Kankomba & Others v Chilanga Cement PLC (SCZ 30 of 2002) [2003] ZMSC 1 (7 January 2003)

KANKOMBA AND OTHERS v CHILANGA CEMENT PLC. Supreme Court. Sakala, Chirwa and mabilima JJS. 26TH July 2001 and 8TH January 2003. (SCZ Judgment No 30 of 2002.) Flynote Employment – Change of shareholding – Conditions of service – Whether affected. Headnote The appellants and others complained that their respective contracts of service were transferred from one employer to another without their consent; that those of their colleagues who were retired on 31st March, a day before the alleged new employers took over should be paid their benefits as provided under Statutory Instrument Number 99 of 1994 under the Minimum Wages and Conditions of Employment Act without discrimination; there was a general complaint that the new employers had changed their conditions of service without their consent and which were less favourable than those they served under the alleged former employers. The learned trial Judge dismissed the appellants’ claims and held that there was no change of employers, only shareholders changed and that there were no new conditions of service which were less favourable to the appellants than those they served under the alleged former employers. Held: (i) (ii) Change of shareholding does not change the company even if there is in place a new management. The change in shareholding does not change the employer so as to make section 35 of the Employment Act apply. Cases referred to: 1. Nokes v Don Caster Limited [1940] A. C. 1014. 2. Zulu and Others v Standard Chartered Bank Limited Appeal Number 59 of 1996. 3. Zulu v Avondale Housing Project Limited (1982) Z. R. 172. 4. Mohamed v Attorney-General (1982) Z. R. 49. M. J. M Pikiti of Pikiti and Company for the appellants. I. C. Ng’onga, of Ng’onga and Company for the respondent. Judgment CHIRWA J. S, delivered the judgment of the Court. In this judgment we share the lamentation of the learned trial judge in which he lamentated about the poor pleadings, especially the statement of claim which, as he correctly observed, contained evidence and other materials offending the rules pertaining to pleadings. What can be discerned from the evidence is that the appellants and others were complaining that their respective contracts of service were transferred from one employer to another without their consent; that those of their colleagues who were retired on 31st March 1995, a day before the alleged new employers took over should be paid benefits as provided under Statutory Instrument No. 99 of 1994, under the Minimum Wages and Conditions of Employment Act without discrimination; there was a general complaint that the new employers had changed their conditions of service without their consent and which were less favourable than those they served under the alleged former employers. The appellants prayed that such conduct by the respondent be declared null and void. The learned trial judge dismissed the appellants’ claims and held that there were no change of employers, only shareholders changed and that there were no new conditions of service which were less favourable to the appellants than those they served under the alleged former employers. The case by the appellants can be put in the following form. The appellants were employed by Chilanga Cement Ltd which was a wholly Government of Zambia owned company under ZIMCO (Zambia Industrial & Mining Company). In 1994 Chilanga Cement Limited was bought by the Commonwealth Development Corporation (CDC). In other words, the shares of Chilanga Cement Limited were bought by CDC and it became a public company hence its title changed to Chilanga Cement PLC (Public Limited Company). This means that Chilanga Cement Company was no longer a private Company, but a public company. The line of business remains the same and the employees who included the appellants were the same. In due process, the new owners of the company changed management. In April 1995, the new management introduced new conditions of service which the appellants, in some cases, alleged are inferior to the previous conditions. They were particularly concerned that some allowances which were previously paid separately and in conformity with the Statutory Instrument No.99 were then fused into their salaries. Such allowances included lunch, and funeral grant. Also under the new conditions, the early retirement service period was increased from 10 years of service to 20 years of service, contrary to what the statutory instrument provides at 10 years. The appellants felt that, in view of these changes, their conditions of service were changed to their detriment and that they should be given an option to retire as from 31st March 1995, on old ZIMCO conditions and re-engaged under the new conditions for those who want to continue working for the company and when they retire under the new conditions of service, be paid gratuity under the new terms. The defence case was that there was no change of employer, what was involved was change of shareholding and the company continued operating as a going concern. The employees were informed of the changes. The employees were free to resign and in this spirit the General Manager resigned. It was denied that the new conditions of service were discriminatory or inferior. On the contrary, they were superior. For instance, funeral grant was increased from K30,000.00 to K50,000.00. In addition, coffin, transport, firewood and money incidental to the funeral are given. Further, under the new conditions of service, under redundancy the employee is given 6 months notice as against one month under Statutory Instrument No. 99 of 1994, and 3½ months pay as against 3 months basic pay under the Statutory Instrument. On the evidence and the long submissions before him, the learned trial judge found that most of what was pleaded was not supported by any evidence. He found as a fact that there was no change of employer so as to call upon the appellants and others to exercise their option of continuing to serve with the new employees; he found that the new conditions of service were not discriminatory and disadvantageous to the appellants, instead they were superior conditions of service. He found that there was no need to request the appellant to exercise the option of whether to retire or continue serving under the new shareholders and management and that Section 35 of the Employment Act did not apply to the appellants. He therefore dismissed the appellant’s claims with costs. The memorandum of appeal contains 7 grounds of appeal. These were supported by detailed heads of arguments on which Counsel relied upon. The first ground of appeal was that the court erred both on facts and on the law by dismissing the appellants several claims without going into the depth of the evidence and stating the grounds on which each of the said claims failed. It was submitted that the claims by the appellants are contained in the writ of summons at pages 44 and 45 of the record and in the amended statement of claim from pages 18-22. It was submitted that since there was a change of employer, the appellants were to be given a choice of retiring or remaining in the service of the respondent and that this is according to section 35 of the Employment Act and indeed authorities with regard to change of employer as expounded in the cases such as Nokes v Doncaster Ltd (1). It was submitted that the previous employers, Chilanga Cement Ltd having been bought by CDC and changed to Chilanga Cement PLC, there was change of employers and as such the appellants ought to have been given the option to be retired and paid their benefits and then join the new employers on new conditions of service. If terminal benefits are withheld, this would amount to forcing one to serve an employer not of his choice and on unwanted conditions. For this, the case of Zulu and Others v Standard Chartered Bank Ltd (2) and Zulu v Avondale Housing Project Ltd (3) were relied upon. In reply to this ground of appeal, it was submitted that if the learned trial judge did not consider any claims by the appellants and there was no evidence to support such claims. Such claims should be considered as abandoned. It was submitted that for the claims that were supported or purported to be supported by evidence, the judge considered each claim and dismissed them, as the evidence did not support the claims. We have considered this ground of appeal. The fundamental issue in this ground is whether, upon acquisition of majority shareholding in Chilanga Cement by the CDC, the company changed. CDC had shares in Chilanga Cement before they acquired majority shareholding. Unlike the Zulu v Standard Chartered Bank Ltd, case SCZ Appeal No. 59 of 1996, Finance Bank a different entity, took over employees of Standard Chartered bank of the branches that it closed. Finance Bank was totally a new employer and it was correctly decided that the change in contract of service must be with the consent of the affected employees, that the new conditions of service should not be inferior to those previously enjoyed. In the instant case, therefore, there was no new contract offered so as to enable the appellants get their previously earned benefits before joining the new look Chilanga Cement Ltd. The appellants stand to lose nothing. If they want to leave the company they can do so at any time. Change of shareholding does not change the company even if there is in place a new management team. No evidence was adduced and showed that the appellants are disadvantaged or that they have lost anything. As the learned judge found, the new conditions are superior to the former. The fact the some allowances, like funeral grants, have been merged into the salary cannot be said that the appellants were disadvantaged. We see no merit on this ground of appeal and it is dismissed. The second ground of appeal, in our view has already been discussed above, on the question of change of ownership or shareholding. A careful study of the sale agreement which was before the court will show as we have already indicated, CDC had some shares (minority) in Chilanga Cement and the sale agreement made CDC a majority shareholder, this is particularly borne out in clause 8 which deals with the movement of shares. The change in shareholding does not change the employer so as to make Section 35 of the Employment Act apply. This ground of appeal is also dismissed. The third ground of appeal was that the court below erred in law in failing to take notice of the fact that the respondent had no witnesses to rebut the evidence of the appellant’s witness at trial. It is trite law that he who asserts must prove and as we stated in the case of Mohamed v Attorney-General (4) and re-stated in Zulu v Avondale Housing Project Ltd (3) that: “An unqualified proposition that a plaintiff should succeed automatically whenever a defence has failed is unacceptable to me. A plaintiff must prove his case and if he fails to do so the mere failure of the opponent’s defence does not entitle him to judgment. I would not accept a proposition that even if a plaintiff’s case has collapsed of its inanition or some reason or other, judgment should nevertheless be given to him on the ground that a defence set up by the opponent has also collapsed. Quite clearly a defendant in such circumstances would not even need a defence.” The appellants were demanding retirement benefits when they were not entitled to them. If the appellants wanted the ZIMCO conditions to apply in calculating their benefits, they had to prove that they qualified for them and not claim that they were entitled to be retired but paid under the new conditions. The learned trial judge found that the appellants had not proved that they were entitled to. Neither have we seen on record that the appellants proved their claim. None of the appellants applied to be retired and they may not have been granted because they did not qualify to be retired, if they wish to get their benefits under ZIMCO conditions. We see no merit in this ground of appeal. Grounds 4 and 7 were argued together. Ground 4 was that the court below erred in law and in fact by not taking recognition that the respondents’ company had actually been sold making a significant change to employer/employee relationship and ground 7 was that the court below erred in law and in fact for ruling that the defendant company, Chilanga Cement PLC was the employer previously known as Chilanga Cement Limited. These grounds, although listed separately, are adequately covered when we deal with ground No. 1. We need not repeat. A critical look at the share sale agreement, which we have done, will show and confirm our views. In addition to what we said, we make an observation that the new conditions are better in our view with the coming of the new capital injection. These grounds are also dismissed. Grounds 5 and 6 were argued together also. In these two grounds it was submitted that the court erred in not making a finding on the non payment of the various claims provided for in the conditions of service as forming contracts of employment and that the court erred in basing its findings based only on the testimony of DW1 which was contradictory. The two grounds did not highlight the claims that were not considered by the lower court. The court found that the various claims under the ZIMCO conditions were fused into salaries under the new. conditions No loss of these benefits was demonstrated by evidence in the court below. These grounds also fail. There is no law that a court cannot base its decision on the evidence of one witness. On the totality, the appeal must fail and it is dismissed with costs to the respondent, to be taxed in default of agreement. Appeal dismissed.