Small Enterprises Development Board v Chibwa (Appeal 127 of 2005) [2007] ZMSC 143 (28 September 2007)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT KABWE (Civil Jurisdiction) BETWEEN: APPEAL NO. ] 27 OF 2005 SMALL ENTERPRISES DEVELOPMENT BOARD APPELLANT AND GRACE KASESE CHIBWA RESPONDENT CORAM: LEWANEKA, DCJ, CHITENGI AND SILOMBA, JJS. On the 4th April, 2006 and 28th September, 2007. For the Appellant: Mr. M. L. Mukande of M. L. Mukande and Company For the Respondent: Mr. S. Chisulo, SC, of Sam Clu'sulo and Company JUDGMENT SILOMBA, JS, delivered the judgment of the Court. Cases referred to:- 1. 2. 3. Augustine Kapembwa -Vs- Danny Maimbolwa and The Attorney General (1981) ZR 127. Nkhata and Others -Vs- The Attorney General (1966) ZR 124. M. M. Lukama and Others - Vs- Lint Company of Zambia Limited, SCZ Judgment No. 8 of 1998. We regret the delay in the delivery of the judgment, which was due to the busy work schedule. The appellant is appealing against the judgment of the High Court dated the 7th of December, 2004. The facts that gave rise to the dispute, culminating in the judgment of the High Court, were that the respondent was employed by the appellant as a Senior Regional Manager. She was later made to act as General Manager in April, 1994 at SIDO Tanning and J2 Leather Limited. Two months later, the post of General Manager was advertised. When no suitable candidate was found, her employer asked her to submit her CV and she was subsequently ratified as General Manager, through a letter dated the 16th of May, 1994, now at page 98 of the record of appeal. According to PW1, when she was confirmed her conditions of service were changed to those of SIDO Tanning in accordance with the letter of the 16th of May, 1994. This was at a board meeting chaired by PW1. Unfortunately for her, the letter of 16th of May, 1994 did not mention that she had been confirmed and when she complained the reply she got did not reflect what the board had discussed. At that stage she decided to go on retrenchment. Her retrenchment was finally approved on the 23rd of July, 1999 to be with effect from the 17th of December, 1997. She disputed the 17th of December, 1997 as date of retrenchment because her service was never disrupted up to the 23rd of July, 1999. She recalled that on 17th of December, 1997 she was dismissed from employment but she was reprieved by the Minister of Commerce and Industry. Later she was reinstated and paid all her arrears. So, as far as she was concerned she had worked for 15 years and 9 months from the date she joined the appellant up to the 23rd of July, 1999. The counter-evidence of the appellant in the court below was that the respondent served in various positions, including that of Acing General Manager, Kafue tannery. However, in 1996 she was reverted to her substantive position of Senior Regional Manager, Kabwe. The appellant’s evidence was that the respondent was seconded to Kafue Tannery to act as General Manager for administrative convenience and was to receive acting allowance and other perks. On reversion, she retained the conditions attaching to General Manager on a personal to holder basis. J3 On reversion to Senior Regional Manager, the respondent worked from the 26th of July, 1996 to the 17th of December, 1997 when she was dismissed from employment. She appealed to the Minister of Commerce and Industry and in 1999 the decision to dismiss her was reversed. The Minister directed that she be retrenched. The appellant complied and paid her a retrenchment package, which covered the period 1983 - 1999 and included the basic pay and the allowances she enjoyed as acting General Manager. What was removed on reversion to Senior Regional Manager, were free electricity, water, telephone, day security and two house servants. According to the respondent, this was so because these were being paid to the service providers and not directly to her as acting General Manager. The learned trial Judge went through the evidence, the submissions and the various authorities cited by the parties. The first issue the learned trial Judge had to resolve was whether the respondent was ever confirmed as General Manager, SIDO Tanning and Leather. He examined the letter at page 98 of the record in which the respondent’s salary and other emoluments were reviewed. He also evaluated the evidence of PW1, as Chairman of the Board of SIDO Tanning and Leather Limited, and came to the conclusion that the respondent was confirmed as General Manager of SIDO Tanning and Leather Limited and served the company from the 16th of May, 1994 to 23rd of July, 1999 when she was retrenched. He premised his foregoing conclusion first on the wording of the letter at page 98 stating that the new salary of the respondent was to be K3,827,665.00 because that was not consistent with the conditions of service of a seconded officer. Secondly the evidence of PW1, as Chairman of the Board of SIDO Tanning and Leather, was that the respondent had been confirmed by the Board as General Manager. The evidence of the J4 appellant’s only witness could not be believed because he was not a perception witness like PW1 as he did not attend the board meeting. On the basis of his reasoning, the learned trial Judge ruled that on her retrenchment on the 23rd of July, 1999 the General Manager’s salary on that date and other emoluments formed the basis of calculating her benefits. He ordered that damages so awarded be agreed and in default thereof be assessed. He also awarded long term deposit interest rate from the issuance of the writ to the date of judgment and thereafter at short-term deposit rate until payment. There are three grounds of appeal. These are as follows:- 1. The trial court misdirected itself on facts in that the judgment is against the weight of evidence and it has ignored specific facts favourable to the appellants such as:~ (a) (b) The respondent was in fact retired on a far superior package applicable only to employees who were at the material time serving under the appellants; The respondent admitted in various letters that she was told by the Board Secretary that the Board did not approve her appointment 2. 3. The court below misdirected itself on fact by its failure to recognize that the respondent has been paid what the appellant considered to be her full retrenchment benefits inclusive of allowances which payment ought to be taken into account when computing her retrenchment package under the SIDO Tannery and Leather Limited conditions of service. The trial court misdirected itself on law and fact by holding that the respondent was General Manager of SIDO when no such evidence was adduced thereby failing to appreciate the fact that SIDO Tannery and Leather Limited is a separate legal entity from the appellants. J5 At the hearing of the appeal, counsel for the appellant indicated to us that he would argue ground 1 (a) and (b) as the main ground of appeal; that grounds 2 and 3 would be combined and argued in the alternative to ground 1. Counsel further indicated to us that he would adopt the submissions he made at trial to reinforce his arguments on appeal. On the whole, counsel relied on his heads of arguments. In his submission, based on his heads of argument respecting ground 1 (a) and (b), counsel quoted extensively from the judgment of the trial court, the evidence of PW1, PW2 (respondent) and the letters that were exchanged between the board of the appellant and PW2 to show that the respondent was never confirmed as General Manager, SIDO Tanning and Leather Limited and also to show that the finding by the learned trial Judge that she was confirmed was a misapprehension of the evidence on record. Counsel submitted that although the trial court attached so much weight to the evidence of PW1, the record showed that his evidence was full of inconsistencies. We were urged to interfere with the finding of fact by the trial court in that it disregarded the evidence on record and the contradictions of the witnesses called by the respondent. The appellant cited the cases of Augustine Kapemfrwa -Vs- Danny Maimbolwa and The Attorney General (1) and Nkhata and Others -Vs- The Attorney General (2) in support of the proposition. In the alternative, counsel submitted under his heads of argument that at the time the respondent was acting as General Manager of SIDO Tanning and Leather her employer was the appellant, a statutory body governed by the Small Enterprises Development Act, Chapter 425. Counsel submitted that legally speaking the two entities were separate; that the conditions of J6 service of the former were different from those of the latter even though the former was a subsidiary of the latter. Counsel further submitted that when the respondent applied to be retrenched on the 29th of August, 1996 she made her application in her capacity as Senior Regional Manager of the appellant. Her package was computed under the formula of the appellant and she was paid a total of KI09,404,035.53. Counsel argued that throughout her testimony, the respondent never disputed the formula used. Counsel recalled that the respondent’s claim before the trial court was that she wanted to be retrenched under the terms and conditions of service obtaining at the SIDO Tannery. As far as counsel was concerned, there were no conditions of retrenchment known to the appellant at SIDO Tannery. Counsel submitted that the conditions for retrenchment the respondent had exhibited (see pages 82 - 83 of the record) related to employees of the appellant, a fact that went to confirm that the respondent was indeed an employee of the appellant and not SIDO Tannery. In the final analysis, counsel submitted that if the respondent was confirmed as General Manager at SIDO Tannery she should have applied to retire under the SIDO Tannery conditions; that the fact that she did not sue SIDO Tanning and Leather Limited meant that she did not want to retire under those conditions. In his oral submission, counsel concentrated on grounds 2 and 3, which were argued in the alternative and not on ground 1 (a) and (b). He submitted that the respondent applied to be retrenched and was paid a retrenchment package as a Senior Regional Manager. He submitted that on retrenchment, she retained the salary of General Manager on personal-to- holder basis and that was what she was paid but that the learned trial Judge J7 found that she was supposed to be paid under SIDO Tannery conditions of service, which were inferior. The reason for the appeal, according to counsel, was that the respondent wanted to be paid some allowances. In response to the submission by counsel for the appellant, Mr. Chisulo, SC, and counsel for the respondent, relied on the respondent’s heads of argument filed herein and the submissions he made in the court below. He submitted in his heads of argument, in relation to ground 1 (a) and (b), that the learned trial Judge properly analysed the evidence adduced before him and decided to believe the testimony of PW1, the former Chief Executive of the appellant and Chairman of SIDO Tanning and Leather Limited, a subsidiary to which the respondent was transferred in 1994. As far as counsel was concerned, the respondent was confirmed as General Manager at a board meeting of SIDO Tannery of May, 1994, chaired by PW1 but the letter of the 16th of May, 1994 (see page 98) did not specifically state that she had been appointed as such. He submitted, quoting from the evidence of PW1, that when the omission was noticed the board sat again in a meeting in 1996 chaired by PW1 at which her appointment as General Manager of SIDO Tanning and Leather was confirmed. He submitted that on the basis of the strength of the evidence and considering the analysis the evidence was subjected to and the reasons the leamed trial Judge advanced for his decision on whether the respondent was confirmed in her position as General Manager or not the finding of fact should not be disturbed. On grounds two and three, the State Counsel submitted, in his heads of argument, that it was admitted in the evidence of DW1 that the respondent was to retain the salary of K3,827,665-00 per annum (see page J8 93 of record) on personal-to-holder basis. According to the State Counsel, this meant that the respondent was not entitled to an annual salary increment from the 23rd of July, 1996, when the appellant unilaterally varied the respondent’s terms and conditions of service to the 23rd of July, 1999 when she was actually declared redundant. He submitted that the learned trial Judge was on firm ground when he rejected the evidence of DW1 and found that the respondent was the General Manager of SIDO Tanning and Leather Limited from the 23rd of July, 1994 and ordered that she be retrenched and be paid a package on the General Manager’s salary and emoluments up to the 23rd of July, 1999. The State Counsel relied on the case of JLW. Lukama and Others -Ks- Lint Company of Zambia Limited21 He said that his client was entitled to all annual increments, with her terminal benefits being calculated on the basis of a serving General Manager’s terms and conditions of service at SIDO Tanning and Leather Limited as at 23rd of July, 1999. In his oral submission, the State Counsel submitted that his client was interested in the package, which she wanted the court to resolve. He referred us to the letter of reversion at page 93 of the record and contended that the salary specified therein was inferior to the one that obtained on the 23rd of July, 1999, when she was retrenched. We have exhaustively examined the evidence on record, including the judgment of the trial court. We have also scrutinized the heads of argument filed by the parties and the oral submissions made before us. On the contested issue of whether the respondent was substantively appointed as General Manager for SIDO Tanning and Leather Limited, we have found that there is enough documentary evidence suggesting that she was seconded to SIDO Tannery to act as General Manager for administrative convenience J9 only. The documentary evidence is found at pages 94 and 100 of the record of appeal. We have also found that there was no attempt in the evidence of PW1 and PW2 to controvert the said documentary evidence by way of minutes of board meetings at which she was confirmed. What it means, therefore, is that the respondent was never, at any one time while at SIDO Tannery, substantively appointed as General Manager. On the authorities cited to us by counsel for the appellant, the finding of fact by the learned trial Judge that the respondent was confirmed as General Manager is accordingly reversed. As the State Counsel, representing the respondent, pointed out what is important in this appeal is whether the retrenchment package of the respondent was calculated based on the correct salary and allowances or perquisites. On the 16th of May, 1994 (see page 98 of the record), the revised salary of the respondent, while on secondment to SIDO Tannery, was K3,827,665.00 per annum in the salary scale STI (K3,594,000 x K46,733 - K4,014,597.00). On the 23rd of July, 1996 (see page 93), more than two years later, she was reverted to the post of Senior Regional Manager. The letter of reversion stated that the respondent was to maintain her salaiy of K3,827,663.00 on personal-to-holder basis in SIDO 4 (K3,143,526 x K285,195 - K5,501,171), Our considered view is that from the 23rd of July, 1996, when she was reverted, to the 23rd of July, 1999, when she was retrenched, she was entitled to annual increments in SIDO 4 within the salary range of K3,143,526 x K285,195 - K5,501,171.00. She could only fail to qualify for an annual increment if, under her conditions of service, she had been disciplined and disqualified from the annual increment. From her evidence, which was not J10 contested by the appellant, her dismissal of the 17th of December, 1997 was nullified by the Minister of Commerce and Industry with a directive that she be reinstated and retrenched. The order of the Minister was complied with in full. This being the case, her salary increments in SIDO 4 were automatic up to the last day of duty. We, therefore, order an adjustment upwards. Added to the foregoing is the issue of allowances that were to be included in the package on retrenchment. We note that at page 74 of the record only allowances relating to housing, retention, entertainment, education and transport were paid on retrenchment. Since the respondent was made to retain the salary of General Manager SIDO Tanning and Leather Limited, she was also entitled to all other allowances as outlined at page 98 of the record. Having said that, the view we hold is that it did not matter whether certain allowances were paid to service providers directly the 1st respondent was still entitled to such allowances. These were electricity, water, telephone, day security and two house servants. To this end, we expect the parties to work out the enhanced salary on retrenchment as well as the additional allowances and agree on the package. If parties cannot agree, the new package, less what is already paid, shall be assessed by the learned Deputy Registrar. The sum agreed or assessed shall attract interest at the average short­ term deposit rate from the date of the writ to the date of payment and thereafter at the current lending rate fixed by the Bank of Zambia. With this ruling on interest, we set aside the order of the learned trial Judge, which fixed interest at long-term deposit from the issuance of the writ to the date of judgment and thereafter at short-term deposit rate. JI 1 From our reasoning on the three grounds of appeal, the net result is that the appellant has partly succeeded on ground 1 (b) and fully on ground three while the respondent has succeeded on ground 1 (a) and ground two. This means that there will be no order for costs as each party is expected to bear its own costs. D. M. Lewanika, DEPUTY CHIEF JUSTICE. TS-Chitehgi, SUPREME COURT JUDGE. S. S. Silomba, SUPREME COURT JUDGE.