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 8^th
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 1^st
January 2003 to 8^th
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 3^rd
   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.

“7^th
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 28^th
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 6^th
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 25^thAugust,
2003 and the Applicant was supposed to appear for a hearing on the
28^th
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