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[2014] ZALCJHB 136
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Pillay and Another v Broadband Infraco (Pty) Ltd and Others (JR706/2012) [2014] ZALCJHB 136 (25 April 2014)
REPUBLIC
OF SOUTH AFRICA
IN THE LABOUR COURT OF
SOUTH AFRICA; JOHANNESBURG
JUDGMENT
REPORTABLE
CASE NO: JR 706/2012
In
the matter between:
PILLAY,
MOGASEELAN
(RAMA)
First
Applicant
LETSOALO,
MAITE
MELIDA
Second
Applicant
and
BROADBAND
INFRACO (PTY)
LTD
First
Respondent
COMMISSION FOR
CONCILIATION,
MEDIATION
AND
ARBITRATION
Second
Respondent
RAFFEE,
MOHAMMED
NO
Third
Respondent
Heard:
17 December 2013
Delivered:
25 April 2014
Summary:
Review Application – Test for Review restated – Court of
Review empowered to interfere
with award only where outcome not
reasonable on the available material and where it fails to meet the
overriding requirement of
fairness. Sanction – may not be
interfered with unless Court of Review finds that decision on
sanction is one that could
not have been reached by a reasonable
decision-maker, even where Court has misgivings about such sanction.
JUDGMENT
BANK; AJ
Introduction
[1]
The first applicant in this matter,
Mogaseelan Pillay ("Pillay"), was an executive heading the
Capital Projects Department
of the first respondent in this matter,
Broadband Infraco (Pty) Ltd ("the Employer"), until his
dismissal on 6 July 2011.
The second applicant, Maite Melida Letsoalo
("Letsoalo"), was likewise employed by the first respondent
in the capacity
of business executive until her dismissal on 22 July
2011. The employer is a state-owned entity under the administration
of the
Department of Public Enterprise.
[2]
Since
inception of the disciplinary proceedings upon which this matter is
based a vast amount of documentation has been accumulated,
comprising
the record of the disciplinary hearings of both applicants
[1]
together with bundles of documents, a transcript of the arbitration
proceedings before the third respondent
[2]
(hereinafter referred to as "the Commissioner") and a full
set of affidavits in this review application, alone comprising
some
250 pages.
[3]
Owing
to the complexity of the matter, the parties agreed to file formal
pleadings prior to the commencement of arbitration. This
was achieved
by the filing of the applicants' statement of case,
[3]
the respondents' statement of response,
[4]
followed by a comprehensive pre-arbitration minute. Both parties
filed detailed heads of argument in both the initial disciplinary
proceedings as well as in the arbitration.
[4]
The applicants each faced numerous charges
of misconduct and gross negligence which essentially amounted to an
allegation that both
applicants were responsible for allowing their
employer to incur unauthorised expenditure in the amount of
R115,630,993.00 as a
result of their failure to comply with a direct
instruction of the Employer's Executive Committee (“EXCO”)
that had
been tabled on 22 January 2010. The expenditure was incurred
in relation to a project for the installation of fibre optic cable
following a tender procurement process. Both applicants faced
separate disciplinary enquiries, the transcripts of which were, by
agreement between the parties, admitted as evidence during the
arbitration proceedings under review.
[5]
Prior to the commencement of the
disciplinary process the Employer had instructed Pillay to appoint
Deloitte and Touche ("Deloitte")
to conduct an evaluation
of the adequacy and effectiveness of the employer's controls with
respect to its procurement and contract
management process. This
resulted in a detailed written report, referred to throughout the
proceedings as "the Deloitte report".
Based upon the
results of the Deloitte report, several of the employer's employees
were subject to disciplinary enquiries, including
the present
applicants.
[6]
The
Employer argued that the applicants were guilty of serious misconduct
by virtue of their failure to comply with a direct instruction
of the
Exco resolution which led the employer to incur unauthorised
expenditure in the abovementioned amount. It also argued that
neither
of the applicants exhibited any degree of remorse, that the
misconduct was of such a serious and grave nature that a continued
employment relationship was no longer tolerable and that dismissal
was the only appropriate sanction. Both applicants were found
guilty
and subsequently dismissed. Both applicants appealed their dismissals
but were unsuccessful, the findings of guilty and
sanction of
dismissal confirmed upon appeal in each case. The matters were then
referred to arbitration and consolidated. Two pre-arbitration
minutes
were concluded after two pre-arbitration conferences held between the
parties on 21 October 2011
[5]
and on 16 January 2012.
[6]
The Arbitration
Award
[7]
In
his award, the Commissioner saw it fit to reproduce the better part
of the second pre-arbitration minute setting out those facts
which
are common cause and those which are in dispute between the parties.
In view of the factual complexity of this matter, there
can certainly
be nothing untoward in the fact that this took up a large portion of
the arbitration award. For clarity’s sake,
it does, however,
bear mentioning that the Commissioner's quotation from the
pre-arbitration minute comprises the entirety of paragraph
3 of the
arbitration award
[7]
and that
his analysis continues with a discussion of procedural fairness in
paragraph 4,
[8]
a listing of the
detailed charges against the applicants in paragraphs 5 and 6
[9]
and a description of the supplementary documents to the statement of
case.
[10]
Paragraphs 8 to 20
of the award comprise the Commissioner's summary of the evidence
presented,
[11]
commencing with
a description of the Employer as a publicly-owned entity, "governed
by a myriad of legislation",
[12]
most notably the Public Finance Management Act No 1 of 1999 ("PFMA").
The Commissioner then summarised the conclusion
of the Deloitte
report which was, simply put:
7.1
that there had been unauthorised
procurement expenditure of almost R116 million;
7.2
that this unauthorised expenditure was not
approved as per the Employer's set delegation of authority, and also
contravened the
PFMA;
7.3
that
the controls set in place by the employer intended to address the
risks associated with inadequate or non-compliance with the
set
corporate governance principles and processes "are both
inadequate and ineffective" and that there was a "failure
to implement processes" to ensure due approval of work or tasks
before the employer was fully committed to expenditure.
[13]
[8]
The
Commissioner then analysed what he termed "the applicants'
version" through a summary of the evidence of the expert
witness
called on behalf of the applicants, Ms Rooshanee Naicker (“Ms
Naicker”), a chartered accountant and the forensic
report that
she had produced. Although the Commissioner states that "the
applicants' version was presented not by the applicants
but [by]
their expert witness",
[14]
it cannot be argued that the Commissioner gave no cognisance to the
transcribed evidence led at the disciplinary enquiry as the
pre-arbitration minute records the parties’ agreement that the
record of the evidence submitted in the disciplinary enquiries
was to
serve as evidence at the arbitration proceedings.
[15]
Indeed, in the Commissioner's analysis of the evidence and argument,
he refers to the closing argument advanced on behalf of their
employer which has numerous references to Pillay's evidence and
cross-examination.
[16]
The
Commissioner was clearly aware of this evidence.
Test for Review on
the grounds of gross irregularity
[9]
The
Supreme Court of Appeal in
Herholdt
v Nedbank Ltd and Another
[17]
confirmed that the test for the review of a CCMA award on the grounds
of a gross irregularity as contemplated by section 145(2)(a)(ii)
of
the Labour Relations Act, 1995 (“LRA”) is that:
‘…
the
arbitrator must have misconceived the nature of the enquiry or
arrived at an unreasonable result. A result will only be unreasonable
if it is one that a reasonable arbitrator could not reach on all the
material that was before the arbitrator. Material errors
of
fact, as well as the weight and relevance to be attached to
particular facts, are not in and of themselves sufficient for an
award to be set aside, but are only of any consequence if their
effect is to render the outcome unreasonable.’
[18]
[10]
The
Supreme Court of Appeal recently reaffirmed this principle in
Kievits
Kroon Country Estate (Pty) Ltd v Mmoledi and Others
[19]
in which it was stated that a CCMA commissioner performs his or her
function inquisitorially, with little formality, but subject
to
‘…
the
overriding requirement of fairness. Ultimately the commissioner must
determine the true facts and reach a fair and equitable
decision. And
if the commissioner determines the dispute in accordance with a fair
procedure, a review court will not interfere
with the decision unless
it is one that could not have been reasonably made on the available
material.’
[20]
Procedural Fairness
[11]
It is argued on behalf of the employer
(correctly, in my view) that although the record of evidence and
pleadings relating to the
earlier disciplinary proceedings was to be
taken into account during the arbitration, that did not preclude the
applicants from
adducing further evidence, especially on those
aspects which were not canvassed during their respective disciplinary
enquiries.
One such issue is the question of procedural unfairness.
[12]
Paragraph
4 of the award
[21]
comprises
an almost verbatim transcription of paragraphs 21 and 22 of the
written closing submissions advanced on behalf of the
employer at the
arbitration proceedings.
[22]
The Commissioner found that he was ‘… unable to make a
finding on procedure on the basis that there was no testimony
led
concerning in which respect was the chairperson biased’.
Finding that what was contained in the pre-arbitration minute,
the
statement of claim and closing arguments failed to constitute
evidence (which is undoubtedly correct); he then stated that
in the
absence of such evidence he would be ‘…unable to make
such a finding on procedure’ and, therefore, dismissed
the
applicants’ ‘attack on procedure’.
[23]
This is one of the findings challenged in the review.
[13]
However, not only did the applicants never
challenge the alleged bias of the respective chairpersons of their
disciplinary enquiries
during such enquiries nor did they ever
request that such chairpersons recuse themselves, but the arbitration
proceedings before
the present Commissioner constituted a
de
novo
hearing at which both parties were
fully entitled to adduce further evidence to the extent that was
relevant and which had not
already been led at the earlier
disciplinary enquiries. No such evidence was, however, led and the
challenges to procedural fairness
raised in the pleadings, such as
they were, did not make out any such case which called for the
employer to adduce any evidence.
I say this fully bearing in mind
that it is the employer which bears the onus to show that the
dismissal of both applicants was
procedurally fair. In any event, I
can find no fault in both the reasoning and the outcome that appear
in the Commissioner's conclusion
regarding procedural fairness and it
certainly cannot be said that his finding in this regard is not a
reasonable outcome. In addition,
it meets the overriding requirement
of fairness.
Substantive
fairness
[14]
With
regard to the substantive fairness of the dismissal imposed by the
employer and confirmed by the Commissioner, it is argued
on behalf of
the applicants that the Commissioner disregarded the evidence of the
applicants led at their disciplinary enquiries
as well as that of
their expert, Ms Naicker. In fact, it is argued on behalf of the
applicants that the Commissioner ‘…completely
ignored
the compelling evidence of the forensic expert and other evidence
presented to him’. In this regard, one of the key
findings of
the Commissioner attacked by the applicants is his finding that Ms
Naicker ‘… was unable to withstand
the rigours of
cross-examination and in an attempt not to make concessions made her
version more and more improbable’.
[24]
[15]
I
have carefully analysed the transcript of Ms Naicker's evidence as
well as her forensic report and I am of the view that, although
I
cannot agree with the Commissioner that her ‘version’
(whatever that may mean) was "more and more improbable",
it
is certainly clear, from a proper reading of the transcript, that the
broad conclusions reached by Ms Naicker in her evidence
could not be
sustained at the conclusion of her cross-examination and that the
Commissioner's criticism of her evidence is not
altogether unfounded.
In my view, the Commissioner's analysis of her evidence
[25]
must be viewed as an assessment that a reasonable arbitrator
occupying the position of the Commissioner could have come to and
that his rejection of her expert findings in contrast to the Deloitte
report certainly falls within the bounds of reasonableness.
[16]
Regarding
the facts of the matter, during argument before me, Mr Beaton very
properly conceded that the two resolutions had not
been complied with
by both applicants although there had, however, been "substantial
compliance" with a portion of the
second resolution. He argued
further that the Commissioner's failure to consider the applicants'
substantial defences to the charges
against them rendered his award
reviewable. He also referred me to the relatively recent case of
Gold
Fields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v CCMA and
Others
[26]
in which Waglay JP succinctly restated the juridical basis for a
review of an arbitration award:
‘
In
short: A review court must ascertain whether the arbitrator
considered the principal issue before him/her; evaluated the facts
presented at the hearing and came to a conclusion which was
reasonable to justify the decisions he or she arrived at.’
[27]
[17]
Later on in his judgment, Waglay JP sets
out the questions to be asked when considering whether an arbitrator
has discharged the
statutory duty placed upon him by section 138 of
the Labour Relations Act, 1995 (“the LRA”) which requires
an arbitrator
to deal with the substantial merits of the dispute
between the parties with the minimum of legal formalities and to do
so expeditiously
and fairly:
‘
(i)
In terms of his or her duty to deal with the matter with the minimum
of legal formalities,
did the process that the arbitrator employed
give the parties a full opportunity to have their say in respect of
the dispute?
(ii)
Did the arbitrator identify the dispute he was required to arbitrate
(this may in
certain cases only become clear after both parties have
led their evidence)?
(iii)
Did the arbitrator understand the nature of the dispute he or she was
required to arbitrate?
(iv)
Did he or she deal with the substantial merits of the dispute? and
(v)
Is the arbitrator’s decision one that another decision-maker
could reasonably
have arrived at based on the evidence (the so-called
Sidumo
test)?’
[18]
Although I was urged by Mr Beaton to
conclude otherwise, it is my view that the Commissioner and the award
that he handed down meet
all the requirements of the above five-part
test. In particular I find that the Commissioner did in fact deal
with the substantial
merits of the dispute and that his decision was
one that another decision-maker could reasonably have arrived at
based on the evidence
before him.
[19]
Mr Beaton submitted further that although
it could be found that, technically, both applicants had committed an
offence in failing
to comply with the Exco resolution and its
conditions, dismissal was a quite inappropriate sanction to have
imposed. Nevertheless,
the applicants, if successful, seek
reinstatement on the basis that a continued relationship between the
parties is still possible
and reject the employer's notion that the
employment relationship has broken down intolerably.
[20]
In
reply, Mr Boda, who appeared on behalf of the employer, pointed out
to me that, based upon these concessions, the review before
me was
essentially a sanction-based review. In light of this, the question
that this court is required to ask itself is whether
the
Commissioner's finding that dismissal was an appropriate sanction was
so unreasonable that it falls outside the band of reason
within which
two reasonable people might reasonably disagree.
[28]
[21]
Mr
Boda also referred me to
Palaborwa
Mining Co Ltd v Cheetham and Others
[29]
in which the Labour Appeal Court reaffirmed the principle expressed
by the Constitutional Court in
Sidumo
and Another v Rustenburg Platinum Mines Ltd and Others
[30]
that confirms that the decision-making power regarding sanction is
that of the Commissioner unless it is concluded that a reasonable
decision-maker could not reach such a decision. The
Palaborwa
Mining
decision clarified that the effect of the
Sidumo
judgment was that the courts, and in particular, the Labour Court,
must defer (but not in an absolute sense) to the decision of
the
Commissioner regarding sanction.
[31]
In the words of Willis JA, who delivered the judgment on behalf of
the LAC, one of the effects of the
Sidumo
decision is that it reduces the potential for the Labour Courts as
well as the Supreme Court of Appeal to exercise scrutiny over
the
decisions of commissioners who are appointed to arbitrate disputes in
terms of the LRA.
[32]
[22]
Applying
these principles to the present matter, even if I were to be of the
view that the sanction of dismissal imposed on the
applicants falls
unnecessarily harshly upon them, I am not empowered to interfere with
this sanction which was effectively confirmed
by the Commissioner
without him having explicitly discussed in his award whether
dismissal, as opposed to a lesser sanction, was
appropriate in the
circumstances. In this regard, Mr Boda pointed out that there had
been no attack on the sanction of dismissal
in neither the review
application itself nor in the heads of argument filed on behalf of
the applicants prior to oral argument
in this matter. He nevertheless
argued that, in light of the fact that the applicants had shown no
contrition at any stage despite
the abovementioned concessions
regarding their guilt, the fact remained that the unauthorised
expenditure of approximately R115
million vastly exceeded the
authorised amount of some R35 million and the fact that this
unauthorised expenditure took place within
a public framework
governed by the provisions of the PFMA meant that the provisions
relating to disciplinary proceedings contained
in the PFMA must be
adhered to.
[33]
[23]
After considering the arguments of both
parties and the relevant case law, I am unable to find fault with the
present Commissioner's
analysis of the facts and the method by which
he reached his conclusion and the reasons given therefore, apart from
my misgivings
expressed above as to his failure to consider whether
the sanction of dismissal imposed by the employer was appropriate in
the
circumstances. As mentioned above, I do bear in mind that this
aspect was not argued before the Commissioner and he cannot be
faulted
in this respect. I reiterate, however, for the sake of
clarity, that his decision in finding the dismissal of both
applicants to
be both procedurally and substantively fair does indeed
meet the threshold of reasonableness as expounded and refined in the
most
recent case law and I, therefore, find no reason to interfere
with the arbitration award.
[24]
For
these reasons, the application for review falls to be dismissed.
Although the respondent seeks costs against the applicants
and costs
would, in a matter of this magnitude, ordinarily follow the result, I
am disinclined to make such an order in the particular
circumstances
of this case. I do so by virtue of the fact that the Deloitte report,
which was the subject matter of much of the
evidence in the
disciplinary enquiry, made several significant findings that all
related to serious issues of corporate governance
as well as a
"failure to implement processes"
[34]
and that internal processes had not been followed.
[35]
Therefore, although the applicants must of course bear ultimate
responsibility for the breaches of policy, procedure and
insubordination,
I do not believe that it is appropriate that they
also be ordered to bear the costs of this protracted and somewhat
voluminous
review application.
[25]
In the result, I make the following orders:
1.
The application for review is dismissed.
2.
There is no order as to costs.
________________
BANK; AJ
Acting
Judge of the Labour Court
Appearances
For
the Applicants:
Advocate RG Beaton SC
Instructed
by:
Naidoo and Associates Inc
For
the First Respondent:
Advocate F Boda
Instructed
by:
Cliffe Dekker Hofmeyr Inc
[1]
Record
Vol B1, B2 and C.
[2]
Record
Vol A, pp 1 - 157.
[3]
Record
Vol A, pp 713 – 739.
[4]
Record
Vol A, pp 717 – 739.
[5]
Record
Vol A pp 740 - 754
[6]
Record
Vol A, pp 755 - 776
[7]
From
pp 46 - 53 of the paginated pleadings
[8]
Pleadings,
p 54
[9]
Pleadings,
pp 54 - 56
[10]
Pleadings,
p 57
[11]
Pleadings,
pp 57 - 61
[12]
Pleadings,
p 58, para 8.4.
[13]
See
arbitration award para 10, p 58 and Deloitte report, conclusion vol
A p 327.
[14]
At
para16 of his award, p 60.
[15]
See
pre-arbitration minute para 3.5, vol A, p 742.
[16]
Award,
at para 2, p 61.
[17]
(2013)
34
ILJ
2795
(SCA).
[18]
Ibid
at para 25.
[19]
2014
(1) SA 585 (SCA).
[20]
Ibid
at para 20.
[21]
Record
at p 54.
[22]
Record
Vol A, at pp 930 – 931.
[23]
Award
para [27] p 62.
[24]
Award
at para 24 p 62.
[25]
In
paras 24 and 25 of the award, p 62.
[26]
[2014]
1 BLLR 20 (LAC).
[27]
Ibid
at para 16.
[28]
Ikwezi
Municipality v SA Local Government Bargaining Council and Others
(2012) 33
ILJ
1447 (LC) at para 13.
[29]
(2008)
29
ILJ
306 (LAC).
[30]
(2007)
28
ILJ
2405 (CC).
[31]
Palaborwa
Mining supra
at para 4.
[32]
Ibid
at para 6.
[33]
See ss 81-85 of the PFMA as read with the Treasury Regulations
(especially Reg 4).
[34]
Deloitte
report, vol A p 329.
[35]
At
p 330.