OMNI Building Contractors v Maoka (Appeal 125 of 2014) [2019] ZMSC 310 (9 July 2019)

IN THE SUPREME COURT OF ZAMBIA APPEAL No. 125/2014 HOLDEN AT KABWE (Civil Jurisdiction) BETWEEN: OMNI BUILDING CONTRACTORS APPELLANT AND JOHN MAOKA RESPONDENT CORAM: Mwanamwambwa, DCJ, Kabuka, Mutuna, JJS On the 4th April, 2017 and 9th July, 2019. FOR THE APPELLANT: FOR THE RESPONDENT: N/A N/A JUDGMENT KABUKA, JS, delivered the Judgment of the Court Cases referred to:- 1. Stevenson Jordan and Harrison Ltd v Macdonald and Evans [1952] 1 TLR 101. 2. Bank of Australia v Palmer 1897 A C 450. 3. Kafue District Council v Chipulu (1997) ZR 13 (SC). 4. Philip Mhango v Dorothy Ngulube and Others (1983) ZR 61 (SC). J2 Introduction 1. When we heard this appeal, we were with the then, Deputy Chief Justice, Hon. M. S. Mwanamwambwa, who has since retired. This judgment is therefore by the majority. 2. The appeal has its origins in the subordinate court of the first class at Lusaka which found that the respondent was not a subcontractor but an employee of the appellant and accordingly granted him his claim for payment of K28,000.00 as balance due on his unpaid salaries. 3. The appellant appealed that decision to the High Court but the appeal was dismissed. The appellant has now further appealed to this Court. Background 4. The relevant background facts to the appeal are that the appellant and the respondent had entered into an oral contract. As regards the nature of this contract, the appellant on the one hand claims that the respondent was engaged as an independent contractor on a contract for services. On the other hand, the respondent contended J3 that, he was an employee of the appellant and the contract was one of service. 5. According to the appellant, it had won a tender from the Southern Water and Sewerage Company (SWASCO) Limited, for the construction of 130 toilets in the Libuyu compound of Livingstone. 6. The respondent was engaged as a subcontractor by the appellant, to supervise the construction works of the toilets on an agreed lump sum of K30,000.00 payable at the end of the contract. As an independent contractor, the respondent rendered his services for a period of one year, from September, 2010 to September, 2011. 7. The appellant further contended that, although the respondent ended up being paid a total sum of K37,000.00 through advances made at his own request, the said payment was made, purely on humanitarian grounds. 8. The respondent’s version of the event however, was that, the contract he entered into with the appellant was a contract of employment for service, at a monthly salary of J4 K5, 000.00. He was recruited from his base in Lusaka and sent to Livingstone, in order for him to undertake the task of supervising works related to construction of toilets. 9. The respondent confirmed receiving his first salary in September, 2010 but contended that, for the next one year up to September, 2011 he only received various amounts of advances, in the sum of K37,000.00 from a total entitlement of K65,000.00 in salaries for the year. This left a balance of K28,000.00 due and payable to him. Proceedings before the Subordinate Court 10. The respondent instituted an action in the Subordinate Court to recover that amount. In his evidence given at the trial of the matter, the respondent produced two documents in support of his contention that he was an employee and these were marked as UMI’ and ‘JM2’. 11. Document, ‘JM1’ is headed: JOHN MAOKA OUTSTANDING WAGES- LIBUYU SANITATION PROJECT This document was prepared and signed by the Accountant of the appellant and states that, the total amount due to the J5 respondent for the twelve months worked was K65,000.00. The document also reflects that the respondent only received some payments of varying amounts, spread over several months, in the total sum of K37,000.00 and the outstanding balance due to him is stated as K28,000.00. 12. Document, JM2’ is a LETTER OF RECOMMENDATION dated 9th January, 2012 which was written by the Projects Officer of the appellant. The respondent is in this letter recommended for employment to future employers and described as a person who had worked in the position of a Site Manager for the appellant at the Libuyu Sanitation Project from 14th September, 2010 to September, 2011. 13. The letter goes on to commend the respondent in the following glowing terms: - “He is a hardworking, self-motivated person who needs minimum supervision. He has very good leadership skills which he displayed at our site. He further worked at our UTH assisting with managing and supervising the works for a period of 3 months; (sic) also in the same capacity at the Chainama Hills College hospital on rehabilitation works. We therefore do not hesitate to recommend him to any future employers. ” (underlining for emphasis supplied) J6 14, The record shows in defence of the claim, before the trial magistrate, the appellant called its Managing Director (DW1), who maintained that the respondent was a subcontractor engaged to supervise the works in issue and the agreed remuneration was the sum of K30,000.00. He was however, paid advances which came to a total of K37,000.00, purely on humanitarian grounds. 15. The appellant’s Accountant (DW2), who authored exhibit £JM1’, showing the outstanding ^wages’ due to the respondent in his evidence claimed, the document was prepared at the instance of the respondent and did not reflect the factual position that, the payment was made on humanitarian grounds, 16. DW2 further testified to the effect that, unlike the respondent, all employees of the appellant were paid monthly and received Pay Statements evidenced by a document marked as ‘OBC1’ which is on the record of appeal. The names of employees also appeared on Pay J7 Sheets for the months of June/July, 2011 up to August /September, 2011. 17. The employees were further said to be registered with the National Pension Scheme Authority (NAPSA) and the Zambia Revenue Authority (ZRA) for payment of tax, as reflected in documents collectively marked as ‘OBC2’, on which the respondent’s name does not appear. 18. For his part, the appellant’s Projects Officer (DW3) testified that, the respondent was a subcontractor who was working under an oral contract. DW3 also claimed that he wrote the recommendation letter, exhibit ‘JM2’ at the request of the respondent. 19. There was a fourth witness, DW4, and the substance of his testimony was that the contract between the appellant and respondent was in writing. Consideration of the matter by the trial magistrate and decision 20. After considering this evidence before her, the learned trial magistrate found the defence evidence given by the J8 appellant’s witnesses suggesting that the respondent was a sub-contractor was contradicted by their own documents ‘JM1’ and 4JM2’ which were reflecting that the respondent was an employee of the appellant. That this contradiction was further entrenched by the appellant’s witness DW4 who was the only witness to testify that, the contract in issue was a written one. 21. On the recommendation letter which the appellant gave to the respondent, document £JM2’, the trial Court noted that, the appellant’s Projects Officer did not deny he authored the same. The trial magistrate also rejected evidence of the appellant’s Accountant (DW2) to the effect that, the respondent was paid K37,000.00 on humanitarian grounds. She reasoned that, the respondent having been paid more than K30,000.00, was clear confirmation of his claim, that he was entitled to get more than that amount. 22. The learned trial magistrate accordingly proceeded to enter judgment in favour of the respondent in the claimed amount of K28,000.00, together with interest at current bank lending rate and ordered that the sums due be paid within J9 30 days. Dissatisfied with that judgment, the appellant appealed to the High Court. Appeal before the High Court 23. Upon considering the arguments and submissions on appeal, the learned High Court judge found that, the trial magistrate could not be faulted. That she resolved the matter on the basis of inconsistencies regarding the documentary and the viva voce evidence of the appellant’s witnesses, on whether the respondent was an employee or not; and also, as to the existence or none existence of a written contract. These, in the judge’s view, were the material issues. 24. On the appellant’s submission that the recommendation letter ‘JM2’ relied on by the trial magistrate was only intended to satisfy the requirements of section 79 (3) of the Employment Act; and, that it was wrong for the trial magistrate to admit it in evidence as it prejudiced the appellant’s case. The High Court judge considered section J10 3 of the same Act and found, it only relates to contracts of service. 25. The appellate judge also referred to the following statement by learned authors of Halsbury’s Laws of England 4th Edition Vol. 2 paragraph 501 at p. 313 where they state that: “The law distinguishes between a contract of service and a contract for services, and correlatively, between an employee and an independent contractor.” 26. The judge observed that, the question whether or not one is an employee, is a question of fact and cited the case of Stevenson Jordan and Harrison Ltd v Macdonald and Evans1 where Denning L J, as he then was, distinguished the two types of contracts in the following words: “a ship’s master, a chauffer, and a reporter on the staff of a newspaper are all employed under a contract of service; but a ship’s pilot, a taxi-man and a newspaper contributor are employed under a contract for services. ” 27. Against that backdrop of the law and evidence on record which disclosed that the appellant was employed on 14th September, 2010 after which he was sent to Livingstone to work as site manager; the judge found, the facts fell I JU squarely within the definition of section 3 of the Employment Act, as states that ‘an employee’ is: ‘any person who has entered into or works under a contract of service, whether the contract is express or implied, is oral or in writing, or whether the remuneration is calculated by time or by work done..’ 28. The judge further considered that, it is the appellant that originated document ‘JM1’, a tabulation showing the respondent was paid K5,000.00 p.m.; amounts of monies paid; and the balance of monies due to him. That the appellant had also conceded it issued document marked ‘JM2’ under section 79 of the Employment Act, which section only provides for contracts of service and not those for services. 29. On those considerations, the judge came to the conclusion that, the trial magistrate was on firm ground when she found the respondent was an employee; and that the payment of K3 7,000.00 was not made to him on humanitarian grounds. 30. On arguments regarding the use of parole evidence, to allegedly, supplement or explain the respondent’s case J12 beyond documents UM2’; ‘BOC1;’ and ^002’ that were relied on by the parties at the trial of the matter, the appellate judge observed that, the parole evidence rule envisages the existence of a contractual document containing terms of the agreement, as agreed to by the parties. 31. The judge referred to Contract Law, by Professor Ewan McKendrick, 7th Edition at p. 184 where he states that: “Once the contracting parties have elected to enshrine their contract in a written document, the Courts have held that, as a general rule, the parties cannot adduce extrinsic evidence to add to, vary or contradict the written document; the document is the sole repository of the terms of the contract.. the purpose behind the rule is for the promotion of certainty; that is to say, once the parties have gone to the trouble of drawing up a written document, one party should not be able to allege with impunity that there were, in fact, other terms which were, for some reason, not incorporated into the final written document.” (Jacobs u Batavia & General Plantations Limited [1924] Ch. D 287). 32. On the facts of the present appeal, the judge found that, the parties did not reduce the terms of their agreement into a written document and it was not in dispute that their agreement was an oral one. That document “JM1” which was prepared by the appellant indicated the respondent was J13 entitled to payment for the remaining months as claimed. The judge accordingly found that, the learned trial magistrate was on firm ground when she used the document to determine the value of the unpaid amounts due to the respondent. 33. On the arguments that the trial magistrate did not consider the whole of the evidence before her, the judge noted that, the cases of Bank of Australia v Palmer; Kafue District Council v Chipulu3 and Philip Mhango v Dorothy Ngulube4, amongst others, were cited by the appellant as authority for the argument that, the court should have considered the evidence of the appellant before arriving at its conclusion. 34. The appellate judge however, found, she could not sustain the appellant’s grounds of the appeal suggesting there was unbalanced evaluating of the evidence. She considered the ‘contra proferentem’ rule that documents must be construed against the author. She also noted that, the trial court accepted that document “JM1” was originated by the J14 appellant’s accountant, on the basis of which she found, the respondent was an employee entitled to salaries. 35. The appellate High Court judge finally determined that, the trial magistrate’s findings were findings of fact which on a proper view of the evidence, any court acting correctly, could reasonably make. It is on that account, that she dismissed the appellant’s appeal, with costs to the respondent. The grounds of appeal to this Court 36. The appellant has now, further appealed to this Court, advancing six grounds of appeal contending that, the judge erred in law and fact when she found: 1. that the respondent was working under a contract of service and not of services; 2. that the trial court did not misdirect itself in coming to the decision that the respondent was owed K28,000.00 by the appellant on the basis of documentary evidence, ‘JM1’ whose legal value was disputed by the appellant; 3. that the respondent was not paid on humanitarian grounds and failing to find that the author of the recommendation letter did so at the behest of the respondent; 4. that the evidence of the appellant was not excluded in any way in arriving at her conclusions; J15 5. that the findings of the trial magistrate were neither perverse nor made in the absence of any relevant evidence or upon a misapprehension of the facts; 6. that the appeal had failed and she awarded costs to the respondent. 37. In support of the grounds of appeal, counsel for the appellant filed written heads of arguments to which their counter-parts also responded in writing. When the matter came up for the hearing of the appeal, however, counsel for both the appellant and the respondent were not in attendance. Upon confirming with the Register for service, that service of the Notice of Hearing was duly effected on them, we adjourned the matter for judgment. Arguments presented by the appellant 38. In their written submissions on ground one of the appeal, learned counsel for the appellant maintained that, the contract entered into with the respondent was one for services. That the High Court held otherwise, by reason only that the appellant had in the letter of recommendation “JM2”, referred to section 79 of the Employment Act Cap. 268. Whilst conceding that the said section relates to contracts of service and thus, to the relationship of J16 employer and employee, the appellant still argued that, the evidence on record does not support the contention that the respondent in the present appeal, was an employee of the appellant. 39. The appellant also conceded it does not dispute the form of the contract in issue as one that was oral. That the dispute was rather confined to the terms, allegedly agreed. Its argument was that, evidence on record shows the learned judge did not take note of the defence witnesses’ testimony confirming that the respondent was a subcontractor, which was the reason that no statutory payments were made on his behalf. 40. Learned authors of Halsbury’s Laws of England 14th Edition, Volume 16 were referred to, particularly at Paragraphs 501, 502, 511 and 566 where they set out the considerations that may assist in determining whether a person is an employee. These are stated as: ‘in addition to control and integration, who provides tools and equipment is an indication; as is the method of payment, arrangements J17 for payment of income tax, national insurance contributions, and whether an individual may delegate work.’ 41. The appellant argued that, the agreed method of paying the respondent was a lump sum and not monthly payments and this was the reason the respondent had failed to produce any Pay Statement. 42. The submission on ground one was that, the evidence of the Accountant of the appellant that all the appellant’s employees paid NAPSA contributions and tax, but the respondent did not, was a fact that the learned appellate judge acknowledged. The judge however, ignored this evidence pointing to the respondent as a subcontractor and not an employee when arriving at her conclusion. 43. It was further submitted that, as a sub-contractor of a larger project which the appellant carried out on behalf of SWASCO Limited, the respondent was left to do the assigned work and to choose the method of accomplishing it. * J18 44. The appellant’s argument in ground two was that, three of its witnesses testified that a lump sum of K30, 000.00 was agreed to be paid to the respondent upon completion of the works. The further agreement was that, in the meantime, the respondent could receive certain advances in payment, as evidenced by document “JM1” and this evidence was not challenged by the respondent. 45. It was further argued that, the said position notwithstanding, the trial magistrate saw it fit to find that the appellant owed the respondent K28, 000.00. The appellate judge below upheld that finding, despite other evidence produced by the appellant, such as document “OBC2” which is a Pay Sheet showing how employees are paid by the appellant and not as tabulated in “JM1”. 46. The appellant contended that, document “JM1” is a mere reconciliation document, showing the advances received by the respondent. That, it was not an official document to be relied upon, particularly as it was only signed by the person J19 who prepared it and the respondent himself, did not even sign against the monies he received. 47. The submission in ground two was that, had the lower court paid attention to all the evidence and documents produced by the appellant, it would not have found that the respondent was owed any money. 48. The argument in ground three, was that, evidence given by DW1, that the respondent was paid on humanitarian grounds, was not challenged. The appellant reiterated that, document “JM1” is not an official document which could be relied on by the respondent, as it was not even approved or signed by him. 49. It was submitted that, the respondent had been overpaid by K7, 000.00 which amount was counter-claimed before the subordinate court. That had the appellate judge considered this evidence on appeal, she would have been swayed by the appellant’s argument to the effect that, the payments were made on humanitarian grounds and found that the J20 respondent was only entitled to K30, 000.00 and not the K65, 000.00, he had claimed. 50. The argument in ground four was that, a reading of the judgment of the trial court shows no portion where the magistrate referred to the documentary evidence of the appellant in her findings, such as the contract between itself and SWASCO, either by way of comment or analysis. 51. The submission in that regard was that, the lack of analysis led to a perverse finding that the respondent was not subcontracted. That, had both lower courts taken into consideration the documents in issue marked “OBC1” and “OBC2,” they would have found, the respondent was not an employee for he did not pay NAPSA or tax, as by law required. 52. In ground five, the appellant’s argument was that, the trial courts’ reliance on the recommendation letter “JM2” to discredit the appellant’s witnesses was a perverse finding, as the said letter had nothing to do with the respondent’s J21 claim. That it also did not meet any of the requirements in establishing the employer-employee relationship. 53. Finally, in ground six, the appellant concluded by arguing that, the issue was not whether or not there was a written contract; and, that the lower court below should not have penalised the appellant purely by reason that one of its witnesses testified that, there was a written contract. The real controversy between the parties, according to counsel, is whether amounts were owing as a result of the oral contract entered into between them, which the appellate judge below failed to address. 54. Whilst conceding that in writing the letter UM2’ reliance was wrongly placed on section 79 of the Employment Act, the appellant still argued that, a recommendation letter does not form a contract from which it can be deduced whether or not the respondent was an employee. Arguments presented by the respondent 55. In their written response, counsel for the respondent only addressed grounds one, two, four and five in the order J22 stated. In ground one, counsel relied on the definition of ‘employee’ as given in section 3 of the Employment Act. The argument was that, this is the governing law in this jurisdiction and the section does not confine the method of paying remuneration to monthly payments, but extends it to include calculation of remuneration ‘by time’, or ‘by work done’. 56. The submission on ground one was to the effect that, granted that definition, the mode of payment be it by lump sum or monthly, does not assist in determining whether one is an employee. That exhibit “JM1” which was originated by the appellant, clearly indicates that monies were payable to the respondent at a rate of K5, 000. 00 per month. It being not in dispute that K37, 000. 00 of the amount due for one year had already been paid to the respondent, only the amount of K28, 000. 00 still remains outstanding. 57. On the appellant’s argument suggesting that the recommendation letter, “JM2” cannot be used to create an employer/employee relationship between the parties. J23 Learned Counsel for the respondent argued that, the converse was also true, that failure by the appellant to comply with section 79 in making statutory contributions to the relevant bodies, would not transform the respondent from being the employee which he was, to a subcontractor. 58. The submission on the point was that, the learned appellate judge did consider the evidence of DW2 to the effect that, no statutory contributions had been made, but still found that, the totality of the evidence shows the requirements of section 3 of the Employment Act had been met. 59 . In ground three, the respondent’s submissions were that, in the absence of any solid evidence advanced by the appellant to show that the money paid to the respondent was on humanitarian grounds, the trial court was correct in rejecting this argument. 60. Whilst acknowledging that the recommendation letter “JM2” does not form part of the elements for establishing the employer-employee relationship, the argument by learned counsel for the respondent was that, the said document is J24 still strong ‘prima facie’ evidence of the existence of such a relationship. 61. That apart from the guidance in section 3 on the various methods by which an employee can be paid, the court also took into account the totality of the evidence, such as lack of Pay Statements, NAPSA contributions that were unpaid. It further considered the deceitful and contradictory evidence of the appellant’s witnesses. The submission in this respect was that, the recommendation letter was just another indication to the court, of the veracity of the respondent’s claim. 62. In ground four, the respondent’s submissions were that, the appellate judge was on firm ground in her findings that the trial magistrate had considered all the evidence in totality. That she took into account relevant evidence such as “JM1” which shows monies payable to the respondent, amounts actually paid, and what was left owing. In the premises, that the other documentary evidence relating to NAPSA contributions and Pay Statements, was irrelevant. • ► J25 63. Finally, in ground five, counsel for the respondent submitted that, the contract between the appellant and SWASCO Limited has no bearing in resolving the bone of contention, which is whether the respondent was an employee of the appellant. He concluded by submitting that, grounds two and six of the appeal had not been made out, as to justify any response and we were urged to dismiss the appeal. Consideration of the matter by this Court and decision 64, We have considered the arguments, submissions from counsel, case law and other authorities, to which we were referred. In our view, this whole appeal is hinged on ground one, which raises a point of law. The other five grounds attack findings of fact made by the trial magistrate, which were upheld by the appellate judge. The appeal therefore stands or falls depending on the outcome of our determination of ground one. 4 t ' f J26 65. The issue raised in ground one is the nature of the respondent’s employment. Was he an employee as he claimed or a subcontractor as contended by the appellant? 66. The Employment Act, Cap 268 in section 2 defines both an employee and employer in the following terms: 2. “employee” means, any person who has entered into or works under a contract of service, whether the contract is express or implied, is oral or in writing, or whether the remuneration is calculated by time or by work done, or is in cash or kind, but does not include a person employed under a contract of apprenticeship made in accordance with the Apprenticeship act or a casual employee;” While, “Employer” is defined to mean any person, or any firm, corporation or company, public authority or body of persons who or which has entered into a contract of service to employ any person, and includes any agent, representative, foreman or manager of such person, firm corporation, company, public authority or body of persons who is placed in authority over such person employed;” (Underlining for emphasis supplied). 67. As correctly argued by the respondent, section 3 of the Employment Act Cap 268 does not confine the method of payment of an employee to monthly payments but refers to the calculation of the remuneration by ‘time’ or ‘work done’ by such employee. * * * > J27 68. The section also does not allude to payment of statutory payments on behalf of a person for them to be considered an employee. The only exclusions are persons under a contract of apprenticeship or a casual employee, and neither party contended that the respondent fell in either of those categories. 69. Further, the argument by the appellant that all its employees paid NAPSA contributions does not, in our view, assist the appellant’s case. This is so, as exhibit “OBC1” at pages 129 and 130 of the record of appeal which has been heavily relied on by the appellant, only lists 6 and 5 names, respectively, of employees whose NAPSA contributions were paid. 70. A perusal of those names and the names appearing on the Build Trust Construction/ Omni Contractors Pay Sheet at pages 133 to 138 of the record, shows that, not all the employees appearing on the Pay Sheets appear on the NAPSA members’ List of the appellant. If we were to adopt the appellant’s logic, then three-quarters of its staff J28 appearing on its payroll are not employees for the simple reason that, no NAPSA contributions were being paid on their behalf. 71. It also appears misleading to infer that the respondent’s name should be on any of those lists, which comprise of guards, maids and general workers, when he was Site Manager and would properly, be expected to on a different list. 72. Section 2 of the Employment Act as reproduced in paragraph 67 of this judgment defines an employee to mean any person who has entered into or works under a contract of service whether express or implied, oral or in writing and includes remuneration calculated “by work. done’. 73. Evidence on record shows it was not in contention between the parties that they entered into an oral contract for the respondent to undertake the work of supervising the construction of 130 toilets in the Libuyu compound of Livingstone. The remuneration was clearly tied to doing that work. J29 74. In view of these facts, the appellate High Court judge cannot be faulted for upholding the decision of the learned trial magistrate on the basis that, the respondent’s relationship to the appellant fit squarely within the meaning of an employee, as defined under section 2 of the Employment Act, as his remuneration was tied to the ‘work done’. Ground one fails for those reasons, and with it, all the other five grounds attacking findings of fact which were anchored on its success. 75. Costs of the appeal will be for the respondent and are to be taxed in default of agreement. Appeal dismissed. J. K. KABUKA SUPREME COURT JUDGE