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 section 93 of the
Labour Act [Chapter 28:01].
His terms of reference were the following:
“1.
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:
(a) Housing loan.
(b) Personal loan.
(c) Performance bonus.
(d) Replacement motor vehicle.
2. Whether or not the respondent, Itayi Utah, is entitled to:
(a) Foreign travel;
(b) 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 In respect of a motor vehicle benefit that had been withdrawn,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 SC22-10, 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.”
See MacDonald v Canada (AG) (1994) 1 SCR 311…,.
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:
1. Did the parties negotiate a retrenchment package in the manner dictated by the applicable law? and
2.
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 section 3(8) of S.I.
186/2003 would kick in, with the dispute to be resolved in terms of
section 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
section 12(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.”…,.
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:
(i)
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.”...,.
This letter, as is evident, reinforced the intention to have the dispute resolved in terms of the arbitral award of Mr Bvumbe.
(ii)
Secondly, the respondent accepted the offer on 24 June 2009, in a
letter written on his behalf by his legal practitioners (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).
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....,.”...,.
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'.
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 HH130-16
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....,.”
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:
(i) Negotiations for a package to be paid to the respondent following the abolition of his employment post with the appellant;
(ii) Agreed referral for final resolution of the dispute, to Arbitrator Bvumbe;
(iii) An offer made by the appellant, to the respondent, of a package worked out in terms of the arbitral award;
(iv) Acceptance, in clear terms, of the offer, by the respondent; and
(v) 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 paragraph (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.”...,.
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)…, 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..., 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.”…,.
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....,.”...,.
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:
1. The appeal succeeds with costs.
2. The judgment of the court a quo is set aside and substituted with the following:
“(i) The appeal succeeds with costs.
(ii) The arbitral award by Arbitrator Manase, dated July 2013, be and is hereby set aside.”
