Musonda and Ors v Zambia Oxygen Ltd and Anor (Appeal 65 of 2002) [2004] ZMSC 124 (21 January 2004)

IN THE SUPREME COURT FOR ZAMBIA HOLDEN AT NDOLA/LUSAKA APPEAL NO. 65/2002 (Civil Jurisdiction) BETWEEN: DAVIES MUSONDA AMOS MBULO PETER CHEPESHI ACKSON CHIFWANI AND Ist APPELLANT 2nd APPELLANT 3rd APPELLANT 4™ APPELLANT ZAMBIA OXYGEN LIMITED ZAMBIA PRIVATIZATION AGENCY lsr RESPONDENT 2nd RESPONDENT Coram: Lewanika, DCJ, Chirwa and Chibesakunda, JJS on 8th October 2002 and 21st January 2004 Ms. C Makungu of Makungu and Company For the Appellants: For the 1st Respondent: Mr. S M Sabi of Mulenga Mundashi and Company For the 2nd Respondent: Mrs. G M Mukata, Legal Officer, ZPA______________ JUDGMENT Chibesakunda, JS, delivered the Judgment of the Court Cases referred to: 1. 2. 3. 4. 5. Lukama and Others vs Lintco (Z) SCZ No. 8 of 1998 Duly Motors vs Charity Namwila Appeal No. 8/182/2000 Moobola and Muweza (1990/1992] ZR 38 Paul Chisakula and Others vs Zamox and ZPA 1997/HN/823 (Unreported) Re Pulborough Parish School Elect Bourke vs Nutt [1989] IQBD. 725 Laws referred to: 6. 7. 8. 9. 10. 11. Section 85 (1 )(4) of the Industrial and Labour Relations Act Cap 269 Sections 3(b), 13(3)(b) and 26(B)(3) of the Employment (Amendment) Act Cap 268 Judgment Act Cap 81 Halsburys' Laws of England 3rd Edition Vol. 34 para. 543 Halsburys’ Laws of England 4,h Edition Vol. 44 at p.571 para 922 Intestate Act Cap 59 Vol. 5 - J2 - This is an appeal by the four Appellants, who were the complainants before the Industrial Relations Court (IRC), against a ruling by the learned Deputy Chairman dated 10th April 2002 and a judgment of the same court dated 14th of January 2002, in a complaint lodged by the same four Appellants against the 1st and 2nd Respondents under Section 85 (1 )(4) of the Industrial Relations and Labour Act (6). The 2nd Respondent also cross appealed stating that the IRC erred in holding that the Appellants were entitled to 100 % of their annual salaries as repatriation benefits. The four Appellants had lodged a complaint because of a dispute, which arose over the formula applicable in calculating their terminal benefits. The grounds lodged supporting their complaint were that:- 1) The first three Appellants were declared redundant or retrenched in September 1997 whilst the fourth Appellant was retired by the Respondent. That part payment of their terminal benefits had been calculated on lower salaries than they were receiving just before the termination of their employment and in controversial of the applicable collective agreement. 2) The Appellants were therefore seeking the following reliefs under Sections 85 (4) and 2 (C) of the Industrial and Labour Relations Act (6) and Section 13(3)(b) of the Employment (Amendment) Act (7). The first three Appellants claimed outstanding balance of their terminal benefits package based on their last drawn salaries and full wages until calculated up to the time they were to be paid these terminal packages, whilst the fourth Appellant - J3 - claimed outstanding benefits based on the last drawn salary. All these four Appellants further claimed interest and costs. During the hearing of the complaint, in compliance with this court's decision, in Paul Chisakula and Others vs Zamox and ZPA (4) case, the parties reached a consent judgment stating that:- “The complainants do recover the admitted part of the outstanding balance of the terminal benefits as follows:- Peter Chepeshi Davies Musonda Amos Mbulo Ackson Chifwani K20 516 763 00 K55 587 867 00 K43 804 317 00 K30 794 283 00 and interest at the current short-term fixed deposit rate from the date of the complaint until the date of this order. If is further ordered that the parties shall meet at court on the 5,h of December 2000 to report on any agreement or for hearing of issues yet unresolved. Costs in favour of the complainants to be agreed upon and default to be taxed. Dated this 3151 day of October 2000." After this agreement the Appellants filed the amended notice of complaint. The amended complaint stated inter alia that the 1st and 3rd Appellants were declared redundant or retrenched on 30th of September 1997. The 2nd Appellant was retrenched on 30th October 1997 whilst the 4th Appellant was retired by the 1st Respondent on 30th July 1997. Their core contention before the IRC was that the calculation formula on their terminal benefits was based on lower salaries resulting in the computation of these terminal benefits being lower than what was expected. So the first three Appellants claimed for the outstanding balance between their calculated redundancy packages plus interest and the amount paid to them after the consent judgment. The fourth Appellant claimed the outstanding between his calculated retirement package and the - J4 - amount, which was paid to him plus interest and costs. The Appellants also claimed that these terminal packages should be calculated up to the time of the actual payment in accordance with Section 26(B) of the Employment Amendment Act (7). The IRC decided that the main contentions before it were: 1) Whether the first three Appellants were entitled to payment of full salaries or wages up to the time there were to be paid their Retrenchment package in line with Section 26 (B) of the Employment (Amendment) Act (7) in particular Section 26 (B)(3); 2) Whether the first three Appellants had been paid their full terminal benefits basing on the calculation of their last salaries drawn at the end of their services; and 3) Whether the Appellants were due any repatriation benefits, and if so at what rate. After hearing all the arguments the court below decided not to receive any viva voce evidence. The court below ruled, on the first point, that Section 26 (B) of the Employment (Amendment) Act (7) did not have retrospective application and as such the four Appellants did not come within its ambit. On the second contention, the court below ruled that the retirement package had to be computed on the 1996 conditions and therefore agreed with the Appellants that the Respondents had to re­ calculate the terminal benefits. - J5 - On the third point, the IRC ruled that, looking at the conditions of service, the Appellants were entitled to repatriation allowance at the rate not exceeding 100% of their annual salaries. In other words, the court ruled that the Appellants were entitled to repatriation allowance at the rate of their annual salaries at the time of retrenchment or retirement as the case may be. The court also awarded the Appellants interest at the rate of twenty per cent (20%) from the date of complaint to the date of judgment and thereafter six per cent (6%) plus costs of the action. In trying to execute this judgment a dispute arose on the computation of the Appellants' terminal benefits. The Appellants worked the outstanding amounts as follows:- 1) The ls1 Appellant's amount outstanding came to KI02 461 688 60 less the amount paid to him came to K6 924 581 60. 2) The 2nd Appellant's amount he was entitled to according to the calculation was K92 108 246 06 less the amount already paid to him came to K7 483 907 06. 3) The 3rd Appellant’s total amount of terminal package came to K86 535 799 less the amount already paid to him came to K815 011 00. 4) The 4,h Appellant's total computed figure was K65 483 867 00 less amounts already paid, the amount was K5 655 099 00. The Appellants after differing with the Respondents in computing of their terminal packages went back to court to seek clarification of the judgment delivered on the 14th of February 2002. The Appellants in particular sought clarification as to what the court ruled on the question ■ J6 - of repatriation allowance as well as the interest rate. The Respondents also sought clarification from the court on what the court meant in its Judgment when the Judgment dated the 10th of April 2002 said:- “Coming to the second question, we wish to state that the position as far as this court is concerned is that it is now settled that the conditions applicable are the April 1996 Conditions" The Respondents also sought clarification as to what formula to be used to ascertain whether or not the Respondents had paid the Appellants all their entitlements after the consent Judgment. The court ruled in its ruling of 10th April 2002 that according to the condition of service, the repatriation allowance was not automatically hundred percent (100%) of the salary. However, the court went on to hold that due to time which had passed between the time when the Appellants were retrenched/retired to the date of calculating their terminal packages, the repatriation allowance had accrued and as such the court awarded to the Appellants 100% across the board. On the second point, that is whether or not the Appellants were entitled to some more payments in addition to what they had received after the consent judgment, the court held that the Appellants were entitled to re-calculate their terminal benefits excluding housing allowance. The court also ruled that the Appellants were entitled to include their three months pay in lieu of notice in calculating their terminal benefits. The Appellants have now come to this court challenging some aspects of this ruling. Before us Ms Mukungu applied for leave to amend the memorandum of appeal and to file heads of arguments which applications were granted. - J7 - The amended memorandum of appeal before us had two ground of appeal:- 1. That the lower court erred in law and fact in holding that the Employment (Amendment) Act (7) does not apply to the three retrenched Appellants for it came into effect when they were already out of employment and to apply it would be to give it retrospective operation, which is against the policy of the law. 2. That the interest rate is too low and should be amended according to the Judgment Act. In her oral submission augmenting the written submission, Ms Makungu argued that the 1st and 3rd Appellants' employment was terminated on 30th September 1997 and the 2nd Appellant's services were terminated on 30th October 1997 end according to their conditions of service, which conditions of service the court below accepted, they were entitled to three months notice. This court therefore should hold that the notice period given to the three Appellants extended their employment period to a date well beyond November 1997 when the Employment Amendment Act (7) came into effect. She urged, basing on the Lukama (1) case, this court to hold that since the period of employment went beyond November 1997 the three Appellants were covered by the provisions of Section 26 (B) of the Employment Amendment Act (7). She, in the alternative, in response to the argument that this point was never canvassed before the IRC, argued that according to Halbury’s Laws of England 3rd Edition (9) the Employment Act (7) has retrospective application, as according to her this Act did not introduce any new remedy. Section 26(B) was procedural, as was held in the case of Moobola vs Muweza (3) which dealt with the existing rights. She submitted, therefore, that the Appellants were entitled to payment of full - J8 - salaries and other perks up to the time of their retrenchment/retirement. Mr. Sabi in response relied on his written submission. He however in court emphasized that the Employment (Amendment) Act (7) did not apply to this case before us. He pointed to us that the application of the ratio decidendi in the Lukama case was never canvassed in the court below. It is well established that this court will not deal with issues raised for the first time in this court. He argued that in the court below there were no arguments that the period of employment included the period of notice. According to him both parties in the court below were in agreement that the effective dates of retrenchment were 30th September and 30th October 1997. He cited the case of Duly Motors vs Charity Namwila (2), and argued that the Employment Amendment Act (7) was a prospective Act and as such would not apply to matters which arose before. He referred us to the presumption of all laws being against retrospective application. He referred to Halsburys* Laws of England 4th Edition! 10) and quoted that, "it is a rule and law of Parliament that a new law ought to regulate what is to follow and not to the past". Mrs. Mukata augmenting Mr. Sabi's arguments, argued that the case of Moobola and Muweza (3) was distinguishable to the case before us. In the case of Moobola this court held that the facts in that case were such that since the rights of the widow did exist before the Interstate Act, the presumption against retrospective application, could not apply. In the case before us, she argued, the rights were not in existence at the time the Employment (Amendment) Act (7) was passed. She referred to the reasoning of the IRC on that point. This act was prospective. Another point she made was that even if the Employment (Amendment) Act (7) had retrospective application, which fact is denied, the facts before us are such that the provisions of Section 26 (B) of that Act would not still be applicable. - J9 - She submitted that it was common ground that the Lukama case was not raised before the court below. Also the Employment (Amendment) Act (7) would still not to be applicable because according to that Act the only time the calculation of the redundancy benefits would include months between the termination of the employment and the date of the actual payment, would only be when there is evidence that the Respondents were unable to pay the Appellants their redundancy packages because of their inability or capacity to discharge such an obligation. She submitted that in the case before us it was common ground that the Respondents were able to discharge their obligation each time they agreed with the computation of the terminal benefits. The dispute arose on account that the computation was based on a basis which the Respondents did not accept. We have considered all the issues raised before us and we have looked at the judgment and the record of the proceedings of the court below. Section 26 (B)(3) of the Employment (Amendment) Act (7) Says:- An employee whose contract of service has been terminated by reason of redundancy shall - a) b) Be entitled to such redundancy payment as agreed by the parties or as determined by the Minister, whichever is the greater; and Be paid the redundancy benefits not later than the last day of duty of the employee: Provided that where an employer is unable to pay the redundancy benefits on the last day of duty of the employee, the employer shall continue to pay the employee full wages until the redundancy benefits are paid. We accept Mr. Sabi's argument that although Ms. Makungu argued forcefully before us on the retrospective applicability of Section 26 (B) (3) of the Act to her clients, she never sought refuge in the principle - J10 - established in the Lukama case before the IRC. As we have held in a number of cases, issues not raised before the lower court cannot be raised before us. So as the Lukama case was not argued in the lower court it is not applicable to the issues before us. Even if for argument sake we accepted her argument that there are exceptions to this general rule, looking at the principle enunciated in the Lukama case, which stipulates conditions of invoking that principle, we are fully in agreement with Mr. Sabi that the Lukama case cannot apply. This is so, because the prerequisite of applying the Lukama principle is that there has to be evidence before the court that the parties intended to continue the employee/employer relationship in the notice period. This intention can be established by looking at the evidence or the conduct between all parties concerned. In the case before us there was no such evidence. Ms Makungu has urged us to invoke the principle of retrospective application of Section 26 (B)(3) of the Employment (Amendment) Act (7). We endorse the views of the learned Deputy Chairman of the Industrial Relations Court that the presumption against retrospective application of the Employment (Amendment) Act (7) applies. Also as Mrs. Mukata rightly argued, for this section to apply there has to be evidence to prove that there was incapacity on the part of the Respondents to pay all the redundancy benefits. On the contrary we find that there is strong evidence that the Respondents, at every stage in the dispute were ready and willing to meet their obligation under the contract. Also this subsection only applies to retrenchees not retirees. Because of these reasons this point cannot succeed. So computation of the Appellants terminal perks had to be done on 1st April 1996 conditions. The salaries to use in computation are the salaries existing at the time of redundancy or retirement of the four Appellants. - J11 - On the contention in the cross appeal that the repatriation allowance was excessive, we agree with the learned trial Judge that, according to the condition of service, the repatriation allowance had to be not more than 100%. Where the lower court misdirected itself was taking into account the fact that it had taken long to pay out these repatriation allowances. Section 13(3)(b) of the Employment (Amendment) Act (7) provides that the employer is under an obligation to give allowances not more that 100%. We agree with the cross appeal that the award of 100% on repatriation allowance was excessive. We therefore order that the repatriation allowance be at 50% of the Appellants' salaries. Coming to the contention on interest rate, we agree with the Appellants that the Judgment Act (8) states that any award must attract interest at the rate of the current Bank of Zambia deposit rate from the date of complaint to the date of judgment and thereafter at the Bank of Zambia lending rate up to the time of payment of the judgment debt. We order that and make no order of costs. D K Chirwa SUPREME COURT JUDGE L P Chibesakunda • SUPREME COURT JUDGE