ZIRAMUKWIYE V. BANQUE POPULAIRE DU RWANDA SA

# ZIRAMUKWIYE V. BANQUE POPULAIRE DU RWANDA SA

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2014-01-10 - Case/document no.: RSOCAA 0013/11/CS - Collection: Supreme Court

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ZIRAMUKWIYE V. BANQUE POPULAIRE DU RWANDA SA [Rwanda SUPREME COURT – RSOCAA 0013/11/CS (Mutashya, P.J., Rugabirwa and Mukanyundo, J.) January 10, 2014] Laws regulating contracts – Contract – In case of termination of the employment contract by one of the parties , he or she notifies the other part but if the termination is duty to negligence the employee has to produce his defence and it has to be based on reasonable ground – An employer who unfairly terminates the employment contract is charged damages – Law n° 51/2001 of 30/12/2001 regulating labour in Rwanda, article 20 ,21,26. Facts: After the failure to reconcile with Banque Populaire du Rwanda at the labour inspectorate, Ziramukwiye sued in the Intermediate Court of Musanze claiming for various damages due to un lawfully dismissal. The Court ruled that he was unlawfully dismissed and ordered BPR to pay him various damages. Banque Populaire du Rwanda argue that it terminated the open ended employment contract because of the negligence and little competence of the employee. Banque Populaire du Rwanda appealed in the High Court, Musanze chamber, which also upheld the verdict, it appealed again in the Supreme Court but upon the screening of the appeal the judge held that there was irregularities in filing it and its pecuniary value is not worth 20.000.000 Frw. Banque Populaire du Rwanda appealed against that decision and consequently it was quashed .. Banque Populaire du Rwanda appealed on the ground that he committed gross negligence when he issued loans to Mukarugero Odette and Nshuti Gautier when they had no capacity to pay it back because those credits were classified in the loans which will not be paid and the credit officer was usual absent from work Ziramukwiye’s fault as his superior did not inform the administration so that they could take a decision and he was asked to defend himself against the allegation but his defence had no merit The Court awarded damages basing on the Ministerial Order nº 16/19 of 27/06/2003 determining modalities of awarding accompanying allowance due to dismissal and retirement which contradicts article 27 of the Law no 51/2021 of 30/12/2001 instituting labour law in Rwanda which was in place at the time of termination of the contract. In his defence Ziramukwiye argue that by the time he gave Mukarugero Oddette and Nshunti Gautier the loan their document showed that they were eligible and an audit was carried out in his absence and he was requested to defend himself within 24 hours and the ministerial decree is not inconsistent with article 27 of the labour law but it was put it came in force to regulate the mode of computing the compensation for termination of the employment contract. Held: The employer pays damages for unfair termination of the employment contract. The Ministerial decree no 16/19 regulates the mode of computing compensation for termination of the employment contract and its not provided for in the Law nº 51/2001 of 30/12/2001 regulating labour in Rwanda .

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The Court apply decrees or instructions only when they are consistent with the Constitution and other laws. The appeal has merit in parts; Cross appeal has no merit;. Banque Populaire du Rwanda must pay Ziramukwiye damages; Court fees on both parties. Statutes and statutory instruments referred to:: The Constitution of Republic of Rwanda of 04 June 2003 as amended up to date., article 141. Law n° 51/2001 of 30/12/2001 regulating labour Rwanda, article 20,21,26 and 27. Ministerial Order nº 16/19 of 27/06/2003 determining modalities of awarding accompanying allowance due to dismissal and retirement 1. No cases referred to. . JUDGEMENT I. BACKGROUND OF THE CASE [1] On 22/05/2003, Banque Populaire du Rwanda concluded an employment contract with Ziramukwiye Schadrack of undetermined period to perform the duty of an inspector, but on 04/02/2008, he was appointed as the branch manager of its branch of Kigombe from 01/03/2008. [2] On 02/02/2009, Banque Populaire du Rwanda terminated that contract alleging that Ziramukwiye Schadrack has been negligent and imprudent in discharging his duties because the evaluation report has shown that he has granted to some people including Nshuti Gautier and Mukarugero Odette, yet they did not meet the requirements for getting a laons, he did not manage well employees under his subordination as there has been misunderstanding between him and them, which distorted the good will of Banque Populaire du Rwanda and the fact that Kanyeshyamba Jean Baptiste who was the loans‘ officer has been as absent as he wanted and the latter failed to report him on his superiors so they could decide on conduct. [3] Ziramukwiye resorted to the Insepector of Labor, but no common ground was reached between him and Banque Populaire du Rwanda, whch led him to filing the case against it before the Intermediate Court of Musanze claiming damages equal to 7.734.545 Rwf including those of unfair dismissal. [4] The Court ruled that Banque Populaire du Rwanda has unfairly dismissed Ziramukwiye and condmned it to pay him 1.505.727 Rwf of unfair dismissal, 1.003.818 Rwf of an accompanying allowance, 501.909 Rwf of annual interests of 2008 and 300.000 Rwf of proceedings‘ expenses, which in total equals 3.311.454 Rwf.

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[5] [5] The Banque Populaire du Rwanda appealed before the High Court, the Chamber of Musanze, which ruled that it unfairly dismissed Ziramukwiye Shadrack and condemned it to pay him 1.505.727 Rwf of unfair dismissal, 1.003.817 Rwf of accompanying allowance and 300.000 Rwf of the council’s honorary, which in total equals 2.809.545 Rwf. [6] The Banque Populaire du Rwanda appealed before the Supreme Court, its appeal preliminary heard, and the responsible took the decisison RSOC 0002/11/Pré-ex/CS of 27/09/2010, ruling that its appeal is dismissed as it was not insitituted not in accordance with the law, and the fact that its object is less than 20.000.000 Rwf. [7] Banque Populaire du Rwanda appealed against that decision of the preliminary hearing stated above and the Court on 17/05/2013, held that it was instituted in accordance with the law, and moreover it is in its jurisdiction, that the preliminary hearing decision is changed. [8] The case was heard in substance on 03/12/2013, Banque Populaire du Rwanda represented by Counsel Alberto Basomingera and Counsel Mhayimana Isaïe, whereas Ziramukwiye Shadrack was represented by Me Bimenyimana Eric. II. ANALYSIS OF THE LEGAL ISSUES 1. Whether Banque Populaire du Rwanda has unfairly dismissed Ziramukwiye. [9] With regard to the faults committed by Ziramukwiye in granting loans, the councils of Banque Populaire du rwanda argues that the high court ruled that he was unfairl dismissed , and condemned it pay him 1.505.727 Rwf of damages due to unfair dismissal, it disregarded that he was dismissed on a real and serious cause as the inspection report of 10/11/2008, shows that on 11/08/2008, he granted a loan of 16.000.000 Rwf to Mukarugero Odette for buying a car, yet was not provisional or final contract was concluded, and there is not invoice of the person who supposed to sell it to her that is included in the file in order to know that she really had to buy it, there were not documents in her file that underpinned her statement that in her exploitation account that she will be earning 1.350.000 Rwf per month, he never visited the security nor had it been evaluated by experts under his subordination, because should he have visited it he should have not granted that loan as he could find that her security made up of that car and immoveable property she contends that it is worth 2.500.000 Rwf was not sufficient as they had to be 120% of the loan to be granted. [10] They also argue that the Court disregarded an other fault that led to his dismissal, because the inspection report stated above shows that 18/08/2008, he granted a loan of 15.000.000 Rwf to Nshuti Gautier of bulding without making a due analysis of his loan file, because except 48.825 Rwf of his monthly salary, there are no other documents in the file that support his statements that he will be earning 385.000 Rwf and 250.000 Rwf from the Shaving Saloon and other three small houses given as a pledge, and in addition he did not visit those securities before granting to him a loan, as should he have visited them, he should have lent him that amount as he had no means to pay it. [11] [11] They explain mistakes committed by Ziramukwiye in the processus of granting of those both loans that caused Banque Populaire du Rwanda the loss worth 10.473.935

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Rwf of the granted to Nshuti Gautier, in addition to 15.747.301 Rwf granted to Mukarugero Odette, because all those debts were classified as bad debts as provided for by the regulations of the Central Bank, which led Banque Populaire du Rwanda to removing them from its accounting books. [12] They also argue that the argument of Ziramukwiye that did not defend himself for faults he is alleged of having committed as found in the aforementioned inspection report is not founded, because on 24/11/2008 Banque Populaire du Rwanda addressed a letter to him requesting him to give his explanation on it, but it found that his explanations was not founded, and it decided to dismiss him. [13] They add that the fact that Banque Populaire du Rwanda concluded another new laon contract with Nshuti Gautier was not because he continued to pay accordingly the loan granted to him by Ziramukwiye, but rather it was because the contract he had with Ziramukwiye was drafted in a bad way and the fact that he was afraid that he Bank would sue him before courts as he could see that he did pay the previous debt. [14] With respect to the absence on duty of Kanyeshyamba, the councils of Banque Populaire du Rwanda argue that the High Court ignored that it dismissed Ziramukwiye on a serious and real cause as Kanyeshyamba Jean Baptiste who was the loan officer used to be absent on duty as much as he wished, but Ziramukwiye as his superior committed the fault failing to notify his superiors so they could take a decision on him. [15] They explains that the inspection report of 10/11/2008, shows that during the month of July 2008, Kanyeshyamba Jean Baptiste was on his duty for 14 day only, he was unjustifiably absent for 7 day, in August that year he worked 12 days and was absent for other 12 days without any causeand in September of it, he worked 9 days only and was absent for 14 days unjustifiably, which means that he has been absent on the rate of 48.5 % of his working days which adiversely affected it as those in charge of analyzing loan files and recovery got an opportunity incomplete files since he was not present. [16] With regard to granting loans, the council of Ziramukwiye Schadrack argues that he did not commit any faults in in loan granting process because fincial inspectors carried out a quick inspection and did not find any evidence supporting what they have heard that loans granted to Mukarugero Odette and Nshuti Gautier belonged to him and Kanyeshyamba, their files meet had all requirements required for them to get those loans as approved by the expert Nsanzabandi Rushemeza Charles, branch risk head, when the High Court carried out investigation on its office based in Musanze. [17] Her explains that the fact that the inspectors of finance accept that they found the certificate and mortgadge of ownership of the mortgadged house show that the granted security met the requirements as that house has administrative documents issued by institutions of Rwandan Government including the cell, and the sector of Kinyinya where that hose is located. [18] He further explains that the loan file of Mukarugero Odette fulfilled all requirement because the public Notary could notarize the loan contract should she give the mortgadge of the

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property that belongs to an other person, rather she met all conditions as approved by Nsanzabandi Rushemeza Charles. [19] Ziramukwiye Schadrack argues that the inspection was carried out when he was not duty as he superior immediately sent him on a compulsory leave of 10 days, after the inspection he was no longer in position of manager which would allow him to have access to the archive of loan files so that it could him allow him to well defend on the alleged faults as included in the aforementioned report, but rather the superior called him to Kigali, thereafter he asked him to give the explanations about those faults within 24 hours, which he did on that day withouth basing on files of those he granted loans in order that he could not dismiss him under the pretext that he has been insubordinate towards him. [20] He further argues that the arguments of councils of Banque Populaire du Rwanda that the loans he granted to Nshuti Gautier and Mukarugero Odette put it into a loss because they were removed from its accounting books are not founded, because they are in its computers, as those clients continued to pay it accordingly because Nshuti Gautier should not have been granted another new, loan if he put it into a loss, but rather it is obvious that there has been a good collaboration between them, because should it have been otherwise, the Bank would have auctioned their properties, especially that their securities were sufficient , for instance Mukarugero Odette got a loan worth 15.000.000 Rwf and give a security of her car worth 16.000.000 Rwf, in addition to 2.500.000 Rwf of domestic ustensils, those securities were very much more than 15.000.000 Rwf she received as a loan. [21] With regard to the absence of Kanyamashyamba Jean Baptiste, he argues that the findings of the inspection report that he has been absent for many times are not founded because most of days were days of rests as it was on Saturday or Sunday, and during other days he gave him permission to go working in the Land commission of Musanze district as he is one of its members. VIEW OF THE COURT [22] Article 20 of the law n° 51/2001 of 30/12/2001 governing labor in Rwanda that was in force by the time the employment contract was terminated provides that the empoyment contract of undetermined can be terminated as long as one of the parties to it wants so, but on just cause. That termination is preceded by the prior notice given by the party that wants the termination. Article 21 of that law provides that the termination of an employee under the contract of undertermined period should be based on a just cause and they have been given the time defend him on allegations against them. [23] Morever, article 26 of the aforementioned law, states that any termination of an employment contract without a just cause may lead to the award of damages given to the unfairly dismissed employee, they cannot exceed his salary of six months in addition to indemnities and other benefits that he was entitled to every month. [24] With regard to granting loans, the regulations of Banque Populaire du Rwanda of 12/12/2008 governing the loans granting, provides that the officer in charge of trade is the one that has to make a follow up on the client, the security and his laon, the loan officer analyzes the

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file given to him by the trade officer and gives his written opinion, the committee in charge of loan grant on the branch level is made up of the branch manager, risk manager, loan officer and the loan recovery officer, the loan granting decision is taken by the majority of 2/3 of its members1. [25] With regard to the loans granted to Nshuti and Mukarugero, the affidavit of 25/05/2010 in the file, shows that envoys of the High Court, the Chamber of Musanze carried out an investigation in the Musanze Branch of Banque Populaire du Rwanda, and Nsanzabandi Rushemeza Charles, who was the Branch Risk Head eplained to them that what is obvious from the file of Nshuti Gautier is that he was given a loan of 15.000.000 Rwfs to buy a house, he has the business that earns 4.620.000 Rwf a year, which means that he will be eaening 385.000 Rwf a month, the report of Kanyeshyamba Jean Baptiste in charge of loan states all requirements as it include the mortgadge certificate of property issued by the executive secretary of Kinyinya Sector of 25/09/2008. [26] That affidavit also shows that Nsanzabandi Rushemeza Charles, who was the Branch Risk Head, explained to the cout envoys the loan file of Mukarugero Odette that shows that she applied for a loan to buy a car Fuso brand that she would use in trading of potatoes, she wrote stating that she has an income worth 1.350.000 Rwf a month, she will be pay 600.000 Rwf every month, she gave a security of that car and domestic ustensils worth 2.320.000 Rwf, in addition, the report of Kanyeshyamba, the loan officer states that she has the income presented in family exploitaion account given to the Bank. [27] In the file, it is also indicated that an other loan contract of 31/07/2008, concluded between Banque Populaire of Kigombe and Mukarugero Odette, stating she gave it that the pledge made up of the car Fuso brand RAB 056M Chassis FK 417 E 221183 6 D 160 AZF 3601, and article 13 of that contract stipulates that the debtor gives to the Bank the right to sell the car without resorting to courts in case she may fail to execute the contract. [28] The Court finds that the fact that Kanyamashyamba Jean Baptiste who was a loans officer and Nsanzabandi Rushemeza Charles who was Branch Risk Head, were in charge of granting laons and were among the members of the committee charged with granting loans in the Branch of Bank Populaire du Rwanda based in Musanze, told the High Court during the investigation that the loan files of Nshuti Gautier and Mukarugero Odette met all conditions for getting them, and the report made by Kanyeshyamba Jean Baptiste by the time he analyzed those files showed that they were financially able to pay them, it is obvious that the arguments of Banque Populaire du Rwanda the the inspection report of 10/11/2008 shows that Ziramukwiye Schadrack committed faults of giving loans to Nshuti Gautier and Mukarugero Odette without meeting the requirements is not founded as that argument was contradicted by its employees that were charged with the day to day the loan granting process basing on documents that were in their files as explained above. 1« L’agent commercial est en contact avec le client est également responsable pour obtenir et suivre la garantie, suivre le client et son crédit. L’agent de crédit étudie la proposition de l’agent commercial et en donne une recommandation écrite. Les membres du comité de crédit de la Branche est la Branch manager, le chargé des risques de la branche, le second agent de crédit et l’agent de recouvrement. Au niveau des Branches, les comités de crédit peuvent prendre décision d’octroi de crédit quand 2/3 des membres sont présents ».

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[29] With regard to the argument of Banque Populaire du Rwanda that the laons given to Nshuti Gautier and Mukarugero Odette induced a loss to it, the Court finds that this argument is not founded, because there is no evidence that proves that they induced its loss, because should have they caused it a loss, it would have auctioned the securities they gave to it, and it should have not concluded another contract with Nshuti Gautier . [30] With respect to absence of Kanyeshyamba Jean Baptiste, the Court finds that the findings of inspection report of 10/11/2008 that he has been absent for the period equal to 48.5 % of his working days within the period of 3 months stated above are not founded because they are 8 days it is argued that he has been absent, yet they were official rests as it was on Saturday and Sunday, those days are the following: 12/07/2008, 2/8/2008, 10/8/2008, 17/8/2008, 23/8/2008, 6/9/2008, 13/9/2008 no kuwa 20/9/2008. The Court finds that other remaining days 25 on 33, should not be a cause to dismiss Ziramukwiye Schadrack as there is no evidence produced by Banque Populaire du Rwanda that contradicts his argument that as the superior of Kanyeshyamba Jean Baptiste gave him the permission to perform other duties in the Land Commission of Musanze district since there is no evidence produced by the Bank that it went there and found that he did perform those other duties. [31] Pursuant to all those explanations, as the High Court found it, The Court is of the view that Banque Populaire du Rwanda terminated the eployment contract it concluded with Ziramukwiye Shadrack in violation of the law as it dismissed him without basing on a just cause, and therefore that Court did not erred in awarding him 1.505.727 Rwf of damages due to unfair dismissal and his salaries of 3 moths according to article 26 of the law n° 51/2001 stated above. 2. Whether Banque Populaire du Rwanda has to pay Ziramukwiye the accompanying allowance [32] The councils of Banque Popilaire du Rwanda argue that the High Court awarded Ziramukwiye Schadrack 1.003.817 Rwf of accompanying allowance basiing on the Ministerial order n° 16/19 of 17/06/2003 determining the modalities of giving accompanying allowance of the dismissal or retirement, and disregarded that that ministerial order is contrary to article 27 of the law nº 51/2001 of 30/12/2001governing labor in Rwanda that was in force by the time the contract was terminated as it provides for accompanying allowance yet it is not provided under article 27 of the aforementioned law since this article provides for the notice compensation for an employee who has been working in the institution for a year at least, therefore thta Ministerial should have not been the basis according to article 141of the Constitution that provides that orders shall not contradict ordinary laws. [33] They also argue that in the case RSOCAA 0004/09/CS, Bralirwa V Mushirabwoba rendered by the Supreme Court on 26/03/2010, it ruled that article 1 and 4 of the aforementioned Ministerial order are contrary to the law of labor stated above since accompanying allowance are not provided under that law. [34] The counsel of Ziramukwiye Schadrack argue that the Ministerial order stated above is not contrary to article 27 of the aforementioned law governining labor as it provides for the modalties of awarding accompanying allowance, especially that under article 26of that law it provides for indemnities and other benefits, and he finds that among those other benefits include the accompanying allowance provided under 27 of that law.

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COURT FINDINGS [35] With regard to accompanying allowance, article 27 of the law nº 51/2001 ryo of 30/12/2001that was in force by the time of termination of the employment contract, states that the dismissal or the termination of the employment contract for the employee who worked in the institution for at least one year, entitles them the right to the notice compensation. The employee who stops from working due to the old age is awarded the accompanying allowance. The Ministerial order charged with labor in his duties shall determine the time and modalities of awarding the accompanying allowance. [36] Article one of the Ministerial Order nº 16/19 of 27/06/2003 determining modalities of awarding accompanying allowance due to dismissal and retirement, provides that any employee who worked at least on for one year in the institution, entitles them, once dismissed the right to accompanying allowance of dismissal or termination of the employment contract, and article 4 of the Ministerial provides for modalities for calculating the accompanying allowance for dismissal or termination of employment contract. [37] The afore mentioned Ministerial order has provided for the accompanying allowance of dismissal or termination employment contract, yet that allowance is not provided for under the aforementioned law, therefore the Court finds that it cannot base on the provisions of that Ministerial order as long as it contrary to that law pursuant o article 141 of the Constitution, which provides thatorders and regulations shall not be contrary to the constitution and other laws. [38] The Court finds that the High Court should have not awarded Ziramukwiye Schadrack an accompanying allowance of 1.003.817 Rwf due the dismissal yet it has no basis. [39] That is in the same line with the rulings of the Supreme Court, including the case RSOCAA 0004/09/CS, Bralirwa v Mushirabwoba rendered on 26/03/2010, the case RSOCAA 0034/10/CS, Bizimungu Jean Bosco v Banque Populaire du Rwanda, rendered on 16/03/2012 and the case RADA 0026/11/CS, EWSA v Muvunyi Faustin, rendered by this Court on 11/09/2013. 3. Whether litigants can be awarded the damages they claim [40] The council of Ziramukwiye Schadrack argues that he raises an incidental appeal requesting that Banque Populaire du Rwanda award him 1.000.000 Rwf of the council’s honorary who assisted him before this Court. [41] The councils of Banque Populaire du Rwanda argues that the incidental appeal Ziramukwiye is not based, but rather he has to give it 800.000 Rwf of proceedings‘ expenses at this instance. [42] The Court finds that Ziramukwiye Schadrack and Banque Populaire du Rwanda should not be awarded this amount each lost some points in the instant case.

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[43] The Court finds that the total o the amount that Banque Populaire du Rwanda has to pay Ziramukwiye Schadrack is 1.505.727 Rwf of damages due to unfair dismissal + 300.000 Rwf of the council’s honorary at the first instance, which in total equals to 1.805. 727 Rwf. III. THE DECISION OF THE COURT [44] It rules that the appeal of Banque Populaire du Rwanda is founded on some points; [45] It rules that the appeal of Ziramukwiye Schadrack is not founded; [46] It rules that the judgment RSOCA 0023/09/HC/MUS rendered by the High Court, Chamber of Musanze, on 19/07/2010 is changed in some points; [47] It orders the Banque Populaire du Rwanda to pay Ziramukwiye Schadrack 1.805. 727 Rwf [48] It orders the Banque Populaire du Rwanda and Ziramukwiye Schadrack to share the payment of court fees equal to 37.400 Rwf, each party paying a half (1/2), which means 18.700 rwf, should they fail to pay it within the period of 8 days, this amounts will be forcibly taken from their properties by the State cohesion .