Dube v PSMAS and Another (5 of 2022) [2022] ZWSC 5 (24 January 2022)

Judgment No. SC 5/22 Civil Appeal No. SC 82/20 1 DISTRIBUTABLE:

(5) CUTHBERT ELKANA DUBE v

(1) PREMIER SERVICE MEDICAL AID SOCIETY

(2) PREMIER SERVICE MEDICAL INVESTMENTS SUPREME COURT OF ZIMBABWE MAKONI JA, MATHONSI JA & CHITAKUNYE JA HARARE: 15 OCTOBER 2021 & 24 JANUARY 2022 L. Madhuku, for the appellant F. Mahere, for the first and second respondents MAKONI JA: This is an appeal against the whole judgment of the Labour Court (the court a quo) which allowed two appeals filed in that court by the first and second respondents in terms of s 98 (10) of the Labour Act [ Chapter 28:01]. It set aside the two awards made in favour of the appellant and in their place substituted them with an order dismissing the appellant`s claims before the arbitrator. FACTUAL BACKGROUND The first respondent is a medical aid society registered in terms of the Medical Services Act, [ Chapter 15:13]. The second respondent is the investment vehicle of the first respondent. Both respondents are managed by two separate boards of directors. Judgment No. SC 5/22 Civil Appeal No. SC 82/20 2 It is common cause that the appellant was the Chief Executive Officer of the first respondent in terms of a contract of employment. He also drew a salary from the second respondent in unclear circumstances. He attained the retirement age of (60 years) in December 2013 in terms of the Retirement Policy of the Society 4/2003 of the first respondent. On 14 March 2013, both boards of directors of the respondents unanimously extended the appellant`s tenure of office by a further ten years. The new contract commenced from 1 January 2014 and would end on 31 December 2024. At the beginning of 2014, the appellant commenced the extended employment contract. The parties also reached an agreement that the appellant`s monthly salary would be US$60 000.00 per month effective January 2014 along with other benefits. It was later reduced to US$43 000.00. Following allegations that the appellant was taking an exorbitant salary of US$92 000.00 every month before allowances without the knowledge of the full board, other than two of its members, the boards withdrew their earlier decision of extending the appellant`s contract of employment. They relied on the provisions of the Retirement Policy to rescind the extension of the employment contract. The appellant was thus requested to take a pre-retirement paid leave. In response, the appellant, through a letter dated 20 February 2014 addressed to the first respondent, claimed that he had a subsisting contract of employment for a period of ten years which commenced on 1 January 2014. He insisted that the contract had not been terminated in any way and consequently he would abide by it and continue to execute his Judgment No. SC 5/22 Civil Appeal No. SC 82/20 3 duties in terms of the same until its expiry. No such letter was written to the second respondent. Consequently, a dispute arose between the appellant and the first respondent. On 17 February 2015, the dispute between the appellant and the first respondent was referred to compulsory arbitration. The terms of reference were as follows: a. “To determine whether or not the claimant`s (the appellant in this matter) contract of employment was lawfully terminated; b. The appropriate remedy” On 14 March 2015, a dispute in the matter between the appellant and the second respondent was referred to compulsory arbitration. It is not clear from the record how the dispute had arisen. The terms of reference were as follows: a. “Whether or not the appellant`s contract of employment was enforceable against the second respondent; b. If so, whether or not the claimant`s contract of employment was lawfully terminated and the remedy thereof.” On 14 April 2015 the arbitrator issued awards in respect of both matters. In the matter between the appellant and the first respondent the arbitral award was to the effect that the contract of employment between the appellant and the first respondent still subsisted and thus remained in force. He further ordered that the first respondent pay the appellant all salaries and benefits from the date these were last paid at the salary scale of US$92 000.00 per month. Judgment No. SC 5/22 Civil Appeal No. SC 82/20 4 In the matter between the appellant and the second respondent the arbitral award was to the effect that the appellant`s contract of employment was enforceable against the second respondent and that the contract was never terminated thereby rendering the appellant entitled to payment of salaries and benefits as claimed.

Aggrieved, the first and second respondents independently appealed against the two arbitral awards to the Labour Court under LC/H/348/15 and LC/H/349/15 respectively. The two appeals were consolidated for the sake of convenience. PROCEEDINGS IN THE COURT A QUO The first respondent, in its heads of argument before the court a quo, in which it was the first appellant, argued that the arbitrator made a determination that ran foul of the issue presented before him. It submitted that the issue before the arbitrator was whether or not the employment contract between the first respondent and the appellant was lawfully terminated. Thus, it insisted that the arbitrator fell into error when he determined that there was a valid and enforceable contract between the parties whereas it was common cause between the parties that no contract still existed. The first respondent contended that the arbitrator was bound by the terms of reference and had no authority to reformat the issues as presented to him by the parties. It was also the first respondent`s case that no evidence was tendered to justify the amount of US$92 000.00 per month which was awarded to the appellant by the arbitrator. The second respondent largely associated itself with the arguments made by the first respondent regarding the arbitrator straying from the terms of reference. In addition to Judgment No. SC 5/22 Civil Appeal No. SC 82/20 5 that, the second respondent submitted that the arbitrator missed the import of the issues referred to him and came to the conclusion that there existed a contract of employment between the appellant and the second respondent. The second respondent further submitted that it was simply the investment vehicle of the first respondent and used to contribute to the appellant`s salary at the request or on the instructions of the appellant. Thus it was the second respondent`s submission that these remittances did not make it the appellant`s employer. Per Contra, the appellant submitted that the arbitrator correctly determined the issues before him. He submitted that the issues referred to the arbitrator were whether or not the appellant`s contract of employment was lawfully terminated and to determine the appropriate remedy. He further submitted that determining whether or not the contract was valid was the first stage of inquiry which would then lead to the conclusion of whether or not the same was lawfully terminated. Regarding the second respondent, he submitted that the evidence placed before the arbitrator of termination of the contract in the form of a letter was not sufficient enough to prove that the same was terminated in terms of the law. The appellant insisted that a contract of employment could only be terminated by mutual consent, death, dismissal through a formal disciplinary hearing or resignation. Thus he proffered that a valid contract still existed as the second respondent failed to prove termination. The appellant further submitted that the second respondent was his employer by extension as management of the same reported directly to him. It followed that his contract of employment with the second respondent was valid and enforceable. Judgment No. SC 5/22 Civil Appeal No. SC 82/20 6 DETERMINATION OF THE COURT A QUO The court a quo examined the terms of reference as placed before the arbitrator by the parties. With respect to the first respondent, the court reasoned that it was clear in the parties` minds that the contract of employment had been terminated and what required determination was whether or not such termination was lawful. The court further reasoned that the arbitrator fell outside the terms of reference by making a determination that the contract of employment still subsisted and remained in force. The court relied on the case of C Kambuzuma and Ors v The Athol Evans Hospital Home Complex SC 118/04 in its reasoning that the arbitrator ought to have confined himself to the terms of reference and not go further than that. In addition, the court a quo held that the arbitrator, by making a finding that there was still a valid contract in existence between the parties, effectively made a new employment contract for the parties contrary to the Supreme Court decision in the matter between Kundai Magodora & Ors v Care International Zimbabwe 2014

(1) ZLR

397. With respect to the second respondent, the court a quo made a finding that, as was apparent from the record, the second respondent did not extend the appellants tenure. It effectively concluded that there was nothing to enforce between the appellant and the second respondent as there was never an employment contract between them. Consequently, the court found that there was nothing to terminate and therefore the appellant was not entitled to anything from the second respondent. In the result it allowed the appeals and set aside the arbitral awards. Judgment No. SC 5/22 Civil Appeal No. SC 82/20 7 This prompted the appellant to note the present appeal on the following grounds:

Grounds of Appeal

“1. The court a quo misdirected itself and erred at law in finding that the decision of the arbitrator that there was still a subsisting contract of employment between the appellant and the first respondent was outside the arbitrator`s terms of reference.

2. The court a quo erred by making a determination that there was no binding contract of employment between the appellant and the second respondent.”

Submissions on Appeal

In addressing the first ground of appeal Mr Madhuku for the appellant made the following submissions; the issue before the court was a question of interpretation of the terms of reference. The terms of reference were quite straightforward and had inherent in them two questions namely:

1. Has the contract of employment been terminated?

2. If so was the termination lawful? A term of reference in terms of the Labour Act [Chapter (28; 01 )] (the Act) is statutorily regulated and must be interpreted in terms of the scheme under Part XII of the Act. What has to be resolved is the dispute that was referred to conciliation. The court a quo fell into error by treating this as voluntary arbitration in which the terms of reference were as a result of the meeting of the minds of the parties. To the contrary this was a compulsory arbitration in terms of the Act where the labour officer formulates the terms of reference after taking into account the nature of the dispute between the parties. A labour officer referring a dispute to compulsory arbitration cannot create a new dispute for the parties as was held in Tafadzwa Sakarombe & Anor v Montana Carswell Meats SC 44/20. Judgment No. SC 5/22 Civil Appeal No. SC 82/20 8 As regards the appellant’s second ground of appeal, Mr Madhuku made the following submissions: a resolution by one party to terminate its contractual obligations cannot bind the innocent party to the contract. It was a serious misdirection by the court a quo that the appellant was bound by the decisions of the respondents in respect of the contract between the parties. Further, a contract need not be in writing. There is no doubt that an oral contract of employment existed between the appellant and the second respondent. The court a quo relied on the absence of a written contract to determine that there was no contract between the appellant and the second respondent. From the circumstances, including the payment of salary and the duties of the appellant vis a vis the second respondent there is no doubt that a contract existed between the parties. Ms. Mahere, for the respondents, submitted; in respect of ground one, that the issue before the arbitrator was to determine whether or not the contract of employment was lawfully terminated. The arbitrator went on to determine that there was a valid contract of employment between the parties, which was not an issue placed before him. The conduct of the arbitrator was tantamount to making a contract for the parties, which he or any court or tribunal cannot do as a matter of law. As regards the purported contract of employment between the appellant and the second respondent, that the appellant could not point to a single document that suggested that there was a contract between him and the second respondent. The only contract produced was the one between appellant and first respondent. The argument by the appellant that there is an oral contract is startling. He failed to present evidence before the Court a quo and this court Judgment No. SC 5/22 Civil Appeal No. SC 82/20 9 to prove that there was an oral contract. Thus, there was nothing to enforce between the appellant and the second respondent.