HIGH
COURT OF MALAWI

LILONGWE
DISTRICT REGISTRY

CIVIL
CAUSE NO. 467/96

BETWEEN:

A.G.
CHATUWA…………………………………………. PLAINTIFF

-and-

AUCTION
HOLDINGS……………………………….. DEFENDANT

CORAM: HON.
CHINANGWA, J

Nkhoma,
Counsel for the plaintiff

Msiska,
Counsel for the defendant

Mrs
Matola, Court Interpreter

Mrs
S.A. Mbewe, Court Reporter

JUDGMENT

The plaintiff
Andrew Gerald Chatuwa by writ of summons brought this civil action
against the defendant Auction Holdings Limited.
Hearing commenced on
2^nd
May, 2003. At that time counsel Kalemba represented plaintiff, but
defendant was unpresented.

In his evidence
plaintiff told court that he was employed on 1^st
March, 1974 by the defendant. His first position on appointment was
that of wages and general duties clerk. His services were
terminated
on 10^th
April 1996. At that time he was at grade A salaries and wages
supervisor.

The job functions
entailed being a paymaster for staff at grades: 4, 3, 2 and 1. These
were clerks, auctioneers, ticket markers,
and general clerks. There
were four wages clerks under him. Here in Lilongwe there were three
and one in Limbe. The main duties
of his office were to prepare
salaries and wages. He would receive a cheque to cash. The cash
was packed in packets ready for
payment as salaries and wages at the
end of the month.

From 1974 to 1993
he worked very well. In 1993 the company decided to computerize the
preparation of salaries and wages. The plaintiff
said that the whole
of 1993 was spent learning the operation of a computer. On 1^st
April, 1994 to 1995 there were no problems. Problems began to be
experienced in January 1996. The company gave directives that
those
officers entitled to housing allowance should be paid at three months
intervals. The plaintiff tendered in evidence a memo
to that effect
marked EXP 1. Plaintiff said that he forwarded the memo to the
computer programmer. At that time the computer
programmer was Mr.
B.T. Mandula. In February 1996 it was observed that those entitled
to receive housing allowance were over taxed.
Plaintiff referred the
matter to the Group Financial Controller. Upon investigation by the
internal audit section the cause of
such anomaly was discovered. The
cause was that in January 1996 the computer did not deduct taxes on
salaries and housing allowance.
Therefore in February 1996 the
January taxes were also deducted. Those affected suffered double
deductions.

On 4^th
April, 1996 a meeting was convened by the Senior Personnel Officer
to discuss and find solutions to problems which were being

experienced in the salaries and wages office. It was found that for
example information on new salary increments and overtime
were
submitted to the plaintiff’s office barely 2 days before payday.
That made it difficult for plaintiff’s office to include
the salary
increases in that month. A new system was devised as outlined in EXP
2 & 3 respectively. That payments of overtime
etc were to be
submitted by the accounts section on the 16^th
of each month to plaintiff’s office.

To plaintiff’s
shock on 10^th
April, 1996 he received a letter terminating his employment services
with defendant. He was shocked because he never received
a letter
warning him of any disciplinary lapse. He had never appeared before
any board on a disciplinary charge. At the time
his services were
terminated he had worked 22 years for the defendant without a
disciplinary record.

The letter of
termination marked EXP 5 stated that plaintiff was negligent in the
performance of his duties. Plaintiff argued that
he was not
responsible for capturing information on salaries and wages in the
computer. That was the responsibility of the computer
programmer.

Following his
termination plaintiff was paid one month’s salary and refunded his
own pension contribution.

Plaintiff said
that having worked for 22 years he was legible for retirement. The
retirement package entitled him to 60 months
salary in a lump sum.
Plus a monthly pension. Plaintiff said that as a result of the
termination he has failed to secure employment.
Consequently he has
no proper means to support his wife and ten children. Plaintiff
tendered in evidence a copy of defendant’s
conditions of service.
He referred court to page 32 dealing with employment benefits and
page 39 dealing with matters of discipline.

On 23^rd
September, 2005 hearing resumed counsel Nkhoma represented plaintiff
and counsel Msiska Sc for defendant. Defence XXD plaintiff
and
thereafter plaintiff, after RXD closed his case. The defendant
called only one witness on its side. That was Mr Isaac Kambirinya

(Dw1). In his evidence Dw1 said that he is the group personnel
manager for the defendant. Among some of his functions are: human

resource management, administration, indusrial relations, and record
keeping of employees. Dw1 said that when plaintiff was in
service
with defendant he was not as yet in the position of group personnel
manager. Dw1 identified a letter to plaintiff regarding
repayment of
pension scheme claim dated 3^rd
September, 1996. It was marked ex D1. He also tendered in evidence
letters and memos exD 2-9. These will be dealt with later.

In XXD he conceded
that in the personal records of plaintiff there was no documentation
of any disciplinary charge. Dw1 also conceded
that plaintiff was
entitled to receive both his own and defendant’s pension
contributions. He also conceded that some problems
were beyond
plaintiff’s control. They involved the participation of other
sections of defendant’s company.

Indeed in RXD Dw1
reluctantly retracted the point that plaintiff was not paid
defendant’s contribution. He said the repayment
included
defendant’s pension contribution.

This being a civil
cause the plaintiff has to prove his case on a balance of
probabilities. Issues not in dispute are as follows:

There is no
dispute that plaintiff was employed by defendant on 1^st
March, 1974. This is a proved fact.

There is no
dispute that defendant terminated plaintiff’s service on 10^th
April, 1996. This is a proved fact.

There is no
dispute that plaintiff was in the employment of defendants for 22
years. This is a proved fact.

There is no
dispute that following the termination of services plaintiff was paid
a month’s salary.

Issues to
determine:

• 
  Whether the
  termination was lawful.

  
  

• 
  Whether pension
  payment included defendant’s contribution.

  
  

The starting point
is to examine the intention of the conditions of service.

1. 
   APPLICATION AND
   INTENTION

   
   

1. 
   All locally
   employed permanent staff and artisans employed by the company on
   this effective day and all persons subsequently locally
   employed as
   permanent staff and artisans shall be subject to these conditions.

   
   

2. 
   ……………

   
   

3. 
   ………………..

   
   

2. 
   EFFECTIVE DATE

   
   

These conditions
are effective from 1^st
April, 1982.

It is this court’s
finding that both the defendant and plaintiff were subject to these
conditions of service which became effective
on 1^st
April, 1982. It will be observed that plaintiff joined defendant’s
employment on 1^st
March, 1974. On 10^th
April, 1996 the defendant terminated the plaintiff’s employment
service with them. The letter of termination is on defendant’s

letter head and it reads:

“ Dear Sir,

TERMINATION
OF EMPLOYENT

I regret to
inform you that management has directed that your services be
terminated with immediate effect.

Your services
are being terminated because of persistent negligence of your duties
despite repeated pleas for you to improve in
your performance. The
tax flag in this computer programme was deliberately changed and
wrong tax deductions were effected on
employees salaries. Other
officers were paid their arrears without recovering tax from their
salary arrears. Wrong tax was recovered
from seasonal labour grade
knowing fully well that they started the season on 18^th
March, 1996 this created despondence on employees.

You will be
paid one month salary in lieu of notice, less statutory deductions
leave pay for 14 days earned this year.

It is noted
that you have outstanding loans with the company; these will be
recovered from your pension benefits.

Transport will
be provided to move your personnel effects to your home.

Yours
faithfully

Auction
Holdings Ltd

SCO: M.R.
MALIRO

GROUP
PERSONNEL MANAGER

It would appear
that defendant terminated plaintiff’s services by invoking point 5
of the conditions of service which provides:

“5. TERMINATION

1. 
   The company or
   members of the permanent staff or artisans may terminate employment
   by either side giving the other one month’s
   notice as the case may
   be.”

   
   

The ground for
terminating plaintiff’s service was stated as persistent negligence
of duties despite repeated pleas to improve
performance.

The plaintiff
conceded that there were several discussions including sections of
the defendant’s company in respect of salaries,
wages and tax
deductions. That was in regard of over and under deductions of tax
from other staff members. This is evidenced
by the Ex P2 reproduced
herein:

“To
: Senior Personnel Officer (SP)

FROM
: Group Personnel Manager

COPY : Group
Financial Controller

: Salaries
& Wages Supervisor

SUBJECT
: STAFF PAYROLL

DATE
: 22/03/96

We have
discussed several times the problems being experienced with the staff
payroll which is run by the Salaries and Wages Supervisor.
Officers
have been paid advance payment of housing allowance when they should
have not. Correct tax has not been recovered from
officers at the
time payment was being made. This has resulted in employees being
deducted heavy taxes the following month.

In order to
ensure that we minimize these problems, you should with immediate
effect, supervise the work of this section, set out
deadlines for
each activity and let us discuss what needs to be put in place to
facilitate your work.

MR MALIRO

MM/220396/204

The following
letter EXP 3 shows that the problem did not only affect the salaries
and wages section, but also other sections:

MEMORANDUM

TO : Salaries
and Wages Supervisor

COPY : Computer
Programmer

FROM : Chief
Internal Auditor

DATE : 26/03/96

SUBJECT: STATEMENT
OF EMOLUMENTS AND TAX DEDUCTED FOR STAFF IN GRADE 1 TO 4.

You will relate
that when I querried the tax being under deducted by the computer I
was told by both yourself and the computer Programmer
that the
programme was designed in such a way that the correct tax is deducted
by the last month (March) of the year. It was agreed
with the
computer programmer, that I should check the computer calculations.
It will be appreciated if you supply them with the
statements before
we pay this month’s PAYE to Government. Please act immediately as
I will have to go through all the entries
before the end of this
month.

T.A.
KADZAKUMANJA

TK/260396/033.

The following
letter tendered by defendant EXD3 is proof of the fact that there was
an overlap of problems from various sections:

MEMO

TO : Salaries
& Wages Supervisor

FROM : Group
Personnel Manager

COPY : Group
Financing Controller

SUBJECT: Wages
for Report

DATE : 02/09/94

We have
discussed this issue several times; but, despite these discussions we
still experience delays in providing details to the
Chief Accountant
for processing cheques. Whilst it is noted that the delays are
occasioned by late submission of overtime details
from Accounts and
the use of one computer terminal. Let us ensure that the break down
for labour wages is submitted to the Chief
Accountant by 24^th
each month.

Where overtime
details are not received by 16^th,
please let me know so that the Chief Accountant is appraised of the
delay. In this way he will use his office to expedite processing
of
the over time returns.

MR MALIRO

MM/620994/765

These two letter
ex p3 and ex d3 are evidence that the problem of anomalies on
salaries and wages affected the salaries and wages
section, accounts
section, and computer programming section. Therefore it was most
unfair to attribute the problems on plaintiff
alone. So this court
finds.

It is this court’s
understanding that negligence is within the sphere of discipline.
Therefore it should have been appropriately
dealt with under Appendix
M
in the conditions of service, especially point 5. The relevant parts
are reproduced:

1. 
   An employee
   may be required to appear before a Disciplinary Committee to answer
   any charges that may be leveled against him.

   
   

2. 
   Where an
   employee has been summoned for a disciplinary hearing, he will be
   given at least 3 days written notice advising the date
   of the
   hearing and the charges to be answered.

   
   

3. 
   An employee
   will have the right to bring his own witnesses and be represented by
   a company employee if he so wishes.

   
   

4. 
   All
   proceedings in a disciplinary matter will be reduced to writing and
   maintained on record files.

   
   

5. 
   Any employee
   who considers that he has been unfairly disciplined has a grievance
   and is entitled to a Direct Interview as outlined
   in paragraph 4
   above.

   
   

6. 
   Where an
   employee has appeared before a disciplinary hearing and is not
   satisfied with the decision made by the committee, he
   can appeal
   against the decision to the office of the Group Company Secretary.
   Such appeal should be lodged within 14 days from
   the date he
   received the decision of the disciplinary hearing.”

   
   

The requirement of
giving information in writing and an opportunity to respond to an
accused party or employee is in conformity
with rules of natural
justice. Plaintiff did state that at no time was he reprimanded
or written a letter warning him of his
negligent performance. DW1
conceded that there was no record in plaintiff’s file in respect of
the negligent performance of
duties or any other disciplinary charge.

Even if it were
the position that plaintiff had become negligent in his performance
of duties. The solution should not have been
to abruptly terminate
his services. A proper and fair process should have been followed
under Appendix M. Verbal discussions,
pleas or warnings did not
qualify under the appendix M. Circumstances did not justify the
termination of plaintiff’s services.
It was a wrong exercise of a
right by defendant to terminate plaintiff’s services. This court
so finds.

PENSION
BENEFITS

The plaintiff told
court that as a permanent staff he had joined the Auction Holdings
Limited Pension Scheme. He used to contribute
5% of his monthly
basic salary. Whereas the defendant contributed 15% of plaintiff’s
basic salary. His assertion is supported
by the conditions of
service. Appendix
J.
which is reproduced:

PENSION FUND
AND DEATH BENEFITS

1. 
   All locally
   employed staff who are less that 60 years old are required to join
   the Auction Holdings Ltd Pension Scheme (1974)
   immediately upon
   being confirmed as a permanent member of staff.

   
   

2. 
   The
   contribution made by the employee is 5% of basic salary and paid to
   the underwriter of the scheme (Old Mutual)

   
   

3. 
   The
   contribution made by the company is equivalent to 15% of the basic
   salary of the employee and is paid monthly together with
   the
   employee’s contribution to the underwriter of the scheme.

   
   

The plaintiff
contends that when his services were terminated he was repaid his own
monthly 5% basic salary contribution. Ex 7
is a letter dated 3^rd
September, 1996 from defendant to plaintiff. It reads:

Dear
Mr Chatuwa,

PENSION
SCHEME CLAIM

Please find
attached our cheque no. 52301, dated 29^th
August, 1996 for K9,329.65 being payment of withdrawal benefits of
Pension contributions to the above scheme.

The net payable
was K30,501.58 and your outstanding loan of K21,171.93 has been
recovered from this amount.

Yours
faithfully.

Auction
Holdings Limited

Mr. Maliro

GROUP
PERSONNEL MANAGER

The plaintiff
contends that he only received his own contributions. Whereas the
defendant counter argues that the pension payment
included the
defendant’s 15% contributions.

In the course of
XXD of DW1 he conceded that plaintiff was paid his own contributions
without defendant’s. However, in RXD Dw1
changed his mind but with
hesitation to concede that pension payment included the 15% by
defendant.

To resolve this
issue is to examine exp6 issued by the insurers Bain Hogg dated 19^th
August, 1996:

“Dear
Sir

PENSION
SCHEME – WITHDRAWALS

We have
pleasure in enclosing herein cheque no. 202891 dated 8^th
August, 1996 for K30,946.71 being refund of pension contributions in
respect of the under listed members.

Ref No.
22 A.G. Chatuwa

Own
Contributions

Plus 1.0%
Compound = K20,334.39

Interest

Service
Benefit = K10,167.19

Net Payable
= K30,501.58

Please note
that prior claim mentioned on the withdrawal form in respect of A.G.
Chatuwa has not been deducted. Assurers have
paid out the benefits
all together.

Kindly
acknowledge receipt.

Your faithfully

M.M. Banda

Life and
Pensions Administrator

On careful
examination of exp6 there is this statement “Own Contributions plus
1.0% Compound Interest = K20,334.39”. Had the
defendant called the
insurer – Old Mutual it would have assisted the court to know any
other meaning as used in this context.
In the absence of a contrary
meaning, it is the understanding of this court that “Own
Contributions plus 1.0% Compound Interestp”
refers to the contributions actually made by the plaintiff which
earned 1.0% Compound Interest.

There is another
item “Service benefit” of K10,167.19. This cannot be a
contribution of defendant. It is therefore the finding
of this court
that 15% of defendant’s contribution towards plaintiff’s pension
was withheld by defendant and its insurers.
It is a further finding
of this court that plaintiff is still entitled to it.

Finally this court
finds defendant liable for unfair termination of employment services,
and under payment of pension benefits.
Assessment of damages and
pensions claims are referred to the Senior Deputy Registrar/Assistant
Registrar for determination.

Pronounced in Open
Court on this 13th day of January 2006 at Lilongwe.

R.R. Chinangwa

JUDGE