Court name
High Court General Division
Case number
271 of 2005

Zimba No & Ors. v Standard Commercial Tobacco (M) Ltd (271 of 2005) [2006] MWHC 95 (20 April 2006);

Law report citations
Media neutral citation
[2006] MWHC 95
Coram
Null






IN
THE HIGH COURT OF MALAWI


LILONGWE
REGISTRY


CIVIL
CAUSE NO 271 OF 2005





BETWEEN:





JUSTO
ZIMBA & OTHERS


[AS
MEMBERS OF THE JOINT CONSULTATIVE


COUNCIL
REPRESENTING MEMBER OF STAFF


AND
PERMANENT WORK] …………………. PLAINTIFF





-and-





STANDARD
COMMERCIAL TOBACCO


(M)LTD
………………………………………. DEFENDANT











CORAM
: JUDGE KAMANGA I.C. (MRS)





Chilenga;
Counsel for the Plaintiff


Katuya;
Counsel for the Defendant


L.N.
Msiska; Court Interpreter











R
U L I N G








This
is a representative action moved by employees of Standard Commercial
Tobacco (M) Limited. It was moved by way of Originating
Summons.
The plaintiff’s seek the determination of the court that the courts
makes a declaration that a pension fund operated
with Indetrust
Limited by the defendant be wound up; a declaration that the pension
fund should not be transferred to Alliance
One International Limited
and a further declaration that the defendant company as trustees do
dissolve the pension fund and distribute
the proceeds amongst all
beneficiaries according to their entitlement.





This
is the background to the application. It is the plaintiff’s
contention that there is an impending merger and acquisition
of the
defendant company by Dimon (Malawi) limited, and the resultant
company is Alliance One International Limited. The defendant

company has over 400 employees who joined Indetrust Limited Pension
and Death Benefits fund. With regard to the merger, there
has been
consultation between the plaintiffs and the defendants on several
issues inter alia severance pay and withdrawal of pension
fund from
Indetrust Limited. And the plaintiffs as employees resolved to have
the pension fund withdrawn and distributed amongst
the members. The
plaintiffs contend that there was a meeting between the parties
hereto and the pension fund administrators Indetrust
Limited and
Ministry of Labour officers to resolve the issue and at the said
meeting. Indetrust Limited stated that the pension
fund can easily
be paid out as long as management of the defendant company had
resolved to do the same. The plaintiffs lament
that at the moment,
management of the defendant’s company is not willing to have the
pension fund dissolved and shared amongst
the members. With regard
to the trust, the defendant company has been holding the pension fund
with Indetrust Limited on trust
for the employees (plaintiffs). The
employees note that there is no contract between themselves and the
new company Alliance One
International that will evolve out of the
merger. And the plaintiff’s would like to withdraw the fund and
start a fresh fund
if any with Alliance One International Limited
upon being reengaged. The plaintiffs would like the same to happen
before the
merger. Their fear is that the funds would disappear in
the event of being transferred to the new company Alliance One
International
Limited and that the employees would lose out upon
dismissal or retrenchment by the new company. The other basis of
the plaintiff’s
apprehension is that the other merging company
Dimon (Malawi) Limited has a different pension fund with different
administrators
from the defendant company.





The
plaintiffs submit a trust is a relationship which arises whenever a
person called trustee is compelled in equity to hold property
whether
real or personal or whether by legal or equitable title for the
benefit of others. Counsel for the plaintiff has argued
that equity
demands that the trust fund be dissolved and proceeds be distributed
among the members. The basis for the same being
that
equity
will not suffer a wrong without a remedy;

equity imputes an intention to fulfill an obligation,
equity
regards as done that which ought to be done and equity looks at
content other than form as well as equity follows the law
.
So many principles have been laid down for the court but not much
has been done to substantiate the principles with regard to
the
matter at hand. So this court will pick those which it believes
would have been relevant to the matter at hand. With regard
to the
maximum that equity will not suffer a wrong without a remedy, it is
not clear from the plaintiff submissions and averements
whether the
merger or its consequences are a wrong that needs to be addressed.
The plaintiffs have stated that they fear that
once the merger comes
into being, they will be disadvantaged in that the new company may
retrench or dismiss them and they will
stand out to lose on their
trust benefits. This is a fear of the unknown which I believe I
would be correct in observing that
it has no legal basis as at now
and it would be dangerous for this court to justify dissolution of
the trust fund and distribution
of the funds merely because the
plaintiffs are afraid of the unknown.





The
maxim equity regards as done that ought to be done indeed has to be
adhered to when parties are dealing with matters that originate
from
trust. I am having difficulties in appreciating that in the matter
at hand equity requires that once two companies merge,
what should
automatically follow is a dissolution and distribution of trust funds
held by a third party with regard to the interests
of employees of
one of the companies that will be merging. The plaintiffs have not
come out clearly to show that with the merger
of the two companies;
the terms that they had been enjoying in the trust fund that is being
managed by Indetrust Limited are going
to change. I should mention
that if the merger would result in the new terms being introduced on
the trust fund, then the plaintiffs
would have a basis for seeking
dissolution. However, where the terms for the operation of the trust
fund are not going to be affected,
the plaintiffs have no basis for
seeking dissolution of the trust fund. It is indeed true that equity
imputes an intention to
fulfill an obligation. It is very difficult
to hold the position that the defendants in the matter at hand do not
wish to fulfill
the same. When one looks at the General Rules of the
fund under the heading
‘The
Schedule, General Rules of Fund B’

one notes that from clause 4 to 13, issues of Retirement Benefit,
Early Retirement, Late Retirement, Leaving the Employer’s Service,

Benefits-Non Assignable, Incapacity, Discontinuance of Contributions,
Employer’s right of dismissal, Transfer from Another Pension
fund,
as well as Transfer to another Pension Fund have been discussed.
None of the provisions indicate that in the event of a
merger the
beneficiaries will be disadvantaged. I am sure that the plaintiffs
in this matter equally intend to apply the equitable
principles that
require them to subject their grievance and put it in context. In so
doing the plaintiffs are conversant with
the fact that they cannot
have their cake and eat it too – this is to the extent that if they
want the prayers that they are
seeking, then the plaintiffs should
make reference to the General Rules of the fund. The General Rules
of the fund to which the
plaintiffs are a party have provided them
with exit points if they wish to benefit from the fund before they
join the new ‘merged’
company. Under Clause 4,5 & 6 they can
retire, under clause 7 they can leave the Employer’s Service among
other remedies.
Unless the plaintiffs cease to operate under the
terms of employment to wit this trust fund is part thereof, the
plaintiffs have
no basis for seeking its dissolution. In the
circumstances, the plaintiffs prayer for declaration that the pension
fund should
not be transferred to Alliance One International Limited,
nor declaration that the Pension fund operated by Indetrust Limited
be
wound up, and that the defendant company do dissolve the pension
fund and distribute the proceeds amongst the members cannot succeed.

The plaintiff’s application is therefore dismissed in its
entirely.




Let
me also mention that the terms and Conditions of this Trust Fund to
wit the plaintiffs are a party has an arbitration clause.
Clause 14
to wit specifically states that “…
if
at any time hereafter any dispute difference or question shall arise
between the employer, the trustee, the members or other
persons or
their personal representatives or any of them respectively touching
the effect of these presents of any clause or thing
herein contained
or the rights or liabilities of the said

parties…
such dispute difference or question shall be referred to
arbitration”.
It
is unfortunate that the parties herein have rushed the matter to
court when it is clear that their agreement is that the court
should
only be involved as a last resort. I was tempted to desist from
making a decision on the matter, I have only persuaded
myself to do,
upon appreciating that it has taken an unduly long period for this
court to make a decision. Pending the matter
any further until
conclusion of arbitration may further delay the operation of business
of all court users concerned hence my decision.
Let me therefore
take the opportunity to encourage legal counsel to positively to
assist potential litigants that where there
is an arbitration clause
in their agreements, it is mandatory for them to engage that
particular conflict resolution mechanism
before bringing the matter
to court.








MADE
in Chambers this 21st day of April 2006.














I.C.
Kamanga (Mrs)


J
U D G E