Zimba NO and Others v Standard Commercial Tobacco (M) Ltd (271of 2005) ((M)) [2006] MWHC 95 (21 April 2006);

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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 And the plaintiffs as employees resolved to have the pension fund withdrawn and distributed amongst the members.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