About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Labour Appeal Court
SAFLII
>>
Databases
>>
South Africa: Labour Appeal Court
>>
2011
>>
[2011] ZALAC 6
|
|
Dell v Seton South Africa (Pty) Ltd and Others (JA 33/09) [2011] ZALAC 6; [2011] 9 BLLR 846 (LAC) (8 April 2011)
IN LABOUR APPEAL COURT OF SOUTH
AFRICA
HELD AT JOHANNESBURG
CASE
NO: JA 33/09
In
the matter between:
RALPH DENNIS DELL
….................................................
APPELLANT
and
SETON SOUTH AFRICA (PTY) LTD
….....................
First
Respondent
COMMISSIONER
FOR CONCILIATION,
MEDIATION
AND ARBITRATION
…............................
Second
Respondent
SHEEN
N.O Third Respondent
Coram:
Jappie JA, Tlaletsi JA; and Hendricks AJA
Judgment
Tlaletsi JA
Introduction
[1] The appellant was employed by
the first respondent, Seton South Africa (Pty) Ltd, as a managing
director in South Africa hereinafter
the respondent. He was dismissed on
6 May 2005 pursuant to a disciplinary enquiry on allegations of
misconduct. He referred a dispute
of unfair dismissal to the second
respondent, the Commission for Conciliation, Mediation and
Arbitration (“the CCMA”).
The dispute could not be
resolved through mediation and was subsequently referred for
arbitration. The third respondent, a commissioner
appointed under the
auspices of the CCMA arbitrated the dispute. The commissioner issued
an award on 29 November 2005 in which
he found,
inter alia
,
that the appellant’s dismissal was both procedurally and
substantively fair.
[2] Aggrieved by the decision of the
commissioner, the appellant instituted review proceedings in the
Labour Court in terms of section
145 of the
Labour Relations
Act
66 of 1995
(“the Act”) seeking an
order, inter
alia,
reviewing and setting aside the award of
the commissioner. On 23 July 2008 the Labour Court, per Molahlehi J,
dismissed the appellant’s
review application and made no order
as to costs. The appellant is now appealing against the judgment and
order of the Labour Court
having been granted leave by that court.
Factual background
[3] On 15 May 1996 the appellant was
appointed Financial Director of a company called Hanni Leathers.
During 1998 Seton purchased
75% of the shares of Hanni Leathers. The
appellant was re-appointed as Financial Director of the respondent.
He was subsequently
appointed Managing Director of the respondent’s
operations situated in South Africa. The other directors, namely
Messrs De
Majistre, Traychek and Winkler were based in the United
States of America and Germany.
[4] During the course of the year
2004, De Majistre who is the president of the respondent, expressed
concerns to other directors
about the appellant’s remuneration
as Managing Director. He then tasked Winkler to investigate why the
appellant’s
remuneration had gone to what he believed to be too
high. De Majistre further tasked Evans, the then chief financial
officer to
obtain information on the market rate of remuneration of
Managing Directors in South Africa. Evans was also instructed to
compare
the appellant’s rate of remuneration with the
information provided by the appellant about his remuneration. There
was also
an annual internal audit that was being undertaken at that
time. De Majistre instructed that the internal audit should have a
special
focus on the appellant’s remuneration from the year
2001 until the commencement of the enquiry. According to Evans the
internal
auditor reported, during March 2005 that the appellant was
receiving remuneration in excess of what the appellant disclosed to
Henry. The internal auditor also found that there was a second
incentive compensation plan in favour of the appellant in addition
to
the one that he had disclosed. As a result of these findings, Evans
was instructed to conduct an investigation on appellant’s
remuneration.
[5] On 28 March 2005 the appellant
was placed on suspension with full remuneration. The purpose of the
suspension according to the
respondent was to allow a smooth process
of investigation and to protect the integrity of the appellant. A
firm of accountants,
Ernst & Young was appointed to conduct an
investigation on the circumstances surrounding the remuneration of
the appellant.
Ernst & Young submitted a report on its findings
on completion of the investigations. Their report formed the basis
for the
subsequent charges for misconduct preferred against the
appellant. De Majistre was supposed to chair the disciplinary enquiry
in
accordance with the respondent’s policy on disciplinary
enquiries. However, in view of the fact that all directors were
involved
in the investigations and others would be witnesses, the
serious nature with which the respondent viewed the allegations of
misconduct,
it was decided that the disciplinary enquiry be presided
by Prof. Harvey Wainer (“the Chairperson”) who was an
outside
independent “
forensic specialist with experience in
disciplinary hearings”
. The enquiry was held on 26 to 28
April 2005.
[6] At the disciplinary enquiry the
appellant declined the offer of representation by a fellow employee
or legal representative.
The respondent also abandoned the decision
to have legal representation. The appellant was found guilty of five
of the seven charges
of misconduct against him and the chairperson
recommended dismissal as an appropriate sanction. The respondent
accepted the recommendation
and dismissed the appellant. The
appellant communicated his intention to appeal against his dismissal.
He was denied the right
to appeal by the respondent on the basis that
there was no one in the structure of the respondent who could hear
the appeal. The
respondent was also not prepared to appoint another
independent person to hear the appeal and instead, advised the
appellant to
refer a dispute to the CCMA.
[7] The appellant then referred his
dispute with the respondent to the CCMA. At the arbitration, the
respondent led evidence only
on the four charges of misconduct on
which the appellant was found guilty and abandoned those on which he
was acquitted by the
chairperson. It is apposite to deal with these
relevant charges individually stating the respective versions of the
parties where
necessary.
The first charge
[8] This charge related to increases
in remuneration without the authority of the respondent, alternately
of its management and
without the knowledge of all the directors of
the respondent.
[9] The respondent’s version
on this charge was that the appellant during the period December 2001
to March 2005 granted himself
increases in his remuneration without
the authority or knowledge of the respondent, alternatively its
management. It was common
cause that at the end of November 2001 the
appellant was earning a monthly salary of R68 500-00.
[10] During December 2001 Winkler,
the then vice-president of Global Operations sent a memorandum to
Henry, the human resources
manager and appellant’s subordinate,
setting out an increase to appellant’ s remuneration. The
increase was from US$
8 245.00 to US$ 10 000.00. The exchange rate
used to convert from a rand value of R68 500-00 to US dollar value of
US$ 8 245.00
was R3.31 to the dollar. This was the exchange rate the
appellant had used during August 2001 when he provided Winkler with a
list
of respondent’s members of management in South Africa and
their respective remuneration.
[11] Winkler testified that he used
the US dollar figure only to determine the increase so that he could
compare the remuneration
paid to the appellant against the
remuneration paid to other employees within the first respondent. He
did not use the US dollar
conversion to make the appellant’s
salary dollar denominated. In order to achieve the 21% increase to
appellant’s remuneration
the figure of US $ 10 000.00 had to be
converted into Rands at the same exchange rate that had been used to
convert the figure
of R68 500.00 into dollars. According to the
respondent’s version the appellant’s new monthly salary
was supposed to
be R83 100.00.
[12] It is common cause that after
Henry had received the memorandum from Winkler relating to the
appellant’s salary increase,
the appellant provided Henry with
a
website
where he could determine the correct exchange rate
for calculating the appellant’s monthly remuneration. Having
done so,
Henry determined the appellant’s monthly remuneration
to be R97 600.00 at the current rate in December 2001. This meant
that
the appellant’s increase was not the 21% that was
envisaged by Winkler.
[13] During January 2002 the
appellant informed Henry by letter that his remuneration was now US
dollar denominated and that he
would suffer from the exchange rate
fluctuations if not fixed at a particular rate. Henry wrote to the
appellant stating that his
remuneration would be adjusted once per
year on 1 January. The appellant’s remuneration then increased
to R121 500.00 per
month from January 2002 based on the dollar/rand
exchange rate applicable at the time. This meant that the appellant
received an
increase in his remuneration over a period of two months
from R68 500.00 to R121 500.00, contrary to what Winkler intended.
[14] The appellant testified that
during 1998 the Board of Directors of the respondent gave him full
authority on all staff matters
of the first respondent. He contended
that the increase of December 2001 was authorised by Winkler. He
referred to a document dated
14/15 November 2002 signed by Winkler in
which,
inter alia
, the appellant’s remuneration was
reflected. He further referred to documents for 2002, and 2003 and
contended that by implication
Winkler was aware of his salary
increase and how it had been implemented. Therefore, he testified, he
did not give himself an increase
in remuneration without the
knowledge of the respondent or its management. The appellant
testified further that for Winkler to
sign the schedules for 2002,
2003, 2004 and 2005 he “
authorised the status quo”
of his salary and the implementation of his salary increase was
“
driven”
by Henry.
[15] It is common cause that during
January 2004 the appellant increased his remuneration to R140 000.00.
He continued to receive
this amount until March 2005. The appellant
did not have any authorisation from other directors of the respondent
for the increase.
The appellant referred to a salary review sheet
(spreadsheet) dated 20 November 2003 which reflected his salary on
the second page
thereof. According to the appellant, Winkler’s
conduct in signing Review Sheet (spreadsheet) dated 20 November 2003
on the
second page meant that he approved his salary increase from
R121 500.00 to R140 000.00. However, Winkler denied agreeing to an
increase for the appellant. He testified that there were some
discussions about the appellant’s remuneration increase and
he
made it very clear to him that there was nothing he could do as it
was De Majistre who had to give approval for his salary increase.
He
could also not remember signing the spreadsheets relied upon by the
appellant but acknowledged that the signature on the second
page of
the document was his.
The second charge
[16] On this charge the respondent’s
version was that during 1999 the appellant approached De Majistre and
recommended that
an incentive bonus be put in place for all staff. At
the time of this recommendation De Majistre was not aware that
certain of
the senior managers including the appellant were already
earning an incentive bonus of 25% of their remuneration as per their
employment
contracts. The appellant did not disclose this fact to De
Majistre at the time of the recommendation. The recommendation made
by
the appellant was accepted and a resolution to that effect was
passed.
[17] The implementation of the
resolution resulted in the appellant receiving two incentive bonuses
of approximately 50% of his
annual remuneration for the period 2000
to 20005. De Majistre testified that had he been aware that appellant
was already receiving
an incentive bonus he would not have agreed to
the recommendation made by the appellant. He mentioned that it was
never his intention
to have the appellant receiving two bonuses.
[18] The appellant’s version
in this regard was that the incentive bonus paid as per the
resolution was over and above the
remuneration per their employment
contract. Although it is true that De Majistre was not presented with
his employment contract
at the time he made the recommendation, he
(De Majistre) ought to have known the contents of his employment
contract as he was
the one who made the offer to him when he was
employed as Managing Director. He mentioned further that other
employees who received
the incentive bonus as per their employment
contract like himself had not been charged or subjected to
disciplinary proceedings.
The third charge
[19] It is common cause that the
appellant from January until June 2004 received monthly payments of
R83 870.00. The total amount
he received out of these unauthorised
payments was R503 220.00. At no stage during this period did the
appellant enquire or stop
these payments. In an attempt to repay the
said amount to the respondent, the appellant sold 55 leave days to
the respondent. The
majority of these leave days had not yet accrued
to him at the time. The actual charge was therefore that in
addressing the overpayment
error, the appellant instead of actually
repaying the amount, he devised a scheme to sell his leave days to
the respondent some
of which had not yet accrued to him, thereby
breaching the policy of the respondent and acting without the
knowledge or authority
of the respondent or its Board of Directors.
[20] The appellant’s
contention on this charge was that he was merely correcting a
clerical error made, not by himself, but
by somebody else. He had to
create negative leave, for instance leave owing to the company, which
was not uncommon. He mentioned
that in many instances employees were
forced to take leave during low production periods which often
occurred during December month’s
“shut-down” or
closure of the plant. He testified that there was no policy on how an
error that occurred to his salary
overpayment could be corrected. He
contended that no company could have policy not to correct errors and
that the management of
the respondent must have “obviously”
been aware of the error.
The fourth charge
[21] The misconduct complained of in
this charge is that the appellant on various occasions misrepresented
to various directors
of the respondent the exact details of what he
had earned from the respondent in remuneration bonuses. The first
allegation was
that he failed to disclose the fact that he was
receiving two incentive bonuses referred to in charge two, the
enormous salary
increase from R68 500.00 to R121 500.00 or the salary
increase from R121 900.00 to R140 000.00 to his fellow directors. He
was
also accused of providing incorrect information to Henry for
onward transmission to Winkler on his remuneration when De Majistre
became suspicious about his earnings during 2004 and 2005.
[22] The appellant’s response
to this charge was that there was no misrepresentation that he had
made or that he was aware
of. He testified that any information that
was requested was supplied in the format as requested and the fact
that Henry supplied
the information on the documents to Winkler
without his knowledge should not be used to blame him. He mentioned
that full details
of remuneration for all employees was reflected in
the company documents which were available to all directors at all
times as
well as in the annual financial statements signed by the
directors of the respondent.
The arbitration award
[23] The
commissioner found that the appellant was indeed dismissed
1
.
He further made the following findings on procedural challenge to the
dismissal:
23.1 Although the appellant
correctly submitted that the misconduct complained of went back some
years, he was satisfied that the
employer “
acted within a
reasonable time from the time the (concerns) of the allegations being
raised and investigated to the time the employee
was disciplined”
The fact that the appellant was
denied an appeal hearing which was provided for in the disciplinary
code did not make the procedure
defective “
as it is not a
must that an appeal hearing must be heard”
.
The fact that the suspension
letter only mentioned “
alleged irregularities
”
did not make the dismissal unfair “
as the employer was
still proceeding with the investigation and as such could not be
expected to lay the specific charges when
the employee was
suspended.”
The instances of the deviation
from the disciplinary code were not prejudicial to the extent of
making his dismissal unfair.
The presence of De Majistre
throughout the disciplinary hearing was not prejudicial to render
the dismissal unfair more so that
his presence was justified by the
fact that he was the President and Chief Operations Officer of the
respondent.
The fact that the respondent had
obtained legal advice and opinion was within its rights, and no
legal representatives participated
in the merits of the
disciplinary enquiry.
On the complaint that the
respondent withheld documentation which prejudiced the appellant,
the commissioner held that he could
not find that the respondent
acted wilfully because the appellant made a blanket request without
specifics on certain documentation
and further that the
documentation would not have made any material difference to either
the disciplinary enquiry or arbitration
proceedings.
[24] As regard substantive fairness
the commissioner made the following findings:
24.1 The appellant wilfully and
knowingly attempted to manipulate the increase that he received in
2001. He “
took deliberate advantage of the fact that the
Rand was at a weak state in January 2002 in the attempt to ensure a
substantial increase
of close on 100%.”
The appellant knew that he had not
been authorized an increase as confirmation was still required in
2004. He nevertheless implemented
an increase from R121 900.00 to
R140 000.00 despite being made aware by Henry. The respondent had
therefore succeeded in proving
the guilt of the appellant on the
misconduct relating to salary increases.
The status and position held by
the appellant required of him to disclose that he was already
earning an incentive bonus and
that it is reasonable to interpret
his actions in this regard as of a person who had the intent to
benefit twice. He also showed
dishonesty on his part to financially
enrich himself.
In creating negative leave the
appellant acted contrary to the “
company policy authorised
by him”.
The appellant deliberately
provided incorrect information with the intention to cover up his
actions in respect to his bonus
scheme and 2004 salary increase.
He clearly abused the position of
trust that was placed in him by the respondent.
He acted in direct contravention
of his fiduciary duties as a member of staff and senior management.
The dismissal was an appropriate
sanction based on the gravity of the conduct of the appellant.
Proceedings in the Labour
Court
[25] In the Labour Court, the
appellant appeared in person and contended both in his Heads of
Argument and at the hearing that he
sought to review the award on the
basis that the Commissioner committed gross misconduct, gross
irregularity, exceeded his powers,
showed bias and made a decision
that was neither reasonable nor justifiable in terms of the evidence
that was properly before him,
“
by not addressing or
considering the pre-determined course of action of the respondent,
”
which was to terminate the employment relationship at all costs. He
contended that the commissioner committed misconduct
by not
addressing the unfair labour practice dispute; committed gross
irregularity by allowing the respondent to have legal representation,
showed bias partying favour of the first respondent at arbitration.
[26] With regard to the substantive
fairness of the dismissal, the appellant’s main contention was
that the commissioner was
wrong in finding that the respondent had
proved the misconduct instances justifying his conviction, and that
the findings ought
to have been in his favour. The appellant further
contended that he should not have been found to have breached a
fiduciary duty
to the respondent as it was not one of the “charges”
preferred against him. No reference to the prescribed grounds of
review has been made by the appellant in his founding and Second
“Founding affidavits’ for the review application.
[27] With regard to the procedural
challenge, the appellant contended that, contrary to the provisions
of the respondent’s
own disciplinary code, he was denied the
right to appeal against the decision of the chairperson of the
disciplinary enquiry; that
De Majistre was present throughout both
the disciplinary and arbitration hearing; that Winkler was allowed to
tender his evidence
through “video conference”; and that
the respondent was allowed to have legal representation.
[28] The Labour Court after
considering the appellant’s contentions held as follows:
That the commissioner applied his
mind to the issue of denial of internal appeal and accepted as
common cause that the appellant
was denied an appeal hearing. It
was held that in his evaluation and assessment of the circumstances
of this case, the commissioner
correctly came to the conclusion
that the fact that the appeal was not held did not make the
procedure defective;
There is no evidence to
substantiate the contention that De Majistre’ s presence
during both proceedings prejudiced the
appellant in any way or
manner;
The respondent was not represented
by a legal practitioner at the arbitration;
That the commissioner’s
award is in line with the required standard of reasonableness and
committed no gross irregularity
or misconduct.
That the commissioner correctly
found that dismissal was the appropriate sanction taking into
account the evidence and the circumstances
of the case.
The application for review was
consequently dismissed with no order as to costs.
The Appeal
[29] In this Court the appellant’s
grounds of appeal against the judgment and order of the labour court
are summarised hereunder:
That the labour court erred:
29.1 in failing to find that the
determinations of the commissioner was unreasonable;
29.2 that the sanction of dismissal
was appropriate in the circumstances of this case;
29.3 in failing to find that the
commissioner had failed to take into account all the relevant
evidence;
29.4 in finding against the
appellant on the procedural and substantive challenges of his
dismissal.
[30] The issue
that the labour court had to deal with was to determine whether the
commissioner had committed misconduct in relation
to his duties as an
arbitrator; whether the commissioner committed gross irregularity in
the conduct of the arbitration proceedings;
whether the Commissioner
had exceeded his powers; or that the award had been improperly
obtained.
2
Furthermore, in
order to comply with the constitutional imperative, the Labour Court
had to determine whether the award is reasonable.
3
The appellant
bears the onus to demonstrate to the labour court that the award of
the commissioner was reviewable on these grounds
and or that the
decision reached by the commissioner is the one that a reasonable
decision maker could not reach.
[31] It is important to note that
the labour court was not sitting on appeal against the award of the
commissioner. It is imperative
that the distinction should always be
observed. I mention this fact at this stage because the appellant
contends that the labour
court erred in coming to or erred in failing
to come to a number of factual conclusions. Put differently, the
appellant’s
main contention is that the commissioner made
several incorrect factual findings in finding him guilty of the
misconduct charges
levelled against him.
[32] In this Court the appellant
carried the onus to demonstrate that the labour court erred in
finding that the award of the commissioner
could not be reviewed and
set aside on the grounds set out above. This Court therefore is
required to apply the same test that
the labour court had applied and
if satisfied that the award falls to be reviewed, it has to
substitute the order of the labour
court and make an appropriate
order.
[33] Mr Nolan who
appeared on behalf of the appellant in this Court submitted that the
respondent had not drawn any distinction
between the appellant’s
roles as an employee and as a director, and further that the
parameters of the appellant’s
fiduciary duties had not been
established. He referred us to the decision in
Wolfowitz
and others v Stein and others .
4
He further
contended that at no stage did the appellant unilaterally award
himself any increase or remuneration but had always negotiated
same
“honestly” and “openly” with the respondent
through the offices of a fellow Director. That in so far
as his
fiduciary duties towards the respondent in his capacity as Managing
Director, all dealings with the respondent were done
through fellow
Directors in particular Winkler and the information was disclosed in
the books of account; the minutes books of
the Board of Directors;
and correspondence between appellant and Directors of the respondent.
[34] It oapposite to consider the
facts considered by the commissioner in finding that the appellant’s
dismissal was procedurally
and substantively fair, starting with the
procedural complaints raised by the appellant. The commissioner
accepted that the allegations
of misconduct occurred over a period of
years and action was only taken when the charges were preferred
against the appellant.
The commissioner then held that the respondent
acted within a reasonable time from time the officials became
concerned about the
appellant’s remuneration and instituting an
investigation to the ultimate disciplinary hearing. There is no
evidence to suggest
that the respondent could have done otherwise.
The finding of the commissioner in this regard is in my view
reasonable.
[35] With regard to the matter
relating to the denial of the internal appeal process, the finding by
the commissioner and the labour
court that failure to allow the
appellant an internal appeal process did not make the procedure
followed defective is in my view
reasonable. It has to be accepted
that all senior personnel of the respondent were involved either as
witnesses or as investigators.
It would also have been unreasonable
to expect the respondent, having appointed an external person to
chair the enquiry, to then
appoint another person(s) as an appeal
tribunal. It was in fact to the advantage of the appellant to proceed
to the arbitration
of the dispute in the CCMA where the matter is
heard
de novo
. It proved to be time saving in the end. There
were therefore in my view, reasonable reasons to deviate from the
disciplinary procedure.
The appellant has not shown any prejudice but
merely demanded the internal appeal process only because it was
provided for in the
respondent’s code. I do not think that the
appellant, being a most senior employee of the respondent in South
Africa should
have had a difficulty in comprehending reasons provided
by the respondent for not instituting an internal appeal hearing.
[36] The finding that the appellant
had failed to show that the presence of De Majistre, in both the
internal disciplinary enquiry
and the arbitration proceedings,
prejudiced him is in my view not unreasonable. It happens in our
courts almost daily that the
defendant or a respondent be present in
court when other witnesses testify and to thereafter tender his or
her evidence after the
plaintiff’s case. His/her evidence is to
be assessed on the basis that he or she was present during the
proceedings when
other witnesses testified. In this case De Majistre
was both the President and Chief Operating Officer of the respondent
and had
to represent the respondent at both these proceedings.
[37] The complaint regarding legal
representation is without merit and goes to show the attitude adopted
by the appellant throughout
the process. The appellant as a Managing
Director ought to know that any party has a right to have a legal
advisor in any matter
as he or she wants. The appellant refused an
offer of having legal representation during the proceedings and
because of his choice
the respondent abandoned its initial decision
of having legal representation during the actual disciplinary
proceedings. The respondent’s
legal representative was only
present to argue and advise the respondent on the proceedings on the
interlocutory issues relating
to the proceedings. In this case the
appellant has not shown that he was prejudiced by the respondent
having legal advice or legal
representative to argue the preliminary
issues at the beginning of the arbitration proceedings only. The
findings of the commissioner
with regard to the appellant’s
dismissal are only based on the evidence that was presented on the
charges of misconduct.
[38] It is clear from the record
that the commissioner considered the various complaints and
allegations raised by the appellant
regarding the procedural fairness
of his dismissal and found no basis for finding that the dismissal of
the respondent was procedurally
unfair. This conclusion is not the
one that a reasonable decision make could not reach.
[39] With regard to the substantive
fairness of the dispute, I am of the view that most of the evidence
presented by the parties
is common cause. What is mainly in dispute
is the interpretation or conclusions to be drawn from the conduct of
the appellant.
The issue therefore is whether the conclusion reached
by the commissioner is the one that a reasonable decision maker could
not
reach. One must also bear in mind that the appellant has not
relied on any of the specific grounds for review but on the
commissioner’s
factual findings.
[40] The first issue that he
commissioner had to decide was whether the appellant’s salary
was dollar denominated. The respondent
contended that it was not
dollar denominated and presented the evidence of Winkler who
testified that he converted all salaries
into dollars so that he
could understand what he was paying as he was not used to working in
South African Rand. The appellant
is the one who converted his salary
into dollar denomination for that purpose. Winkler testified that he
never intended to make
the appellant’s salary dollar
denominated and expected him to convert it back to the rand value
using the same rate he used
for the purpose of the exercise.
[41] The appellant on the other hand
could not produce any document or evidence to prove that there was a
decision to convert his
salary into dollar denomination. He merely
decided on his own that his salary was now to be dollar denominated
and agreed with
his junior, the financial manager to pay him the rand
value of the dollar at the time. During January 2002 he then allow
himself
to be paid at a new rand dollar exchange rate resulting in
him receiving a further increase and considered the version of the
parties
on this aspect and preferred the respondent’s
thereafter caused his salary to be fixed at that higher rate.
[42] The commissioner considered the
version of the parties on this aspect and preferred the respondent’s
version as being
more probable and reasonable. By this finding the
commissioner did not misdirect himself or commit any irregularity.
His finding
is not a decision that a reasonable decision make could
not reach.
[43] The next issue that the
commissioner had to determine was whether the appellant was given an
increase from R121 900.00 to R140
000.00 salary per month. In an
e-mail dated 18 December 2003 from Winkler to Evans, which was copied
to De Majistre and sent to
the appellant, it was stated that:
“
I did
review the plan with Ralph and signed them off. I did not do anything
with Ralph or Herbert and it was my intention to go
through the list
during Bob’s visit in Germany on the 3
rd
or 4
th
of December. Unfortunate this never took place but it is still my
intention of reviewing this Bob in person. Hermaan (sic)”.
It is clear from the above e-mail
that Winkler states categorically that he has done nothing with the
appellant’s salary increase
at that stage and would be reviewed
by “Bob”.
[44] However, the appellant relied
on a schedule headed Salary Review Effective for January 2004 wherein
his name appears on line
24 reflecting his salary as R140 000.00. To
this document Winkler testified that he could not remember seeing a
document reflecting
that salary for the appellant and further denied
giving him a salary increase. He made it clear that the appellant’s
salary
had to be authorised by De Majistre. The latter corroborated
Winkler’s version in this regard. There is also a similar
schedule
that did not contain the appellant’s name but of the
rest of the employees and their salaries issued during that period.
[45] Again on this aspect the
commissioner preferred the version of the respondent over that of the
appellant. This finding is in
my view not unreasonable more so that
on the appellant’s own version he never received any
authorisation of the increase
from De Majistre. He was not supposed
to allow the increase on his salary to continue until such that he
had De Majistre’s
authority. It cannot expected of him as the
Managing Director to rely on an “
administrative error”
when he fully knew that he had not been authorised an increase. He
was also not supposed to give himself an increase in anticipation
of
approval.
[46] On the issue of the bonus it is
correct as the appellant asserts that it was authorised by a
resolution of the respondent’s
Board of Directors. However, the
respondent’s concern with the bonus is that the appellant, when
he proposed the introduction
of the bonus, did not make it clear that
he was already receiving a 25% incentive bonus as per his employment
contract. He then
drafted the resolution in such a way that his
incentive bonus was protected from any challenge by stating that the
new incentive
bonus would be over and in addition to any remuneration
in terms of the employment contract. The appellant on the other had
agreed
that he did not disclosed the existence of his contractual
incentive bonus to De Majistre and reasoned that he had no duty to do
so as De Majistre ought to have known as he was the one who offered
him the employment contract.
[47] On this aspect the commissioner
held that the status and position of Managing Director held by the
appellant at the time required
that he make the “
information
apparent. A reasonable person would make the interpretation that the
employee did not inform the President of the initial
scheme with the
intent of benefiting him twice, which was my interpretation of the
actions of the employee”
. This conclusion by the
commissioner is not farfetched. The appellant must have considered
the possibility of De Majistre excluding
him from the scheme because
of the incentive he was already receiving. If there was nothing to
hide, the appellant should have
made it known or reminded De Majistre
of the incentive bonus and not to adopt a technical approach to
defend his actions.
[48] It is not disputed that the
appellant offered to repay the money in excess of the salary he was
lawfully entitled to. However,
in doing so he used the bonus scheme
to do so. By such action, he continued to receive the salary of R140
000.00 and caused himself
to be overpaid in his bonus by the amount
of R217 200.00 which was the amount he was supposed to repay. On this
aspect the commissioner
held that:
“
It was
also clearly apparent that the employee manipulated the bonus scheme
so that he would be paid an amount roughly equal to
an overpayment
made by the company, which the employee had to pay back. This act
clearly showed the dishonesty of the employee
in his attempt to
financially enrich himself.”
The appellant has not demonstrated
that the finding of the commissioner in this regard is unreasonable
or unjustifiable. He may
not agree with the conclusion of the
commissioner but the conclusion is based on material that was placed
before the commissioner.
[49] On the instance of
misrepresentation the commissioner found that the respondent showed
on a balance of probabilities that the
appellant deliberately
provided incorrect information with the intent of covering up his
actions with regard to his initial bonus
scheme and salary increase.
His argument that it was Henry who provided the information to the
head office was in my view correctly
rejected by the commissioner
because the appellant was the origin of the information. It is not
disputed that the document incorrectly
reflected the appellant as
earning R121 900.00 per month when he was at that stage receiving a
salary of R140 000.00. It also reflected
the appellant as receiving
one bonus when in fact he was receiving two bonuses. It cannot be a
defence for a person in the position
of the appellant to contend that
the charge technically stated that he misrepresented to other
“Directors of the respondent”
and not to Henry. It means
that the information meant for Henry would be factually different
from that intended for his co-directors
with regard to his
remuneration. There is no explanation why he gave Henry the wrong
information when it was required by the directors.
[50] It was
contended on behalf of the appellant that he never faced a specific
charge of
“
breach
of fiduciary duties”
and
as such he should not have been found guilty of breach of fiduciary
duty or breach of trust. I am not persuaded by this argument.
The
breach of trust in this matter is implicit in the conduct of the
appellant on the specific charges. His overall conduct leads
to a
conclusion that he breached the trust that the employer placed on
him.
[51] What the evidence show in this
case is that the appellant at all times placed his interests above
those of his employer in
the institution he headed as the most senior
employee. It is in my view far more than merely negotiating the best
salary for himself.
In his dealing with other directors on matters
relating to his employment contract, he owed a duty to the respondent
to disclose
fully why he declared his salary to be dollar
denominated, what would the effect of the bonus scheme be on him and
the employer.
He owed a duty to stop payment of an unauthorised
salary to him and to refund forthwith what he unduly received.
[52] It is not
necessary, in my view, as it was argued for the respondent, to
establish the parameters of the appellant’s
fiduciary duties as
a director and as an employee. It should be implied in a contract of
employment that an employee in the position
of the respondent owes to
his employer a fiduciary duty to at all times work in the interests
of the employer and not against the
employer’s interests. The
appellant in this case by virtue of his employment relationship was
an agent of the respondent
and must act in the interest of his
principal. I am mindful of the fact that breach of the fiduciary duty
would depend on the facts
of a particular case.
5
However, in this
case I am satisfied that the appellant breached his fiduciary duty to
the respondent as his employer.
[53] In conclusion, I am of the view
that the appellant has not succeeded in showing any misdirection on
the part of the Labour
Court and the appeal falls to be dismissed
with costs.
Order
The appeal is dismissed with costs.
______________
Tlaletsi
J A
I
agree.
_______________
Jappie
J A
I
agree.
_________________
Hendricks
AJA
Appearances:
For
the Appellant: Mr D Nolan
Malherbe
Rigg & Ranwell Incorporated
For
the Respondent: Mr D Masher
Bell
Dewar & Hall Incorporated
1
The
appellant had contended that he was not dismissed because the
respondent failed to provide him with a notice of cancellation
or
termination of his employment and that until such time that there
had been compliance he had not been dismissed.
2
Section
145
of the
Labour Relations Act 66 of 1995
3
Sedumo
v Rustenburg Platinum Mines Limited (2007) 28 ILJ 2405 (CC).
Fidelity Cash Management Service v CCMA & Others
[2008] 3 BLLR
197
(LAC)
4
1909
TH 120
at 125. This case concerned an application by some of the
shareholders of a company for an interdict to restrain the directors
from acting on a resolution of theirs voting themselves and others
in the employ of the company an increase of salary on the
ground
that the said resolution
was ultra
vires
the company and illegal, and
praying for a refund of all moneys paid in excess of the salaries as
fixed by the company. The Witwatersrand
High Court held that their
actions were not ultra vires as they were neither inconsistent with
the Articles nor with their Agreement.
5
See:
Phillips v Fieldstone Africa (Pty) Ltd and another [2004]1 All SA
150 (SCA) at paras[33]