Galco Zambia Ltd and Anor v Munengo and Ors (Appeal 63 of 2001) [2003] ZMSC 175 (17 July 2003)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA APPEAL NO. 63/2001 (CIVIL JURISDICTION) BETWEEN GALCO ZAMBIA LIMITED PLASTICO ZAMBIA LIMITED 1st APPELLANT 2ndAPPEALLANT AND LAWRENCE MUNENGO & OTHERS CHANCE KALIMA & OTHERS BARCLAYS BANK ZAMBIA LIMITED INDO ZAMBIA BANK LIMITED 1st RESPONDENT 2nd RESPONDENT 1st garnishee 2nd GARNISHEE Coram: Sakala, CJ, Chirwa and Chibesakunda, JJS on 17th July 2003 and 9th February For the Appellants: For the 1st Respondent: Mr H Silweya of M/s Silweya and Company For the 2nd Respondents: N/A N/A For the Garnishee: N/A JUDGMENT Chibesakunda, JS, delivered the judgment in Court Laws referred to: 1. 2. 3. S346(l)(d) of the Companies Act, Cap. 388 S26(B)(1)(3) of the Employment (Amended) Act, Cap 268 Industrial Labour and Relations (Amendment) Act, Cap 269 On 14th September 2001, on an application by the Respondents and upon reading the affidavit in support and the affidavit in opposition, a single Judge of this court, Honourable Chaila, JS (late), dismissed the appeal in cause No. SCZ/8/300/2000 with costs. He, however, ordered that the Respondents were at liberty to argue the cross appeal. - J2 - This judgment therefore will be confined to the cross appeal by the Respondents. It should be noted that this cross appeal was argued before us after one or two adjournments in the presence of the Appellants and the two garnishees. The court therefore, when it sat on 17th July 2003, decided to proceed to hearing of the appeal in the absence of the 1st and 2nd Appellants and the 1st and 2nd Garnishee as the court was satisfied that these parties were aware of the court's sitting on that date. The history of this case is imbedded in a series of court actions commencing in the Industrial Relations Court (IRC). The 1st Appellant is a manufacturing company. In the course of its operation it borrowed US $ 250,000.00 from the First Alliance Bank (Z) Limited. It also borrowed some money from the 1st Garnishee. The failure by the 1st Appellant to service the loan with the 1st Garnishee, led to the 1st Garnishee appointing a receiver/manager for the 1st Appellant. The 1st and 2nd Respondents, who were employees of the 1st and 2nd Appellants, had their services terminated between 23rd December 1997, 5th January and 23rd January 1998, respectively. The 1st and 2nd Respondents then lodged a complainant for delayed payment of terminal benefits with the department of Labour - Principal Labour Officer. After the meeting of 28th February 1998 attended by the joint/receiver and manager and the 1st Appellant there was an agreement that the 1st and 2nd Respondents' termination of employment be treated as declaration of redundancies and Section 26 (B)(l)(3) of the Employment (Amendment) Act (2) was to apply. But the Respondents objected to this and filed a complaint under Section 85 of the Industrial and Labour Relations (Amendment) Act (3) while both Appellants (in receivership) seeking the following remedies:- - J3 - a) An order of declaration that the various letter of termination of employment by the respective receivers and managers to the (Applicants) are null and void and consequent orders of reinstatement of all the (Applicants); or b) An order of declaration that the said Employer Companies in receivership were neither bankrupt nor liquidated and Consequent Order that this termination of the (Applicants') employment be deemed redundancies The Industrial Relations Court by consent judgment ordered that the Respondents be paid their respective redundancy packages effective from the date of termination with costs to the Appellants. A similar order of consent was issued by court, dated 19th August 1999, in respect of the Respondents' redundancy benefits against the 2nd Appellant. In an effort to execute these consent judgments the Respondents applied for an exparte garnishee nisi order. This was granted on 2nd September 1999 by the Industrial Relations Court. Before the Industrial Relations Court the Respondents applied to have this degree nisi made absolute. The Appellants strongly argued against this application on grounds, inter alia, that it was improper to do so before the redundancy benefits were assessed and agreed upon by the parties through the court process of assessment. The court then ordered the parties to put in written submissions. On the 2nd of April 1999, the IRC declined to make a garnishee nisi absolute but agreed with the Respondents' that their redundancy packages ranked higher than the secured debts of the 1st and 2nd Garnishee. The court ruled that the terminal packages, which the 1st and 2nd Respondents were entitled to, ranked higher than the secured debt due to the 1st and 2nd garnishee. This is the judgment that has been appealed against. - J4 - The 1st and 2nd Respondents are challenging the lower court's refusal to make the degree nisi absolute. Before us, Mr. Silweya more or less repeated the same arguments he advanced before us in cause Appeal No. 63 of 2001. In the memorandum of appeal he advanced four grounds of appeal:- 1. That the Court below erred in law in refusing to make the order of garnishee nisi absolute after confirming that the 1st and 2nd Respondents' redundancy payments ranked the highest in priority rights to the other debts pursuant to Section 346(l)(d) a.r.w. Section 110(1) of the Companies Act (1) and Sections 26 B(l) and 26 B(3) of the Employment Act (2). 2. That the Court below erred in law and misdirected itself in facts in refusing to make the order of garnishee nisi absolute on grounds that the 1st and 2nd Respondents' Judgment debt had not been ascertained when the court itself had ordered parties to submit the figures to enable the court assess these redundancy entitlement and that these figures were duly submitted. 3. That the Court below erred and misdirected itself in law and facts in deciding that it was up to the 1st and 2nd Respondents to show that the 1st and 2nd Appellants and their appointed Receiver/Managers were dealing with the Assets of the 1st and 2nd Appellants in order to prove that the 1st and 2nd Appellants were solvent and going concerns. - J5 - 4. That the Court below erred and misdirected itself and failed to comprehend adequately the full effect of the orders of garnishee nisi and absolute as a device of execution of a judgment debt. A prohibition against an assignment by the bank concerned of a debt for the judgment debtor free from the interests of the judgment creditor/garnishor. The money in the Bank account remains the property of the judgment debtor - the 1st and 2nd Appellants until paid out first to the garnishor by the judgment debtor or with his approval and instructions. Mr. Silweya amplified only one ground of appeal by stating that the court misdirected itself in accepting the suggestion that the 1st and 2nd Appellants were insolvent. He relied on his heads of argument. The Respondents did not file any heads of arguments in response. We have considered the arguments and the record before us. Our views are that these issues raised by Mr Silweya, ingenious as they may sound, and forceful as they may have been presented to us, have been raised in the cause of action in which we delivered the judgment on 26th April 2002. We are of the view that the provisions of the law referred to by Mr. Silweya, in trying to persuade us that the lower court misdirected itself, have been misunderstood by the learned counsel. Our standing is the same as that of the lower court. We are of the view that the lower court was on firm ground to have held that the debts of the 1st and 2nd Respondents did not come under the provisions of Section 346 (Id) of the Companies Act (1). They cannot be ranked higher than the secured debts. The IRC cannot be faulted on that point. We therefore dismiss the appeal. We order costs to be borne by the Respondents. J6 - E L Sakala CHIEF JUSTICE irwa SUPREME COURTJUDGE L P Chibesakunda SUPREME COURT JUDGE