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JUDGMENT
BROBBEY, J.A.:
Six people, suing for
themselves and 764 others, originally instituted an
action in the High Court. All the plaintiffs were
pensioners of the Ghana Commercial Bank Limited.
Their initial claims
were for the following reliefs;
“ 1. A declaration
that the plaintiffs are entitled to be paid their
pension rights in accordance with the defendant’s Board
of Directors Amendment decision of 27th February 1987.
2. Arrears of pension
due plaintiffs with interest at current bank rate with
effect from 1st July 1989.
3. Damages for
breach of contract
4. An order of
perpetual injunction restraining defendant bank from
transferring any of its assets or changing its legal
identity or ownership of itself by way of sale,
assignment or divestiture in any form until plaintiffs’
entitlements would have been paid and concrete legal
arrangements also made for the continued payment of
plaintiffs’ pension in accordance with existing
contractual arrangements”
The plaintiffs
subsequently abandoned reliefs three and four on the
writ of summons.
When the trial
commenced, counsel for the defendant bank submitted to
judgment on relief one. The plaintiffs filed judgment
after trial in which they stated that the trial court
had “adjudged that the defendant bank should pay the
plaintiffs all their pension rights in accordance with
the defendant’s Board of Directors Amendment decision of
27th February 1987. Arrears of pension to the
plaintiffs as from 1st July 1989. The rate of interest
to be subject to agreement.”.
At the trial court, the
defendant bank submitted to only relief one. Counsel for
the defendant indicated that he had instructions to
attempt settlement with counsel for the plaintiffs on
the question of interest. In order to arrive at the
correct interest, the parties decided to go into
accounts. The defendant bank filed a statement of
accounts setting out what in its view was due to each
member of the plaintiffs’ Association. The parties
failed to agree on the accounts.
The next main move in
the case was that the trial judge appointed as referee
Mr. W. K. Nketia of the Accra High Court Registry to “go
into accounts with both parties.” That was done. The
referee submitted his report.
Following the report,
the plaintiffs filed an application in the High Court
praying for the definitions of the expressions “current
basic salary” and “automatic adjustment of pensions
whenever salaries change.” The trial court ruled in
favour of the plaintiffs. The defendants appealed to the
Court of Appeal against that ruling and the plaintiffs
too cross appealed against it.
It was then discovered
that the trial court did not enter formal judgment on
the admitted relief. The Court of Appeal ruled that
since no formal judgment was entered by the trial court,
there was no judgment to be enforced. It ordered that
the case should be sent back to the High Court to be
heard on its merits.
An application was
filed in the Supreme Court for an order of certiorari to
quash the ruling of the Court of Appeal and for another
order of mandamus to compel the Court of Appeal to
rehear the matter before it in accordance with the Court
of Appeal Rules, 1997 (C.I.19), rules 31 and 32. The
Supreme Court granted the applications and ordered that
this Court should enter the judgment that the trial
court failed to enter and proceed to dispose of the
appeal as filed by the parties in this court. At the
last sitting here, this court entered judgment as
ordered.
We now proceed to
dispose of the appeal in the terms of the arguments
filed by the parties before us. The defendant bank shall
hereafter be described as the appellant and the
plaintiffs shall be described as the respondents.
In the ruling of the
trial court which favoured the plaintiffs and which gave
rise to this appeal, the trial judge ordered that a
letter from the Ministry of Finance on payment of
pensions based on consolidated salary was applicable to
the defendant bank and further that the pension to be
paid was to be based on 50% of the consolidated salary.
From those rulings, the first two grounds of appeal
filed by the appellants read as follows;
“a. The learned High
Court Judge erred in holding that the letter from the
Ministry of Finance dated December 18, 1992 on ‘payment
of pension on the basis of Consolidated Salaries and
addressed to the Controller and Accountant General,
Treasury Head Office, Accra and to the General
Secretary, Ghana Government Pensions Association, Trades
Union Congress, Accra, was applicable to the defendant.
b. the Learned High
Court Judge erred when he sought to impose on the
defendant 50% of the consolidated salary as pension to
the plaintiffs in the face of evidence that there has
been an internal mechanism and procedure used by the
parties herein for reviewing pension entitlements”.
The background to the
first ground was this; On the 27th of February 1987 a
decision was taken within the bank as to how pension
should be computed. The exact decision was this;
“The Board of Directors
of the Ghana Commercial Bank Special Staff Pension
Scheme at a meeting held on 17th December 1986 agreed
that proportionate adjustment pension should be effected
to the Bank’s pension based on current basic salaries
with effect from October 1986. It was also agreed to
recommend automatic adjustments of pension whenever
salaries change.”
In his judgment, the
trial judge referred to some legal issue which arose
before the referee and which were stated in paragraphs
13 and 14 of the referee’s report as follows;
“13. The legal issue is
that on the 18th of December 1992, the Ministry of
Finance and Economic Planning in a circular issued to
the Controller and Accountant General stated that the
Ministry has approved the payment of pension on the
basis of the new enhanced consolidated salary scale with
effect from December 1992.” It further stated that
monthly pension should be pegged at 50% of the salary
base instead of 70%
14. With the
introduction of the consolidated salary scales, the
salary base is on the consolidated salary. Basic
monthly salary now is the consolidated monthly salary.”
The circular, sometimes
described as a letter, from the Ministry of Finance
dated 18th December 1992 read as follows;
“ PAYMENT OF PENSION ON
THE BASIS OF CONSOLIDATED SALARIES
I have been directed to
inform you that this Ministry has approved the payment
of pension on the basis of the new enhanced consolidated
salary scales with effect from December 1, 1992.
It has also been
decided that monthly pension drawings should be pegged
at 50% of the salary base instead of 70”.
From these, the trial
judge formed the view that the circular was applicable
to the computation of the pensions due to the
plaintiffs. He also held that basic salary means
consolidated salary. He therefore ordered that:
“ a. The defendant bank
do pay to each plaintiff his/her pension based on the
basic salary with the necessary adjustments, as it
existed from 1986 to November 1992 pegged at 70% of the
salary base.
b. Defendant bank do
pay to each plaintiff his/her pension based on the new
consolidated salary with effect from 1st December 1992
pegged as 50 % of the salary base.”
From the arguments
canvassed before us, the basic issues to be resolved may
be summed up as follows.
1. Was the circular
applicable to the instant case
2. What is the meaning
of the term “basic salary” within the context of the
facts of the instant case.
3. What formula
should be used to calculate the pensions in dispute.
In arguing the first
ground, counsel for the appellant forcefully contended
that the circular in question cannot be applied to the
appellant bank. The reasons he assigned are quite
logical and consistent with the law. As he rightly
pointed out, the appellant as a bank, has a separate
corporate existence which is different from the civil
service. It operates under the Ghana Commercial Bank
Decree. 1968 (NLCD 282) as subsequently amended by NRCD
163 and PNDCL 148.
The circular clearly
applies to public servants. However, those who work in
the appellant bank cannot correctly be described as
public servants because the Constitution, 1992, Article
295(1) defines public service as including “service in
any civil office of the Government, the emoluments
attached to which are paid directly from the
Consolidated Fund or directly out of moneys provided by
Parliament and service with a public corporation.” The
appellant bank is not funded from the Consolidated Fund
or from funds provided by Parliament. Employees of the
appellant are not paid out of the Consolidated Fund.
Even if the appellant were to be described as a public
corporation, it will still not qualify to be a public
service because the 1992 Constitution which listed what
comprise “public service” expressly excluded
institutions like the appellant by the provision in
Article 190(1)(b) that “public corporation other those
set up as commercial ventures” do not form part of the
Public Service. The appellant bank was set up as a
commercial venture.
Another reason which
the circular cannot be applied to the appellant bank is
that the nature of pension run by the appellant for its
employees differs significantly from the pension run by
the civil service or public service. There is already in
place a Civil Service Pensioners Association. The
respondents are not members of that Association. The
pension scheme of the appellant is financed by the
shareholders of the bank. The pension scheme of the
civil servants is financed form the Consolidated Fund.
There is an age limit of sixty years for a civil or
public servant to qualify for pension. The age
qualification in the appellant bank is different.
From the foregoing it
is obvious that the trial judge erred in applying the
circular to the appellant bank. The respondents were
employees of the appellant bank. The bank had its own
rules on pension. Those who went on pension did so on
the express understanding that their pension
entitlements were to be calculated on the basis of the
pension rules of the bank, not on any anticipated
general pension rules made for Association or
institutions of which they were not members and have
never been members. This was the reality of the
situation at the time the respondents went on pension
and they should come to terms with that.
The most important
factor in this litigation is the decision taken by the
Board of Directors of the appellant bank on 27th
February 1987 concerning the basis for calculating
pension entitlements. The crux of the decision was that
“proportionate adjustment should be effected based on
current basic salary.” This has provided the serious
bone of contention.
In December 1992, a new
rate of salary base was introduced in the country. It
was called the consolidated salary. All workers in the
country, including those in the public and private
sector, were paid and have up till now been paid on the
basis of the consolidated salary. The appellants
themselves started to pay and have continued to pay its
employees on the basis of the consolidated salary. There
is nowhere in the proceedings where this fact has been
denied by it or where the appellant has stated that the
Ghana Commercial Bank excepted its employees from being
paid on the basis of consolidated salary.
One may ask why the
appellant currently applied and continues to apply the
consolidated salary system to pay its employees. It may
not only be for the reason that almost every employer in
the country is applying it. It will probably for the
reason that there are merits in applying consolidated
salary instead of basic salary. Whatever merits there
may be in applying it, it will certainly not be fair to
deny the past employees of those merits. In fact, the
appellant may be accused of double standards when it
continues to apply consolidated salary to pay its
current employees but insists on applying the basic
salary to its past employees. In any case, the adoption
of the consolidated salary wiped out the “basic salary”
concept for paying workers that was in existence and was
practiced at the time the decision was taken in February
1987. What used to be called the “basic salary”
literally ceased to exist from the books of the
appellant as far back as 1991. The fact that the
appellant no longer applies the basic salary and no
employer applies it are themselves sufficient reasons
for concluding that basic salary no longer exists as a
means of determining pay. If the basis for determining
pay has ceased to exist, there will be no justification
for invoking the non-existent basis for calculating
pension which itself arises out of pay. The trial judge
concluded that basic salary means consolidated salary.
In a sense, he was not far from right because
consolidated salary has entirely replaced the basic
salary in all matters of pay for workers.
A similar issue arose
in the case of WUAKU V. ATTORNEY-GENERAL AND ANOTHER
[1993-94] 2 GLR 393. S.C. At pages 398 to 399 the report
contains this passage;
“Sometime in 1991 it
was decided that certain allowances then paid to public
officers be abolished and instead be paid to them as
their basic salaries. The term “consolidated salary”
came in vogue to designate the new salary structure. The
question then arose as to whether gratuities of retiring
officers were to be computed with the old basic salary
or the new “consolidated salary.”After some hesitation
on the part of the authorities, the matter was resolved
when the Attorney-General advised that gratuities be
computed on the basis of the “consolidated” salary.”
Beside this passage,
almost the rest of the determination of that case
proceeded on the basis that “basic” salary is the same
as what is described now as “consolidated” salary. There
is no doubt that that case dealt with the salary and
allowances of judges who are public servants. The
relevance of the decision however lies in the fact of
the definition and clarification of the relationship
between basic salary and consolidated salary.
What is deducible from
the foregoing is that the decision of the appellant’s
Board of Directors that governed the payment of pension
entitlements to the respondents should be applied to the
computation of those benefits before the introduction of
consolidated salary. At that time, basic salary was
known and was used to determine pension benefits. The
respondents who opted to go on retirement did so on the
express terms of the prevailing conditions for paying
workers, one of which was the basic salary as the means
for determining workers' pay. All pension entitlements
should be calculated on the basis of the basic salary
because that was what they knew and that was what they
accepted at the time of their retirement. This will be
the position up to the time of the introduction of the
consolidated salary system. If the basic salary is used,
then in conformity with the 1987 decision, the
calculation should be based on 70% of the basic salary.
After 1st December 1992, consolidated salary should be
used as the basis for calculating pension.
The main reason for
adopting the “consolidated salary” beside the Supreme
Court is the provision in the Directors’ decision to the
effect that there will be “automatic adjustment of
pensions whenever salaries change.” The meaning of this
phrase was one of the issues for determination before
the trial judge. His interpretation was that the
expression “whenever salaries change” cannot mean
anything other than whenever there is change in the
salary. Considering the expression in its ordinary sense
and giving it a plain meaning, the trial judge expressed
the right opinion. That phrase by itself did not give
rise to any ambiguity or uncertainty.
What was not that
simple to adopt in the context was the word “automatic.”
The ordinary meaning of the word “automatic” may be
found in Chambers 21st Century Dictionary, 1996 edition,
page 88, where it is stated, inter alia, that the word
automatic “said of action (means) done without thinking,
unconscious, spontaneous.” When the parties agreed in
that decision of 1987 that pensions would be
automatically adjusted, they meant precisely what was
stated, namely that pensions would be spontaneously
adjusted whenever salaries change.
The use of the word
“automatic” in the decision defeats any argument that
seeks to introduce human intervention in deciding on the
change itself.
In the second ground of
appeal, counsel for the appellant contended that there
is an internal mechanism for calculating pension that
the trial judge should have considered. That argument
did not deal with the change per se. It rather dealt
with 50% which the trial judge ordered to be used to
calculate the pension. The 50% was actually taken from
the circular in question which has been decided to be
inapplicable to the respondents. Consolidated salary has
taken into account certain allowances. Those allowances
may very well affect the percentage to be used in
computing the pension entitlements. That may very well
be the reason why the circular advised the reduction
from 70 to 50 per cent. The respondents did not deny the
existence of the mechanism for deciding on the
percentage to be adopted in computing pensions. In
fairness to the parties, they should meet to discuss the
percentage that should be used in computing pension
entitlements as from December 1992 when consolidated
salary will be used in determining their pensions.
That decision of
February 1987 clearly stated that there would be
‘adjustment of pension whenever salaries change.
Salaries changed from basic salary to consolidated
salary. Everybody, every employer and every institution
in this country will admit that the introduction of
consolidated salary to replace the basic salary amounted
to “change in salaries.” The decision of the appellant’s
Directors in February 1987 was binding not only on the
respondents. It was binding on the appellants as well.
Having contracted in that decision to effect automatic
change whenever salaries change, the appellants should
consider themselves bound by the consolidated salary
concept which has brought about change in salaries.
It will be wrong to
argue that this case concerns pension and not salaries
and so if there were changes in the salaries that could
not affect pensions. What has to be clearly understood
is that pension is based on salaries and that is why the
parties contracted in that decision that changes in
salary would automatically bring about changes in
pension. Since the appellant itself accepted the fact
of the change and proceeded to pay its present workers
on the basis of the changed salaries, it should accept
the change and automatically change pension entitlements
accordingly.
In the additional
grounds of appeal, counsel contended that to apply
consolidated salary would amount to giving retrospective
effect to the use of consolidated salary policy and that
is not legally permissible. Counsel cited a number of
authorities which no doubt state the position of the law
accurately. Unfortunately for counsel, those authorities
cannot be applied to the facts of the instant case for
the simple reason that the application of the
consolidated salary has been brought about by the
decision of the Directors of the appellant bank in
February 1987. In that decision, the parties bound
themselves to automatic adjustment of pension whenever
salaries change. The necessary effect of that decision
is that any change in salary will call for adjustment in
the pension. If the appellant had applied the
consolidated salary concept to the pensioners as soon as
the concept was introduced or at the same time as it
applied it to the current employees, there would have
been no question of retrospective application. Having
waited up till now before being ordered to do what they
should have done years past, officers of the appellant
bank cannot take advantage of their own inaction to
complain of retrospective application. There is no merit
in the additional ground of appeal and it is
consequently dismissed.
It follows from the
foregoing that with effect from 1st December 1992 when
basic salary was changed to “consolidated salary,” the
pension entitlements of the respondents should be based
on “consolidated salary” because that is the basis on
which the pay of every worker, past or current, in this
country is calculated, including the workers of the
appellant.
In conclusion, the
appeal succeeds to the extent that the trial judge ruled
that the circular from the Ministry of Finance should be
applied to the pension computation of the respondents’
salary. It further succeeds to the extent that 50%
mentioned in the circular cannot be applied to the
respondents.
The appeal however
fails in so far that the appellant bank would like the
defunct basic salary to be used in computing all the
pension entitlements of the respondents. Basic salary is
to be used up to the time when basic salary was used in
paying workers in this country, including workers in the
appellant bank i.e. up to 1992 November 30th. With
effect from 1st December 1992, when consolidated salary
was adopted nationwide as the basis for paying workers,
including workers of the appellant bank, the pension
entitlements of the respondents should be computed on
consolidated salary.
S. A. BROBBEY
JUSTICE OF APPEAL
TWUMASI, JA:
I agree.
P. K. TWUMASI
JUSTICE OF APPEAL
AKOTO-BAMFO, JA:
I also agree.
V. AKOTO-BAMFO (MRS.)
JUSTICE OF APPEAL
COUNSEL
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