About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Labour Appeal Court
SAFLII
>>
Databases
>>
South Africa: Labour Appeal Court
>>
2017
>>
[2017] ZALAC 31
|
|
Moen v Qube Systems Proprietary Limited and Others (JA107/2015) [2017] ZALAC 31; [2017] 11 BLLR 1096 (LAC); (2017) 38 ILJ 2712 (LAC) (31 May 2017)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA107/2015
In
the matter between:
HENK
MOEN
Appellant
and
QUBE
SYSTEMS PROPRIETARY
LIMITED
First Respondent
QUBE
MANUFACTURING PROPRIETARY
LIMITED
Second Respondent
QUBE
TECHNICAL SERVICES PROPRIETARY
LIMITED
Third Respondent
QUBE
PROPERTY HOLDINGS PROPERTARY
LIMITED
Fourth Respondent
Heard:
28 March 2017
Delivered:
31 May 2017
Summary:
Review of arbitration award – employee dismissed for alleged
gross dishonesty for activating
the in-contact service SMS
notification on the company’s credit card without informing the
employer and also to divert all
company SMS notification to his cell
phone– commissioner finding that dismissal substantively and
procedurally unfair. Labour
Court setting aside award. Held that
courts in review proceedings should avoid conflating review and
appeal. The evidence on the
probabilities not revealing that employee
approached the bank to be placed in a position to receive
communications pertaining to
all financial movements on the account -
Although, the evidence revealing that the employee did not notify the
company that he
was receiving information about the company’s
bank account it was insufficient to conclude that the commissioner’s
finding that the dismissal of employee was substantively unfair was
unreasonable in the proper application of the review test. –
Labour Court applying the incorrect test and that the decision of the
arbitrator is not one of which it can be said that a reasonable
arbitrator could not have reached on the material placed before him.
Appeal upheld.
Coram:
Waglay JP, Davis JA
et
Kathree-Setiloane AJA
JUDGMENT
DAVIS
JA
Introduction
[1]
This is an appeal against an
order of Brassey AJ of 16 September 2015 made pursuant to a review
application that had been launched
by the first to fourth respondents
in respect of an award made by a commissioner at the Commission for
Conciliation Mediation and
Arbitration (“CCMA”) on 08
August 2011. In this award, the Commissioner found that the appellant
had been procedurally
and substantially unfairly dismissed by the
first to the fourth respondents and they were ordered to pay
appellant compensation
in the equivalent of eight months’
remuneration which amounted to a sum of R 936 000.00 within 14
days of the date of
the award. In addition, the Commissioner ordered
that certain statutory payments had to be paid to appellant. This
issue was not
taken on review nor has an appeal been lodged against
the order.
[2]
In setting aside, the award,
Brassey AJ found that the first respondent’s dismissal of the
appellant was procedural unfair
but not of substantively unfair. He
ordered first respondent to pay appellant compensation equal to an
amount of three months’
remuneration being R 341 000.00.
Factual
background
[3]
Appellant was the joint
managing director of first respondent and in this capacity was issued
with a company credit card by First
National Bank (“FNB”)
which he was entitled to use for business purposes. On 1 December
2009, he went into the Carswald
Branch of FNB to activate what is
known as the “in-contact” service on the credit card.
This is an information service
which, once triggered, ensures that
the bank sends a SMS message to the credit card holder every time the
credit card is used.
[4]
Appellant activated this
service on his company credit card because, according to his
evidence, he and the joint managing director
Mr Roderick Dyson
travelled to Europe on business in 2009. During this trip, Mr Dyson’s
credit card was fraudulently used.
According to appellant, he thought
it prudent to activate this service on his company credit card to
ensure that he could be notified
of any transaction thereon and thus
detect possible fraud at the earliest opportunity.
[5]
On 1 December 2009, he was
assisted in his request to install the in-contact service by FNB bank
teller Mr Phenney Maleka. He handed
Ms Maleka both his credit card
and identity document and provided her with his cell phone number so
that she could activate the
service. She checked his documents and
thereafter activated the services. It appears from appellant’s
evidence that his instruction
to Ms Maleka was to activate the
service only in relation to his own credit card. However, it later
appeared that the in-contact
detail on first respondent’s
cheque account had been so altered that information relating to the
account only appeared on
appellant’s cell phone. Accordingly,
he began to receive SMS notifications of transactions not only in
relation to his own
company credit card but also in respect of first
respondent’s cheque account.
[6]
Some eight months after he had
activated the service, that is on 31 August 2010, appellant was
confronted by Mr Dyson who accused
him of acting dishonestly and
contrary to the interests of first respondent in activating the
in-contact details of his company
credit card. According to
appellant, this was the first time he became aware of the fact that,
when he activated the service on
his credit card and began receiving
information in relation to first respondent’s cheque account,
it meant that only he received
these details as opposed to Mr Dyson
who had previously received SMS messages in respect of banking
transactions on the first respondent’s
cheque account.
[7]
Following this development,
appellant was charged with gross dishonesty in relation to the
activation of the service and his failure
to disclose this to first
respondent.
[8]
The charges brought against
appellant read as follows:
‘
1
Gross Dishonesty and or Misconduct in that you arranged that the
“in-contact”
details on the company’s FNB bank
accounts were changed, during December 2009, so that you would be in
a position to receive
communication pertaining to all financial
movement on the account or your cell phone since December 2009 until
now, without permission
or authorisation.
2
Gross dishonesty in that you failed to obtain permission or
authorisation
form Mr Rod Dyson to effect the abovementioned change
on the “in-contact” details at FNB.
3.
Gross
dishonesty in that you failed to report either the Authorised
Financial person or Mr Rod Dyson that you were able to receive
communication pertaining to all financial movement on the account on
your cell phone since December 2009.
4.
Gross
misconduct in that you acted without authority and outside the scope
of your responsibilities when you effected the abovementioned
changes
to the company’s bank accounts.’
A
disciplinary hearing was convened and appellant was dismissed with
immediate effect.
The
Commissioner’s findings
[9]
Following this decision, the
dispute was heard by the Commissioner. The Commissioner found it
improbable that Ms Maleka would have
activated the in-contact service
had she not been satisfied that appellant was possessed of the
necessary authority to do so and
hence acted in a dishonest manner.
As the arbitrator said in his award:
‘
I
find it completely and utterly improbable that a banking institution
of high repute such as Ms Maleka’s employer probably
would
permit a transaction of the nature testified to by Ms Maleka to occur
in the manner that she testified that it occurred without
being alert
to alleged dishonesty of such a palpable nature. I find that
even if it were true that the applicant presented
himself as the
Financial Manager, Ms Maleka was duty bound to satisfy herself that
he was who he purported to be. Her evidence
suggests that she was
aware that the applicant was not the Financial Manager at the time of
the transaction because she accessed
the respondent’s account
and, in my view, the transaction should not have gone much further
than handing back the applicant’s
identity document and telling
him, in no uncertain terms, that he could not perform the transaction
that he desired which, of course,
on her version, was to change the
existing contact details on the respondent’s business account.
I simply cannot accept
that an employee, even an employee of the
applicant’s standing on her version, could just walk up to a
bank official and
request changes even of the nature testified to by
Ms Maleka, to be made on a business account, in the face of clear
mandates at
the bank regarding who the authorised financial person at
the respondent was.’
He
then concluded:
‘
I
find that if Ms Maleka, whether by accident or design, then went on
to effect different changes to the respondent’s account
than
that which the applicant requested, it can never be that the
applicant can be said to have been dishonest as a result
.’
[10]
As a managing director of first
respondent, appellant was not required to report to Mrs Dyson nor to
inform her of the activation
of an in-contact service on a business
credit card which had been allocated to him for business purposes. In
addition, the Commissioner
found that, given his position in the
organisation, appellant would, in any event, have had access to the
information that he had
received following the activation of the
in-contact service. Furthermore, the Commissioner considered that it
was troubling that
Mrs Dyson had only detected that he was no longer
receiving SMS messages on the first respondent’s cheque account
some months
after appellant’s visit to the bank. On this line
of reasoning, either Mrs Dyson did not notice that she was no longer
receiving
the messages or she considered this to be of insufficient
importance to raise the issue with the bank. The Commissioner thus
found
that the dismissal of appellant had been substantively unfair
and awarded him the compensation indicated earlier in this judgment.
The
finding of the court
a quo
[11]
Brassey AJ held that the fact
that appellant received SMS messages in respect of first respondent’s
cheque account for eight
months before Mrs Dyson found out about the
termination of the service was of little consequence. In his view,
appellant had a
duty to obtain the consent of the Dysons before he
altered the bank account details of first respondent. As a director,
he owed
a special duty to the first respondent and his co-directors
to make the requisite disclosures and obtain the appropriate
consent.
[12]
Brassey AJ found that not only
did he not solicit consent from Mr Dyson but he failed to make sure
that he was only added as a recipient
rather than as a substitute in
respect of the in-contact service. Thus, he failed to deal with the
potential consequences that
flowed from the information generated on
the SMS amount. This negligence was bordering, in the learned judge’s
view, on recklessness.
[13]
In summary, the basis by which
Brassey AJ granted the application for review of the award, save for
procedural unfairness, is captured
in the following passages of his
judgment:
‘
In
my view, the arbitrator’s reasoning on the merits was
materially deficient. There was a fundamental failure by the
learned arbitrator to understand what it is that he was expected to
do. He was expected to evaluate the facts. He had
two
conflicting versions. The one tendered by the employer,
principally through the mouth of the bank teller was that Moen
misrepresented his reasons for wanting a change to the in-contact
information. The second tendered by Moen was to the effect
that
he had made no misrepresentation and was certainly not wilfully
dishonest when he acted in the way that he did.
…
On
this version I have to consider whether there has been a material
irregularity, and I come to the conclusion that there has been.
What the learned arbitrator, having discovered that there was no
dishonesty, should have done is to consider whether the facts
disclosed a competent alternative conclusion that should have been
adopted in the circumstances.
…
Moen
was a senior man in the company. He was intimately connected
with the Dysons. He was obliged to play totally open cards
with them
in the circumstances. He must have known what good corporate
governance standards required of him. He must have
known that
what he was doing might, if not properly communicated, engender
suspicion. It was matter of a few moments first to solicit
permission
and if he chose not to do that, at the very least to send an e-mail
or some other communication to the Dysons, explaining
what he had
done and asking them to be alert to ensure that despite what his
actions entailed, they continued to receive the necessary
communications from the bank. He did none of that. In those
circumstances he is guilty, it seems to me, of negligence, indeed
such want of care as amounts to recklessness. To act in a way that is
so pregnant with potential suspicion is to act in a thoroughly
neglectful way.
’
Appellant’s
contentions on appeal
[14]
Central to the appeal was the
argument that the court
a
quo
had applied the wrong
test for review. It is now trite law that the test for review is
whether the Commissioner’s decision
is one that a reasonable
decision-maker could not reach in the circumstances of the case. See
Sidumo and Another v
Rustenburg Platinum Mines and Others
2008 (2) SA 24
(CC) and the further explication of this judgment by
this Court in
Fidelity Cash
Management Services v CCMA and Others
2008 (29) ILJ 964 (LAC).
[15]
By contrast, the court
a
quo
formulated the test
thus:
‘
Of
course, it is not my function as a judge sitting on review to pick my
way through the arbitration award in order to discern elements
of
acts of misdirection; quite the reverse. My job is to ask
whether, whatever, the misdirection may have been, they actually
produced an outcome that was materially deficient… the test is
whether, by reasoning as he did, the Arbitrator in effect
went off
the rails.
…
…
I
have to consider whether there has been a material irregularity, and
I come to the conclusion that there has
been.’
[16]
Regrettably, this test does not
appear to be congruent with the proper approach to a review of a CCMA
award. As Cachalia and Wallis
JJA said in
Herholdt
v Nedbank Ltd
[1]
‘
For
a defect in the conduct of the proceedings to amount to gross
irregularity as contemplated by s 145(2) (a) (ii), the arbitrator
must have misconceived the nature of the enquiry or arrive at an
unreasonable result. A result will only be unreasonable
if it
is one that a reasonable arbitrator could not reach on all the
material that was before the arbitrator. Material errors of
fact, as
well as the weight and relevance to be attached to particular facts,
are not in and of themselves sufficient for an award
to be set aside,
but are only of any consequence if their effect is to render the
outcome unreasonable
.’
[2]
[17]
This
dictum
emphasises that the significance of the arbitrator’s reasons
are less important than a careful examination by the reviewing
court
of the result arrived at by the arbitrator, after a consideration of
all the materials placed before the arbitrator. This
exercise does
not entirely exclude an examination of how the arbitrator might have
arrived at his or her conclusion, in that a
review will still succeed
if the conclusion reached is unsupported by or in conflict with the
evidence read as a whole.
[18]
By contrast, the approach
adopted by Brassey AJ, in this case, raises the danger of a
conflation between an appeal and a review,
the latter which is
obviously the mandated enquiry in the present dispute.
[19]
The present dispute turned on a
series of charges of gross dishonesty and/or misconduct and this must
form the bedrock for any enquiry
as to whether the commissioner
arrived at an unreasonable result.
[20]
In support of first
respondent’s case much was made of a company resolution of 15
October 2007 which read thus:
‘
We,
the undersigned, being the members representing the total issued
share capital of the company do hereby consent to the following
banking arrangements:
Resolved
that a cheque account and a call investment account be opened at the
First National Bank Limited.
Reserved
that the following restrictions are applicable to the banking
facilities:
·
Signatures
of N M Dyson and any other authorised director listed above are
jointly required to amend any profiles or instructions
on the
account.
·
Signatures
of N M Dyson and any other authorised director listed above are
jointly required to amend any internet banking profiles
or
instructions on the internet banking service.
·
Signatures
of N M Dyson and any other authorised director listed above are
jointly required to sign cheques in excess of R1,000-00
(one thousand
rand only) to effect payment.
·
Only
one signature on a cheque is required to effect payment of R1,000-00
(one thousand rand only) or less.
’
[21]
It was contended that, as
appellant had admitted that he knew of this resolution, he had
breached it by way of his conduct when
he requested the in-contact
service on his business credit card. He had failed to inform his
fellow directors and concealed his
engagement with the bank for eight
months until he was found out. This conduct was sufficient not only
to justify a conclusion
that charges brought against him were
sustainable but so argued first respondent, no reasonable arbitrator
could have come to a
different conclusion. It was further contended
that appellant’s failure to correct this situation constituted
a deliberate
breach of duties, alternatively gross negligence,
sufficient as Brassey AJ had said to justify the conclusion that
“such
want of carelessness … amounts to recklessness.”
Evaluation
[22]
The evidence, as analysed by
the Commissioner, did not, on the probabilities, reveal that
appellant had approached FNB to ensure
that he be placed in a
position “to receive communications pertaining to all financial
movements on the account.” (charge
1) The fact was that these
further communications, other than those which related to his own
business credit card, could not be
sourced, on the evidence, in any
request that was made by appellant to the bank. The probabilities are
that this was a bank error
and not one which could be attributed to
him. Accordingly, it was not an unreasonable result to conclude that
the charges of gross
dishonesty and misconduct pertaining to the bank
providing appellant with communications on all the financial
movements of first
respondent could not be justified on the evidence
available.
[23]
Regarding the additional
charges, the resolution of October 2007, upon which first respondent
placed so much emphasis, clearly related
to a cheque account and a
call investment account of first respondent. It was not unreasonable
to conclude that the resolution
did not cover the in-contact facility
available on credit cards. Accordingly, it was not unreasonable to
conclude that appellant
had not exhibited gross dishonesty in failing
to obtain permission from Mr Dyson in respect of this SMS facility.
Appellant’s
evidence that he required the facility because he
was concerned about fraud on the credit card was not disturbed under
cross-examination
and it is difficult to discount it as the
justification for his approach to the bank.
[24]
I accept readily that
appellant’s excuse for not correcting the bank communication
which enabled him to receive communications
on all of first
respondent’s accounts, namely that it was tiresome to stand in
a queue at the bank, is not reflective of
the kind of conduct that
one would expect from a managing director of a company. I also accept
that, in terms of his fiduciary
duties, appellant should have spoken
to his fellow directors about the additional information that he
received in terms of the
in-contact system. But it is, in my view,
not unreasonable to conclude that this conduct did not amount to the
kind of gross dishonesty
as formulated in the charges brought against
him.
[25]
First respondent’s
counsel sought to justify his client’s case by submitting that
the appellant had engaged the bank
without authorisation regarding
the lifting of the credit card limit. With the exception of a single
comment made by Mr Dyson in
passing, the evidence amounted to no more
than a suspicion on the part of Mr Dyson. This issue was not
canvassed by either party
in evidence during the arbitration hearing.
No evidence was led that the appellant had acted in this manner nor
was the issue canvassed
when the relevant bank officials testified at
the hearing. More significantly perhaps, is the fact that this was
not an issue raised
by first respondent as a ground of review in
respect of the Commissioner’s decision to justify first
respondent’s contention
that the Commissioner had erred in
finding that the appellant’s dismissal was substantively
unfair.
[26]
Viewed in its totally, the
evidence does reveal that the appellant did not notify anyone at
first respondent, in particular, Mr
Dyson, that he was receiving
information about first respondent’s bank account or that he
took steps to rectify the position.
But alone this is insufficient to
conclude, on the evidence that was placed before the Commissioner,
that the result reached, namely
that on the charges brought by first
respondent, the dismissal of appellant was unreasonable in terms of
the proper test for review
which must be applied.
The
amount of compensation to be awarded
[27]
In light of the finding that
Brassey AJ’s order stands to be set aside on the basis that the
learned judge applied the incorrect
test and that the decision of the
arbitrator is not one of which it can be said that a reasonable
arbitrator could not have reached
on the material placed before him.
The further question arises as to whether there is any basis for an
alteration of the amount
of compensation awarded by the arbitrator.
The question arises as to whether eight months’ salary as
compensation constituted
a capricious exercise of a discretion, based
upon a wrong principle without reason or stands to be classified as a
biased decision.
See
Kukard
v GKD Delkor
[2015] 1 BLLR
63
(LAC). Again, it must be emphasised that this is a case brought on
review. This test emphasises that the particular view of the
reviewing judge is not to be equated with the proper test which
entails an analysis of whether any of these specified factors have
been shown to be present in the award of compensation. On these
facts, it cannot be said that compensation in the amount of eight
months’ salary is a decision that stands to be reviewed.
[28]
In the final result, the
finding that the dismissal was both substantively and procedurally
unfair must stand. Viewed accordingly,
an award of compensation
amounting to eight months’ remuneration cannot be considered to
unreasonable.
Conclusion
[29]
For all of these reasons, the
appeal must succeed and thus the following order is made:
1.
The appeal succeeds with costs.
2.
The order of the Court
a
quo
is set aside and
replaced with the following order: “The application is
dismissed”.
3.
First respondent is to pay the
appellant compensation in the amount R936 000.00 (nine hundred
and thirty-six thousand rands)
within 14 (fourteen) days of the date
of this judgment.
___________________
Davis
JA
I
agree
____________________
Waglay
JP
I
agree
____________________
Kathree-Setiloane
AJA
APPEARANCES:
FOR
THE APPELLANT:
Adv A Redding
SC
Instructed by Edward Nathan
Sonnenbergs INC
FOR
THE RESPONDENTS: Adv
N Smythe
Instructed by Howard S Woolf Attorneys
[1]
2013 (6) SA 224 (SCA).
[2]
At para 25.