Gitrine Sakala Ncube and Anor v Kwacha Pension Trust Fund and Anor (Appeal No. 203 of 2024) [2025] ZMCA 68 (30 May 2025)

IN THE COURT OF APPEAL OF ZAMBIA Appeal No. 203 of 2024 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: NAKAVO NORA CHI LALA CHIRWA AND KWACHA PENSION TRUST FUND BANK OF ZAMBIA 1sr APPELLANT 2"0 APPELLANT 1sr RESPONDENT zt.1o RESPONDENT CORAM: SIAVWAPA JP, CHISHIM BA & PATEL, JJA On 22nd April & 30th May 2025 For the Appellants: Mr. K. Kaunda Messrs. Kaunda Kaunda & Mwila Legal Practitioners For the 1>1 Respondent: Mr. P. Chungu Messrs. Ranchhod Chungu Advocates For the 21 c Respondent: Ms. S. Kaingu-ln House Counsel Bank of Zambia JUDGMENT Patel, JA, delivered the Judgment of the Court. Cases Referred To: 1. 2. 3. Audrey Nyambe V Total Zambia Limited- SCZ Judgment No.1 of 2015 Anti-Corruption Commission V Charles Sambondu - SCZ/8/389/2012 Zambia National Commercial Bank V Chiluba - SCZ (2006) ZR137 4. Anti-Corruption Commission V Sambondu - Appeal No. 54 of 2014 (2017) ZMSC 136 5. Chimanga Changa Limited V Stephen Ch ipango Ng' ombe - SCZ Judgment No.5 of2010 6. 7. 8. 9. MUVI TV Limited V Makandani Banda- CAZ Appeal No. 154/2023. Ashville Investments V Elmer Constructors Limited 1988 2 ALL ER 577 Vangelatos V Vangelatos- SCZ Appeal No.7 Of 2006 Leopard Ridge Safaris V Zambia Wildlife Authority (2008) ZR 97 Vol 2 Legislation Referred To: 1. 2. The Constitution of Zambia (Amendment) No.2 of 2016 The Arbitration Act No. 19 of 2000 Texts And Other Materials Referred To: 1. Commercial Arbitration zn= Edition Butterworth (1989) By Sir Michael Mustill and Stewart Boyd. 2. International Arbitration Law And Practice By Manro Robina Summartano (Kluwer Law International 2001). 3. Chitty On Contracts Vol. 1 - General Princ·1ples - 28th Edition London Sweet & Maxwell 1999 J2 INTRODUCTION 1.1 This is an interlocutory appeal against what is referred to as the 'whole Ruling and Order (embodying ruling)' in Cause No. 2024/HP/0283 delivered by Hon G. Chawatama dated 9th April 2024 and 16:h April 2024. 1.2 This Appeal interrogates once again, the role of the Court. in its supervisory and complementary capacity in the arbitral process coupled with the exercise of case management, a preserve of the trial Court. 1.3 We also note that this appeal is cause-listed for hearing in the same session with Appeal No. 108 of 2024. Both appeals arise out of Orders made by the lower Court to stay proceedings and refer the respective Parties to arbitration. Invariably in addressing the grounds of appeal, other than where they may be specific to each appeal, the general analysis and determination will reflect in both appeals. 1.4 The Record of Appeal is presented in a single volume, Reference to page numbers shall refer to the Record of Appeal unless otherwise noted. 2.0 BACKGROUND 2.1 For the purposes of th is section. the Parties shall be referred to as they are in this Court. 2.2 It is noted that on 23rd February 2024, the 1st and 21 dAppellants, (then the 1~· and 2nd Plaintiffs) commenced proceedings in the general Ii st of the High Court J3 under Cause No. 2024/HP/0283 seeking reliefs which are dearly endorsed on the Writ of Summons and Statement of Claim as can be seen from pages 14 to 21. 2.3 The defence filed by the l" and 2nd Respondent (then 1': and 21d Defendants) is noted from pages 39-to 42 and 29 to 31 respectively. 2.4 The 1'1 Respondent subsequently, and on the same date of filing its defence, did file an application by way of Summons to stay proceedings and have matter referred to arbitration. The application, the supporting affidavit and the skeleton arguments are noted from r:,ages 43 to 72. 2.5 It is also noted that the summons was returnable on gt:, April 2024 before the learned Judge of the trial Court. It is also common cause that the learned Judge appears to have delivered what is referred to as an extempore Ruling dated 9'~ April 2024, which is not before this Court. The said Ruling appears to have been reduced into an embodiment order dated 16th April 2024, now the subject of appeal. DECISION OF THE LOWER COURT 3.1 Upon hearing the l't Respondent's Application referred to in paragraph 2.4 above, the learned Judge issued an Order dated 15:t April 2024 entitled as follows: "Order to stay proceedings and have matter referred to Arbitration". 3.2 The said Order is seen on page 12. J4 3.3 As noted above, the Ruling referred to as extempore, is not on the Record save to state that the Order appears to note that there being no opposition to the !51 Respondent's application and there being no appearance for the 1s: and 2"'1 Appellants, the lower Court granted the Order prayed for by the 1st Respondent, the effect of which was to stay proceedings and refer the Parties to arbitration. The lower Court also ordered costs against the is: and 2n= Appellants. 4.0 THE APPEAL Dissatisfied with the said Order in the Court below, the Appellants (having obtained leave from the lower Court) filed their Notice and Memorandum of Appeal, on 5 th June 2024, advancing four (4) grounds of appeal, as follows; 1. The Court below erred both in law and fact by hearing or determining the Respondent's [inter-partesj application to have the matter referred to Arbitration, leading to the Ruling and Order herein, without according the Appellant an opportunity to be heard thereon, as there is no evidence of service of the application or notice of hearing on the Appellants' Advocates. 2. The Court below erred both in law and fact by referring this matter to arbitration without analyzing whether or not rule 26 of the Rules of the Kwacha Pension Trust Fund is operative in view of the stated facts in paragraphs 1, 9 and 13 of the statement of claim to the effect that the Appellants are not members of the 1s1 Respondent as guided by the definitions of 'member' and 'employee'. 3. The Court below erred both in law and fact by referring this matter to Arbitration notwithstanding that rule 14[2] of the Trust Deed of the Bank of Zambia Pension Trust Fund, and rule 26 of the Rules of the Kwacha Pension Trust Fund are ejusdem generis. 4. The Court below erred both in law and fact by referring this matter to arbitration notwithstanding that one of the Appellants' claims relates to Article 189 of the Constitution of the Republic of Zambia, Chapter 1 of the Laws of Zambia, on which an Arbitrator has no jurisdiction. 5.0 APPELLANT'S HEADS OF ARGUMENT IN SUPPORT OF THE APPEAL 5.1 \Ne have duly considered and appreciated the Heads of Argument filed on 611' August 2024. 5.2 We have taken on board the arguments and submissions of Counsel, pertaining to ground 1, which has canvassed the argument that the 1" and 2"d Appellants were not heard. We have followed Counsel's submissions which culminate in the submission that the 1st and 2n~ Appellants intended to oppose the l51 Respondent's application to stay proceedings and refer the Parties to arbitration. 5,3 We have noted the argument that there is no proof of service of the summons on the Appellants and that they were only served with the resulting Order under cover of letter appearing on page 79. JG 5.4 This, the Appellants have argued, resulted in a denial of their tu ndame ntal right to be heard and a breach of the rules of natural justice. 5.5 In arguing grounds 2 & 3 of the appeal, the Appellants have submitted that the arbitration clause in casu, namely Rule 26 of the Kwacha Pension Trust Fund is inoperative, in relation to the Appellants, Counsel has argued that the two trigger elements of Rule 26, are non-existent and as such rendered the arbitration clause inoperative against the Appellants. 5,6 Counsel has also argued the position at law with reference to the ejusdem generis principle to canvass the argument that the arbitration clause in Rule 26, at the time of the dispute, was inapplicable to the Appellants. 5.7 In support of ground 4 of the appeal, it is argued that the Appellant's claim tor payment of salaries until the pension payments are liquidated, being in line with Constitutional provisions, is outside the ambit of the power of an Arbitrator, and hence their argument that th~ refere nee to arbitration is erroneous as the arbitration clause had become inoperative. In support of this argument, reliance was placed on a decision of the Apex Court rendered in the case of Audrey Nyambe v Total Zambia Limited 1. 6.0 1st RESPONDENT'S HEADS OF ARGUMENT 6.1 We have equally considered the 1st Respondent's Heads of Argument also filed on 6:h August 2024. With reference to ground 1, the 1" Respondent has countered the argument on lack of service, to placing a burden on the Appellants, who had in fact been served with the documents supporting the l't J7 Respondent's application. as seen from page 78, to canvass the argument that the 1st and 2rd Appellants ought to have been placed on their guard to the impending date to be issued by the lower Court. 6.2 The pt Respondent has also called in aid several decisions of the Supreme Court, to canvass the argument that service by pigeon-hole, maintained at the High Court, is effective service, more so if the party claiming lack of service, has been notified of the existence of the process. Reference was made to the cases of Anti-Corruption commission v Charles SambonduJ and Zambia National Commercial Bank v Chiluba 3 • 6.3 In response to grounds 2 & 3, the 1st Respondent has strongly argued against the attempt by the Appellants to invoke the ejusdem generis rule when they have in fact used the literal rule of interpretation in addressing rule 26, the arbitration clause. 6.4 It is the vehement argument of the 1" Respondent that a literal interpretation of Rule 26 of the Kwacha Pension Trust Deed Rules would lead to absurdity and should be avoided. It was submitted that to remove the 1•t and 2'd Appellants (as former members or former employees), as canvassed by the Appellants, from the definition of a Member or Employee, would lead to an absurdity, which the Court should not allow. 6.5 Counsel has belabored by its submissions, to show the intended mischief which legislature had intended to cure by the enactment of Articles 189 and 266 of the Constitution ~ which was only enacted to cushion the hardships of retirees who cou Id not find any other gainfu I employment due to their age. J8 6.6 We have been beseeched by the 1st Respondent to employ the correct application of the ejusdem generis rule in the interpretation of the arbitration clause, the subject of the Order made by the lower Court. 6.7 With respect to its arguments in opposition to grounds 2, 3 & 4, the 1st Respondent has relied on several interpretations and decisions of the Courts, to canvass the argument of the constitutional meaning of the words pension, gratuity and compensation, and submitted that the same should be given their ordinary meaning as it does not result in any absurdity to warrant a purposive interpretation. 6,8 Finally, and in dealing with the ground that the dispute cannot be settled by arbitration due to the constitutional issues raised, Counsel has argued that Courts have held that arbitral tribunals have the authority to resolve disputes within the scope of the arbitration agreement, noting that their decisions ought not violate statutory laws or public policy. 7.0 THE HEARING 7.1 At the hearing, Counsel placed reliance on their respective heads of argument while Counsel Ka ingu informed the Court that the 2"d Respondent did not file its heads of argument, citing late service by the Appellant. However, Counsel informed the Court that the 2nd Respond~nt would place reliance and stand by the arguments on record filed by the 1st Respondent. J9 7.2 Much ado was made over whether the Court had issued a notice of hearing, or had simply placed the Summons in the respective pigeon holes of Counsel before the hearing of the section 10 application. 8.0 ANALYSIS AND DECISION OF THE COURT 8.1 It is not disputed that the 1st and 2nd Appellants were members of the 1st Respondent's Pension Scheme and employees of the 2nd Respondent. It is also not disputed that the main document which governed the relationship of the Parties is the Kwacha Pension Trust Fund Rules (hereinafter the KPTF Rules). It is also not disputed that the relevant arbitration clause is Rule 26 of the said KPTF Rules. 8.2 It is also not disputed that the 1st Respondent was established or constituted by the 2nd Respondent to among other things, manage, invest employee-employer contributions, and pay out portable pension benefits, as mandated or prescribed by law to the employees of the 2nd Respondent who have retired or separated from the 2nd Respondent. 8.3 In the main matter, what is in dispute, however, is the applicability or otherwise of the arbitration clause to the dispute at hand which we shall determine in the latter pa rt of our Judgment. 8.4 With reference to ground 1, it was argued that the Appellants were not accorded an opportunity to be heard on the 1st Respondent's application to stay proceedings and refer the matter to arbitration in accordance with the Arbitration Act7 , commonly referred to as the section 10 application. no 8.5 The issue of service, what constitutes service and what is expected of Counsel has been the subject of many pronouncements by the Superior Courts. In support of the above, we rely on the decision of the Su pre me Court in the case of Anti-Corruption Commission v Sambondu4 where the Court stated as follows: "In the present case, the Court below was entitled to infer from the circumstances in this matter that the appellant was aware of the hearing dates . ........ We also note that the appellant did not dispute that it had a pigeonhole at the High Court, but instead it argued that there was no evidence that it received the notices. Court processes that are placed in the pigeon holes are usually put at the instance of the Court and it cannot be reasonably argued that the Court should adduce evidence that the processes were so placed and that litigants received them. In the face of this evidence, we are satisfied that the appellant was aware of the hearing dates and it cannot be said that it was prejudiced in any way ........ " 8.6 V,/e have also considered the case of Chimanga Changa Limited v Stephen Chipango Ng'ombe5 where the Court held that: "There is no sacrosanct method to prove service of process ... A Court is at liberty to infer from the circumstances in a case whether a litigant is aware of the hearing date." 8. 7 Our attention has also been drawn to the case of Zambia National Commercial Bank v Chiluba3, which decision confirms the principle that service by a pigeonhole is valid, more so where the party has been notified of the existence Jll of the process. We made similar pronouncements in the case of MUVI TV Limited v Makandani Banda6 . 8.8 In cosu, the Appellants confirm service of the documents sent under cover of a letter from the l't Respondent as seen at page 78 of the Record. We are persuaded by the fact that the Appellants had been served with the supporting documents and that in itself was sufficient to place them on guard and to be on the look•out for the actual Summons with the endorsed date of hearing. We a re satisfied that if the 1 s: Respondent, received the Summons and attended Court, the presumption of service on the Appellants may be safely made by the lower Court for it to have proceeded to hear the application. Ground 1 has no merit and we dismiss it. 8.9 Grounds 2 & 3 were argued together, and we will consider them in like manner. vVe have noted that in the main matter, the argument purely is whether the arbitration clause, namely rule 26 is effective, operative and applies to the Parties in dispute. In determining whether a matter is amenable to arbitration, Courts have consistently scrutinized the arbitration clause. 8.10 Rule 26 of the KPTF Rules seen on page 65 reads as follows: "Except where the decision of the Trustees or Employer is made conclusive if at any time hereafter any dispute difference or question shafl arise between the Trustees, the Employer, the Members or any interested person or persons ar the representative of any af them respectively touching the construction meaning or effect of the rules or any of them hereunder then every such dispute or question shall be referred to J12 arbitration by one Arbitrator agreed upon by both parties thereto, the result of which shall be regulated by the provisions of the Arbitration Act in force in Zambia or any Jaw or instrument taking the place of such Act in force at the time of such Arbitration". 8.11 Vve have had the occasion to scrutinize the definitions of the l<PTF Rules. On pages 51/SZ, we note the following definitions: 'Employer: shall mean Bank of Zambia a corporate Body established by the Bank of Zambia Act No. 24 of 1985 of the laws of Zambia, or its successors in title. Employee: shall mean a person in the full-time employment on the permanent establishment pf the Employer. Member: shall mean an Employee who has been admitted to membership of the Fund in accordance with these rules. Trustees: shall have the meaning expressed in the Trust Deed.' 8.12 The Appellants have placed reliance on a decision of the Supreme Court in the case of Aubrey Nyambe v Tota I Zam bi a Limited : where the Court d et ermined that at the time the dispute arose, the arbitration clause had become inoperative and incapable of being performed, to advance the argument that by the time the dispute {in casu) arose, the Appellants being former employees, the arbitration clause was rendered inoperative. J13 8.13 Parties by their submissions have attempted to draw us into the meaning and intent and the mischief that the legislature intended to address by advancing arguments with reference to Articles 189 and 266 of the Constitution of Zambia 1 . With the greatest deference, we will not be drawn into this discussion as we believe it is peripheral to the dispute in hand. 8.14 It is trite, and Courts have consistently guided that the logical starting point is to closely examine the arbitration clause itself. This approach was also confirmed in the cited case of Audrey Nyambe. May L. J. in the case of Ashville Investments v Elmer Constructors Limited' guided as follows: "In seeking to construe a clause in a contract, there is scope for adopting either a liberal or a narrow approach, the exercise which has to be undertaken is to determine what the words mean." 8.15 What is apparent to us is that the intention of the Parties should be clear and unambiguous. It is also clear that the arbitration process survives the ter'Tiination as espoused by the doctrine of severability and separability. This has been aptly postulated in the book Commercial Arbitration by Sir Michael J Mustill and Stewart C. Boyd Q. C. (2nd Edition at page 185) 1 where the learned authors state as follows: "This doctrine treats the arbitration clause as having a life of its own, severable from the substantive contract, and capable of surviving it so as to give the arbitrator continuing jurisdiction not only over disputes arising from events happening whilst the contract was in existence, but also upon J14 whether the contract has come to an end, and if so with what consequences to the parties." 8.16 At this juncture, we ask ourselves what the terms 'inoperative' and 'incapable of being performed' mean. Once again, we lean heavily on the book on Commercial Arbitration 1 , where the learned authors at page 464 guide that "inoperative" includes instances of an arbitration agreement which has for some reason ceased to have effect or where the legal doctrine such as frustration and discharge have occurred or where the agreement has ceased to operate by reason of some further agreement between the parties. In the Audrey Tembo1 case, the arbitration clause was drafted in a narrow and restrictive manner and only gave effect to the arbitration clause provided the dispute arose during the continuance of the agreement. Obviously therefore, the Court took the view that a dispute that arose after the termination of the agreement was inoperative. 8.17 The significance or import of an arbitration agreement or arbitration clause is clearly illustrated by the observation of Manro Robino Summartano in a book en,titled International Arbitration Law and Practice2 (Kluwer Law International 2001} as follows: "The agreement to refer a dispute to arbitration whether in a submission agreement or in an arbitration clause, consists in the agreement of the parties to refer to arbitration one or more disputes which have already arisen or which may arise. According to prevailing opinion, such an agreement is a contract between persons or bodies acting in a private J15 capacity to which the arbitrator who at the time is generally not even appointed is at least at the time not a party." 8.18 In casu, rule 26 does not provide any such restriction to the timing of the dispute. We have quoted the rule above and it clearly provides ' •• .if at any time ... '. The Appellants have also argued that rule 26 does not apply to them as the dispute arose after they left the employment of the 2nd Respondent. However, as is clearly noted, the dispute that has arisen, albeit after their employment, pertains to the period or duration of their employment as to the ca lcu I ati on of their porta b I e benefits. 8.19 The issue is now that there is a dispute, difference or question on how those benefits were calculated, how will that be resolved? In our considered view, the answer lies ' ..... in the construction, meaning or effect of the rules or any of them hereunder then every such dispute or question shall be referred to arbitration ..... " 8.20 The Appellants have argued that the arbitration clause is inoperative against them, as they are no longer covered by any dispute, difference or question now arising by virtue of them being former employees. They have attempted to canvass this argument using the ejusdem generis principle and argue that they are beyond the reach of rule 26. 8.21 The learned authors of Chitty on Contracts3 at paragraph 12-085 with reference to the ejusdem generis rule state as follows: J16 ''The rule which is laid down with reference to the construction of statutes, namely, where several words preceding a general word point to a confined meaning the general word shall not extend in its effect beyond subjects ejusdem generis (of the same class), applies to the construction of contracts. The rule depends on the assumed intention of the framer of the instrument, i.e. that the general words were only intended to guard against some accidental omission in the objects of the kind mentioned and were not intended to extend to objects of a wholly different kind. (emphasis added). 8.22 Paragraph 12-087 provides as follows: "The ejusdem generis rule is not a rigid technical rule, but a mere canon of construction. It has been held that, in a commercial contract, where general words follow an enumeration of particular things, those words are prima facie to be construed as having their natural and larger meaning, and are not to be restricted to things ejusdem generis with those previously enumerated, unless there is something in the instrument which shows an intention so to restrict them." 8.23 Chitty on Contract3 with reference to the scope of an arbitration agreement have guided that this is to be determined by reference to the precise wording of the agreement, construed according to its language and in the light of the circumstances in which it was made. The words, "all disputes or differences" or "all claims" are words of wide import but must necessarily be controlled by the subject-matter to which they relate. The word ''differences'' is wide enough to J17 embrace a difference between the parties, e.g. as to the price, where the contract provides for this to be determined by mutual agreement, and the parties fa ii to agree. There is a "dispute" between the parties if a claim is made by one party on the other, which is neither admitted nor disputed, but merely ignored. There is also a ''dispute" even if the claim made by one party on the other is one to which there is no arguable defence. The words "in connection with'' "in relation to" "in respect of" or "with regard to" (a contract) are clearly wide in scope. A wide meaning will also be attributed to the words "arising out of". 8.24 Whilst the Appellants' submission on the face of it may appear attractive, it is surely a na'ive argument which cannot be supported by the Court. What is critical to note is that the relationship between the Parties, (the 2nd Respondent and the Appellants) was that of Employer and Employee and the l't Respondent administered the Fund, from which it made payment to an Employee, who became a Member of the Fund. It is obvious that a dispute, when it arises, is a dispute in the course of the relationship of Employer/Employee. It is also equally obvious that the dispute may arise within or outside the period of employment if it relates to the period while the Member was in employment. There can be no other dispute, It is also obvious that the arbitration clause survives the period of employment. In casu, we are alive to the fact that the Court's power to utilize a viable interpretation over one that impugns an arbitration clause is in keeping with party autonomy and choice of dispute resolution, 8.25 In casu, we cannot fault the learned Judge in the lower Court for doing specifically what the Supreme Court has directed Courts to do. Authorities J18 abound where it is noted that a Judge has no option but to stay legal proceedings and refer the parties ton rbitrntion where there is n val id arb'1tration ngreement and where the Court is satisfied that the agreement is not null and void, inoperative or incnpable of being performed. Notnble authorities are Vangelatos v Vangelatos8 and Leopard Ridge Safaris v Zambia Wildlife Authority~. I/Ve therefore find no merit in grounds 2 & 3 and dismiss them. 8.26 With respect to ground 4, the Appellant has arp,ued that the claim for unpaid salaries of the Appelln nts, in as far as they touch on the provisions of the Constitution, may amount to the construction and interpretation of the Constitution. wh·1ch powers are outside the jurisdiction of an Arbitrator. 8.27 In our rensoning above. we have nlready found nnd held that the reference to arbitration of any dispute difference or question a •ising out of the relationship between the Parties, and thereby dealing with underpayments if any, are valid submission to arbit~ation. We wii! therefore not be drawn into any speculative discourse on the interpretation or otherwise of Constitut'1onal p·ovisions. It is also trite in our jurisdiction that mere reference to the Constitution, in itself, does not divest a Court or indeed an Arbitrator of its jurisdiction. Ground 4 must faii. 8.28 We have no hesitation whatsoever in dismissing the appenl on all the grounds raised. Jl9 9.0 CONCLUSION 9.1 We uphold the decision of the learned Judge as a consequence of which the Parties must proceed to arbitration as their choice of dispute resolution. 9.2 We dismiss this appeal with costs to the l't Respondent to be taxed in default of agreement. M. J, SIAVWAPA JUDGE PRESIDENT F. M CHISHIMBA COURT OF APPEAL JUDGE A. N. PATEL S. C. COURT OF APPEAL JUDGE J20