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[2003] ZALCD 1
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Mhlatuze Water Board v Commission for Conciliation Mediation And Arbitration and Others (D757/06) [2003] ZALCD 1 (23 June 2003)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
Case
no: D757/06
In
the matter between:
MHLATUZE
WATER BOARD
Applicant
and
COMMISION
FOR CONCILIATION
MEDIATION
AND ARBITRATION
1
st
Respondent
DORASAMY
N.O
2
nd
Respondent
JAMES
BARNARD
3
rd
Respondent
JUDGMENT
MOLAHLEHI
J
Introduction
[1]
This is an application in terms of which the applicant seeks an order
to review and set aside the arbitration award issued by
the second
respondent under case number KNRB883-06 and dated 7 November 2006.
Background facts
[2]
The facts in this matter are fairly common cause.
The third respondent, hereafter referred to as "the employee"
was charged
and dismissed for dishonesty. The employee who also
served as trustee and chairman of the Mhlatuze Water
(1998)
Pension Scheme (the Fund) was charged with conduct relating to
dishonesty in that that he signed the withdrawal form of Mr Graham
(Graham) indicating that he (Graham) had retired when he was in fact
dismissed.
[3]
It is common cause that Graham who had been
dismissed and had referred his allege unfair dismissal dispute to the
CCMA, addressed
a letter to the employee as the chairperson of the
Fund and indicated that he was entitled to withdraw the value of
his benefit
from the Fund and to invest it in a separate annuity. He
further indicated that if the Board was not prepared to allow him to
keep
the money in the Fund he requested that a declaration form
regarding retirement which had been issued to him by Simeka
Consultants,
the official consultants of the Fund be completed and be
signed. The letter reads as follows:
“
Withdrawal
from Mhlathuze Water Pension Fund
With
the termination of my services as an employee at end November 2005,
my membership of the Mhlathuze Water Pension Fund was also,
in terms
of the rules of the fund, terminated with effect from this date.
As
a consequence of this, I must now withdraw the value of my benefit in
the fund and re-invest the money in a separate annuity.
I wish to
take the tax free portion permitted in
terms
of the Income Tax Act. The Board may, however, decide to allow me to
continue keeping the money in the fund in which case
r will be
entitled to all the benefits offered by the fund, namely, group life
and disability cover.
Should
this not be the case, then r would be most grateful if you could sign
the Declaration Regarding Retirement farm sent to you
recently by
Simeka Consultants, and forward this to Sanlam. Whilst my services
were terminated and I did not actually retire from
service, I would
appreciate you signing this form so as to minimize the tax
implications. The Pension Fund rules allow employees
to retire after
age 55, an age which the Receiver of Revenue also recognizes for
retirement.
I
acknowledge that signature of this form applies only to the
Mhlathuze Water Pension Fund and that no other benefits which
I
enjoyed as an employee of the Board, will be affected thereby,
Yours Faithfully,
X
.G
ra
ham.”
[4]
The employee testified that he was
contacted by Graham during the middle of February 2006, and informed
him that his dismissal was
pending before the CCMA and that he had no
income. The employee then referred Graham to Simeka Consultants and
the applicant's
human resource department.
[5]
During April 2006, Graham reverted back to
the employee and informed him that he had been advised by Simeka
Consultants that they
would release his funds once the declaration
regarding retirement was signed. This form was completed on the 11
April 2006, and
the employee signed the form in his capacity as
chairperson of the Fund. The employee further testified that he was
also advised
by Simeka that Graham was close to "retirement,
being 63 years of age, he was entitled to take a maximum of one-third
of his
funds in cash. The employee also believed that the amount of
R120 000, 00 which Graham wanted to withdraw from his scheme was in
conformity with the
Pensions Fund Act 24 of 1956
and the Income Tax
103 of 1976.
[6]
It was as result of the above and in
particular the advice he received from Simeka that the employee,
claim to have held the view
that Graham's retirement from the scheme
was above board and that the applicant would not suffer any harm as a
result. He believed
that Graham was preserving the bulk of his funds
for retirement and after signing the form he submitted it to Simeka.
It
was for this reason that the applicant charged the employee
with the following:
"(a)
Serious dishonesty in that on 11
April
2006 the employee knowingly and fraudulently misrepresented the
reason of Mr Theo Graham's withdrawal from the employment
of the
employer by signing a declaration of retirement;
(b)
Abuse of trust, authority and position in that by signing a
declaration as the finance manager and chairperson of the pension
fund, the employee used his position to contradict the employer's
position in respect of Mr Graham's termination".
[7]
At the disciplinary hearing the employee
was found guilty of serious dishonesty in that on 11 April 2006 he
fraudulently misrepresented
the reasons for Graham’s exist from
Fund as being retirement instead of dismissal. He was also found
guilty in that he abused
his position of trust and authority in that
he used his position as the finance manager and chairperson of the
Fund to require
Ms Berning to fill the declaration form incorrectly
and thereafter submitting the same to Simeka.
The award
[8]
The parties at the arbitration hearing
agreed that issues to be determined by the commissioner were the
following:
"1
Whether the signing of the Declaration Form
as
a
retirement and not dismissal
constituted an act of misrepresentation. If it was/was not an act of
misrepresentation, what would
be the tax implications.
2
Whether the applicant abused or misused his position of trust and
authority in making the recording on
the declaration Form.
3
Whether the applicant is guilty
/
not
guilty of acting in the best interest of the company.
4
Whether the sanction of
dismissal of the applicant was appropriate or not".
[9]
It is apparent from the reading of the
award that the commissioner accepted the version of the employee
that he was contacted
by Graham on his return from sick leave
regarding the money he wanted to have from his pension fund. He
further found that the
amount of R120 000.00 in the form was filled
in by the Graham who also indicated that the remainder would be
invested in the retirement
annuity. The version of the applicant was
rejected on the basis that the charge did not “
speak
of potential losses suffered as a result of the fraudulent
behaviour of the applicant.”
[10]
I
t was for this reason that the
commissioner found that there was no “
no
misconduct at least to the degree, which warranted dismissal.
The
applicant was directed to reinstate the employee whose dismissal was
found to be unfair.
Grounds for review
[11]
The applicant contended that the
commissioner failed
to apply his
mind, misconducted himself, committed a gross irregularity, and
exceeded his powers by acting unreasonably in:
“
9.1.1
Finding that Barnard had not acted dishonestly in circumstances
where he had endorsed the withdrawal
form on the
basis that Graham had retired in circumstances where Graham had been
dismissed. This is factually incorrect;
9.1.2 The Arbitrator
failed to take into consideration that this misrepresentation is
profound in that Graham, as a consequence,
would receive benefits he
would not have been entitled to if he had been dismissed.
9.1.3 An
employee who acts dishonestly in a fiduciary capacity, albeit
indirectly related to the duties provided to the Applicant,
clearly
impacts on the trust relationship, especially in circumstances where
Barnard was the Accounting Officer within the
9.1.4
The Arbitrator makes findings regarding the fact
that the matter before him was a case of fraud when this
was not so
because the misrepresentation was not against the Applicant but
against the Pension Fund. Notwithstanding this, the
nature of the
misrepresentation would have been fraudulent with respect to the
Provident Fund;
9.1.5
The Arbitrator has overlooked the fact that
Barnard was obliged to act in concert with the trustees and
failed to
do so as he effectively proceeded on a dishonest frolic of his own;
9.1.6
It is noted that the Arbitrator makes reference to the fact
that Barnard was influenced by Graham's age which
is an irrelevant
factor to take into consideration.
9.1.7
Finally, the Arbitrator seems to infer that Barnard
could be excused from the advice he received from Simeka.
Barnard
wished to act dishonestly and relied on the advice of a third party
which would also have been dishonesty and cannot be
an excuse.
[12]Vahad
Sc for the applicant argued that the case before the commissioner was
not about the employee defrauding the applicant
but concerned the
duty of care which the employee owed the applicant in the manner in
which he dealt with the issue of signing
the form for Graham. The
commissioner was also criticised for relying on the version of an
unqualified expert witness, Mr Strydom.
In this regard the
commissioner was accused of failing to apply the rules of the Fund
and understand how the law of taxation should
apply.
Evaluation of the
award
[13]
In considering whether or not to
review and set aside the decisions of the CCMA commissioners this
Court is enjoined to apply the
reasonable decision-marker test which
was formulated by the Constitutional Court in
Z
Sidumo v Rustenburg Platinum Mines 2007 (28) ILJ 2405 (CC)
and
subsequently endorsed by the Labour Appeal Court in
Fedelity
Cash Management v CCMA and others DA10/05.
[14]
In following its earlier decision of
Bato Spar Fishing (PTY) v Minister
of Environmental Affairs and Tourism
[2004] ZACC 15
;
2004 (7) BCLR 687
(CC),
where it was held that the provisions
of
section 145
of the
Labour Relations Act 66 of 1995
, were suffused
by the criterion of reasonableness, the
Constitutional
Court per Navsa AJ in Sedumo (at para 110)
formulated
the review test as follows:
“
The
better approach is that
s 145
is now suffused by the constitutional
standard of reasonableness. That standard is the one explained in
Bato Star: Is the decision
reached by the commissioner one that a
reasonable decision maker could not reach? Applying it will give
effect not only to the
constitutional right to fair labour
practices, but also to the right to administrative
action which is lawful,
reasonable and procedurally fair.”
[15]
In assessing the reasonableness of an
arbitration award, the Court should do so in the context where there
is recognition that the
primary function of determining whether or
not the dismissal is fair rests with the commissioner and not itself.
In this
regard the Court should guard against substituting the
decision of the commissioner simply on the basis that it would have
dealt
with the matter differently
.
See
Fidelity Cash Management (supra).
[16]
In my view the decision of the commissioner
in the present instance cannot be said to be one which a reasonable-
decision-maker
could not reach because the decision was arrived at
after analysing the evidence which was presented and taking into
account the
circumstance of the case. The circumstances which the
commissioner took into account is that after receiving the request
from Graham,
the employee took the necessary step of seeking advice
from Simeka as to how he should deal with the request. There is no
evidence
that despite knowing that the advice was wrong he proceeded
to implement it regardless.
[17]
I am also unable to agree that the
commissioner in arriving at the conclusion that the
dismissal was unfair was
influenced or placed reliance on the
evidence of the so-called expert witness- Strydom, in relation to the
interpretation of the
rules of the Fund. The commissioner does
record in his award what Strydom, said about the rules of the Funds
but the analysis
of the award does not reveal the commissioner having
relied on his testimony in arriving at his decision.
[18]
The employee as indicated earlier was
charged with fraud and the commissioner after considering all the
evidence before him and
the circumstance of the case came to the
conclusion that the employee did not commit fraud. The commissioner
gives his reasons
which, in my view, are not unreasonable.
[19]
Whilst it is correct that the employee knew
that Graham’s employ with the applicant was terminated
due to dismissal,
it is equally true that he sought the advice of the
applicant’s consultants as to how he should approach the query
which
was raised by the Graham. The argument of the applicant that
issue before the commissioner was about the duty of care which the
employee owed to it would have probably been sustainable had the
employee been charged with negligence. The employee would
have
probably been guilty of an offence had he been charged with
gross negligence for the issue would have been why did he
not satisfy
himself as to the correctness of the advice received from Simeka by
reading the rules of the Fund.
[20]
In my view there is no basis upon which the
decision of the commissioner should be interfered with. It is
also my view that
the dictates of both law and fairness requires that
costs should follow the results.
[21]
For the foregoing reasons the review
application was dismissed with costs.
________________________
MOLAHLEHI
J
DATE
OF HEARING: 05 JUNE 2008
DATE
OF ORDER: 06 JUNE 2008
DATE
OF JUDGMENT: 23 JUNE 2003
APPEARANCES
For
the Applicant: Adv Vahad SC
Instructed
by: Deneys Reitz INC
For
the Respondent: Adv Hutchinson
Instructed
by: Fluxman Attorney