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Mercy Dare N.O. and Raphael Manomano v Chitungwiza Municipality
[2022] ZWLC 50LC/H/50/222022
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### Preamble IN THE LABOUR COURT OF ZIMBABWE JUDGMENT NO. LC/H/50/22 HELD AT HARARE ON 3RD FEBRUARY, 2022 CASE JUDGMENT NO. LC/H/50/2022 CASE NO. LC/H/LRA/412/17 --------- IN THE LABOUR COURT OF ZIMBABWE JUDGMENT NO. LC/H/50/22 HELD AT HARARE ON 3RD FEBRUARY, 2022 CASE NO.LC/H/LRA/412/17 AND 25TH FEBRUARY, 2022 In the matter between:- MERCY DARE N.O. 1ST APPLICANT AND RAPHAEL MANOMANO 2ND APPLICANT AND CHITUNGWIZA MUNICIPALITY RESPONDENT Before the Honourable Makamure, J. For the 1st Applicant : In Person (Labour Officer) For the 2nd Applicant : In Person (Labour Officer) For the Respondent : Mr. T. Mupamhadzi (Legal Practitioner) With him Mr. R. Masocha, Intern MAKAMURE J. This is an application for confirmation of a draft ruling and order which was brought before this court in terms of section 93(5c), (5a) and (5b) of the Labour Act [Chapter 28:01] (The Act). The matter was initially heard in the absence of the employee. When the matter was taken to the Supreme Court, the Supreme Court set aside the judgment of this court and ordered a rehearing after the employee, Mr. Manomano was joined as a party to the proceedings. The Supreme Court Order No. SC 776A/18 reads: “IT IS ORDERED BY CONSENT THAT:- The The appeal be and is hereby allowed with no order as to costs. The judgment of the Labour Court is set aside. The matter be and is hereby remitted to the Labour Court for a re-hearing after the employee Mr. R. Manomano has been joined to the proceedings.” The employee is now party of the proceedings. The applicant has brought the application and has been asked to cite the parties properly. The citation is: MERCY DARE N.O. Applicant AND CHITUNGWIZA MUNICIPALITY 1st Respondent AND RAPHAEL MANOMANO 2nd Respondent The face of the record cites the parties appropriately but the pleadings filed on behalf of the parties were cited as: MERCY DARE N.O. 1st Applicant AND RAPHAEL MANOMANO 2nd Applicant AND CHITUNGWIZA MUNICIPALITY Respondent The citation has been duly corrected. The applicant summarized her findings. She indicated that the matter involved the non-payment of benefits to the 2nd Respondent by the 1st Respondent. The applicant advised the court that parties reached an agreement. As a result of that agreement, a certificate of settlement was signed. The certificate of settlement appears at page 27 of the record, where the following is recorded: “The employer has agreed to pay the claimant the sum of US$44 872,50 for terminal benefits. Payment Plan: US$10 000,00 by 31/7/14 US$ 8 000,00 by 31/8/14 Remaining US$26 872.50 by end of February 2015. This will be in full and final settlement of the dispute. No further claims.” Both parties signed. (In this judgment “Labour Officer” and “Applicant are used interchangeably). The respondent paid the some of instalments. According to the Applicant the balance of US$18 000,00 remains outstanding. In 2017 the 2nd respondent went back to the labour officer (applicant) in order to register the 1st respondent’s failure to honour the balance due to him. By that time, a balance of US$18 872,50 remained outstanding. The 1st respondent told the labour officer that after signing the certificate of settlement, and making some payments it later told 2nd respondent that it could no longer pay the gratuity. Instead, the 1st respondent told the applicant that the 2nd respondent was supposed to pay back to the 1st respondent, the sum of eleven thousand five hundred and seventy six dollars and forty four cents (US$11 576,44) for “overpayments”. The 2nd respondent argued before the labour officer that in terms of Section 138 of the Urban Councils Act, Council, [Chapter 29:15] the 1st respondent could not fix or alter the conditions of service of its employees except with the approval of the Minister responsible for the administration of the Labour Act. It was further argued before the labour officer that in terms of Section 36(1) of the Civil Evidence Act [Chapter 8:01], an admission in civil proceedings shall be admissible in evidence as proof of the fact, whether made orally or in writing. It was the 2nd respondent’s case before the labour officer that the right to receive gratuity accrued to him on the date that he retired, that is 20 February 2014. As such those rights could not be affected by a resolution which Council made on March 3, 2015. Further it was averred that a resolution by Council could not be applied retrospectively and that the law does not allow the taking away of vested rights. Section 17(1)(b) of the Interpretation Act [Chapter 1:01] was cited as authority for that submission. The 1st respondent’s case before the labour officer was that indeed a Certificate of Settlement was signed. However, a justus error occurred in that the 2nd respondent was not entitled to gratuity. The argument was that there was no provision that gratuity had perpetual application. Further it was submitted before the labour officer that gratuity was not part of the 2nd respondent’s contract of employment. Reference was also made to Section 71 (1)d of the Constitution of Zimbabwe with the argument that the Constitution seeks to protect where a right existed. It was also averred that there was no collective bargaining agreement within the first respondent, to that effect. It was also averred that Chitungwiza Municipality paid gratuity at its discretion. It was further averred that where an employee is entitled to receiving a pension, such an employee was not or would not be entitled to gratuity. In support of the case for justus error the court was referred to the case of NATIONAL AND OVERSEAS DISTRIBUTION CORPORATION (PVT) LTD vs POTATO BOARD 1958 (2) SA 437 AD at 469. After analysing the oral and written submissions placed before her, the labour officer found that the 1st respondent was still bound by the Certificate of Settlement which it signed in 2014. It was found that that the figures tendered before her were tendered on behalf of the 1st respondent which figures included gratuity. As proof of its responsibility the 1st respondent went on to pay the 2nd respondent the total sum of $26 000,00 in instalments and one such instalment was made on 18th March 2015. Reference was made to the resolution which the respondent made in 2007. It was the labour officer’s finding that the resolution bound the parties in that it stipulated that employees who had completed ten or more years of service would, on termination, of employment be paid a gratuity after using a formula provided by the 1st respondent. It was also found that there was some Collective Bargaining Agreement which provided that where one is entitled to pension, the same pension is not entitled to gratuity. However, the respondent’s operations were found not to fall under the National Employment Councils with those provisions. It was found that the 2007 Resolution was rescinded on 3 March, 2015. That rescission did not affect what was due to the 2nd respondent because his benefits, part of which had already been paid, were calculated before the rescission of the resolution in question. The labour officer also found it unjust for the 2nd respondent to pay the 1st respondent for alleged overpayments. The case of AGERE v NYAMBUYA 1985 (2) ZLR 336 (S) at 338G – 339G was relied on as the authority for this finding. The labour officer also found that there is a strong presumption against retrospective application of statutes. Reference was made to the case of NKOMO AND ANOTHER v ATTORNEY GENERAL AND OTHERS 1993 (2) ZLR 422 (S) at p429 C where it was held that there is a strong presumption against retrospective construction. The applicant found that justus error cannot be pleaded where the 1st respondent actually gave a breakdown of how the agreed figure was arrived at. It was also found that many other employees has received their terminal benefits inclusive of gratuity and that the 2nd respondent could not be denied what was due to him. It was emphasised that both parties had appended their signatures to the Certificate of Settlement with the 1st respondent undertaking to honour its obligation. Reliance was also placed on the provisions of Section 17(1)(b) and (c) of the Interpretation Act [Chapter 1:01]. The applicant thereafter ruled that the 1st respondent was and continues to be bound by the resolution it made in 2007 meaning that the 1st respondent is obliged to pay the 2nd respondent the outstanding amount. Before this court, it was submitted on behalf of 1st respondent that indeed there was a Certificate of Settlement signed by both parties and certain sums were paid to the 2nd respondent. Mr. Mpamhadzi who appeared for the 1st respondent argued that it was discovered that there was an error in the calculations of the amount due to the 2nd respondent. There was then a mistaken belief that 2nd respondent was entitled to gratuity when he was not so entitled, the argument proceeded. It was submitted that indeed the 1st respondent had passed a resolution in 2007 but that such resolution was only for the years 2006 and 2007. The said resolution it was submitted, did not have perpetual existence and was budgeted with a certain figure in mind for who it would have accrued to. In support of this averment the court was referred to pages 32 and 33 of the record whereat the council minutes with respect to the resolution are captured. It was also submitted that the 2nd respondent who avers that he is owed, must prove it. In support of this submission reliance was placed on the case of NYAHONDO v HOKONYA 1997 (2) ZLR 457 (S). On the averment that some employees were paid gratuity and therefore 2nd respondent cannot be excluded, it was submitted that payment of gratuity to one employee does not entitle the next employee to gratuity. The case of STANDARD CHARTERED v MATSIKA 1997 (2) ZLR 389 (S) was cited as authority for that submission. For that reason it was submitted that the 2nd respondent cannot claim the payment of gratuity. It was averred that after the recalculation, it was found that the benefits due to 2nd respondent were seven thousand six hundred and ninety four dollars and sixty nine cents ($7 694,69) and six thousand seven hundred and twenty eight dollars and eighty seven cents ($6 728,87) in salary arrears. The total of these two amounts were then subtracted from the $26 000,00 which had already been paid to the 2nd respondent. It was then found that the 2nd had been overpaid by a total sum of eleven thousand five hundred and seventy six dollars and forty four cents (USD11 576,44). As such it was submitted on behalf of the 1st respondent the 2nd respondent owes the 1st respondent in this amount. It was also submitted that the legal position is that gratuity is discretionary and cannot be claimed as a right. In support of this submission reliance was placed on the case of BAKO v AIR ZIMBABWE ZLWLC12. This, it was submitted, was a point of law since a deed of settlement was signed. The point being made was that the agreement or deed of agreement or deed of settlement could not was signed on the basis of an error. As such that deed could not be enforced. Reliance was placed on the case of NYIKAVANHU HOUSING COOPERATIVE v MINISTRY OF LOCAL GOVERNMENT HH 369/13 where the case of MCFOY v UNITERD AFRICA COMPANY (1961) 3 ALLER 1169 (MCFOY) is referred to. It was submitted that the insistence on payment by the 2nd respondent is not founded on law. Reference was also made to the case of BMW SOUTH AFRICA (PRIVATE) LIMITED v VAN DER WALT 1999 ZALC 28 for the proposition that fairness is the yardstick in labour matters. It was submitted that this is a case of justus error and the error was reasonable. In support of the defence or plea of justus error reliance was placed on the case of NATIONAL AND OVERSEAS DISTRIBUTION v POTATO BOARD 1958 (2) SA 437 AD at 469. The 2nd respondent’s address was short. He associated himself with the findings by the applicant. He further stated that the 1st respondent had wrongly deducted an amount of $7 694,94 in salaries so he was owed in this amount. 2nd respondent also stated that when he presented the question of these deductions made to his benefits to the applicant, the applicant indicated that it had to be dealt with as a separate matter. The applicant did therefore not determine this issue when 2nd respondent appeared (before her) for the second time. In response to the submissions by 1st and 2nd respondent the applicant indicated that when parties appeared before her for the second time, and the issue of deductions from the benefits was raised, she did not understand where this was coming from. What she was aware of was that the 1st respondent had not honoured the certificate of settlement. After the explanation from the 2nd respondent regarding deductions made to his terminal benefits, it was queried whether it was lawful for 1st respondent to make deductions in a bid to recover what were alleged to be overpayments, and for the employer to proceed to make the deductions without the consent of the employee. The position of the applicant was that what the 1st respondent did was not part of the Certificate of Settlement. This question was raised by the 2nd respondent after the Certificate of Settlement had already been signed. The applicant left the court to exercise its discretion with respect to this amount especially as the 1st respondent had opted to deduct the said amount from the figure which was agreed in the certificate of settlement. The applicant also left the court to decide whether a resolution which was made in 2007 and rescinded in 2015 could affect an employee’s contract which had been terminated in 2014. The facts of this case are largely common cause. I think that the following issues are for determination by this court: Whether or not applicant’s finding that the 1st respondent‘s resolution of 2007 which was rescinded in 2015 should not affect the 2nd respondent’s benefits was properly made. Whether or not justus error should be found in favour of the 1st respondent in the circumstances of this case. Whether or not a deed of settlement as represented by a “Certificate of Settlement” and binding the two parties can be varied unilaterally by one of the parties. 1. WHETHER OR NOT APPLICANT’S FINDING THAT 1ST RESPONDENT’S RESOLUTION OF 2007, AND RESCINDED IN 2015 SHOULD NOT AFFECT 2ND RESPONDENT’S BENEFITS WAS PROPERLY MADE. At pages 32 and 33 are excerpts of minutes of “The Executive Committee of the Municipality of Chitungwiza held at 5:40 pm on Thursday, 22 February 2007, in the Council Chamber, Zengeza”. At page 33 the following appears “N/B The amounts should be equivalent to the items shown above. The long service awards shall be paid on termination of service. An amount of $27 970 000,00 has been set aside in the 2006/7 budget. (b) GRATUITY Due to poor pensions payment to workers it was agreed at a Works Council (sic) that employees will be paid gratuities on termination of service. An amount of $550 000 000,00 (five hundred and fifty million dollars) has been budgeted for. An employee who has completed ten or more years of continuous (sic) shall on termination of employment be paid a gratuity of not less than the amount derived by multiplying the number of completed years of continuous good service by appropriate percentage of his gross salary as set out in the schedule below: 10-14 years 40% 15-19 years 60% 20-24 years 80% 25 years plus 100% Example An employee who has served council for ten years and currently earning $100 000,00 as gross salary would be paid a gratuity benefit as follows: “Gross salary x number of years of service x rate $100 000 x 10 x 40” (Emphasis added) In the above resolution as is set out, there was no time limit with respect to which or what period the gratuity would cover. The resolution was clear that it was arrived at “Due to poor pensions payment paid to workers”. The averment on behalf of the 1st respondent that gratuity would not be paid to an employee who was a recipient of pension has no place in the resolution. In fact the resolution was made specifically to augment workers’ poor pension payments. It was averred on behalf of the 1st respondent that the gratuity only applied for the years 2006 to 2007. This averment cannot stand in the face of page 33 of the record where it is stated that an amount of $27 970 000,00 was set aside for the years 2006/7. Thus the averment to the effect that the gratuity was only for the years 2006 and 2007 is incorrect. It is not supported by facts. It is meant to mislead the court. In 2014 the respondents signed a certificate of settlement which is in all earnesty a deed of settlement. The figures agreed on were supplied by the 1st respondent. This was on 24th July, 2014. The resolution was rescinded in March 2015. In AGERE v NYAMBUYA 1983 (2) ZLR 336 (SC) the Supreme Court held that: “It is a fundamental rule of construction in our law dating probably from Code X 1:14:7, that there is a strong presumption that retrospective operation is not to be given to an enactment so as to remove or in any way impair existing rights or obligations unless such a construction appears clearly from the language used or arises by necessary implication. For instance, where it is expressly retrospective, or deals with past events, or concerns a matter of procedure, practice or evidence.” The learned judge of Appeal went on to quote with approval from CURTIS v JOHANNESBURG MUNICIPALITY 1906 TS 308: “The general rule is that, in the absence of express provision to the contrary, statutes should be considered as affecting future matters only; and more especially that they should if possible be so interpreted as not to take away rights actually vested at the time of their promulgation. The legislature is virtually omnipotent, but the courts will not find that it intended so inequitable a result as the destruction of existing rights unless forced to do so by language so clear as to admit of no other conclusion.” Section 17 of the Interpretation Act [Chapter 1:01] provides for the repeal of an enactment as follows: “17 Effect of repeal of an enactment; Where an enactment repeals another enactment, the repeal shall not – revive anything not in force or existing at the time at which the repeal takes effect; or … affect any right, privilege, obligation or liability acquired, accrued or incurred under the enactment so repealed; or …” And Section 36(1) of the Civil Evidence Act [Chapter 8:01] provides that: “36(1) An admission as to any fact, in issue in civil proceedings, made on behalf of party to those proceedings, shall be admissible in evidence as proof of that fact, whether the admission was made orally or in writing or otherwise.” And Section 138 of the Urban Councils Act provides that: “Notwithstanding anything to the contrary in any other law, no council shall fix or alter the conditions of service of its employees except with the approval of the Minister responsible for the administration of Labour Relations [Chapter 28:01]” The issue for interpretation in casu is the effect of a Council Resolution which was repealed after an agreement had already been concluded. Further, part of the agreement had been executed as expected by both parties. It is clear that the wording of the resolution does not and cannot affect the agreement entered into by the parties in 2014. For that reason the finding by the applicant that the 1st respondent is bound by the terms of the Certificate of Settlement is beyond reproach. The 1st respondent effectively unilaterally varied the terms of a contract it had entered into with the 2nd respondent. That is unlawful. In JOHN TRANOS MATUKUTIRE v TINASHE JOHN MAKWASHA & THREE OTHERS SC 92/21 the Supreme Court was dealing with the parole evidence rule and quoted with approval from the case of UNION GOVERNMENT v VIANNI FERRO-CONCRETE PIPES (PVT) LTD 1941 AD 43 at page 47 as follows: “now this court has accepted the rule that when a contract has been reduced to writing, the writing is, in general, regarded as the exclusive memorial of the transaction and in a suit between the parties no evidence to prove its terms maybe given save the document or secondary evidence of its contents, nor may the contents of such document be contradicted, altered, added to or varied by parole evidence.” Equally in the present matter the terms of the certificate of settlement cannot be varied. The conduct of the 1st respondent was therefore irregular. WHETHER JUSTUS ERROR MUST BE FOUND IN FAVOUR OF 1ST RESPONDENT In O.D. MCHECHESI v MICHAEL HARVEY FIELD N.O. SC 132/97 the Supreme Court had this to say: “What about justus error? The first point to be made is that this is a difficult ground to establish. As appears from the many cases that have followed the decision of DE VILLERS JP IN CHILDERLEY ESTATE STORES v STANDARD BANK OF S.A. LTD OPD 163, the “just error” must be an error by the court, induced by a non-fraudulent misrepresentation to the court by the party obtaining the judgment. Even then, apart from rare and unusual circumstances, such an error does not justify rescission. See DEARY v DEARY 1971 (1) SA 227 (C) at 230 C-E; MUKUNDEDZVITI v MUTASA 1990 (1) ZLR 342 (HC)at 345 F-347 H” In DEARY v DEARY 1971 (1) SA 227, it was stated (headnote) that: “Rule 42 of the Uniform Rules of the Supreme Court does not alter the common law to the effect that a non-fraudulent misrepresentation including justus error on the part of the Court is not a ground for setting aside a judgment induced by such error.” In ZIMBABWE ELECTRICITY SUPPLY AUTHORITY v DARRYL SMITH AND FIFTY-FIVE OTHERS SC 9/05 the Supreme Court quoted with approval from GEORGE v FAIRMEAD (PTY) LTD 1958 (2) SA 465 (A) where FAGAN CJ stated as follows at 471 A-D: “When can an error be said to be justus for the purpose of entitling a man to repudiate his consent to a contractual term? As I read the decisions, our Courts in applying the test, have taken into account the fact that there is another party involved and have considered his position. They have in effect, said: Has the first party – the one who is trying to resile – been to blame in the sense that by his conduct he has led the other party, as a reasonable man, to believe that he was binding himself?... If his mistake is due to a misrepresentation, whether innocent or fraudulent, by the other party, then of course, it is the second party who is to blame and the first party is not bound.” In NATIONAL AND OVERSEAS DISTRIBUTORS CORPORATION (PTY) LTD v POTATO BOARD 1958 (2) SA 473 SCHREINER JA considered the effect of a unilateral mistake on a contract and said the following at 479 E-H: “If the respondent had been a natural person who had accepted a tender according to its terms, there is no doubt that a contract would have been made when the acceptance was communicated to the tenderer, by posting it. It would not be possible for such a natural person, if he repudiated, to escape liability by proving that he had posted the wrong letter or the like. That follows from the generally objective approach to the creation of contracts which our law follows … No other approach would be consistent with fairness or practicality. Our law allows a party to set up his own mistake in certain circumstances in order to escape liability under a contract into which he has entered. But where the other party has not made any misrepresentation and has not appreciated at the time of acceptance that his offer was being accepted under a misapprehension, the scope for a defence of unilateral mistake is very narrow, if it exists at all. At least the mistake (error) would have to be reasonable (justus) and it would have to be pleaded”. (Emphasis added). In UNIVERSITY OF ZIMBABWE v GUDZA 1996 (1) ZLR 249 (S), the Supreme Court held that: “Generally speaking, an offeror cannot escape liability by establishing that he made the wrong offer which was accepted by the offeree: VAN RYN WINE & SPIRIT CO, v CHANDOS BAR 1928 TPD AT 417 AT 424-5. In SOUTH AFRICAN RAILWAYS AND HARBOUR V NATIONAL BANK OF SOUTH AFRICA LTD 1924 AB 704 at 715, cited with approval in Irvine & Johnson (SA) Ltd V Kaplan 1940 CPD 647 at 650 WESSELS JA said: “The law does not concern itself with the workings of the minds of parties to a contract, but with the external manifestations of their minds. Even, therefore, if from a philosophical stand point the minds of the parties do not meet, yet, if by their acts their minds seem to have met, the law will, where fraud is not alleged, look to their acts and assume that their minds did meet and that they contracted in accordance with what the parties purport to accept as a record of their agreement. This is the only practical way in which courts of law can determine the terms of a contract. … …the law will only attach a limited category of mistakes to the quality of justus, and the degree of fault attributable to the person making the error is of supreme importance in the determination of whether or not a mistake is justus. The mistaken party will not be permitted to rely on the absence of the consensus if his mistake was due to his own fault.” (Emphasis added). In casu the figures which were presented before the applicant were calculated by the 1st respondent. It was not guess work. It cannot suddenly be a mistake which amounts to justus error. There is no reasonable explanation that this should be so. A resolution was made. The benefits were calculated during the existence of that resolution. As indicated in the above, it cannot be effected retrospectively. Further an agreement entered to by consent cannot be varied unless there is a reasonable explanation. The explanation by the 1st respondent has been rejected by the Court. If consideration is had to what the authorities say, a case for justus error has not be made. The question of justus error cannot and does not, under the circumstances of this case arise. The deductions on the 2nd respondent’s benefits were irregular, unilateral and therefore unlawful. The 2nd respondent must be reimbursed the $6 946 unlawfully deducted. As for the assertion that the 2nd respondent owes the 1st respondent an amount in excess of eleven thousand dollars, again the calculations appear to have been made in bad faith and unilaterally and contrary to the terms of the deed of settlement. That was illegal. This will be commented on below. UNILATERAL VARIATION OF CONTRACT (CERTIFICATE OF SETTLEMENT) The parties entered into an agreement. The labour officer questioned whether the 1st respondent could unilaterally make deductions from the 2nd respondent’s terminal benefits without 2nd respondent’s consent. In AIR ZIMBABWE (PVT) LTD v ZENDERA & ORS 2002 (1) ZLR 132 (S) @ 135 (H) the Supreme Court stated that: “A contract having been concluded between the appellant and the respondents, it could not legally be repudiated by either party unilaterally.” In casu the 2nd respondent could not and therefore cannot unilaterally vary what was agreed to in the certificate of settlement (JOHN TRANOS MATUKUTIRE v TINASHE JOHN MAKWASHA & THREE OTHERS (above). In view of the foregoing, I find that the ruling made by the applicant was properly made and must be confirmed and honoured. The Applicant asked the Court to exercise its discretion with respect to the deduction unilaterally made and by the 1st respondent. The 1st respondent is the one who has transgressed by unilaterally making deductions from what is due to 2nd respondent. In the spirit of fairness and equity, that cannot be ignored. It has already caused hardship on the 2nd respondent. This is why 2nd respondent is seeking relief. The 1st respondent cannot benefit from its own wrong doing. The sum must be paid back to the 2nd respondent. In view of the foregoing it is ordered that: The Draft Ruling and order made by the labour officer Mercy Dare on 29 March 2017 be and is hereby confirmed with amendments. The 1st respondent, Chitungwiza Municipality be and is hereby ordered to pay the 2nd respondent Raphael Manomano the total of USD$18 872,50 calculated in terms of the official ZWL exchange rate within thirty(30) days of receipt of this Order. The 1st respondent be and is hereby ordered to reimburse the 2nd respondent R. Manomano the amount of $7 694,94 which it unlawfully deducted from the 2nd respondent’s benefits and any other sums which the 1st respondent unilaterally deducted or withheld from the 2nd respondent. Such reimbursement be made within 30 days of receipt of this Order. The 1st respondent pays the costs of suit. MATSIKIDZE ATTORNEYS AT LAW – 1st Respondent’s legal practitioners