Canape Investments (Private) Limited v Wilson Pasipanodya N.O. & 6 Ors

### Preamble
Judgment No. SC 83/19 1
Civil Appeal No. SC 449/15
REPORTABLE (78)
10
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REPORTABLE	(78)

CANAPE     INVESTMENTS     (PRIVATE)     LIMITED

v

WILSON     PASIPANODYA     N.O.     (2)     STEPHEN     TARAMBWA     (3)    NELSON     MLANDWA     (4)     TEA     SIANKUKA     (5)     NDABENHLE     MAHLANGU     (6)     NKULULEKO     SIZIBA     (7)     SIMILE     MKANDLA

SUPREME COURT OF ZIMBABWE

GOWORA JA, MAVANGIRA JA & BHUNU JA

HARARE, 18 February 2016

T. Mpofu, for the appellant

B. Magogo, for the second to the seventh respondents

MAVANGIRA JA:	This is an appeal against the whole judgment of the Labour Court wherein an application for condonation of the failure to timeously file an application for review was dismissed with costs.

After hearing both parties we allowed the appeal and made the following order:

The appeal be and is hereby allowed with costs.

The judgment of the court a quo be and is hereby set aside and substituted with the following:

The applicant’s failure to timeously file an application for review is hereby condoned.

The matter be and is hereby remitted for determination of the review on the merits.

The Court indicated that the reasons for this judgment were to follow. These are they:

FACTUAL BACKGROUND

The facts of the matter may be summarized as follows.  The second to the seventh respondents (the respondents) were employed by the appellant. A dispute arose relating to an alleged unilateral variation by the appellant of their contracts of employment with regard to unpaid overtime and other dues and employee benefits that the respondents believed they were entitled to.

The dispute came before an arbitrator, one Mr W. Pasipanodya, the first respondent herein. On 28 October 2013 the arbitrator wrote to the parties to call for a hearing on 4 November 2013. The appellant’s representative, retired Justice Smith, was not available on the given date on account of the short notice. Repeated attempts were made by way of email communication to make arrangements in advance to have the hearing postponed to another date. Eventually, on 1 November 2013 retired Justice Smith managed to talk with the arbitrator over the phone and the arbitrator agreed to postpone the matter.

As matters turned out, on 4 November 2013 the matter was not postponed. Rather, on 22 November 2013, the appellant received the respondents’ statement of claim. On 11 December 2013, appellant received a letter from the respondents advising it that the arbitrator had proceeded to hear the respondents on 4 November 2013 in what was termed a “pre-arbitration hearing.” The letter called on the appellant to file a statement of defence.

The appellant responded by letter dated 12 December 2013 asking about the results of the “pre-arbitration hearing” and informing the respondents and the arbitrator that its offices would be closed for the festive season from 13 December 2013 to 13 January 2014, and that the consultant attending to the matter on their behalf would be out of town until 16 January 2014. The appellant asked for these factors to be considered in the determination of how the matter was to be dealt with going forward.

It is the appellant’s contention that the arbitrator instead wrote to the respondents advising them to apply for a default judgment which the respondents duly did. The appellant contends that this application was never brought to its attention and consequently it could not and did not attend to it.

In spite of the appellant making known its unavailability, the arbitrator proceeded with the matter in the appellant’s absence culminating in an award that was issued on 14 January 2014. The arbitrator recorded the appellant as being in willful default stating that the respondents had served their statement of claim on the appellant on 22 November 2013, to which the appellant did not respond. Consequently, the arbitrator made the following award in favour of the respondents:

“Whereas the Respondent having been properly served with Claimant’s Statement of Claim on the 22nd November 2013 and a subsequent letter having been written and served on the Respondent on the 12th December 2013 by the Claimant; there having been no response from the Respondent, I find that the Respondent is in willful default. I accordingly award as follows

The Respondent pays the Claimants their unpaid overtime as well as overtime worked from July 2012 (after the introduction of the new contracts) to date since the respondent has been forcing the Claimants to work for 10 hrs as follows:-“  (sic)

Following immediately after the above preamble appear computations relating to the individual claimants. Thereafter, the following appears:

“2. The Respondent is ordered to cease perpetrating the foregoing UNFAIR labour practices forthwith, that is to say:

The unilateral contracts of employment introduced in July 2012 be and are hereby declared to be null and void ab initio.

Consequently the 2nd, 3rd, and 5th Claimants are no longer bound by the null and void contracts.

The Respondent be directed to renegotiate with the Claimants with a view to incorporating all the terms of their current verbal contracts into the new contracts.

The respondent pays the Claimants their annual bonuses for the year ending December 2012.

Within seven (7) days of this order, the Respondent to provide all health and safety amenities required to be used for work by the Claimants and the items must be of a standard and quality approved by the representatives of the workers or a health and safety committee composed of at least half of the Claimants.

The Respondent to provide bedding, tents hotel standard food approved by the representative committee of the workers, a maid to attend to the employees’ laundry and cooking.

The Respondent be directed to pay each Claimant US$1000 as compensation for the personal tents they are using for official business.

3. The Respondent be ordered to pay the Claimants cash in lieu of their leave days forfeited from 2010 to 2012 as well as those forfeited after the Christmas annual shutdown of 2011 – 2012.

4. The Respondent be ordered to pay interest at the prescribed rate on all the payments referred to in (a) – (c) above at a rate of 5% per annum.”

Dissatisfied with the award, the appellant filed an application for review in the court a quo contending that the arbitrator erroneously dealt with the matter as unopposed. The appellant conceded that it did not file a statement of defence but explained that this was because it was never advised of the directions allegedly given by the arbitrator. The submission was also made on behalf of the appellant that even in the absence of its statement of defence, the course adopted by the arbitrator of granting a default judgment was not proper as it was contrary to the provisions of Article 25 (b) and (c) of the UNCITRAL Model Law annexed to the Arbitration Act, [Chapter 7:15] (hereinafter called the Arbitration Act), which provides:

“ARTICLE 25

Default of a party

Unless otherwise agreed by the parties, if, without showing sufficient cause—

…;

the respondent fails to communicate his statement of defence in accordance with article 23 (1), the

arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations;

(c) any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it;”

The appellant further alleged that it was neither informed of the pre-arbitration hearing, nor served with the arbitrator’s directions. Furthermore, that it was never given notice of the substantive hearing that resulted in the award. The appellant sought that the arbitral award be set aside.

It is common cause that the appellant having become aware of the award on 20 January 2014, was out of time by eight days in filing the application for review. The respondents raised this as a point in limine in their papers but the appellant took no action before the date of trial. It was only at the hearing before the court a quo, that the legal practitioner for the appellant made an oral application for condonation of the late noting of the application for review. The legal practitioner for the applicant confessed that he erroneously believed that he had thirty days within which to file the application, and not twenty-one days.

The court a quo found that the delay of eight days was not inordinate. However, it did not accept as reasonable the explanation proffered by the legal practitioner. The court a quo also took issue with the fact that the preliminary issue having been raised in the respondents’ heads of argument, the appellant nevertheless waited until the day of the hearing to seek condonation from the bar.

With regard to prospects of success the court a quo was persuaded by the argument presented on behalf of the respondents to the effect that the appellant would have been better advised to make an application for rescission of the default judgment as opposed to proceeding by way of review. For these reasons, the court a quo dismissed the application for condonation.

THIS APPEAL

The appellant appealed to this Court against the dismissal of the application for condonation. We allowed the appeal and issued the order appearing earlier at pp 1 and 2 of this judgment.

Whether the court a quo grossly misdirected itself in dismissing the application for condonation

It is trite that appellate courts are slow to interfere in the exercise of discretion by lower courts unless there has been a misdirection so gross that it requires the intervention of a superior court.

The court a quo`s finding was that the appellant ought to have sought rescission of the arbitral award from the Arbitrator instead of applying for review of that award. It stated:

“There is a default judgment. The best placed person to hear the application where good cause will be shown, is the one who heard the matter in default. A higher court is placed in the embarrassing situation of assessing the veracity of facts that it has no knowledge of. I believe this is why a party has to apply for rescission of judgment before the tribunal before which it is alleged to have defaulted.”

The jurisdiction and powers of the Labour Court are contained in s 89 (1) and (2) of the Labour Act. S 89 (1) in relevant part provides as follows:

89 Functions, powers and jurisdiction of Labour Court

The Labour Court shall exercise the following functions—

hearing and determining applications and appeals in terms of this Act and any other enactment;

….

(d1) exercise the same powers of review as would be exercisable by the High Court in respect of labour matters;

Section 89(1)(d1) of the Labour Act endows the Labour Court with “the same powers to review any inferior proceedings in labour matters on the same grounds of review as may be invoked by the High Court in the exercise of its powers of its powers of review in relation to other matters not embraced by the Labour Act.”

It is clear to me that the Labour Court has the jurisdiction to entertain an application for review notwithstanding the powers of rescission that may be reposed in the arbitrator by virtue of s 98(9) as read with s 92C of the Labour Act. In my view the court a quo erred in making a finding that the appellant had to apply to the arbitrator for rescission of the arbitral award and that it could not entertain the application for review. This is particularly so when regard is had to the appellant’s grounds for review raised in the court a quo.

The court a quo also erred in its finding that the application for review had no prospects of success. The appellant’s contention was that it was not served with a notice of the arbitration hearing that was held after 4 November 2013 and that it was therefore was not afforded the opportunity to appear or present its argument. No evidence was adduced to rebut this. The appellant’s argument that its right to be heard was thereby violated resulting in a flouting of the principles of natural justice by the arbitrator cannot be glossed over or ignored.

The appellant also repeatedly asserted that it believed the telephone call to the arbitrator resulted in the postponement of the proceedings. No meaningful challenge was mounted against this assertion.

The right to be heard encapsulated in the audi alteram partem principle is one of the cardinal rules of natural justice. It demands that a party be heard before an adverse decision is made against it. In Attorney General v Mudisi & Ors 2015 (2) ZLR 214 (S) at 219 E-G the court held that:

“One of the fundamental precepts of natural justice, encapsulated in the maxim audi alteram partem, is the right of every person to be heard or afforded an opportunity to make representations before any decision is taken that might impinge upon his rights, interests or legitimate expectations. This precept of the common law forms part of the larger duty imposed upon every administrative authority to act legally, rationally and procedurally. See the Telecel case (supra) at 20-22 of the cyclostyled judgment. That common law duty is now codified in s 3(1)(a) of the Administrative Justice Act  as the duty to “act lawfully, reasonably and in a fair manner”. The obligation to act in a fair manner is further expanded in s 3(2) of the Administrative Justice Act to require the giving of “adequate notice of the nature and purpose of the proposed action” and “a reasonable opportunity to make adequate representations …”

Over and above the general common law principles of fairness, the arbitrator was also bound by Article 24 of the Arbitration Act which codifies these principles of basic fairness including advance notice, discovery of documents and the right to be represented.

The first respondent neither accepted nor denied the allegation by the appellant which is the basis of the application for review. In issuing the award, the arbitrator makes reference to the respondents’ statement of claim and a letter he says was written to the appellant on 12 December 2013. The contents of that letter are not divulged. Article 24(2) of the Arbitration Act requires that parties shall be given sufficient advance notice of a hearing.

The appellant’s reference to the case of Zimbabwe Banking Corporation v Masendeke 1995 (2) ZLR 400 (S) at 402D is apt. It was stated therein:

“Willful default occurs when a party, with full knowledge of the service or set down of the matter, and of the risks attendant upon default, freely takes a decision to refrain from appearing …”

The court a quo ought to have considered the question of wilful default in determining the prospects of success of the review. It did not and thereby misdirected itself.

The court a quo adopted an excessively technical approach at the expense of the real issues between the parties. It had to deal with the application for review.

The court a quo erred in dismissing the application for condonation of late filing of the review application. It misdirected itself in holding that the application had no prospects of success as it did not consider the issues that were before it. The finding by the court a quo that the appellant had adopted the wrong procedure is fundamentally flawed and ought to be interfered with by this Court.

As already noted above, the procedure adopted by the appellant in approaching the court a quo seeking a review of the proceedings before the arbitrator was justified and was also proper. The purpose of review proceedings is to examine the procedural correctness or otherwise of the process leading to a decision. In review proceedings the court does not normally look into the substantive correctness of a decision but the procedural propriety of the proceedings.

It is the essence of the appellant’s complaint a quo that there were procedural irregularities that ought to have the effect of vitiating the proceedings before the arbitrator. The appellant’s challenge was in respect of the procedural fairness of the decision. The review powers of the Labour Court in s 89 (1) (d1) of the Labour Act were designed for such applications. Accordingly, the appeal must succeed.

DISPOSITION

The court a quo is properly placed to inquire into the merits of such an application. It is for these reasons that we made the order that is recorded at the beginning of this judgment.

GOWORA JA		I agree

BHUNU JA			I agree

Costa & Madzonga, appellant’s legal practitioner

Makuwaza & Magodo Attorneys, respondents’ legal practitioners