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[2013] ZALCJHB 347
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Department of Education: Gauteng Provincial Government v Public Servants Association obo Appadu and Others (JR1531/10) [2013] ZALCJHB 347 (29 January 2013)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA,
IN
JOHANNESBURG
JUDGMENT
NOT
REPORTABLE
CASE
NO: JR 1531/10
In
the matter between:
DEPARTMENT OF
EDUCATION: GAUTENG PROVINCIAL GOVERNMENT
Applicant
And
PUBLIC
SERVANTS ASSOCIATION OBO R E APPADU
First
Respondent
GENERAL
PUBLIC SERVICE SECTORAL BARGAINING COUNCIL
Second
Respondent
ADVOCATE
R BRACKS (
N.O.
)
Third
Respondent
Heard
:
04 October 2011
Delivered
:
29 January 2013
Summary:
(Review – misconduct –
conflict of interest – misconstrued charge – employee
guilty. Procedural fairness
– no prejudice caused by delays in
enquiry – no unfairness).
JUDGMENT
LAGRANGE,
J
Introduction
[1]
This is an application to review and set
aside an arbitration award issued by the third respondent a senior
panellist of the arbitration
panel of the GP SSBC (‘the
bargaining council’). The arbitrator had found that the
employer had failed to discharge
the onus of showing that Mr R
Appadu, who was employed as the employer's Chief Security Officer,
was guilty of the offence for
which he was charged. Accordingly, the
arbitrator ordered the employer to reinstate Appadu retrospectively
to the date of his dismissal
on 1 June 2010.
[2]
Because the arbitrator found that Appadu
was not guilty of the charge he did not consider his alternative
claim that his dismissal
was procedurally unfair. Appadu had
complained that his hearing was procedurally unfair because the
disciplinary proceedings were
instituted in July 2007 but only
commenced in April 2008 and was concluded the following year in
September, thereby compromising
his right to a speedy enquiry.
[3]
The employer had found Appadu guilty and
dismissed him on the following charge:
It is alleged that you
failed to comply with the Public Service Code of Conduct which
requires you as a public service official
to serve the public in an
unbiased and impartial manner in nature gave undue preferential
treatment in the appointment of service
providers contracted to
provide security services to the Department.
The basis of the above
allegation is that you are a member of the Central Bridge Trading CC,
which you co-owned with Messrs Zeyn
Khan and Solomon Mothupi.
Available evidence is that during the following period you acted in a
biased manner and that you facilitate
extension and/or appointed of
security contracts for undermentioned business entities with which
you shared business interests
through your membership of the Central
Bridge Trading CC."
[4]
The charge was construed as misconduct in
terms of annexure “A” of PSCBC Resolution 2 of
1999. In the charge sheet,
five separate entities were identified
which Appadu had allegedly preferred and which were linked to his
interests in Central Bridge
Trading CC (‘CBT’).
[5]
The applicant seeks to set the award aside
on the basis that:
5.1
The arbitrator failed to apply his mind to
the evidence of two of the employer’s witnesses who had
testified on the alleged
misconduct of Appadu.
5.2
The arbitrator failed to apply the Public
Service Code of Conduct concerning conflicts of interest.
5.3
The arbitrator misdirected himself because
he assumed that unless it could be proven that Appadu benefited
financially from a transaction
he was not guilty of the misconduct he
was charged with.
[6]
Among other things, PSCBC Resolution 2 of
1999 identifies misconduct as the contravention of any prescribed
code of conduct for
the Public Service. Paragraph 4.4.5 of the Public
Service Code of Conduct reads:
"An employee does
not engage in any transaction or action that is in conflict with or
infringes on the execution of his or
her official duties.
In
order
to bring about and maintain trust
in the public service,
all employees are expected to serve in a loyal and dedicated manner.
This requires employees
not to get involved
, either on or off
duty,
in matters or activities
that c
ould
:
(a) be regarded as being
fraud or theft;
(b)
interfere with the
carrying out of their duties
;
(c)
influence the way
in which they do their work
;
(d)
influence their
objectivity
in making decisions;
(e)
create
embarrassment
for the stated employer; or
(f)
be perceived to
potentially
prejudice or
favour
certain parties."
The arbitration
[7]
The crucial evidence implicating Appadu was
given by Ms M Chipasula and Ms E Brits. Ms Chipasula had been
involved in a forensic
investigation conducted by OMA Chartered
Accountants into irregularities at the security unit of the Gauteng
Shared Service Centre
(GSSC). Brits was employed as a deputy director
in charge of the security unit in which Appadu worked.
[8]
The gist of Chipasula's evidence was that
Appadu was a co-member of CBT together with Messrs Z Khan and S
Mothupi, and that he was
involved in the appointment and monitoring
of Security service providers including those in which one of his two
business partners
were members or shareholders of such firms. On the
basis of recommendations made by Appadu, contracts were awarded or
extended
by Brits. The result of her investigation was that there
appeared to be biased in the award of the tenders to security
providers
in that most of the firms contracted were linked to Appadu
indirectly through the involvement of his co-members of CBT, though
she did agree that in one instance Appadu had not recommended any of
the linked firms, but one of them had ultimately been awarded
the
contract under consideration. Importantly, part of her report showed
that during 2006 and 2007 six of these firms benefited
from two or
more of eleven separate contracts, with an aggregate value of just
over R 3 million.
[9]
Chipasula was not cross-examined on her
evidence by Appadu’s representative.
[10]
Brits stated that she gave the final
approval for the appointment of providers after receiving
recommendations from Appadu. She
agreed that Appadu did not attempt
to bully her into accepting his recommendation, but because she
respected his opinion she would
normally accommodate his
recommendation. At this juncture, it should be mentioned that the
arbitrator believed it was a matter
of some importance whether or not
Appadu forcefully punted his recommendation in discussions with
Brits. Brits was also not cross-examined
on her evidence.
[11]
The last witness for the employer was Mr V
Ndlovu, the chairperson of the disciplinary enquiry. The only
material part of his evidence
for the purpose of these proceedings
concerned the delays in the disciplinary enquiry. He agreed that
there had been a number of
postponements of the proceedings but
testified that all of those had been at the request of one of the
parties and with the agreement
of the opposing party. He rejected the
suggestion by Appadu's representative that he should have ‘put
his foot down’
and ensured that the enquiry proceeded to a more
speedy conclusion.
[12]
Appadu testified that the procedure for
awarding contracts was that they would get a request from the
building department for security
services and he would go out and do
a risk analysis to determine the requirements and specifications for
the contract. A form requesting
the services would then be completed
in which the names of possible vendors would be included. Once Brits
had approved the recommendation
it would go to the GSSC for final
adjudication. He gave evidence which showed that the GSSC did not
always follow the recommendations
made by himself and approved by
Brits. He denied that he had any ability to influence the GSSC’s
decision. Despite persistent
questioning, he would not concede that
the list of suppliers which he compiled was anything more than a list
of possible suppliers
and not a list of preferred suppliers, even
though it is obvious that some selection process must have been
involved.
The arbitration award
[13]
The arbitrator accepted that Appadu's
superiors were not bound to accept his recommendations but at best
for the employer it could
be said they trusted him. He agreed that
the evidence showed that there was a link between some of the
companies and CBT and that
Appadu had made suggestions about who had
to be appointed. However, the arbitrator held that:
"...this
is where the applicant's duty ended. Firstly the applicant’s
suggestions were subject to the approval of Brits
and Daniels and if
they took their responsibilities seriously they should have
scrutinised the appointments more carefully to ensure
the same
companies were not advantaged every time.”
[14]
He also found that the GSSC made the final
appointment and took its decisions independently, which was evidence
by the fact that
it sometimes ignored recommendations made by Appadu.
In the arbitrator's view, the employer had failed to demonstrate that
Appadu
was able to influence those who had made the final
appointment. Consequently, it had failed to discharge the onus of
proving him
guilty of the offence for which he was dismissed.
The review
[15]
The applicant raised a number of grounds of
review related to the alleged unreasonableness of the award or to the
arbitrator failing
to apply his mind to the evidence. In order to
decide whether or not the award should be set aside, only one ground
of review is
decisive in my view. The applicant contends that the
arbitrator misdirected himself in interpreting the charge, or
alternatively
considered irrelevant factors when determining if
Appadu was guilty or not. It submits that the issue the arbitrator
should have
determined was whether Appadu had an impermissible
conflict of interest for someone who was in a position to possibly
benefit from
the choice of Security service providers, especially
when he was tasked and trusted to make recommendations on possible
recipients
of contracts. In order to be found guilty of misconduct
under item 4.4.5 of the public service code it was irrelevant that he
did
not take the final decision.
[16]
In treating the power to make the final
decision as the decisive factor, the arbitrator had taken into
account an irrelevant factor
and had misconstrued the nature of the
misconduct. I agree. If one considers item 4.4.5 of the code it is
readily apparent that
much of it is concerned with the potential harm
and not the actual harm which can result from an employee having
personal interests
in the transactions of the employer which might
adversely affect the employee’s approach to such transactions
because the
employee might prioritise his or her interests over their
employer’s.
[17]
This
is not only a consequence of the public service code, but also part
and parcel of an employee’s common law duties towards
an
employer. In
Phillips
v Fieldstone Africa (Pty) Ltd & Another
(2004)
25
ILJ
1005 (SCA)
the
SCA held that where a fiduciary relationship does exist, “...
it
extends
not only to actual conflicts of interest but also to those which are
a real sensible possibility.”
[1]
The court also held that a fiduciary relationship can exist not only
between senior managers and an employer but between other
employees
and their employer.
[2]
[18]
In Appadu’s case he was not a mere
ball-bearing in the machinery of decision-making, but played a role
in identifying potential
recipients of state contracts. It is true
that his recommendations were not binding and the ultimate decision
rested with others,
but that did not mean he was without influence.
Brits confirmed that she trusted his recommendations, which means she
placed reliance
on them. The question which really needed to be asked
is: would any of the decision-makers higher up in the chain of
command have
been more wary of those recommendations if they had
known who his business associates were? It is difficult to believe
that anyone
would have viewed his recommendations as neutral if they
had known about his connections. It is the potential which his
personal
interests held for colouring his recommendations which is
identified in item 4.4.5 of the code.
[19]
I am satisfied that the arbitrator
fundamentally misconstrued the nature of the charge which caused him
to decide that it was necessary
for the employer to prove that AR’s
recommendations were decisive. Had he focused instead on the
potential bias which AR's
interests might have created he would not
have acquitted him of the charge. Consequently, the arbitrator’s
finding that Appadu’s
dismissal was substantively unfair, on
the basis that he was not guilty, must be set aside.
[20]
It follows also from the above, that the
issue of procedural unfairness, which the arbitrator did not
determine because of his conclusion
on substantive fairness, must be
considered. Appadu relied on the often heard principle, ‘justice
delayed is justice denied’.
However, the chairperson’s
evidence was that postponements in the hearing itself were at the
request of the parties and were
not opposed at the time. Further, no
evidence was tendered by Appadu as to how he had been prejudiced by
the delay in the conduct
of his defence. I am satisfied in the
circumstances, that Appadu was not unfairly prejudiced by
delays in the process and
find that his dismissal was procedurally
fair.
Remedy
[21]
While it is clear the award cannot stand,
this is not a case in which it is easy for the court to simply
substitute its view of
whether dismissal was appropriate or not.
Evidence on the record of mitigating and aggravating factors is
scarce on the record,
and this is not a case in which the court has
the necessary evidentiary material to decide the matter. Reluctantly,
I must refer
the matter back for the determination of whether or not
AR’s dismissal was substantively fair.
Order
[22]
In the circumstances:
22.1
The third respondent’s finding that
Mr Appadu was not guilty of the offence for which he was dismissed is
set aside and substituted
with a finding that he was guilty as
charged.
22.2
The dismissal of the third respondent was
procedurally fair.
22.3
The second respondent is directed to set
the matter down for a hearing before an arbitrator other than the
third respondent to determine
the substantive fairness of the
dismissal, based on the existing record and any additional evidence
the parties may lead in mitigation
or aggravation.
22.4
The first respondent must pay the
applicant’s costs.
_______________________
R LAGRANGE, J
Judge of the Labour
Court of South Africa
APPEARANCES
APPLICANT:
W Mokare, SC instructed by the State Attorney
FIRST
RESPONDENT:
T Ntshebe of Thabang Ntshebe Attorneys
[1]
At
1017,[31]
[2]
Viz,
at 1019-1020, [34]:
“
The
South African cases which recognize the duty of an employee to
account for profits received in breach of a fiduciary duty
(Jones v
East Rand Extension Co, Robinson v Randfontein Estates GM Co,
Peacock v Marley
A
1934 AD 1
and
Uni-Erections v Continental Engineering Co Ltd1981 (1) SA 240 (W) at
252H) do not lay down that such a duty can only arise
in the
relationship of managerial employees to their employers. What
Nestadt J in the Uni-Erections case, at 254B, intended in
saying -
'[i]t
seems to me some circumspection is required in applying it [the
''Palmer principle'] to the case of master and servant',
is
made clear by his comments which followed:
'Innes
CJ in Palmer's case referred to the difficulty in deciding whether
the profits were made ''in the course or by means of
the agency' or
whether the agreement complained of was ''a subsidiary contract'. It
will not assist to canvass the facts of that
case. Each matter has
to be decided on its own particular facts. In my opinion the profits
made have not been shown to be directly
or indirectly connected with
Rousseau Junior's employment or earned by virtue of his position as
an employee. Had his position
D
been that of a salesman
canvassing for erection work, the position might have been
different. His duties were merely those of
an estimator whose task
it was to calculate what defendant would charge its customers.'
The
learned judge was clearly intent to reiterate the need to determine
from the facts of each case whether a duty
exists which carries with it
a duty of disclosure, emphasizing that the lowlier or more
restricted in discretion the position
held the less likely that the
facts will support such a conclusion. (See also Sibex Construction
(SA) (Pty)
Ltd & another v
Injectaseal CC & others1988 (2) SA 54 (T) at 65F-G.)
That
dictum, it seems to me, provides no support for the submission that
an employee is per se to be approached on a different
basis from any
other supposed fiduciary whose relationship with another is being
examined
.
See
New Zealand Netherlands Society Oranje Inc v Kuys
[1973] 1 WLR 1126
(PC) ([1973]
2 All ER 1222)
at 1129 (WLR). As La Forest J said in
Hodgkinson v Simms:
'I
t
is the nature of the relationship, not the specific category of
actor involved that gives rise to the fiduciary duty. The categories
of fiduciary, like those of negligence, should not be considered
closed
.'
The
learned judge also referred with approval to the judgment of Wilson
J in Frame v Smith
[1987] 2 SCR 99
(SCC) at 136 which suggests that
relationships in which a fiduciary obligation has been imposed are
marked by three characteristics:
(1) scope for the exercise of some
discretion or power; (2) that power or discretion can be
I
used unilaterally so as to
effect the beneficiary's legal or practical interests; and (3) a
peculiar vulnerability to the exercise
of that discretion or power.
I agree that that analysis is
helpful in the identification of such a relationship although not
decisive. It can be applied in
the employment context as easily as
to relationships giving rise to more obvious duties of trust.
”
(emphasis
added)