SGC Investments Limited v Mary Mwansa (2024/HN/CA/19) [2025] ZMHC 48 (14 July 2025)

IN THE HIGH COVRT FOR ZAMBIA AT THE DISTRICT REGISTRY HOLDEN AT NDOLA (Civil Jurisdiction) BETWEEN: HIGH COURT OF ZAMBIA 1 4 JUL 2025 2024/HN/CA/ 19 SGC INVESTMENTS LIMITE APPELLANT AND MARYMWANSA RESPONDENT Before: Hon. Lady Justice Dr. Winnie Sithole Mwenda at Ndola this 14th day of July, 2025. For the Appellant: For the Respondent: Ms. L. Mulasikwanda of Messrs. Isaac & Partners. Mr. D. S. Libati of Messrs. D. S. Libati Leg~aGt ' JUDGMENT Cases referred to: 1. P C Cheelo and 9 others v. ZCCM, SCZ Appeal No. 25 of 1 2. Stanbic Bank Zambia Limited v. Natasha Patel, CAZ Appeal No. 274/2022(2024) ZMCA. 3. Midlands Milling (2011) Limited v. Lloyd Tembo ((Appeal 297/2022) 2024 ZMCA. 4. Vangelatos and Another v. Metro Investments Limited and 3 Others, Selected Judgment No. 35 of 2016. 5. JCN Holdings Limited v. Development Bank of Zambia, Selected Judgment No. 22 of 2 013. J2 6. Sonny Paul Mulenga and Others v. Investment Merchant Bank Limited, S. C. Z Judgment No. 15 of 1999. 7. Kalunga Chansa v. Evelyn Hone College, CAZ Appeal No. 134/ 2019. 8. Isaac Lungu v. Mbewe Kalikeka, SCZ Appeal No. 114 of 2013. 9. Sir Lindsay Parkinson and Company Limited v. Triplan Limited (1973) 2 All ER 273. 10. Bank of Zambia v. AI Shams Building Materials Company Limited, Jayesh Shah, Attorney General, CAZ/ 08/ 430/ 2023. 11 . Match Corporation Limited v. Development Bank of Zambia and Attorney General, S. C. Z Judgment No. 3 of 1999. 12. Kingfred Phiri v. Life Master Limited, CAZ Appeal No. 24 of 2023. 13. Zambia National Commercial Bank v. Joseph Kangwa, SCZ Appeal No. 54 of 2008. 14. Cosmas Mukuka (Sued in his capacity as Secretary General of the Zambia Congress of Trade Unions) v. Jason Mwanza (Suing in his Capacity as General Secretary of the University of Zambia Lecturers and Researchers Union) Selected Judgment No. 13 of 2019. 15. Gift Mulambo Moonga v. Standard Chartered Bank Plc., SCZ Appeal No. 56 of 2018. 16. Mohammed Enterprises (T) Limited v. Hamrah Enterprises, 2014/ HPC/ 0535. 17. Amchile Import and Export Limited v. Ian Chimanga & Another, SCZ Appeal No. 43a of 2011. Legislation Referred to: 1. Section 12 of the Subordinate Courts Act, Chapter 28 of the Laws of Zambia. 2. Order 5, rule 15, Order 6, rule 4 (1), Order 39, rules 4 and 5 of the Subordinate Courts Rules, Chapter 28 of the Laws of Zambia. 3. Order 13, rule 2(1), (2) of the County Court Rules, 1981. J3 4. Sections 58 (1) and 85 (1), (9) of the Industrial and Labour Relations Act, Chapter 269 of the Laws of Zambia. 5. Subordinate Courts (Civil Jurisdiction) Rules, Statutory Instrument No.12 of 2024. 6. Rule 13 (3) of the Local Government Election Tribunal Rules, 2016. 7. Section 54 {l)(a)(b)(c)(d)(e}, (3) of the Employment Code Act, No. 19 of 2019. 8. Subordinate Courts (Civil Jurisdiction) (Amendment) Rules, 2001, Statutory Instrument No, 22 of 2001. 9. Employment Code (Exemption) Regulations, 2020. 10 Order 40, rules 7 and 8, Order 4 7, rule 1 of the High Court Rules, Chapter 27 of the Laws of Zambia. Authoritative Text referred to: Mwenda, W. S. and Chungu. C, Comprehensive Guide to Employment Law in Zambia, (2021 UNZA Press, Lusaka). 1. Introduction This appeal contests the Ruling rendered on 19th August, 2024, a Judgment delivered on 23rd August, 2024 and part of an Order made on 27th August, 2024 by the Honourable Magistrate Mr. B. Simachela at the Ndola Subordinate Court of the First Class sitting at Ndola. 2. Background 2.1 The Respondent commenced an action against the Appellant in the Ndola Subordinate Court by way of a J4 Default Writ of Summons accompanied by an Affidavit Verifying Debt, claiming the sum of K200, 733.66 as monies owed by the Appellant to the Respondent as severance pay for the period May 2020 to March 2023, plus interest thereon at the current Bank of Zambia lending ra te. 2.2 The Appellant filed a Notice of Motion to raise an issue in limine Pursuant to Section 12 of the Subordinate Courts Act, Chapter 28 of the Laws of Zambia and Order 13, rule 2(1) and (2) of the County Court Rules, 1981 and sought for the determination of the following issues: 1. Whether or not this action was properly commenced before the Subordinate Court given the fact that the Plaintiff was claiming for severance pay; and ii. Whether or not paragraph 16 of the Respondent's Affidavit Verifying Debt should have been expunged from the record for containing extraneous matters. 2 .3 Paragraph 16 of the Respondent's Affidavit was deposed to as follows: "That I have been advised by my lawyers, which ad vice I believe to be true, that the High Court of Zambia did on the 20th of February, 2024 deliver a Judgment in the matter of Dansiano Phiri JS v. Afronet Trading Limited and Another Comp/IRCLK/283/2021 wherein interpretation of the provisions of Section 54 (l)(c) of the Employment Code Act, No. 3 of 2019 was provided to the extent that employees who are employed on permanent and pensionable basis are entitled to severance pay calculated at the rate of twenty five percent of their basic pay. Mine is as calculated in paragraph 15 herein. Now produced and marked as "MM4" is a copy of the said High Court Judgment, with the relevant portions highlighted therein." 2.4 In Support of the Preliminary Issue, the Appellant argued that the Respondent's action was not a debt and therefore, should not have been commenced by a Default Writ of Summons, as the dispute between the parties arose from a contract of employment and the matter ought to have been commenced in the Industrial and Labour Relations Court. 2.5 The Appellant concluded that the Subordinate Court did not have jurisdiction to hear the matter. 2.6 On the second issue, the Appellant contended that paragraph 16 should have been expunged from the Affidavit Verifying Debt as it contained an extraneous matter by way of a Court Judgment, which is a legal Authority. 2.7 In response, the Respondent submitted the Skeleton Arguments in Opposition to Notice of Motion to Raise J6 Preliminary Issues. On the first issue, it was argued that industrial relations matters mean collective disputes, collective agreements or recognition agreements or matters affecting the rights, obligations and privileges of employees, employers and their respective bodies under the signed agreement as provided in Section 58 (1) of the Industrial and Labour Relations Act, Chapter 269 of the Laws of Zambia. 2.8 The Respondent also argued that both the High Court and the Subordinate Court have jurisdiction to hear and determine matters of this nature. 2 .9 It was contended that they complied with Order 6, rules 1 and 4 of the Subordinate Courts Rules, Chapter 28 of the Laws of Zambia and this matter was properly before the Subordinate Court for the claim of severance pay amounting to K200,733.66 , which claim was within the jurisdiction of the Subordinate Court. 2.10 With regard to whether or not paragraph 16 of the Plaintiffs Affidavit Verifying Debt should have been expunged from the record for containing extraneous matters, the J7 Respondent averred that paragraph 16 was put up for the purposes of calculating the Respondent's severance pay and not to put forward a legal argument. 3. The Decision of the lower Court 3. 1 On the issue of commencement of the matter in the Subordinate Court for severance pay, the lower Court took guidance from the case of P C Cheeto and 9 Others v. ZCCM 1 , where the Court pronounced as follows: "In the instant case the appellants are no longer employees of the respondent and their claim is for benefits due to them under the redundancy agreement. To give the expression 'Industrial Relations matters' a wide interpretation so as to encompass cases of breach of contract, wrongful dismissal or claims of the nature before us which could be tried by a local court or subordinate court would lead to absurdity." 3.2 The lower Court was of the opinion that the Supreme Court gave the Subordinate Courts jurisdiction to hear and determine matters such as the claim for non-payment of severance pay provided it does not exceed the Subordinate's jurisdiction as provided by the Subordinate Courts (Civil Jurisdiction) Rules, Statutory Instrument No.12 of 2024. JS 3.3 The lower Court found that it had jurisdiction to hear and determine the matter before it. 3.4 Regarding the issue of paragraph 16 of the Respondent's Affidavit Verifying Debt being expunged from the record, the lower court cited Order 5, rule 15 of the Subordinate Courts Rules, Chapter 28 of the Laws of Zambia, which provides as follows: "An Af.ftdavit shall not contain extraneous matter by way of objection or prayer or legal argument or conclusion." 3.5 In view of the above provision, the lower court expunged the full citation of the Judgment of the Industrial and Labour Relations Court and the citation of the Employment Code, No. 3 of 2019 in the said Affidavit and reserved the advice given to the Respondent by her Counsel. 3.6 The lower Court dismissed the Appellant's Notice of Motion to Raise a Preliminary Issue and proceeded to hear the matter. 3.7 In the Affidavit verifying Debt the Respondent averred that on 16th August, 2016 she entered into a permanent employment contract with the Appellant until March, 2023 J9 when she resigned from the Appellant Company with a terminal salary of K22, 940. 99. 3.8 The Respondent stated that upon resignation, the Appellant only paid her accrued leave days and not severance pay from May, 2020 to March, 2023 calculated at the rate of 25% of her basic pay in the sum of K200,733.66 . 3 . 9 For the Appellant Maur-ice Masiya, the Appellant's Human Resource Manager, deposed in the Affidavit in Opposition, that the Respondent was employed by the Appellant and tendered in her resignation letter on 13th February, 2023. He also stated that the Respondent was paid her accrued leave days at the time of separation with the Appellant. 3.10 The Appellant argued in the lower court that the Respondent was not entitled to severance pay and gratuity as she was on permanent and pensionable employment. 3. 11 The learned Magistrate evaluated the evidence and facts before him and found that the Respondent was a permanent employee and was as such entitled to severance pay in accordance with section 54 (l)(c) of the Employment Code Act No. 3 of 2019 and gratuity at the rate not less JlO than 25% of the basic pay earned during the contract period as at the effective date of termination. 3.12 The lower Court established that the Respondent proved her case on a balance of probabilities and awarded severance pay in the sum of K200, 733.66 as claimed with interest at short-term bank deposit rate from the date of complaint to the date of Judgment. 4. The Appeal 4. 1 Dissatisfied with the Ruling, Order and Judgment of the lower Court, the Appellant appealed to this Court against the Ruling of 19th August, 2024 and part of the Order for stay of execution of the Judgment and payment of KS0,000.00 security for costs pending appeal dated 27th August 2024. The Appellants advanced the following grounds of appeal: 4.1.1 That the trial Court erred in law and in fact by dismissing the Defendant's preliminary issue as to mode of Jll commencement as the Plaintiff had not demonstrated her entitlement to severance pay. 4. l.2The trial Court misdirected itself by imposing a condition against the Defendant to pay security for costs and combining it with the stay of execution. 4. l .3The trial Court misdirected itself at law when it ordered the Defendant to pay the sum of KS0,000 cash as security for costs when the amount is not reflective of the Subordinate Courts Scale of Legal Practitioners' Costs. 4 . 1. 4 The trial Court erred in law and fact when it ordered that the Defendant pay the sum of KS0,000 cash as security for costs when there was no conduct on the part of the Defendant to warrant such payment. 4.2 Against the Judgment dated 23rd August, 2024 the Appellant raised the following grounds of appeal: 4.2.1 That the trial Court misdirected itself at law when it held that then Plaintiff as a permanent and pensionable employee was entitled to severance pay in accordance with Section 54(1)(c) of the Employment Code Act, No. 3 of 2019. J12 4.2.2The trial Court erred in law by not abiding by the doctrine of stare decisis when it failed to follow the binding authority of the Court of Appeal in the cases of Stanbic Bank Zambia Limited v. Natasha Patel2 and Midlands Milling (2011) Limited v. Lloyd Tembo3 when it awarded the Plaintiff, a permanent and pensionable employee, severance pay. 4.2.3The learned Hon. Magistrate misdirected himself in law and in fact when he ordered that the Defendant pays the Plaintiff severance pay in the sum of K200, 733.66 contrary to the applicable law. 5. Appellant's Arguments 5.1 The Appellant argued ground one of appeal against the ruling of 19th August, 2024 and part of the Order dated 27th August, 2024 and stated that the issue that fell to be determined in the first place was whether the Respondent was entitled to severance pay and not a matter of non-payment of severance pay. J13 5.2 The Appellant went further to submit that it had not been established that the Respondent was entitled to severance pay and as such, the lower Court did not have the jurisdiction to determine the matter due to the manner in which the Respondent commenced the matter by way of a Default Writ of Summons accompanied by an Affidavit Verifying Debt. Reliance was placed on the case of Vangelatos and Another v . Metro Investments Limited and 3 others4 where the Supreme Court stated that: "It can be discerned from the foregoing position of the law, that the absence of jurisdiction nullifies whatever follows from such proceedings." 5.3 The Appellant also cited the case of JCN Holdings Limited v. Development Bank of Zambia5 where the Supreme Court held that: " ... It is settled law that if a matter is not properly before a court that, that court has no jurisdiction to make any orders or grant any remedies. This was the position we established in Chikuta v. Chipata Rural Council." J14 5.4 It was the Appellant's prayer that in the absence of jurisdiction the proceedings in the Court below be nullified and urged this Court to allow ground one of the appeal. 5.5 Grounds 2, 3 and 4 relating to the lower court's ruling and part of the order of the lower court, were argued collectively and this Court was referred to page 209 of the Supplementary Record of Appeal where the lower court ordered the Appellant to pay KS0,000 cash as security for costs before any documents could be signed. 5.6 To buttress the point above, the Appellant drew this Court's attention to the case of Sonny Paul Mulenga and Others v. Investment Merchant Bank Limited6 where the Supreme Court held that: "In exercising its discretion whether to grant a stay or not, the court is entitled to preview the prospects of the proposed appeal." JlS 5.7 Also cited was the case of Kalunga Chansa v. Evelyn Hone College 7 where the Court of Appeal stated as follows: "A Judge is vested with inherent discretionary power to make legal decisions according to their discretion. This discretionary power for a Judge as a decision maker is to make a judgment taking into account all relevant information. This entails making a choice of approving or not approving. The benefits of judicial discretion are that a Judge can determine a case fairly based on the consideration of individual circumstances. The only time this exercise of judicial discretion can be impeached is if the Judge did not exercise it judiciously. What this means is that a failure to take proper consideration of the facts and law relating to a particular matter will be considered to be an abuse of discretion. One must establish that the discretion exercised is an arbitrary one or is unreasonable thereby flying in the teeth of precedent and judicial custom." 5.8 The Appellant further cited the case of Isaac Lungu v. Mbewe Kalikeka8 , where the Supreme Court referred to the case of Sir Lindsay Parkinson and Company Limited v. Tri plan Limited9 , wherein Lord Denning highlighted the circumstances that the court might J16 consider on an application for security for costs as follows: " (i) Is the claim bona.fide and not a sham? (ii) Does the claimant have a reasonably good prospect of success? (iii) Is there an admission by the defendant on the pleadings or elsewhere that money was due?" i. Is there a substantial payment into Court, or an 'open offer' of payment? ii. Is the application for security being used oppressively so as to try to stifle a genuine claim? iii. Is the claimant's want of means brought about by any conduct by the defendant, such as delay in payment or doing their part of the work? w. Is the application for security made at a late stage of the proceedings?" 5.9 It was the Appellant's submission that the Court is entitled to preview the prospects of success of a proposed appeal in exercising its discretion, which discretionary power to make legal decisions must be made after considering all relevant information. 5.10 The Appellant contended that the Court below did not consider the high degree of probability of success or failure when it ordered that the Appellant pay the sum Jl7 of KS0,000.00 as security for costs when the circumstances did not warrant an order for payment of such an amount. 5.11 It was also argued that there was no conduct on the part of the Appellant to warrant such an order and no application was made by the Respondent in the Court below for security for costs. It was the Appellant's contention that while the Court below was clothed with the discretion to make an order for security for cost, the lower court did not judiciously exercise its discretion as the amount for security for costs was not just in the circumstances. 5.12 The Appellant drew comparisons with the Local Government Election Tribunal Rules, 2016, which provide for security for costs not to be less than KS00.00 while the Court below in this matter imposed the sum of KS0,000.00. 5.13 It was submitted that if in matters as serious as local government elections disputes a court can order security for costs as low as KS00.00, it is expected that Jl8 in an employment case security for costs would not be so exorbitantly high and arbitrary as in the current case. 5.14 The Appellant opined that the lower court did not judiciously exercise its discretion when it combined the stay of execution with payment of security for costs in the sum of KS0,000.00. That, the amount did not reflect the Subordinate Courts Scale of Legal Practi~ioners' Costs and was unreasonable, thereby flying in the teeth of precedent and judicial customs. 5.15 The case of Bank of Zambia v. AI Shams Buildings Materials Company Limited, Jayesh shah, Attorney General10 was cited, where the Court held thus: "It would appear therefore that conditional leave may be made in cases where ipso fact leave to appeal is required. We must hasten to add therefore that conditional leave should be ordered very sparingly if at all. It should be in extra ordinary circumstances such as one in which the intended appellant clearly wishes to use the appeal process to circumvent the course of justice. Before taking such a course of action a court must undertake a meticulous analysis justifying the imposition of the condition. This is in order to avoid haphazard J19 and spontaneous orders, which may have the effect of technically denying the leave purported to have been granted. Notwithstanding the foregoing, we urge trial courts not to impose conditions on granting leave to appeal. A court should either grant leave or not grant leave, in instances where leave is required." 5.16 The Appellant contended that the leave to appeal granted by the Court below was conditional when the court imposed the payment of KS0,000.00 by Appellant, thereby technically denying the leave purported to have been granted. It was argued that the trial Court misdirected itself at law when it ordered the Defendant to pay the sum of KS0,000 cash as security for costs when the amount is not reflective of the Subordinate Courts Scale of Legal Practitioners' Costs 5.17 The Appellant submitted that the Subordinate Courts (Civil Jurisdiction) (Amendment) Rules, 2001, Statutory Instrument No, 22 of 2001, provides for the Scale of Costs that a legal practitioner can charge in an action or matter in the Subordinate Courts in Zambia per hour in Parts II and III ranging from the J20 lowest hourly charge of K30 and the highest being K135. 5.18 It was the Appellant's argument that talcing into account the time spent on the action in the lower court it is impossible for the costs of the Respondent's Advocates to reach levels of KS0,000.00 in any event and thus, the court's order for security for costs of KS0,000.00 is way out of the range required to provide security for the same. It was further argued that there was no evidence in the Court below that the Appell~t was incapable of paying the costs or that it was a flight risk. 5.19 The Appellant urged this Court to set aside the order of the lower court dated 27th August, 2024 as it relates to the Appellant paying KS0,000.00 cash as security for costs and replace it with a reasonable amount and that the funds in excess be ordered to be returned to the Appellant immediately. 5.20 The Grounds of Appeal against the Judgment of 23rd August 2024 were also argued jointly. The Appellant J21 stated that the doctrine of stare decisis was considered in the case of Match Corporation Limited v. Development Bank of Zambia and Attorney General 11 where the Supreme Court stated the following: "Again in Kasote v the People (1977) Z. R. 75 this Court not only affirmed the importance of the principle of stare decisis to a hierarchical system of Court (whereby lower Courts are bound to follow the latest of any superior Court's decision on a point) but also affirmed that being the final Court in Zambia this Court adopts the practice of the House of Lords in England concerning previous decisions of its own and will decide first whether in its view the previous case was wrongly decided and , secondly, if so, whether there is a sufficiently strong reason to decline to fallow it." 5.21 The Appellant submitted that the lower court was bound to follow the decisions of the Court of Appeal in the case of Stanbic Bank Zambia Limited v Natasha Patel, supra, where the Court of Appeal stated that: "From where we stand, the natural and ordinary meaning of the foregoing is that this provision exclusively applies to employees on fixed duration contracts. Our understanding is that the afore-cited provision applies to those contracts with a specified start and end date which entitles them to gratuity. We agree with the arguments advanced by the Appellant that J22 employees on a permanent and pensionable basis are excluded as can be deduced from the terms 'contract period' And 'gratuity ... Section 54(1)(c) applies only to employees eligible for gratuity specifically those on long-term contracts of 12 months or more, renewable for further terms. It does not apply to employees on permanent and pensionable contracts." 5.22 The Appellant also called in aid the case of Midlands Milling (2011) Limited v Lloyd Tembo, supra, where the Court of Appeal held that: "In a nutshell, when it comes to payment of severance pay, the key is section 54 (1) of the Employment Code Act, which prescribes when an employer can pay severance pay to an employee, that is, where there is a termination or expiration of the contract. When it has been established that an employee falls within the prescribed mode of separation from employment, then recourse can be had to Section 54(3) to determine whether the employee does not fall within the category of excluded employees. Once the above steps have been satisfied, that is when recourse can be had to the applicable severance package." 5.23 It was contended that a contract of employment is governed by its terms and conditions, like any other contract an~ the Affidavit in Opposition filed into Court by the Appellant on 3 rd July, 2024 shows that the Respondent was offered employment in 2016 J23 under a permanent and pensionable contract of employment. That, the Respondent's contract of employment, which is at page 32 of the Supplementary Record of Appeal, demonstrates that the said contract only has a commencement date of 16th August, 2016 at the Head Office and it does not have an end date. It was thus, the Appellant's contention that the Respondent as an employee under a permanent and pensionable contract of employment was, consequently, not entitled to receive gratuity. 5.24 The Appellant further submitted that the Respondent is excluded from the provisions of Section 54 (1) (c) of the Employment Code Act, No. 3 of 2019 and as such, not entitled to severance pay. It was further contended that a fixed term contract and a permanent and pensionable contract are distinguishable as was held in Stanbic Bank Zambia Limited case where the Court held that: J24 "A permanent contract of employment and a contract of fvced duration are distinguishable. for the avoidance of doubt, they are not synonymous. " 5.25 The case of Kingfred Phiri v. Life Master Limited12 was cited, where the Court of Appeal held that: "In the Natasha Patel Case, we adequately distinguished between a fixed-term contract and a permanent and pensionable contract. We made the point that while a fvced term contract has a set end date; a permanent and pensionable contract of employment does not. We stand by that decision and the distinction therein." 5.26 It was submitted that the Court of Appeal in the case above reaffirmed its position that an employee on permanent and pensionable contract of employment, who 1s terminated other than through the circumstances set out in subsection (l)(a), (d) and (e) of Section 54 of the Employment Code Act No. 3 of 2019, is not eligible for severance pay. 5.27 The Appellant further relied on the case of Zambia National Commercial Bank v. Joseph Kangwa13 where the Supreme Court distinguished between a J25 fixed term contract and permanent contract when it stated that: "On the 9th October, 1999 the Appellant was placed on a fvced term contract and, therefore, ceased to be on permanent and pensionable conditions of service." 5.28 It was stated that according to the Employment Code (Exemption) Regulations, 2020 an employee 1n management 1s exempted from the prov1s1ons of Section 54 (1) (b) and (c) of the Employment Code being the provisions specified in the schedule. 5.29 The Appellant further, submitted that the definition of management has been provided for in Section 4 of the Industrial and Labour Relations Act, Chapter 269 of the Laws of Zambia which provides that: "4. An employee shall cease to be an eligible employee and become a member of management if the employee- (a) is empowered to make management decisions; (b) is entrusted with personal management and industrial relations functions; or (c) reports directly to the Chief executive : Provided that where there is a disagreement on the point when an eligible employee becomes a member of J26 management, the matter shall be ref erred to the Minister for resolution subject to appeal to the Court." 5.30 The Appellant argued that the Respondent was an employee in management because as Legal Officer/ Company Secretary , some of her duties as stated in her Affidavit Verifying Debt, included providing legal advice and opinions on all legal matters, handling all insurance matters on behalf of the company, claims handling procedure and payments, liaising on behalf of the company with relevant government agencies and ministries, attending to and advising on labour disputes and internal disciplinary procedures as well as liaising with external lawyers on all litigation matters. 5.31 It was submitted that considering the duties of the Respondent, she was empowered to make management decisions and was entrusted with personnel management and industrial relations functions and she also reported directly to the Chief Executive. The Appellant urged this Court to find that J27 the Respondent is not entitled to severance pay as the claim lacks merit and allow the appeal with costs. 5.32 The Respondent filed Heads of Arguments on 12th February, 2025 and in response to ground one of the appeal on the ruling of 19th August, 2024, the Respondent, inter alia, stated that the lower court held that it had jurisdiction to hear and determine matters of such a genre and not that the Respondent had demonstrated her entitlement to severance pay. 5.33 The Respondent went on to state that the lower court was called upon to determine whether or not it had jurisdiction to entertain the Respondent's claim for severance pay at the liquidated amount of K200,733.66. 5.34 The Respondent further stated that at that stage of the proceedings, the Court had no business determining whether or not the Respondent had demonstrated that she was entitled to her claims as that was an issue to be determined at trial of the main matter. J28 5 .35 The Respondent called 1n aid the case of PC Cheelo and 9 Others v. Zambia Consolidated Copper Mines, supra, where the Supreme Court gave interpretation to what is meant by 'Industrial Relations matters' as contained in Section 85( 1) of the Industrial and Labour Relations Act, Chapter 269 of the Laws of Zambia when it held that: "It is quite clear from the subsection that the terms 'Industrial Relations matters' mean collective disputes, collective agreements or recognition agreements or matters affecting the rights, obligations and privileges of employers and their respective bodies under the signed agreement." 5.36 The Respondent went on to state that in the same case the Supreme Court went on to guide on cases involving litigants that were no longer employees of their former employers, against whom they had grievances for which they sought intervention from the courts, when it held that: "In the instant case the appellants are no longer employees of the respondent and their claim is for benefits due to them under the redundancy agreement. To give the expression 'Industrial relations matters' a wide interpretation so as to encompass cases of breach of contract, wrongful dismissal or J29 claims of the nature before us which could be tried by a local court or subordinate court would lead to absurdity." 5.37 In view of the above, it was argued that both the High Court and the Subordinate Court have Jurisdiction to hear matters for non-payment of severance pay. The Respondent further cited the case of Cosmas Mukuka (Sued in his capacity as Secretary General of the Zambia Congress of Trade Unions) v. Jason Mwanza (Suing in his Capacity as General Secretary of the University of Zambia Lecturers and Researchers Union) 14 , where the Court gave guidance on the issue as follows: "We are alive to the fact that in the case of PC Cheelo and Others v. Zambia Consolidated Copper Mines we held that the term 'Industrial relations matters' did not have such wide interpretation so as to encompass cases of breach of contract, wrongful dismissal or even monetary claims for unpaid salaries or redundancy benefits which could be tried by a subordinate court, provided the amount did not exceed the court's jurisdiction." 5.38 The Respondent also referred to the learned authors of A Comprehensive Guide to Employment Law 1n Zambia (2021) at page 380 where they stated that: J30 "Whereas section 85(9) of the Act provides for what industrial relations matters include, this cannot be taken to mean that the Industrial Relations Division of the High Court has such a wide jurisdiction over industrial relations matters that matters of wrongful dismissal or breach of contract cannot be dealt with in the subordinate courts. . This is especially so considering the nature of access to justice and the costs of litigation that would deprive many lower-level employees of access to justice in lower courts if an unnecessary wide interpretation is given to industrial relations matters." 5.39 The Respondent was of the opinion that the lower court was on firm ground when it held that it had jurisdiction to hear and determine the Respondent's claim. The Respondent added that the issue of whether or not she had demonstrated entitlement to severance pay was dealt with later in the proceedings in the Court below and not at the point of determining its jurisdiction. 5.40 In response to ground two where the Appellant contends that the trial Court misdirected itself by imposing a condition against the Defendant to pay security for costs and combining it with the stay of J31 execution, the Respondent cited Order 39, rules 4 and 5 of the Subordinate Courts Rules which enact thus: "4. Where a plaintiff does not, or does not ordinarily, reside in Zambia, the court may, either on its own motion or on the application of any defendant, if it sees fit, require any plaintiff in any suit, either at the commencement or at any time during the progress thereof, to give security for costs to the satisfaction of the court, by deposit or otherwise, or to give further or better security. 5. Where the court orders costs to be paid, or security to be given for costs, by any party, the court may, if it thinks fit, order all proceedings by or on behalf of that party in the same suit or proceeding, or connected therewith, to be stayed until the costs are paid or security given accordingly, but such order shall not supersede the use of any other lawful method of enforcing payment. 5.41 It was submitted that the foregoing statutory provisions provide the jurisdiction for the Subordinate Court to make an order for security for costs and stay of proceedings until such a time that the security for costs are paid. 5.42 The Respondent referred the Court to the case of Gift Mulambo Moonga v. Standard Chartered Bank Plc 15 where it was stated as follows: J32 "As regards the making of the payment of security a condition precedent, there is no question that upon taking all circumstances into consideration, if the order for security is granted, the court may also make the payment a condition precedent to the hearing of the appeal." 5.43 It was argued that the Court below was on firm ground when it imposed a condition against the Appellant to pay security for costs and combining that with the stay of execution. 5.44 In response to ground three where the Appellant argues that the trial Court misdirected itself at law when it ordered the Defendant to pay the sum of KS0,000.00 cash as security for costs when the amount is not reflective of the Subordinate Court Scale of Legal Practitioners' Costs, the Respondent made reference to the High Court decision in the case of Mohammed Enterprises (T) Limited v. Hamrah Enterprises16 , where the Court cited Order 40, rules 7 and 8 of the High Court Rules, and further noted as follows: J33 " ... The Defendant's Application is further premised on Order 23, rule 1 of the Supreme Court Practice. Order 23/ 0/ 2 the editorial notes state that the Court must take into consideration all the circumstances of the case and after having done that, if the Court thinks it just to do so. it may Order security for costs in any of the following circumstances: The first mentioned (and from a practical point of view, the most important) is that the plaintiff is ordinarily resident out of jurisdiction; 2. The Companies Act gives the Court power to order security where there is reason to believe that a plaintiff limited company may be unable to pay the defendant's costs in the event of his being successful in the action; 3. Where there is misinformation either by misdescription of Plaintiff's address or change of plaintiff's address; 4. Where there is an appeal to the Court of Appeal either on final or interlocutory orders and 5. That the plaintiff (not being a plaintiff who is suing in a representative capacity) is a nominal plaintiff who is suing for the benefits of some other person and that there is reason to believe that he will be unable to pay the costs of the defendant if ordered to do so. " 5.45 The Respondent argued that an appeal 1s one of the grounds upon which an order for security for costs can be made and added that there is nothing strange 1n the lower court ordering for the payment of KS0,000.00, notwithstanding that such an amount J34 was not reflective of the Subordinate Courts Scale of Legal Practitioners' Costs. 5.46 In response to the three grounds of appeal against the Judgment of the lower Court dated 23r d August, 2024, the Respondent relied on the case of Dansiano Phiri v. Afronet Trading Limited and another18 where the Court held that an employee on permanent employment is entitled to severance pay. 5.47 The Respondent stated that Judgments in the cases of Stanbic Bank Zambia Limited v. Natasha Patel and Midlands Milling (2011) v. Lloyd referred to by the Appellant, were delivered by the Court of Appeal on the 22nd August, 2024 a day before the Court below passed its judgment. 5.48 The above notwithstanding, the Respondent urged this Court to dismiss this appeal in its entirety, with costs. 5.49 In reply, the Appellant maintained its position in the substituted Heads of Arguments filed, which I have alluded to before. Although there are new authorities provided by the Appellants in reply, I will not J35 reproduce them here as they merely buttress the position already established. I will however, consider them in determining of this appeal. 6. Hearing of the Appeal 6 .1 The appeal came up for hearing on 14th February, 2025 and the Appellant relied on the Substituted Heads of Arguments and the Supplementary Record of Appeal and sought the indulgence of the Court to reply to the Respondent's Heads of Arguments, which they did as alluded in paragraph 5.49 above. 6.2 The Respondent equally relied on the Heads of Arguments filed on 12th February, 2025. However, Counsel for the Respondent augmented the Heads of Arguments orally by arguing that the case of Bank of Zambia v. AL Shams referred to by the Appellant was misplaced, particularly with what had been referred to as conditional leave. Counsel for the Respondent argued that the case was misplaced as it refers to instances of granting leave to appeal on condition that a portion of the J36 Judgment sum be paid into court before such leave is granted. Counsel opined that that is totally at variance with this case. 6.3 Counsel also referred to the case of Amchile Import and Export Limited v. Ian Chimanga 17 , where the Supreme Court outlined instances when an appellate court can interfere with the finding of the trial Court and urged this Court to dismiss the appeal with costs. 7. Determination of the Appeal 7 . 1 There are two appeals raised in this matter, one against the Ruling of the learned Magistrate on the preliminary issue dated 19th August, 2024 and part of the Order dated 27th August, 2024 which I will refer to as the first appeal. The second appeal challenges the Judgment of the lower court dated 23r d August, 2024. 7.2 The Grounds of Appeal against the Ruling and the Order have been framed as follows: i) That the trial Court erred 1n law and in fact by dismissing the Defendant's preliminary issue as to J37 mode of commencement as the Plaintiff had not demonstrated her entitlement to severance pay. ii) The trial Court misdirected itself by imposing a condition against the Defendant to pay security for costs and combining it with the stay of execution; iii) The trial Court misdirected itself at law when it ordered the Defendant pay the sum of KS0,000 cash as security for costs when the amount is not reflective of the Subordinate Courts Scale of Legal Practitioners' Costs. iv) The trial Court erred in law and fact when it ordered that the Defendant pay the sum of KS0,000 cash as security for costs when there was no conduct on the part of the Defendant to warrant such payment. 7 .3 In respect of the first ground of appeal, the Appellant raises the issue of jurisdiction, thus: "Whether or not the action was properly commenced before the Subordinate Court given that the Respondent was claiming severance pay". J38 7.4 The mode of commencing matters in the Subordinate Cour t is governed by Order 6 of the Subordinate Cour ts Rules, Order 6, rules 1,2,3 and 4 which enact as follows: "1. Except where otherwise by law provided, every suit shall be commenced by writ of summons issued by the clerk of the court. 2.(1) The writ shall be p repared by the plaintiff or his legal representative save that where the plaintiff is (a) illiterate or for some other good reason unable to prepare the writ himself; and (b) unable from lack of means or other good cause to instruct a legal representative; the clerk of the court or the magistrate or any district secretary or assistant district secretary may prepare the writ on payment by the plaintiff of the prescribed fee. (2) The writ shall be signed by the plaintiff or by his legal representative as such: Provided that, if the plaintiff be unable to sign his name, it shall be sufficient if he shall affix his mark to the writ in the presence of the magistrate or the clerk of the court who shall thereupon certify the said mark as being that of the plaintiff made in his presence 3. (1) Every writ of summons shall be in such one of the prescribed forms in the First Schedule or forms to the like effect as may be applicable to the case with such variations as circumstances may require. (2) Every writ shall contain the full name and place of abode of the plaintiff and the name and address of his legal representative, if any, the full name and place of abode of the defendant so far as these be known to the p laintiff, and the nature of the plaintiffs claim, particulars of which shall be J39 set out as nearly as may be in accordance with the provisions of Order IX; and if either the plaintiff or the defendant be a married woman, that fact shall be stated in the writ. 4. (1) When the claim is in respect of a debt or liquidated demand, the plaintiff may file a default writ of summons in the prescribed fonn, or a fonn to the like effect, and at the time of the tiling of such default writ of summons, shall tile an affidavit verifying such debt or demand and thereupon such affidavit shall, for the purpose of service upon the defendant, be treated in all ways as part of such default writ of summons. (Emphasis supplied by the Court) 7 . 5 It is evident from the foregoing that where a claim is in respect of a debt or liquidated demand, the mode of commencement of the action is by way of a default writ of summons. 7.6 In this case, facts and evidence clearly show that the Respondent sought for a liquidated sum of K200,733.66 as severance pay. In the Supplementary Record of Appeal at page 10, the Respondent, through Counsel, initially issued a demand letter to the Appellant for a liquidated sum of K200, 733.66 as severance pay. J40 7.7 Further, at page 1 of the Supplementary Record of Appeal, the Default Writ of Summons filed in the trial Court reads as follows: "THE PLAINTIFF CLAIMS THE SUM OF K200, 733. 66 being monies owed by the Defendant for severance pay for the period May 2020 to March 2023 plus interest thereon at the current Bank of Zambia lending rate" 7. 8 The Respondent commenced this action 1n the Court below claiming a liquidated sum of K200,733.66 as severance pay and the correct mode . lil the circumstances, was by way of the Default Writ of Summons. 7.9 Therefore, I find that the matter was properly commenced in the lower Court and the learned Magistrate was on terrafirma to hear and determine the matter. That said, I further find that ground one of the appeal has no merit and is dismissed. 7.10 Grounds two, three and four of the appeal challenge the Order of the learned Magistrate dated 27th August, 2024 that the Appellant pays KS0,000.00 as security for costs, J41 amongst other things, before any documents could be signed. 7. 11 The three grounds of appeal will be determined together as the same are of the same genre. 7.12 Payment of security for costs in the Subordinate Court is provided for in Order 39, rules 4 and 5 of the Subordinate Court Rules which provides as follows: "4. Where a plaintiff does not, or does not ordinarily, reside in Zambia, the court may, either on its own motion or on the application of any defendant, if it sees fit, require any plaintiff in any suit, either at the commencement or at any time during the progress thereof, to give security for costs to the satisfaction of the court, by deposit or otherwise, or to give further or better security. 5. Where the court orders costs to be paid, or security to be given for costs, by any party, the court may, if it thinks fit, order all proceedings by or on behalf of that party in the same suit or proceedings, or connected therewith, to be stayed until the costs are paid or security given accordingly, but such order shall not supersede the use of any other lawful method of enforcing payment." 7.13 However, such payment of security for costs relates to a matter at its commencement or at any time during the progress of the matter in the Subordinate Court. J42 7.14 Where there is an appeal from the Subordinate Court as in this case, the provisions of Order 4 7, rule 1 of the High Court Rules provide guidance on security as follows: "l. (1) Every appellant shall give security to the satisfaction of the subordinate court (hereinafter in this Order called I "the Court below"), either by deposit or by bond in Form 48 in the First Schedule, for payment of all such costs as may be awarded to any respondent by the Court. He shall also pay into the Court below the amount of the expense of making up and transmission to the Court of the record of appeal. He shall also give notice of the appeal to all parties directly affected by the appeal, and to such others, as respondents, as the Court below thinks fit to direct. If security, payment and notice are so given and made within one month after the application for conditional leave to appeal, and if application for final leave to appeal be filed in the Court below not later than seven days after the expiration of such month, then and not otherwise the Court below shall give final leave to appeal: Provided that- (i) the Court below, in its discretion, may extend the time for the fulfilment of the conditions of appeal, or of the application for final leave to appeal; (ii) the Court below may, in its discretion, on account of the poverty of an appellant, although such appellant may not have been formally admitted to sue or def end as a pauper, dispense with such security for costs. J43 (2) Leave to appeal, if granted by the Court, under rule 4, shall be granted, mutatis mutandis, in accordance with the provisions of sub-rule (1)." (Emphasis, the Court's) 7. 15 The provision above is couched in mandatory terms and makes it a condition precedent to making an appeal for the Appellant to give security by way of a deposit or by bond as prescribed in Form 48 in the First Schedule of the High Court Act, save in the case of the poverty of the Appellant. 7.16 The Court of Appeal in the case of Gift Mulambo Moonga v. Standard Chartered Bank Plc., supra, stated that: "As regards the making of the payment of security a condition precedent, there is no question that upon taking all circumstances into consideration, if the order for security is granted, the Court may also make the payment a condition precedent to the hearing of the appeal." 7 .1 7 In relation to the quantum of the security for costs ordered by the lower Court, Order 4 7, rule 1 of the High Court Rules above, gives the Subordinate Court the discretion to determine the security to its satisfaction. Further, the security for costs are itemised as costs J44 which the Court may have awarded to the Respondent in the Court below and costs of expense of making up and transmitting of the Record of Appeal to the High Court. 7.18 In casu, the lower Court ordered the Appellant to pay K50, 000.00 cash as security for costs. While the learned Magistrate did not give a breakdown of what the costs comprised of, I am of the considered view that the sum was inclusive of the costs of making and transmitting the record of appeal to the High Court and the costs the Respondent would incur in defending the appeal in the High Court in the event that the appeal is dismissed. 7 .19 In my view the rationale for an order for the Appellant to pay the security for costs on one limb is to ensure that a Respondent who was successful in the Court below is assured of collecting costs incurred in defending the appeal should the appeal fail. On the other limb, the rationale 1s to facilitate for the production and transmission of the record of appeal to the High Court. 7 .20 It is my further finding that the order for the deposit of KS0,000.00 as security for costs was reasonable in the J45 circumstances. That said, grounds two, three and four of the appeal against the Order of the Court below dated 27th August, 2024, lack merit and are dismissed. 7 . 21 I now tum to Consider the Grounds of Appeal against the Judgment of 23rd August, 2024 which are framed as follows: 7. 21.1 The trial Court misdirected itself at law when it held that the Plaintiff as a permanent and pensionable employee is entitled to severance pay in accordance with Section 54(1)(c) of the Employment Code Act, No. 3 of 2019; 7.21.2 The trial Court erred in law by not abiding by the doctrine of stare decisis when it failed to follow the binding authority of the Court of Appeal in the cases of Stanbic Bank Zambia Limited v. Natasha Patel Appeal No. 274/2022 and Midlands Milling (2011) Limited v. Lloyd Tembo Appeal 297 / 2022 when it awarded the Plaintiff, a permanent and pensionable employee, severance pay. J46 7.21.3 The learned Hon. Magistrate misdirected himself in law and fact when he ordered that the Defendant pays the Plaintiff severance pay in the sum of K200,733.66 contrary to the applicable law. 7.22 The three grounds of appeal against the Judgment in the Court below all border on whether the Respondent was in the circumstances entitled to severance pay in the sum of K200,733.66. 7 .23 "Severance pay'' Is defined In Section 3 of the Employment Code Act, 2019 provides as follows : "Severance pay means the wages and benefits paid to an employee whose contract of employment is terminated in accordance with section 54." 7 .24 Section 54 of the Employment Code stipulates as follows: "54. (1) An employer shall pay an employee a severance pay, where the employee's contract of employment is terminated or has expired, in the following manner: (a) Where an employee has been medically discharged from employment, in accordance with section 38(5); (b) Where a contract of employment is for a fixed duration, severance pay shall either be a gratuity at the rate of not less that twenty-five percent of the employee's basic J47 pay earned during the contract period or the retirement benefits provided by the relevant social security scheme that the employee is a member of, as the case may be; (c) Where a contract of employment of a fvced duration has been terminated, severance pay shall be a gratuity at the rate of not less than twenty-five percent of the employee's basic pay earned during the contract period as at the effective date of termination; (d) where a contract of employment has been terminated by redundancy in accordance with section 55, the severance pay shall be a lumpsum of two months' basic pay for each year served under the contract of employment; or (e) where an employee dies in service, the severance pay shall be two months' basic pay for each year served under the contract of employment. (2) Where an employee dies before receiving the severance pay, the employer shall pay the severance pay to the employee's estate in accordance with the Intestate Succession Act or the Wills and Testate Estates Act. (3) The severance pay under this section shall not be paid to a casual employee, a temporary employee, an employee engaged on a long-term contract or an employee serving a period of probation. (4) The Minister shall prescribe the formula for the minimum computation of severance pay." J48 7 .25 In the case of Stanbic Bank Limited v. Natasha Patel, the Supreme Court interpreted Section 54(1)(c) as follows: "Section 54( 1 )(c) applies only to employees eligible for gratuity specifically those on long-term contracts of 12 months or more, renewable for further terms. It does not apply to employees on permanent and pensionable contracts." (Emphasis supplied by the Court) 7.26 In a more recent case, the full bench of the Court of Appeal had an opportunity to clarify and give a position on the payment of severance pay to employees who are on permanent and pensionable contracts of employment in the case of Kingfred Phiri v. Life Master Limited, supra, the Court, inter alia, held that: "We also re-affirm our position that an employee on permanent and pensionable contract of employment, who is terminated other than through the circumstances set out in subsection (1) (a), (d) and (e) of Section 54 of the Act, is not eligible for severance pay." 7.27 The Court of Appeal went on to hold that: "In light of the position we have taken in this Judgment, we hereby depart from our decision in the case of Zubao Harry Juma v. First Quantum Mining and Operations - Road Division, (supra), in so far as it holds that employees engaged on a permanent basis are entitled to a severance package under Section 54 (1) (c) of the Employment Code Act." ,. J49 7 .28 My understanding of the above authority is that an employee on permanent and pensionable contract is only entitled to severance pay if and only if the contract of employment was terminated in one of the following ways: medical discharge in accordance with Section 38(5), redundancy in accordance with Section 55 and where an employee dies in service. 7.29 The facts in the case before me are that the Respondent entered into a permanent contract of employment with the Appellant as a Legal Officer, which contract of employment was confirmed on 12th June, 2017. In March 2023 the Respondent resigned from employment and was paid accrued leave days. 7.30 It is evident that the Respondent was employed on a permanent and pensionable contract of employment and the circumstances through which she left employment is not covered under subsection (1) (a), (d) and (e) of Section 54 of the Employment Code Act. 7.31 Hence, I find that the Respondent 1s not entitled to severance pay. Having so found, grounds one, two and JSO three of the appeal against the Judgment of the lower Court dated 23rd August, 2024 have merit and are allowed. 8. Conclusion and Orders 8. 1 In conclusion, the net result is that the appeal against the Ruling dated 19th August, 2024 and the Order dated 27th August, 2024 has no merit and is dismissed. 8.2 However, the appeal against the Judgment dated 23rd August, 2024 is allowed for the reason that the Respondent was on a permanent contract of employment and resigned from employment. 8.3 I order the withdrawal of the security for costs deposited by the Appellant and reimbursement of the same to the Appellant, less the cost of production and transmission of the Record of Appeal to the High Court. 8.4 Each Party shall bear its own Costs. Dated at Ndola this 14th day of July, 2025. Winnie Sithole Mwenda (Dr.) ~ JlJDICIA~re ~ HIGH COU RT 114 JUL 202] \ . l