Maikisa Matthew Ilukena v Patents and Company Registration Agency (APPEAL NO. 34/2023) (20 November 2024) – ZambiaLII

IN THE COURT OF APPEAL OF ZAMBIA APPEAL NO. 34/2023 HOLDEN AT NDOLA (Civil Jurisdiction) BETWEEN: Coram: Chashi, Makungu, and Sharpe-Phiri, JJA On the 12th and 20th November 2024 For the Appellant: Mr. Munalula and Mr. T. Griu both of MML legal Practitioners For the Respondent: Mr. D. Kamfwa and Mr. D Chiwambo, In House- Counsel JUDGMENT Makungu, JA, delivered the judgement of the Court. Cases referred to: 1. Heather Musariri v. !school Zambia Limited - Comp-2010/HN/ 120 2. Emporium Fresh Foods Limited (trading as Food Lovers Market) and Gourment Market v. Kapya Chisanga, Appeal No. 44 of 2021 3. Kasote Singogo and 2 Others v. Barclays Bank, SCZ Appeal No. 33 of 2012 4. Zambia Consolidated Copper Mines v. James Matale (1995-1997) Z.R 157 (S.C) 5. Zambia Revenue Authority v. Dorothy Mwanza and Others (201 OJ 2 Z.R 6. Jacques Chis ha Mwewa v. Attorney General- Comp No. 95/ 08 7. Moses Choongo v. ZESCO Recreation Club, SCZ Appeal No. 168/ 2013 8. Zambia Electronic Clearing House Limited v. James Kalengo, CAZ Appeal No. 239 of 2020 9. Swarp Spinning Mills v. Sebastian Chileshe and Others (2002) ZR 23 Legislation referred to: 1. The Employment Code Act, No. 3 of 2019 2. The Employment Act, Chapter 268 of the Laws of Zambia (repealed) 3. The Industrial and Labour Relations Act, Chapter 269 of the Laws of Zambia 1.0 INTRODUCTION L.1 This is an appeal against the judgment of Judge T.S Musonda of the Industrial Relations Division of the High Court, dated 29th August 2022, dismissing the appellant's case in its entirety. l .2 In the first part of the judgment, the parties will be referred to by their designations in the court below and thereafter as they are cited in this appeal. 2.0 BACKGROUND ~.1 On 7th September 2021, the complainant, now appellant lodged a complaint in the Industrial Relations Division of the High Court seeking the following reliefs: (a) A declaration that the complainant was constructively dismissed. (b) Payment of 60 months' salary with all allowances as damages for constructive dismissal. (c) In the alternative a declaration that the complainant was dismissed maliciously and unfair termination of employment. (d) Damages for malicious and unfair termination of employment. (e) Damages for loss of earnings. (f) Damages for emotional stress. (g) Damages for loss of expectation of continued employment. (h) General damages for breach of contract. (i) Costs and any relief the Court may deem.fit. 3.0 COMPLAINANT'S CASE 3.1 The complaint was supported by an affidavit dated 7th September 2021, sworn by the complainant himself. He averred that on 2nd May 2007, he was employed by the respondent as a Human Resources and Administrative Manager on renewable five (5) year contracts. 3.2 His last contract was renewed for a period of five (5) years and scheduled to run up to 30th April 2021. 3.3 By letter dated 4th February 2021, the respondent's Registrar and Chief Executive Officer reminded the complainant that his contract was expiring on 30th April 2021, and requested him, in line with the conditions of service, to indicate whether he wished to be considered for a new contract. 3 .4 The complainant wrote a letter dated 10th February 2021, indicating his desire to be considered for a new employment contract. By letter dated 23rd April 2021, the respondent notified the complainant that his contract would not be renewed. 3.5 By letter dated 30th April 2021, the complainant through his advocates stated that the belated notification of the decision not to renew his contract was in breach of contract. He claimed that his contract should be deemed to have been automatically renewed for another term of 5 years. 3.6 In response, the respondent notified the complainant's advocates that the complainant would be paid one month's salary in lieu of notice of non-renewal of contract and requested for bank details through which the money was to be paid. The complainant through his advocates informed the respondent that the payment of one month's salary in lieu of notice was not provided for in his conditions of service. The respondent nevertheless proceeded to deposit a month's salary into the complainant's bank account but the complainant refunded it. .. .. 3.7 The complainant further averred that his position that his con tract was unlawfully and maliciously terminated was based on the following grounds: z. That the respondent failed and or neglected to infa rm him of its decision not to renew the contract when the respondent was mandated to do so by 31st March 2021. That the respondent, as an afterthought, by a letter ll. issued ten (1 OJ days after the expiry of his contract, purported to pay him a salary of one month in lieu of notice not to renew his contract. m. That the respondent belatedly notifying the complainant of the decision not to renew his contract shattered his reasonable expectation of continued employment. 3.8 Cross-examination of the complainant Under cross-examination, the complainant acknowledged that his contract of employment expired on 30th April 2021, and its renewal was at the discretion of the respondent. 3.9 He admitted that under clause 12.2 of the conditions of service, there was no provision for automatic renewal of the contract for another period of five years . ...... 4.0 RESPONDENT'S CASE 4.1 The respondent's sole witness was Muyanje Kalumba Kawama, the Human Resource Officer for the respondent. In his testimony, he repeated the contents of the affidavit in opposition that the complainant was not constructively dismissed but his contract had expired. The complainant would only be entitled to claim for constructive dismissal if he was subjected to working under a hostile environment and forced to resign under duress. 4.2 Further, the complainant would be entitled to claim for malicious dismissal where company policies had not been followed or there was an ulterior motive on the part of the respondent. Unfair termination would arise if the reasons given for termination were unfair or no reasons were given. 4.3 He stated further that the complainant was not entitled to damages for loss of earnings on the ground that he was on a fixed term contract. For the same reasons, he was not entitled to damages for loss of expectation of continued employment. 4. 4 The witness conceded that there was a breach of con tract concerning the notice period. He stated that the complainant should have been given a month's notice. To TL rectify the breach, the complainant was paid a month's salary in lieu of notice as per the common practice in cases of termination. 4.5 Cross-examination of the respondent's witness Under cross-examination, Mr. Kawama stated that although the respondent violated clause 12.2 of the conditions of service by not giving a month's notice, this did not amount to malicious dismissal. He noted that clause 12.2 requires that an employee is notified before the contract expires, if they will not be re-engaged. The witness denied that the complainant's contract was terminated without valid reasons. He also acknowledged that the contract did not specify that a violation would result in payment of a month's salary in lieu of notice. 5.0 DECISION OF THE LOWER COURT 5. 1 The lower Court deciphered the following issues for determination. Whether the complainant was constructively dismissed. i. n. Whether there was legitimate expectation that the contract would be renewed. m. Whether the complainant was maliciously dismissed or unfairly terminated. w. Whether the complainant is entitled to the reliefs sought. 5.2 On the question of whether the complainant was constructively dismissed, the trial Judge found that the circumstances of this case did not amount to constructive dismissal as the complainant never resigned, but left employment at the expiration of his fixed term contract of employment on 30th April 2021. 5.3 The trial Judge went on to address the second and third issues together. She found the following facts not in dispute: • The contract of employment signed by the complainant on 28th April 2016 was for a fixed term of five years to expire on 30th April 2021. The said contract was to be read together with the Patents and Companies Registration Agency Conditions of Service (Conditions of Service). • In the letter dated 4th February 2021, the complainant was advised that his contract would be coming to an end on 30th April 2021 and further that in line with clause 12.1 of the conditions of service, the complainant was to indicate if he wished to be considered for a new contract. • The respondent notified him that his contract would not be renewed on 23rd April 2021. • The respondent should have given the complainant at least one month's notice of its intention not to renew the contract. 5.4 Regarding the argument by the complainant that he had a legitimate expectation of his contract being renewed, the trial Judge found that the complainant's contract did not provide for automatic renewal. The decision to renew was at the sole discretion of the respondent according to clause 3 of the contract of employment. 5.5 The trial Judge observed that a fixed-term contract expires at the stipulated time according to section 54(7) (a) of the Employment Code. Renewal of the contract was not automatic. What was automatic was the expiration of the contract on 30th April 2021. The non-renewal of a fixed-term or long-term contract cannot amount to termination of the contract because, upon effluxion of time, no contract exists. 5.6 As regards the question of whether the complainant was maliciously dismissed, the Judge held that the complainant was required to adduce cogent evidence that he was induced to believe that his contract had been renewed. However, there is no evidence to show that the respondent either expressly or by other conduct induced the complainant to believe that his contract would be renewed. 5. 7 The trial Judge further held that the complainant could not claim that he was entitled to an automatic renewal of the contract based on the respondent's lapse and past renewed contracts. 5.8 The fact that the respondent wrote to the complainant on 23rd April 2021, was a clear indication of its position that the contract would not be renewed. 5. 9 In light of the preceding, the Judge held that the complainant had not made out a case of legitimate expectation or breach of contract. 5.10 Further there was no breach of contract by the respondent which would entitle the complainant to general damages as claimed. 5.11 In the premise, the Judge dismissed all the complainant's claims. 5.12 However, she found that the complainant was entitled to a relief under section SSA (d ) of the Industrial and Labor Relations Act which empowers the Court to grant any remedy that it considers just and equitable in the circumstances of the case. She accordingly awarded the complainant one month's salary as damages for the respondent's breach of clause 12.2 of the conditions of service. Plus interest at short term bank deposit rate from the date of notice of complaint, 7th September 2021 to the date of judgment and thereafter at the current lending rate as determined by the Bank of Zambia until full payment. There was no award for costs. 6.0 GROUNDS OF APPEAL 6.1 Being dissatisfied with the lower court's judgment, the appellant has advanced the following grounds of appeal: 1. That the learned trial Judge erred in law and fact when she held that the complainant has not made out a case of legitimate expectation on a balance of probabilities. 2. That the learned trial Judge erred in law and fact when she held that no breach of contract ....... would entitle the complainant to general damages as claimed. 3. That the learned trial Judge erred in law and fact when contrary to her finding that there was no breach of contract and dismissing the appellant's claims entirely, she then held that she was awarding the appellant one month's salary for the respondent's breach of clause 12.2 of the conditions of service. 7.0 APPELLANT'S HEADS OF ARGUMENT 7.1 The appellant filed heads of argument on 6th February 2023, in which the three grounds of appeal were argued separately as follows: 7.2 The substance of the arguments supporting ground one is that, according to clause 12.2 of the employment contract, the respondent should have notified the complainant at least a month before the expiration of his existing contract. The respondent's failure to provide this notification raised a legitimate expectation that the contract would be renewed. The case of Heather Maureen Campbell Musariri v. iSchool Zambia Limited1 was cited to support this argument. In that case, the High Court held that: "The notion of reasonable expectation clearly suggests an objective test; the employee must prove the existence of facts that would lead a reasonable person to anticipate renewal. The facts that found a reasonable expectation will differ from case to case but will most commonly involve some prior promise or past practice. Factors such as the employer's conduct in dealing with the relationship, statements made to the employee at the time the contract was cone luded, and the motive for terminating the relationship are to be considered." 7.3 Although counsel for the appellant agreed with the learned trial Judge that legitimate expectation must be based on cogent, rational, and objective reasons induced by the employer, either expressly or through conduct, he contended that the Judge took a narrow view. He stated that the appellant did not receive any communication from the respondent about its intention not to renew his contract by 31st March 2021. The reasonable expectation arose from the absence of communication before the contract expired. 7.4 In support of ground two, counsel submitted that on 10th February 2021, the appellant informed the respondent that he wanted his contract to be renewed. So the respondent had from 10th February to 31st March 2021, to inform him that his contract would not be renewed. However, it chose to remain silent, contrary to clause 12.2 of the conditions of service, which mandated it to inform the appellant about its decision not to renew the contract, at least a month before the subsisting contract expired. This failure on the part of the respondent constituted a breach of contract. 7.5 In support of the third ground of appeal, Counsel argued that awarding only one month's salary for the respondent's breach of clause 12.2 of the conditions of service, did not cover the immeasurable anguish and stress the appellant suffered, upon being informed that his contract would not be renewed. 7.6 He contended that this case warrants damages above the normal measure. He referenced the cases of Emporium Fresh Foods Limited (trading as Food Lovers Market) v. Kapya Chisanga2 and Kasote Singogo and 2 others v. Barclays Bank,3 where the Courts deviated from the normal measure of damages for wrongful dismissal. He thus urged the Court to set aside the award of one month's salary and replace it with 24 months' salary. 8.0 RESPONDENT'S HEADS OF ARGUMENT 8.1 In opposing the appeal, the respondent filed heads of argument on 17th March 2023. On the first ground of appeal, counsel for the respondent submitted that the lower Court's decision was on firm ground because it was based on well-established legal principles. It is trite that a fixed term contract lapses automatically when the specific duration of the contract ends in line with sections 19(3) and 52 (7) (a) of the Employment Code, which applies by virtue of paragraph 5(1) of the Employment Code. Reference was also made to the case of Zambia Consolidated Copper Mines v. James Matale4 on the principle that a fixed-term contract expires at the end of the term it is expressed to be made. 8.2 The respondent submitted that the appellant's contract came to an end by effluxion of time on 30th April 2021. 8.3 Further, renewal of a fixed-term contract is not automatic and is within the discretion of the employer as per the case of Zambia Revenue Authority v. Dorothy Mwanza and Others5 The Courts only deviate from this principle in very . exceptional circumstances. 8.4 In the cases of Jacques Chisha Mwewa v. Attorney General,6 and Moses Choonga v. ZESCO Recreation Club, 7 the Courts recognized legitimate expectation of renewal of contract where the employer allowed the employee to continue working even after the contract of employment had expired. 8.5 Counsel further submitted that the present case 1s distinguishable from the cases of Heather Musariri, Jacques Chisha, and Moses Choonga supra, because in this case, the appellant was informed by the respondent of its decision not to renew the contract before the contract expired and he was not allowed to continue working after 30th April 2021. 8.6 In response to the appellant's reliance on clause 12.2 of the conditions of service, the respondent's counsel contended that the Employment Code and case law supersede the administrative notice requirement stated in clause 12.2. The respondent atoned for failing to meet this administrative requirement by paying the appellant a month's salary in lieu of notice. Even if the appellant expected the contract to be renewed, this expectation was extinguished on 23rd April 2021, when the respondent informed him of the decision not to renew the contract. 8.7 To counter ground 2, counsel for the respondent submitted that the trial Judge was correct in holding that there was no breach of contract entitling the complainant to general damages. The breach of clause 12.2 did not legally result in legitimate expectation and automatic renewal of the contract. Thus, the appellant was not entitled to the remedies sought. 8.8 In opposing the third ground of appeal, counsel for the respondent maintained that the learned trial Judge was on firm ground in awarding the appellant a month's salary for the respondent's breach of clause 12.2 of the Conditions of Service. He pointed out that the appellant did not request for damages equivalent to the breach of the notice period, but rather sought damages for the purported breach of legitimate expectation. Therefore, the Judge awarded relief under section 85A(d) of the Industrial and Labour Relations Act. He argued that the cases of Kasote Singogo and 2 Others and Emporium Fresh Food Limited supra, relied upon by the appellant, are inapplicable to this case. 8.9 Furthermore, the respondent fulfilled its obligations by paying the appellant his accrued leave days and gratuity upon the expiry of the contract. We were therefore urged to dismiss the appeal. 9.0 THE HEARING OF THE APPEAL 9.1 The appeal was heard on the 12th day of November 2024. Both parties were represented by the learned counsel as indicated in the heading of this judgment. 9.2 Mr. Munalula, Counsel for the appellant relied on the filed heads of argument. Additionally, he stated that clause 12.2 of the conditions of service is couched in mandatory terms. Since it was the respondent's policy to inform the appellant that his con tract would not be renewed at least 30 days before the expiry of the contract, breach of this condition resulted in legitimate expectation that the contract would be renewed. 9.3 Mr. Kawama, counsel for the respondent, relied on the respondent's heads of argument. He augmented the same by stating that there is a plethora of authorities on fixed term contracts which state that such contracts terminate by effluxion of time. Therefore, the appellant has the onus of proving that there was something more than just the breach of clause 12.2 of his conditions of service, that led him to believe that the contract of employment would be renewed. 9.4 There was no established practice whereby a contract of employment was automatically renewed due to delay 1n notifying the employee that the contract would not be renewed. 9.5 In reply, Mr. Munalula stated that letters of renewal of the previous contract were not produced and that is why legitimate expectation arose. 10.0 OUR ANALYSIS AND DETERMINATION LO. l We have considered the record of appeal and the written and oral arguments made by counsel on both sides. We will tackle the grounds of appeal individually. L0.2 The first ground of appeal challenges the lower Court's holding that the appellant had not made out a case of legitimate expectation: Clause 12.2 of the conditions of service stipulates as follows: "Where the Agency has received communication from an employee of the intention to be re-engaged but the Agency does not intend to renew that employee's contract, the Agency shall inform the employee at least one (1) month before the subsisting contract expires." L0.3 The case of Heather Maureen Campbell Musariri v. iSchool Zambia Limited1 is to the effect that an objective test should be used to determine whether legitimate expectation exists. Although High Court cases are not binding on this Court, it is correct to state that an objective test should be used to determine whether legitimate expectation exists. L0.4 We note that the appellant's contract was governed by the repealed Employment Act,2 where section 36(1)(a) stated: "A written contract of service shall be terminated by the expiry of the term for which it is expressed to be made." L0.5 The Employment Code No. 3 of 2019,1 applies to employment contracts made prior to its enactment by virtue of section 5(1), which states: "A contract of employment entered into before the commencement of this Act in accordance with the repealed Act shall, insofar as it is inconsistent with the provisions of this Act, be deemed to be a contract of employment entered into under this Act." 10.6 Sections 19(3) and 52(7)(a) of the Employment Code1 clarify: "19 (3) A contract for a specified period of time shall automatically expire on the date specified for its expiration and notice shall be required for its expiration at that time, except that expiration before the specified period shall be done in accordance with the provisions of this Act." "52 (7J(a) A contract of employment expires at the end of the term for which it is expressed to be made." 10.7 In the case of Zambia Consolidated Copper Mines v. James Matale,4 the Supreme Court held as follows: "Where the contract expressly or impliedly provides that the relationship of the emp layer and employee is to endure for a certain time, the contract will be determined on the conclusion of such period." 10.8 While the appellant emphasizes the significance of clause 12.2 of his conditions of service, the broader legal context provided by the Employment Code and relevant case law referred to above indicates that the primary determinant of the end of a fixed term contract, is the date expressed in the contract. L0.9 According to clause 16(1) of the conditions of service, a contract of employment with the agency maybe terminated in any of the following circumstances: (a) ..... . (b) ..... . (c) ..... . (d) Expiry of contract of employment. L0.10 It is common ground that the appellant's contract was set to expire on 30th April 2021. According to clause 12.2, after receiving the letter from the appellant indicating his desire for his contract to be renewed, the respondent was supposed to communicate its decision not to renew the contract at least a month before the contract's expiry. However, the respondent communicated its decision on 23rd April 2021 seven days before the specified date of expiry. L0.11 As regards the application of the doctrine of legitimate expectation to employment law, in the case of Zambia Electronic Clearing House Limited v. James Kalengo,8 we stated as follows: "We have noted the case of Communications Authority v. Vodacom where the Supreme Court established that legitimate expectation arises where a decision maker, such as an employer makes representation or leads someone to believe that they will receive or retain a benefit or advantage including that a hearing will be held for a decision to be taken. In such a scenario, such decision maker or employer is estopped from going back on his wellfounded affirmation or representation ....... . We further stated that: The principle of legitimate expectation cannot be said to be applicable in this case as the respondent had a fixed term contract which came to an end by effluxion of time and without assurance being given by the appellant that it was committed to renewing his contract for a further term. ..... The sanctity of a contract ought to be upheld and respected unless there was something more. In this case there was none." .. ... ,.. 10.12 This case 1s distinguishable from cases of Heather Musariri, Jacques Chisha Mwewa and Moses Chongo supra, where legitimate expectation was recognized because the employees were allowed to work after the expiry of their contracts. In the present case, the appellant was not permitted to work after the contract expired. In fact, he was notified that the contract would not be renewed seven days before the date of expiry. The appellant did not make any commitment that it would renew the contract. There was nothing that the appellant did that would have led to a genuine expectation that the contract would be renewed. 10.13 Under the circumstances, we take the view that the trial Judge correctly concluded that the circumstances of this case do not create a reasonable expectation of renewal of the contract of employment. 10.14 We further hold that the employer's discretion to renew the contract remained unfettered. 10.15 We reject the appellant's argument that legitimate expectation arose between 10th February 2021, and 31st March 2021, because the period under consideration was a month before the contract1 s expiry: between 31st March and 30th Apri~ 2021, because clause 12.2 of the conditions of service provides for the minimum period of a month within which notice of non-renewal of contract should be made. That is our interpretation of the words "at least one month before the contract expires" used in that clause. L0.16 The appellant ought to have known that renewal was at the respondent's discretion and not automatic because it was clear from clause 3 of his employment contract that the employer's power to offer a new contract was discretionary and the employer would determine the duration of the new contract. L0.17 Further, any hopes of renewal were extinguished on 23rd April 2021, when the respondent communicated to the appellant its intention not to renew the contract. L0.18 Based on the preceding analysis, we find no merit 1n the first ground of appeal. L0.19 On the second ground of appeal, the appellant argued that the respondent's failure to notify him of the non-renewal of the contract within the stipulated time, constituted a breach of contract. The respondent argued that the trial Judge correctly held that there was no breach of contract entitling the appellant to general damages, emphasizing that the breach of clause 12.2 did not result in a legitimate expectation or automatic renewal of the employment. 10.20 Our firm view is that the delay in communicating the said decision to the appellant constitutes a breach of contract (breach of clause 12.2 of the conditions of service). This warrants an award of the normal measure of damages which is payment for the stipulated notice period, and in casu, one month's salary (see the case of Swarp Spining Mills v. Sebastian Chileshe and Others.9 ) L0.21 It is trite law that a fixed term contract ends by effluxion of time as established in the Employment Code and reinforced by the Zambia Consolidated Copper Mines v. James Matale4 case. Therefore, in this case, the contract ended on 30st April 2021 despite the late notification of non-renewal thereof. 10.22 Before the case was commenced, the respondent had paid the appellant a month's salary in lieu of notice as compensation for the administrative lapse but he refunded it. It was reasonable to pay in for failure to give at least a month's notice of non-renewal of the employment contract. Under the circumstances, we hold that the appellant is not ... ,...'- entitled to general damages for the said breach but to the normal measure of damages. 10.23 In light of the above holdings, the second ground of appeal also lacks merit. 10.24 In the third ground of appeal, the appellant contends that the lower court in awarding him only one month's salary as damages for breach of clause 12.2 of the contract, did not consider the distress he suffered upon learning that the contract would not be renewed. He referenced the cases of Emporium Fresh Foods Limited v. Kapya Chisanga2 and Kasote Singogo v. Barclays Bank3 to argue for higher damages. 10.25 On the other hand, the respondent contended that the trial Judge's award was made on firm ground. 10.26 The cases of Kasote Singogo3 and Emporium Fresh Foods Limited2 involve deviations from the normal measure of damages on the basis of exceptional circumstances. The appellant failed to prove legitimate expectation and that he suffered emotional distress due to the late notice of non - renewal of the contract. Furthermore, as stated under the second ground of appeal, he is only entitled to the normal measure of damages. 10.27 We therefore uphold the award of a month's salary for the respondent's breach of clause 12.2 of the conditions of service under Section 85 of the Industrial and Labour Relations Act which allows the Court to grant any remedy that it considers being just and equitable 1n the circumstances of the case. 11.0 CONCLUSION 11.1 In summary, the appeal fails entirely because the appellant's fixed term contract of employment ended by effluxion of time. The appellant failed to prove legitimate expectation that the contract would be renewed for another five (5) years. He also failed to prove that he suffered emotional distress due to the late notification of non renewal of contract. Nevertheless, the respondent breached clause 12.2 of the conditions of service by notifying the appellant of non-renewal late. 11.2 For the foregoing reasons, we order that the appellant be paid a month's salary with interest, as ordered by the lower Court as damages for breach of contract. Each party shall bear its own costs as this is an industrial relations matter. J. C SHI COURT OF APPEAL JUDGE C.K. MAKUNGU COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE