Retention of company assets after termination of employment

By Basil Makururu

There has been a worrying trend where employees who would have had their contracts terminated hold on to property of the employer. This has been due to the fact that the employees would not be aware of the law pertaining to the right of an owner to vindicate his property. Employees who hold on to the property of an employer has in most cases found themselves at the High Court and being saddled with legal costs which would have been avoided had they merely surrendered the property and followed the prescribed remedies in claiming what the employer owes.

This article will look at the right of an employer to vindicate and why it is not prudent for employees to hold on to property which is not theirs in order to force an employer to accede to a demand. Where any employee refuses to surrender the property of an employer, an application is usually filed at the High Court for an order that the employee surrenders the property.

This application is known as an application for rei vindication. The issues for determination by the court which are basically requirements for rei vindicatio can be have been laid down as follows in the case of Minister of Higher and tertiary Education v Rudolph Pimai Matsanga HH104/19 '' Whether or not the applicant is the owner of the property in question. Whether or not the property is in possession of the respondent without the consent of the applicant. Whether or not the respondent has a right to retain the property as against the owner.''

That the owner of the property can claim it from anyone holding on to it emanates from the nature of ownership. Possession of the thing lies with the owner. Any person holding on to the property must do so on the basis of some legally recognized justification. This can be noted from the following judgment in Chitungwiza Municipality v Maxwell Karenyi HH 93-18;

“It is trite that the owner may claim his property whenever, from whoever is holding it. It is in terms in the nature of ownership that possession of the rei should normally be with the owner and it follows that no other person may withhold it from the owner unless he is vested with some right enforceable against the owner and such as right of retention or contractual right.”

The courts have stated that a person who is in possession of the property of another will not receive sympathy if he holds such property without justification.

Whether non payment of terminal benefits or challenging the termination will constitute a proper justification will be looked at later in this article. That the person will receive no sympathy from the court can be noted from the following passage in CFI Holdings Limited v Peggy Rambanapasi and Others HH838/17. 'A man who, without justification, holds on to another person's property receives little, if any, sympathy from anyone let alone the court.

 A fortiori when he, directly or indirectly, pleads a non-existent claim of right to the property. Where such has been demanded by its owner, the possessor must simply hand it over to him without further ado. It is a complete waste of time for the possessor to cling on to what he know does not belong to him under the pretext that he has the right to retain the property. This is all the more so where he cannot prove his purported right of retention.''

An employee who holds on to the property must have a justitication. A legally recognised justification usually takes the form of a lien. As to what constitutes a lien, the court stated the following in National Blood Services Zimbabwe v Emmanuel Masvikeni HH539/17 that; 'A lien is only exercisable against the owner of a thing that has been improved at the expense of another. The person who has incurred expense in improving the other's property is then protected by issuing retention pending compensation for the improvement or, in the case of a mechanic, pending payment for the services rendered in respect of the particular motor vehicle.'

The High Court has dealt at length with the issue of lien in the case of CFI Holdings Limited v Peggy Rambanapasi and Others HH838/17 where it listed the three categories of a lien. Applicant's case does not fit in any of the three categories. The judgment is cited here extensively;

''The respondents, it is evident, did not read and understand the circumstances which give rise to a lien. They are, in this regard, referred to the remarks of SANDURA JA who discussed that matter at length in Nexbank Investments (Pvt) Ltd & Anor v Global Electrical Mfrs (Pvt) Ltd & Anor, 2009 (2) ZLR 270 (D) at 273 G-H and 274 A[1]C wherein the learned judge, quoting a text in Professor R.H. Christie's Business Law in Zimbabwe p 454-455, stated as follows: 'The respondents, it is evident, did not read and understand the circumstances which give rise to a lien. They are, in this regard, referred to the remarks of SANDURA JA who discussed that matter at length in Nexbank Investments (Pvt) Ltd & Anor v Global Electrical Mfrs (Pvt) Ltd & Anor, 2009 (2) ZLR 270 (D) at 273 G-H and 274 A[1]C wherein the learned judge, quoting a text in Professor R.H. Christie's Business Law in Zimbabwe p 454-455, stated as follows: “A right of retention or lien, arises by operation of law from the principle that no one should be unjustly enriched at the expense of another.

A person who has incurred expenditure on the property of another, movable or immovable, and who is in possession of that property, is entitled to retain possession until paid sufficient compensation to prevent the owner being unjustly enriched at his expense. The amount of this compensation will depend on the circumstances. A possessor who has incurred necessary expenses- i.e. expenses which must be incurred to prevent the destruction or deterioration of the property, has a right of retention until paid the amount of his expenditure.

This is known as a salvage lien, and it gives the possessor a real right against all the world. Useful expenses, i.e expenses which have enhanced the value of the property, give rise to an improvement lien, also valid against all the world, for the amount of the enhancement: Fletcher and Fletcher v Bulawayo Waterworks Co. Ltd 1915 AD 636. The third type of lien, is available to anyone who has, by contract, performed work or incurred expenditure on the property of another. It confers a personal right available only against the other party to the contract (or third parties with the knowledge of the lien) to retain the property until paid the contract price” (emphasis added).

'' A nopayment of terminal benefits or a challenge to the termination of employment does not fit within any of the categories of a lien. It would not be wise to hold on to the property on the basis of any of these two issues. Faced with an application for rei vindication, an employee has limited grounds upon which he can ward it off. The defences were summarized by Dube J in the case of Hwange Colliery Co v Savanhu 2013 (1) ZLR 555 as follows: The defendant had acquired the property by prescription. The third party is the owner. The property was alienated or destroyed. The defendant has a superior contractual right to possess.''

The right to possess the property of an employer does not extend beyond termination of a contract of employment. This is due to the fact that the property is usually given to advance the business of an employer. It is a benefit linked to employment and cannot therefore extend beyond termination of employment. The right of first refuse does not entitle an employee to retain the property after termination of employment. It is only a right that can be utilized in the event that the employer intends to dispose the property. It is not necessary for employees to hold on to property belonging to their employers in order to force the employer to accede to certain demands.

An employee who feels aggrieved by any determination must follow the laid down procedures and therefore avoid unnecessary legal costs. Retaining property which belongs to an employer does not assist unless if there is reasonable justification which can defeat the employer's right to vindicate.

Leave a comment

Filtered HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
4 + 1 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.