REPORTABLE ZLR (41)

Judgment No. SC 62/04

Civil Appeal No. 58/04

BARCLAYS BANK OF ZIMBABWE LIMITED

v PRIZE MAHACHI

SUPREME COURT OF ZIMBABWE

SANDURA  JA, ZIYAMBI JA & GWAUNZA JA

HARARE, JUNE 22 & SEPTEMBER 10, 2004

G V Mamvura, for the appellant

H Zhou, for the respondent

SANDURA  JA: This is an appeal against a judgment of the Labour Court (formerly the Labour Relations Tribunal) which ordered the appellant (“the Bank”) to pay to the respondent (“Mahachi”) his salary and benefits pending the determination by that court of Mahachi’s appeal against his dismissal by the Bank.

The factual background is as follows.

The respondent was employed by the Bank as an assistant director in the Corporate Banking Division. At the relevant time there was a critical shortage of foreign currency in Zimbabwe. In order to ensure that all the foreign currency that accrued to the Bank was properly allocated, the Bank established an Allocations Committee (“the committee”). Mr Mahachi occasionally sat on the committee.

Although the committee had no written rules regulating the allocation of foreign currency, a practice developed and it was understood that persons requiring foreign currency for certain purposes would be given priority in the allocation of foreign currency. For example, those who required foreign currency for medical or educational purposes and large companies, which were customers of the Bank, were given priority over all other applicants.

One of the Bank’s customers, whose affairs at the Bank were handled by Mahachi, was a company called National Power International Limited (“the company”), which had its head office in the United Kingdom, and a subsidiary operating in Zimbabwe. The company had a foreign currency account in pound sterling at the Bank, as well as a current account in local currency which had an overdraft.

In September 2001 Mahachi received instructions from the company’s head office in the United Kingdom to close the company’s foreign currency account. Part of the foreign currency was to be converted into local currency which was to be transferred to the current account in order to pay off the overdraft, and the balance of the foreign currency was to be remitted to the company’s bank in the United Kingdom.

Acting on these instructions, Mahachi converted £9 080.65 into local currency using the official exchange rate, paid off the overdraft on the company’s current account, and remitted the balance of the company’s foreign currency, amounting to £518.94, to the company’s bank in the United Kingdom.

Having done that, Mahachi then allocated the £9 080.65 to his own company called Shamina Holdings (Private) Limited (“Shamina Holdings”), without the involvement of the committee, and paid for the foreign currency using his own money.

Thereafter, Mahachi used the foreign currency which he had allocated to Shamina Holdings, and some of his own money, to import a motor vehicle from South Africa. The motor vehicle was subsequently registered in his name.

At the relevant time, Shamina Holdings was not a customer of the Bank, and when the Bank discovered that foreign currency had been allocated to an unknown entity, investigations were instituted and it was later discovered that the foreign currency had been allocated by Mahachi.

When Mahachi was questioned about the foreign currency allocation, he disclosed for the first time that Shamina Holdings was his company and that he was its sole director. In addition, he stated that Shamina Holdings had concluded an agreement with the company which owned the foreign currency, in terms of which Shamina Holdings had acquired the foreign currency from the company without the involvement of the Bank and the committee.

As a result of Mahachi’s claims, the Bank contacted its customer in the United Kingdom, and the claim by Mahachi that the company had sold its foreign currency to Shamina Holdings was denied.

In the circumstances, the Bank charged Mahachi with two acts of misconduct under s 5.4.4 of the Managerial Employees Code of Conduct (“the Code”). Section 5.4.4 of the Code reads as follows:

“Any act, conduct or omission inconsistent with the fulfilment of the express or implied conditions of any employee’s contract of employment with the Bank.”

In the first count it was alleged that Mahachi had committed the act of misconduct set out in s 5.4.4 of the Code, as read with article 4 of the Articles of Agreement, which Mahachi had signed when he joined the Bank. Article 4, in relevant part, reads as follows:

“The employee agrees to serve the Bank honestly, faithfully and diligently, and to comply with all the rules and regulations of the Bank. He agrees at all times readily to obey all orders and instructions and duly, honestly and faithfully to account for all moneys, securities, vouchers, bills, cheques, title deeds and other instruments which shall come into his hands as a servant of the Bank, and he further agrees to conduct himself in such a way as shall not injure the reputation of the Bank …”.

In the second count, it was alleged that Mahachi had committed the act of misconduct set out in s 5.4.4 of the Code, as read with article 5 of the Articles of Agreement. That Article reads as follows:

“The Employee agrees that he will not, without the written consent of the Bank first obtained, at any time during the continuance of his employment under this Agreement, engage or be engaged or concerned directly or indirectly in any other business or occupation whatsoever whether for profit or otherwise either as principal, agent, servant or in any other capacity, but will devote the whole of his time and attention to the business of the Bank and will use his best endeavours to promote and extend it.”

In due course, the matter came before the hearing authority of the Bank and Mahachi was found guilty on both counts. The penalty imposed in respect of each count was that of dismissal.

Aggrieved by that decision, Mahachi appealed to the Bank’s appeals board. Thereafter, in October 2002, the appeals board confirmed the conviction on the first count but set aside the penalty of dismissal and substituted a final written warning. However, with regard to the second count, the appeals board set aside the conviction as well as the penalty imposed.

Dissatisfied with that result, the Bank noted an appeal to the Labour Relations Tribunal. In its notice of appeal, the Bank challenged the decision by the appeals board to substitute a final written warning for the penalty of dismissal in respect of the first count. In addition, it challenged the setting aside of the conviction on the second count and the penalty of dismissal imposed in respect of that count. There was no cross-appeal by Mahachi against the confirmation of his conviction on the first count.

However, before the appeal by the Bank was heard by the Labour Court, Mahachi filed an application in that court seeking an order directing the Bank to pay him his salary and benefits pending the determination of the Bank’s appeal by that court. That application was made in terms of s 97(4) of the Labour Act [Chapter 28:01] (“the Act”), which reads as follows:

“Pending the determination of an appeal the Labour Court may make such interim determination in the matter as the justice of the case requires.”

The application was granted in February this year. Feeling aggrieved by that decision, the Bank appealed to this Court on the ground that the Labour Court’s decision is grossly unreasonable.

It is clear from the provisions of s 97(4) of the Act that the President of the Labour Court had a discretion to grant the interim relief sought by Mahachi. In the circumstances, unless it is shown that the learned President made an error in exercising that discretion, this Court would not interfere with her decision.

As GUBBAY  CJ said in Barros and Anor v Chimphonda 1999 (1) ZLR 58 (S) at 62G-63A:

“It must appear that some error has been made in exercising the discretion. If the primary court acts upon a wrong principle, if it allows extraneous or irrelevant matters to guide or affect it, if it mistakes the facts, if it does not take into account some relevant consideration, then its determination should be reviewed and the appellate court may exercise its own discretion in substitution, provided always it has the materials for so doing.”

See also Robinson v Minister of Lands and Anor 1994 (2) ZLR 171 (S) at 175 A-C.

In the present matter, I am satisfied that the learned President erred and seriously misdirected herself when she concluded that Mahachi’s prospects of success in opposing the Bank’s appeal to the Labour Court were bright.

I say so because in her judgment, and whilst dealing with the act of misconduct charged in the first count, the learned President said the following:

“I have considered the applicant’s submissions … . I find that the submissions have merit thereby making his prospects of success in defending the appeal bright. The applicant committed a one off act of misconduct for which he was convicted. This was an abuse of authority. Abuse of authority is an offence on its own in terms of the Respondent’s Code. Its penalty is a written warning.” (emphasis added).

In this regard, I wish to make three points.

The first point is that it was wrong to describe the act of misconduct for which Mahachi was convicted in the first count as an abuse of authority. I say so because Mahachi did not have any authority whatsoever to allocate foreign currency to Shamina Holdings. The allocation of foreign currency was the special preserve of the allocations committee, and Mahachi knew this. He, therefore, acted dishonestly in breach of article 4 of the Articles of Agreement.

The second point is that in the first count Mahachi was not charged with abuse of authority, but with committing an act or conduct inconsistent with the fulfilment of the express or implied conditions of his contract of employment with the Bank, as read with article 4 of the Articles of Agreement. He was convicted by the hearing authority and that conviction was subsequently confirmed by the appeals board. Thereafter, when the Bank noted an appeal against the setting aside of the penalty of dismissal, Mahachi did not cross-appeal against the confirmation of his conviction. This fact was overlooked by the learned President in determining Mahachi’s prospects of success in contesting the Bank’s appeal to the Labour Court.

And the third point is that the learned President overlooked the fact that the Bank had noted an appeal against the decision by the appeals board to set aside the conviction on the second count and the penalty of dismissal imposed in respect of that count. She did not at all deal with Mahachi’s prospects of success in contesting the Bank’s appeal on that count.

In the circumstances, this Court will exercise its own discretion in the matter. However, in view of the fact that the Bank’s appeal is still pending in the Labour Court, the views I shall express on the prospects of success of that appeal are prima facie views which are not in any way intended to influence the Labour Court in the determination of that appeal.

In my view, and bearing in mind all the evidence in this matter, the Bank has good prospects of success in respect of the appeal pending in the Labour Court. It seems to me that with regard to the first count, the appeals board correctly set out the aggravating factors in the matter as follows:

“(a) The appellant (Mahachi) was a very senior member of staff in whom the Bank had a lot of trust and who had to be exemplary in the way he conducted himself in the eyes of his juniors and customers.

(b) He exposed the Bank to a serious reputational risk by falsely claiming that he had been involved in a parallel deal with the customer. The Bank had to verify (the) appellant’s assertions with its customer in Britain through Barclays plc. That exposed the Bank to a serious risk which the Bank has to guard very jealously in these days of stiff competition.

(c) The appellant hid his transaction behind a company. He did not want to leave tracks that connected him. That showed the worst sin in banking, that of dishonesty. A banker is expected and is supposed to be honest and faithful in whatever he does. The appellant’s failure to live up to that standard made his offence very serious.

(d) The appellant abused his position in the Bank and the relationship that he enjoyed with the customer. He used the relationship to his personal benefit.

(e) The appellant did what he did out of greed and not need. The appellant bought a vehicle which is an item of luxury which clearly shows that he did not need forex for a pressing desperate purpose. Considering his position in the Bank, the appellant obviously had a car already which he had purchased through the Bank’s assistance and could have got another if he had properly approached the Bank with a case for replacement. Here, the appellant was very selfish.”

In the circumstances, the Labour Court should have dismissed Mahachi’s application for interim relief.

However, that is not the end of the matter because advocate Zhou, who appeared for the respondent, submitted that it had not been necessary for the respondent to apply for interim relief because, by operation of law, the respondent was entitled to his salary and benefits, notwithstanding the noting of the appeal by the Bank.

In making that submission, counsel relied upon the provisions of s 97(3) of the Act, and the decision of this Court in UTC (Zimbabwe) (Pvt) Ltd v Chigwedere 2001 (1) ZLR 147 (S).

Section 97(3) of the Act provides that an appeal against a determination made under an employment code shall not have the effect of suspending the determination or decision appealed against; and in the UTC case supra this Court decided that the noting of an appeal against a determination made in terms of a registered Code of Conduct did not have the effect of suspending the decision appealed against.

In the circumstances, counsel submitted that as the appeals board set aside the penalty of dismissal which had been imposed on Mahachi this meant that Mahachi remained an employee of the Bank and was entitled to his salary and benefits, notwithstanding the noting of an appeal by the Bank against the decision of the appeals board.

Although the argument sounds persuasive, it overlooks the fact that there is a specific provision in the Code which determines whether or not the decision appealed against becomes operative. It is s 3.1.f, which reads as follows:

“The decision of the Appeals Board will be binding unless appealed against within fourteen working days to the Labour Relations Tribunal.”

What this provision means is that where an appeal is noted against the decision of the appeals board within the fourteen day period, the decision appealed against does not become operative. The provision is part of the agreement between the Bank and its managerial employees, and is binding on them.

In the present case, the appeals board handed down its decision on 14 October 2002, and the Bank noted its appeal to the Labour Relations Tribunal on 18 October 2002. As the appeal was noted within the fourteen day period, the decision of the appeals board, which set aside Mahachi’s dismissal, did not become operative.

It therefore follows that Mahachi was not entitled to his salary and benefits.

In the circumstances, the following order is made –

1. The appeal is allowed with costs.

2. The order of the court a quo is set aside and the following is substituted –

“The application is dismissed with costs”.

ZIYAMBI JA: I agree.

GWAUNZA JA: I agree.

Scanlen & Holderness, appellant's legal practitioners

Manase & Manase, respondent's legal practitioners