GWAUNZA
JA:
This
is an appeal against the whole judgment of the Labour Court handed
down on 20 February 2015.
FACTUAL
BACKGROUND
The
respondent was employed by the appellant as an Apprentice
Distribution Electrician on 17 September 1984. He rose through the
ranks until he was promoted to the position of Technical Services
Director in terms of a contract dated 27
August
2004. In July 2007 the appellant's Managing Director wrote to the
respondent advising him of a restructuring exercise being underway,
and that his post had to be abolished. He also notified him of an
intention to work out his retrenchment package. On 30 July 2007 the
Group Company Secretary of the appellant wrote a letter to the
respondent in which he outlined the appellant's proposal for a
retrenchment package.
The
respondent, through his legal practitioners, indicated that he was
not agreeable to the proposals concerning the date of termination of
the employment relationship, the housing loan, performance bonus,
personal loan, foreign travel, purchase of a replacement motor
vehicle and furniture.
After
some correspondence, the parties failed to agree on the appropriate
package and eventually the matter was referred to arbitration
before
Arbitrator Bvumbe in terms of s 93 of the Labour Act [Chapter
28:01].
His terms of reference were the following:
-
“Whether
or not ZESA Holding Private Limited was in breach of the terms
and conditions of the contract of employment in respect of Itayi
Utah who is employed by the applicant as Technical Services
Director. Employment contract dated 7 August 2004 in respect of the
non-fulfilment of the following benefits:
-
Housing
loan
-
Personal
loan
-
Performance
bonus
-
Replacement
Motor Vehicle
-
Whether
or not the respondent Itayi Utah is entitled to:
-
Foreign
Travel
-
Office
Furniture
Benefits
as part of his retrenchment package.”
Before
the Arbitrator, the parties had agreed that the effective date of the
'retrenchment' would be the date of the arbitral award (and this
agreement was captured in the arbitral award by Arbitrator Bvumbe).
In addition, the arbitrator held that the respondent was not entitled
to foreign travel and office furniture as well as the housing loan
which he claimed. In respect of a motor vehicle benefit that had been
withdrawn, the arbitrator held that the respondent should be paid
damages and he also ordered three months' worth of salary as
compensation for the personal loan.
On
24 June 2009, the appellant calculated the severance package which
the respondent signed “without prejudice”. The money was
subsequently deposited into his account. In an apparent volte
face,
the respondent later contended that the package had not been properly
calculated and that his date of termination should change from 31
March 2009 to the date he would be paid what he contended he was
entitled to. He also at this stage questioned the lawfulness of the
'retrenchment' process even though it had resulted in him signing
for and accepting, a package in terms of Arbitrator Bvumbe's award.
This
new challenge to a process that had been concluded between the
parties was referred to a different Arbitrator, Mr Manase. His terms
of reference encapsulated the respondent's challenge to the earlier
'retrenchment' process concluded through Arbitrator Bvumbe's
award. They read as follows:
“(i)
Whether or not respondent`s purported retrenchment of applicant and
the process that followed was lawful, and
(ii)
Whether or not applicant is still an employee of respondent in terms
of the law.”
Arbitrator
Manase held that the purported retrenchment of the respondent was
null and void as it had not been approved by the Minister and
therefore the respondent was still an employee of the appellant. He
ordered that he be reinstated to his former employment with the
appellant.
Aggrieved
by this decision, the appellant appealed to the Labour Court on the
grounds that the Arbitrator erred in not finding that acceptance of
the retrenchment package even on a purported “without prejudice”
basis destroyed any future claims in that respect, by the respondent.
The appellant also averred that the Arbitrator erred grossly at law
in holding himself to have jurisdiction to determine the
conclusiveness or otherwise of the award by Arbitrator Bvumbe. The
Labour Court dismissed the appeal. Having unsuccessfully sought leave
to appeal to this Court, in the Labour Court, leave was sought and
granted by this Court on 14 December 2016. This Court is now seized
with the appeal.
It
has been noted that in the Labour Court the appellant unsuccessfully
argued that Arbitrator Manase lacked the jurisdiction to determine
the lawfulness or otherwise of the award by Arbitrator Bvumbe. In
other words, Arbitrator Manase, who at law enjoyed parallel
jurisdiction with Arbitrator Bvumbe, could not competently interfere
with the latter's award. The appellant, on appeal to this Court,
did not directly allude to the matter in its grounds of appeal. In my
view however, the question of Arbitrator Manase's jurisdiction to
hear the matter is an important question of law whose determination
may effectively dispose of the appeal. In any case it is also
important to consider the effect his award had on Arbitrator Bvumbe's
award. It was also helpful to the court that detailed submissions on
the matter were made by both parties in their heads of argument and
in argument during the hearing of this appeal.
Relying
on the case of Williams
& Anor v Msipha NO & Ors
SC-22-10, the appellant correctly argued in its heads of argument
that an appeal court:
“must
be able to intervene not only against the direct dictates of a
judgment of the lower court, but also against its effect”
However,
before addressing the issue of Arbitrator Manase's jurisdiction to
hear the matter, it is my view that the nature and effect of the
process of 'retrenchment' that the parties negotiated and acted
upon, must be determined first.
The
appeal therefore raises two issues for determination:
-
Did
the parties negotiate a retrenchment package in the manner dictated
by the applicable law, and
-
Did
Arbitrator Manase have jurisdiction to determine the lawfulness or
otherwise, of the process that culminated in the package of benefits
being paid to the respondent?
In
his heads of argument, the respondent correctly outlines the
retrenchment procedure then applicable, as follows:
“Thus,
in case of agreement and forwarding of the agreement to the
Retrenchment Board, the effective date of retrenchment would more or
less coincide with the date of the final award …. However, if
there was no agreement within one month, the provisions of s 3(8) of
S.I. 186/2003 would kick in, with the dispute to be resolved in terms
of s 12 (C) of the Act. That is assessment of the matter by the
Retrenchment Board and its recommendations to the Minister and
finally the approval of the retrenchment package by the Minister,
subject to any modifications she or he may make in terms of s12(C)(9)
of the Act. Until then, the employees remain employees of the
employer and entitled to their salaries and benefits”
It
is not in dispute that this process is not what the parties in
casu
engaged in. As indicated above the genesis of the dispute was a
letter written to the respondent in June 2007, informing him of a
restructuring exercise within the appellant, and the abolishment of
his post. Thereafter the parties engaged in a process that they
termed 'retrenchment' and in terms of which a package of benefits
payable to the respondent, was negotiated. When a dispute arose as to
the total package due to the respondent, the parties by agreement,
referred the matter to Arbitrator Bvumbe, whose terms of reference
have been set out above. According to the respondent's own outline
of the correct process to follow in the event of a retrenchment, this
was the stage at which the parties would have referred the matter to
the Retrenchment Board. They chose not to do so.
Arbitrator
Bvumbe prefixed his award with the following comment:
“On
this occasion (5 April 2008 the date of referral of the matter to
him) the parties endorsed the referral to me as a single arbitrator.
They also agreed on the terms of reference which were to be
considered for the finalisation
of the dispute between the parties, which were ….
The
parties concurred that the effective date of retrenchment would be
the date of the arbitration award.” (my
emphasis)
This
statement by the arbitrator significantly refers to 'finalisation
of the dispute' between the parties. This suggests clearly that
neither side contemplated engaging in the retrenchment process
alluded to above. Their intention was to have the dispute relating to
the benefits on which agreement had not been reached, finally
determined by Arbitrator Bvumbe.
That
this was the parties' clear intention is borne out by their
subsequent conduct. Firstly, following Arbitrator Bvumbe's award,
dated 24 October, 2008, the appellant on 30 March 2009
addressed a letter to the respondent's legal practitioners, to the
following effect:
“Re:
Retrenchment Package
The
above matter refers:
Please
find attached to this letter the Retrenchment offer for your client,
Itayi for his signature. May we have your response as a matter of
urgency so that we put this matter to rest. “(my
emphasis)
This
letter, as is evident, reinforced the intention to have the dispute
resolved in terms of the arbitral award of Mr Bvumbe.
Secondly,
the respondent accepted the offer on 24 June 2009, in a letter
written on his behalf by his legal practitioners. The letter in
relevant part read as follows:
“We
write to advise that our client has since accepted the retrenchment
package by signing the letter. We attach herewith a signed copy of
your offer from our client for immediate processing, without
prejudice …. Payment should be processed and deposited in our
client's account by 30 June 2009, failure which(sic)
interest and damages shall be raised against Zesa Holdings in terms
of the law. We are also instructed to remind you to immediately
communicate our
client's termination of employment
on 31 March 2009 to his pension managers in order to facilitate
immediate pension payments from two pension funds…” (my
emphasis)
The
content and tone of this acceptance letter by the respondent in my
view admits of no doubt as to the intention, by him as much as by the
appellant, to bring finality to the dispute in this manner. This is
regardless of some indications in the letter that the respondent had
signed the 'retrenchment' package on a 'without prejudice
basis'.
It is also significant that the only recourse that the respondent at
that point contemplated in the event of the appellant's failure to
pay the package in question, was to sue the latter for 'interest
and damages'. Sight must also not be lost of the fact that the
respondent accepted the termination of his employment and expected
immediate notification thereof to his two Pension Funds.
Finally,
it is not in dispute that the appellant thereafter paid, and the
respondent received, the package that the parties had signed for.
Against
this background I have no doubt in my mind that the process engaged
in by the parties, as outlined above, clearly speaks to:
-
Negotiations
for a package to be paid to the respondent following the abolition
of his employment post with the appellant;
-
Agreed
referral for final resolution of the dispute, to Arbitrator Bvumbe
-
An
offer made by the appellant to the respondent, of a package worked
out in terms of the arbitral award;
-
Acceptance
in clear terms of the offer, by the respondent; and
-
Implementation
of the agreement through release of the relevant benefits, into the
respondent's bank account.
The
issues listed above bear all the hallmarks of a contract negotiated,
signed and perfected. Despite the parties' loose usage of the term
'retrenchment' package, I am satisfied that the parties
negotiated for and signed, an agreement for the termination of the
respondent's employment with the appellant. The agreement was
entered into between two consenting parties and was signed freely and
voluntarily. It was a contract like any other contract and can,
therefore not be said to be unlawful, as the respondent now seeks to
argue.
Accordingly,
I find that the parties neither contemplated nor engaged in a
retrenchment process as outlined in the relevant law.
This
brings me to the second issue to be determined in this matter:
“Did
Arbitrator Manase have jurisdiction to determine the lawfulness or
otherwise, of the process that culminated in the package of benefits
being paid to the respondent?”
Neither
the parties nor Arbitrator Manase dispute that no appeal was filed
against Arbitrator Bvumbe's award. This was the award on the basis
of which the package terminating the employment of the respondent was
worked out, paid and accepted. The award is therefore extant, and has
been fully implemented. In para (c) of his award, Arbitrator Manase
correctly stated as follows:
“Given
the fact that Arbitrator Bvume's award was neither challenged and
set aside, it remains binding… I as an Arbitrator, cannot properly
set aside a subsisting arbitral award by a brother arbitrator. The
award however, was not conclusive and there were outstanding items
for resolution and clarification.”
(my
emphasis)
He
clearly was aware of the legal position regarding his competency or
lack thereof, to interfere with a fellow arbitrator`s decision.
Despite this, he seemed to have entertained the notion that he could
vary, amend or supplement the latter's award. This is evidenced by
the latter part of the statement cited above. This is clearly not
permissible at law, as illustrated by the authorities cited below.
Section
98(9) of the Labour Act [Chapter
28:01]
provides that:
“(9)
In hearing and determining any dispute an arbitrator shall have the
same powers as the Labour Court.”
Thus
when an arbitrator makes an award, his position is akin to that of a
court of law. A court is defined to mean all its judges sitting alone
or with other judges. This is because they have the same powers and
exercise parallel jurisdiction. Arbitrators are no different in this
respect. Accordingly, the res
judicata and
functus officio
legal principles will apply should the matter be brought before the
same or a different judge, or in this case, arbitrator.
The
learned authors Herbstein & Van Winsen “The
Civil Practice of the High Courts and the Supreme Court of Appeal of
South Africa”
5th Ed state that:
“The
general principle, now well established in our law, is that once a
court has duly pronounced a final judgment or order, it has itself no
authority to correct, alter or supplement it. The reason is that the
court thereupon becomes functus
officio:
its jurisdiction in the case having been fully and finally exercised,
its authority over the subject matter ceases. The other equally
important consideration is the public interest in bringing litigation
to finality. The parties must be assured that once an order of court
has been made, it is final and they can arrange their affairs in
accordance with that order.”
In
the case of Kassim
v Kassim
1989 (3) ZLR 234 (H) at p242 C-D the court held that:-
“In
general, the court will not recall, vary or add to its own judgment
once it has made a final adjudication on the merits. The principle is
stated in Firestone
South Africa (Pvt) Ltd v Genticuro Ag
1977 (4) SA 298 (A) at 306, where TROLLIP JA stated:
'The
general principle, now well established in our law, is that, once a
court has duly pronounced a final judgment or order, it has itself no
authority to correct, alter, or supplement it. The reason is that it
thereupon becomes functus
officio:
its jurisdiction in the case having been fully and finally exercised,
its authority over the subject matter has ceased.'”
Furthermore,
in Unitrack
(Pvt) Ltd v Telone (Pvt) Ltd
SC10/18 MAVANGIRA AJA (as she then was) held as follows:
“It
is a general principle of our law that once a court or judicial
officer renders a decision regarding issues that have been submitted
to it or him, it or he lacks any power or legal authority to
re-examine or revisit that decision. Once a decision is made, the
term “functus
officio”
applies to the court
or judicial officer concerned.” (my
emphasis)
In
his award, Mr Manase sought to reinstate into his former employment,
an employee (the respondent) who had freely and consciously signed an
agreement to terminate such employment, and accepted the benefits
agreed to between the parties. He thus purported to revive a moribund
employment contract as well as reverse the import of Arbitrator
Bvumbe's determination on the benefits payable to the respondent in
terms of the supposed retrenchment agreement signed by the parties.
No evidence was tendered that the respondent had paid back the
amounts that he received. Arbitrator Manase's award, therefore
would have resulted in the respondent being paid essentially the same
benefits, twice.
Since
Arbitrator Manase was not sitting as an appeal court, it was clearly
not open to him to do as he purported.
More
confounding, in my view, is the fact that the parties in this matter
agreed to refer the dispute to Arbitrator Manase. This was
notwithstanding the common understanding by all that an Arbitrator
who enjoys parallel jurisdiction with any other arbitrator can at
law, neither set aside nor interfere in any manner with the award of
another arbitrator. They also did this in full knowledge of the fact
that the first arbitral award was extant, and that the agreement
based on it had been fully implemented by the parties to the dispute.
The
respondent attempts to differentiate between the two arbitral awards
as follows:
“….
The court a
quo
did not err because the two awards dealt with separate and distinct
causes of action. The Manase award dealt with the lawfulness
of the retrenchment while
the Bvumbe award dealt with a dispute over claimed contractual
benefits and benefits to be included in a retrenchment package….”
(my
emphasis)
There
can be no doubt that the 'retrenchment' referred to in this
submission is the process, based on Arbitrator Bvumbe's award, that
culminated in the signing of the termination of employment agreement
by the parties. As already stated it is evident that the parties
loosely used the term 'retrenchment' when in fact all they signed
was an agreement terminating the respondent's employment with the
appellant. This is the process that Arbitrator Manase was to review
and whose lawfulness or otherwise he was to determine.
I
have found that the process did not amount to a retrenchment. I must
make the point that even if it had been a retrenchment process,
Arbitrator Manase would still have lacked the jurisdiction to
determine its lawfulness or otherwise. Following upon the arbitral
award handed down by Arbitrator Bvumbe, the matter became res
judicata.
By virtue of the fact that both arbitrators were endowed with the
same jurisdictional powers, Arbitrator Manase was accordingly functus
officio
in relation to the same dispute. The first arbitral award could only
be reviewed or set aside by a court of higher jurisdiction.
Because
that did not happen,
that
award stands as the one that finally determined the dispute, leaving
no basis for interference therewith, by the second Arbitrator, Mr
Manase. His attempt to do so was therefore of no force or effect.
I
find in the result that the court a
quo
misdirected itself in upholding Mr Manase's award. The appeal
therefore has merit and ought to succeed.
Having
determined that the parties effectively signed and honoured an
agreement to terminate the employment of the respondent with the
appellant, and that this circumstance constituted a final resolution
of the dispute between them, it becomes unnecessary to consider the
alternative ground of appeal relating to whether or not the
respondent repudiated the employment contract.
DISPOSITION
In
the premises, it is ordered as follows:
-
The
appeal succeeds with costs
-
The
judgment of the court a
quo
is set aside and substituted with the following:
“(i)
The appeal succeeds with costs.
-
The
arbitral award by Arbitrator Manase dated July, 2013 be and is
hereby set aside.”
GUVAVA
JA: I
agree
MAVANGIRA
JA: I
agree
Dube
Manikai Hwacha, Appellant`s
legal practitioners
Munyaradzi
Gwisai and Partners, Respondent`s
legal practitioners
1.
See MacDonald v Canada (AG) (1994) 1 SCR 311 at 329
2.
The letter erroneously states that the offer letter was received on
24 June, 2009, when the legal practitioners' date stamp on the
latter document clearly indicates it was received on 30th March 2009
3.
This
would, in any case not have changed the character and effect of the
agreement, for that is not capable of being concluded on a “without
prejudice” basis. See
Yakub
Mahomed v John Arnold Bredenkamp HH 130/16
where it was held as follows;
“I
also find persuasive the submission made on behalf of the plaintiff
that an agreement cannot be without prejudice or privileged, only the
negotiations can…”
