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[2014] ZALAC 8
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Solari v Nedbank Ltd and Others (CA3/2012) [2014] ZALAC 8; [2014] 9 BLLR 884 (LAC); (2014) 35 ILJ 3349 (LAC) (27 March 2014)
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REPUBLIC
OF SOUTH AFRICA
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA; JOHANNESBURG
Reportable
Case no: CA 3/2012
In the matter between:
MARK
SOLARI
Applicant
and
NEDBANK
LTD First
Respondent
COMMISSION FOR
CONCILIATION, Second
respondent
MEDIATION &
ARBITRATION
COMMISSIONER VAN
ROOYEN Third
Respondent
Heard: 5
November
2013
Delivered: 27
March 2014
Summary: review of
arbitration award- employee approving home loans facility without
following bank procedure- employee dismissed
for dishonesty-
commissioner reinstating employee- commissioner failing to apply his
mind to relevant facts- award failing to meet
the reasonableness
test- Labour Court setting aside arbitration award – Labour
Court judgment upheld- Appeal dismissed with
costs.
CORAM:
WAGLAY JP, C.J. MUSI
et
DLODLO AJJA
JUDGMENT
C.J.
MUSI AJA
[1]
This appeal, which is brought with the leave of the court
a quo
(Lagrange J), in essence concerns the meteoric rise and shameful fall
from grace of the appellant.
[2]
The appellant was, at the time of his dismissal, the area manager of
the first respondent (Nedbank Ltd). He was charged and
convicted at a
properly held disciplinary hearing of dishonesty in that, he
collaborated with junior staff to approve and release
unsecured loans
from Nedbank without the necessary signed documents, thereby causing
potential financial and reputational risk
to the bank. He was also
convicted of e-mail abuse in that he received, returned and forwarded
pornographic material using Nedbank
resources in contravention of the
bank’s e-mail and internet policy. He was consequently
dismissed. He referred the matter
to the second respondent
(Commission for Conciliation Mediation and Arbitration (CCMA)). After
unsuccessful conciliation proceedings,
he referred the matter for
arbitration. The arbitrator (third respondent) found that the
appellant’s dismissal was substantially
unfair and ordered his
reinstatement. Nedbank launched review proceedings in the court
a
quo
against the arbitrator’s award. The court
a quo
reviewed and set aside the arbitrator’s award. The appellant
appeals against the court
a quo
’s judgment.
[3]
Before dealing with the merits, I pause to deal briefly with a
preliminary issue. The appellant applied for condonation for
his
failure to comply with Rule 5 of this Court’s rules. Although
it is not contained in his notice of motion, he also, in
his founding
affidavit, applied for condonation for the late filing of the appeal.
[4]
Leave to appeal was granted on 21 February 2012. The record was due
to be delivered by no later than 22 May 2012, being 60 days
after the
order granting leave to appeal. It was, however, only delivered on 25
June 2012. It was therefore 34 days late.
[5]
The record was also incomplete in that the affidavit filed in the
review application, the judgment of the Labour Court, the
order
granting leave to appeal and the notice of appeal were omitted from
the record. The record was not properly paginated and
divided into
conveniently sized volumes of approximately 100 pages each. The
record did not contain a consolidated index. It contained
irrelevant
documents and heads of arguments. The record did not reflect any
cross-reference or marginal notes where reference was
made to pages
in the appeal record.
[6]
Nedbank opposed the application and pointed out that the deficiencies
have not all been cured and that it would be prejudiced.
[7]
The appellant cured the defects and filed a replying affidavit
wherein he stated that he complied with the rules at considerable
cost to himself.
[8]
His explanation for not complying with the rules, in the first place,
is that he was impecunious because he used his pension
money to pay
the home loans which form the subject matter of this case (R800 000)
and other creditors (R150 000). He
did not have money to put his
attorney in funds and therefore had to attend to the copying,
binding, paginating and filing of the
record himself, due to his
financial position. He was unaware of the rules because he is not a
legal practitioner. He at all times
thought that he is going about it
the right way.
[9]
Although Mr Myburgh, on behalf of Nedbank, indicated that Nedbank was
still opposing the application, he could not indicate
how Nedbank
would be prejudiced in the conduct of its case if the deficiencies
were not corrected. In fact, Nedbank filed comprehensive
heads and Mr
Myburgh addressed us fully on the merits.
[10]
The appellant’s explanation was not disputed by Nedbank. It is
an acceptable explanation. The delay was long but not
inordinately
so, in view of the explanation given therefor. The prospects of
success are also not hopeless. In my view, the application
for
condonation ought to be granted and the appeal reinstated.
[11]
The facts of this matter are mostly common cause or not seriously
disputed. The difficulty lies in determining what inferences,
if any,
should be drawn from the facts.
[12]
Mr Jonathan Mitchell, a friend and colleague of the appellant, was
the team leader in the home loans department of Nedbank.
They used to
work together at the SA Perm bank before they were employed by
Nedbank. Mitchell had super user rights which allowed
him to make
indicative changes on Nedbank’s computer system in order to
change bond registration amounts and property values
on the system.
[13]
The appellant had three bonds and therefore home loan accounts with
Nedbank relating to immovable property. The first bond
was registered
in June 2002 for R415 000. The second was registered in February
2005 for R110 000 and the third was registered
in July 2006 for
R200 000.
[14]
During 2008, Mitchell was investigated for abusing his super user
rights by making unauthorised indicative changes to home
loan
accounts. It was discovered that Mitchell also made indicative
changes to the appellant’s home loan accounts.
[15]
The appellant, with the assistance of Mitchell, withdrew during the
period February 2003 to 25 June 2008, a total of R853 507.00
in
excess of the registered bond amounts, from the three accounts.
[16]
When the appellant’s accounts were investigated, it was found
that the outstanding balance on the first bond of R415 000
was
R1 132 307. On the second bond of R110 000 it was
R193 200 and on the third bond of R200 000 it was
R243 000.
[17]
Mitchell would make the indicative changes to the bond accounts after
receiving an e-mail request from the appellant. I reproduce
some of
the e-mails, for the sake of context.
[18]
On 19 October 2005 at 12:33, the appellant wrote the following e-mail
to Mitchell:
“
Hi
Jono
As discussed please make
R15 000.00 available on my bond
Should there be any
problems please call me on …...
Thanking you in advance
Regards
Mark Solari
Manager
Nedbank Parow
Tel-
[………]
Fax-
[……….]” (Cellular phone number not
reproduced.)
At
01:12 pm on the same day, Mitchell responded as follows:
“
Registered
amount increased by R15k, however only R12 761.00 available,
because of ….. you know what!”
On
9 December 2005 at 02:10 pm, the appellant sent the following e-mail
to Mitchell:
“
Hi
Jonathan
As discussed can you
please make R100 000.00 available on the above bond
Please advise once done.
Thanking you in
anticipation.
Regards
Mark.”
Mitchell
responded, at 03:52 pm on the same day, as follows
:
“
Sorry,
R97 860.00 only
Advise if okay
Jonathan”
On
21.9.2006 at 3:04 pm the appellant sent the following e-mail request:
“
Hi
Mr Mitchell
As discussed please
increase limit on above bond by R50k
Please advise when done
Regards
Mark”
Mitchell
responded at 3:15 pm and said
“
Check
if enough. The credit is E van Heerden, wiettie wie daai
issie!”
On
12 October 2007 at 02:30 pm, the appellant sent the following e-mail
to Mitchell:
“
Hi
Jonathan
The 11
th
hour
has arrived, better get my last bit in before the world end
As discussed could you
please arrange the following:
(1)
Bond account […….], M Solari,
please increase bond to R500 000.00. Instalment on balance
of bond.
(2)
Bond account unknown. Client is A J &
G E Petersen. Mrs A J Petersen Id [………].
Address
of property = [……….]. Request is
to change debit order date to the 25
th
of each month from the 20
th
.
Will assist as husband get paid on this day.
Hope you can still assist
with this as I know I left it late.
Let me know, please sir.
Regards
Mark”
On
12 October 2007 at 02:40 pm, Mitchell replied as follows:
“
Done
J”
On
15/01/2008, the appellant sent the following e-mail to Mitchell:
“
Hi
Jonathan
Compliments of the season
to you & your love one’s (sic). Hope that 2008 will
be a successful year for you.
As discussed could you
please make the funds available on the above bond.
Please give me a call
once done.
Your assistance is highly
appreciated & I thank you in advance for it.
Regards
Mark”
Mitchell
responded as follows, at 12:13 pm
“
Mark,
hoeveel soek jy!”
[19]
On 26 June 2008, Mr Peter Jacques Simon, a forensic investigator at
Nedbank, interviewed the appellant. The appellant then
wrote the
following statement:
‘
Although
I cannot recall dates (exact dates that is) we were told 5 – 6
years ago that bond admin can increase limits of registration
amounts
to assist clients provided there is sufficient value in the
property. Based on this I asked how and was told all
that’s
required is an email. I have made use of this to increase the
value of the property further by doing renovations
and alterations.
As mentioned above and
due to pressures at branch level, Parow branch to be exact, we had,
in order to assist clients, maintained
good relationships with the
H/L teams. Clients became increasingly frustrated with H/L.
Jonathan Mitchell who I worked
with and socialised with on the odd
occasion advised me that it was possible to increase limits and
registered amounts on H/Loans.
I admit that I should have
investigated how this is possible but took it on (sic) his word.
I know for a fact that we assisted
at least one or two clients on
this basis. I had at that stage registered a bond of
R415 000-00 on my property and had
just completed doing some
renovations. The valuator told me the value went up with the
addition of the double garage and
other work done. As I
required more money and based on what Jonathan had told me about the
system change, I approached him
for assistance. All that was
required was an email stipulating the amount. I thought nothing
of it and did not find
it strange, although in hindsight it is.
However all the funds were not used for personal gain but to do
improvements, whether
superficial or structural. The only
important thing for me was the saving on registration fees that the
attorneys intend
to charge. I have not once defaulted on a
payment and ensured that I could afford the payments including all
other accounts.
At one stage the funds were drawn to
consolidate debt. Due to the fact that I was never told that
the system is not allowing
the transaction, I never thought that it
was not authorised. This belief was further confirmed as I
emailed and this would
serve as my signature, albeit electronic.’
[20]
On 11 July 2008, the appellant wrote a letter to his superiors, Brian
Duguid and Anthony Costa, wherein he repeated his assertion
that he
was told by Mitchell that the home loans department has a mandate to
increase bond limits provided there is sufficient
value and
affordability. He also stated that there were dual control systems in
place, in that whatever indicative changes are
made, they are checked
by someone else. He further stated that
‘
the
only people who lost anything are the attorneys as they did not
register a bond. The risk to the bank is no different
whether a
bond was registered or not.’
[21]
On 14 August 2008, the appellant tendered his resignation, in
writing, with immediate effect. Due to the fact that he had to
give a
month’s notice, it was not accepted and the disciplinary
proceedings, which were scheduled for 21 August 2008, continued.
He
was found guilty and dismissed.
[22]
At the arbitration, the procedural fairness of the dismissal was not
in dispute. The commissioner only had to decide whether
the dismissal
was substantially fair.
[23]
The arbitrator set out the facts and respective arguments and
correctly stated that to prove dishonesty Nedbank had to prove
that
the appellant had the intention to deceive, defraud or steal. The
arbitrator also correctly stated that the appellant cannot
be found
guilty of the first count unless Nedbank proved on a balance of
probabilities that he had known Mitchell was not authorised
to
process his requests or that he should reasonably have known this.
[24]
The arbitrator then proceeded to repeat the evidence and arguments of
the parties without any analysis, let alone a critical
analysis, of
the evidence. The arbitrator then, strangely, concluded that
‘
after
a careful analysis of the evidence presented, I find the respondent
did not discharge the onus to prove the applicant knew
what Mitchell
was doing was unauthorised or that he should reasonably have known
this.’
With
regard to the second count, the arbitrator found that Nedbank did not
prove that the applicant was guilty of transgressing
the internet and
e-mail policy to the extent that could justify his dismissal.
[25]
The Labour Court examined the award of the arbitrator and came to the
conclusion that the arbitrator did not conduct a balanced
assessment
of all the significant evidence that was material to deciding if the
appellant knew, or probably knew, that he was making
use of an
unauthorised loan facility. The court a
quo
stated that in
ignoring important evidence and failing to evaluate the evidence
pointing to the appellant’s probable knowledge
of the
illegitimate nature of the loan transactions, the arbitrator denied
Nedbank a fair hearing and thereby committed a reviewable
irregularity rendering the award unreasonable. In respect of the
second count, the court
a quo
found that although the
arbitrator’s reasoning is susceptible to criticism, its finding
that the sanction of dismissal would
be inconsistent given the
evidence that was before it, is not unreasonable. Nedbank did not
appeal against the court a
quo’s
finding with regard to
the second count.
[26]
Mr Myburgh, on behalf of Nedbank, argued that the arbitrator
committed a latent gross irregularity by not applying her mind
to
materially relevant facts and circumstances. Although Mr Myburgh
initially argued that the arbitrator’s award should have
been
set aside on this ground alone, irrespective of the result, he
however conceded that the facts of this matter are of such
a nature
that it is clear that the failure to consider relevant facts led to
an unreasonable result. It is therefore not necessary
to revisit the
issue whether an award falls to be set aside only because the result
is one which a reasonable decision-maker could
not reach (result
based) or whether it could be set aside solely on the basis that the
commissioner committed an irregularity in
the conduct of the
proceedings.
[1]
[27]
Mr Fischer, on behalf of the appellant, argued that the arbitrator
considered all the relevant evidence and reached a finding
that was
consistent therewith. He submitted that there was no basis for the
court
a quo
to interfere with the evidence of the arbitrator,
because it cannot be said that the latter’s findings are those
which a
reasonable decision-maker could not reach.
[28]
In terms of section 138(7)(a), the commissioner must within 14 days
of the conclusion of the arbitration proceedings, issue
an
arbitration award with brief reasons. In
Maepe v Commission for
Conciliation, Mediation & Arbitration and Another,
it was
said:
‘
Although
a commissioner is required to give brief reasons for his or her award
in a dismissal dispute, he or she can be expected
to include in his
or her brief reasons those matters or factors which he or she took
into account which are of great significance
to or which are critical
to one or other of the issues he or she is called upon to decide.
While it is reasonable to expect a commissioner
to leave out of his
reasons for the award matters or factors that are of marginal
significance or relevance to the issues at hand,
his or her omission
in his or her reasons of a matter of great significance or relevance
to one or more of such issues can give
rise to an inference that he
or she did not take such matter or factor into account.’
[2]
[29]
Allied to what was said above is the fact that where it is clear on
the totality of the evidence before the commissioner, that
he did not
properly consider all the evidence and therefore arrived at a
conclusion that a reasonable decision-maker could not
reach then the
award ought to be set aside. The same will apply when the
commissioner makes certain inferences from the proven
facts that are
totally out of sync with those facts. The inference reached without a
proper consideration of the proven facts would
be an unreasonable
decision or a decision which a reasonable decision-maker could not
reach.
[30]
It must also be remembered that where a commissioner fails to take
into account all the relevant evidence before him/her and
thereby
reaching a conclusion which a reasonable decision-maker could not
reach, such award falls to be set aside.
[3]
[31]
The commissioner was bombarded with an avalanche of evidence,
documentary and
viva voce
. Most of the evidence was
circumstantial and the commissioner was called upon to determine the
appellant’s state of mind
when he sent his e-mail requests to
Mitchell. The commissioner did not analyse the evidence before coming
to the conclusion that
Nedbank had not discharged the
onus
of
proving that the appellant knew or ought reasonably to have known
that Mitchell was not authorised to do what he did. In my
view,
having regard to the evidence that was before the commissioner, she
failed to apply her mind to materially relevant factors
that had a
bearing on the appellant’s state of mind, before reaching her
conclusion. I say this for the following reasons:
31.1
The appellant had 26 years experience in the banking industry. He
worked in the home loans department at
SA Perm bank before joining
Nedbank. He was a bank manager who had three properly registered
bonds which were obtained after due
processes were followed.
31.2
The appellant knew that an increase in a bond amount can only be
obtained after a formal process had been
followed. When Mitchell told
him that it could be done by simply sending an e-mail, he accepted it
without inquiring or investigating
further. One has to be naïve
in the extreme to accept or believe that a bank would extend a loan
of up to R97 000 without
a formal application or risk assessment. The
appellant is certainly not naïve. His upward mobility at
Nedbank is undisputed
testimony of that fact.
31.3 It
is common cause that Mitchell was transferred from the home loan
department at the end of October 2007.
On 12 October 2007, the
appellant wrote to him and stated that the 11
th
hour has
arrived and that he “better get his last bit in before the
world end (sic)”. Those words were followed by
a request that
his bond be increased to R500 000. It is in my view clear that the
world that would end is obviously the fact that
Mitchell would no
longer be at the home loans department. The appellant had to have his
bond increased by Mitchell for the last
time, because thereafter
Mitchell would not be able to do so. Much has been made of the fact
that on 15 January 2008, Mitchell
effected another change on the
appellant’s bond. In my view, this reinforces the inference of
subterfuge. If the home loans
department could, as a rule, effect
changes to bond limits without following a process other than sending
an e-mail, why did the
appellant not send his e-mail “application”
to home loans? Why did he send it to Mitchell who was no longer
working
in the home loans department?
31.4
Even the code language employed by Mitchell in his e-mail dated 19
October 2005 that “only R12 761.00
available, because of …
you know what!” If everything was above board, one would not
expect such a response to a formal
and legitimate application for a
loan. Such language is mostly, if not only, employed if one wants to
hide something in case someone
else, other than the intended
recipient reads the e-mail.
31.5
The appellant sought to portray himself as being a naïve banker
who assumed that Mitchell was doing
everything in accordance with
banking practices. He could however not explain how loans could be
approved within 10 minutes! His
evidence that he thought that
Mitchell did everything else that was necessary is highly improbable.
How could Mitchell do a risk
assessment and have the property valued
in 10 minutes or even two hours? How could the risk assessment be
done without the income,
if any, of the appellant’s wife? How
could it be done without the appellant’s expenditure?
[32]
The appellant himself, in the 26
th
of June 2008 statement,
stated that he wanted to save on registration fees, which attorneys
charged. He, however, testified that
he knew a lot of attorneys who
could attend to the registration on his behalf, without charge. This
was clearly an attempt to explain
away a damning admission. I agree
with the court
a quo
that it stretches the limits of credulity
to accept that the appellant honestly believed that all the costs and
efforts of registering
an additional bond had simply been absorbed by
the bank, without such a major benefit ever being announced through
any of the bank’s
communication channels.
[33]
The appellant endeavoured to justify Mitchell’s conduct by
pointing out that Nedbank’s loan policy provides for
“further
loans without registration”. He was, however, constrained to
concede during cross-examination that further
loans without
registration does not apply to increases in bond amounts, but to
re-advance withdrawals.
[34]
The appellant personally signed bond restructuring agreements on
behalf of Nedbank where clients applied for excess facility
on their
bonds. Yet he thought that it is not necessary for him to sign such
an agreement. Nedbank’s policy, as the appellant
correctly
conceded, is clear, if a client wants to increase the loan amount a
new agreement of loan or re-advance form must be
completed. The
appellant did not enter into any agreement neither did he complete
any form.
[35]
The appellant’s contention that the bank would not have
suffered any loss is devoid of all truth. The registration of
a bond
makes Nedbank a secured creditor; that is a creditor who enjoys a
security for his claim. If the debtor should be declared
insolvent,
the creditor would have a preferent right over the property of the
insolvent by virtue of the bond.
[4]
The security only relates to the bond amount. A preferent creditor
has a right to receive payment before other creditors. If a
loan is
unsecured, the bank becomes part of the concurrent creditors. The
bank therefore runs the risk of losing its status as
a preferent
creditor if it does not register a bond over the property. Unsecured
lending exposes it to the risk of being a concurrent
creditor.
Therein lays the potential risk to the bank.
[36]
The appellant also testified that in terms of the mortgage loan
agreement, all future indebtedness to Nedbank that he might
incur is
covered by the agreement. According to him, the bank’s rights
or money was not at risk because the bond covered
all monies owed to
Nedbank. He relied on the following clause for his assertion:
‘
1.
Continuing Covering Security
This bond is a continuing
covering security for all and any sum or sums of money which may now
or in the future be owing to or claimable
by the Bank from any cause
aforementioned and any other cause of whatsoever nature, and remains
of full force and effect until
cancelled in the deeds registry
notwithstanding any fluctuation in, or temporary extinction of, the
Mortgagor’s indebtedness
to the Bank from time to time.’
I
agree with the court
a quo
that the mortgage loan agreement
makes it clear that all debt incurred would be covered by the bond
provided that the debt does
not exceed the amount of the registered
bond.
[37]
The fact that the appellant would have received the loans if he
properly applied therefore does not detract from the fact that
he
used a method which he knew was not in accordance with the bank’s
policy and practice in order to gain an undue advantage
viz
saving time and money. He saved time in that he did not have to wait
for the credit department to do a risk assessment; he did
not have to
wait for a valuator to evaluate his properties; he did not have to
wait for the formal approval of the loan and he
did not have to wait
for the bond to be registered. He saved money because an additional
bond would not have to be registered.
[38]
In my view, the appellant must have known that the procedure followed
by him and Mitchell circumvented banking procedure to
save money and
time. This could only have been done if Mitchell presented that
proper procedure was followed entitling him to make
the indicative
changes. The appellant had to know that Mitchell must make certain
misrepresentations in order to effect the indicative
changes. When
you deliberately use an improper procedure to gain an advantage, time
and money, in this case you are being dishonest
because you deceive
in order to get the advantage.
[39]
I am of the view that had the commissioner applied her mind to all
the material facts, she would not have reached the decision
that she
did. Her award does not remotely fall within the ranch of reasonable
outcomes. It is not a decision which a reasonable
decision-maker
could reach.
[40]
I am of the view that the court
a quo
was correct in setting
the award aside. The requirements of equity and the law militate in
favour of a costs order in this matter.
[41]
I accordingly make the following order:
(a)
Condonation for the late filing of the appeal and non- compliance
with rule 5 is granted
and the appeal is reinstated.
(b)
The appeal is dismissed with costs.
_____________
C.J.
Musi AJA
Waglay
JP and Dlodlo AJA concur with Musi AJA.
APPEARANCES
:
FOR THE
APPELLANT:
Adv Fisher
Instructed
by Marius Abrahams Attorneys
BELLVILLE
For First
respondent:
Adv Myburgh SC
Instructed
by DLA Cliffe Dekker Hofmeyr
CAPE
TOWN
[1]
See
Sidumo
and Another v Rustenburg Platinum Mines Ltd and Others
(2007) 28 ILJ 2405 (CC) at para 267;
Commercial
Workers Union of SA v Tao Ying Metal Industries and Others
(2008) 29 ILJ 2461 (CC) at para 76. This court recently revisited
this issue and came to the conclusion that even where there
is an
irregularity, such irregularity must render the result unreasonable.
See
Gold
Fields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v CCMA and
Others
JA 2/2012
[2013] ZALAC 28
(4 November 2013).
[2]
(2008) 29 ILJ 2189 (LAC) at para 8.
[3]
Afrox
Healthcare Ltd v Commissioner for Conciliation Mediation and
Arbitration
and
Others
(2012) 33 ILJ 1381 (LAC) at para 19.
[4]
Mars:
The
Law of Insolvency in South Africa
-
Bertelsmann
et
al
Juta
9
th
Ed page 432.