Joshua Chirikutsi v Zimbabwe Power Company (Pvt) Ltd

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO. LC/H/290/2020
HARARE, 30 OCTOBER 2020
CASE NO. LC/H/04/20
AND 4 DECEMBER 2020
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IN THE LABOUR COURT OF ZIMBABWE 	            JUDGMENT NO. LC/H/290/2020

HARARE, 30 OCTOBER 2020 					CASE NO. LC/H/04/20

AND 4 DECEMBER 2020

In the matter between:

JOSHUA CHIRIKUTSI						APPELLANT

versus

ZIMBABWE POWER COMPANY (PVT) LTD			RESPONDENT

Before The Honourable Makamure J

For the Appellant			Mr B. Magogo (Legal Practitioner)

For the Respondent			Mr T. S. Manjengwah (Legal Practitioner)

MAKAMURE J:

The appellant was employed by the respondent as its Operations Director. He was also, for a period, appointed as the organisation’s Acting Managing Director. He was dismissed from the respondent’s employ following disciplinary proceedings for acts of misconduct which happened during the period that he was Acting Managing Director. He was charged with three counts for violating section 4 (a) of the Labour (National Employment Code of Conduct), Regulations Statutory Instrument 15 of 2006 (S.I. 15/06), that is

“any act of conduct or omission inconsistent with the fulfilment of the express or implied conditions of his or her contract;”

Out of the three counts the Disciplinary Authority acquitted him of two and convicted him of one. The charge is as follows:

“You authorized the making of advance payments totaling US$870 000.00 made up of             US$120 000.00 paid on 23rd February 2016, US$250 000.00 paid on 25th April 2016,                US$150 000.00 paid on 26th April 2016 and US$350 000.00 on 29th April 2016 to Intratek Zimbabwe (Private) Limited before it had provided an advance payment guaranteed to ZPC. At the time of your authorizing such payments, you appreciated or ought to have appreciated, by diligent inquiry that the Advance Payment Guarantee, explicitly required to be provided by Intratek Zimbabwe (Private) Limited in terms of the parties’ contract before any advance payment was made, had not yet been provided. Your actions or inaction in the context fell short of your responsibilities as set out in section 45 of the Public Finance Management Act (PFMA)

[Chapter 22:19] and in the contract itself that enjoined you to ensure that the system of financial management and internal controls established for ZPC were implemented and to further take effective and appropriate steps to prevent any irregular, fruitless and wasteful expenditure. Your actions actively subverted the internal control system both internal as espoused in the contract itself and exposed ZPC to significant financial loss in the event that Intratek Zimbabwe (Private) Limited to whom advance payment was made, failed as it did, to perform the contract either in full or in part. You, as the Accounting Officer, failed or neglected to manage the contract with due care and attention and such conduct or omission was inconsistent with the fulfilment of the express or implied terms of your contract.”

The appellant was aggrieved by the outcome of the disciplinary proceedings. He appeals to this Court on the following grounds and I quote:

“1.	The Disciplinary Authority erred in finding firstly that the locus standi of the so called Board member was not challenged when it was in fact challenged and in proceeding to find, in the absence of evidence, that the Respondent’s Board had resolved to discipline the Appellant.

2.	The Disciplinary Authority erred and misdirected itself in failing to find that prior to his elevation to the Acting Managing Director’s position, the provision of the bank guarantee prior to the payment to the contractor had been partially waived by the substantive Managing Director following upon pressure from the relevant Minister.

3.	As regards the penalty, the Disciplinary Authority grossly misdirected itself in its exercise of discretion such that no reasonable tribunal could have arrived at such a decision by settling for the ultimate penalty of dismissal. The Authority paid his service to the totality of the mitigatory circumstances raised by the Appellant relating, inter alia, the fact that the offences were committed in the first week of the Appellant’s Acting tenure as Managing Director as well as the evident ministerial pressure exerted on Appellant personally.”

The facts of the matter are largely common cause. They are as follows:

The respondent entered into a contract for the construction of a 100MW (Gwanda) Solar Power Station Project with a company called Intratek Zimbabwe (Private) Limited. The Contract was in relation to the Engineering Procurement and Construction of the 100MW GWANDA SOLAR POWER STATION PROJECT. Clause 5 of the said contract provides, among other things that:

“… This contract shall otherwise commence (the Commencement Date)” in full force and effect on the date when the following conditions precedent (Conditions Precedent) are satisfied:

(a)	the Financing Agreements have been signed, come into full force and all of the conditions to the first drawdown of funds (other than in relation to any conditions which relate solely to the effectiveness of the Contract) have been satisfied;

(b)	the Advance Payment Demand Guarantee is provided to the Employer by the Contractor in accordance with Sub – Clause 14.2;

(c)	the Contractor receives the amount of the advance payment in accordance with Sub – Clause 14:2;

(d)	the Performance Security is provided to the Employer by the Contractor in accordance with Sub Clause 4.2;

(e)	the completion of feasibility studies with bankable findings alignable to the implementation of the Project.

(f)	Due Diligence Exercise by the Employer;

(g)	Production of an Environmental Impact Assessment (“EIA”) Certificate;

(h)	Acquisition of land for the Project by the Employer as informed the feasibility studies;

(i)	Corporate authorizations having been obtained by both Parties…” (My Underlining).

The contract between the parties required in peremptory terms that among other conditions precedent, the Advance Payment Demand Guarantee (Clause 5 b) be provided to the respondent by the contractor.

Herein the appellant authorized payment of the total sum of US$870 000-00 to the contractor before the said guarantee had been provided. This was a violation of Clause 5 (b) of the contract. In his defence the appellant cited pressure from the then minister at the reason why he authorized the payment in question. There is no written instruction from the said Minister instructing him (the appellant) to authorize payment before this particular requirement was fulfilled or waiving the requirement. What is on record (p 169) is a letter from Intratek dated               3 February 2016 which made a request for the respondent to pay it (Intratek) in terms of a suggested proposal. On that letter there is a handwritten suggestion, of the same date, that Intratek be paid “$250 K per week since we do not have the capacity to go by his request.” Since this was a suggestion it was up to the appellant to interrogate the suggestion taking into account the conditions which had to be fulfilled by the contractor before respondent could make any payment to it. In terms of the contract each party was expected ‘to ensure the satisfaction of the conditions precedent.’ The proviso entitling the respondent to waive the conditions precedent was: “(a) the Employer may waive the Contractor Conditions Precedent and such waived Conditions Precedent will be deemed satisfied for the purposed of this agreement.”

The agreement also stipulated that: “The Contract may only be amended by a written document duly executed by the Parties.” What this means is that both parties had to agree to any amendment in writing. Thus, if the Employer had waived the need to comply with Clause 5 (b), this had to be specific and in writing. The appellant relied on the instructions and pressure from the Minister to pay the contractor before it had supplied the necessary guarantee. The question of pressure to pay without the peremptory requirements being made is governed by the Public Finance Management Act [Chapter 22:19] (PFM Act). Section 14 of the PFM Act provides that:

“(i)	If…

(a)	an accounting officer is directed by a Minister or a Deputy Minister to order or commit a payment which such accounting officer believes he or she is not authorized to make in terms of any enactment; or

(b)	a receiver of revenue is directed by a Minister or Deputy Minister

(i)	not to collect any public money which such receiver of revenue believes he or she should collect; or

(ii)	to deal with public money in a manner in which the receiver of revenue believes he or she is not authorized to deal in terms of any enactment;

he or she shall submit in writing to the Minister or Deputy Minister, as the case maybe, his or her objections and reason therefor.” (My underlining)

The Legislature in its wisdom anticipated situations where pressure could arise and an accounting officer finding themselves in a difficult situation. As a result, the PFM Act was put in place. The PFM Act has safeguards where, as in the present case, an accounting officer is under pressure from a Minister or a Deputy Minister to make a payment which they believe they are not authorized to pay. The PFM Act goes on to provide for what they do should such Minister or Deputy Minister insist that such payment be made. What this means is that the appellant as the accounting officer was obliged to rely on the provisions of the PFM Act to either comply or not comply with the instructions from the Minister seeing that he was dealing with Public Funds. If there was pressure from the Minister, and the pressure was putting him in a position to violate the terms of the contract, and the appellant objected to violating the contract, he should have objected in terms of the PFM Act. However, if there was pressure and the appellant saw no need to object then the appellant fell into error. He cannot rely on the said pressure especially where there is no written instruction from the said Minister. The Appellant ought to have complied with the provisions of the PFM Act in dealing with the pressure from the Minister.

The handwritten note of 3 February 2016 suggested that Intratek be paid and yet there was no proof of the guarantees. The suggestion cited inability by ZPC to meet the terms of payment requested by Intratek. At that point ZPC (respondent) did not have to even consider its limitations. It needed the necessary guarantee. Payment could only be done after the requisite guarantees had been provided. The question of the ability or inability of ZPC to make the payment at that juncture was therefore premature. It could only be considered once the proof of the Advance Payment Guarantee had been secured. This is why the appellant ought to have taken issue with it instead of simply fulfilling it without question. It was the appellant’s duty to ensure that this was in place. The written instruction which appellant relied on was illegal. It is trite that a subordinate is not obliged to follow an illegal instruction. He should not have relied on it. He had the provisions of the PFM Act to rely on. Those provisions are specifically crafted to cover an accounting officer who finds himself or herself in the situation that the appellant found himself in.

In Standard Chartered Bank of Zimbabwe Limited v Christopher Chipiningu SC 104/2002, an employee, took instructions from another person other than from his superior leading to loss by the bank. The employee was found guilty of gross negligence. While in the present case the charge is not one of negligence, it is a question of conduct inconsistent with what is expected, I find that the facts relay a similar message. Appellant ought not have allowed pressure from the Minister to overwhelm him especially where he had the provisions of the PFM Act to fall on. Further, there is no proof of waiver as envisaged by the contract between the parties. If indeed the employer had waived the conditions it would not, then have proceeded to insist on their fulfilment. The operation of the contract commenced only after certain conditions which included relevant guarantees, were in place. They were not.  Appellant therefore ought not have authorized the payments in question. What this mean is that the appellant cannot rely on waiver. The second ground of appeal therefore has no merit.

The appellant queried the locus standi of a Board member who was present at the hearing. Such Board member should have been cross examined or asked to explain the propriety of his presence. The same Board Member should have been asked to clarify whether or not a resolution for the charges to be on ZESA Holdings letterhead had been passed.  It was pointed out during the course of the disciplinary proceedings that a respondent’s affidavit which formed part of the respondent’s documents had been deposed to by a Board Member who was not present during the proceedings. When questions to do with the contents of that affidavit arose, the Board member present could not answer. This is for the obvious reason that he/she could not answer to an affidavit which they did not author. However, he/she could certainly have explained their own presence and the absence or presence of a resolution. It was incumbent upon the appellant to question the Board Member then present, about the locus standi. He cannot raise that question now. There was ample time for him to have done so during the presence of the Board Member in question before the Board Member was excused from the hearing. This means that the first ground of appeal has no merit.

Regarding penalty, the Disciplinary Authority considered the fact that the employer had taken a serious view of the appellant’s conduct and that it went to the root of the contract between the parties. Such conduct repudiated the contract between the parties and therefore destroyed the employer – employee relationship between the parties. The conduct of the appellant was a serious breach of the trust reposed in him by the respondent. In Circle Cement v Chipo Nyawasha

SC 60/03 the Supreme Court held that:

“Once the employer had taken a serious view of the act of misconduct committed by an employee to the extent that it considered it to be a repudiation of contract which it accepted by dismissing her from employment the question of a penalty less severe than dismissal being available for consideration would not arise unless it was established that the employer acted unreasonably in having a serious view of the offence committed by the employee.”

In the present case the offence committed by the appellant was serious. The employer took a serious view of it. The employer’s discretion was therefore properly exercised.

An appeal court should be slow to interfere with the findings of a lower tribunal. In Christopher Samson v Windmill (Private) Limited SC 7/15 the Supreme Court held that:

“The position is now clear that an appellate court has no power to interfere with the findings of fact made by a lower court unless it is persuaded that the findings complained of are so outrageous in their defiance of logic that no sensible person properly applying his mind to the question to be decided would arrive at such a conclusion.”

See also Barrons and Another v Chimponda 1999 (1) ZLR 58 (SC), Hama v National Railways of Zimbabwe 1996 (1) ZLR 664.

In view of the foregoing, I find that there is no merit in the appeal. Consequently, there is no reason to interfere with the earlier decision.

Accordingly, it is ordered that the appeal be is hereby dismissed with costs.

Makuwaza & Magogo, Appellant’s Legal Practitioners

Wintertons, Respondent’s Legal Practitioners