Road Transport and Safety Agency v Zindaba Soko (APPEAL NO. 84/2023) (26 February 2025) – ZambiaLII

IN THE COURT OF APPEAL OF ZAMBIA APPEAL NO. 84/2023 HOLDEN AT NDOLA (Civil Jurisdiction) BETWEEN ROAD TRANSPORT AND SAFETY AGENCY APPELLANT AND ZINDABA SOKO RESPONDENT CORAM: Chashi, Makungu, Banda-Bobo, JJA ON: 19th and 26th February 2025 For the Appellant : P. Mulenga, Messrs Paul Mulenga Advocates For the Respondent: T. Munalula, Messrs Munati Chambers JUDGMENT CHASHI JA, delivered the Judgment of the Court. Cases referred to: 1. Attorney General v Marcus Kampumba Achiume (1983) ZR, 1 2. National Milling Corporation Limited v Macadam Bakery Limited and Aziz Kapdi - 2008/HPC/0402 3. Hastings Obrian Gondwe v B.P. Zambia Ltd - SCZ Judgment No. 1 of 1997 -J24. Bullock v The Wimmera Fellmongery (1879) 5 V.L.R. (L) 5. Woolscouring Co Ltd and Department of Agriculture, Forestry and Fisheries v Teto and Others CA8/2019) [2020] ZALAC 19; (2020) 41 ILJ 2086 (LAC); [2020] 10 BLLR 994 (LAC) (28 May 2020) 6. J.K. Rambai Patel v Mukesh Kumar Patel (1985) ZR, 220 7. YB and F Transport Limited v Supersonic Motors Limited (2000) ZMSC 91 sec 8. UBER Technology Inc. v Heller (2020) 16 9. Lloyds Bank v Bundy (1974) EWCA CIV 8 10. Alec Lobb (Garages) Ltd v Total Oil (GB) Ltd (1985) 1 ALL ER,303 11. Owen Mayapi & Others v Attorney General - 2019/CCZ/003 12. Mususu Kalenga Building Limited & Others v Richman's Money Lenders Enterprise - SCZ Judgment No. 4 of 1999 13. Mumba v Lungu (2014) Vol 3 ZR, 351 14. National Drug Company Limited and Zambia Privatization Agency v Mary Katongo - SCZ Appeal No. 79 of 2001 -J315. Printing and Numerical Registered Company v Simpson (1875) LRR 19 Eq 462 16. Anderson Mazoka & Others v Levy Mwanawasa {2005) ZR, 138 1 7. Joe's Earthworks and Mining Limited v Dennyson Mulenga - CAZ Appeal No. 107 of 2022 Legislation referred to: 1. The Employment Code Act No. 3 of 2019 2. The Constitution of Zambia, Chapter 1 of the Laws of Zambia 3. The English Law (Extent of Application) Act, Chapter 11 of the Laws of Zambia 1.0 INTRODUCTION 1.1 This is an appeal against part of the decision of Honourable Madam Justice M. M. Bah Matandala, delivered on 7th November 2022. 1.2 In the Judgment, the learned Judge found that the Respondent was not entitled to a renewal of his employment contract, but upheld his claim to purchase a personal to holder motor vehicle. -J42.0 BACKGROUND 2 .1 The brief background to this appeal is that the Respondent, as the plaintiff 1n the court below, commenced an action against the Appellant on 22nd September 2020, by way of an amended writ of summons, seeking several reliefs, including three months' salary in lieu of notice, full gratuity, an offer to purchase a personal to holder vehicle and damages for breach of contract and mental stress. 2.2 According to the statement of claim, the Respondent was employed by the Appellant as Director and Chief Executive Officer under a three year contract from 4th January 2013. After its expiration, he continued working under the same terms until his contract was renewed on 4th March 2016, for another three years, expiring on 3rd January 2019. On 6th December 2018, he expressed his intention to renew his contract but received no response. After the contract's expiry, he continued working and was appointed to the RTSA Board on 24th January 2019. 2.3 It was averred that on 11th September 2019, while on leave, the Respondent received a termination letter, -JSeffective 12th September 2019. He also claimed that his gratuity was paid on a pro-rated basis, contrary to Clause 19.1.2 of the contract. 2.4 In its defence, the Appellant admitted that the Respondent continued in office beyond the expiration of his contract on 3rd January 2019, but argued that this was due to circumstances that permitted the extension. It contended that the RTSA Board appointment was an error and that his continued work did not imply a renewal of the contract, citing Clause 2(c) of the contract. 2.5 The Appellant argued that the Respondent was paid a prorated gratuity for the period between 3rd January 2019 and 11th September 2019 and was not entitled to any of the claims in his pleadings, alleging that no contractual provisions were breached. 2.6 At trial, the Respondent relied on his witness statement and maintained that his contract was renewed. Under cross-examination, he admitted receiving full gratuity and purchasing the personal to holder vehicle under the previous con tract. -J62.7 The Appellant's witness, a Human Resource Officer, testified that the contract was not renewed and that the Respondent was only entitled to prorated gratuity for his extended period of service. 3.0 DECISION OF THE COURT BELOW 3.1 Upon considering the evidence on record and the submissions made by Counsel for the Respondent, the learned Judge began by addressing the claim for damages for breach of contract. She observed that in matters involving breach of contract, the starting point is always the contract itself and referred to clause 2(c) of the employment contract dated 4th March 2016, which explicitly stated that continued service beyond the contract's expiration would not amount to renewal. 3.2 The Judge acknowledged the principle of reasonable expectation but noted that the contract clearly stipulated that work performed after the expiration of the contract would not constitute renewal. She emphasized that this clause reflected the parties' agreed intention. Therefore, in the absence of evidence to the contrary, she held that the contract was entered into voluntarily and should be upheld. -J73.3 On the claim that the Appellant failed to communicate any special circumstances justifying continued employment, the Judge noted that clause 2 already addressed situations where work continued beyond the contract term and remuneration. She found no obligation on the Appellant to provide further communication. 3.4 The claims for mental stress, gratuity and salaries in lieu of notice were dismissed, as no breach of contract was established. Regarding the sale of a personal to holder vehicle, the Judge found that clause 13.2.1 entitled the Respondent to an offer for its purchase, a claim the Appellant did not dispute. 4.0 THE APPEAL 4.1 Dissatisfied with part of the decision of the court below, the Appellant has appealed to this Court advancing two grounds of appeal as follows: 1. That the learned trial court misdirected itself in law and fact when it held and found that the Respondent was entitled to purchase the personal to holder motor vehicle when it had already found that there was no renewal of the -J8Respondent's contract of employment beyond 2019 and notwithstanding the evidence showing that the Respondent had already purchased a personal to holder motor vehicle under an earlier contract of service. 2. That the learned trial court erred in law and fact when it failed to order/ award costs in favour of the Appellant after successfully and substantially defending itself against all the Respondent's claims save for the issue of the personal to holder motor vehicle. 5.0 ARGUMENTS IN SUPPORT OF THE APPEAL 5.1 Mr. Mulenga, Counsel for the Appellant, relied on the heads of argument dated 29th March 2023. The first ground of appeal was argued on two points. First, it was submitted that after the expiry of the employment contract on 4th January 2019, the Respondent received all terminal benefits and was allowed to purchase the personal to holder vehicle as per the Appellant's disposal policy. The Respondent's testimony at page 247 of the record of appeal (the record), confirmed the full -J9settlement of entitlements under the expired contract, including the purchase of the personal to holder vehicle. 5.2 It was argued that after 4th January 2019, no contract existed to support the Respondent's claim. The claim was based on the mistaken belief that remaining in office until 12th September 2019, implied contract renewal or legitimate expectation, as reflected in the Respondent's pleadings. In conclusion, Counsel submitted that the claim to purchase the vehicle was based on a non-existent contract that the Respondent wrongly assumed had commenced in January 2019. 5.3 Secondly, it was argued that while the Judge correctly found that the contract had not been renewed under Clause 2(c) of the 2016 employment contract, she contradicted this by granting the Respondent the right to purchase a vehicle despite his admission at page 24 7 of the record that he had already done so under the expired contract. Counsel questioned the legal basis for this decision. 5.4 It was further contended that even if the Judge relied on the expired contract, allowing the Respondent to purchase two vehicles for one period of service, would -JlOamount to unju st enrichment. Citing Attorney General v Marcus Kampumba Achiume1 it was submitted that , the Judge's finding lacked supporting evidence and misapprehended the facts, warranting interference by this Court. 5.5 In support of ground two, it was argued that although the Respondent sought nine reliefs, only one was granted, yet the Appellant was not awarded costs despite successfully defending most claims. Reliance was placed on various authorities including National Milling Corporation Limited v Macadam Bakery Limited and Aziz Kapdi2 emphasising that while courts have discretion over costs, they must exercise it judiciously. That generally, the successful party is entitled to costs unless its conduct warrants disapproval or the case involves public interest. 5.6 Since the Appellant largely succeeded in its defence and there was no misconduct or public interest element, it was contended that the court had no valid reason to deny an award of costs. -J 116.0 ARGUMENTS OPPOSING THE APPEAL 6.1 Mr. Munalula, Counsel for the Respondent, relied on the heads of argument dated 25th April 2023. In response to ground one, it was argued that the lower court correctly found the Respondent entitled to purchase the personal to holder vehicle. It was argued that Clause 7(c) of the 2016 employment contract and Clause 13.2.1 of the Conditions of Service allowed employees to purchase such vehicles at the expiration of the contract or upon termination. 6.2 In the present case, the Respondent continued working for nine months under a contract by holding over after his contract expired in January 2019. Upon termination on 11th September 2019, he became entitled to purchase another vehicle, in addition to the one acquired under his previous contract, citing Hastings Obrian Gondwe v B.P. Zambia Ltd.3 6.3 Regarding the employment contract by holding over, it was undisputed that the Respondent worked under the same terms, receiving salary and benefits without communication of termination or non-renewal. The Appellant also received the Respondent's request to -J12renew the contract before its expiry but gave no indication of termination. Instead on 24th January 2019, he was appointed to the RTSA Board for three years, signalling the Appellant's intention to retain him. 6.4 This conduct, it was contended, implied a renewal of the contract from 4th January 2019 and terminated on 11th September 2019, overriding Clause 2(c) of the original contract. Further that no evidence was provided to suggest Clause 2(c) justified the extended employment. 6.5 It was argued that the applicable law in this case was common law, recognized in Zambian law through Article 7 of The Constitution2 and Section 2 of The English Law (Extent of Application) Act3 which provides for , the doctrine of reasonable expectation which prevents the Appellant from denying the validity of this new contract. In support of this position, the cases of Bullock v The Wimmera Fellmongery and Woolscouring Co Ltd4 and Department of Agriculture, Forestry and Fisheries v Teto and Others5 were cited to confirm that continued service and remuneration after a contract's expiry imply tacit renewal or novation. -J 136.6 In response to ground two, it was submitted that although awarding costs is within the discretion of the Court, a Judge may choose not to award costs even if a party is successful. Relying on J.K. Rambai Patel v Mukesh Kumar Patel6 and YB and F Transport Ltd v Supersonic Motors Ltd7 it was argued that costs may , be withheld if justified by the nature of the claim or conduct of the parties. Here, both parties obtained some relief, thus justifying the Judge's decision not to award costs solely to the Appellant. 7.0 THE CROSS-APPEAL 7 .1 The Respondent, being dissatisfied with part of the decision of the lower court, filed a cross-appeal raising four (4) grounds of appeal as follows: 1. The learned trial Judge erred in law and fact when she held that there was no renewal of the Respondent's contract of employment beyond January 2019 after the expiry of the existing contract of employment on 3rd January 2019, despite the Respondent having worked for nine months after the expiry of the previous contract on 3rd January 2019, when on the -J 14other hand, she upheld the claim for an offer for the sale of a personal to holder motor vehicle to the Respondent based on clause 13.2.1 of the Respondent's conditions of service under the purportedly invalid contract. 2. The learned trial Judge erred in law and fact by holding that clause 2 (c) of the employment contract dated 4th January 2016 to 3rd January 2019 was valid and enforceable. 3. The learned trial Judge erred in law and fact by failing to address its mind to the fact that the Respondent's employment was terminated while he was on leave contrary to the provisions of the Labour laws, under section 53(3) of the Employment Code Act No. 3 of 2019. 4. That the learned Judge erred in law and fact when she held that the Appellants had not breached any new contract and thereby denied the Respondent the remaining reliefs which he was entitled to in addition to the motor vehicle which he had been awarded by the court -Jl5namely, three month's salary in lieu of notice; payment of full gratuity; payment of monthly salaries from the date of termination until full gratuity is paid; damages for breach of contract and damages for mental stress. 8.0 ARGUMENTS IN SUPPORT OF THE CROSS-APPEAL 8.1 Mr. Munalula, Counsel for the Respondent relied on heads of argument dated 12th April 2023. In support of ground one, he submitted that a valid employment contract existed from 4th January 2016 to 3rd January 2019 and that the Respondent continued working thereafter for nine months without communication from the Appellant regarding non-renewal. Further, despite the Respondent's request for renewal, the Appellant remained silent and instead appointed him to the RTSA Board for three years, indicating an intention to renew the employment. 8.2 Counsel argued that by allowing continued employment and making the board appointment, the Appellant effectively created a new contract from 4th January 2019 to 12th September 2019, regardless of Clause 2(c). It was further argued that no special circumstances justified -J16extended employment under Clause 2(c). Instead, the doctrine of reasonable expectation supported the existence of a valid renewed contract through holding over. 8.3 On ground two, it was argued that the Judge erred in upholding Clause 2(c) while ignoring principles of employment by holding over and legitimate expectation. Counsel contended that Clause 2(c) was inapplicable because the parties' conduct, particularly the Respondent's nine month continuation in employment, indicated an implied renewal of the contract, consistent with prior practice. 8. 4 Relying on UBER Technology Inc. v Heller8 Lloyds , Bank v Bundy9 and Alec Lobb (Garages) Ltd v Total Oil GB Ltd10 it was argued that Clause 2(c) was , unconscionable, unfairly imposed by the Appellant from a stronger bargaining position. Given the Respondent's continued employment under the same terms and conditions for nine months without formal notification of the clause, the trial court erred in not recognizing an implied renewal of the contract. -Jl 78.5 In support of ground three, it was argued that under Section 53(3) of The Employment Code Act1, an employer cannot terminate employment while an employee is on leave. The Respondent's termination while on leave was therefore unlawful, entitling him to three months' salary in lieu of notice. 8.6 In support of ground four, it was argued that since a valid and enforceable contract existed, the Judge should have considered the Respondent's reliefs as part of his contractual entitlements. That under Clause 20(c), read with Clauses 19.1.1 and 19.1.2, the contract was terminated for non-disciplinary reasons, entitling the Respondent to full gratuity. Additionally, based on Article 189(2) of The Constitution2 and Owen Mayapi & Others v Attorney General11, he should have been retained on payroll and paid his salary until gratuity was fully settled. 9.0 ARGUMENTS OPPOSING THE CROSS-APPEAL 9.1 Mr. Mulenga, Counsel for the Appellant, relied on the heads of argument dated 19th May 2023. In response to ground one, he submitted that although the Judge correctly found no renewal of the Respondent's contract -Jl8beyond 4th January 2019, her subsequent decision granting entitlement to a personal to holder vehicle was legally unsound. 9.2 Counsel argued that the Respondent failed to substantiate the principle of holding over or cite relevant authorities. It was argued that Clause 2(a) of the contract sufficiently provided notice of expiry, and additional notice was required only if clause 2(b) was invoked. Thus, renewal by conduct, holding over, or legitimate expectation did not apply under clause 2(c). 9.3 According to Counsel, Clause 2(c) explicitly excluded implied renewal. Any continued employment due to circumstances or conduct did not constitute renewal but was anticipated by clause 2(c). 9.4 In response to ground two, Counsel submitted that the issue of unconscionability was neither pleaded nor addressed at trial, making its introduction on appeal improper. It was argued that Courts have consistently disapproved of introducing new matters at the appellate stage and that a party is bound by its pleadings. In support thereof, Counsel cited the cases of Mususu -Jl 9Kalenga Building Limited & Others v Richman's Money Lenders Enterprise12 and Mumba v Lungu.13 9.5 It was argued that while exceptions exist, the bargaining power between the parties at the time of execution of the contract does not fall within them. It was submitted that there was no evidence at trial suggesting exploitation or unconscionability regarding clause 2(c), especially as the Respondent had previously accepted identical terms. 9.6 In response to grounds three and four, Counsel argued that the trial Judge correctly held that the Respondent's contract was never renewed, despite being on leave for criminal investigations. Counsel submitted that claims of termination during leave lacked merit, as no employment contract existed beyond the expiry date; thus, there was no termination. 9.7 Further, there being no valid contract after the expiry of the previous contract, there was no legal basis for the reliefs claimed. We were urged to dismiss the cross appeal. -J2010.0 ANALYSIS AND DECISION OF THE COURT 10.1 We have considered the evidence on record, submissions by Counsel, and the impugned Judgment. We agree with the learned Judge that the central issue is the interpretation of the employment contract between the Appellant and the Respondent, specifically whether the Respondent's continued employment after January 2019, amounted to a renewal, and 3rct consequently, whether he is entitled to the associated benefits. 10.2 The relevant provision governing renewal is Clause 2, which states as follows: a) The contract shall automatically expire at the end of three (3) years from the date the employee takes up the appointment and no notice of expiration will be due or given. b)The Agency at its discretion may renew or extend the Employee's contract for such a period the Agency may consider appropriate provided that the Employee shall, three (3) months before the expiration of this Cont ract -J21give written notice to the Agency of his intention to renew. c) Should circumstances arise that require or otherwise result in the employee continuing in office beyond the expiration date of the contract, such circumstances shall not constitute a renewal of contract and the Employee shall be remunerated on a pro rata basis for the period worked. 10.3 Our interpretation of the above provision 1s that the contract automatically expires at the end of the three year period. However, if the employee expresses an interest in renewal, the employer is under no obligation to renew it; the decision rests solely at the employer's discretion. Furthermore, if the employee continues working beyond the expiration date, this does not constitute a renewal of the contract. Instead, such continued work 1s regarded as a 'temporary arrangement' not an extension of the original contract and in such a case, the employee is only entitled to pro- -J22rata remuneration for the additional period worked but does not acquire a legally renewed contract. 10.4 The Respondent claimed that his employment contract had been renewed based on the following key events: a) Continued service beyond 3rd January 2019, working under the same terms and conditions while receiving salary and benefits without a formal renewal b) A formal request for renewal through a letter to the Ministry of Transport and Communications, which was not responded to and no renewal agreement was issued. c) Appointment to the RTSA Board on 24th January 2019, for a three year term while still serving in his role, which he argued implied contract renewal 10.5 Considering the above arguments, it is essential to examine whether established principles of contract interpretation support the Respondent's position. It is settled law that parties are bound by the terms of their contracts and courts must not rewrite them. This was reaffirmed in the case of National Drug Company -J23Limited and Zambia Privatization Agency v Mary Katongo14 where the Supreme Court stated as follows: , "It is trite law that once the parties have voluntarily and freely entered into a legal contract, they become bound to abide by the terms of the contract and that the role of the Court is to give efficacy to the contract when one party has breached it by respecting, upholding and enforcing the contract". In this appeal, it is apt to quote Evan Mckedrick's Contract Law, (7) at page 3, that: "The Law of contract is perceived as a set of power conferring rules which enable individuals to enter into agreement of their own choice on their own terms. Freedom of contract and sanctity of contract are the dominant ideologies. Parties should be as free as possible to make agreements on their own terms without the interference of the courts or Parliament and their agreements should be respected, upheld and enforced by the courts". -J2410.6 Similarly in Printing and Numerical Registered Company v Simpson 5 it was held that: 1 , " .. .if there is one thing more than another which public policy require, it is that men of full age and competent understanding shall have the utmost liberty in contracting and that their contract when entered into freely and voluntarily shall be held sacred and shall be enforced by courts of justice." 10.7 Applying these principles to the present case, the Respondent's claim for a contract renewal 1s unsustainable, given that Clause 2(c) explicitly excludes any implied renewal. Although the Respondent continued working beyond 3rd January 2019, without a formal renewal agreement, the contractual terms clearly established that continued service would only result in pro-rata remuneration, not renewal. 10.8 Clause 2(c) of the contract is, in our view, unambiguous in its wording. The use of the term "shall" denotes an absolute obligation, eliminating any room for discretion or alternative interpretation. Consequently, the clause -J25firmly prevented any automatic or implied renewal resulting from continued employment. 10. 9 Public policy reinforces the principle that contracts freely entered into must be upheld strictly according to their terms. Therefore, the trial court correctly dismissed the Respondent's claim for a renewal of the contract. 10.10 However, the trial court erred 1n granting the Respondent entitlement to purchase a personal to holder vehicle. The evidence, including the Respondent's testimony, confirms he had already purchased a vehicle under the previous contract. Without a renewed contract, there 1s no legal basis for entitlement to a second vehicle. Allowing such entitlement amounts to unjust enrichment. Therefore, based on Attorney General v Marcus Kampumba Achiume1 the finding , by the lower court was perverse and unsupported by the evidence on record and it is accordingly set aside. 10.11 Regarding costs, the general rule that "costs follow the event" dictates that the substantially successful party should be awarded costs unless exceptional circumstances exist. The Appellant was largely -J26successful in defending against the Respondent's claims, yet the trial court did not award costs. Given the absence of misconduct or exceptional reasons to deny costs, the trial court improperly exercised its discretion and the Appellant should have been awarded costs. 10.12 Coming to the cross-appeal, our earlier findings clearly establish that Clause 2(c) expressly negated any implied or legitimate expectation of renewal. The Respondent's continued employment beyond the contractual term was merely temporary and did not amount to renewal. Consequently, the Respondent was entitled only to pro rata remuneration for the additional period worked and no further reliefs, including entitlement to purchase another motor vehicle were justified. 10.13 Regarding the Respondent's argument that Clause 2(c) was imposed unfairly due to an imbalance of bargaining power, a review of the record confirms that this issue was not raised at trial but was introduced only on appeal. Numerous authorities underscore the significance of pleadings, as stated clearly in Anderson Mazoka & Others v Levy Mwanawasa16 where the , Supreme Court emphasized that pleadings define the -J27issues to be adjudicated and bind the parties to their stated cases. 10.14 Moreover, the facts do not support the Respondent's claim of unfairness or unequal bargaining power. The Respondent was a senior executive and CEO who freely negotiated and voluntarily signed the contract, including Clause 2(c). Further, as correctly noted by the Appellant, the Respondent previously signed and served under similar contracts containing such a clause. By continuing employment under these terms, the Respondent demonstrated acceptance and understanding of the contractual obligations. There is no evidence of coercion or undue influence to invalidate Clause 2(c) as unconscionable. Therefore, the argument concerning unequal bargaining power lacks merit and is dismissed. Thus, grounds one, two and four of the cross-appeal lack merit. 10.15 On ground three, Counsel argued that Section 53(3) of The Employment Code Act1 prohibits termination while an employee is on leave, making the Respondent's termination unlawful. However, the Appellant argued that The Employment Code Act1 was not in force when -J28the employment contract was executed and further, as no employment contract existed beyond its expiry, no termination occurred. 10.16 We agree with Counsel for the Respondent to the extent that procedural provisions of The E~ployment Code Act1 apply immediately upon enactment, regardless of when the employment contract was executed. However, substantive rights remain subject to a transitional period, as clarified in our decision in Joe's Earthworks and Mining Limited v Dennyson Mulenga 17 where we , stated: "For avoidance of doubt and to guide litigants) we reiterate the guidance of the Supreme Court) that the procedure and practice of a statute take effect immediately. It is thus clear that the procedural and practical elements of the Employment Code Act became applicable immediately) while the cooling-off, or grace period) referred to the substantive aspects of an employment contract. Gratuity is an example of a substantive provision." -J2910.17 However, while Section 53(3) is procedural and takes immediate effect, it is irrelevant in this case since there was no termination. The Respondent's employment ended naturally through effluxion of time upon reaching its agreed duration, distinct from termination, which involves prematurely ending a contract by employer or employee action. Therefore, Section 53(3) does not apply and ground three lacks merit. 11.0 CONCLUSION 11.1 In light of the foregoing, the appeal is meritorious and is accordingly allowed, whilst the cross appeal is dismissed for lack of merit with costs to the Appellant in this Court and in the court default of agreement. COURT OF APPEAL JUDGE A.M. BANDA-BOBO COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE