CEC Liquid Telecommunication Limited v Nerbert Phiri (APPEAL NO.300/2021) [2023] ZMCA 331 (22 November 2023)

IN THE COURT OF APPEAL FOR ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) APPEAL NO.300/2021 BETWEEN: CEC LIQUID TELECOMMUNICA AND NERBERT PHIRI UBLIC 0 OURTOFA ITED NOV 2023 K OF COU 50057, L SPONDENT CORAM: KONDOLO SC, MAJULA AND CHEMBE JJA On 13th October, 2023 and 22nd November, 2023. For the Appellant Ms. C. Sak a la - Messrs August Hill & Associates. For the Respondent No Appearance JUDGMENT CHEMBE, JA delivered the judgment of the Court Cases referred to: 1. 2. Jacob Mulenga v Rucom Industries (1978) ZR 21 Harbutts Plastine Limited v Wayne Tank and Pump Company Limited (1970) 2 WLR 198 3. Zambia State Insurance Corporation v Serios Farms Limited SCZ Judgment No. 6 of 1987 Kwacha Pension Trust Fund v Ali Nesr 2021/ HPC/ 0492 Dana it Transport Limited v Zambezi Portland Cement Limited 2010/HPC/0629 Bruno Musungu v Road Contractors Company Appeal No. 1032/ 2018 Kauseni v Shankar (COMP/ 121/2015) (2016) ZMIC 11 Buk Truck Parts Limited v Sinyenga Appeal No. 59/20 16 4. 5. 6. 7. 8. J2 9. Minister of Home Affairs, Attorney General v Lee Habasonda (2007) ZR 172 10. Lukama and Others v Lint Company of Zambia Limited SCZ Judgment No. 8 of 1999 11. lndeni Petroleum Refinery Company Limited v V. G. Limited (2007) ZR 197 12. BP Zambia PLC v Expendito Chipasha and Others SCZ Judgment No.57 / 13. Richard Ndashe Chipanama v Zambia Railways Limited Appeal Mo. 151/2 011. 14. Kasote Singogo v Appeal No. 33 o/2012 Legislation referred to: 1. 2. 3. The High Court Rules Chapter 27 of the Laws of Zambia. The Rules of the Supreme Court, White Book, 1999 Edition Banking and Financial Services {Cost of Borrowing) Regulation Statutory Instrument No. 179/ 1995 4. Judgments Act Chapter 81 of the laws of Zambia Works referred to: 1. 2. Halsbury 's Laws of England, Volume 27, 3 rd Edition. Zambian Civil Procedure Commentary and Cases Volume II. 1.0 INTRODUCTION 1. 1. This appeal emanates from the judgment on assessment by the Registrar of the Industrial Relations Division of the High Court Honourable J. Banda (as he then was) in which he awarded the Respondent K630 ,8 17 .27 in interest. J3 1.2 The parties had opted to refer the issue of calculation of interest to the Registrar for assessment after failing to agree on the rate applicable. 2.0. BACKGROUND 2.1. The Respondent was employed by the Appellant until he was dismissed on 7 th July 2016 following a disciplinary hearing. Unhappy with the loss of his job, he commenced legal proceedings in the court below challenging the termination. His suit succeeded and the court ordered that he be paid three months' salary with interest as damages for wrongful dismissal together with the unpaid salary for March 2016 and leave days. 2.2 On 9 th June 2020, the Appellant paid the principal amount due in the sum of ZMW 117,712. 00 ( which comprised of 3 months' salary for damages plus the salary for March 2016) but did not pay the interest as a dispute arose on the computation with the Respondent basing his calculation on the monthly basis whilst the Appellant insist that it should be annual. J4 2.3 By consent the parties r eferred the computation of interest to the Registrar who proceeded to compute the interest on a monthly basis. 3 .0 DECISION OF THE REGISTRAR 3.1 After considering the evidence and arguments by the parties, the learned Registrar formed the view that the judgment of the court did not provide for calculation of interest on per annum basis. He referred to the Court order on interest which stated that interest was to be calculated on the short term lending rates from 6 th October 2016 to the date of judgment and thereafter at the commercial bank lending rate as determined by Bank of Zambia until settlement. 3.2 The Registrar proceeded to compute the interest on a monthly basis resulting in the figure due being K630, 817 .27 less what had been paid. 4.0 GROUNDS OF APPEAL 4.1. Dissatisfied with the Judgment on Assessment dated 30th June 2021 by the Registrar, the Appellant filed two grounds of appeal as follows: JS 4.1.1 That the lower Court erred in law and in fact whe n it held that it was erroneous for the Respondent to propose to calculate interest on per annum basis contrary to the law which stipulates the interest should be calculated per annum; 4.1 .2 . The lower Court erred in law and infact when it proceeded to calculate the interest payable on the Judgment sum using a monthly basis contrary to principles of calculating interest. 5.0. APPELLANT'S ARGUMENTS 5.1 The Appellant filed heads of argument on 13th December, 202 1 in which the two grounds of appeal were argued together. We were referred to Order 36 Rule 8 of th e High Court Rules which provides that interest on a ju dgment for a sum of money sh all be paid thereon at the average of the short term deposit rate per annum prevailing from the date of cause of action. It was acknowledged that the Labour Relations Act did not have a similar provision but that it was trite law that an award of interest could be granted a t the discretion of the trial judge as was held in the case of Jacob Mu lenga v Rucom lndustries1 • 5.2 The Appellant maintained that the rate and method of calculation of interest ought to be on per annum basis as that was the r a te that J6 had been applied by the courts in this jurisdiction. It was argued further that if litigants were given the liberty to choose which rate to apply there would be no uniformity and the essence of granting interest as a measure to compensate a litigant for being kept away from their money would be defeated. It would also lead to unjust enrichment. 5.3 Relying on the case of Jacob Mulenga v Rucom Industries 1 , th e Appellant submitted that interest should be calculated at a reasonable rate. The case of Harbutts Plastine Limited v Wayne Tank and Pump Company Limited2 was cited in submitting that the purpose of an interest awarded on a judgment was to compensate a successful party that had been kept away from his/her money. It was argued that an award of interest is merely meant to serve as compensation and not as a penalty on the party ordered to pay. 5.4 Our attention was drawn to section 4 of the Banking and Financial Services (Cost of Borrowing) Regulations which provides for calculation of interest on loans at annual effective rate. 5.5 We were also r eferred to Section 2 of the Judgments Act which provides that the highest interest shall be calculated at the Bank of Zambia lending rate. It was submitted that the Industrial Relations J7 Court being a division of the High Court as provided for in Article 113 of the Constitution, interest awarded must be computed 1n accordance with the Judgments Act and on per annum basis. 5.6 Our a ttention was drawn to the case of Zambia State Insurance Corporation v Serios Farms Limited3 where the Supreme Court stated the following: "That Mr. lmasiku has relied on rates applicable in a case where a party has to borrow other money from the bank in place of the money owed to him by the opponent. However, we agree with the principle that the rate of interest must move with the times and must take into account prevailing commercial practices. In the case of interest awarded by the courts, this will normally be guided by the rate of interest which a depositor is likely to earn had he had the use of his money and had he placed it in an interest-bearing account of a reasonable nature." 5. 7 The Appellant referred us to Zambian Civil Procedure Commentary and Cases a t page 1276 where the learned author states as follows: "Rates of interest are expressed in percentage form. The percentage used to calculate the rate of interest may differ from case to case. The period of time used in order to calculate the percentage may also differ. Interest may therefore be charged at a certain percentage calculated J8 over a period of a day, week, month or year. However, in practice the period over which interest is calculated is invariably per year. An example of the way in which this is expressed, using an arbitrary rate of 18% would be interest at the rate of 18% per annum." 5.8 It was submitted that the judgment of the Registrar deviated from the principle of calculating interest on per annum basis. The Appellant cited the cases of Kwacha Pension Trust Fund v Ali Nesr4; Danait Transport Limited v Zambezi Portland Cement Limiteds; Bruno Musungu v Road Contractors Company6 ; Kauseni v Shankar7 and Buk Truck Parts Limited v Sinyenga8 as examples of cases where interest was calculated on per annum basis. 5. 9 The Appellant contended that the mere fact that the Court below did not state th e words 'per annum' did not leave it op en for a litigant to decide what rate to use. He lamented that this could cause an a bsurdity as litigants would be at liberty to calcula t e interest as they see fit. We were urged to uphold this appeal and set aside the Judgment on Assessment d a ted 3 0 th June, 2021 by th e learned Registrar. 6 .0 RESPONDENT'S ARGUMENTS 6. 1 The Respondent did not file any h eads of argument. 7.0 HEARING J9 7 .1 At the hearing, Cou nsel for the Appellant relied entirely on the filed heads of argum ent. 7.2 The Respon dent filed a notice of n on - appearance. 8.0. DECISION OF THIS COURT 8.1. We have carefully considered the Registrar's judgment on assessment dated 30th June, 2021 and the Appellant's h eads of argument. Th e issue for determination is wheth er the Registrar was entitled to compute in terest due to the Respondent at a monthly rate as opposed to the annual rate. 8.2. We note that the trial court awarded interest on the sums due as follows: "I award interest at the short term lending rates from 6 th October 2016 to judgment date and thereafter at the commercial bank lending rates as determined by Bank of Zambia" The rate at which interest was to be computed was not stated. 8 .3 The issue of com putation of interest is governed by the Judgments Act and the High Court Rules. Order XXXVI Rule 8 of the High JlO Court rules governs the award of interest up to the date of judgment and provides as follows: "Where a judgment or order is for a sum of money, interest shall be paid thereon at the average of the short-term deposit-rate per annum prevailing from the date of the cause of act ion or writ as t he court or judge may direct to the date of j udgment." 8.4 Clearly the above order provides that interest shall be calculated on the short term deposit rate per annum. As shown above, the learned trial judge awarded interest at the short term lending rate which in our view was a misdirection in view of Order XXXVI Rule 8 of the High Court Rules. Although the learned trial judge did not specify whether the interest was to be calculated on a monthly or per annum basis, the law provides that it shall be on a per annum basis. 8.5 We have anxiously searched the judgment on assessment by the Registrar in a bid to discern the basis on which he arrived at the decision that interest should not be calculated on per annum basis and we have found none. The Registrar did not gr apple with the issue before him or reveal the reason for his decision. Jll 8 . 6 In the case of Minister of Home Affairs, Attorney General v Lee Habasonda9 , the Supreme Court stated the fo llowing on judgment writing: ''judgments must reveal a review of the evidence, where applicable, a summary of the arguments and submissions, if made, and the application of the law and authorities, if any, to the facts." (Emphasis ours) In the present case, despite the availability of authorities and legal provisions on th e issue of interest, the learned Registrar did not apply these to the facts or even refer to them. As a result, the computation of interest did not conform to the law and was therefore flawed. 8.7 Counsel for the Appellant referred u s to the Banking and Financial Services (Cost of Borrowing) Regulations which provides for calculation of interest on a per annum basis. We were also referred to a number of cases wh ere the courts have consistently applied the rate of interest as p r ovided in the High Court Rules and the Judgments Act. 8.8 In the case Jacob Mulenga v Rucom lndustries 1 , the Supreme Court set aside an award of interest at 7% per annum which was J12 granted by aju dge who did not consider any legal provisions. In the case of Lukama and others v Lint Company of Zambia Limited10, the Supreme Court awarded interest at the rate of 10% per annum . 8.9 The High Court cases of Danait Transport Limited v Zambez i Portland Cement limiteds, Kauseni v Shankar7 together with other cases cited by the Appellant all show awards of interest which were to be calculated on a per annum basis. We therefore see no basis for departing from this practice especially in view of the express provision in the High Court rules and Banking and Financial Services ( cost of borrowing) Regulations. 8.10 We hold the view that the finding of the Registrar that interest was to be calculated on a monthly basis was perverse as it was not supported by any facts or law. 8.11 We have noted that the rate of interest awarded by the trial judge was erroneous as he awarded interest at the 'short term lending rate' which is contrary to Order XXXVI Rule 8 of the High Court Rules which provides that interest from date of writ to the date of judgment shall be at the average of the short-term deposit-rate per annum. 8.12 The Appellant paid Kl 17, 712. 00 as the principle judgment sum J13 on 27th July 2020. We note that this figure excluded the value for 2 leave days which the Respondent was entitled to. The Respondent computed this award as K2 264.00 (see page 183 of the record of appeal). The correct principle judgment sum, therefore, was Kl 19 976.00 and it is this figure which should have been used for computation of interest from date of complaint (6 th October 2016) to the date of judgment (9th June 2020). 8.13 As guided by the Supreme Court in the case of Kasote Singogo v Appeal No. 33 of 2012, the judgment sum comprises of the principle debt together with the interest accrued from the date of writ to date of judgment. Thereafter interest is calculated as provided in the Judgments Act which states as follows: "Every judgment, order or decree of the High Court or of a subordinate court whereby any sum of money, or any costs, charges or expenses, is or are to be payable to any person shall carry interest as may be determined by the court which rate shall not exceed the current lending rate as determined by the Bank of Zambia from the time of entering up such judgment, order or decree until the same shall be satisfied ..... " 8. 14 The Honourable Registrar, therefore , should have first calculated Jl4 interest on the principle sum of Kl 19 976.00 from date of complaint to the date of judgment at the short term deposit rate per annum. The interest together with the principle would then constitute the judgment debt. We note that the formula for the calculation of interest being on a monthly basis resulted in ridiculously high interest of over 300% of the principle debt. The formula for computation of interest per annum should be P xT x R. 100 X 12 8.15 Thereafter, interest should be at the Bank of Zambia policy rate which is the lending rate from date of judgment to 28th July 2020 (date of partial payment of Kl 17 712.00). The final computation should be on the amount computed up to that date, less the amount paid from 28th July 2020, to the date of full payment at the Bank of Zambia Policy rate. 9.0 CONCLUSION 9.1 In view of the foregoing, we find that the appeal has merit and we allow it. The Judgment on assessment by the Deputy Registrar is set aside. The matter is remitted to the High Court to the Registrar JlS of the Industrial Relations Division fo r recalculation of interest (as guided above) at the average short term deposit rate per annum from date of complaint to date of judgment and th ereafter at the Bank of Zambia policy rate until payment. Each party shall bear its own costs. ------~~----- M. M. KONDOLO S. C. COURT OF APPEAL JUDGE B. M. JULA COURT OF APPEAL JUDGE --------~ ---------- Y. CHEMBE COURT OF APPEAL JUDGE