Stanbic Bank Zambia Ltd v Muyaba (Appeal 203 of 2012) [2016] ZMSC 281 (19 August 2016)

IN THE SUPREME COURT OF ZAMBIA APPEAL NO 203/2012 HOLDEN AT LUSAKA (CIVIL JURISDICTION) BETWEEN: STANBIC BANK ZAMBIA LIMITED APPELLANT AND ANDREW MUYABA RESPONDENT CORAM: MAMBILIMA CJ, HAMAUNDU AND WOOD JJS; On 14th July, 2015 and 19th August, 2016 For the Appellant: Ms. L. C. Kasonde, of Mulenga, Mundashi and Kasonde Legal Practitioners. For the Respondent: Mr. K. M. G. Chisanga, of KMG Chisanga Advocates. JUDGMENT MAMBILIMA, CJ delivered the Judgment of the Court. CASES REFERRED TO- 1. WESTERN EXACTION (EEC) LTD V SHARP (1978) 1 ALL ER 713 2. ANDERSON KAMBELA MAZOKA & OTHERS V LEVYPATRICK MWANAWASA 8s ANOTHER (2005) ZR 3. ISAAC PHIRI V KAPIRI GLASS PRODUCTS (1985) ZR 167 4. BARCLAYS BANK ZAMIBA LIMITED V MANDO CHOLA AND IGNATIUS MUBANGA (1995-1997) ZR 212 5. RE WAKELY, WAKELY V VACHELL [1920] 2 Ch. 205 6. KENT MANAGEMENT SERVICES LIMITED V BUTTERFIELD [1992] IRLR 394 EAT 7. BOART LONGYEAR (ZAMBIA) LIMITED V AUSTIN MAKANYA SJ NO.9 OF LEGISLATION REFERRED TO- 1. SUPREME COURT ACT, CHAPTER 25 OF THE LAWS OF ZAMBIA JI 2. INDUSTRIAL AND LABOUR RELATIONS ACT, CHAPTER 269 OF THE LAWS OF ZAMBIA WORKS REFERRED TO- 1. RULES OF THE SUPREME COURT (WHITEBOOK) 1999 EDITION This is an appeal from a Judgment of the Industrial Relations Court (IRC), delivered on 9th May, 2012 awarding bonus, accrued leave days and salary arrears to the Respondent. The facts of this case are common cause. The Respondent, Andrew MUYABA, was employed by the Appellant Bank on 1st December 1996, as a Management Trainee. He rose through the ranks to the position of Head, Treasury Sales in the Treasury Department. He told the Court below that the Department was headed by a Treasurer and that there were other officers who were below his rank and these included three managers. The Respondent further testified that he consistently met his target but he was surprised to receive a note dated 7th January 2008 from the Head of Corporate and Investment Banking questioning as to why he was not meeting his targets. According to the Respondent, this was barely four days into the new year and it was during the festive period when most clients were on industrial break. He did not J2 respond to the note but continued working until May, 2008, when a new Treasurer, Mr. Nick CHALMERS, from Standard Bank of South Africa took office. He told the Court that the new Treasurer made his stay in the Bank uncomfortable and un-enjoyable. He would shout at him in the presence of his subordinates. When he would be out of station, he would leave the Respondent's junior, a Mr. KOMEKI, to act in his place. One such incident was on 2nd July, 2008 when the said Mr. CHALMERS travelled to Johannesburg. He sent an email, a copy of which is on page 155 of the record of appeal, stating among others "Dear All, I will be travelling back to Johannesburg tomorrow afternoon and will be returning on the morning of the 14th. Musenge Komoki will be in charge of the Treasury while I am away." The Respondent testified that during the time that such emails were circulated, he would receive negative comments from his subordinates and other employees of the Bank, thus creating a lot of stress and discomfort on his part, thereby affecting his self esteem. The Respondent further alleged that in November 2008, he, together with the others, successfully worked on a big lucrative deal involving US$18 million. It received a lot of praise in the Bank, but Mr. J3 CHALMERS censured him prompting him to complain to others, via email, about the treatment that he got. That on 17th November, 2008, during his review for the year 2008, Mr. CHALMERS told him he had no plans for him in his department for the following year and asked him to approach Mr. Anton MARAIS, the Executive Director, for reassignment even though his rating was at 3.5, out of a maximum rating of 5. The Respondent was thereafter reassigned and appointed to the position of Account Executive; a position for which in his view, he was not qualified to hold. That when he complained to Human Resource, nothing was done. He decided not to take up the position and instead proceeded on leave. Whilst on leave, Mr. MARAIS phoned him and told him that he had been transferred to another department, Government and Institutional Organisations. The Respondent told the court that he resumed work in January 2009 and complained about his treatment to the Managing Director, Mr. Joseph CHIKOLWA who advised him to put his complaint in writing, which he did. When he did not receive a response, he wrote a letter indicating that he would be retiring because of frustrations and ill treatment. On 10th March 2009, he J4 wrote another letter to the Managing Director informing him that unless he was considered as retired, he would stop working for the Respondent on the 13th March 2009. The Managing Director, in his response dated 11th March, 2009 stated: "Dear Andrew, REQUEST TO BE RETIRED I acknowledge receipt of your letters dated 17 February and 10 March 2009. In response to the letters, I would to state the following: 1. It is not unusual for a Head of Unit to request why we are not meeting budget in the first few days of the year, as the Unit Head would want to understand what is going and what plans are in place. 2. A Head of Unit has the prerogative to decide who acts on his behalf. 3. I do not see any systematic manoeuvres, intimidation or harassment to move you out of a Job or to get you to resign. If you feel aggrieved with the events as laid out in your letter, the bank provides for a grievance process which one can raise in accordance with the bank's Disciplinary & Grievance Procedures. Your request to be retired from the bank with full benefits cannot be acceded to as the bank has not indicated any intention to terminate your services. If it is your decision to leave the bank on 13th March 2009 as indicated in your letter, such decision would be at your own accord and would therefore be treated as a resignation without notice. Yours sincerely J. M. Chikolwa MANAGING DIRECTOR" J5 Upon receipt of this letter, the Respondent felt that the Bank did not require his services. He resigned his position on the 13th March 2009. He took it that he had been constructively dismissed from employment. In his Notice of Complaint to the IRC, the Respondent alleged that his grievances were not fully dealt with. He sought a declaration that the conduct of the Appellant amounted to constructive dismissal and that this was wrongful and unfair. He also prayed for damages or compensation for the dismissal; costs and any other relief. During trial, he advanced other claims which were not specifically pleaded in the complaint. These were for the days that he worked in March 2009, the month in which he resigned; accrued leave days; and, bonus for the year 2008. The Appellant’s position was that the Respondent resigned on his own accord, and was not, therefore, constructively dismissed. In its answer, the Appellant averred that the grievances raised by the Respondent were interrelated and its response was sufficiently broad to cover all the issues raised. That the Respondent was invited to follow the grievance code and he was informed that his decision to J6 leave employment would be treated as resignation without notice but he elected to go ahead with it. That the Respondent only gave three days notice and found employment with a competitive bank. Consequently, the Appellant counterclaimed K50,544,981.73 which was equivalent to three months’ salary in lieu of notice. On the claims raised during trial, the Appellant's position is that the Respondent had not been awarded a discretionary bonus because he resigned before it was paid out. Upon considering the evidence before it, the submissions of Counsel and the authorities cited, the trial Court came to the conclusion that there was no evidence satisfying the ingredients of constructive dismissal. The Court relied on the case of WESTERN EXCAVATING (EEC) LTD VS SHARP1 where it was held that an employee had the right to treat himself as discharged from his contractual obligations only where his employer was guilty of conduct which went to the root of the contract of employment or exposed an intention not to be bound by the contract. The Court, in the case in casu, found no evidence showing that the Appellant no longer wanted to be bound by the terms of the contract or that it was guilty of conduct that went to the root of the contract of employment. J7 The Respondent's claim was consequently dismissed and he was ordered to pay an equivalent of three months’ salary in lieu of notice that was counter-claimed by the Appellant. The trial Court then made the following finding of fact- “Notwithstanding the foregoing, we find, on the basis of the evidence on record that the Complainant is entitled to payment of the bonus for 2008, for accrued leave days, and the salary for the days worked in March 2009. We therefore order the Respondent to pay the Complainant the same accordingly. The sums due will attract interest at Bank fixed term deposit rate from the date of filing the Notice of Complaint to date of this judgment, and thereafter at current Bank lending rate to date of full payment.” It is against this portion of the Judgment that the Appellant has now appealed to this Court. In the Memorandum of Appeal, three grounds of appeal have been advanced, namely - 1. That the Court below erred in law and in fact in awarding the Respondent a bonus for the year 2008, accrued leave days and salary worked for (in) March 2009 when the same had never been pleaded and the Appellant was never given an opportunity to give evidence or arguments against the said awards. 2. That in any event the Court below erred in law and fact in finding that a bonus was due to the Respondent where in fact the said bonus is awarded on merit and cannot be awarded to employees who have left the employment before the bonus was awarded. 3. That no order of assessment was made in respect of the award of a bonus for 2008, leave days (and) salary for March 2009. In support of the appeal, the learned Counsel for the Appellant, Ms. KASONDE relied on the written heads of argument filed on J8 26thNovember, 2012 which she augmented with oral submissions. In the said heads of argument, Counsel listed five grounds of appeal. It would appear that three new grounds of appeal have been added while the third ground of appeal has been dropped. As far as we can see from the record, there was no leave obtained from the court to file further grounds of appeal. Failure to obtain leave to add new grounds of appeal is a breach of Rule 58 (2) and (3) of the SUPREME COURT RULES1 which in the relevant parts provides “(2) The memorandum of appeal .... shall set forth concisely and under distinct heads ..... the grounds of objection to the judgment appealed against..... (3) The Appellant shall not thereafter without the leave of the Court put forward any grounds of objection other than those set out in the memorandum of appeal...” A perusal of the head of argument show that the first, third and fifth grounds of appeal are new and were not listed in the memorandum of appeal. Consequently, we have no jurisdiction to entertain these grounds. We will also treat the third ground of appeal that was put forward in the memorandum of appeal as abandoned. The first ground in the memorandum of appeal raises issue with the decision of the Court below to award the Respondent a bonus for J9 the year 2000, accrued leave days, and, days worked for in March, 2009 when the same were never pleaded. The appellant contends that it was not given an opportunity to react to the claims. To underscore the importance of pleadings, Counsel referred us to our decision in the case of ANDERSON KAMBELA MAZOKA AND OTHERS V LEVY PATRICK MWANAWASA AND ANOTHER2 in which we stated: "The function of pleadings is to give fair notice of the case which has to be met and to define issues on which the court will have to adjudicate in order to determine the matters in dispute between the parties.... In a case where any matter not pleaded is let in evidence, and not objected to by the other side, the Court is not and should not be precluded from considering it. The resolution of the issue will depend on the weight the Court will attach to the evidence on unpleaded issues.” According to Counsel, our views in the case of MAZOKA2 echo our earlier decision in the case of ISAAC NYIRENDA V KAPIRI GLASS PRODUCTS LIMITED3 in which we refused to entertain a claim for a payment for which there was no claim in the statement of claim and on which no evidence had been led in the lower Court. Counsel submitted that in this case, not only was the claim for a bonus not pleaded, no evidence was led to prove how the Respondent was J10 entitled to it and neither were arguments led on the issue in the Respondent's submissions. Counsel further submitted that the lower Court never alluded to Section 85(5) of the INDUSTRIAL AND LABOUR RELATIONS ACT2, which is a peculiar provision exempting the IRC from the strict adherence to the rules of evidence in civil and criminal matters because the object of the Court is to do substantial justice. To buttress her point, Counsel referred us to a portion of our judgment in the case of BARCLAYS BANK ZAMBIA LIMITED V MANDO CHOLA AND IGNATIUS MUBANGA4 where we said:- “We take the opportunity to dispel the notion that the Industrial Relations Court should be regarded as a court of technicalities and pleadings.... While undoubtedly it would be desirable that a recognisable cause of action should manifest in the originating documents including the affidavit in order that the opponent may have reasonable notice of the case to be met and so prepare adequately, nonetheless it is not wrong for the Court of substantial justice to entertain a complaint however inadequately couched-especially by a lay litigant- and to make decision or give award on the merits of the case, once it is heard.” Counsel submitted that whilst the IRC is a court of substantial justice, it is trite that even in that court, he who alleges must prove. He contended that in this case, the complainant admitted on record that he had not filed any evidence to support his claim for a bonus. jii That no evidence was specifically led to show when or how the bonus was due or how much it was. That the Respondent did not even produce his terms and conditions of service. Coming to the second ground of appeal, which appears as the fourth ground in the heads of argument, Ms. KASONDE submitted that even if evidence had been led to support the claim, the Respondent would still not be entitled to the bonus on the merits. According to Counsel, a bonus is the same as a dividend in a company. She submitted that it is a well-settled principle of law that a dividend is only payable where there has been a profit in that year, and it is paid to shareholders who were members of the company at the time that the dividend is declared. Counsel referred us to, among others, the case of RE WAKELY, WAKELY V VACHELL5 where WARRINGTON LJ held that- “In fact the shareholder has no right to a dividend, whether cumulative or otherwise, until there are profits available and the company by proper authority has determined to distribute them. It follows that when profits are available and the company determines to distribute them then it is the shareholder who is then entitled to the shares who takes the dividends...” According to Counsel, the principles adumbrated in this case ought to apply mutatis mutandi to bar employees who leave employment before a bonus is declared from benefitting. J12 In response to the Appellant’s arguments, Mr. CHISANGA, relied on the written heads of argument filed on behalf of the Respondent on 18th February, 2014. He augmented them with viva voce submissions which, in the main, echoed the written submissions. Counsel’s response to the Appellant’s arguments on the first ground of appeal, is that on the basis of Section 85(5) of the INDUSTRIAL AND LABOUR RELATIONS ACT2, the Court below was correct when it made an award for a bonus although it was not specifically pleaded. That, on the totality of the evidence led on behalf of both parties, the Respondent’s entitlement to a discretionary bonus was proved on a balance of probabilities. That the quantum of what was payable to the Respondent was the prerogative of the Appellant, which had already graded him as a 3.5 out of 5 performer. That the Respondent had been appraised in November 2008, the year in which the entitlement to a bonus to the serving staff arose. That it would be a grave injustice to deny the Respondent his well deserved bonus considering his outstanding performance. J13 In respect to the second ground of appeal, Mr. CHISANGA submitted that the Court below was on firm ground when it found that the Respondent was entitled to the bonus because evidence before the Court showed that the Respondent was a meritorious player. That the trial Court collected evidence which proved two things; firstly that the Respondent was a meritorious performer, and, secondly, that after appraisal, the Respondent became entitled to be paid a bonus payable to all eligible employees of the Appellant. That the Court below found that the Respondent was in the employment of the Appellant until March 2009. On the argument that the Respondent left employment before payment of the bonus, Counsel contended that this did not affect his entitlement as the Appellant's profits from which the bonus was awarded was earned in the year that the Respondent was an employee and in which he had received a good appraisal score. That the fact that the Respondent had left employment before the bonus was paid did not affect his entitlement because the bonus was based on the profits earned in the previous year when the Respondent was still an employee and in which he had received a good appraisal score. J14 Mr. CHISANGA further submitted that it was a legal fallacy to draw an analogy between an employee performance-related bonus and dividends payable to members out of a company’s distributable profits. He argued that the manner in which a person acquires shares in a company and participates in the share of declared dividends is very different from the manner in which an employee under an employment contract participates in the share of performance bonus. That slightly different considerations apply where employees are allowed to benefit from an employee share scheme. He submitted further that a bonus is paid to deserving employees and is designed as an incentive to ensure that workers participate in improving the capacity of employers to rake in profits. Counsel cited the case of KENT MANAGEMENT SERVICES LIMITED V BUTTERFIELD6 for the submission that the expressions 'wages' does include a bonus. In that case it was held, among others, that a commission and bonus scheme, expressly described as discretionary, ex gratia and non-contractual, constituted wages under the Wages Act (United Kingdom) 1986. Section 7 of that Act provides- J15 “In this Part “wages” in relation to a worker, means any sums payable to the worker by his employer in connection with his employment including- (a) Any fee, bonus, commission, holiday pay or other emolument referable to employment whether payable under contract or otherwise;” We have considered the evidence on record, the submissions of Counsel and the Judgment appealed against with regard to the two grounds of appeal. On the first ground of appeal, it is not in dispute that the Respondent did not specifically plead the award of a bonus, accrued leave days and salary worked for in March 2009 in his Notice of Complaint. However, a perusal of the Respondent's evidence in the Court below shows that he did lay claim to these emoluments. On page 96 of the record of appeal he stated: "To this day the Respondent Bank has not paid me for the days worked in March 2009, my accrued leave days, and a bonus for the year 2008." The thrust of the Appellant’s submissions and the evidence in the court below targeted the payment of a bonus. We can only opine that this could be because an entitlement to payment for accrued leave days and days actually worked for is entrenched and goes without saying. One is paid for work actually done and entitled to J16 emoluments for earned leave days. A bonus is discretionary and its payment and quantum depends on the performance of an entity. The respondent in this case, in cross examination, on page 403 of the record stated:- "Yes, one of my claims is payment of a performance bonus for the year 2008. Yes, it was a term of my contract of employment to be paid a yearly bonus." The Appellant's own witness, Nicholas CHALMERS told the Court that 'For good performance, one would be eligible for a discretionary bonus depending on the financial performance of the business as a whole (page 414 of the record). He described the Respondent's rating as '...above the expected minimum delivery standard.' In cross examination, he stated:- "The complainant was not awarded a discretionary bonus because he resigned before the same was paid. The discretionary bonus was paid in April of the following year. Yes, after the performance appraisal the complainant was entitled to a discretionary bonus.” (page 421 of the record of appeal) It is clear to us from the evidence, that although the Appellant did not plead the claims for a bonus, leave days and salary worked for in March 2009, he did raise them in his evidence and the Appellant responded only to the claim for a bonus through viva voce J17 evidence. The record shows that there was no objection to the testimony of the Respondent when he made the claims. As we stated in the case of ANDERSON KAMBELA MAZO KA2, where a matter that is not pleaded is let in evidence and not objected to, the Court is not precluded from considering it. In this case, the matters in issue were not only let in evidence, RW2 conceded that the Respondent was a high performer and that he was entitled to a discretionary bonus for the year 2008. According to RW2, this bonus was paid in April, 2009. Be that as it may, it is trite that under Section 85 (5) of the INDUSTRIAL AND LABOUR RELATIONS ACT2, the IRC is not fettered with the rules of procedure in civil and criminal proceedings because its main objective is to do substantial justice between the parties before it. We are alive to this objective which allows some degree of flexibility to ensure that the court interrogates the real issues in dispute in order to meet the demands of justice in a particular case. This is the point that we made in the case of BARCLAYS BANK ZAMBIA LIMITED V MANDO CHOLA AND IGNATIUS MUBANGA4 when we said- “While undoubtedly it would be desirable that a recognisable cause of action should manifest in the originating documents including the affidavit in order that the opponent may have reasonable notice of the case to be met and so prepare adequately, nonetheless it is not J18 wrong for the Court of substantial justice to entertain a complaint however inadequately couched-especially by a lay litigant- and to make decision or give award on the merits of the case, once it is heard.” In our recent decision in the case of BOART LONGYEAR (ZAMBIA) LIMITED V AUSTIN MAKANYA7 we stated: “Section 85(5) stipulates that the main object of the IRC is to do substantial justice between the parties and in order to achieve this objective, it is not bound by rules of evidence. The words ‘shall not be bound’ must be construed purposefully. They do not bar the Court from observing rules of evidence. It is only when faced with a situation where observing rules of evidence will compromise the justice of the situation between the parties that the rules of evidence will give way to justice. Faced with a situation which demands one’s observance of the rules of evidence, the Court has to interrogate the demands of justice in the case. It goes without saying that a rule which promotes justice between the parties must carry the day.” We do not therefore fault the Court below for having awarded the Respondent a bonus for the year 2008, accrued leave days and salary worked for March 2009. By March 2009, when the Respondent left the employment of the Appellant, he had already earned the bonus. Also, as a matter of course, he was entitled to be paid for accrued leave days and the days actually worked for in March 2009. The first ground of appeal therefore fails. Coming to the second ground of appeal, Ms. KASONDE argued spiritedly that the Respondent was not entitled to the bonus because he had already left the bank when the bonus was paid. Mr. J19 CHISANGA, on the other hand, contended that the Respondent’s departure from the bank did not disentitle him to the bonus. As we have stated above, RW2 did concede that after the performance appraisal, the Respondent was entitled to the discretionary bonus. The bonus was earned in 2008. According to the evidence of RW2, the discretionary bonus for 2008 was paid to the other employees in April 2009. In this respect, we find the case of KENT MANAGEMENT SERVICES LIMITED V BUTTERFIELD6, referred to us by Mr. CHISANGA, illuminating on the rationale for paying under such schemes. It was stated:- “If reasonable notice is given clearly these schemes can be varied and altered or might be abolished but whilst the schemes are in being the anticipation will be that in normal circumstances commission will be paid on work which has been carried out and on which the calculation is based and the anticipation of both parties is clearly that it will be payable. There may be circumstances such as breach of the terms of the contract of employment or other circumstances where it may be said ‘No, there is a good reason why it should not be paid’. But it is anticipated that in the ordinary circumstances if it is earned, it will be paid. ” In this case, from the evidence on record, it is clear that the bonus was earned during the year 2008 when the Respondent was in the employment of the Appellant. This second ground of appeal also fails. J20 Both grounds having failed, this appeal is dismissed with costs to be taxed in default of agreement. I. C. Mambilima, CHIEF JUSTICE E. M. Hamaundu SUPREME COURT JUDGE A. . Wood SUPREME COURT JUDGE J21