Cassation File No. 220072 | June 08, 2022 G.C.
Judges: Solomon Areda, Birhanu Amenew, Teshime Shiferaw, Habtamu Irqihun, Netsanet Tegegn
Applicant: Ato Kidu Aregawi Weldemichael
Respondent: G.M.T Industrial Private Limited Company
J U D G M E N T
The Applicant, in a statement of claim filed on October 25, 2019 G.C., stated that he was employed as a driver by the Respondent organization from 2015 to 2018 G.C. While transporting fuel 94 times from Djibouti to Ethiopia and from Sudan to Ethiopia, I personally paid a total of Birr 109,185, consisting of Birr 75,200 for ‘kote’ (entry permits) to Sudan and Djibouti; Birr 11,800 for vehicle guarding abroad and Birr 1,960 for domestic guarding; Birr 14,000 for grease; Birr 4,650 for ‘labiajo’ maintenance and for the tire repairman; and Birr 1,475 for the Adama Expressway. When I requested the Respondent to reimburse these amounts, he refused to pay, thus I seek judgment for their payment.
The Respondent, in a statement of defense filed on November 27, 2019 G.C., argued that it has no obligation to make any payment to the Applicant other than salary and per diem. Since the Applicant was being paid petty cash for expenses incurred for each trip, he cannot claim reimbursement again. The Applicant has not presented any evidence showing that he obtained permission from the Respondent to incur the various expenses he claimed. Therefore, he requested that the Applicant’s claim be dismissed.
The court, having examined the arguments of both parties, determined that according to the Applicant’s employment contract and the Respondent’s directive, the Applicant is paid a per diem of Birr 1,500 for each trip. Since the directive and the employment contract show that the expenses claimed by the Applicant are included within this per diem, the court ruled that the Respondent should not reimburse the expenses again and accordingly dismissed the Applicant’s claim. The Applicant filed an appeal against this decision to the Federal High Court, but the appeal was dismissed pursuant to Article 337 of the Civil Procedure Code.
The Applicant, in a cassation petition filed on January 28, 2022 G.C., argued that when contracts are clear, judges cannot deviate from the clear content of the contract to give an interpretation. In the employment contract, the Respondent agreed to pay Birr 1,500 per diem in addition to the salary. While the Respondent argued that it has no obligation to pay the expenses, the lower court’s interpretation that the expenses are included within the per diem is outside the contract. The Respondent did not present any evidence that the expenses are included within the per diem.
Per diem is paid for the driver’s lodging, food, and water expenses, not to cover the employer’s expenses. Given that a round trip to Djibouti takes 7-10 days, the lower court should have rendered its decision considering the factual circumstances. Even though the witnesses we presented to the lower court testified that expenses are not included in the per diem, the decision that the per diem includes expenses constitutes a violation of the fundamental principle of evidence evaluation and should therefore be rectified.
The Cassation Screening Bench examined the Applicant’s petition and ordered the Respondent to submit a response, stating that it finds it necessary to ascertain the appropriateness of the assertion that the expenses claimed by the Applicant should not be paid, in light of the employment contract between the parties.
The Respondent, in a response filed on April 11, 2022 G.C., stated that it has no obligation to reimburse expenses arising from law or contract. Even if it is assumed that the Applicant incurred expenses, he should have requested reimbursement after each round trip. The Applicant filed the claim because he was ordered to pay for missing fuel. Therefore, he argued that there was no fundamental error of law committed by the lower courts.
The Applicant strengthened his cassation petition by submitting a reply on April 20, 2022 G.C.
The origin of the dispute is as stated above, and we have examined the arguments of both parties in relation to the issue under consideration, the facts established by the lower court, and relevant legal provisions, as follows.
As we have examined, the Applicant sought judgment for the Respondent to reimburse various expenses incurred for three years during his employment as a driver with the Respondent organization, specifically while transporting fuel from Djibouti and Sudan. The Respondent, for its part, argued that it has no obligation to reimburse expenses other than paying the Applicant’s salary and per diem. The lower court also held that, based on the employment contract and the Respondent organization’s directive, the Respondent has no obligation to reimburse expenses. It dismissed the Applicant’s claim for payment, stating that the claimed expenses are included within the per diem.
Therefore, the question requiring a response from this Bench is: Is the Respondent obligated to pay the expenses claimed by the Applicant or not? And does the per diem paid to the Applicant include expenses or not?
Firstly, when considering whether the Respondent is obligated to reimburse the expenses claimed by the Applicant, it is essential to examine the content of the employment contract, as the relationship between the parties is based on this contract. Articles 2.4 and 2.5 of the Applicant’s employment contract state that the Applicant shall be paid a salary of Birr 3,000 and, in addition to the salary, a per diem of Birr 1,500 for a round trip to Djibouti. On the other hand, the Applicant’s obligations are listed under Article 4 of the contract, and its sub-article indicates that the Applicant is responsible for properly handling and safeguarding fuel, tires, petty cash, as well as consumable and non-consumable assets provided by the employer in connection with the work.
From these contractual provisions, it can be understood that for the driving work performed by the Applicant for the Respondent, the Respondent has an obligation to pay a monthly salary of Birr 3,000 and a per diem of Birr 1,500 for a single round trip to Djibouti, and that the Applicant has an obligation to carefully handle properties and money provided as necessary for the work. In light of this Applicant’s obligation, the contract explicitly states that the Respondent shall provide working capital (petty cash) for essential daily minor expenses for the work, and that the Applicant has an obligation to carefully handle this money.
This indicates that the Respondent has an obligation to provide the Applicant with funds to cover minor expenses necessary for the work, in addition to the salary and per diem paid to the Applicant. The Respondent has not presented any argument denying that the Applicant performed the fuel transportation work. As long as the Applicant performed the work, the Respondent’s argument that it has no obligation to pay the Applicant money to cover essential minor daily expenses for the work, as per its contractual obligation, is unacceptable as it does not take into account the content of the contract.
The lower court concluded that the Respondent is not obligated to pay the amount claimed by the Applicant on the grounds that the expenses were included in the per diem paid by the Respondent to the Applicant. As stated above, the employment contract clearly indicates that the Respondent shall provide the Applicant with funds (petty cash) for minor daily expenses necessary for the work, in addition to salary and per diem. Furthermore, it is stipulated under Article 1733 of the Civil Code that when a contract is clear, judges cannot interpret it beyond its clear intent. Therefore, the lower court’s conclusion that the per diem paid to the Applicant includes working expenses, by deviating from the clear intent of the contract, is not in line with the content of the contract and the principles of contract interpretation, and thus ought to be rectified.
Even if the contract between the parties were to be interpreted, as stated in Article 1732 of the Civil Code, a contract must be interpreted by following the good faith, trust, and customary practice that should exist between the contracting parties. Accordingly, it should have been examined what the per diem and petty cash stated in the contract refer to, in consideration of the prevailing circumstances.
As is known, per diem is a payment made by an employer to an employee for food, drink, lodging, and personal expenses incurred as necessary when the employee is away from their regular place of work. Daily minor expenses working capital (petty cash), on the other hand, is money given by an employer to an employee to cover daily expenses necessary for the work. If the purpose of these two payments is different, then unless the contracting parties explicitly indicate in their contract that one payment includes the other, interpreting the contract to mean that one type of payment includes the other would burden the employee’s obligation and disregard customary practice, thus such an interpretation cannot be in line with the principles of contract interpretation.
Accordingly, while it is maintained that the contract between the parties is clear and does not require interpretation, even if the lower court believed the contract required interpretation, its interpretation that the per diem paid to the Applicant includes daily working capital is not in line with the principles of contract interpretation and is therefore inappropriate.
Another basis for the lower court’s decision was the Respondent organization’s directive. The lower court incorporated the content of the directive into its decision, stating that a directive issued in 2015 G.C. indicates that heavy truck drivers are paid Birr 1,500 for various work expenses for trips they make outside Ethiopia. A revised directive issued in 2018 G.C. clarifies that the previously paid per diem and the amount paid for the aforementioned expenses have been revised. The content of these directives also shows that per diem and expense payments are separate, rather than indicating that per diem includes expenses. Even if it were argued that the directive shows various expense payments are included in the per diem, since the employment contract explicitly states that the two payments are separate, the Applicant’s claim for payment should be resolved according to the employment contract.
In summary, the employment contract between the Applicant and the Respondent states that the Respondent shall provide the Applicant with funds (petty cash) for daily expenses necessary for the work, in addition to the per diem payment. Aside from arguing that it has no obligation to pay expenses to the Applicant in addition to the per diem, the Respondent has not presented any argument that it provided the Applicant with funds for working capital for each trip.
The fact that the Applicant did not request reimbursement for expenses incurred while transporting the Respondent’s fuel for three full years after each trip does not indicate that the Respondent has no obligation to pay for the expenses incurred for the work, or preclude the Applicant’s right to claim reimbursement for expenses incurred, as long as the Respondent does not deny that the work was performed by the Applicant. Therefore, the lower court’s conclusion that the expenses claimed by the Applicant for the work were paid to him bundled with the per diem constitutes a fundamental error of law and thus, pursuant to Article 10 of Proclamation No. 1234/2013, it must be rectified by this Bench. We have therefore rendered the following decision.
D E C I S I O N
- The decision rendered by the Federal First Instance Court under file number 74206 on March 01, 2021 G.C. and the order issued by the Federal High Court under file number 270711 on October 31, 2021 G.C. are hereby reversed pursuant to Article 348/1 of the Civil Procedure Code.
- We have stated that the Respondent shall reimburse the Applicant for the expenses incurred for the work related to fuel transportation.
- The case is remanded to the Federal First Instance Court, pursuant to Article 343/1 of the Civil Procedure Code, to reopen the closed file, examine the arguments and evidence presented by both parties regarding the type and amount of the detailed expenses submitted by the Applicant, and render an appropriate decision.
- Both parties shall bear their own costs and damages incurred for the litigation before this court.
The file is closed; return to archive.