APPLICATION OF LIMITATION LAW TO EMPLOYMENT CONTRACTS AND THE COMMON LAW PRINCIPLES OF LACHES AND ACQUIESCENCE

Introduction

There is a wave of judicial decisions emanating from the National Industrial Court of Nigeria (NICN) to the effect that statutes of limitation do not apply to employment contracts. The latest of such decisions to my knowledge is the case of Grant Iheanacho v. BAP Services Limited¹ decided on 20 August 2024.² In arriving at its decision, the NICN relied on the recent Supreme Court decision in Rector Kwara Poly v. Adefila³ which followed the earlier Supreme Court case of National Revenue Mobilization Allocation and Fiscal Commission v. Ajibola Johnson & Ors.⁴

The natural implication of this position is that the NICN appears to have cloaked employment contract claims with the robe of perpetuity. However, by some judicial ingenuity, and in subtle admission of the absurdity associated with such a conclusion, the NICN in Grant Iheanacho v. BAP Services Limited provided a window under the common law doctrine of laches and acquiescence to assist a party wishing to challenge a suit instituted after a reasonable length of time had passed.

In this piece, I contend, with the greatest respect, that the NICN inadvertently misapplied the Supreme Court’s decisions in Rector Kwara Poly v. Adefila and  National Revenue Mobilization Allocation and Fiscal Commission v. Johnson. Nevertheless, the ray of hope flickered by the NICN’s reference to the common law principle of laches and acquiescence is greatly commended but not without a few reservations.

NICN’s Position

Grant Iheanacho v. BAP Services Limited

The brief facts of the case are that in 2012, a company—BAP Services Limited—terminated the employment of its former General Manager—Mr. Grant Iheanacho. Mr. Iheanacho (as Claimant) had waited until 2021 to institute an action against the company claiming outstanding salaries and other allowances due to him in addition to unpaid pension deductions.

The company (as Defendant) filed a defence to the suit and in addition, challenged the jurisdiction of the court to entertain the action on the ground that the suit was statute-barred. The Defendant’s contention was that the Claimant’s suit was filed about 9 years after the cause of action arose and that this was outside the 5-year period allowed by section 16 of Limitation Law of Rivers State.

In its Judgment, the Court discountenanced the Defendant’s contentions and held as follows:

I have noted the trend of judicial authorities on the applicability of statute of limitation, such as Public Officers Protection Act (POPA), on employment contract claims, which has rested on upholding the inapplicability of such limitation law, going by the latest authority of the Supreme Court case of Rector Kwara Poly v. Adefila [2024] 9 NWLR (Pt.1944] 529, which towed the same line with the earlier Supreme Court case of  National Revenue Mobilization Allocation and Fiscal Commission v. Ajibola Johnson & Ors [2019] 2 NWLR (Pt.1656) 247, cited and relied on by the learned Claimant’s counsel. There is no doubt that all categories of statute of limitation have the same effect on validity of a suit challenged. Thus, if a particular model of statute of limitation, such as POPA has been held inapplicable to employment contract claim, invariably, the effect applies to similar model, such as the Limitation Law of Rivers State in issue herein. To that end, I share a considered view that the said Limitation Law of Rivers State is similarly not applicable to defeat the instant suit.

Nkume v. FBN⁵; Akumah v. FBN⁶

Similarly, in Nkume v. FBN, the NICN referred to its previous position stated in Akumah v. FBN where it was held—relying on the Supreme Court’s decision in National Revenue Mobilization Allocation and Fiscal Commission v. Johnson—as follows:

The Defendant’s counsel has tried to argue that the above-cited Supreme Court decision does not apply to the present case because it was decided based on the S. 2(a) of the Public Officers Protection Act, while the present case is considered under S. 8(1)(a) of the Limitation Law of Lagos State. That distinction is neither here nor there. Both statutes are statutes of limitation of action. The subject matter of what they deal is contract of employment. Therefore, both statutes stand side by side insofar as it relates to limitation of action in contract of employment. While one is a federal enactment, the other is a state law. The decision of the Supreme Court on any of the statute[s] must of necessity guide a court of record in the application of any of those enactment[s] on the subject matter of limitation of action in contract of employment.

A Review of the NICN’s Position

In National Revenue Mobilization Allocation and Fiscal Commission v. Johnson relied on by the NICN, Johnson and others were employed by the National Revenue Mobilization Allocation and Fiscal Commission (“the Commission” or “NRMAFC”), an agency of the Federal Government of Nigeria. The Commission later terminated their employment. Johnson and his co-employees sued the Commission for wrongful dismissal and claimed their salaries and other work benefits. The matter went all the way to the Supreme Court where the Court was called upon to decide whether the action was statute-barred in the first place.

The Commission had contended that as a Federal agency, no legal action could be commenced against it except within three months of the accrual of the cause of action as provided by section 2 of the Public Officers Protection Act (POPA). The Supreme Court held that it is settled law that section 2 of the POPA does not apply to contract cases. Thus, being that a contract of service is a contract, the apex Court held that the limitation period provided under section 2 of the POPA does not apply.

Takeaways

Interestingly, the Supreme Court did not decide that statutes of limitation do not generally apply to employment contracts. The decision of the Supreme Court was squarely based on POPA and not necessarily on employment. The attention of the apex Court was never on employment contracts. The decision has its roots from the settled position that POPA does not apply to all contract cases and not just employment contracts. Thus, aside from contracts of employment, the limitation period provided in POPA will not apply to save a public officer from actions emanating from any other form of contract. In myriads of cases touching on other kinds of contracts, the courts have consistently held that the limitation period in POPA does not apply. Similarly, it has been held that the POPA does not apply to cases of recovery of land.⁷ The idea was to create some exceptions to the general protection to public officers which the statute—POPA—affords. 

In effect, the Supreme Court did not reach this decision because the case bordered on contract of employment but because it was a contract simpliciter and a public officer was involved. It would have been a different issue entirely if the Supreme Court’s decision was based on the idea that the limitation period in POPA did not apply because the subject matter was employment contract. If that was the case, then, every limitation law would be rightly held inapplicable to employment contracts. Thus, the issue in Johnson’s case was whether the POPA applies to contract cases, and not whether POPA applies to employment contracts. It is trite that no case is identical to another even if they are similar. Thus, each case is only an authority for what it decides and nothing more.

The Supreme Court did not decide that if a case based on a contract of employment was filed outside six years, the Limitation Act (or limitation laws as the case may be) would be inapplicable. I am of the reasoned opinion that the POPA is not a model of limitation law held inapplicable to employment contracts. Rather, the Supreme Court merely restated the settled principle that the POPA does not apply to contract cases generally.

I find support in the reasoning of Learned Counsel, Godwin Etim and Linda Osuagwu, expressed in their article⁸, where they rightly observed that a blanket pronouncement, as was made in Nkume v. FBN and Akumah v. FBN, that contracts of employment are not subject to limitation laws, does not represent the law. According to the learned authors:

It is our considered view that the NICN decisions relying on NRMAFC v Johnson (supra) to hold that contracts of employment are now immune from limitation laws, is with respect, incorrect, as the Supreme Court did not make such pronouncement nor provide an umbrella exception for contracts of employment as now found by the NICN. As earlier stated, the decision of the Supreme Court in NRMAFC v Johnson (supra) was premised on a consideration of the applicability of Section 2(a) of the POPA to the appellants in that case, it is wrong, in our view for the NICN to equate that finding to the Limitations Law of Lagos State (or any other State), a statute of specific application, on the ground that that statute is also a limitation law like the POPA.

Therefore, it is equally my position that this blanket pronouncement which was also adopted in Grant Iheanacho v. BAP Services Limited does not accurately represent the law. The Defendant in that case validly relied on section 16 of Limitation Law of Rivers State to challenge the action instituted nearly 9 years after the cause of action accrued.

Laches and Acquiescence

In Iheanacho v. BAP Services Limited, the NICN acknowledged that statutes of limitation are rooted in the equitable defences of laches and acquiescence. The Court took the position that although statutes of limitation are inapplicable in employment contract cases, however, a defendant may rely on laches and acquiescence to challenge an action filed after a reasonable delay. In the words of the Court:

I note also, that what was however, left un-canvassed by the learned Defendant’s counsel in his jurisdictional objection relating to delayed suit, is the application of the common law principle of ‘laches and acquiescence’, which provides for alternative argument in the face of the judicial stance on non-application of statutes of limitation to employment contract claims. After all, the statute of limitation has its root in the common law idea that legal right to approach court for redress over perceived wrong does not exist in perpetuity. The differing feature is only in provision for exact time-line expressed in the relevant statute of limitation, as against the adoption of ‘reasonable time’ test in the common law principle of ‘laches and acquiescence’. Had learned Defendant’s counsel adverted to this principle and canvassed same instead of relying on the statute of limitation, the ‘test of reasonable time’ would have been a formidable ground for the preliminary objection on ground of unreasonable time delayed before bringing the suit, in line with the common law principle of ‘laches and acquiescence’. As the Court is not ‘Father Christmas’, the Court would not adopt this principle not raised and canvassed by learned counsel to defeat the unreasonably delayed suit.

While laches touches on undue delay in pursuing a legal claim, acquiescence deals with passive acceptance. At common law, the position is that it would be inequitable to allow a person who is guilty of undue delay in filing an action to proceed with such action; or to allow a person who is in tacit acceptance of a position to subsequently take undue advantage. Thus, when you abstain from interfering when a violation of your rights is in progress, you may not be allowed to complain later.⁹ These twin equitable principles of laches and acquiescence work hand in hand.

I have expressed my disagreement with the NICN’s conclusion on the inapplicability of statute of limitation to employment contracts. Notwithstanding, I commend the Court on its attempt to provide a window in order to cure the absurdity associated with the idea of allowing employment contract claims to see eternity. The view has been expressed elsewhere that the Court’s position by introducing the equitable principles of laches and acquiescence was an obiter dictum.¹⁰ It is difficult to bury the position of the Court at the hall of obiter because of its fundamental relevance to the subject matter. Even if the Court’s remarks were to be ever considered an obiter, it must be of such a nature that it can reasonably rank as a ratio because of its compelling importance.

The Court rightly observed that the only reason it restrained itself from making a definite finding and pronouncement on the equitable principles was because the Defendant’s Counsel did not canvass arguments in that regard. Meanwhile, reading between the lines of the Judgment, one could easily see that the Court believes that the suit was an “unreasonably delayed suit”.

Where do we go from here?

It appears parties are now left to avoid statutes of limitation but rather explore the equitable principles of laches and acquiescence when dealing with employment cases caught by undue delay. But I have some reservations.

First, if the strong arguments canvassed above on the right import of the Supreme Court’s decision in National Revenue Mobilization Allocation and Fiscal Commission v. Johnson are put into serious consideration, there would not be any need to have recourse to the equitable doctrines of laches and acquiescence. Afterall, it has been acknowledged that statutes of limitation draw life from these equitable defences. A direct application of the applicable limitation statute is sufficient. 

Second, it is preferable to allow statute of limitation to apply because it takes away some of the challenges of the “reasonable time test” under the common law. Determining what constitutes a reasonable time which is subject to court’s discretion could be problematic. The advantage of a statute of limitation, as acknowledged by the Court, is that it provides exact timelines within which an action may be commenced. For instance, section 16 of Limitation Law of Rivers State already provides a limitation period of 5 years. Some other statutes provide for 6 years. This creates certainty and eliminates the uncertainty associated with the application of “reasonable time test”.

Conclusion

The vital takeaway from the position of the NICN in Iheanacho v. BAP Services Limited is that the right to enforce employment contract claims cannot be validly said to exist in perpetuity. Otherwise, it would be absurd. An introduction of the equitable principles of laches and acquiescence brings hope, but would be needless if the Supreme Court’s decision in National Revenue Mobilization Allocation and Fiscal Commission v. Johnson is properly applied by restricting that decision to POPA and contracts generally, and allowing our statutes of limitation to apply to employment cases as is reasonably expected to apply to all other contract cases.

1. Grant Iheanacho v. BAP Services Limited

2. See also Suit No. NICN/LA/553/2018 – Mr. Godson Ikechukwu Nkume v. First Bank of Nigeria Ltd decided on 5 March 2020; and Suit No. NICN/LA/402/2018 – Lilian Nnenna Akumah v. First Bank of Nigeria Plc decided on 10 October 2019.

3. [2024] 9 NWLR (Pt.1944] 529.

4. [2019] 2 NWLR (Pt.1656) 247.

5. Nkume v. FBN

6. Akumah v. FBN

7. Olateju v. Commissioner for Lands and Housing, Kwara State [2010] 14 NWLR (Pt. 1213) 297.

8. Article

9. Atunrase v. Sunmola (1985) 1 NWLR (Pt.1) 105.

10. https://dnllegalandstyle.com/dnl/wrj-nicn-no-14-balancing-employee-rights-and-employer-responsibilities-a-review-of-iheanacho-v-bap-services-ltd/