DISTRIBUTABLE (84)

Judgment No. SC 105/04

Civil Appeal No. 287/99

VIMBAINASHE THEOPHILUS DUBE v STANDARD

CHARTERED BANK

SUPREME COURT OF ZIMBABWE

SANDURA  JA, ZIYAMBI JA & GWAUNZA JA

HARARE, JUNE 21 & DECEMBER 16, 2004

E T Matinenga, for the appellant

C Phiri, for the respondent

ZIYAMBI JA: The appellant was employed by the respondent as operations manager at its Robert Mugabe Branch, a post to which he was promoted in 1993 having joined the respondent in 1976. On or about 30 September 1994, he was placed on suspension without pay and an application was made to the Minister for authority to dismiss him in terms of the Labour Relations (General Conditions of Employment) (Termination of Employment) Regulations, 1985, SI. 371/85 (“the Regulations”) on the grounds that he had displayed gross incompetence and inefficiency in the performance of his work. The application was granted by the Labour Relations Officer and upheld both by the Senior Labour Relations Officer and the Tribunal which delivered, on 27 September 1999, the judgment now appealed against.

The record is long and illegible in parts. It also contains unnecessary material which need not concern the Court. The papers are out of sequence. However counsel for the respondent has conveniently set out the background facts in chronological order and I propose to follow the same order.

On 16 July 1993, the Human Resources Division of the respondent issued a circular relating to the unprecedented level of fraud in the bank involving no fewer than twenty-nine staff members and pointing out that this was often brought about by a total disregard for standing instructions. A warning was issued that decisive action would be taken to rectify the situation.

On 17 August 1993 the Head of Branch Operations wrote to the appellant outlining the duties of branch management and emphasizing the need to follow laid down instructions and to undertake regular scrutinies of staff.

On 27 January 1994 the Head of Branch Operations reported adversely to the Executive Director, Personal Banking on the unacceptable state of Robert Mugabe Branch. He complained to the appellant of the apparent careless attitude regarding systems and controls which had led to recent claims by customers, loss of entries and failure to carry out customers’ instructions on time.

The appellant was requested to submit an Action Plan by 3 February 1994 outlining how he intended to avert the deteriorating situation. The letter stated:

“Looking at your background, especially your experience in the Internal Control Function, we would expect tight controls in your administration. We expect to see a revamp in your systems and administration. If no improvement is noticeable with immediate effect we will have no option but to adopt stern measures.”

On 3 February 1994 the appellant replied, assuring his superiors that he was in “full control of the branch situation and am always looking at ways to improve operations and service and that work is up to date.” He submitted the required Action Plan.

On 11 February 1994 a circular was issued to all managers referring to the adverse inspection reports from auditors, particularly those reports graded 3 and 4. These reports were said to be receiving an increased level of scrutiny not only from local Management but by the respondent’s London Head Office as well. Managers were warned that accountability for such reports would impact on their career development inter alia.

On 28 February 1994 the Head of Branch Operations wrote to the appellant, complaining that his list of objectives for 1994 “comprises the same objectives which have been set year after year but you have had limited success in achieving”. He urged the appellant to exert greater effort during that year in order to fulfil all his objectives.

On 8 April 1994 the Head of Branch Operations wrote to the appellant expressing the bank’s disappointment that the Robert Mugabe Branch had been awarded the lowest rating by the Internal Controller during an inspection for the quarter year ended 31 March 1994. An explanation was demanded for “this sad state of affairs and how you are going to rectify it”.

On 2 June 1994, the Head of Branch Operations again wrote to the appellant, this time advising him of an audit soon to be undertaken at Robert Mugabe Branch. It was pointed out to the appellant that as he had been provided with “matters arising from previous adverse audits” of three other branches of the bank there was no reasonable excuse why the weaknesses highlighted in these branches should recur at the appellant’s branch. The appellant was urged with the aid of his staff to “update and rectify all areas you are not happy with so as to make the audit a success”. The appellant was urged to aim for and attain an overall rating of not less than 2.

The internal control report for the Robert Mugabe Branch for the period ended 30 June 1994 revealed that the “standard of operations at the branch is generally unsatisfactory”. It was the view of the Head of Internal Control that:

“It is quite apparent that a casual approach is being adopted in many of the key control areas and, as an example, we find it inconceivable that the Operations Manager can permit bank cheque amounts to be cleared to unclaimed balances for such well known customers as Cone Textiles, Old Mutual etc. …”

An audit of selected operational areas of Robert Mugabe Road Branch was conducted as at the close of business on 3 August 1994. The branch was graded 4 “reflecting an unsatisfactory system of internal control”. The major cause of the “present state of controls is non-compliance with laid down instructions specifically designed to manage inherent risk”. It was found that contributing factors were inadequately trained staff, increased volumes of work, weak management and poor communication of problems to Head Office.

On 8 September 1994 the Robert Mugabe Branch again received an adverse audit report. Out of eight areas audited, five grade 4s were awarded. The grades achieved were considered unsatisfactory. This prompted a letter from the Executive Director for Personal Banking to the appellant on 26 September 1994, expressing his disappointment at the unsatisfactory grading of the branch. The letter reads in part:

“In previous discussions on the adverse ratings accorded your Branch by Internal Control, you vehemently denied that the reports were a reflection of the lax controls and lack of adherence to systems and procedures prevalent in almost all areas under your control. You asserted that your work deserved better grades from the internal controller who you alleged to be biased against you. You defended your staff including the known poor performers and maintained that their performance was good. You took issue with your performance appraisal rating and called on us on several occasions seeking a reversal of the adverse grading. As a result of your arrogant attitude and your refusal to acknowledge your glaring shortcomings, we found it difficult to assist you improve your performance.”

It is not surprising, then, that a disciplinary hearing was held on 30 September 1994 and the appellant was by letter of that date, suspended from employment without pay or other benefits pending the determination of an application to the Ministry of Labour for approval to dismiss him in terms of s 3(1)(h) of the Regulations.

Following his suspension, and on 1 December 1994, the new Branch Operations Manager of Robert Mugabe Road Branch discovered the fraudulent activities of one Kandafu in relation to customers’ accounts at that Branch involving some $67 553,88 during the period 24 December 1993 to 7 November 1994. The following is an extract from his report to the Head of Branch Operations:

“Mr Kandafu credited his account with funds intended for commission from special clearances. He also fraudulently debited customers’ accounts and siphoned funds through other customers’ (believed to be his friends) accounts. These funds were then withdrawn in cash or through the issue of bank cheques which were cashed over our counters … .

The deposits to his account were not authorised and Mr Kandafu seems to have taken advantage of the weak controls over this area as it would appear that such deposits were not being queried …”

On 3 May 1995 permission was granted to the respondent to terminate the appellant’s services. The appellant was found by the Labour Relations Officer to have contravened ss 3(1)(a) and 3(1)(h) of the Regulations. The relevant provisions are set out below:

“3. (1) Where an employer has good cause to believe that an employee is guilty of -

(a) any act, conduct or omission inconsistent with the fulfilment of the express or implied conditions of his contract;

(b) wilful disobedience to a lawful order given by the employer;

(c) wilful and unlawful destruction of the employer’s property;

(d) theft or fraud;

(e) intoxication that renders him incapable of performing his duties properly;

(f) absence from work for a period of five or more working days without reasonable excuse;

(g) habitual and substantial neglect of his duties;

(h) gross incompetence or inefficiency in the performance of his work;

(i) …;

the employer may suspend such employee without pay and other benefits and shall forthwith apply to a labour relations officer for an order or determination terminating the contract of employment.”

The main grounds of appeal relied upon by the appellant were:

“… that the learned Deputy Chairman of the Tribunal erred in law by holding that the appellant had committed ‘a dismissable act of misconduct in terms of the registered Code of Conduct’ when in fact the appellant was not governed by any registered Code of Conduct”;

and, secondly,

“… that the learned Deputy Chairman erred and misdirected himself in law in holding that ‘the manner in which a fellow employee was punished is not a relevant consideration’.”

It is clear from the record that the appellant was found guilty of having contravened s 3(1)(h) of the Regulations and that authority for his dismissal was granted in terms of s 2 of the same Statutory Instrument. That the Tribunal was aware of this fact is quite clear from the judgment. At p 9 of the record the learned Deputy Chairman of the Tribunal said:

“ … the respondent sought the appellant’s dismissal on allegations of gross incompetence or inefficiency in the performance of his work.”

And at p 11 :

“I am satisfied that the respondent has proved on a balance of probabilities that the appellant was grossly incompetent or inefficient in the performance of his work.”

The evidence clearly supports this finding.

It was common cause at the hearing before the Tribunal that the Code of Conduct for the Banking Industry, SI 201/95, was inapplicable to the present matter. The reference to a “dismissable act of misconduct in terms of a registered Code of Conduct” by the learned Deputy Chairman is clearly inadvertent since it is evident in his judgment that he was aware, and based his judgment on the fact, that the appellant had been dismissed on the authority granted by the Labour Relations Officer to dismiss him.

Turning to the second ground of appeal advanced on behalf of the appellant, namely, that the learned Deputy Chairman erred and misdirected himself in law in holding that the manner in which a fellow employee was punished was not a relevant consideration, the learned Deputy Chairman relied on the remarks of McNALLY  JA in Lancashire Steel (Private) Limited v Elijah Zvidzai Mandevana & Ors SC 29/95 at p 6 of the cyclostyled judgment where he said:

“Arguments may be addressed ad misericordiam as to how unfair it is that the four respondents out of a number of forty workers who participated in the unlawful collective job action should have been selected for punishment, but such arguments cannot absolve them of their breach of their statutory duty not to participate in such action. It is not uncommon for the alleged ringleaders in any unlawful gathering or action to be singled out for punishment. If they are guilty it is not in law relevant that others may also have been guilty.” (emphasis added)

In the instant case authority was granted to terminate the appellant’s services on the grounds of gross incompetence or inefficiency in the performance of his work. It matters not that authority was not sought for the dismissal of others who performed badly. The learned Deputy Chairman was correct in his application of the law.

Mr Matinenga drew the Court’s attention to s 12B of the Labour Act [Chapter 28:01], which was introduced by the Labour Relations Amendment Act, 2002 No. 17 of 2002 (“the Amendment Act”), and pointed out that in terms of subs (4) of s 12B the Labour Court has a discretion to order any other form of punishment. Subsection 4 provides:

“In any proceedings before a labour officer, designated agent or the Labour Court, where the fairness of the dismissal of an employee is in issue, the adjudicating authority shall, in addition to considering the nature or gravity of any misconduct on the part of the dismissed employee, consider whether any mitigation of the misconduct avails to an extent that would have justified action other than dismissal, including the length of the employee’s service, the employee’s previous disciplinary record, the nature of the employment and any special personal circumstances of the employee.”

However, the Amendment Act came into effect in March 2003, more than three years after the matter was heard by the Tribunal and could not, therefore, apply to the determination of this case.

Lengthy submissions were made, in the appellant’s heads of argument, on the question of the fairness of the appellant’s dismissal. The background facts set out in great detail at the commencement of this judgment show that the appellant was given several warnings and opportunities to better his performance, to no avail. Accordingly, even if the Amendment Act had been relevant to the determination of this matter, this is not a case where the Tribunal could be faulted for failing to impose a sentence less than dismissal.

In the result, the appeal is dismissed with costs.

SANDURA  JA: I agree.

GWAUNZA JA: I agree.

Sinyoro Muunganirwa & Company, appellant's legal practitioners

Coghlan, Welsh & Guest, respondent's legal practitioners