Gift Bob Samanyau and Thirty-Eight Others v Fleximail (Private) Limited

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO.LC/H/776/14
HELD AT HARARE ON 29TH OCTOBER, 2014
CASE NO. LC/H/880/13
AND 21st NOVEMBER, 2014
JUDGMENT NO. LC/H/776/14
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IN THE LABOUR COURT OF ZIMBABWE	   JUDGMENT NO.LC/H/776/14

HELD AT HARARE ON 29TH OCTOBER, 2014  CASE NO. LC/H/880/13

AND 21st NOVEMBER, 2014

In the matter between:-

GIFT BOB SAMANYAU AND THIRTY-EIGHT OTHERS	Applicants

And

FLEXIMAIL (PRIVATE) LIMITED				Respondent

Before the Honourable Justices: 	G. Mhuri,

E. Makamure,

L. Hove,

G. Musariri,

R.F. Manyangadze

For Applicants: Mr. M. Gwisai and Mr. E. Matika

(Legal Practitioners)

For Respondent: Advocate T. Sibanda instructed by

Mr. D. Chinawa (Legal Practitioner)

MHURI J.:

This is an application for quantification of damages consequent upon a remittal by the Supreme Court in its judgment No. SC 21/14 pitting the same parties.

The undisputed brief background of this matter is that on the 11th July, 2008 both parties appeared in this Court for quantification of damages under Case No. LC/H/16/2006.

In its judgment No. LC/H/216/2008, of the 10th December, 2008 the Court ordered as follows

that:-

the cut-off date be 5th July, 2007;

damages equivalent to 5 years salary be paid to each employee;

there be no order as to costs.

It is from this order that this application arises, particularly the 2nd paragraph thereto.

On remittal, the Supreme Court directed this Court to determine four (4) issues, to wit,

the effect of the change in currency effected in February 2009 on debts occurring before the effective date.

Whether the Labour Court has the power to order payment in the operational currency (the United States dollar) of debts incurred under the Zimbabwe dollar currency which, though not demonetized is no longer in use.

Whether the principle of currency nominalism has any application in the circumstances of this case.

The method of calculating the quantum of the debt in current realizable currency if the conclusion of the above issues is in favour of payment in United States dollars.

It is common cause that the debt giving rise to this application arose prior to the year 2009 and by then, the currency obtaining in Zimbabwe as legal tender was the Zimbabwe dollar.

In January 2009, the Acting Minister of Finance made a pronouncement which was eventually gazetted in September, 2009, by Statutory Instrument 5 of 2009 prescribing that with effect from February, 2009 it shall be legal to use other foreign currency (United States Dollar, British Pound, Euro, South African Rand, Botswana Pula) as legal tender in Zimbabwe.  This notwithstanding, the Zimbabwe dollar was not demonetized.  This is common cause.

At the onset of the hearing, parties were in agreement as regards the first three (3)(a-c) issues referred by the Supreme Court.  The only disagreement was on the fourth (d) issue.

As regards the first issue, the position was agreed by the parties that debts are not extinguished by the demonetization or change in currency.  It is therefore accepted that the debt owed by Respondent to Applicants arising from this Court’s Order of the 10th December, 2008 is still in existence.  It has not been extinguished by the introduction of the multi currency.

The Court agrees with this position and finds support in the case of

MADHATTER MINING COMPANY V MARVELLOUS TAPHUMA SC 51/2014 (MADHATTER)

in which GWAUNZA JA clearly states:

“The undeniable fact is that a debt is not wiped out by the mere fact that there has been a change to the realizable currency.”

So, until Respondent has discharged its obligation by paying Applicants damages in lieu of reinstatement, the debt still remains due and payable.  It is only fair and just that Applicants be remunerated for their services.

On the second issue, which was also conceded to by the parties, the Court is guided by Section 2A(1)(f)of the Labour Act [Chapter 28:01] (The Act) which provides:-

“The purpose of this Act is to advance social justice and democracy in the workplace by –

….

…

…

…

…

Securing the just, effective and expeditious resolution of disputes and unfair labour practices.”

In conformity with the above provision, and in the exercise of its equitable jurisdiction it is the Court’s considered view that the Labour Court has the jurisdiction to order payment of damages in the operational and realizable currency (foreign currency)either in the pound sterling, United States dollar, Botswana Pula, the South African Rand or the Euro.

Even though the Zimbabwe dollar has not been demonetized the Court takes judicial notice of the fact that as from February, 2009, the Zimbabwe dollar became de facto demonetized and consequently could not be used as legal tender.  It ceased to have the characteristics of legal tender as it could and still cannot be used to discharge any financial obligation.

It will be inappropriate to make an award in a currency which is no longer in use and from which no value will be realized.  I do not think that even Respondent itself would accept it in its transactions.

To make an award in the Zimbabwe dollar is to issue a brutum fulmen and by so doing justice will not be achieved.  It will be a mockery of justice as stated in the MADHATTER case supra.

Further, public policy demands that a wronged party must get adequate compensation.  Admittedly such compensation should not be unduly harsh on the party that has wronged them.

This position was stated with approval in MADHATTER case where at page 16 of the cyclostyled judgment the Judge of Appeal, after citing Section 2A of the Act, stated,

“The principles of equity and social justice as well as the imperative for the Labour Court to secure just and effective resolution of labour disputes, are all called into question when it comes to determining the basis and formula for computing a debt (for example damages) suffered in Zimbabwe dollars but claimed in foreign currency.

This is particularly so where such damages, being owed to an employee, can no longer be paid in Zimbabwe currency realistically or in a way that gives due value to the employee.” (Underlining is for emphasis)

Section 165 of the Constitution also underscores the point.  It reads:-

“In exercising judicial authority members of the judiciary must be guided by the following principles-

Justice must be done to all irrespective of status;

Justice must not be delayed, and to that end members of the judiciary must perform their duties efficiently and with reasonable promptness.

The role of the Courts is paramount in safeguarding human rights and freedoms and rule of law.”  (Emphasis added)

In casu justice must be done to both parties.  The interests of both parties must properly be taken into account and considered.  It is a human right in terms of Section 65 of the Constitution for a person to enjoy fair and safe labour practices and standards and to be paid a fair and reasonable wage.  This Court is enjoined to safeguard this right.

To that end therefore the Court is not precluded from ordering payment in the multi-currencies now operational in Zimbabwe.

The third issue of whether the principle of currency nominalism applies in this case was not canvassed by the parties.  Both parties accepted that it was just and equitable that Applicants be paid in the currency that would enable them to realize value.

This principle is to the effect that a debt sounding in money has to be paid in terms of its nominal value irrespective of any fluctuations in the purchasing power of the currency.  This would mean that the damages which arose in the Zimbabwean dollar are to be calculated in the Zimbabwe dollar and paid in that currency despite the fluctuation of the dollar at the time.

See:-

SA EAGLE INSURANCE COMPANY LIMITED V HARTLEY 1990 (4) SA 833

As alluded to, the parties were in agreement that the debt be discharged in foreign currency.  The following exchange between the Court and Respondent’s counsel is instructive:

Court

“Is it your position that the employer is prepared to pay in United States dollars provided the rate is determined by the legislature?”

Counsel’s Answer

“Those are my instructions”.

To that end therefore this principle is not applicable in casu.

The only issue then for determination by the Court is the method of calculating the quantum of the debt.

Applicants advanced three (3) possible scenarios, one of which could be adopted by the Court.  These were advanced as follows:-

The breach date, rule (i.e. 5th July, 2007) as per this Court’s order, following the principle in the case of –

REDSTAR WHOLESALERS V

EDMORE MABIKA SC 52/2005.

which is to the effect that the rates to be used are those which were applicable on the date of the first order of reinstatement.

The date when Respondent first started paying its employees wholly in foreign currency being April, 2009.

The date of actual enforcement.

Applicants’ Counsel gave examples of each of the above scenarios.  As for scenario (a) he picked Applicant (E. Dinha) and submitted that using the official exchange rate then applicable on the date, of ZW$250.00 to US$1, the monthly salary would be

US$14 051,16.  This figure multiplied by 5 years would translate to US$843 009 698.  This excludes cash-in-lieu of leave and interest.

On the second scenario (b) still using Applicant Dinha’s salary, it was submitted that the April 2009 salary of US$203,00 multiplied by 5 years, the total amount payable would be US$12 180,00 excluding cash in lieu of leave days and interest.

The third scenario still using Applicant Dinha’s salary in 2014 of $663,91 multiplied by 5 years, the total amount payable would be $39 834,60 excluding cash in lieu of leave days.

To this issue (d) Respondent did not offer any plausible solution preferring rather to insist that the Court should wait for the Legislature to come up with a formula for converting Zimbabwe dollars to United States Dollars.

It was argued on behalf of Respondent that the role of the Court is to interpret the law and where there is no law, the Court is to wait for the promulgation of such law.

In buttressing the argument that the Court waits for the promulgation of a law, Respondent expressed fears that the Court may come up with a rate and thereafter the legislature may promulgate a statute radically different from the position adopted by the Court.

Firstly, this scenario would not arise, because, the parties are in agreement that the damages be paid in foreign currency.  So there is no rate of conversion that will be adopted and applied by the Court.

Secondly, if that were to be the case, it is an established principle of interpretation that the law should be interpreted so as to restore rather than take away existing rights.  In the same vein, where the Legislature intends retrospectivity it will be specifically stated in the Statute.

See:		BARCLAYS BANK (PRIVATE) LIMITED V

TICHAWANA NYAHUMA SC 86/04.

It was further argued that should the Court adopt either of the three (3) formulas advanced by Applicants it will be usurping the role of both the Executive and the Legislature.

The Court has some reservation with this argument in view of the following.

In terms of Section 165 of the Constitution, Courts are to be guided by the principle that justice must be done to all and must not be delayed.

At times there are lacunae in the law and Courts do not sit back until such time that the Legislature has promulgated the appropriate statute.  If that were allowed to happen, parties would suffer an injustice due to the delay.  This is contrary to the letter and spirit of the Constitution.

This matter has been pending finalization since the year 2008.  It has not been finalized precisely because of the lacuna created in our law as a result of the introduction of the multi-currency regime in 2009.  Hence it is the Court’s duty to fill such lacuna

The record shows that the government intended to promulgate a Statutory Instrument addressing the lacuna created as aforesaid by the end of April, 2013.  In his affidavit dated 28th February, 2013, the Permanent Secretary in the Ministry of Finance deposed thus

“Government intends to publish an enactment in the very near future to remedy or deal with this situation, and it is in my expectation that the necessary enactment will be in place before the end of April, 2013.

……………………………

It is appropriate that this be done in the normal course, and that the public await the actual publication of the Statutory Instrument.

What is important and indeed significant, is that government finally intends to deal with the matter.”

However, this noble intention has not to date, (one and half (1½) years later) translated into anything tangible.

By sub-paragraph 1(f) of Section 2A of the Act, this Court is mandated to secure the just, effective and expeditious resolution of disputes.  To that end therefore this Court cannot sit back, fold its arms and wait indefinitely for an intention that might never be realized.

If this were to be adopted, it would work an injustice and hardship on the Applicants.

In the MADHATTER case, the Court succinctly put it thus:-

“Equity would demand that a formula be found to give effect to the employee’s entitlement of, and the employer’s obligation to pay, the debt in question.”

It is for these reasons that the suggestion that the Court waits for the legislature to promulgate the appropriate Statutory Instrument is rejected.

The Order of the 10th December, 2008 awarded 5 years salary to each Applicant as damages.  The Court has considered the three formulas proposed by Applicants’ Counsel.

In coming up with the appropriate formula, the Court has weighed the interests of both parties – to wit, that the wronged party must get adequate compensation but one which is not unduly harsh on the other party (the wrong doer).

The Court is also alive to the fact that the five (5) years - damages were awarded during the Zimbabwean Dollar era – 2008.  This was at the height of hyper inflation.  This observation was also acknowledged in the MADHATTER case.  During this time, 5 years - damages would have adequately compensated Applicants without being unduly harsh on the Respondent.

Multi currencies in use in Zimbabwe currently are stable currencies.  It is on that basis that the Court is of the view that adopting the 1st formula (the breach – date rule) would be unrealistic and harsh on the Respondent, and will over compensate Applicants.

The third (c) formula (using the 2014 current monthly salary) or date of final appeal would again over-compensate Applicants as it will produce unrealistically high figures.  Further, it cannot be said with any measure of certainty what salary will be earned at that time.  It will be mere speculation if the Court were to adopt this formula.

An example of Formula (c)

1st Applicant, SAMANYAU’s salary in 2014 - US$428,08

multiplied by 5 years 				 	 =US$25 444.80

The total bill payable to all Applicants under this formula would be US$994 953,78.

An example of Formula (a)

1st Applicant, SAMANYAU’s total after conversion from Zimbabwe Dollars to United States Dollars is

US$733 391 330.

It is to be noted that this figure is only for one Applicant.

The Court was persuaded more by the proposition to pay using the date of first use of foreign currency (April, 2009).

This second (b) formula, will be most equitable, is ascertainable and is a rational basis of calculating the figures.

Both parties acknowledged though that as at April 2009, the salaries were artificially low.

However the Court’s view is that since the order is for 5 years, the resultant figures will be realistic and fair to both parties.

An example of Formula (b)

1st Applicant, SAMANYAU’s

April, 2009 salary of 					    US$159,00

multiplied by 5 years 				 	  = US$9 540.80

The total bill payable to all Applicants under this formula will be US$340 434,00.

In the result therefore, it is ordered that Respondent pays each Applicant damages in the United States Dollars equivalent to five (5) years salary at the April, 2009 salary rate.

…………………………………………									MHURI J.

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MAKAMURE J.		I concur

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HOVE J. 			I concur

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MUSARIRI J.		I concur

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MANYANGADZE J.	I concur

Munyaradzi, Gwisai and Partners–Applicants’ Legal Practitioners

Chinawa Law Chambers–Respondent’s Legal Practitioners