United Bank of Africa Zambia Ltd v Kafwariman and Ors (Appeal 138 of 2014) [2017] ZMSC 271 (16 May 2017)

IN THE SUPREME COURT OF ZAMBIA Appeal No. 138/2014 HOLDEN AT KABWE (Civil Jurisdiction) BETWEEN: UNITED BANK OF AFRICA ZAMBIA LTD APPELLANT AND JOSEPH KAFWARIMAN AND 14 OTHERS RESPONDENTS Coram: Phiri, Muyoywe and Chinyama, JJJS On the 4th April, 2017 and 16th May, 2017. For the Appellant: Mrs. P. Ngoma Mduwara of Messrs Chibesakunda and Company For the Respondents: Mr. Muyatwa of Messrs Muyatwa Legal Practitioners. _______________ JUDGMENT_______________ Phiri, JS, delivered the Judgment of the Court Cases referred to: 1. 2. Charles Zavare vs. United Bank of Africa Zambia Limited, Comp. NO./267/2017 Rodgers Chama Ponde and 4 Others vs. Zambia State Insurance ° Corporation (2004) Z. R. 151 3. Wilson Masauso Zulu vs. Avondale Housing Project Ltd. (1982) Z. R. 4. J. Evans and Son (Portmouth) Limited vs. Andrea Merzario Ltd (1976) 2 All ER 930 5. Mercantile Bank of Sydney vs. Taylor (1893) A. C. 317 at 321 6. Indo Zambia Bank Limited vs. Mushaukwa Muhanga (SCZ Judgment No. 26 of 2009) This is an appeal against the decision of the Industrial Relations Court to award the respondents 12% of their annual basic salary as annual leave allowance in accordance with clause 2.4.1 of the UBA Group Employment Handbook upon their separation from employment with UBA Africa Zambia Limited. The brief background of the case is that the 15 respondents were each employed by the appellant Bank in different capacities with effect from various dates between 2009 and 2012. They resigned from their employment on various dates between January, 2011 and April, 2013, for various reasons. Upon their resignation, the 12% annual leave allowance which was provided for in the UBA Group Employee Handbook was not paid to them, though none of the respondents immediately laid claim to this allowance. Apparently, there was litigation in the Industrial Relations Court lodged in December, 2011 involving a former employee of the UBA (Z) Ltd. who had resigned. That litigation brought out the issue, among others, of the payment of the 12% annual leave J2 allowance upon an employee’s separation from the Bank, under the UBA Group Employee Handbook. The full citation of that case was Charles Zavare vs. United Bank of Africa Zambia Limited*1*. In that case, the Industrial Relations Court, in its judgment dated 20th September, 2012, held that: “..... The complainant’s conditions of service were derived from the UBA Group Handbook since the UBA Zambia Handbook was non­ existent; and that the complainant (Charles Zavare) was entitled to leave allowance pursuant to clause 2.4.1 of the UBA Group Employee Handbook, which provided for the payment of the annual leave allowance to confirmed employees once a year in May at the rate of 12% of the annual basic salary”. Thus, the Industrial Relations Court ordered the payment of this allowance to Charles Zavare, in addition to the other reliefs he claimed. That judgment was not appealed by the Bank. Spurred by the results of the Charles Zavare litigation, the respondents lodged their complaint out of time, with leave of the Court, claiming their 12% basic salary annual leave allowance, and damages for withholding the same and for the deprivation of same. The appellants’ answer to the complaint was that the UBA Group Employee Handbook was never part of the contracts and conditions of service for employees in Zambia. J3 In its judgment, the Court below did not agree with the appellants’ position and held that the respondents were similarly circumstanced with Charles Zavare, with regard to their entitlement to the 12% basic salary annual leave allowance under the UBA Group Employee Handbook; and the Court below invoked the provisions of Section 85(6) of the Industrial and Labour Relations Act Cap 269, to bind the parties to its earlier pronouncement on the application of the UBA Group Employee Handbook in the Zavare case. Thus, the Bank was ordered to pay the respondents their 12% annual leave allowance for the period before the UBA Zambia Employee Handbook came into existence; which the lower Court determined to be February, 2012. We will return to this date later. Dissatisfied with the decision of the trial Court, the appellant Bank appealed to this Court raising six grounds as follows: 1. The Court below erred in law and in fact by failing to take into consideration the fact that the law with respect to parole evidence never prevents a party from relying on evidence of terms which were intended to be part of the contract. In this regard, the Court relied on a condition of service which was not intended to be a part of the contractual relationship with the appellant. J4 i 2. 3. 4. 5. 6. The Court below erred in law and in fact by failing to take into account the fact that the appellant had no intention that the United Bank of Africa Group Handbook should govern the employment relationship between the appellant and the respondent, and, further that at no time were the conditions of service derived from the said Group Handbook. The Court below erred in law and in fact by failing to take into account the fact that the appellant had paid to the respondents all their separation packages at the time they were terminating their employment relationship with the appellant and that in this regard the respondents were not entitled to any further separation packages. The Court below misdirected itself in law and in fact when it considered and accepted in evidence that since the Zambia Employee Handbook had not been birthed then the Group Handbook which was in existence regulated the conditions of service when in fact not. Furthermore, there was no substantial evidence that was availed by the respondents that constituted conclusive proof that the respondents were entitled to the annual leave allowance condition derived from the Group Handbook. The Court below erred in law and in fact when it considered and accepted bare assertions that were made by the respondents with respect to their entitlement to the annual leave allowance and that mere assertions are not enough. The Court below erred in law and in fact when it failed to take into account that there were various contracts executed by the appellants and the respective respondents which had different terms and conditions of service. J5 At the hearing of the appeal, both Counsel for the parties indicated that they would rely on their respective heads of argument which they filed on 14th August, 2014 and 18th March, 2016 respectively. In support of the first ground of appeal; namely, that the Court below should not have relied on a condition of service which was not intended to be part of the contractual relationship with the appellant, the learned Counsel for the appellant submitted that the parole evidence rule never prevents a party from relying on evidence of terms which were intended to be part of the contractual relationship, but that the parole evidence rule prevents a party from introducing extrinsic evidence; which the UBA Group Handbook was in this case. In aid of this argument, the commentary on parole evidence in ‘Black’s Law Dictionary’ was cited. Also cited was our decision in the case of Rodgers Chama Ponde and 4 Others vs. Zambia State Insurance Corporation12’, that: “Parole evidence is inadmissible because it tends to add, vary or contradict the terms of a written agreement validly concluded by the parties”. J6 The appellants’ argument, according to the learned Counsel, was that it was not the intention of the parties that the respondents should be entitled to annual leave allowance of 12% of the annual basic salary. There was a contradiction between the terms of employment contained in the UBA Group Employment Handbook which provided for the payment of this allowance, and the respondents’ contract of employment which did not provide for the payment of this allowance. The learned Counsel for the appellant suggested to us to strike out the provisions of the UBA Group Handbook pertaining to the annual leave allowance; as a solution to resolving the contradiction. In support of this proposal, the learned Counsel cited a passage from a commentary on “Chitty on Contracts”, found at page 867 of the Common Law Library, General Principles 13th edition Vol. 1; to the effect that, if there is an inconsistency, that is, if effect cannot fairly be given to both terms, then the Court might reject that term which defeats the object and intent of the parties as expressed in the whole of their agreement. J7 In support of ground two of the appeal, the learned Counsel for the appellant submitted that the absence of the UBA Zambia Employee Handbook did not mean that the UBA Group Employee Handbook automatically regulated the relationship between the appellant and the respondents; that there was need for evidence to be adduced by the respondents to support the trial Court’s finding that the UBA Group Handbook applied to the respondents, when the same had never been used during the respondents’ course of employment. In support of ground three of the appeal, the learned Counsel for the appellant submitted that the respondents were paid their respective termination packages in accordance with the Minimum Wages and Conditions of Employment Act as amended by Statutory Instrument No. 46 of 2012 which provides that an employer shall grant leave of absence on full pay to an employee at the rate of two days per month; and none of them raised any issue of underpayment after acknowledging receipt of their packages. It was further argued that the respondents acquiesced to the separation package they received as full and final settlement, and J8 that they very well knew that they were not entitled to the annual leave allowance; that the respondents’ claim for annual leave allowance at 12% annual basic salary was misconceived at law and was an afterthought. The arguments in support of grounds four, five and six were similar to those advanced in support of grounds one and two. It was contended that the respondents failed to provide the trial Court with conclusive proof that they were entitled to the annual leave allowance derived from the UBA Group Handbook in the absence of the Zambian Handbook; and that they failed to establish a custom of reliance on the UBA Group Handbook. In support of the latter argument, the learned Counsel for the appellant quoted a passage from the learned authors of “Selwyn’s Law of Employment” 13th edition 2004 (Oxford University Press), at page 91, which states: “But a custom to be upheld must be long established, reasonable and certain, not contrary to law and must be strictly proved....... ” Regarding the argument that the respondents failed to prove their case, the case of Wilson Masauso Zulu vs. Avondale Housing Project Ltd(3) was cited. In that case, it was held, inter alia, that: J9 “A plaintiff who has failed to prove his case cannot be entitled to judgment whatever may be said of the opponent’s case....... ” With these submissions, we were urged to allow this appeal. The learned Counsel for the respondents equally relied on his written heads of argument. With regard to ground one of the appeal, the response was that the respondents’ contracts of employment were not fully integrated; but clearly stated that their employment would be governed by the UBA Zambia Employee Handbook which was a separate document from the employment contract. Therefore, since the UBA Zambia Handbook was not in existence at the time of executing the contracts, the contracts could not be said to constitute the whole or entire agreement between the parties, as there was clear reference to the terms and conditions contained in a separate document which was not available. This entailed that the parole evidence rule could not apply in this case; as it was trite law that the rule applied where the entire contract is embodied in a document. It was further argued that this rule has no operation until it is first determined that all the terms of the contract are reduced in writing and contained in the contract documents. In support of this position, Mr. Muyatwa referred us to j 10 a passage from Chitty on Contracts, Vol. 1, Chapter 12 at page 625. In view of the position we have taken, we find no need to restate that extract. It was further submitted that in a case where the terms of a contract are contained partly in a written document and partly outside the document, the Court is entitled to consider all the evidence, from start to finish, relating to the parties’ contractual relationship; and the Court is not restricted by the parole evidence rule. The English case of J. Evans and Son (Portmouth) Limited vs. Andrea Merzario Ltd*41, was cited. Also cited, was the case of Mercantile Bank of Sydney vs. Taylor*5’, where it was held, inter alia, that: “Courts have been prepared to admit extrinsic evidence of terms additional to those contained in the written document if it is shown that the document was not intended to express the entire agreement between the parties”. Thus, it was submitted that the Court below was on firm ground by relying on the conditions contained in the UBA Group Handbook. JU With regard to the second ground of the appeal, concerning the finding by the Court that the respondents’ terms and conditions of employment derived from the UBA Group Employee Handbook, it was submitted, on behalf of the respondents that there was documentary evidence before the trial Court in form of excerpts from the written contracts of employment (which were produced before the trial Court), that the two Handbooks were specifically mentioned. These contrasting provisions in the two Handbooks were mentioned as follows: i) ii) “Your employment shall be governed by the Bank’s policies and procedures as contained in the UBA Zambia Employee Handbook and as may be amended from time to time (underlining supplied)”. “Your employment shall be governed by the Bank’s policies and procedures contained in the UBA Employee Handbook and as may be amended from time to time (underlining supplied)”. It was the respondents’ submission that since the UBA Zambia Handbook was non-existent; the Court below was on firm ground in both law and fact, by concluding, as it also did in the Zavare case, that the respondents’ conditions of service were derived from the UBA Group Employee Handbook. J12 In response to ground three of the appeal which argued that the respondents were paid all that was due to them as separation packages under the Minimum Wages and Conditions of Employment Act, as amended by Statutory Instrument No. 46 of 2012, Mr. Muyatwa’s submission was that this argument was defective at law because the respondents’ contracts of employment were not governed by the Minimum Wages and Conditions of Employment Act; but by contracts, with all basic elements of enforceable contracts to make them legally binding. In support of this position, Mr. Muyatwa referred us to a passage by the learned authors of “Law of Employment”, 2nd edition, at page 23. It was submitted that, by express stipulation, the parties intended to have their relationship governed by the Bank’s policies and procedures which were contained in a Handbook. This argument was extended to support the respondents’ submission in answer to grounds four, five and six of the appeal. Mr. Muyatwa further submitted that if the insertion of the reference to a non­ existent handbook, namely, the UBA Zambia handbook was a result of careless drafting on the part of the appellant, the contra J13 proferentem doctrine applied to them. In support of this proposition, the case of Indo Zambia Bank Limited vs. Mushaukwa Muhanga(6), was cited. In that case, it was stated that: “Moreover, this document on “terms and conditions of employment” was prepared by the appellant itself. If the insertion of “permanent and pensionable” was a result of careless drafting then the appellant surely shot themselves in the foot. Under the ‘contra proferentem’ doctrine, the document has to be construed against them, and in favour of the respondent”. With the foregoing submissions, the learned Counsel for the respondents urged us to dismiss this appeal. We have examined the evidence on the record and the judgment of the Court below. We have also considered the submissions and authorities cited by the parties on all the six grounds of the appeal; which, in our view, are all related to one issue; and this is the application of the UBA Bank of Africa Group Employee Handbook before the coming into effect of the UBA Africa Zambia Employee Handbook. The basic facts of this case are largely not in dispute; and it is clear to us that the judgment of the lower Court was based on findings of fact, which we cannot readily interfere with unless it is shown, to our satisfaction, that the findings were perverse or J14 f ’ * unsupported by the evidence. The parties are agreed that the UBA Zambia Employee Handbook, which all the letters of offer and acceptance of employment referred to, did not exist at the time of employment. In addition, there is no dispute that UBA Zambia Limited is part of the UBA Group which hosts the UBA Group Employee Handbook. It is also not disputed that the UBA Zambia Employee Handbook did not come into effect in Zambia until much A later when it was approved by the UBA Group board. It is also not in dispute that in dealing with Zavare’s resignation, management in Zambia did have recourse to the UBA Bank Group Employee Handbook. This fact was confirmed in the evidence of the appellant’s witness, RW1, on record. The uncontested facts and evidence on record satisfy us that the grounds of the appeal were repetitively overstated and the submissions made by both parties were an overkill. The issue which decides this appeal was already decided in the Zavare case; namely that, an employee who resigned prior to the coming into effect of the UBA Zambia Employee Handbook was entitled to the J15 12% annual leave allowance provided for in clause 2.4.1 of the UBA Group Employee Handbook. We have already stated that the lower Court’s judgment in the Zavare case was not appealed against. We hold that the lower Court was on firm ground when it held that the respondents were similarly circumstanced with Zavare; and that the appellant was bound by the Zavare judgment by virtue of Section 85(6) of the Industrial and Labour Relations Act, Cap. 269, which provides that: “An award, declaration, decision or judgment of the Court on any matter referred to it for its decision or on any matter falling within its exclusive jurisdiction shall, subject to Section ninety-seven, be binding on the parties to the matter and on any parties affected”. For the reasons which we have given, we do not find any of the findings of fact made by the Court below to be perverse or unsupported by the evidence; and we find no merit in any of the six grounds of the appeal. We dismiss this appeal, with costs to be taxed in disagreement. We stated earlier that we would revert to the issue of the effective date of the UBA Zambia Employee Handbook, which the J16 lower Court stated as February, 2012. We do note from the record that the reference to February 2012, which the lower Court made as a matter of clarification, was on the basis of a statement made in Court by the appellant’s witness, RW1. There is ample documentary evidence on record to show that by February, 2012, the draft UBA Zambia Employee Handbook was still circulating among the approving signatories. It was not finalized until the approval was communicated with effect from the 14th of June, 2013. It is clear to us therefore, that the effective date of the Zambia Employee Handbook is 14th June, 2013 as opposed to February, 2012. This means that the cut-off date for entitlement to the 12% basic salary annual leave allowance is 14th June, 2013 for those of the respondents who resigned after February 2012, but before 14th June, 2013. This appeal remains dismissed. J17 r - ■ < lower Court stated as February, 2012. We do note from the record that the reference to February 2012, which the lower Court made as a matter of clarification, was on the basis of a statement made in Court by the appellant’s witness, RW1. There is ample documentary evidence on record to show that by February, 2012, the draft UBA Zambia Employee Handbook was still circulating among the approving signatories. It was not finalized until the approval was communicated with effect from the 14th of June, 2013. It is clear to us therefore, that the effective date of the Zambia Employee Handbook is 14th June, 2013 as opposed to February, 2012. This means that the cut-off date for entitlement to the 12% basic salary annual leave allowance is 14th June, 2013 for those of the respondents who resigned after February 2012, but before 14th June, 2013. This appeal remains dismissed. SUPREME COURT JUDGE SUPREME COURT JUDGE E. N. C. Muyovwe J. Chin ma SUPREME COURT JUDGE J17