Reddy and Others v Mondi Paper Limited (DA24/98) [1999] ZALAC 35 (24 June 1999)

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[1999] ZALAC 35
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Reddy and Others v Mondi Paper Limited (DA24/98) [1999] ZALAC 35 (24 June 1999)

IN THE
LABOUR APPEAL COURT OF SOUTH AFRICA
Held at
Durban
CASE No.: DA 24/98
In
the matter between:
R
Reddy
First Appellant
M
Naidoo
Second Appellant
K
Reddy
Third Appellant
I
Kannigan
Fourth Appellant
and
Mondi
Paper Limited
Respondent
___________________________________________________________________________
Judgment
___________________________________________________________
Ngcobo
AJP
[1] The
appellants were employed by the respondent, Mondi Paper Limited,
until their dismissal. They were all members of a medical
aid scheme,
Anglo American Corporation Medical Scheme, which was administered by
Affiliated Medical Administrators (Pty) Ltd, (“AMA”).
The
respondent contributed 80% of the employee’s monthly medical aid
contribution. The appellants were dismissed after the respondent
had
discovered that appellants had received and deposited cheques from
the medical aid in circumstances where they were not entitled
to do
so. They unsuccessfully claimed in the Industrial Court that they had
been unfairly dismissed.
[2] The present appeal
is against the determination of the Industrial Court that appellants
were not unfairly dismissed.
[3] During the period
March to August 1995 Mr Kevin Reddy, an employee of AMA, who is not
one of the appellants, authorised cheques
for various amounts in
favour of the appellants. Each cheque was accompanied by an advice
statement indicating that the cheque was
in respect of medical
services rendered either to each appellant or their respective
dependants. The appellants deposited these cheques
into their bank
accounts. Neither the appellants nor their dependants had received
any medical services in respect of the said cheques.
These cheques
were authorised by Reddy pursuant to a fraudulent scheme which he
perpetrated upon the medical aid and to which he
later confessed. A
subsequent investigation led to the appellants being charged with
disciplinary misconduct and later dismissed.
[4] At the enquiry, and
in the court below, Reddy testified that the appellants were willing
participants in the fraudulent scheme
perpetrated by him on the
medical aid. In terms of this scheme Reddy, using appellant’s
medical aid numbers, generated false claims
in respect of the
appellants or their dependants, and thereafter authorised cheques in
favour of the appellants in respect of such
false claims. The
appellants deposited these cheques and thereafter paid Reddy half the
amounts of the cheques and retained the other
half. All the
appellants are related to Reddy in one way or the other.
[5] Initially at the
enquiry, the appellants took the point that the alleged misconduct
had nothing to do with the respondent. When
this point did not avail
them, only second, third and fourth appellants testified at a
subsequent enquiry. At the enquiry and in
the court below, the
appellant’s version was that they were innocent victims of the said
fraudulent scheme perpetrated by Reddy.
[6] The version
testified to by the appellants was substantially the same. Each
received a telephone call from Reddy announcing that
a medical aid
cheque in his favour was on its way. They were given instructions by
Reddy to deposit the cheques into their bank accounts
and thereafter
withdraw the amounts of the cheques and pay them to him so that he
can in turn pay the money back to the medical aid.
It was necessary
to do this, each was told, in order to avoid the amounts of the
cheques being deducted from their respective salaries.
Each was told
that the cheques had been authorised in his favour as a result of a
computer error. The appellants complied with Reddy’s
instructions
and paid him back the full amounts of the cheques. Each received a
receipt for the full amounts of the cheques received
from Reddy.
[7] The sole issue for
determination in the appeal, as in the court below, is whether the
appellants were innocent victims of the
fraudulent scheme by Reddy or
whether they were willing participants in such a scheme. On this
issue, the court below was faced with
two diametrically opposed
versions.
[8] The
onus was on the respondent to justify the fairness of the dismissal
of the appellants. Where, as here, there are two mutually
destructive
stories, the respondent could only succeed if it satisfied the
Industrial Court on a preponderance of probabilities that
the version
testified to by Reddy is true and accurate and therefore acceptable,
and that the appellant’s version is therefore
false or mistaken and
ought to be rejected. Before rejecting the appellants’ version, it
was necessary for the Industrial Court
to weigh up and test each
version against the probabilities. In that process, the estimate of
the credibility of witnesses is inextricably
bound up with the
consideration of the probabilities of the case. If at the end of the
process, the Industrial Court was satisfied
that the balance of
probabilities favoured the version testified to by Reddy, then the
court was entitled to accept his version as
being probably true and
to hold that the respondent had discharged the onus.
National
Employers’ General Insurance v Jagers
,
1984 (4) 437 (ECD) at 440 D - G.
[9] Mr
Soni, who appeared on behalf of the appellants, reminded us that the
court below made credibility findings against both Reddy
and the
appellants. He sought to draw a distinction between the finding that
Reddy was “a self-confessed liar” and “unimpressive
witness”
on the one hand and that appellants were described merely as
“unsatisfactory witnesses”. This distinction, he submitted,
is
significant, and must weigh heavily in the assessment of the evidence
of Reddy. In my view, this case is not so much about the
credibility
of witnesses - it is about probabilities. In my view, a consideration
of the probabilities in this case indicates where
the truth probably
lies. The estimate of credibility is inextricably bound up with a
consideration of the probabilities. It is therefore
not necessary to
have recourse to an estimate of relative credibility apart from the
probabilities.
National Employers’
General Insurance v Jagers
, supra,
at 441A. The question presented in this appeal is which of the two
versions is more probable than the other.
[10] The probabilities
here are overwhelmingly in favour of the version testified to by
Reddy. I do not propose to examine the version
of the appellants in
any great detail in order to illustrate this. For the purposes of
this judgment it is sufficient to refer to
the key aspects of the
appellants’ version.
[11] Appellant’s
version rests on evidence that they paid in full the amounts of
cheques they had received. In order to bolster
their version they
each relied upon receipts alleged to have been issued to them by
Reddy upon making the said payment. In addition,
though to a lesser
extent, they relied upon their respective bank statements reflecting
amounts withdrawn, even though these amounts
were not the amounts
reflected on the receipts and furthermore, these amounts had not been
withdrawn on the date of the alleged payment
to Reddy. The
appellants, therefore, must stand or fall by the receipts. If the
receipts are shown, on a balance of probabilities,
to have been
manufactured, the appellants must fail.
[12] It must be
recalled that Reddy testified that during 1996 appellants confronted
him and demanded that he issue them with receipts
reflecting that
they had paid the full amounts of the cheques they had received. They
required him to space out these receipts such
that they do not follow
one another in sequence. These receipts, he testified, were a forgery
and were issued on the same day to
all the appellants. He estimated
that they were issued during April 1996.
[13] The record
reflects that the original receipt book was produced in the court
below. It had disappeared by the time the record
of the appeal was
prepared. However, the contents of the receipt book emerge from the
record. The schedule below reflects the receipt
number, date of issue
or purported issue and the person to whom it was issued.
Receipt Number Date Name
1 5 April 1996 Mrs Qoloko
2 Blank Unissued
3 Torn out
4 15 April
1996 Mrs Koloko
5 3 July
1995 First Appellant
6 -
13 Blank Unissued
14 27 July
1995 Fourth Appellant
15 14
September Fourth Appellant
19 2 August
1995 Fourth Appellant
23 4 September
1995 First Appellant
37 15 September
1995 Second Appellant
42 9 September
1995 Third Appellant
[14]
It is evident from the record that the receipts issued to the
appellants were issued from the same receipt book. This being
the
case one would have expected the receipts to follow one another in
sequence. Yet they do not. Instead there are blank receipts
in-between. The receipts issued to appellants were deliberately
spaced out to create the impression that they were not issued on
the
same day. Receipts Numbers 1 and 4 dated 5 April 1996 and 15 April
1996 respectively, were in all probability, although preceding
them,
issued subsequent to the receipts issued to the appellants and were
issued prior to the receipts which had been left in blank.
[15] There is no
explanation why later receipts should bear a date earlier than that
reflected on earlier receipts. The only probable
explanation for the
discrepancy in the dates of the receipts is that these receipts were
issued on the same day from the same receipt
book. They were
deliberately spaced out so that it would appear that they were not
issued on the same day. What the designers of
the receipt scheme did
not consider is that if the receipt book was made available, it would
become evident not only that the receipts
issued to appellants were
issued from the same receipt book, but also that the receipts were
deliberately spaced out. More importantly,
they did not consider the
fact that the receipts that had not been issued would subsequently be
issued and bear a date later than
the date reflected in their
receipts even though, in sequence, they should have reflected an
earlier date. For example Mrs Qoloko
receipts Numbers 1 and 4 reflect
the dates 5 April 1996 and 15 April 1996, respectively. Yet they are
followed by receipt Number
5 issued to the first appellant which is
dated 3 July 1995. This is where the receipt scheme collapsed. The
probabilities are that
all the receipts issued to the appellants were
issued on the same day and at the same time. They were deliberately
spaced out to
create a false impression that they were issued on
different dates. They were deliberately manufactured to provide the
appellants
with a defence.
[16] In the course of
his argument Mr Soni drew our attention to the fact that some of the
appellants offered receipts at the second
enquiry which was held on
or about 3 April 1996. He submitted that this shows, on a
probability, that when the first legitimate receipt
was issued to Mrs
Qoloko on 5 April 1996, appellants had already been issued with their
receipts. This, he contended, undermined
the evidence by Reddy that
the receipt were issued to the appellants after April 15. In my view,
what this does is merely to demonstrate
that Reddy is probably
mistaken as to the date when he issued the receipts to the
appellants. Indeed Reddy conceded that he might
be mistaken as to the
dates. However, this does not detract from the fact that the receipts
were manufactured.
[17] There is a further
difficulty with the alleged payment. None of the appellants withdrew
the exact amount of the cheque each had
received from the medical
aid. Each withdrew a portion and supplemented such amount from large
amounts of cash, which each claimed
to keep at home. One would have
expected them to have withdrawn the same amount of the cheque they
had deposited instead of using
the money which was destined for other
purposes. None of the appellants withdrew the money on the date that
payment was supposedly
made to Reddy. In some instances the amount
was withdrawn some three weeks earlier and kept at home for Reddy to
come and collect.
What emerges here are strikingly similar
discrepancies in respect of all the appellants which are inexplicable
except on the basis
of design.
[18] The probable
explanation for these strikingly similar discrepancies is that once
the receipts had been manufactured, the appellants
realised that they
might be called upon to provide proof of having withdrawn the amounts
paid to Reddy. As none of the dates in the
receipts coincided with
the dates of withdrawal from their respective bank accounts, the only
option they were left with was to point
to withdrawals which were
close in time to the dates of the receipts as being the withdrawals
made for the purposes of making the
alleged repayments. As a result
of this the withdrawals alleged to have been made neither reflect the
amounts of the cheques they
had received nor the dates of the alleged
payment.
[19] In their dealings
with Reddy all the appellants demonstrate behaviour which is
strikingly similar. Each appellant was told he
was about to receive a
cheque authorised in error in his favour. The easiest thing to have
done was to return the cheque back to
the medical aid without
depositing it. Instead, each appellant chose to deposit the cheque,
thereafter withdrew a portion of the
amount of the cheque and
supplemented this from money that was destined for some other
purpose, waited for Reddy to come and collect
the money, and in the
process of doing so, incurred unnecessary bank charges and subjected
themselves to great inconvenience. Some
of the appellants did not
only do this once, they went through this process more than once.
None appear to have thought it wise to
simply tell Reddy that they
would not deposit the cheque but instead would simply send it back to
the medical aid.
[20] The
aforegoing difficulties in the version testified to by the appellants
must further be seen against the fact that at the enquiry,
three of
the appellants gave a version different from that which they later
relied upon. Mr Govender, who represented second, third
and fourth
appellants at the second enquiry, gave a false version according to
these appellants. In the case of the second appellant
it was stated
that he cashed the cheque under the impression that his wife had
either paid cash or in some way settled the medical
account. In the
case of the third appellant it was stated that his wife deposited the
cheque without informing him. While in the
case of the fourth
appellant it was stated that he thought the cheques were for the
paediatrician. These three appellants testified
that what was stated
on their behalf was false. Yet they did nothing to correct the false
impression. Once again they claimed that
they simply followed the
advice of Govender, their union representative. In my view it is
difficult to understand how appellants,
who on their version were
innocent of any misconduct could have stood by and allowed Govender
to give false versions on their behalf.
In my view the false versions
were put up with the consent and the cooperation of the appellants.
[21] For these reasons,
I conclude that the version testified to by Reddy is more probable
than that of the appellants. All the appellants
were willing
participants in the fraudulent scheme perpetrated by Reddy upon the
medical aid. Their version was accordingly, rightly
rejected by the
court a quo.
[22] There being no
question as to the appropriateness of the sanction of dismissal, it
follows that the appeal must fail.
[23]
In the event the appeal
is dismissed
with costs.
____________________
Ngcobo AJP
I
agree
____________________
Conradie JA
I agree
____________________
Nicholson JA
Date of hearing: 11
June 1999
Date of judgment: 24
June 1999
Appearances:
For
appellants: V. Soni
Instructed
by: Chennels Albertyn & Tanner
For respondent: A.E.
Franklin
Instructed by: Deneys
Reitz