Maamba Collieries Ltd v Siakalonga and Anor (Appeal 51 of 2004) [2005] ZMSC 23 (24 November 2005)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT KABWE APPEAL NO. 51/2004 (CIVIL JURISDICTION) BETWEEN: MAAMBA COLLIERIES LIMITED APPELLANT AND DAGLUS SIAKALONGA AND OTHERS RESPONDENT Coram: LEWANIKA, DCJ., CHIBESAKUNDA and CHITENGI, JJS on 3rd August 2004 and 24th November 2005 F£>r the Appellants: Mr. J Kalokoni of Messrs Kalokoni & Co For the Respondent: N/A JUDGMENT Chibesakunda, JS, delivered the Judgment in Court Cases referred to: 1. 2. 3. 4. 5. Professor Ram Copal (DR) v Mopani Copper Mines Plc Appeal No. 30/2000 ZR 397 Robbie Mumba v ZPA and Consumer Buying Corporation of Zambia ZRA Appeal No. 149 of 2001 Early Chaponda and Others v Energo Investments Limited SCZ Appeal No. 13/98 G Michelo and Others v Zambia National Provident Fund Board SCZ Appeal No. 37/2000 Lackson Lazarous Mwansa and Others v Maamba Collieries Limited 1999/HP/1987 Clauses referred to: 6. Clause 35 Maamba Collieries Conditions of Service We regret the delay in delivering this Judgment of this appeal. This has been due to circumstances beyond our control. When this appeal was heard Messrs Kongwa and Company, the counsel, who appeared on behalf of the Respondents at the trial, did not appear before us. The court, however, indicated that it would take into account Mr. Kongwa's written submissions. At the hearing of this appeal Mr. Kalokoni relied on his written heads of argument. He made no oral submissions. The brief history of this claim is that the Respondents were employees of Maamba Collieries (Now Appellants), who were subsidiaries of Zimco (now in . liquidation). The Respondents all belonged to middle management and on 31s,of 5 July 2002 they were all retired in accordance with Clause 34 of the Conditions of Middle Management Employees by the Appellants. It was common cause that the assessment of their retirement benefits was to be done in accordance with Clause 35 of the same conditions of service introduced on the 27th of Juno, 2000 Clause 35 at page 91 of the record says: “35.0 NORMAL RETIREMENT AND EARLY RETIREMENT BENEFITS/PACKAGE (a) In the absence of notice, the Company shall pay six (6) months pay. (b) 01 - 05 years of service : 06 - 10 years of service : five (5) months pay plus one (1) month’s pay for each completed year of service. ten (10) months pay plus two (2) months’ pay for each completed year of service 11 - 15 years of service : fifteen (15) months pay plus three (3) months’ pay for each completed year of service 16 - 20 years of service : Twenty (20) months pay plus four (4) months’ pay for each completed year of service 21 and above years of service : , Twenty-five (25) months pay plus five (5) months pay for each completed year of service (c) Full payment of Maamba pension scheme if any employee is a member (d) Long service gratuity - clause 41 (e) Passage as per clause 39 (f) Leave days accruals (g) Any other contractual benefits” The Respondents consequentially made their own assessments as per document DDSS2 at page 98 of the record. The Appellants also made their own calculations as tabulated at page 112 of the record. A dispute therefore arose as the Respondents maintained that the Appellants declined to take into account various administrative circulars and contributions of moneys by officers as termination packages in Zimco. It was argued by the Respondents that all allowances had to be taken into account. These ought to have been consolidated in the basic salaries before calculating the separation packages in accordance with Clause 35. The Respondents then took the Appellants to court. At court the matter was directed to be handled by a mediator Mr. Nigel Kalonde Mutuna. The parties consented to an order oh the 3rd of May 2001. It was subsequently registered at the High Court on 4th May 2001. It says:- “CONSENT SETTLEMENT ORDER The Parties agree as follows: 1. The Plaintiffs have all along been under Zimco Corporate terms of service applicable to the Plaintiffs immediately prior to 1st April 2. The said Zimco Corporate terms of service shall be understood to include all circulars, directives and memoranda favourable to the Plaintiffs issued or implemented by the Zimco Board and/or the Defendant’s Management subject to statutory provisions issued from time to time 3. In the event of any dispute or difference on the specifics or details of the Zimco Corporate terms of service or if any dispute arises from this consent settlement order, the dispute shall be referred back to Nigel Kalonde Mutuna for further mediation and/or further subsequent order" After the consent order the Respondents now came back to court for assessment before the learned Deputy Registrar. The arguments were that the Appellants had failed to incorporate into their calculations the consent Order dated 4th March 2001, which had been subsequently amended. It was argued for the Respondents that the Appellants had neglected to fully implement the provisions of the administration circulars and directives and consent order when assessing the severance packages for the Respondents. It was the Respondents’ case that, up to the time they were retired, the question of incorporating allowances into their basic salaries had not been resolved. They referred to the letter dated 27th March 2002 addressed to the Advocates in which it talked about meeting to resolve this issue. The Respondents also referred to the pay slip of one of their members which indicated that they had continued, even after several circulars, to receive allowances in cash or in kind separately from their basic salaries up to the date of their separation on 31st January 2003. The Appellants before the learned Deputy Registrar argued that the Respondents severance packages were assessed correctly and that all their allowances had been incorporated in the basic salaries from 1999. They argued that their own assessment of severance benefits was the correct assessment. The learned Deputy Registrar ruled in favour of the Respondents and hence the appeal by the Appellants before us. Before us, there were three (3) grounds of appeal, namely: 1. The learned Deputy Registrar having made findings of fact that the Respondents were on Maamba Collieries conditions of service at the time of retirement and that these conditions of service did not provide for the incorporation of allowances into the Basic Pay for computing the Respondent s’ benefits, misdirected himself in both Law and Fact in directing the Appellant company to incorporate all allowances enjoyed in cash and kind by the Respondents into their basic pays when computing their terminal benefits. 2. The Learned Deputy Registrar misdirected himself in law and fact in holding that the Appellant Company never merged the allowances of the allowable kind into the Respondents’ Basic Pays in 1999 thus awarding the Respondents a Zimco package when they were on Maamba Collieries Conditions of Service. 3. The Learned deputy Registrar misdirected himself in law and fact in failing to understand the effect in Law of the Consent Order that was signed between the Appellant and the Respondents dated 13th December 2002. In the written arguments the Appellants have argued that the Learned Deputy Registrar having made findings of fact that the Respondents were on Maamba Collieries Conditions of Service at the time of retirement and that these conditions do not provide for the incorporation of allowances into the basic pay for the purposes of computing retirement benefits, misdirected himself in both law and fact in directing that the Appellant incorporate all the allowances in cash and in kind before calculating the severance packages of the Respondents. They pointed out to the findings of the Learned Deputy Registrar in his ruling at pages 7 - 13 of the record. They argued that this court has consistently held that in employment law, conditions of service that existed at the time of separation, are the ones to be used in calculating benefits due to the terminated employees. They referred to the case of Professor Ram Copal (DR) v Mopani Copper Minses Plc (1). They maintained that since the applicable conditions of services at the time of separation were Maamba Collieries conditions of service and that these do not provide for incorporating of allowances into basic pay, it was a misdirection on the part of the learned Deputy Registrar to order the Appellant to incorporate all the allowances into basic pay of the Respondents before computing their terminal benefits. They submitted that this court in the case of । Robbie Mumba and Others v Consumer Buying Corporation of Zambia ZRA 1 (2), rejected the argument that the current judicial trends emphasize that all allowances being enjoyed by an employee during his duration of service should be incorporated into his salary for the purposes of computing terminal benefits. This court held in that case that, “Allowances enjoyed in cash and in kind can only be incorporated into salary for the purposes of computing terminal benefits if it can be justified by applying the conditions of service." They maintained that the current position at law is that allowances in kind and in cash enjoyed by an employee during his duration of service can only be incorporated in his/her salary before computing his/her salary if the applicable conditions of service provide so. On Ground 2, it was argued for the Appellants that the Learned Deputy Registrar misdirected himself in law and in fact in holding that the Appellant Company never merged the allowances of the allowable kind into the Respondents’ basic pay in 1999 thus awarding Zimco packages to the Respondents when they were on Maamba Collieries conditions of service. In augmenting this point he further argued that the Learned Deputy Registrar went wrong when he held that, “It is not true to say that all the allowances were integrated in their basic salaries as documents DSS/9 - DSS/12 produced in these proceedings will show some of the allowances separate from the basic salaries.’’ It was argued that this finding flew in the face of both documentary and viva voce evidence. It was further argued that on 31st March 1999 when the departure from zimco conditions of service took place by mutual consent of the parties, all the allowances of the allowable kind were incorporated into the Respondents’ pays - see page 141 of the record. The also submitted that even Douglas Siakalonga one of the Respondents admitted that in cross- examination. On Ground 3, the Appellants argued in augmenting that ground that even , assuming for the sake of argument that there were/are some allowances which i the Appellant Company did not incorporate into the Respondents’ basic pays at the time when they departed from Zimco condition of service on 31st March 1999, the Respondents were adequately compensated by paying them K400,000,000.00 in full and final settlement of all claims arising from Zimco conditions of service. They submitted that between April 1999 and July 2002, negotiations took place between Middle Management Committee representing the Respondents and the Appellant Management. These negotiations centred on new Maamba Collieries conditions of service. During these negotiations the parties came up with items agreed upon and those items that were not agreed upon. Among the items not agreed upon were: i. Consolidation of allowances ii. Work pattern iii. iv. Retirement age Payment of gratuity on dismissal According to them those items not agreed upon, were then narrowed down to three through negotiations. These are: i. ii. Work pattern Retirement age iii. Payment of gratuity on dismissal These three items were then included in the new Maamba Collieries conditions of service, which both parties signed on 26th July 2002. The issues of incorporation of allowances into the basic pay was not included in the new Maamba Collieries conditions of service because both parties hereto acknowledged the fact that the incorporation of allowances into the basic pay as directed by Zimco was done by the Defendant Company in the year 1999 as admitted by DW 1 in cross- examination. Moreover, when these negotiations were going on, the Respondents took the Appellants to court in the base of LACKSON LAZAROUS AND OTHERS VS MAAMBA COLLIERIES LIMITED (6) claiming the issue of incorporation of allowances into the basic pay. The matter went for mediation. According to them it was agreed that the incorporation was done in 1999 and that , if there were any allowances that the Appellant Company did not incorporate into i the Respondents’ basic pay, by paying them K400 Million that compensated them in full and final settlement of all claims on arrears or loss arising from the departure from the Zimco conditions of service - see pages 124 - 125. The Appellants further submitted that the effect of the consent order of paying K400 Million to the Respondents was to obliterate or blot out all claims for loss of not incorporating allowances into the basic pays. In other words, no further payments are payable to the Respondents under the Zimco conditions of service after receiving the K400 Million full and final settlement. They referred to the case of EARLY CHAPONDA AND OTHERS V ENERGO INVESTMENTS LIMITED (3). The Respondents, in their written response argued that the Appellants’ argument on Ground 1 are based on misapprehension of the learned Deputy Registrar’s ruling. It was argued for the Respondents that although the learned Deputy Registrar made those findings he nonetheless went on to hold that: “On the foregoing I agree with the Plaintiffs that their retirement packages should include the allowable allowances they enjoyed in both cash and kind, as directed by Zimco management and agreed to by both parties by virtue of DSS/7, the consent order, that directives circulars and memoranda issued by the Zimco Board would be terms of service for the employees." He, the counsel for the Respondent, pointed out that it was common ground as admitted by the Appellants that the Maamba Collieries conditions of service for middle management staff on which the Respondents served applied to them at the time of their retirement and that these did not provide for consolidation of allowances. It was also common ground that the directives from the Ministry of Finance in Zimco formed part of the Respondents’ conditions of service before their departure from Zimco. These circulars appeared at pages 110-130. The directives at pages 147-149 make reference to the specific allowances that had to be incorporated into basic pay. Counsel, however, argued that it was common ground that some of these allowances were enjoyed in kind and in cash, allowances such as housing allowances for those workers who were not provided I with accommodation. He mentioned some of the employees who had such allowances in kind - Messrs Mayoba and Siasidu who were accommodated. But Mr. Malumani who was not accommodated, received housing allowance; it was reflected in all his pay slips separate from his basic pay. They argued that upon retirement the allowances enjoyed in kind and in cash ought to be treated the same for the purposes of assessment of the separation package. It was, however, argued for the Respondents that the Respondents served on the Zimco conditions of service until 16th July 2002 when the Appellant’s conditions of service took effect. Therefore, the question, which the learned Deputy Registrar had to decide, is whether at the Respondents’ departure from Zimco conditions of service all the allowances that the Respondents enjoyed were incorporated into basic pay. According to counsel, the answer to that question is negative. And that is why he argued that at page 12 the learned Deputy Registrar agreed with the Respondents that not all allowances were integrated into their basic pay salaries - see DSS/ 9 - DSS/12, which were receipts. He pointed out that this is why in the letter to the Appellants form the Respondents Advocates dated 17th March, 2002, which was only four months before coming into effect of the Appellant’s conditions of service, the Respondents requested them to arrange for a meeting with the Appellants to resolve this same problem. Therefore, he argued that the learned Deputy Registrar was on firm ground when he concluded that the Appellants did not carry the Zimco directives to incorporate all allowances in their basic pay. On the contention of the Appellants that the consent judgment effectively consolidated all the allowances into basic pay, Counsel for the Respondents argued that the learned Deputy Registrar was on firm ground when he rejected this contention and referred to the terms of the consent order, which explicitly stated that the amount of K400 Million was for arrears and loss suffered by the Respondents during the separation of Maamba Collieries Limited from the Zimco Group of Companies’ condition of service in April 1999. Counsel to demonstrate this point referred to the assessment of the terminal benefits of workers I discharged on medical ground. He cited the case of Milton Siakanyika and 19 1 Others v Maamba Collieries Limited 2002/HP/118. He argued that the wording Clause 37 in that case was identical to Clause 35, which was used in this case to calculate the Respondents’ benefits. Counsel also cited ROBBIE MUMBA V ZPA AND CONSUMER BUYING CORPORATION (2) and D MICHELO AND OTHERS V ZNPF BOARD (4). He also cited John Paul Mwila Kadenqele and Others v Zambia National Commercial Bank SCZ Appeal No. 161/1999 and Malisawa v Bank of Zambia and argued that the courts held in these cases that the directives of the owners of the parastatal companies, form part of the terms of conditions of employment of respective employees in those companies and that the effect must be given to all circulars which provide that allowances enjoyed and received by workers in cash and in kind should be consolidated into basic pay for the purposes of assessing terminal benefits. On Ground 2, it was argued for the Respondents that Ground 2 was essentially the same as Ground 1 and that the arguments advanced in response to arguments in Ground 1 applied to arguments in Ground 2. On ground 3, the learned counsel for Respondents argued that the learned Deputy Registrar was on firm ground in interpreting the consent order. Counsel argued that the consent order provided for the payment of K40 Million for arrears and loss suffered by the Respondents from the Appellants’ separation from Zimco Corporation. He referred to the case of ROBBIE MUMBA V ZPA AND CONSUMER BUYING CORPORATION (2), which have been cited supra and argued that that the case was not relevant to the case before the court. It was further argued that the interpretation of CLAUSE 35 (5) by the learned Deputy Registrar was correct and that this court should uphold his holding. He referred to the case of G MICHELO AND OTHERS V ZAMBIA NATIONAL PROVIDENT FUND BOARD (4) and argued that the expression of basic pay did not include allowances We have looked at the issues raised and we have looked at the record of appeal and the Judgment of the learned Deputy Registrar and analyzed the arguments presented by both parties. We note that the three (3) grounds of appeal are interrelated. Therefore, we will deal with the heads of argument generally. We note that most of the facts are not disputed. It is not disputed that in 1999 Maamba Collieries (the Appellant Company) separated from Zimco. It is also common ground that on 16th July 2002 the Appellant Company agreed with the workers on different conditions of service from Zimco conditions of service. So at the time the Respondents were retired they were serving under Maamba Collieries Limited conditions of service. It is also not disputed that by consent order dated 3rd May, 2001 the parties agreed inter alia that Zimco Corporate terms of service were to be understood to include all circulars, directives and memoranda favourable to the Respondents issued or implemented by the Zimco Board and or the Appellant’s management directives subject to statutory provisions issued from time to time. It is also common ground that when the Respondents retired the computation of their terminal packages had to be done in accordance with CLAUSE 35 (5) which we have quoted at J2. The core contention before us is whether the computation by the Appellants of the Respondents’ retirement packages was done correctly or not. The Respondents have maintained that the Appellants did not add all allowances in cash and in kind to their basic salaries before computing the terminal benefits. This court’s reasoning in case of PROFESSOR RAM COPAL (DR) V MOPANI COPPER MINES PLC (1) was that when computing terminal benefits of any employee, the existing conditions of service at the time of separation, have to be used for computing such benefits. In line with that thought, in the case before us, the existing conditions of service at the tirhe of the Respondents’ separation from Maamba Collieries Limited have to be used in computing their terminal benefits. Moreover, this court in the case of ROBBIE MUMBA AND OTHERS V ZPA AND . CONSUMER BUYING CORPORATION (2) has laid down the principle that in computing terminal benefits of an employee not all benefits enjoyed by an employee during his period of service must be integrated in the basic salary before computing that employee’s terminal benefits except where the conditions ofi service state so. In the case before us there is no dispute that as at 31st January 2003 when the Respondents retired the conditions of service governing their employment were those of Maamba Collieries Limited. These are referred to as “middle management staff terms of conditions of service". These did not have a clause of incorporating allowances in cash and in kind into basic salaries before computing terminal benefits for the employees. These conditions of service governed the relationship between the Respondents and the Appellants. The main contention as we see it is that the Respondents have argued that these Maamba conditions of service which came into effect on 27th June 2000 are based on Zimco conditions of service and these Zimco conditions of service as per directives from the Ministry of Finance incorporated all the allowances in cash and in kind and that in calculating terminal benefits pursuant to Clause 35 of the Maamba Collieries Limited Middle Management Staff Terms of conditions of service, the pay stated in that clause was meant to be the sum aggregate of all basic pay plus all the allowances in cash and in kind and therefore basic salaries are to be ascertained before computing the terminal benefits. We are of the view that, in line with ROBBIE MUMBA AND OTHERS’ case, this argument must fail because the Maamba conditions of service' did not state that all allowances in cash and in kind have to be incorporated into the basic salaries. Gleaning from the arguments of the Respondents we get the impression that what they are saying is that the salaries carried over from the Zimco conditions of service, formed the basis of what was termed as their basic salaries and that these have the component of allowances incorporated well before their departure from the Zimco conditions of service. ‘ Firstly we agree with Mr. Kalokoni that at page 141 there is evidence that as 31st March 1999 the allowances were incorporated in the basic pay and even Douglas Siakalonga in cross- examination accepted that point. Secondly, there is evidence that between April 1999 and July 2002 negotiations took place between the middle Management Committee representing the Respondents and the Appellant Company. These s negotiations centred on the new Maamba conditions of service. During these i negotiations the parties thereto came up with items agreed upon and items not agreed upon - see pages 128 - 140. Among the items not agreed upon were: i. Consolidation of allowances ii. Work pattern iii. iv. Retirement age Payment of gratuity on dismissal There is also evidence that some of these items not agreed upon, were included in the new Maamba Collieries conditions, which both parties signed on the 16th of July 2002. Counsel for the Appellant has argued that the issue of incorporating of allowances into basic pay did not find itself into the new Maamba conditions of service. We agree with that. He has further argued that this was so because both parties hereto acknowledged the fact that such incorporation was done in 1999 as admitted by PW1 Douglas Siakalonga in cross-examination. Although we find that argument to be persuasive, nonetheless our view is that this point was still a bone of contention. We base this contention on the fact that after the introduction of these new conditions of service which were different from Zimco the Respondents took the Appellant Company to court in the case of LACKSON LAZAROUS AND OTHERS VS MAAMBA COLLIERIES LIMITED (6). This matter ended up at mediation. At mediation there was an agreement that the incorporation was done in 1999 and that if there were any allowances that were not incorporated into the Respondents’ basic pay there was compensation to be given to the Respondents in the sum of K400 Million in full and final settlement of all claims on arrears or loss arising from the separation of I Maamba from Zimco conditions of service. In answer to the question whether the Respondents even now are entitled to incorporation of allowances in cash and in kind received under Zimco conditions of service and after Zimco conditions of service, our view is that the effect of the consent order was to obliterate completely all claims for loss or arrears arising from Zimco conditions of service. In other words, no further payments are applicable to the Respondents under Zimco conditions of service after receiving K400 Million in full and final settlement of all claims. In line with the case of EARLY CHAPONDA AND OTHERS V ENERGO INVESTMENTS LIMITED (3) we hold that the Respondents’ claim cannot succeed. We therefore find merit in the appeal. We quash the lower court’s order. In view of the delay caused in delivering the Judgment we order no costs. D M Lewanika DEPUTY CHIEF JUSTICE L P Chibesakunda SUPREME COURT JUDGE supreme coOrt judge