Erickson Mvududu v Agricultural and Rural Development Authority (ARDA)

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGEMENT
NO
LC/H/87/14
HELD AT HARARE 13th JUNE, 2012
CASE NO LC/H/636B/10
JUDGEMENT NO LC/H/87/14
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IN THE LABOUR COURT OF ZIMBABWE	    	JUDGEMENT NO LC/H/87/14

HELD AT HARARE 13th JUNE, 2012		CASE NO LC/H/636B/10

AND 14 FEBRUARY, 2014

In the matter between:-

ERICKSON MVUDUDU							Appellant

And

AGRICULTURAL AND RURAL

DEVELOPMENT AUTHORITY (ARDA)					Respondent

Before The Honourable Justice B.T. Chivizhe,

For Appellant:	Mr. A. Muchadehama, Mbidzo, Muchada and Makoni

(Legal Practitioner)

For Respondent:	Adv. Uriri – Instructed by Honey and Blackenberg

(Legal Practitioner)

CHIVIZHE, J.

The matter was placed before me as an appeal/cross-appeal against an arbitral award handed down by Honourable Mucheche on 28 October, 2010.  For convenience the Appellant/Cross-Respondent shall be referred to as Appellant whereas the Respondent/Cross Appellant shall be referred as Respondent.

The Appellant having filed an application for upliftment of the bar operating against him in respect of late filing of heads of argument, the Respondent having consented to such, the court on the date of hearing granted by consent an order for the upliftment of the bar operating against Appellant for late filing of Heads of Argument.  The Heads of argument were thus deemed to have been properly filed in terms of the Rules.

The material background facts to the matter are as follows;

The Appellant was employed by the Respondent as its Chief Executive Officer/General Manager.  He was employed with effect from 1 January, 2008.  The Appellant was on 26 February, 2009 sent on special leave in order to enable the ARDA Board to carry out Strategic Reviews within the Authority.  By way of a letter dated 19 May, 2009 Respondent notified Appellant of its decision to terminate employment.  Appellant referred the matter to conciliation subsequently to arbitration.

The Arbitrator in his award dated 26 January 2010 concluded that the Respondent had acted ultra vires the provisions of Section 14B of the Labour Act [Chapter 28:01] by sending Appellant on special leave; the Respondent had summarily terminated the Appellant’s employment through its letter dated 19 May 2009: Respondent had consequently breached the provisions in section 12B(1) and (2) of the Labour Act [Chapter 28:01] requiring an employee who is lawfully dismissed to be dismissed in terms of an Employment Code or in its absence the model code i.e. National Code enshrined in Statutory Instrument 15 of 2006.  The Arbitrator accordingly handed down an award in the following terms;

“IT IS ORDERED THAT:

The dismissal of the claimant from employment by the respondent on 19 May 2009 was unlawful, null and void and accordingly, it is hereby set aside.

The respondent be and is hereby ordered to reinstate the claimant back to his job without loss of salary and benefits with effect from 19 May 2009.

In the event that reinstatement is no longer tenable, parties should agree on the appropriate quantum of damages in lieu of reinstatement failure of which either party can approach the arbitrator for quantification of damages.

The costs of arbitration shall be borne by both parties equally in the ratio 50%:50%.

Each party shall bear its arbitration costs.”

The parties having failed to agree on reinstatement and having failed to negotiate conclusively damages in lieu of reinstatement requested the Arbitrator to quantify his award of the 20th January, 2010.  On the 28th October, 2010 the Arbitrator handed down his second award based on the quantification of damages in lieu of reinstatement granted in his first award.  In his award the Arbitrator noted that his first award dated 26 January, 2010 implied retrospectivity and therefore Appellant was entitled to backpay, salaries in benefits from the date of unlawful dismissal i.e. 19 May, 2010 to 26 January, 2010 the date of his first award ordering reinstatement.  The parties having presented before him different salary rates (Appellant indicated salary was US$4 621.00 for March, 2009 to May, 2009 then US$5 030,00 for June to December, 2009 whilst Respondent position was that the monthly basic salary was US$1 009,00) the Arbitrator in the absence of any proof tendered by the Appellant adopted US$1 009,00 as the monthly basic salary.  Using that salary the Arbitrator proceeded to quantify the backpay salaries and benefits, the damages in lieu of reinstatement.

The Arbitrator after a clear analysis of the law applicable in calculations of damages and upon consideration of the evidence and the parties position in respect to the claims before him then handed an award in the following terms;

“1.	Backpay and benefits in the sum of US$19 384.09.

2.	Cash in lieu of leave

3. 	Sixty (60) months salary from 26 January 2010 as damages for loss of employment in the sum of US$60 540.00

4.	Sixty (60) months salary as punitive damages in the sum of US$60 540,00.

5.	Interest at the prescribed rate.”

The Appellant noted his appeal against the award.  The grounds of appeal are in the narrative form.  The four main issues before the court in my view are as follows:

Whether the Arbitrator erred in law in holding that the only issue before him was one of quantification of damages thus ignoring the issue of reinstatement which has been placed before him.

Whether the Arbitrator erred in not making a determination as to the date of termination of employment where re-instatement was no longer possible.

Whether the Arbitrator erred in holding the correct salary rate for Appellant to be $1 009,00

Whether the Arbitrator erred in not awarding Appellant his contractual benefits and entitlements.

The Respondent in his cross-appeal raised the following grounds.

“1.	The cross appellant appeals against part only of the award on quantification of damages.   The cross-appellant appeals against that part of the quantification that awarded punitive damages in the equivalent of 60 months’ salary.

2.	The award the subject of this appeal is attached as Annexure “A”.  The cross-appellant incorporates herein the record of appeal in LA/H/63/10.  Further, the cross appellant relies on the referral to the arbitrator for quantification, (Annexure “B);  the statement of claim in respect of the quantification, the statement of reply and all the submissions made in respect of the quantification a record of which the arbitrator will be asked to place before the court.

3.	The learned arbitrator grossly misdirected himself, such gross misdirection amounting to misdirection in law, in disregarding evidence of an irretrievable breakdown of the employer-employee relationship and in holding that the decision not to reinstate was not founded.  Such evidence is manifestly clear in the Statement of Claim, Statement of Response and Statement of Reply in the principal arbitration proceedings, and in the statement of claim on quantification, the Statement of Response, and the statement of reply on quantification.

4.	Consequently, and for the stronger reason, the learned arbitrator erred in law in holding that punitive damages were called for.

In any event, the learned arbitrator erred in awarding punitive damages when his principal award made provision for an alternative pay damages.

Employer’s primary obligation is to remunerate the employee and not necessarily to the learned (sic) provide work.  A fortiori, as long as the employer discharged its obligations to the employee by paying his remuneration, the requirement that the employee does not tender service, by whatever name called, was not an unfair labour practice.

The learned arbitrator erred in law in not deducting from his final award those amounts the cross-respondent admitted owing to the cross appellant.”

The Respondent in its response to the appeal and in oral submissions raised a procedural issue and a point in limine.  The procedural issue was that the Appellant having failed to file a notice of response within fourteen days of the cross-appeal the cross-appeal was unopposed and ought to succeed on that point.  The point in limine was that the quantification of damages, in the absence of an allegation of gross misdirection amounting to a misdirection of law, is a matter of fact.  There being no allegation of gross misdirection in Appellant notice and grounds of appeal the Respondent’s submission was the appeal was incompetent and ought to be struck off.

The Appellant in counter-argument submitted that the appeal was properly before the Labour Court.  The Arbitrator had grossly misdirected himself on the issue of salary upon which damages had been quantified.  He had also failed to determine a crucial point as to the effective date for reinstatement even though the submissions had been placed before him. No submissions were made in respect to the procedural issue.

The court notes that as submitted by the Respondent the Appellant did not file a notice of response to the cross-appeal and the cross appeal ought to succeed merely on that basis.  However in view of the approach that has always been taken that labour matters ought to be resolved on the merits rather than on technicalities  I was prepared to condone the failure on the part of the Appellant to comply with the Rules.  In so doing however I am not condoning the tardiness on the part of legal practitioners who flout the court rules.  With regards the point in limine I was satisfied to the extent that Section 98(10) of the Labour Act [Chapter 28:01] enjoins that an appeal against an arbitral award has to be on a point of law that the appeal raised points of law.

The first issue relates to the aspect of reinstatement.  It was submitted by the Appellant that the Arbitrator failed to make a specific finding on whether or not reinstatement was no longer possible.  The Respondent on the other hand contended that the Appellant is issue estopped from contending that reinstatement is still open to him after the Respondent specifically wrote on 4th of February, 2010 indicating that it was not going to reinstate him, the Appellant’s legal practitioner had written back and confirmed that the only outstanding issue was damages.

I am persuaded by the Respondent submission on this point.  The record reflects that the Respondent wrote a letter on 4 February, 2010 to the Appellant indicating that it was not going to reinstate him.  The Appellant’s legal practitioner then wrote back on 8 February 2010 and confirmed the outstanding issue as being that of damages.  The Appellant had in the same letter proceeded to make demands in relation to damages.  Against that background it is my considered view that the Arbitrator did not err when he proceeded to address the issue of quantification of damages.  He had no mandate to consider whether or not reinstatement was still possible.

The second issue raised by the appeal is that the Arbitrator also erred in not making a determination as to the effective date of termination if reinstatement was no longer possible.  It was Appellant’s view that the effective date of termination ought to have been the date on which the Labour Court ruled against reinstatement.  This position was following on the declaration of untenability of employment by the Respondent through its letter dated 4 February, 2010.  In Appellant’s view the Arbitrator erred when he gave the effective date of termination as the date of his determination viz 26 January, 2010.  His submission was he remained an employee until the Labour Court ruled against reinstatement.

The submission clearly has no merit.  The Arbitrator in his first award found the Appellant was unlawfully dismissed on 19th May, 2009 being the date when Respondent terminated employment.  The Arbitrator then directed reinstatement on the date of his award being 26 January, 2010.  The alternative was for Respondent to pay damages in lieu of reinstatement.  That for all purposes became the effective date of the order of reinstatement.  It is also the date to which the backpay is payable.  The effective date of termination in my view was the 4th of February, 2010 when Respondent opted to pay damages.  It cannot be correct as alluded to by the Appellant that he would remain an employee until the Labour Court determined the point.

The third issue raised in appeal is in respect to the salary rate adopted by the Arbitrator.  It is Appellant’s contention that the Arbitrator erred in using the salary rate of $1 009,00.  The correct rate in the light of Respondent’s policy and the General Manager‘s earnings was in the region of $5 000 per month. Appellant also disputed as contended by the Arbitrator that he had accepted the amount of $1 009,00 as his salary.

The salary rate that is employed in any quantification is the rate applicable on the date that reinstatement was ordered. The Respondent position is that it placed irrefutable evidence before the Arbitrator to show what the Appellant would have earned.  There is no reason why the position should change.  The Arbitrator in his award after weighing submissions by both parties on the point concluded that submission by the Respondent was more in accordance with reason.  He accepted the monthly salary of US$1 009.00 as the salary rate for computing the damages.  I am satisfied that the Arbitrator in determining the point did not err in this regard.

The last issue pertains to benefits.  The Appellant claims that the Arbitrator failed to award him benefits which were contractual.  He further contends that the Arbitrator even refused to award benefits that Respondent had itself consented to.  The Appellant specifically referred to housing allowance, business allowance, entertainment allowance, rotation allowance and clothing allowance as forming part of basic salary.

The Respondent in its response did not address itself to these issues. Instead it has addressed motor-vehicle benefits, pension contributions all of which claims in Respondent’s view have no legal basis.  With respect to motor vehicle it was Respondent’s contention that the benefit was only available as and when services were rendered and would not apply.  With medical aid contributions it was Respondent’s submission that these are not paid directly to an employee but to a medical aid society.  The position is the same with pension which is paid to a pension fund and not an employee.  The Respondent also dismissed the claim for bonus on the basis that it is performance related.

The Arbitrator in his award found that the Appellant was entitled to backpay in the amount of US$15 328.09.  He in addition found that Appellant was entitled to school fees in the amount of US$4 056,78 bringing the total to US$19 384,00 plus interest.  He then dismissed the rest of the Appellant’s contractual benefits on the basis of lack of proof.  Before the Labour Court the Appellant has placed a bundle of documents that includes for an example school fees receipts, city of Harare rates bill, ZESA bills, telephone bills, etc.  It is clear these papers were not before the Arbitrator.  Whilst they have been placed before the Labour Court no attempt was made to substantiate the claims.  For an example the Arbitrator had already awarded school fees in his quantified award it is not clear whether the claims before the Labour court are not the same as that were before the Arbitrator for which the Arbitrator awarded $4 056,78.  It is settled law that all damages claims should be properly proved before the court.  The Appellant ought to have proved each claim by way of adducing evidence before the court.  See First Mutual Life Assurance Vs Jackson Muzivi SC 9/2007.  Placing receipts, statements in the record is not tantamount to proving the claims before the court.  I would consequently dismiss the claim for benefits as unsubstantiated.

The Respondent has in the cross-appeal raised two issues; firstly the issue of punitive damages.  It is Respondent’s submission that the Arbitrator erred in finding that there was nothing on the record to suggest irretrievable breakdown of the employer/employee relationship in order to justify his imposition of the punitive damages.  It is Respondent’s submission that there was overwhelming evidence of breakdown of the employer/employee relationship.

It is settled law that damages must be properly proved by the party seeking the same.  Whilst the Arbitrator in his award addressed the issue of punitive damages the records does not show if the issue was raised before him by the Appellant as a claim.  Even if the issue had indeed been raised as an issue the punitive damages still would need to be proved by way of evidence.  No such evidence was placed before the Arbitrator.  The Arbitrator could not therefore have based his award of punitive damages on an unsubstantiated statement of claim by

the Appellant.  Whilst I agree totally with the Arbitrator that employers should be discouraged from unjustified termination and consequent refusal to reinstatement it is however the court’s view that punitive damages ought to be claimed by a party before the court can award them.  Secondly there must be a clear basis for calculating them.  They cannot be plucked from the air as what the Arbitrator clearly did in casu.  In the circumstances I would set aside the portion of the award granting the Appellant punitive damages.

The Respondent has also in its cross-appeal raised the second issue that the Arbitrator erred in law in not ordering the deduction from the total amount awarded the amounts which Appellant had himself admitted to owing to the Respondent.  The record does not show if the issue was raised before the Arbitrator.  The award makes no reference to such a claim.  It is the court’s view that the claim being an unsubstantiated statement of claim by the Respondent before the Labour Court clearly cannot be awarded.  It therefore stands as dismissed.

Wherefore it is hereby ordered as follows;

The appeal is dismissed.

The cross-appeal is allowed to the extend that paragraph (4) of the quantification award is set aside.

For avoidance of doubt the quantification award now reads as follows;

“In the final analysis therefore, I order that respondent pay the claimant as follows:

Backpay and benefits in the sum of US$19 384.09.

Cash in lieu of leave.

Sixty (60) months salary from 26 January 2010 as damages for loss of employment in the sum of US$60 540.00.

Interest at the prescribed rate.”

Mbidzo, Muchadehama and Makoni – Appellant’s Legal Practitioners

Honey and Blankenberg – Respondents’ representatives.