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[2011] ZALCD 22
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CMH Luxury Motors (Umhlanga) (Pty) Ltd t/a Auto Umhlanga v Pather NO and Others (D724/09) [2011] ZALCD 22 (7 March 2011)
IN THE LABOUR COURT OF
SOUTH AFRICA
HELD IN DURBAN
Case No. D724/09
In the matter between:
CMH LUXURY MOTORS
(UMHLANGA)
(PTY) LTD t/a AUTO
UMHLANGA
................................................
Applicant
And
SUNGAREE PATHER N.O
...............................................
First
Respondent
DISPUTE RESOLUTION
CENTRE
MOTOR INDUSTRIES
BARGAINING COUNCIL
.......
Second
Respondent
ABDOOL KADER MALEK
RASSOOL
...........................
Third
Respondent
____________________________________________________________
JUDGMENT
____________________________________________________________
GUSH, J.
The applicant seeks an
order reviewing, correcting and/or setting aside the arbitration
award made by the first respondent on
the 20 August 2009. The first
respondent found that the dismissal by the applicant of the third
respondent was substantively
unfair and ordered the applicant to
reinstate the third respondent.
On 2 October 2008 the
respondent appeared before a disciplinary enquiry where he was
charged with gross negligence. The third
respondent pleaded guilty
to the charge and was, at the conclusion of the enquiry on 6 October
2008 was dismissed.
The first respondent
concluded in her award that the third respondent’s misconduct
could not be regarded as a serious enough
to have warranted
dismissal. Whilst the parties were at idem that the crisp issue
before the court was to determine whether the
misconduct committed
by the third respondent was so gross as to warrant the sanction of
dismissal, the question to be determined
on review is whether:
“
Whether
the award is one that a reasonable decision maker could arrive at
considering the material placed before him.
1
The applicant had
employed the third respondent in 2004 and had promoted the third
respondent to the position of used vehicle
sales manager in May
2008.
On 11 July 2008 the
applicant's chief executive officer sent a memorandum to the
applicants senior managers, including the third
respondent (who was
an F&I manager) , which inter alia recorded the following:
“
Used
Cars/ Processes/Responsibilities
[F & I managers]
are expected,
and it is their responsibility ... to ensure the group policies and
processes are followed...
Unfortunately we have had several
instances where a gross misreporting or lack of discipline in
following procedures and policies
have led to major losses, or
allowed fraud to be committed. ... People in these key positions must
accept the responsibility for
their actions or lack thereof.
I would like to highlight several
issues. This is a high-risk area of the business and it is vital that
all the procedures followed
... Natis documents must be kept under
lock and key, under the accountant’s control. The Natis
document proves ownership
of the vehicle. It is vital that no
outsider ever has access. If they did, they would be able to
fraudulently transfer ownership
to themselves or to a third party.
The Natis, car description should exactly match the invoice to
ourselves. Exotic cars must be
treated with extreme care. We have a
recent example, when by adding ‘CSL’ to ‘BMW M3’,
the value was fraudulently
increased by R550,000.00 ... Once a policy
document is issued staff are expected to implement it immediately.
Franchise directors
and managers, and most particularly franchise
accounts and F&I area managers, must ensure that their staff are
implementing
the policies”
On 18 August 2008 the
applicant’s chief executive officer addressed a further
memorandum to inter-alia the third respondent
(F & I managers).
This memorandum stated:
“
I would
just like to reiterate and remind all dealers of company policy re
the sale of used cars to traders. Neither the car nor
the Natis
papers must be released until the cash is cleared through our bank
account. Natis documents must be kept under lock and
key and under no
circumstances can they be released without full payment. On no
account must they be “lent” to anyone.
...
Please be careful. Don't take any
chances. Make sure that your accountant has effective control of the
Natis documents and the use
of balance or weekly when stop taken. The
security of the documents cannot be left in the hands of a relatively
junior stock clerk.”
On the 19 August 2008
the third respondent forwarded the memorandum of the 18
th
August, to his subordinates with the following instruction:
“
This is
one of the many rules that we have to follow. Read the attachment and
understand what we as management need to achieve to
make your job
easy.”
On 28 August 2008 the
third respondent sought and obtained authority sell a vehicle to a
Mark Misdorp
.
On 30 August 2008
Misdorp asked the third respondent if he could borrow the vehicle’s
logbook (Natis documents) in order
to prove to another dealer that
the car had been paid for.
Remarkably, despite the
memoranda of 11 July and 18 August 2008 which contained a specific
instruction not to release Natis documents
and the third respondents
own email of the 19
August, the third respondent (a mere
ten days later) agreed to lend the vehicle’s logbook (Natis
documents) to Misdorp.
Misdorp undertook to return the documents to
the third respondent later that day. Whilst in possession of the
Natis documents
however Misdorp perpetrated the exact same fraud
that the applicant's CEO had warned of in his memorandum of the 11th
July.
As a result of his
actions the third respondent was charged with “gross
negligence”. His supervisor advised him that
the charge of
misconduct involved the “
release of the logbook and, you
know, this is company procedure
” At the disciplinary
enquiry the third respondent pleaded guilty to gross negligence
being the misconduct with which he
was charged, was found guilty and
dismissed.
It is abundantly clear
that the third respondent had instructed his attorney who
represented him at the arbitration that the memoranda
had not been
addressed to him and that he had first become aware of the contents
thereof at the disciplinary enquiry and accordingly
this was the
explanation offered. At no stage did the third respondent deal
directly with the admitted fact that he had disregarded
a direct
instruction. The third respondent dealt with the memoranda as
follows in the opening statement made at the arbitration
and during
his evidence in chief:
"
these
are not letters addressed to the applicant. These are letters which
were raised during the course of the disciplinary
enquiry
addressed, inter-alia, to the dealer principal.
"
2
“
Could
you tell Madam Commissioner why it was put to Mr Ellis that you
have no recollection of seeing those e-mails prior to
you being
called in for an enquiry or suspension? --- Madam Commissioner, on
that basis, we get approximately about 150 e-mails
a day. ... When
we come in, I go through them, I see if it needs to go to the sale
staff, i send it off immediately…
I don't deny seeing any
e-mails, but honestly not could not recall it.”
3
It is highly improbable
and certainly inconceivable that the third respondent, who was the
newly promoted sales manager, would
not have recalled having
received and having read and remembered the contents of the emails
particularly given their content
and relevance to his
responsibilities, and that he had specifically forwarded the email
of the 18 August to his staff admonishing
them to read and
understand the contents.
It is clear from the
record that the misconduct the applicant complained of was that the
third respondent had released the Natis
documents in the face of the
specific instructions issued by the applicant’s CEO viz:
“
[F & I
managers]
are
expected, and it is their responsibility ... to ensure the group
policies and processes are followed... we have had several
instances where ... lack of discipline in following procedures and
policies have ... allowed fraud to be committed. ... People
in
these key positions must accept the responsibility for the actions
or lack thereof.”;
“
... it
is vital that all the procedures followed ... Natis documents must
be kept under lock and key, under the accountant’s
control.
... It is vital that no outsider ever has access;
F&I area managers, must
ensure that their staff are implementing the policies”;
“
Neither
the car nor the Natis papers must be released until the cash is
cleared through our bank account. Natis documents must
be kept
under lock and key and under no circumstances can they be released
without full payment. On no account must they be
“lent”
to anyone. ... Please be careful. Don't take any chances.”
In the award the first
respondent correctly records:
“
at issue
was whether the applicant ‘was aware, or could reasonably be
expected to have been aware’ (item 7 of schedule
8 - Code of
Good Practice: Dismissal) of the memorandum dated 18 August 2008,
issued by the CEO of the
[applicant's
]
parent company in which it is expressly forbidden that the Natis
documents (or the vehicle) be released ‘until the cash
is
cleared through our bank account’”
4
The parties spent much
time during the arbitration dealing the circumstances surrounding
the identity of the purchaser the background
to the transaction and
what transpired thereafter. It is therefore possibly not surprising
that the first respondent, too, placed
much emphasis on these
aspects of the matter apparently losing sight of the misconduct for
which the third respondent was dismissed,
and the “issue”
referred to in para 14 above.
The first respondent
simply fails to properly address this issue. The first respondent
correctly records that the act of releasing
the Natis documents
contrary company policy could be considered to reckless
(particularly so given the evidence of the applicant’s
memoranda). She continues however to then record that regard must be
had to the circumstances surrounding the transaction with
Misdorp.
This is despite the fact that none of these circumstances are
relevant to the misconduct which involved a blatant disregard
for an
express instruction. The third respondent did not argue that he had
disregarded the instruction because of these circumstances.
The
third respondent’s explanation was that he was not aware or
could not recall the rule or procedure. The circumstances
which the
first respondent found to relevant were:
the sound business
relationship between the applicant and Misdorp senior;
that the applicant had
improved the deal the sale;
that the applicant
would have earned a profit of R40,000 on the deal;
that ‘Bob’
of Hooper motors had telephoned the third respondent for
confirmation that Misdorp had purchased the
vehicle;
that the third
respondent was a victim of the fraud; and
the damage was minimal.
Taking those
circumstances into account the first respondent then concluded that
the third respondent’s conduct which she
initially described
as reckless (the “
applicants
act in releasing”
[the
documents]) could
“
best
be described as an exercise of managerial discretion
”
5
It is on the strength of
those circumstances set out in paragraph 15 above and the conclusion
that it was an exercise of managerial
discretion, that the first
respondent found that the fact that the third respondent had
released documents contrary to the direct
and specific instructions
from the CEO could not be regarded as serious enough to have
warranted dismissal.
The first respondent
found that not only was the sanction of dismissal too harsh and
therefore unfair but that whilst a sanction
of a written warning
would have sufficed because of the third respondent’s
emotional suffering it was not necessary to
impose any alternative
sanction.
The first respondent’s
conclusions and logic suggest that the first respondent completely
misunderstood the nature of the
misconduct and in particular the
gravity thereof. The suggestion that the third respondent was
exercising his “managerial
discretion” is startling
especially in the light of having found that releasing the Natis
documents was reckless. The first
respondent fails to consider or
evaluate the contents of the memoranda which in no way at all offer
any delegated discretion
in the handling of Natis documents. The
rule set out therein is unequivocal. The actions of the third
respondent were in direct
contravention of a specific instruction
given by the applicant to its sales staff. It is particularly
noteworthy that at no stage
in his evidence did the third respondent
suggest that he was exercising what he regarded as his managerial
discretion, nor does
he offer an explanation for disregarding the
policy
In its founding
affidavit the applicant avers that the first respondent’s
award is reviewable inter alia because she:
Misconceived the nature
of the enquiry; and
Failed to apply her
mind to the evidence properly before her;
and accordingly the first
respondent’s award is reviewable and should be set aside. I
agree.
In considering whether
the award is reviewable I am mindful of the judgement of Zondo JP in
Fidelity Cash Management Service v
CCMA
6
in which he said:
“
It
will often happen that, in assessing the reasonableness or otherwise
of an arbitration award or other decision of a CCMA commissioner,
the
court feels that it would have arrived at a different decision or
finding than that reached by the commissioner. When that
happens, the
court will need to remind itself that the task of determining the
fairness or otherwise of such a dismissal is in
terms of the Act
given primarily to the commissioner and that the system would never
work if the court would interfere with every
decision or award of the
CCMA simply because it, that is the court, would have dealt with the
matter differently.”
Despite that and for the
reasons set out above I am satisfied that the award is not one that
a reasonable arbitrator could have
arrived at considering the
evidence placed before her and that accordingly it should be set
aside. The applicant asked that the
award of the first respondent be
substituted with an order that the dismissal of the third respondent
was both procedurally and
substantively fair, alternatively that the
matter be referred back to the second respondent to be considered
afresh. I do not
believe that any purpose will be served by
referring the matter back to the second respondents as the relevant
facts are all
canvassed in the pleadings and the record.
As far as costs are
concerned both parties argued that costs should follow the result
and I see no reason why that should not
apply.
In the circumstances i
make the following order:
The arbitration award
made by the first respondent on the 20 August 2009 and case
reference MIDB 4880 is reviewed and set aside
and replaced with an
order that the dismissal of the third respondent was both
procedurally and substantively fair.
The third respondent is
ordered to pay the applicants costs.
___________
GUSH J
Date of hearing
:
17
February 2011
Date of judgment
:
7
March 2011
APPEARANCES
For the applicants : Adv
M D C Smithers SC
Instructed by : MacGregor
Erasmus Attorneys
Third respondent : Adv P
Schumann
Instructed by : Brett
Purdon Attorneys
1
Edcon
Ltd v Pillemer NO & others[2010]
1 BLLR 1
(SCA) at p9 Para 15
2
Record
page 1B
3
Record
page 77
4
Award
pleadings bundle page 35
5
Award
page 38
6
(2008)
29
ILJ
964
(LAC) paras [98] – [100]