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[2015] ZALCJHB 398
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Mkhize v Antrobus SC and Another (JR1342/12) [2015] ZALCJHB 398 (13 November 2015)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Case
No: JR1342/12
Not reportable
Not of interest to other
judges
In the matter between:
THOKOZANI RAYMOND J
MKHIZE
Applicant
and
MARK ANTROBUS SC
(ARBITRATOR)
First Respondent
BONITAS MARKETING
(PTY) LTD
Second Respondent
Heard
:
5 November 2015
Delivered:
13 November 2015
Summary:
Review of a private arbitration award in terms of
section 33(1)
of
the
Arbitration Act 42 of 1965
. Review dismissed with costs.
JUDGMENT
AC BASSON J.
Introduction
[1]
This
is an application to review and set aside an arbitration award that
was conducted in terms of the provisions of the Arbitration
Act
[1]
(hereinafter referred to as “the Act)”
[2]
.
This review is brought in terms of section 33 of the Act. I will
return to the grounds for review specified in section 33(1) of
the
Act hereinbelow.
[2]
This dispute has a
protracted history and was referred to the Commission for
Conciliation, Mediation and Arbitration and the Labour
Court at
various stages. The matter was ultimately finalised by way of private
arbitration by Mr Mark Antrobus SC presiding as
the arbitrator (the
first respondent - hereinafter referred to as “the
arbitrator”).
[3]
The matter to be
decided by the arbitrator was whether the dismissal of the applicant
was substantively and procedurally fair.
Facts
[4]
The relevant facts
pertaining to this matter are summarised in great detail by the
arbitrator and it is not necessary for this Court
to repeat the
relevant facts except for highlighting a few pertinent facts.
[5]
The
Council for Medical Schemes (hereinafter referred to as “the
Council”) is a statutory body established under section
3 of
the Medical Schemes Act
[3]
.
Various medical schemes are registered in terms of that Act one being
the Bonitas Medical Fund (hereinafter referred to as “the
Fund”). From time to time the Council conducts inspections and
investigations at registered medical aid schemes in terms
of
legislation.
[6]
The second respondent
is Bonitas Marketing (Pty) Ltd, a private company with limited
liability which is a wholly owned subsidiary
of the fund. (I will
refer to the second respondent as “the respondent”). The
respondent trades as a marketing arm
of the Fund. The business of the
respondent is to market, grow and enhance the membership of the Fund.
[7]
The applicant was
employed as the managing director of the respondent with effect from
1 July 2009. In terms of his contract of
employment the applicant
reported to the board of directors of the respondent. The applicant
also served on the board of directors
of the respondent as an
executive board member. At the time of the applicant’s
dismissal, the respondent’s board of
directors consisted of
three non-executive board members namely Mr Seobi, Mr van Heerden and
Mr Van Emmenis. The applicant was
the only executive director at the
time.
[8]
During July 2009 there
was a change to the composition and functions of the respondent’s
board. On 17 September 2010 the Council
obtained a court order in
terms of which the Fund’s board of trustees were divested of
its powers. Van Emmenis became vested
with the powers of the Fund’s
board of trustees and he effectively became the board of the Fund.
[9]
The respondent was
suspended and charged with misconduct and was dismissed on 3 December
2010. The charges against the applicant
were extensive and relate to
a gross dereliction of duty alternatively gross incompetence and
alternatively gross negligence in
respect of,
inter
alia,
payments made
to the South African Revenue Services (hereinafter referred to as
“SARS”) which payments had to be ratified
by the board;
unauthorised payments of significant sums to his erstwhile personal
assistant which were neither due nor owing to
her nor budgeted for
and in excess of the applicant’s delegation of authority. The
applicant was also charged with allowing
the marketing manager to go
on “a frolic of her own” by allowing her to pursue the
procurement of a loyalty awards
program for the members of the scheme
when such a program was not to be implemented or where procurement
was never approved by
the board which caused severe reputational,
financial and/or governance risk to the respondent; the applicant’s
involvement
in the unauthorised attempts made to procure a service
provider for a loyalty awards program contrary to the direct
instructions
of the board to suspend the procurement or
implementation of any such loyalty program. The applicant was also
charged for a failure
and/or a refusal to timeously execute upon the
decisions and instructions of the board by disregarding a resolution
by the board
that his erstwhile personal assistant was to be employed
on a permanent basis thereby causing significant risk to the
respondent
relating to financial and/or labour implications. The
applicant was further charged with not sufficiently and timeously
keeping
the board informed of the operational and financial
well-being of the business and more in particular his failure to take
instructions
from and report to the board timeously and without
unnecessary delay relating to the operations and well-being of the
respondent,
in particular in respect of the search and seizure of
documentation and information relating to an ongoing inspection and
for not
reporting to the board on the inspection in good time
notwithstanding being informed by the Council’s compliance
officer
that the applicant should seek legal advice regarding the
investigation which the applicant did not do.
[10]
In the letter informing
the applicant of his dismissal it is recorded that he was “guilty
of misconduct as alleged in the
Notice and, based on the fact that
the relationship of trust has irretrievably broken down between the
board and yourself as well
as your employer, which trust relationship
cannot be restored”.
Arbitration Act
[11
]
It
is trite that a private arbitration award is not reviewable in terms
of the provisions of the Labour Relations Act (hereinafter
referred
to as “the LRA)
[4]
but
only on the limited grounds set out in section 33(1) of the Act.
[5]
In
this regard the Court in
SACCAWU
v Pick ‘n Pay Retailers Pty Ltd and others
[6]
with reference to the grounds upon which a review can be brought,
explains that there exists little scope for reviewing the merits
of a
private arbitration award:
“
[7] The
specific grounds upon which a private arbitration award can
be reviewed on account of the conduct of the arbitrator
are
those grounds (strictly interpreted) set out in
s 33(1)
(a)
and
(b)
of
the
Arbitration Act, ie
misconduct; gross irregularity; or excess of
powers. Neither
s 33
(just administrative action) nor
s 34
(access to courts) of the Constitution apply directly to private
arbitrations, and thus cannot serve as a basis for extending
the
grounds upon which a private arbitration award can be reviewed.
In
Lufuno Mphaphuli and Associates (Pty)
Ltd v Andrews and another
2009 (4) SA
529
(CC), O'Regan J, writing for the majority, set out the policy
basis for the limited scope of intervention in private arbitrations:
'Courts should be respectful of the
intention of the parties in relation to procedure. In so doing, they
should bear in mind the
purposes of private arbitration which include
the fast and cost-effective resolution of disputes. If courts are too
quick to find
fault with the manner in which arbitration has been
conducted, and too willing to conclude that the faulty procedure is
unfair
or constitutes a gross irregularity within the meaning of
section 33(1), the goals of private arbitration may well be
defeated.'
This cautionary sentiment is reflected
in the conclusion reached by Van Dijkhorst AJA in
Stocks Civil
Engineering
:
'A court is entitled on review to
determine whether an arbitrator in fact functioned as arbitrator in
the way that he upon his appointment
impliedly undertook to do,
namely by acting honestly, duly considering all the evidence
before him and having due regard
to the applicable legal principles.
If he does this, but reaches the wrong conclusion, so be it. But if
he does not and shirks
his task, he does not function as an
arbitrator and reneges on the agreement under which he was appointed.
His award will then
be tainted and reviewable.... An error of law or
fact may be evidence of the above in given circumstances, but may in
others merely
be part of the incorrect reasoning leading to an
incorrect result. In short, material malfunctioning is reviewable,
a wrong
result per se not (unless it evidences malfunctioning). If
the malfunctioning is in relation to his duties that would be
misconduct
by the arbitrator as it would be a breach of the implied
terms of his appointment.'
In short: in the case of a review of a
private arbitration award, there exists little scope for a
review going to the merits,
as a private arbitrator has the right to
be wrong.”
The
court in this case continued to explain that in order for there to be
a gross irregularity warranting interference on review,
two
conditions must be met:
“
[8] The
applicants rely solely on the ground of review of a (latent) gross
irregularity. In order for there to be a gross irregularity
warranting interference on review, two conditions must be met:
firstly, the omission on the part of the arbitrator must involve
his
or her having misconceived the nature of the enquiry or his or her
duties in connection with the enquiry, and thus result
in his
preventing a fair trial of the matter. Secondly, there must not exist
material that would serve to justify the arbitrator's
decision,
because 'if there was material before the [arbitrator], justifying
the action taken, the court would not be entitled
to interfere
even if an irregularity had been committed'. Put differently, if an
arbitrator was caused by inappropriate means to
reach one conclusion
whereas if he had adopted appropriate means he might have reached
another conclusion favourable to the applicant,
then the award is
reviewable.”
[12]
The
Supreme Court of Appeal in
Telcordia
Technologies Inc v Telkom SA Ltd
[7]
likewise confirmed that an arbitrator has “the right to be
wrong”:
“
[85]
The fact that the arbitrator may have either misinterpreted the
agreement, failed to apply South African law correctly, or
had regard
to inadmissible evidence does not mean that he misconceived the
nature of the inquiry or his duties in connection therewith.
It only
means that he erred in the performance of his duties. An arbitrator
‘has the right to be wrong’ on the
merits
of the case, and it is a perversion of language and logic to label
mistakes of this kind as a misconception of the
nature
of the inquiry
– they may be
misconceptions about meaning, law or the admissibility of evidence
but that is a far cry from saying that they
constitute a
misconception of the nature of the inquiry. To adapt the quoted words
of Hoexter JA:
It
cannot be said that the wrong interpretation of the Integrated
Agreement prevented the arbitrator from fulfilling his agreed
function or from considering the matter left to him for decision. On
the contrary, in interpreting the Integrated Agreement the
arbitrator
was actually fulfilling the function assigned to him by the parties,
and it follows that the wrong interpretation of
the Integrated
Agreement could not afford any ground for review by a court.”
See also
Academic and
Professional Staff Association v Pretorius SC N.O and others
[2008]
1 BLLR 1
(LC) where the following is said:
“
[59] The
courts have, in dealing with reviews of private arbitrations, adopted
a narrow approach. This approach confines itself
to mainly issues
related to procedural aspects of the arbitration. This approach is
mainly informed by the fact that private arbitrations
flow from the
consent of the parties, who, through an agreement, determine the
powers of the arbitrator.”
[13]
It
is lastly important to point out that a review in terms of section
33(1) of the Act does not amount to an appeal: It is not the
function
of this Court to reassess the evidence that was placed before the
arbitrator and consider the evidence in a way an appeal
court would
have done. See in this regard
Telcordia
Technologies:
[8]
“
[99]
The High Court's approach was to interpret the agreement afresh; to
come to a different conclusion about its meaning; and then to
conclude that as a result of the difference 'the arbitrator did not
apply his mind thereto in a proper manner, [and] that he misconceived
the whole nature of the inquiry and his duties therewith' and that he
simultaneously exceeded the bounds of his powers. But it
was not for
the High Court to reinterpret the contract; its function was
to determine whether the gross irregularities alleged
had been
committed. By its reinterpretation the Court dealt with the matter as
an appeal, reasoning in effect that because the
arbitrator was wrong
it had to follow that he had committed an irregularity. The failure
to apply the applicable principles of
interpretation or to come to a
wrong conclusion does not amount to a 'gross irregularity', as
the quotations from
Doyle
v Shenker
illustrate.
It is circuitous to reason, as the court did, that this alleged
failure amounted to a misconception of the whole
nature of the
inquiry and that consequently the failure amounted to a gross
irregularity. The Court sought to distinguish
Doyle
v Shenker
on the basis that in that case the magistrate committed an error of
law while acting within his jurisdiction, implying that
by interpreting
the Integrated Agreement the arbitrator had
acted outside his jurisdiction, which is simply wrong. If one
considers the length
of the proceedings, the arbitrator's active
involvement in defining and refining the issues, and the detailed and
reasoned award,
it was as presumptuous as it was fallacious for the
Court to have held that the arbitrator did not apply his mind
properly
to the issues at hand.”
[14]
A
party who agrees to arbitration also agrees to limit an interference
of this Court to the grounds of review as set out in section
33(1) of
the Act. The Court in
Telcordia
Technologies
[9]
explains
as follows:
“
[51]
Last, by agreeing to arbitration the parties limit interference by
courts to the ground of procedural irregularities set out
in s
33(1) of the Act. By necessary implication they waive the right to
rely on any further ground of review, 'common law' or otherwise.
If
they wish to extend the grounds, they may do so by agreement but then
they have to agree on an appeal panel because they cannot
by
agreement impose jurisdiction on the court. However, as will
become apparent, the common-law ground of review on which
Telkom
relies is contained - by virtue of judicial interpretation - in the
Act, and it is strictly unnecessary to deal with the
common law in
this regard.”
[15]
With the above in mind
I will now proceed to evaluate the grounds of review as set out by
the applicant in the Founding Affidavit.
The grounds of review
in terms of section 33 of the Act
[16]
Section 33 of the Act provides for the setting
aside of an arbitration award:
“
(1) Where -
(a)
any member of an arbitration tribunal has misconducted himself in
relation to his duties
as arbitrator or umpire; or
(b)
an arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration
proceedings or has exceeded his powers; or
(c)
an award has been improperly obtained, the court may, on the
application of any party
to the reference after due notice to the
other party or parties, make an order setting the award aside”.
As
already pointed out, the test on review which is set out in
Sidumo
and another v Rustenburg Platinum Mines Ltd and others
[10]
is not applicable.
[17]
In respect of
the concept of an arbitrator exceeding his or her powers the Court in
Telcordia
held as follows:
“
[52]
The term 'exceeding its powers' requires little by way of elucidation
and this statement by Lord Steyn says it all:
'But
the issue was whether the tribunal ''exceeded its powers'' within the
meaning of s 68(2)
(b)
[of the English Act]. This required the courts below to address the
question whether the tribunal purported to exercise a power
which it
did not have or whether it erroneously exercised a power that it did
have.
If it is merely a case of
erroneous exercise of power vesting in the tribunal no excess of
power under s 68(2)
(b)
is
involved
. Once the matter is approached
correctly, it is clear that at the highest in the present case, on
the currency point, there was
no more than an erroneous exercise of
the power available under s 48(4). The jurisdictional challenge must
therefore fail.'”
In
Amalgamated
Clothing and Textile Workers Union of South Africa v Veldspun (Pty)
Ltd
[11]
the Court held as follows in respect of the three grounds of review
and confirmed that the grounds on which an arbitration award
may be
reviewed are narrow:
“
Before
considering these grounds, it is as well to emphasise that the basis
upon which a Court will set aside an arbitrator's award
is a
very narrow one. The submission itself declared that the
arbitrator's determination 'shall be final and binding on the
parties'. And
s 28
of the
Arbitration Act provides
that an
arbitrator's award shall be final and not subject to appeal and each
party to the reference shall abide by and comply with
the award in
accordance with its terms'.
It
is only in those cases which fall within the provisions of
s 33(1)
of the
Arbitration Act that
a Court is empowered to intervene.
If an arbitrator
exceeds
his powers
by making a determination outside the terms of the submission, that
would be a case falling under
s 33(1)
(b)
.
As to
misconduct
,
it is clear that the word does not extend to
bona
fide
mistakes the arbitrator may make whether as to fact or law. It is
only where a mistake is so gross or manifest that it would
be
evidence of misconduct or partiality that a Court might be moved to
vacate an award:
Dickenson
and Brown v Fisher's Executors
1915 AD 166
at 174-81. It was held in
Donner
v Ehrlich
1928 WLD 159
at 161 that even a gross mistake, unless it establishes
mala
fides
or partiality would be insufficient to warrant interference.”
[12]
The review application
[18]
It is somewhat
difficult to distil from the review application exactly on what basis
the applicant is bringing this review application
and it would appear
that the applicant (apart from possibly one ground relating to his
right to be represented) is bringing a review
under the guise of an
appeal. In essence the applicant is taking issue with the numerous
factual findings made by the arbitrator
and in respect of each of
these factual findings the applicant sets out in detail what facts
the arbitrator should have taken into
account. In respect of the
majority of the factual findings made by the arbitrator, the
applicant averred that the arbitrator “committed
misconduct in
relation to his duties as an arbitrator, gross irregularity in the
conduct of the arbitration proceedings and he
exceeded his powers”.
[19]
Insofar
as it was possible to do so, I have endeavoured to extract from the
papers (which are voluminous) on what basis the applicant
is bringing
this application to review the arbitration award. I will accordingly
deal with the issues as they are raised in the
applicant’s
papers as well as the Heads of Argument. At the outset, it must again
be pointed out that the applicant did not
bring a proper review in
terms of the Act but brought an application more akin to an appeal.
If regard is had to the case law referred
to hereinabove it is clear
that a review in terms of the Act can only be brought on a limited
basis. Moreover, as already pointed
out it is not the function of
this Court to reassess the evidence that was placed before the
arbitrator and consider the evidence
in a way an appeal court would
have done. Essentially this Court can consider whether the arbitrator
has duly considered the evidence
before him and “if he does
this, but reaches the wrong conclusion, so be it”.
[13]
Legal representation
[20]
The first ground for
review appears to be the procedural fairness of the dismissal. In
this regard the applicant submitted that
he had expressed concerns to
the arbitration regarding the fact that he was not able to have legal
representation at arbitration
and that he was then obliged to be
represented by his brother who did not have any legal background and
who was at the time a Human
Resources Manager at Transnet. This
appears to be the only ground of review that can be brought within
the boundaries of
section 33(1)
of the Act.
[21]
There is no merit in
this ground of review and in fact it would appear in light of the
papers that the applicant is blatantly attempting
to mislead the
Court. On 9 February 2012, the arbitrator arranged for a meeting in
his chambers with all parties present. The meeting
was mechanically
recorded. A transcript of the recording is included in the papers.
The applicant (Mr Mkhize) as well as his brother
Mr Sipho Mkhize (his
representative) were present at this meeting. The issue was
pertinently raised whether the applicant could
be represented by his
brother. In fact, Mr Bekker – the representative for the
respondent - specifically requested an assurance
from the applicant
that his brother was fully qualified and experienced to represent him
at the private arbitration process. It
is clear from the transcribed
record that Mr. Sipho Mkhize in no uncertain terms assured the
arbitrator not only that he was able
to represent the applicant, but
that he and the applicant were fully prepared and able to proceed
with the matter. In this regard
he stated on record as follows:
“
Ja
that is fine, Mr Arbitrator, I can assure you we are prepared for
this case. If this case was to start tomorrow we are prepared
for it
and we are going to see it through to the end. In short, I believe I
am qualified to fully represent the applicant in this
matter, and I
will not withdraw myself in the process. Thank you.”
Disciplinary hearing
[22]
The applicant was
dismissed pursuant to a decision taken by the board on recommendation
from a subcommittee appointed by the board.
The applicant contended
that he was entitled to a disciplinary hearing in terms of the
respondent’s disciplinary code and
procedure. The arbitrator
noted in his award that the respondent’s disciplinary code does
not require the appointment of
an independent chairman to conduct a
disciplinary enquiry. In any event, as will be pointed out
hereinbelow, the applicant refused
to attend the hearing and is
therefore the author of his own misfortune.
[23]
It appears from the
evidence that the applicant was called to a board meeting which was
held on 2 December 2010 to answer the allegations
contained in the
notice attached to the letter (which contained the charges) and
“advance to us reasons why the sub-committee
of the board
cannot terminate your services.” The applicant was
therefore invited to attend the meeting of 2 December
2010 to state
his case in relation to the charges contained in the charge sheet.
The applicant was not prepared to engage with
the board as he was of
the view that he was a whistle-blower.
[24]
In this regard the
applicant contended that this board meeting did not constitute a
disciplinary enquiry and that there was no independent
and impartial
chairman appointed to conduct the disciplinary enquiry. The applicant
further contended that the board was biased
and not impartial.
[25]
The arbitrator deals
extensively with the procedural fairness of the dismissal and finds
firstly that the decision to terminate
the applicant’s
employment was taken by the board pursuant to a recommendation from a
subcommittee of the board that his
employment be terminated. The
arbitrator further held that the respondent’s disciplinary code
does not require the appointment
of an independent chairperson to
conduct disciplinary enquiry. Because the person (the applicant)
charged with misconduct was the
managing director there was in any
event no more senior executive managers within the ranks of the
respondent available who could
have conducted the enquiry and that it
was for that reason that the board itself, to which the applicant
reported directly, conducted
the disciplinary proceedings. This, the
arbitrator found, was not unfair. Secondly, the applicant had been
granted an opportunity
to address the subcommittee that was
established to fulfil the same function as a disciplinary hearing but
the applicant refused
to take part in the process.
[26]
I have considered the
conduct of the arbitrator and his findings in light of the narrow
grounds set out in
section 33(1)
of the Act and can find no reason to
interfere with the findings made by the arbitrator.
Alleged
bias
[27]
The applicant claimed
rather vaguely that the arbitrator was biased and based this on the
fact that Mr Van Heerden who testified
for the respondent was once
employed by a subsidiary of Kumba Iron Ore which was at one time a
client of the arbitrator.
[28]
There is simply no
merit in this complaint especially in light of the fact that the
arbitrator had disclosed this fact to the parties
and not one of the
parties objected to the arbitrator continuing with the arbitration
hearing.
The respondent’s
failure to call certain witnesses
[29]
The applicant further
claimed that the award is reviewable since the respondent did not
call a witness that the applicant regarded
to be pertinent to the
issues raised by him. In this regard the applicant contended that the
legal representatives for the respondent
had at some point undertaken
that certain witnesses would be called only not to do so.
[30]
There is no merit in
this allegation as there is no obligation on a party to call a
specific witness and, moreover, the applicant
in any event had the
right to call any of the witnesses not called by the respondent to
testify on his behalf.
Reporting lines
[31]
In respect of the
substantive fairness of the dismissal the applicant raised various
concerns to the effect that the arbitrator
according to him did not
consider various portions of the evidence. More in particular it was
submitted that the arbitrator’s
award “is based on a
wrong assumption that there was no change in reporting lines from
Bonitas Marketing Company (BMC).”
In this regard it was
submitted that the arbitrator disregarded the evidence which showed
that new reporting lines were implemented.
The applicant submitted
that the arbitrator misconducted himself, that he did not apply his
mind and that he had exceeded his powers.
[32]
I have considered these
complaints which essentially amount to an attack on the arbitrator’s
findings in respect of what the
facts were on the basis of the
evidence. These grounds for review amount to nothing more than an
attempt to appeal the findings
and the award of the arbitrator. I can
find no reason to conclude that the arbitrator had misconducted
himself or that he had exceeded
his powers in arriving at the
conclusions recorded in the award. The applicant is also losing sight
of the fact that a
n
arbitrator “has the right to be wrong on the
merits
of the case”. Although I am alive to the fact that this is not
an appeal I nonetheless venture to point out that the
facts set out
by the arbitrator in his award clearly support his findings: The
applicant failed to follow the instructions of his
employer (the
respondent) and more specifically that of the board of directors of
the respondent. The applicant was also not able
to explain during
cross examination why he elected to disregard instructions of the
board of directors and instead attempted to
rely on a new reporting
structure which was not borne out by the evidence that was placed
before the arbitrator.
SARS payments
[33]
In respect of the
charge that the applicant had not obtained the board’s approval
for payments made to SARS in respect of
outstanding VAT and that
exceeded his delegation of authority and that he paid the amount
without first enquiring into the nature
of the payment. The
arbitrator again deals in detail with the evidence in respect of this
charge and concluded in light of the
evidence that it was common
cause in the arbitration that incorrect VAT payments were made and
that this expenditure was unauthorised.
In this regard the arbitrator
concluded on the probabilities that the board did not approve these
VAT payments and that the applicant
was guilty of misconduct in
having failed to obtain approval from the board and that he made
these payments in excess of his delegated
authority.
[34]
In respect of this
charge the applicant in his papers and the Heads of Argument
endeavours to revisit the extensive evidence led
by the respondent on
this charge and submitted that, because the arbitrator did not
consider all the evidence, he misconducted
himself in relation to his
duties as arbitrator and exceeded his powers.
[35]
There is simply no
merit in the allegation that the arbitrator had failed to take into
account the evidence and therefore misconducted
himself in relation
to his duties as an arbitrator. It is clear from the award that the
arbitrator was fully apprised of the evidence
and that he has duly
considered the evidence that was properly placed before the
arbitration. The fact remains: the respondent
had direct evidence on
the charge pertaining to the payment of VAT. Mr. Van Heerden gave
extensive evidence on this charge. The
arbitrator has applied his
mind to the evidence and came to a conclusion. Any allegation that he
has misconducted himself is misconceived.
Payments
to his Personal Assistant
[36]
The applicant was
charged with the unauthorised payment of significant sums to Khelele
Consulting CC for his erstwhile personal
assistant which were neither
due nor owing nor budgeted for and for disregarding a resolution by
the board that his personal assistant
was to be appointed on a
permanent basis. In this regard the evidence was that there was a
clear instruction from the board at
a meeting (at which the applicant
was present) that his personal assistant was a temporary employee and
should be appointed on
a permanent basis. This instruction is
contained in the minutes of the board meeting of 8 November 2009. The
applicant submitted
in his defence that this was merely a comment by
the chairman of the board and not a board resolution and that it was
his choice
whether he wished to appoint his personal assistant
permanently or not. The arbitrator evaluated the evidence and
concluded that
there was indeed a board resolution to the effect that
the applicant should appoint his personal assistant on a permanent
basis.
Moreover, the arbitrator took into account that the applicant
himself in an e-mail confirmed that there exists such a board
resolution.
[37]
The arbitrator also
carefully evaluated the evidence which pointed to the fact that the
personal assistant had received excessive
amounts in overtime and
that the applicant had approved payment thereof. In fact the evidence
showed that the personal assistant
claimed overtime in the region of
160 hours in one month only. In some months the employment agency was
paid more than R50, 000.00
including the overtime claimed by the
personal assistant with the applicant authorising payment thereof.
The arbitrator concluded
that the evidence established that the
amounts paid to the agency were not due either to the agency or to
the personal assistant
herself and that the payments constituted
unauthorised payments made by the respondent in consequence of a
fraud perpetrated by
the personal assistant. The arbitrator also
found that it was clear from the evidence that the applicant was
responsible for signing
off and acknowledging that the overtime
claimed by the personal assistant had indeed been worked and that the
applicant did so
despite the fact that no such overtime was worked.
The arbitrator consequently found the applicant guilty as charged.
[38]
The applicant submitted
that the arbitrator had committed misconduct, alternative gross
irregularity in the conduct of the proceedings
in that he did not
properly apply his mind alternatively disregarded relevant evidence.
I have perused the evidence and I do not
agree with the submission
that the arbitrator had misconducted himself in relation to his
duties as an arbitrator. It is clear
that the arbitrator was aware of
the issues that were before him. Moreover, this is not an appeal and
even if the arbitrator was
wrong in arriving at this findings, that
does not constitute a ground for review.
Loyalty Programme
[39]
The applicant was
charged with two charges relating to the so-called PanAvest report.
The evidence in this regard briefly was that
it was decided that the
issue of loyalty programs be put on ice until an investigation by the
Council was completed. The minutes
of the meeting held on 22 July
2009 reflect that the respondent should not sign any contract until
the investigation was completed.
Van Heerden explained in his
evidence that PanAvest was a company that offered a loyalty
programme. Evidence was produced in terms
of a letter from the
president and CEO of PanAvest to the applicant recording that
PanAvest had been appointed as the preferred
service provider to roll
out a loyalty programme for the respondent. In this regard it was the
evidence of Van Heerden that this
loyalty program was not approved by
the respondent and that the applicant was aware of this as he was
present at the Board meeting
where this decision was taken.
[40]
The arbitrator
concluded that the applicant was aware that his marketing manager was
pursuing the procurement of a loyalty awards
programme and that he in
fact suggested to her that she prepare for the agenda items which he
indicated she should raise at the
forthcoming marketing meeting.
[41]
The arbitrator
accordingly concluded that the respondent has established that the
conduct of the applicant constituted misconduct
in the form of gross
negligence and gross incompetence.
[42]
Once again the
applicant submitted that the arbitrator committed misconduct
alternatively committed a gross irregularity in the
conduct of the
proceedings. There is absolutely no basis for concluding that the
arbitrator had committed misconduct alternatively
committed a gross
irregularity. The evidence overwhelmingly show (although I am mindful
that this is not an appeal) that the applicant
was aware of the
conduct of his marketing manager and that he blatantly disregarded
the decisions and instructions of the board.
Failure to execute
decisions and instructions of the board
[43]
The applicant claims
that the arbitrator failed to take into account that he had led
evidence to the effect that he never failed
to execute the decisions
and instructions of the board. In order to place this charge in its
proper context it is necessary to
briefly refer to some of the events
that preceded the laying of the disciplinary charges against the
applicant.
[44]
In March 2010 the board
became concerned about the running of the respondent. The applicant
was then required to report on a weekly
basis in writing to board.
[45]
The respondent’s
attorneys in the meantime conducted an investigation. The
investigation was completed on 2 August 2010 and
the findings we
recorded in the so-called PanAvest report. In that report it was
concluded that the applicant was guilty of gross
dereliction of his
duties, gross negligence and incompetence which he had exhibited in
the execution of his duties as managing
director of the respondent.
The applicant was not immediately charged and was only charged on 25
November 2010.
[46]
Matters took a turn
when Mr Maluleke (for the respondent) received a call from a Senior
Investigator at the Council in which he
(Maluleke) was advised that
the Registrar of the Council had in terms of the Medical Schemes Act
and the Inspection of Financial
Institutions Act appointed certain
inspectors from Syncerus Business Solutions (hereinafter referred to
as “Syncerus”)
to inspect the respondent and the Fund and
any associated financial institution. On this point it is important
to point out that
it was common cause that the applicant had reported
certain alleged financial irregularities to the Council. The alleged
complaints
by the applicant were subsequently found to be without
merit. In this regard the respondent had appointed senior counsel to
investigate
the allegations levelled against Van Emmenis. The
conclusion reached by Council was that the allegations against Van
Emmenis were
baseless.
[47]
Maluleke emailed the
applicant on the same day and requested him as managing director of
the respondent to notify the staff of this
development. At that stage
Van Heerden and the other board members were not aware of the fact
that the inspection which the Registrar
had called for was as a
direct consequence of information contained in a report which the
applicant had furnished to the Council.
In fact, Maluleke testified
that he was not aware of what had prompted this inspection and it was
only later that he established
that the applicant had compiled a
dossier which he had forwarded to the Council. When Maluleke obtained
the dossier from the Council
he realised that the applicant had
levelled various serious allegations against Van Emmenis. Maluleke
also testified that the applicant
had at no point informed him that
the appointment of inspectors was as a consequence of the dossier
which he had furnished to Council.
[48]
Van Heerden also
testified that he was concerned by the fact that the applicant had
failed to inform the respondent that the notification
of the
inspection had been received the day before.
[49]
Van Heerden issued an
email on 18 November 2010 to the applicant in which he instructed him
not to make available any information
to the investigators until the
respondent had received legal opinion in respect of the pending
investigation. The arbitrator found
that this instruction from the
board had been issued at the stage when the applicant himself was
aware of the content of the PanAvest
report which concluded that the
applicant was guilty of gross dereliction of his duties, gross
negligence and incompetence.
[50]
The arbitrator deals
with the evidence in detail as well as with the other events that
followed upon the email sent to the applicant
on 18 November 2010.
The arbitrator also considered all the defences raised by the
applicant against the charges levelled against
him. The arbitrator
concluded that the respondent has on a balance of probabilities made
out a case that the applicant had failed
to timeously inform the
respondent of the fact that Council had ordered an inspection and
that the applicant had failed timeously
to seek advice from the board
and from the respondent’s lawyers in circumstances where the
applicant wanted to ensure that
the investigation proceed in the hope
that Van Emmenis and the board would not be able to discipline him
pursuant to the PanAvest
report. The arbitrator further concluded
that on a balance of probabilities, the applicant’s conduct was
not motivated by
what was in the best interests of the respondent but
that his conduct was driven by what the applicant perceived as being
in his
own interest. This, the arbitrator concluded, constitutes
insubordinate conduct and constitutes very serious misconduct on the
part of a managing director.
[51]
In this regard the
applicant tried to persuade the Court that the arbitrator had
misconducted himself in ignoring the evidence that
was placed before
the arbitration. I have carefully considered the evidence and can
find no indication of misconduct on the part
of the arbitrator or
that he committed a gross irregularity in the conduct of the
arbitration proceedings. Again, the applicant
argued an appeal not a
review.
Ruling in respect of
further evidence
[52]
The applicant alleged
that the arbitrator made a ruling that he could not lead evidence of
financial irregularities amounting to
approximately 20 million Rand
and that the arbitrator therefore did not consider the “undisputed
evidence” that officials
of the respondent had committed
untoward conduct.
[53]
Apart from the fact
that there is no merit in this allegation, the applicant is again
blatantly trying to mislead the Court: It
is clear from the
transcribed record that the applicant’s representative
specifically indicated to the arbitrator that they
are not going to
object to the arbitrator’s ruling in this regard. Furthermore,
the record also reflects that the applicant’s
representative
expressly stated that the evidence that the applicant had wished to
put forward on this issue “is not relevant”.
Alleged lack of
authority to depose to the answering affidavit
[54]
In the replying
affidavit the applicant raised the fact that Ms Gray from the
respondent’s attorneys is not authorised to
depose to the
answering affidavit or to oppose the review application.
[55]
In this regard the
applicant alleged that he was not furnished with the minutes of the
meeting of the board of directors which authorised
Ms Gray to depose
to the answering affidavit and to oppose the review application.
[56]
There is no merit in
this allegation as it appears from the papers that the attorneys were
authorised as far back as 1 July 2011
by the board of directors of
the respondent to “act as the legal representatives of the
company in these and any related
or ancillary proceedings which exist
or may exist in the future and all that is necessary and sign any
document that is required
for the protection or prosecution of the
company’s rights and interests”. A second resolution was
also obtained in
respect of the two applications to strike out. A
further resolution dated 18 March 2014 confirmed the previous
resolutions of the
board dated 1 July 2011. In the event this point
is dismissed.
Conclusion
[57]
In respect of the
review application, the application is dismissed. Because the
application is ill-conceived and in light of the
warnings expressed
by Lagrange, J that the review had very little prospects of success
and in light of the fact that the applicant
was pursuing an appeal in
the guise of a review, I have decided to dismiss the review with
costs on a punitive scale.
Interlocutory
applications and the application to strike out
[58]
The respondent has
filed two applications to strike out scandalous, vexatious and/or
irrelevant matter that appear in the applicant’s
supplementary
affidavit for the review dated 10 February 2014 as well as the
applicant’s replying affidavit dated 3 March
2014.
[59]
The first application
to strike out was brought by the respondent on 25 February 2014 and
was opposed by the applicant. The second
application to strike out
was brought by the respondent on 20 June 2014 and was not opposed by
the applicant.
[60]
In essence the
respondent has sought to strike out references by the applicant
alleging that the attorney of the respondent (Ms
Gray) and officials
of the respondent perpetrated “serious fraud with underpinned
motive”. There is also an allegation
that Bonitas is involved
in “irregularly transferring millions of rands of public
funds”. Ms Gray (the attorney on
behalf of the respondent) is
accused of being “the main culprit, the mastermind and
architect who drafted a dismissal roadmap
against me fraudulently”.
This evidence once again suggested that Ms Gray completely sacrificed
her professional ethics as
an officer of court, and also sacrificed
professional ethics as a director of Gildenhuys Malatji Incorporated.
Therefore, appropriate
punitive measures should be taken against Ms
Gray.”
[61]
The first application
to strike out was preceded by a letter to Mr Shongwe (the attorney on
behalf of the applicant) setting out
in detail what the issue of the
respondent was with reference to the various scandalous averments
contained in the applicant’s
papers. In fact, Ms Gray on behalf
of the respondent stated clearly that the “scandalous,
malicious, defamatory and malevolent
expressions of animosity”
is “devoid of any truth”.
[62]
Despite the fact that
Mr Shongwe was pertinently and in no uncertain terms made aware of
the scandalous averments contained in the
papers, he tried to
distance himself from these allegations in the Heads of Arguments
filed in opposition to the first application
to strike out. In a poor
attempt to distance himself from the scandalous allegations, Mr
Shongwe now effectively tried to convince
this Court that he was not
aware of the contents of the affidavits:
“
4.
As the heads were prepared and having gone through the Bonitas
Marketing heads, it dawned on us that the complaint that led to
the
application to strike out is the words like “fraudulent “and
“fabrication”. Contact was then made with
Bonitas
Marketing attorneys to try and resolve the matter but no solution
came at the time to file the heads was fast approaching.
The heads
were then filed in which the explanation as aforegoing is made.”
[63]
This is, in my view, a
patent attempt to mislead the Court and I am of the view that this
constitutes conduct unbecoming of an officer
of this Court.
[64]
What makes matters
worse is the fact that Mr Shongwe deposed to a confirmatory affidavit
(although unsigned) in which he stated
as follows:
“
I
have further read through the application to strike out filed by
Bonitas Marketing’s attorneys of record and have noted
the
order of costs sought against me and our client. I am unable to
comprehend the basis of seeking such a cost order. It is in
my view
that this may be a way of intimidating me not to advise Mr Mkhize
further. On reading the striking out application I have
observed no
scandalous, vexatious and/or irrelevant issues raised.”
Mr. Shongwe therefore
clearly made common cause with the scandalous averments contained in
the applicant’s papers.
[65]
In a surprise turn of
events the applicant and his attorney then states the following in
the Heads of Argument:
“
5.
It is suspected submitted that had Bonitas Marketing explained
himself clearly that they were worried about words and phrases,
surely the matter would not have come this far. It would have been
resolved. We are however opposed to a complete removal of certain
paragraphs as cited by the Bonitas Marketing legal team. It is our
considered view that removing this seeming scandalous words
and/or
phrases should be enough and the matter can proceed without any
further delay. And if it is made to correct the supplementary
affidavit and the replying affidavit as far as offensive words are
concerned. Both the Honourable Court and the legal team of Bonitas
Marketing should be received a copy in less than seven days hereof.
6. We propose that the application to
strike out be withdrawn and the cost be reserved.”
[66]
Shongwe Attorneys
thereafter served and filed two fresh and amended affidavits (a
supplementary affidavit and a replying affidavit)
from which it
appears that the bulk of the offensive phrases were removed.
[67]
What is however of
concern to this Court is the fact that an officer of this Court makes
common cause in an affidavit with scandalous
and unsubstantiated
allegations not only against a party to this dispute, but more
importantly, a member of the same profession.
This is conduct
unbecoming of an officer of this Court. I should mention at this
juncture that Mr Shongwe confirmed in Court that
he had deposed to
this affidavit which makes common cause with the scandalous
allegations against Ms Gray.
[68]
Furthermore, it is not
accepted that it only “dawned” on the applicant and Mr.
Shongwe when they prepared their Heads
of Argument that the
respondent has raised the issue of the striking out. I am in
agreement with the submission that the applicant
simply had to remove
the offensive contents from the respective affidavit and tender the
respondent’s costs for bringing
the two applications to strike
out. I am further in agreement with the submission that the
applicant’s conduct and that of
Mr. Shongwe in respect of the
two applications deserves the imposition of a punitive costs order.
[69]
As if matters cannot
become worse, the Court’s attention was drawn to the fact that
this particular affidavit deposed to by
Mr. Shongwe had mysteriously
disappeared from the papers filed at this Court. Mr Bekker handed up
a copy of this affidavit and
indicated to the Court that this
affidavit was in fact part of the papers originally filed at court
and that this affidavit is
clearly identified in the index as
“Unsigned Confirmatory Affidavit: Isiaah Moses Shongwe”.
The page reference is pages
59 and 60. Pages 59 and 60 are missing
from the record and it would seem that they were removed from the
file prior to the hearing
of this matter.
[70]
The two striking out
applications are therefore granted and it is ordered that the
applicant and Mr Shongwe pay the costs of the
respondent relating to
these two applications on the scale as between attorney and own
client (pertaining to the applicant) and
costs
de
bonis propriis
against Mr Shongwe, the one paying the other to be absolved.
[71]
I have in light of my
view of what seems to be unprofessional conduct unbecoming of an
officer of this Court directed the Registrar
of this Court to furnish
the Law Society of the Northern Provinces with a copy of my judgment
for investigation into the conduct
of Mr Shongwe of Shongwe
Attorneys.
Security for costs
[72]
When the applicant
instituted the review proceedings, Lagrange, J of this Court held
that the applicant should set security for
costs after an application
was brought by the respondent seeking to compel the applicant to set
security for costs.
[73]
In his judgment,
Lagrange, J clearly warned the applicant that he (the applicant) was
“attempting to pursue an appeal in the
guise of a review.
Further, the limited procedural challenges which are raised appear to
have very limited prospects of success.”
The Court also warned
the applicant that he cannot rely on the test in
Sidumo
to augment his grounds raised in respect of the merits of his review.
More in particular, the Court pointed out that it appears
that the
applicant is pursuing the current review application with a “reckless
disregard for the likely outcome” based
on the basis of the
scant prospects of success as set out in the judgment and the fact
that most of the review is based on grounds
of appeal. The costs of
the application for security for costs were ordered to be costs in
the cause of the review application.
[74]
I have considered the
issue of costs and in light of the outcome in these proceedings I can
find no reason why the applicant should
not be ordered to pay the
costs in the application to set security for costs.
Order
[75]
In the event the
following order is made:
76.1
The applicant is
ordered to pay the costs in the application to set security for costs
which was reserved by Lagrange, J.
76.2
The applicant and Mr
Shongwe are ordered to pay the costs of the first application to
strike out on an opposed basis on the scale
as between attorney and
own client (pertaining to the applicant) and costs
de
bonis propriis
against Mr Shongwe the one paying the other to be absolved.
76.3
The applicant and Mr
Shongwe are ordered to pay the costs of the second application to
strike out on an unopposed basis on the scale
as between attorney and
own client (pertaining to the applicant) and costs
de
bonis propriis
against Mr Shongwe, the one paying the other to be absolved.
76.4
The application for
review is dismissed with costs on an attorney and client scale.
76.5
The Registrar is
directed to furnish the Law Society of the Northern Provinces with a
copy of this judgment for investigation into
the conduct of Mr
Shongwe of Shongwe Attorneys.
AC BASSON
Judge
of the Labour Court
Appearances:
For
the applicant : Mr Shongwe of Shongwe
Attorneys.
For
the respondent : Advocate WP Bekker
Instructed
by
: Gildenhuys Malatji Incorporated
[1]
Act 42 of
1965.
[2]
Section
33 reads as follows: “Setting aside of award.—
(1) Where—
(
a
)
any member of an arbitration tribunal has misconducted himself in
relation to his duties as arbitrator or umpire; or
(
b
)
an arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration proceedings or has exceeded its
powers;
or
(
c
)
an award has been improperly obtained, the court may, on the
application of any party to the reference after due notice to the
other party or parties, make an order setting the award aside.”
[3]
Act 131 of
1998.
[4]
Act 66 of
1995.
[5]
See:
Stocks
Civil Engineering (Pty) Ltd v Rip NO and Another
[2002] 3 BLLR 189
(LAC) where the Labour Appeal Court summarized the
principles regarding reviews in terms of the Labour Relations Act as
Follows:
“
Review
principles
[23]
The question which arises is whether, if these aberrations are
reviewable, the
Arbitration Act or
the principles applicable in
reviews under the LRA should govern the proceedings. One line of
thought is that as
section
33(1)
of
the
Arbitration Act and
section
145
of
the LRA are virtually the same, this Court and the Labour Court
should apply the same norm under both,
viz
that
of rational justifiability laid down in
Carephone
(Pty) Ltd v Marcus NO and Others
(1998)
19
ILJ
1625
(LAC) (now since this matter was heard redefined by this Court as
rationality in
Shoprite
Checkers (Pty) Ltd v Ramdaw NO and Others
2001 (4) SA 1038
(LAC) paragraph 25). This approach is to be found in
Transnet
v HOSPERSA
(1999)
20
ILJ
1293
(LC) paragraph 15;
NUM
v Brand NO and Another
[1999]
8 BLLR 849
(LC)
paragraph
14
and
Orange
Toyota (Kimberley) v Van der Walt and Others
[2001]
1 BLLR 85 (LC)
.
The other line of thought is that whatever the test may be for
matters falling under the LRA regime, private arbitrations are
to be
reviewed (also in the Labour Court) in terms of the norms laid down
in
section
33(1)
of
the
Arbitration Act. The
latter view was expressed in
Eskom
v Hiemstra NO and Others
(1999)
20
ILJ
2362
(LC) and
Seardel
Group Trading (Pty) Ltd t/a Bouwit Group v Andrews NO and Others
[2000]
10 BLLR 1219 (LC)
.
[24]
In my view the latter is the correct approach. Private arbitrations
are subject to the
Arbitration Act
42
of 1965
.
Section
40
provides
for an exception where an Act of parliament expressly or by
implication excludes its operation. An example is
section
145
of
the LRA. There is no such exception in the case of private
arbitrations. Considerations of expediency based upon the fact that
the arbitration provisions of the LRA coincide with those in the
Arbitration Act and
that it would be preferable for Labour Courts to
apply one test throughout, cannot override the clear provisions of
the
Arbitration Act. I
do not share the view of Molahledi AJ in the
Orange
Toyota
case
(
supra
)
paragraph 13 that the
Arbitration Act is
to be read subject to the
Constitution and that therefore the test for review of the CCMA
arbitration awards set out in the
Carephone
judgment
would equally apply to reviews in terms of
section
33
of
the
Arbitration Act. The
important difference between the two types
of arbitration is that CCMA arbitrations were held to be by an organ
of state to which
the constitutional precepts for just
administrative action applied, whereas private arbitrations are not.
This arbitration therefore
has to be evaluated against the norms
laid down in
section
33(1)
of
the
Arbitration Act as
if this were a High Court doing likewise.”
[6]
2012 (33)
ILJ 279 (LC).
[7]
2007 (3) SA
266 (SCA).
[8]
Supra
[9]
Ibid
.
[10]
[2007]
12 BLLR 1097
(CC).
[11]
1994 (1) SA
162 (A)
[12]
Emphasis
added.
[13]
See par [11] supra.