Zambia Telecommunications Company Limited v Violet Kasengele Bwalya and Ors (APPEAL NO. 104/2011; SCZ/8/104/2011) [2013] ZMSC 84 (18 October 2013)

IN THE SUPREME COURT FOR ZAMBIA APPEAL NO. 104/2011 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: SCZ/8/104/2011 ZAMBIA TELECOMMUNICATIONS COMPANY LIMITED APPELLANT AND VIOLET KASENGELE BWAL YA & OTHERS RESPONDENT CORAM: Chirwa, Mwanamwambwa and Muyovwe, J. J. S., On 20th March 2012 and 18th October 2013 For the Appellant: For the Respondents: Mr. M Mundashi, S. C., and with him, Mr. M Chiteba of Messrs. Mulenga Mundashi & Company Mr. D. B. Mupeta of Messrs D. B. Mupeta & Co. and Mr. L. M Matibini of Messrs L. M Matibini & Company JUDGMENT Mwanamwambwa, JS, delivered the Judgment of the Court. Cases Referred to: 1. 2. 3. 4. Boe Gases PLC v Phesto Musonda (2005] Z. R. 119. Attorney General v Lewanika & Others (1993/94] Z. R. 164. Seaford Court Estates Limited -v Asher (1949] 2 K. B. 481 . . Okikuusook Majid (and others)v Attorney General (of u -«utn.da) Petition No. 10 of 2009. UBZ v Shanzi (1977) Z. R. 397. Jefford v Gee (1970] ALL E. R.1202. Times Newspapers (Z) Limited v Chisulo (1984) Z. R. 83. Ford v Beech (1848) 11 QB 852. Kapembwa v Maimbolwa & Attorney General (1981) Z. R.127. Zulu v Avondale Housing Project Limited (1982) Z. R. 172. 5. 6. 7. 8. 9. 10. 11. Richard Ndashe Chipanama·:v Zambia Railways Limited, SCZ .0 Appeal No. 143/2002. ~ -t'; ; I -J2- Legislation Referred to: 1. The Law Reforms (Miscellaneous Provisions) Act, CAP 74 of the Laws of Zambia. Section 4. 2. Other Works Referred to: 1. The Phipson on Evidence 15th Edition, page1195. 2. Anson's Law of Contract Pages 32-33 Hon. Mr. Justice D. K. Chirwa was part of the Court that heard this appeal. He has since retired. The ref ore, this Judgment is by the majority. This is an appeal against the Judgment of the Industrial Relations Court, of 6 th May 2010. The Judgment in question awarded the Respondents a redundancy package of three months basic salary for each year served and pro-rata, for any uncompleted year of service, during the tenure of employment, with the Appellant. That was in addition to the minimum terminal benefits, as determined- by the Appellant's Board of Directors, in compliance with Clause 10 of the Terms and Conditions of Service for non-represented staff. It also awarded interest on each Respondent's redundancy package, at the then average lending rate, from the cfate of the respective complaints to the date of the Judgment and !he_r_eafter, at 6% per annum . . ,· . . .:._,.~ .. until settlement. )' j }' I ' -J3- The facts of this matter are that the Appellant is the former employer of the Respondents. In September 2009 , the Government, the owner and majority shareholder of the Appellant, announced its decision to sell 75% of shares in the Appellant, to an equity partner. In anticipation of the sale, the Appellant informed its employees of the intention to declare them redundant. The terms and conditions of service between the Appellant and the Respondents, were regulated by a document entitled: "Terms and Conditions of Service for Non Represented Staff). Clause 10 of the Terms and Conditions of Service for Non-Represented Employees , deal with redundancy. It provides as follows: is inevitable "10 REDUNDANCY Due to circumstances beyond the company's control the company may effect redundancy redundancy/retrenchment on the principal of first in last out and last in first out taking into consideration the employee's age, experience, educational qualifications and training, conduct and effectiveness and commitment to duty. The Board shall determine a redundancy package the following: a) Repatriation costs calculated at two months of the last in addition disciplinary efficiency record, and to drawn basic salary. b) Three months pay in lieu of notice; c) Long Service Gratuity." On 28 th October 2009 , the Appellant's Board of Directors met and passed a resolution, determining the redundancy package , payable to the Resportdents. The Board resolv.:ed that the Respondents be -paid a redundancy/retrenchment package as follows:·- l , ' -J4- "(a) 3 months' basic salary for each year served and pro- rata for any uncompleted year served; (b) 2 months basic salary repatriation; (c) 1 month's basic salary in lieu of notice; and (d) Tax if, any, shall be borne by the Company." The Board passed this resolution in exercise of powers under Clause 10 of the Terms and Conditions of Service for non-represented staff. In December 2009, the Respondent published a "conditional redundancy Agreement ", which stated, inter alia, as follows:- "3. REDUNDANCY/RETRENCHMENT PACKAGE 3.1 In the event of the Employee is declared redundant pursuant to Section 2 above, the Employee will have the right to receive the Redundancy/Retrenchment Package in accordance with Clause 10 of the Terms and Conditions of Service for non-represented employees as follows:- (a) A payment equivalent to two months basic salary as repatriation allowance; and An additional payment of three months basic salary to cater for notice of redundancy; and Long service gratuity, being three (3) months basic salary, for each year served and pro-rata for any uncompleted year served; and Taxi, if any, shall be borne by Zamtel." (b) (c) (d) On terminating the Respondents' employment, by way of retrenchment, the Appellant w.ote a uniform-letter to each of the Respondents, which read, _iriter alia, as _ follows:- ' ' • -JS- "In line with your retrenchment, you will be paid the sum of (sum state), being terminal benefits computed based on the following: 1. Three (3) months' basic salary in lieu of notice. 2. Long service gratuity being three (3) months basic salary for each year served and pro-rata for any uncompleted year served, 3. A payment equivalent to two (2) months basic salary, as repatriation allowance; and 4. Tax, if any, on items 1, 2 and 3 will be borne by the Company. 5. Any accrued leave days unutilised to date have been commuted for cash. In accordance with the Taxation Laws of Zambia, all tax on any such leave days will be borne by yourself." When the Respondents were separated from the Appellant, they were paid redundancy packages in line with the Board resolution. The Respondents were not happy with what they were paid. They contended that the package paid to them was inconsistent with their conditions of service. So, they sought an order, in the Industrial Relations Court, inter alia, that the Appellant pays each of them an additional redundancy package of three (3) months pay for each year served and pro-rata, for each uncompleted year served. The Industrial Relations Court granted them the order, as set out aboye. The Attorney-General was joined as a party to the case, at appeal stage . Dissatisfied with the Juci~ment of the lower Court, the Appellant has appealed to this Court, raising three (3) grounds of appeal. } ' ,. .,, -J6- Ground one faults the trial Court's holding that the ZAMTEL Board acted outside its mandate by including in its resolution of 28th October 2009, items that were covered under Clause 10 of the ZAMTEL Terms and Conditions of Service for non-represented staff. Arguing this ground, on behalf of the Appellant, Mr. Mundashi and Mr. Chiteba start by referring to Clause 10, the Board's Resolution and the observation of the trial Court that Clause 10 entrenched what the trial Court termed as "the minimum terminal benefits". They submit that despite the trial Court having made the foregoing observation, it took the position that in determining a redundancy package, the Board should not take into account items covered by Clause 10. That the position of the trial Court effectively was that the package approved by the Board should be mutually exclusive of the minimum benefits under Clause 10. They submit that position of the trial Court is an erroneous interpretation of Clause 10. They argue that the plain meaning of Clause 10 is that the conditions listed thereu~der ·•fP~-;minimum benefits due to the employees on redundancy. That in determining a package, it was in order for the Board to include them as m1n1mum benefits. They submit that in determining whether the Appellant's Board complied wit'ii Clause 10, in determining the _redundant package, the test to be appli,ed is twofold . . Firstly: . ..· . •. ;· _ . · .. • whether the package given to the Respondent's provided for the 'II -J7- minimum benefits under Clause 10. Secondly: whether there was added benefit over and above the minimum benefits. They submit that the Appellant passed by tests, in determining a redundancy package. They point out that the Respondents were given a tax benefit which was a significant gain. On behalf of the Attorney-General on ground one; Mrs. Chomba submits that what was contained in Clause 10 was the minimum redundancy benefits. What the Board was mandated to do was to determine what was payable in addition to what was contained in Clause 10. She argues that the additional benefit to what was provided under Clause 10 was the tax benefit. That in line with Clause 10, the Board had to determine a redundancy package which was to be over and above what was in Clause 10, but not less favourable to what was in Clause 10. She submits, therefore, that the trial Court erred in law and fact when it held that the Board acted outside its mandate by including in its resolution of 28th October 2009, items that were already in Clause 10. That the trial Court failed to correctly, interpret Clause 10 and to evaluate the evidence by the Appellant at trial. Therefore, in line with Times Newspapers (Z) Limited v Chisulo 171, she urges us to reverse the findings of the trial Court. In response to ground on~, on behalf of the Respondents, Mr. Mupeta and Mr. Matibini su_bmit. that in arriving a ( the decision, the · Court below addressed · its mind to the Board l I )' If -J9- They submit that in the present case, the Judgment of the trial Court is premised on a proper interpretation of Clause 10, coupled with irrefutable evidence of omission of payment of one component of the redundancy package, namely; three months pay for each completed year of service and pro-rata, for any uncompleted year of service. That this was after the trial Court found as a fact that on 28th October 2009, the Appellant's Board passed a Resolution to award the same to the complainants on the authority of Clause 10 of the Terms and Conditions of Service, for non-represented staff. It is their submission that the trial Court's findings of fact and interpretation of Clause 10 are neither perverse nor made in the absence of relevant evidence; or upon a misapprehension of the facts . Therefore, there is no basis for this Court to interfere with the Judgment of the trial Court on ground one. Ground two states that the trial Court erred in law and fact when it refused to accept the evidence of the Appellant that it was the intention of the ZAMTEL Board, vide its Resolution dated 28th October 2009, to afford the Respondents a comprehensive redundancy package, with an added tax benefit in compliance with Clause 10 of the ZAMTEL Terms and Conditions of Service for non-represented staff. On q.ehal{ .of.the Appellant on ground two, Mr: . Mundashi - and Mr. Chiteba submit that there was evidence in the Court . . ..-~·-·-: • ·-•, ·.· . .· •. · .. · __ - . . . . - • - • I i ' r t -JS- Resolution and the evidence before it; which showed that the Board Resolution had some elements of minimum benefits included in it. That more importantly, it considered the types of payments envisaged by Clause 10 and found as established that long service gratuity, notice pay and repatriation pay formed the minimum benefits, whereas the three (3) months pay for each completed year of service and pro-rata, for any l uncompleted year of served and tax waver, constituted the redundancy package, which the trial Court rightly termed as the "complainants' compensation for the premature termination of their employment". They submit that although the complainants benefitted from the tax waver, they did not receive the other component of the redundancy package, namely: three months for each year served and pro-rata for any uncompleted year served, as determined by the Board on 28th October 2009. Therefore, the trial Court was on firm ground in awarding the said award. On the request to this Court to reverse the trial Court's findings of fact, they advance two arguments. First is that . : _·,·.·'.;": t· . appeals from the Industrial Relations Court to the Supreme Court, are only on a point of law or a point of mixed law and fact. Second is that an appellate Court will only interfere with findings of fact by a trial Court, in limited circumstances. ., support their argument, they cite: (a) Kapembwa v Maimbolwa I and Attorney General 191 and (b) Zulu v Avondale Housing Project Limited 1io1. , ) ' -JJO- below that item (a) in the Board Resolution, referring to three (3) months pay for each year served, was in fact meant to provide for long service gratuity. That the trial Court refused to accept that evidence and instead it took the position that the three months salary referred to in the Board Resolution did not refer to long service gratuity, with the result that it ordered that the said 3 months' salary for each year served should be paid to the Respondents as an additional benefit. That in refusing to accept the Appellant's evidence on item (a) of the Board Resolution, the trial Court stated at page J.24 of the Judgment, that if that had been the Board's intention, the Resolution would have said so in clear terms. They submit that though the Resolution does not specifically mention long service gratuity, the trial Court ought to have accepted the Appellant's evidence that it was the intention of the Board in passing the Resolution. They argue that though it is a fundamental principle of law that evidence is not admissible to vary the terms of a written document, there are exceptions to the parol evidence rule. They refer us to a passage in Anson's Law of Contract, materials referred to at pages 32-33, which states that evidence will be adm1.ssible to prove the factual background known to the contracting parties as well as to ascertain the true meaning of any ambiguity in a written agreement. They further refer to BOC Gases Pie v Phestos .. ;; Musonda 111 • ' ) ' ' - ' " -Jll - Counsel submit that its clear from the evidence that the intention of the Board was not to pay the Respondents their redundancy package twice but only once. And that in order to ease the burden of tax on their benefits, the Board decided to bear the tax, as an added benefit. In this case, they submit that extrinsic evidence should have been accepted to explain the meaning of the Board's Resolution. That the Board did not intend for the Resolution passed to act as an additional redundancy package to that obtained in Clause 10. That the trial Court ought to have taken into account the relevant background to privatisation of the Appellant, as brought out in evidence in order to properly construe the meaning of the Board Resolution. Counsel point out that there was undisputed evidence that the Appellant was in an extremely precarious financial state at the time of privatisation. That this is confirmed by various circulars issued to the Appellant's employees, prior to privatisation, as per pages 99-11 7 of the record of appeal and the evidence of R. W.1 and R. W.2. Ground three states that trial Court erred in law and in fact when it failed to properly construe the terms and conditions of service for non-represented staff, thereby awarding the Respondents an additional redundancy package of 3 months basic salary, for each year served and pro-rata for each uncompleted year of seJ;,:Vice, when the Court had no e .. authority to do so under the conditions of service. .-.- , · .. •· . :.· . . . I , .. -J12- On this ground, Counsel for the Appellants, start by quoting from Ford v Beech181 a passage which reads as follows: "An agreement ought to receive that construction which its language will admit, which will best effectuate the intention of the parties, to be collected from the whole agreement, and greater regard is to be had to the clear intent of the parties than to any particular words which they may have used in the expression of their intent ... however, if the words of a particular Clause are clear and unambiguous, they cannot be modified by reference to other Clauses in the agreement." Counsel submit that the trial Court failed to properly construe Clauses 8 and 10 of the terms and conditions in relation to the Board Resolution of 28th October 2009. They argue that in interpreting Clause 10, regard ought to be had to the words of the Clause as well as the intention of the parties to the terms and conditions. They argue that as a starting point, the terms and conditions provide under Clause 10 that the Board shall determine a redundancy package in addition to the following ... (as already specified above). That as correctly stated by the trial Court, the plain meaning of Clause 10 is that the conditions as set out therein are the "minimum benefits", due on redundancy. That in addition to the minimum benefits under Clause 10, the Board was required to determine a redundancy package. That the ordinary effect of Clause 10 was "'~ -r-o that the benefits that were determined by the Board should at a ..• minimum, encompass the benefits· in Clause 10, coupled with an additional benefit(s). That in this case, it was the evidence ' ' I ' -J13- of the Appellant that the three (3) months salary for each year served was equivalent to long service gratuity and that the additional benefit approved by the Board was payment of tax. They submit that under Clause 8 of the terms and conditions, the level of long service gratuity is three (3) months salary for each year served and pro-rata, for each uncompleted year of service. Counsel submit that, based on this, although the Board Resolution did not specifically mention long service gratuity, the package approved was in compliance with Clause 10; because it covered at minimum, the conditions prescribed under Clause 10, as well as an additional benefit in the form of the tax relief borne by the Appellant. Further, Counsel submit that the Court below ought to have adopted a purposive approach in construing Clause 8 and 10 in relation to the Board Resolution. That this was so because the literal interpretation of the Board Resolution, as the trial Court applied, would lead to an absurd and totally unrealistic conclusion. That in this case, the effect of the Judgment in the Court below was to pay the Respondents their long service gratuity twice, a situation that clearly flew in the face of the precarious financial position the Appellant found itself, at the time of privatisation. That a Board of Directors of a company that was clearly insolvent, could not be expected to ., make payment of terminal beniefits twice, over and abov~. the normal benefits. They conclude that in construing the·t~rins of the conditions of service in relation to the Board Resolution, the • , f -J14- role of the Court below was merely to ensure that the terms and conditions of service had been complied with; in the sense that the benefits that were given to the Respondents were not less favourable than what was provided for in the terms and conditions of service. They urge us to allow the appeal. In the alternative, they pray that in line with the indemnity agreement executed by the Attorney General on 9 th July 2010, in favour of the Appellant, we should order the Government to indemnify the Appellant in respect of the Judgment of this Court, 1n the event the appeal 1s unsuccessful. On behalf of the Attorney-General, Mrs. Chomba argues grounds two and three together because she found them inter related. On these grounds, she repeats her submissions on ground one. She adds that in considering grounds two and three, it was important for this Court to consider what led to the redundancies. She refers to the evidence of R. W.1 to the effect that the Appellant company was privatised for the sole reason that it had finartcial probiems. That as far back as 2006, it has been recording losses. This is as per page 332 of the record of appeal. She argues that financial losses was one of the main reasons behind the redundancy. That if that be the case, the question which this Oould consider is:- .-, Could it have been the intention of the Board to award the Respondents an · additional · redundancy package of three months basic salary for each year served and pro-rata for -JJS- each uncompleted year of service, when the same had already been provided for under Clause 1 O? She argues that the answer is in the negative. She then refers to the finding of the trial Court, when it said: "We do not accept the Respondent's evidence and submission that item (a) in the Resolution was by implication the long service gratuity, appearing in the minimum terminal benefits under Clause 10. If that was the Board's intention, it should have said so in clear terms." • Counsel attacks this finding. She argues that the trial Court only considered the Resolution of the Board without properly construing the terms and conditions for non represented workers and also without considering what the real intention of the Board was. That the Court should have considered the circumstances leading to the redundancy, the terms and conditions of service as well as the intention of the Board. That these factors would have aided in interpreting the Resolution of the Board, so as to ascertain its actual meaning • and application to the facts of the case and to remove the ambiguities. Counsel argues that to the effect, the trial Court should have considered to admit extrinsic evidence in aid of interpretation. In support of her submission, she refers us to page 1195 of the 15th edition of Phipson on Evidence. Counsel further submits that the trial Court erred in law by using the literal Rule of interpretation to interpret Clause 10 ., .. and the Board Resolution, wliich resulted in absurdity:: . _She argues that the trial Court should have adopted the purposive ' -Jl6- approach in interpreting Clause 10 and the Board Resolution. On the purposive approach she refers to:- (a)Attorney General (& Another) v Lewanika (& Others) 121; and (b)Seaford Court Estates Limited v Asher 131 • Counsel points out that the evidence on record is that the Appellant company was making losses, hence the privatisation. That the Appellant's evidence is that the three (3) months basic salary for each year served and pro-rata for each year of uncompleted service, provided for in the Resolution, was in fact long service gratuity. That the critical question which the trial Court should have determined is whether it was the Board's intention to pay three (3) months' basic salary for each year served and pro-rata for each year of uncompleted service, in addition to the long service gratuity provided under Clause 10. It is Counsel's contention that if the trial Court had not taken a literal interpretation but a purposive approach, in construing the terms and conditions of service, in line with the authorities referred to above, by bringing into perspective all relevant provisions and evidence to the issue to be determined, it would have come to the conclusion that the three (3) months pay for each complete year of service and pro-rata for the incomplete year in the Board Resolution, actually referred to long service gratuity. Counsel adds that i lause 8.3 of the conditions of service supports her submission. Clau~e 8.3 deals w.ith long service gratuity and provides as follows:- - . . ,. -J17- "3 months pay for each complete year of service and pro-rata for the incomplete year." Counsel submits that this Clause is relevant to the issue which was to be determined by the trial Court; as it clearly explains that long service gratuity is actually three (3) months pay for each complete year of service and pro-rata for the incomplete year, which was item (a) in the Board Resolution. She argues that without considering Clause 8.3 and by adopting a strict interpretation of the Resolution, the lower Court concluded that since the words "long service gratuity" were not used in the Resolution, then three (3) months pay for each complete year of service and pro-rata, for the incomplete year, which was item (a) in the Board Resolution, was an additional benefit. Counsel submits that it could not have been the intention of Board to pay the three (3) months basic salary for each year served and pro-rata for each year of uncompleted service because that would have meant paying long service gratuity twice. That the strict literal construction adopted by the lower Court gave rise to absurdity and unjust situation. That this is because, the Appellant is required to pay long service gratuity twice, when it did not have the ability to pay. That the interpretation did not take into account the consequences. On the alternative prayer by the Appellant, C?unsel invites us to take judicial notice of the · fact that the indemnity I . - • ► -J18- agreement ha:s been overtaken by events, following compulso:ry acquisition by the Zambian Government, of 75% shareholding held by Lap Green, in the Appellant Company, the party in whose favour the indemnity was granted. In response on grounds two and three, Counsel for the Respondents support the findings of fact and holding of the trial Court. They submit that the trial Court correctly addressed itself on the core issue of interpreting Clause 10 of the terms and conditions of service, with particular regard to what constituted redundancy package, together with the Board Resolution. That in interpreting, the Court was guided by the plain and clear language of Clause 10 and the Board Resolution. That findings of the trial Court cannot be faulted as they were supported by evidence on record. That the findings are neither perverse nor made on a misapprehension of facts. Therefore, there is nothing to warrant reversing them on the authorities of Kapembwa v Maimbolwa & Attorney General 191 and Zulu v Avondale Housing Project Limited 1101• On the issue of extrinsic evidence, Counsel argue that the trial Court correctly did not deem it fit to consider extrinsic evidence because the language of Clause 10 and the Board Resolution are clear. They add that the trial Court gave a "" reason for discounting the notion of tax as a full package. ' . ' -J19- Further, Counsel point out that the Appellant had attempted to change the terms of the Board Resolution. In this regard, Counsel refers to pages 79 to 83 of the record of appeal. At those pages is a draft Agreement made by the Appellant. It proposed a method of calculating the redundancy /retrenchment package of the Respondents , as provided in Section three (3) thereof. Section three (3) of the same reads as follows:- "3. REDUNDANCY/RETRENCHMENT PACKAGE 3.1 In the event that the Employee is declared redundant pursuant to Section 2 above, the Employee will have the right to receive the Redundancy/Retrenchment Package in accordance with Clause 10 of the Terms and Conditions of Service for non-represented employees as follows:- (a) (b) (c) (d) 3.4 A payment equivalent to two months basic salary as repatriation allowance; and An additional payment of three months basic salary to cater for notice of redundancy; and Long service gratuity, being three (3) months basic salary, for each year served and pro-rata for any uncompleted year served; and Taxi, if any, shall be borne by Zamtel. The employee agrees that payment of the said shall Redundancy/Retrenchment constitute a full and final payment of any and all monetary and other claims that the Employee the may have against Employment Agreement or under any other previous agreement or engagement that may have existed between the Parties." Zamtel under Package Counsel then advance two arguments on the draft agreement. Firstly, they argue ,;that the Appellant's attempt to introduce a redundancy package under Clause 3.1 could. only ~ mean that it was aware that the Board Resolution of 28th • -J20- October 2009 did sanction three months for each completed year of service and pro-rata for an uncompleted year served, as part of the redundancy package. Secondly, they argue that the clarity that is in Clause 3.4 of the draft Conditional Redundancy Agreement discounts the notion that only tax was intended to be the sole redundancy package. That this is another solid demonstration to support the lower Court's conclusion that had the Board intended to afford the tax relief as the sole benefit, it would have said so in similar terms. Counsel point out that long service gratuity and redundancy package were both paid to one Cecilia Kumwenda, a non-represented employee, in 1995, upon being declared redundant. They argue that the Appellant, was therefore, aware of long service gratuity and redundancy package, being paid simultaneously. That as such, the intention of the Board, should have been consistent with past conduct of simultaneous payment, unless a clear intention to the contrary was expressed in the Terms and conditions of service and the Board Resolution. On the question of the Appellant's financial position, Counsel argue that no material evidence in the form of financial statements showing the assets and liabilities, were placed before the trial Court. Counsel argue that Clause 10 as read • .. -J21- with Clause 8.3 prescribes mandatory payment of three months pay for each year completed and pro-rata, for the incomplete year, in respect of long service gratuity. They refer to the Board Resolution and submit that as per the termination letter, the Appellant paid all the minimum benefits envisaged by Clause 10 plus tax, a component of the redundancy package. That the Appellant omitted to pay the other component; namely - three (3) months for each completed year of service and pro-rata, for any uncompleted year served; which by virtue of Section SSA of the Industrial and Labour Relations Act, the trial Court ordered that it be paid. That the question of double payment is misconceived. Counsel further argue that to insist that the trial Court should have adopted the purposive approach in interpreting the documents is misleading. They argue that based on the facts of a case, Courts determine whether to adopt the Golden Rule, the Commercial or purposive interpretation, or the mischief Rule. That in this case, it was appropriate for the trial Court to adopt the Golden Rule and no absurdity or unrealistic conclusions were reached as a result thereof. On the alternative prayer, Counsel raise two arguments. One is that the Respondents are not a party to the Indemnity Agreement of 9 th July 2010, between the Attorney General and the Appellant. As such the issue of indemnity is a private matter between the parties thereto. Secondly, they argue that - o - I .. -J22- the matters therein were never raised 1n the Court below. Therefore, this Court is incompetent to adjudicate upon the prayer sought. We have examined the Judgment of the Court below, and the evidence on record. We have also considered the submissions on behalf of three parties on the three grounds of appeal. In our view, the three grounds of appeal are inter-related. They all question the award by the lower Court. Their ultimate goal is to have that award reversed and set aside. Accordingly, we shall deal with the three grounds at one go. In urging us to reverse and set aside the award appealed against, the Appellant and the party interested urge us to accept extrinsic evidence and to adopt the purposive approach, in interpreting the following:- 1. Clause 10 of the ZAMTEL Terms and Conditions of service for non represented members of staff; 2. Clause 8 of the same document; and 3. The ZAMTEL Board Resolution of 28th October 2009. To that effect we are referred to a number of authorities. One of them is the Anson's Law of Contract. In that Book, the learned author states that extrinsic evidence will be admissible to prove the factual background known to the contracting parties as well as to ascertain the true meaning -J23- of any ambiguity in a written agreement. ( Unfortunately) Counsel did not state the page and Edition of the Text Book). We are also referred to Boe Gases PLC v Phesto Musonda 111 . It held as follows: "It is a fundamental rule of English law that extrinsic evidence is not admissible to vary or contradict the terms of the written document. To this basic proposition, an important exception exists. Where, owing to some error, a written document fails to record accurately the terms of the parties' true agreement, equity will rectify the document to make it accord with their agreement." Clause 10 and 8 and the Board Resolution are set out above. We do not wish to repeat them here. The two authorities referred to above , in sum, state that for extrinsic evidence to be accepted as an exception to the rule against extrinsic evidence rule, there must be an ambiguity or error in the document or contract in question, that will require the background to be brought out, to resolve the ambiguity or rectify the error. In the present case, we are of the view that the Board's Resolution of 28th October 2009 and Clauses 8 and 10 of the terms and conditions of service for non-represented staff, do not have an ambiguity or an error. They are clear and plain. Accordingly, we are of the view that extrinsic evidence was not required to address them. Further on this issue, a good deal of submissions on behalf of the Appellant and the interested party, are based on the bad financial position of the Appellant company; as the basis to bring in the background to the privatisation and hence .. -J24- the basis to admit extrinsic evidence , as an exception to the Rule. We do agree that the Appellant Company was in financial problems at the time of privatisation. However, there is evidence that the retrenchment packages were not paid out of ZAMTEL's own little financial resources , as they stood before privatisation. The redundancy/ retrenchment packages were paid from the proceeds of privatisation. 75% of Zamtel Limited was sold to Lap Green for US$257 million. This is as per Managing Director's circular No. 2 of 2010, at page 110 of the record of appeal. US$257 million was then equivalent to about K 1. 3 trillion. Paragraph 8 of the same circular states as follows: "(f) As part of the restructuring ALL Zamtel employees will be retrenched and ALL employees will be paid their agreed settlement packages in full. For this the Government has allocated a purpose, substantial proportion of the total purchase consideration for the payment of the agreed settlement packages to ALL employees." For the foregoing reasons, we do not accept the Appellant's submissions based on the financial position of ZAMTEL Limited. On the purposive approach, we have looked at the three cases cited by Counsel for the interested party. These are:- Attorney General v Lewanika (& Others) < Seaford Court Estates Limited vs Asher < (i) (ii) (iii) DKikuusook Majid and Others v Attorney General, 3>; and > Petition No. 10 of 2009. . •-, -J25- In the 2 nd case, Counsel quotes a passage by Lord Denning, which reads as follows:- "1 have read that passage at large and I wish to repudiate it. I heard many such It sounds like a voice from the past. the voice of the strict It is words 25 years ago. constructionist. It is the voice of those who go by the letter. It is the voice of those who adopt strict literal and grammatical construction of words, heedless of the consequences. Faced with glaring injustice, the Judges are, as said, impotent, incapable and sterile. Not so with us in this Court. The literal method is now completely out of date. It has been replaced by the approach Lord Diplock described as 'purposive approach' ... in all cases now in the interpretation of statutes, we adopt such a construction as will 'promote the general legislative purpose'underlying the provision. It is no longer necessary for Judges to wring their hands and say: 'there is nothing we can do about it'. When strict interpretation of a Statute gives rise to absurdity and unjust situation, the Judges can, and should use their good sense to, remedy it- by reading words in, if necessary so as to do what Parliament would have done, had they had the situation in mind." The 3 rd one is the Ugandan case, wherein the Court said: "All provisions relevant to an issue are to be brought into perspective to give effect to, or not to derogate from, the intention of the Constitution." The purposive approach should be adopted where strict and literal interpretation of a Statute or document gives rise to absurdity and unjust situation. In the instant case, the trial Court gave the Board Resolution, Clauses 8 and 10 of the Terms and Conditions of Service, strict literal interpretation. And as a result, it awarded the Respondents a redundancy package of three months basic salary, for each year served and pro-rata, for any uncompleted year served, during the tenure of employment with the Appellant. That was in addition to the \ _ . .._ .. 'I -J26- terminal benefits, as determined by the Appellant's Board, pursuant to Clause 10 of the Terms and Conditions of Service for non-represented staff. The question here is whether, on the facts of this matter and having regard to the law, this was an absurdity and unjust result. The facts of this matter, in so far as relevant here, are as follows:- 1. Clause 10 empowered to determine a redundancy package, in addition to the following: the Appellant's Board (a) Repatriation costs calculated at two months of the last drawn basic salary. (b) Three months pay in lieu of notice. (c) Long service gratuity 2. On 28th October 2009, the Board resolved that non- paid employees represented redundancy/retrenchment packages as follows:- be (a) 3 months basic salary for each year served and pro-rata for any uncompleted year served (b) 2 months basic salary repatriation. (c) 1 month basic salary in lieu of notice, and (d) Tax if any shall be borne by the company. 3. Clause 8.3 provided for payment of long service gratuity at three months pay for each completed year of service and pro-rata for the The salary applicable in this regard is the last drawn one. incomplete year. In the face of the above facts and the law, the Appellant and the interested party argue the trial Court was wrong in awarding an additional package against the Appellant. That the trial Court had no jurisdiction to make such an award. That the award of such a package amounted to making the " -J27- Appellant pay the redundancy package twice. That the award in question was absurd and unjust because the Appellant was in serious financial problems. They urge us to admit extrinsic evidence and adopt the purposive approach, to sort out the absurdity and injustice. We do not accept these arguments. Item (b) in Clause 10 and item (c) in the Resolution are both salary in lieu of notice. They are one and the same benefit; but provide for different amounts. Clause 10 provides for the benefit at three months basic salary. While the Resolution provides for it at only one month's basic salary; two months less than Clause 10. In our view, the words in Clause 10: "in addition to the following:") clearly means over and above: "the following:" What the Board did in the Resolution is to substantially repeat what was already provided for by Clause 10, except for item (d), the Tax benefit. Not only did the Board Resolution substantially repeat the benefits provided by Clause 10, but it reduced one of them, salary in lieu of notice, from three months' basic salary to one month's basic salary. Further, as the Board Resolution stands, only item (d), the tax benefit, was intended to be the redundancy package. ZAMTEL was sold for us US$257 million, which was then equivalent to about Kl.3 trillion. The redundancy packages were paid out of this amount. • I ,' -J28- In 1995 one Cecilia Kumwenda, a non-represented employee of ZAMTEL, like the Respondents , was paid a redundant/ retrenchment package, which included the following: (a) Twenty four (24) months' pay as a lump sum, plus one month's pay for each completed year of service. (b) Three months' salary in lieu of notice. (c) Long service gratuity, depending on the number of years served, up to a maximum of 2½ months pay, for each completed year of service. (d) Repatriation allowance up to a maximum of K500,000 depending on marital status. This is per page 88 of the Record of appeal. And as for the law, Section 85 of the Industrial and Labour Relations Act, as amended, confers upon the Industrial Relations Court, jurisdiction to do substantial justice between parties to the matter before it and any party affected. Section 85 A of the same Act confers on the Court, jurisdiction to "grant such remedy as it considers just and equitable and it may .... make any other award the Court may consider fit in the circumstances of the case.'' We uphold the decision of the lower Court and agree with Counsel for the Respondents , that the Appellant's Board did not substantially comply with Clause 10, by substantially repeating in its Resolution, items that were already covered by Clause 10. We accept that tax relief was a good benefit; but on the evidence, it alone , was not enough. True, Zamtel was making losses and facing financial problems . But at the time of . ' . 'Iii -J29- privatisation, it had about Kl .3 trillion, raised from its sale. There is evidence that the retrenchment package was to be paid out of this Kl.3 trillion. There is also evidence that in 1995, shortly after Zamtel was incorporated, it paid a better retrenchment package to Cecilia Kumwenda. We consider Zamtel's past a relevant factor to be taken into account here. There has to be consistence in similar situations. Having said that the retrenchment package under the Resolution and the draft agreement was not adequate, we are of the view that the trial Court was in order to use its jurisdiction under Section 85 of the Act, to do substantial justice, by making the further award, complained of. On the evidence and law, we hold that the trial Court, correctly interpreted Clauses 10 and 8 of the Terms and Conditions of Service and the Board, by using the literal rule of interpretation. These were clear and plain. We hold that there was no absurdity or injustice in the resultant award of a further retrenchment package. We are of the view that the trial Court was in order in not adopting the purposive approach in interpreting the Resolution and the two Clauses. We hereby uphold the Judgment of the lower Court and dismiss the appeal. We now move on to the cross appeal. The cross appeal is on interest. The trial Court awarded interest on each I • ,. t -J30- Respondent's redundancy package, at the average Bank lending rate, from the date of the respective complaints to the date of the Judgment and thereafter, at 6% per annum, until final settlement. The Respondents say that the trial Court erred in law in the award of interest. On behalf of the Respondents, Mr. Matibini argues that the interest at 6% is too low and will disadvantage the Respondents, as their money has been withheld. He urges us to set aside the award of interest at 6% per annum and substitute it with interest at Bank lending rate , as determined by the Bank of Zambia. In support of his argument, he cites Richard Ndashe Chipanama v Zambia Railways Limited 1io1. In response on behalf of the Appellant, Mr. Mundashi and Mr. Chiteba support the trial Court's award of interest at 6% per annum. They urge us to read the Law Reform (Miscellaneous Provisions) Act, CAP 74 together with the Judgment Act, CAP 81 , in order to determine whether the award of interest by the trial Court was reasonable. They argue that Section 4 of Chapter 7 4 provides the guideline for awards of interest in Court proceedings. That on the other hand Section 2 of CAP 81 provides for the calculation of interest on a Judgment debt. That these provisions give the Court a wide latitude to determine the rate of interest to be awarded on the Judgment debt. ... -J31- Coming back to this case, they invite us to take Judicial notice of the fact that at the time the Judgment in the Court below was pronounced, the average Commercial Bank lending rate was in the region of 22% per annum. It is Counsel's argument that though the interest on the Judgment debt was awarded at 6%, that was mitigated by the much higher rate of interest awarded for the period, from the commencement of the action to the date of Judgment. They submit that the trial Court properly exercised its discretion under Section 2 of CAP 81, in awarding 6% interest, per annum. We have looked at the Chipanama case, Section 4 of CAP 74 and Section 2 of CAP 81. We have also considered submissions of Counsel. In dealing with this issue, the starting point is to look at the rationale for awarding interest. Interest is awarded to a Plaintiff, not as compensation, but for being kept out of money, which ought to have been paid to him. See: (a)UBZ v Shanzi 151 and (b)Jefford v Gee 161 • Section 4 of the Law Reform (Miscellaneous Provisions) Act, CAP 74 provides as follows:- "4 In any proceedings tried in any Court of record for the recovery of any debt or damages, the Court may, if it thinks fit, in order that there shall be included in the sum for which judgment is given, interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the Judgment .... " I I 'I I -J32- Section 2 of the Judgment Act, CAP 89, provides as follows: "2. Every Judgment, order, or decree of the High Court or Subordinate Court whereby any sum of money, or any costs, charges or expenses, is or are to be payable to any person, shall carry interest as may be determined by the Court, which rate shall not exceed the current lending rate as determined by the Bank of Zambia, from the time of entering up such Judgment, order, or decree, until the same shall be satisfied, and such interest may be levied under a writ of execution on such judgment, order or decree." Richard Ndashe Chipanama v Zambia Railways Limited1111 was an award of interest by the Industrial Relations Court. The trial Court had awarded interest at 12% per annum, from the date of commencement of the action to the date of Judgment and thereafter, at 6 % per annum. On appeal, this Court quashed the award by the Industrial Relations Court. It awarded interest at Bank of Zambia short term deposit rate, from the date of the cause of action to the date of Judgment and thereafter, at the current lending rate , until payment. We have decided to follow the Chipanama case because the Respondents have been kept out of their money. We allow the cross appeal on interest. We hereby order that the Respondents be paid interest at bank lending rate , as determined by the Bank of Zambia, from the date of Judgment till payment. J ~ .., I r .. -J33- Finally, we move on to the Appellant's alternative prayer. The prayer is for indemnity from the Attorney General, the interested party, pursuant to the Indemnity undertaking, dated 9 th July 2010 , signed by the Zambian Government, in favour of ZAMTEL Company Limited. The Indemnity undertaking reads as follows:- "REPUBLIC OF ZAMBIA MINISTRY OF FINANCE AND NATIONAL PLANNING OFFICEOF THE MINISTER [website: wwwmofnp.gov.zm, email:inter@mofnp.gov.zm] REF: MFAL/102/9/328 9th July 2010 Zambia Telecommunications Company Limited and Directors Provident House Corner Moffat Road/Broadway Road PO Box 71660 NDOLA. its I, on behalf of the Government of the Republic of Zambia("the Government'~ confirm and undertake as follows: 1. It is recognised by the Government that: (a) Certain claims have been or may in future be made against Zambia Telecommunications Company Limited ("the Company'') by individuals who were employed by the company and which were or will be made on the Claim Basis (as defined below), such claims hereafter referred to as "Past Employee Claims"; and (b) Further claims may in future be made by Departing Employees as defined in Clause 14. 7 of the Share Sale and Purchase Agreement made the Government, LAP GreenN and the Company on 5th June 2010 ("SSPA") on the Claim Basis (as defined below), to as "Departing such claims hereafter Employee Claims", and for these purposes "Claim Basis" means a claim: (i) terminal benefits were That an employee's computed without into account his taking contractual allowances, materially similar to that between referred j . . . ' -J34- versus Mendai Leonard in Zambia Telecommunication Authority (High Court, Lusaka, reference 2001/HP/246; or Based in whole or in part on the Ministerial Directive dated 28th March 1995; and in either case; In respect of terminal benefits which are due to them under their contracts of employment as a result of termination of their employment with the Company. (ii) (iii) 2. If: (a) A Judgment of the Supreme Court of Zambia is given in favour of the relevant plaintiff(s) in respect of the first Past Employee Claim (if any) to be adjudged by such Court and an award of damages or compensation is made to such plaintiff(s) based on a Claim Basis, then the Government shall indemnify the Company, and the the the Government shall directors of Company, and the directors of the Company past, present and future, and keep it, and the directors, indemnified from and against: (i) (ii) all Past Employee Claims; and all losses, charges, costs damages, penalties and expenses which the Directors, may incur in connection with such Past Employee Claims; the Company, and/or indemnify In each case: (aa) regardless of whether any such damages, compensation, costs, damages, penalties and expenses are paid or incurred before or after the date of such judgment; and charges, losses, (bb) only to the extent to which such sums are awarded based on a Claim Basis; (b) A Judgment of the Supreme Court of Zambia is given in favour of the relevant plaintiff(s) in respect of the first Departing Employee Claim to be adjudged by such Court and an award of damages or compensation is made to such plaintiff(s) based on a Claim Basis, then the Government shall indemnify the Company, and the directors of the Company past, present and future, and keep it, and the directors, indemnified from and against: j I .. t -J35- (i) (ii) All Departing Employee Claims; and All losses, charges, costs damages, penalties and expenses which the Directors, may incur in connection with such Departing Employee Claims; the Company, and/or In each case: (aa) regardless of whether any such damages, costs, losses, compensation, damages, penalties and expenses are paid or incurred before or after the date of such judgment; charges, (bb) only to the extent to which such sums are awarded based on a Claim Basis; PROVIDED however that any liability of the Government under this paragraph 2(b) shall only apply if and to the extent to which the Potential Employee Redundancy Liability (as defined in the SSPA) has been disbursed in full but subject thereto without limit. 3. If: (a)Ajudgment on merits (rather than a technicality) is given in favour of the Company by the Supreme Court of Zambia in respect of the first Past Employee Claim (if any) to be adjudged by such Court and no award of damages or compensation is made to the relevant plaintiff(s) based on a Claim Basis, then the Government shall indemnify the Company, and the directors of the Company past, present and future, and keep it, and the directors, indemnified from and against: (i) following All Past Employee Claims in respect of which proceedings are served on the Company within the date of such the six months judgment; and All losses, charges, costs, damages, penalties and expenses which the Directors, may incur in connection with such Past Employee Claims; the Company, and/or (ii) In each case only to the extent to which such sums are awarded based on a Claim Basis; (b)A judgment on merits (rather than a technicality) is given in favour of the Company by the Supreme Court of Zambia in respect of the first Departing Employee Claim to be adjudged by such Court and no award of damages I A t • ,.. , • -J36- or compensation is made to the relevant plaintiff(s) based on a Claim Basis, then the Government shall indemnify the directors of the Company past, present and future, and keep it, and the directors, indemnified from and against: the Company, and (i) (ii) following All Departing Employee Claims in respect of which proceedings are served on the Company within the date of such the six months judgment; and All losses, charges, costs damages, penalties and expenses which the Directors, may incur in connection with such Departing Employee Claims; the Company, and/or In each case: (aa) Only to the extent to which such sums are awarded based on a Claim Basis; and (bb) To the extent that the amount by which the the recovered total amount amount paid or payable to the relevant plaintiff(s) the Potential respect of Employee Redundancy Liability pursuant to Clause 14 of the SSPA. exceeds in PROVIDED that the aggregate liability of the Government under paragraphs 3 (a) and 3(b) shall be limited to an amount of US $10,000,000 (ten million dollars). 4. In relation to any Past Employee Claim or Departing Employee Claim (each a "Claim"), the Company shall promptly notify the Government as soon as reasonably practicable of any such Claim of which it has notice and if the Government shall so request:- (a) Not admit any liability or agree to any settlement or compromise of any Claim, without first consulting with the Government; (b) Allow the Government to manage and conduct all negotiations and proceedings at the Government's own expense;and (c) Ensure that the Government is granted access to all relevant documents and proceedings connected with any such Claim and shall update the Government at regular intervals regarding the progress thereof. This indemnity and any disputes or claims arising out of or in connection with its subject matter or formation are governed • • • • • ' ' ... ~ ~ 'ft/ • I -J37- by and construed in accordance with the laws of the Republic of Zambia. This indemnity has been entered into as a deed on 9th July 2010. Signed as a deed by THE MINISTER OF FINANCE AND NATIONAL PLANNING, acting on Behalf of the Government of the Republic of Zambia, in the presence of: SIGNED Signed as a deed by ABDULBASET ELAZZOBI Acting on behalf of LAP Green N, in the Presence of:" SIGNED We have perused the Indemnity undertaking. We do not accept the argument by Counsel for the Interested Party that the Indemnity undertaking has been overtaken by events; namely the compulsory acquisition by the Zambian Government, of 75% shareholding held by Lap Green N in ZAMTEL Company Limited. Clauses 2 (a), (b) , 3 (a) and (b) of the Indemnity undertaking, state that the Zambian Government undertook to indemnify the company, ZAMTEL Company Limited, and the Directors of the Company, past, present and future , against inter alia, all past Employee Claims, by Court Judgments. The Indemnity is very clear. It is in favour of ZAMTEL Company Limited and its Directors, irrespective of who they were or are , at a given time. The compulsory -J38- acquisition of 75% shares by the Government does not affect the Indemnity undertaking. The Zambian · Government, the interested Party, is still bound by it. Accordingly, we order that the interested Party indemnifies the Appellant, in respect of this Judgment, pursuant to the Indemnity undertaking of 9 t h July 2010. We award costs to the Respondents, against the Appellant and Interested Party. These shall be taxed, in default of agreement . • • .. • • E . C . MUYOVWE SUPREME COURT JUDGE