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[2024] ZALCJHB 131
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Maharaj v Transnet Soc Limited and Others (JR1497/21) [2024] ZALCJHB 131 (23 February 2024)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
No: JR1497/21
In
the matter between:
RAKESH
MAHARAJ
Applicant
And
TRANSNET
SOC LIMITED
First Respondent
TOKISO
DISPUTE SETTLEMENT (PTY) LTD
Second Respondent
GERALDINE
DUNN
N.O.
Third Respondent
Heard:
15 February 2024
Delivered:
23 February 2024
T
his
judgment was handed down electronically by circulation to the parties
and legal representatives by email. The date and time
for hand-down
is deemed to be 23 February 2024
JUDGMENT
MAKHURA,
J
Introduction
[1]
This
is an application in terms of section 145 of the Labour Relations
Act
[1]
(LRA) to review and set
aside an arbitration award issued pursuant to section 188A of the LRA
proceedings. In terms of the award,
the applicant was dismissed after
he was found guilty of 5 allegations of gross negligence. The
application is opposed by the first
respondent (the company).
Material
facts
[2]
The
facts of the matter are largely common cause. The applicant was
employed by the company for 27 years until his dismissal. At
the time
of his dismissal, he held the position of Senior Manager: Transnet
Socio-Economic Infrastructure Development. He held
this position for
10 years.
[3]
The
applicant was charged with 5 allegations of gross negligence in
respect of two transactions - the procurement of three agricultural
tractors and the school building material. Semphakwe Trading Projects
(Semphakwe) was awarded an agricultural tractor contract
and SwaziKM
Trading (Pty) Ltd (SwaziKM) was awarded the school building material
contract.
[4]
The
first two charges relate to the agricultural tractor procurement
awarded to Semphakwe and the remainder of the charges relate
to the
building material contract awarded to SwaziKM.
[5]
The
agricultural tractor contract was for the supply and delivery of
three tractors to the three district municipalities in KwaZulu-Natal.
The bid documents specified that the tractors should be two-wheel
drives. However, during the Bid Clarification Meeting, the bid
specifications were amended from two-wheel drive to four-wheel drive
tractors with air-conditioned cabs. However, for reasons which
became
known to be budgetary constraints, Semphakwe delivered two-wheel
drive tractors without air-conditioned cabs.
[6]
The
building material contract was for the supply and delivery of
building materials for the renovations and upgrading of the King
Zwelithini School in Soweto.
The
agricultural tractor contract
[7]
In
respect of the agricultural tractor contract, the first allegation
was that the applicant compiled and submitted a memorandum
for
approval with a budget of R1 740 000.00, that this was done in the
absence of approved plans and/or budget, that the tractors
procured
did not comply with the bid specifications and were not fit for
purpose and that this resulted in irregular and fruitless
and
wasteful expenditure. The second charge was that the applicant
purchased or was involved in the transaction of purchasing diesel
from Semphakwe in the amount of R17 896.20 without following the
procurement process thereby causing the company to incur irregular
expenditure.
[8]
The
applicant does not dispute that during the Bid Clarification Meeting,
the bid specifications were amended from seeking two-wheel
drive
tractors to four-wheel drive tractors with air-conditioned cabs. It
is also not in dispute that the original bid was not
cancelled and
that despite the meeting resulting in the amendment of the bid
specifications, the applicant did not cancel the original
bid and
issue a new bid with new specifications. The applicant appointed or
participated in the decision to appoint Semphakwe to
supply and
deliver two-wheel drive tractors.
[9]
The
applicant’s evidence was that the planning and funding was not
his responsibility. He argued that this was the responsibility
of his
line manager, Musa Mkhwanazi (Mkhwanazi).
[10]
After
the delivery of the tractors, the applicant then requested a
quotation from Semphakwe for the delivery and supply of diesel,
three
pumps and storage containers at a cost of R17 896.20. Semphakwe was
then appointed to provide this additional work. There
was no
procurement process followed. The applicant’s case was that he
was acting on the request of Qwabe and that this procurement
was an
emergency and unforeseen. He disputed that the expenditure was
irregular and argued that Nthuthuzelo Ngqeleni (Ngqeleni)
should have
stopped the transaction. He also justified the transaction by stating
that he applied for condonation after he was
advised by procurement
to do so and that the application was still pending. Therefore, he
submitted, the allegation that he committed
the company to an
irregular charge expenditure was premature.
The
building material contract
[11]
The
principal allegation in respect of charges 3, 4 and 5 is that the
applicant procured or was involved in the procurement of additional
work from the appointed service provider, SwaziKM, in the form of
provision of security services, grass cutting and construction
services without following the procurement process. The allegation
goes on further that the additional work cost the company R120
500,
which is more than 15% of the original contract value and that this
is an irregular expenditure.
[12]
The
applicant’s primary argument was that he was exonerated by the
Nexus Forensic Investigation Report, which found him not
culpable for
the additional work procured from SwaziKM, that is, the grass
cutting, provision of security services and construction
services.
The company’s evidence on these charges was led through
Namaswazi Masange (Masange), the owner of SwaziKM. Masange
testified
that the applicant requested her to provide additional work to the
scope of the project. SwaziKM does not provide any
of these services
and had to source third parties to execute the work. The applicant
told Masange to find and appoint a service
provider to provide
security services. He informed her that she would invoice the company
for security services and then pay the
service provider. In all
additional works, Masange was informed by the applicant who to
appoint and how the payment of these additional
works should be
invoiced.
[13]
The
additional works cost the company R120 500.00 more than the contract
amount. The applicant disputed that this expansion of the
scope of
the project was irregular and further disputed that the additional
works cost the company more than 15% of the original
contract amount.
The
award
[14]
Dealing
with charge 1, the commissioner found that before the request for
quotation was issued, there should be an approved budget
for the
project. She found that there was no budget approved for the tractor
project and no plan and approved model in place. She
found further
that the change in the bid specification from two-wheel drive
tractors to four-wheel drive tractors with air-conditioned
cabs
during the Bid Clarification Meeting constituted a material amendment
to the bid specification and that the bid should have
been cancelled
and a new RFQ issued.
[15]
The
commissioner further found that the transaction was irregular and
that the expense was fruitless and wasteful. The basis for
this
conclusion was that the tractors were underutilised and as a result,
the project did not yield optimal results. The commissioner
concluded
her findings in respect of charge 1 as follows:
‘
I
find that based on the overwhelming evidence presented by the
Employer that there was no approved agriculture farming procurement
or funding projects by Transnet to purchase the tractors. There was
no proper planning or research done regarding the type of tractors
required, the purpose, the manner, the costs associated with the
implementation of the farming projects and the management of the
tractors and farming projects.’
[16]
On
charge 2, the commissioner noted the applicant’s defence that
he received verbal authorisation from Ngqeleni. She however
found
that this is not compliant as the applicant procured the diesel
without following the procurement procedures. She concluded
that the
applicant was grossly negligent.
[17]
Regarding
charges 3, 4 and 5, the commissioner noted that there was no attempt
to comply with the procurement procedures and found
that the
additional works or extension of the scope of the project was done to
circumvent the procurement policies of the company.
Further, the
extension of the scope of the project exceeded 15% of the original
contract amount and therefore in breach of the
Procurement Procedures
Manual. The commissioner rejected the applicant’s argument that
the procurement department should
have stopped the transaction. She
found that it was not possible for procurement to stop the
transaction when the service had already
been rendered.
[18]
The
commissioner also addressed the applicant’s defence that the
forensic investigation report exonerated him of the three
charges.
The forensic investigation concluded that the applicant could not
have prevented the R120 500.00 incurred on the additional
works and
that the expense was an emergency and unforeseeable. The commissioner
found that the applicant had sufficient time to
plan, manage and
control the project.
The
grounds for review
[19]
The
applicant attacks the findings of guilt and sanction. He advances
five grounds why the award should be reviewed and set aside.
[20]
First,
he argues that the commissioner failed to establish whether or not he
was aware of or could reasonably have been aware of
the rule
allegedly breached and whether the rule was consistently applied.
Second, the commissioner failed to attach sufficient
weight to his
limited role in the decision-making process, his limited powers and
that he was acting on his supervisor’s
instruction. In
amplification, the applicant submits that he was under the impression
that his superior had finalised and signed
the plan. These two
grounds are dealt with together as ‘
the
limited accountability ground’
.
[21]
Third,
the commissioner is alleged to have failed to consider and/or attach
sufficient weight to the fact that the forensic investigation
report
concluded that he was not responsible for the expenses referred to in
charges 3, 4 and 5 as they involved unforeseen circumstances
and
expenditure (
the forensic
investigation report ground
).
[22]
Fourth,
the applicant argued that he had applied for condonation in respect
of the transactions referred to in charges 2 to 5 (
the
condonation application ground
).
[23]
Fifth,
the applicant argued that the commissioner failed to properly
consider the issue of whether the sanction of dismissal was
appropriate. He argues that the commissioner failed to consider
whether the trust relationship had irretrievably broken down, whether
the continued relationship was intolerable, his length of service
with a clean disciplinary record, his personal circumstances,
that he
was a first offender and that he showed remorse (
the
sanction ground
).
The
review test
[24]
The
Constitutional Court has set out the test for the review of
arbitration awards.
[2]
The
Court held that arbitration awards would be reviewable when the award
is one ‘
that
a reasonable decision-maker could not reach’
.
[3]
[25]
The
Labour Appeal Court in
Fidelity
Cash Management Services v Commission for Conciliation, Mediation and
Arbitration and Others
,
held that this is a stringent test:
[4]
‘
The
test enunciated by the Constitutional Court in Sidumo for determining
whether a decision or arbitration award of a CCMA commissioner
is
reasonable is a stringent test that will ensure that such awards are
not lightly interfered with. It will ensure that, more
than before,
and in line with the objectives of the Act and particularly the
primary objective of the effective resolution of disputes,
awards of
the CCMA will be final and binding as long as it cannot be said that
such a decision or award is one that a reasonable
decision maker
could not have made in the circumstances of the case. It will not be
often that an arbitration award is found to
be one which a reasonable
decision-maker could not have made.’
[26]
The
Supreme Court of Appeal (SCA) further explicated on the
Sidumo
test
in
Herholdt
v Nedbank Ltd (Congress of SA Trade Unions as Amicus Curiae),
[5]
finding that the mere fact that a commissioner erred does not imply
that the award is reviewable – the award will only be
reviewable if the arbitrator’s failings resulted in the award
ultimately being unreasonable.
[6]
[27]
In
Makuleni
v Standard Bank of South Africa Ltd and Others
[7]
,
the LAC reminded this Court of what the review test is about or not:
‘
[4]
...
The
court asked to review a decision of commissioner must not yield to
the seductive power of a lucid argument that the result could
be
different. The luxury of indulging in that temptation is reserved for
the court of appeal. At the heart of the exercise is a
fair reading
of the award, in the context of the body of evidence adduced and an
even-handed assessment of whether such conclusions
are untenable.
Only if the conclusion is untenable is a review and setting aside
warranted.’
[8]
Evaluation
[28]
The
applicant was a senior manager with 27 years of service. His last 10
years of service was in the position of Senior Manager:
Socio-Economic Infrastructure Development. Though not a supply chain
management official, he has acknowledged that he has a fair
understanding of procurement procedures. The first respondent is a
state-owned company, funded by public monies and subject to
inter
alia
its own procurement procedures and other policies, the Public Finance
Management and its Regulations and the Treasury instructions.
[29]
The
Transnet Procurement Procedures Manual (Manual) regulates and
incorporates procedures for General Procurement and Construction
Procurement. Chapter 7 deals with demand planning and management.
Clause 7.1.2 provides that demand planning is the first step
in the
procurement process where the business needs are assessed, the
specifications are precisely determined, the requirements
are linked
to the budget and the supplying industry has been analysed and
constraints identified and assessed. The Manual requires
an annual
procurement plan for capital and operational expenditure and services
and planned maintenance. Clause 7.5 provides that:
‘
Once
the end users (operations) have identified their individual annual
business needs and there has been approval of the budget
by Finance
and any other applicable approvals … the end user must forward
their approved requirements for the forthcoming
financial year to
Procurement…’
[30]
It
is common cause that the applicant was the end-user in respect of the
two projects – the agricultural tractor and building
material
contracts. As the end-user, he knew or should reasonably have known
his responsibilities.
[31]
On
5 October 2018, the applicant signed a memorandum to the General
Manager, his line manager, in terms of which he requested approval
to
go to the market for agricultural farming equipment. This was a
request to procure the three agricultural tractors. He stated
that
the allocated budget was R1 740 000.00 excluding VAT and that the
funds would be available in the Socio-Economic Infrastructure
Development (SEID). This tender was awarded to Semphakwe.
The
limited accountability ground
[32]
The
applicant’s gripe with the findings in respect of charges 1 and
2 is two-fold – first, he was not involved and had
no role in
the planning and costing phase of the project, was not accountable
and responsible for the negligence that occurred
and that his
superiors should take the responsibility. Second, he was only
following his superiors’ instructions, which,
as he testified,
were made verbally.
[33]
Charge
1 deals with the applicant’s conduct in the agricultural
tractor contract. The applicant is alleged to have been involved
and
has played a role in the transaction. It is alleged that he compiled
and submitted the memorandum already referred to above,
that the
memorandum was compiled and submitted even though there were no
approved plans and budget and no research and planning
done in
respect of amongst other costs associated with the implementation of
the project and the management of tractors. It is
further alleged
that he procured the tractors that were not fit for purpose. In
conclusion, the company alleged that it incurred
irregular, fruitless
and wasteful expenditure.
[34]
The
commissioner found that before the RFQ could be issued, the end-user,
in this case the applicant, should have an approved budget.
However,
the applicant proceeded to issue an RFQ without the approved budget.
She found further that there was no procurement demand
plan for the
project. The commissioner concluded that:
‘
In
the absence of an (approved) budget [the applicant] cannot claim that
the two-wheel drive tractors were cheaper and therefore
within the
budgetary constraints. By trying to pin the blame on Mkhwanazi is
also disingenuous. As a senior manager trained on
procurement
procedures, [the applicant] was grossly negligent by initiating the
tender without approval of the expense. The material
change to the
tractor specifications was irregular and prejudiced other bidders.
This is an irregular procurement practice and
contrary to the PPM.
…
I
find that based on the overwhelming evidence presented by the
Employer that there was no approved agricultural farming procurement
or funding projects by Transnet to purchase the tractors. There was
no planning or research done regarding the type of tractors
required,
the purpose, the manner, the costs associated with the implementation
of the farming projects and the management of the
tractors and
farming projects.’
[35]
The
first part of charge 2 relates to the purchase of diesel from
Semphakwe without following procurement procedures. The company
procured diesel, pumps, grease and storage at an additional cost of
R17 896.20. In addition, the applicant is charged for causing
the
company to incur irregular expenditure. I was referred to an email
dated 26 April 2019, sent by Semphakwe to Ngqeleni attaching
a quote.
Ngqeleni then forwarded the email to the applicant. The applicant
argued that the commissioner failed to take this into
account and
that this shows that it was Ngqeleni who procured additional
services. Unfortunately, this argument ignores the fact
that the
applicant’s involvement in the procurement of these additional
services from Semphakwe was never disputed.
[36]
The
commissioner found that as a consequence of the applicant’s
negligent conduct as an end-user to plan for the project,
no
provision was made for diesel. Although the applicant sought to
dispute that the procurement of diesel was effected without
following
procedures, the evidence overwhelmingly established that no
procurement procedures were followed. The applicant’s
version
that he received verbal approval to purchase the diesel was rejected
by the commissioner as uncorroborated. In any event,
whether he
received verbal instruction or not does not, in my view, make the
transaction regular. The commissioner concluded that
the applicant
was guilty of gross negligence and of committing the company to an
irregular expenditure.
[37]
The
applicant was the end-user of the project. He was a senior manager of
an important portfolio – Socio-Economic Infrastructure
Development. Whilst he may have not been trained in procurement
procedures, he had a fair understanding of procurement, as evidenced
by his ability to compile an RFQ and preparation of memorandums to
get approval to go to the market. Despite his knowledge of the
non-compliance or what he should have reasonably known to be
non-compliant, he prepared a memorandum and issued an RFQ on the
agricultural tractor contract in the absence of an approved budget
and that there was no demand planning. This poor or non-planning
meant firstly that the tractors procured were not fit for purpose and
secondly, that there was no provision made in the bills of
quantities
for diesel, pumps, grease and storage.
[38]
Is
the commissioner’s decision on the two charges above one that a
reasonable decision-maker could not reach? The test is
not about what
I think the commissioner should have found. It is certainly not about
whether I agree with the commissioner or not.
It is whether the
decision she reached is one that a reasonable decision maker
confronted with the same evidence and facts, could
not reach. I am
not persuaded that the applicant has satisfied the test. There is no
basis for this Court to interfere with the
commissioner’s
decision on the above charges. This ground must therefore fail.
The
condonation application ground
[39]
The
company’s case was that it incurred irregular expenditures in
the amount of R17 896.20 and R120 500.00 respectively. It
is common
cause that the appointment of the service providers for these works
was in contravention of the procurement procedures
as no RFQs were
issued and therefore there was no competitive bidding.
[40]
On
1 May 2020, the Acting Group Corporate Affairs addressed a memorandum
to the Chairperson of the Procurement Committee requesting
the
chairperson to recommend condonation for the irregular expenditure
incurred in contravention of the legislation and procurement
procedures in respect of the tractor procurement and building
material contracts The memorandum records that the company incurred
the following irregular expenditure – R120 500.00 for the
building material procurement and R17 896.20 for the tractor
procurement.
The expenditures were reported to Internal Control on 5
August 2019 and 12 November 2019 respectively.
[41]
The
applicant’s argument was that charges 2, 3, 4 and 5 were
premature because the condonation applications in respect of
the two
transactions had not been finalised. There is no merit in the
argument. The fact that the company had to apply for condonation,
which was done many months after the conclusion of these
transactions, is an acknowledgement that there has been
non-compliance
with procedures.
[42]
The
commissioner found the expenditure expenses to be irregular. The
purpose of the condonation application was to report the transactions
and to request the National Treasury for approval or overlooking of
the irregular expenditures. It does not exonerate the applicant
of
his decision to procure services without following procedures. It is
the employer’s prerogative to discipline its employees.
This
review ground stands to fail.
The
forensic investigation report ground
[43]
The
applicant’s case is that the commissioner failed to consider
and/or attach sufficient weight to the fact that the forensic
investigation report concluded that he was not responsible for the
expenses referred to in charges 3, 4 and 5. The forensic
investigation
report concluded that:
‘
Maharaj
could not have prevented the additional R120 500.00, for the
following reasons:
·
Trainee
artisans could not have foreseen the exact quantity of materials
upfront and timeous
·
There
were already time pressures, given the launch date of 5 April for the
dignitaries
·
There
was a shortage of material to complete the renovations of the school
in time.’
[44]
The
applicant submitted that he is not suggesting that the report was
binding on the commissioner or that the commissioner must
have
deferred to it. It was submitted that it took about 8 months to
investigate and finalise the report and therefore the commissioner
should have placed significant weight on the report and the
conclusion.
[45]
The
substance of this argument is that the commissioner should have
deferred to the report. This is a fundamental misunderstanding
of the
purpose of an investigation process and report. The applicant wants
to elevate an investigation report into an outcome of
a properly
constituted disciplinary tribunal. The conclusion contained in the
investigation report is no more than an expression
of opinion which
is not binding on any party involved, more so a chairperson of the
disciplinary hearing or in this case, a commissioner
appointed in
terms of section 188A of the LRA. The chairperson of the disciplinary
hearing or the commissioner is not required
to defer to such an
opinion, or finding. The applicant’s argument is unsustainable
and stands to be rejected.
[46]
In
any event, the investigation did not cover charge 4. The allegations
in charge 4 are serious. The applicant’s conduct in
procuring
the three additional services in respect of the building material
contract amounted to outsourcing the company’s
supply chain
management responsibilities to a third party, SwaziKM and in the
process, circumventing the company’s policies.
The commissioner
found, regarding the procurement of construction and security
services, that his conduct exposed the company to
potential risk
because these service providers were not assessed or verified (at
least by the company) that they are compliant
with the industry
specific regulatory requirements.
[47]
The
applicant took issue with the findings that he was trained in
procurement processes and that he was unreliable. However, it
was not
shown how these alleged latent irregularities had a distorting effect
on the decision reached by the commissioner. Therefore,
the applicant
has failed to satisfy the review test on the grounds of irregularity.
The
sanction ground
[48]
Although
the applicant submitted that he stands by his review grounds, a large
part of his oral submissions was dedicated to the
issue of sanction.
The applicant’s case is that the misconduct allegations at best
should attract the sanction of a final
written warning. In his
supplementary affidavit, the applicant argues that:
‘…
the
Third Respondent failed to consider adequately, as she was obliged
to, whether the trust relationship had broken down irretrievably,
whether progressive discipline or dismissal for a first offence was
appropriate, whether continued employment was intolerable,
and the
extent to which my personal circumstances, my cooperation and genuine
demonstration of remorse, length of service of 27
years and my clean
disciplinary record mitigated a sanction of dismissal.’
[49]
In
addition, the applicant submitted that he was never suspended. I am
mindful of the fact that the applicant did not specifically
plead
this issue and that the company did not have the opportunity to
address it in its answering affidavit. These being motion
proceedings, the applicant is constrained to argue his case as
pleaded in his affidavits.
[50]
The
commissioner considered the nature of the charges and the
irregularity of the transactions which resulted in the company
incurring
irregular expenditure. She found that the misconduct was
serious and breached the trust relationship. She considered the
applicant’s
seniority and his experience working on projects.
Further, the commissioner found that the applicant did not show
remorse and therefore
the principle of progressive discipline is not
applicable.
[51]
The
applicant’s submission that he showed remorse is inconsistent
with the facts of this case. I accordingly reject it. The
applicant
either tried to shift the blame or simply disputed the obvious facts,
such as the three additional works which meant
that the company had
to call Masange as a witness. His argument that he should not have
been charged with certain allegations further
demonstrates a lack of
appreciation for his conduct and the consequences thereof.
[52]
The
commissioner has in view considered and engaged the factors that the
applicant accuses her of not considering. I am therefore
satisfied
that the commissioner has considered the relevant factors in the
enquiry into the appropriateness of sanction and did
not commit any
irregularity in the proceedings. This review ground fails.
Conclusion
[53]
There
is no basis to interfere with the commissioner’s decision on
the merit of the allegations and sanction. Therefore, the
applicant’s
review application stands to fail. The company has not pleaded any
facts to warrant this Court deviating from
the trite legal principle
that costs do not follow the result.
[54]
In
the premises, the following order is made:
Order
1.
The
application is dismissed.
2.
There
is no order as to costs.
M.
Makhura
Judge
of the Labour Court of South Africa
Appearances:
For
the Applicant
:
Adv. S Swartz
Instructed
by
: Mooney Ford
Attorneys
For
the First Respondent :
Adv. Z Navsa
Instructed
by
: Bowmans
[1]
Act
66
of 1995, as amended.
[2]
Sidumo
and Another v Rustenburg Platinum Mines Ltd and Others
[2007]
ZACC 22
; (2007) 28 ILJ 2405 (CC).
[3]
Ibid at para 110.
[4]
[2007] ZALAC 12
; (2008) 29 ILJ 964 (LAC) at para 100.
[5]
(2013)
34 ILJ 2795 (SCA); [2013] ZASCA 97.
[6]
Ibid at para 12; see also
Gold
Fields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v Commission
for Conciliation, Mediation and Arbitration and Others
[2013]
ZALAC 28
;
(2014)
35 ILJ 943 (LAC) at paras 16 – 21;
Anglo
Platinum (Pty) Ltd (Bafokeng Rasemone Mine) v De Beer
[2015] 4 BLLR 394
(LAC);
[2014] ZALAC 82
;
Head
of the Department of Education v Mofokeng and Others
[2014] ZALAC 50
; (2015) 36 ILJ 2802 (LAC) at paras 30 – 33.
[7]
[2023] ZALAC 4
; (2023) 44 ILJ 1005 (LAC).
[8]
Ibid
at para 4.