Headnote
On 2 March 2000, the Applicant lodged a complaint in the Industrial Relations Court (“IRC”) against the Respondent for wrongful termination of employment. On 9 October 2007 the IRC delivered a judgment in his favour and awarded him, among other reliefs, 24 months’ salary plus interest at the Bank of Zambia short term lending rate from the time of filing the complaint to the date of judgment and thereafter at the current lending rate until full settlement. The Respondent was dissatisfied with the decision of the IRC and on 6 November 2007, it launched an appeal to the Supreme Court. The Supreme Court upheld the decision of the IRC on 12 June 2009. The Respondent then paid a sum of K69 570.55 into Court which it believed was due to the Applicant. The Applicant acknowledged receipt of the money and withdrew it from Court. The Applicant was however, not satisfied with the quantum which the Respondent had paid into Court. He applied for assessment before the Deputy Director IRC. The Deputy Director ordered that all allowances should be included when calculating the Applicant’s terminal benefits. It was also ordered that the judgment sum should attract interest at the Bank of Zambia lending rate until settlement.
The Respondent contested the decision of the Deputy Director to the full bench of the IRC. The full bench allowed the appeal. The Applicant then escalated the matter to the Supreme Court. The Supreme Court allowed the appeal and held that the calculation of the Applicant’s terminal benefits should include among others, the basic salary, leave pay, house rentals, education allowance and fuel allowance for 24 months. On interest, the Supreme Court ordered that interest should be applied as awarded in the judgment of the IRC. Following the Supreme Court’s judgment, the parties failed to agree on the computation of interest as a result of which, the
Applicant applied pursuant to rule 48 (5) of the Supreme Court Rules for the interpretation of the judgment.
Held
1. When a judgment is rendered, the principal sum found owing and interest if any, merge to form the judgment debt and this attracts interest as may lawfully be ordered by the Court in accordance with section 2 of the Judgments Acta.
2. Our interpretation of section 4 of the Law Reform (Miscellaneous Provisions) Actb is that interest on damages awarded by the Court must be simple interest. This is the interest, which when added to the amount owing creates the judgment debt; that judgment debt will attract interest in accordance with the law relating to judgment debts and not in accordance with the Law Reform (Miscellaneous Provisions) Act. (Bank of Zambia v Caroline Anderson and Andrew W Anderson (1993-1994) ZR 47 affirmed).
3. The Judgments Act provides for payment of interest on judgment debts.
4. Section 4 of the Law Reform (Miscellaneous Provisions) Act confers discretionary power on the Court to award simple interest on debts and damages from the date that the cause of action arose up to the date of judgment. The usual practice by the courts has been to peg this interest at the average short term deposit rate from the date when an action is commenced up to the date of judgment. After judgment, the rate of interest imposed is in accordance with the Judgments Act, that is to say, at the current lending rate as determined by the Bank of Zambia. (Barclays Bank Zambia Plc v Patricia Leah Chatta Chipepa Selected Judgment No 16 of 2017 followed).
5. The argument that charging interest on a judgment date up to the date of payment amounts to compounding the interest is untenable.
6. The basis of an award of interest is that the defendant has kept the plaintiff out of his money and has had the use of it himself and should therefore, compensate the plaintiff for the period that he has kept the plaintiff out of the use of his money.
7. Once money has been paid into court by a defendant, there can be no basis for requiring such defendant to pay interest on that money from the date that it is paid into court (BP Zambia Plc v Expendito Chipasha and 253 Others Selected Judgment No 57 of 2018 followed).
8. The payment of money into court is intended to promote settlement of the matter, and also to protect the defendant from incurring interest on that money.
9. In this case, the IRC delivered its judgment in favour of the Appellant on 9 October 2007. In our decision of 12 June 2009, we upheld the decision of the IRC. The Respondent only paid what it considered to be the judgment sum into court on 6 October 2009, well after the judgment of the IRC and this Court. The Respondent cannot, therefore, claim any comfort from the principle which shields a litigant from paying interest on a judgment sum up to the date of judgment, when the money has been paid into court. The Appellant was kept out of his money up to the date of judgment of the IRC and this Court.
10. The matter appears to have been protracted by the parties themselves who were appealing at each stage. We therefore, find no justification to curtail the period during which interest should be charged, more so that it is the Respondent who refused to pay the interest due in the face of clear provisions of the law and various authorities of this Court on the formula for calculating interest before and after judgment. (Grindlays Bank International (Z) v Nahar Investments Limited (1990-1992) ZR 86 distinguished).
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a.Section 4 of the Law Reform (Miscellaneous Provisions) Act, Chapter 74 of the Laws of Zambia in so far as is relevant provides that:
In any proceedings tried in any Court of record for recovery of any debt or damages, the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment:
Provided that nothing in the section-
(i) shall authorise the giving of interest upon interest; or
b Section 2 of the Judgments Act, Chapter 81 of the Laws of Zambia provides that:
Every judgment, order, or decree of the High Court or of a subordinate court whereby any sum of money, or any costs, charges or expenses, is or are to be payable to any person shall carry interest as may be determined by the court which rate shall not exceed the current lending rate as determined by the Bank of Zambia from the time of entering up such judgment, order, or decree until the same shall be satisfied, and such interest may be levied under a writ of execution on such judgment, order, or decree.