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[2012] ZALCJHB 175
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Mutual Safes & Security (Pty) Ltd v Commission for Conciliation Mediation and Arbitration and Others (JR811/2011) [2012] ZALCJHB 175 (8 August 2012)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Case no: JR811/2011
Not Reportable
In the matter between:
MUTUAL SAFES & SECURITY (PTY) LTD
.
....................................................
Applicant
and
THE COMMISSION FOR CONCILIATION, MEDIATION
AND ARBITRATION
...........................................................................
First
Respondent
COMMISSIONER W KRUGER
......................................................
Second
Respondent
LYDIA HLAHLA BANDA
..................................................................
Third
Respondent
Heard: 10 July 2012
Delivered: 8 August 2012
JUDGMENT
Dodson AJ
Introduction
[1] This is an application for the review of an award of the second
respondent, a commissioner of the Commission for Conciliation,
Mediation and Arbitration (“the CCMA”), the first
respondent.
[2] In his award, the second respondent found the dismissal of the
third respondent by the applicant to be unfair and ordered the
applicant to pay compensation equivalent to eight months’
salary.
[3] The review application was not opposed.
Factual context
[4] The third respondent was employed by the applicant from 8 March
2007 and at the time of her dismissal, held the position of
office
manager – service and despatch administrator at the applicant’s
Johannesburg branch.
[5] As at the time of her dismissal her responsibilities included:
[5.1] organising deliveries;
[5.2] following up on collection;
[5.3] day-to-day administration of the branch, including showroom and
warehouse neatness, ensuring stocks of pamphlets were available
for
clients and managing the cleaner;
[5.4] general stock and product control, including regular
stock-taking and maintaining of stock lists; and
[5.5] ensuring the smooth running of the branch.
[6] During June 2010, the applicant was informed by an employee who
had resigned, that there were irregularities taking place at
the
Johannesburg branch relating to the illegal sale of refurbished safes
and related theft and fraud. The applicant sells new
as well as
refurbished safes. The investigation revealed that refurbished safes
had left the premises without the necessary paperwork
having been
completed or with incorrect paperwork having been used and that
moneys paid pursuant to the incorrect paperwork had
not been
deposited into the applicant’s bank account.
[7] The applicant then held a meeting with the employees in the
Johannesburg branch in order to bring the situation to their
attention
and to investigate with them the reasons for what had
transpired. The first person to be called into the meeting was a Mr
Albert
Herholdt, a salesman, who had been identified by one of the
applicant’s clients as the person that they had dealt with in
relation to a tainted transaction. Initially Mr Herholdt denied the
allegation, then attempted to shift blame to the general manager,
Mr
Lombaard, but finally acknowledged that he had been guilty of
unlawful conduct in selling refurbished safes and retaining the
proceeds. His computer was confiscated and on it further evidence of
theft and fraud was found. In acknowledging his unlawful conduct,
Mr
Herholdt denied that any other employees had been involved and
insisted that he was solely to blame.
[8] The applicant doubted this and proceeded to hold a further
meeting with its Johannesburg branch employees on 30 June 2010.
It
was on this occasion that the third respondent revealed for the first
time that some one or two weeks before this time, when
she, Herholdt
and Helen Kgatle had been having drinks in the company bar, in her
words, “Albert got talking when he had a
couple too many”.
He revealed that cash was being received, misappropriated and kept in
a safe in the office of Mr Lombaard.
The third respondent had however
never previously reported any of this to the applicant.
[9] Lombaard, the third respondent and Helen Kgatle were requested to
undergo polygraph tests. Lombaard and the third respondent
refused
but Kgatle agreed. However she failed her test.
[10] This took place against the backdrop that it was the third
respondent’s duty to ensure that all stock was accounted
for,
and, in particular, that she was responsible for keeping the keys of
the safes which were held in stock. The keys were to
be kept safely
and were only to be handed over when a safe was to be transported to
a client pursuant to a valid sale and the necessary
paperwork was in
place. According to the applicant, central to the necessary paperwork
was a rule that in respect of every delivery,
she was required to
make out a delivery note which was generated along with an invoice by
the firm’s Pastel computer software
system.
[11] What the investigations revealed, however, was that in respect
of some of the fraudulent transactions, stock was despatched
on the
basis of pro forma invoices which were not properly completed and
which in any event was not allowed. The third respondent’s
answer to this was that she was permitted to do so by Mr Lombaard.
[12] Lombaard, Helen Kgatle and the third respondent were then
subject to formal disciplinary enquiries. The third respondent was
charged with-
[12.1] gross misconduct in not reporting theft or fraud by a
co-worker;
[12.2] gross negligence in the execution of her duties as branch
controller in not seeing to the proper paperwork and controls
instituted and required in the despatch area;
[12.3] gross negligence in not acting in the best interest of her
employer.
[13] The disciplinary enquiry was held on 13 July 2010 and was
presided over by Mr Lucas Coetsee from the South African Employers
Organisation. The third respondent pleaded guilty to the first charge
and not guilty to the second and third charges.
[14] She was found guilty of all three charges and dismissed on 16
July 2010. An internal appeal failed.
[15] The third respondent then referred the matter to the first
respondent. Conciliation failed and the arbitration was then held
over a period of six days, concluding on 11 March 2011.
[16] On 17 March 2011, the second respondent handed down his award.
[17] In brief, the second respondent reasoned as follows. He drew an
adverse inference against the applicant because it failed
to call
either Helen Kgatle or Albert Herholdt or Hennie Lombaard or the
chairperson of the disciplinary enquiry as witnesses to
rebut the
third respondent’s version that blame was to a greater extent
attributable to those three than herself. He was
particularly
critical of the fact that the other two persons charged were treated
differently. Helen Kgatle, who was responsible
for invoices, was
subject to the same three charges, also pleaded guilty to the first
charge, was found guilty of the other two
charges but was only
demoted. Hennie Lombaard, the general manager was dismissed but the
applicant entered into a contract with
him as an independent
contractor with a sister company.
[18] However the second respondent recognised that “the
applicant is not totally blameless in this case. If she had put
proper systems in place the fraud could have been prevented. However,
there is no prove(sic) that she was dishonest. There is also
no prove
(sic) that she was grossly negligent.” He considered that she
had been “over powered by the general manager
and ‘cheated’
by Albert Herholdt”.
[19] He declared her dismissal to be unfair and awarded eight months
compensation.
Legal context
[20] Having regard to the decision of the Constitutional Court in
Sidumo and Another v Rustenburg Platinum Mines Ltd and Others
,
1
the Labour Appeal Court in
Andre Herholdt v Nedbank Ltd
2
and of this Court in
Southern Sun Hotel Interests (Pty) Ltd v CCMA
and Others
,
3
amongst others, the decision of a Commissioner of the CCMA is
reviewable with reference to-
[20.1] the substantive reasonableness of the decision, with the focus
being on whether the result or outcome of the decision-making
process
is one which a reasonable decision-maker might reach; and
[20.2] the dialectical or “process-related”
reasonableness of the decision, with the focus being on the logical
path
by which the decision-maker arrived at his or her decision.
Analysis
[21] Taking into account the fact that the second respondent’s
award must withstand scrutiny in terms of both substantive
and
dialectical reasonableness as outlined above, there was a failure on
his part to consider a number of important aspects of
the evidence
before him.
[22] Perhaps the most important of all was the fact that the third
respondent was aware of a serious instance of fraud and theft
against
the company but did nothing to report it for somewhere between one
and two weeks. To her credit, she made no attempt to
dispute this and
pleaded guilty to the relevant charge. Yet this is only taken into
account in the second respondent’s reasoning
in comparing the
treatment of Kgatle and the third respondent. Because Kgatle also
pleaded guilty to the first charge and was not
dismissed, the
implications of this misconduct are given no further consideration.
This evidence had to be considered in deciding
whether or not the
third respondent’s admitted misconduct in this respect rendered
her dismissal unfair, regardless of how
Kgatle was dealt with. On
this basis alone, the award is, in my view, unreasonable, at least in
terms of dialectical reasonableness
and possibly in terms of
substantive reasonableness in terms of the overall outcome.
[23] A further fundamental error on the part of the second respondent
was his having given significant consideration to the absence
of
proof that the third respondent had been dishonest. This fact was
entirely irrelevant because none of the charges alleged dishonesty
against her. The only charge or complaint that came close to that was
the complaint that she failed to report evidence of fraud
and theft
that she came across. On that charge there is no dispute that she was
guilty. Moreover, her purported explanation of
the failure to report
the matter was manifestly unsatisfactory – namely that she was
conducting her own investigation into
the matter. No reasonable
decision-maker would give such an explanation credence.
[24] A further aspect of the reasoning process of the second
respondent which crosses the bounds of reasonableness is his finding
that there was no evidence that the third respondent was grossly
negligent. This finding is simply not in any way supported by
the
evidence that was led before the arbitrator. There was significant
evidence that pointed to negligence on the part of the third
respondent. Yet the second respondent plainly failed to have proper
regard to it or to assess whether it constituted the gross
negligence
complained of.
[25] On the third respondent’s own version she conceded that-
[25.1] she had responsibility for controlling the stock of
refurbished safes, yet, at some stage, lost control over the stock.
She did attempt to attribute blame for this elsewhere, but certainly
did not testify that she reported this fact to anyone or attempted
to
take corrective steps herself or call for assistance;
[25.2] if she had applied and maintained the correct control
mechanisms, none of the dishonesty or fraud pertaining to the
refurbished
sales would ever have taken place;
[25.3] the keys for the refurbished safes which she was meant to
exercise control over used to go missing;
[25.4] notwithstanding that she was responsible for the smooth
running of the office, the office did not run smoothly; and
[25.5] notwithstanding that she was responsible for general stock and
product control the products and stock were not controlled
in the
Johannesburg branch.
[26] At the very least, it was incumbent upon the second respondent
to acknowledge that this did indeed constitute evidence of
what the
applicant considered to be gross negligence and, if he disagreed, to
provide a logically reasoned basis for his conclusion
in that regard.
[27] The second respondent was strongly influenced in his decision,
by his perception that there was inconsistency in the treatment
of
the three employees charged. However, there were two important
components of the evidence which he failed to take into account
and
those were -
[27.1] the fact that the third respondent had a prior written warning
for gross negligence in allowing an amount of R3622,81 to
go missing;
[27.2] the applicant’s explanation as to why it treated Hennie
Lombaard and Helen Kgatle differently. On the evidence, it
seems
clear that Helen Kgatle was not vested with nearly as much authority,
responsibility and trust as was the case with the third
respondent.
As far as Hennie Lombaard is concerned, not accommodating him in some
way would, according to the applicant, have resulted
in the loss by
the applicant of three major contracts.
[28] None of this evidence was analysed as to why it might or might
not be a legitimate basis for differentiation. He also failed
to have
regard to the applicant’s uncontested evidence that if it had
been able to find a position similar to that of Lombaard
for the
third respondent, it would readily have done so. However, no similar
position was available.
[29] A further respect in which the second respondent’s award
fails the test of dialectical reasonableness is that he proceeded
on
the basis that the question of procedural fairness was in issue
despite the fact that it had been conceded by the third respondent’s
legal representative in argument that the dismissal was procedurally
fair.
[30] There are other respects in which the commissioner’s
decision can be criticised. However the above is sufficient to
show
that the award does not withstand scrutiny either on the basis of
dialectal or substantive reasonableness. The errors on the
part of
the second respondent were serious and amounted to material
irregularities preventing a fair trial of the issues. Accordingly,
the award stands to be reviewed and set aside.
Appropriate relief
[31] The applicant asks that this court substitute its award for that
of the second respondent. Because the matter is unopposed,
I am faced
with a situation where there are no competing contentions advanced on
behalf of the third respondent.
[32] In view of the distinction drawn between the review of
arbitration awards of the CCMA, on the one hand, and judicial review
of administrative action under the
Promotion of Administrative
Justice Act No. 3 of 2000
on the other, in the
Sidumo
judgment,
4
as well as the emphasis placed by the Constitutional Court on the
need for finality in labour matters, I am of the view that
substitution
is an appropriate remedy in this case.
[33] Having regard to the fact that-
[33.1] the third respondent pleaded guilty to the first charge of
failing to report fraud and dishonesty, a charge which this court
considers to be of the utmost seriousness;
[33.2] the concessions made by the third respondent as to the
complete failure on her part to carry out the responsibilities
attaching
to her post, together with the causal connection between
that failure and the significant losses suffered by the applicant as
a
result of fraud and theft;
[33.3] the fact that, on the basis of the concessions made by the
third respondent in this regard, the only conclusion to which
a
reasonable decision-maker could come was that there was gross
negligence on her part;
[33.4] the fact that the third respondent had a prior written warning
for similar misconduct;
[33.5] the fact that the third respondent bore considerably more
responsibility and had more trust reposed in her than Helen Kgatle;
[33.6] the considerations identified in the above analysis of the
award of the second respondent,
I am satisfied that the third respondent was fairly dismissed.
[34] I accordingly make the following order:
[34.1] the arbitration award made by the second respondent on 17
March 2011 under Case No. GATW9087-10 is reviewed and set aside;
[34.2] the award is substituted with the following award:
‘
1. the dismissal of the applicant [third
respondent in the review application] was fair.’
[34.3] No order is made as to costs.
________________
Dodson AJ
APPEARANCE
S:
FOR THE APPLICANT: Ms E Duvenhage of Duvenhage Attorneys
1
(2007)
28 ILJ 2405 (CC) at paras 109 – 110.
2
Unreported
judgment of the Labour Appeal Court under Case No. DA20/2010 dated 4
May 2012 at paras 33 – 41.
3
[2009]
11 BLLR 1128
(LC).
4
Sidumo
and Another v Rustenburg Platinum Mines Ltd and Others
, (2007)
28 ILJ 2405 (CC) at paragraph 98.