REPORTABLE (94)

Judgment No. SC. 125/04

Civil Appeal No. 361/03

STANDARD CHARTERED BANK ZIMBABWE LIMITED

v MICHAEL CHAPUKA

SUPREME COURT OF ZIMBABWE

CHIDYAUSIKU CJ, ZIYAMBI JA & MALABA JA

HARARE, OCTOBER 5, 2004 & JANUARY 27, 2005

T Biti, for the appellant

R T Maganga, for the respondent

MALABA JA:

This appeal is against part of the judgment of the then Labour Relations Tribunal (“the Tribunal”) setting aside the dismissal of the respondent (“Chapuka”) from employment with the appellant (“Standard Chartered”) and substituting the penalty of “FINAL WRITTEN WARNING” on a conviction of misconduct inconsistent with the fulfilment of the express or implied conditions of his contract of employment in contravention of s 11(1) of Category “D” offences under the Employment Code of Conduct for the Banking Undertaking, Statutory Instrument 201 of 1995 (“the Code”).

The facts on which the appeal turns are these. Chapuka, who was employed by Standard Chartered, a financial institution, as a support service manager at its branch in Bindura, was in 1999 granted a loan under a scheme to assist employees to build their own dwelling houses. The loan was granted in terms of a contract which required that payment of the money be made through “bank cheques” drawn by Standard Chartered on its branch at Africa Unity Square in Harare in favour of suppliers of building materials or contractors.

On 26 August 1999 Chapuka submitted a written request to the Credit Department at Standard Chartered's Africa Unity Square Branch, which had the responsibility of administering the housing loan scheme, for two bank cheques in the amounts of $17 496.37 and $15 638.38 drawn in favour of Valley Farm Services and D.S.T. respectively for the purchase of building materials.

The two cheques were drawn in favour of the named payees and given to Chapuka. They bore two signatures of officials authorised to issue the cheques on behalf of Standard Chartered. Each cheque was crossed and endorsed “account payee only”. Once the cheques were in his custody, it became Chapuka’s duty to preserve them in their complete and regular form and deliver them to the intended payees in that state.

In breach of the obligation to preserve the instruments in their integrity, Chapuka altered them in material parts by deleting the names of the payees, by putting lines across them and substituting his wife’s name as payee. He did not deliver the cheques to the intended payees. He signed for the alterations and got a teller who was his subordinate to counter-sign so as to create the impression that the alterations had the authority of Standard Chartered. To induce the unsuspecting teller to put his signature on the altered cheques, Chapuka misrepresented to him that the cheques had been drawn in favour of the original payees by mistake and the alterations had been authorised by the Credit Department at Africa Unity Square Branch of Standard Chartered.

The forged cheques were deposited by Chapuka into his wife’s account. An amount of $32 000 was immediately withdrawn therefrom and deposited by Chapuka into his own personal account, leaving a balance of $2 099.75 in his wife’s account. He deposited the $32 000 into his account without having sought and obtained authority from the branch manager.

To guard against its employees misappropriating depositors’ funds and depositing them into their own accounts, the bank had a standing order requiring that all deposits by employees into personal accounts should receive the authority of branch managers.

On discovering Chapuka’s conduct, the branch manager charged him with conduct inconsistent with the fulfilment of the express or implied conditions of his contract of employment. On 21 September 1999 Chapuka appeared before a hearing officer to answer the charge, the particulars of which were that Chapuka had –

“1. Altered bank cheques without authority/falsified bank records.

2. Instructed a subordinate to carry out an improper transaction.

3. Deposited cheques meant for the benefit of a bank employee into the wife’s account.

4. Deposited $32 000 into a personal account without authority.

5. Left a balance of $2 099.75 in the wife’s account when she was not entitled to it.”

Chapuka did not deny committing all these acts. He said he wanted to have access to the money so that he could buy the cheapest building materials in the market. As the facts were not in dispute, the hearing officer had no difficulty in holding that the misconduct which Chapuka admittedly committed was inconsistent with the fulfilment of the express or implied conditions of his contract of employment. The hearing officer also held that the misconduct by Chapuka involved a breach of trust and its degree of seriousness justified dismissal from employment, as it struck at the root of the confidential relationship between the parties. Chapuka was accordingly dismissed.

Chapuka appealed unsuccessfully to the grievance and disciplinary committee and then to the appeals board of the National Employment Council for the Banking Undertaking. In holding that the misconduct justified Chapuka’s dismissal, the chairman of the appeals board, writing for all its members, on 17 December 1999, said:

“The facts of the case were clear and the Appeals Board were in complete consensus that the evidence clearly showed that Mr Chapuka was guilty of the charges laid against him. They agreed that he had abused his position in the bank to misdirect money that was to have paid for a house. The bank would never have lent him the money if they were not sure that the house itself would act as security. Mr Chapuka knew this and deliberately flouted the regulations. They all felt that Mr Chapuka had abused a position of trust.”

So the appeals board’s view of the facts constituting the misconduct committed by Chapuka was that it was not trivial and inadvertent but serious and deliberate.

The determination that the misconduct Chapuka was convicted of having committed gave Standard Chartered the power and authority to dismiss Chapuka from employment, as it constituted a serious breach of trust and confidence on which the relationship of employer and employee was based, was not challenged on appeal to the Tribunal. Chapuka’ ground of appeal was that he had been wrongly charged. His contention was that he should have been charged with “failure to comply with standing instructions” in contravention of s 8 of Category “B” offences under the Code.

The Tribunal confirmed the determination by the appeals board that Chapuka had committed conduct which was inconsistent with the fulfilment of the express or implied conditions of his contract of employment, effectively holding against him on the ground on which the appeal turned.

Without it having been raised as a question for determination by Chapuka, the Tribunal nonetheless considered the correctness or otherwise of the decision by the appeals board that the misconduct Chapuka had been found to have committed gave Standard Chartered the right to dismiss him from employment. The inference it drew from some of the facts was that the dismissal was not justified. It said:

“It is not disputed that the appellant’s conduct was improper. However, it must be borne in mind that the intention behind the (appellant’s conduct) was not to defraud the respondent. When the respondent wrote a cheque (sic) in favour of the creditors it was effectively doing so on the appellant’s behalf. Thus what money was being paid to the creditors effectively belonged to the appellant. What the appellant did, did not prejudice the bank.”

The dismissal was then set aside and substituted with the penalty of a “FINAL WRITTEN WARNING”. The Tribunal said that in substituting dismissal with the less severe penalty of a “FINAL WRITTEN WARNING” it acted in terms of s 91 of the Labour Relations Act [Chapter 28:01] (“the Act”).

The decision was attacked on appeal to this Court on two grounds. The first was that s 91 of the Act did not authorise the Tribunal to substitute its own determination for a determination on a matter not appealed against. The second was that as its decision could only be made upon consideration of the correctness of the dismissal of Chapuka as a question of fact, no such question had been raised in the grounds of appeal for the Tribunal to consider. Even if the question had been raised, the determination would have been reached only if the Tribunal was satisfied in regard the question that the decision of the appeals board was one no reasonable tribunal could have made.

I have found it unnecessary to consider the validity of the first ground of appeal because I am satisfied that the determination that the misconduct committed by Chapuka did not give Standard Chartered the right to dismiss him from employment was clearly wrong. My reasons are the following –

Conduct which is found to be inconsistent or incompatible with the fulfilment of the express or implied conditions of a contract of employment goes to the root of the relationship between an employer and an employee, giving the former a prima facie right to dismiss the latter. In Clouston & Co Ltd v Corry [1906] AC 122 LORD JAMES OF HEREFORD remarked by way of a dictum at p 129:

“Now the sufficiency of justification depends upon the extent of misconduct. There is no fixed rule of law defining the degree of misconduct which will justify dismissal. Of course, there may be misconduct in a servant which will not justify the termination of the contract of service by one of the parties to it against the will of the other. On the other hand, misconduct inconsistent with the fulfilment of the express or implied conditions of service will justify dismissal.” (the underlining is mine for emphasis)

In Sinclair v Neighbour [1967] 2 QB 279 SELLERS LJ held at 287 that to be conferred with the power and authority to dismiss a manager found guilty of taking money out of the till and leaving an “I.O.U.” note when he knew that if he had asked he would not have been given the money:

“… it was sufficient for the employer if he could, in all the circumstances, regard what the manager did as being something seriously inconsistent – incompatible – with his duty as the manager in the business in which he was engaged.”

In Tobacco Sales Floors Ltd v Chimwala 1987 (2) ZLR 210 (S) McNALLY  JA approved of the dictum by LORD JAMES OF HEREFORD in the case of Clouston & Co Ltd v Corry supra before going on at 218H-219A to say the following:

“I consider that the seriousness of the misconduct is to be measured by whether it is ‘inconsistent with the fulfilment of the express or implied conditions of his contract’. If it is, then it is serious enough prima facie to warrant summary dismissal. Then it is up to the employee to show that his misconduct, though technically inconsistent with the fulfilment of the conditions of his contract, was so trivial, so inadvertent, so aberrant or otherwise so excusable, that the remedy of summary dismissal was not warranted.”

In this case it was held on the facts by the Tribunal that the misconduct Chapuka had been convicted of having committed was inconsistent with the fulfilment of the express or implied conditions of his contract. He did not show that the misconduct was “so trivial, so inadvertent, so aberrant or otherwise so excusable, that the remedy of” dismissal was not warranted.

In Mine Workers’ Union v Brodrick 1948 (4) SA 959 (A) GREENBERG JA held at p 978 that a wrongful and unauthorised alteration by its Secretary General of a resolution made by the executive committee of the appellant amounted to misconduct which justified summary termination by the appellant of the relationship of employer and employee.

It is clear from the cases that even if the question of the correctness of the decision by the appeals board that Standard Chartered was justified in dismissing Chapuka from employment for the misconduct had been raised as a ground of appeal, the Tribunal would have had to be satisfied that the decision was on all the facts clearly wrong.

In my judgment, what was said by the Tribunal about the effect of the misconduct committed by Chapuka against Standard Chartered would not have been sufficient to justify interference with the judgment of the appeals board. The relevance of the statement by the Tribunal that the intention of Chapuka in committing the misconduct was not to defraud Standard Chartered and that no prejudice was suffered by Standard Chartered as a result of his acts is open to doubt, because the alleged intention of a fraudulent employee cannot be taken as a standard with which to determine whether an employer acted reasonably in taking the view that the misconduct was so serious in nature as to justify dismissal. The unlawful intention would have been one of the circumstances which put the employee in the position in which he considered the pursuit of personal interest more important than the honest discharge of his duties to the employer.

The relationship between Standard Chartered and Chapuka was one based upon trust and confidence. It is sufficient that in dismissing Chapuka from employment Standard Chartered felt that as a result of his own acts of misconduct it could not continue in future to repose in him the trust and confidence that he would perform his duties as a senior member of staff with a high degree of honesty. It was also sufficient that any reasonable employer in the position of Standard Chartered could on the facts have dismissed Chapuka for what he did.

The appeal is allowed with costs. The decision of the Tribunal is set aside and substituted with the following –

“The appeal against the decision of the appeals board of the National Employment Council for the Banking Undertaking upholding the dismissal of the respondent from employment is dismissed with costs.”

CHIDYAUSIKU CJ: I agree.

ZIYAMBI JA: I agree.

Honey & Blanckenberg, appellant's legal practitioners

Muzenda & Maganga, respondent's legal practitioners