Zambia National Provident Fund Board and Ors v Mulenga and Ors (Appeal 140 of 2006) [2009] ZMSC 147 (15 January 2009)

IN THE SUPREME COURT OF ZAMBIA appeal no. 140 of 2006 JI HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN ZAMBIA NATIONAL PROVIDENT FUND BOARD 1st APPELLANT (Now National Pension Scheme Authority) _ NATIONAL iMMaagi liaifjii BOARD OF T DANNY KUNDA MUSENGE JOSEPH MUSONDA HUMPHREY MWANZA BILLY CHOLA ' LEMMY CHIMUKA JORDAN-THEU--------- MAMBWE KATINALA IAN LIALABI AND 3RD APPELLANT 4™ APPELLANT 5™ APPELLANT ------- 6™ APPELLANT 7™ APPELLANT - 8™ APPELLANT 9™ APPELLANT 10™ APPELLANT BERNARD MULENGA & OTHERS RESPONDENTS Coram: Chirwa, Mumba, JJS and Kabalata AJS On 25th September, 2007 and 15th January, 2009 For the Appellant: Ms. M. Mulonda, in house Counsel For the Respondent: Mr. P. Mwikisa of Mwikisa and Company Kabalata, AJS, delivered the judgment of the court. JUDGMENT Cases referred to: J2 (1) Lint Company of Zambia vs. Lukama and Others (1998) ZR 45 (2) Goodson Michelo vs. Zambia National Provident Fund Board, Appeal No. 37/2000 This is an appeal against the judgment of the Industrial Relations Court dated 24th May, 2006 in which the Industrial relations Court Contributions by the Staff Pensions Scheme be paid to the Respondents^— — ------------------------------- - The facts leading-to this appeal can be briefly stated? Between October and November 1998, the Respondent and 9 others applied for early retirement under Clause 49 of the Collective Agreement signed between therRespondents and the Zambia Union of Financial Institution and Allied Workers on the 1st July, 1998 and the applications were approved by the 1st Appellant on the 19th October 1998. Whilst the Respondents were serving their Notice, the Unionized Workers were granted K80,000-00 salary increment across the board effective from 1st April, 1999. The Respondents filed their Notice of complaint challenging the computation of their terminal benefits. They also sought a declaration by the court that J3 they be declared to have been retrenched and therefore entitled to redundancy package provided in the collective agreement and not the inferior early retirement separation package that they were paid. After considering the evidence adduced by the parties, the submissions of Counsel, the Industrial Relations Court dismissed evidence before the court that the Respondents wished to go on =early retirement under ^a clearly defined contract of service with — - clear provisions on how to jterminate. their employment. Further, the lower court ordered that the Respondents be paid their Pension • I --------- Contributions by the Respondent Staff Pension Scheme and that _ any other allowances of regular nature be paid to the Respondents. Dissatisfied with the decision of the Industrial Relations Court as it related to payment of other allowances of regular nature and Pension Contributions, the Appellants have now appealed to this court. | There I are two grounds of appeal namely: I 1. That the trial Court erred in law and fact by ordering that I the Respondents be paid their Pension Contributions when I J4 in fact it was established during trial that the Appellant had refunded the Pension Contributions to the Respondents. Therefore the lower court by making this order created an injustice to the Appellants. 2. That the trial Court erred in law in ordering that the - ----- _ _ Respondents be paid allowances of regular nature when the wf""—"Collective-Agreement did not providtrfbr suclupayments:---- Counsel for the Appellants filed detailed written arguments and authorities which were augmented by oral submissions at the - = - ---- - I _______------------- — - ________ ___ hearing of this appeal. Similarly, Counsel for the Respondents filed = detailed written arguments and authorities which were buttressed by oral submissions at the hearing of this Appeal. The gist of the argment in the 1st ground of appeal is that the court l below erred in law and fact in not addressing itself fully on the issue of refund of Pension Contributions to the Respondents when in fact it was never the Respondent’s claim that they had not been refunded their contributions. In reaction to this head of argument, Counsel for the Respondents submitted that the lower court was on J5 firm ground by ordering the Appellants to pay the Respondents the Pension Contributions. The gist of the argument in the 2nd ground appeal is that in ordering the Respondents to be paid allowances of regular nature when the Collective Agreement did not provide for such payment, The lower Agreement. Counsel for The Appellant submitted that the cases of ___ Lint Company of Zambia vs. Lukama and Others* 1 and Goodson 1 --- ------------- -——_ Michelo’vs, Zambia National provident Fund Board2 provide the lawon the issue. In reaction to this head of argument, Counsel for 1---- =---- —------- ~ - ---- the Respondents submitted that the Collective Agreement entered into between the 1st Appellant and the Unionized Respondents on the 1st July, 1998 provides for the payment of the allowances in question. We have carefully considered the evidence on record, the judgment of the Industrial Relations Court and the submissions of Counsel on the grounds of appeal and cross appeal. I On ground one, the respondents put it clearly in the amended claim at page 74 of the Record of Appeal under paragraph 6(iii) that; J6 “Upon their early retirement the Applicants were instead refunded the contribution and not put on life Pension contrary to the scheme rules.” In the affidavit in support of the amended complaint at page 76 to 132 of the Record of Appeal the complainants witness swore at “that the scheme was not also registered with the Pensions and Insurance Authority norwas it approved under the Income Tax., Act 1996. The Respondentsjailed . to supply evidence of such registration or approval. The ____ letter requesting of evidence of registration is now produced exhibited and marked “BM7”. As a result the funds of the scheme were not properly invested in accordance with the requirement of the Pensions and Insurance Authority and the refunds of members contributions on retirement were paid to the beneficiaries after deductions of tax when they are normal exempted.” i The documentaiy evidence on the payment of the refunds of members contributions on retirement was produced in the original affidavit in support of complaint sworn to by the complainants witness where under paragraph 10 of the Affidavit on page 21 of the Record of complaint stated as follows “The Respondent did not pay the Complainants housing, ___ education and other allowances during the period of 30th April 1999. The payment vouchers from the — Respondent are now shown and marked “BM8”—------------—. --- It is quite clear to us that-in the-judgment of the _ court below,the I trial Cout’s summing of the facts as presented by the complainants —witness misunderstood the issues with regard to the contribution refunds and also left out evidence on admission of payments of the complainants contributions together with the employers contributions and interest. See lines 19 and 20 of the Notes of proceedings in the court below on page 193 of the Record of Appeal which states: i “ I 'was paid my contributions together with the employers contributions with interest thereon.” J8 Two Respondents’ witnesses at page 203 of the Record of Appeal lines 12 to 14 and at page 209 of the Record of Appeal told the court that “those who retired early were paid both their contributions and the employers contributions, this was to mitigate the negative impact of early retirement which ^~2nT Respondent witness thaf theqperisioh contributions to thFhouse - staff pension scheme were refunded to employees because they left prematurely see page 13 of the Record of Appeal. Therefore, in our considered view, there was over whelming LZ______ evidence of the refunds of thd Staff Savings Contributions later called the Staff Pension Scheme and consequently, we find that it was not justifiable that the complainants be paid their Pension Contributions by the Respondent Staff Pension Scheme without giving the reason for so ordering. The ruling on the issue of refund of Pension Contributions by the court below is therefore set aside for being without any base or supporting evidence and therefore unjust. Ground one succeeds. J9 We now move on to ground two of the main appeal which avers that the learned trial judge erred in law in ordering that the complainants be paid allowances of regular nature when the Collective Agreement did not provide for such payments. It is trite law that a Collective Agreement which has been approved Section 71(3) (c)of the Industrial and Labour Relations Act Cap 269 as amended by Act of No. 30 of 1997. We have pronouneed this before in cases of Lint Company vs. Lukama and Others1 and Goodson Michelo vs. Zambia National Provident Fund Board2 —and that the contract of service does not Terminate upon receipt of Notice but at the end of the Notice period. The question of what was payable during that Notice period in this case was a matter subject to an Agreement between the parties as pronounced in the Collective Agreement. The Collective agreement at page 3 to 53 of the Record of Appeal and Clause 49 of the same Agreement at page 44 of the Record of Appeal stipulates the conditions for eligibility for early retirement and what is payable as between the parties. We have looked at Clause 49 and nowhere are allowances of regular J10 nature mentioned in the Clause. Consequently, the lower court erred in law in ordering that the complainants be paid allowances of regular nature when the Collective Agreement did not provide for such payment. In our view, the order for payment of any other allowances of regular nature to the Respondents which were not Tn sum therefore ground one and two And the appeal is allowed with costs to the Appellants. We now move on to the cross appeal which is that the Industrial Respondent Occupational Pension scheme pay withdrawal benefits to the Respondents but erred in law and fact when it ordered that such withdrawal benefits be by way of refund of contributions. The reaction by the Appellants to the cross appeal is that the Respondents have confirmed in their argument that they were I refunded their Contributions to the Pension Scheme upon early i I retirement. What remains to be determined is whether these JU refunds were done in accordance with the rules of the Scheme and There is no douhf—that the 2nd Appellant was a Defined Benefit Scheme not a Defined Contribution Scheme. It was also an I approved Scheme under the Income Tax Act Cap 323 of the Laws of Zambia as confirmed at page 256 of the Record of Appeal. For the Scheme to be am approved Scheme and exempt under the second schedule of the Income tax Act, it should meet the provisions in the Income Tax Act which are in tandem with the General Principles of a Pension Fund. After analyzing the evidence on record, and the law, we are satisfied that the payments which were made to the Respondent were based on the Defined Benefit Scheme Rules and the law and not the Defined Contribution or money purchase J12 scheme as alleged by the Respondents. We therefore find no merit in the cross appeal and it is hereby dismissed with costs to the Appellants. & F. N. M. Mumba SUPREME COURT JUDGE ACTING SUPREME COURT JUDGE