Zambia Consolidated Copper Mines Ltd v Kangwa and Ors (SCZ Judgement 25 of 2000) [2000] ZMSC 129 (6 June 2000)

THE SUPREME COURT FOR ZAMBIA SCZJudgment No.25/2(I(M) HOLDEN AT NDOLA Appeal No. 169 9 (201) (C vii Jurisdiction) B! TWEEN: ?/ MBIA CONSOLIDATE!) COPPER MINI'S LIMITED Appellants AND RICHARD KANG WA AND OTHERS Respondents C( !RAM: Ngulube CJ. ami Sakala and Chirwa jjs On 7'11 March and 6lh June, 2000 Pc appellants - Mr. P. Chamutangi. Legal Counsel of ZCCM lx • respondents - Mrs. L. K. Mbaluku. Mbaluku and Company ~ —- j v M E N T_______________ _ ______ Ngulube CJ. delivered the judgment of the court. This is an appeal from the Industrial Relations Court. This case arose from a decision of the appellants not to extend the sale of houses to “sitting tenants” who arc employees of wholly owned subsidiary companies, preferring instead to sell some of' the housing units occupied by the respondents to direct employees and others who were not even the “sitting tenants” that is to say, they were not the persons in occupation and (202) residence. Employees of subsidiaries were to be empowered by sale of bouses only after sales to direct employees and only if any houses remained. The respondents are employees of' Ndola Lime Company Limited, a wholly owned subsidiary of the appellant company. There was evidence that some of the complainants started working for the appellants and were transferred from one division or associated company to another and finally ended up at Ndola Lime while some were first seconded from ZCCM before becoming absorbed as direct employees of Ndola Lime. Some people in top management continued to be seconded from the appellant. There was evidence also that the appellant’s board of directors or Management sold Some houses belonging to Ndola Lime to their direct employees and to a tew Outsiders. It was the contention of the appellants in their answer to the Complaint and in submissions that the sale ol houses to direct employees t tec1 its authority and genesis to a decision by the board of directors who expressly excluded direct employees ot subsidiaries. It was submitted that ’the. Court below was right not to have based its decision on presidential directives, f or our part, we are prepared to take judicial notice of the fact that sales of houses to “sitting tenants” across the country in local authority and public institution houses was the brainchild and decision ot the (203) Government which ultimately also owns the appellant as the majority Shareholder. It is a mistake to talk about political directives and to ignore ic government’s other more relevant character and capacity as the Shareholder with the controlling interest. The attitude of the appellants Seems to be that the wishes of the ultimate majority owners (that is the Government of the Republic of Zambia) as expressed by the Head of State or his representatives can be ignored in this matter. They can not. In fact, ic law accepted in this country and in many others is that the beneficial wi ers of a company - the shareholders - have and enjoy as of right ve riding authority over the company’s affairs and even over the wishes of ic: nominees or directors: see. B. O. Z. -V- CHIBOTE MF. A I O iPORATION SCZ Judgment No. 14 of 1999; VAN EOXTEL -V- 'E \RNEY (1987) ZR 63; and In re PAN ELECTRONICS (1988-89) ZR 9. It is public knowledge and there are documents to this effect, on the ?ci rd of appeal before us (e.g. the Minutes at Page 94) that the State wishes .) sell parastatal houses to “sitting tenants”, including employees of cib. idiarv companies who are and have been in actual occupation ol lac ou;es. However, these observations arc obiter since the decision below ca.1 indeed not said to be grounded in the expressed wishes of the .stale. (204) The Industrial Relations Court dealt with the affected workers' ar )laint upon their argument that tor all practical purposes the appellants id their subsidiary fell to be treated - for all intents and purposes - as ' he same thing in different tunics”. The court considered the evidence ; ven on both sides and said, among other things - “Prom the evidence we are satisfied that Ndola Lime Company Limited is a fully owned subsidiary of ZCCM. Further we arc satisfied that the complainants have proved that 'the conditions of service at Ndola Lime are the same with those existing at ZCCM. Further ire have found as a fact that though Ndola Lime Company Limited and ZCCM are in law separate legal entities, it was not unknown for the parens company to transfer workers from other divisions to Ndola Lime Company Limited. Further when such transfers occurred, the service period of service of such employees- was not affected and they continued as if they had been transferred within the same company. Further we find as a fact that ZCCM did actually sell some Ndola Lime Company houses such as the one sola to Mr. Mutati and merely gave notice to Ndola Lime. With these findings we are agreed that the two companies operated as one • economic entity, and for all intents and purposes they are run like one company 'I he court went on to specifically say it was "‘mindful of the separate 1' al personality of the companies” but was satisfied on the evidence that it v til I be unrealistic to adhere to the legal separateness which might wreak ate d unfairness”. Thus, the Industrial Relations Court made findings of I I v hich they considered to have been supported by the evidence and they (205) 1st quite correctly directed themselves on the legal separateness of on panics. I hat court is mandated to do substantial justice, unfettered by ;g; listic niceties and appeal lies to this court only on a point of law or a oil t of mixed law and fact. The first ground of appeal was that the court below made a finding ■ hi h was against the weight of evidence when it held that the conditions of en ice at Ndola Lime are the same with those at ZCCM. There is no point f 1 av or of mixed law and fact involved in this ground which is vague in ic '.xtreme and which has never qualified as a valid and meritorious ground f ; ppeai let alone as raising any point of law. In any event there was vicence given by the complainants’ witnesses which was to this effect, ’.el iding evidence of a witness who got a thirty years long service award hi' h included service in various associated divisions and companies .ill inating with Ndola Lime, all of which service was regarded as a single nb oken period of service. There was other evidence in the documents eft re court and viva voce that there were shared schemes such as of home wrership and shared amenities such ns schools. There was a common oli y declared by the appellants in their disciplinary code. The matter was (206) nt beyond debate by the appellants own witness RW2 Richard ( hilando ■h< told the court under cross-examination that the conditions were the ;im;. We accept Mrs Mhaluku's submissions and reject those of Mr. ha nutangi. This ground was without any merit and was in any case alr Ipful for not raising any point of law. The second ground of appeal was that the court below erred to find : tat ZCCM sold houses belonging to Ndola Lime. Again no point of law or < :'n ixed law and fact is manifest and again the evidence fully supported the rdi ig. A telling example is the evidence of the appellants’ own witness i ir. Chilando who confirmed that such sales took place and who also < mfrmed that ZCCM treated Ndola Lime properties as their own: See for >1 i sta ice his admissions to this effect at Pages 35 et scq of the record. . lot ler example which even Mrs Mbaluku drew to our’attention is to be I un I at page 89 of the record where in dealing with one such house a f JC vl official wrote- ‘7/ mav be of interest to you to know that before the said ZCCM general valuation of fixed assets the above property was pegged at K33,500.00 in our Ndola Lime hooks (207) Th : house referred to was sold on the appellants instruction to a Mr. Lumpa. o IT ire were enough facts before the court to support the finding complained of n the second ground which did not raise any point of law. t The third ground of appeal was that the court below erred in law and i in tact in holding that ZCCM and Ndola Lime “operated as one economic en ity” and run like one company. This was a conclusion of fact which the trii 1 court reached on the evidence adduced. In the heads of argument, thus gr< und was combined with the fourth ground which alleged that the court be ow misconceived the law in holding that on the facts of this case they co ild pierce the corporate veil and “the complainants were employees of ZC. CM Limited”. More accurately, the court below held that the co nplainants were for all intents and purposes employees of ZCCM Limited rat ter than as simply put by the ground of appeal. Although the grounds alhged errors of law, the court had in fact given itself a correct direction on the law when it acknowledged the separate legal identity of each company, lie court in fact made findings of fact and it was to such findings that the arguments and submissions were directed so that, effectively, no point of kr ’ or of mixed law and fact was raised. The Industrial Relations Court had (208) -(< re it evidence how some workers could be seconded or transferred and on this was treated as continuous service. There was before the court vie mcc that top management at Ndola Lime came from ZCCM as did the >ar i of directors. The employees on both sides shared the same amenities id he same fringe benefits as ordained by ZCCM itself; they participated ; a common home ownership scheme. ZCCM sold some Ndola Lime i ms is and in other cases got involved in such sales, even keeping the i oc eds. Mr. Chamutangi submitted that these features were not enough to i arr mt the conclusions reached below. For our part, we agree with Mrs f ba uku that these and other aspects which were pointed out and which it is t necessary to tabulate in extensio constituted ample ground for a tribunal t su istantial justice to reach the conclusions it did. ZCCM were clearly not ( erl •/ scrupulous in observing any legalistic lines of demarcation in the i me of separate corporate identities and the court was not in error to hold t. e v ew that there would be “untold unfairness” to the aggrieved workers s me of whom had formerly been ZCCM direct employees themselves and v o tad ended up at the subsidiary' company by accident of circumstance or b ac of ZCCM in transferring them. <1 (209) T'he fifth and final ground was limit it was impossible to sell the houses o he complainants since they had allegedly already been sold to direct mmloyees who were not sitting tenants and who presumably could have m sold the houses they were living in themselves instead of those -cc ipied by somebody else. It was submitted that the judgment if enforced ' vo ild be extremely disruptive of the process of privatizing ZCCM which :ac hoped to reduce its liability to direct employees by offsetting the houses old against the separation packages. It was suggested that instead, the court hc ild order compensation equivalent to what the complainants would have ;ai .ed had they bought the houses from ZCCM, that is to say, giving the iif erence between the purchase price and the valued prices. Mrs Mbaluku .oi itered this by drawing attention to an injunction which had been issued me which was disregarded when the sales were proceeded with. She argued ha Counsel on the other side should not be allowed to prescribe the remedy or the complainants. There was in fact nothing unlawful about the awards In ady made by the Industrial Relations Court and no occasion for us to ntc rfere and to prescribe some other relief. If there are problems of nl wcement as alleged, they arc for the trial court to inquire into and ' es Ive. It is for the trial court to consider alternative remedies if their (210) nd. .merit can not specifically be performed or enforced and al] or any such lift culties should be discussed in that forum. For our part, Vve have not ee i any point of law or of mixed law and fact to warrant our interfering /it i the judgment of the Industrial Relat ions Court. The appeal is dismissed with costs to be taxed if not agreed. M. M. S. W. Ngulube CHIEF JUSTICE K. L. Sakala SUPREME COVRT JUDGE D. K. Chirwa SUPREME COURT JUDGE