Capital Drilling (Z) Ltd v Wamulume (Appeal 160 of 2010) [2015] ZMSC 178 (24 March 2015)

THESUPREME COURT OF ZAMBIA APPEAL NO 160/2010 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: SCZ/8/127/2010 CAPITAL DRILLING (Z) LIMITED APPELLANT AND PATRICK WAMULUME RESPONDENT CORAM: Chibesakunda Ag. CJ, and Wanki and Kaoma JJS On 18th November, 2014 and 24th March, 2015. For Appellant: Mr. L. Linyama-Eric Silwamba, Jalasi & Linyama Legal Practitioners. For Respondent: Mr. A. Mbambara-Mbambara Legal Practitioners JUDGMENT Kaoma, JS, delivered the Judgment of the Court Cases referred to: 1. Wilson Masauso Zulu v Avondale Housing Project Ltd (1982) Z. R. 172 2. Zambia Consolidated Copper Mines Ltd v Matale (1995-97) Z. R. 144 3. Redrilza Limited v Abud Nkwazi & Others (201 l),Vol. 1, Z. R. 394 4. Kalyangu and others v Maamba Collieries Ltd Appeal No. 152/2011 5. Chilanga Cement Pic v Kasote Singogo (2009) Z. R 122 6. Nsansa School Inter Education Trust v Musamba (2010) Z. R. Vol. 1, 457 7. Jacob Nyoni v The Attorney General (2001) Z. R. 65. 8. Swarp Spinning Mills Pic v Chileshe & Others (2002) Z. R. 23 9. Zambia State Insurance Corporation Ltd and another v Singogo - Appeal No. 02/2007 10. Chitomfwa v Ndola Lime Company limited (1999) Z. R. 172 f J2 Statutes and other works referred to: Industrial and Labour Relations Act, Cap 269 1. 2. Employment Act, Cap 268 3. Chitty on Contracts, Vol. 1, 1999, Sweet & Maxwell, London 4. High Court Act, Cap 27 When we heard this appeal, we sat with the Honourable Acting Chief Justice, Lady Justice Chibesakunda. She has since retired. Therefore, this is a majority judgment. The appeal is against the award to the respondent of 12 months’ salary with interest as damages for wrongful termination of employment. On 4th June, 2008, the respondent filed a notice of complaint under section 85(4) of the Industrial and Labour Relations Act, Cap 269 (the Act) seeking, inter alia, damages for wrongful and unlawful termination of employment; and damages for discriminatory remarks, and mental torture and distress. The respondent was employed by the appellant as a purchasing officer on 17th October, 2007 on a one year contract. In March, 2008, he drove to Arcades Shopping Centre on company business, using a company motor vehicle. Upon returning to the office he was told that Mr. Brian Birmingham, the company’s Regional Manager for Africa wanted to see him. f J3 As he was walking back to his office, he met Mr. Birmingham, who shouted at him saying, "Where were you? And why did you take the vehicle?" The respondent told Mr. Birmingham that it was not proper to shout in the walkway. Mr. Birmingham continued to shout till they got to his office. He went on to say, "That is how all you blacks are, even in West Africa where I was, blacks do not know how to ask". There was a heated argument, but later the two made up and shook hands. Two weeks later, Mr. Birmingham, a colleague of his and the accountant, met with the respondent in the chief accountant's office. Mr. Birmingham asked the respondent to retract the word "racist" he had used earlier to describe him, either orally or in writing. The respondent refused to do so. A week later, the respondent wrote the letter to Mr. Birmingham, about the incident, in which he insisted that there was racial discrimination at the company and that he had agreed to write because Mr. Birmingham had insisted that he does so to pave way for investigations, which the respondent stated should be done by an independent body, preferably the Government. He copied the letter to the Ministry of Labour and Social Services. J4 Following that, the respondent got a call from Mr. David Payne the appellant's Chief Financial Controller based at head office in Australia who requested to meet with him. Within a week, Mr. Payne came to Zambia and they met. In the meeting, Mr. Payne asked the respondent if he had any problems at work. He said the only problem was pressure of work from Mr. Birmingham and that his subordinate, Shona Harrison, had lost respect for him and had stopped reporting or answering to him. Mr. Payne asked about the remarks made by Mr. Birmingham. The respondent answered that he thought the matter was buried. Mr. Payne insisted that an investigation be conducted. Afterwards, in April, 2008, the respondent received a phone call from Mr. Michael Mundashi, the appellant’s Country Chairman, who requested to meet him. The respondent got permission from the General Manager, Mr. Walter Harrison. But as he packed his laptop, Mr. Harrison asked him to remove any personal things from his laptop bag and to leave the laptop in his office. In the meeting with Mr. Mundashi, the latter asked how the respondent was relating with the employer after the incident with Mr. Birmingham. He explained about the meeting with Mr. Payne. J5 Thereafter, Mr. Mundashi asked him to go back to work and promised to call him on Friday. However, when the respondent reported for work, Mr. Harrison asked him what he was still doing at the office. He told him what Mr. Mundashi had said, but Mr. Harrison requested him to go back home and rest until Mr. Mundashi called him. When the respondent went back to see Mr. Mundashi he was given a letter of termination of his contract although the letter was addressed to Mr. Mundashi. Later, by a letter dated 6th May, 2008, the appellant wrote to the respondent informing him that his employment had been terminated on mutual basis and a package of his dues was worked out. On 8th May, 2008, the respondent replied disputing the package and denying that the separation was mutual. The next day the appellant wrote back admitting that the package was wrongly calculated, but insisted on mutual separation. After a further exchange of letters, the appellant invoked cl. 31 of the contract, and terminated his contract by one month's pay in lieu of notice. He was also paid his gratuity, leave pay and salary up to the date of expiry of his contract. The respondent considered the termination as discriminatory and unlawful and as due to the racial remarks. J6 According to the appellant, after the respondent was confirmed in his job, he started having clashes with all his fellow employees and his superiors based in South Africa prompting Mr. Payne and a Mr. Korbus to meet with him. The respondent told them that he was not happy in his job because he felt restricted especially when Mr. Harrison's sister, was working within the company and reporting directly to Mr. Harrison. The appellant confirmed that the respondent differed with Mr. Birmingham who allegedly made some racist remarks against him and that upon hearing of the incident, the owner of the company, requested for a full investigation. The appellant also confirmed that the respondent was asked to render a report concerning the incident, but he refused to do so and Mr. Mundashi sought for clarification from him about the same, but the respondent did not succumb. Thereafter, management decided to terminate his contract by one month's pay in lieu of notice. He was also paid, his dues and five months’ salary for the unexpired term of the contract. As we have already said, the trial court found in favour of the respondent and awarded him 12 months’ salary with interest as damages for wrongful termination, but declined to make any J7 separate award for discriminatory remarks, mental torture and distress. The appellant now appeals on three grounds, namely: 1. The trial court misdirected itself in law and fact in holding that the complainant was wrongfully terminated when the respondent had invoked the termination clause of his employment. 2. The trial court misdirected itself in law and fact in awarding 12 months salaries as damages for wrongful termination when the complainant had only worked for a period of seven months and had been paid his dues as if the contract had run its full course of one year period. 3. The trial court misdirected itself in law in awarding damages for wrongful termination of employment without proof of any loss to the complainant. At the hearing of the appeal, both counsel for the appellant and the respondent indicated that they would rely on their written heads of argument. Counsel for the appellant augmented his briefly. We wish to state that it was a waste of effort for counsel for the appellant, in his written heads of argument, to discuss rules of court that were not called in question. Counsel would do well to address matters that are in dispute as this serves the Court’s time. On ground 1, it was submitted that it was a gross misdirection by the lower court to hold that the respondent's employment was wrongfully terminated when the appellant had invoked cl. 13 of the employment contract governing the relationship between the parties. We were referred to a number of authorities whose J8 substance is that one of the modes of terminating employment available to an employer is by notice or pay in lieu of notice. It was also contended that wrongful dismissal connotes dismissal which is contrary to the terms of a contract, but as the appellant invoked the notice clause, it cannot be said that the termination was wrongful, especially in light of section 36(1) of the Employment Act which provides for the mode of termination of a written contract of service. It was also submitted that it was a gross misdirection for the lower court to find that the incident involving Mr. Birmingham is what led to the termination. It was further argued that there was no evidence to support the assertion by the court that the appellant decided to investigate the respondent solely, or that the meetings were for the sole purpose of retracting the racist tag the respondent labelled Mr. Birmingham. That the efforts were meant to investigate the incident and not the respondent, who when given a chance to elaborate on the racial remarks, failed to do so, but Mr. Birmingham was sorry that the respondent thought he had uttered racial remarks. We were also referred to some authorities including the case of Wilson J9 Masauso Zulu v Avondale Housing Project Limited1, where we have said it is generally for the plaintiff to prove allegations made. In return, counsel for the respondent submitted that the lower court did not err by holding that the respondent's employment was wrongfully terminated because the Industrial Relations Court, in doing substantial justice, is empowered to look beyond the reasons given for the termination so as to redress any injustice. To support this argument, counsel cited a number of our decisions, including the cases of Zambia Consolidated Copper Mines Limited v Matale2 and Redrilza Limited v Abuid Nkwazi and others3. He also argued that when the evidence is holistically considered, it is clear there was sufficient evidence showing that the appellant decided to invoke the notice clause in bad faith. That though Mr. Harrison testified that the respondent’s contract was terminated because he was unhappy at work, he conceded that the issue was never discussed with the respondent. It was further argued that the decision to terminate the contract emanated from the respondent’s complaint against Mr. Birmingham, over what he perceived as racial abuse, so the lower court's finding was supported by evidence and should not be disturbed. J10 We were also referred to section 97 of the Act which prohibits an appeal solely against a finding of fact made by the Industrial Relations Court. The case of Richard Kalyangu and others v Maamba Collieries Limited4, in which we affirmed the principle was also cited. We were also urged to disregard the English authorities cited by the appellant on termination by notice as that fact is not in dispute and the appeal emanates from a judgment of the Industrial Relations Court whose mandate is to do substantial justice. Counsel for the appellant argued grounds 2 and 3 together. He contended that the lower court erred by relying on the case of Chilanga Cement Pic v Kasote Singogo5 and awarding the respondent 12 months' salary as damages for wrongful termination of employment when it was held, in that case, that payment in lieu of notice is a proper and lawful way of terminating employment, since every contract of service is terminable by reasonable notice. Our attention was drawn to a couple of renowned authors including Chitty on Contracts, Volume 1, General principles, 1999, on the general purpose of awarding damages which is to place a plaintiff in the same position as he was before the apparent breach of contract had occurred. JU It was argued that the award of 12 months' salary as damages for wrongful termination of employment was contrary to the objective of such awards, especially that the respondent had only worked for seven months, but was paid dues equal to what he would have earned, had he finished his contract and he was in gainful employment at Munali Nickel Mine at the time of trial, so he did not suffer any loss. We were referred to a number of authorities and our decisions where we have emphasised the need for a claimant to prove loss in order to benefit from an award of damages, such as Nsansa School Inter Education Trust v Musamba6. Section 13 of the High Court Act was also cited for the proposition that the lower court failed to resolve the principal issue in controversy of whether the respondent was entitled to 12 months' salary as damages for wrongful termination of employment. In response, it was submitted that the trial court did not err when it awarded the respondent 12 months’ salary as compensation, without any loss to him. That where it is found that there has been wrongful termination of employment, an award of damages is what follows and the fact that the respondent had a one J12 year contract out of which he served seven months is irrelevant. The case of Jacob Nyoni v the Attorney General7 was relied on. It was also submitted that the lower court was on firm ground when it found that the termination by notice was not an ordinary one. We were referred to the events that occurred when the respondent met Mr. Harrison after the meeting with Mr. Mundashi and how he was sent back home by Mr. Harrison. We were also referred to the letter on alleged mutual separation prior to the appellant invoking the termination clause in the contract. On the quantum of damages, counsel also relied on the Jacob Nyoni7 case and other cases where we have said depending on the circumstances of each case, we have been awarding damages ranging from notice required under terms of contract to two years’ salary. It was argued that the court took into account that the respondent had been paid as if he had served the full extent of his contract, but still opined that he was entitled to damages due to the manner the termination of employment was done. It was also argued that the award may be looked at as the Mpundu damages which we referred to in the case of Swarp Spinning Mills Pic v Chileshe and others8 and was justifiable given the facts of the case. J13 As to the argument that the respondent did not prove any loss to justify an award of damages, it was submitted that it is an established principle of law that when there is wrongful termination of employment, damages will follow and the actual award depends on the circumstances of the case. Lastly, it was argued that reliance on section 13 of the High Court Act, to attack the lower court’s alleged failure to address issues in controversy, is misguided as the Industrial Relations Court is not subject to the High Court Act. In his viva voce submissions, counsel for the appellant added that the Mpundu damages were inapplicable to the case at the bar because the respondent had not shown the particular loss suffered. We were urged to interfere with the award by the lower court. We have examined the record of appeal and arguments from both parties. In our view, the issues that arise for decision, relative to the three grounds of appeal are (1) whether the respondent's employment was wrongfully terminated; and if so, (2) whether he was entitled to an award of 12 months’ salary as compensation; and (3) whether the respondent had proved any loss to be entitled to damages. For expediency, we propose to discuss the first issue and then the third issue first, before we deal with the second issue. J14 With regard to the first issue, there is no dispute as to the provisions of section 36(1) of the Employment Act or the fact that in a master servant relationship there is always an implied right to terminate the contract at any time, for any reason or for none or indeed the fact that the respondent’s contract was terminated under cl. 31 of his contract of employment, which was the notice clause. The said clause provided as follows: ”31. Either party may terminate this contract by a period of one months’ notice, except in the case of summary dismissal, which shall have the immediate effect of terminating the contract. On the other hand, one's gross pay in lieu of notice may be paid by either party as a separation package depending on the circumstances." However, it is also clear that the lower court decided to go behind the termination by notice to ask itself whether on the facts and evidence before it, the termination was wrongful. The court found as a fact that the termination was triggered by the incident between Mr. Birmingham and the respondent at which the former allegedly uttered some racial remarks. And on the authority of Zambia Consolidated Copper Mines Limited v Matale2 and the Kasote Singogo5 case, the lower court held that the respondent was wrongfully terminated. J15 The encounter between Mr. Birmingham and the respondent was not disputed or the fact that afterwards, the two made up and shook hands. However, a meeting was held at which the respondent was asked to retract the remarks and the owners of the company insisted that an investigation be conducted. Quite clearly, at all the three meetings the respondent was called to, the incident about the racial remarks was discussed. We agree with the lower court that the investigation was centred on the respondent as there was no evidence that either Mr. Payne or Mr. Mundashi met with Mr. Birmingham to get insight on the matter, nor was he asked to render a report, like the respondent. It was also not disputed that on 3rd May, 2008, Mr. Harrison wrote to Mr. Mundashi detailing the terminal payment due to the respondent even before he was informed of the separation and on 6 th May, 2008, the appellant attempted to terminate the respondent's employment on alleged mutual basis, but this fail through. It was after the respondent refused to separate on mutual basis that the appellant invoked the notice clause. The lower court was right that even before the termination; Mr. Harrison had made it very clear that the respondent was no longer welcome at work. J16 As correctly submitted by counsel for the respondent, the Industrial Relations Court is not subject to the High Court Act. The court is empowered to do substantial justice and to go behind the termination clause under section 85(5) of the Act to look at the real reason for termination, with or without notice. However, as we said in the case of Redrilza Limited v Abuid Nkwazi and others3 and in various other cases, while the Industrial Relations Court is empowered to pierce the veil, the power must be exercised judiciously and in specific cases where it is apparent that the employer is invoking the termination clause out of malice. In this case, we are satisfied that the lower court was justified to delve into the reason for the termination of the respondent's employment. We entirely agree that the termination, though by pay in lieu of notice, was done in bad faith. It was fuelled by the racial incident relating to Mr. Birmingham. And from the letters exchanged between the parties, following the incident, we can deduce that the appellant intended to get rid of the respondent, at whatever cost. That explains why Mr. Harrison gave the respondent marching orders when he returned to the office and why the appellant wanted to get rid of him on alleged mutual basis. J17 In these circumstances, we do not agree with the appellant that it was a gross misdirection for the trial court to pierce the veil and to find that the incident involving Mr. Birmingham was what led to the termination of the respondent's employment. The finding by the court is, in fact, a finding of fact which we cannot, as a matter of principle, lightly interfere with as it was supported by evidence (Wilson Masauso Zulu1 case). Moreover, section 97 of the Act, cited by counsel for the respondent prohibits appeals solely against findings of fact made by the Industrial relations Court. Indeed, we affirmed the principle in the Richard Kalyangu4 case. For these reasons, we find no merit in ground 1 of the appeal. We now turn to the third issue of whether it was necessary for the respondent to prove loss. According to the appellant, there was no proof of any loss by the respondent to entitle him to compensation as he had found alternative employment at the time of trial. On his part, the respondent did not dispute that he was in gainful employment, but he contended that he was entitled to damages because where it is found that there has been wrongful termination of employment, a court ought to award damages. c J18 Of course, the purpose of an award of damages is to give the injured party compensation for the damage, loss or injury he or she has suffered. He or she is, as far as money can do it, to be placed in the same position as if the contract had been performed (Nsansa School Inter Education Trust v Musamba6). But, we reiterate that the Industrial Relations Court is empowered to do substantial justice and section 85A of the Act empowers the court where it finds that a complaint presented to it is justified and reasonable, to grant such remedy as it considers just and equitable and may award the complainant damages or compensation for loss of employment. The loss must be proved. In this case, it is clear that the respondent suffered premature loss of employment, seven months into the contract because of malice on the part of the appellant, and since the lower court found that the termination was wrongful, it followed that he was entitled to compensation. In the case of Zambia State Insurance Corporation Limited and Attorney General v Alisand Singogo9, we said, inter alia, that it should be frowned upon that an employer, who is, in most cases the stronger party, should be left to act impervious to the well-being of an employee who has a settled hope of a reasonable J19 tenure of office; and that it is in support of these principles that the Industrial Relations Court is empowered to do substantial justice. Therefore, the argument by counsel for the appellant that the court misdirected itself by awarding the respondent damages in the absence of evidence of loss is untenable. The case of Nsansa School Inter Education Trust v Musamba6 is distinguishable because in that case, the respondent questioned the termination of some anticipatory future contract and not her existing contract. It was in that context that we said the respondent could not have suffered any injury which needed to be atoned by damages because entitlement to damages can only arise where there has been a proven breach of a valid contract. In addition, the authorities cited by counsel for the appellant, relating to wrongful dismissal and to the award of damages in personal injury cases and in cases of negligence and false imprisonment, are inapplicable. Therefore, ground 3 has no merit. We come back to the second issue of whether the respondent is entitled to 12 months’ salary as compensation for loss of employment when he was paid his dues and salary for the unexpired term of his contract and had found gainful employment. J20 Certainly, this court does not lightly interfere with assessment of damages except for good cause shown. However, we find merit in the appellant's argument. We say so, not because in the Kasote Singogo5 case we said payment in lieu of notice is a proper and lawful way of terminating employment, which it is, but because the respondent was paid all his dues and salary as if the contract had run its full course. There was also the undisputed fact that he had found alternative, gainful employment at the time of the trial. In our view, this is what distinguishes this matter even from the Swarp Spinning Mills Pic8 case where we awarded the equivalent of six months’ earnings, as Mpundu damages, over and above what the company had already paid or intended to pay. Indeed, in the Kasote Singogo5 case, we held that the common law remedy for wrongful termination of a contract of employment is the period of notice, but we went on to add that in deserving cases, the Courts have awarded more than the common law damages as compensation for loss of employment. We also held that the rationale for awarding two years as damages in Chitomfwa v Ndola Lime Limited10 was due to the appellant’s grim future job prospects, J21 but, when each case is considered on its own merit, future job prospects may not be the only consideration for enhanced damages. We declined to interfere with the award of 24 months’ pay because we shared the indignation with the lower court in the harsh and inhuman manner the respondent was treated and we pointed out that hapless and weak employees need to be protected from the whims and caprices of powerful elements in large conglomerates who might be tempted to antagonize employees. But earlier, in the Jacob Nyoni7 case we held that in case of wrongful termination of employment the award of damages is rarely computed on the basis of the remaining period of service; that damages awarded range from the notice period required under a contract to the equivalent of two years' salary. In our view, the fact that the respondent was paid his salary for the unexpired period of service cannot stop the court from awarding compensation, over and above what he was paid as his employment was terminated in bad faith. Further, the court refused to make any separate award for racial remarks, and mental torture and distress because it considered the 12 months’ compensation, as adequate. J22 However, we agree with counsel for the appellant that the award of 12 months’ salary as compensation was excessive. Therefore, we set aside the award. But, because of the manner the employment was terminated, we award the respondent six months’ salary inclusive of all allowances, as compensation over and above what he was paid. To that extent, we find merit in ground 2. We also award interest at the Bank of Zambia short term deposit rate from the date of complaint up to judgment, and thereafter at the lending rate until full payment. We make no order as to costs. M. E. WANKI SUPREME COURT JUDGE R. M. C. KAOMA SUPREME COURT JUDGE