Rules of Construction or Interpretation re: Deeming Provisions

SC49-20 : ALBERT JAVANGWE vs VORTIGEN INVESTMENTS (PRIVATE) LIMITED T/A CPL
Ruled By: MAKARAU JA, HLATSHWAYO JA and UCHENA JA

This is an appeal against the whole judgment of the Labour Court dismissing the appellant's application for review.

After hearing submissions from counsel for the parties we dismissed the appeal with costs, indicating that reasons for our decision would follow. These are they.

The detailed facts of the case can be summarized as follows;

In April 2017, the appellant, who was employed by the respondent as a journeyman printer, was charged with misconduct for unsatisfactory performance of his duties. He was charged in terms of the respondent's employment Code of Conduct (hereinafter referred to as the “CPL Code”). After disciplinary proceedings, the appellant was found guilty and dismissed from employment.

Aggrieved by that decision, he appealed to the Appeal's Officer who dismissed his appeal.

After the unsuccessful internal appeal the appellant applied to the court a quo for the review of that decision praying for the reversal of his conviction and dismissal from employment. He alleged that the proceedings a quo were tainted by irregularity as the CPL Code which was used had not been referred to the NEC for ratification in terms of section 101(1)(b) of the Labour Act [Chapter 28:01]. He further alleged that the CPL Code was inconsistent with S.I.175 of 2012, the NEC Code.

It is not in dispute that in February 2009, the National Employment Council for the Printing, Packaging and Newspaper Industry (NEC) had approved and registered the respondent's Code of Conduct, the CPL Code, in terms of which the appellant was charged. The registration was in terms of section 101(1)(b) of the Labour Act. This registration was necessitated by the coming into force of the NEC's own Code for the Industry in terms of S.I.148 of 2009; as, in terms of section 101(1)(b) of the Labour Act, when the National Employment Council registers its own Code, such Code supersedes all Codes under the industry made at Works Council levels, unless such Codes are submitted to it for approval and registration.

In 2012, the National Employment Council for the Printing Packaging and Newspaper Industry (NEC) published a new industrial Code under S.I.175 of 2012 which repealed and replaced S.I.148 of 2009.

It is this new Code the appellant alleged was binding and should have been used during the disciplinary proceedings against him.

In the court a quo, the appellant further argued that the respondent had to register its employment Code again following the repeal of S.I.148/09 and its replacement by S.I.175/12. He also submitted that the CPL Code was inconsistent with the NEC Code of Conduct and ought not to have been used.

The respondent opposed the application arguing that the company's Code had been duly registered with the employment council in terms of S.I.148 of 2009, and was, after the coming into effect of S.I.175 of 2012, approved by section 4.1 of that statutory instrument.

The court a quo dismissed the application for review. It held that it was not necessary for the respondent to resubmit its Code to the National Employment Council for the Printing, Packaging and Newspaper Industry (NEC) which had, through section 4.1 of S.I. 175 of 2012, ratified all Codes which came into existence before it and held that the employer had used the correct Code of Conduct in disciplining and dismissing the appellant from employment. Accordingly, the court a quo dismissed the appellant's application for review.

Aggrieved by that decision, the appellant appealed to this Court on the following grounds:

“1. The court a quo erred and misdirected itself in not finding that in the absence of ratification, the workplace Code of Conduct could not supersede the NEC Code of Conduct.

2. The court a quo erred and misdirected itself in failing to appreciate that Appellant had been dismissed in terms of the wrong Code of Conduct and his dismissal was consequently a nullity.”

The appeal raised one issue for determination: Whether or not the court a quo erred in finding that the appellant was dismissed using an approved Code of Conduct.

Counsel for the appellant submitted that the nub of the matter was the interpretation of section 101(1)(b) of the Labour Act [Chapter 28:01]. He submitted that the National Employment Council for the Printing, Packaging and Newspaper Industry (NEC) Code of Conduct for the Industry surpersedes all other Codes unless they are approved. He further argued that the in-built approval in section 4.1 of S.I.175 of 2012 is not what was contemplated by section 101(1)(b) of the Labour Act. He contended that the CPL Code had to be re-submitted for approval. Counsel for the appellant further argued that it followed that the Code used by the respondent was not approved and everything that flowed from it was a nullity.

Counsel for the respondent submitted that the CPL Code was approved. He contended that S.I.175/12 incorporated an inbuilt approval which provided that all pre-existing Codes were approved and were not affected by its promulgation. Counsel for the respondent further submitted that the in-built approval of all pre-existing Codes was to avoid a duplicate process and could not be held to be inconsistent with the Labour Act. He submitted that the inbuilt approval in S.I.175 of 2012 was sufficient in the circumstances and that the appellant's dismissal was in terms of an approved Code of Conduct.

The determination of this appeal depends on the interpretation of section 101(1)(b) of the Labour Act [Chapter 28:01] and S.I.175 of 2012.

Section 101(1)(b) of the Labour Act [Chapter 28:01] provides as follows:

“Where an employment code is registered by a works council in respect of any industry, undertaking or workplace represented by an employment council and the employment council subsequently registers its own employment code, the employment code registered by the employment council shall supersede that of the works council unless the works council refers it to the employment council for approval.”

The effect of section 101(1)(b) of the Labour Act is that where the National Employment Council registers a Code for the industry, its Code will supersede any Works Council Code unless the Works Council Code would have been submitted to the National Employment Council for approval.

In this case, the respondent's employment Code was superseded by the Employment Council's Code under S.I.148 of 2009. After that supersession, the respondent submitted its Code to the National Employment Council for approval, which approval was granted. Section 101(1)(b) of the Labour Act was therefore complied with at that stage.

Later, S.I.148 of 2009 was repealed and substituted by S.I.175 of 2012.

Cognisant of the previous approval and registrations of the respondent's, and other Codes, the Employment Council, through section 4.1 of S.I.175/12, exempted the respondent, and others in similar circumstances, from having to resubmit their Codes for approval and re-registration. Section 4.1 of S.I.175 of 2012 provides as follows:

“The Code shall not apply to employees with registered company Codes of Conduct already in use at the time of registration of the industry Code of Conduct."

In terms of our law, the overriding consideration in interpreting statutes is the intention of the legislature. The resultant interpretation must not lead to an absurdity. In Grey v Pearson 1857 10 ALL ER 1216…, it was held that in construing all written instruments, the grammatical and ordinary sense of the words is to be adhered to unless that would lead to some absurdity.

The legislature, in enacting section 4.1 of S.I.175 of 2012, which expressly provides that it was not to be used for employees who already had registered company Codes, must be presumed to have applied its mind to the possible effects of requiring re-registration of company Codes which were already in existence.

The grammatical construction of section 4.1 of S.I.175 of 2012 clearly proves that the legislature intended to establish a blanket approval of all pre existing Codes to avoid an absurd scenario of re-registration of pre-existing Codes it had previously approved. Section 4.1 of S.I. 175 of 2012 cannot therefore be said to be inconsistent with the Labour Act.

Counsel for the appellant's submission, that there should be a re-submission of Codes for approval, is an absurd and cumbersome process which was not intended by the legislature.

It is apparent that what section 101(1)(b) of the Labour Act requires is that the National Employment Council should consider and approve Employment Codes before they can be used.

In this case, the National Employment Council for the Printing, Packaging and Newspaper Industry (NEC) had, in its office, the respondent's approved Code before the repeal of its S.I.148/09 and the enactment of S.I.175/12 in its place. It was therefore entitled to review it and provide, in its section 4.1 of S.I.175/12, that it approved its continued use by the respondent. It had already been submitted to it and had been approved in terms of section 101(1)(b) of the Labour Act. It was therefore lawful for the National Employment Council for the Printing, Packaging and Newspaper Industry (NEC) to consider the pre-existing copy and approve it through the inbuilt provision. There was therefore no need for the re-registration of the respondent's Code.

The respondent correctly used its Code in disciplining the appellant.

The appellant was therefore charged and dismissed in terms of the correct Code of Conduct. Accordingly, the decision of the court a quo cannot be faulted. The appeal has no merit. It was for these reasons that the appeal was dismissed with costs.

Appealed
SC61-17 : ARUNDEL SCHOOL and CHISIPITE SENIOR SCHOOL and ST JOHNS EDUCATIONAL and GATEWAY SCHOOL and ST GEORGES COLLEGE and CHRISTIAN BROTHERS COLLEGE vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GARWE JA, GUVAVA JA and UCHENA JA

The Income Tax Act defines the term “gross income” as follows: “8 (1) For the purposes of this part:- “gross income” means the total amount received by or accrued to or in favour of a person or deemed to have been received by or to have accrued to or in favour of a person in any year ...

SC12-21 : TOBACCO PROCESSORS ZIMBABWE (PRIVATE) LIMITED vs TONGOONA MUTASA and OTHERS
Ruled By: MAVANGIRA JA, MAKONI JA and CHATUKUTA AJA

This is an appeal against the whole judgment of the Labour Court upholding the National Employment Council - Tobacco Grievance and Disciplinary Committee's (NEC GDC Committee) finding that the appellant tacitly renewed the respondents' contracts of employment.FACTUAL BACKGROUNDThe following facts are common cause. The respondents were employed by the appellant ...

FACTUAL BACKGROUND

The following facts are common cause. The respondents were employed by the appellant on two-year fixed contracts beginning 1 May 2011 to 30 April 2013.

After the expiry of their contracts of employment, they continued to work for the appellant for eleven months following which the appellant offered them new contracts with the same terms as the expired ones.

The respondents signed the new contract which effectively regularised their employment in retrospect for the period of 1 May 2013 to 30 April 2015.

Upon expiry of the contracts, on 30 April 2015, the appellant retained the respondents until 22 June 2015 on the same terms as the expired contracts. It then offered them one-year fixed term contracts. The proposed contracts had a two-months probation clause and other less favourable conditions.

The respondents rejected the appellant's offer.

The appellant terminated their contracts of employment by letter dated 7 July 2015 on the basis that the negotiations between the parties had collapsed.

Aggrieved by the termination of their employment, the respondents noted a grievance of unfair dismissal with the appellant's Works Council.

The Works Council upheld the decision by the appellant's Human Resources department to offer the appellants one year contracts after the expiry of the two year contracts. It reasoned that there was no legal impediment to the appellant replacing the expired two-year contracts with other contracts which had different terms and conditions from the expired contracts.

The Work's Council further found that the respondents suffered no prejudice as they were paid for the period they worked whilst the parties were negotiating.

Thereafter, the respondents appealed to the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC).

They submitted, that, in instances where an employer allows an employee to work after a fixed-term contract had expired, the contract is deemed to have been tacitly relocated on the same terms and conditions. Therefore, they submitted, there was no basis for the new contracts as there had been tacit renewal. They also averred, that, the alleged negotiations were inconsequential as they ensued after the tacit renewal.

In response, the appellant submitted, that, the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC) had no power to interfere with the findings of facts made by the lower tribunal unless the findings were outrageous in their defiance of logic. The appellant contended that the two-month delay in notifying the respondents of the new offer could not be inferred to mean there was tacit renewal.

It did not intend to renew the two year contracts.

The National Employment Council - Tobacco Grievance and Disciplinary Committee ruled in favour of the respondents.

It held, that, tacit relocation could be safely presumed since the appellant did not communicate its intention to change the terms of the respondents' contracts before their termination and that the respondents were engaged on the same terms and conditions as before. It accordingly ordered the reinstatement of the respondents for the unexpired period of their contracts without loss of pay and benefits or payment of their salaries and benefits up to 30 April 2017.

Aggrieved by this decision, the appellant appealed to the Labour Court (the court a quo) on the ground, that, the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC) grossly misdirected itself when it made a finding that there was a tacit renewal of the respondents' two year employment contracts simply because the appellant allowed the respondents to continue reporting for duty after the expiry of their contracts.

It argued, that, where there are clear indications that the other party did not intend to be bound by the old contract, there could not be tacit relocation of a contract that extended beyond the contractual period.

The appellant submitted, that, tacit relocation could not occur where the parties are engaged in negotiations over a new agreement. It contended that the respondents were allowed to work and were paid for the period when their new contracts were being attended to.

To the contrary, the respondents argued that there was tacit relocation in that the appellant allowed them to continue working on the same conditions from 1 May 2015 to 22 June 2015 notwithstanding that their contracts expired on 30 April 2015.

They also emphasized that the parties did not agree on a new arrangement.

The respondents further indicated that the appellant had the option of terminating their contracts of employment but allowed them to render their services and subsequently introduced unfavourable conditions. It was submitted that a finding against tacit relocation in the circumstances of the case would be contrary to social justice and fair labour standards of equity and fairness in the workplace.

DETERMINATION OF THE COURT A QUO

The court dealt with the issue of whether or not the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC) erred in finding that the contracts of employment had been tacitly relocated.

In doing so, it considered the employment status of the respondents at the time their contracts were terminated. The court a quo found that there was no evidence to the effect that the new contracts were as a result of any negotiation process as no negotiations were done from 1 May to 22 June 2015.

It reasoned, that, the old contracts were tacitly relocated in that the appellant had allowed the respondents to continue working on the same terms and conditions as before, and did not communicate any intention to change the terms and conditions of the employment.

The court a quo also had regard to the precedent that the appellant did not immediately terminate or renew the respondent's contracts but allowed them to continue working, for some period, on the same terms and conditions of the expired contracts.

It reasoned, that, had the appellant not wished to be bound by the old expired contracts, it would have expressed that intention.

The court accordingly concluded, that, the National Employment Council - Tobacco Grievance and Disciplinary Committee's decision did not constitute an outrageous defiance of logic since the facts indicated that there was tacit relocation of the two year contracts.

Aggrieved by that decision, the appellant noted the present appeal on the following grounds:

GROUNDS OF APPEAL

“1. Having accepted that the fixed term contracts between appellant and each of the various respondents had come to an end and that new fixed term contracts have been offered, within two months of the expiry of respondent's contracts, the court a quo erred in finding notwithstanding those agreed facts, that the old contracts had been relocated.

2. The court a quo erred in not coming to the conclusion that the negotiation that took place after the expiry of the contracts were such as negated any finding that there was an extension of the contractual relationship between the parties by the quasi-mutual assent.

3. The court a quo erred in imposing upon appellant a contract it had not concluded to prejudice the clear terms it had actually offered. (sic)

4. Respondents, having rejected the terms of the contract offered by appellant, the court a quo erred in concluding that respondents had a contract to enforce.”

SUBMISSIONS BEFORE THIS COURT

At the hearing, counsel for the appellant submitted that the court a quo asked itself the wrong question, and, ultimately, gave itself the wrong answer.

The wrong question was whether it had been shown that there had been negotiations between the parties from 1 May 2015 to 22 June 2015, and, if not, what the effect of the absence of negotiations, during that period, would be.

The court a quo's ratio was that, upon the expiry of the contract, they only engaged in negotiations after a period of six weeks: because of that silence, there was tacit relocation of the contract.

He contended, that, the real dispute between the parties was not that the respondents' contracts had been relocated but that the respondents were aggrieved by the terms of the new contracts.

Counsel for the appellant submitted, that, the respondents admitted that there were negotiations and that they did not refuse to sign the one-year contracts but were looking forward to working under the old two-year contracts.

Counsel for the appellant further contended, that, a holistic analysis of the facts would show that relocation of contracts in 2015 could not have been the appellant's intention.

The parties knew of the need for a written contract at all material times as evidenced by the fact that in 2013 the respondents worked for eleven months without contracts and later signed contracts backdated to the period when they were without contracts.

The parties haggled over the terms of the one year contracts as the employees did not like the new terms of the contract. They did not argue that the old contracts had relocated.

To confirm the appellant's position some of the employees signed the one-year contracts.

He concluded by saying that tacit relocation cannot be inferred from the facts of this matter.

On being asked the date when the negotiations started, he was unable to pinpoint a date.

He however submitted that even if there were no negotiations between 1 May and 20 June 2015 a tacit relocation could not be inferred when the parties subsequently negotiated.

He further submitted, that, the fact that the parties were negotiating shows that there was no intention on the part of the appellant to revert to the old contract. He relied for that proposition on the case of Justin Kwangwari v Commercial Bank of Zimbabwe HH79-03.

He submitted, that, there is no period set in our law between the expiry of a fixed term contract and the conclusion of a new one for it to be held that there was tacit relocation. He urged the court to consider all the facts holistically in order to draw inferences consistent with the proven facts.

On being asked what would be the status of the employees in the seven (7) weeks, before the offer, he submitted that the status was determined by the new contract.

Counsel for the respondents submitted, that, the facts of the matter point to tacit relocation.

He indicated that the root of the dispute lies in the determination of the respondents' employment status in the seven (7) week period.

Accordingly, he referred to section 12(1) of the Labour Act [Chapter 28:01] (the Act) for the proposition that the legislature envisaged the existence of 'deemed contracts' in respect of an employee who works for an employer and is receiving or entitled to receive any remuneration notwithstanding that such contract has not been reduced to writing.

He also referred to section 12(2) of the Labour Act, which, so he argues, demands mandatory compliance by the employer to inform the employee, in writing, the period in terms of which they are engaged and section 12(3)(a) of the Labour Act which provides that where a contract does not specify its duration or date of termination, it is deemed to be one without a limit of time.

As such, he argued, the legislature sought to protect employees from unscrupulous employers who have more bargaining power than the employees.

He emphasized, that, there was tacit relocation in that the respondents reported for work and were remunerated under the old contracts.

He further indicated that the respondents' concerns did not only relate to their disgruntlement with the new offer but also spoke to the issue of tacit relocation.

He further submitted, that, the appellant's offer of new contracts of employment was immaterial to the concept of tacit relocation.

Additionally, he stated that the one-year contracts offered by the appellant were unjust, unfair, and violated the respondents' right to fair and safe labour practices and standards provided for in section 65 of the Constitution of Zimbabwe, 2013.

In rebuttal, counsel for the appellant submitted that there can be a delay after the expiry of the contract and the delay does not amount to relocation.

It would be wrong to say once there is a delay then section 12 of the Labour Act is the answer.

He submitted that section 12 uses “shall” in a directory sense and not in a peremptory manner. Failure to comply with it does not render conduct void.

He concluded by saying that section 12 of the Labour Act is what the employer was complying with in the seven (7) weeks.

ISSUE FOR DETERMINATION

From a consideration of the grounds of appeal raised and the submissions made, one issue falls for determination which is:

Whether or not the court a quo erred in finding that the contracts of employment in question had been tacitly relocated.

A reading of the record reflects that the ratio of the court a quo's ruling was that the respondents' continued rendering of services from 1 May 2015 to 22 June 2015 in terms of the expired contracts constituted tacit relocation of the contracts by the appellant.

That tacit relocation was at the centre of the parties' dispute is also evidenced in the way the matter progressed before the various fora. This will be shown by a perusal of the minutes of the appeal hearing of 26 October 2015 before the Work's Council to the respondents' appeal before the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC Committee) and the subsequent proceedings in the court a quo.

THE LAW

It is settled law that a fixed-term contract of employment automatically expires at the end of the specified period unless the parties thereto mutually agree to its termination: see ZIMRA v Mudzimuwaona SC04-18.

However, in certain instances, despite the expiry of the period of employment, the employer-employee relationship may be found to exist owing to the parties' conduct under the concept of tacit relocation.

Tacit relocation, as it applies to contracts of employment, entails that where an employee's fixed term contract expires without renewal and the employee continues to render his services to the employer with the employer paying the previously agreed remuneration, the expired contract is deemed to be relocated. Therefore, the employee is deemed to be employed on the same terms and conditions as the previous contract.

In Gumbo v Air Zimbabwe (Pvt) Ltd 2000 (2) ZLR 126…, the court made the following pertinent remarks regarding the principle of tacit relocation;

“Finally, the best that can be said for the applicant is that in certain cases, akin to the present, there is a presumption that when the parties continue the employer-employee relationship beyond the contractual period, without agreeing new terms, there is a tacit relocation of the expired contract on the same terms and for the same duration.

In other words, all things being equal, it could be said that on 1 October 1999, the applicant commenced a new probationary period.

However, this presumption does not operate when it is clear that one of the parties has no intention of continuing on the terms of the expired contract: see Lilford v Black 1943 SR 46 at 47, where BLAKEWAY J said:

'The renewal of a lease or of a contract for services to be performed can take place either by express agreement or tacitly. If, after the expiration of the period provided for the duration of the contract, the parties continue their relationship without any fresh agreement the law presumes, in the absence of indications to the contrary, that they have agreed to enter upon a new lease on the same terms as the expired lease. But, this presumption does not operate when it is clear that the parties, or one of them, does not intend to carry on with the contract on the old terms.'” …,.

JOHN GROGAN in his book “Workplace Law” 8th ed…, states the following:

“If, after the agreed date for the termination of the contract, the employee remains in service and the employer continues to pay the agreed remuneration, the contract is deemed to have been tacitly renewed, provided that an intention to renew is consistent with the parties' conduct. The relocated contract will continue on exactly the same terms and conditions as the previous fixed-term contract, except that the duration of the contract need not be the same as that of the original contract; the life of the relocated contract must be determined in light of the particular circumstances of each case.”…,.

In Golden Fried Chicken (Pty) Ltd v Sirad Fast Foods CC & Ors 2002 (1) SA 822 (SCA)…, the court held:

“After the termination of the initial agreement, and prior to this letter, the parties (in the light of the facts recited) conducted themselves in a manner that gave rise to the inescapable inference that both desired the revival of their former contractual relationship on the same terms as existed before.

Taken together, those facts establish a tacit relocation of a franchise agreement (comparable to a tacit relocation of a lease) between the appellant and Sirad (Shell South Africa (Pty) Ltd v Bezuidenhout and Others 1978 (3) SA 981 (N) 984B-E).

A tacit relocation of an agreement is a new agreement and not a continuation of the old agreement (Fiat SA v Kolbe Motors 1975 (2) SA 129 (O) 139D-E; Shell 985B-C).

The fact that the appellant had forgotten that the agreement had lapsed is beside the point because in determining whether a tacit contract was concluded a court has regard to the external manifestations and not the subjective workings of minds (Fiat SA 138H-139D).”…,.

The principle that can be drawn from the cited authorities is that an inference of tacit relocation is dependent upon the continued existence of an employer-employee relationship after the expiration of the contract. The employee will continue rendering his services to the employer who, in turn, pays remuneration in terms of the expired contract.

Tacit relocation is based on the intention of the parties which must be consistent with their conduct. The court, in determining such an issue, considers all the facts holistically as it draws inferences which are consistent with the proved facts.

The principle of tacit relocation of contracts of employment appears to be embodied in statute, in particular section 12 of the Labour Court Act [Chapter 28:01] which provides:

“12 Duration, particulars and termination of employment contract

(1) Every person who is employed by or working for any other person and receiving or entitled to receive any remuneration in respect of such employment or work shall be deemed to be under a contract of employment with that other person, whether such contract is reduced to writing or not.

(2) An employer shall, upon engagement of an employee, inform the employee, in writing, of the following particulars —

(a) The name and address of the employer;

(b) The period of time, if limited, for which the employee is engaged;

(c) The terms of probation, if any;

(d) The terms of any employment code;

(e) Particulars of the employee's remuneration, its manner of calculation, and the intervals at which it will be paid;

(f) Particulars of the benefits receivable in the event of sickness or pregnancy;

(g) Hours of work;

(h) Particulars of any bonus or incentive production scheme;

(i) Particulars of vacation leave and vacation pay;

(j) Particulars of any other benefits provided under the contract of employment.

(3) A contract of employment that does not specify its duration or date of termination, other than a contract for casual work or seasonal work or for the performance of some specific service, shall be deemed to be a contract without limit of time:

Provided that a casual worker shall be deemed to have become an employee on a contract of employment without limit of time on the day that his period of engagement with a particular employer exceeds a total of six weeks in any four consecutive months.

(3a) A contract of employment that specifies its duration or date of termination, including a contract for casual work or seasonal work or for the performance of some specific service, shall, despite such specification, be deemed to be a contract of employment without limitation of time upon the expiry of such period of continuous service as is —

(a) Fixed by the appropriate employment council; or

(b) Prescribed by the Minister, if there is no employment council for the undertaking concerned, or where the employment council fixes no such period; and thereupon the employee concerned shall be afforded the same benefits as are in this Act or any collective bargaining agreement provided for those employees who are engaged without limit of time.”

Section 12(2) of the Labour Act has been interpreted to merely impose an obligation on the employer to supply the information and does not require the parties to sign a written contract: see Rumbles v Kwa Bat Marketing (Pty) Ltd (2003) 8 BLLR 811 LC.

The statement of particulars is not the contract itself nor is it even conclusive evidence of the contract: see L. MADHUKU, Labour Law in Zimbabwe, 2015…,.

However, a proper construction of section 12(1) of the Labour Act yields the result, that, where an employee renders services in return for remuneration, a contract of employment exists notwithstanding that such a contract has not been reduced to writing.

Tacit relocation is therefore presumed.

This is made clearer by the provisions of section 12(3a) of the Labour Act which states, that, a fixed term contract shall be deemed to be a contract without limit of time upon the expiry of such period of continuous service.

APPLICATION OF THE LAW TO THE FACTS

A determination of whether a written contract was automatically renewed in accordance with the principle of tacit relocation is a question of fact which has to be answered after an analysis of the particular facts and circumstances of each case: see Sun International (South Africa) Ltd v Crocodile Enterprises [2014] ZANWHC 52.

In casu, it is not in dispute that the parties' relationship was governed by a written contract of employment which terminated by effluxion of time on 30 April 2015. As at that date, the respondents would have ceased to be the appellant's employees.

However, the appellant allowed the respondents to continue working on the old terms and conditions of their contracts until 22 June 2015 when it then offered the respondents one-year contracts with less favourable conditions.

It can be reasonably inferred from this conduct of the parties that a new contract had come into existence by the principle of tacit relocation.

Applying the dicta in Golden Fried Chicken (Pty) Ltd v Sirad Fast Foods CC & Ors 2002 (1) SA 822 (SCA)…, that, tacit relocation of an agreement is a new agreement and not a continuation of the old agreement, it follows, that, a new agreement between the parties came into effect on 1 May 2015 owing to the appellant's conduct of retaining the respondents in its employ on the same terms and conditions of the expired contracts.

Such a finding would have resolved the matter; however, a secondary issue arises from the parties' submissions.

The issue for consideration is the effect of the alleged negotiations, if any, on the relocated contract.

This is necessitated by the appellant's position that the existence of negotiations regarding a new contract negates any finding to the effect that the old contracts were relocated. It is the appellant's position that the engagements between the parties, after the expiration of the contract, are a clear indication that it had no intention of continuing on the old terms.

It relied on communication by the appellant's Human Resources Manager, dated 7 July 2015, informing the respondents that the negotiations had collapsed, thus, a new contract would not materialize and the Works Council determination to that effect.

Per contra, the respondents aver, that, negotiations regarding the new offer made by the appellant did not have any legal effect on tacit relocation as a new contract had already materialised.

In their written submissions, they aver that the purported negotiations were induced by duress as the appellant's Human Resources' Manager threatened to dismiss them if they did not abandon the claim for tacit relocation and dispense with the services of their legal practitioners.

As such, they submitted that the 'alleged collapse of negotiations' in the circumstances, could not be a basis for the termination of employment.

Since tacit relocation is inferred from the presumed intention of the parties to the contract and their conduct, where it is established that both parties accepted that the old contract had terminated and engaged in negotiations regarding a new contract, tacit relocation will be negated.

This is for the reason that neither of the parties would have conducted themselves in a manner that gave rise to the inescapable inference that both desired the revival of their former contractual relationship on the same terms as existed before.

In this regard, the court a quo made a factual finding that there was no evidence to the effect that there were any negotiations between the parties from 1 May 2015.

It further found, that, although the appellant may have intended to terminate the contracts, it failed to communicate that intention.

It also took into account the manner in which the parties dealt with the same issue in the past.

When the initial two year contracts expired the employer did not immediately renew the contracts. It merely allowed the employees to continue rendering services on the same terms and conditions of the expired contracts.

It only regularised the contracts after eleven (11) months.

It is settled law that an Appellate Court may only interfere with the decision reached by a lower court based on factual findings where gross misdirection has been established: see Hama v National Railways of Zimbabwe 1996 (1) ZLR 664 (S).

The appellant has not alleged such a gross misdirection which necessitates this court's interference.

More importantly, there is nothing on record to show that the parties engaged in negotiations during the period 1 May 2015 to 22 June 2015 when they were without contracts.

There is no evidence, that, during this period, the appellant communicated to the respondents its intention as to whether or not the two-year contracts would be renewed or terminated.

The first meeting on record occurred in the appellant's board room on 29 June 2015, notably after the period upon which the respondents base their claim for tacit relocation. This is followed by the appellant's letter of 7 July 2015 indicating the collapse of the alleged negotiations.

Given this, the court a quo's finding cannot be assailed.

Its decision was based on a correct application of the principle of tacit relocation as enunciated in Gumbo v Air Zimbabwe (Pvt) Ltd 2000 (2) ZLR 126.

The fact of the matter is, that, for the two month period, that is 1 May 2015 to 22 June 2015, the conduct of the parties reflects that they intended to be bound by the expired contracts.

Those contracts were therefore tacitly relocated and were to expire after two years - just like the expired contracts.

In the circumstances of this case, a mere attempt to negotiate a new contract does not operate to vary an existing binding contract. The appellant's new offer thus amounted to an attempt to unilaterally vary the respondents' relocated contracts.

This is a classical case of the application of subsections 12(1) and (3a) of the Labour Act [Chapter 28:01] which seek to protect employees by estopping an employer from alleging the non-existence of a contract of employment where there has been continued service in terms of an expired contract.

Counsel for the appellant argued that it would be wrong to invoke section 12 of the Labour Act everytime there is a delay in re-negotiating an expired contract. He contended that section 12 of the Labour Act uses “shall” in a directory sense and not in peremptory terms.

It is the generally accepted rule of interpretation that the use of the word “shall” as opposed to “may” is indicative of a peremptory intent on the part of the legislature.

Failure to comply with the mandatory dictates of law renders the act done a nullity.

However, where the legislature has not explicitly provided that non-compliance is fatal, there is a presumption that the legislature left it to the courts to determine the consequences of non-compliance.

In Shumba & Anor v The Zimbabwe Electoral Commission & Anor SC11-08…, the court had occasion to deal with the issue of interpreting a statute that does not prescribe the consequences of non-compliance with a statutory provision.

In interpreting the provisions of the Zimbabwe Electoral Commission Act, CHIDYAUSIKU CJ remarked as follows…,:

"It is the generally accepted rule of interpretation that the use of peremptory words such as 'shall' as opposed to 'may' is indicative of the legislature's intention to make the provision peremptory.

The use of the word 'may' as opposed to 'shall' is construed as indicative of the legislature's intention to make a provision directory.

In some instances, the legislature explicitly provides that failure to comply with a statutory provision is fatal. In other instances, the legislature specifically provides that failure to comply is not fatal.

In both of the above instances, no difficulty arises.

The difficulty usually arises where the legislature has made no specific indication as to whether failure to comply is fatal or not.

In the present case, the consequences of failure to comply with the provisions of section 18 of the Zimbabwe Electoral Commission Act are not explicitly spelt out.

In those statutory provisions where the legislature has not specifically provided for the consequences of failure to comply, it has to be assumed that the legislature has left it to the Courts to determine what the consequences of failure to comply should be.

The learned author FRANCIS BENNION in his work Statutory Interpretation suggests that the courts have to determine the intention of the legislature using certain principles of interpretation as guidelines. He had this to say at pp21-22:

'Where a duty arises under a statute, the court, charged with the task of enforcing the statute, needs to decide what consequence Parliament intended should follow from breach of the duty.'

In Sutter v Scheepers 1932 AD 165 at pp.173, 174 the court gave guidelines on how the real intention of legislature can be arrived at. These were summarised in Pio v Franklin NO and Another 1949 (3) SA 442 (C) as follows:

'(1) The word 'shall' when used in a statute is rather to be considered as peremptory, unless there are other circumstances which negative this construction.

(2) If a provision is couched in a negative form, it is to be regarded as a peremptory rather than a directory mandate.

(3) If a provision is couched in positive language and there is no sanction added in case the requisites are not carried out, then the presumption is in favour of an intention to make the provision only directory.

(4) If when we consider the scope and objects of a provision, we find that its terms would, if strictly carried out, lead to injustice and even fraud, and if there is no explicit statement that the act is to be void if the conditions are not complied with, or if no sanction is added, then the presumption is rather in favour of the provision being directory.

(5) The history of the legislation also will afford a clue in some cases.'”

The principle which comes out of the guidelines is that where strict adherence to the wording of a statute leads to an injustice, or even fraud, in instances where no penalty is prescribed, it may be desirable to lean in favour of making the provision directory.

From the cited authorities, it is the general position that the use of the word 'shall' in a statutory provision requires mandatory compliance.

Where the penalty for infraction of the provision is not explicitly stated, it is for the courts to determine what the consequences of failure to comply should be. In doing so, the court must interrogate the purpose of the relevant statute and pronounce a penalty which is proportionate to the mischief the legislature sought to remedy.

It is my considered view that both provisions are peremptory owing to the specific use of the word “shall” which has mandatory connotations.

Section 12(1) of the Labour Act [Chapter 28:01] provides:

“12 Duration, particulars and termination of employment contract

(1) Every person who is employed by or working for any other person and receiving or entitled to receive any remuneration in respect of such employment or work shall be deemed to be under a contract of employment with that other person, whether such contract is reduced to writing or not.”

It is accepted that there is no explicit obligation on an employer, under this provision, to reduce a contract into writing. However, that fact alone does not render the provision directory.

The use of the word “shall” after a description of a factual set of facts in an employment set up, followed by the pronouncement of a specific outcome, is indicative of the fact that the legislature intended the provision to be peremptory.

In enacting section 12(1) of the Labour Act, it appears that the legislature envisaged a situation where services are rendered in return for remuneration but the recipient of the services later disputes the existence of a contract of employment.

The peremptory nature of section 12(1) of the Labour Act is not dependent on whether or not a particular act is done, which, in this case, would be a mandate on the employer to reduce a contract into writing. The peremptory nature of the provision lies in the deemed existence of a contract of employment which follows the rendering of services and remuneration for such services.

Once it is established that services have been rendered, and there is a correlative entitlement to remuneration or actual remuneration, a contract is deemed to be in existence.

It is prima facie proof of employment.

A similar interpretation can be ascribed to section 12(3) of the Labour Act. The peremptory nature of the provision stems from the fact that a contract is deemed to be without limit of time where no specific details of its duration are provided.

The same applies to a casual worker who continues rendering services notwithstanding the expiry of the specific period for which he was engaged.

Therefore, the onus to disprove the continued existence of the contract rests on the party disputing its existence.

It is my considered view, that, the legislature must have been cognisant of the fact that employees are vulnerable under some unscrupulous employers, hence the use of such peremptory provisions in section 12 of the Labour Act.

Having said the above, the circumstances of this case fall into the ambit of the sentiments of the court in Melamed and Hurwitz v Vorner Investments (Pty) Ltd 1984 (3) SA 155 (A) at 165B-C, that:

“…, a court may hold that a tacit contract has been established where, by a process of inference, it concludes that the most plausible probable conclusion from all the relevant proved facts and circumstances is that a contract came into existence…,.”

Applying this approach to the matter at hand, an inference of tacit relocation was justified on the facts of this case.

The court a quo's finding, that, the respondents' contracts were tacitly renewed from 1 May 2015, is unassailable. Therefore, the appellant's termination of the respondent's contracts of employment in the circumstances was grossly irregular.

An employer clearly cannot terminate a contract that has expired - even though it has been tacitly renewed.

The appeal therefore lacks merit and ought to be dismissed. Costs will follow the cause.

It is accordingly ordered as follows:

“The appeal is dismissed with costs.”

HHH256-21 : IGNATIUS CHOMBO vs THE STATE
Ruled By: CHATUKUTA J

This is an application referred to by the applicant as “Court Application for the Second Revival of Temporary Variation of Bail Conditions in B1836/19: HH735/19” being made in terms of section 126(1) of the Criminal Procedure and Evidence Act [Chapter 9:07] (the Act).

The application was initially not opposed.

On 3 May 2021, I directed that the parties file supplementary heads of argument on whether or not this court has jurisdiction to determine the application.

It is necessary to remark, at the onset, that this is a novel application.

Counsel for the applicant referred to it, in his oral submissions, as an application sui generis. It is a novel application because neither section 126(1) of the Criminal Procedure and Evidence Act, nor any other provision of the Act for that matter, provides for the ranking of applications where more than one application is filed. Therefore, there cannot be a first, second, or third application for variation of bail conditions. This is simply an application for the alteration of bail conditions. There is no legal basis, either, for the application to be referred to as sui generis. The fact that an order is sought for “the second revival of temporary variation of bail conditions” does not bestow on it a special status.

The application is improperly before me as I do not have the jurisdiction to vary bail orders of the Magistrates Court except on appeal.

The background to the application is that on 27 November 2017, the applicant was denied bail by the Magistrate Court. He appealed against the dismissal and was granted bail by this court on 11 April 2018 in case number HH196-18.

On 16 September 2018, he applied before the Magistrate Court, under case number CRB NO ACC54/19 for a variation of the bail conditions. He, inter alia, applied for the temporary release of his passport to enable him to travel to South Africa for medical attention. The application was dismissed.

The applicant appealed to this court against the dismissal, under case number B1836/17. His appeal was upheld by CHITAPI J. He was granted an order for the variation of the bail condition. The order allowed for the temporary release of the passport on condition that the applicant surrendered the title deed of an immovable property registered in the name of Nimrod Willard Chiminya. The passport was to be returned on or before 3 December 2019.

Upon return of the passport, the title deeds were to be released back to the applicant. Full reasons for the court's decision were rendered in the judgment in case number HH753-19.

On 11 February 2020, the applicant applied before this court for “revival of a temporary variation of the applicant's bail conditions” seeking the release of his passport. The order was granted by FOROMA J on 26 February 2020 on condition the applicant surrendered the same title deeds as in HH753-19. The passport was to be returned on 16 March 2020: and, as in HH753-19, the title deeds were to be returned to the applicant following the surrender of the passport to the Clerk of Court.

There are no reasons for judgement.

The applicant is back seeking the release of his passport, yet again, to enable him to go to South Africa for medical attention. He is seeking a variation of the order granted on appeal under case number HH753-19 (B1836/17). In lieu of the passport, the applicant offers to surrender a title deed for yet another immovable property registered in the name of Pomlic Investments (Pvt) Ltd.

Counsel for the applicant submitted that this court accepted jurisdiction when an order for “revival of a temporary variation of the applicant's bail conditions” was granted by FOROMA J. He submitted that it is contrary to the rule of law for the same court to seek now to question the basis of its jurisdiction involving the same parties and the same matter.

The submissions by counsel for the applicant are unmeritorious.

Jurisdiction is founded on the provisions of the Criminal Procedure and Evidence Act [Chapter 9:07] and not on the basis that another judge assumed jurisdiction.

Counsel for the applicant also submitted that this court has jurisdiction to revive the temporary variation as sought by the applicant in terms of section 126(1) of the Criminal Procedure and Evidence Act as read with section 46(2), 50(1)3(d), 70(1)(a), 76 and 176 of the Constitution of Zimbabwe.

He submitted that when a court sits on appeal it can grant an order on the basis of section 121(5) or its inherent jurisdiction. The context of the application before CHITAPI J, the order he granted, and the reasoning thereof implied that the court was not proceeding in terms of section 121(5) but was exercising its inherent powers. The order under HH753-19 is therefore a High Court order. It can be varied or altered in terms of section 126(1) of the Criminal Procedure and Evidence Act.

The respondent abandoned its concession to the application.

Counsel for the respondent's submissions were on the question whether or not section 126(1) of the Criminal Procedure and Evidence Act provides for the temporary suspension of a bail order.

The submissions are not relevant to the resolution of the question of jurisdiction.

The answer to the question for determination is found in section 121 subsections (5) and (7) of the Criminal Procedure and Evidence Act and in the reasons for judgment and the order issued by CHITAPI J. The subsections provide as follows:

“(5) A judge who hears an appeal in terms of this section may make such order relating to bail or any condition in connection therewith as he considers should have been made by the judge or magistrate whose decision is the subject of the appeal.

(6)…,.

(7) Any order made by a judge in terms of subsection (5) shall be deemed to be the order made in terms of the appropriate section of this Part by the judge or magistrate whose decision was the subject of the appeal.”

A judge dealing with an appeal in terms of section 121 of the Criminal Procedure and Evidence Act is therefore empowered, in subsection (5), to make an order he considers appropriate which should have been made by a magistrate.

The status of that order is provided for in subsection (7). Whatever order the judge makes is deemed to be the order of the magistrate whose decision was the subject of an appeal.

Both subsections are clear and unambiguous. They both relate to an appeal filed in terms of section 121 of the Criminal Procedure and Evidence Act.

A reading of the judgment by CHITAPI J is specific that the judge was considering an appeal made by the applicant in terms of section 121(1) of the Criminal Procedure and Evidence Act. There is nowhere in the judgement that the judge indicated or can be assumed that he was exercising inherent jurisdiction. The order shows that the judge was mindful of subsection (7). Paragraph (a) of the order reads:

“(a) The order of the magistrate, made on 18 September 2019, dismissing the appellant's application for a temporary release of his passport held as a bail condition in case No. CRB 11633/17 as read with case No CRBs 12182/17, 12251-53/17, 2254/18 and 9388/19 is set aside and substituted with the following order.”

The judge set aside the order of the magistrate and substituted it with the new order. The order is couched in clear and unambiguous peremptory terms. The order became the order of the Magistrates Court.

The judge ordered the surrender of the title deed to the immovable property to the Clerk of Court and not to the Registrar of the High Court.

The applicant was aware that the order was an order of the Magistrate Court. He duly complied with the order by surrendering the title deed to the Clerk of Court. He retrieved his passport from the Clerk of Court. Upon his return, he surrendered the passport back to the Clerk of Court and retrieved the title deeds.

It is therefore inexplicable why the applicant has been approaching this court for a variation of an order of a magistrate. He can only approach this court on appeal in the event that he is dissatisfied with the decision of the lower court as he did in case number HH753-19.

The applicant referred to various provisions of the Constitution on the rights of an accused person.

The constitutional provisions are of no relevance to the determination of the question of jurisdiction.

It seems they were referred to so as to give “flavour” to the otherwise unmerited submissions so that the submissions would be high sounding. I therefore find it not necessary to be detained by making any reference to the provisions, suffice to remark that this court is not denying the applicant his right to protection of the Constitution. It is simply pronouncing that the application for the realization of those rights has been made at the wrong forum.

It is this court's finding that this court does not have jurisdiction to entertain the application. The application is improperly before the court. It was ill-conceived and amounts to an abuse of court process.

Applicants in general, and the present applicant in particular, are strongly discouraged from forum shopping, and, in the process, abusing court process.

The application is accordingly struck off the roll.

HB01-15 : MARIA RABEKA vs LARISSA STOCKIL and ASSISTANT MASTER OF THE HIGH COURT and REGISTRAR OF DEEDS N.O.
Ruled By: MAKONESE J

Section 18(1) of the Wills Act [Chapter 6:06]..., provides as follows:“Effect of subsequent birth, legitimation or adoption of children on Will(1) If, after a testator has made a Will -(a) A child is born, of whom the testator is the mother or, the child being legitimate, the father; or(b) An ...

HH842-19 : BARIADIE INVESTMENTS (PVT) LTD vs PUWAYI CHIUTSI and TENDAI MASHAMHANDA and REGISTRAR OF DEEDS and SHERIFF OF THE HIGH COURT OF ZIMBABWE N.O. and ELLIOT ROGERS
Ruled By: CHITAPI J

Form 29, referred to in Rule 230, on application procedure, calls upon the respondents to oppose the relief sought by the applicant if they wish to do so. This implies that the respondent can also consent to the application expressly by stating so or not file any papers in which ...

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HHH231-14 : ROBERT GUMBURA vs THE STATE
Ruled By: MUSAKWA J

Section 69(1) of the Criminal Law (Codification and Reform) Act (the Code)..., states that;“Without limiting Part XII of Chapter XIV, a person shall be deemed not to have consented to sexual intercourse or any other act that forms the subject of a charge of rape, aggravated indecent assault, or indecent ...

SC27-21 : HONEST CHAPANGURA and OTHERS vs KWEKWE CITY COUNCIL and DELIWE MAKOTA
Ruled By: GWAUNZA DCJ, GUVAVA JA and UCHENA JA

This is an appeal against the whole judgment of the Labour Court handed down on 1 August 2019, dismissing an application for the confirmation of a draft ruling of a Lbour Officer (second respondent), to the effect that transfer of the employees (appellants) from Kwekwe Brewery to the first respondent ...

FACTUAL BACKGROUND

The detailed facts of the case can be summarised as follows;

The appellants are former employees of Kwekwe Brewery, a company duly incorporated in terms of the laws of Zimbabwe. The first respondent (Kwekwe City Council) is Kwekwe Brewery's sole shareholder. As a result of Kwekwe Brewery's financial difficulties, the first respondent entered into a management agreement with Limsol Trading which was to manage the affairs of Kwekwe Brewery for five (5) years between 2010 and 2015.

As early as 2011, Limsol Trading started experiencing viability problems in its management of Kwekwe Brewery.

In 2012, the first respondent applied for and was granted a Bank loan to support the financial position of Kwekwe Brewery. According to minutes of a meeting of 6 May 2016, on Kwekwe Brewery's financial position, the brewery owed the Bank USD53,000 and was making a loss of USD23,000 per month.

A decision was made to lay off all casual employees and reduce working hours of permanent employees with immediate effect.

Kwekwe Brewery was eventually closed.

To avoid loss of employment due to the brewery's closure, the appellants entered into and signed contracts of employment on transfer from Kwekwe Brewery to the first respondent.

They were, on 5 September 2016, offered jobs totally different from those they had with Kwekwe Brewery. For example, the first appellant (Honest Chapangura), who was a Marketing Manager with Kwekwe Brewery, was employed as a Debt Collection Supervisor Grade 4. The fourth appellant (Josiah Dhobha), who was a Production Manager with Kwekwe Brewery, was employed as a Municipal Policeman Grade B3.

They worked for the first respondent from 5 September 2016 to 19 October 2017 when they raised an issue of unfair labour practice with a labour officer.

The appellants lodged a complaint of unfair labour practice with the second respondent alleging that they had been transferred to the first respondent on less favourable terms and conditions in contravention of section 16(1) of the Labour Act [Chapter 28:01].

They alleged that the first respondent had unilaterally altered their contracts of employment upon transfer of an undertaking and that they were put under less favourable terms which had resulted in their salaries and other benefits being reduced.

They prayed that they be reinstated in their former jobs and the terms and conditions which applied to them before the transfer be restored.

In response to the complaint, the first respondent denied that there had been a transfer of an undertaking as envisaged by section 16(1) of the Labour Act.

It submitted, that, the undertaking (Kwekwe Brewery) had closed due to viability challenges. It therefore submitted, that, there was no undertaking which could be transferred in the circumstances. It averred that section 16(1) of the Labour Act was intended to apply to a situation where an undertaking or business is transferred to another person and that it was not intended to apply to a situation where employees are transferred to another organisation following the closure of the undertaking by which they were employed.

Alternatively, it was submitted, that, if indeed there had been a transfer of an undertaking, it had been one in which the appellants voluntarily agreed to terms and conditions which were less favourable than those they enjoyed before the transfer.

In determining the dispute between the parties, the second respondent found that there had been a transfer of an undertaking and ruled that the first respondent pay the appellants salaries equivalent to those they enjoyed before the transfer.

Thereafter, the second respondent, in compliance with the provisions of section 93(5a) and (b) of the Labour Act, applied to the court a quo for the confirmation of her draft ruling.

The first respondent opposed the application, arguing that there had been no transfer of an undertaking from Kwekwe Brewery to it. The first respondent argued that it was not legally possible for Kwekwe Brewery, which it owned, to be transferred to it. It argued that there was no change of ownership of the brewery.

After perusing documents filed of record and hearing the parties, the court a quo held, that, the facts of the matter did not support the claim that there had been a transfer or alienation of Kwekwe Brewery as an undertaking to the first respondent. It further held that it was not proved that the first respondent acquired the assets, liabilities, and total operations of Kwekwe Brewery, but that there had been a transfer of employees by way of the contracts of employment entered into by the parties.

As a result, it held that there had been no transfer of an undertaking and dismissed the application for the confirmation of the draft ruling.

Aggrieved by the decision of the court a quo, the appellants noted an appeal to this Court on the following grounds:

GROUNDS OF APPEAL

“1. The court a quo erred at law in holding that there was no transfer of an undertaking when this is clear in the circumstances of the case as envisaged in terms of section 16(1) of the Labour Act [Chapter 28:01].

2. The court a quo erred at law in giving section 16(1) of the Labour Act [Chapter 28:01] an unreasonable restrictive interpretation which interpretation defeats or contradicts the purpose the section was enacted to achieve when the court ruled that:

(i) There was a transfer of employees and not a transfer of assets which transfer of employees, on its own, is transfer of an undertaking.

(ii) First Respondent acquired no assets, no liabilities and no total operation of Kwekwe Brewery but such transfer of employees is transfer of assets and liabilities. No question was in issue on this.

(iii) There was a distinction between the facts in Mutare Rural District Council v Chikwena 2000 (1) ZLR 534 (S) when in actual fact there was no such distinction.”

The appeal raises two issues for determination:

(a) Whether or not the court a quo correctly found that there was no transfer of an undertaking in terms of section 16(1) of the Labour Act.

(b) Whether or not if a transfer took place the appellants accepted less favourable terms than those they enjoyed before the transfer.

SUBMISSIONS MADE BY THE PARTIES

Counsel for the appellants submitted that the court a quo erred by failing to give section 16(1) of the Labour Act a broader meaning in light of the words “in anyway whatsoever.”

Counsel for the appellants contended that the words “in anyway whatsoever” demonstrated that a transfer of an undertaking may take any form as long as there is a change of hands.

She argued that a transfer of employees from Kwekwe Brewery to the first respondent constituted a transfer of an undertaking as held in the case of Mutare Rural District Council v Chikwena 2000 (1) ZLR 534 (S).

She further averred that the first respondent unilaterally varied the appellants conditions of employment to less favourable conditions without consultation.

Counsel for the appellants asserted that this constituted a breach of section 16 of the Labour Act and prayed that the decision of the court a quo be vacated.

Counsel for the first respondent submitted that Kwekwe Brewery was not alienated or transfered as a going concern as it merely ceased operations due to viability challenges. He contended that the transfer of employees, alone, did not constitute a transfer of an undertaking as envisaged by section 16(1) of the Labour Act.

He further submitted, that, the court a quo did not decide on whether or not the appellants had agreed to less favourable terms and conditions than those they enjoyed before the alleged transfer which he submitted had a bearing on the relief sought by the appellants and was an issue which the court a quo was seized with.

Counsel for the first respondent prayed that the appeal be dismissed with costs as it was devoid of merit.

THE LAW

The law which the court a quo had to interpret and apply in determining whether or not to confirm the draft ruling related to the question: in what circumstances can an undertaking be said to have been alienated, or transferred, in terms of section 16(1) of the Labour Act?

Section 16(1) of the Labour Act reads as follows:

“16 Rights of employees on transfer of undertaking

(1) Subject to this section, whenever any undertaking in which any persons are employed is alienated or transferred in any way whatsoever, the employment of such persons shall, unless otherwise lawfully terminated, be deemed to be transferred to the transferee of the undertaking on terms and conditions which are not less favourable than those which applied immediately before the transfer, and the continuity of employment of such employees shall be deemed not to have been interrupted.”…,.

The critical words which determine the issue and have to be interpreted are “whenever any undertaking in which any persons are employed is alienated or transferred in any way whatsoever, the employment of such persons shall, unless otherwise lawfully terminated, be deemed to be transferred to the transferee of the undertaking.”

Section 16(1) of the Labour Act therefore simply means, when an undertaking/business is alienated or transferred, its employees whose employment is not otherwise lawfully terminated, are deemed to have been transferred with it to the transferee.

This means the undertaking/business must first be alienated or transferred to the transferee before the employees rights to continued employment can be deemed to have been transferred to the transferee.

The employees rights to continued employment under the transferee are, therefore, activated by the alienation or transfer of the undertaking/business to the transferee.

The words “whenever any undertaking in which any persons are employed is alienated or transferred” are significant.

It is the undertaking's/business alienation or transfer which triggers the simultaneous transfer of the employees to the transferee. The employees transfer arises from their being employees of the alienated or transferred undertaking/business.

The law on what is an undertaking and how it is alienated or transferred was discussed in the case of Mutare Rural District Council v Chikwena 2000 (1) ZLR 534…, where GUBBAY CJ said:

“The word undertaking is of variable meaning. Basically, the idea it conveys is that of a business or enterprise. In the Australian case of Top of the Cross (Pty) Ltd v Federal Commissioner of Taxation (1980) 50 FLR 19, WOODWARD J said at 36:

'Frequently, the word undertaking is used in circumstances where it could be interchanged with either the word business or enterprise and with varying shades of meaning. Sometimes it is used alone, sometimes by way of distinction from the assets of the owner and sometimes as a synonym for business. Sometimes it is used to embrace the property which is used in connection with the undertaking as well as the debts and liabilities which have arisen in relation thereto.'

In this matter, it is indisputable that what was transferred to CIG was the appellant's viable and separate business, the Mutare Furniture and Hardware factory. It had its own set of employees under the control and supervision of production and factory managers. It was an undertaking as contemplated and sanctioned by section 16(1).”

At p537F to 538C GUBBAY CJ compared our section 16(1) of the Labour Act with section 197 of the South African Labour Relations Act 1995, which was interpreted in Manning v Metro Nissan (1998) 19 ILJ 1181 (LC) at 1189 as follows:

“What these subsections provide for is that a business, trade, or undertaking is sold as a going concern; the purchaser, for all intents and purposes, vis-a–vis the employees of the business, trade, or undertaking purchased, puts himself in the place of the seller. Consequently, all the rights and obligations that existed between, the seller and its employees are transferred, by operation of this section, to the purchaser.”…,.

The phrase “in any way whatsoever,” concerning alienation or transfer of an undertaking, in section 16(1) of the Labour Act, does not connote a broader interpretation as submitted by counsel for the appellants because the mere transfer of the employees cannot be said to be a transfer of an undertaking.

Several considerations must be taken into account.

This was aptly illustrated in Aviation Union of South Africa and Another v South African Airways (Pty) Ltd and Others 2012 (1) SA 321 (CC), where it was held that “for a transfer to be established, there must be components of the original business which are passed on to the third party.”

These components would include, but not be limited to, the taking over of employees, assets (tangible or intangible), customers, debtors, and the business would maintain or continue its activities whilst retaining its identity.

Therefore, the mere transfer of employees from one employer to another, on its own, cannot be taken to constitute a transfer of an undertaking.

While the Labour Act seeks to protect the rights of both the employer and the employee, for section 16(1) of the Labour Act to apply, there must be an alienation or transfer of an undertaking/business in any way whatsoever and such transfer is not of employees alone.

In Mutare Rural District Council v Chikwena 2000 (1) ZLR 534 (S), this Court held that a business, trade, or undertaking must be transferred as a going concern “that is to say, what is taken over must be an active and operating business, trade, or undertaking.”

These sentiments were fortified in the South African case of National Education Health and Allied Workers Union (NEHAWU) v University of Cape Town and Others 2003 (3) SA 1 (CC), where the Constitutional Court stated that:

“…, in deciding whether a business has been transferred as a going concern, regard must be had to the substance and not the form of the transaction. A number of factors will be relevant to the question whether a transfer of a business as a going concern has occurred, such as the transfer or otherwise of assets, both tangible and intangible, whether or not the workers are taken over by the new employer, whether customers are transferred, and whether or not the same business is being carried on by the new employer.

What must be stressed is that this list of factors is not exhaustive and that none of them is decisive individually. They must all be considered in the overall assessment and therefore should not be considered in isolation…,.”…,.

Similar sentiments were echoed in the case of Spijker Gebroeders Benedik Abattoir v Alfred Benediken Zonen [1986] 2 CMLR 296, where it was stated that:

“The decisive criterion is whether the business in question retains its identity. Consequently, a transfer of an undertaking, business, or part of a business does not occur merely because its assets are disposed of. Instead, it is necessary to consider whether the business was disposed of as a going concern, as would be indicated, inter alia, by the fact that its operations were actually continued or resumed by the (new) employer, with the same or similar activities…,.”…,.

The provisions of section 16(1) of the Labour Act are subject to the provisions of the whole section. Subsections 2 to (3) provide as follows:

“(2) Nothing in subsection (1) shall be deemed —

(a) To prevent the employees concerned from being transferred on terms and conditions of employment which are more favourable to them than those which applied immediately before the transfer, or from obtaining terms and conditions of employment which are more favourable than those which applied immediately before, or subsequent to the transfer;

(b) To prevent the employees concerned from agreeing to terms and conditions of employment which are in themselves otherwise legal and which shall be applicable on and after the transfer, but which are less favourable than those which applied to them immediately before the transfer:

Provided that no rights to social security, pensions, gratuities or other retirement benefits may be diminished by any such agreement without the prior written authority of the Minister;

(c) To affect the rights of the employees concerned which they could have enforced against the person who employed them immediately before the transfer, and such rights may be enforced against either the employer or the person to whom the undertaking has been transferred or against both such persons at any time prior to, on, or after the transfer;

(d) To derogate from or prejudice the benefits or rights conferred upon employees under the law relating to insolvency.

(3) It shall be an unfair labour practice to violate or evade or to attempt to violate or evade in any way the provisions of this section.”

A reading of the whole section, besides adding that employees can get more favourable conditions or agree to less favourable conditions, and the preservation and non-diminution of rights to social security, pensions, gratuities, or other retirement benefits, without the Minister's authority, and the non-derogation of employees rights under the law of insolvency, does not change the interpretation discussed above.

The meaning remains, that, it is the alienation or transfer of the undertaking/business which triggers the transfer of employees.

There must, therefore, be alienation or a transfer of an undertaking before employees of the transferred undertaking can claim to have become employees of the transferee in terms of section 16(1) of the Labour Act.

WHETHER OR NOT THE COURT A QUO CORRECTLY FOUND THAT THERE WAS NO TRANSFER OF AN UNDERTAKING IN TERMS OF SECTION 16(1) OF THE LABOUR ACT

Counsel for the appellants sought to rely on the case of Mutare Rural District Council v Chikwena 2000 (1) ZLR 534 (S) to advance an argument that the transfer of employees of an undertaking can, on its own, constitute the alienation or transfer of an undertaking.

She also argued that the facts of this case are on all fours with those of Mutare Rural District Council v Chikwena 2000 (1) ZLR 534 (S).

She did not correctly understand the facts of the case.

In that case, Mutare Rural District Council formed a limited liability company known as Council Income Generator (Private) Limited (CIG) to which it transferred its interests in Mutare Furniture and Hardware factory. Mutare Rural District Council held all the shares in Council Income Generator (Private) Limited (CIG). It, however, eventualy sold all its shares in Council Income Generator (Private) Limited (CIG) to third parties who became the transferees of Council Income Generator (Private) Limited (CIG) and took over its employees.

In this case, Kwekwe City Council (the first respondent) did not sell its shares in Kwekwe Brewery. It remains the sole shareholder of Kwekwe Brewery.

As explained above, Kwekwe Brewery was closed and stopped operating - without being alienated or transferred to a third party. Its employees signed new contracts of employment with the first respondent which are totally different from those they had with Kwekwe Brewery.

The undertaking that the appellants worked for before their new contracts with the first respondent was not transferred to the first respondent. There was, therefore, no alienation or transfer of Kwekwe Brewery to the first respondent.

As a result, there was no transfer of its employees to the first respondent in terms of section 16(1) of the Labour Act.

A reading of the record establishes that Kwekwe Brewery has always been owned by the first respondent; therefore, it is not correct to say that the business changed hands. The first respondent could not be both a transferor and a transferee of Kwekwe Brewery. It could not alienate or transfer its business to itself.

The court a quo, therefore, correctly dismissed the application to confirm the second respondent's draft ruling to the effect that the appellants had been transferred to the first respondent in terms of section 16(1) of the Labour Act and were entitled to the salaries and benefits that they enjoyed as employees of Kwekwe Brewery....,.

The appeal has no merit and must be dismissed. Costs will follow the result.

In the result, the appeal is dismissed with costs.

View Appeal
SC61-21 : COSMA CHIANGWA vs DAVID KATERERE and ROBERT CAMPBELL LOGAN and ISRAEL GUMUNYU and REGISTRAR OF DEEDS and EDMOND CHIVHINGE and MASTER OF THE HIGH COURT
Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE AJA

This is an appeal against the whole judgment of the High Court (“the court a quo”) handed down on 15 June 2011 wherein the court a quo granted an application for a declaratur that the sale and transfer of Stand 382 Good Hope Township to the appellant was null and ...

FACTUAL BACKGROUND

The matter before the court a quo was a court application for a declaration of the sale and registration of Stand 382 Good Hope Township of Subdivision B of Good Hope into the appellant's name as being null and void.

In November 1999, the first respondent entered into an agreement of sale in terms of which he purchased an immovable property, namely, Stand 382 Good Hope Township of subdivision B of Good Hope, from the estate of the late Johanna Maria Francisca Logan as represented by the executrix testamentary of the estate.

The immovable property was transferred to the first respondent on 2 April 2007 by virtue of Deed of Transfer number 1597/2007.

On 1 October 2006, one Tsungirai Musenha and the appellant, represented by the third respondent, filed an application in the Magistrates Court, in Case No.12060/06, citing Robert Adrian Campbell-Logan, estate late Maria Johana Campbell-Logan, and the Registrar of Deeds as respondents.

They alleged therein that the second respondent had sold to them and they had purchased Stand Numbers 412 and 382 Good Hope Township of Subdivision B of Good Hope.

On 5 October 2006, a rule nisi was granted by the Magistrate's Court, interdicting the three (3) respondents and all those acting through them from disposing or transferring to anyone Stand Numbers 412 and 382 respectively being subdivisions of the remainder of subdivision B of Good Hope held under Deed Number 6180/95 pending the return date.

The return date was, however, not stated in the order.

On 29 November 2006, the sixth respondent issued Letters of Administration appointing the third respondent as executor dative to administer the estate of the late Maria Johanna Francisca Campbell-Logan, for the sole purpose of effecting transfer of Stand Number 382 into the name of Cosma Chiangwa, (the appellant herein).

On 4 July 2007, Stand 382 was transferred into the name of the appellant by Deed of Transfer 4079/2007....,.

The appellant..., contended that the first respondent had no real rights over the property in question and that the Registrar of Deeds had confirmed, by letter, that the property belongs to him....,.

Section 10 of the Deeds Registries Act [Chapter 20:05] provides that:

“10 When registration takes place

(1) Deeds executed or attested by a registrar shall be deemed to be registered upon the affixing of the registrar's signature thereto:

Provided that no such deed which is one of a batch of interdependent deeds, intended for registration together, shall be deemed to be registered until all the deeds of the batch have been signed by the registrar.

(2) If, by inadvertence, the registrar's signature has not been affixed to a deed at the time at which the signature should have been affixed in the ordinary course, the registrar may affix his signature thereto when the omission is discovered, and the deed shall thereupon be deemed to have been registered at the time at which the signature should have been affixed.

(3) All endorsements or entries made on title deeds or in registers in connexion with the registration of any deed executed or attested by a registrar shall be deemed to have been effected simultaneously with the registration of such deed, although in fact they may have been made subsequent thereto.”…,.

By virtue of this section, the first respondent's title was deemed to have been registered on 2 April 2007 under transfer number 1597/2007 when the registrar affixed his signature.

Appealed
HH122-11 : DAVID KATERERE vs COSMA CHIANGWA and ROBERT CAMPBELL-LOGAN and ISRAEL GUMUNYU and REGISTRAR OF DEEDS and EDMOND CHIVHINGE and MASTER OF THE HIGH COURT
Ruled By: MAVANGIRA J

In 1999, the applicant herein entered into an agreement of sale in terms of which he purchased an immovable property from the estate of the late Johanna Maria Fransisca Logan as represented by the executrix testamentary of the estate.The immovable property, described as Stand 382 Good Hope Township of Subdivision ...

The immovable property, described as Stand 382 Good Hope Township of Subdivision B of Good Hope, was transferred to the applicant in April 2007 by Deed of Transfer number 1597/2007.

On or about 1 October 2006, one Tsungirai Musenha and the first respondent herein filed an application, as co-applicants, in the Magistrates Court in Case No.12060/06. They cited Robert Adrian Campbell-Logan (the second respondent herein), estate late Maria Johanna Campbell-Logan, and the Registrar of Deeds (the fourth respondent herein) as the first, second, and third respondents respectively.

They contended therein that the second respondent herein had sold to them and they had purchased Stands Numbers 412 and 382.

They further contended, that, the second respondent herein was avoiding them then for the purpose of passing transfer to them of the said properties.

On or about 5 October 2006, a rule nisi was granted by the Magistrates Court in the following terms:

“A Rule Nisi be and is hereby issued returnable to this honourable court on the…, day of…,. 2006 calling upon the first and second respondents to show cause, if any, why? (sic)

1. First, second, and third respondents, and all those acting through them, should not be barred from transferring to anyone other than first and second applicants Stand Numbers 412 and 382 respectively, being subdivisions of the remainder of subdivision B of Good Hope held under Deed Number 6180/95. (sic)

2. First, second, and third respondents should not be ordered to effect transfer of Stand 412 and 382 to first and second applicants Stand Numbers 412 and 382, respectively, being sub-divisions of the remainder of subdivision B of Good Hope held under Deed Number 6180/95. (sic)

3. First, second, and third respondents, and all those acting through them, should not be barred from disposing first and second applicants in any way of their occupation of Stand numbers 412 and 382 respectively. (sic)

4. First respondent should not be ordered to pay costs of this application. (sic)

INTERIM RELIEF:

1. Pending the return date, all respondents and all those acting through them be and are hereby interdicted from disposing or transferring to anyone Stand Numbers 412 and 382 respectively, being subdivisions of the remainder of sub-division B of Good Hope held under Deed Number 6180/95.”

On 8 November 2006, the magistrate granted default judgment in the same matter for an “interdict and compelling order” in favour of the applicants therein.

On 29 November 2006, the sixth respondent issued Letters of Administration appointing the third respondent as executor dative to administer the estate of the late Maria Johanna Fransisca Campbell-Logan, for the sole purpose of effecting transfer of “a certain piece of land situated in the District of Salisbury being a remainder of subdivision B of Good Hope, being Stand Number 382 measuring 2200 square metres into the name of Cosma Chiangwa.”

On 4 July 2007, the immovable property was transferred into the name of Cosma Chiangwa, the first respondent herein by Deed of Transfer 4079/2007.

The applicant now applies for an order in the following terms:

“1. That the sale to the first respondent, by the second respondent, of Stand 382 Good Hope is null and void. (sic)

2. That the registration of Stand 382 of Good Hope Township of Subdivision B of Good Hope into the name of first respondent is null and void. (sic)

3. That the appointment of the third respondent, as Executor Dative of the estate of the late Maria Johanna Fransisca Campbell-Logan, is null and void.

4. That the applicant is the sole lawful registered owner of Stand 382 Good Hope Township of Subdivision B of Good Hope.

5. That the fourth respondent shall, within 3 days of service of this Order upon him, delete the name of the first respondent from the name of the applicant as the registered owner of Stand 382 Good Hope Township of subdivision B of Good Hope. (sic)

6. That the first, second, third, and fifth respondents shall pay costs of these proceedings jointly and severally, the one paying the others to be absolved.”

In the main, the applicant contends, that, the appointment by the sixth respondent of the third respondent as the executor dative of the estate, during the lifetime of the executrix testamentary and during a period of time when the executrix testamentary was still holding office and was not incapacitated, is not valid in law.

He further contends, that, when the second respondent sold Stand 382 to the first respondent, he (the second respondent had no title to pass and that the sale by the second respondent was done in the second respondent's personal capacity and was also done without authority.

He also contends that when the second respondent sold the property (to the first respondent) he knew that it had already been sold to the applicant as he had co-signed the agreement of sale between the applicant and the executrix testamentary.

It is also contended by the applicant that the fourth respondent registered the property into the name of the first respondent without checking his register.

Furthermore, the fifth respondent, who was the conveyancer of the property into the first respondent's name, did not conduct any checks as to title to the property before drafting and lodging conveyancing papers with the Deeds Registry. If he had exercised care he would have discovered that the immovable property belonged to the applicant as it had already been registered into the applicant's name more than two months earlier.

The applicant further contends, that, the position stated by the executrix testamentary, in the letter of 1 September 2007, is the correct position at law.

The letter raised with the sixth respondent the invalidity of the appointment of the executor dative as it was done when the executrix testamentary had not been removed from the office by a competent court or judge.

The contention then was that the sixth respondent acted without authority when he appointed the third respondent as executor dative and consequently all acts done by the executor dative in relation to the transfer of the property is of no force or effect.

The property was thus illegally transferred into the name of the first respondent.

He also contends, that, the third respondent ought to have known that the sale by the second respondent to Tsungirai Musenha and the first respondent was defective.

It is the applicant's contention that there is sufficient justification for this court to grant him the relief that he seeks....,.

The fourth reason the respondents contend that the application ought not to succeed is that the applicant has no real rights over Stand 382 Good Hope Township of sub-division B of Good Hope and that the Registrar of Deeds has confirmed, by letter, that the property belongs to the first respondent....,.

The first respondent has sought to rely, inter alia, on the letter written on 3 April 2008 by the Assistant Registrar of Deeds addressed to the third respondent and which reads, in part:

“Ref: Deed Number 1597/2007 and 4079/2007

Reference is made to your letter dated 28 March 2008 where you wanted this office to clarify the position of Deed of Transfer 1597/2007 and 4079/2007. (sic)

Our investigation has shown that both deeds refer to Stand 382 Good Hope Township of Subdivision B of Good Hope. There are two records in our database. One in the name of David Katerere, under transfer p11…, 1597/2007, dated 2 April 2007, and the other in names of Cosma Chianwa, under transfer 4079/2007, dated 4/7/2007. (sic)

On further investigation, we noted that Deed of Transfer 4079/2007 was deducted first at the surveyor General's office and 1597/2007 was rejected because the Stand was already registered.

It is not clear why deed 4079/2007 was deducted first at the Surveyor General. But, this is not unusual since work is allocated to various examiners whose performances differ. What it now means is that Deed 4079/2007 has completed all the processes while transfer 1597/2007 has not, making it invalid. (sic)

However, ownership of the property and cancellation of invalid deed has to be done by the courts in line with section 8 of the Deeds Registries Act [Cap 20:05].”...,.

Counsel for the applicant submitted that the letter written by the Registrar of Deeds, indicating that the applicant's Deed is invalid, ought not to be admitted as evidence as the Registrar is one of the respondents and cannot be viewed as being entirely objective.

Furthermore, that, in any event, declaring a Deed invalid is the prerogative of the court and the Registrar was thus usurping the court's power when he wrote the letter....,.

Section 14 of the Deeds Registries Act provides:

“Subject to this Act or any other law -

(a) The ownership of land may be conveyed from one person to another only by means of a deed of transfer executed or attested by a registrar.”

Section 8 of the Deeds Registries Act, which is referred to in the above quoted letter, provides as follows:

“(1) Save as is otherwise provided in this Act, or in any other enactment, no registered deed of grant, deed of transfer, or conveying title to land, or any real right in land, other than a mortgage bond, and no cession of any registered bond not made as security, shall be cancelled by a registrar except upon an order of court.”

The letter by the Assistant Registrar of Deeds does not constitute cancellation of the Deed of Transfer in favour of the applicant.

In my view, it expresses the author's opinion on the matter....,.

It does not, in my view, support the first respondent's contention that there is no double registration of the property. The fact is that there is double registration of the property in issue; the one registration being in favour of the applicant and effected on 2 April 2007 whilst the other registration is in favour of the first respondent and was effected on 4 July 2007 - some three months later.

Section 10 of the Deeds of Registries Act provides -

“(1) Deeds executed or attested by a registrar shall be deemed to be registered upon the affixing of the registrar's signature thereto…,.”

Thereafter, section 11 provides -

“(1) Save as otherwise provided in this Act or as directed by the court -

(a) Transfers of land and cessions of real rights therein shall follow the sequence of the successive transactions in pursuance of which they are made…,.”

The fourth respondent is of the opinion that the Deed of Transfer in favour of the applicant is invalid for the reasons stated in the letter from his office; which letter has already been quoted above....,.

The following are the facts which emerge from the papers and upon which this matter will be determined:

(i) Firstly, the applicant purchased the property in issue from the estate, as represented by the executrix testamentary. The first respondent, on the other hand, purchased the same property, purportedly from the same estate, but, in his case, the estate was represented by the executor dative.

It is an undisputed fact that the executor dative was appointed to the office while the executrix testamentary was still alive, holding office, not incapacitated, and still sane. Neither had the executrix testamentary been removed from office.

(ii) Secondly, the applicant's agreement of sale preceded that of the first respondent.

(iii) Thirdly, it is also clear from the papers that the property was registered into the applicant's name on 2 April 2007 by Deed of Transfer 1597/2007 while the transfer to the first respondent was done 3 (three) months later, on 4 July 2007, by Deed of Transfer 4079/2007.

The relevant law applicable to the instant matter, with particular regard to the registration of real rights as provided in the following sections of the Deeds Registries Act, is:

“10 When registration takes place

(1) Deeds executed or attested by a registrar shall be deemed to be registered upon the affixing of the registrar's signature thereto:

Provided that no such deed, which is one of a batch of interdependent deeds intended for registration together, shall be deemed to be registered until all the deeds of the batch have been signed by the registrar.

(2) If, by inadvertence, the registrar's signature has not been affixed to a deed at the time at which the signature should have been affixed in the ordinary course, the registrar may affix his signature thereto when the omission is discovered, and the deed shall thereupon be deemed to have been registered at the time at which the signature should have been affixed.

(3) All endorsements or entries made on title deeds or in registers in connexion with the registration of any deed executed or attested by a registrar shall be deemed to have been effected simultaneously with the registration of such deed, although in fact they may have been made subsequent thereto.”…,.

Section 11 then provides:

“11 Deeds to follow sequence of their relative causes

(1) Save as otherwise provided in this Act or as directed by the court —

(a) Transfers of land and cessions of real rights therein shall follow the sequence of the successive transactions in pursuance of which they are made, and if made in pursuance of testamentary disposition or intestate succession they shall follow the sequence in which the right to ownership or other real right in the land accrued to the persons successively becoming vested with such right;

(b) It shall not be lawful to depart from any such sequence in recording in any deeds registry any change in the ownership in such land or of such real right unless the registrar is satisfied that the circumstances are exceptional and has consented to such departure:

Provided that —…,.”…,.

Section 14 provides:

“14 How real rights shall be transferred

Subject to this Act or any other law —

(a) The ownership of land may be conveyed from one person to another only by means of a deed of transfer executed or attested by a registrar;

(b) Other real rights in land may be conveyed from one person to another only by means of a deed of cession attested by a notary public and registered by a registrar:

Provided that attestation by a notary public shall not be necessary in respect of the conveyance of real rights acquired under a mortgage bond.”…,.

On a perusal of section 10 of the Deeds Registries Act, it follows, therefore, that, when the Registrar affixed his signature to the Deed of Transfer in favour of the applicant, on 2 April 2007, the Deed was, with effect from that date, deemed to be registered.

Furthermore, and on a perusal of section 14 of the Deeds Registries Act, ownership was conveyed from the estate of the late Maria Johanna Francisca Campbell-Logan to the applicant. Thus, the applicant became or was henceforth deemed to be the owner, and the property no longer formed part of the deceased estate.

It therefore follows, that, when, in Deed of Transfer 4079/2007, on 4 July 2007, it was purported to convey ownership of the property from the estate to the first respondent, the estate, at that stage, was no longer the owner thereof and it thus had no rights to transfer to the first respondent.

The agreement of sale, purportedly in favour of the first respondent, cannot therefore be valid....,.

Although the Deed of Transfer in favour of the applicant was registered first, the fourth respondent's opinion is that the Deed is invalid for the reasons stated in the letter from his office already quoted above.

It would appear to me that this can only be viewed as the Registrar's opinion and not a statement or declaration of the legal position.

I am fortified in this assessment by the provisions of section 8(1) of the Deeds Registries Act already quoted above, in terms of which any Deed of Transfer shall not be cancelled by a Registrar except upon an order of court.

There has been no order of court which has cancelled or authorized the cancellation of the applicant's Deed of Transfer.

SC64-21 : PATRICK MANJOVHA vs DELTA BEVERAGES (PRIVATE) LIMITED
Ruled By: GWAUNZA DCJ, HLATSHWAYO JA and BHUNU JA

This is an appeal against the whole judgment of the Labour Court (the court a quo). The order appealed against is dated 14 November 2018.

That order upheld the respondent's objection in limine to the effect that the appellant's claim had prescribed.

Consequently, it dismissed the appellant's application for condonation of late noting of appeal and extension of time within which to note the appeal.

Aggrieved by the judgment a quo, the appellant approached this Court, on appeal, for relief.

The appellant subsequently applied for leave to appeal to this Court. The application was granted by the court a quo on 19 December 2018 with costs being costs in the cause....,.

BRIEF SUMMARY OF THE CASE

The appellant was employed by the respondent as a truck driver/salesman. He was charged with theft of his employer's property and he paid an admission of guilt fine to the police. He was subsequently dismissed from employment for theft in terms of the respondent's registered Code of Conduct on 29 January 2015.

He appealed to the Works Council without success.

On 18 March 2015, he was served with a letter advising him of the dismissal of his appeal, and, if aggrieved, to appeal to the court a quo within a period of 14 days in terms of the registered Code of Conduct.

The appellant did not appeal to the court a quo within the prescribed time limit.

He applied for condonation of late noting of appeal and extension of time within which to note the appeal. His application was successful, and, on 20 January 2016, he was ordered to lodge his appeal within seven (7) days of the order.

The appellant was, again, in default, by failing to comply with the seven (7) days period.

He, again, belatedly approached the court a quo two (2) years later, on 17 August 2018, with an application for condonation of late noting of appeal and extension of time within which to note the appeal.

The application was unsuccessful hence this appeal.

FINDINGS OF THE COURT A QUO

In dismissing the application, the court a quo found, that, the appellant's cause of action had prescribed in terms of the Prescription Act [Chapter 8:11]. This was because of his failure to successfully prosecute his appeal within the prescribed 3 year period from the date of his dismissal.

The court a quo also found, that, in the absence of a provision in the registered Code of Conduct authorising it to extend the 14-day period within which the appellant was obliged to appeal, it had no jurisdiction to extend the dies induciae.

THE APPELLANT'S GROUNDS OF APPEAL

Arising from the above two findings of the court a quo, the appellant has raised the following two grounds of appeal:

“1. The court a quo erred and misdirected itself at law by concluding that the appellant's right to appeal the decision of the Works Council had prescribed in terms of the Prescription Act [Chapter 8:11] by computing the period (of) prescription began to run from 18 March 2015, while overlooking the fact that the Appellant's right to appeal, and time to appeal, had been successfully condoned and extended under LC/H/19/16 granted on the 20th of January 2016.

2. The court a quo erred and misdirected itself by concluding that (the) Labour Court does not have jurisdiction and power to condone late filing of appeals sought to be made outside the days stipulated by an Employment Code agreed to by the parties and neither can the Labour Court extend the time within which such appeals can be made outside the days stipulated in an employment Code.”

ISSUES FOR DETERMINATION

The grounds of appeal raise two issues for determination:

1. Whether or not the appellant's cause of action has prescribed.

2. Whether or not the Labour Court has the jurisdiction to extend the time within which to appeal set out in the employment Code of Conduct.

WHETHER OR NOT THE APPELLANT'S CAUSE OF ACTION HAS PRESCRIBED

It is trite that ordinary debts are irrevocably extinguished by prescription after three (3) years in terms of section 15(d) of the Prescription Act.

Section 2 of the Prescription Act defines a debt as including anything that may be sued for. That definition squarely brings an appeal within the ambit of the definition of a debt.

The definition therefore renders an appeal subject to the Prescription Act.

It is therefore necessary to ventilate the time frames in this case to see if the appellant's appeal falls foul of the Prescription Act.

In this regard, it is common cause that the appellant's cause of action arose from his dismissal from employment by the disciplinary committee on 29 January 2015. The notice of dismissal was served on him on 6 February 2015.

He lodged various appeals and applications which interrupted the running of prescription in terms of section 7(2) of the Prescription Act. Subsection (3)(b), however, provides, that, if one fails to successfully prosecute his cause of action, and, in this case, his appeal, to finality, the interruption shall lapse and the running of prescription shall not be deemed to have been interrupted.

The subsection provides as follows:

“(3) Any interruption in terms of subsection (2) shall lapse, and the running of prescription shall not be deemed to have been interrupted, if the person claiming ownership in the thing in question —

(a) Does not successfully prosecute his claim under the process in question to final judgment; or

(b) Successfully prosecutes his claim under the process in question to final judgment, but abandons the judgment or the judgment is set aside.”

The section is couched in clear, unambiguous terms.

Once a litigant has failed to successfully prosecute his cause of action, and, in this case, his appeal, to finality, the interruption lapses and the running of prescription is not deemed to have been interrupted.

APPLYING THE LAW TO THE FACTS

It is common cause, that, on 20 January 2016, the court a quo gave the appellant seven (7) days within which to prosecute his appeal with effect from the date of the order. He failed to prosecute his appeal within the prescribed period with the result that his appeal lapsed and prescription was deemed not to have been interrupted by operation of law.

Prescription began to run on 6 January 2015 when he was served with notice of dismissal; the set period of prescription of three (3) years had already set in as at the time of the court a quo's judgment on 14 November 2018.

In Hodgson v Granger & Anor 1991 (2) ZLR 10 (H) the court articulated the purpose of prescription, it said:

“It is important, in this exercise of interpretation, to emphasise, that, it is trite that the whole purpose of statutes of limitation is to ensure that a person who has a valid cause of action, of which he is aware, proceeds reasonably timeously to prosecution thereof before events become 'stale'. It is absolutely clear that the purpose is to penalise the dilatory creditor but not a creditor who is unaware, through no fault of his own, of the cause of action at his disposal.”

As the appellant was eminently aware of his cause of action right from the beginning, way back in January 2015, his dilatoriness in prosecuting his appeal deserves censure to give effect to the purpose of the Prescription Act.

DISPOSITION

The net effect of the appellant's failure to prosecute his appeal in the court a quo is that there can be no valid appeal before this Court in the absence of any appeal having been placed before the court a quo in respect of this matter.

The appellant's failure to successfully note his appeal with the court a quo within the 7-day period, as ordered by the court, sounded the death knell for his appeal as the 3-year prescription period had already run its course.

From the foregoing, the learned judge a quo cannot be faulted for holding that the appellant's appeal has prescribed for want of successful prosecution within a period of three (3) years.

That finding of fact strips the court of the jurisdiction to determine the second issue.

That being the case, the appeal can only fail. Costs follow the cause.

It is accordingly ordered that:

1. The appeal be and is hereby dismissed.

2. The appellant is to bear the costs of suit.

Appealed
SC82-21 : TRIANGLE LIMITED and HIPPO VALLEY ESTATES LIMITED vs ZIMBABWE REVENUE AUTHORITY and OTHERS
Ruled By: GWAUNZA DCJ, MATHONSI JA and CHITAKUNYE AJA

This is an appeal against the judgment of the High Court sitting at Masvingo, delivered on 24 June 2020, which dismissed with costs the application made by the two appellants for a declaratory order and an interdict.FACTUAL BACKGROUNDThe two appellants are sugar-producing giants in the Lowveld while the first respondent ...

FACTUAL BACKGROUND

The two appellants are sugar-producing giants in the Lowveld while the first respondent (Zimbabwe Revenue Authority) is the statutory body charged with revenue collection in Zimbabwe. The remainder of the respondents are either sugar cane farmers or associations representing such farmers (Zimbabwe Sugarcane Development Association, Zimbabwe Cane Farmers Association, Mkwasine Sugarcane Farmers Trust, Commercial Sugarcane Farmers Association of Zimbabwe, Hippo Valley Productive Farmers Association, Zimbabwe Sugarcane Development Association Royal Trust, Chipiwa Mpapa Mill Group, Chiredzi Productive Cane Growers, Farai Dumo Augustine Musikavanhu and Roy Bhila).

The respondents will be referred to in this judgment, for convenience, as Zimbabwe Revenue Authority and the farmers respectively.

The appellants and the farmers entered into two types of agreements, either a “Cane Milling Agreement” or a “Cane Purchase Agreement” in terms of which the appellants would either provide milling services to the farmers and market their sugar and molasses or outrightly purchase the sugar cane.

The dispute which arose between the parties did not involve the outright purchase and sale of sugar cane. As such this judgment does not deal with that scenario at all. The judgment concerns itself with the cane milling agreements entered into between the parties.

In terms of the cane milling agreements, the charge for milling and marketing services, payable by the farmers to the appellants, was calculated in terms of a pre-determined ratio referred to as the “Division of Proceeds” (DoP) ratio. It was fixed at 23 percent of the proceeds the farmers would get; meaning that, the appellants would retain 23 percent of the proceeds while remitting the balance of 77 percent to the farmers.

Regrettably, in fixing the milling and marketing charge, the appellants did not include Value Added Tax (VAT) as required by law. It follows, that, no Value Added Tax was paid by the appellants to the Zimbabwe Revenue Authority in that regard.

It was in the process of auditing the appellants Value Added Tax (VAT) assessments for the period 2009 to 2017 that the Zimbabwe Revenue Authority decided that the milling and marketing charges of 23 percent of the proceeds levied by the appellants against the farmers attracted VAT.

The Zimbabwe Revenue Authority proceeded to issue assessments of value added tax (VAT) for those years and demanded payment of same from the appellants. These assessments related to the past supplies where the appellants ought to have, but failed, to collect and remit VAT to the Zimbabwe Revenue Authority.

The appellants objected to the assessments which objections were all disallowed by the Zimbabwe Revenue Authority. The appellants appealed to the Fiscal Appeals Court but paid the assessed value added tax (VAT) to the Zimbabwe Revenue Authority notwithstanding.

An appeal does not exonerate a tax payer from paying the assessed tax.

After effecting payments to the Zimbabwe Revenue Authority, the appellants sought to recover such value added tax (VAT) from the farmers on the basis that they were obliged to charge and collect the VAT from the consumers of the service, the farmers, but had not done so.

The appellants were of the view, that, it was only fair and reasonable that the farmers should re-imburse them of the value added tax (VAT) paid by them to the Zimbabwe Revenue Authority.

There being no convergence between the farmers, who had obtained advice from the Zimbabwe Revenue Authority, that, the 23 percent Division of Proceeds ratio was inclusive of value added tax (VAT), and the appellants, the latter filed an application in the court a quo.

In their application, the appellants sought declaratory relief that they were legally entitled to continue charging and collecting value added tax (VAT) from the farmers - over and above the 23 percent milling charge.

The appellants also sought to be reimbursed the monies they paid to the Zimbabwe Revenue Authority on past assessments.

In addition, they accused the Zimbabwe Revenue Authority of interfering with contractual issues between them and the farmers by rendering advice to the farmers on the value added tax (VAT) dispute.

Accordingly, the appellants sought an order interdicting the Zimbabwe Revenue Authority from what they called “gratuitously interfering in pricing and contractual issues” between them and the farmers.

The application was opposed by the Zimbabwe Revenue Authority and most of the respondents.

DECISION A QUO

It was the view of the court a quo, that, the entire dispute revolved around the interpretation of section 69 and section 72 of the Value Added Tax Act [Chapter 23:12].

Regarding the past supplies of sugar cane to the appellants, the court a quo found, that, the literal meaning of section 69 of the Value Added Tax Act suggests, that, it is irrelevant whether the registered operator has charged VAT or not. If the price does not reflect the tax component, section 69 of the Value Added Tax Act operates such that there is a presumption that a price not reflecting VAT included that tax.

It was the finding of the court a quo, that, the section serves to “estop” a registered operator, who has not reflected value added tax (VAT) on the price, from denying that the price includes that tax.

It also found, that, section 69 of the Value Added Tax Act precludes such registered operator from subsequently claiming VAT not reflected on the price.

In the court a quo's view, permitting the appellants to recoup value added tax (VAT) in retrospect would render nugatory the deeming provision of section 69 of the Value Added Tax Act as the deeming provision cannot be interpreted to mean different things to two different people.

Regarding the claim for value added tax (VAT) on present and future supplies of sugarcane, which the contracts of the parties are still silent on, the court a quo took the view, that, it was up to the parties to re-negotiate or clarify the terms of their contracts in order to plug the existing lacunae.

If they do not, then, section 69 of the Value Added Tax Act will continue to apply.

The court a quo was not persuaded that a case was made for an interdict against the first respondent.

It recognised, that, the appellants had made a formal request to the first respondent to intervene and educate the farmers on the tax implications of their agreement. They could not, thereafter, cry foul after such intervention.

In addition, the court a quo found no evidence of the first respondent's interference with the pricing issues between the appellants and the farmers.

On the question of costs, the court a quo found no basis for departing from the general rule, that, costs follow the result. It dismissed the application with costs granted in favour of only those respondents who participated in the suit.

The appellants were aggrieved. They noted this appeal to this Court on the following grounds;

GROUNDS OF APPEAL

1. The learned judge of the court a quo erred and misdirected himself in finding that section 69 of the Value Added Tax Act [Chapter 23:12] operated to preclude the appellants from recovering value added tax (VAT) for past supplies on an alleged milling service which the first respondent considered to have been rendered to farmers.

2. Further, the court a quo erred and misdirected itself in failing to pronounce, definitively, on the appellants right and entitlement to charge, levy, and collect value added tax (VAT), and the farmers respective obligation to pay same, in addition to the value of the alleged milling service, with respect to current and future supplies pursuant to the first respondent's decision to impose tax.

3. The learned Judge of the court a quo erred and misdirected himself in failing to find, that, the letter by the first respondent to the farmers, with respect to the farmers tax obligations, strayed upon purely contractual matters which it was not competent for the first respondent to prescribe to parties.

4. The court a quo erred in awarding costs against the appellants, and in favour of the respondents in general, and, at any rate, most especially as it relates to the second (Zimbabwe Sugar Cane Development Association), fifth (Commercial Sugar Cane Farmers Association of Zimbabwe), seventh (Zimbabwe Sugar Cane Development Association Royal Trust), eighth (Chipiwa Mpapa Mill Group), and tenth (Farai Dumo Augustine Musikavanhu) respondents in particular.

ISSUES

The grounds of appeal may be four, but they speak to essentially two narrow issues for determination in this appeal. They are:

1. Whether or not the court a quo erred in refusing to grant the declaratur and the interdict.

2. Whether or not the court a quo erred in granting costs against the appellants.

SUBMISSIONS ON APPEAL

Counsel for the appellants anchored his arguments on the legal effects of the decision taken by the first respondent, contained in its letter dated 9 September 2019. Following meetings held by the parties, the first respondent determined that:

“1. The VAT Act, under section 6, provides that VAT shall be charged and levied where a service is provided. Facts at hand indicated that millers provide milling services to the farmers and they retain 23% from the sugar proceeds…,.

Given the above legislative requirements, VAT is therefore applicable on the milling fees, and, as discussed in the meeting, VAT is recovered as depicted in the following scenario…,.”

It was submitted, that, the moment the first respondent made the decision to commence recovering value added tax (VAT) on milling services, when, prior to that, it had not done so, the provisions of section 72(1) of the Value Added Tax Act [Chapter 23:12] were triggered.

The section provides:

“(1) Whenever the value added tax is imposed or increased in respect of any supply of goods or services in relation to which any agreement was entered into by the acceptance of an offer made before the tax was imposed or increased, as the case may be, the registered operator may, unless agreed to the contrary in any agreement in writing and notwithstanding anything to the contrary contained in any law, recover from the recipient, as an addition to the amounts payable by the recipient to the registered operator, a sum equal to any amount payable by the registered operator by way of the said tax on increase, as the case may be, and any amount so recoverable by the registered operator shall, whether it is recovered or not, be accounted for by the registered operator under this Act as part of the consideration in respect of the said supply.”

To the extent that value added tax (VAT) was only imposed on the milling fees, by letter quoted above, so the argument goes, when it had not been claimed previously, the appellants were entitled to recover it from the recipients of the milling services by virtue of that provision.

It was submitted, further, that, the deeming provisions of section 69 of the Value Added Tax Act do not preclude the appellants from recovering the value added tax (VAT) paid to the first respondent. This is so because the section is a shield in the hands of the revenue collector. It is an administrative tool for the facilitation of easy collection of taxes without disruptive disputes with registered operators.

In counsel for the appellants view, section 69 of the Value Added Tax Act cannot be used to estop the operator from recovering value added tax (VAT) paid to the collector.

Per contra, counsel for the first respondent submitted, that, given that the contracts for milling services did not reflect value added tax (VAT), section 69 of the of the Value Added Tax Act applies. To that extent, in respect of past supplies, the contract price is deemed to be inclusive of VAT.

It was submitted further, that, in the absence of an agreement with the farmers to vary the contract price, even by the application of basic principles of Contract Law, the appellants could not unilaterally vary the price by levying value added tax (VAT).

On the effects of section 72 of the Value Added Tax Act, it was submitted, that, the section may be regarded as a law–changing provision. In the event that the law changes to include value added tax (VAT), where it was not applicable, so it was argued, or to increase the applicable VAT, then, by dint of section 72 of the Value Added Tax Act, the agreement is varied accordingly.

The net effect of those submissions is that the section has no application where value added tax (VAT) was excluded in the agreement when it should have been included.

Regarding the alleged interference with contractual rights and obligations by the first respondent, counsel for the first respondent submitted, that, the advice rendered by the first respondent was not only at the invitation of the appellants themselves but also in fulfilment of a statutory obligation. The first respondent is obliged to educate taxpayers on their tax obligations.

The requirements for an interdict were not met.

Counsel for the rest of the respondents in attendance, in chorus, associated themselves with submissions made on behalf of the first respondent.

ANALYSIS

In as much as the record of appeal and the submissions made by counsel are heavy, what has to be decided has become very narrow indeed. The entire appeal turns on the effect of the deeming provision in section 69 of the Value Added Tax Act [Chapter 23:12].

In particular, whether it operates to prevent a registered operator who has fallen foul of the law, by not reflecting value added tax (VAT) on the price of goods and services, from later recouping the VAT demanded by the first respondent from the consumer.

A fortiori, whether section 72 of the Value Added Tax Act applies to a situation where the registered operator has excluded or not reflected value added tax (VAT) on the price of goods and services even though the law required such registered operator to levy and reflect VAT on the price.

Section 72 of the Value Added Tax Act varies the contract price by the margin of value added tax (VAT) imposed or increased subsequent to the contract being concluded.

I agree with counsel for the first respondent, that, it is a law-changing provision as it clearly relates to the imposition of a new tax or the increase of an existing tax.

It is common cause that the burden of paying value added tax (VAT) lies with the consumer of goods and services.

The system of value added tax (VAT) collection existing in this jurisdiction was succinctly summarised by the court in Zimbabwe Revenue Authority v Packers International (Private) Limited 2016 (2) ZLR 84 (S)…, thus:

“The system of collection of VAT, as embodied in the VAT Act, involves the imposition of tax at each step along the chain of manufacture of goods or the provision of services subject to VAT.

Consequently, every registered operator is required, in terms of section 28 of the VAT Act, to submit returns to the Commissioner of Taxes ('the Commissioner') every month, calculate the VAT due on the return, and make payment of such VAT.

Due to the sheer volume and complexity of the VAT collection system, ZIMRA lacks the capacity and manpower to effectively monitor each and every transaction liable to VAT, and, as a consequence, it is heavily reliant on the self-assessment process by registered operators.

However, in order to ensure that operators comply with the requirements to render returns and collect VAT, ZIMRA conducts periodic investigations as well as audits.”

In terms of the value added tax (VAT) collection system which is in place, while the burden to pay resides with the consumer of goods and services, the registered operator bears the burden of collecting VAT and remitting it to the revenue collector.

Where the registered operator has omitted, as required by section 6(1) of the Value Added Tax Act, to include value added tax (VAT) on the price, section 69(1) of the Value Added Tax Act is activated to deem VAT to be included in whatever price is pegged by the operator.

Section 6(1) of the Value Added Tax Act is very clear in its wording, it provides:

“Subject to this Act, there shall be charged, levied, and collected, for the benefit of the Consolidated Revenue Fund, a tax, at such rate as may be fixed by the Charging Act, on the value of -

(a) The supply, by any registered operator, of goods or services supplied by him on or after the 1st January 2004, in the course or furtherance of any trade carried on by him:”

What it means is, that, by failing to charge, levy, and collect value added tax (VAT) from the consumers of their milling services, the appellants breached, to their peril, the peremptory provisions of section 6(1) of the Value Added Tax Act.

By operation of section 69(1) of the Value Added Tax Act, the 23 percent charge for milling services was taken to include VAT for all intents and purposes.

The court a quo cannot be faulted for finding, that, whether by inadvertence, oversight, or misinterpretation of the nature of the contract, the consequence of the failure to specifically include value added tax (VAT) are that it is deemed included in the milling price.

The deeming provision cannot be applied differently on the registered operator and the consumer.

As regards the question whether section 72(1) of the Value Added Tax Act rescues the appellants from the consequences of their failure to comply with the peremptory provisions of section 6(1)(a) of the Value Added Tax Act, it is clearly a matter of statutory interpretation.

In my view, the simple grammatical meaning of the words “whenever the value added tax is imposed or increased in respect of any supply of goods and services…,” is that, in the first instance, there would be no tax on such supply and the law steps in to impose a tax.

In the second instance, the law would have imposed a tax on the supply but it moves in to increase the value of tax.

In both instances, the parties would have contracted in certain terms before the law changes.

Upon change of the law, section 72(1) of the Value Added Tax Act comes in to vary the terms of a pre-existing contract to either impose or increase the tax.

I do not agree with counsel for the appellants submission, that, upon conducting an audit which revealed that the appellants were rendering a taxable milling service while not levying and collecting tax, the first respondent imposed a tax.

In my view, the law had already imposed the tax, but the appellants were committing an infraction by not reflecting it.

Again, the court a quo was correct in concluding, that, there was no imposition of a “new tax” nor an increase of chargeable tax.

Accordingly, section 72(1) of the Value Added Tax Act has no application and is certainly not available to the appellants.

Counsel for the appellants did not prosecute the issue of the interdict sought against the first respondent with any degree of enthusiasm.

It is not without reason that this is so:

(a) Firstly, evidence placed before the court a quo shows, that, the appellants invited the first respondent to intervene and educate the farmers on the tax implications of their contracts with the appellants. That the first respondent interpreted their contracts in a manner not favourable to the appellants can scarcely found a cause of action.

(b) Secondly, and more importantly, the requirements for the grant of an interdict were not met.

I can only advert to the fact that the court a quo made factual findings relating to the failure by the appellants to prove that the first respondent had interfered with the contractual issues.

It also made a finding that the advice rendered by the first respondent was only confined to value added tax (VAT) matters falling within the statutory province of the first respondent as a revenue collector.

Surely, one cannot be interdicted from carrying out a lawful duty.

The court a quo also made a finding that the use of the term “gratuitously interfering” was too imprecise and unenforceable.

On appeal, the appellants failed to set out a basis for interference with those findings.

It is trite, that, it is only where the factual findings of the lower court are clearly irrational, to an extent that no sensible court seized with the same facts could have reached such a conclusion, that the Appellate Court will interfere: see Hama v National Railways of Zimbabwe 1996 (1) ZLR 664 (S); Shuro v Chiuraise SC20-19.

No such threshold was attained in the present case. As such, this Court cannot interfere.

It remains for me to deal with the question of costs.

The court a quo granted costs against the appellants in favour of those respondents who participated in the proceedings.

It premised its decision on the general rule that costs follow the result.

Its attention was not drawn to the widely held principle, in tax cases, that, the High Court or the Special Court, is loathe to make an order as to costs save where the claim is held to be unreasonable or the grounds of appeal are frivolous: see section 65(12) of the Income Tax Act [Chapter 23:06].

On appeal, counsel, again, did not address that issue at all.

It occurs to me, that, the court a quo was incapacitated in respect of costs by the failure to bring its attention to the prevailing jurisprudence on such costs. As a result, it misdirected itself, a misdirection entitling this Court to interfere with its exercise of discretion.

There is nothing in this case suggesting that the appellants case was unreasonable or that it was frivolous.

Quite to the contrary, they raised quite pertinent issues which required the court to embark on a detailed interpretation of the law. The same applies to the appeal.

In my view, this is a classic case in which the costs, both a quo and in this Court, should not be awarded to any party.

In the result, it be and is hereby ordered as follows:

1. The appeal, in respect of grounds of appeal 2.1, 2.2, and 2.3 is dismissed with each party to bear its own costs.

2. The appeal, in respect of ground of appeal 2.4, is upheld.

3. The judgment of the court a quo is amended by the deletion of paragraph 5 and its substitution with the following:

“5. Each party shall bear its own costs.”

View Appeal
HMA28-20 : TRIANGLE LIMITED and HIPPO VALLEY ESTATES vs ZIMBABWE REVENUE AUTHORITY and OTHERS
Ruled By: ZISENGWE J

The parties in this application are embroiled in a bitter dispute over the implications of their failure to specifically include Value Added Tax (abbreviated herein as “VAT”) matters in agreements for the milling of sugarcane.

The applicants are both companies duly incorporated in terms of the laws of Zimbabwe whose names over the years have become synonymous with sugar and sugar cane production in Zimbabwe. They grow, source, and mill sugar-cane and market its products. They carry on this agro-based business in and around the Lowveld towns of Triangle and Chiredzi.

The first respondent is the Zimbabwe Revenue Authority (ZIMRA): a statutory body whose chief mandate is to assess, collect, and enforce the payment of all revenues on behalf of the State. It is established in terms of the Revenue Authority Act [Chapter 23:11].

Save for the 10th (Farai Dumo Augustine Musikavanhu) and 11th (Roy Bhila), the rest of the respondents are organisations representing the interests of sugarcane farmers in the Lowveld (Zimbabwe Sugar Cane Development Association, Zimbabwe Cane Farmers Association, Mkwasine Sugar Cane Farmers Trust, Commercial Sugar Cane Farmers Association of Zimbabwe, Hippo Valley Productive Farmers Association, Zimbabwe Sugar Cane Development Association Royal Trust, Chipiwa Mpapa Mill Group and Chiredzi Productive Cane Growers Association).

The 10th (Farai Dumo Augustine Musikavanhu) and 11th (Roy Bhila) respondents are individual sugar cane farmers.

They were probably singled out on account of the positions they hold as Members of Parliament for the Chiredzi South and Chiredzi North constituencies respectively over and above their roles as sugar-cane farmers. They also occupy and serve in specialised Parliamentary capacities.

BACKGROUND

Solely for purposes of convenience and brevity, the second to eleventh respondents (Zimbabwe Sugar Cane Development Association, Zimbabwe Cane Farmers Association, Mkwasine Sugarcane Farmers Trust, Commercial Sugarcane Farmers Association of Zimbabwe, Hippo Valley Productive Farmers Association, Zimbabwe Sugarcane Development Association Royal Trust, Chipiwa Mpapa Mill Group, Chiredzi Productive Cane Growers Association, Farai Dumo Augustine Musikavanhu and Roy Bhila) will be referred to simply as “the farmers” and the first respondent as “ZIMRA”.

It is common cause, that, pursuant to the terms of either of two types of written agreements between them, the farmers supply the sugar cane that they produce to the applicants. These contracts are generally referred to by the parties as the “Cane Milling Agreement” and the “Cane Purchase Agreement.”

Under the former, the basic idea (as is implicit in the name) is that the applicants merely provide a milling service to the farmers. In addition, the applicants also proceed to market, on behalf of the farmers, the sugar and molasses thereby produced as well as other by-products, and, thereafter, remit to the farmers the proceeds thereof after deducting the expenses associated with the milling of the sugarcane and marketing of the sugar and the other by-products.

It is further common cause, that, under the cane milling arrangement, there is an existing agreement that the charge for the milling is calculated according to a pre-determined ratio referred to as the “Division of Proceeds” (DoP) ratio. This ratio currently stands at 23 percent of the proceeds which the applicants retain in the wake of the marketing of the products of the milling process. The farmer gets the remainder.

The Cane Purchase Agreement operates differently.

According to the parties, this agreement involves a direct and complete sale of the sugar cane by the farmers to the applicants with risk and benefits passing to the latter upon the delivery of the cane.

During oral submissions in court, counsel for the applicants referred to a rather convoluted method by which the purchase price of the cane is computed under this arrangement; suffice it to say that there is no convergence as among the parties as to whether the supplies of cane that gave rise to the current dispute constitute a Cane Milling Agreement or a Cane Purchase Agreement.

Be that as it may, it is common cause, that, in a decision (which has since been appealed against to the Fiscal Appeals Court), the first respondent determined that the set-up which currently obtains, chiefly characterised by the distribution of proceeds arrangement, constitutes one which attracts value added tax (VAT).

Therein lies the genesis of the dispute.

This is because the simple question to be answered is whether the 23 percent retained by the applicants, post the milling and marketing, incorporates value added tax (VAT) (as contended by the farmers) or it does not (as maintained by the applicants).

It is further common cause that the Zimbabwe Revenue Authority (ZIMRA), having made the decision that the aforementioned arrangement was one that attracts value added tax (VAT) in terms of the law, and that the applicants were therefore legally obligated to have, all along, charged and collected from the consumers (i.e. the farmers) and remitted the amounts so collected to it, directed that the said amounts be paid to it.

In compliance with that decision, the applicants aver, that, they have since calculated the outstanding amounts in this regard and remitted the same to the first respondent.

Through the current application, the applicants seek;

(i) A declaratory order to the effect that they are legally entitled to recover from the farmers the value added tax (VAT) which they have since paid to the first respondent; and

(ii) Secondly, that they are legally entitled to continue charging and collecting value added tax (VAT) from the farmers over and above the 23 percent milling charge.

The applicants also take exception to the fact that the first respondent (through some of its officials) took it upon itself to render certain advice to the farmers which advice they contend amounts to an unwarranted interference in matters that are purely contractual.

Part of that advice related to the first respondent's interpretation of the tax implications of the failure to include value added tax (VAT) matters in the cane supply agreements.

The terms of the declaratur sought by the applicants are captured in the draft order annexed to the application which reads:

“Wherefore, after reading papers filed of record and hearing counsel, IT IS ORDERED THAT:

1. The application succeeds with costs.

2. It be and is hereby declared that -

(a) The conduct by the first respondent to give advice to the applicants and the second to eleventh respondents on what are purely contractual matters is ultra vires its functions and responsibilities as an administrative authority and therefore unlawful.

(b) To the extent that they are liable to pay VAT for milling costs, the applicants are entitled to charge, levy, and collect such VAT in accordance with the VAT Act on and in addition to the value for the milling charge.

3. The first respondent be and is hereby ordered and directed to refrain from gratuitously interfering in pricing and contractual issues between the applicants and the second to eleventh respondents.

4. The respondents shall, jointly and severally, the one paying the others to be absolved, pay the applicants costs of suit on an attorney–client scale.”

The applicants raised a number of arguments in support of their contention that they should be permitted to recover that which they have since paid to the Zimbabwe Revenue Authority (ZIMRA) in the wake of the latter's aforementioned determination.

The main thrust of their argument, as I see it, however, is that the very fact that the Act makes it clear that the burden to pay the tax in question rests on the consumers, who in this case are the farmers, yet it was them (applicants) who were compelled to pay it, necessarily implies that they can recover the same from the farmers.

Reliance was placed, inter alia, on the elucidation by GOWORA JA, of the tripartite relationship in the value added tax (VAT) equation. This was in the case of ZIMRA v Packers International (Private) Limited SC28-16 where the following exposition was made:

“The system of collection of VAT, as embodied in the VAT Act, involves the imposition of tax at each step along the chain of manufacture of goods or the provision of services subject to VAT;”

And further that:

“…, tax under the VAT Act consists of monies that have been taxed on goods and services paid by consumers for onward transmission to the Commissioner. All that is required of an operator is to calculate the amount so paid, submit a return, and make payment.”

Flowing from this basic premise, according to the applicants, are two applicable precepts that emanate therefrom, namely, unjust enrichment and equity.

The latter, though not specifically pleaded in their papers, was nevertheless amply canvassed during the oral submissions in court.

Regarding unjust enrichment, it was averred, that, should the court not find in the applicants favour, an injustice will ensue in that the respondents will have been unjustly enriched at their expense.

For the requirements and application of the principle of unjust enrichment, the following cases were cited as authority; Industrial Equity v Walker 1996 (1) ZLR 269 (H); Chioza A.M. v Siziba S.W. SC04-15; and Trojan Nickel Mine Ltd v Reserve Bank of Zimbabwe HH169-13.

It was contended, that, the facts of this case point to the fact that all the pre-requisites for a finding for the applicant on the basis of unjust enrichment have been met.

The nub of the equity argument is that justice and fairness simply demand that the applicants be allowed to recoup from the farmers that which they paid to the Zimbabwe Revenue Authority (ZIMRA) in compliance with the latter's determination.

It is clear that this is merely an extension or adjunct of the unjust enrichment contention.

The applicants further referred to various sections of the Act which, in their view, fortify their position. Reliance was placed in this regard to section 9(2) which provides as follows:

“The value placed on any supply of goods or services shall, save as is otherwise provided in this section, be the value of the consideration for such supply, as determined in accordance with subsection 3, less so much of such value as represents tax: Provided that -

(a)…,.;

(b) Where the portion of the value of the said consideration which represents tax is not accounted for separately by the registered operator, the said portion shall be deemed to be an amount equal to the tax fraction of that consideration.”

Similarly, reliance was placed on section 9(5) of the Act which provides:

“Where goods or services are deemed to be supplied by a registered operator in terms of subsection (2) or (8) of section 7, the supply shall be deemed to be made for a consideration in money equal to the lesser of -

(a) The cost to the registered operator of the acquisition, manufacture, assembly, construction, or production of goods or services, including -

(i) Any tax charged in respect of the supply to the registered operator of such goods or services or of any components, materials, or services utilised by him in such manufacture, assembly, construction or production;

(ii) Where such goods or any right referred to in subsection (2) of section seven, when held by the registered operator, constituted trading stock as defined in section 2 of the Taxes Act, any further costs, including tax incurred by him in respect of such goods or right;

(iii) Any costs, including tax, incurred by the registered operator in respect of the transportation or delivery of such goods or the provision of such services in connection with the transfer of such goods or the provision of such services as contemplated in subsection (8) of section seven; and

(iv) Where such goods or services were acquired under a supply in respect of which the consideration in money was in terms of subsection (4) of this section deemed to be the open market value of the supply or would in terms of that provision have been deemed to be the open market value of the supply were it not for the fact that the recipient would have been entitled under subsection (3) of section fifteen to make a deduction of the full amount of tax in respect of that supply, such open market value to the extent that it exceeds the consideration in money for that supply: or

(b) The open market value of such supply.”

THE POSITION OF THE RESPONDENTS

The third (Zimbabwe Cane Farmers Association) and fourth (Mkwasine Sugar Cane Farmers Trust) respondents did not ultimately participate in the proceedings on account of the fact that the former did not file any opposing papers and the latter filed its heads of argument outside the prescribed time and was therefore barred.

In a similar vein, there was no appearance by or on behalf of the sixth (Hippo Valley Productive Farmers Association), ninth (Chiredzi Productive Cane Growers Association) and eleventh (Roy Bhila) respondents on the day of the hearing.

Effectively, therefore, only the positions of the first (Zimbabwe Revenue Authority), second (Zimbabwe Sugar Cane Development Association), fifth (Commercial Sugar Cane Farmers Association of Zimbabwe), seventh (Zimbabwe Sugar Cane Development Association Royal Trust), eighth (Chipiwa Mpapa Mill Group), and tenth (Farai Dumo Augustine Musikavanhu) respondents were before the court.

ZIMBABWE REVENUE AUTHORITY's POSITION (ZIMRA)

Regarding the implications of the failure by the applicants and the farmers to specifically incorporate value added tax (VAT) matters in their Division of Proceeds (DoP) arrangements, ZIMRA articulated two distinct positions, namely;

(i) That which relates to past supplies of cane; and

(ii) That which attends to present and future supplies of cane.

In respect of past supplies of sugarcane, the Zimbabwe Revenue Authority (ZIMRA) averred that a proper construction of section 69 of the Value Added Tax Act shows, that, in the absence of the express mention of value added tax (VAT) component in any price for goods or services, then the price will be deemed to contain the said tax.

As far as the alleged impropriety of the advice it rendered to the farmers, it contended that whatever advice it gave to the farmers was not only within its legal powers to give but also that it did so at the behest of the applicants.

It further averred, that, it has a duty to provide education to taxpayers not only to impart knowledge of the same but also to inculcate and engender a spirit of compliance.

First (ZIMRA) respondent's position on VAT implications for present and future supplies of cane

In its papers opposing this application, the Zimbabwe Revenue Authority (ZIMRA) does not commit itself on what the tax implications in respect of present and future supplies are. It opted, instead, to confine itself to the question of past supplies.

However, it soon became apparent that its position is that the applicants are not only at liberty to charge, levy, and collect from the farmers the said tax, but that they are in fact obligated to do so.

It suffices, however, to note that this does not address the issue of whether this will be over and above the 23 percent being charged for the milling of the cane.

THE FARMERS POSITION

As earlier stated, only the positions of the second (Zimbabwe Sugar Cane Development Association), fifth (Commercial Sugar Cane Farmers Association of Zimbabwe), seventh (Zimbabwe Sugar Cane Development Association Royal Trust), eighth (Chipiwa Mpapa Mill Group), and tenth (Farai Dumo Augustine Musikavanhu) respondents were effectively before court.

Save for a few instances of divergence (which will be highlighted below) the farmers were united not only in their resistance to the application but also on the grounds thereof.

The rallying point in their opposition to the quest by the applicants to recover the tax for past supplies was section 69 of the Value Added Tax Act. Their position essentially mirrors that of the Zimbabwe Revenue Authority (ZIMRA).

Over and above the import of section 69 of the Value Added Tax Act, however, a few additional arguments were presented to buttress their position and these are:

1. The very fact that the Zimbabwe Revenue Authority (ZIMRA) has determined that the 23 percent milling charge includes value added tax (VAT) as far as the second (Zimbabwe Sugar Cane Development Association), eighth (Chipiwa Mpapa Mill Group) and tenth (Farai Dumo Augustine Musikavanhu) respondents are concerned, is dispositive of the whole dispute.

They go as far as contending that the decision of ZIMRA is binding.

They further assert, that, in their view, the applicants have merely abdicated from their responsibility to remit the value added tax (VAT) so collected to ZIMRA and the consequences attendant thereto cannot be visited on them.

2. That the endeavour, on the part of the applicants, to recover the value added tax (VAT) they paid from them amounts to an attempt to vary the implied terms of their contract.

3. That, as far as the fifth (Commercial Sugar Cane Farmers Association of Zimbabwe) respondent is concerned, its cane supply arrangement with the applicants is governed by neither a cane milling agreement nor a cane purchase agreement, but, rather, by what it terms a “memorandum of understanding.” A copy of which was attached.

4. A further point raised by the fifth respondent (Commercial Sugar Cane Farmers Association of Zimbabwe) was that the very fact that invoices relating to disbursements of the individual farmer's share of proceeds is silent on the collection of value added tax (VAT) necessarily implies that VAT was included in the 23 percent milling charge.

During oral addresses in court, yet another argument was presented, namely, that, the Division of Proceeds (DoP) ratio was decided upon by the Minister responsible for the superintendence of the sugar sector, namely, the Minister of Industry and Commerce.

It was averred, in this regard, that, during the negotiations leading up to those figures (of 23 percent and 77 percent) it was in the contemplation of the parties that value added tax (VAT) was incorporated in the 23 percent milling charge.

In apparent departure from the positions held by the other respondents, the seventh respondent (Zimbabwe Sugar Cane Development Association Royal Trust) maintained that section 69 of the Value Added Tax Act applies to all supplies of cane; past, present, and future.

THE ISSUES

In my view, there are two broad issues up for determination in this dispute, and, from each, two sub-questions arise. The two broad questions are:

(1) Whether the 23 percent cane milling charge includes or excludes value added tax (VAT); and

(2) Whether there has been an unjustifiable interference by the first respondent the Zimbabwe Revenue Authority (ZIMRA) in purely contractual matters between the applicants and the farmers.

The sub-questions in respect of (1) above are:

(a) Whether or not the applicants are entitled to recover from the farmers value added tax (VAT) which they (i.e. applicants) paid to ZIMRA for past supplies; and

(b) Whether or not the applicants are entitled to charge, levy, and collect from the farmers value added tax (VAT) over and above the 23 percent milling charge.

The sub-questions from (2) above are:

(a) Whether the applicants have satisfied the requirements for the declaratur sought in paragraph 2(a) of the draft order; and

(b) Whether the applicants have satisfied the requirements for the interdict sought in paragraph 3 of the draft order.

WHETHER THE 23% CANE MILLING CHARGE INCLUDES OR EXCLUDES VALUE ADDED TAX (VAT)

This is arguably the most significant question as it lies at the very heart of the dispute.

As indicated above, the applicants used various arguments in support of their contention that the 23 percent milling charge must be taken as excluding value added tax (VAT).

They relied, inter alia, on subsections 2 and 5 of section 9 of the Value Added Tax Act.

I however fail to see how section 9(2)(b) of the Value Added Tax Act assists the applicants.

Section 9 of the Value Added Tax Act, in general, is aimed at the determination of the value of supply of goods or services. Paragraph 2(b), in particular, is a proviso to the general provision that the value to be placed on any supply of goods or services is the value of the consideration.

This proviso however addresses a situation where the registered operator neglects to separately account for the value of the consideration which represents tax in which case it will be deemed to be the tax fraction of the consideration.

Implicit in this proviso is that the tax fraction is to be calculated from that consideration: not in addition to the consideration. A fraction of something is a piece, part, portion, or component of something. Put in context, therefore, the tax fraction is incorporated in not excluded from or to be added to the 23 percent milling charge which is the consideration.

Sub-section (5) of section 9 of the Value Added Tax Act equally does not avail the applicants.

It is simply a method aimed at assisting in the computation of the consideration of the supply of the goods or services in question in instances of “deemed supply”. The basic idea being that this involves a calculation of all the expenses incurred in or attendant to the acquisition of the goods or services (or any lesser amount) or simply the open market value of such supply.

Needless to say that this provision does not even come close to unlocking the current legal logjam, let alone assist the applicants....,.

The real issue as I see it, lies in the interpretation of sections 69 and 72 of the Value Added Tax Act and their application to the facts of this matter....,.

REGARDING PAST SUPPLIES OF CANE

As indicated earlier, in this regard, the Zimbabwe Revenue Authority (ZIMRA) relied almost exclusively on the provisions of section 69 of the Value Added Tax Act (and the farmers adopt a similar stance) which provides as follows:

“69 Prices deemed to include tax

(1) Any price charged by the registered operator in respect of any taxable supply of goods or services, shall, for the purposes of this Act, be deemed to include any tax payable in terms of paragraph (a) of subsection (1) of section six in respect of such supply, whether or not the registered operator has included tax in such price.”

According to ZIMRA, the significance of this section is that where the price/charge (which, in this case, the milling price which is pegged at 23 percent of the value of the proceeds from the cane) is silent on the value added tax (VAT) component thereof, it is deemed, ex lege that VAT is included in that price.

Put in perspective, therefore, according to the first respondent, the Zimbabwe Revenue Authority (ZIMRA), it is deemed that the consumer of the goods or service (in this case the farmer) has already paid value added tax (VAT) in that price, and, by logical extension, all the registered operator (in this case the applicants) needs to do is to remit it to ZIMRA.

Any purported attempt to recover the same from the consumer is untenable because that would not only amount to taxing the consumer twice but also runs contrary to the tenor and spirit of that section.

The Zimbabwe Revenue Authority (ZIMRA) further contended, that, doing so would inevitably lead to a fresh computation of the value added tax (VAT) payable because the one calculated and subsequently paid by the applicants was on the basis of section 69 of the Value Added Tax Act.

In a nutshell, accepting the position adopted by the applicants would yield higher figures for the value added tax (VAT) payable.

The applicants took a contrary view and argued;

(i) Firstly, that there is no need to resort to the deeming provision of any legislation when in fact the issue in question is adequately provided for elsewhere in that Act.

This is because, so the argument goes, it should only be resorted to in instances of omission on the part of a party with the duty to comply with a statutory obligation.

(ii) Secondly, they contended that section 69 of the Value Added Tax Act only serves to remove as a potential defence in situations such as the present when ZIMRA demands from it the value added tax (VAT) component of any price where same is not expressly stated therein.

However, according to them, it offers no sanctuary to a consumer when the registered operator now seeks to recover from him (i.e. consumer) that which they paid pursuant to ZIMRA's decision.

In my view, the position adopted by the applicants cannot be sustained.

Firstly section 9(2) and section 9(5) of the Value Added Tax Act, which they relied on, have already been found to be of no application to the current dispute.

Secondly, the plain and literal meaning of the section suggests that it is irrelevant whether or not the registered operator has in fact charged the tax in question; where the price does not reflect the tax component thereof it is presumed that the tax is incorporated in that price.

In other words, the phrase “whether or not the registered operator has included tax in such price” operates a twin blow to the registered operator: it serves to estop him from denying that the price in reality did not include tax in a bid to avoid accounting for the tax to the Commissioner. At the same time, it precludes him from purporting to claim from the consumer the tax that he may or may not have collected from the consumer.

The question of who bears the obligation under the Value Added Tax Act to pay the tax (who is obviously the consumer), which the applicants expended so much effort on, is hardly the issue.

To contend that section 69 of the Value Added Tax Act should be construed so as to permit the registered operator to pursue the consumer for the recovery of the tax they paid to the Zimbabwe Revenue Authority (ZIMRA) would, in my view, run contrary to the clear intention of the legislature.

The legislature must obviously have been alive to the fact, that, in most day to day supply of goods and services, the customer disappears without trace soon after the transaction.

How then would the registered operator be able to recoup the tax that he claims he did not in fact charge and collect?

Even if the customer could be traced, there would be an unnecessary proliferation of disputes between him and the registered operator as to whether the price included value added tax (VAT) or not.

It would create unnecessary uncertainty and confusion in the market place where the consumer will never know whether or not the price charged includes value added tax (VAT) and where he always runs the risk of being informed ex post facto that the price he paid actually did not include tax.

If the applicants are permitted to recover the tax in question from the farmers then the deeming provision will be rendered nugatory. It would mean the price cannot then be deemed to include tax - it is as simple as that.

Further, related to the above, the deeming provision cannot be interpreted to mean two different things to two different people.

The interpretation that the applicants want to foist on section 69 of the Value Added Tax Act will result in a mathematical or accounting incongruence and an absurdity in logic.

The Zimbabwe Revenue Authority (ZIMRA), in its papers, vividly illustrate the mathematical inconsistency that will arise when they juxtapose the outcomes of the two contrasting positions using the hypothetical figure of $1,000 as proceeds for the sale of sugar thus:

(a) Where section 69 of the Value Added Tax Act is invoked

Proceeds from sale of sugar = $1,000
Price for milling services at 23% of the proceeds = ($1,000 x 23%) = $230
VAT due after deeming that that price includes VAT = ($230 x 15/115) = $30

(b) Where the applicants recover the section 69 ($30) VAT from the farmers

Proceeds from sale of sugar = $1,000
Price for milling services at 23% of the proceeds = ($1,000 x 23%) = $230
VAT due after deeming that that price includes VAT = ($230 x 15/115) = $30
VAT due after the applicants recover the $30 VAT from the farmers = 15% ($230-30+30) = $34.50

What the applicants are moving the court to accept will also yield a further absurd result in the following context:

Where, from the standpoint of the first respondent, the Zimbabwe Revenue Authority (ZIMRA), vis a vis the applicants, value added tax (VAT) is deemed to be included in the price; yet, from the standpoint of the applicants vis-a-vis the farmer, the price is deemed not to include the tax.

It could never have been the intention of the legislature to produce such an absurd or anomalous situation.

The net result of the interpretation should be uniform, consistent, and certain not only to the parties but also to other persons similarly situated.

Section 69 of the Value Added Tax Act effectively places the registered operator on guard on the consequences of his failure to specifically include in his price the value added tax (VAT) component thereof.

Viewed differently, it is the responsibility of the registered operator to ensure that value added tax (VAT) matters are addressed in his dealings with the consumer. It is not a responsibility that the registered operator jointly shares with the consumer because the duty to account to the Commissioner ultimately rests with him (i.e. Registered Operator).

There can never be a conflation of the roles, duties, and responsibilities among the various parties: the burden to pay the tax lies with the consumer (the farmer), the duty to charge, collect, and remit the tax lies with the registered operator (the applicants).

In the context of this case, whether occasioned by inadvertence, oversight, or a mis-interpretation of the nature of the contract, the consequences of the failure to specifically include the value added tax (VAT) are that VAT is deemed included in the milling price.

During the proceedings, resort was made by the applicants to section 72(1) of the Value Added Tax Act which provides as follows:

“72 Contract price or consideration may be varied according to rate of value-added tax

(1) Whenever the value added tax is imposed or increased in respect of any supply of goods or services in relation to which any agreement was entered into by the acceptance of an offer made before the tax was imposed or increased, as the case may be, the registered operator may, unless agreed to the contrary in any agreement in writing and notwithstanding anything to the contrary contained in any law, recover from the recipient, as an addition to the amounts payable by the recipient to the registered operator, a sum equal to any amount payable by the registered operator by way of the said tax or increase, as the case may be, and any amount so recoverable by the registered operator shall, whether it is recovered or not, be accounted for by the registered operator under this Act as part of the consideration in respect of the said supply.”

In my view, this provision is meant to address the adjustments that may have to be made in contractual situations wherein, at the time the offer was made, there was no value added tax (VAT) imposable on that contract or it stood at a certain level; however, by the time the acceptance is made, that type of contract, by operation of the law, now attracts VAT or had been increased.

The imposition of or the increase in the value added tax (VAT) was not in the contemplation of the parties thereby necessitating an adjustment in the price.

This provision is clearly not applicable to the current dispute.

There was no imposition of a “new” tax which hitherto did not exist, nor was there an increase of the value added tax (VAT) chargeable and payable.

The parties merely failed to take into account a tax which was already in existence.

PRESENT AND FUTURE SUPPLIES OF CANE

Therefore, against the backdrop of a finding that the parties (whether through inadvertence, oversight, or mis-apprehension) failed to address value added tax (VAT) matters in their contracts, one cannot legitimately vouch for the perpetuation of the status quo.

It behoves the parties to re-negotiate or clarify the terms of their contract to plug that lacuna.

It suffices to state, that, failure to do so may very well result in section 69 of the Value Added Tax Act being continuously invoked.

I did not get the impression from the concession made on behalf of the second (Zimbabwe Sugar Cane Development Association), eighth (Chipiwa Mpapa Mill Group) and tenth (Farai Dumo Augustine Musikavanhu) respondents that they are necessarily agreeable to the charging of value added tax (VAT) by the applicants over and above the 23 percent milling charge.

What I gathered was a concession merely that the applicants can charge, levy, and collect value added tax (VAT) from the farmers in compliance with the requirements of the Value Added Tax Act....,.

1....,.

2. The application for a declaratur, as sought in paragraph 2(b) of the draft order, as it relates to past supplies of sugar cane, be and is hereby dismissed.

3. In respect of present and future supplies of sugar cane, it is hereby ordered that the applicants and the 2nd-11th respondents are at liberty to re-negotiate and/or clarify the terms of their contracts to specifically incorporate value added tax (VAT) issues and proceed on that basis.

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Rules of Construction or Interpretation re: Deeming Provisions

SC49-20 : ALBERT JAVANGWE vs VORTIGEN INVESTMENTS (PRIVATE) LIMITED T/A CPL
Ruled By: MAKARAU JA, HLATSHWAYO JA and UCHENA JA

Appealed
SC61-17 : ARUNDEL SCHOOL and CHISIPITE SENIOR SCHOOL and ST JOHNS EDUCATIONAL and GATEWAY SCHOOL and ST GEORGES COLLEGE and CHRISTIAN BROTHERS COLLEGE vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GARWE JA, GUVAVA JA and UCHENA JA

SC12-21 : TOBACCO PROCESSORS ZIMBABWE (PRIVATE) LIMITED vs TONGOONA MUTASA and OTHERS
Ruled By: MAVANGIRA JA, MAKONI JA and CHATUKUTA AJA

HHH256-21 : IGNATIUS CHOMBO vs THE STATE
Ruled By: CHATUKUTA J

HB01-15 : MARIA RABEKA vs LARISSA STOCKIL and ASSISTANT MASTER OF THE HIGH COURT and REGISTRAR OF DEEDS N.O.
Ruled By: MAKONESE J

HH842-19 : BARIADIE INVESTMENTS (PVT) LTD vs PUWAYI CHIUTSI and TENDAI MASHAMHANDA and REGISTRAR OF DEEDS and SHERIFF OF THE HIGH COURT OF ZIMBABWE N.O. and ELLIOT ROGERS
Ruled By: CHITAPI J

View Appeal
HHH231-14 : ROBERT GUMBURA vs THE STATE
Ruled By: MUSAKWA J

SC27-21 : HONEST CHAPANGURA and OTHERS vs KWEKWE CITY COUNCIL and DELIWE MAKOTA
Ruled By: GWAUNZA DCJ, GUVAVA JA and UCHENA JA

View Appeal
SC61-21 : COSMA CHIANGWA vs DAVID KATERERE and ROBERT CAMPBELL LOGAN and ISRAEL GUMUNYU and REGISTRAR OF DEEDS and EDMOND CHIVHINGE and MASTER OF THE HIGH COURT
Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE AJA

Appealed
HH122-11 : DAVID KATERERE vs COSMA CHIANGWA and ROBERT CAMPBELL-LOGAN and ISRAEL GUMUNYU and REGISTRAR OF DEEDS and EDMOND CHIVHINGE and MASTER OF THE HIGH COURT
Ruled By: MAVANGIRA J

SC64-21 : PATRICK MANJOVHA vs DELTA BEVERAGES (PRIVATE) LIMITED
Ruled By: GWAUNZA DCJ, HLATSHWAYO JA and BHUNU JA

Appealed
SC82-21 : TRIANGLE LIMITED and HIPPO VALLEY ESTATES LIMITED vs ZIMBABWE REVENUE AUTHORITY and OTHERS
Ruled By: GWAUNZA DCJ, MATHONSI JA and CHITAKUNYE AJA

View Appeal
HMA28-20 : TRIANGLE LIMITED and HIPPO VALLEY ESTATES vs ZIMBABWE REVENUE AUTHORITY and OTHERS
Ruled By: ZISENGWE J

SC140-21 : MBCA BANK (PRIVATE) LIMITED (Now known as Nedbank Zimbabwe Limited) vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

HH99-18 : C F (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

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Law Portal Zimbabwe

Rules of Construction or Interpretation re: Deeming Provisions

SC49-20 : ALBERT JAVANGWE vs VORTIGEN INVESTMENTS (PRIVATE) LIMITED T/A CPL Ruled By: MAKARAU JA, HLATSHWAYO JA and UCHENA JA

Appealed SC61-17 : ARUNDEL SCHOOL and CHISIPITE SENIOR SCHOOL and ST JOHNS EDUCATIONAL and GATEWAY SCHOOL and ST GEORGES COLLEGE and CHRISTIAN BROTHERS COLLEGE vs ZIMBABWE REVENUE AUTHORITY Ruled By: GARWE JA, GUVAVA JA and UCHENA JA

SC12-21 : TOBACCO PROCESSORS ZIMBABWE (PRIVATE) LIMITED vs TONGOONA MUTASA and OTHERS Ruled By: MAVANGIRA JA, MAKONI JA and CHATUKUTA AJA

HHH256-21 : IGNATIUS CHOMBO vs THE STATE Ruled By: CHATUKUTA J

HB01-15 : MARIA RABEKA vs LARISSA STOCKIL and ASSISTANT MASTER OF THE HIGH COURT and REGISTRAR OF DEEDS N.O. Ruled By: MAKONESE J

HH842-19 : BARIADIE INVESTMENTS (PVT) LTD vs PUWAYI CHIUTSI and TENDAI MASHAMHANDA and REGISTRAR OF DEEDS and SHERIFF OF THE HIGH COURT OF ZIMBABWE N.O. and ELLIOT ROGERS Ruled By: CHITAPI J

View Appeal HHH231-14 : ROBERT GUMBURA vs THE STATE Ruled By: MUSAKWA J

SC27-21 : HONEST CHAPANGURA and OTHERS vs KWEKWE CITY COUNCIL and DELIWE MAKOTA Ruled By: GWAUNZA DCJ, GUVAVA JA and UCHENA JA

View Appeal SC61-21 : COSMA CHIANGWA vs DAVID KATERERE and ROBERT CAMPBELL LOGAN and ISRAEL GUMUNYU and REGISTRAR OF DEEDS and EDMOND CHIVHINGE and MASTER OF THE HIGH COURT Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE AJA

Appealed HH122-11 : DAVID KATERERE vs COSMA CHIANGWA and ROBERT CAMPBELL-LOGAN and ISRAEL GUMUNYU and REGISTRAR OF DEEDS and EDMOND CHIVHINGE and MASTER OF THE HIGH COURT Ruled By: MAVANGIRA J

SC64-21 : PATRICK MANJOVHA vs DELTA BEVERAGES (PRIVATE) LIMITED Ruled By: GWAUNZA DCJ, HLATSHWAYO JA and BHUNU JA

Appealed SC82-21 : TRIANGLE LIMITED and HIPPO VALLEY ESTATES LIMITED vs ZIMBABWE REVENUE AUTHORITY and OTHERS Ruled By: GWAUNZA DCJ, MATHONSI JA and CHITAKUNYE AJA

View Appeal HMA28-20 : TRIANGLE LIMITED and HIPPO VALLEY ESTATES vs ZIMBABWE REVENUE AUTHORITY and OTHERS Ruled By: ZISENGWE J

SC140-21 : MBCA BANK (PRIVATE) LIMITED (Now known as Nedbank Zimbabwe Limited) vs ZIMBABWE REVENUE AUTHORITY Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

HH99-18 : C F (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA J

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Zimbabwe

SC49-20 : ALBERT JAVANGWE vs VORTIGEN INVESTMENTS (PRIVATE) LIMITED T/A CPL
Ruled By: MAKARAU JA, HLATSHWAYO JA and UCHENA JA

Appealed
SC61-17 : ARUNDEL SCHOOL and CHISIPITE SENIOR SCHOOL and ST JOHNS EDUCATIONAL and GATEWAY SCHOOL and ST GEORGES COLLEGE and CHRISTIAN BROTHERS COLLEGE vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GARWE JA, GUVAVA JA and UCHENA JA

SC12-21 : TOBACCO PROCESSORS ZIMBABWE (PRIVATE) LIMITED vs TONGOONA MUTASA and OTHERS
Ruled By: MAVANGIRA JA, MAKONI JA and CHATUKUTA AJA

HHH256-21 : IGNATIUS CHOMBO vs THE STATE
Ruled By: CHATUKUTA J

HB01-15 : MARIA RABEKA vs LARISSA STOCKIL and ASSISTANT MASTER OF THE HIGH COURT and REGISTRAR OF DEEDS N.O.
Ruled By: MAKONESE J

HH842-19 : BARIADIE INVESTMENTS (PVT) LTD vs PUWAYI CHIUTSI and TENDAI MASHAMHANDA and REGISTRAR OF DEEDS and SHERIFF OF THE HIGH COURT OF ZIMBABWE N.O. and ELLIOT ROGERS
Ruled By: CHITAPI J

View Appeal
HHH231-14 : ROBERT GUMBURA vs THE STATE
Ruled By: MUSAKWA J

SC27-21 : HONEST CHAPANGURA and OTHERS vs KWEKWE CITY COUNCIL and DELIWE MAKOTA
Ruled By: GWAUNZA DCJ, GUVAVA JA and UCHENA JA

View Appeal
SC61-21 : COSMA CHIANGWA vs DAVID KATERERE and ROBERT CAMPBELL LOGAN and ISRAEL GUMUNYU and REGISTRAR OF DEEDS and EDMOND CHIVHINGE and MASTER OF THE HIGH COURT
Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE AJA

Appealed
HH122-11 : DAVID KATERERE vs COSMA CHIANGWA and ROBERT CAMPBELL-LOGAN and ISRAEL GUMUNYU and REGISTRAR OF DEEDS and EDMOND CHIVHINGE and MASTER OF THE HIGH COURT
Ruled By: MAVANGIRA J

SC64-21 : PATRICK MANJOVHA vs DELTA BEVERAGES (PRIVATE) LIMITED
Ruled By: GWAUNZA DCJ, HLATSHWAYO JA and BHUNU JA

Appealed
SC82-21 : TRIANGLE LIMITED and HIPPO VALLEY ESTATES LIMITED vs ZIMBABWE REVENUE AUTHORITY and OTHERS
Ruled By: GWAUNZA DCJ, MATHONSI JA and CHITAKUNYE AJA

View Appeal
HMA28-20 : TRIANGLE LIMITED and HIPPO VALLEY ESTATES vs ZIMBABWE REVENUE AUTHORITY and OTHERS
Ruled By: ZISENGWE J

SC140-21 : MBCA BANK (PRIVATE) LIMITED (Now known as Nedbank Zimbabwe Limited) vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

HH99-18 : C F (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J