Ellerine Holding Limited v Commission For Conciliation, Mediation and Arbitration and Others (JA22/2005) [2008] ZALAC 6; (2008) 29 ILJ 2899 (LAC) (8 May 2008)

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[2008] ZALAC 6
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Ellerine Holding Limited v Commission For Conciliation, Mediation and Arbitration and Others (JA22/2005) [2008] ZALAC 6; (2008) 29 ILJ 2899 (LAC) (8 May 2008)

JA22/2005-DKDJ
11
JUDGMENT
LOM Business Solutions t/a Set LK Transcribers
IN THE LABOUR APPEAL COURT OF SOUTH AFRICA
JOHANNESBURG
CASE NO
: JA22/2005
2008-05-08
In the
matter between
ELLERINE HOLDINGS LIMITED Appellant
And
CCMA AND OTHERS Respondent
_________________________________________________________
J U D G M
E N T
_________________________________________________________
DAVIS JA
:
[1] This is an appeal against the judgment of the Labour Court
delivered by Ngcamu AJ ON 21 July 2004.
[2] The issues can be summarised briefly thus:
Appellant
is a furniture retailer which owns stores throughout the country. Mr
Mcingane (‘the employee’) who is represented
by the third
respondent had been employed by the appellant at its Burgersdorp
store. On or about 18 June 2001, the employee
completed
the banking register in respective of a deposit slip, number 10521,
in an amount of R3 000. Later on the same morning,
he completed
a banking register in respect of another slip, number 710522, in an
amount of R2 619.
[3] On 18
July 2001, the manager of the Burgersdorp store received a call from
his area manager in which it was reported that the
records of the
appellant showed that the two deposit slips, to which I have made
mention, totalling in an amount of R5 619 had
not been banked.
Subsequent
investigations took place. The bank statement obtained from the
Burgersdorp branch of First National Bank revealed that
the amounts
reflected, the two deposit slips had indeed not been banked. It is
also apparent that on 18 June 2001, the employee
left the store with
amounts totalling R5 619 and by virtue of his signature
confirmed that the monies had been banked.
[4] On 25
July 2001, he was suspended from his employment. Notice of the
suspension provided that a disciplinary hearing would be
held on
30 July 2001 at 11:00. On that day he was served with a
notice to appear at the disciplinary hearing.
The
allegations were formulated thus:
It is
alleged that you Alfred in your capacity of stock controller made
yourself guilty of gross dishonesty, in that on 16/04/01,
you
accepted money to the value R5 619,00 to be banked. You entered
it into the bank register as if banked and signed of the
register
yourself, receiving that, the said money was not banked thereby,
enriching yourself by the amount of R5 619,00.
[5] On 27
July 2001, the employee signed an acknowledgment of debt, which
stated that he was “truly and lawfully indebted” to
the appellant
in the sum of R5 619,00 in respect of the cash shortage.
Reference was made in this document to the two deposit
slips. In the
acknowledgment of debt, he also authorised appellant to make monthly
deductions from his salary until the capital
amount had been settled.
On 28
July 2001, the appellant resigned from the employer and in his letter
of resignation he stated, “I hereby do wish to tender
my
resignation as a stock controller with immediate effect. I am
resigning out of my freewill, I thank you. I hope you find this
in
good order”. This resignation was not accepted. The background to
this is not relevant to the present dispute.
On 30
July 2001, appellant convened a disciplinary enquiry as planned. The
employee did not attend the hearing. He submitted another
resignation letter, stating “I hereby accordingly wish to tender my
resignation as a stock controller in your company with immediate
effect. Thanking you so much for the opportunity you gave me to
demonstrate my skills and experience”. On 31 July 2001, the
disciplinary
hearing was convened. He did not attend the hearing.
He was found guilty of the charge against him and dismissed.
It was
against this decision that he then referred an unfair dismissal
dispute to the first respondent.
The
second respondent concluded that the employer, being appellant, had
been justified on the grounds of substantive fairness in
the decision
that it had taken to dismiss the employee. The essence of the
finding is captured in the following paragraph:
“I have
no hesitation to conclude that the employer discharged the onus on
them in terms of section 192(2), proving on a balance
of
probabilities that the employee enriched himself at the employer’s
expense. The employee signed an acknowledgement of debt
and tendered
his resignation even though it was not accepted. I have no doubt if
the employee was not guilty of the charges against
him, that he would
not have tendered his resignation nor would he have signed an
acknowledgement of debt … Despite the employee’s
personal
circumstances, I can come to no other conclusion but to find the
sanction of dismissal was an appropriate sanction for the
offence
committed”.
[6] The
second respondent did find that there had been a procedural
irregularity and that accordingly appellant had not complied with
the
requirements of procedural fairness. He concluded the dismissal was
procedurally unfair because the employee’s post had been
advertised
on 30 July, a day before the disciplinary hearing was concluded.
After concluding that the dismissal had been substantially
fair but
procedurally unfair, second respondent then engaged in an analysis as
to whether compensation should be awarded.
[7] It is
important to note that the law governing the question of compensation
was section 194 of the Labour Relations Act of 66
of 1995 (‘the
Act’) prior to the 2002 amendments having been effected in the Act.
In
essence therefore, second respondent was confronted with legislation
which had been given content by this court in
Johnson &
Johnson (Pty) Ltd v CWIU,
(1998) 12 BLLR 1209
(LAC).
Conventionally the approach adopted in
Johnson
is referred to
as ‘the all or nothing approach’: either compensation for a
procedural irregularity is granted in terms of a prescribed
formula
or no such compensation would be awarded.
In his
judgment in
Johnson
, Froneman DJP said at para 41, “The
compensation for the wrong in failing give effect to an employee’s
right to a fair procedure
is not based on patrimonial or actual loss,
it is in the nature of a solatium, for the loss of the right and is
punitive to the extent
that an employer (who breached the right) must
pay a fixed penalty for causing that loss”.
In
amplification of the
Johnson
doctrine, and in particular in
dealing with the question as to whether compensation ought to be
refused in a case where a dismissal
was substantively fair but
procedurally unfair. Landman J  said
in
Lorentzen v Salachem (Pty) Ltd
, (1999) 20 ILJ 1811
(LC) para 25, “I agree that the test would require one to ask what
fairness demands, taking
into account the interests of the employee
and the employer”.
[8] In his
award, second respondent concluded thus:
“I have
therefore come to the conclusion, taking into account the interests
of the employee and employer as well as what fairness
demands, not to
award any compensation to the employee. The harm done to the
employer in the event in applying the statutory formula,
would by far
outweigh the harm done if compensation was refused”.
[9] It was
this precise finding that was taken on review before the court
a
quo
. It is important to emphasise that, although the entire
finding of second respondent, that is the substantive fairness and
the procedural
fairness were the subject of the review, the court
a
quo
confirmed the finding of the second respondent in respect of
the substantive fairness of the dismissal. That left only the
question
of procedural unfairness which became the centre of the
judgment of the court
a quo
and of the dispute which came
before this court.
The court
a quo
found, insofar as the procedural irregularity was
concerned, that the second respondent had misdirected himself. The
basis for this
finding can be found in the judgment and can be
reduced to the following conclusions:
Second respondent had taken into account in his refusal to award
compensation for procedural unfairness, that an offer had apparently
been made by appellant to the employee in the amount of one month’s
salary as a form of settlement. Ngcamu AJ found:
“The discussion during the conciliation are private and privileged.
None of the parties is entitled to refer to such discussions.
In my
view it was improper for the commissioner to take into account that
the offer was refused”.
The court
a quo
referred to the finding of the second
respondent, that if compensation was awarded in the constitute,
overpayment to the employee.
Ngcamu AJ said:
“
The
fact of the matter is that the commissioner found the dismissal
procedurally unfair for the reason that the position was advertised
before the disciplinary hearing which then suggested the employer had
in mind that the employee was going to be dismissed. In my
view, the
employer’s actions were grossly unfair: The employer on its own
postponed the matter from 30 July to 31 July. If the
employer was
under the impression that the employee was not going to attend on
31
st
, I see no reason
why there was any postponement of the hearing. The advertising of
the position before the hearing was finalised
and was not fair”.
The court
a quo
referred to the fact that second respondent
was not required to determine if any particular loss had been
suffered by the employee.
Ncgamu AJ concluded:
“In my view, the commissioner misdirected himself in concluding
that no particular loss was suffered. There is no justification
for
the finding that to apply the statutory formula would outweigh the
harm to the employer. The employee had not been paid for
the period
up to the finalisations of arbitration, there was therefore no over
compensation as there was no compensation at all”.
[10] After finding these misdirections if the court
a quo
set
aside the award of second respondent and substituted the following
order:
“The dismissal of the employee Mr Mcingane is found to have been
substantively fair. The dismissal of the employee is found
to be
procedurally unfair. The first respondent was ordered to pay five
month’s compensation in the total amount of R15 250,00
calculated at the rate of R3 050,00 per month. The first
respondent is ordered to pay the costs”.
[11] It is against this finding that appellant has approached this
court on appeal with leave of the court
a quo
. Mr Grobler who
appeared on behalf of the third respondent submitted that the essence
of the approach which must be adopted by this
court in dealing with
the judgment of the court
a quo
, was to examine whether there
were material irregularities, if they were found the court
a quo
was justified in intervening in the dispute. Because it would then
have exercised its discretion in terms of Section 145 of the
Act, it
was not for this court to ‘second guess’ that exercise of
discretion. For Mr Grobler, the key test was whether
the
finding of material irregularity by the court
a quo
was
sustainable. The counter conceptual framework offered to this court
by Mr Ngcukaitobi who appeared on behalf of the appellant
was that in
proceedings of this kind, a court should eschew the red light test
for review and adopt a more facilitative framework.
By that I took
him to mean that it would be wrong to formalistically pass through
the award of second respondent, find some irregularity
had taken
place that irregularity would set off the judicial trip wire, the red
lights of review would flicker brightly and the result
would be to
sustain an application for review. A more substantive overall
framework for review would examine the nature and role
of first
respondent with the broad framework of labour relations, the role
played by an official such as second respondent, and then
take into
account the substance of that decided, both in terms of its
conclusion and the reasoning which underpinned the conclusion.
There is some confusion as to the law regarding the review of an
award by second respondent. After
Sidumo & Others v
Rustenburg Platinum Mines Limited & Others
,
[2007] 12 BLLR
1097
(CC), the source of review of matters of this kind is to be
found in the Act particularly section 145 and section 158 read
together.
The earlier adherence by some courts to the Promotion of
Administrative of Justice Act as the source for review, has been
rejected
in
Sidumo
. That leads to the grounds for a review in
terms of the Act.
In
section 145(2) of the Act the trigger for a review is a ‘defect’,
namely ‘a defect’ in any arbitration proceedings under
the
auspices of the Commission” (Section 145(1)). Defect is defined as
follows:
a. that
the commissioner:
(i) committed misconduct in relation to the duties of the
commissioner or a arbitrator;
(ii) committed a gross irregularity in the conduct in the
arbitration proceedings; or
exceeded the commissioner’s powers. (section 145 (2))
This provision had given the courts considerable trouble because it
must be reconciled with section 158(1) (g) of the Act which
appeared
to give far wider powers of review to the courts than the specific
provisions of section 145(2).
This
conundrum was resolved in the case of the
Carephone (Pty) Ltd v Marcus NO &
Others
,
1999 (3) SA 304
(LAC), in which the court gave broad
content to the phrase ‘exceeded the commissioner’s powers’, by
reading into that provision,
an administrative law test of
reasonableness. In short, this Court approached the argument that
Section 158(1)(g) of the Act
gave broad powers of review to the
Labour Court with the narrow provisions of Section 145(1) and
(2), by concluding that administrative
law concepts such as
reasonableness, proportionality could be read into section 145(2)
thereby reconciling the two sections.
I have
examined this history in some length because it is important to
understand what the judgments in
Sidumo
determine. In my
view,
Sidumo
decided
inter alia
, that, when a court
deals with the question of an arbitrator exceeding her powers, it is
obliged to adopt a
Carephone
type test. To recapitulate at
para 110, Navsa AJ says: “To summarise:
Carephone
held that
section 145 of the LRA, was suffused by the then constitutional
standard that the outcome of an administrative decision
should be
justifiable in relation to the reasons given for it. The better
approach is, that section 145 are now suffused by the
Constitutional
standard of reasonableness. That standard is the one explained in
Bato Star. Is the decision reached by the commissioner
one that a
reasonable decision maker could not reach? Applying it will give
effect, not only to the Constitutional right, to fair
labour
practices but also to the right to administrative action which is
lawful, reasonable and procedurally fair.” That dictum
must be
understood thus in terms of the earlier interpretative conundrum
resolved by
Carephone
with respect to sections 145 and 158.
The
court, in
Sidumo
, was also concerned to ensure that a ‘red
light’ approach to review, should no longer form part of our labour
relations procedures
with regard to review of first respondent. The
court said the following, “In respect of the absence of dishonesty,
the Labour
Appeal Court find that the commissioner’s statement in
this regard “baffling”. In my view the Commissioner cannot be
faulted
for considering the absence of dishonesty, a relevant factor
in relation to the misconduct. However, the commissioner was wrong to
conclude that the relationship of trust may have not been breached.
Mr Sidumo was employed to protect the mine’s valuable
property
in which he did not do. However, this is not the end of the enquiry.
It will still be necessary to weigh all the relevant
factors
together in light of the seriousness of the breach”. (para 116)
This
passage which finds earlier support in a dictum of this court per
Zondo JP in
Shoprite Checkers (Pty) Ltd v Ramdaw NO
& Others
, (2001) 22 IAJ 1603 (LAC)
1636H-I
, “In my
view, it is within the contemplation of the dispute resolution system
prescribed by the Act that there will be arbitration
awards which are
unsatisfactory in many respects, but nevertheless must be allowed to
stand because they are not so unsatisfactory
as to fall foul to the
applicable grounds of review. Without such contemplation, the Act’s
objective of the expeditious resolution
disputes would have no hope
of being achieved. In my view, the first respondent’s award cannot
be said to be unjustifiable when
regard is had to all the
circumstances in this case and the material that was before him”.
With
this approach, it is important to examine what it second respondent
allegedly did, so as to perpetrate a defect in terms of
Section 145
of the Act. Mr Grobler insisted in his submission that once there
was a ground for review, the court can interfere.
There is some
confusion as to precisely which of the three defects were committed
by second respondent. I shall canvas briefly
the two possible basis
on which Mr Grobler’s arguments were predicated. The first
concerns gross irregularity, a concept not canvassed
by Navsa AJ
in
Sidumo
but subject to a typically learned and perceptive
analysis from Ngcobo J in the same case. In essence, Ngcobo J held
that a distinction
must be made between the process by which a
decision is taken and the content of the decision itself. It was
clear that he said,
that
“
Where
a commissioner fails to have regard to material facts, the
arbitration proceedings cannot in principle be said to be fair
because
the commissioner fails to perform his or her mandate. In so
doing … the commissioner’s action prevents the aggrieved party
from
having its case fully and fairly determined. This constitutes a
gross irregularity in the conduct of the arbitration proceedings
as
contemplated in section 145(2)(a)(ii) of the LRA. And the
ensuing award falls to be set aside, not because the result is
wrong
but because the commissioner has committed a gross irregularity in
the conduct of the arbitration proceedings”. (at para
268)
Adopting
that approach, the question arises to the gross irregularity which
was allegedly perpetrated by second respondent? For
the answer it is
necessary to return to the judgment of Ngcamu AJ and on the ‘error’
on which he justified his intervention.
The first ‘error’ he
took account of was of a month’s salary offer of which no reliance
should have been placed. This finding
of Ngcamu AJ was contended by
Mr Ngcukaitobi who pointed out that, whereas the court had found that
the offer had been made during
conciliation proceedings, it appears
that it was made during the arbitration proceedings. I hasten to add
that Mr Grobler contended
that the offer took place during
certain, off the record, settlement talks. I am prepared to assume
that Mr Grobler was correct
and that second respondent erred.
But is
this an irregularity of a gross kind which would disturb the basis of
the process, so that an injustice was committed of
the kind
contemplated by Ngcobo J? Was this the kind of failure to have
regard to material facts which, notwithstanding the result,
would
trigger off a review? I hardly think so for reasons I shall mention.
As for
the second reason, that the second respondent did not exercise an
adequate degree of proportionality between the competing
interests of
employer and employee, is hardly a gross irregularity. This is a
‘judgment call’, which by its very nature is a
process of
decision making which, absent any evidence to the contrary, can
hardly be classified as a gross irregularity. The other
‘error’
was that second respondent had misdirected himself by concluding that
no particular loss was suffered. But again, is
this a gross
irregularity of a kind which would sustain a review?
The
reasons why these questions must be answered in the negative, is in
the first place, that a court must be careful to parse an
award by
second respondent in the same fashion as one would an elegant
judgment of the Supreme Court of Appeal or the Constitutional
Court.
These awards must be read for what they are, awards made by
arbitrators who not judges are. When all of the evidence is
taken
into account, when there is no irregularity of a material kind in
that evidence was ignored, or improperly rejected, or where
there was
not a full opportunity for an examination of all aspects of the case,
then there is no gross irregularity as urged upon
us by Mr Grobler.
The core
finding was “I have come to the conclusion taking into account the
interests of the employer and the employee as well
as what fairness
demands, not to award any compensation to the employee. The harm
done to the employer in the event of applying
the statutory formula,
would by far out weigh the harm done if compensation is refused”.
That finding also congruent with the
evidence placed before the
second respondent. To suggest that the taking into account of the
offer of the salary or at some extent,
an inelegant phrasing dealing
with the issue of patrimonial loss, is to be equated to a gross
irregularity and cannot be sustained.
Once the issue of gross
irregularity cannot pass muster neither can the result of an outcomes
based enquiry, namely the reasonableness
of the award, be helpful to
respondents.
In his
judgment Ngcamu AJ appears to conflate gross irregularity with a
reasonableness review. For example in the following
passage of the
judgment the learned judge says: “With regard to the refusal to
award compensation, the question is whether the
commissioner’s
award is justified in this regard”. The test of justification is
sourced in
Carephone
and takes us directly to the
reasonableness enquiry. Applying the
Sidumo
test, it cannot
be said, that an employee who has been found guilty of theft (the
issue as to whether in fact he stole or not is
no longer before this
court because that finding is not being appealed), can be refused
R15 000 of compensation on the
Johnson
formula and that
refusal as being unfair. In my view, on the test of Navsa AJ,
namely, was this a decision that no reasonable
decision maker could
reach? The answer must surely be in the negative. It was a
justifiable decision once justifiable, that leg
of Ngcamu AJ’s
judgment must fall away.
In
summary, there was no basis in law to interfere, on the grounds of
section 145 with the decision of the second respondent. Accordingly
there is no need to examine whether the decision of the court acting
in terms of Section 145 is itself one that should be set aside
or
being incorrect in law.
For
these reasons the appeal is upheld with costs. The order of the
Labour Court should be set aside and replaced with the following
order:
“
The
review application is dismissed with costs”.
LEEUW JA & NDLOVU AJA:
Concurred.
---oOo---
Appearances
On behalf of the Appellant Mr T Ngcukaitobi
Instructed by Bowman Gilfillan Inc
On behalf of the Respondent Advocate Grobler
Instructed by Joubert Attorneys