Thewaterskloof Municipality v South African Local Government Bargaining Council (Western cape Division) and Others (C966/2008) [2010] ZALCCT 23 (12 March 2010)

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[2010] ZALCCT 23
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Thewaterskloof Municipality v South African Local Government Bargaining Council (Western cape Division) and Others (C966/2008) [2010] ZALCCT 23 (12 March 2010)

IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT CAPE TOWN
CASE
NO C966/2008
In
the matter between:
THEWATERSKLOOF
MUNICIPALITY
Applicant
and
SOUTH
AFRICAN LOCAL GOVERNMENT
BARGAINING
COUNCIL
(WESTERN
CAPE DIVISION)
First
Respondent
ARBITRATOR
ADV C DE KOCK N.O.
Second
Respondent
IMATU
on behalf of A J D HENN
Third
Respondent
JUDGMENT
TIP
AJ:
1.
As at the date of his dismissal on 2
October 2007 Mr Henn was employed by the applicant as its Manager:
Health Services.  He
had been in service with the Municipality
for some 22 years.  The events giving rise to his dismissal had
their origins in
a difference between himself and the applicant
concerning the application of a transport allowance scheme.
After his dismissal
Henn referred a dispute to the first respondent,
the SALGBC.  An arbitration was conducted before the second
respondent who
held that the dismissal was substantively and ordered
that Henn should be retrospectively reinstated with full back pay.
The applicant was dissatisfied with this outcome and instituted the
present review proceedings.
2.
Before turning to a consideration of the
issues in this review it will be useful for me to set out a
chronological outline of the
events:
2.1.
On 20 October 2004 Henn entered into a
contract with the Municipality in terms of its transport allowance
scheme for essential users,
which provided that he would receive a
fixed monthly allowance of R3,500 in return for which he was to use
his own vehicle for
official trips within the municipal area.
2.2.
After a while Henn formed the view that
fuel and maintenance increases were such as to place the cost to him
of using his own vehicle
well above the level of the allowance.
On 2 August 2006 he accordingly gave notice that he would leave the
scheme on 1 February
2007 unless the Municipality saw fit to increase
the allowance.  He gave notice that an official vehicle was to
be available
for him as from 1 February 2007.
2.3.
IMATU wrote to the Municipality on Henn’s
behalf on 23 January 2007 alleging an unfair labour practice in that
Henn was not
being paid R3,500 per month in accordance with an
Executive Mayoral Committee resolution (which was adopted on 1
December 2004).
This resolution stated that the essential
transport scheme would be allocated in this way: all managers would
receive R3,500 per
month; all officials who carried out duties
throughout the municipal area would receive R3,500 per month; all
other officials who
qualified would receive R3,000 per month.
Although the letter cites the detail of the resolution it did not
identify precisely
what the complaint was.
2.4.
The Municipality responded on 26 January
2007 but that letter is not in the record.  Nonetheless, clarity
in respect of IMATU’s
demand is apparent from its letter of 27
January 2007, where it is said that Henn was to receive his allowance
on the same unqualified
basis as other managers whereas he, it was
alleged, had to furnish a log sheet.
2.5.
The latter allegation seems not to have
been correct and in a letter from the Municipality of 7 February 2007
it was stated that
Henn currently received a fixed monthly transport
allowance and was not required to submit log sheets.  On the
face of it,
it may be noted, the writer of this letter was not
mindful of the fact that Henn was by 7 February 2007 no longer a
member of the
scheme.  By the same token, the letter does not in
any way lend itself to the interpretation that Henn’s allowance
status
had been altered and that it was now a form of “perk”.
2.6.
1 February 2007 did not bring an official
car for Henn’s use.  To some extent he made use of his own
vehicle during that
month, as agreed with Mr Venter, the Director:
Technical Services.  On 12 March 2007 he put in a claim form.
2.7.
Meanwhile, the Municipality included the
amount of R3,500 in his salary payment for February.  According
to Henn, he became
aware of this only on 14 March 2007 when his wife
drew his attention to it.  Mrs Henn also worked at the
Municipality.
She took receipt of his payslips and managed all
the household finances.
2.8.
The R3,500 appeared on the payslip against
the entry “ESSEN. VERVOER” which evidently stands for
“Essensiëlevervoer”,
that being the allowance which
Henn had been receiving since his entry into the scheme in October
2004.  It would appear that
both Mr and Mrs Henn understood it
in that way.  Mrs Henn reported it to him on 14 March in those
terms and, as Henn himself
put it in his evidence-in-chief when asked
whether he had received a transport allowance after 1 February 2007:
“
Ja, daar is ‘n
vervoertoelae aan my oorbetaal, foutiewelik aan my oorbetaal,
alhoewel die werkgewer geweet het dat ek uitgetree
het uit die skema
uit.
”  It is also clear from
the evidence that it had been their joint expectation that their
income would be reduced after
1 February 2007 as a result of Henn’s
decision to withdraw from the scheme.
2.9.
On the same day, 14 March 2007, Henn wrote
to the Municipality referring to the fact that he had withdrawn from
the essential transport
scheme on 30 January 2007 and then stating:
“
Ek bedank u egter vir die “perk”-
voordeel wat vanaf 1 Februarie 2007 ingevolge UBK besluit 278/2004
aan my uitbetaal
word.
”  The
reference to ‘UBK’ is a reference to the Mayco decision
of 1 December 2004, mentioned above.
2.10.
Venter responded to this letter on 20 March
2007.  He made a number of points, including the statement that
the R3,500 which
Henn had been receiving was paid in accordance with
the ‘UBK’ decision and the observation that consideration
was being
given to an increase in the allowance.  He directly
addressed Henn’s view that he should receive the R3,500 as a
“perk”
without having to use his own vehicle for official
duties, this because there were some officials who received the
allowance but
used their vehicles for less than 300km on official
use.  Venter provided some comments on this aspect and on the
operation
of the scheme in general, on the strength of which he made
it clear that there was no “perk” scheme and that all
officials
who received the allowance had to use their vehicles for
official purposes.  The letter concluded with this specific
statement:
“
Weens ‘n
misverstand het u egter nog steeds die bedrag van R3 500 vir
Februarie ontvang, en sal die bedrag derhalwe van
u verhaal word.
”
2.11.
This letter could have left Henn in no
doubt that, as far as the employer was concerned: (i) there was no
“perk” scheme
in existence; (ii) Henn was not being
discriminated against in terms of the scheme because there were other
managers who received
the same monthly allowance but used their
vehicles for less distance on official duties; (iii) the payment to
him of R3,500 for
February 2007 had been made in error; and (iv) that
amount had to be repaid to the Municipality.
2.12.
A further letter was addressed to Henn on
23 March 2007 in similar terms from Mr Fisher, the Chief Personnel
Officer, which reviewed
the position, noted that Henn had received
the allowance for February and March 2007 and requested him to make
the necessary arrangements
with the salaries section for these
amounts to be repaid.
2.13.
At around the same time, some disagreements
arose between Henn and Venter concerning travel for official purposes
and the use of
his vehicle.  These came to form part of the
disciplinary environment but, that aside, the details thereof do not
fall for
my adjudication.
2.14.
The Municipality again paid Henn an
allowance of R3,500 for March, similarly reflected on his payslip
dated 25 March 2007 as being
the essential transport allowance.
It also paid him an amount of R251.12 for travel, that being the
claim for travel outside
the municipal area as lodged by him for
February.  His claim for travel within the area was not paid.
2.15.
As with the February payment of R3,500 Henn
did not refund the March amount.  Instead, he spent it.
His testimony on
this is best left to speak for itself:
“
Ja.
Mnr Henn, toe kom Maartmaand en u ontvang weer ‘n toelae, en op
daai stadium weet u u moes die toelaag nie ontvang
het nie.  Wat
maak jy toe met daai toelae?  Gee jy hom toe uit?
--- Dit was by my
salaris inbetaal, foutiewelik meneer.
Ja maar u weet nou mos
u moet dit nie ontvang nie.  Gee u dit toe uit?
---
Ja.
”
2.16.
On 29 March 2007 Henn signed a
document authorising the Municipality to deduct an amount of R10 per
month in respect of his indebtedness
for the transport allowance
payments to him.  There is evidence that it was the practice of
the Municipality to negotiate
repayment terms with employees and Henn
conveyed to it that his expectation was that there should be such
negotiation with him.
That notwithstanding, the applicant has
in these proceedings described the tender of R10 as derisory, fairly
so in my view.
At that rate, it would take about 58 years to
liquidate the debt of R7,000.
2.17.
In any event, in an internal memorandum,
Fisher recommended to Venter that a meeting with Henn should be
arranged in order to discuss
the matter.  Such meeting took
place on 22 May 2007 as summarised in a memorandum to Henn of the
following day, where it was
recorded that: (i) Henn would reconsider
whether he would participate in the scheme; (ii) he owed the
Municipality R7,000 which
he had offered to repay at the rate of R10
per month; (iii) by accepting the erroneous payments while knowing
that he wasn’t
entitled to them he had not acted in the best
interests of the Municipality; (iv) this could be seen as unlawful
appropriation
of Council funds; (v) certain provisions of the
Municipal Finance Management Act had been contravened; (vi) since the
payment of
the R7,000 was hence unauthorised expenditure it should be
repaid within 48 hours
alternatively
Henn could rejoin the scheme and set
off that amount by using his vehicle without further payment for a
period of two months; and
(vii) Henn should inform the Municipality
of his intentions within 48 hours failing which summons would be
issued and disciplinary
action would be considered.
2.18.
It is apparent from this record that Henn
did not at any stage suggest that he could do better than R10 per
month.  According
to him, he wasn’t given an opportunity
to do so.  That is a piece of evidence which does not strike me
as inherently
plausible and I should have thought that a man in his
position could surely have tabled an improved offer for discussion,
had he
wanted to do so.  It seems that he had no such wish, as
emerges from a letter of 24 May 2007 written by IMATU on his behalf.
2.19.
The effect of this letter was
inter
alia
as follows: (i) Henn’s
complaint that although all managers received the allowance of R3,500
they did not all travel the minimum
total kilometres per month; (ii)
it was therefore contended that this amount was paid to them as a
benefit rather than as part
of the Essential Transport Scheme; (iii)
Henn was therefore entitled to this monthly allowance without any
obligation to comply
with any of the requirements of the scheme; (iv)
it was hence denied that Henn had received any unauthorised payments
and stated
that any action to recover such amounts would be
vigorously resisted; and (v) there was no basis for the threat of
disciplinary
action.  Perhaps somewhat revealingly, the letter
did not go so far as to demand that Henn should be paid R3,500 for
April
2007 and likewise for future months.  The letter also did
not intimate that a dispute would be declared in respect of the
manner in which the allowance scheme was being implemented.
Given its tenor, there was of course no proposal that Henn should

undertake repayments at a more realistic level than R10 per month.
3.
All considered, it could have as no
surprise to Henn that the Municipality then proceeded with
disciplinary action.  A charge
sheet was drawn up, dated 7 June
2007, containing six alleged offences.  He was found guilty of:
(i) charges 1 and 5 which
broadly related to the failure to carry out
instructions, for which he was sentenced to a period of suspension
without pay for
10 days; (ii) charge 3 relates to Henn’s claim
for travel during February, despite his receipt of the R3,500
allowance, for
which he was summarily dismissed; and (iii) charge 6
relating to the unlawful appropriation of the R7,000, for which he
was summarily
dismissed.
4.
Incidentally, in respect of the period of
suspension, the applicant submitted that it was for 10 months and not
10 days.  That
submission is based on a patent error in the
chairperson’s findings on sanction.  Those findings also
recite the relevant
portions of the applicable disciplinary code,
paragraph 7.5.8.4 of which makes it plain that the maximum period of
any such suspension
is 10 days.  Likewise, the disciplinary
outcomes notification to Henn of 2 October 2007 stipulates 10 days
and not 10 months.
5.
In the course of the referral of the
dispute to arbitration, the parties agreed that only the following
two charges were required
to be determined by the arbitrator.
These are in the following terms:
5.1.
“
U het na bewering nie met die nodige
eerlikheid en integriteit opgetree nie deurdat u op 12 Maart 2007 ‘n
eisvorm vir reiskoste
vir die tydperk 1 Februarie 2007 tot 25
Februarie 2007 ten opsigte van ritte binne die TWK regsgebied voltooi
het welwetende dat
u reeds ‘n vervoertoelaag vir gemelde
tydperk ontvang.”
5.2.
“
U het ‘n bedrag van R7 000-00
wederregtelik vir uself toegeëien deurdat u gedurende Augustus
2006 u deelname in
die essensiële vervoerskema opgesê het
en sodanige toelaag vir u persoonlike gewin aangewend nadat dit
foutiewelik vir
Februarie en Maart aan u betaal was.”
6.
The first of these charges turns on the
question whether the employer established that Henn was aware on 12
March 2007 that he had
received a transport allowance for the month
of February.  In determining this question the arbitrator
accepted the evidence
of Mr and Mrs Henn that she dealt with the
finances and in particular that she routinely took receipt of her
husband’s payslips.
Their evidence is further that she
did not look at the content of the February payslip until 14 March
2007, being the day on which
Henn wrote to the Municipality to thank
it for paying him the “perk” allowance.  That letter
was written after
Henn had been informed by his wife that the
transport allowance had been paid to him despite his resignation from
the scheme.
7.
The arbitrator also had regard to the fact
that Henn had been entirely candid about the fact that he was putting
in a claim for
the use of his vehicle during February, this being
something for which he had along the way obtained the approval of
Venter.
It is apparent from the evidence also that both Mr and
Mrs Henn had approached their financial planning on the basis that
the allowance
of R3,500 per month would no longer be paid after 1
February 2007.  Viewed overall, there is no reason to doubt this
evidence
and, likewise, no reason to believe that Henn had expected
that his salary for February would still include that allowance.
8.
In the course of the arbitration the
Municipality attacked the credibility of especially Mrs Henn along
the lines that she must
surely have looked at the payslip well before
14 March 2007.  Neither Mr nor Mrs Henn wavered on their
evidence in this respect
and the employer’s efforts ultimately
fell to be treated as speculative and argumentative, with no
evidential support.
9.
The arbitrator hence concluded that Henn
had not been aware until 14 March 2007 of the payment to him in
February of the allowance
amount and that he was accordingly fully
entitled to submit a claim form on 12 March 2007 for his February
vehicle use.  This
conclusion contains no affront to the
evidence placed before the arbitrator and I see no good grounds for
it to be reviewed and
set aside.  The finding that Henn is not
guilty of the first charge is therefore upheld.
10.
As to the second charge, the arbitrator’s
approach was a good deal less satisfactory.  He took as his
departure point
the fact that the Municipality had in error made two
undue allowance payments for February and March 2007 and classified
these
payments as the factual cause for all that followed.  As
he put it, if the Municipality had not made these errors then none
of
the subsequent problems would have arisen, Henn would never have had
that money and his dismissal would not have taken place.
In
other words, he located the culpability within the Municipality’s
administrative incompetence and, conversely, held that
Henn’s
conduct was to be exonerated as a result thereof.  This approach
on the part of the arbitrator is in my judgment
fundamentally
unsound.  The true root of the problem is not that the
Municipality made erroneous payments but that Henn made
the election,
in effect, to retain them.  The distortion in the arbitrator’s
reasoning that was associated with this
view is reflected for
instance in the terms of his recital of the issue before him, in
paragraph [51] of the award:
“
The
second and last issue that needs to be determined is whether the
applicant’s refusal to repay the R7 000-00 within
48
hours, or alternatively his refusal to rejoin the scheme and then to
travel for two months without receiving an allowance constituted
a
fair reason for his dismissal.  It needs to be kept in mind, in
determining this question, that the respondent was solely
responsible
for creating the situation that led to the applicant having to repay
monies to the respondent.
”
11.
In formulating the issue in this way the
arbitrator strayed from the content of the charge to the terms of the
meeting of 22 May
2007 as recorded in the memorandum of the following
day.  Whilst it is no doubt so that Henn could have avoided
disciplinary
action by reacting in an appropriate way within the 48
hour ultimatum period conveyed to him at that meeting, the terms of
that
ultimatum did not constitute the charge which the arbitrator was
obliged to determine.  Rather, the key question posed through

the second charge was whether or not Henn had unlawfully appropriated
the amount of R7,000 for his own use.
12.
Had the arbitrator set about addressing
that question, certain elements of the evidence which he had received
should have been given
greater weight and others, such as the fact of
administrative error, ought to have received less.  In the
context of a review,
as distinct from an appeal, the issue before me
is whether, in so doing, the arbitrator produced an unreasonable and
unjustifiable
award.
13.
I have outlined the relevant facts above.
On his own evidence, Henn knew that there was not a “perk”
scheme.
If there had been any uncertainty before, which is my
view not the case, the employer’s position was made
unmistakably clear
on 20 March 2007.  Despite that, Henn kept
and spent the payment to him made on 25 March 2007.  In simple
terms, he appropriated
monies for his own use to which he knew he was
not entitled.  That brought him directly within the language of
the second
charge.  He should either have repaid the monies
promptly or, at the very least, put forward a serious repayment
proposal.
14.
This perspective was clearly understood by
the arbitrator but he nevertheless found that Henn should be
exculpated, on a basis so
slender as to amount to a failure to have
proper regard to the relevant evidence.  As an illustration of
this, the following
passage appears in paragraph [55] of the award:
“
I
must state that the applicant knew that he was not entitled to the
monies, yet he used the monies.  His actions in this regard

could possibly have been construed as misappropriation of monies to
which he was not entitled to and which were paid to him in
error.
It however appears from the evidence that incorrect payments to
employees are not uncommon and neither is it uncommon
for the
respondent to then engage these employees into negotiations to repay
the monies on a monthly basis. ... It is therefore
my finding that,
although the applicant ought not to have used the R7 000-00 in
question, the fact that he did so was not
a dismissible offence.
”
15.
The arbitrator went on in similar vein in
paragraph [57]:
“
I
also do not believe that it was necessary to discipline the
applicant, especially based on the fact that the respondent was the

sole cause of the incorrect payment of the allowances.  The
respondent could further have prevented the March 2007 payment,
but
instead continued with its poor administrative functions and allowed
yet another incorrect payment to go through and in the
process,
causing the respondent further harm.  This obviously also
unnecessarily exposed the applicant to another amount of
money being
deposited into his account
.”
16.
The arbitrator’s notion that Henn was
“
exposed
”
to another payment into his account is a troubling one.  The
evidence quite clearly establishes that there was nothing
hapless
about Henn’s conduct.  He did not inadvertently spend the
March payment of R3,500 but did so in the full knowledge
that this
was another mistake and that he was not lawfully entitled to the use
of that money.  The arbitrator’s persistent
theme that
Henn was really blameless because the fault lay entirely with the
Municipality is not sustainable.
17.
The arbitrator sought further support for
his approach in the evidence that it was not uncommon or even the
usual practice that
the Municipality would negotiate suitable
repayment terms with its employees in instances where there had been
mistaken overpayments
to them.  This evidence was couched in the
most general way and nothing was placed before the arbitrator to the
effect that
this was the practice even where an employee had
deliberately used money in the knowledge that it was not due and
would have to
be repaid.  In a case of that kind the true
inquiry would be into the conduct of the employee.
Misappropriation remains
precisely that despite the possibility that
repayment terms might be negotiated.
18.
It is also plain from the award that the
arbitrator thought it to be a factor in favour of Henn that the
Municipality was in a position
to institute a civil action against
him in order to recover the R7,000 and that this was likely to result
in the imposition of
reasonable monthly terms.  In this, too,
the arbitrator in my view ignored the true question before him, being
whether Henn
had unlawfully appropriated the money.  Moreover,
the arbitrator should have had regard to the fact that litigation is
costly
and that the Municipality would have had to expend public
money in order to retrieve funds which Henn had wittingly retained.
19.
Submissions were made to me by both parties
as to whether Henn had acted dishonestly.  I do not consider
that to be an essential
element of the charge as formulated.  It
is nonetheless appropriate that I should deal briefly with it.
In my judgment
Henn’s conduct cannot meaningfully be said to
have been moved by dishonesty.  There was nothing furtive in his
actions.
Although there may be scope for some debate as to his
precise motives in respect of his letter of 14 March 2007, the
objective
fact is that he immediately communicated to his employer
that he had received the February allowance payment notwithstanding
that
he had resigned from the scheme.  The claim he put in for
February was done pursuant to full engagement with his superior
Venter.  Nothing was done by him which was not known to the
Municipality and, in particular, there can be no suggestion that
Henn
at any time contemplated that he could “get away with”
the payments which had been made to him.  Accordingly,
the facts
before me are different from those in
Africa
and Public Servants Association
(2003)
24 ILJ 1153 (CCMA).  There was also no
animo
furandi
on the part of Henn, unlike the
case of
S v Graham
1975
(3) SA 569
(AD) at 573F-H.
20.
Reverting to the award, a striking feature
of it is that the arbitrator’s reasoning frequently and rather
confusingly migrates
backwards and forwards between issues relating
to guilt and those that bear on sanction.  Ultimately, though,
he held as follows
in paragraph [60] of the award:
“
I
therefore find that, although the applicant is guilty of using the
R7 000-00 when he knew that he was not entitled thereto,
the
sanction of dismissal was not an appropriate sanction under the
circumstances.
”
21.
Although he did not expressly state it, I
infer from this that the arbitrator had concluded that Henn was
guilty on the second charge.
If that is what the arbitrator
intended, I uphold it since I am decidedly of the view that such
guilt was indeed established on
the record of the arbitration
proceedings.  If that is not what the arbitrator intended, then
I review and vary his conclusion
accordingly.  Either way, I
declare that Henn is guilty on the second charge.
22.
The arbitrator then proceeded to set out
his award in paragraph [61], the relevant portion of which is as
follows:
“
The
dismissal of the applicant was substantively unfair in that the
sanction of dismissal was not an appropriate sanction under
the
circumstances.  I am unable to make a finding as to what would
have constituted a fair sanction other than to state that,
had there
been negotiations with the applicant, there might well not have been
a need for any sanction whatsoever.
”
23.
From this passage it again appears that the
arbitrator had concluded that Henn was guilty, but that he should not
have been dismissed.
That being so, he was obliged to make a
finding on what the appropriate sanction was to be.  By choosing
not to do so, he
failed to discharge a primary duty of an arbitrator,
which is to fully determine the dispute referred to him.  The
order of
reinstatement, it is to be noted, dealt with remedy and not
with sanction.
24.
The omission of the arbitrator to fully
deal with the sanction issue has the unfortunate consequence that the
parties were not in
a position to pertinently direct submissions to
the suitability of the sanction as determined by him.  By the
same token,
this Court does not have the benefit of such
submissions.  Taking into account also that the reasoning for my
conclusion that
Henn is guilty on the second charge is in material
respects not the same as that of the arbitrator, it is my view that
the parties
should be afforded a fresh opportunity to place written
submissions before me in respect of sanction.  I express that
view
on the basis that it would be convenient for me to deal with
that issue.  The parties are nevertheless at liberty to submit

that such issue should instead be remitted to the Bargaining
Council.
25.
An order in respect of the costs of this
review will be dealt with once the further submissions of the parties
have been received.
Such submissions may revisit that question
also.
26.
I make the following order:
1
The determination by the second respondent
that Mr A J D Henn is not guilty of the first charge is upheld.
2
The second respondent’s award in
respect of the second charge is reviewed and varied to the extent
necessary and it is declared
that Mr A J D Henn is guilty of the
second charge.
3
The parties are to deliver such further
submissions as they may wish to make in respect of the issues of the
sanction and costs,
the applicant to do so on or before 26 March 2010
and the third respondent on or before 1 April 2010.
____________________________
K
S TIP
ACTING
JUDGE OF THE LABOUR COURT
DATE
OF HEARING:

27 JANUARY 2010
DATE
OF JUDGMENT:

12 MARCH 2010
FOR
APPLICANT:

ADV C S KAHANOVITZ SC
instructed
by Herold Gie Attorneys
FOR
THIRD RESPONDENT:
MS E HARTZENBERG
of
IMATU