Ntshangase v MEC: Finance Kwa-Zulu Natal and Another (402/08) [2009] ZASCA 123; 2010 (3) SA 201 (SCA) ; [2010] 2 All SA 150 (SCA) ; [2009] 12 BLLR 1170 (SCA); (2009) 30 ILJ 2653 (SCA) (28 September 2009)

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[2009] ZASCA 123
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Ntshangase v MEC: Finance Kwa-Zulu Natal and Another (402/08) [2009] ZASCA 123; 2010 (3) SA 201 (SCA) ; [2010] 2 All SA 150 (SCA) ; [2009] 12 BLLR 1170 (SCA); (2009) 30 ILJ 2653 (SCA) (28 September 2009)

Links to summary

THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No: 402/08
HAMILTON NTSHANGASE Appellant
and
MEC FOR FINANCE: KWAZULU-NATAL 1
ST
Respondent
MEC FOR EDUCATION: KWAZULU-NATAL 2
ND
Respondent
Neutral citation:
Ntshangase
v MEC: Finance Kwa-Zulu Natal and Another
402/08
[2009] ZASCA 123
(28 September 2009)
Coram:
BRAND, NUGENT, HEHER,
SNYDERS JJA et
BOSIELO AJA
Heard:
7 SEPTEMBER 2009
Delivered:
28 SEPTEMBER 2009
Summary:
Labour law –
whether an employer in the public sector is entitled to review its
own decision pursuant to a disciplinary enquiry,
not to dismiss an
employee – whether on the merits the decision in question was
reviewable and whether the Labour Appeal Court
should have
substituted its own decision to dismiss the appellant instead of
referring the matter for a rehearing on the issue
of an appropriate
sanction.
______________________________________________________________
ORDER
On appeal from:
Labour Appeal
Court (Zondo JP, Pillay et Kruger AJJA on appeal from the Labour
Court)
1. The appeal is dismissed.
JUDGMENT
BOSIELO AJA (Brand, Nugent, Heher et Snyders JJA
concurring)
[1] The appellant was employed in the Department of
Education: Kwazulu-Natal, as Director: Arts, Culture, Museum Services
and Youth
Affairs. He was charged and found guilty of twelve charges
of misconduct in a disciplinary hearing initiated by the second
respondent,
the MEC for Education: KwaZulu-Natal, and chaired by Mr
Wentworth Dorkin (Dorkin). With regard to the sanction that should be
imposed,
Dorkin determined that the appellant should be given a final
written warning. The second respondent found that sanction
inappropriate.
In his view the appellant should have been dismissed.
He therefore brought a review application in the Labour Court for the
proposed
sanction to be set aside and replaced with the sanction of
dismissal. His application to the Labour Court was unsuccessful.
However,
on appeal to the Labour Appeal Court, the decision of the
Labour Court was set aside and the second respondent's review
application
was granted. The Labour Appeal Court set aside the
sanction imposed on the appellant by Dorkin, the chairperson of the
disciplinary
hearing, and replaced it with a sanction of dismissal
with immediate effect. The appellant is appealing against the
judgment of
the Labour Appeal Court with special leave of this court.
[2] The facts of this matter are fairly simple and to a
large extent common cause. A succinct account will suffice to
elucidate
this judgment. As I have said, the appellant was charged
and convicted of twelve counts of misconduct, involving allegations
of
wilful or negligent mismanagement of the State's finances and of
abusing his authority. Facts found by Dorkin to support these charges

indicated, inter alia, the unauthorised awarding of bursaries to
various students amounting to approximately R1m and the unauthorised

purchase by the appellant of goods exceeding R500 000. It also
transpired that the second respondent suffered a loss of R200 000

from the last mentioned transaction. After considering some evidence
tendered both in aggravation and mitigation of sentence, Dorkin

decided, as I have said, that the imposition of a final written
warning would be an appropriate sentence. That is the decision
which
gave rise to the review proceedings by the second respondent; first
unsuccessful in the Labour Court and then successful
in the Labour
Appeal Court.
[3] In his answering affidavit the appellant admitted
that he was found guilty on all twelve counts and stated further that
he did
not challenge any of Dorkin's factual findings. As clearly
foreshadowed in the appellant's notice of appeal the appellant raised

three legal issues for determination by this court, namely:
'15.1 Whether Dorkin's decision not to dismiss the
appellant constitutes administrative action which in principle is
reviewable
at the instance of the respondent;
15.2 if it is, whether the respondent made out a proper
case to review and set aside Dorkin's decision on the merits; and
15.3 In the event that both of the aforementioned
questions are decided in the respondent's favour, whether LAC was
correct in deciding
itself to dismiss the appellant in preference to
the alternative relief sought in the review application, namely the
referral of
the matter for decision by another presiding officer in
respect of the appropriate sanction.'
In supplementary heads of argument volunteered by the
appellant, the appellant added another ground of appeal to the three
referred
to above, namely what the applicable grounds of review are
in this matter.
[4] Although the second respondent initially relied on
s158(1)(g), (h) and (j) of the Labour Relations Act 66 of 1995 (LRA)
as grounds
for its review, the arguments both in the Labour Court and
the Labour Appeal Court were confined to s158(1)(h) of the LRA.
[5] It became clear during argument before us that the
appellant relied on the decision of
Chirwa v
Transnet Ltd and Others
[2007] ZACC 23
;
2008 (4) SA 367(CC)
and a recent decision by this court in
Makhanya
v University of Zululand
[2009]
8 BLLR 721
(SCA) for its main proposition
that a decision by an organ of state to dismiss one of its employees
or not to dismiss such an employee
does not constitute administrative
action and is therefore not reviewable by the Labour Court. However,
it was conceded on behalf
of the appellant that the Labour Court has
jurisdiction to adjudicate second respondent's claim under s
158(1)(h) of the LRA. The
appellant contended however that s
158(1)(h) of the LRA does not establish a statutory right of review
where none existed either
in terms of the common law or Promotion of
Administrative Justice Act 3 of 2000 (PAJA). It was submitted
therefore that Dorkin's
decision not to dismiss the appellant is not
administrative action and is therefore not reviewable.
[6] Regarding the decision by the Labour Appeal Court to
substitute its own decision for that of the chairperson of the
disciplinary
enquiry, it was submitted that a decision to dismiss is
essentially an operational decision. It was contended that as the
element
of trust is at the heart of every employment relationship,
the Labour Appeal Court was not in a position to decide on an
appropriate
sanction as it had no knowledge of the appellant's
employment history in the period between his reinstatement and when
the appeal
was heard. In other words, the Labour Appeal Court was
not in a position to consider all facts relevant to a determination
of
an appropriate sanction. The upshot of the argument is that having
reviewed and set Dorkin's decision aside, the Labour Appeal Court

should have referred the matter back to the disciplinary hearing for
a determination of an appropriate sanction. The appellant
argued that
there are no exceptional circumstances to justify the decision by the
Labour Appeal Court not to refer the matter back
to the disciplinary
hearing for a reconsideration of an appropriate sanction and to
impose it itself.
[7] On the other hand the second respondent, relying on
Sidumo & Another v Rustenburg Platinum
Mines Limited & Others
2008 (2) SA
24(CC)
, submitted that a disciplinary enquiry of the type undertaken
in terms of the Public Service Co-ordinating Bargaining Council
(PSCBC)
Resolution 2 of 1999 constitutes administrative action which
is reviewable not in terms of s 33 of the Constitution of the
Republic
of South Africa (the Constitution) or PAJA but under s
158(1)(h) of the LRA. It was submitted that because Resolution 2
created
a statutorily imposed disciplinary system which involved an
independent enquiry, the procedure was in substance the same as that

which would be followed in arbitration proceedings before the CCMA.
In terms of
Sidumo
arbitration proceedings are reviewable in terms of the LRA. It was
contended that by parity of reasoning Dorkin's decision at the

disciplinary hearing held in terms of Resolution 2 is reviewable.
Furthermore, it was contended that in terms of Resolution 2 the

second respondent does not take an independent decision after the
hearing is finalised but is obliged to implement the sanction

pronounced by the chairperson of the disciplinary enquiry. As a
result Dorkin's decision becomes that of the second respondent.
Based
on this, it was submitted that the enquiry undertaken by Dorkin
cannot be correctly described as 'an internal managerial
enquiry.'
[8] The second respondent contended that in terms of
Resolution 2 Dorkin was obliged to follow due process and then
pronounce an
appropriate sanction. In so acting, he would be acting
qua
the second
respondent which is the State itself. As Dorkin had failed to apply
his mind to the issue of an appropriate sanction
thus resulting in
him arriving at an irrational decision, it was argued that the second
respondent was not only entitled but obliged,
in the public interest,
to have Dorkin's irrational decision reviewed by a court of law. This
is particularly so as the employer,
as opposed to the employee, does
not have a right of appeal. It was argued that the contrary argument
is untenable as it implies
that in the absence of the right to appeal
or review its own decision, the second respondent would be left in an
invidious position
where it would be forced to enforce a decision
with which it does not agree or one which is patently unjustified.
Relying on
Pepcor Retirement Fund v Financial
Services Board
2003 (6) SA 38
(SCA) the
second respondent contended that it was not only entitled but was
obliged to take Dorkin's decision on review.
[9] Concerning the question whether the Labour Appeal
Court should have referred the matter back to the disciplinary
hearing for
a reconsideration of an appropriate sanction, the second
respondent submitted that on the facts of this case, the only
appropriate
sanction which Dorkin could have imposed is a dismissal.
It was contended that, given the gravity of the appellant's
misconduct,
any other sanction would have been irrational. The
essence of this submission is that it would be futile and fruitless
to refer
the matter to Dorkin when the sanction he should have
imposed is a foregone conclusion. The second respondent maintained
that the
Labour Appeal Court acted correctly in the circumstances as
all it did was to replace Dorkin's sanction with the sanction which

he should have imposed.
[10] The crisp legal issue in this appeal is therefore
whether Dorkin's decision amounts to administrative action or not.
This question
has created a lot of controversy in the past. To my
mind the first port of call is s 33(1) of the Constitution of the
Republic
of South Africa 108 of 1996 (the Constitution) which
provides that :
'Everyone has the right to administrative action that is
lawful, reasonable and procedurally fair.'
In an attempt to define what administrative action is,
the Constitutional Court stated the following in
President
of the Republic of RSA v South African Rugby Football Union
2000
(1) SA 1(CC)
in para 141:
'In s 33 the adjective "administrative" not
"executive" is used to qualify "action". This
suggests
that the test for determining whether conduct constitutes
"administrative action" is not the question whether the
action
concerned is performed by a member of the executive arm of
government. What matters is not so much the functionary as the
function.
The question is whether the task itself is administrative
or not. It may well be, as contemplated in
Fedsure,
that some acts of a legislature may constitute "administrative
action". Similarly, judicial officers may, from time to
time,
carry out administrative tasks. The focus of the enquiry as to
whether conduct is "administrative action" is not
on the
arm of government to which the relevant actor belongs, but on the
nature of the power he or she is exercising.'
[11] In grappling with the difficult task of trying to
define a difficult and complex concept like 'administrative action'
Professor
Cora Hoexter states in her book,
Administrative
Law
In South Africa at p 167:
'In the SARFU case the Constitutional Court admitted
that deciding what is and what is not administrative action "may
be difficult"
and suggested that it would have to be done on a
case-by-case basis. It offered the following as relevant
considerations in the
diagnosis: the source of the power, the nature
of the power, its subject matter, whether it involves the exercise of
a public duty
and how closely it is related to policy matters –
which are not administrative – or to the implementation of
legislation which
is characteristic of administrative action.'
[12] To my mind, it cannot be argued that the second
respondent is not an organ of State as envisaged by s 239 of the
Constitution.
Furthermore, there is no gainsaying that the second
respondent exercises public power in the public interest in terms of
legislation.
This gives the second respondent's powers the necessary
public character as opposed to a private character. Undoubtedly, when
the
second respondent appointed Dorkin to preside over the
appellant's disciplinary hearing, it did so in its capacity as the
State.
It follows, in my view, that Dorkin's action complained of
herein which essentially is that of the second respondent qualifies
as administrative action. That being so, such action has to be
lawful, reasonable and procedurally fair as contemplated by s 33(1)

of the Constitution.
[13] It is not in dispute that Dorkin was appointed by
the second respondent as chairperson of the disciplinary hearing
involving
the appellant to preside over it as its (second
respondent's) representative. Dorkin was appointed in terms of
Resolution 2. In
terms of Resolution 2 the second respondent is
obliged to execute the decision taken by Dorkin, the chairperson of
the disciplinary
hearing. To my mind, it follows that Dorkin was
acting
qua
the second
respondent and his decision became that of second respondent. It is
common cause that Resolution 2 embodies the procedure
negotiated and
agreed upon by the employer and trade unions representing the
employees. Unlike an ordinary collective agreement,
the procedure
embodied in Resolution 2 has a statutory force which is buttressed by
s 23 of the LRA which provides clearly that
the collective agreement
binds the parties thereto. As this court observed in
S
v Prefabricated Housing Corporation (Pty) Ltd & Another
1974
(1) SA 535
(A) at p 539G-540B:
'It is true that the type of document now under
consideration is termed under the Act and in industrial parlance an
"agreement",
and it is said to be "negotiated" or
"entered into" but technically it is not a contract in the
legal sense
. . . . From all those provisions it is clear, I think,
that an industrial agreement is not a contract but a piece of
subordinate,
domestic legislation made in terms of the Act by the
industrial council and the Minister. (See the clear and concise
summary of
the position given by Dowling J, in
South
African Association of Municipal Employees (Pretoria Branch) and
Another v Pretoria City Council
1948 (1) SA
11
(T) at p 17). In that respect it does not differ from by-laws made
by the council of a local authority and approved by the Administrator

of a Province under its Local Government Ordinance, or from a wage
determination made by the Minister on the recommendation of
the Wage
Board under the provisions of the Wage Act, presently 5 of 1957, both
of which are similarly regarded. (See
Rex v
Stoller,
1939 A.D. 599
at pp 616-8; Kneen's
case supra at pp 406-7). . . '.
[14] It is plain from paras 10 to 12 above that the
powers to be exercised by Dorkin in terms of Resolution 2 in the
disciplinary
hearing against the appellant qualify as public power or
a public function performed in terms of Resolution 2 which has
statutory
authority in terms of s 23 of the LRA. Furthermore, it
cannot be gainsaid that the exercise of such public power by Dorkin
was
in the public interest and had a direct and external effect on at
least the appellant's employment relationship with the second

respondent. To my mind, it follows that the decision by Dorkin
qualifies as administrative action. However, the vexed legal question

remains whether Dorkin's decision is reviewable at the instance of
the second respondent or not. If so, is it under the Promotion
of
Administrative Justice Act 3 of 2000 (PAJA) or s 158(1)(h) of the
LRA?
[15] S 158(1)(h) of the LRA provides as follows:
' 158(1) The Labour Court may-
. . .
review any decision taken or any act performed by the
State in its capacity as employer, on such grounds as are
permissible in
law;'
. . . .'
Undoubtedly this section provides in explicit terms that
a decision like the one taken by Dorkin who acted
qua
his employer can be reviewed on such grounds
as are permissible in law. The ground relied upon by the second
respondent for the
review of Dorkin's decision is rationality, which
is one of the recognised grounds of review. I am therefore of the
view that Dorkin's
decision can be taken on review under s 158(1)(h)
of the LRA.
[16] I am also persuaded to agree with Zondo JP in his
judgment in the Labour Appeal Court where he stated in para 10:
'In
Sidumo & Another v
Rustenburg Platinum,
case no: CCT 85/06 as
yet unreported, which was handed down on the 5
th
October 2007, the Constitutional Court had to decide whether, when a
CCMA commissioner conducts arbitration proceedings under the

compulsory arbitration provisions of the Labour Relations Act 1995
(Act 66 of 1995) ("The Act") to resolve a dismissal

dispute, that constitutes administrative action. It held that such
action does constitute administrative action. It seems to me
that if
the conduct of compulsory arbitrations relating to dismissal disputes
under the Act constitutes administrative action,
then the conduct of
disciplinary hearings in the workplace where the employer is the
State constitutes, without any doubt, administrative
action. If it
constitutes administrative action, then it is required to be lawful,
reasonable and procedurally fair. Accordingly,
if it can be shown not
to be reasonable, it can be reviewed and set aside.'
[17] However, this is not the end of the conundrum.
Having found that the decision by Dorkin amounts to administrative
action, the
pertinent legal question remains whether the second
respondent (the employer) had the
locus standi
to take the matter on review. In this court,
like in the court below, the appellant seriously challenged the
second respondent's
locus standi
to
bring the review proceedings. To my mind the answer to this legal
question hinges on whether Dorkin acted as the second respondent
or
as an independent arbiter. It is common cause that Dorkin was
appointed in terms of Resolution 2 which provides that the employer

is bound by Dorkin's decision. In the result Dorkin's decision
becomes that of the second respondent as Dorkin acted
qua
the second respondent. Admittedly the
challenge raised herein is novel as it has never enjoyed the
attention of our courts. However,
I found some guidance from
Pepcor
Retirement Fund and Another v Financial Services Board and Another
2003 (6) SA 38
(SCA), where confronted by a
similar problem, this court held as follows in para 10:
'This Court has already held that if an administrative
act has been performed irregularly – be it as a result of an
administrative
error, fraud or other circumstance – then, depending
upon the legislation involved and the nature and functions of the
public
body, it may not only be entitled but also bound to raise the
matter in a court of law, if prejudiced:
Transair
(Pty) Ltd v National Transport Commission and Another
1977
(3) SA 784
(A) at 792H-793G.'
[18] Although
Pepcor
involved the action by the Registrar of Pension Funds this
dictum
is equally applicable to this case as both
the Registrar and the second respondent are public functionaries
exercising a power in
the interests of the public in terms of
legislation. Based on the
Pepcor
judgment I am of the view that the second respondent was not only
entitled, but bound to take Dorkin's decision on review. This
it
could competently do in terms of s 158(1)(h) of the LRA which makes
clear provision for such a review on such grounds as are
permissible
in law. As Cloete JA aptly remarked in
Pepcor
in para 13:
'. . . . It is unthinkable that, if the Registrar were
to realise
ex post facto
that
there had not been compliance with the section, he could not apply to
Court to have it set aside. Compare in this regard what
was said by
this Court in
Rajah and Rajah Ltd and Others v
Ventersdorp Municipality and Others
1961 (4)
SA 402
(A) at 407 E:
Mr
De Villiers
for the Council submitted that in the exercise of its statutory
functions it has an administrative interest, on behalf of the public,

in certificates for local trading. I agree: that is what gives it a
locus,
unlike a purely
judicial tribunal.
It would indeed be the Registrar's duty to make such an
application, if prejudiced.'
Undoubtedly the second respondent has an interest in
ensuring that fair labour practices are upheld in its employment
relationships.
The same holds true for its employees. All actions
and/or decisions taken pursuant to the employment relationship
between the second
respondent and its employees must be fair and must
account for all the relevant facts put before the presiding officer.
Where such
an act or decision fails to take account of all relevant
facts and is manifestly unfair to the employer, he/she is entitled to
take such decision on review. Moreover, the second respondent has a
duty to ensure an accountable Public Administration in accordance

with ss 195 and 197 of the Constitution. I therefore find that the
second respondent had the necessary
locus
standi
to take Dorkin's action on review to
the Labour Court.
[19] The second respondent contended that Dorkin acted
irrationally in deciding to give the appellant a final written
warning instead
of dismissing him, given the seriousness and gravity
of the charges for which he was found guilty. Furthermore, the second
respondent
argued that based on Resolution 2 the second respondent
has no choice but to execute the decision by Dorkin, wrong and
irregular
as it may be. Undoubtedly, Dorkin's decision has caused the
second respondent some prejudice in that, despite the alleged
breakdown
of trust, the second respondent is obliged to retain the
appellant in employment. Furthermore, second respondent contended
that
if Dorkin's decision was allowed to stand, it would be difficult
for the second respondent to impose the sanction of dismissal on

anyone of its employees in line with the hallowed principle of parity
of treatment of employees. The Labour Appeal Court found
in para 18
of its judgment that 'a finding by Dorkin that this was a case in
which dismissal was not an appropriate sanction and
that a final
warning was, is a conclusion which could only be reached by someone
who did not exercise any discretion at all and
who simply acted
arbitrarily and did not apply his mind at all. To the extent that his
decision constitutes an administrative action,
I have no hesitation
in concluding that his decision is a decision that no reasonable
person could reach on the facts of this case
and his decision is not
just unreasonable but is, without doubt, grossly unreasonable . . .
.' Suffice to state that I am in respectful
agreement with this
dictum.
[20] I agree that Dorkin's decision, measured against
the charges on which he convicted the appellant appear to be grossly
unreasonable.
Given the yawning chasm in the sanction imposed by
Dorkin and that which a Court would have imposed, the conclusion is
inescapable
that Dorkin did not apply his mind properly or at all to
the issue of an appropriate sanction. Manifestly, Dorkin's decision
is
patently unfair to the second respondent. To my mind, it fails to
pass the test of rationality or reasonableness (see
Pharmaceutical
Manufacturers of SA and Another:
in re
Ex
Parte President of the Republic of South Africa and Others
[2000] ZACC 1
;
2000
(2) SA 674(CC)
para 89;
Sidumo And Another v
Rustenburg Platinum Mines Ltd And Others
2008
(2) SA 24(CC)
paras 106 and 276;
Toyota SA
Motors (Pty) Ltd v Radebe and Others
[2000]
21 ILJ 340 (LAC) para 53). In the circumstances, the second
respondent was entitled to take such a decision on review in
terms of
s 158(1)(h) of the LRA to have it set aside.
[21] Having reviewed and set aside Dorkin's decision on
the basis of gross unreasonableness, the Labour Appeal Court imposed
a
sanction of dismissal on the appellant. A strong attack was
levelled against the decision of the Labour Appeal Court on the basis

that there were no exceptional circumstances which justified the
Labour Appeal Court departing from the established and orthodox

approach and to take such a decision. The main argument was that the
Labour Appeal Court did not have all the relevant material
to
consider in the determination of an appropriate sanction. It is
indeed correct that it is well established that, ordinarily,
a court
will refer a matter back to the administrative functionary for
reconsideration rather than to substitute its own decision
for that
of the functionary. The underlying reasons for this are as Heher JA
stated in
Gauteng Gambling Board v Silverstar
Development Ltd and Others
2005 (4) SA 67
(SCA) in para 29 that such a functionary is generally best equipped
by amongst others, its composition, by experience, and its
access to
sources of relevant information and expertise to make the right
decision. However, this principle is not inflexible.
[22] The facts of each case will determine whether it is
fair and practical to remit the matter to the original functionary or
for
the court to substitute its own decision for that of the original
functionary. The appellant was suspended on 25 August 2000 pending

the outcome of a disciplinary hearing. On 12 February 2002 the
appellant was given a final written warning. During July 2002 he
was
reinstated. The review application was finalised in the Labour Court
on 18 March 2005 when the application was dismissed. The
judgment of
the Labour Appeal Court was delivered on 21 December 2007. Manifestly
there has been a time lapse of approximately
five years from the time
of the original sanction to the judgment of the Labour Appeal Court.
To remit this matter to the chairperson
of the disciplinary hearing
in a situation where the appropriate sanction to be imposed is
inevitable, would, to my mind, not be
fair to both parties.
[23] Given the nature and gravity of the misconduct for
which appellant was found guilty, there can be no argument that
dismissal
was the only appropriate sanction. Referring the matter to
the disciplinary hearing to impose a sanction of dismissal would, in

my view, serve no purpose.
[24] What remains to be determined is the issue of
costs. Both the Labour Court and Labour Appeal Court did not make any
order regarding
costs. In the result, I think it is appropriate not
to make any order regarding costs.
[25] In the result the following order is made:
1. The appeal is dismissed.
………………
..
L O BOSIELO
ACTING JUDGE OF APPEAL
A
PPEARANCES:
FOR APPELLANT: C E
WATT-PRINGLE SC
Ms D LANDSTRöM (Pupil)
Instructed by
MACGREGOR ERASMUS
ATTORNEYS, DURBAN
LOVIUS BLOCK, BLOEMFONTEIN
FOR RESPONDENT: P J OLSEN SC
M G de KLERK
Instructed by
FEISAL ABRAHAM ATTORNEYS, DURBAN
MATSEPES INC, BLOEMFONTEIN