Kamoto v Zambia National Building Society (Appeal 2 of 2012) [2016] ZMSC 255 (7 January 2016)

IN THE SUPREME COURT OF ZAMBIA HOLDEN ATNDOLA (Civil Jurisdiction) BETWEEN: APPEAL NO. 02/2012 SCZ/8/244/2011 PAUL CHIBANGU KAMOTO APPELLANT AND ZAMBIA NATIONAL BUILDING SOCIETY RESPONDENT CORAM: Mwanamwambwa, Ag. D. C. J, Muyovwe, Malila, J. J. S. On the 3rd March, 2015 and 7th January, 2016 For the Appellant: Mr M. Z. Mwandenga of Messrs M Z Mwandenga and Co. For the Respondent: Mr I. K. Mulenga of Messrs Iven Mulenga and Co. JUDGMENT Mwanamwambwa, D. C. J, delivered the Judgment of the Court. Cases referred to: 1. National Breweries Limited V. Philip Mwenya (2002) Z. R. 118 (SC). 2. ZNPF V. Chirwa (1986) Z. R. 70. 3. Attorney-General V. Richard Jackson Phiri (1988/89) Z. R. 121 (SC). Legislation referred to: The Building Societies Act, Chapter 412 of the Laws of Zambia, Section 12. Other works referred to: 1. Gwyneth Pitt (1995) Employment Law, 2nd Edition, London Sweet and Maxwell, page 61. 2. Norman Selwyn (2012) Law of Employment, 13th Edition, page 370, paragraph 16.23 and page 369, paragraph 16.21. This is an appeal, from the Judgment of the High Court, dismissing the Appellant’s claim. J2 The brief facts of the matter are that on 2nd May 1972, the Appellant was employed by the Respondent as a Clerk. He rose through the ranks to the position of Mortgages Manager. Initially, the Appellant was employed under ZIMCO conditions until 4th November, 1992, when he was employed under a 3 year contract. On the 5th of May, 1994, the Appellant received a disciplinary charge from the Managing Director, for gross negligence of duty and dishonest conduct. The charge was couched in the following terms: “gross negligence of duty and/or dishonest conduct in that on the 14th of April, 1994, you caused account no. 34916 in respect of plot 7422, Lusaka to be redeemed at less than was due to ZNBS resulting in a potential loss of K16,669,864.38 to the society.” On the 6th of May, 1994, the Appellant exculpated himself in a letter and on the 13th of May, 1994, he was dismissed from employment. The Appellant appealed to ZIMCO against the dismissal but he did not get any response. On the 24th of June, 1996, the Appellant wrote to the Respondents claiming his benefits. The Respondents forwarded him a cheque of K270,000 and a document showing how the figure was arrived at. Dissatisfied with the amount and how it was arrived at, the Appellant brought this action in the High Court. His claim was for J3 compensation or damages for loss of employment in the sum of K29,869,162.00 and damages for injury of feeling, self­ esteem, humiliation and inconvenience arising from the loss of opportunity, interest and costs. During the hearing of the matter, the Appellant conceded that he computed the amount for Big Five Car Hire, the mortgagor in this case, twice. The Appellant stated that the first computation was KI07m while the second one was K90m. The Appellant conceded that the reduction of about KI6m was as a result of a waiver under clause 20(2)(a) of the Respondent’s mortgage rules. The Appellant stated that he did not seek authority to waive the interest because there was already authority obtained from the Managing Director as the Board only sat periodically. It turned out that the Managing Director did not give the Appellant such authority. After considering the pleadings, evidence and arguments from both parties, the learned trial Judge was of the view that it was clear that the Appellant had neither the approval from the Managing Director nor the Board of Directors to waive the penalty interest in the manner he did. That the Appellant admitted this fact in his exculpatory letter to the Managing Director. The trial Judge added that the Appellant’s contention that he had standing approval of the Board had no merit in the circumstances of the case. The Court further found that the Appellant was in violation of the Rules of the Zambia National Building Society under Clause 20(2)(a), as J4 read with Clause 23(1)(a). That it was the onus of the Appellant to establish, on a balance of probability, that he had the necessary authority to waive the penalty interest in the manner he did. The trial Judge held that the Appellant committed a disciplinary wrong for which he was dismissed. That it was clear that the wrong doing in issue was incompatible with the due or unfaithful discharge of his duty to his employer, the Respondent. Finally, the learned trial Judge dismissed all of the Appellant’s claims with costs. Dissatisfied with the above decision, the Appellant appealed to this court on three grounds. These are- Ground one That the Honourable learned judge misdirected himself by failing to consider the implications or consequences of the fact that the Appellant was charged with having caused potential loss (instead of actual loss) when dealing with the issue of whether or not the Applicant was properly dismissed from employment by the Respondent. Ground two That the Honourable learned judge misdirected himself by concentrating on the issue of whether the Appellant had authority to waive interest or not instead of concentrating on whether or not the Appellant’s conduct for which he was charged merited the infliction of summary dismissal as a punishment. J5 Ground three That the Honourable learned judge seriously misdirected himself when he concluded in the judgment complained of that: “it is clear from the evidence that the Plaintiff committed the disciplinary wrong for which he was dismissed. It is further clear that the wrong in issue was incompatible with the due or unfaithful (sic) discharge of his duty to his employer; the defendant” We shall deal with all the grounds of appeal at the same time, since they are inter-related. Counsel for the Appellant, Mr Mwandenga submitted, in ground one that the Court misdirected itself by failing to consider the consequences of the fact that the Appellant was charged with having caused potential loss instead of actual loss when dealing with the issue of whether or not the Applicant was properly dismissed from employment. Counsel argued that in dealing with this matter, the learned Judge ought to have considered the question whether an employee can or ought to lose employment for causing “potential loss” as opposed to causing “actual loss”. That causing “actual loss” could, depending on the magnitude certainly warrant dismissal but “dismissing an employee” for causing potential loss seems most unjustifiable in many circumstances. J6 He added that the Respondent failed to recover the loss in question in a matter commenced in the High Court under cause number 1993/HP/371. That the Respondent did not succeed on appeal to this Court either. Counsel added that it is clear from the High Court and Supreme Court Judgments that the Respondent did not lose the K16,669,864.38 as a result of any action or actions by the Appellant. It was submitted that no evidence was adduced by the Respondent to show that violation of the Rules of the Respondent was a dismissible offence. That therefore, the question which should be answered is “should an employee who has not caused any loss to his employer by his action or indeed any omission, be dismissed from employment’? Counsel stated that this question should be answered in the negative. He referred us to the book Employment Law, 2nd Edition, London Sweet and Maxwell, 1995 by Gwyneth Pitt at page 61, which states that:- “an employer is entitled to dismiss an employee summarily if the employee has committed an act of gross misconduct”. He added that the learned authors of ‘Chitty’s Mercantile Contracts’ at page 103 stated that “there is no fixed rule of law defining the degree of misconduct which will justify dismissal. The general rule is that if a servant does anything which is incompatible with the due or faithful discharge of his duty to his master the latter has the right to J7 dismiss him even though the incompatible thing was done outside the service...” Counsel added that to warrant a dismissal, the breach must be a serious one and not a flimsy one. In ground two, counsel for the Appellant argued that the learned trial Judge misdirected himself by concentrating on the issue of whether the Appellant had authority to waive interest or not instead of concentrating on whether or not the Appellant’s conduct for which he was charged merited the infliction of summary dismissal as a punishment. In ground three, counsel for the Appellant submitted that the ground of appeal had two limbs. In the first limb, counsel argued that there was no evidence that the Appellant committed the disciplinary wrong for which he was dismissed. On the second limb, counsel argued that the Appellant did not do anything which was incompatible with the due or faithful discharge of his duty to the Respondent and that consequently, the termination of the Appellant’s employment by the Respondent was wrongful. The Respondent argued all the grounds of appeal together. On behalf of the Respondent, it was submitted that the learned trial judge was on firm ground when he held that .. the Plaintiff committed a disciplinary wrong... for which he was dismissed.” .18 Counsel stated that the Appellant was trying to mislead the Court by concentrating on semantics and leaving the law aside. That it was not a question of what wording was used in the charge sheet but whether or not the Appellant had committed an offence for which he ought to have been dismissed. Counsel added that the Respondent, as employer of the Appellant, had the right to dismiss the Appellant because the Appellant committed an offence. That it is clear from the record that the Appellant was charged with the offence of “ Gross negligence of duty and/ or dishonest conduct...” That it is also clear that the Appellant did not have the authority of the Chief Executive of the Respondent to waive the interest. That the Appellant unilaterally went against the laid down procedures under rule 23 of the Respondent’s Rules on waiving of interest. Counsel submitted that it was clear from rule 23 aforesaid, that the discretion to waive the interest was only exercisable by the board and not the Chief Executive. That according to section 12 of the Building Societies Act, it was only the Board which had discretion to allow or not to allow a waiver on interest. Counsel pointed out that in the case of National Breweries Limited V. Philip Mwenya, (1) this Court went ahead and overturned the holding of the trial court despite National Breweries not suffering any loss. It was submitted J9 that with the holdings in National Breweries V. Mwenya(1)and ZNPF V. Chirwa (2) in mind, the appellants cannot shift the attention of this Court from the law to language used in the charge sheet. In response to the Respondents arguments, it was submitted that the Appellant cannot be said to be using semantics to mislead the Court. That the semantics complained of are part of the bedrock of the Appellant’s case in this Court and in the Court below. Counsel went further to state that the issue this Court needs to concern itself with is whether the charge was one for which the Appellant ought to have been dismissed from employment. He added that in the circumstances, it is inevitable for this Court to look at the wording of the charge sheet before it can decide whether or not the Appellant had been charged with an offence for which he could have been dismissed. That in doing so, this Court ought to determine whether there was any evidence to prove that the Appellant had indeed committed an offence for which he ought to have been dismissed. It was submitted that since there was no actual but potential loss occasioned to the Respondent, the Appellant did not commit any dismissible offence. That therefore, the Respondent was unreasonable and was therefore liable to be questioned. It was submitted further that the question which this Court should deal with is whether the abrogation of Rule 23 of the Respondent’s mortgage rules can lead to dismissal of .110 an erring employee. He added that no evidence was produced to show that the breach of the rules was punishable by dismissal. That the Respondent dismissed the Appellant for an act which caused it a potential loss of KI6,669,864.38 and not an actual loss of K16,669,864.38. That as a result, the dismissal cannot be justified by the cases of National Breweries Ltd V. Mwenya111 and ZNPF V. Chirwa(2) cited above. He added that failure to follow procedure in dismissing an employee is fatal to a dismissal. We have carefully looked at the evidence and submissions on record. From the evidence, it is clear that the Appellant acted without getting the Board’s approval to waive interest in the sum of K16,559,864.38. This is in accordance with the Appellant’s own evidence as well as exculpatory letter. Further, the trial Court also found that the Appellant did not seek the Board’s approval in waiving the interest. The Court found that the Appellant was in violation of Rule 23 of the Respondent’s Mortgage Rules. With the above evidence, the Appellant cannot argue that there was no evidence to show that he committed an offence. Section 12 of the Building Societies Act, Chapter 412 of the Laws of Zambia provides that- “The rules of a building society are binding upon each of the members and officers of the society, and on all persons claiming on account of a member or under the Ill rules; and all such members, officers and persons shall be deemed to have full notice of the rules.” The above provision clearly shows that all officers of the Respondent are expected to conduct themselves in accordance with the Rules. In the case before us, the Appellant breached the above rule. The Appellant argued that he should not have been dismissed because his action only caused potential loss and not actual loss to the Respondent. We are of the view that this argument fortifies the findings of the trial Judge that the Appellant acted dishonestly. Whether the Appellant caused any loss or not does not matter. The fact remains that the Appellant breached the Mortgage Rules. He committed a wrong. Further, the Appellant argued that the penalty meted on him by the Respondent was too harsh for the offence he committed. That he should not have been dismissed. The evidence on record reveals that the Appellant was charged, exculpated himself admitting the wrong doing and later dismissed. Therefore, there is no doubt that procedure was followed. The Appellant was dishonest in the performance of his duty and as a result of his dishonesty, he exposed the Respondent to a potential loss of K16,669,864.34. JI 2 In the case of the Attorney-General V. Richard Jackson Phiri(3), this Court held that- “Once the correct procedures have been followed the only question which can arise for the consideration of the court, based on the facts of the case, would be whether there were in fact facts established to support the disciplinary measures since any exercise of powers will be regarded as bad if there is no substratum of fact to support the same. (ii) The court cannot be required to sit as a court of appeal from the decision of the Public Service Commission to review its proceedings or to inquire whether its decision was fair or reasonable. The court ought to have regard only to the question whether the Public Service Commission had valid disciplinary powers and, if so, whether such powers were validly exercised.” From the above, it is clear that the role of the Court in disciplinary cases is not to act as an appeal court from the decision of the disciplinary body in question. The role of the court is to consider whether or not, the disciplinary body had valid powers to discipline an employee and if yes, whether those powers where validly exercised. In the case before us, there is no doubt that the Respondent had powers to discipline the Appellant and that these powers where validly exercised. The procedure before dismissing the Appellant was followed. The Appellant was .113 charged and he exculpated himself admitting not following the Rules. Therefore, the Respondent was entitled to dismiss him. Further, it has been argued by the Appellant that the punishment meted out on him by the Respondent was too harsh. We do not agree with this submission. Norman Selwyn, Law of Employment, 13th Edition, page 370, paragraph 16.23 states that- “the breach of an express term of the contract or of a provision in the work rules may justify summary dismissal, provided it has been brought expressly to the attention of the employee that there is certain conduct which the employer will on no account tolerate.” In the case before us, the Appellant stated, in his evidence that he was aware of the binding Mortgage Rules. In light of the above law, we hold the strong view that the Respondent was justified in dismissing the Appellant because he breached the rules which he was aware of. Further, the aforementioned author, states at page 369, paragraph 16.21 that- “nonetheless, there are a number of well-recognised grounds on which an employer may dismiss an employee summarily; these include gross misconduct, wilful refusal to obey a lawful and reasonable order, gross neglect, dishonesty and so forth...” ) J14 The trial Judge found that the Appellant was guilty of dishonest conduct. According to the above paragraph from Selwyn’s Law of Employment, dishonesty is one of the reasons an employer can dismiss an employee summarily. From what we have said above, we uphold the findings and decision of the learned trial Judge. We find no merit in the appeal and we dismiss it. We award costs to the Respondent. These will be taxed in default of agreement. E. C. MUYOVWE SUPREME COURT JUDGE