Galiwango v Attorney General (Appeal 97 of 2010) [2015] ZMSC 179 (29 May 2015)

IN THE SUPREME COURT OF ZAMBIA APPEAL NO. 97/2010 HOLDEN AT NDOLA (CIVIL JURISDICTION) BETWEEN: SCZ/8/95/2010 JOHN-MARY GALIWANGO APPELLANT AND THE ATTORNEY-GENERAL RESPONDENT CORAM: Phiri, Wanki and Kaoma, JJS On the 3rd of September, 2014 and 29th May, 2015 For the Appellant: Mr. I. Chogwe-Principal Legal Aid Counsel For the Respondent: Mr. F. Imasiku-Senior State Advocate JUDGMENT KAOMA, JS, delivered the Judgment of the Court Case*£ referred to: 1. Khalid Mohamed v The Attorney General (1982) Z. R. 49 at 50 and 53 2. Wilson Masautso Zulu v Avondale Housing Project Limited (1982) Z. R 172 3. The Attorney General v Steven Luguru - SCZ Judgment No. 20 of2001 4. Mike Kabwe v BP (Zambia) Limited (1995-97) Z. R. 18 5. Zamox and Zambia Privatization Agency v Paul Chisakula and others (2001) Z. R. 27 Legislation referred to: 1. Industrial and Labour Relations Act, Cap 269, section 85(5) J2 The appeal is against the judgment of the Industrial Relations Court dated 16th March, 2010, dismissing the appellant’s complaint for lack of merit. The facts not in dispute are that the appellant, a Ugandan national, was employed as a Secondary School teacher on contract by the Ministry of Education. The first contract ran from 1992 to 1994 and he served on expatriate conditions of service. The second contract ran from 1995 to 1998 and the appellant served on local conditions of service after the expatriate conditions were abolished. The third and last contract ran from 28th November, 2000 to 26th September, 2003 and he again served on local condition of service. Under the local conditions of service, gratuity was initially paid at 25% of the basic pay. In 1995, it was increased to 35% by means of circular B.21 and in 2001 it was increased to 100% of basic pay by circular B.8 and by circular B.15 of 2001, the effective date of the increased rate of gratuity was pronounced as 1st January, 2001. At the end of his second contract in 1998, the appellant was paid gratuity at 35% and again at the end of his third contract in 2003 he was paid gratuity at 35%. In August, 2003 the Government J3 issued circular B.25 which sought to clarify that the 100% rate of gratuity was payable only to Zambians on local conditions while the rate for non-Zambians was still 35%. The appellant was paid his gratuity for the third contract in January, 2005 and immediately thereafter the Government stopped paying for his accommodation. On 17th August, 2006 the appellant commenced proceedings in the Industrial Relations Court claiming, inter alia, that he was paid gratuity on the third contract at 35% instead of 100% and he be paid the balance of 65% gratuity amounting to K25,500,000 and be refunded all rental expenses from February, 2005 amounting to KI5,600,000. On the evidence before it, the court below observed that Circular B.8 of 2001 which increased gratuity from 35% to 100% was very clear and unambiguous, that it simply stated that gratuity had been revised and would be paid at 100% of basic pay for all personnel on gratuity terms effective May, 2001 and that RW1 acknowledged that “all personnel” included the complainant (appellant), who at the time of issuance of circular B.8 was serving his third contract which was effective November, 2000 and was due to expire in September, 2003. J4 However, the court was of the view that by circular B.25 of 2003, which superseded circular B.8, it was Government’s intention and policy that 100% gratuity was only applicable to Zambian employees on local conditions whilst for non-Zambian employees gratuity would still be calculated at 35%. For that reason, the court held that the appellant was not entitled to payment of gratuity at 100% since he is not a Zambian. The court further found that at the time of signing his third contract in 2000, gratuity was payable to the appellant at 35%, so the 35% accrued to him at that time, and he was correctly paid and circular B.25 did not take away his accrued rights. The court further opined that though the payment of gratuity at 100% to Zambians only on local conditions appears to be discriminatory, it was not unlawful as it was done in pursuance of circular B.25 which was issued in compliance with Government policy and intention at the time. With regard to the claim for refund of rentals, the court agreed with the respondent that once the appellant was paid his dues in 2005, Government was under no obligation to pay for his accommodation. J5 Dissatisfied with the decision, the appellant appealed on the following five grounds: 1. The trial Court erred in law and fact when it held that the complainant’s (appellant herein) contract was not altered at all by PSMD circular B.25 of 2003 when this circular created a distinction within the local conditions to which the appellant subscribed. 2. The trial court erred in law and fact when it held that the complainant was paid in full when he received gratuity at 35% of his basic pay being the rate applicable under local conditions at the time of signing the contract. 3. The trial court erred in law and fact when it held that the complainant’s gratuity was not reduced when the complainant was paid the rate of 35% of basic salary by the Respondent. 4. The trial court erred in law and fact when it held that circular B.25 of2003 did not take away the complainant’s accrued rights under the contract between the parties in which the complainant were to serve on local conditions. 5. The trial court erred in law and fact when it disallowed the claim for refund of rentals from 2005 to date on account that payment was made in full at the rate of 35% of the complainant’s basic pay. In his heads of argument, the appellant argued grounds 1 to 4 all together for the reason that they are interrelated and he abandoned ground 5 of the appeal. The essence of the appellant’s arguments is that the trial court fell into serious error when, having found that under circular B.8 of 2001 5 * * * * * 11 all personnel” included the appellant, held that the rate for his gratuity was at 35% because that was the rate due to him when he signed the contract in 2000. J6 We were referred to the cases of Khalid Mohamed v The Attorney General1 at pages 50 and 53 where it was stated that the appellate court may draw its own inference in opposition to those drawn by the trial court although it may not lightly reverse findings of primacy fact. We were also referred to the case of Wilson Masautso Zulu v Avondale Housing Project Limited2 at page 174 where we said an appellate court will only reverse findings of fact made by a trial court if it is satisfied that the finding in question was either perverse or made in the absence of any relevant evidence or a misapprehension of the facts or that they were facts which, on a proper view of the evidence, no trial court acting correctly could reasonably make. It was then argued that unsatisfactory reasons were given by the court below in accepting the respondent’s evidence on circular B.25. Counsel for the appellant pointed out that circulars B.21 of 1995, B.8 of 2001 and B.21 of 2001 did not specify application to Zambian or non-Zambian. That the appellant signed the second contract on 19th September, 1995 when the rate for gratuity was 25%, then later the rate of 35% took effect from 1st January, 1995 by virtue of circular B.21 of 1995 which was dated 29th December, J7 1995, such that even though the appellant was entitled to gratuity at the rate of 25% when he signed the second contract, the new rate of 35% was to accrue to him with effect from 1st January, 1995. Counsel for the appellant also noted that when the appellant signed the third contract on 28th November, 2000, circular B.21 that raised the rate to 35% was not yet superseded by circular B.8 of 2001 by which it was increased to 100% for all personnel with effect from 8th May, 2001. But the effective date for the rate of 100% was changed to 1st January, 2001 by circular B.15 of 2001; that the court below should not have ignored the effective date. It is also the submission of counsel for the appellant that according to the court below circular B.25 of 2003 expressed the intention and or policy of the Government and RW1 said the circular changed the policy of the Government to have 100% and 35% gratuity for Zambians and non-Zambians respectively and that circulars are policy themselves. That it is this change in policy that in effect altered/reduced the rate for gratuity applicable to the appellant that he contends could not take away the rate of 100% that had accrued as at 1st January, 2001 and was to the appellant’s disadvantage. J8 It was submitted, that the court’s position, that the discriminatory circular was not unlawful, is not tenable. That there is no evidence of any enactment or any instrument made under any enactment or that the circular was in order to comply with a condition or requirement imposed by the Minister by virtue of any enactment vis-a-vis circular B.25 of 2003, so on a view of the facts, a finding that the discriminatory circular was lawful cannot reasonably be entertained. Counsel for the appellant sought to distinguish the case of Attorney General v Steven Luguru3 which had been cited by the learned State Advocate in the Court below, on the ground that there was no time, under the housing scheme when non-Zambians were ever entitled to buy houses. In conclusion, he urged us to allow the appeal and to order the respondent to pay gratuity to the appellant less the 35% paid, with interest and costs. In response, the respondent argued grounds 1 to 4 of appeal individually. We shall not address our minds to the arguments on ground 5 as it has been abandoned. As regards ground 1, the respondent’s argument is that the court below was on firm ground when it held that circular B.25 did J9 not alter the appellant’s conditions of service. It was acknowledged that circular B.8 of 2001 increased the rate of gratuity from 35% to 100% and it superseded circular B.21 of 1995. It was also noted that while conditions of service were improved by issuance of circulars, which superseded previous circulars, Government equally issued circulars clarifying grey areas which hinged on the implementation and interpretation of the conditions of service. That Government, through circular B.15 of 2001 amended a position previously stated, the appellant never objected to the intention and spirit of these circulars which were implemented by the Government as and when they were issued, and the appellant under this ground of appeal is inadvertently challenging the authority under which circular B.25 was issued. It was also argued that circular B.25 superseded circulars B.8 and B.15 of 2001 and was intended to clarify the policy of Government in respect of the conditions that Zambian and non­ Zambian employees in the Public Service were entitled to. On ground 2 of the appeal, it was submitted, in short, that it is incumbent upon the appellant to demonstrate that the rate of gratuity at the time of signing the contract was in fact not 35%, and J10 that the evidence on record demonstrates that the appellant’s entitlement to gratuity was 35% as found by the court below. Concerning ground 3, counsel for the respondent submitted that a reduction in the appellant’s rate of gratuity without his consent entails a variation of his basic conditions of service. But he sought to draw a distinction between this case and the case of Mike Musonda Kabwe v BP (Zambia) Limited4 in which we found that the contract of employment between the parties terminated when the respondent reduced the appellant’s salary without his consent and that his benefits ought to have been calculated on the increased salary applicable to him then. It is also the respondent’s argument that the rate of gratuity, being a basic condition enjoyed by the appellant, was determined from time to time through Government policy communicated through circulars issued at different times. That during the subsistence of the appellant’s contract between 2000 and 2003 Government issued circulars B.8 and B.15 of 2001 and B.25 of 2003, and at the time the appellant’s contract ended circular B.23 was in force and its provisions superseded the two earlier circulars Jll and that the condition precedent to be entitled to gratuity at the rate of 100% is that one must be a Zambian national. As to ground 4, it was argued that the court was on firm ground when it held that circular B.25 had not taken away the appellant’s accrued rights. That by virtue of his contract, the appellant had the accrued right of being paid gratuity at the rate of 35%, that circulars B.8, B.15 of 2001 and B.25 of 2003 were clear in their terms and did not apply to non-Zambians and the appellant has not demonstrated that he had an accrued right by virtue of the said circulars. As authority for this argument the respondent relied on our decision in the Steven Luguru3 case and concluded that the appellant is not entitled to any of his claims under ground 4. We have considered the record of appeal and the arguments by the parties. In our view, the question that flows from the four grounds of appeal is whether the appellant was entitled to payment of gratuity, on the third contract, at 100% of his basic pay. The fact that the rate of gratuity stood at 35% when the appellant signed his third contract on 28th November, 2000 is common ground. So is the fact that circular B.8 dated 22nd May, 2001 increased the rate of gratuity from 35% to 100% for employees in the public, service. J12 As properly found by the court below, this circular was clear and unambiguous and it applied to all personnel at that time serving on gratuity terms and those recruited on or before 1st May, 2001. The circular did not differentiate between Zambian and non­ Zambian employees and as properly acknowledged by both sides, it superseded circular B.21 of 1995. It is also common ground that circular B.15 dated 16th July, 2001 amended the contents of paragraphs one and two of circular B.8 of 2001 to include the effective date of 1st January, 2001 for officers serving on contract/gratuity terms and those recruited on contract/gratuity terms on or after 1st January, 2001. This circular also did not draw a distinction between Zambian and non-Zambian employees serving on local conditions. What this meant was that the appellant who was serving in the public service on local conditions was entitled to benefit from the increased rate of gratuity at 100% of his basic salary. However, on 28th August, 2003, one month before the expiry of the appellant’s third contract, the Government issued the controversial circular B.25, which, as already stated, sought to clarify that 100% gratuity was only applicable to Zambian J13 employees on local conditions and that gratuity for non-Zambians was still calculated at 35% of basic salary for each period served. Again, as correctly observed by the court below, the payment of gratuity at 100% to Zambians only on local conditions appears to be discriminatory, and in our view, is in fact discriminatory. It may have been the intention of the Government that Zambians be paid gratuity at 100% and non-Zambians at 35% of one’s basic salary. However, this intention was not publicized when circulars B.8 and B.15 were issued in May and July, 2001 respectively. It was for that reason that some Ministries and or Provinces and Government Departments had been paying gratuity to expatriate employees who were working in the Public Service on contract at the rate of 100% as disclosed in circular B.25 of 2003. Contrary to the finding by the court below and the argument by the respondent that the appellant was entitled to gratuity accrued to him at 35% when he signed the contract in 2000, we find and hold that when the rate of gratuity was increased from 35% to 100% for all employees in the public service, effective 1st January, 2001, without Government policy and or intention of limiting the increase to Zambian employees being disclosed, the J14 rate of gratuity for the appellant equally changed from 35% to 100% as he served on local conditions. We have no doubt that that was the rate of gratuity that accrued to the appellant when circulars B.8 and B.15 of 2001 superseded circular B.21 of 1995. Circular B.21 of 1995, under which the appellant benefited at the end of his second contract revised and standardized the gratuity earning rate for the Public Service from 25% to 35%. That circular as well did not discriminate between Zambian and non-Zambian employees. It simply referred to “officers currently serving on contract gratuity terms...” As rightly submitted by counsel for the appellant, despite that the rate of gratuity stood at 25% when the appellant signed his second contract on 19th September, 1995, he benefited from the increased rate of 35% under circular B.21 of 1995 issued on 29th December, 1995 but was effective from 1st January, 1995. The appellant’s third contract was effective from 28th November, 2000. He was in service, both on 22nd May, 2001 and on 16th July, 2001 when circulars B.8 and B.15 respectively were issued. Therefore, it cannot be seriously argued that his rate of gratuity was not increased and remained at 35%. J15 So, when the Government issued circular B.25 on 28th August, 2003 and made the rate of 100% of one’s basic pay applicable only to Zambians on local conditions, it varied, without his consent the appellant’s rate of gratuity that accrued to him on 1st January, 2001. In our view, circular B.25 could only apply to those employed after the date of issue of the circular and not before. This case falls squarely within the ambit of our decisions in the cases of Mike Musonda Kabwe v BP (Zambia) Limited4 and Zamox and Zambia Privatization Agency v Paul Chisakula and others5, where we made it clear that conditions of service already being enjoyed by the employees cannot be altered to their disadvantage without their consent. The Steven Luguru3 case is distinguished for the reasons given by counsel for the appellant. It follows, from all the above mentioned, that the court below erred when it held that the appellant was not entitled to payment of gratuity at 100% since he is not Zambian; that his contract was not altered at all; and that he was correctly paid his gratuity at 35% of his basic pay. The main object of the Industrial Relations Court as provided under section 85(5) of the Industrial and Labour Relations J16 Act, Cap 269 is to do substantial justice between the parties before it. It ought to have properly applied its objective in the present case. All in all, we allow the appeal and set aside the judgment of the court below on the claim for gratuity. Instead, we hold that the appellant should be paid gratuity at 100% of his basic salary less what he was already paid at 35%. We also award interest on the amount due to him at the average of the short term deposit rate from the date of complaint to the date of this judgment and then at the bank lending rate as determined by the Bank of Zambia until fully paid. Costs shall abide the event to be taxed if not agreed. G. S. PHIRI SUPREME COURT JUDGE M. E. WANKI SUPREME COURT JUDGE • L • • R. M. C. KAOMA SUPREME COURT JUDGE