The Doctrine of Loss of Expectation Interest in Labour Law

A Review of the Decision in Modilim vs. United Bank for Africa Plc

by Cajetan Osisioma

Introduction

On 19th June 2014, Justice B. B. Kanyip of the National Industrial Court of Nigeria, sitting in

Lagos, delivered a well-considered judgment in Mr. Patrick Obiora Modilim vs. United

Bank for Africa Plc2, where the claimant sought, among other reliefs, a declaration that the

defendant’s failure to upgrade and/or review the claimant’s emoluments to that of a general

manager’s level amounted to a breach of his contract of employment and a declaration that

the defendant constructively and wrongfully terminated the claimant’s employment.

Summary of Facts of the Case

The claimant was offered employment by the defendant as a Deputy General Manager and

the defendant undertook to confirm his appointment as a General Manager after a period of

six months subject only to the condition that the claimant would meet certain set targets

contained in a performance contract executed by the parties. The claimant contended that

he met the set targets and was confirmed but that the defendant continued to pay him the

salaries of a Deputy General Manager for the 20 months he worked after his confirmation

despite repeated demands by the claimant that his employment be reviewed to that of a

General Manager. Consequently, the claimant was forced to resign his employment via a

letter of resignation dated 31st March 2010 and the defendant purportedly accepted the

claimant’s resignation via a letter dated 30th March 2010. The claimant contended that the

totality of the defendant’s attitude clearly showed that he was constructively dismissed. The

defendant, however, maintained that the claimant voluntarily resigned his appointment, did

not work as a General Manager and therefore cannot be paid salaries of a General

Manager.

Decision of the Court

In its judgment, the court held, inter alia, that the defendant’s failure to review the claimant’s

level to that of a General Manager on confirmation was a breach of his contract of

employment contained in the offer letter and letter of commitment, thereby holding the

defendant liable to the claimant for breach of its commitment.

Loss of Expectation Interest and Claim thereof

The decision in this case is important as it touches on a novel area of the law which is not

yet fully appreciated in Nigeria and other jurisdictions; that is, loss of expectation interests

and claim thereof. In upholding part of the claimant’s relief, the court held as follows:

“Having therefore breached the contract of employment and so entitling the

claimant to relief (b) as indicated, the next question is what the remedy of the

claimant is. The commitment on the part of the defendant to be willing to review

the claimant’s position to the level of General Manager gave rise to an expectation

interest on the part of the claimant. The rule, by Tadduggoronno v. Gotom [2002]

NWLR (Pt. 757) 453, is that there cannot be a vested right when an exercise is

made subject to the fulfillment of some conditions and acceptance of those

conditions at the discretion of the affirming body. And in Medical and Health

Workers Union of Nigeria & Ors v. Federal Ministry of Health unreported Suit No.

NICN/ABJ/238/2012, the judgment of which was delivered on July 22, 2013, this

Court acknowledged that the practice of skipping of salary grade levels by

Government can create an expectation interest, which in turn is capable of

creating an entitlement or vested right in favour of the complainants who have all

this while been beneficiaries of the practice. In the instant case, the conditions for

the exercise of the commitment on the part of the defendant were all met. In fact,

in University of Jos v. Dr. M. C. Ikegwuoha [2013] 9 NWLR (Pt. 1360) 478, the

Supreme Court ordered that the respondent’s appointment be confirmed once the

conditions for confirmation were met. In the instant case, the claimant is no longer

in the service of the defendant, so the question of ordering that he be confirmed

does not arise. The claimant in the instant case is accordingly entitled to a remedy

regarding the loss of the expectation interest in terms of the breach of the

defendant’s commitment to be willing to review his position to the level of General

Manager”.

Further, the Court queried: “What then is the measure of damages for this loss of expectation

interest?” And, after its computation and determination of the difference in salaries between

the Deputy General Manager and that of the General Manager, awarded the sum of

N75,535,128.00 as the measure of damages in expectation interest that the claimant would

have earned had the defendant kept to its commitment to review the employment of the

claimant from the position of a Deputy General Manager to that of a General Manager upon

confirmation as agreed.

Comments

The Court was right in holding that the defendant was in breach of its commitment to be

willing to review the claimant’s position to the level of General Manager upon confirmation

and that the breach gave rise to an expectation interest on the part of the claimant. Judges

involved in labour/employment law disputes are encouraged to be proactive in granting

claims for expectation interests where the facts and circumstances of cases reveal (as in the

case under review) that certain benefits would have accrued to a claimant had the defendant

kept to its commitment as contained in a contract of employment.

1 Cajetan Osisioma is an Associate with S. P. A. Ajibade & Co., Lagos, Nigeria: +234 (0) 8063640152,

cosisioma@spaajibade.com

2 Suit No. NICN/LA/353/2012