MTSHIYA J: This is an opposed application. The background to this
application is the following.
The applicant
was employed by the first respondent as a General Manager. She left the employ
of the first respondent on 30 September 2007. There are still issues yet to be
resolved by the labour Court relating to the circumstances under which she left
employment.
In addition to
her employment the applicant avers that there was an agreement between her and
the first respondent whereby she was entitled to a percentage share of the
profits for each financial year. The applicant alleges that she was not paid
her profit share for the years 2006 and 2007. These facts can best be brought
forward by reproducing them as narrated by the applicant in her founding
affidavit. She states, in part;
“7.1. The first respondent and I had an agreement under which and
over and above my normal salary and benefits, I was entitled to a percentage
share of the profits for each financial year.
7.2. It
is not in disputed (sic) by
respondents that I was not paid my profit share for the years 2006 and for
2007.
7.3. The
reason for non payment of the profit share which has been given by Mr
Cranswick, in an email to me in September 2007, is the claim that “numerous
accounting issues and irregularities to be worked through”
In other words, the respondents have
not paid me the agreed percentage share of the profit
for the “ reason” that there must
first be a debatement of the account”
It is on the basis of the above
facts that on 27 October 2008 the applicant filed this
application for a debatement of accounts of the first respondent in
the following terms:-
“1. The
first respondent is ordered and directed to pay the applicant the sum of USD
110 022 together with interest at the applicable rate from the date of these
proceedings.
2. In
the event that the first respondent fails to pay the sum of USD 110 022 as
ordered, first respondent is ordered to render an account of all the business
of Travel Connections (Private) Limited including specifically the foreign
currency profit and loss accounts for 2006 and 2007 within 14 days of the date
of the service of the order.
3. It
is ordered that the parties shall debate the accounts rendered in terms of para
2 above, within 14 days of the date of delivery of the accounts to applicant's
legal practitioners.
4. If
agreement is reached, the first respondent shall pay to the applicant a profit
share of one third (1/3) of the profits for 2006 and 2007, within 3
days of the date of agreement.
5. In
the event that the accounts are not agreed within 14 days, it is ordered that
either party shall be at liberty to approach Messrs Deloitte and Touch
Chartered Accounts to appoint a Chartered Accountant from within their firm to
act as referee and intervener.
6. The
intervener appointed shall and is hereby fully empowered with unlimited access
to all accounting, financial and all other documents as may be necessary for
him/her to give effect to this order. Such power shall include, but not be
limited to, access to any and all financial and banking records, whether in
Zimbabwe or abroad, and direct access to any foreign transactions, information,
or accounts in the custody or control of the first and second respondents or
records held by the Reserve Bank of Zimbabwe, which have a bearing on the
profit and loss of the first respondent for 2006 and 2007. In discharging this
order, the intervener shall be empowered to subpoena the parties, witnesses and
to gather such oral evidence as may be necessary.
7. The
intervener/referee shall upon due investigation, examination, assessment and
consideration of the matter make a report to the parties, with a copy to this
court, and determine the profit for 2008 and 2007 within 21 days from the date
of appointment.
8. It
is ordered that upon determination of the profit for 2006 and 2007 by the
intervener, the first respondent shall pay to the applicant a 1/3 of
the profit of the first respondent for 2006 and 2007.
9. The
applicant shall be entitled to file a chamber application to register the
decision/quantification fixed by the referee/intervener as an order of the
court for the purpose of execution.
10. In
the event that either party is in default of any of the time limits fixed in
this order, where such limits have not been mutually extended by order of this
court, the party not in default shall be entitled to apply by chamber
application, on notice, for default judgment or other relief as may be
appropriate.
11. The
respondents are ordered to pay the costs of the application”.
I believe that in order for this
court to properly consider whether or not to grant the relief in
the manner sought above, this court must first determine whether or
not there was indeed a profit sharing agreement between the first respondent
and the applicant. It is only on the basis of a finding on that issue in favour
of the applicant that the relief sought can then be granted.
In the opposing
affidavit, filed under a Power of Attorney granted to CheryIynn Jean Watson by
the second respondent (i.e the Managing Director of first respondent) the following
is stated on behalf of the respondents:-
“9. This
is denied. The applicant was overally responsible for the first respondent's
operations in Zimbabwe and Zambia for the duration of her employ with the first
respondent. Included as part of her functions was the control of all financial
matters including the preparation of financial statements and accounts. It is
not necessary, in order to asses whether or not the applicant is owed any money
by the first respondent, to order the debatement of the first respondent's
foreign currency or any accounts nor obtain the services of an intervener or
referee, as the applicant was responsible for the preparation of the financial
accounts and supervision of the auditors that audited all the accounts of the
first respondent's group operations. The audited accounts for the Group
prepared under the supervision of the applicant show that the Group did not
make any profits in the years in respect of which she seeks a profit share
payment.
Further,
I aver that there was never a profit sharing agreement concluded and or signed
between the applicant and the first respondent. The applicant initiated several
discussions with the second respondent pertaining to her request for a share of
the profits of the first respondent as she believed she had brought a lot of
business into first respondent's group. The last of these discussions
culminated in a note that was written by the second respondent illustrating the
proposal applicant was making for the profit sharing. Attached hereto as
Annexure 'E' is the said note, which applicant would have the court believe is
the profit sharing consultancy agreement.
10. Ad Paragraph 9
This
is denied. These alleged facts are disputed.
10.1 Ad
sub-paragraph 7.1 – This is denied. There was never an agreement
between the applicant and the first respondent in
terms of which applicant was entitled to a percentage share of the profits for
each year.
10.2 Ad sub-paragraph 7.2 – This is agreed
as there was no share profit agreement between the parties and even if it is
found that there was an agreement for profit sharing, the first respondent
reported a net loss position for both the 2006 and 2007 financial years. As
such therefore no payment would have been due to the applicant, but instead she
would be liable to pay the first respondent for her part of the losses”.
The applicant raised the point that
Cherylynn Jean Watson (Watson) who
was the Group Financial Manager of the first respondent could not
properly swear to the opposing affidavit since she had no knowledge of any
facts which could assist the court and that the respondents had 'failed to
comprehend the nature of and purpose of an application for debatement of
account. The applicant averred that due to her entitlement 'to a percentage
share of the profits for each financial year, the first respondent had a
fiduciary obligation to debate or disclose the accounts or profits of the
disputed periods.
The respondent's position was that Cherylynn Jean Watson's opposing
affidavit was valid because in her capacity as Group Financial Manager the
matters she deposed to were clearly within her purview. I share that view and
in so doing I derive comfort from r 227(4)(a) of the High Court Rules, 1971
which provides as follows:-
“(4) An affidavit filed with a written
application –
(a) Shall be made by the applicant or respondent as the case may be, or
by a person who can swear to the facts or averments set out therein;….”
(My own underlining)
It was not disputed that Watson was indeed the first respondent's Group
Financial Manager
who supervised the auditing of all group companies .
I am satisfied that in that position she had the capacity to swear
to the opposing affidavit.
I also note that whilst praying for the dismissal of the opposing
affidavit, the applicant has, in support of her case, heavily relied on the
same affidavit.
In view of the
foregoing, I am unable to uphold the point in
limine. The opposing affidavit is properly filed.
In
supplementary heads of argument filed on 8 February 2011 the respondents argued
this was a labour matter which should be dealt with under s 89 of the labour
Act [Cap 28:01]. It was submitted
that this was so because the applicant had indicated that she had instituted
proceedings in the Ministry of Public Service, Labour and Social Welfare to
deal with the unlawful termination of her contract of employment. Advocate Mushore, for the respondents,
submitted that the basis of the relief sought derived from an employer/employee
relationship. The applicant was seeking a determination of what her terminal
benefits were. The matter, it was argued, was pending at the Ministry of Public
Service, Labour and Social Welfare.
Mr Hwacha, for the applicant, argued that
the profit sharing agreement was not part of the applicant's conditions of
service. This, it was argued, was a separate contract from the employment
contract. To the extent that the applicant's claim is firmly based on the fact
that there was between her and the first respondent a distinct profit sharing
agreement. I would agree with Mr Hwacha's
submission. The applicant is not raising an employment dispute. She is making a
claim on an agreement which, although probably influenced by virtue of her
employment, had nothing to do with her contract of employment. The fact that her
contract of employment might have placed her in an advantageous position into
being granted a profit sharing agreement, does not, in my view, convert this
into a labour dispute.
The thrust of
the applicant's argument is that there was a profit sharing agreement between
her and the first respondent. The first respondent had failed to honour her
entitlements for the years 2006 and 2007. There was therefore need for a
debatement of account in order to establish what she ought to have been paid.
In her heads of
argument Advocate Mushore correctly
notes:
“The issue that has been brought before this Honourable Court
relates to relief brought in instances where a partnership contract exists and
an issue of accounting arises for example upon dissolution of partnership. The
issue of debatement is for example a sequitor
to the fiduciary duty between parties who are in a partnership”.
The above realisation, in my view, is an acceptance of the fact that
this is not a labour
matter. Accordingly this court can deal with the issue. In proving her claim the applicant relies on
a number of documents but places greater emphasis on the one document provided
by respondents' in the opposing affidavit. Hence in her answering affidavit she
states as follows:-
“The respondents themselves have annexed the document marked 'E'. It
is written to me by the second respondent and shows clearly that there was a
profit sharing arrangement. Annexure “E” reads:-
'All up to date (K.T) (Karen Tumazos). As of 1/7/05:3 thousand per
month for SC (Stewart Cranswick) and K.T. (Karen Tumazos) to 31/12/05: 4
thousand per month for 06.
P/share (profit share) of 1/3 attributable each and 1/3
for reserves”
There is nothing unclear in the above. That my salary and Mr
Cranwisk's salary would be pegged at three thousand US dollars to the end of
December 2005 and upped to four thousand US dollars for 2006. That each of us
would be paid 1/3 of the profit with the other third going to
reserves”.
In order to buttress the above, the applicant, in her heads of
argument, quotes the following
statements from Mr Cranswick:-
“As far as your payment goes:
(a) There are accounting
issues with the account returning to Rodger that I have told you about and have
to go over and rectify
(b) I have only just received
the i.f.o you sent
(c) You make no mention in the
reports of AF guarantee issues and it was clearly recorded that this would be
collected prior to bonus”
(Annexure 1)
'If you are to
get one (profit share), its won't be for a while as there are numerous
accounting issues and irregularities to be worked through'
(Annexure J)
'there are some
serious accounting issues still outstanding'
(Annexure K)”
The above statements, as indicated, are selectively pulled out from
different documents. On
the basis of the above, the applicant submitted that the actual
terms of the profit sharing agreement arrangement and the applicant's
entitlements resulting therefrom had been clearly spelt out.
Apart from
having argued that the applicant's relief lay in the Labour Court, the respondent
also submitted as follows:-
“In casu, the relationship that is evident from the pleadings and the relief
sought is based on a calculation of terminal benefits due or not due to
applicant arising from her relationship with first respondent (labour matter)
and not from a contract of partnership. A party who relies on a partnership
contract must allege and prove a
contract with the following essentials”-
(a) Each party must undertake to bring into the partnership money,
labour and skill;
(b) A business is to be carried on for the joint benefit of all the
parties; and
(c) The common object is to make a profit”.
Indeed as already pointed out, the relief sought herein can only be
granted if there is proof
of the existence of a clear contract of profit sharing. This was strongly
disputed by the respondents who argued that in the absence of a proper
agreement, the applicant could not rely on 'scribbled notes' produced by the
respondents. It was submitted that whilst the applicant might have received
certain payments, which could either be bonus or profit share, that alone did
not prove the existence of a proper profit sharing agreement with clearly
defined terms.
An indepth
analysis of the facts in the papers before me and a careful consideration of
the submissions from both parties make it very difficult for me to conclude
that there was ever a proper and clearly defined profit sharing agreement
between the first respondent and the applicant. I want to believe that such an
arrangement, if at all it had existed, would have been formalised. Instead, what I have before me is a request
to put together scribbled pieces of
paper and then come up with a formal agreement. It is extremely difficult to do
that without full knowledge of what led to the writing of those various pieces
of paper that the applicant wants me to believe constitute evidence of the
profit sharing agreement. Acceptance of the applicant's request in the manner
suggested, would in my view, place the court in a situation where it will be
crafting a contract for the parties. That not be. In any case the pieces of
'correspondence' relied on by the applicant are proof of 'correspondence
between the second respondent and the applicant. I am mindful of the fact that
the second respondent was only the Managing Director of first respondent.
However, for the purposes of establishing a binding agreement between the
applicant and the first respondent, the need for a Board resolution would, in
my view, arise. It cannot, in the absence of evidence, just be assumed that the
second respondent had authority to enter into certain binding arrangements with
the applicant on behalf of the first respondent. The alleged contract was meant
to be between the applicant and the first respondent. In para 8 of the founding
affidavit the applicant presents her case as follows:-
“8. I
approach this honourable court for an order directing and authorising a
debatement of the foreign currency accounts of Travel Connections (Private)
Limited, for the appointment of an intervener or referee, and for payment of
all foreign currency due to me from Travel Connections on account of the profit
sharing consultancy agreement which I had with Travel Connections (Private)
Limited prior to the unlawful termination of my employment”.
The documents relied upon as
evidence of the existence of a profit sharing agreement
Clearly appear to emanate directly from the second respondent. There
is nothing to tell us that in so doing the second respondent was mandated by
the first respondent to negotiate an agreement with the applicant – moreso in
foreign currency.
In view of the
foregoing, I am unable to find that there was a profit sharing agreement
between the applicant and the first respondent. I therefore agree with the
respondents that:
“The applicant has failed to establish that she has a right to
receive the accounts in respect of which she seeks debatement, and the basis of
such right;
She has not furnished the court with a contract or some other
document or proof which establishes that indeed she was entitled to the profit
share claimed, either by contract or fiduciary relationship or otherwise”.
As earlier
opined, the above finding means that the basis upon which the relief sought
would have been granted, falls away. Accordingly the application should fail.
The application
is dismissed with costs.
Dube, Manikai & Hwacha, applicant's
legal practitioners
Gula-Ndebele &
Partners, respondent's legal practitioners
