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[2015] ZALCD 18
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Nedbank Limited v Mvelase and Others (D.299/2014) [2015] ZALCD 18 (13 January 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE LABOUR COURT OF
SOUTH AFRICA, DURBAN
JUDGMENT
Case no. D.299/2014
DATE: 13 JANUARY 2015
Not Reportable
In the matter between:
NEDBANK
LIMITED
..............................................................................................................
Applicant
And
NKOSINGIPHILE CEDRIC
MVELASE
..................................................................
First
Respondent
COMMISSIONER B PILLEMER
N.O
..................................................................
Second
Respondent
COMMISSION FOR CONCILIATION,
MEDIATION &
ARBITRATION
.............................................................................
Third
Respondent
Heard: 13 January 2015.
Delivered: 13 January 2015
Summary:
Conflict of interest.
No breach of any obvious fiduciary duty. Dismissal unfair.
JUDGMENT
CRAMPTON AJ
[1] This is a review application in
terms of
Section 145
of the
Labour Relations Act No. 66 of 1995
.
First Respondent was dismissed on 15
November 2013. His letter of dismissal reads as follows:
‘At a disciplinary enquiry which
took place on 15 November 2013 you were found guilty of the serious
misconduct of conflict
of interest in that:
(a) During 2013 you facilitated the
sale of your brother’s KIA truck, with an unknown registration,
to Nedbank’s existing
client;
(b) You engaged your brother, Mr Bonga
Mvelase, thereby facilitating the registration of Mbalisto Food
Services on behalf of Nedbank’s
existing client;
(c) On 3 September 2013, you attended a
meeting where the existing Nedbank client, Concrescore Motor Works
Auto Body Repairs, was
signing a memorandum of agreement with the
client;
(d) During 2013, you entered into a
personal vehicle-swop deal involving your private vehicles with a
Nedbank client without authority
of your management.’
These charges all related to a
relationship that had developed between First Respondent, who was
employed by Applicant as a financial
advisor, and one Mr Nxele, who
was one of applicant’s clients to whom First Respondent was
required to render financial advice.
Mr Nxele was a lottery winner
and, therefore, a relatively uneducated client who had “come
into money”. As the charges
reveal, a close relationship had
developed between First Respondent and a Mr Nxele (who is referred to
in the charge sheet as “Nedbank’s
existing client”).
First Respondent became involved in Nxele’s business and
personal affairs outside the ambit of the
professional relationship
of adviser and client. It is apparent that Applicant became
uncomfortable with the closeness of this
relationship. Hence the
charge that First Respondent has acted in conflict of interest.
[2] Second Respondent (“the
Commissioner”) found that the dismissals were unfair, and
consequently she awarded certain
relief. Applicant now applies for a
review of her Award.
[3] The grounds of review include:
3.1 a general attack, which is related
to a statement in the Award, from which it appears that the
Commissioner may have excluded
certain evidence on the ground that
such evidence was inadmissible;
3.2 four grounds of review
corresponding to each of the commissioner’s four findings in
relation to the four counts of alleged
misconduct. In each case it is
contended that her findings are not findings that could have been
made by a reasonable decision
maker.
[4] I deal firstly with the attack
relating to the inadmissibility of evidence. In the course of her
Award, the Commissioner made
the following statement:
‘The only admissible evidence, at
the arbitration, in relation to the events that gave rise to the
charges, was that of the
Applicant himself.’
[5] In fact, there were three witnesses
who gave evidence at the arbitration:
5.1 First Respondent, the employee, who
gave direct evidence relating to all the events in respect of which
he was charged.
5.2 Mr Ernest Phewa, an internal
forensic investigator, who gave evidence on behalf of the Employer.
His evidence was mostly hearsay,
but, in any event, did not conflict
with that of the First Respondent.
5.3 Mr Ravin Maharaj, Applicant’s
area manager who, as Applicant’s second witness, gave his views
on the alleged misconduct
and how, in his opinion, this affected the
trust relationship between employer and employee.
[6] In these circumstances, the
Commissioner was, in my view, quite correct to state that:
‘The only admissible evidence as
to the events (my emphasis) was that of the employee.’
[7] In any event, Applicant has not
pointed to any specific evidence as to the events that the
Commissioner did not consider and
which might have impacted
materially upon the conclusions in her award. Indeed, the argument
before me proceeded on the basis that
the parties were ad idem as
regards the facts which constituted the misconduct for which the
employee was charged.
[8] The Commissioner’s said
statement cannot, therefore, in my view, provide grounds for any
review.
[9] I turn to consider the
Commissioner’s findings in relation to the four charges.
The attendance at the meeting (charge
3)
[10] As regards this charge, the
Commissioner’s factual findings, which are not challenged on
review, are set out at paragraph
5.3 of her award, from which I
quote:
‘Nxele had asked Applicant to
accompany him to a meeting where he was to sign an agreement in a
business venture relating
to certain motor vehicles. Applicant knew
nothing about the business, which was in the domain of Nxele’s
experience, but
he had been asked by Nxele to accompany him to make
sure that he understood the content of the agreement, as his
[Nxele’s]
English was poor. Applicant was an observer at the
meeting and signed the agreement as a witness. He had not benefitted
from the
transaction and had not perceived any actual or potential
conflict of interest, so had not disclosed the transaction to
Respondent.”
[11] On the facts so stated the
Commissioner made the following finding:
‘The complaint that is now made
is subtle. Having attended a meeting only to assist in understanding
in English, but nonetheless
being a financial adviser employed by the
bank and the person who dealt with Nxele, there was notionally
potential, if the deal
had gone sour, for Nxele to complain that
Applicant ought not to have sat by without advising him against the
pitfalls and to sue
the Bank. There is something to be said for the
complaint that Applicant should not have agreed to attend the
meeting, as it conflicted
with his duty to the bank, not to put it at
risk. On the other hand, should that have been his position, it would
potentially have
harmed the relationship between the client and the
bank and, refusing to attend, could also be seen as acting against
the interests
of the bank. On Applicant’s explanation for his
role, there could be no legitimate claim against the bank. Applicant
did
not, himself, see the possible conflict of interest and one can
understand that because it is subtle, and based upon the proposition
that the client could, if the deal went sour, potentially claim,
dishonestly, that the reason why Applicant had attended was to
give
advice as a representative of the bank. In the circumstances, it
seems to me that Applicant was not guilty of misconduct in
attending
the meeting or in signing the agreement as a witness.’
With respect to the learned
Commissioner, I have, in this and other instances, made some
adjustments, and I think improvements to
her grammar, without
changing her intended meaning.]
[12] In its founding affidavit,
Applicant alleges that, since the Commissioner found that there was a
conflict of interests, albeit
subtle, she ought to have found that
First Respondent was guilty of misconduct. Accordingly, so it is
argued, the Commissioner
ought then to then have gone on to consider
the appropriateness of the sanction. This is advanced as a ground for
review.
[13] In my view, that allegation is
based on a misunderstanding of the Commissioner’s role.
[14] A Commissioner is not required to
determine what sanction ought to have been imposed by the employer,
only whether the sanction
of dismissal is fair in the light of the
material presented before her.
[15] A dismissal can be unfair either:
(a) because there was no misconduct; or
(b) because such misconduct as was
committed was not sufficiently serious to attract the ultimate
sanction of dismissal.
[16] It, therefore, matters little
whether the Commissioner determined:
(a) that the conflict of interest was
so subtle that it did not constitute misconduct; or
(b) that, although there was a conflict
of interest, it was too subtle, and, therefore, did not constitute
misconduct that was sufficiently
serious to warrant dismissal.
[17] Suffice to say, in my view, both
these conclusions fall within the band of reasonable conclusions that
could have been adopted
by a reasonable decision-maker.
The sale of the Kia
[18] Again, the relevant facts are not
disputed on review. These are summarised, as follows, at paragraph
5.1 of the award:
‘In respect of the first
allegation, Applicant denied that he had facilitated the sale of the
truck between his brother and
Nxele. He explained that Nxele had
wanted to buy the truck and, as it was his brother’s truck, he
referred Nxele to his brother.
Nxele and his brother negotiated a
deal. Applicant did not know the financial details of the deal.
Applicant explained that Nxele
was “at home” with trucks,
as a truck driver, was happy with the deal. Applicant had not
benefitted from the transaction.
He did not disclose the transaction
to Respondent because, in his view, there had not been a conflict of
interests and he had not
seen the need to make disclosure.’
[19] In relation to this transaction,
the Commissioner found that First Respondent did not, by merely
putting Nxele in contact with
his brother, act in conflict with
Applicant’s interests. Indeed, Mr Pillay, who appeared before
me on behalf of First Respondent,
argued that First Respondent’s
intervention could be equated to a situation where a financial
adviser, such as First Respondent,
refers a client, such as Nxele, to
a restaurant that is operated by a family member of the financial
adviser. He argues that that
would not constitute misconduct worthy
of the ultimate sanction of dismissal.
[20] Applicant, on the other hand,
describes the situation as one where “First Respondent utilised
his relationship with Nxele
to facilitate a business transaction with
his brother”.
[21] Applicant is, however, not in the
business of selling motor vehicles. Nor was First Respondent employed
by Applicant to advise
Nxele on what vehicle to buy. In my view,
Applicant had no legal interest that would be affected by Nxele’s
decision to purchase
the vehicle from First Respondent’s
brother and not some other vendor. At worst, any such conflict of
interest that there
might be, would be subtle in the manner described
above.
The registration of the company
[22] Again, the facts, which are not in
dispute, are summarised as follows in the arbitration award-:
‘Nxele had approached the
Applicant for assistance when he needed to register a company.
Applicant told Nxele that his brother
registered companies and they
telephoned him to see of he could assist. He could and he registered
the company for Nxele at the
cost of R800-00, which was much less
than the going price. [The employee] explained that he had not
benefitted from the transaction.
He did not declare his interest to
Respondent as, in his view, there was no conflict of interests. He
merely assisted Nxele to
resolve a problem, as the bank expected him
to do, when looking after an important client.’
[23] The Commissioner’s findings
on these facts were stated as follows:
‘The complaint against Applicant
is very subtle. Nxele needed a company formed. Applicant’s
brother provided this service
and did it relatively cheaply. The
bank did not provide the service and so referring the work to his
brother did not present any
conflict. The price for the service was
extremely reasonable. It is acknowledged that a case such as this,
where a client is referred
to family members for professional
service, needs careful scrutiny. There is a potential for the service
provider to be chosen,
not on merit, but because of the family
connection. That might not serve the client’s best interests.
However, on the present
facts, there does not appear to me to be
anything untoward in using the relatively inexpensive services of
Applicant’s brother
to secure the registration of a company
that Nxele wanted formed. In this instance too, I see no conflict of
interests and no misconduct
established.’
[24] In the founding affidavit, the
Commissioner’s said reasoning is subjected to the following
attack:
‘The Commissioner has thus
confused the issue of whether First Respondent was guilty of the
misconduct and the appropriate
sanction that should be meted out.’
[25] As I state above, such an
allegation is based on a misunderstanding of the Commissioner’s
role. More particularly, it
was not the Commissioner’s function
to determine what sanction ought to be meted out. Her function was to
determine the fairness,
or otherwise, of the dismissal.
[26] In my view, the Commissioner’s
finding is, if not correct, then certainly a reasonable one. Again,
the misconduct was
subtle. It was, therefore, reasonable to conclude
either that it did not constitute misconduct or, even if it did
“cross
the line” and did, therefore, constitute
misconduct, it did not merit the ultimate sanction of dismissal.
The vehicle exchange
[27] The facts, which, again, were
common cause, are stated as follows in the Commissioner’s award
‘Nxele arrived to see Applicant
as he was leaving to buy a motor vehicle for his wife. Nxele insisted
on accompanying him,
and when he heard Applicant was to exchange his
Hummer and Polo for a new Jeep, he insisted that he wanted the two
motor vehicles
and that he would pay for the Jeep. Without thought,
the Applicant accepted the offer. Applicant said the value of his two
vehicles
was R450,000-00 which was much more than the price of the
Jeep (R395,000-00) and that Nxele gained in the deal. Applicant had
seen
this as a personal transaction, where Nxele had benefitted at
his expense and where he, Applicant, had taken a loss. He did not
perceive there to be any conflict of interests. Nxele had to go to
the bank to do the transfer. At the bank the supervisor and
branch
manager asked him to confirm that he was happy to make the payment,
which he was. Applicant, therefore, did not see the
need to disclose
the transaction to Respondent as this was a personal matter.’
[28] The Commissioner’s findings
on these facts were stated as follows:
‘This is the most difficult of
the four charges to assess. Prima facie, it is wrong for a financial
adviser of a relatively
unsophisticated client to allow the client to
pay for a new vehicle and to swop that vehicle for the adviser’s
used vehicles.
This is so even if the financial effect of the
transaction is fair. However, the circumstances under which the
transaction materialised
were unique. The [employee] was willing to
do the swop with the motor dealer and it was the client, Nxele, who
was not there as
a client but as a friend, who then insisted that he
wanted the Hummer vehicle and that he wanted to do the swop rather
than have
his adviser and friend do the deal with the third party.
One can understand how, in those circumstances, such a strange
transaction
took place. It is not a transaction that should have had
any effect on the bank, which was not involved. Nor did the
transaction
undermine the relationship with the client. If anything,
it would have strengthened it. The swop was not a gift. There was no
conflict
of interests with the bank, since it was the client that
insisted on the deal. It was not instigated by [the Employee]. In
this
instance too, therefore, having regard to the unusual
circumstances that gave rise to the swop, I do not see that it has
been proved
that [the Employee] did anything wrong. I accordingly
find that the swop agreement, although borderline, did not constitute
misconduct.
‘But even if I am wrong, and the
swop agreement can be said to be so inappropriate that [the employee]
should have explained
it to Nxele that he could not enter into such a
transaction with him, because of their relationship of adviser and
client, it is
not the kind of conduct that should have resulted in
[the employee’s] dismissal. There was no dishonesty. The
transaction
was instigated by the client and the client benefitted
from the deal.’
[29] I agree with the Commissioner’s
reasoning so stated and can, therefore, find no ground upon which it
should be set aside
on review.
[30] Ms Caddie, who appeared before me
on behalf of the Applicant, argued that the Commissioner should have
viewed the four events
cumulatively and that she ought, accordingly,
to have found that the combined effect of the separate instances of
misconduct was
sufficient to warrant dismissal.
[31] Although there may be some merit
in such an argument, the difficulty for the employer, in my view, is
that, as was common cause,
it has no specific policy to govern
relations between financial planners and clients, particularly
lottery winner clients such
as Mr Nxele. Nor is there, apart from
“Nedbank’s Level 3 Code of Conduct”, any policy
that might demarcate the
borderline between relations that the
employer considers to be appropriate and those that it does not.
[32] A reasonable Commissioner, in the
position of Second Respondent, would be guided by section 7 of the
Code of Good Practice
(schedule 8 to the LRA). In my view, it can be
implied from this provision that an employer is, in appropriate
circumstances, required
to prove the misconduct in question
contravened a rule or a standard of which the employee was aware, or
ought reasonably to have
been aware and, furthermore, the employee
was similarly aware, or ought reasonably to have been so aware, that
a contravention
would or could attract the sanction of dismissal.
[33] In the present case all the
instances of misconduct inhabit a grey area:
(a) On the one hand, it cannot be
doubted that First Respondent was serving the Applicant’s
interests by establishing a sound
personal relationship with the
client. It appears that he took a genuine interest in Mr Nxele’s
affairs and this would no
doubt have benefitted Applicant since Nxele
would be less likely to take his business elsewhere.
(b) On the other hand, Applicant became
uncomfortable with the closeness of relationship that developed
between First Respondent
and Mr Nxele. As Ms Caddie argued: such a
relationship could provide fertile ground for abuse since a lottery
winner such as Nxele,
might be uneducated and malleable and,
therefore, an easy victim for an scrupulous adviser – not that
there is any evidence
of any such unscrupulousness in the conduct of
First Respondent.
[34] In my view, this is a case where
it was incumbent on Applicant to have demarcated the borderline
between what it considered
to be appropriate relations between an
adviser and client, and what was not. In the absence of any clear
demarcation, a reasonable
decision-maker might well have concluded,
like the Commissioner, that it was unfair for First Respondent
express its discomfort
with the ultimate sanction of dismissal.
[35] This is particularly so in the
case of First Respondent who, it is not disputed, was an exemplary
employee with a clean disciplinary
record.
[36] In my view, therefore, the review
application must fail.
[37] As regards costs,there was some
debate before me as to whether I should award costs, since the Labour
Court is a court of equity.
In the end, however, I am persuaded by Mr
Pillay’s submission that it is eminently fair that the costs
should follow the
result.
[39] I therefore order that the review
application should be dismissed with costs.
Crampton AJ
Acting Judge of the Labour Court of
South Africa
APPEARANCES
For the Applicant: Ms Caddie of
Cliffe Dekker Hofmeyr Inc
For the Respondent: Adv I Pillay
instructed by Mhlanga Inc.