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Ndimeni v Meeg Bank Ltd (Bank of Transkei) (DA11/2007) [2009] ZALCD 29 (3 September 2009)

80 Reportability
Labour Law
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Brief Summary

Labour Law — Unfair Dismissal — Appeal against dismissal of branch manager — Appellant dismissed for misconduct including unauthorized payments and failure to control staff — Appellant contended dismissal was substantively unfair and alleged lack of impartiality of presiding judge — Appeal court evaluated merits of case and found that appellant had disobeyed written instructions regarding payment of a cheque, thus justifying dismissal — Appeal dismissed.

Comprehensive Summary

Summary of Judgment


1. Introduction


The proceedings were an appeal to the Labour Appeal Court against a judgment and order of the Labour Court concerning the substantive fairness of a dismissal for misconduct. The appeal also raised, in the alternative, an allegation that the trial judge in the Labour Court lacked impartiality due to alleged commercial connections with the respondent.


The appellant, Mr Sonwabiso Maxwell Ndimeni, was an employee of the respondent, Meeg Bank Limited (Bank of Transkei), where he served as the branch manager of the Lusikisiki branch. The dispute arose from disciplinary action taken against him in 1998, culminating in his dismissal.


Procedurally, the appellant was subjected to a disciplinary hearing on 21 July 1998 (after delays) and was found guilty on all charges. A dispute about the fairness of his dismissal was referred by the Commission for Conciliation, Mediation and Arbitration (CCMA) to the Labour Court for adjudication in terms of section 191(6) of the Labour Relations Act 66 of 1995. The Labour Court (Zilwa AJ) heard evidence over two periods in August 2000 and delivered judgment on 9 March 2001.


In that judgment, the Labour Court substituted lesser sanctions for some charges (final written warnings) but upheld dismissal for the principal charge relating to irregular conduct on a customer’s account. The appellant obtained leave to appeal by petition on 6 December 2007, filed a late and substantively defective notice of appeal, and the Labour Appeal Court determined that condonation should be assessed in light of the merits.


The general subject matter of the dispute concerned whether the appellant breached the bank’s standing procedures and instructions in managing transactions on the account of a customer (Dockrat), particularly in relation to payments made against uncleared effects, and whether those alleged breaches justified summary dismissal.


2. Material Facts


It was common cause that, by February 1998, the appellant had been employed by the respondent bank for over fifteen years and had an impeccable work record. He was then the manager of the Lusikisiki branch. A key account at that branch was operated by Mr Dockrat, who ran a supermarket and had previously caused substantial losses to the bank through a kite flying scheme, resulting in a deficit described in evidence as being in the region of R9 million to R14 million.


On 3 February 1998, the appellant received a written instruction from Mr Marais, the collections manager at head office in Umtata. The instruction permitted payment of certain cheques drawn on Dockrat’s account but expressly directed that a cheque for R625 672.69 was to be dishonoured, and further cautioned that careful attention had to be paid to uncleared effects according to the bank’s manual.


It was also common cause that a telephone conversation took place between the appellant and Mr Marais at Mr Marais’s instance, and that Mr Marais informed the appellant that a cheque of approximately R700 000 would be deposited by Dockrat. On 4 February 1998, a cheque for R727 190.16 was deposited at a time when the Dockrat account was already overdrawn. Following the deposit, the account reflected a positive balance.


Further, it was common cause (as recorded in the pre-trial minute) that nearly seventy cheques were paid on the Dockrat account from 4 February 1998 to 20 February 1998. A crucial feature of the evidentiary matrix was that, notwithstanding the written instruction that the R625 672.69 cheque was to be dishonoured, the appellant’s conduct resulted in payments being made during a period when the deposited cheque later proved problematic and was returned.


On 20 February 1998, the R727 190.16 cheque was returned marked “payment stopped”, causing the Dockrat account to revert to an overdraft. The cheque was redeposited that same day, temporarily restoring a positive balance. On 5 March 1998, the same cheque was again returned, now indicated as “mutilated”, and the account became substantially overdrawn. The appellant then engaged with Mr Marais and was instructed to return the cheque and raise a query with Standard Bank. A Standard Bank manager informed the appellant that the cheque had initially been met but was then dishonoured on 16 February, and that notification had been sent to the respondent bank.


The principal factual dispute, as framed by the court, concerned whether Mr Marais gave the appellant a verbal counter-instruction authorising payment of the R625 672.69 cheque despite the earlier written instruction not to pay it. The appellant’s case was that he acted on head office instruction and should not have been held responsible for the resulting loss. Mr Marais, by contrast, denied authorising such payment and asserted that the appellant disobeyed the written instruction and proceeded improperly, including by permitting payments against uncleared effects.


The court treated as materially significant the existence of the written instruction not to pay, and the appellant’s own written recordal of a telephone conversation on 3 February 1998. That recordal did not include any purported authorisation to pay the R625 672.69 cheque. The appellant was unable to explain satisfactorily why the alleged key verbal instruction would have been omitted from his record.


The evidence of Mr Dockrat was relied upon insofar as it addressed whether Mr Marais had undertaken to “meet” the R625 000 cheque. Dockrat’s evidence was that Mr Marais did not give an assurance that the cheque would be paid, stating instead that he would “see what he can do.” The court treated this as inconsistent with the appellant’s contention that clear authorisation to pay had been given.


3. Legal Issues


The central legal question was whether the appellant’s dismissal (as upheld by the Labour Court on charge 1) was substantively fair, given the competing versions about instructions and the documentary record relating to the Dockrat account.


This question required the court to determine the application of legal standards to the facts, with a strong evaluative component focused on the probabilities and the plausibility of competing factual versions, rather than a pure point of law. The dispute also engaged evidentiary assessment insofar as the appellant’s version sought to overcome the respondent’s prima facie case established by documentary instructions and the pattern of payments made.


A secondary legal issue, raised only if the merits did not conclusively favour the respondent, was whether the Labour Court judge (Zilwa AJ) lacked impartiality due to alleged prior commercial relationships with the respondent bank and related connections involving family members, and whether this required that the matter be remitted for rehearing before a different judge.


An ancillary procedural issue arose from the appellant’s late filing of the notice of appeal and the poor quality of the notice (which failed to set out grounds). The respondent opposed condonation, but it was agreed that the court would determine condonation in the light of its assessment of the merits.


4. Court’s Reasoning


On the procedural question of delay, the court noted the respondent’s objection to condonation but recorded the parties’ agreement that condonation should be determined with reference to the merits. The court then proceeded to consider the merits as the decisive consideration for whether the appeal could succeed.


On the merits of the dismissal, the court approached the dispute as turning primarily on the objective documentary evidence and the inherent probabilities of the competing versions. A key starting point in the court’s reasoning was that there existed a clear written instruction from Mr Marais directing that the cheque for R625 672.69 was to be dishonoured, coupled with a warning to pay attention to uncleared effects.


The appellant’s case required acceptance that a subsequent verbal instruction overrode the written instruction and authorised payment of the dishonoured cheque. The court treated as decisive the fact that the appellant himself had made a written recordal of the telephone conversation of 3 February 1998, but that recordal did not contain the alleged crucial authorisation to pay the R625 000 cheque. The court found the appellant unable to give a satisfactory explanation for why such an important counter-instruction would be absent from his own contemporaneous note.


In evaluating the attempt to reconcile this omission, the court rejected the suggested explanation that the note used internal language not intended to be interpreted “as ordinary language,” viewing that as an unsatisfactory basis upon which to prefer the appellant’s version over the written instruction and the documentary trail. The court considered that acceptance of the appellant’s version would require the court to believe that, despite an express written direction not to pay, the alleged permission to pay was neither reflected in the written instruction nor captured by the appellant when he documented the conversation.


The court also relied on concessions made in argument. Counsel for the appellant accepted that, on the evidence before the Labour Court, the respondent had established a prima facie case against the appellant. The court applied the principle that, absent credible evidence to displace a prima facie case, it becomes conclusive proof and the party bearing the onus is treated as having discharged it. In this regard, the court referenced Marine and Trade Insurance Company Limited v Van der Schyff 1972 (1) SA 26 (A).


The court further considered Dockrat’s evidence, but interpreted it as not supporting the appellant’s contention that Marais had undertaken to pay the R625 000 cheque. Rather, Dockrat’s testimony indicated that Marais offered no assurance and merely said he would see what he could do. This, on the court’s assessment, did not corroborate the existence of a firm instruction authorising payment contrary to the written directive.


Drawing these threads together, the court concluded that, at minimum, the appellant caused payments to be made against uncleared effects and contrary to express written instructions, and that the respondent suffered significant losses as a result. It held that dismissal was justified and that the Labour Court’s decision to uphold the dismissal on charge 1 was supported by the probabilities and the documentary evidence.


On the alternative ground concerning impartiality, the court treated this as unnecessary to determine in the appellant’s favour once the merits were resolved decisively against him. The court reasoned that the case could be determined without reliance on credibility findings and without prejudice to the appellant, because the outcome followed from plausibility and probability assessed against the documentary record. On that approach, remitting the matter for a rehearing before another judge would serve no purpose.


5. Outcome and Relief


The Labour Appeal Court dismissed the appeal and upheld the Labour Court’s order confirming the appellant’s summary dismissal on charge 1. The appellant’s alternative request that the matter be referred back for a fresh hearing before a different judge was rejected on the basis that the merits could be resolved on the record and probabilities.


The court ordered that the appeal was dismissed with costs.


Cases Cited


Marine and Trade Insurance Company Limited v Van der Schyff 1972 (1) SA 26 (A).


Legislation Cited


Labour Relations Act 66 of 1995, section 191(6).


Rules of Court Cited


No rules of court were cited in the judgment.


Held


The court held that the respondent had established at least a prima facie case that the appellant acted contrary to express written instructions and bank procedures by permitting payments (including in circumstances involving uncleared effects) on the Dockrat account, and that the appellant failed to present credible evidence to displace that case. On the probabilities, the dismissal was substantively fair and justified.


The court further held that, given the manner in which the merits could be decided on the documentary record and probabilities, there was no justification to remit the matter for rehearing on the basis of alleged lack of impartiality of the Labour Court judge. The appeal was dismissed with costs.


LEGAL PRINCIPLES


The judgment applied the principle that where a party establishes a prima facie case on the evidence, and the opposing party fails to provide credible evidence to rebut it, the prima facie proof may become conclusive proof, and the party bearing the onus may be regarded as having discharged it, as articulated with reference to Marine and Trade Insurance Company Limited v Van der Schyff 1972 (1) SA 26 (A).


In assessing substantive fairness in a misconduct dismissal, the court emphasised that the evaluation may be resolved by reference to documentary evidence, plausibility, and the probabilities arising from the record, and need not necessarily depend on credibility findings where the objective material is determinative.


The judgment further reflected the evaluative approach that, where the record and probabilities decisively support one outcome, an alternative procedural complaint (such as an allegation of judicial partiality raised as a basis for remittal) will not justify rehearing if it would not affect the outcome and the dispute can fairly be resolved on the existing evidence.

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[2009] ZALCD 29
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Ndimeni v Meeg Bank Ltd (Bank of Transkei) (DA11/2007) [2009] ZALCD 29 (3 September 2009)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA
(HELD
AT JOHANNESBURG)
Case
No.: DA 11/2007
SONWABISO
MAXWELL
NDIMENI

Appellant
and
MEEG
BANK LIMITED (BANK OF
TRANSKEI)

Respondent
JUDGMENT
DAVIS
JA:
Introduction
[1]
The appellant was employed by respondent as a branch manager at its
Lusikisiki branch. After a number of delays, he was finally
subjected
to a disciplinary hearing on 21 July 1998. He was charged with the
following counts of misconduct.
1.
He acted irregularly and contrary to the standing bank
procedures/practice in
the execution of his duties as a branch
manager at Lusikisiki as reflected by transactions in the account of
YI Dockrat;
2.
He made an unauthorised payment from the housing loan of B Lwana;
3.
He failed to control staff according to correct procedures for he
threatened
some staff members of the Flagstaff agency of respondent.
He
was found guilty on all counts by the chairperson of an enquiry which
was held to deal with the charges.   In respect
of charges
1.3 and 4 he was summarily dismissed, while in regard to the
respective charge 2 he was give a final written warning.
[2]
On 4 November 1998, the Commission for Conciliation Mediation and
Arbitration (‘CCMA’) determined that the dispute

regarding appellant‘s unfair dismissal should be referred to
the Labour Court for adjudication in terms of section 191 (6)
of the
Labour Relations Act 66 of 1995 (‘LRA’).
[3]
The Labour Court heard evidence from 14 to 18 August 2000 and again
from 28 to 30 August 2000, during which trial respondent
called three
witnesses and appellant called four witnesses.   On 9 March
2001, Zilwa AJ determined, with regard to charges
2 and 3, that the
appropriate sanction was a final written warning.
However, with regard to charge 1, he found appellant
guilty and
ordered that he confirmed that appellant be summarily dismissed.
[4]
It is against this order that appellant has now proceeded to this
court, leave to appeal having been granted by way of petition
on 6
December 2007.
The
nature of the appeal
[5]
Subsequent to his successful petition on 6 December 2007, appellant
filled a notice of appeal on 5 March 2008.   The
notice of
appeal is hopelessly unsatisfactory in that it sets out no grounds
for appeal and merely records that the appeal is against
the whole of
the judgment and order of Zilwa AJ. There is in addition the further
question as to whether the delay of more than
two months in filing
the appeal notice should be condoned. Respondent persisted with its
objection that no condonation should be
granted in respect of this
delay, but it was agreed during the hearing that this court should
determine condonation in the light
of an evaluation of the merits of
the case.   It is thus to the merits that I now turn.
Merits
[6]
From appellant’s heads of argument it appears that there are
two separate grounds of appeal:
6.1
The court
a quo
erred in finding the dismissal of appellant to
be substantively fair.   In this regard, the argument is
that, on the
probabilities, appellant was not guilty on the first
charge of misconduct; that is that he did not breach certain
instructions,
rules and practices of respondent in relation to the
account of Dockrat.
6.2
In the event that the appellant is unsuccessful with regard to its
first ground of appeal,
he contends that Zilwa AJ lacked
impartiality. In support of this submission, appellant contends that
the presiding judge, who
was an acting judge, had practiced as an
attorney, in which capacity he enjoyed a commercial relationship with
respondent. His
wife and wife’s brother had a similar
relationship with respondent, prior to 9 March 2001, when judgment
was delivered. Thus,
it was contended by appellant that the
commercial link between the presiding judge and his family with
respondent and with senior
management of the bank, precluded ZIlwa AJ
from hearing the dispute, particularly in circumstances where the
dispute as to the
justification for the dismissal turned on the
credibility of two witnesses, one of whom was a senior manager of
respondent. Accordingly,
there was a reasonable prospect that, in
such a case, the presiding judge could not bring an impartial mind to
the proceedings.
For this reason, appellant adopted the position that
the matter be referred back for a fresh hearing before a different
judge.
[7]
Mr Pillemer, who appeared on behalf of appellant, accepted that, were
this court to find, on the substance of the dispute, that
the
probabilities were clearly in favour of respondent after an analysis
of the record, credibility questions would have no bearing
on the
decision, no purpose would be served by referring the case back to
another judge. For this reason therefore, the critical
issue turns on
the evidence relating to the charge.
The
merits relating to appellant’s dismissal
[8]
It appears that, as at February 1998, appellant had been employed by
respondent for over fifteen years. At that stage he had
an impeccable
work record and was manager of the Lusikisiki branch of respondent
bank.   One of the accounts at the branch
was operated by
Mr Dockrat who ran a supermarket.  It appears that Mr Dockrat
had a most unfortunate history with the bank
in that he owed the bank
many millions of rands following a kite flying operation.
Such an operation entails depositing
cheques and drawing against
uncleared affects in different accounts and accordingly borrowing by
using funds that were actually
not in the account. Thus, when the
kite falls, the bank invariably has to bear the loss. In Mr Dockrat’s
case, a deficit
of some R14 million, according to appellant, or R9
million, according to respondent, had been generated as a result of
this scheme.
[9]
On 3 February 1998, appellant received a written instruction
permitting him to pay certain cheques drawn on the Dockrat account

but to dishonor one cheque for R 625 612. 69. This instruction was
given to appellant by Mr Marais, the collections manager based
at the
head office of the respondent bank in Umtata.   The exact
instruction read thus:
“
You may pay the
cheques except R 625 672.69 which has been dishonored. You must pay
careful attention to uncleared defects according
to your manual.”
[10]
It is common cause that a telephone conversation took place between
appellant and Mr Marais at the latter’s instance.
Mr Marais
informed the appellant that a cheque in the sum of approximately R
700 000 would be deposited by Dockrat. It is agreed
that on 4
February 1998, a cheque of R727 190.16 was deposited at a time when
the Dockrat account had been overdrawn to the extent
of R 201 631
.66. As a result of the deposit the account now reflected a positive
balance of R 525 558 . 50.
[11]
It also appears to be common cause, from the pre-trial minute, that
almost seventy cheques were paid on the Dockrat account
during the
period 4 February 1998 to 20 February 1998. This included, crucially,
a cheque in the amount of R 625 672 . 69. In terms
of the instruction
given to appellant as set out in the relevant documentation of 3
February 1998, this cheque was not paid.
[12]
On 20 February 1998, the cheque for R 727 190.16, was returned,
‘payment stopped’. The Dockrat account was now
overdrawn
in the amount of R 462 654. 12. On the same day the cheque was
redeposited, resulting in a positive balance in the Dockrat
account.
On 5 March 1998, the same cheque was returned and was reflected as
having been ‘mutilated’. The account was
now overdrawn to
the extent of R 829 442.82. When the cheque was returned mutilated,
appellant again communicated with Marais and
was instructed to return
the cheque and to raise a query with Standard Bank. A manager of
Standard Bank informed appellant that
the cheque had initially been
met but then had been dishonored on 16 February, pursuant to which a
notification had been sent by
Standard Bank to respondent bank.
According to appellant, all of this was communicated to Mr Marais
over the telephone and later
a letter was generated by appellant in
which the series of events leading up to the dishonouring of this
cheque was set out in
full. Appellant contends that respondent has
suppressed the discovery of this letter and thus it was not made
available at the
trial.
[13]
By contrast, Mr Marais denied the content of the telephone
conversations to which the appellant testified.  He denied
that
he gave any instructions to pay as alleged by the appellant, even
though he had access to the account electronically and could
have
seen the nature of the uncleared effects. He relied upon the
appellant who was the manager on the ground’ who, he claimed,

had never clarified that the R 727 000 cheque was an uncleared effect
until it was returned on 20 February 2008.
The
key issue
[14]
When the matter was argued on appeal, much turned on the allegation
that appellant was instructed by Mr Marais to pay the cheque
of R625
612.89 and that accordingly he could not be blamed for any loss
suffered by respondent as a result of an instruction given
by Mr
Marais. In short, he had simply implemented an instruction from his
superior. Mr Pillemer suggested further that the reason
for the
denial by Mr Marais of this conversation was that the latter had
shifted the blame for his own incompetence in handling
the Dockrat
account to appellant who had become ‘the fall guy’.
[15]
In support of this contention, Mr Pillemer referred to the evidence
of Dockrat who testified that his account had been supervised
by Mr
Marais. In Mr Pillemer’s view, this gave credence to
appellant’s version that  Marias had performed more
than a
‘watching brief’ over the Dockrat account but, in effect,
had managed the account directly so that the payment
of R625 000
could not be blamed upon appellant.  However, the evidence of Mr
Dockrat in this connection justifies a somewhat
different
interpretation of the events than that placed by Mr Pillemer on Mr
Dockrat’s testimony.
[16]
Mr Dockrat testified that he issued a cheque of R 625 000 to a
supplier by name of Tastic Rice. At that stage his account was

overdrawn and he telephoned Mr Marais and informed him that the
cheque of R 727 000 ‘will be deposited to cover up the
overdrawn’.
Marais, according to Dockrat,
“
asked me to
send that deposit to ….. Lusikisiki on a separate deposit slip
and he will speak to Mr Ndimeni at the bank and
we see- he didn’t
give me his assurance that he was going to meet the cheque for R 625
000 but he says that he’ll see
what he can do.
”
Asked
about Mr Marais’s approach, Dockrat confirmed that Mr Marais
had given him no assurance that this amount of R 625 000
would be so
paid.
[17]
Appellant’s version is essentially the following:
notwithstanding any documentation which had been presented to the
court
a quo
, a verbal communication took place between Marais
and himself in which he was given instructions, which were contrary
to those
continued in the written documentation, namely for appellant
not to pay the R 625 000. By contrast, Marais testified that
appellant
had disobeyed his direct instruction not to pay the cheque
for R 625 000 and that accordingly appellant had proceeded on his own

and caused a significant loss to be suffered by the respondent
bank.
Evaluation
[18]
It is clear from the relevant documentation that Marais had
instructed the appellant in writing not to pay a cheque for R 625

000. It was also clear that appellant made a written recordal of the
verbal instruction of Marais on 3 February 1998, and that
verbal
recordal crucially contains the following paragraph:
“
The client is
promising to deposit R 742 000 in the afternoon, can we pay.
Cheque no 17234 for R 280 563 – 78
has been deposited today
after we asked for code prior deposit which was code C. We
recommend.”
Appellant
was unable to explain why he had not included in his written recordal
of the crucial telephone conversation the key instruction
as he
alleged, namely that he was entitled to pay the R 625 000 cheque. Mr
Pillemer attempted to deal with this problem by suggesting
that the
language employed in the instruction was of an internal nature and
was not intended to be interpreted as ordinary language.

With the utmost respect, that explanation is unsatisfactory.
It suggests that this court give credence to a version
that,
notwithstanding a crucial instruction not to pay a cheque by way of
express written notification, the counter instruction
to pay had been
omitted by the appellant from his own written recordal of the verbal
conversation.
[19]
Significantly, Mr Pillemer was forced to concede that, on the
evidence presented to the court
a quo,
both by way of verbal
testimony and written documentation, there was a
prima facie
case which had been made out against the appellant. That assessment
clearly is congruent with the evidence which was so presented.
In the
absence of any credible evidence from appellant, the
prima facie
proof must become conclusive proof such that respondent must be held
to have discharged the necessary onus.
Marine and
Trade Insurance Company Limited v Van der Schyff
1972 (1) SA 26
A
at 37.
[20]
Viewed accordingly, at the very least appellant caused payments to be
made against uncleared effects and contrary to express
written
instructions. Respondent suffered significant loses as a result
thereof. Accordingly, it was justified in dismissing the
appellant.
This conclusion is the only reasonable conclusion to which a court
can arrive, after an examination of the competing
versions put up by
Marias and appellant and viewed within the prism of the available
documentary evidence. In short, there is no
basis which was provided
by appellant, on the available evidence, to indicate that
respondent’s Umtata head office as opposed
to appellant had
authorised the relevant payments.
[21]
Once this conclusion is reached, Mr Pillemer’s concession with
regard to the second leg of appeal, namely the impartiality
of the
judge
a quo
becomes relevant. Careful examination of the key
evidence surrounding the issue in dispute reveals clearly that this
is a matter
that can be dealt with on appeal, without any prejudice
to the appellant.  There is simply no justification for
referring
this matter back for a rehearing before a different judge.
The dispute does not turn on the credibility findings of witnesses
but
on the plausibility of the evidence and an evaluation of the
probabilities. The competing versions can be justified or rejected

exclusively on the evidence placed before the court
a quo
and
which was available to this court. That evidence reveals that the
probabilities clearly support the decision of respondent to
dismiss
appellant and hence the decision of the court
a quo
.
[22]
For these reasons, the appeal is dismissed with costs.
_____________
DAVIS
JA
I
agree
______________
JAPPIE
JA
I
agree
_________________
LEEUW
JA
APPEARANCES
For
the Appellant: Adv M Pillemer SC
Instructed
by: Jafta Incorporated
For
the Respondent: F.A Boda
Instructed
by: Hofmeyr Herbstein & Gihwala Inc
Date
of hearing: 8 May 2009
Date
of Judgment: 3 September 2009

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