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[2014] ZALAC 23
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South African Municipal Workers Union National Fund v Arbuthnot (JA73/11) [2014] ZALAC 23; (2014) 35 ILJ 2434 (LAC) (5 June 2014)
REPUBLIC
OF SOUTH AFRICA
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
NOT REPORTABLE
CASE NO: JA 73/11
SOUTH AFRICAN
MUNICIPAL WORKERS’
UNION NATIONAL
FUND Appellant
and
JANE EDITH
ARBUTHNOT Respondent
Heard:
19 March 2013
Delivered:
05 June 2014
Summary:
Protected disclosure- employer- trustees of a pension fund requesting
legal opinion on their liability, if any- employee
receiving opinion
and forwarding it to union member before employer having sight of the
opinion -employee dismissed for forwarding
confidential documents
contrary to instructions- Labour Court finding that disclosure
protected on basis that it was reasonable
and substantively true-
Appeal Employee asking union member to keep opinion secret- employee
disclosure
mala fide
- employee making premature disclosure
before employer could consider it. Employee on final warning for
similar offence- Dismissal
not automatically unfair. Labour court
decision set aside. Appeal upheld.
Coram:
Waglay JP, Tlaletsi DJP and Coppin AJA
JUDGMENT
WAGLAY
JP
[1]
This is an appeal against the judgment of the Labour Court (Van
Niekerk J) upholding the respondent’s claim that her dismissal
was automatically unfair on the basis that she was subjected to an
occupational detriment for making a protected disclosure in
terms of
the Protected Disclosures Act 26 of 2000 (‘PDA’).
Background facts
[2]
The appellant is a fund established by the South African Municipal
Workers Union (SAMWU) in terms of the Pension Fund Act 24
of 1956.The
respondent was employed by the appellant as a paralegal officer from
June 2007 and she was reporting to Mr Themba Mfeka(‘Mfeka’),
the appellant’s principal officer.
[3]
The appellant lost a significant amount of money due to an investment
it had made in the Living Hands Trust, an entity controlled
by
Fidentia
[1]
. Subsequent to this
loss, the appellant instructed its attorneys to obtain counsel’s
opinion concerning the trustees’
liability to the beneficiaries
of the fund for the possible breach of their fiduciary duties
relating to their decision to invest
a substantial sum of the
appellant’s pension funds in the Living Hands Trust.
[4]
On receipt of the opinion from counsel and on 1 October 2008, at
10h16, the appellant’s attorneys emailed the opinion
to the
appellant. It was received by the respondent. The attorneys also
telephoned Mfeka and informed him that the opinion had
been emailed
to the appellant’s office.
[5]
At 14h05 of the same day, the respondent forwarded the opinion to Mr
Odendaal (‘Odendaal’), the national benefit
officer of
SAMWU. He was required to oversee the benefit schemes instituted for
the benefit of SAMWU members and he would also
sometimes attend
meetings of the appellant. Odendaal was not a trustee of the
appellant, nor was he entitled to receive the opinion.
[6]
When Mfeka’s returned to his office on the next day, 2 October,
he asked the respondent whether she had given the opinion
to anyone.
She claimed not to have done so. There is a dispute about whether
Mfeka had instructed the respondent not to forward
the opinion to
anyone on 01 October 2008, (the day she received the opinion). What
is not in dispute, although originally denied
by the respondent, was
that Mfeka had instructed her on 2 October 2008 that the opinion was
not to leave the appellant’s
offices.
[7]
On 6 October 2008, the respondent was called to Mfeka’s office,
where she was asked, in the presence of the appellant’s
chair
and vice chair, whether she had passed on the opinion to anyone. She
replied that she had not. Mfeka then asked her whether
she had sent
the opinion to the union and she again responded in the negative. He
further enquired whether she had sent the opinion
to Odendaal. She
denied this as well. Mfeka then confronted the respondent with a copy
of the email that she had addressed to Odendaal
on 1 October. It was
then that the respondent admitted that she had lied and that she had
sent the opinion to Odendaal. She then
stated that after sending the
opinion to Odendaal she telephoned him and asked him to keep the
opinion confidential.
[8]
Following on the above, as the respondent
was already on a final written warning for a similar offence, namely,
for
divulging
information to an outsider in violation and disregard of the rules of
the appellant and instructions from her superior,
she
was charged with
insubordination,
dishonesty and disloyalty. A hearing was duly held and she was found
to have committed the misconduct complained
of and dismissed. The
respondent, unhappy with the outcome of the disciplinary hearing,
referred her dismissal dispute to the CCMA
for conciliation. The
matter was subsequent referred to the Labour Court for adjudication.
The
Labour Court
[9]
The respondent did not raise the issue of protected disclosure in
terms of the PDA at the disciplinary hearing, but raised it
for the
first time at the Labour Court when she challenged the fairness of
her dismissal.
[10]
The Labour Court upheld the respondent’s claim that she was
dismissed for making a protected disclosure in terms of the
PDA. The
Labour Court held that at the time the respondent forwarded the
opinion to Odendaal, she reasonably believed that the
opinion was
substantively true and that it disclosed a breach of fiduciary duty
by the appellant’s trustees. In dealing with
the seriousness of
the disclosure, the Labour Court held that the consequences of any
failure by the trustees of a retirement fund
to comply with a legal
obligation would be exceptionally serious. The Labour Court arrived
at this conclusion after considering
the fact that some R150 million
of the monies under the control of the appellant was lost in the
investment made by its trustees
in the Living Hands Trust.
The
Appeal
[11]
The appellant seeks to overturn the decision of the court
a quo
on
the basis that the respondent cannot be protected by the PDA as the
disclosure she made to Odendaal did not comply with section
9 of the
PDA in that it was not reasonable for her to make the disclosure and
that she did not act
bona fide
when she made the disclosure.
[12]
The appellant’s further ground of appeal is that the court
a
quo
erred in finding that the information disclosed by the
respondent was substantively true as required by section 9 of the
PDA.
[13]
The sub-sections of section 9 of the PDA that embody the requirements
for a protected disclosure, insofar as they are relevant
to this
matter, read as follows:
9.
General protected disclosure.—
(1)
Any disclosure made in good faith by an employee—
(a)
who reasonably believes that the information disclosed, and any
allegation contained in it, are substantially true;
...
is a protected
disclosure if—
(ii) in all the
circumstances of the case, it is reasonable to make the disclosure.
[14]
Having regard to the grounds of appeal and the relevant legislation,
this Court has to be satisfied that the respondent:
(i)
reasonably believed that the information she disclosed to Odendaal
was substantially
true;
(ii)
that in making the disclosure to Odendaal she acted in good faith;
and
(iii)
that the disclosure was a protected disclosure, because in all the
prevailing circumstances,
it was reasonable to make that disclosure.
(i)
Did the respondent reasonably believe the information disclosed was
substantially
true?
[15]
The appellant argued that the Labour Court erred in applying the
standard that the reasonable belief must be that the information
shows or tends to show a failure by the employer to comply with a
legal obligation. The appellant submittedd that section 9 of
the PDA
required a higher standard than, simply, a failure to comply
with a legal obligation. What is required, submits the
appellant, is
that the information disclosed must be objectively true and the
discloser of the information must subjectively believe
that the
information disclosed is substantively true. Hence, even if the
information disclosed is objectively true, but the discloser
did not
subjectively believe that the information was true, the reasonable
belief requirement in s9 of the PDA is not met. The
appellant thus
tried to divide “reasonable belief” into two concepts,
each self-standing with its own independent elements
that required to
be fulfilled in order to clear the first hurdle towards having
the disclosure declared protected in terms
of the PDA. According to
the appellant, the reasonableness of belief entailed an element of
accuracy of the information disclosed
and the belief itself was,
simply, a personal or subjective observation. This argument is
misconceived. The PDA provides that a
disclosure is protected if,
inter
alia
,
the person who makes the disclosure reasonably believes that the
information is true. The enquiry is not about the reasonableness
of
the information, but about the reasonableness of the belief
vis
à vis
the
truthfulness of the information
.
The
requirement of “reasonable belief” does not entail
demonstrating the correctness of the information, because a belief
can still be reasonable even if the information turns out to be
inaccurate. In this regard, this Court, in
Radebe
v Premier Free State Province,
[2]
held
that:
The
requirement of ‘reason to believe’ cannot be equated to
personal knowledge of the information disclosed. That would
set so
high a standard as to frustrate the operation of the PDA. Disclosure
of hearsay and opinion would, depending on its reliability,
be
reasonable. A mistaken belief or one that is factually inaccurate can
nevertheless be reasonable, unless the information is
so inaccurate
that no one can have any interest in its disclosure.
[16]
Moreover, the appellant’s failure to challenge the accuracy of
the information regarding the trustees’ breach of
their
fiduciary obligation meant that the respondent’s reasonable
belief that the information was true cannot be faulted.
Accordingly,
in my view, the Labour Court correctly held that:
‘
This
formulation does not require an employee to believe that any
wrongdoing has actually or definitely occurred; it is sufficient
that
the employee believes that the available evidence suggests that it
has.
In
the present instance, the applicant’s uncontradicted evidence
was that she read the opinion to suggest that the trustees
of the
fund may be in breach of their fiduciary obligations and that they
were potentially personally liable for the beneficiaries’
loss...’
[17]
The Labour Court was therefore correct in concluding that the
respondent reasonably believed that the information disclosed
was
substantially true.
(ii)
Was the disclosure made in good faith?
[18]
The appellant contends that the respondent acted in bad faith in
disclosing the opinion to Odendaal. It submitss that the respondent’s
action was tainted by bad faith because the information was disclosed
prior to any of the trustees having had the opportunity to
have sight
of it. In brief, the appellant contends that the timing of the
disclosure rendered the respondent’s conduct
mala fide.
[19]
In dealing with the question of good faith, the court in
Radebe
[3]
,
in
assessing whether the employee had satisfied the requirement of good
faith, stated:
‘
Whilst
good faith and honesty may conceivably amount to the same thing, I am
of the view that a case by case approach is the proper
one for a
court considering these issues. Factors such as reckless abandon,
malice or the presence of an ulterior motive aimed
at self
advancement or revenge, for instance, would lead to a conclusion of
lack of good faith. A clear indicator of lack of good
faith is also
where disingenuity is demonstrated by reliance on fabricated
information or information known by the employee to
be false. The
absence of these elements on the other hand is a strong indicator
that the employee honestly made the disclosure
wishing for action to
be taken to investigate it.’
[20]
It is important to note the actions of the respondent in dealing with
the element of good faith. It is not disputed that the
respondent was
on a final written warning for divulging information in violation and
disregard of the rules and instruction of
her superior. The final
written warning dated 16 September 2008 in terms records the
following:
‘
At
about 09h00 this morning, you came to my office to discuss the
response you had drafted to the Pension Funds Adjudicator. During
this discussion I questioned you as to your reasons of making
attachment of information about SA Quantum....
You
argued that I always twist what you say and you are sick and tired of
arguing with me and stormed out my office, despite me
telling you to
come back. You actually replied on your way out that you are not
prepared to come back.
Let
me remind you that all correspondence to the Pension Funds
Adjudicator or any statutory body leaves the office in the name of
the Principal Officer and therefore I sanction such correspondence,
there needs to be full understanding and agreement on the contents
thereof.
I
consider this as serious insubordination and therefore give you a
final written warning, with effect from today, the 16
th
September 2008. This warning will be valid for a period of six
months, and should you be found guilty of misconduct similar or
related to this behaviour, this warning will be taken into account in
considering the appropriate sentence.’
[21]
This warning was consequent upon the respondent acting in violation
of the instructions not to send any documents to anybody
without the
approval of the Principal Officer of the appellant, Mfeka. The letter
clearly demonstrates the attitude of the respondent
to undermine her
superior’s instruction. It is trite that in an employment
relationship an employee is obliged to carry out
the lawful commands
and instructions of the employer.
[22]
Despite this final written warning, the respondent, only two weeks
later, sent the opinion to Odendaal. According to the appellant,
the
respondent appears to have displayed an attitude of defiance towards
her superior and had committed an act of insubordination
by sending
the information to Odendaal. Having failed to retain her employment
after the disciplinary hearing, the respondent grabbed
on to the
defence of protected disclosure. Hence, so the appellant argues the
absence of good faith in passing the opinion to Odendaal.
[23]
Good faith, in my view, entails in part that there should be no
ulterior motive, revenge or malice in making the disclosure.
[4]
It is common cause that the respondent did not claim protected
disclosure at the disciplinary hearing and that her reliance on
protected disclosure only surfaced for the first time during the
proceedings before the Labour Court. The inference that the appellant
wants this Court to draw is that the reliance on the protected nature
of the disclosure was more of an afterthought, in an attempt
to
downplay the tendency of the respondent to disregard the employer’s
instruction.
[24]
During the examination and cross-examination of the respondent, who
initially maintained that she was not instructed to not
send the
opinion, was obliged to concede that she was instructed not to
send it. When an employee makes a disclosure with
the aim of
disclosing some improprieties, he, or she, should be able to admit
and take responsibility for his, or her, actions.
This cannot be so
where the employee lies and denies that she had made a disclosure to
a third party. More importantly, if the
respondent had the interest
of the appellant at heart, as she claimed, she should not have
instructed Odendaal to keep the opinion
confidential: what was
required of him was to act on it.
[25]
The purpose of the PDA is to protect employees from being subjected
to an occupational detriment for having made a disclosure.
An
employee would be afforded protection only if he, inter alia,
satisfies the Court that the disclosure was made in good faith.
Earlier on, I indicated that good faith entails in part the absence
of an ulterior motive, revenge and malice in making the disclosure.
In addition, it is also a requirement that the party making the
disclosure intends thereby for the wrong disclosed to be remedied,
or
addressed, in some way. In the present matter, by asking Odendaal to
keep the opinion confidential, it cannot be said that the
respondent
intended Odendaal to address the issues raised in the opinion.
Rather, the only reasonable inference to be drawn is
that the
respondent wanted to keep Odendaal abreast of what was happening at
the appellant. I say this because the appellant had
not yet seen the
opinion at the time it was forwarded to Odendaal. It was an opinion
requested by the appellant and at that stage
the respondent had
no idea what the appellant would or would not do with it. This issue
is supported by the fact that she
did not want Odendaal to act on the
opinion. Her evidence that the appellant might not act on the opinion
or even destroy it is
at best speculative, particularly, because the
opinion was not final and required further information before it
could be finalised.
(iii)
Was it reasonable to make the disclosure?
[26]
While the appellant does not dispute the finding that the
improprieties disclosed in the opinion were exceptionally serious,
it
argues that, for reasons stated above, (i.e. the timing of the
disclosure) it also cannot be said that it was reasonable to
make the
disclosure. According to the appellant, the fact that the respondent
disclosed the opinion prior to the trustees having
received it made
it unreasonable for the respondent to make the disclosure and that
such action was evidence of bad faith.
[27]
The appellant sought the opinion because it wanted to ascertain the
extent, if any, of the liability of the trustees concerning
the
beneficiaries’ fund. The respondent, in my view, acted
prematurely in sending the opinion without first ascertaining
whether
the appellant would react in a particular way in light of the
opinion. She should have awaited the reaction of her employer
before
disclosing the opinion. The respondent could not just assume that
nothing would be done. In fact, there is nothing to demonstrate
that
at the time the respondent forwarded the opinion to Odendaal she had
any reason to believe that the appellant would not act
on the
opinion. Mfeka, who instructed the appellant’s attorneys to
brief counsel to furnish an opinion on the possible liability
of the
trustees, was phoned by the attorneys and informed that the opinion
was forwarded to the appellant’s office. Therefore,
it can be
inferred that it was unreasonable for the respondent to have sent the
opinion to Odendaal before the appellant had even
had a look at it
and decided what if any action it would or would not take. I
therefore agree with the appellant that the respondent
acted
prematurely and before the appellant had an opportunity to act on the
findings and recommendations in the opinion.
[28]
When all the facts and circumstances are taken into account, I am of
the view that the respondent did not act in good faith
in making the
disclosure, nor was it reasonable for her to make the disclosure when
she did and that the disclosure made by the
respondent was not a
protected disclosure as contemplated in the PDA and that the
respondent actions are, thus, not protected by
the provisions of the
PDA.
[29]
In the premises, the respondent’s dismissal was not
automatically unfair. Concerning the costs, I am of the view having
regard to law and equity that this is a matter where each party
should bear its own costs.
[30]
In the result, the following order is made:
1
The appeal is upheld.
2
The order of the Labour is set aside and replaced with the following:
‘
(i)
the applicant’s dismissal was not automatically unfair.
(ii)
There is no order as to costs.
___________
Waglay
JP
I
agree
____________
Tlaletsi
JA
I
agree
_
_____________
Coppin
AJA
APPEARANCES:
FOR
THE APPELLANT:
Adv C E
Watt-Pringle SC
Instructed
by Bowman Gilfillan Inc
FOR
THE RESPONDENT:
Adv G A Leslie
Instructed
by Malcolm Lyons and Brivik Inc
[1]
A
company which according to the appellant gained widespread notoriety
for losses it had incurred and was subsequently placed
under
curatorship.
[2]
Radebe
v Premier Free State Province
2012
(5) SA 100
(LAC) at para 36.
[3]
Supra
at para 35.
[4]
Radebe
supra
para 35