The High Court has dismissed an application by Turnall Holdings Limited, a manufacturer and supplier of building and construction materials in Zimbabwe, seeking a declaratory order that a US$260,000 settlement paid to its former finance director, Kenias Horonga, was subject to Pay As You Earn (PAYE) tax deductions.
In a judgement delivered by Justice Gibson Mandaza, the court upheld preliminary objections raised by Horonga and dismissed the application with costs.
Turnall had asked the court to declare that the agreed terminal benefits constituted taxable income, that its withholding of 40 percent of the settlement amount as PAYE was lawful, and that the US$172,500 already paid to Horonga represented full and final settlement of the dispute.
The dispute stems from the termination of Horonga’s fixed-term contract as finance director, which led to years of litigation over his terminal benefits.
After proceedings before conciliators, an arbitrator, the Labour Court and the Supreme Court, the parties entered into a Deed of Settlement under which Turnall agreed to pay US$260,000 in full and final settlement of all claims arising from the termination of his employment.
Turnall argued that the court should clarify whether the settlement amount attracted PAYE, saying it risked tax penalties if it failed to remit the deductions to the Zimbabwe Revenue Authority.
The company also expressed concern that Horonga could seek to execute the Supreme Court order despite receiving a reduced payment after the tax deduction.
Horonga opposed the application, arguing that the matter had already been conclusively resolved through the consent order recorded by the Supreme Court.
He further contended that the application was effectively an attempt to review or vary a Supreme Court order, which the High Court has no authority to do.
Justice Mandaza agreed, finding that the settlement agreement constituted a final and binding resolution of the dispute. He held that the matter was res judicata, meaning it had already been determined and could not be litigated again.
The judge also ruled that granting the declaratory relief sought would amount to reviewing or varying a Supreme Court consent order, which falls outside the jurisdiction of the High Court.
“The Respondent submitted that the relief sought amounts to ‘a disguised review’ of the Supreme Court order. I find merit in that submission.
“The High Court lacks authority to overturn or vary a decision of the Supreme Court. To attempt such would constitute a grave error of monumental proportions.
“It is self-evident that the High Court is subordinate to the Supreme Court, which stands as the apex appellate tribunal within the judicial hierarchy.
“I do not possess the jurisdiction to review any decision of the Supreme Court, and I decline to act beyond the scope of my judicial competence. Accordingly, the preliminary point is upheld,” the judge said.
Justice Mandaza noted that the dispute had persisted for many years and urged the parties to seek finality.
The court upheld the preliminary objections and dismissed Turnall’s application with costs.
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