Barclays Bank Zambia PLC v Simfukwe (Appeal 51 of 2013) [2017] ZMSC 67 (19 April 2017)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) APPEAL NO. 51/2013 BETWEEN: BARCLAYS BANK ZAMBIA PLC APPELLANT AND PAUL SIMFUKWE RESPONDENT Coram: Mwanamwambwa, DCJ, Muyovvve and Kaoma, JJS On 11th August, 2015 and 19th April, 2017 For the Appellant: Mr. C. K. Bwalya, Messrs D. H. Kemp and Company For the Respondent: Mr. D. O. Sakala, Messrs David Oliver Sakala and Company JUDGMENT MUYOVWE, JS, delivered the Judgment of the Court. Cases referred to: Wise vs. Hervey Limited (1985) Z. R. 179 Chilanga Cement PLC vs. Kasote Singogo (2009) Z. R. 122 Pamodzi Hotel vs. Goodwin Mbewe (1978) Z. R. 56 Philip Mhango vs. Dorothy Ngulube and Others (1983) Z. R. 61 Legislation referred to: The Employment Act, Cap. 268 of the Laws of Zambia, Section 26(B) The High Court Rules Cap. 27 of the Laws of Zambia .11 (cid:9) (cid:9) (cid:9) This is an appeal against the judgment of the High Court sitting at Lusaka which found in favour of the respondent. The brief background is that the respondent was employed by the appellant as a Management Development Trainee and rose to the position of Senior Corporate Manager. The respondent had a good relationship with the Bank to the extent that he was sent for attachment at one of its branches in London. However, in October 2001 the appellant offered the respondent a retirement package which he initially rejected. (cid:9) However, after negotiations the appellant upgraded the package as requested by the respondent and served him with a final package in their letter dated 30th October, 2001 which the respondent signed signifying acceptance of the terms and conditions of the agreement. According to the respondent, he expected to receive a package calculated at 4.7 x basic salary up to a maximum of five years as this was agreed between the Senior Staff Association and the appellant. The respondent was not satisfied with the package he received, hence this suit. The respondents sole witness Raphael Chisupa, a member of the Senior Staff Association testified that the respondent approached him because he felt he was constructively dismissed and that he was unfairly treated as he was offered a lower exit package in comparison to other employees like Peggy Kante who had been declared redundant. This witness testified that the respondent left the bank as a result of the appellant undertaking a scheme called 'Project Horizon' which was aimed at eliminating five employees from the bank. The witness was one of the former employees of the appellant who had taken out an action against their former employer in the Industrial Relations Court, claiming redundancy benefits, using the formula 4.7 x basic salary. In its defence to the action, the appellant relied on the letter dated 30th October, 2001 containing the agreement between the parties, which according to the appellant, the respondent voluntarily accepted in full and final settlement of all his claims against the appellant. In her judgment, the learned judge, after analyzing the evidence, passed judgment in favour of the respondent and ordered that the respondent be paid the following: "(i) Damages for the wrongful manner in which the employment was terminated, for inconvenience, loss, pain and suffering caused as a result of the dismissal. His terminal benefits be calculated using the 4.70 by annual salary formula that was applicable at the time the plaintiff's employment was terminated by way of redundancy. All awards in this action shall attract interest at short term Bank rate from the date of filling to the date of judgment. Thereafter interest shall accrue at Bank of Zambia lending rate to the date of full and final settlement less what has been paid. In determining the balance, if not agreed, the learned Registrar shall determine the issues on assessment. Costs to the plaintiff Costs to be taxed in default of agreement." Dissatisfied with the judgment of the lower court, the appellant appealed to this court and advanced six grounds of appeal, couched in the following terms: The learned High Court judge misdirected herself in law and in fact in limiting the issues that arose for determination to whether the Respondent's employment with the Appellant was terminated by redundancy. The learned High Court judge misdirected herself in law and in fact by holding that the respondent's employment was terminated by way of redundancy. The learned High Court judge misdirected herself in law and in fact by holding that the appellant breached the contract of employment with the respondent by 'tampering with the terms of the contract of employment namely the formula of 4.70 by annual salary' when no such term or terms were applicable to the respondent. The learned High Court judge misdirected herself in law and in fact by awarding damages for wrongful dismissal having held that the respondent's employment was terminated by way of redundancy. The learned High Court judge erred in law and in fact by not giving effect to the letter dated 31st October, 2001 which set out the terms and conditions of the termination of the respondent's employment with the appellant. The learned High Court judge erred in law by holding that 'all awards in this action shall attract interest at short term Bank rate from the date of filing to the date of judgment. At the hearing of the appeal, Mr. Bwalya Counsel for the appellant relied on the heads of argument filed herein. In support of ground one, it was submitted that the learned judge failed to properly consider the functional utility of pleadings in line with the case of Wise vs. Hervey Limited,' when she limited herself to the issue of whether or not the respondent's termination of employment was by redundancy. It was submitted that a perusal of the pleadings clearly shows that the issues raised by the parties went wider than a simplistic consideration of whether or not the termination of the respondent's contract of service was by redundancy. That the failure by the lower court to properly isolate the issues I presented for determination laid a foundation for an • assailable judgment. The gist of Counsel's argument in ground two is that the learned judge misdirected herself in holding that the respondent was declared redundant. Citing the case of Chilanga Cement plc vs. Kasote Singogo,2 Counsel pointed out that although Section 263 of the Employment Act deals with termination of employment by redundancy, it does not apply to written contracts. Therefore, the learned judge's reference to Section 263 of the Employment Act in relation to the respondent's case was erroneous. Counsel's argument is that the finding by the learned judge that the respondent Was terminated by redundancy was not supported by the evidence on record. That the learned judge should have properly addressed her mind to the two letters written by the appellant to the respondent, which support the appellant's case that the respondent's contract of employment was not terminated by redundancy. Further, that the learned judge misdirected herself when she stated that' the respondent was put on compulsory redundancy 'as the circumstances in which he was retired did not give him an option to continue in employment if he so wished'. It was submitted that the fact that an employee is not given an option to continue in employment by an employer does not mean that such an employee is declared redundant. It was submitted that there is no legal support for this proposition and that to the contrary, the respondent had the chance to continue in employment. Counsel also pointed out that during cross-examination, the respondent admitted that the letter dated 30th October, 2001 was an offer of retirement and that his contract of employment was terminated by retirement. Further, that during cross-examination, the respondent testified that he wanted the court to determine the issue of his retirement benefits. Counsel also referred us to the letter written by the respondent to the Managing Director of the appellant dated 28th October, 2001 which reads in part as follows: • "I refer to the meeting on the 23rd October, 2001 and the letter handed over to me advising the Bank's offer of early termination of employment. The main points raised during the handover of the letter were: a) there are no other roles in the Bank for me other than what I am currently doing, b) I was informed that there were no prospects for further advancement in the foreseeable future. c) the fact that the offer to retire has been initiated by the bank amounts to constructive dismissal. Under the circumstances and with sincere regret, I wish to confirm that I have accepted to take early retirement subject to the areas indicated below being addressed to our mutual satisfaction." It was submitted that it was clear that the respondent could have elected to stay in employment as the option was available to him That, therefore, the conclusion by the learned trial judge that the termination was by redundancy was a misdirection both in fact and in law. In support of ground three, Counsel repeated his arguments in ground two •adding that there was no evidence before the court below that showed that the respondent was supposed to be paid in accordance with the formula of 4.70 by annual salary. Counsel further submitted that Peggy Kante whom the learned judge compared with the respondent, was declared redundant by the appellant and that in fact she got an inferior package as can be seen when the two are compared. Counsel argued that the learned judge's decision on this point cannot be supported. In relation to ground four, it was submitted that the learned judge fell into grave error when she awarded damages for wrongful dismissal, after holding that the respondent's employment was terminated. by way of redundancy. It was submitted that it is legally untenable to award a redundancy package and damages for wrongful dismissal simultaneously. In support of ground five, Counsel submitted that Section 36 (1) (c) of the Employment Act provides for the lawful termination of a written contract of service. This may be under the contract itself, the law or by agreement of the parties. Counsel submitted that it was legal for the parties to terminate the contract of employment by agreement. That it is clear from the evidence that the appellant paid out the package and the respondent was allowed to continue enjoying' other benefits for a period of twelve months from the date of termination of the contract of employment by early retirement. It was submitted that the learned judge disregarded the terms of the agreement in her judgment. Counsel contended that the letter dated 30th October, 2001 constituted a valid agreement between the parties and the learned judge was bound to give it legal effect. It was submitted that as at 30th October, 2001, the respondent had agreed to the terms of his early retirement and that, therefore, had the learned judge properly directed her mind to the terms of the said letter, she would have concluded that the respondent was bound by it and he could not have succeeded in his action against the appellant. Turning to ground six, it was submitted that the learned judge's order on interest is not supported by the guidelines set out in Order 36, Rule 8 of the High Court Rules Cap. 27 of the Laws of Zambia. In conclusion, Counsel urged us to allow the appeal and set aside the judgment of the lower court with costs. Mr. Sakala learned Counsel for the respondent equally relied on his heads of argument filed herein. In response to ground one, it was submitted, inter alia, that the appellant's conduct clearly revealed that the respondent was terminated by redundancy. It was submitted that the appellant's decision to terminate his employment was influenced by "Project Horizon" which was specifically to remove individuals who were "cultural terrorists". Counsel argued that the learned judge cannot be faulted for relying on the evidence before her which pointed to the fact that the respondent was terminated by redundancy. In responding to ground two, Counsel argued that the case of Chilanga Cement vs. Kasote Singogo2 can be distinguished from this case. In Chilanga Cement vs. Kasote Singogo2 we held, inter alia, that: 3. Section 26E of the Employment Act, dealing with termination of employment by way of redundancy does not apply to written contracts. In enacting this provision, Parliament intended to safeguard the interests of employees who are employed on oral contracts of service, which by nature would not have any provision for termination by way of redundancy. Counsel for the respondent strongly argued that Section 26B of the Employment Act can be applied in exceptional circumstances even where a written contract of employment exists like in the case in casu where the term "redundancy fits in very well. Counsel argued that the conduct of the appellant towards the respondent clearly shows that it ignored the written contract with the respondent. According to Counsel, it is from this background that the learned judge arrived at the conclusion that the respondent was terminated by redundancy. Counsel argued that "Project Horizon" revealed a boardroom decision by the appellant to religiously follow its objective to eliminate from employment five employee by 30th October, 2001 as they were perceived "cultural terrorists' by the appellant. That the action by the appellant to verbally and in writing terminate the respondent's employment was a breach of duty to act fairly and was a breach of natural justice as the respondent was denied lime to reflect. Further, that it was clear that the respondent had no option but to leave employment to the satisfactir of the appellant. Turning to ground three, Counsel submitted, inter alia, that the learned judge was on firm ground when she held that the appellant breached the contract of employment. (cid:9) Counsel questioned the formula used to calculate the respondent's compensation adding that the formula was hidden in order to cheat • the respondent of his benefits. He alluded to Peggy Kante's termination package which, in his view, was higher than that of the respondent. (cid:9) Counsel insisted that 4.70 multiplier should have been used in the case of the respondent as well. He accused the appellant of lack of transparency in the way they dealt with the respondent. The gist of Counsel's response to ground four, is that the learned jUdge was on firm ground when she awarded damages as the respondent was not retired but was terminated by redundancy. In his response to ground five, Counsel argued that it is apparent from the evidence that it was the appellant's desire to terminate the respondent's employment. That the separation was not mutually agreed and that the respondent's retirement should have been pursued in August, 2000 when the respondent had opted for early retirement. Counsel emphasized that the appellant set out to terminate the five employees among them the respondent who were perceived as cultural terrorists. In response to ground six, Counsel supported the learned judge's decision adding that Order 36 rule 8 of the High Court Rules is Only applicable where judgment is for a sum of money. We were urged to dismiss the appeal with costs. We have considered the evidence in the court below; the judgment appealed against and the submissions by Counsel for the parties. We find it necessary from the outset to state our position regarding the applicability to this case of Section 26B of the Employment Act which applies to oral contracts. A reading of Section 268 shows that it does not provide for any exceptions which would bring the respondent under its umbrella. It is not in dispute that the respondent was serving under a written contract and obviously it was legally untenable for the respondent to succeed with his claim under Section 26B. Further, we have already pronounced ourselves on this issue in a number of cases including the case of Chilanga Cement PLC vs. Kasote Singogo,2 which has been cited by both parties. The law is crystal clear and we cannot twist it to suit the respondent's case. The question for determination in this appeal is whether the respondent's contract of employment was terminated by early retirement; dismissal or redundancy? We intend to deal with all the grounds of appeal together as the issues raised by the parties are inter-related. We note that the learned judge began by stating the following: "The issue before me is whether the plaintiffs employment was terminated by redundancy or not." (emphasis ours) The argument by Counsel for the appellant is that the issues in this case were not restricted to termination by redundancy. On the othei- hand, Counsel for the respondent insisted that the learned judge was on firm ground taking into account the appellant's conduct. Having perused the judgment, we take the view that despite the learned judge's use of the words "redundancy or not," she clearly revealed that her mind was focused on terminatibn by redundancy. • In her judgment, the learned judge started on the right track by addressing her mind to the following: "I refer to the two letters that were written to the plaintiff (cid:9) Both the undated letter and the letter of 30th October, 2001, in their opening paragraphs state that it was agreed between the plaintiff and defendant that the plaintiff be retired. The letters go on to state the terms upon which the agreement was based." However, she strayed away from the right path when she stated the following: "I am of the considered view that the plaintiff's employment was terminated by way of redundancy, in which case he was entitled to be paid using the formula that applied at the time he was declared redundant. DW1 told the court that there was a Compulsory Redundancy Scheme where the Bank identified the employees to leave the Bank and there was no option of one continuing in employment. " The 'above conclusion was against the evidence adduced by the parties which the learned judge should have weighed properly. In his statement of claim in the court below, the respondent, inter alia, prayed for the following reliefs couched in the following terms: "(i) (cid:9) Payment of his full retirement benefits inclusive of all allowances. , Payment of his emoluments under Section 26B of the Employment Amendment Act 1997 until redundancy benefits are paid. Exemplary damages for the wrongful and abrupt manner in which his services were terminated." It aPpears to us that Counsel for the respondent, in drafting his pleadings, decided to cast his net as wide as possible instead of hitting the nail on the head. We get the impression that the respondent was not sure what he was claiming for, whether it was the balance of his retirement benefits or his redundancy package. The position of the law is that he was precluded from claiming for both. The learned judge should have been alive to the respondent's claim and she should have dealt with each claim on the merits. The evidence before the trial court was very clear and as we have noted herein the learned judge addressed her mind to the crucial evidence from the beginning. There is uncontroverted evidence that the parties entered into an agreement by virtue of the letter dated 30th October, 2001 that the respondent be retired. That the agreement was initiated by the appellant is also undisputed. The terms of the agreement are contained in the letter. We take the view, taking into account the facts of this case, that although the respondent pleaded redundancy, this was erroneous as the circumstances of the case, leave no doubt that the respondent was terminated by way of early retirement whose package he negotiated with the appellant. This distinguishes this case from the case of Chilanga Cement PLC vs. Kasote Singogo2 in which we stated that the events leading to the termination of the respondent's employment laid bare, the true intention of the appellant, through the General Manager, was to get rid of the respondent. We further stated in that case that the events showed that it was not an ordinary termination of employment and that the appellant could not hide its bad faith under normal termination of employment by notice. In the case in casu, there is clear evidence that after he was served with the first letter of termination, the respondent who expressed misgivings over the offer to retire, negotiated for a better retiremeL package which the appellant acceded to. Counsel for the respondent put up spirited arguments to the effect that the appellant ignored the contract of employment. That in fact, the respondent was offered an inferior package to that of his named subordinates. We agree with Counsel for the appellant that the learned judge misdirected herself in law and in fact when she held that the appellant breached the contract of employment with the respondent by 'tampering with the terms of the contract of employment namely the formula of 4.70 by annual salary' when no such term or terms were applicable to the respondent. This holding was not supported by the evidence before the trial court. In fact, the learned judge went as far as erroneously comparing the respondent to other employees who had been declared redundant, which was totally uncalled for as he was in his own category, having negotiated his retirement package and reached an agreement with the appellant. The offer to retire was an offer which the respondent chose to accept; whether he was approached by the Managing Director is neither here nor there, the bottom line is that finally, he chose to agree to the terms and conditions of retirement. The respondent cannot after agreement argue that the package was inferior or that he was declared redundant. (cid:9) We find that the learned judge misapprehended the facts and the law when she held that the respondent was terminated by redundancy. In the same vein, the learned judge misdirected herself by treating the respondent as if he was wrongfully dismissed. The learned jUdge stated that: "I find that the defendant Bank treated the plaintiff unfairly in the manner in which it terminated his employment with the bank. I am fortified in saying so and in agreement with the submissions of the learned Counsel for the plaintiff that the plaintiff accepted to be retired but not to be under paid." The learned judge, then went on to hold, while relying on the case of Pamodzi Hotel vs. Goodwin Mbewe3 (a case on dismissal) that although the respondent was not dismissed, the facts revealed that there was malice in the manner his services with the respondent were terminated. This was a clear misdirection and misapprehension of the facts that led to the retirement of the respondent. We reverse this finding of fact which was the basis of the learned judge's award of damages for wrongful dismissal and also terminal benefits for termination by way of redundancy. Indeed, as • we have held in a plethora of cases, including the case of Philip Mhango vs. Dorothy Ngulube and Others,' that: i) (cid:9) The court will not reverse findings of fact made by a trial judge, unless it is satisfied that the findings in question were either perverse or made in the absence of any relevant evidence or upon a misapprehension of the facts or that they were findings which, on a proper view of the evidence, no trial court acting correctly could reasonably make. Having reversed the fundamental finding of fact by the learned judge that there was malice in the manner the respondent was terminated, it follows that the awards granted in favour of the respondent had no legal basis and we accordingly set aside the awards of the lower court. With regard to the issue of interest, we fail to comprehend the argument by Counsel for the respondent that Order 36 rule 8 of the High Court Rules is not applicable to this case We agree with Counsel for the appellant that the trial court should have followed the guideline set out in Order 36 rule 8 which provides that interest shall be paid at the average of the short term deposit rate per annum from the date of the cause of action to date of judgment. In sum, we find merit in all the grounds of appeal and we set aside the judgment of the lower court. Costs to the appellant to be taxed in default of agreement. M NAMWAMBWA DEPUTY CHIEF JUSTICE MUYOVWE SUPREME COURT JUDGE R. M. C. KAOMA SUPREME COURT JUDGE 122