REPORTABLE (97)

Judgment No. SC. 122/04

Civil Appeal No. 229/04

STANDARD CHARTERED ZIMBABWE LIMITED

v GEORGE MUSANHU

SUPREME COURT OF ZIMBABWE

CHIDYAUSIKU CJ, ZIYAMBI JA & MALABA JA

HARARE, NOVEMBER 1, 2004 & JANUARY 27, 2005

L Uriri, for the appellant

D Mbidzo, for the respondent

MALABA JA: This is an appeal against the judgment of the Labour Court delivered on 19 July 2004, granting with costs an application by the respondent (“Musanhu”) against the appellant (“Standard Chartered”) for an interim determination in terms of s 97(4) of the Labour Relations Act [Chapter 28:01] as amended (“the Act”), pending the final determination of the appeal from a judgment of the senior labour relations officer (now a “labour officer”).

The background facts of the case are these. Musanhu was employed by Standard Chartered, a financial institution, as Head of Money Markets Division. He sometimes acted as Head of Treasury when the incumbent was on leave. On a date not disclosed in the record, but probably in 2002, Musanhu was suspended from work and an application made forthwith to a senior labour relations officer for an order terminating the contract of employment in terms of s 3(a) of the Labour Relations (General Conditions of Employment) (Termination of Employment) Regulations, Statutory Instrument 371 of 1985 (now repealed).

Standard Chartered believed that Musanhu had abused his authority as Head of Money Markets Division or as acting Head of Treasury to commit acts inconsistent with the fulfilment of the express or implied conditions of his contract of employment, justifying his dismissal. The allegation made against him was that he had fraudulently withdrawn foreign currency from the bank for personal use or allocated foreign currency to his wife, relatives and a friend.

The evidence placed before the senior labour relations officer at the hearing of the application on 20 November 2002 was thus –

On 17 May 2001 the Head of Treasury approved payment of tuition fees in the sum of ?2 080 and ?12 500 for board, fares and stationery in terms of an invoice from Emile Woolf College for Musanhu’s sister. On 8 June 2001 Musanhu accessed the sum of ?12 500 from the Highlands Branch of Standard Chartered on the authority of the invoice granted on 17 May 2001. That left the sum of ?2 080 unpaid. On 12 June 2001 Musanhu is said to have forged the invoice by writing on it the words “approved ?18 000”. He presented the forged invoice at the Avondale Branch of Standard Chartered and withdrew the sum of ?10 000 instead of ?2 080. Standard Chartered was prejudiced of ?7 920.

On 20 June 2001 Musanhu was alleged to have presented a DSTV invoice of US$209 for his subscription fees. He was paid the foreign currency in cash. On 26 June 2001 he presented a duplicate of the invoice to Priority Banking and obtained US$209 in the form of a bank draft. The allegation was that he had misrepresented the fact that the invoice had not been paid when he presented it to Priority Banking for payment of the money to Multichoice by means of a bank draft.

On 30 July 2001 Musanhu is said to have authorised allocation and payment of US$3 000 to his wife at the exchange rate of 55:1 instead of 56.962:1. The bank was prejudiced of $9 625. The authority was granted under reference no. 3945/01. He also used the same reference number to allocate and have paid to a friend of his US$150 000. This meant that there was in fact no authority for this allocation and payment, as each allocation and payment of foreign currency had to have its own authority identified by a reference number. The amount allocated to Musanhu’s friend was way above the maximum of US$5 000 an individual could access.

Musanhu was given authority under reference no. 641/01 to access foreign currency for his holiday and official travel allowance. On 16 January 2001 he allocated US$5 000 to his sister and had it paid under reference no. 641/01. There was no proper authority for the allocation and payment of foreign currency to his sister.

It was also alleged that whilst Musanhu was supposed to be attending a course in Nyanga he was arrested at Chirundu Border Post smuggling into Zambia about $1 200 000 concealed in a plastic fuel container. He was convicted of the crime. The criminal conduct was said to be unbecoming of a senior bank employee and an embarrassment to Standard Chartered

In his defence Musanhu did not deny the acts of misconduct. He gave irrelevant explanations which unfortunately misled the senior relations officer into believing that they constituted defences to the charges of misconduct.

For example, he claimed that he could not get the ?14 580 paid on 8 June 2001 because the Highlands Branch of Standard Chartered did not have enough foreign currency. He said he had a right to approach the Avondale Branch of Standard Chartered for the payment of the balance on the invoice. But the gravamen of the allegation against him was that as a result of the forgery he committed, in endorsing on the invoice the words “approved ?18 000”, he fraudulently induced the Avondale Branch of Standard Chartered to pay him more than the ?2 080 he was entitled to.

On the allocation of foreign currency to his wife, his friend and his relatives, he said the fact that they were people related to him did not disentitle them to receive foreign currency from Standard Chartered. He did not address the gravamen of the allegation, which was that not only did he put himself in a position where there was a conflict of interest but also allocated foreign currency higher than the official limits and without the authority of the Head of Treasury.

All Musanhu could say in respect of the criminal conduct committed at Chirundu Border Post was that it took place outside the performance of his duties. He forgot that for conduct to constitute misconduct inconsistent with the fulfilment of the express or implied conditions of a contract of employment it is not necessary that it should have been committed during working hours or in the carrying on of the service or the business of the employer. In Pearce v Foster 1886 QB 536 at 539 LORD ESHER MR said:

“But if a servant is guilty of such a crime outside his service as to make it unsafe for a master to keep him in his employ the servant may be dismissed by his master, and if the servant’s conduct is so grossly immoral that all reasonable men would say that he cannot be trusted, the master may dismiss him.”

The same view was taken by LORD JAMES OF HEREFORD in Clouston & Co Ltd v Corry 1906 AC 122, a case of dismissal of a manager who had been convicted by a magistrate of drunkenness.

The senior labour relations officer took a shockingly superficial view of the evidence produced by Standard Chartered to prove the acts of misconduct alleged against Musanhu and concluded that it had not established the offences charged. He said:

“1) It does appear that there is nothing wrong with or fraudulent in the respondent using two separate branches to withdraw his forex allocation. In any case it is common knowledge that there was a critical shortage of foreign currency in Zimbabwe during the period in question. If the respondent failed to get the full amount authorised at Avondale Branch, there is nothing fraudulent in proceeding to draw the balance at Highlands Branch.

2) …

3) …

4) The applicant seems to take great exception to the fact that some of the people issued forex were known to the respondent. But the totality of evidence led appears to show a farfetched attempt by the applicant to desperately find fault on the respondent’s part and impute evil into otherwise transparent transactions. The bottom line is that all these people were customers of the bank just like the hundreds (of) others the respondent transacted with as part of his duties during the course of his employ.

5) The Chirundu Border Post incident is yet another farfetched charge. The incident is divorced from the respondent’s duties and, in any case, the matter is sub judice.”

Absent from the judgment of the senior labour relations officer was a critical and objective analysis of the evidence to determine whether acts of misconduct inconsistent with the fulfilment of the express or implied conditions of employment had been shown on a balance of probabilities to have been committed. Standard Chartered was ordered to reinstate Musanhu from the date of suspension, presumably (it was not specified in the order) without loss of salary and benefits, failing which to pay him damages in lieu of reinstatement. The amount of damages to be awarded was not specified, nor was the method of their quantification stated.

On 28 March 2003 Standard Chartered appealed to the Labour Court on the ground that the decision that the evidence produced did not establish acts of misconduct by Musanhu inconsistent with the fulfilment of the express or implied conditions of his contract of employment was so outrageous in its defiance of logic that no sensible person who had applied his mind to the evidence could have arrived at such a conclusion.

Section 97(3) of the Act provides that an appeal against a determination such as the one made by the senior labour relations officer shall not have the effect of suspending the determination or decision appealed against. Although the Labour Court could, upon application being made to it under s 97(4) of the Act and in the exercise of its discretion, may have ordered suspension of the execution of the judgment pending determination of the appeal, no such application was made by Standard Chartered. The judgment remained enforceable by process of execution appropriate to its nature.

On 28 April 2003 Standard Chartered advised Musanhu by letter that it was not going to reinstate him in its employment, leaving the award of compensatable damages as the only remedy for the enforcement of the judgment of the senior labour relations officer.

Notwithstanding this development, Musanhu made an application to the Labour Court on 12 July 2003 in terms of s 97(4) of the Act for an interim determination. In the founding affidavit he said:

“… the appeal is being filed just for the purposes of delay. In the meantime, however, I have no source of livelihood and I pray to this honourable court for an order compelling payment of salary and benefits per month pending finalisation of this case in terms of the law. This to be effected whether or not the appellant reinstates me to my previous job.”

The draft order to be the interim relief was that:

“1. In the interim the respondent be and is hereby ordered to reinstate the applicant without loss of pay or benefits.

Alternatively –

Pay the applicant from date of suspension to date of determination and thereafter the applicant is to be paid his salary per month and benefits until such time as the appeal has been finalised.

2. The respondent bears costs of this suit.”

In opposing the application, Standard Chartered denied that the appeal had been noted for purposes of delay as opposed to a genuine desire to reverse an outrageous decision. It averred that the prospects of success in the appeal were good. It denied that Musanhu was indigent.

Upon the hearing of the application on 9 July 2004, it was argued on behalf of Standard Chartered that the cause of action had been misconceived because it was believed that the noting of the appeal had the effect of suspending the execution of the determination of the senior labour relations officer. As the effect of s 97(3) of the Act was that the determination was enforceable pending the determination of the appeal and there had been no application for stay of execution in terms of s 97(4) of the Act, the making of the order sought was unnecessary. It was argued that the application for interim relief in terms of the draft order was ill-conceived. It was not in the interests of justice to make a second order in terms identical to the determination appealed against. No useful purpose would be served by duplicating orders.

The argument did not find favour with the presiding President of the Labour Court, who said:

“I am unpersuaded by these submissions. The effect of subsection 3 is that the labour officer’s determination is not suspended by the respondent’s appeal to this court. Therefore the respondent is legally obliged to either reinstate the applicant to pay him damages. The only way the respondent could avoid complying with the determination was to file an urgent application under subsection 4 for stay of execution pending the outcome of the appeal.

The respondent has not done so. Therefore the applicant is lawfully entitled to enforce his rights under the determination. Whether you call such enforcement a mandamus or interim relief is neither here nor there.

Accordingly I make the following order –

‘1. Pending the outcome of the respondent’s appeal, pending in this court under reference LC/H222/03, the respondent shall reinstate the applicant without loss of pay or benefits, as from the date of suspension.

Alternatively, the respondent shall pay the applicant his salary and benefits from the date of suspension until the date when the respondent’s said appeal is finalised; and

2. The respondent shall pay the applicant’s costs.”

The contention on appeal was that the decision of the Labour Court to grant the order was clearly wrong. I agree. Section 97(4) of the Act, in terms of which the application was made and on the authority of which the interim determination was made, provides that:

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

Whilst the Labour Court has a discretion in the matter whether or not to make an interim determination in the matter, it has to have regard to the justice of the case. Assuming for a moment that the interim determination could be made in the circumstances of this case to provide for the reinstatement of Musanhu without loss of salary and benefits failing which payment of damages, did the Labour Court properly exercise its discretion?

The Labour Court made the interim order without having considered the prospects of success in the main appeal, the purpose of the order, the practicability of forcing the employee on the employer and the possibility of giving the employee an unfair advantage.

The Labour Court does not appear to have appreciated that it had a discretion in the matter, which was to be exercised after having regard to the requirements of justice. There was no consideration of what the justice of the case required. The Labour Court believed that because the determination appealed against had not been suspended, it was bound to make the order by way of enforcement of that determination.

I accept the submission made by Mr Uriri, on behalf of Standard Chartered, that it was not open to the Labour Court in the circumstances of this case to make the order it did. Reinstatement was no longer a matter for which an interim determination under s 97(4) of the Act could provide. It had been adjudicated upon by the senior labour relations officer and made the subject of a valid order. Reinstatement had been dispensed with as a subject of controversy to be determined in terms of s 97(4) of the Act when Standard Chartered indicated on 28 April 2003 that it was not going to reinstate Musanhu.

The object of an interim determination made under s 97(4) of the Act is to give a party in whose favour the determination appealed against was made an interim right which he would otherwise not have because of the noting of the appeal. It may also be to grant the party against whom the judgment was made temporary relief from the burden of the obligation imposed by the determination which he would otherwise not have because of the appeal.

In this case, there was no hindrance at all to the enforcement of the rights under the determination appealed against by Musanhu. He could have enforced the determination by the process of execution appropriate to it regardless of the appeal. As correctly pointed out, he was free to have had the damages quantified and the order registered with the magistrate’s court or the High Court for purposes of enforcement of payment.

It is not necessary to decide in this case whether an interim determination made under s 97(4) of the Act can take the place of the ordinary process of execution of a judgment appealed against. What is clear is that the effect of the provisions of s 97(3) and the absence of an application for an order of stay of execution were circumstances the Labour Court had to take into account in deciding whether a case had been made for an interim determination. It seems that, contrary to the view taken by the Labour Court that the effect of s 97(3) and the absence of an interim order of stay of execution obliged it to make an interim determination, these factors should have persuaded it against making the interim determination. It should have realised that simply making yet another order on the same matter and in the same terms as those of the determination appealed against was not the appropriate remedy for the enforcement of the judgment appealed against.

The appeal is therefore allowed with costs. The order of the court a quo is set aside and substituted with the following –

“The application for an interim determination in terms of section 97(4) of the Labour Relations Act [Chapter 28:01] is dismissed with costs.”

CHIDYAUSIKU CJ: I agree.

ZIYAMBI JA: I agree.

Honey & Blanckenberg, appellant's legal practitioners

Mbidzo, Muchadehama & Makoni, respondent's legal practitioners