Savanna Pharmaceuticals (Private) Limited v Judith Marera & Tinei Chimusoro

### Preamble
Judgment No. SC 24/19
Civil Appeal No. SC 47/17
1
REPORTABLE (48)
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REPORTABLE	(48)

SAVANNA     PHARMACEUTICALS     (PRIVATE)     LIMITED

v

(1)	JUDITH     MARERA     (2)     TINEI     CHIMUSORO

SUPREME COURT OF ZIMBABWE

HLATSHWAYO JA, BHUNU JA & BERE JA

HARARE, SEPTEMBER 10, 2018 & JUNE 18, 2019

T. Mpofu, for the appellant

First respondent in person

W. Nyika, for the second respondent

BHUNU JA: The appellant is a former employer of the respondents. On 12 March 2012 the first respondent commenced employment with the appellant as a Human Resources Manager. The second respondent commenced employment with the appellant on 1 March 2012 as an Accounts Manager. The respondents signed written contracts of employment agreeing to serve a probationary period of three months. During that period the notice period for termination of employment was 24 hours.

It is not in dispute that upon successful completion of probation, the respondents would be engaged on fixed term contracts of six months. The fixed term contracts were renewable based on the respondents` performance and that of the organization.

The respondents served their probationary periods as per their contracts of employment which were scheduled to expire on 12 June 2012 and 31 May 2012 respectively. On 2 July 2012 the respondents received letters from the appellant which read thus;

“As per our conversation on 29 June 2012 regarding your inability to meet the performance expectation associated with your job within the 90-day probationary period, we have decided to extend your probationary period. Your probationary period will be extended to 30 September 2012.”

The letter shows that on 29 June 2012, the appellant through its Chief Operations Officer had reviewed and discussed the essential job functions and performance expectations with the respondents. Also, reasonable solutions were identified which would improve the respondents` performance. It is pertinent to note, however, that the said meetings of 29 June 2012 were held after the expiry of the respondents` probationary periods. The appellant alleged that the extension of the probationary period was consented to by the respondents.

On 10 August 2012 the second respondent was served with a letter of suspension from duty on allegations of unsatisfactory work performance. However, the allegations came to nothing as there was no outcome to the investigations and the second respondent returned to work. On 27 September 2012 and on 28 September 2012 the appellant wrote letters to the second and first respondents respectively, advising them that their employment contracts had been terminated because of their unsatisfactory performance throughout the probationary period.

The respondents were aggrieved by the appellant`s decision to terminate their contracts of employment. Resultantly, they referred the matter for conciliation and finally to arbitration. The arbitrator found that the respondents had been unfairly dismissed and ordered that they be reinstated or paid damages in lieu of reinstatement, if reinstatement was no longer possible.

The appellant was aggrieved by the decision of the arbitrator and it appealed to the Labour Court. On the date of the hearing, the second respondent was in default. The first respondent presented to the court a quo an affidavit deposed to by the second respondent. The affidavit was to the effect that the second respondent was not able to attend the proceedings and she mandated the first respondent to represent her. The appellant applied for a default judgment to be entered against the second respondent.

The court a quo declined to grant the application for default judgment and went on to determine the matter on the merits. The court a quo found that the appellant did not communicate with the respondents before the expiry of the probationary period that they had failed to perform satisfactorily. As such the respondents were now employed on fixed term contracts of six months when the appellant terminated their contracts of employment. It therefore follows that the respondents` contracts could not be terminated on 24 hours` notice as was done by the appellant. To that end, the court a quo upheld the decision of the arbitrator and dismissed the appeal. The appellant noted an appeal against the judgment of the court a quo on four grounds, namely:-

The Honourable Judge of the court a quo erred and grossly misdirected himself at law in finding that first respondent could represent respondent at the Labour Court contrary to the provisions of s 92 of the Labour Act [Chapter 28:01];

The court a quo erred at law in concluding that the Respondents’ contracts of employment had become substantive upon expiry of the probation period merely because the Appellant had not yet communicated the outcome of the probation;

The court a quo grossly misdirected itself on the facts which misdirection amounts to an error at law in failing to consider that confirmation of successful completion of probation was a condition precedent to the Respondents being substantively employed on fixed term contracts;

The court a quo grossly misdirected itself on the facts which misdirection amounts to an error at law in finding that the first and second respondents would have been given warnings about their performance during the probation period.

In respect of the first ground of appeal Mr T Mpofu for the appellant argued that the second respondent was in default in the court a quo and she could not be represented by the first respondent. He argued that doing so would constitute performance of reserved work and would be unlawful in terms of the Legal Practitioners Act [Chapter 27:07].

I agree with the appellant`s argument only to the extent that the second respondent was in default, she was not present for the hearing. That being the case the question to be asked is how should the Labour Court proceed where a litigating party is in default on the day of hearing before considering the correctness or otherwise of the reasoning of the court a quo in declining the application for a default judgment.

The answer to the above posed question lies in Rule 37 of the Labour Court Rules 2017. This rule gives a guideline to the Labour Court on how to proceed where a litigating party is in default. The rule reads thus:

“37. Default judgment entered where party or witness fails to appear

Where a party fails to appear at a hearing, the Court may, according to the nature of the case, or as the justice of the case requires—

(a) grant default judgment;

(b) proceed with the hearing on the merits; or

(c) postpone the matter.”

Rule 37 of the Labour Court Rules is a replica of r 30 of the repealed Labour Court Rules, Statutory Instrument 59 of 2006. The Rule is clear, where a party is in default, the Labour Court has a discretion as to the course of action to take. It may grant default judgment, proceed with the hearing on the merits or postpone the matter according to the nature of the case or as the justice of the case requires. It is without doubt that guided by r 37 (b) the court a quo in the exercise of its discretion proceeded to determine the matter on the merits in respect of the second respondent.

It is trite that an appellate court can only interfere with the lower court`s exercise of judicial discretion on limited grounds. A lower court`s exercise of discretion can only be interfered with in exceptional cases where it has been exercised in an unreasonable manner. This position was laid down in clear terms in Barros & Anor v Chimphonda 1999 (1) ZLR 58 (S) at page 62G to 63A as follows:

“The attack upon the determination of the learned judge that there were no special circumstances for preferring the second purchaser above the first — one which clearly involved the exercise of a judicial discretion — may only be interfered with on limited grounds. See Farmers‘Co-operative Society (Reg.) v Berry 1912 AD 343 at 350. These grounds are firmly entrenched. It is not enough that the appellate court considers that if it had been in the position of the primary court, it would have taken a different course. It must appear that some error has been made in exercising the discretion. If the primary court acts upon a wrong principle, if it allows extraneous or irrelevant matters to guide or affect it, if it mistakes the facts, if it does not take into account relevant some (sic) consideration, then its determination should be reviewed and the appellate court may exercise its own discretion in substitution, provided always (sic) has the materials for so doing. In short, this court is not imbued with the same broad discretion as was enjoyed by the trial court.” (my emphasis)

It appears to me that the court a quo exercised its discretion judicially which does not warrant any interference by this court. In considering the justice of the case the court a quo did not ignore the fact that the respondents had jointly brought a suit against the appellant and were successful at the arbitration stage. The court a quo correctly noted that the circumstances under which the respondents’ employment contracts were terminated were similar and as such similar issues arose for determination which required to be addressed at the same time. It is therefore clear that the respondents had common interests and it was in the best interest of justice to adjudicate the matter jointly.

The second respondent despite being absent on the day of the hearing had filed heads of argument stating her case and placing before the court a quo arguments as to why the appeal should not be allowed. Further to that, she did not absent herself in silence. The second respondent deposed to an affidavit which informed the court a quo of her default and gave a reason for such default. This shows that the second respondent was actively involved in the matter and was very much interested in the outcome of the matter. To further justify the court a quo`s decision, no arguments were made on behalf of the appellant with regards to the prejudice that the appellant would suffer if the court a quo made a finding on the merits in respect of the second respondent who was in default.

Further to the above, the general rule is that labour matters should not be disposed of on technicalities but on the merits. This position was set out by McNally JA in Dalny Mine v Banda 1999 (1) ZLR 220 (S) at 221 B-F:

“As a general rule it seems to me undesirable that labour relations matters should be decided on the basis of procedural irregularities. By this, I do not mean that such irregularities should be ignored. I mean that the procedural irregularities should be put right.” (See also Olivine Industries (Pvt) Ltd v Shonhiwa & Ors SC-18-15).

The court a quo was well within its rights to determine the matter on the merits as that was in the best interest of justice. In this regard, the first ground of appeal lacks merit and ought to be dismissed accordingly.

Turning now to the appellant`s second to fourth grounds of appeal, the law regulating probationary employment contracts is now settled in this jurisdiction. It is permissible under employment laws for an employer to engage an employee on a probationary employment contract. The purpose of probation is to give the employer an opportunity to evaluate the employee`s performance before confirming employment. GUVAVA JA in St. Giles Medical Rehabilitation Centre v Patsanza SC-59-18 summarized the principles guiding probationary employment as follows:

“It is apparent from the above that firstly, the employee must successfully complete the period of probation before he can be permanently employed. Secondly, that the probationary period is a separate and distinct contract. Thirdly, the contract of permanent employment only comes into operation once an employee has successfully completed the period of probation and finally, it is reciprocal in nature. In other words if an employee is dissatisfied with the employer he may also terminate the employment by giving the requisite notice.” (my emphasis)

To avoid abuse of probationary employment contracts, the Labour Act [Chapter 28:01] provides that there can only be one, non-renewable probationary period.  Section 12(5) of the Labour Act provides as follows:

“(5) A contract of employment may provide in writing for a single, non-renewable probationary period of not more than—

(a) one day in the case of casual work or seasonal work; or

(b) three months in any other case;

during which notice of termination of the contract to be given by either party may be one week in the case of casual work or seasonal work or two weeks in any other case.” (my emphasis)

The Labour Act permits only one probationary period which is non- renewable. This means that probation cannot be extended. In the words of Madhuku L in his book Labour Law in Zimbabwe,(Weaver Press, Harare, 2015) at page 44;

“In terms of the Labour Act, there can only be one, non-renewable probationary period. The maximum length for a probationary period is one day for casual or seasonal contracts and three months for all other contracts. This means that at the end of a probationary period, the employer has only two choices: either allow the probationary contract to lapse and let the employee go, or enter into a second employment contract with the employee. There is no room for renewal of the probationary period.” (my emphasis)

In view of the above, an employer who engages an employee on a probationary contract must ensure that at the expiry of the probationary period the employee is notified whether he or she  has successfully completed probation and if employment is to be confirmed. If the employee is unsuccessful the employer is obliged to communicate as much and the probationary contract terminates as there is no room to extend or renew it.

In casu the respondents served their probationary periods of three months and at the expiry of such the appellant did not communicate whether they had successfully completed their probation. The respondents continued to come to work after the expiry of their probationary periods. Weeks after the expiry of their probationary periods the appellant engaged the respondents in meetings wherein it reviewed their performance and communicated that they had not performed to the employer`s expectations. On 2 July 2012 the appellant wrote to the respondents informing them of its decision to extend the probationary periods.

The issue that arises for determination is what the respondents` employment status was after the expiry of their probationary periods given that no communication was made as to whether they had successfully completed probation. Put differently, did the respondents become employees on fixed term contract automatically after the expiry of their probation due to the appellant`s failure to timeously communicate the outcome of the probation?

The terms of the respondents` employment contract read thus;

“Probationary Period

Probationary period is 3 months. Notice in that period is 24 hours.

Contract Period

On successful completion of probation, contract will be valid for 6 months and renewable bases on your performance and that of the organisation.” (my emphasis)

As correctly pointed out by GUVAVA JA in St Giles Medical Rehabilitation Centre (supra), the above contract presents two distinct separate contracts. That is to say, the Probationary contract and the substantive fixed term contract of 6 months. Upon a proper interpretation of the parties’ contract of employment the substantive contract was conditional upon a successful completion of the probationary contract. In other words, the probationers could not progress to the substantive contract unless they had successfully completed their probationary contract.

It is clear from the wording of the contract itself, that the parties were ad idem in respect of this vital precondition of this fixed term contract. This is so notwithstanding that the appellant was labouring under a mistake of the law that it could extend the probationary period oblivious of the provisions of s 25 (5) of the Act which prohibits the extension of any probationary period. There is however, no legal or factual basis upon which the appellant could extend the probationary period when the law prohibits it and the written contract does not provide for such an extension.

By allowing the respondents to unconditionally progress to the substantive fixed term contract, the appellant’s conduct amounted to a fictional fulfilment of the precondition for the consummation of the substantive fixed term contract. That conduct undoubtedly gave the impression to the proverbial reasonable bystander that the appellant allowed the respondents to embark on the substantive fixed term contract because they had successfully completed their probationary period. This is so because in such a case, the proverbial reasonable man and the courts do not concern themselves with the minds of the contracting parties but the outward manifestation of their conduct.  In the famous case of South African Railways & Harbours v National Bank of SA Ltd 1924 AD 704 at 715 – 6  the court held that:

“The court does not concern itself with the working of the minds of the parties to a contract but with the external manifestations of their minds. Even therefore if from a philosophical standpoint 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 to what the parties purport to accept as a record of their agreement. This is the only way courts can determine the terms of a contract”|. (My emphasis).

That line of reasoning is in consonant with the doctrine of quasi mutual assent where if a party so conducts himself in a way that leads the other party to believe that he was consenting to a contract then, he is bound by his conduct. See Smith v Hughes (1871) 6 QB 597 at 607 where BLACKBURN J says:

“If whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party upon that belief enters into a contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms”.

In this case the parties by their conduct and free volition fulfilled all the essential elements of a valid contract of employment particularly offer and acceptance. The appellant offered the respondents the fixed term contracts by conduct when it allowed them to commence work on the 6 months fixed term contract notwithstanding the alleged unsatisfactory work performance during the currency of the probationary period. The respondents in turn accepted the appellant’s offer by conduct when they commenced work in terms of the offer.

By offering the respondents work on the fixed term contract at the expiration of the probationary period with the full knowledge that their performance was unsatisfactory, the appellant must be deemed to have waived its rights to terminate their respective contracts of employment at the expiration of their probationary contracts. This is so because at the expiration of the probationary period the appellant had an election to make, ether to terminate or to let them progress to the next contract of fixed term. It chose to let them proceed to the fixed term contract. Having made that election it will be absurd and a violation of the doctrine of sanctity of contract for the appellant to dismiss the respondents on the basis of conduct during the currency of the expired probationary period.

The mere fact that the appellant was ignorant of the fact that the law prohibits the extension of any probationary period cannot provide a defence for the appellant because it is a fundamental principle of our law that ignorance of the law is no defence. See Ncube v Ndlovu 1985 ZLR 281 (SC).

It is equally of no benefit to the appellant that the respondents may have consented to the unlawful extension of their respective probationary periods because such extension was vitiated by illegality and therefore a nullity. A nullity cannot be extended,

Though not specifically pleaded the appellant’s conduct exposed it to the defence of estoppel which tends to hunt in pairs with the other defences of waiver and quasi mutual assent.

From the above, it is without doubt that for the respondents to be engaged on a fixed term contract of six months they should have successfully completed their probation. At the expiry of the probation period the respondents ceased to be employees on probation because s 12(5) rules out extension or renewal of a probationary period. Certainly therefore, the respondents were no longer employees on probation.

For the respondents to be employed on a fixed term contract, they should have successfully completed their probationary period. The only way to know that they had successfully completed their probationary periods was communication of same from the appellant at the end of the probationary period. No such communication was made by the appellant. In Kazembe v Adult Literacy Organisation S-173-94 MACNALLY JA had the following to say:

“A period of probation by its nature presupposes that during the period of probation the probationer is on trial. At the end of the period stipulated, if there is dissatisfaction by the person placing an individual on probation common sense dictates that he is entitled to elect on whether to continue to employ the probationer or not.” (my emphasis)

In casu, at the end of the probationary period the appellant did not communicate its dissatisfaction, the respondents continued to provide their services to the appellant for weeks without receiving any communication from the appellant. The appellant did not terminate the respondents` contracts during the three months probationary period and continued to accept their services after the expiry of the probationary period. In this regard, the appellant tacitly confirmed the respondents` employment hence they were now employed on fixed term contracts.

The appellant finally decided to communicate its intention to extend the probationary period on 2 July 2012, weeks after the expiry of the probationary period. The appellant`s decision was a nullity because s 12 (5) of the Labour Act prohibits such extension and renewal of the probation period. In St. Giles Medical Rehabilitation Centre (supra) the court in concluding that a probationary period cannot be extended stated as follows:

“I do not accept Mr Banda’s submission that the appellant could extend the probationary period. The appellant relied on the position in Kwangwari v Commercial Bank of Zimbabwe (supra) where the court allowed the employer the discretion to extend a probationary period without the employee assuming substantive appointment to a permanent position. It is apparent that at the time that NDOU J dealt with the Kwangwari case, s 12(5) of the Labour Act had not come into operation.  This case came before the High Court in 2002. Section 12(5) of the Act was only enacted by amendment 17/2002 which was published and came into operation on 7 March 2003.”

The appellant sought to convince the court that the extension was with consent of the parties because they acknowledged receipt of the letter which communicated the extension of the probation period. The respondents however refuted consenting to the extension. I am not convinced that the respondents consented to the extension of the probation period. They simply acknowledged receipt of the letters and that cannot be said to be consenting to the contents of the letter. In any event, the appellant`s decision to extend the probationary period remains a nullity even if it is proved that it was with the respondents` consent because the Labour Act prohibits extension of the probation period. A nullity cannot be extended or renewed because it is non-existent.

From the period of the expiry of the probationary period, the respondents were no longer on probation. The appellant elected not to timeously communicate its dissatisfaction with the respondents` performance and let them go. Thereafter the appellant took a course of action which is impermissible at law by extending the probation periods. The extension of the probation was a nullity and so was the termination of the extended probationary period communicated on 27 and 28 September 2012. The appellant could not give the respondents 24 hours’ notice of termination of employment in terms of non-existent probationary terms of the employment contract which expired when the three months period ended.

The appellant had a duty to effect communication timeously on whether the respondents had successfully completed their probation. It is clear that by its conduct the appellant tacitly confirmed the respondents` employment in terms of the original contract of employment. The extension of the probationary period was a nullity; hence the subsequent dismissal of the respondents on 24 hours` notice of termination of employment was illegal as the respondents were no longer on probation.

On a proper reading of s 25 (5) of the Act it is plain that it was meant for the protection and benefit of the employees against abuse of the probationary periods of employment by employers.. It is therefore our considered view that allowing the appellant to hide behind the spurious defence of ignorance of the law will set a dangerous precedent depriving employees of the protection and benefit accorded them by law.

On these premises, the appeal lacks merit and it cannot stand and costs should follow the result.

IT IS ORDERED THAT:

“The appeal be and is hereby dismissed with costs.”

HLATSHWAYO JA:	I agree

BERE JA:	 		I agree

Scanlen & Holderness, appellant`s legal practitioners

Nyika Legal Practitioners, second respondent’s legal practitioners