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[2018] ZALAC 55
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Goldgro (Pty) Ltd v Mcevoy (JA 133/2017) [2018] ZALAC 55; (2019) 40 ILJ 1202 (LAC) (12 December 2018)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA 133/2017
In
the matter between:
GOLDGRO
(PTY) LTD
Appellant
and
CAROLINE
MCEVOY
Respondent
Heard:
08 November 2018
Delivered:
12 December 2018
Summary:
Alleged Protected disclosure – employee contending that her
retrenchment was due to the disclosure she made concerning
certain
irregularities to the board of which she is a member - the
employee caused her attorney to send a letter (the PD
letter) to the
board concerning: (1) the integrity of the facility for coins held in
safekeeping, (2) the integrity of the appellant’s
stance on
dealing with lessors to whom turnover rentals were owed, and (3) the
merits of an application to place the appellant
into business rescue.
Held
that:
Every
fact raised in the PD letter was known to every director and other
members of the management and also to the auditors. Indeed,
the
matters were being addressed in the context of satisfying the
auditors in respect of annual accounts. Terner, of Grant Thornton,
the Auditors, was in conversation with employee about these very
matters and sat in on meetings of the appellant when they were
addressed.
The
letter does not, on the facts adduced in evidence, constitute a
protected disclosure; rather is a contrived attempt to bully
the
employee’s fellow members of the board into adopting her point
of view, and an attempt to distance herself from her
co-decision-makers should there be a fall-out.
Concerning
the Labour Court’s finding that that the retrenchment was a
direct result of her refusal of the reassignment of
her role, it was
held that
The
employee was fully aware of the financial predicament of the
business, and indeed, lacked no information required reasonably
by
her to consider the business rationale of the retrenchment decision
with its concomitant costs savings. She also was aware that
she was
not singled out in an aberrant redundancy but that the second stage
of the restructuring was broadly based. Moreover, her
redunancy as a
director did not imperil her employment per se, and a reasonable
alternative offer in the virtually identical role
was made and, in
the context of the dire financial condition of the business,
unreasonably refused She had no reasonable ground
for a belief that
the decision was one which targeted her or that, logically, her
so-called disclosures were causally connected.
Order of the Labour
Court set aside and appeal upheld.
Coram:
Phatshoane ADJP, Sutherland JA and Kathree-Setiloane AJA
JUDGMENT
SUTHERLAND
JA
Introduction
[1]
Caroline
McEvoy, the respondent, was successful in the court
a
quo
with a claim for an automatically unfair dismissal in terms of
section 187(1)(h) of the Labour Relations Act 66 of 1995 (LRA),
on
the grounds that the dismissal was an occupational detriment
precipitated by her making a protected disclosure as contemplated
by
section 6 of the Protected Disclosures Act 26 of 2000 (PDA).
[1]
The appeal lies against that finding.
[2]
The critical issues are whether a
protected disclosure was made at all and in good faith, and in any
event, even if such finding
is correct, whether the termination of
employment was causally connected thereto, and as such, constitutes
an occupational detriment
sustained as contemplated by section 1 of
the PDA. The enquiry is into these two factual findings.
[3]
The business of the appellant is trading
in gold coins, especially Kruger Rands. Adjunct to the trading
activity, the appellant
also provided, at the option of the owners of
coins, a safe deposit service. Marketing of the business was
conducted in several
subsidiaries through a
de
facto
branch system in leased
premises in various places in South Africa. The appellant company is
the holding company of several subsidiaries;
unless the particular
corporate entity needs to be specifically identified, they are
collectively referred to as the appellant.
The
case for a protected disclosure
The
alleged protected disclosure relied upon by the respondent was a
letter she caused her personal attorney, Clifford Green, on
21
November 2018, to send, addressed to the board of directors of
Goldgro (Pty) Ltd (“the PD letter”) The text reads
thus:
[2]
‘
THE
BOARD OF DIRECTORS OF GOLDGRO
[the
five co-directors email addresses are set out]
RE:
PROTECTED DISCLOSURE ITO
PROTECTED DISCLOSURES ACT 26 OF 2000
1.
We act on behalf of Caroline McEvoy (our
Client)
2.
We are advised by our client that the
company is committing the following irregularities which I have been
instructed to bring to
your attention:
2.1.1
Coins are held for customers in safe custody boxes.
2.1.1
It has come to the attention of our client that instructions have
been given by the CEO of the company to
remove some coins for use by
the company with the intention of replacing them at a later date.
2.1.2
It is our considered opinion that this practice is unlawful.
2.2
Further, in terms of property leases signed by Scoin and its
subsidiary Talya, a % of turnover
was to be paid over to the
landlord.
2.2.1
It has come to the attention of our client that an amount of R15m is
due and owing by Scoin and further
R12m by Tayla.
2.2.2
Our client has been advised by the CEO and Chairman that the company
has no intention of paying these amounts
over to the Tayla landlord.
3.
Further, the company has sustained a
loss of approximately R20m in the year to date September 2014. This
includes a loss of R6m
in September alone with further losses
expected in October 2014, based on accounts still to be finalised.
3.1.1
It is the opinion of our client that the company should seek business
rescue proceedings as a matter of
urgency to avert the likelihood of
liquidation.
4.
We require your response within seven
days failing which we reserve the right to take further action.’
[4]
A
similar formal report was made on 10 December to Grant Thornton, the
appellant’s auditors.
[3]
The
respondent’s role in the business
4.1.
At the time of the PD letter, the
respondent was a director of Goldgro (Pty) Ltd, having been appointed
on 12 August 2014, about
three months prior thereto. The respondent
is a chartered accountant. She initially became employed by the
appellant in March 2014.
The position she initially held was General
Manager, Finance in a subsidiary, Scoin.
4.2.
The individuals named in the e-mail
addresses were her fellow board members who were, as at 22 August
2014:
4.3.
Alan Demby – Executive chairman.
4.4.
Selwyn Grimsley – Group Executive
Officer
4.5.
Leon and Hilton Kaplan, both
non-executive directors.
[5]
A “Trading Board” was also
appointed, which included several persons, including Michelle Rauff,
the Human Resources
Director, who was also at the same time as the
respondent, appointed to that board. Its function as the second-tier
executive management
was the operational management of the several
aspects of the business.
[6]
The appellant retained the services of
several attorneys and sought advice from time to time from each of
them. Clifford Green was
not one of them.
The
Financial crisis in the business and its consequences
[7]
It is common cause that there was a
financial crisis in the business. This was learnt by the respondent
shortly after taking up
employment in March 2014 and she would in her
role have been hands-on in endeavours to address the crisis. The
nature of the crisis
was primarily experienced as an acute cash flow
shortage owing to plummeting sales, a reflection of broader economic
woes in the
country. The appellant’s banker refused to extend
the overdraft facility of R 45 million, which was at a point of near
exhaustion.
[8]
The difficulties were recognised by the
board and by the broader management. The result was a series of
decisions taken by the board
which can be tracked through the minutes
of board meetings. The thrust of the strategy adopted was a rapid and
immediate contraction
of business operations to slash overhead costs.
This involved a restructuring of the business to render certain
subsidiaries dormant,
close down outlets, and retrench staff. The
CEO, Grimsley took a 25% cut in salary.
[9]
The
financial management arm of the business was affected as were all
others. This impacted on the respondent directly. In a restructuring
of the financial management throughout the group, the finance
function was centralised. A consequence of that restructuring was
that the respondent was reassigned duties within the new centralised
structure. She became, as alluded to earlier, the Group Chief
Financial Officer, and was appointed to the main board, and given a
10% increase in salary. Grimsley announced on 1 August that
the
restructuring process was completed, a view which proved to be
unjustifiably optimistic.
[4]
[10]
This process of restructuring was, in
due course, deemed to be inadequate to meet the challenge of cutting
overheads. This was plain
from the financial data, monitored at this
time on a daily basis. Thus, on 15 October 2014, the CEO, Grimsley,
again notified all
staff that a further retrenchment exercise was
necessary and that the affected persons would be notified. A
pertinent mention was
made of the then-in-progress consolidation of
the finance functions and pointedly mentioned that “…further
costs savings
are being sought in every aspect of the business.”
On 19 November, a further communiqué to all staff noted the
rationalisation
of subsidiaries and marketing implications.
[11]
During the course of these developments,
which carried on for the rest of 2014, Grimsley left the business and
Demby assumed the
role of CEO. Rauff was dropped from the trading
board and reverted to the position and salary she had formerly held
prior to the
first phase of restructuring. Others in management were
reassigned or retrenched.
[12]
The
respondent left the business as a retrenchee with effect from 19
December 2014. The details relevant thereto are addressed discretely
elsewhere in this judgment. Her claim is that this was the
occupational detriment caused by her sending the PD letter.
[5]
The
subject matter of the PD letter
[13]
There are three topics mentioned in the
PD letter: (1) the integrity of the facility for coins held in
safekeeping, (2) the integrity
of the appellant’s stance on
dealing with lessors to whom turnover rentals were owed, and (3) the
merits of an application
to place the appellant into business rescue.
[14]
The controversy to be decided is whether
the “disclosures” of these issues can be properly
construed as protected disclosures
as defined.
[15]
Part of the defence advanced is that the
subject matter was already before the board, prior to the PD letter
of 21 November. Indeed,
it is true the topics were addressed, some
decisions taken, and other proposals raised for consideration. The
three issues are
addressed in turn.
[16]
Coins safety:
16.1.
Soon after joining the appellant,
Terner, the Auditor from Grant Thornton, told the respondent that
clients’ coins were being
removed from the vault to use for
trading. Moreover, this had been noted in FY 2013, and was, despite
Terner having been told the
practice would stop, still happening.
From this communication it was plain that the Auditors were well
aware of the issue.
16.2.
Any doubt about Management, or the board
in particular, being aware of the practice, is dispelled by the
resolution passed by the
board on 17 November 2014 prohibiting the
practice.
16.3.
Evidence was adduced on when the coins
were improperly removed. The removals in various volumes occurred
from 13 December 2013.
All but one removal occurred before the 17
November board resolution. One removal of 50 Kruger Rands occurred on
19 November 2014.
16.4.
The PD letter omits reference to the
board resolution of 17 November. Further, it makes no reference to
the several dates of removal.
No mention is made when the instruction
by the CEO to remove the coins was made. It must be assumed that
respondent’s attorney
was not told of these pertinent facts.
Moreover, it is to be inferred from the evidence of the respondent
that she never set about
gathering this information and she was
ignorant of the critical details of when the instruction was given or
of the dates of all
the removals.
16.5.
Email
correspondence exchanged on 8 December reveals a flurry of exchanges
among the respondent, Demby and the non-executive directors
about the
timing of buy-backs of coins to replace the improperly removed coins;
a process hamstrung by cash flow constraints.
[6]
The issue was put on the agenda of a board meeting scheduled for 12
December; a meeting later cancelled.
16.6.
The respondent was wholly justified in
being dissatisfied about the removal practice. However, was she
reasonable in not informing
herself fully about the circumstances?
There was only one removal after the resolution; what inferences
could properly be drawn?
Was this removal one which flowed from an
instruction given prior to the 17 November resolution? Was it a
result of a fresh instruction
given in defiance of the resolution?
The respondent apparently did not enquire.
16.7.
As a director, what was her
responsibility? This aspect is addressed more fully elsewhere,
however it is plain that she did not
follow through on determining
the relevant circumstances to determine if the board’s
resolution had been defied or not.
16.8.
What she did do is to report to the
board in the PD letter, in the vaguest of terms, facts known already
to the board and in respect
of which the board had taken the step to
prohibit the practice. In relation to what the PD letter addressed,
the board had already
acted.
[17]
Debts to Lessors:
17.1.
Terner, had also told the respondent,
shortly after she joined the appellant, of the problem regarding the
computation of sums due
to lessors of various shops based on
turnover. The issue enjoyed considerable attention, not least because
the annual accounts
finalisation was being held up owing to the
issue.
17.2.
The record picks up the issue in a
meeting on 11 June 2014 of the Audit and Risk Committee. In
attendance were Terner, the respondent,
Leon Kaplan Alan Demby,
Grimsley, and several others. The turnover rental issue was addressed
in paragraph 3.1.8 of the minute.
The minute records that legal
advice had been taken on the prescription of debts older than three
years, that the extent of the
exposure was R4.68 m for Scoin and
R9.02m for Talya. Sean Effune, the property manager was directed to
negotiate with the lessors
to find the “best possible
solutions”.
17.3.
The issue arose again on 12 August at
the board meeting. There it was reported that on 31 July the matter
had been discussed with
the auditors. The effect it had on the
preparation of the annual accounts was addressed and in particular
whether a reportable
irregularity had occurred. The auditors were
applying their minds to the opinions of several attorneys. It was
agreed that negotiations
with the lessors take place. In this regard,
it was said that the business’s cash flow problem had to be
factored in the
approach. The auditors were to be kept informed.
17.4.
The next day, 13 August, a letter was
sent to Grant Thornton by Grimsley and Demby addressing the treatment
of the issue. The letter
addressed the ground covered at the board
meeting and concluded by saying that the appellant would “…
in a timely
manner engage with the landlords to rectify any past
errors in the declaration of turnover and negotiate payment of any
arrears
that may arise”.
17.5.
On 4 September, Sean Effune, the
property manager put forward a proposal on how to tackle the issue.
It was premised on a disclosure,
explained as a misinterpretation, an
offer to rectify, and an attempt to come to a settlement. He
cautioned that ACSA was likely
to be a difficult lessor to win over.
17.6.
On 11 September, yet another Board
meeting addressed the issue. The respondent herself reported on the
financial data relevant to
the turnover computations. An exposure of
R27m was estimated. The respondent was directed to engage further
with the calculations
and inform the auditors.
17.7.
The predicament of having to address a
retrospective repair was fraught with several impediments, of which
cash flow was the most
visible. On 20 November, Grimsley wrote an
e-mail that introduced a twist in ideas about prospective dealings
with the lessors.
It followed on a meeting held on 18 November. The
text reads in full:
‘
Sean,
Herewith
my record of the strategy arising from our meeting on 18 November.
You now need to document this strategy, based
on this, your
understanding plus with input from AD [Alan Demby] and CME [ Caroline
McAvoy]. This will then be provided to
the Board as a formal
position at our board meeting on 12 December 2014. The paper is
required by 3 December.
Scoin:
1.
Identify all premises leases in respect
of which we have liability for financial years 2010 – 2014
(done- attached file, tab
“By Landlord”)
2.
Identify those in respect of which we
have received turnover certificate request (green in attached).
3.
Secure turnover rent certificates to
meet each request. The audit requirements in the leases must be
fully met. If the
company’s statutory auditor is required
to fulfil the audit, then comply. If not, then use same auditor
as previously
(CME).
4.
First landlord to approach is
Growthpoint (Walmer, La Lucia). Liability is R12k in respect of
year 2014 which is only year
request was made. Negotiate
settlement for 2014.
5.
Remaining outstanding turnover
certificates are in respect of Liberty Properties & Old Mutual
Properties.
6.
Commence with Liberty. Approach
Mel Urdang, past Liberty Properties director, for advisory role on
Liberty.
7.
Report back on progress with both items
4 and 6.
8.
We then consider next steps, including
approach to Old Mutual.
9.
For landlords where certificate is
requested there is no liability, secure certificates and comply with
lease obligation to provide
same.
10.
In respect of premises leases where
no request for turnover certificates has been received, take no
action.
Talya:
1.
The company’s Annual Financial
Statements over the period 2010 to 2014 do not reflect the cost of
managing the business, as
this was carried by Scoin. It is
estimated that the cost per year of management services provided by
Scoin was R5m to R6m.
If charged the company would be
insolvent.
The company
therefore does not have funds to meet its obligations. We do
not intend to engage with ACSA.
2.
The CTIA store is to close no later than
February 2015. You are negotiating settlement with ACSA Cape
Town.
3.
King Shaka rent payments cease with
immediate effect.
4.
Turnover certificates are not to be
requested.
5.
Management will dormatise this company
and assess how to minimise the risk of claims from ACSA.’
(Underlining
supplied)
17.8.
It is plain that, as CEO, Grimsley was
formulating a proposal to put before the board. It was contemplated
to be the Management’s
viewpoint. The controversial aspects
related in the main to an approach that left matters undisturbed with
certain lessors, a stance
that was influenced by liquidity
difficulties. ACSA, in particular, would be affected. The e-mail
expressly called for input from
Demby and the respondent.
17.9.
The respondent regarded these views as
inappropriate. The same day Grimsley sent Jordaan, the risk manager,
an e-mail and asked
whether the approach suggested was:
‘…
.defendable
in the context of directors’ responsibilities to creditors and
whether in the event the company were to
fail and if the directors
were in fact found guilty of reckless trading , the company’s
insurance policy would respond.’
17.10.
It was this approach to the turnover
rental problem, and a report to the respondent by Oosthuizen that
there were still coins unaccounted
for in the safe custody facility,
that, so says the respondent, triggered her concern which led to her
decision to seek advice
from her personal attorney. That, in turn,
led to the PD letter being sent on 21 November.
17.11.
The appellant’s contention is that
it was unreasonable to construe Grimsley’s suggestions as more
than a proposal, subject
to advice, to be considered by the board.
This proposition is sound, not least because it articulated expressly
that it be an item
for the board meeting of 12 December and was
described as a potentially “formal Position”.
17.12.
The respondent was fully aware of this
information. Yet the PD letter reflects no appreciation of these
facts. Again, it must be
assumed that her attorney was not told. The
unequivocal statement in the PD letter that it had been decided that
the lessor of
Tayla would not be paid is false and the respondent,
who had all of this information, could not have reasonably believed
it to
be true. In evidence, the respondent unconvincingly tried to
suggest that Grimsley’s view, once adopted, was the final
decision,
a position which is unsustainable on the text of the e-mail
and when it is plain he sought advice on its feasibility.
[18]
Business rescue:
18.1.
The
reference to a demand to business rescue does not remotely, in my
view, constitute material that falls within the rubric of
a
“disclosure” as defined. It has no place in a so-called
protected disclosure.
[7]
However, the presence in this letter of that demand is significant in
demonstrating the motivation for the letter.
18.2.
The allusion to the losses was a fact
known to all.
18.3.
The
respondent’s
opinion
that
a business rescue was appropriate is a legitimate stance to adopt on
the basis of her subjective appreciation of the financial
condition
of the business. She had raised it and the members of the board had
considered the implications. The fact that her view
was a minority
view does nothing to elevate it to another status.
[8]
18.4.
The view expressed to the contrary by
Rawlings, a turnaround expert the board had recruited to advise in
through the crisis, on
19 November, that because of the nature of the
business, to go the route of business rescue was not viable, was no
less a legitimate
view. Understandably, given its source, it was
likely to carry more weight than of the respondent.
[19]
What can be inferred from the
respondent’s evidence is that prior to getting advice on 21
November, she had never heard of
a protected disclosure. Indeed,
judging from her evidence, it is uncertain that by the time of the
trial she was any better informed
in any material sense. She stated
that the advice she got was that in this sort of situation a
“protected disclosure”
is what one did. Thus, to seek
advice on protection from an occupational detriment could not have
been what drove her to take advice
from her personal attorney. On the
probabilities, it was self-preservation that drew her to take outside
advice. She expected the
business to fail. She was concerned about
her exposure as a director and her prospects as an employee. The
demand that the board
resolve to put the appellant into business
rescue is the key to her attitude. The PD letter was motivated by a
desire to pressurise
the board to adopt her point of view. Its import
and effect must be understood in that context.
[20]
It was argued that the respondent failed
in her fiduciary duties as a director by so acting; that she was duty
bound to argue her
case in the board, and if she felt strongly
enough, to resign as a last resort. Instead she took up an
adversarial stance against
the board of which she was a member. I
agree that she completely misdirected herself. As a director she
carried co-responsibility
for the appellant’s decisions which
she herself would participate in making. By, in effect, distancing
herself from the board,
she committed a serious lapse of judgment.
She was not justified in contriving a stratagem to try to snooker the
board into capitulating
to her perspective. The rubric of a
“protected disclosure” is inapposite.
[21]
Two other aspects of a legal nature bear
mention.
[22]
First, a disclosure cannot be of a
notorious fact. Every fact raised in the PD letter was known to every
director and other members
of the management and also to the
auditors. Indeed, the matters were being addressed in the context of
satisfying the auditors
in respect of annual accounts. Terner, of
Grant Thornton, was in conversation with respondent about these very
matters and sat
in on meetings of the appellant when they were
addressed.
[23]
The
question of the prior knowledge and extent of the knowledge of the
persons or entity to whom the disclosure is made has been
the subject
of judicial consideration. In
Beaurain
and Others v PHSDSBC (Labour Court, unreported, C15/2012, per
Steenkamp J, 16 April 2014))
it was held that a “report” of notorious information
could not constitute the substance of a protected disclosure.
That
case concerned poor ventilation in a hospital, the subject matter of
protracted prior discussion, complaints and investigation.
In
City
of Tshwane Metropolitan Municipality v Engineering Council of SA and
Another
[9]
,
Wallis JA dealt with a submission that prior knowledge by the
employer of the subject matter of the disclosure is a bar to the
disclosure qualifying as a protected disclosure. That view was
rejected. That situation is distinguishable from the present case;
the appellant, here, was not merely “aware” of the facts;
it was, through its board, actively addressing the issues
and the
respondent was an active participant in so doing.
[24]
Second, there is a further curiosity in
the notion of a director making a protected disclosure to the board
of which that director
is a member and is therefore already engaged
with the issues, collectively, with her fellow directors. Can one, in
effect, make
a disclosure, as defined in the PDA, to oneself? A
so-called protected disclosure to the directors of the board of which
the reporter
is herself a member and upon receipt of which, she along
with all other directors who are in receipt of the “disclosure”,
are under an obligation to address the issue, is a strange procedure
indeed. The policy choice inherent in the concept of a protected
disclosure is that an employee who is powerless to address the
problem may divulge all the embarrassing facts to the decision-makers
who
can
address
it and be immune from any occupational detriments for having blown
the whistle. The procedure is not designed to offer a
director an
indirect methodology to advance her point of view in a debate about
decisions to be made by the board. However, this
question needs not
be decided.
Conclusions
[25]
Accordingly, the PD letter does not, on
the facts adduced in evidence, constitute a protected disclosure;
rather is a contrived
attempt to bully the respondent’s fellow
members of the board into adopting the respondent’s point of
view, and an
attempt to distance herself from her co-decision-makers
should there be a fall-out. In short, it served her self-interest
exclusively.
The
absence of any causal connection between the PD letter and the
redundancy of the respondent’s directorship
[26]
It is in my view plain that there is no
demonstrable link between the PD letter and the termination of the
respondent’s employment.
Indeed, the facts show that the
termination was an outcome of her own choosing.
[27]
The first of two stages in the
restructuring of the business had resulted, among other aspects, in
the respondent, after three months
in the employ of the appellant,
being taken onto the board and made the chief financial Officer in a
centralised and consolidated
finance function of the whole business.
That decision costs the appellant an additional 10 % in salary
payable to her. The second
stage of the restructuring involved a
further trimming of costs and among other aspects, resulted in the
departure of Grimsley
from the business and, among other persons
affected, the dropping of respondent and of Rauff to their former
status with a reversion
to their former salaries. The process was
addressed by the appellant as a formal redundancy in their roles as
directors. In both
cases, the effect of restructuring was the
redundancy of their directorships not of their jobs in the business.
[28]
The reaction of respondent to the
section 189
letter notifying her of the theoretical danger of
retrenchment, on 11 December, was, by way of a letter from her
attorney, to refuse
to participate in consultations and to allege an
occupational detriment owing to the PD letter. Notwithstanding her
formal refusal
to participate, she nevertheless met Rauff twice and
Demby once and was given an opportunity to be heard. She flatly
refused the
reassignment of her role, which
de
facto
was a reversion to the status
quo
of three months earlier. The retrenchment was a direct result of that
refusal.
[29]
The respondent, being fully aware of the
financial predicament of the business, and indeed, deeply concerned
about that condition
lacked no information required reasonably to
consider the business rationale of the decision with its concomitant
costs savings.
She also was aware that she was not singled out in an
aberrant redundancy but that the second stage of the restructuring
was broadly
based. She had no reasonable ground for a belief that the
decision was one which targeted her or that, logically, her so-called
disclosures were causally connected. Despite this degree of
awareness, she, ostensibly, on advice from her attorney, adopted a
solid stance in which she insisted she was a victim of an
occupational detriment for the dispatch of the PD letter.
[30]
The thesis of the respondent’s
case relies heavily on the timing of the events; ie, the disclosure
was followed shortly after
by a rearrangement of the board resulting
in a demotion –
ergo
,
the one event caused the other. This line of argument conflates
correlation with causation. The primary fact which contextualises
the
happenings of late 2014 is the dire financial straits of the
appellant. Moreover, as the change to the respondent’s position
was largely to save money and retain her services in the role of
consolidated CFO, the alterations were largely cosmetic. Her
short-lived stint on the board was no real sacrifice in the context
of other sacrifices being made.
[31]
The case for concluding a causal
connection is plainly unconvincing. On the probabilities, the
restructuring was a rational response
to the predicament of financial
instability in which the appellant found itself. She was not being
expelled from the business.
Her envisioned revised role, insofar as
it meant a reduction in salary, was common to several others in the
management echelon.
She could have carried on and expressed her
points of view as before.
[32]
In my view, on the probabilities, the
inference is warranted that respondent contrived the PD letter to set
up a complaint of an
occupational detriment for financial gain
because she personally had formed the view, incorrectly as it turned
out, that the business
could not avoid ruin.
Conclusions
[33]
Accordingly:
33.1.
There was no protected disclosure as
contemplated by the PDA.
33.2.
There was no automatically unfair
dismissal.
33.3.
The appeal must be upheld.
[34]
The decision
a
quo
must be reversed. Costs were
awarded to the respondent
a quo
;
it is appropriate, given the facts of the matter, that the costs
order also be reversed.
[35]
The respondent in opposing the appeal
sought to defend a judgment in her favour. In those circumstances, it
is appropriate that
no costs order be made.
The
Order
(1)
The appeal is upheld.
(2)
The order in the court
a
quo
is set aside and substituted as
follows:
“
The
application is dismissed with costs”
__________________
Sutherland
JA
Sutherland
JA (with whom Phatshoane ADJP and Kathree- Setiloane AJA concur)
APPEARANCES:
FOR
THE APPELLANT:
Adv Jonathan Kaplan,
Instructed
by Roy Suttner.
FOR
THE RESPONDENT:
Attorney Clifford Green.
[1]
Section
6:
Protected
disclosure to employer
(1)
Any
disclosure
made in good faith-
(a)
and
substantially in accordance with any procedure authorised by
the
employee's
or
worker's
employer
for reporting or
otherwise remedying the
impropriety
concerned
and the
employee
or
worker
has
been made aware of the procedure as required in terms of subsection
(2)
(a)
(ii);
or
(b)
to
the
employer
of
the
employee
or
worker
,
where there is no procedure as contemplated in paragraph
(a)
,
is
a protected disclosure.
(2)
(a)
Every
employer
must-
(i) authorise
appropriate internal procedures for receiving and dealing with
information about
improprieties
; and
(ii) take
reasonable steps to bring the internal procedures to the attention
of every
employee
and
worker
.
(b)
Any
employee
or
worker
who,
in accordance with a procedure authorised by his or her
employer
,
makes a
disclosure
to
a person other than his or her
employer
,
is deemed, for the purposes of
this
Act
, to be making the
disclosure
to
his or her
employer.
[S.
6 substituted by
s.
6
of
Act
5 of 2017
(wef
2 August 2017).]
[2]
“Disclosure
is defined in section 1 of the PDA to “[mean] any disclosure
of information regarding any conduct of an
employer
,
or of an
employee
or
of a
worker
of
that
employer
,
made by any
employee
or
worker
who
has reason to believe that the information concerned shows or tends
to show one or more of the following:
(a)
That
a criminal offence has been committed, is being committed or is
likely to be committed;
(b)
that
a person has failed, is failing or is likely to fail to comply with
any legal obligation to which that person is subject;
(c)
that
a miscarriage of justice has occurred, is occurring or is likely to
occur;
(d)
that
the health or safety of an individual has been, is being or is
likely to be endangered;
(e)
that
the environment has been, is being or is likely to be damaged;
(f)
unfair
discrimination as contemplated in Chapter II of the Employment
Equity Act, 1998 (
Act
55 of 1998
),
or the
Promotion of Equality and Prevention of Unfair Discrimination
Act, 2000
(
Act
4 of 2000
);
or
(g)
that
any matter referred to in paragraphs
(a)
to
(f)
has
been, is being or is likely to be deliberately concealed;
[Definition
of 'disclosure' substituted by s. 1
(b)
of
Act
5 of 2017
(wef
2 August 2017).]
[3]
The
Court a quo decided the matter on the basis of a section 6
disclosure to the employer and did not for that reason consider
the
second alleged disclosure to the auditors, Grant Thornton.
Because of the rationale for the findings in the appeal,
it has also
been unnecessary to consider the second alleged disclosure, albeit
for reason different to that of the Court a quo.
[4]
In the judgment a quo, at [21] it is said that the appellant
“resolved’ that the restructuring was complete. This
finding of fact is incorrect; no such evidence was adduced.
Moreover, an employer who declares a restructuring is complete is
not inhibited from resuming the exercise, which is the implication
of the erroneous finding.
[5]
'occupational
detriment'
,
in relation to an
employee
or
a
worker
,
means-
(a)
being
subjected to any disciplinary action;
(b)
being
dismissed, suspended, demoted, harassed or intimidated;
(c)
being
transferred against his or her will;
(d)
being
refused transfer or promotion;
(e)
being
subjected to a term or condition of employment or retirement which
is altered or kept altered to his or her disadvantage;
(f)
being
refused a reference, or being provided with an adverse reference,
from his or her
employer
;
(g)
being
denied appointment to any employment, profession or office;
(h)
being
subjected to any civil claim for the alleged breach of a duty of
confidentiality or a confidentiality agreement arising
out of
the
disclosure
of-
(i) a
criminal offence; or
(ii) information
which shows or tends to show that a substantial contravention of, or
failure to comply with
the law has occurred, is occurring or is
likely to occur;
(i)
being
threatened with any of the actions referred to in
paragraphs
(a)
to
(h)
above; or
(j)
being
otherwise adversely affected in respect of his or her employment,
profession or office, including employment
opportunities, work
security and the retention or acquisition of contracts to perform
work or render services;
[Definition
of 'occupational detriment' substituted by s. 1
(d)
of
Act
5 of 2017
(wef
2 August 2017).]
[6]
The judgment
a
quo
at [47] held that the appellant did not take the issue seriously.
This finding is inconsistent with the evidence adduced.
[7]
In
the judgment
a
quo
at [7.3] a statement is made that the complaint in the letter about
business rescue refer to a breach of
section 129(7)
of the
Companies
Act 71 of 2008
. This finding is wrong as no reliance was placed on
that section by the PD letter nor was any evidence adduced
concerning its
relevance.
[8]
In the judgment a quo at [42] it is held that as CFO the respondent
knew best and somehow this was relevant. The finding is wrong,
illogical and irrelevant.
[9]
(2010) 31 ILJ 322 (SCA) at para 47.