claimed at the rate 21% per annum on the said amount due from October 2013 until final liquidation. There is no evidence before me on how he arrived at the percentage claimed as interest. Or was that the prevailing lending rate approved by the Central Bank of Nigeria as the regulator of the banking industry at the point in time? I have no answers to these questions or any of them. However, under the Rules of this Court, this Court is allowed to award a post judgment interest of not less than 10%. I thus order the Claimant to pay interest at the rate of 10% per annum on all the sum of money already awarded in this suit from October, 2013 till final liquidation of same.
53. The 4th counter claim is for the sum of =N=5,000,000 (Five Million Naira) only, as damages for wrongful termination of employment. This Court has ordered the Claimant to pay to the Defendant both the one-month unpaid salary as well as one-month salary in lieu of notice of termination. Those are the legitimate entitlements of the Defendant/Counter claimant from the Claimant/Respondent. To further award any sum as damages will tantamount to awarding double compensation in favor of the Defendant/Counter claimant. I refuse and dismiss this head of claim accordingly.
54. Claimant is ordered to pay the cost of this proceedings assessed at =N=200,000.00 to the Defendant/Counter claimant.
55. Finally, for the avoidance of doubt and for all the reasons as contained in this Judgment,
1. I hold that Clauses 3(e) & 7 of Exh. JN2 is invalid and unenforceable being covenants in restraint of trade and against public policy.
2. I refuse and dismiss all the reliefs sought by the Claimant for lack of proof by cogent, credible and admissible evidence.
3. The Claimant is ordered to pay to the Defendant the sum of =N=628,404 (Six Hundred and Twenty-Eight Thousand, Four Hundred and Four Naira) only being Defendant’s unpaid salary for the month of October 2013.
4. I order the Claimant to pay to the Defendant/counter claimant the sum =N=628,404 (Six Hundred and Twenty-Eight Thousand, Four Hundred and Four Naira) only as salary in lieu of notice of termination of his employment.
5. I order the Claimant to pay interest at the rate of 10% per annum on all the sum of money already awarded in this suit from October, 2013 till final liquidation of same.
6. Claimant is ordered to pay the cost of this proceedings assessed at =N=200,000.00 to the Defendant/Counter claimant.
56. All the terms of this Judgment shall be complied with within 30 days from today.
57. Judgment is entered accordingly.
Hon. Justice J. D. Peters