DISTRIBUTABLE (89)

Judgment No SC. 120/04

Civil Appeal No. 188/02

ZIMBABWE MINING AND SMELTING COMPANY (PRIVATE) LIMITED

v JEPHITER BANDA

SUPREME COURT OF ZIMBABWE

CHIDYAUSIKU CJ, SANDURA JA & ZIYAMBI JA

HARARE, NOVEMBER 22, 2004 & JANUARY 14, 2005

J C Andersen SC, for the appellant

The respondent in person

SANDURA JA: This is an appeal against a judgment of the Labour Relations Tribunal (“the Tribunal”) (now the Labour Court) which ordered the appellant (“Zimasco”) to reinstate the respondent (“Banda”) as Zimasco’s financial accountant, or pay him damages in lieu of reinstatement.

The background facts in this matter may be tabulated conveniently as follows:

1. In August 1985 Banda joined Zimasco as a cost accountant. Four years later, in 1989, he was transferred to the post of financial accountant. His immediate superior was Mr P Daya (“Daya”), the chief accountant.

2. On 6 December 1990 Daya wrote to Banda as follows:

“It is becoming of great concern to me that to date none of the deadlines set for the timeous completion of work for the year-end audit reporting purposes have been met. For your information I detail below some of these deadlines –

(a) Staff Debtors

Deadline to have a typed reconciliation in my office by 10.00 am Monday 3^rd December was not met. This, I remind you, was extended after you failed to produce it with the October reconciliation as detailed in my memo to you dated 12^th November, 1990.

(b) Filing

All filing of creditor accounting records were (sic) to be filed by the 23^rd November, 1990. On my follow-up you were unable to give me a reply and to which you stated you would come back to me. This you never did.

(c) Sampling of Invoice with ‘Paid’ Stamp

The deadline for the completion of this exercise, which I kindly remind you again are unstamped from July, was the 23^rd November (refer my memo dated 12^th November, 1990). This was not met.

I would have expected you to issue a memo to your bookkeeper and creditors’ clerks instructing them to complete the above exercises.

(d) Accrued Liabilities

You produced a schedule as requested but informed me that the opening balance details would be acquired from Deloittes. To date I have not received any information nor any feedback on this.

(e) Creditors Reconciliation to Control Account Etc

Per the audit plan the deadline for this was 5^th December 1990 by 10.00 am. Refer my audit plan memo dated 21^st November 1990. I have specifically stated in this memo, that should the deadline not be met, I was to be approached well before to take timeous and corrective action. This information would then be passed to the Deloitte auditors to assist in their planning. I have to emphasise that we need not give Deloitte an opportunity to report on our inability to produce the work to them as planned.

(f) Alloy Transfers and Adjustments (Section Eight)

The deadline for this was 4.12.90. To date I have not received this, bearing in mind that I specifically stated in my audit plan that the prepared by, checked by and approved by controls be adhered to (to) avoid handing over incorrect schedules to the auditors.

What is also distressing is that you have not bothered to inform me or to liaise with me on any of the above matters. Please can you ensure that the above state of affairs is corrected and all deadlines met.”

3. On 31 May 1991 Banda was given a final written warning in respect of the acts of misconduct of habitual and substantial neglect of duty, and gross inefficiency. The warning was valid for twelve months, and Banda was informed that if, during that period, he committed an act of misconduct in terms of the Code of Conduct (“the Code”) he would be in danger of being dismissed.

4. In November 1991 Banda was seconded to the costing section as a cost accountant.

5. On 30 January 1992 Deloitte & Touche, the external auditors, reported on Banda as follows:

“Our relationship with Mr Banda was strained over the last few years. This might be as a result of personality clashes, but judging by the number of people who have problems communicating with him it would appear that the problem lies with his attitude.

During the current audit, most staff tried to avoid him because they found him arrogant and unco-operative. Our communication with him was channelled through Mr N Mpofu.

We found that Mr Banda always has a reason/excuse for any errors or omissions, and often these attempt to transfer blame onto other members of staff.

None of the stock reconciliations for (the) year end had been checked by him, yet it was specifically stated in Mr Daya’s memo concerning year end planning that they should be checked and signed before being handed to us. From our work on these reconciliations it would appear that Mr Banda had no input at all and did not help his assistant when it was obvious that the latter struggled to complete them.

In general we found that the checking function which was his responsibility, both in the financial and cost department, was not performed satisfactorily.”

6. On 13 February 1992, Daya wrote to Banda as follows:

“Continuous Ignoring of Instructions and Procedures

(a) In your secondment to the costing section it was made clear to you in my memo dated 27.11.91 that you were under (an) obligation to inform me at all times should you foresee any problems in not meeting deadlines. At no time did you comply with this instruction. You continually left it to me to chase you up and several commitments were made by you to have various reports completed. These commitments were never fulfilled, nor did you have the courtesy to inform me accordingly.

(b) In my audit planning memo I made it clear that overtime will be allowed ‘after complying with the normal overtime procedures’. These procedures were never complied with.

(c) In the same memo I instructed that all schedules for the auditors be typed. Further these schedules were never checked by you and approved by (you) meaning this goes against all efforts to improve the quality of work from the section.

(d) In your appraisal dated 15.10.91 I pointed out the need for you to improve your presentation quality. Your contribution to the December Management Report leaves a lot to be desired and indicates a total lack of respect for my office.

Conclusion

The above facts indicate a very careless attitude to your work which does not augur well for current efforts to improve your overall situation in the section.”

7. On 19 February 1992 Daya again wrote to Banda complaining about inaccurate reconciliations and, inter alia, said:

“The quality of checking and supervision is very poor and is highlighted by the above. You appear to be very content to accept reconciling items without further investigation. As an accountant, I would have expected you to identify the incorrect treatment, especially as both reconciliations did not ‘talk to each other’.”

8. Later that month, i.e. February 1992, Banda was charged with two acts of misconduct in terms of the Code. The first was gross inefficiency in the performance of his duties, and the second was habitual and substantial neglect of duty.

9. In March 1992 a disciplinary hearing, presided over by Mr P Breese (“Breese”), the administrative manager, was held. Although two main charges had been preferred against Banda, as set out above, the disciplinary hearing proceeded on the basis that the particulars of those charges were individual charges. At the end of the hearing, six of the charges were found to have been proved, and Banda’s dismissal was recommended.

10. Banda then appealed against that decision in terms of the Code, and the appeal was heard by Mr H J Briel (“Briel”), the general manager, on 27 March 1992. Briel confirmed the verdicts in respect of five of the six charges, and dismissed Banda with effect from 10 April 1992.

11. About two years later, on 7 March 1994, Banda noted an appeal to the Tribunal. There is nothing in the record before this Court which indicates the circumstances in which the late noting of that appeal was condoned. Nevertheless, the appeal was allowed by the Tribunal, and the order indicated at the beginning of this judgment was given.

Aggrieved by that result, Zimasco appealed to this Court.

In my view, the Tribunal seriously misdirected itself when it allowed Banda’s appeal and ordered that he be reinstated or paid damages in lieu of reinstatement. I shall deal with the five charges, found proved by Briel, in turn.

Count One

The allegation in this count was that Banda had distributed a production labour analysis report for January 1992 in which the cost of overtime was grossly overstated by $1 062 892.00, a very large amount of money in those days. The report had been prepared by an analysis clerk, and Banda assured Daya, to whom he was accountable, that the report reflected genuine overtime worked.

However, when Banda was called upon by Daya to substantiate the statement that the report indicated genuine overtime, he discovered that the report was inaccurate and that the overtime had been overstated by $1 062 892.00.

There can be no doubt that Banda admitted the charge in this count. I say so because when he was asked by Briel, at the hearing of his appeal, why he had not discovered the error made by the analysis clerk, he said it was because he “did not check properly”. In my view, he did not check the report at all because, had he done so, he would have discovered the error in the same way that he discovered it after Daya had called upon him to substantiate the assurance that the overtime reflected was genuine.

In my view, when the Tribunal concluded that the charge in this count had not been established, it seriously misdirected itself. In its judgment it stated as follows:

“An error of overstatement under the circumstances cannot be a sign of incompetence. It also seems that the company did not in any way reprimand Mr P Daya, (Banda’s) senior, when he overstated by a figure of $2 178 127.00 which was more than the overstatement by (Banda). If the mistake amounted to a serious or substantial neglect of duty, then Mr Daya too ought to have been charged and dismissed.”

Quite clearly, the Tribunal seriously misdirected itself in at least two respects.

Firstly, it was a serious misdirection to say that the error of overstatement could not be a sign of incompetence on the part of Banda. Banda’s main function was to check the accuracy of the reports prepared by his subordinates. The overstatement of the cost of overtime by $1 062 892.00 was a very serious error which Banda did not discover because he did not perform the fundamental duty of checking the report. In my view, the failure to check the report was a complete dereliction of duty on his part, which justified the conclusion by Briel that Banda was guilty of substantial neglect of duty and gross inefficiency. As an accountant Banda must have appreciated the importance of accurate figures in making business decisions.

Secondly, the statement by the Tribunal that if the overstatement of the cost of overtime was a serious or substantial neglect of duty by Banda, then Daya should also have been charged and dismissed, was completely unjustified. The fact that Daya might have committed a similar act of misconduct and might not have been charged was irrelevant in the determination of whether Banda had committed the act of misconduct with which he was charged. There is no logical connection between the two. In any event, the full facts of the alleged overstatement by Daya were not before the Tribunal.

In the circumstances, and bearing in mind that the Code provides that the penalty for substantial neglect of duty and gross inefficiency is dismissal, the Tribunal should not have set aside Banda’s dismissal.

On that basis alone the appeal must be allowed. Nevertheless, I shall deal with the rest of the counts.

Count Two

The allegation in this count was that Banda failed to follow the correct procedure in reconciling reline spares and high value stores at the end of 1991.

Zimasco had three different classifications of stock reserved for its own use. These were reline spares, high value stores and insurance spares.

Reline spares were spare parts kept for the major refurbishment of furnaces every twelve to fifteen years. High value stores consisted of spare parts and materials required by Zimasco for its daily operations, and included things like oil, grease, bolts and protective clothing. And insurance spares were spare parts purchased specifically for major breakdowns of machinery which could occur within five to twenty years.

The allegations in respect of this count were set out by Daya in his memorandum to Banda dated 19 February 1992. That memorandum, in relevant part, reads as follows:

“The effect of this journal was an attempt to disclose separately Reline Spares. Reline Spares were however separately disclosed under Insurance Spares for year end purposes.

The correct treatment was to transfer the entire amount from Insurance Spares to Reline Spares and add on the January receipts of Reline Spares. …

Reconciliations for both accounts were prepared for January and checked by yourself. The Reline Spares reconciliation starts with a balance per ledger and ends with (a) 9.4 million figure (which supposedly represented the total of stores ledger cards). Surely, the basic accountancy concept in this particular situation is to represent the ledger balance as the total of the cards on hand.

Similarly, the High Value reconciliation contains a reconciling item, which is the total January receipt of Reline Spares. Surely, this should be transferred to the Reline Spares account so that the Ledger balance would equal the value of cards on hand.”

Oral evidence confirming the above allegations was given by Breese, who testified under oath before the Tribunal, and it was not seriously challenged. In addition, it is pertinent to note that Banda did not testify under oath when he appeared before the Tribunal. He simply made a number of submissions, and therefore gave no evidence.

In its judgment the Tribunal said:

“The appellant (i.e. Banda) cannot be charged for failing to follow a procedure that he did not know existed. … Especially when management had commended his reporting system as being more user friendly.”

In stating the above, the Tribunal seriously misdirected itself. This is so because there was no evidence showing that Banda did not know that the procedure in question existed or that management had commended Banda’s reporting system as being more user friendly.

The Tribunal’s finding in respect of this count was, therefore, wholly unjustified and cannot be allowed to stand.

Count Three

The charge in this count was in two parts. The first part alleged that Banda had failed to produce reconciliations on time, and the second alleged that he had not complied with the laid down procedure which required that the reconciliations be checked and authorised by Daya before they were submitted to the auditors.

Briel found Banda not guilty in respect of the first part, but guilty in respect of the second part. In fact, Banda had not denied the allegation in the second part.

Before the Tribunal, Breese testified under oath and confirmed the allegations in the second part of the charge. However, no evidence was given by Banda. Notwithstanding that fact, the Tribunal in its judgment said:

“The appellant’s (i.e. Banda’s) evidence was that Mr Dias (sic) was not available, and waiting for his availability would have meant that we (sic) would have failed to meet the deadline. The appellant then made a decision to hand them in as his supervisor was unavailable.”

In my view, bearing in mind that Banda did not give any evidence before the Tribunal, and that he did not deny the allegation that he had not complied with the laid down procedure, the Tribunal seriously misdirected itself by referring to “evidence” given by Banda, and by finding that Banda was not guilty of failing to comply with the laid down procedure. It follows that the Tribunal’s decision cannot be allowed to stand.

Counts Four and Five

I shall deal with these counts together because that is what the Tribunal did in its judgment.

The allegation in respect of Count Four was that there were numerous old reconciling items on the Creditors’ Statement reconciliations which had not been resolved by Banda, and that that was evidence of Banda’s habitual and substantial neglect of duty and gross inefficiency.

The disciplinary hearing, in finding Banda guilty on this count, stated as follows:

“The Creditor Section for which Mr J Banda was responsible up until the end of November 1991 has been the subject of serious and grave concern by both External and Internal Auditors as borne out in various reports on this section. His failure to rectify the situation necessitated the seconding of the Group Internal Audit Department to the Creditors Department. In a hands on ‘Fix It Role’ they instituted investigations to clear the queries within the section. This lack of substantial action by Mr J Banda constituted his habitual and substantial neglect of duty and gross inefficiency in the performance of his duty.”

The allegation against Banda in respect of Count Five was that he had failed to clear long outstanding balances on the Debtors’ Account, and that that was evidence of Banda’s habitual and substantial neglect of duty and gross inefficiency.

The disciplinary hearing found that the allegations in this count had been proved, and that Banda had failed to follow standard accounting procedures for the collection of outstanding debts.

On appeal, Briel confirmed the disciplinary hearing’s verdicts on Counts Four and Five, and noted that although Banda had started attending to the problems affecting both the Creditors and Debtors Accounts, he did not sustain the effort to complete the exercise in respect of each account.

These findings were subsequently confirmed by Breese when he appeared before the Tribunal and testified under oath. As already stated, no evidence was given by Banda, nor did he call any witnesses.

However, in its judgment the Tribunal ignored the evidence given by Breese in respect of Counts Four and Five, without commenting on it, and stated as follows:

“The remaining two charges (i.e. Counts Four and Five) related to the failure by Mr Banda to clear items on the creditors’ statement that had been long outstanding, and sundry debtors as well.

The evidence showed that (Banda) had made several attempts to clear the long outstanding items. For example, the twenty-six items on the Sundry Debtors account had been reduced to nine items only. In some incidences it was (Banda’s) supervisors who had to make the decisions to write off some of the debts that could no longer be recovered. A request to write off the debts had been forwarded. (Banda) was frustrated by false promises to pay by the debtors. Under the circumstances it was not due to the negligence of (Banda) that these two accounts continued to have long outstanding items.”

There can be no doubt that the Tribunal seriously misdirected itself. It completely ignored the evidence given by Breese and did not even comment upon it. That evidence clearly established that the charges in both counts had been proved. In addition, the Tribunal proceeded on the basis that Banda had given evidence, when in fact he had simply made submissions, which could not be described as evidence.

In the circumstances, the Tribunal’s decisions on both counts cannot be allowed to stand.

Finally, I would like to comment on Banda’s submission that in view of the provisions of clause 4.1.1 of the Code the charges preferred against him were null and void. That clause reads as follows:

“When an offence is alleged to have been committed, the Supervisor will arrange an investigation by the Personnel Manager/Officer and Workers Representatives, and either dismiss the case or give a verbal warning or lay a formal disciplinary complaint in writing. The complaint must be made within forty-eight hours of discovery of the alleged offence. Complaints lodged outside this period shall be null and void except in situations where parties are operating away from their base. These are expected to lodge a complaint within forty-eight hours of their return to their base.”

It was submitted by Banda that as the complaints against him had been made outside the forty-eight hour limit the charges preferred against him were null and void.

Whilst the wording of the clause seems to indicate that its provisions apply to all acts of misconduct, it seems to me that the clause was not intended to apply to those acts of misconduct, such as habitual and substantial neglect of duty, which could only be committed after the same act had been committed a number of times, or after a series of similar acts had been committed. I say so because if that were not the case, it would be difficult to tell at what point, for example, the act of misconduct of habitual and substantial neglect of duty was committed or discovered. In any event, it would be undesirable to determine labour disputes on the basis of technicalities, such as the one relied upon by Banda.

In the circumstances, the following order is made –

1. The appeal is allowed with costs.

2. The order granted by the Labour Relations Tribunal is set aside, and the following is substituted –

“The appeal is dismissed with costs.”

CHIDYAUSIKU CJ: I agree.

ZIYAMBI JA: I agree.

Coghlan, Welsh & Guest, appellant's legal practitioners