Zambia National Commercial Bank PLC v Chanda (Appeal 104 of 2014) [2017] ZMSC 289 (8 September 2017)

a Z-A b CJ SCZ SELECTED JUDGMENT NO. 44 OF 2017 IN THE SUPREME COURT OF ZAMBIA APPEAL NO. 104/2014 HOLDEN AT NDOLA (CIVIL JURISDICTION) & REPUBLIC of ZAMBIA 8/55/2014 JUDICIARY APPELLANT AND MISHECK CHANDA RESPONDENT CORAM: Hamaundu, Kaoma and Musonda, JJS On 5th September, 2017 and 8th September, 2017 For the Appellant: Mr. B. Gondwe of Buta Gondwe and Associates and Mr. Siamoondo of Corpus Legal Practitioners For the Respondent: N/A JUDGMENT KAOMA, JS delivered the Judgment of the Court Cases referred to: 1. Zambia National Commercial Bank v Geoffrey Muyamwa and 88 others - Selected Judgment No. 37 of 2017 2. John Paul Kasengele and others v Zambia National Commercial Bank (2000) Z. R. 72 3. Robbie Mumba and others v Consumer Buying Corporation of Zambia and Zambia Privatisation Agency - Appeal No. 149 of 2001 4. Zambia Consolidated Copper Mines and another v Ndola Sikanyika (2000) Z. R. 105 5. Maamba Collieries Limited v Douglas Siakalanga and others - Appeal No. 51 of 2004 6. Mendai v Zamtel - 2001/HP/246 7. Boniface Joseph Sakala v Zambia Telecommunications Company Limited - Appeal No. 104 of 2014 8. Davies Jokie Kasote v The People (1977) Z. R. 75 9. Match Corporation v Development Bank of Zambia - SCZ Judgment No. 3 of 10. Dickson Zulu and others v Zambia State Insurance Corporation Limited - Appeal No. 203 of 2008 11. Newton Siulanda and others v Foodcorp Limited (2002) Z. R.36 This is another appeal involving Zambia National Commercial Bank and one of its former employees pertaining to the question whether allowances ought to be incorporated into the basic salary for purposes of calculating terminal benefits. After our very recent decision in the case of Zambia National Commercial Bank Plc v Geoffrey Muyamwa and 88 others1, delivered on 18th August, 2017 this question has become otiose and is now res judicata. The facts leading to this appeal are the same as in the above mentioned matter except that in the current case, the respondent issued proceedings out of the High Court and thus, he did not claim that he was similarly circumstanced with other former employees of the appellant. However, the respondent was employed by the appellant on 15th March, 1977 as a clerk. Initially, he served on unionised conditions of service. At that time, the appellant was a J2 subsidiary of the Zambia Industrial and Mining Corporation Limited (ZIMCO). The respondent rose through the ranks to become General Manager on 16th August, 2004. Now, on 28th March, 1995 during the privatisation of State owned enterprises, the Government of the Republic of Zambia gave a directive, through the then Minister of Finance, the late Ronald Penza, that all subsidiary companies of ZIMCO should integrate allowances into basic salaries when calculating terminal benefits. At the time the ‘Penza letter1 was written, the respondent was in management category of employees. It seems that the directive in the ‘Penza letteP was not implemented by the appellant and subsequent to the liquidation of ZIMCO between 1995 and 1996, the appellant adopted its own conditions of service for non represented staff (the ZANACO conditions of service), which did not provide for inclusion of allowances to the basic salaries in computing terminal benefits. Nonetheless, the respondent continued to work for the appellant until he was promoted to the position of General Manager in 2004 and placed on a fixed term contract for one year. Since the J3 respondent had not reached the retirement age of 55 years, he was put on a severance scheme which was provided for in the ZANACO conditions of service to enable him take up his new appointment. As a result, on 22nd September, 2004 he was paid a sum of K343,982,934.22 (unrebased), being full and final settlement of the terminal benefits due to him for the 27 years of service rendered to the bank. He was also given a schedule of computation for the payment. Of course, the computation did not include the fuel and housing allowances which the respondent was receiving together with his salary. The respondent also received his pension benefits from Zambia State Insurance Corporation. He finally left the appellant in July, 2005 at the end of his one year contract. About three and half years later, specifically on 28th November, 2008 the respondent issued an action in the High Court by writ of summons seeking a sum of K477,371,104.25 (unrebased), being outstanding terminal benefits after re-computation to include allowances; interest from due date until payment; any other relief the court may deem fit and costs. J4 In a nutshell, his evidence was that he was entitled, on the basis of the ‘Penza letter1 to the inclusion of the fuel and housing allowances to the basic salary in computing his terminal benefits, as he served under ZIMCO conditions of service for 27 years before he was appointed General Manager. However, he acknowledged that the ZANACO conditions of service came into play on 1st December, 1996 and that the said conditions did not provide for inclusion of allowances to the basic salary in computing terminal benefits. Conversely, it was the appellant’s evidence that although the ‘Penza letter’ was an integral part of the ZIMCO conditions of service and the decision to include allowances to the basic salary was never reversed, the ZIMCO conditions of service ceased to apply after the liquidation of ZIMCO and were superceded by the ZANACO conditions of service which came into effect on 1st December, 1996. It was also the appellant’s evidence that the employees were written to and made aware of the change in the conditions of service; that the respondent did not object to the new conditions; that his severance package was computed in accordance with the J5 ZANACO conditions of service; and that had he retired in 1995, he would have been entitled to inclusion of allowances in the package. The learned trial judge took note of facts which were common ground and referred to various authorities of this Court, including John Paul Kasengele and others v Zambia National Commercial Bank2, Robbie Mumba and others v Consumer Buying Corporation of Zambia and Zambia Privatisation Agency3, Zambia Consolidated Copper Mines and another v Ndola Sikanyika4and Maamba Collieries Limited v Douglas Siakalanga and others5. She identified the issue for decision as the effect of the purported variation of the ZIMCO conditions of service. In determining this issue, the trial judge also applied a High Court case of Mendai v Zamtel6 where Hamaundu J (as he then was), held regarding the ‘Penza Letter’, that only the shareholders could change the condition of service incorporating allowances into the salary, as the directors and managers had no power to alter a decision of the shareholders. We reiterate what we said in Boniface Joseph Sakala v Zambia Telecommunications Company J6 Limited7 that the Mendai6 judgment was later set aside by the trial judge and that therefore, it cannot be relied on as authority. However, on the basis of the above authorities, the learned judge took judicial notice of the fact that when ZIMCO was dissolved, Government remained as shareholder in ZANACO until the shares were sold off; that even after that sale, the bank remained the same entity; and that in 1996, the Minister of Finance was shareholder in ZANACO and hence, the shareholder who had decided that allowances be merged into the salary was the owner of the bank and that directors and managers could not alter that directive. The judge then held that the failure or refusal by ZANACO to implement the directive had no effect on the import of that directive unless and until the shareholder/s varied it. On the appellant’s assertion that the ZIMCO conditions of service were changed, the learned judge took the view that it was not indicated as to who changed the condition merging allowances into the salary, whether management, directors or shareholders and that in the absence of proof, by the appellant, the conclusion that the condition was not effectively altered was inevitable and that in J7 those circumstances it could not be argued that the respondent acquiesced in the purported variation of that condition. The learned judge distinguished the Maamba Collieries Limited5 case on the basis that in that case the company agreed with the workers on different conditions of service from the ZIMCO conditions of service which they were at law entitled to do and that at the time they were retired, the employees were serving under the Maamba Collieries Limited Conditions of Service. Finally, she held that the purported variation having had no effect on the term merging allowances and salaries, the fuel and housing allowances fell to be included in computing the respondent’s severance package and ordered a re-computation in accordance with the directive in the ‘Penza letter’. Hard done by this decision, the appellant has appealed on three grounds framed in the memorandum of appeal as follows: 1. That the judgment did not comply with the recent authorities by the Supreme Court, which have since established that the current conditions and not ZIMCO conditions are applicable. 2. That the court below erred in law and in fact in finding that there was no evidence to show that the respondent agreed to the ZANACO conditions of service and acquiesced to the change by J8 working beyond the date when he claims the contract was repudiated. 3. That the court erred in law in holding that ZIMCO conditions could not be altered by the appellant company. Counsel for the appellant filed written heads of argument on which they relied. The respondent has not filed any heads of argument and counsel for the respondent of M. L. Mukande and Company did not attend the hearing of the appeal. We were informed by Mr. Gondwe that counsel had missed his flight. To us this is a clear indication of lack of seriousness on the part of counsel and this was not a ground on which we could adjourn the hearing of the appeal. We proceeded to hear the appellant. Due to the position we have taken in this appeal we shall not set out the arguments and authorities cited by the appellant in any detail. The gist of the arguments in ground 1 is that the trial judge departed from the principle of stare decisis explained in the cases of Davies Jokie Kasote v The People8 and Match Corporation v Development Bank of Zambia9. The case of Maamba Collieries Limited5 is also cited where we held that current conditions of service were applicable when settling terminal benefits. J9 In ground 2 the appellant contends that the respondent was aware of the change in the conditions of service and acquiesced to the same as the employees were written to and made aware of the change and the respondent did not object to the new conditions; and his severance package was computed in accordance with the ZANACO conditions of service which did not provide for inclusion of allowances to the basic salary in computing terminal benefits. In ground 3, the main contention is that there was no issue raised in the court below that required to be settled as to who altered the conditions of service or that the conditions were improperly changed. According to counsel, the issue was the calculation of the terminal benefits under the severance scheme. We have considered the record of appeal and the arguments by counsel for the appellant. On the basis of our latest decision in the Geoffrey Muyamwakase referred to above, the three grounds of appeal should succeed. And since the above case has informed our decision in this case, we shall set out, in brief, the facts of that case relevant to this appeal and our decision in that case on the same core issue we are facing in the current case. J10 The respondents in the Geoffrey Muyamwa1 case were aggrieved by the appellant’s refusal to include allowances in computing their terminal benefits, after one Kalaluka and Mwiinga were paid benefits that included allowances. They commenced an action in the Industrial Relations Court (IRC) seeking an order for payment of terminal benefits on the basis of the ZIMCO conditions of service. The IRC upheld their claim on the basis of being similarly circumstanced to Kalaluka and Mwiinga. The appellant appealed to this Court in Appeal No. 33 of 2014. In our judgment delivered on 27th February, 2015 we found that the IRC was on firm ground when it upheld the respondents’ claim for the addition of allowances to the basic salaries in computing their terminal benefits. Following our judgment, the matter went back to the IRC for assessment of the terminal benefits due to the respondents. The appellant was aggrieved by the assessment and again appealed to this Court. In ground 3 of that appeal, which is the most relevant to this appeal, the main contention by the appellant was that the terms and conditions introduced by the “Penza letter” of adding allowances to the basic salaries in computing terminal benefits were jii only applicable during the period the ZIMCO conditions of service were applicable to the appellant, which was prior to the liquidation of ZIMCO and the introduction of the ZANACO conditions of service. For this argument counsel had relied on the case of Dickson Zulu and others v Zambia State Insurance Corporation Limited10. It was further argued in that appeal by Mrs. Wamulume, in­ house counsel for the appellant that at the time of migrating from the ZIMCO to the ZANACO conditions of service, there was no terminating event as the respondents continued in employment and in so doing, they consented to the change in the conditions of service which were indicated as superceding the ZIMCO conditions of service in the letters of migration. In deciding that appeal, we accepted that by finding that the IRC was on firm ground when it upheld the respondents’ claim for the addition of allowances to the basic salaries in computing their terminal benefits in our judgment of 27th February, 2015 we departed from the principle of stare decisis in as far as we did not consider our earlier decisions on the effect of an employee consenting to a change in his or her conditions of service. We were J12 also compelled to comment on the rationale for the “Penza letter”. We put the matter as follows at page J52: “The position we have taken is that when considering the “Penza letter” one must not lose sight of the fact that it was issued at a time when a number of employees in Zambia were being laid off as a consequence of the privatization exercise. In this regard, it was intended as a tool to cushion the impact of the layoffs and retrenchments on the employees and not as a tool to be used later by those employees who had consensually remained in employment under new conditions of service, to bargain for better separation packages. To the extent that we did not consider the “Penza letter” in this light in our judgment of 27th February 2015, when we held that the benefit under the “Penza letter” accrues to the respondents based on the principle of being similarly circumstanced, we misdirected ourselves”. In that case, we found the fact that the respondents had consented to the migration from ZIMCO to the ZANACO conditions of service undisputed as it was clear from the evidence on record that they had conceded that the ZIMCO conditions were no longer applicable to them since the ZANACO conditions of service had been introduced. As such we held that we were bound by our earlier decisions and now by the Dickson Zulu10 case and Zyter v Zambia Telecommunications Company Limited v Felix Musonda and others11. We went further to quote our decisions in the above cases. Thereafter, we made it clear that the effect of the two decisions was that upon migration to the ZANACO conditions of service, which the J13 respondents did freely and willingly, they lost the right to the benefit of the “Penza letter” on termination; and that their terminal benefits were to be computed in line with their conditions of service at the point of exiting which were the ZANACO conditions of service which did not provide for inclusion of allowances in computing terminal benefits. In effect, we reversed our earlier decision of 27th February, 2015 that the respondents’ terminal benefits were to be computed by addition of allowances to the basic salaries. Coming back to the present case, we agree with the appellant that the judgment appealed against did not comply with the recent authorities of by this Court which have since established that the current conditions of service and not ZIMCO conditions of service are applicable, particularly the Maamba Collieries Limited5 case. We are satisfied that the distinguishing factors referred to by the learned judge in the Maamba Collieries Limited6 case were really the factors that made the two cases indistinguishable. Evidently, the ‘Penza letter’ was an integral part of the ZIMCO conditions of service and the learned judge rightly set out the law as propounded in the Kasengele6 case. However, in dealing with J14 ground 4 of the appeal in the Geoffrey Muyamwa1 case, we distinguished the Kasengele6 case on the same distinguishing factor which we found in the Dickson Zulu10 case which was that, unlike the Kasengele6 case where the appellants retired under the ZIMCO conditions of service, in that case the respondents continued to work under new conditions of service. In the current case, the record shows that there was evidence, which the learned trial judge glossed over, although not in the nature of a document to the effect that the respondent was aware of the change in the conditions of service as all the employees were notified in writing of the change and that the respondent did not object to the new conditions and so, he acquiesced to the change. Furthermore, as the learned judge noted, the respondent served the appellant for 27 years and to enable him to take up the position of General Manager, his employment was terminated under the severance scheme provided for in the ZANACO conditions of service. The respondent also conceded that the ZANACO conditions of service applied from 1st December, 1996. JIS Surely the respondent could not have been in management from 1996 when the ZANACO conditions were adopted, rising to the position of General Manager in 2004, without him knowing of the change in the conditions of service before his separation under the same conditions he is now impugning. Besides, he continued to draw his salary for 7 years on the basis of the same conditions of service. Clearly, the learned judge misdirected herself when she held that the respondent did not acquiesce in the purported variation of the condition of service in the ‘Penza letteP; and when she held that the failure or refusal by ZANACO to implement the directive had no effect on the import of that directive unless and until the shareholder/s varied it. We held in Newton Siulanda and others v Foodcorp Limited11, that if the respondent had not consented to the altered conditions of service, he was entitled to treat the unilateral alteration to a basic condition as a breach and repudiation of the contract of employment by the employer which would have entitled him to a separation package. In this case, the respondent did not take this option and therefore, he could not seek to enforce the J16 ZIMCO conditions of service later. As he exited under the ZANACO conditions his terminal benefits were properly computed. We wish to take this opportunity to draw the attention of all legal practitioners and litigants, with cases similar to this one, to what we said in the Geoffrey Muyamwa1 case because as rightly submitted by Mr. Gondwe we have put it beyond doubt in that case that the ZANACO conditions of service applied to those employees of the appellant who remained in employment after the liquidation of ZIMCO and adoption of the ZANACO conditions of service. As we said at the beginning of our judgment, this issue has now become res judicata and shall not be revisited by this Court. In the event we allow this appeal and set aside the judgment of the court below with costs to the appellant here and below. E. M. HAMAUNDU SUPREME COURT JUDGE R. M. C. KAOMA SUPREME COURT JUDGE M. MUSONDA SUPREME COURT JUDGE J17 ZIMCO conditions of service later. As he exited under the ZANACO conditions his terminal benefits were properly computed. We wish to take this opportunity to draw the attention of all legal practitioners and litigants, with cases similar to this one, to what we said in the Geoffrey Muyamwa1 case because as rightly submitted by Mr. Gondwe we have put it beyond doubt in that case that the ZANACO conditions of service applied to those employees of the appellant who remained in employment after the liquidation of ZIMCO and adoption of the ZANACO conditions of service. As we said at the beginning of our judgment, this issue has now become res judicata and shall not be revisited by this Court. In the event we allow this appeal and set aside the judgment of the court below with costs to the appellant here and below. E. M. HAMAUNDU SUPREME COURT JUDGE SUPREME COURT JUDGE M. MUSONDA SUPREME COURT JUDGE J17