None retroactivity of legislation: Nyambe Martin Nyambe & others v KCM

On 19th October 2023, the Supreme Court of Zambia delivered a judgment that addressed the question whether amendments to law have retrospective application. A majority of the three panel coram that included the Chief Justice of the Republic of Zambia, concluded in a split decision that a subsequent amendment or repeal of the law has no bearing on existing contracts unless the amendment explicitly so provides. Parties are bound by the terms agreed in their contract within the confines of the applicable law in force at the time of contract. Accordingly, the provisions of the National Pension Scheme (Amendment) Act No. 7 of 2015 ('the Amendment Act') which increased the retirement age from 55 years to 60 years do not have retrospective effect. It applies only to employees who were engaged after its enactment.

The brief background animating this matter is that the appellants were employed on various dates and in various capacities by the Respondent. Their employment was subject to permanent and pensionable conditions with a contractual retirement age of 55. This retirement age was also consistent with the applicable law at the time being the National Pension Scheme Act No. 40 of 1996 ('the NAPSA Act'), the Constitution of Zambia and the Income Tax Act, Cap 323. However, on 14th August 2015, the NAPSA Act was amended by the Amendment Act (sections 2 and 18 of the NAPSA Act which provided for the definition of 'pensionable age' and provided for early and late retirement). The effect of the amendment was that regular retirement age was moved up to 60 years. The Appellants all attained the age of 55 between 2015 and 2016, whereupon the Respondent KCM proceeded to give notice of retirement in accordance with the respective contracts. At the expiration of the notice period, the Appellants were all retired. The Appellants, still feeling vigorous and vibrant and noting the recent amendment to the NAPSA Act, took issue with the retirement, contending that they ought to have been retired at the age of 60 as per the amendment.

The litigation commenced in the Industrial Relations Division of the High Court ('IRD') which found for the Appellants. The IRD adjudged that the retirement was contrary to the law in force at the time of retirement and thus premature, illegal, null and void.

KCM was dissatisfied with this and launched an appeal to the Court of Appeal ('CA'). The CA overturned the IRD, finding that the parties were bound by the contractual terms including the retirement age of 55. The CA found that the amendments to the NAPSA Act only applied to those employees who had never made irrevocable options to retire at 55 years before the amendment and also to those employees who joined after the amendment. The CA found that the Appellants had accrued rights based on their conditions of service and could not rely on the amended retirement age to apply to them. To find otherwise would be to allow for unjust enrichment.

The Appellants sought the intervention of the apex court and accordingly appealed to the Supreme Court. Though seven grounds of appeal were advanced by the Appellants, the Supreme Court distilled six of those into two questions i.e. firstly whether the Appellants were bound to retire at 55 years as per their contracts and in line with applicable legislation at the time of contract or secondly whether the new mandatory retirement age of 60 as per the Amendment Act was retrospectively applicable to the Appellants.

In the majority decision, the Supreme Court found that the true principle remains that lex prospicit non respicit (law looks forward and not back). The apex Court referred to its previous decisions in Jackson Munyika Siame & 33 Others and ZCCM Investments Holdings v Cordwell Sichimwi. The Supreme Court rejected the proposition that the Appellants' right to retire at age 55 had not yet accrued as at the date of the Amendment Act. Recourse was had to the text of the Vortex Refrigeration Case which highlighted that the law was not intended to trap the unwary or unsuspecting by making present relations subject to future laws or conversely that historical relations subject to present day laws. The right to retire at 55 years was contractual, with statutory support at the time of contract and could not be varied without the consent of the parties. Jacob Nyoni v Standard Chartered Bank was accordingly followed. The Supreme Court was further fortified in its view of the non retrospective effect of law by section 10 of the Acts of Parliament Act, Cap3 as well as by section 14(3)(b) and (c) of the Interpretation and General Provisions Act, Cap 2. The primacy of the doctrine of freedom of contract and of the undeniable duty of Courts of law to enforce these contracts, were given their full day in the sun. Colgate Palmolive Zambia (Inc) v Shemu & Others was summoned in aid of that proposition. The Supreme Court accordingly found that the Appellants had not been prematurely retired; that they had been incorrectly awarded retirement benefits which they had not worked for, amounting to an unjust enrichment; and that there being no breach of contract, there was no entitlement to damages (Zesco Ltd v Alexis Mabuku Matale and Kitwe City Council v William Ng'uni followed).

Though the majority were unanimous on the above, the dissenting judge also delivered an opinion. The dissent was premised on a broader and more purposive interpretation of the Amendment Act. Informed by the legislatures intent to keep seemingly active and vibrant individuals working beyond 55 years and also by the need to shore up the ebbing National Pension Fund by postponing/deferring retirements to 60; fortified by what was viewed as evidence of steps taken to comply with the amendment by the Respondent, the dissenting Judge would have allowed the appeal.

This decision invariably stirs up many conversations including the revival of the debate between proponents of freedom of contract on one hand and pundits of the statutory variation to contractual terms on the other. To what extent must/will freely contracting parties be able to resist the dictates of statutory law impeding upon their private contracts? Should parties be allowed to resist the 'all boat' lifting effect of a statutory tide behind the twin shields of freedom of contract and vested rights?

The Supreme Court has spoken with authority and finality. It is the retirement bed that one makes at the time of contracting that one will eventually lie in! Make a good bed!

Kaumbu Mwondela, LLB LLM AHCZ FCIArb.