Stanbic Bank Ltd v Mtukula (24 of 2004) ((24 of 2004)) [2006] MWHC 112 (22 August 2006);

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IN THE HIGH COURT OF MALAWI

LILONGWE DISTRICT REGISTRY

CIVIL APPEAL CASE NO. 24 OF 2004


BETWEEN


STANBIC BANK LIMITED…………………………APPELLANT


AND


R.B. MTUKULA ………………………………………RESPONDENT


Appeal from the Industrial Relations Court sitting at Lilongwe. Being Matter No. 375B/2003



CORAM: HON. JUSTICE CHINANGWA


Counsel for the Appellant, Chilenga

Counsel for the Respondent, Kaphale

Court Interpreter, Gonaulinji

Court Reporter, Mrs Mhone



JUDGMENT



This is an appeal by Stanbic Bank against the judgment of the trial court. The appellant summarily dismissed respondent in respect of a matter arising from employment. The respondent challenged the summary dismissal that it was unfair dismissal. The trial court in its judgment decided in his favour.


In order to appreciate this appeal it is pertinent to state the facts in brief. The respondent was employed by the appellant in 1985 soon after graduating from college. At that time appellant was operating under the name Commercial Bank of Malawi. He was dismissed on 8th September, 2003. At the time of dismissal he had served 19 years. In those 19 years he served in various capacities and rose up to the rank of Branch Manager. He served in this capacity at Lilongwe Stanbic Branch from 1st January 2003 to 8th September, 2003.


His dismissal was connected to a cheque Exp 6 for K100,000 which he authorized an overdraft. The said cheque was presented to a bank teller for encashment. The bank teller Mrs Gunde referred it to the bank supervisor because it was beyond her authorized limit to payout. The supervisor noted that the account of Bookworm had insufficient funds. So he referred the cheque to the respondent with comments “funds”. At that time the account had K99,970.67 only. The shortfall was K29.33 only. The respondent authorized an overdraft because he was satisfied that Bookworm managed their account efficiently. It turned out that Bookworm had not issued it. It was a forged cheque. As a result of this respondent was summarily dismissed. As already mentioned earlier the trial court decided in his favour. It ordered reinstatement of respondent and payment of all his employment financial benefits from date of dismissal to reinstatement.


The appellant is dissatisfied with the decision of the lower court. Perhaps, it should be mentioned at this juncture that an appeal from the trial court has to be on a point of law. However, it is impracticable to consider on a point of law only without beefing with the facts.


The appellant filed the following 7 grounds:


  1. That the court erred in reinstating the judgment of 3rd May 2004 contrary to then respondent prayer.

  2. The court erred in ordering assessment of damages for the period between date of reinstatement and date of dismissal.

  3. The court erred in law in finding that exp 9 did not apply to the respondent

  4. The court erred in ignoring the evidence of Mr Supply Mwale

  5. The judgment of the court is unreasonable and was made without proper legal basis.

  6. The court erred in law on the standard of proof required in the matter.

  7. The judgment is against the weight of evidence and legal principles.



4. Relief sought

Reversal of the whole judgment.


This court will proceed to determine the grounds as argued by counsel for appellant and counsel for respondent.


Counsel for appellant argued that the trial court erred in ordering reinstatement without regard to the circumstances which led appellant to lose K100,000. He argued that the amount could not have been lost but for respondent’s negligence. It is the observation of this court that the trial court did make a finding that the bank teller and supervisor were the officers to verify with the owners of the account. The duty of the respondent was to exercise his discretion whether to authorise an overdraft or not. He did authorise and it is not disputed that he had the mandate to do so. This court cannot apply the but for test in such a narrow context to the exclusion of the facts of the case a whole. That would be an attempt to unjustly net the respondent. The respondent’s mandate has to be given due weight. The but for test does not in this case apply because appellant was not negligent.


On the second ground it is this court’s view that the trial court did not error to order damages. Upon the facts as determined by the trial court the respondent was not in breach of section 59(1) Employment Act. There was no existence of a serious misconduct. The respondent did not allow a fraudster to cash K100,000. Facts are crystal clear that such was not the position. The respondent did not know that fraud was being executed. He did not have reason to suspect for any fraud. He was therefore not a party to the fraud as counsel for appellant is persuading this court to believe. There is no merit on this ground.


The third ground is based on exp 9. It is the argument of appellant that it applied to respondent. Respondent told court that it did not apply to him because he was not a Branch Operations Manager.


It is important to reproduce exp 9 for a better understanding.


“7th June, 2001

OPERATION CIRCULAR 24 OF 2001

THIRD PARTY CHEQUE ENCASHMENT

OR DEPOSTS


Recent fraud cases have revealed that members of staff are not following procedural requirements as stipulated in O.M. Circular No. 10/98 dated 28th May, 1998. In view of this, we wish to remind all those concerned that all third party cheques presented for encashment or DEPOST IN EXCESS OF K50,000 should be confirmed telephonically with the drawer. Large withdrawals and deposits of say, K20,000.00 and above to ‘small’ accounts made over the counter or through inward clearing should be personally scrutinized and authorized by the Branch Operations Manager or a senior officer appointed by him. Where the Branch Operations Manager or senior officers are in doubt, reference should be made to the drawer of the cheque. All members of staff are therefore encouraged to adhere to the above circular and are also called upon to be vigilant at all times when discharging their duties.


SGD: G.G. A. KADZAKUMANJA

ASSISTANT GENERAL MANAGER

(OPERATIONS & ADMINISTRATION)”



It is pertinent to refer to the judgment of the trial court on this point pages 9-10


“According to the Respondent (Appellant) they say that the Applicant (Respondent) did not adhere to this circular. Had he done that, he could have saved the Respondent (Appellants) property. He therefore contributed to the loss of the cash on the 6th January, 2003.


On the other hand, the Applicant said that there was nothing wrong that he did. He said that he only authorized for encashment of the cheque. The duty was on the supervisor to telephonically confirm with the drawer since it was the supervisor doing the encashment and not the Applicant.


The court has carefully looked at the flow of events in relation to the cheque exp 6. The first person to touch the cheque was the teller Mrs Gunde who did all the spade work . After that, she found the figure to be above the limit as per the circulars. Mrs Gunde rightfully referred the cheque to the bank supervisor. The Bank Supervisor again wanted to cash the cheque as it was within his range. But he too discovered that there were insufficient funds in the account. He accordingly referred it to the Branch Manager with the words “funds”, meaning that it was only the Applicant who could have authorized. This is indeed the sign that the Branch Manager had the discretion to authorise or not, or else, why refer the cheque to him. What is however disputed here is the fact that had this account possessed enough funds, the Bank Manager could not have known about this cheque because the supervisor could have encashed it then and there.


It would therefore have been the supervisor doing the telephonic confirmation as per exp 9 since he was the one encashing it. After the Applicant had called for the history card, he used his discretion to give an overdraft. Certainly, I would not fault him because the history card was impressive. There were of course some questions from the Respondent counsel that the mere fact that the client had never written a cheque more than the account balance should have put the Applicant on guard that something was amiss. But the court finds that this was stretching things too far. Certainly the bank would not give an overdraft to habitual financial doubtful character whose account is hazy. After having made the decision to grant an overdraft, which decision was within the mandate of the Applicant, the Applicant initialed to the Supervisor to pay. This was now a very crucial moment. The officer responsible to encash the cheque was the supervisor. At this point, as per the circular Exp 9, the encashment officer was supposed to telephonically confirm with the drawer before surrendering the cash to Mr. Kasimu. But the supervisor did nothing. A supervisor is usually an officer of high experience. There is no reason as to why the Branch Manager should have doubted his supervisor who had already ably referred the cheque to him for insufficient funds. Had applicant paid out the money in person, certainly he should have been required to telephonically confirm with the client before such encashment as per the set down procedures in Exp 8 & 9. But here was a situation whereby the encashment was done by the supervisor. The duty certainly was upon the supervisor to telephonically confirm with the client before releasing the money to the third party. That, the supervisor did not do. The blame for negligence cannot certainly be saddled on the Applicant.”


This court proceeds to examine exp 9 in the context of the present case. Paragraph 2 specifically mentions the Branch Operations Manager or a senior officer delegated by him. The responded was not a Branch Operations Manager, but a Branch Manager. Neither was he a senior officer delegated to verify the cheque. Even the third paragraph is too general so that it could be unfair to interpret it as applying to the respondent. It would have been prudent for the appellant to specifically list down in the circular the ranks of officers affected by exp 9. This court concurs with the finding of the trial court that exp 9 did not apply to respondent on the merits of this case. The finding is indorsed.


Counsel for appellant on fourth ground contents that the trial court did not consider the evidence of Mr Supply Mwale (Dw1). This is utterly incorrect. The evidence of this witness is covered in the judgment from the last paragraph on page 3 and proceeds to page 4. However, how much weight the trial court attached on his evidence was entirely upon its discretion. It cannot be faulted at all. This ground lacks merits.


Counsel for appellant further argued that respondent was given an opportunity to be heard before summary dismissal. This is a question of fact which the trial court adequately dealt with on pages 6-7. The relevant part of the judgment is reproduced:


“The letter (Exp3) was written on 25thAugust, 2003 and the Applicant was supposed to appear for a hearing on the 28th August, 2003. The wording of this letter does not at all disclose the charge the applicant would be facing. It is always fair that the employee should be informed of the charge he/she is facing in good time so that he/she can adequately prepare for the defence. The charge should be very clear and specific. The charge should not be brought to the attention of the employee on the day of the hearing. In the instant case, the letter of invitation to the hearing talks of forged cheques amounting to K250,000.00 yet the applicant was only involved in a cheque of K100,000.00. The letter is also headed in a way as if it is the Applicant who was involved in the forgery. This clearly shows how vague this letter is. That there was a hearing is not disputed. But fairness in a hearing does not start in the boardroom where the hearing is actually taking place. Fair hearing is a long process. It starts from the time the employee is invited for hearing. It is a process like elections. You cannot call elections fairly done unless the whole process is properly done. This would include the period during registration, the campaign period and the actual voting as well as the counting and other incidental issues.


This court therefore puts it on record that the Respondent should have done better than what is on record’. Since the Applicant did not dwell much on the issue of hearing, the court will not make a specific finding”



Although the trial court did not conclude with a specific finding on the fairness of the hearing, it thoroughly analysed the facts. It is the view of this court that the purported hearing did not adhere to the rules of fairness. The charge was unclear. Notice time of the date of hearing very short. It is the finding of this court that the whole process was unfair.


On the fifth ground counsel Chilenga argued that loss of K100,000 by appellant was a valid reason to effect summary dismissal of respondent in terms of section 59 (1) Employment Act. It is the view of this court that the trial court found that exp 9 did not apply to respondent as Branch Manager. Therefore, there was no valid reason to warrant summary dismissal of respondent. That finding is indorsed.


Counsel for appellant dealt with the burden of proof as well as the standard of proof in relation to section 61(1) Employment Act which is reproduced.


“In any claim or complaint arising out of the dismissal of an employee, it shall be for the employer to provide the reason for dismissal and if the employer fails to do so, there shall be a conclusive presumption that the dismissal was unfair.”


It is this court’s understanding of this section that such reason must conform to section 57 Employment Act It must be a valid reason not in the mind of the employer, but to the trial court. In the present case there is no evidence to support that respondent was an accomplice in the fraud. Neither is there evidence that he was previously engaged in fraud or other dishonesty activities. There is no evidence to the effect that respondent was once reprimanded for mischief in the 19 years of service with appellant. The trial court found that there was no valid reason to warrant summary dismissal in the circumstances. This court concurs.


Counsel for appellant argued that the judgment of the trial court was against the weight of evidence and law. He referred to page 6 of the court record on which appellant admitted in XXD that he had a role to play in the loss of K100,000.00. He submitted that it was a clear admission of liability. To strengthen his argument he cited the case of Combank v. Mhango MSCA No 8 of 2001. It was held in that case that a Branch Manager who occasioned loss at his branch was liable to summary dismissal. This court observes that facts in the Mhango case are different to the present one. In the present case respondent performed his duties within his mandate. Counsel also cited the case of Savage v British Steam Indian Company(1930) 46 Time LR page 277. In that case it was held that it was the nature of the act and not the consequences which are relevant. This court disagrees with such narrow application of the law in the present case. If justice has to be done, the circumstances of the whole case deserve scrutiny.


He cited another case Taylor v Aladair Limited (1977) ICR 446 it held that neglect by senior employees who hold responsible positions appear to amount to a greater dereliction of duty than junior staff, and are likely to attract instant dismissal. The trial court found that there was no dereliction of duty in the present. This court concurs with such finding.


CONCLUSION


On the totality of the evidence obtaining in this case the respondent had proved his case against the appellant on a balance of probability. The judgment of the trial court cannot be faulted. However, it is the order of reinstatement which has given this court anxious moments. It would appear that appellant is very reluctant to take on board the respondent. The question is whether it would be in the interest of both parties to force them into an employment relationship. Counsel Chilenga has submitted that respondent could be compensated under section 63(5) and (6) of the Employment Act. On the other hand counsel Kaphale has prayed to the court that should it decide that compensation is preferred remedy, then the years he has served be taken into consideration.


It is the considered view of this court to order compensation as an effective remedy other than re-instatement. The compensation is ordered as follows:


  1. Under section 63(5) to pay 3 months pay for each year of service up to the date of this judgment.

  2. Under section 63(6) 12 weeks salary.

  3. Severance allowance of one month for each year of service up to the date of this judgment.


Appeal succeeds on the ground of reinstatement but the rest of the grounds are dismissed. Costs to respondent.


PRONOUNCED in Open Court this 22nd day of August 2006 at Lilongwe District Registry.




R.R.CHINANGWA

JUDGE