Tembo v National Milling Corporation Ltd and Ors (Appeal 105 of 2007) [2009] ZMSC 154 (27 February 2009)

IN THE SUPREME COURT FOR ZAMBIA HOLDEN AT LUSAKA (CIVIL JURISDICTION) APPEAL NO. 105/2007 BETWEEN: ROBBIE TEMBO and APPELLANT NATIONAL MILLING CORPORATION LIMITED NATIONAL MILLING COMPANY LIMITED YUSIKU MAINGA Ist RESPONDENT 2nd RESPONDENT 3rd RESPONDENT CORAM: MAMBILIMA, DCJ, CHITENGI, JS KABALATA, A/JS On 20th May 2008 and 27th February 2009 For the Appellant: For the lsl & 2nd Respondent: Mr. N. NCHITO of MNB For the 3rd Respondent: Mr. C. L. MUNDIA of Mundia & Co. Mr. J. A. WRIGHT of Wright Chambers _________________________ JUDGMENT__________ MAMBILIMA, DCJ delivered the judgment of the Court. AUTHORITIES REFERRED TO: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. ROSEMARY CHIBWE VS AUSTIN CHIBWE (2001) ZR 2 MW ANGELA VS NSOKOSHI AND NDOLA CITY COUNCIL (2000) ZR 131 TIMOTHY HAMAUNDU MUUKA MUDENDA VS TOBACCO BOARD OF ZAMBIA SCZ APPEAL NO. 49 OF 1998 MWENYA AND ANOTHER VS KAPINGA SCZ JUDGMENT NO. 4 OF 1998 JAMES MANKWA ZULU & 3 OTHERS VS CHILANGA CEMENT, PLC COMPLAINT NO. 160 OF 2000 WILSON MASAUSO ZULU VS AVONDALE HOUSING PROJECT (1982) ZR 173 AT PAGE 175 SR. CELINE NAMALAMBO, SUPERIOR GENERAL VS MALI JOSE MABULA CHILESHE SIMFUKWE , SCZ APPEAL NO. 152 OF 1997 DE SMITH WOOLF AND JOWELL’S JUDICIAL REVIEW OF ADMINISTRATIVE ACTION 5th EDITION PAGE 576 PHILLIP MHANGO VS DOROTHY NGULUBE & OTHERS (1983) ZR 61 ZAMBIA RAILWAYS LIMITED VS OSWELL JOSEPH SIMUMBA, SCZ APPEAL NO. 2 OF 1995 ZCCM & ANOTHER VS SIKANYIKA (2000) ZR 105 12. 13. 14. NATIONAL MILLING COMPANY LIMITED VS GRACE SIMATAA & 3 OTHERS (2001) ZR 91 HYBRID POULTRY FARM LIMITED VS TEMBO (2003) ZLR 98 COLLETTE VS YAN ZYLE BROS LIMITED (1966) ZR 65 This appeal is against the decision of the High Court that dismissed the Appellant’s claim to buy house No. 2 Namambozi Road, Rhodespark, Lusaka which he had occupied as an incidence of his employment. The Appellant moved the Court below through a Writ of Summons claiming:- 1. a declaration that the 1st and 2nd Respondents should be deemed as one and the same company or one as agent or trustee of the other in this case; 2. a declaration that he was entitled to purchase or have an option of first refusal to purchase house no. 2 Namambozi Road, Lusaka; 3. a declaration that the refusal by the 1st and 2nd Respondents to sell the house to him is discriminatory; wrong, unfair, null and void, ab initio; and 4. an Order of Specific Performance to compel the first and second Appellants to sell the house to him. According to the evidence before the Court below, the Appellant was employed by National Milling Company Limited, the 2nd Respondent, in 1992 as a Mechanical Engineer. His last appointment was that of Stock feeds Engineer. On the 31st August 1999 he was declared redundant. According to the letter of redundancy, a copy of which appears on page 86 of the record of appeal, the reason for the redundancy arose from the on going restructuring of the company. He was to be paid one month notice pay, as well as leave days and 2 months basic pay for each completed year of service. The letter of redundancy also stated that he would be paid repatriation allowance if applicable, to the place of recruitment. At the time, the Appellant was residing in house No. 2 Namambozi Road Rhodespark. On 8th September 1999, the Appellant wrote to the Managing Director applying to buy the same house. He stated in his letter that he had been residing at this house since 1992. This was followed by another letter on 15th September 1992 in which the Appellant referred to a discussion which he had with the Manager, Human Resources, regarding the sale of the house to him. In this letter, he requested the 2nd Respondent to consider reducing the cost of the house to K40 million and also that the house be revalued since according to him ‘77 is almost falling.” Of the K40 million he offered to pay an initial payment of K30 million on approval, and the balance of K10 million by December 1999. It would appear that there was no written response to this letter. In his evidence to the Court below, he stated that the response to his letters was verbal. He also told the Court below that there was no mention in his letter of redundancy that he should vacate the house. On 17th May 2000 the 2nd Respondent issued a Memorandum to all employees communicating the decision of the Board of Directors to dispose of company owned houses in Lusaka, Kabwe, and Kitwe. The following guidelines were given in the memorandum: “1. The first right of refusal will be to the sitting employees. 2. If the sitting employee is unable or declines to buy, then the second offer will be to any other employee interested in the said property. 3. If no any other employee is interested in the said property, then the property will be offered to any interested 3rd party. 4. As for the PP employees with retirement benefits (gratuity), management is amenable to crystallizing their benefits towards the purchase price. For any shortfall on the purchase price such employees will have to show proof of how they propose to pay off the balance. 5. In the event that PP employee’s benefits are crystallized towards the purchase price, they will cease to be PP employees, but will instead sign individual contracts like any other contract employees. 6. Since the move by management to sell company houses to employees is in recognition of their dedicated years of services to the company, and that the company still needs their services, these employees will be bonded to NMCorp for a period of 5 years at the sole discretion of management. Should an employee decide to terminate his/her services, prior to the completion of the bonding period, the company reserves the right to purchase the said property at the original price. During the bonding period, the title deeds shall be held by MNB in trust for NMCor and the employee. 7. MNB Legal Practitioner (company lawyers) will be the conveyance lawyers on the buyer’s account. 8. Interested parties are invited to lodge in their applications within 14 days of this memo with the Manager, Human Resources specifying the house they intend to purchase. Only one application per person will be accepted. 9. Attached is a list of the houses on sale. For the purchase price, contact the Manager, Human Resources Office. On 20 June 2000, the offer to purchase house No. 2, Namambozi th Road, Rhodespark was given to Mr. Yusiku MAINGA, the 3rd Respondent, herein. The purchase price of the house was pegged at K75 million, to be settled within 30 days of executing the contract. Other conditions of the offer required that Mr. MAINGA accepts this offer within 30 days in default of which the offer will be deemed to have lapsed. This letter of offer was signed by the Managing Director. The 3rd Respondent accepted the offer. On 19th December 2006, the 3rd Respondent’s contract of service was terminated. According to the letter of termination, he was allowed one month grace period in which to stay in the company house. It is on record that at the time, the 3rd Respondent was staying in a company house in Livingstone. He had worked for National Milling Company Limited for 25 years. He also told the Court that he had never been a sitting tenant in house No. 2 Namambozi Road, Rhodespark. The 1st Respondent’s witness, Mr. Richard NGALANDE, the Human Resources Manager for the company, denied that he ever agreed, verbally, to offer the house in dispute to the Appellant for sale. He told the Court that at the time that the 2nd Respondent resolved to sell houses to its employees, the Appellant was no longer in its employment. He went on to state that the house in question was offered to the 3rd Respondent who has since paid for it. The company however failed to convey vacant possession of the house to the 3rd Respondent because the Appellant was still in occupation. This witness also told the Court that the 1st Respondent, National Milling Corporation Limited, came into being on 4 February 2000 and it put in place the scheme of selling company houses to existing employees who were in the service of the company. This scheme was conveyed through the Memorandum of 17th May 2000. The learned trial Judge in the Court below found, on the evidence which was before him, that the Appellant was not a party to the memorandum by the 1st Respondent to dispose of company houses to its employees because he had ceased to be an employee of the company. The Court also found that the 3rd Respondent responded to the offer to purchase the house and accordingly purchased the property. The Judge was of the view that the Appellant was a stranger to the contract and however persuasive his arguments may be, he had no claim under the contract. He dismissed the Appellant’s claim in its entirety. He upheld the counter claim by the third Respondent to be paid mesne profits from 5 March 2001 up to th the date of judgment. The money owing was to attract interest at the rate of 6% at current bank rate. Dissatisfied with the judgment, the Appellant has now appealed to this Court advancing five grounds of appeal, namely: 1. That the Court below misdirected itself when it found that the 3rd Respondent had purchased the property in question; 2. That the learned trial Judge misdirected himself in failing to take into account the discriminatory conduct of the 1st and/or 2nd Respondents in not granting the Appellant the right of first refusal as it did to other employees who were in the same circumstances as the Appellant; 3. That the learned trial Judge misdirected himself in law in holding that the Appellant had no claim on the basis that the Appellant was not privy to the contract for the sale of the property in question between 1st and 3rd Respondents; 4. That the learned trial Judge misdirected himself in failing to address the Court’s mind as to whether the 1st ad 2nd Respondents should be regarded as one and the same entity, and lastly; 5. That the Judge misdirected himself in awarding costs to the Respondents given the circumstances of this case and the evidence on record. In support of the 1st ground of appeal, Mr. WRIGHT on behalf of the Appellant, referred us to the case of ROSEMARY CHIBWE VS AUSTIN CHIB WE,(1) especially to our holding that “it is a cardinal principle supported by a plethora of authorities that Courts ’ conclusions must be based on facts stated on the record. ” Mr. WRIGHT relied on this principle to contend that the cheque which was issued by the 3rd Respondent meant to pay for the house was not presented to any bank. He stated that the cheque in question, a copy of which appears on page 127 of the record of appeal, did not have any marks on it. He further pointed out that the 3rd Respondent admitted in cross examination that he was not given any acknowledgement of receipt for the purported payment. He went on to state that if there was any payment towards the purchase of the house; the Respondents could have brought that evidence to Court. He therefore questioned whether the Respondent did in fact buy the property in question. Mr. WRIGHT submitted further, that the 3rd Respondent had never lived at the house in question because he was based in Livingstone. He referred us to the case of MWANGELA VS NSOKOSHI AND NDOLA CITY COUNCIL, (2) particularly to a portion of the judgment in which we stated that “since the house was never transferred to the Appellant and the Appellant was not a sitting tenant, the Appellant was not entitled to purchase the house.” He urged us to apply the same reasoning to this case because evidence has demonstrated that firstly, that the 3rd Respondent had never lived at the property in question either as a sitting employee or ex sitting employee. Secondly, the property in question had never been transferred to the 3rd Respondent and thirdly, he argued that on the face of the evidence on record, the third Respondent had not purchased the property. In further support of the first ground of appeal, Mr. WRIGHT invited us to look at the mode of separation from employment of the Appellant and the 3rd Respondent. He pointed out that the 3rd Respondent’s services were terminated while the Appellant was declared redundant and no time limit was given as to how long he could stay in the house. In this respect, he referred us to the evidence of DW 2 who told the Court below that there was no reference for the Appellant to vacate the property. On the other hand, the 3rd Respondent was given one month to stay in the company house. In response to the first ground of appeal, Mr. NCHITO, for the 1st and 2nd Respondents, argued that the Court below was on firm ground when it found that the 3 rd Respondent had purchased the property in question. He conceded on the law that a Court’s conclusion must be based on the facts stated on record. He went on to state that in the case at hand, there was sufficient evidence on record to show that the 3rd Respondent purchased the property in question. He argued further that the 1st and 3rd Respondents complied with the simple tenets of contract law and Statute of Frauds 1677 in that there was an offer made by the 1st Respondent to the 3 rd Respondent which was duly accepted by the 3rd Respondent. On the submission by Mr. WRIGHT, that the cheque used for payment was not presented to the bank for payment, Mr. NCHITO submitted that this was irrelevant. He went on state that the internal arrangements as to whether or not the cheque was presented for payment is no business of the Appellant as he was not a party to the transaction. As to the question of who was entitled to purchase the house in question, he submitted that there was established, by cogent, clear and irrefutable evidence that there was a contract between the 1st and 3rd Respondent under which the house was contracted to be sold to the 3rd Respondent. He pointed out that the testimony of DW 2 shows that the 1st Respondent acknowledged receipt of the funds from the 3rd Respondent when he stated that the amount was fully paid and it reflects in the books of the company. On the argument by the Appellant, that the 3rd Respondent never lived at the house in question, Mr. NCHITO submitted that the case of MW ANGELA VS NSOKOSHI AND NDOLA CITY COUNCIL (2) has been cited out of context because the facts in that case are very different. He went on to state that in this case, the issue was not whether the Appellant or the 3 rd Respondent was a sitting tenant, but whether he was an employee as envisaged by the Memorandum which was issued on 17th May 2000 for the sale of company houses. He went on to state that the Appellant admitted in his testimony that at the material time, he was not an employee of the first Respondent. Mr. NCHITO argued that at the time when the Appellant was in occupation of the house, he was a mere licensee. He stated further that as such the Appellant was not a sitting employee and neither was he a sitting tenant since he was not paying rent. For this submission, he referred us to the case of TIMOTHY HAMAUNDU MUUKA MUDENDA VS TOBACCO BOARD OF ZAMBIA, SCZ APPEAL (3) in which it was stated; “ ....legalposition has always been that a licensee is not a sitting tenant at law and as such has no legal right to purchase the house he is living in except where there is a firm offer and acceptance of that offer to purchase the house. ” Mr. NCHITO consequently submitted that the contract to sell the house was not meant to prejudice the Appellant’s rights to purchase the house because he had no such rights; having been made redundant before the 1st Respondent offered the houses to employees. He submitted that the decision of the Court below is amply supported by evidence and it cannot be said that the decision of the court was made to prejudice the Appellant. 11