Mwape and 61 Others v ZCCM Investments Holdings Limited PLC (Appeal 57 of 2012) [2014] ZMSC 120 (29 May 2014)

IN THE SUPREME COURT OF ZAMBIA SCZ JUDGMENT NO. 23 OF 2014 HOLDEN AT NDOLA APPEAL NO. 57/2012 (555) (Civil Jurisdiction) BETWEEN: JACKSON MWAPE AND 61 OTHERS APPELLANTS AND ZCCM INVESTMENTS HOLDINGS LIMITED PLC RESPONDENT CORAM: CHIBOMBA, MUSONDA, JJS and KAOMA Ag JS On 5th of March, 2013 and 30th May, 2014 For the Appellants: Mr. T. M. Chabu - Ellis & Company. For the Respondent: Practitioners. Mr. J. Kaite - J. Kaite Legal JUDGMENT Kaoma, Ag JS delivered the Judgment of the Court. Cases referred to: 1. Sam Amos Mumba v Zambia Fisheries and Fish Marketing Corporation (1980) Z. R. 135 2. Walton Harvey Ltd. v Walker and Homfrays Ltd. (1931) 1 Ch 3. Bank Line Ltd. v Arthur Capel & Co. (1919) AC 435 4. Maritime National Fish v Ocean Trawlers (1935) AC 524 J2 5. Zambia Oxygen Limited and another v Paul Chisakula and others (2000) Z. R. 27 6. BP Exploration Co (Libya) Limited v Hunt (1982) 1 ALL ER 925 7. Jacob Nyoni v Attorney General (2001) Z. R. 65 8. Standard Chartered Bank Plc v Willard Solomon Nthanga and Others (2008) 1 Z. R. 127 (556) 9. Salomon v Salomon & Co. (1897) AC 22 (HL) 10. Davies Contractors Ltd. v Farcham U. D. C (1956) AC 696 11. British Movietonews Ltd v London and District Cinemas [1952] A. C. 166. 12. Fribrosa Spolka Akcyjna v Hairbairn Lawson Combe Barbour Ltd. (1943) A. C. 32. 13. Zambia Consolidated Copper mines Ltd v Kangwa and others (2000) Z. R.109 14. Mususu Kalenga and another v Richman’s Money lenders Enterprises (1999) Z. R. 27 Statutes and other works referred to: 1. The Privatisation Act, Chapter 386 2. The Law Reform (Frustrated Contracts) Act, Chapter 73 3. Gower and Davies: Principles of Modern Company Law, 8th Edition, 2008, Sweet and Maxwell, London 4. Chitty on Contracts, Vol. 1, 29th Edition, 2004, Sweet and Maxwell, London 5. Chitty on Contracts, Vol. 1, 30th Edition, 2008, Sweet and Maxwell, London 6. Halsbury’s Laws of England, 4th Edition (Reissue), Vol. 9(1) When we heard this appeal, we sat with Honourable Dr. Justice Musonda. He has since resigned. This is, therefore, a judgment by the majority. This is an appeal against the High Court judgment in which the court found that the agreement between the appellants and the respondent, for provision of health services to the appellants, after separation from employment was frustrated by J3 Government’s decision to privatise hospitals and clinics previously owned and operated by the respondent; and that the claim that the respondent must pay cash in lieu of provision of health facilities (557) was asking the respondent for something not agreed upon or contemplated at the time of the employment of the appellants. The main facts which were not in dispute are that the appellants were on diverse dates employed by ZCCM Limited, the respondent’s predecessor. Later, they were on varied dates, but between 1998 and 1999, separated from employment; some on medical grounds, others on grounds of redundancy, and others on normal retirement. It was a condition of service that employees who were discharged on medical grounds were to access the ZCCM hospitals and clinics for life as long as the illness was job related; those declared redundant were to access the medical facilities for one year; and those on normal retirement for five years. Following the privatisation of ZCCM Limited and the hospitals and clinics by the Government on 1st April, 2000, the J4 appellants lost access to the hospitals. The new owners put in place new regulations of access and the respondent had no control and/or hand in the running of the health facilities. On 7th December, 2006, the appellants commenced an action by writ of summons against the respondent seeking damages as a (558) result of failure by the respondent to provide medical services, payment of monies as damages in lieu of the provision of medical services, damages for mental anguish, and interest and costs. They pleaded in the statement of claim that they suffered trauma and pain when they tried to attend upon the former hospitals of the respondent which had been privatised and were not allowed access in breach of the term in their contracts; and that the respondent did not provide monies or subsidies in lieu of medical facilities. In its defence, the respondent denied any breach and averred that the condition of service with regard to access to medical facilities was frustrated by the Government decision to sell the hospitals through privatisation. J5 Three witnesses testified for the appellants. Jackson Mwape (PW1) who represented other appellants who were medically discharged, testified that he was employed by the respondent on 29th June, 1976. He was discharged on 23rd September, 1999 on medical grounds. He became ill due to the nature of his job. After discharge, he tried to seek treatment from the company hospital, but was sent back. That happened to the other appellants. He said (559) by refusing them access to treatment, ZCCM breached the terms of their employment, and that if there was a change of policy before their discharge, it was not brought to their attention. He wanted ZCCM to compensate them or pay damages in lieu of the lost entitlements, and damages for contracting illness on duty. He said he needed compensation as he sought treatment in other hospitals whenever he was ill when he should have been treated in the company hospital, and ZCCM deducted between K150.00 and K200.00 per month from his salary for treatment. He admitted that he had no documentary proof to show that he J6 was denied access to the hospitals or that the deductions were made. Edwin Mwami (PW2) testified that he was employed by the respondent in 1965. He served for 33 year before normal retirement on 19th March, 1998. He was advised that he would access treatment for 5 years. He went to the hospitals, but was told that they had been sold. He wanted money in lieu of service for the 5 years. He said deductions of K150.00 or K200.00 were made for medical fees, but that there was no documentary proof. (560) Chomola Kafumbu (PW3) testified that he was employed by ZCCM in 1982. He served for 171/ 2 years before he was declared redundant. He was entitled to access treatment at ZCCM hospitals for 1 year. He tried to attend the hospitals twice, but was turned away. He deemed that a breach of contract, so he wanted cash in lieu of lost medical services. He agreed that for some of the appellants declared redundant, the 1 year period within which to attend the hospitals lapsed before privatisation. J7 Richard Nduna Chilembo (DW1) confirmed that it was a condition of service that employees who were separated by retirement, redundancy or medical discharge were to access ZCCM hospitals. He testified that all the people who left were accorded the facility until 1st April, 2000 when the hospitals were privatised by the Government through an Act of Parliament. As a result, the employees lost access to the hospitals. The privatisation was not a ZCCM programme, but those who needed treatment after 1st April, 2000 attended Government or private hospitals and ZCCM met the costs of such treatment. He was not aware that any of the appellants were denied access to Government hospitals or presented receipts for treatment at a private hospital and ZCCM (561) refused to pay. No one was refused treatment before privatisation so long they presented letters of separation. There was no evidence that any of the appellants fell sick and was refused access to medical facilities. In cross examination, he said after privatisation they discussed the issue with the Union which was informed that ZCCM would no longer provide medical J8 services to former employees and that upon the sale of the hospitals, the right fell off. In his judgment, the learned trial Judge found as undisputed that the appellants were employees of the respondent; that they were separated from employment either by normal retirement in which case they were entitled to have post-employment access to hospitals and clinics of the respondent for five years; on medical grounds in which case, they were entitled to access the hospitals and clinics for life if the illness was job related; and declared redundant in which case, they were entitled to access the hospitals and clinics for one year. He also found that both parties were agreed that after the hospitals and clinics were privatised by the Government, the majority shareholder in the respondent, the appellants had no access to the health facilities as the new owners (562) put in place new regulations of access and the respondent had no control or hand in the running of the facilities. The learned Judge set out two issues for decision: (a) whether the privatisation of the hospitals and clinics of the J9 respondent by the Government was or was not a frustrating factor of the contracts on post-employment treatment of the appellants in the hospitals and clinics, until then, owned by the respondent; and (b) whether the appellants were entitled to damages as a result of failure by the respondent to provide them with medical services, or payment of money as damages in lieu of medical services and/or damages for mental anguish or any other relief. Regarding the first issue, the learned Judge observed that the respondent was a parastatal company in which the Government was a majority shareholder; and that the decision to privatise the hospitals and clinics was made by the Government and not the respondent which had no choice in the matter or control over the decision of the Government to privatise the hospitals and clinics. Further, whilst he accepted the existence of the post- employment condition of service for provision of medical services (563) J10 to the appellants depending on the mode of separation, he noted that the respondent could not provide the services as they no longer had authority to operate the health facilities privatised by Government, thus making it impossible for them to honour the contracts with the appellants, and so could not be held liable. He found like in Sam Amos Mumba v Zambia Fisheries and Fish Marketing Corporation Ltd1 that the decision by the Government to privatise the health facilities was a frustrating factor. As to the second issue, the learned Judge observed that the post-employment condition of service agreed upon by the parties was that of provision of treatment/health facilities for specified periods. He found no clause in the conditions of service that provided for payment of cash in lieu of access to health facilities. In his view, the claim for payment of cash in lieu of provision of health facilities was asking the respondent for something that was not agreed upon or contemplated at the time of employment of the appellants. According to him, the post-employment provision of health facilities was based on the belief that the respondents would continue operating the hospitals and clinics in question. J11 (564) Displeased with that judgment, the appellants have appealed to this Court on the following two grounds: 1. That the learned trial Judge erred in law and in fact when he held that the agreement between the appellants and the respondent relating to the provision of health services after separation was frustrated by the action of the Government when it privatised the hospitals and clinics previously operated by the respondent. 2. That the learned trial Judge erred in law and fact when he held that the appellants’ claim for cash in-lieu of provision of health facilities was asking the respondent something not agreed upon or contemplated at the time of employment of the appellants. Mr. Chabu, Counsel for the appellants, relied mainly on his Heads of Argument which he augmented with oral submissions. In aid of ground 1, he contended that the doctrine of frustration did not apply because it was self-induced as the respondent had foreseen the effect of privatisation and the Government, as majority shareholder, provided against the risk of privatisation. In support of this argument he cited Walton Harvey Ltd v Walker Homfrays Ltd2. He submitted that the respondent was well aware of the Government policy to privatise mines; which J12 policy was a notorious fact, thus the respondent should have provided (565) against its risk by paying the appellants money in lieu of provision of the health services, which they did not do, so this case fell within the above cited exception to the doctrine of frustration. Counsel also argued that the doctrine of frustration does not apply where it is self-induced as affirmed in Bank Line Ltd. v Arthur Capel & Co.3 and adopted in Maritime National Fish v Ocean Trawlers4. He submitted that the Government was a majority shareholder in the respondent, and made the decision to privatise, so privatisation was not a frustrating event as it was self-induced by the Government in its capacity as owners of the respondent. Additionally, Counsel submitted, that the privatisation of the health facilities was not a frustrating event as the Government, being the majority shareholder in the respondent, had provided against the risk under section 39 (1) and (2) of the Privatisation Act, Cap 386 (the Act). He cited Zambia Oxygen Limited and J13 Zambia Privatisation Agency v Paul Chisakula and others5 which made reference to section 39(1) and (2) of the Act. He argued that the law expected the proceeds of privatisation to support provision of health services to former employees of the (566) respondent in line with the above case and not to curtail employees’ conditions of service in the privatised companies. In support of ground 2, Mr. Chabu contended that the respondent had a statutory obligation to pay monies in lieu of provision of health services notwithstanding that they ceased to have control over the hospitals and clinics by virtue of sections 3(1) and 3(3) of the Law Reform (Frustrated Contracts) Act, Cap 73. He cited BP Exploration Co (Libya) Ltd v Hunt (No 2)6 in which he argued, Robert Goff, J., highlighted the principles under the English Law Reform (Frustrated Contracts) Act, 1943, which Act he argued, has been re-enacted under our Cap 73. He argued that for a party to obtain a remedy under section 3(1) of Cap 73 the contract must be governed by the law of Zambia; it must become impossible of performance; and the J14 parties must be discharged from further performance as a result of impossibility of performance. He argued that the contract herein satisfied the above in light of the court’s factual findings; and the appellants provided services to the respondent while in employment which amounted to a valuable benefit within the meaning of section 3(3). (567) He added that upon cessation of employment, the appellants acquired rights to access medical facilities in hospitals and clinics owned by the respondent under their contracts of employment, so monies as damages in lieu of provision of medical services were payable by virtue of the above Act. According to him, the said rights were accrued rights which could not be abrogated in any way. He referred us to our decision on accrued rights in Jacob Nyoni v Attorney General7 which he argued, was cited with approval in Standard Chartered Bank Zambia Plc v Willard Solomon Nthanga and others8. He submitted that the Privatisation Act did not abrogate the appellant’s entitlements as it provided that the proceeds of privatisation were to support redundancies and retrenchments J15 and provision of health services, inter alia, to former employees of the respondent. In his oral submissions, Mr. Chabu argued that even if privatisation was held to be a frustrating event, the appellants were entitled to the remedies as pleaded on ground that the respondent had been making monthly deductions for purposes of health services to be rendered to the appellants after the cessation (568) of employment. He invited us to refer to pages 95 to 99 of the Record of Appeal. He prayed that this appeal be upheld. Mr. Kaite, Counsel for the respondent, equally relied on his Heads of Argument, which he too augmented with oral submissions. In response to ground 1, he submitted that the frustrating event was neither foreseeable nor self-induced. He referred us to Chitty on Contracts-General Principles (2004) at page 1311 where the learned authors state as follows: “A contract may be discharged on the ground of frustration when something occurs after the formation of the contract which renders it physically or commercially impossible to fulfil the contract or transforms the obligation J16 to perform into a radically different obligation from that undertaken at the moment of entry into the contract.” In light of the above, he argued, the court below was on firm ground in its findings that the privatisation of the hospitals and clinics made the contracts that provided for access to medical services post-employment incapable of performance and that the circumstances under which the appellants were asking the respondent to perform its obligations under the contract would (569) render performance something radically different from what was envisaged by the parties at the inception of the contracts. Pertaining to the argument by Mr. Chabu that the frustrating event was foreseeable, so the respondent should have made provision against it by paying monies in lieu of actual services, Mr. Kaite submitted that Walton Harvey Ltd. v Walker & Homfrays Ltd.2 is distinguishable because, in that case, the defendant knew at the time of contracting with the plaintiff of the risk that the premises would be compulsorily acquired and J17 demolished by a local authority acting under its statutory powers, but did not notify the plaintiff about the risk. Counsel contended that frustration can only be foreseeable if it was foreseen at the time of contracting by the party sought to be held liable or if a reasonable person of ordinary intelligence would regard as likely to occur (at the time of contracting), the said frustrating event and omitted to inform the other party to the contract so that a contingency is made. He submitted that in this case, the evidence reveals that PWs 1, 2 and 3 were employed in 1976, 1965 and 1982 respectively; (570) that at the material times, the privatisation of the respondent was not something that either party could have foreseen, so it is an error for the appellants to argue that the frustrating event was foreseeable at the time of termination of the contracts or immediately before. He argued that the respondent had no obligation, contractual or otherwise, to change the terms of the employment contracts on account of the privatisation process. J18 He stated that in terms of section 3(1) of Cap 73, the respondent was discharged from extra performance of the contract at the time it was divested of its health facilities by Government. Regarding self-induced frustration, Counsel referred us to Chitty on Contracts (supra) at page 1343 where it is stated that the essence of frustration is that it should not be due to the act or election of the party seeking to rely on it and that a contracting party cannot rely on self induced frustration. He distinguished Maritime National Fish v Ocean Trawlers4, on the basis that the decision to not use the otter trawls on the chartered vessels was that of the defendant; while in this case, the appellants should demonstrate that the respondent itself made the decision that (571) caused it to become incapable of performing its post contractual obligations of providing medical facilities to the appellants. Furthermore, Counsel submitted, the appellants’ argument that since the Government was a major shareholder in the respondent, and the decision to privatise the respondent was its J19 decision, then the respondent should be held liable for the decision that the Government made, ignores the fact that a company has a separate legal personality from that of its members and that the company is not in law the agent for its members. In support of this argument, he cited Gower and Davies: Principles of Modern Company Law (2008) at pages 33 and 34 and the dictum of Lord McNaughton in the celebrated case of Salomon v Salomon & Co9. He argued that the respondent and the Government were not and are not the same person at law, that the decision to privatise the parastatals was a government decision that was made in its capacity as such and not as shareholder such that the decision should be imputed to the respondent, and that decisions that are capable of being imputed to the respondent are those it makes through its board of directors and its members in general meeting; and that the appellants did not tender evidence to (572) J20 show that the respondent itself passed a resolution to privatise itself. He also submitted that in terms of section 39 of the Privatisation Act, the proceeds of sale of shares and assets in the privatised companies were paid into the Privatisation Revenue Account established by the Minister of Finance and held at the Bank of Zambia; that the Act does not vest any power in the company that was to be privatised to either sell its own shares or collect proceeds thereof; that power was vested in the Zambia Privatisation Agency established under section 3 the Act. Mr. Kaite also distinguished Zambia Oxygen Ltd. v Chisakula and others5 where he argued, we took cognisance of the fact that the payment of proceeds of privatisation was the responsibility of the Zambia Privatisation Agency and not the company undergoing privatisation. He argued that the appellants’ argument in terms of that case and section 39 of the Act is misconceived in so far as it intended to attach liability to the respondent to pay monies out of (573) J21 the Privatisation Revenue Account to the appellants as the respondent has no access or authority to deal with the Account. With regard to ground 2, Counsel contended that the court below was on firm ground when it held that the claim for cash in lieu of provision of health facilities was asking the respondent for something that had not been agreed upon or contemplated at the time the contracts were executed. He submitted that Davis Contrators Ltd. v Fareham UDC10 dealt with the principle of frustration from the premise that a contract is frustrated when without default of either party, as in this case, the contract becomes incapable of performance as the circumstances in which performance is required would render a thing radically different from what was undertaken in the contract. He submitted that the court below stated what considerations it made in order to establish whether performance following the frustrating event, would differ radically from what was initially agreed between the parties. He further referred us to Chitty on Contracts (supra) at page 1351 where it is stated that: J22 “At common law, frustration does not rescind the contract ab initio; it brings to an end forthwith, without more, (574) automatically in the sense that it releases both parties from any further performance of the contract. A court does not have the power to allow the contract to continue and just adjust its terms to the new circumstances”. He argued the common law position is consistent with the Law Reform (Frustrated Contracts) Act. That the appellants seek to rely on section 3(3) of that Act, to assert the respondent is liable to pay the monetary value of their services pre- termination in lieu of a hospital benefit post-employment. That section 3(3) (a) and (b) give a guide on specific considerations the court will make to determine the value of the benefit; in terms of paragraph (a) the court will consider the amount of any expenses incurred before the time of discharge by the benefitted party in, or for the purpose of, performance of the contract, and any sums paid or payable by him to any other party in pursuance of the contract and retained or recoverable by that party under subsection 2 of the said Act. He submitted, PWs 1, 2 and 3 failed to produce pay slips to show that the respondent deducted any money from their J23 salaries to enable them enjoy the benefit during and post- employment or proof of having been put to any expense in the performance of their contracts which would warrant payment by the respondent (575) and for which they were not compensated by way of remuneration in their monthly salary; and that they did not provide the court with the basis upon which to apply section 3 of Cap 73. Counsel also argued, that section 3(a) of Cap 73 should be read together with section 3(b) which empowers the court to consider the effect, in relation to the said benefit, of the circumstances giving rise to the frustration of the contract, which in this case, were out of the control of the respondent and the benefit had long ceased to be received by the respondent as the contracts had been terminated before the frustrating event. Additionally, Mr. Kaite submitted, when asked by the Court, that the Government, in privatising the respondent, acted as a Sovereign and not in its capacity as shareholder, and that there was no action by the members of ZCCM Limited or the board of J24 ZCCM Limited in effecting the decision to privatise the company. He urged us to dismiss the appeal. We have critically considered the evidence on record, the judgment of the court below and the submissions of learned Counsel on both sides, for which we are grateful. We propose to deal with both grounds of appeal successively. In doing so, we will address our minds to the following four issues: (576) 1. Whether the privitisation of the hospitals and clinics in question was a frustrating factor on the appellants’ post-employment contracts for access to the health facilities; 2. Whether the action of the Government to privatise the hospitals and clinics was foreseeable by the respondent and/or was it self induced; 3. Whether the appellants were entitled to payment of cash as damages in lieu of provision of medical services; and 4. Whether the Government as majority shareholder of the respondent had provided against the risk of privitisation As regards whether the contracts for access to the health facilities were frustrated by privitisation, we agree with Chitty on Contracts (2008), at paragraph 23-001, that a contract may be J25 discharged on the ground of frustration when something occurs after the formation of the contract which renders it physically or commercially impossible to fulfil the contract or transforms the obligation to perform into a radically different obligation from that undertaken at the moment of entry into the contract. We also agree with both learned Counsel that of importance in deciding whether a contract is frustrated is that the event (577) cannot have been in any way induced by either of the parties; and that any supervening event must be unforeseeable and vitiated by entirely external factors. Halsbury’s Laws of England, 4th Edition, at paragraph 899, puts the matter as follows: “The doctrine of frustration is in all cases subject to the important limitation that the frustrating circumstances must arise without fault of either party; that is the event which a party relies upon as frustrating his contract must not be self-induced. The defence of frustration can therefore be defeated by proof of fault, and the burden of proof lies upon the party alleging it. Deliberate choice either not to perform or to put performance out of one’s power will certainly be fault within this rule....” J26 In Walton Harvey Ltd. v Walker & Homfrays Ltd2, discussed by both learned Counsel in their Heads of Argument, the defendants granted the plaintiffs the right to display an advertising sign on the defendant’s hotel for seven years. Within that period, the hotel was compulsorily acquired, and demolished by a local authority, acting under statutory powers. It was held, precisely, that the contract was not frustrated because the defendants knew, and the plaintiffs did not, of the risk of compulsory acquisition and they could have provided against that risk, but they did not. (578) Similarly, in Maritime National Fish v Ocean Trawlers4, both parties knew that the use of the hired steam trawler, without a licence was illegal. Maritime National Fish applied for five licences from the Canadian Government, for the five trawlers they were using. However, only three licences were granted. They did not name the St. Cuthbert from Ocean Trawlers as one of the licenced vessels and refused to go through with the hire; on the grounds the contract was frustrated. Their appeal was, properly, rejected on the ground that they themselves had taken on the risk that some licences J27 may be denied, and by thereby not allocating a licence to the hired trawler, the frustration was self-induced. In Davis Contrators Ltd. v Fareham UDC10, cited by Mr. Kaite, the plaintiff pleaded that the weather and labour shortages, which were unforeseen, had frustrated the contract to build houses in eight months at a fixed price, after the work took much longer and cost more than anticipated. The House of Lords, and rightly in our view, declined to render the contract frustrated purely because the price of labour and materials had increased. (579) As to whether performance of a contract can be frustrated by changes in the law, Halsbury’s Laws of England (supra), puts the matter as follows at paragraph 902: “Where performance of the contract has been rendered impossible by an Act of Parliament passed after the contract was made, then the promisor is excused from performing his promise (unless it appears that he intended to bind himself with reference to the future state of the law), for the presumption is that the parties intend to contract with reference to the law as existing at the time when the contract is made”. J28 This is affirmed by Chitty on Contracts (2008), at paragraph 23-022, where it is stated: “A subsequent change in the law or in the legal position affecting a contract is a well recognised head of frustration; Parliament or another authority may intervene by legislative action, or the Government may exercise the royal prerogative or administrative powers so as to affect the legal situation of the contracting parties”. In Sam Amos Mumba v Zambia Fisheries and Fish Marketing Corporation Ltd1, a decision of the High Court, which the learned trial Judge relied upon, the plaintiff claimed damages for breach of contract of employment, claiming his conditions were altered and some not fulfilled. The defence was frustration, that the conditions (580) were altered as a result of the Mwanakatwe Salaries Commission followed by a Government white paper which directed that all salaries of permanent employees were to be within Government’s recommendations. The plaintiff challenged the implementation of the recommendations as unlawful. Sakala, J (as he then was) held, inter alia: J29 “(ii) A subsequent change in the law or in the legal position affecting a contract is a well recognised head of frustration. At common law, the occurrence of a frustrating event terminates the contract forthwith... (iii) The Government directives to the defendant company were a frustrating event and put an end to the contract between the parties...” He referred to Davis Contrators Ltd. v Fareham UDC10 at pages 720-721, which is cited here by Mr. Kaite, where Lord Reid stated: “It appears to me that frustration depends, at least in most cases, not on adding any implied term, but on the true construction of the terms which are in the contract read in light of the nature of the contract and of the relevant circumstances when the contract was made.” Sakala, J also quoted Viscount Simon in British Movietonews Ltd and District Cinemas Ltd.11 at page 185 where he stated: (581) "If, on the other hand, a consideration of the terms of the contract, in the light of the circumstances existing when it was made, shows that they never agreed to be bound in a fundamentally different situation which has now unexpectedly emerged, the contract ceases to bind at that point - not because the court in its discretion thinks it just and reasonable to qualify the terms of the contract, but because on its true construction it does not apply in that situation." J30 He also quoted Lord Wright in Fribrosa Spolka Akoyjina v Fairbairm Lawson Combe Barbour Ltd12 at page 70 as follows: "In my opinion the contract is automatically terminated as to the future because at that date its further performance becomes impossible in fact in circumstances which involve no liability for damages for the failure on either party." In the present case, we accept the established position that the company is at law a different person altogether from the subscribers or shareholders. Certainly, the celebrated case of Salomon v Salomon9 on the point is still good law. Therefore, as submitted by Mr. Kaite, the respondent as the company, and the Government, as majority shareholder, are not one, and the same person at law. It is also trite law that a company, as a body corporate and a legal personality, can only do things through its officers, even though shareholders as beneficial owners of a company have and enjoy as of right, overriding authority over the company’s affairs even over the wishes of directors (Zambia Consolidated Copper Mines Ltd v Kangwa and others13). (582) J31 On the other hand, the preamble to the Privatisation Act, which is the subsequent legislation, provides as follows: “An Act to provide for the privatisation and commercialisation of State owned enterprises; to provide for the establishment of the Zambia Privatisation Agency and to define the functions of the Agency; to provide for the sale of shares in State owned enterprises; and to provide for matters connected with or incidental to the foregoing.” On the basis of all the above mentioned, we are satisfied that although the Government was the majority shareholder in the respondent company, the decision to commercialise and/or sell shares in State owned enterprises, including the respondent, and the enactment of the Privatisation Act, was made by the Government as a Sovereign, and not in its capacity as shareholder. It is cardinal to comprehend that the policy to privatise did not single out the respondent; it affected all State owned enterprises as can be seen from the preamble to the Privatisation Act. As correctly argued by Mr. Kaite, there was no action by members of ZCCM Limited or the board of directors in general meeting in effecting the decision to privatise the company. The (583) J32 decision to privatise State owned enterprises was an exercise of the administrative or governmental or executive powers of the State. It was a directorial decision which unfortunately affected the legal situation of the parties to the post-employment contracts. Even if we were to admit that the decision to privatise ZCCM Limited and/or the health facilities in question was made by the Government as shareholder of the company, Halsbury’s Laws of England (supra), at paragraph 899 puts the matter as follows: “...... A state trading enterprise, although subject to its government’s direction and control and a party to governmental legislation which rendered performance of a contract to which it was a party illegal, was not precluded from relying on frustration as a defence, since it had a separate legal existence.” On the whole matter, the learned trial Judge was on firm ground when he held that the agreement between the appellants and the respondent relating to the provision of health services after separation was frustrated by the action of the Government when it privatised the hospitals and clinics previously operated by the respondent and that the respondent could not be held liable. J33 (584) Mr. Chabu argued firmly that if the contracts were frustrated, we must find that the frustrating event was self induced, in that the Government was the majority shareholder in the company, so its decision to privatise the health facilities was inevitably the decision of the respondent. Whilst it is quite clear to us that a party cannot rely on an event which was self induced, or should have been, foreseen by him but not by the other party, in this case, we are disposed to agree with Mr. Kaite that the circumstances before us are distinguishable, from those obtaining in Walton Harvey Ltd v Walker Homfrays Ltd2, and Maritime National Fish v Ocean Trawlers4 relied on by Mr. Chabu. We are persuaded, on the strength of the various authorities referred to in our judgment, especially Halsbury’s Laws of England, at paragraph 899 (supra), that the respondent, as a state trading enterprise, although subject to the Government’s direction and control was not precluded from relying on frustration as a defence, since it had a separate legal existence. The Government was the majority shareholder of the J34 respondent, and it made the decision to privatise, but as we have already said, the decision was a governmental, executive or directorial decision. (585) Furthermore, even as we take judicial notice of the fact that the privatisation of the respondent did not occur overnight, it would be absurd to believe that it was envisaged by the respondent at the respective times of contracting. Chitty on Contracts (2008) at paragraph 23-016 states: “The test for frustration is objective; and not a subjective inquiry into the actual or presumed intentions of the parties, since the discharge of a contract on the ground of frustration occurs automatically upon the happening of the frustrating event, and does not depend upon any repudiation or other act of volition on the part of either party; and the fact that the parties, at the time of contracting, actually foresaw the possibility of the event or new circumstances in question does not necessarily prevent the doctrine of frustration from applying”. For these reasons, we reject the argument by Mr. Chabu that the frustrating event was self induced, and/or foreseen by the respondent or that this case falls within the exceptions to the doctrine of frustration. The frustrating event was not a deliberate act by the respondent to escape its contractual obligation to J35 provide post-employment health services to the appellants. Therefore ground 1 of the appeal fails. We turn now to ground 2 concerning whether the appellants were entitled to payment of money as damages in lieu of provision (586) of medical services. It is Mr. Chabu’s contention that the privatisation is something the respondent had foreseen, it could have prevented the risk by paying the appellants money in lieu of provision of health services. Conversely, Mr. Kaite submitted that from the evidence of PWs 1, 2, and 3, they were employed in 1976, 1965 and 1982 respectively, and that privitisation could not have been foreseen at the time of contracting, so the respondent could not have provided against the risk. He further argued that the appellants’ contention that privitisation was foreseeable on the basis of events that occurred immediately before the frustrating event is untenable as what must be considered are events at the time of contracting. J36 The appellants’ contention in the court below was that accessing the health facilities had become an entrenched or accrued post-employment right upon separation such that the Privatisation Act which the respondent was relying on and which did not specifically abrogate that condition was of no legal effect. Mr. Chabu is right that in Jacob Nyoni v Attorney General7, we held that the amendment to the law did not take away the right as (587) the amending Act did not specifically abrogate the accrued right which became entrenched in the appellants’ conditions of service. While it is trite that an accrued right cannot be taken away, the question in this case is, what right did accrue to the appellants that the respondent has taken away? It is agreed that when the employment contracts were executed, and undeniably at separation, the respondent undertook to provide health facilities to the appellants depending on the mode of separation. Thus we accept that the appellants had the right to attend the respondent’s hospitals after they were separated. But there was J37 no evidence before the lower court, that the appellants had the option to trade off that right for some monetary equivalent value. We also acknowledge, the undisputed fact that the appellants were turned away from the hospitals, not by the respondent, but by the new owners who put in place new regulations of access following the privatisation of the health facilities; even if it seems that the respondent would settle costs of treatment at Government and private hospitals as long as receipts were produced. (588) Nevertheless, the learned authors of Halsbury’s Laws of England (supra) assert at paragraph 910, that the court must look at the matter on the basis of the facts known to the parties at the time of the event interfering with the contract and the probabilities as they then appeared, and not in the light of later events which may show that the contract could in fact have been performed. J38 It is apparent that whilst PWs 1, 2, and 3 likened their situation to the rest of the appellants; they said little about when the other appellants were separated and the letters of separation are not part of the record of appeal. However, we have approached the matter from the undisputed fact that all the appellants were separated between 1998 and 1999. That being the case, for the appellants who were declared redundant before 31st March, 1999, the 1 year period within which they were entitled to access the health facilities had lapsed at the time of privatisation on 1st April, 2000. For the other appellants, we repeat that there was no established right of trading off the acquired right for cash. Consequently, the learned Judge was correct that the claim for payment of cash in lieu of the provision of health facilities was (589) asking the respondent for something that was not agreed upon or contemplated at the time of employment of the appellants and that payment of cash as damages in lieu of provision of J39 medical services would render such performance something radically different from that undertaken by the respondent. As to whether the Government provided against the risk of privatisation, Mr. Chabu argued that the appellants were entitled to be compensated out of the Reserve Account in terms of section 39 of the Privatisation Act. Clearly this section provides that net proceeds from completed sales of shares and assets shall be paid into a Privatisation Revenue Account established by the Minister responsible for finance and held at the Bank of Zambia; and that with the prior approval of the said Minister, the proceeds of sale may be used, inter alia, for funding the cost of privatisation and the Privatisation Trust Fund, and supporting redundancy payment schemes in consultation with the Ministry responsible for labour. Indeed, in Zambia Oxygen Limited and another v Paul Chisakula and others5, we dealt with the interpretation of section 39 of the Privatisation Act and we held that the said Act stipulates (590) J40 that the proceeds of privatisation are to be available to support redundancies or retrenchments; and that conditions of service, already being enjoyed by employees cannot be altered to their disadvantage without their consent. However, as argued by Mr. Kaite, the facts of that case are distinguishable from the case before us. In that case, it was argued, on behalf of the Zambia Privatisation Agency, that the employees were not privy to the agreement between the appellants under which the Zambia Privatisation Agency was to provide funds to Zambia Oxygen Limited for the payment of benefits to the employees. In addition, Zambia Oxygen Limited had unilaterally changed the employees’ conditions of service. The issue of frustration of the employment contracts never arose. Unfortunately, we cannot, on the basis of the foregoing, affirmatively pronounce that the circumstances of this case fall within the ambits of section 39 of the Privatisation Act or that the Government provided against the risk of privatisation, when the Government and/or the Zambia Privatisation Agency are not parties to this appeal and there was no arrangement or J41 (591) understanding between the Zambia Privatisation Agency and the respondent as was the case in the Zambia Oxygen Limited5 case. As rightly submitted by Mr. Kaite, the Zambia Privatisation Agency, and not the respondent, would have been responsible to pay money out of the Privatisation Revenue Account. However, we have already made the point that the appellants’ post- employment right to access the respondent’s hospitals and clinics did not entitle them to payment of monies in lieu thereof. Mr. Chabu has spiritedly argued, that the respondent had a statutory obligation by virtue of sections 3(1) and 3(3) of the Law Reform (Frustrated Contracts) Act, Cap 73, to pay monies in lieu of provision of health services, notwithstanding that the respondent ceased to have control over the hospitals and clinics. Regrettably, though Mr. Kaite responded to this argument, the issue that the appellants have raised now under the Law Reform (Frustrated Contracts) Act were not raised in the court below. We have said many times that where an issue was not raised in the court below, it is not competent for any party to J42 raise it in a higher court (See e.g., Mususu Kalenga and another v (592) Richman’s Money Lenders Enterprises14). For this reason, we decline to go into the issue of whether or not the appellants were entitled to recover any payments under the said Act. It is Mr. Chabu’s further contention that even if privatisation was held to be a frustrating event, the appellants were entitled to the remedies as pleaded because the respondent had been making monthly deductions from their salaries for purposes of health services to be rendered to them after the end of employment. It is quite clear to us that the appellants did not prove, before the lower court, that deductions were made from their salaries for purposes of health services to be rendered to them after the end of employment. PWs 1 and 2 conceded, in cross- examination, that the alleged deductions of K150.00 or K200.00 were not shown on their monthly pay statements. What's more, there was no proof that any of them were turned away from the hospitals or clinics before the frustrating J43 event or that they incurred expenses for treatment before or even after the frustrating event. Whilst PW1 testified that he attended (593) treatment at other hospitals, after he was turned away from the health facilities in issue, he too provided no documentary proof. As we have said in a plethora of cases, he who asserts a claim in a civil trial must prove on a balance of probabilities that the other party is liable. In this case, the appellants did not discharge their evidential burden. In sum ground 2 equally fails. Both grounds having failed for the reasons stated in our judgment, we dismiss the appeal. However, we order that each party will bear own costs of this appeal. _________________________________ H. CHIBOMBA SUPREME COURT JUDGE J44 __________________________________ R. M. C. KAOMA ACTING SUPREME COURT JUDGE