Absa Brokers (Pty) Limited v Moshoana NO and Others (JA45/03) [2005] ZALAC 3; (2005) 26 ILJ 1652 (LAC); [2005] 10 BLLR 939 (LAC) (26 May 2005)

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Absa Brokers (Pty) Limited v Moshoana NO and Others (JA45/03) [2005] ZALAC 3; (2005) 26 ILJ 1652 (LAC); [2005] 10 BLLR 939 (LAC) (26 May 2005)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA
(HELD
AT BRAAMFONTEIN)
CASE
NO: JA 45/03
In the
matter between:
ABSA
BROKERS (PTY) LIMITED Appellant
and
G N
MOSHOANA N.O. First Respondent
THE
COMMISSION FOR CONCILATION,
MEDIATION
AND ARBITRATION Second Respondent
J P VAN
STADEN Third Respondent
Before: ZONDO JP, PILLAY AJA, NKABINDE AJA
JUDGMENT
Nkabinde
AJA
Introduction
[1] This is an appeal against a judgment of Jammy AJ
sitting in the Labour Court in which he dismissed with costs a review
application
brought by the appellant in terms of s 145 of the Labour
Relations Act No. 66 of 1995 (“the Act”), for the review and
setting
aside of an arbitration award issued by the first respondent
under the auspices of the second respondent. The first respondent is
a commissioner of the Commission for Conciliation, Mediation and
Arbitration (“the CCMA”). The third respondent (“the employee”)
is a former employee of the appellant. The arbitration proceedings
related to a dispute between the appellant and the employee about
the
fairness of the employee’s dismissal from the appellant’s employ.
Before I deal with the merits of the appeal, it is necessary
to set
out the facts relating to this matter.
Background and common cause facts
[2] The appellant is a registered insurance brokerage
company and a member of the Life Officers Association (“the LOA”).
The first
respondent is a commissioner of the CCMA who conducted the
arbitration proceedings. The LOA rules (embodied in the Code of
conduct
of association) seek to safeguard the interests of insurance
policy holders and to protect the good name of the life insurance
industry.
[3] The employee commenced employment with the appellant
on 1 April 1993 as an insurance broker. His duties included the
selling of
life insurance policies to, and advising, the appellant’s
clients with regard to their financial matters.
[4] On 21 May 1999 the employee was consulted by one Mr
John Isaac Khoza (“the client”). No one else except the two
attended the
consultation. The client’s financial situation was, at
the time, desperate. The consultation was mainly about the client’s
interest
in applying for a life assurance policy. As at that time,
the client had an endowment policy with Sage Life which had commenced
on
16 February 1995 (“the old policy”). The client had registered
a bond with ABSA to the value of R63 073.00. He was in arrears
with
the payment of installments on the bond. The employee assessed the
client’s financial situation and gave him advice. Different
options
were explained to the client with a view to addressing his desperate
financial situation. One such option was to replace
the Sage Life
policy with one ordinary endowment policy which had a life cover
benefit.
[5] During the consultation the employee sold to the
client an insurance policy which was registered under policy number
64215262
(“the new policy”). He completed the application forms
for life assurance (“the proposal form”) on behalf of the client.
[6] Clause 14 of the proposal form reads as follows:
“14
PROTECTION OF EXISTING ASSURANCES
Important note:
Replacement of any insurances is generally
to the
disadvantage
of the owner because it involves duplication of
initial costs charged
to the policy.
Is this proposal to
replace the whole or any of your existing insurance
with any insurer (whether replacement is to occur immediately or to
replace an insurance discontinued within the past six months
or
within
the next six months)?
YES / NO
If
‘yes’ the introducer must discuss and complete the Replacement
Policy
Advice Record and attach it to this proposal form.
”
(underlining supplied)
In this case the
reference to “the introducer” in the last sentence of clause 14
would have been a reference to the employee.
[7] It will be noted from the contents of clause 14 that
there is a question that must be answered with “yes” or “no”.
The
question is whether the proposal form being completed is for the
replacement of any of the client’s existing insurance policies
with
the insurer. It will also be seen that, if the answer is “yes”,
which will be the case if the proposal is for the replacement
of an
existing policy, the “introducer” is required to ‘discuss and
complete the Replacement Policy Advice Record and attach
it to the
proposal form.’. If the answer to the question in clause 14 were
in the negative, it would not be necessary to
discuss and complete the Replacement Policy Advice Record (“the
RPAR”) nor was it
necessary to attach it to the proposal form.
[8] For reasons that will appear later in this judgment,
it is necessary to also quote clause 16 of the proposal form. Clause
16 was
required to be signed by the “introducer” who made
the declaration at the end of the process of
the completion of the proposal form. It reads thus:
“I certify that I have explained the meaning of question 14 to the
owner. I am aware of the possible detrimental consequences of
replacing a life policy. I have informed the owner of the declaration
I am signing and am fully conversant with the ‘S’-referencing
system embodied in the LOA Code on the S Refence System and I accept
the consequences thereof.
Signature of Introducer ----------------
Special
remarks--------------------”
The employee signed the above declaration and put the
date of 21 May 1999. The effect of the employee signing the
declaration in clause
16 was that by his signature thereto he was
certifying that, among other things, he had explained the meaning of
clause 14 to the
client. It would seem that the policy proposal was
then processed in the normal way. However, on 24 May 1999, which was
only three
days from the 21
st
when the proposal form was completed, the client surrendered the old
policy.
[9] On 20 September 1999 the client addressed a letter
of complaint to the appellant. The letter read as follows:
“REF POLICY NO 64215262 J.I KHOSA
In 1995 [I] took out a policy to cover my bond of R63 000.00 with
Allied Bank. The payment was on my bond.
In June 1999 a certain
Mr Van Staden made contact with me and
said we must stop the
old policy of R180.52 and take out a new
policy. He said that my
installment to (sic) my house will be the same
as it was
namelyR1453.00. He also said that the old policy money will
be paid onto my house
and that the new policy will pay my house in 8 years.
Now to my surprise my
house is still R1453 and the new policy is R398 per month, and [I]
cannot afford this as my salary is only R3393
per month.
I think Mr van Staden
did not tell me the truth and [I] want to cancel my policy and get
the R398 back.”
The disciplinary inquiry
[10] Pursuant to the client’s complaint, the appellant
preferred a disciplinary charge against the employee and notified him
to
attend a disciplinary inquiry. The charge, which was in Afrikaans,
read thus :
“Daar word beweer dat u wanvoorstelling en/of ‘n valse verklaring
afgelê het deurdat u op die aansoekvorm om versekering van
Sage
Lewens vir die kliёnt John Isaac Khoza, die vraag oor vervangende
versekering by puntnommer 14 van die aansoekvorm, negatief
beantwoord
het, terwyl dit positief beantwoord moes word.
Bogemelde optrede het
‘n direkte finansiële voordeel vir u ingehou en bogemelde optrede
is strydig met die vervangingskode van
die Vereniging van
Lewensversekeraars van Suid-Afrika (LOA) en is ‘n verbreking van
klousule 20.3.7 van u makelaarsdiensooreenkoms,
welke oortreding in
‘n ernstige lig beskou word in terme van ABSA Makelaars se
Dissiplinêre Kode met spesifieke verwysing na paragraaf
1.1 en 1.2
van die lys van wangedrag soos vervat in die kode en sou u skuldig
bevind word op bogenoemde klagte, kan dit tot u summiere
ontslag
lei.”
In an affidavit in subsequent court proceedings the
appellant provided the following as the English translation of the
charge that
was put to the employee, namely:
“misconduct relating to the making of a misrepresentation and/or
false statement in that the employee completed an application
form
for life insurance in which he stated that John Isaac Khosa was not
applying for replacement life insurance under circumstances
in which
Khosa was applying for replacement life insurance and thereby
obtained a financial benefit in contravention of the LOA rules
as
read with clause 20.3.7 of the employee’s contract of employment.”
The relevant LOA rule is set out in clause 3.2.1(b) of
the Code. It provides thus:
“(b) If the transaction is a replacement, the intermediary must
inform and counsel the client appropriately and must complete the
RPAR (Annexure 3) in consultation with the client. Member officers
may decide whether they wish to have this signed.”
Clause 20.3.7 of the employee’s contract of employment
reads as follows:
“20.3.7 Vervanging van bestaande aansoeke
of polisse soos in die
Vervangingsooreenkoms omskryf, waar die Werknemer
bewus
dat n
vervanging plaasvind, die vervanging ongetwyfeld nie in
belang
van die kliёnt was nie en nie in die aansoekvorm vermeld
nie,”.
[11] The appellant was represented by Mr Johannes Joost
van Heerden (“Van Heerden”) in the disciplinary inquiry. Van
Heerden was
the appellant’s compliance consultant. The employee
represented himself. Van Heerden led evidence in the inquiry. The
appellant
did not call the client to testify. It relied, essentially,
on the evidence of Mr. Simon van der Merwe (“Van der Merwe”),
the
audit manager of Sage Life. Much of his testimony was common
cause. In essence, Van der Merwe testified with regard to the
contents
of the proposal form which Sage Life received after the
consultation between the employee and the client.
[12] Van der Merwe testified about the manner in which
Sage Life handled matters arising out of clause 14 relating to the
replacement
of an insurance policy. He testified that the old policy
was surrendered on 24 May 1999 and that Sage Life did not receive the
RPAR.
At first, Van der Merwe testified that he could not say who had
initiated the surrender application. After the letter of complaint
had been read into the record, he testified that, based on the letter
and the date on which the proposal form was signed, the employee
was
the initiator of the surrender of the old policy.
[13]
Van
der Merwe explained that the basic rules of LOA were that, when a
proposal was sought or received in respect of a new assurance
policy,
the intermediary and insurer were obliged to establish whether such
a policy was a replacement policy or not. If it was,
the client had
to be properly counselled on the consequences of a replacement so as
to enable him to make a fully informed decision
regarding the
replacement and the RPAR had to be completed. If it was not, the RPAR
would not be required. Van der Merwe testified
further that the
employee was paid a commission on the new policy in the sum of
R4059.60 which amount would have been debited to
the account of the
client. Van der Merwe explained the advantages and disadvantages of
each policy and concluded that the new policy
was “commission
driven”.
[14] The employee also testified in the disciplinary
inquiry. He denied the allegations made against him. When the
chairman of the
disciplinary inquiry asked him to give his version of
what had taken place, the employee refused to do so. He responded
thus:
“Ek dink nie ek moet op hierdie stadium dit doen nie. Ek dink ons
moet ons bepaal by die klag, met alle respek. Die klag is dat
ek ‘n
valse verklaring gemaak het. Ek dink nie ek moet van ‘n ander ding
aangekla as dat ek ‘n valse verklaring afgelê het
nie. Daardie
punt betwis ek. Soos ek sê, dit is nie korrek nie. Ek wil nie enige
ander kommentaar lewer daaroor nie.”
[15 Under cross-examination by Van Heerden, the employee
admitted having assisted the client by completing the proposal form.
He testified
that he answered the question in clause 14 in the
negative on instructions of the client. He testified further that he
discussed
replacement with the client. When asked whether he had been
aware that replacement was going to take place, the employee
testified
that ‘daar was ‘n vervanging ter sprake gewees. Ek kan
nie sê date ek op daardie oomblik bewus was van ‘n vervanging wat
sou
plaasvind nie, maar daar was ’n vervanging ter sprake gewees’.
Van Heerden put to him that ‘… U tree op as ‘n agent van
‘n
lewensversekeraar. So alhoewel u voorsien het dat hierdie ‘n
moontlike valse verklaring is, het u nog steeds op instruksie
van die
kliënt ‘n wanvoorstelling aan die versekeraar gemaak deur dit nie
te openbaar nie.’ The employee responded thus :
“Dit is korrek. Ek gaan nie toelaat dat u my in ‘n hoek druk om
te sê ek was bewus of nie bewus daarvan nie. Hier is ‘n aantyging
teen my gemaak dat ek ‘n valse verklaring afgelê het en ek wil net
herhaal vir u was ek non-nou gesê het. Ek het ‘n vorm voltooi-dit
is dee van my werk, die kliënt het die verklaring afgelê en
geteken.”
[16] The
employee further admitted having signed the declaration in clause 16.
However he testified that the declaration in clause
16 ‘sê nie dat
ek ‘n valse verklaring geteken het nie. Dit sê dat ek met die
kliёnt bespreek het en ek is bewus van ‘n
S-verwysing. Dit
beteken nog nie ek het ‘n valse verklaring afgelê nie.’ At that
stage of the inquiry the Chairman inquired
from Van Heerden ‘of
daar enige ander soortgelyk sake is wat teen mnr van Staden ondersoek
word waarop hy bevestiging kry dat
daar so ‘n ondersoek is wat nog
nie afgehandel is nie.’ Van Heerden indicated that the charge
would not be amended. No further
witnesses were called.
[17] The chairman of the disciplinary inquiry found the
employee not guilty in respect of the allegation of making a false
statement.
However, he did find him guilty of the allegation of
misrepresentation. He gave the following purported reasons for this
latter finding,
that:
“a) Dat u u posisie misbruik het deur ‘n nuwe polis vir die
kliënt J I Khosa as vervanging van ‘n bestaande polis, vir eie
finansiële gewin. Die stap hou geen voordeel vir die kliёnt in nie,
wat ook
aanleiding to sy skriftelike klagte van 20 September 1999 gegee het;
b) Dat u die riglyne soos vervat in die vervangingskode van die
Vereniging van Lewensversekeraars van Suid-Afrika opsetlik verbreek
het deur nee te antwoord op die vraag of dit ‘n vervangende polis
is trewyl uself erken het dat u bewus was dat dit wel ‘n
vervangende
polis was.”.
According to the parties’ legal representatives before
us the English translation of the above is -
“a) That you abused your position by a new policy for the client JI
Khoza as a replacement for an existing policy, for own financial
gain. The step is not to the benefit of the client, which gave rise
to his written complaint of 20 September 1999.
b) That you
intentionally transgressed the guidelines contained in the
replacement code of the Life Officers Association of South
Africa by
answering no to the question whether it is a replacement policy
whereas you have admitted that you were aware that it was
a
replacement policy.”
Regarding the
sanction the chairperson decided that the employee be dismissed. The
employee noted an internal appeal against the decision
of the
chairman of the disciplinary inquiry. The chairman of the appeal
hearing dismissed the appeal and confirmed the decision to
dismiss
the employee.
Arbitration proceedings
[18] A dispute then arose between the employee and the
appellant about the fairness or otherwise of the dismissal. The
employee referred
the dispute to the CCMA for, initially,
conciliation and, eventually, arbitration. The issue for
determination in the arbitration
was whether the dismissal was
substantively fair or not. The procedural fairness of the dismissal
was not in dispute. During the
arbitration the appellant was
represented by an attorney, a Mr Ferreira. The employee appeared in
person. The employee presented
certain documentation which included
the minutes of the disciplinary enquiry, the minutes of the appeal
hearing and the LOA rules.
By agreement between the parties the
minutes were admitted as evidence. The other documents, including the
LOA rules, were admitted
as
what they purported to be. The commissioner spelled out the nature of
the arbitration proceedings. He remarked that the arbitration
was a
hearing
de novo
and
that, if the dismissal was not in dispute, the appellant bore the
onus to prove the fairness of the dismissal. This statement
was based
on s 188(1) of the Act.
[19] In the arbitration Mr Ferreira did not call the
client to testify. Van Heerden testified on behalf of the appellant.
He testified
mainly with reference to the transcript of the
disciplinary inquiry against the employee so as ‘to give a general
overview of the
proceedings…’ He testified further that, as a
compliance consultant, he had to ensure that the appellant adhered to
new legislation
and dealt with the appellant’s disciplinary
matters. He further testified that, in terms of clause 20.3.7 of his
contract of employment
with the appellant, the employee was bound by
the LOA rules.
[20] Van Heerden testified that the employee had
contravened the LOA rules because he had misrepresented or given
false information
to the client in that, whilst he knew that there
existed an old policy, he failed–
(a) to indicate on the proposal form to Sage Life that
the new policy was replacing the old policy; and
(b) to explain the consequences of such replacement to
the client.
[21] During Van Heerden’s cross examination by the
employee the latter put it to Van Heerden that he (i.e. the employee)
had answered
the question in clause 14 in the negative ‘under the
instruction of [the client]’ and that the client was ‘unsure
about the
situation…’ Van Heerden’s response was –
“In general there are no indications of any of these discussions
with the client and Mr Van Staden did not use the opportunity
in the
disciplinary matter to put forward his argument that he has now chose
(sic)...
. . .
… Well, my comment is it is very improbable…”
Of course, Van Heerden’s answer to such question was
irrelevant because he had no personal knowledge of the discussion
that had
taken place between the employee and the client.
[22] In the arbitration the employee repeated the
defence he had raised in the disciplinary inquiry that he had not
made any misrepresentation
or false statement. According to him the
arrears on the payment of the installments on the client’s bond
were occasioned by, among
other things, by the fact that the client
had been furnished with inaccurate information by ABSA concerning the
repayment of the
bond and that there had been a duplication of
insurance on his bond. He testified that no decision to replace the
existing policies
had been taken during the consultation between
himself and the client or soon thereafter. He also testified that he
had been unaware
of the cancellation of the old policy until this
fact was brought to his attention in the inquiry. He testified
further that, had
the client heeded his advice, the arrears in his
bond would have been reduced, the duplication on his bond insurance
would have been
rectified and the monthly insurance costs on the bond
could have remained the same.
[23] The employee testified further that he had given
the client the best advice that he could. According to him, the
fairness of
the dismissal turned on the answer to the question in
clause 14. He testified further that, if the client had decided to
cancel the
old policy, the answer to the question in clause 14 would
have been in the affirmative and the RPAR would have been completed.
He
further testified that, although the various options had been
discussed, the client had not been sure whether he should continue
with the existing policies or not. He testified that the client had
been surprised that his bond was in arrears because he had been
paying for four years. The employee testified that the client could
also not understand how two insurance policies had been debited
to
his bond. The employee further testified that, after he had discussed
the various options with the client, he advised the client
that the
question in clause 14 had to be answered. He testified that the
client was not sure at that stage whether or not to go ahead
with the
suggestion of canceling the existing policies and replacing them with
a new one. The employee informed the commissioner
that he told the
client that the decision was his (i.e. the client’s) and that the
question in clause 14 had to be answered with
either, ‘yes’ or
‘no’ but the client was not sure. The employee testified that
finally the client had told him to answer
the question in the
negative and had then said: ‘… because I do not know what I want
to do’ and that ‘[a]lthough we can apply
for the cover I do not
know whether I am going to cancel those policies’. He testified
that the client, after the completion of
the proposal form, had
signed a declaration to the effect that the answers given in the
proposal form were true and correct. The
employee testified that he
had signed the declaration under clause 16 ‘as an introducer’ to
confirm that he had explained the
questions in the proposal form to
the client’. As to the relief, the employee sought compensation
equivalent to 12 months’ remuneration.
He testified that his
remuneration had been R45 000.00 per month.
[24] At the commencement of the cross-examination of the
employee Mr. Ferreira asked the employee whether he intended calling
the
client as his witness. When the employee answered in the
negative, Mr. Ferreira put it to him that his ‘credibility on the
evidence
he tendered is very important.’ The following discussion
ensued when Mr. Ferreira suggested to the employee that the new
policy
was intended to replace the old policy:
“Not hundred percent correct, Mr. Ferreira.
Our discussion went along
the way in that direction. When coming to question 14, I have
testified that the client was not sure, so at that stage we could not
make a decision. He could not make a decision and I could not make it
for him. That is what I have said.
……
But the whole discussion
concerning this, the replacement was involved. So, there has not,
replacement has not happened at that stage.’
…
MR FERREIRA:
Jy sê jy het punt 14 met die kliënt bespreek.
---Yes, I have said it.
‘Hoekom het jy dit
met die kliёnt bespreek? Was jy bewus dat daar ‘n vervanging gaan
plaasvind.’? … ---Exactly. It is exactly,
I do not have to
rephrase that . . . I stated in Afrikaans daar was ‘n vervanging
tersprake. Ek kan nie sê dat ek op die oomblik
bewus was van ‘n
vervanging wat sou plaasvind nie maar daar was ‘n vervanging ter
sprake …
Yes, but you have
testified there was a great possibility in that this policy must be
replaced… --- But that is, exactly, Mr. Ferreira.
We are talking
about possibilities now. We are not talking about facts (?)”
The
employee testified further, under cross examination, that he was
entitled to earn a commission regardless of the answer to the
question in clause 14. No further witnesses were thereafter called.
[25] The commissioner found the dismissal substantively
unfair. He ordered the appellant to compensate the employee in an
amount of
R540 000.00 being an equivalent of twelve months’
remuneration at the rate of R45 000.00 per month. The commissioner
articulated
his reasons for his finding thus:
“The issue in this case is centered on
question 14… According to the [appellant], the [employee] was not
supposed to answer question
14 in the negative but was supposed to
answer it in the positive. That being the view held by the
[appellant] the facts before me
is that the question itself has been
answered in any event in the negative. There is no dispute about
that.
. . .
As pointed out earlier the evidence presented at the arbitration
points out that the question was answered in the negative. That
being
the answer, the proviso that the introducer must discuss and complete
replacement advise record does not apply. At the end
of [the proposal
form] there was a declaration by [the client] declaring that he has
answered all the questions truly and correctly.
At the bottom of [the
proposal form] the [employee] reported that and certified that he had
explained the meaning of question 14
and confirmed that he is aware
of the possible detrimental consequences and confirmed that he is
fully conversant with the LOA rules
and accept the consequences
thereof.
… [T]he [appellant’s basis of the dismissal is that the
[employee] at the time of proposing this insurance cover was aware
that
[the client] was covered by another policy and accordingly the
second policy should be a replacement policy. Unfortunately the only
evidence at my disposal to point out what the second policy was is
document “K”. According to document “K” the person to
be
assured declared that the subsequent policy was not a replacement
policy. If I am to accept that the only evidence reflecting
the
intentions of [the client] is document “K”, then it follows that
it was not necessary for the applicant to complete the so-called
replacement record (i.e. annexure 3 to the LOA rules) or to comply
with
the LOA rules.”.
Again I cannot ignore the evidence of the [employee] . . . that the
policy allegedly to replace was only cancelled on the 24 May
1999.
This support (sic) the
[employee’s] version that [the client] as at 21 May 1999 was not
sure whether he was going to replace or
cancel the existing policy.
. . .
…In this case there is no dispute that the [employee] was dismissed
and accordingly the onus was on the [appellant] to prove that
there
existed a fair reason for a dismissal.
In my view the
[appellant] has failed to discharge its onus that the [employee] had
contravened any work rule and or the [employee]
misrepresented facts
as alleged and therefore contravened the LOA rules together with the
contract of employment and the disciplinary
code and procedure.”
Review proceedings
[26] Aggrieved by the commissioner’s award, the
appellant launched an application in the Labour Court for the review
and setting
aside of the award essentially on the grounds that the
commissioner -
(a) had failed to appreciate the full extent of the
employee’s contravention of the LOA rules, thereby rendering the
award unjustifiable
as contemplated in s 145 of the Act;
(b) had
misconstrued the evidence placed before him, the contention being
that he should have concluded that the employee had deliberately
answered the question in clause 14 in the negative so as to obviate
the need to explain the consequences of a replacement policy
to the
client so as to earn a commission which he would otherwise not have
been entitled to; and
(c) had
failed to exercise his discretion in terms of s 194(2) when deciding
on the compensation to be awarded to the employee.
Allegations were made in the review application,
inter
alia,
that the
complaint by the client was that the employee had sold a
replacement
life
policy to him without explaining the consequences of such a
transaction
to him as required by clause 3.2.1.(b) of the LOA rules.
[27] The court
a quo
dismissed
the application with costs. It concluded, with regard to the grounds
in (a) and (b), above, that the appellant had not shown
any basis to
justify interference with the award. With regard to the third ground
it found no sustainable basis for the contention
that the award was
excessive.
The appeal
[28] On appeal Counsel for the appellant was
specifically asked to specify exactly what the employee’s conduct
was for which he
had been dismissed and on which the appellant relied
to contend that the employee was fairly dismissed. Counsel pointed
out that
such conduct was that the employee had made a false
declaration in clause 16 of the proposal form in that he certified
therein that
he had explained the meaning of the question in clause
14 to the client when he, in fact, had not done so. He submitted
further that
the commissioner had misconstrued the evidence and that
this had led to him issuing an award that was unjustifiable and stood
to
be reviewed and set aside. Counsel for the appellant referred to
some evidence presented by the employee during the arbitration when
the latter testified that he had discussed replacement with the
client. Counsel submitted that there was no way in which the client
would have decided to submit the proposal form that he submitted
if replacement had been discussed with him.
He pointed out that the taking out of the new policy would not have
addressed the client’s
precarious financial position but would have
made it worse. It was on the basis of this logic that counsel
submitted that the conclusion
must be drawn that the employee’s
declaration that he had explained clause 14 to the client was
probably false.
[29] The attorney who appeared on behalf of the employee
submitted that clause 16 in the proposal form never formed part of
the charge.
He submitted that the case which the employee had to meet
in the disciplinary inquiry, the arbitration proceedings and the
appellant’s
case in the court
a quo
was that, by supplying “no” as the answer to the question in
clause 14, the employee had made a representation that the proposal
was not to replace an existing policy when, in fact, it was. Mr.
Kocks submitted that this was, according to the appellant, the
misrepresentation.
In this regard Mr Kocks pointed to a number of
areas in the record in support of this contention.
[30] With regard to what the appellant’s case against
the employee has been through the various stages, a perusal of the
record
reveals the following:
(a) the charge against the employee made no reference to
the employee having made a false declaration;
(b) in
finding the employee guilty of the second part of the charge which he
regarded as misrepresentation, the chairman of the disciplinary
inquiry advanced the reasons referred to in paragraph 17, above, as
his reasons. There was, manifestly, no reference at all to the
employee having allegedly made a false declaration in clause 16;
(c) during
the arbitration proceedings the commissioner stated the appellant’s
case, as he understood it, thus: ‘Mr Van Staden
according to [van
Heerden ] the case for the [appellant] is not that you have fixed
policies…The case of the [appellant]…is that
there was a question
set out in the questionnaire … [w]hich question was answered in the
negative whereas the truth of the matter
is, it is yes… That is the
[appellant’s] case.’. The appellant’s counsel did not say that
this did not correctly reflect
the appellant’s case;
(d) in his
award the commissioner remarked that ‘[t]he issue in this case is
centered around question 14 of [the proposal form]’;
(e) in the
arbitration Van Heerden testified that at the disciplinary inquiry,
he had questioned Van der Merwe about clause 14;
(f) during
Van Heerden’s cross-examination the employee asked Van Heerden
whether the cause of the appellant’s unhappiness was
about the
answering of the question in the negative or the replacement of the
policy whereupon Van Heerden answered that both were
the concerns of
the appellant. He did not say that the employee’s declaration in
clause 16 was the cause for the appellant’s
concern ; and
(g) in the
review application the deponent to the appellant’s founding
affidavit stated that ‘the employee’s decision to answer
the
question in clause 14 in the negative and more importantly, not to
advise [the client] of the financial implications of a replacement
policy, constitutes a flagrant breach of the LOA rules and therefore
a contravention of the terms and conditions of the terms of
conditions of employment.’ The deponent did not say that the
possible falsity of the employee’s declaration in clause 16 was
a
breach of the LOA rules.
[31] It was never suggested, either in the disciplinary
inquiry, the arbitration proceedings or the review proceedings, that
the appellant’s
case against the employee was that the employee’s
declaration in clause 16 was false.
The
only time that clause 16 was mentioned was during the employee’s
cross-examination in the disciplinary inquiry when Van Heerden
merely
referred to the declaration in that clause.
[32] Counsel for the appellant took the above approach
with regard to the conduct for which the employee was dismissed when,
on the
second day of the hearing of argument in this matter, he was
asked to clarify what the appellant’s case was on this issue. Not
only is Counsel’s reliance upon the making of an allegedly false
declaration by the employee at variance with the appellant’s
case
as revealed in the areas of the record referred to above but also it
is at variance with Counsel’s argument before us during
his main
address on the first day of the hearing of this matter. Above all, it
is not the case contained in his heads of argument
before this Court.
The appellant’s case, as set out in the appellant’s Counsel’s
heads of argument, is that the conduct on
the part of the employee
that the appellant complained about and for which he was dismissed is
that he failed to explain the consequences
of a replacement policy to
the client. In dealing with the objectionable conduct on the part of
the employee in his heads of argument
Counsel for the appellant
refers to certain extracts of evidence which the employee gave in the
arbitration. In paragraphs 3.6-3.11
of his heads of argument Counsel
for the appellant wrote thus:
“3.6 It is apparent from the aforementioned extract (as read with
the previous extract) that question 14 of the application form
was
answered in the negative because [the client] (on the [employee’s]
version) had not yet made a decision concerning the cancellation
of
the first policy.
3.7 Under such circumstances, the status of the [new] policy was
unclear since:
3.7.1 the [new] policy would be a replacement policy in the event of
[the client] canceling the [old] policy;
3.7.2 the [new] policy
would not be a replacement policy in the event of [the client]
continuing with the [old] policy.
3.8 The primary purpose of the LOA Rules (and more specifically
clause 3.2.1 (b) (sic) is to explain the financial consequences of
a
replacement policy to members of the general public, including [the
client].
3.9 Since it must have
been reasonably foreseeable to the [employee] (on his own version)
that [the client] could not afford to maintain
two policies (i.e. the
[new] and [old]), the [employee] should reasonably have construed the
[new] policy as a replacement and therefore
should have completed the
RPAR (annexure 3) in consultation with [the client].
. . .
3.10 This is especially
so since the [employee] (on his own version) was aware of the fact
that [the client] had not decided to retain
the [old] policy at the
time of applying for the [new] policy.
3.11 Accordingly, it is
respectfully submitted that the learned Judge (and the
[commissioner]) adopted too technical an approach in
this matter. The
[employee] should have explained the consequences of a replacement
policy to [the employee] (who was in financial
difficulties) under
circumstances in which [the client] was undecided as to the
cancellation of the [old] policy.”.
[33] From all of the above there can simply be no doubt
that it has never been the appellant’s case that the objectionable
conduct
on the part of the employee was the allegedly false
declaration in clause 16. Indeed, that was not the reason for his
dismissal.
The reason for his dismissal related to clause 14. It was
either that he provided a negative answer to the question in clause
14
or that he failed to give the client the explanation contemplated
in clause 14. If the appellant’s Counsel’s heads of argument,
as
set out earlier, are anything to go by, the reason for the dismissal
was the alleged failure on the employee’s part to give
the client
the aforesaid explanation.
[34] If one has regard to the findings and the purported
reasons of the chairman of the disciplinary inquiry for his findings,
it
will be seen that he specifically found the employee not guilty of
making a false statement but found him guilty of misrepresentation.
What was the alleged false statement in respect of which the employee
was found not guilty? The immediate impression one gets is
that the
statement was the giving of the negative answer to the question in
clause 14. The difficulty with this, however, is that
paragraph (b)
of the purported reasons of the chairman of the disciplinary inquiry,
referred to in paragraphs 17 above, suggests
that the giving of a
negative answer to the question in clause 14 formed part of the basis
for the chairman’s finding that the
employee was guilty of
misrepresentation.
[35] If one has regard to the charge that the employee
faced in the disciplinary inquiry, one will realize that the first
part thereof
is clear. It is to the effect that the charge against
the employee was that he had given a negative answer to the question
in clause
14. It was alleged that his misconduct was the ‘making of
a misrepresentation and or false statement in that he (i.e. the
employee)
stated that [the client] was not applying for replacement
life insurance under circumstances in which [the client] was applying
for
the replacement life insurance …’ . The charge then went on
to read: ‘…and thereby obtained a financial benefit in
contravention
of the LOA rules as read with clause 20.3.7 of the
employee’s contract of employment.’. The matter was dealt with on
the basis
that the findings of not guilty made by the chairman of the
disciplinary inquiry related to the allegations that the employee
gave
a negative answer to the question in clause 14. If that is not
correct and the chairman’s finding of not guilty did not relate
to
this but related to something else and he found him guilty of this,
there can be no doubt that it could not have been open to
the
commissioner to so find. This is because it is common cause that, on
the unchallenged evidence of the employee before the commissioner,
the employee explained to the client that the question in clause 14
had to be answered in one way or another and that the client
said
that he was undecided on whether to cancel the old policy but
ultimately instructed the employee to answer in the negative.
Accordingly, since at the time when the question in clause 14 had to
be answered, the client had not taken any decision to cancel
the old
policy, the answer to the question in clause 14 could not have been
given as yes. In part the employee testified in the arbitration
on
this issue as follows:
“So, then I asked [the client], I said…we have got this question
here which says, is this policy to replace any of your policies,
yes
or no, and the client says, but I cannot answer that. I say to him,
but you’ve got to answer it because it is a questionnaire
which
says yes or no. if we answer the question yes, you got to complete an
additional application or an additional form which gives
the
information concerning this … (intervenes)
So [the client] said,
no, I do not want to do that. I do not want to answer that question
yet because if I answer that question then
I have made a decision on
this thing. So I, my question to [the client) then is, do we answer
question 14 then No, on which he confirmed.”
[36] That evidence, which was unchallenged, would
preclude any finding that the employee gave the negative answer in
clause 14 on
his own and without the authority of the employee. It
would also preclude any finding that the answer that should have been
given
to the question in clause 14 is yes. This is because there
would have been no basis for a positive answer to have been given to
that
question when the client had not as yet made the decision that
he was going to cancel the old policy.
[37] In so far as the appellant may have dismissed the
employee for his alleged failure to give the explanation contemplated
in clause
14, the first answer to that is that there was no
obligation on the employee to give the client such explanation as the
client had
not taken the decision to cancel the old policy. If there
was no such obligation, there could not have been any basis for a
charge
of misconduct arising from his failure to provide the
explanation contemplated in clause 14. I am aware that in his
declaration in
clause 16 the employee certified that he had given the
client such explanation. That statement may or may not have been
false. However,
since he was not charged with allegations of making a
false declaration in clause 16 and since this was not the reason for
his dismissal,
the declaration cannot be taken into account for the
purpose of the determination of the fairness or otherwise of the
dismissal.
The substantive fairness or otherwise of the employee’s
dismissal must be assessed with reference to the reason for which he
was
dismissed.
[38] In any event it would appear from the record that
it was not at any stage during the employee’s cross-examination put
to him
that the declaration that he made in clause 16 was false in
that he had not given the client the explanation that he said in the
declaration he had given him. Indeed, Counsel for the appellant was
asked during the hearing of argument whether he was able to refer
to
any part of the record that would show that this had been put to the
employee. He could not do so.
[39] It is an
essential part of the administration of justice that a cross-examiner
must put as much of his case to a witness as concerns
that witness
(see Van Tonder v Killian NO en Ander
1992 (1) SA 67
(T) at 72I). He
has not only a right to cross-examination but, indeed, also a
responsibility to cross-examine a witness if it is
intended to argue
later that the evidence of the witness should be rejected. The
witness’ attention must first be drawn to a particular
point on the
basis of which it is intended to suggest that he is not speaking the
truth and thereafter be afforded an opportunity
of providing an
explanation (see Zwart and Mansell v Snobberie (Cape) (Pty) Ltd 1984
(1) PH F19 (A)). A failure to cross-examine
may, in general, imply an
acceptance of the witness’ testimony. In this regard Pretorius has
the following to say in ‘Cross
-examination
in South African Law’
Butterworths 1997
p149-150 :
“… it is unjust and unfair not to challenge a witness’s account
if offered the opportunity, then later argue – when it is
no longer
possible for the witness to defend himself or offer an explanation –
that his evidence should not be accepted.
. . .
…It would create an
untenable situation if each witness had to be recalled later to
respond to claim emerging from the opponent’s
case which the
witness might be able to elucidate. In the interest of finality and
convenience of witnesses, it is clear that all
matters must, as far
as possible, be dealt with at a single opportunity. There can thus be
no doubt that there is a clear responsibility
on a cross-examiner to
cross-examine if a witness’s account is rejected.”.
(See also Small v Smith
1954 (3) SA 434
(SWA)).
[40] The effect of a
failure to cross-examine a witness is instructively dealt with in
R
v M
1946 A.D. 1023
at 1027-1028 where Davis
AJA remarked-
“Counsel for the Crown stressed the fact that the defence story was
never put to the Crown witnesses, who were hardly cross-examined
at
all …In this connection reference may be made to the House of Lords
case of
Browne v Dunn,
which is to be found reported in full
only in 6 R. 67… but the relevant extracts from the speeches are …
summarized by Phipson,
Evidence
(7
th
ed., p.460) :-
‘As a rule a party should put to each of his opponent’s witness
in turn so much of his own case as concerns that particular witness,
or in which he had a share. . . . If he asks no questions he will,
in England, though not perhaps in Ireland, generally be taken
to
accept the witness’s account. . . . Moreover, where it is intended
to suggest that the witness is not speaking the truth upon
a
particular point, his attention must first be directed to the fact by
cross-examination, so that he may have an opportunity of
explanation.
… Failure to cross-examine, however, will not always amount to an
acceptance of the witness’s testimony, e.g. if
the witness has had
notice to the contrary beforehand, or the story is itself of an
incredible or romancing character…’
These remarks are not intended to lay down any inflexible rules even
in civil cases, and in a criminal case still greater latitude
should
usually be allowed.” .
[41] It is also
apposite to refer to what the Constitutional Court had to say in this
regard in
President of the Republic of South
Africa v South African Rugby Football Union
2000 (1) SA 1(CC)
at
paragraphs 61 and 62. There the Court said :-
“[61] The institution of cross-examination
not only constitutes a
right, it also imposes certain obligations. As a general rule it is
essential, when it is
intended to suggest that a witness is not speaking
the truth on a
particular point, to direct the witness’s attention to the
fact by questions put
in cross-examination showing that the imputation
is intended to be made
and to afford the witness and opportunity,
while still in the
witness-box, of giving any explanation open
to the witness and of
defending his or her character… This rule
was enunciated by the
House of Lords in
Browne v Dunn [(1893)
6R
67 (HL)]
and had been adopted and
consistently followed by
our courts.
[62] The rule in
Browne v Dunn
is not merely one of
professional practice but ‘is essential to fair play and fair
dealing with witnesses’….
[63] The precise nature
of the imputation should be made to the witness so that it can be met
and destroyed, particularly where the
imputation relies upon
inferences to be drawn from other evidence in the proceedings. It
should be made clear not only that the evidence
is
to be
challenged but also
how
is to be challenged. This is so
because the witness must be given an opportunity to deny the
challenge, to call corroborative evidence,
to qualify the evidence
given by the witness or others and to explain contradictions on which
reliance is to be placed.”
(See also Sv Boesak
[2000] ZACC 25
;
2001 (1) SACR 1
(CC) para [26])
[42] The only explanation I can think of as to why it
was never put to the employee that his declaration in clause 16 was
not true
or could not possibly be true is that the appellant’s case
was never that the declaration he made in clause 16 was false. In all
of these circumstances I conclude, therefore, that, in so far as the
appellant sought to challenge the court
a
quo’s finding that there was no basis to
interfere with the commissioner’s finding that there was no fair
reason for the employee’s
dismissal, such challenge must fail.
[43] Another ground upon which the appellant based its
review application in the court
a
quo
relates to the decision of the commissioner to award the employee the
amount of compensation that was awarded. In this regard
the appellant
did not contend that the commissioner should not have awarded the
employee any compensation at all but complained that
the amount was
excessive. The appellant contended that, if regard was had to the
conduct of the employee, the prejudice he had caused
to the client,
the impact of his conduct on the insurance industry as a whole and
the financial prejudice he caused to the appellant,
the amount of
compensation should have been nominal. In the alternative Counsel for
the appellant submitted that the matter should
be remitted to the
CCMA to enable the appellant to call the client to testify. With
regard to the latter point there is, in my view,
no factual or legal
basis for the appellant to be given two bites at the cherry. The
appellant elected not to call the client. When
it made that election,
it made its bed. Now it must lie on it. There is no basis upon which
the Court could reverse the process and
thus give the appellant a
chance to make a different election in this regard.
[44] The court
a quo
found
no basis to interfere with the amount of compensation that the
commissioner awarded. The commissioner did not give any reasons
for
the amount that he gave. He should have. However, the fact that he
did not give any reasons for deciding on such an amount is
itself no
reason to conclude that he committed a reviewable irregularity in
awarding such amount of compensation.
[45] The award was handed down on 19 October 2001. That
was prior to the Labour Relations Amendment Act No. 12 of 2002 (“the
Amendment
Act”) which came into operation on 1 August 2002. As at
the 19
th
of
October 2001, which is when the award was handed down, s 194 of the
Act, which deals with the awarding of compensation to unfairly
dismissed employee, read thus in ss (1) and (2) :
“(1) If a dismissal is unfair only because the employer did not
follow a fair procedure, compensation must be equal to remuneration
that the employee would have been paid between the date of dismissal
and the last day of the hearing of the arbitration or adjudication,
as the case may be, calculated at the employee’s rate of
remuneration on the date of dismissal. Compensation may however not
be
awarded in respect of any unreasonable period of delay that was
caused by the employee in initiating or prosecuting a claim.
(2) The compensation
awarded to an employee whose dismissal is found to be unfair because
the employer did not prove that the reason
for dismissal was a fair
reason related to the employee’s conduct, capacity or based on the
employee’s operational requirements,
must be just and equitable in
all the circumstances,
but not less than the amount specified in
subsection (1)
, and not more than the equivalent of 12 months’
remuneration calculated at the employee’s rate of remuneration on
the date of
dismissal.”
(underlining supplied).
[46] In
Johnson & Johnson
(Pty) Ltd v Chemical Workers Industrial Union
(1999) 20 ILJ 89 (LAC) this Court held that the Labour Court’s or
the arbitrator’s discretion in dealing with an issue of
compensation
in regard to a dismissal that is unfair only because no
fair procedure was followed is limited to the question whether or not
compensation
should be awarded and there was no discretion as to how
much compensation should be awarded once the court or the arbitrator
has
decided that compensation should be awarded. That was prior to
the Amendment Act. The Court held that once the Labour Court or an
arbitrator had decided to exercise its or his discretion in favour of
awarding compensation, the amount of compensation was determined
by
the statutory formula in s 194(1) of the Act. That was that the
employee had to be awarded compensation that was equal to the
remuneration that the employee would have been paid from the date of
dismissal to the last day of the hearing if he had not been
dismissed. The part of s 194 (2) which is underlined above stated
that the compensation which must be awarded to an employee whose
dismissal had been found to lack a fair reason should not be less
than the amount contemplated in s 194 (1). This means that it was
precluded that an employee whose dismissal fell under s 194 (2)
should get lesser compensation than he would have got if his
dismissal
case fell under s 194 (1). This makes sense because there
would be no basis to treat an employee whose dismissal has been found
to
lack any fair reason less favourably than an employee whose
dismissal has been found to have been for a fair reason but was not
preceded
by a fair procedure. In other words it would be unacceptable
that the latter should be awarded a bigger amount of compensation
than
the former.
[47] In this case, if the employee’s dismissal had
been for a fair reason but had not been preceded by a fair procedure,
the employee
would have been awarded 12 months remuneration in
compensation because the last day of the hearing of the arbitration
proceedings
was well beyond 12 months from the date of his dismissal.
Accordingly, the commissioner was precluded by s 194 (2) from
awarding
the employee an amount of compensation that would have been
less than 12 months remuneration. Not only would he have acted
ultra
vires if he had awarded the employee less but
also he would have acted irrationally. There is no legal or factual
basis to interfere
with the amount awarded by the commissioner.
Therefore, this leg of the appellant’s appeal must also fail.
[48] As to costs the matter was dealt with on the basis
that costs should follow the result.
[49] In the premises the appeal is dismissed with costs.
_______________
NKABINDE
AJA
I agree
___________
ZONDO JP
I agree
___________
PILLAY AJA
Date of Hearing: 11 November 2004
Date of judgment: 26
May 2005
Appearances:
For the appellant: Adv
J Van As
Instructed by Messrs
Erasmus & Ferreira Inc.
For the Third
Respondent: Mr. Kocks of Kocks & Dreyer Attorneys