Packrite (Pvt) LTD V JOHN Dzivakwe & 7 Others

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT
NO LC/H/174/16
HELD AT HARARE 1 MARCH 2016
CASE NO
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IN THE LABOUR COURT OF ZIMBABWE			JUDGMENT NO LC/H/174/16

HELD AT HARARE 1 MARCH 2016				CASE NO LC/H/466/14

& 18 MARCH 2016

In the matter between:

PACKRITE (PVT) LTD 					Appellant

And

JOHN DZIVAKWE & 7 OTHERS			Respondents

Before The Honourable E Muchawa, Judge

For Appellant			T Thondhlanga (Legal Practitioner)

For Respondent		C Mugari (Trade Unionist)

with Mr Chimhuka (General Secretary)

+ Mr Dzivakwe

MUCHAWA, J:

This is an appeal against an arbitral award.

The respondents were employed by the appellant in various capacities and claimed that as at 7 May 2014, they were owed salary arrears running from November 2010 to December 2013.  They then approached the National Employment Printing’s designated agent for conciliation.  Failing this, the matter was referred to arbitration.

The terms of reference for arbitration were;

To determine the quantum of outstanding salaries due to the claimants; and;

Determine when the amounts should be paid.

In defence against the claim, the appellant contended that there was no basis for the

claim of outstanding salary as an unbundling exercise of the Screen Rite division in February 2013 had dealt with the arrear salaries running from November 2010 to February 2013.

The Screen Rite division was said to have been offered to the respondents as settlement of the outstanding salaries.

In the alternative it was argued that the claims by the respondents were incorrect as they were based on wrong grades and that the total claim amounting to $62 289.55 should be reduced to $31 342.07 in line with the NEC rates.

The arbitrator found that the respondents were indeed owed arrear salaries and awarded the total amount of $31 144.76.

The grounds of appeal before me are as follows

Having found that the respondents were offered a business division of the appellant called Screen Rite which they took and are operating without appellant’s involvement to offset their arrear salaries, the Honourable arbitrator erred at law by holding that there was no agreement to offset the salaries simply because there was no written agreement.

The arbitrator seriously misdirected himself by awarding the respondents a total of USD31 144.76 after finding that the respondents had not provided evidence to prove their claim and such a misdirection is wholly unreasonable as to amount to an error at law.

I now turn to deal with each ground of appeal, in turn below

Ground 1 – Whether an agreement to off set salary arrears existed between the parties

The appellant concedes that there was no written agreement between the parties.  It is however argued that the conduct of the respondents in taking control of Screen Rite and running it on their own, following a meeting held with the Managing Director on 6 February 2013, in which it was proposed that this be done to settle all outstanding salaries and benefits and the respondents accepted, establishes an agreement between the parties.

The finding of the arbitrator that all the income generated by the business was received by the respondents thereafter who controlled it, is alluded to.

Reference was made to the case of Timoney & King v King 1920 AD 133 at 141 where INNES CJ said

“An acceptance may be inferred from conduct.”

Further, I was referred to the case of Collen v Riet Fontelin Engineering Works 1948 (10 SA 413 A at 429 – 3- where it is stated,

“There is no doubt in my mind that the Plaintiff did by its conduct accept.  It did not reply in writing that it accepted, but it paid the defendant’s cheque in to its banking account.  Its conduct in so doing and its retention of the proceeds of the cheque, coupled with the fact that it failed to notify the defendant that it did not accept his offer was in my view, a sufficient indication to the defendant that it had accepted his proposals.”

The respondents counter argue that the appellant failed to discharge the onus of proving that an agreement existed between the parties, as it alleged.  (See Astra Holdings v Peter Chamburuka SC-27 12).

It is contended that the arbitrator’s factual finding that there was no agreement, can only be impugned on appeal on the basis that the decision is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it.

See Associated Provincial Picture Houses Ltd v Wednesbury Corp [1947] 2 ALLER 680, [1948] 1KB 223.

When acceptance is inferred from conduct, one has to consider the totality of the conduct and what it is pointing to.

On record page 19 is a letter of 18 February 2013 written to the managing director by the respondents as the Screen Rite department employees. It states;

“RE:  Unbundling of Packrite Screen Printing division to employees

The above refers

We are in receipt of your proposal dated 6 February 2013 and wish to respond to its contents as follows

1 – Before we agree or disagree to your proposal we hereby request the following

that you furnish us with the beneficiaries list

that you furnish us with the beneficiaries service and entitlements

that you clearly spell out the amount you wish to extinguish with the machinery and accessories

that the said machinery and accessories be evaluated by an evaluator agreed by the concerned parties

that you continue to pay us our salaries until we agree to your proposal

that you organise a meeting between yourselves and us where we will be represented by our attorneys to discuss a possible way forward, we are proposing Thursday 21 February 2013.

Lastly we wish to remind you that our contracts of employment with Packrite (Pvt) Ltd have not been legally terminated as such we remain your employees until such a time we agree to your proposal.”

On 10 June 2013, a follow up letter was written advising that the respondents

were still awaiting a response and reiterating that they were not prepared to take the machines.  It was around the same time that the respondents referred the matter of non- payment  of salaries to the NEC Printing Packaging and Newspaper Industry on 5 June 2013.

Unlike the case of Collen v Riet Fontein Engineering Works (supra), the respondents responded in writing and made their position clear and ended up lodging a complaint.  The respondents also submitted before the arbitrator that in March 2013, the appellant relocated them to Willowvale from Msasa citing operational challenges and abandoned them there.

In my considered opinion, no inference of an acceptance can be drawn from such conduct.

The arbitrator cannot be said to have reached a conclusion which is outrageous in its defiance of logic, in the circumstances.

Ground 2 – Quantum of damages awarded

The appellant alleges that the arbitrator erred in awarding the amount of $31 144.76 despite having made a finding that the claimants (respondents now), had failed to provide convincing evidence to support the level of their claim.

The approach taken by the arbitrator of awarding this amount on the basis that the appellant had argued in the alternative that if its argument for a set off was dismissed then the arrear salaries of US62 287.00 were excessive and should be reduced to US$31 342.07 is said to be erroneous.

It is contended that the respondents should have proved their claim instead of the arbitrator relying on the appellant’s argument.  For this I was referred to the case of Alfred Muchini v Elizabeth Mary Adams & 4 Ors SC 47/13.

The respondents argue that it is common cause that the appellant admitted before the arbitrator, owing US$31 342.07 and that this is precisely what the arbitrator awarded.  I was referred to the case of Mining Marketing (Pvt) Ltd SC-25-12 wherein MAKARAU JA held that a formal admission made in pleadings cannot be ignored by the court before whom it is made and the court cannot allow any party to lead or call for evidence to prove the facts that have been admitted.

A closer look at the respondent’s statement of defence shows that the amount agreed to, in the alternative is $31 343.07 yet the arbitrator’s award amounts to $31 144.76.  the arbitrator does not show how he arrives at this amount.

The respondent’s statement of defence before the arbitrator contains an annexure A which is a letter from NEC Printing’s Chief Executive Officer.  This is dated 10 October 2012 and points to what should be the correct grading of the respondents in terms of Statutory Instrument 69 of 2006.

The appellant further refers in his statement of defence, to Annexure B and says it is a schedule showing the salaries that the respondents received and the shortfalls following the NEC rates.  Such schedule summarises the totals for November 2010 to March 2013.  It shows that of the NEC total of US$68 945.56 that was to be paid, only US$37 603.49 was paid, leaving a total of $31 342.07.

There are however wide divergences between what is contained in annexure B and what the arbitrator awarded.  I demonstrates this below,

In the light of the difference in the numbers of claimants dealt with by the arbitrator whose list had eight instead of seven people and the difference in the amounts for each one, it is difficult to sustain the respondents’ argument that the amount awarded was as admitted by the appellants in annexure B.

It does not help that the Arbitral award does not show how such amounts were arrived at.  Accordingly, I find that the arbitrator erred in awarding the amount of $31 144.76

Consequently the appeal partly succeeds and I order as follows;

The arbitral award by Honourable Arbitrator E F Chitsa of 7 May 2014 be and is hereby set aside in respect to the quantum of arrear salaries owed for each respondent.

The issue of quantification of arrear salaries is referred back to the arbitrator to be done in accordance with the principles of the law.

Thondhlanga & Associates, appellant’s legal practitioners