About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Durban Labour Court, Durban
SAFLII
>>
Databases
>>
South Africa: Durban Labour Court, Durban
>>
2015
>>
[2015] ZALCD 40
|
|
Mdlangathi v Commission for Conciliation Mediation And Arbitration and Others (D998/12) [2015] ZALCD 40 (10 July 2015)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT DURBAN
Not Reportable
CASE NO. D998/12
In the
matter between:
RAYNOLD
ZITHULELE
MDLANGATHI
Applicant
and
THE
COMMISSION FOR CONCILIATION,
MEDIATION
AND
ARBITRATION
First Respondent
MIKE
COWLING
N.O.
Second Respondent
EZEMVELO
KZN
WILDLIFE
Third Respondent
Heard: 14
February 2015
Delivered:
10 July 2015
Summary:
Review of an award –
manipulation
of adjudication process of tenders – preparation of initial
payment assessment when work is far from completion
–
unreasonableness in the award not proved.
JUDGMENT
CELE J
Introduction
[1] This
is an application in terms of section 145 of the Labour Relations
Act
[1]
to review, set aside, substitute and/or correct the arbitration award
dated 14 September 2012, handed down by the second respondent,
acting
under the auspices of the first respondent. The third respondent
opposed this application.
Factual
Background
[2] The
applicant was employed in the Technical Services Department as an
Acting Project Manager and his main duties were to identify
projects
and thereafter to source service providers through a tender process
that was determined by an adjudication committee which
he had to
facilitate. His duties included liaising with successful bidders and
taking part in authorizing payment on completion
of projects or tasks
as well as general oversight of the project. Such oversight was done
in conjunction with Inspectors of the
Department. One such Inspector
was Mr Duma. All the information concerning inspections undertaken is
recorded in the Site Instruction
Book which is thereafter
communicated to the applicant to alert him of the progress in such
projects. In the bidding process the
applicant did not have the final
say. He merely made recommendations which were passed on to Mr
Khumalo, his line Manager. Ultimately
the bidding process was
referred to the adjudication committee which had the final
responsibility.
[3] Most
of the maintenance work was outsourced and therefore it was necessary
for the applicant to assess the nature of the work
and estimate the
cost thereof. Thereafter this information would be sent to
Procurement Services who would provide a list of companies
that
qualified in terms of the third respondent’s procurement policy
to perform that particular type of work. The applicant
would
only meet potential contractors at the compulsory briefing sessions
that were held on site.
[4] Mr
Thembani Mzulwini was a Project Coordinator having oversight of the
Umlalazi Project which fell under the work supervised
by the
applicant. Mr Mzulwini received an interim payment certificate
relating to the Umlalazi Project that was signed by the applicant.
As
a result of complaints received from the Camp Hospitality Manager at
Umlalazi it was known that the work was incomplete. The
interim
payment certificate had been received at the very early stages of the
project. The interim payment certificate was
normally signed to
confirm that work had been done. In the Umlalazi case, that was false
since it was known that the work had not
been done. An interim
payment certificate would normally not on its own result in payment
being made as supporting documentation,
such as a bill of quantities,
invoice and a completion certificate, needed to be submitted along
with the interim payment certificate.
[5]
According to Mr Mzulwini, in order to clear the Umlalazi debacle up,
a meeting was arranged between him, the applicant and the
Camp
Hospitality Manager which would take place on site in order to
determine whether the work had in fact been completed.
However
the applicant failed to appear at this meeting.
[6]
Nominya Construction and Rapid Dawn 1099 CC are some of the companies
which tendered for some of the projects handled by the
applicant. At
one instance of the bidding process, the applicant did not recommend
the tender by Rapid Dawn due to the fact that
only one of the line
items was above the rates estimate and despite the latter having the
overall lowest quote. That tender was
awarded to Nominya
Construction. Subsequent to that the applicant recommended the
awarding of a tender to Rapid Dawn despite being
outside rates
estimates in regard to certain items. That recommendation excluded
Nominya Construction which had tendered for the
project.
[7] Ms
Xolisile Hlongwane was the owner of Nominya Construction. Sometime in
or around 2006 the applicant sold his motor vehicle
to her while at
that time she was one of the contractors that the applicant had to
deal with, but this was an open transaction.
According to the
applicant Ms Hlongwane paid for the motor vehicle by making erratic
monthly deposits into his Absa Bank account.
[8] An
investigation was ordered by the KwaZulu-Natal (KZN) Provincial
Parliament arising from a concern about fraudulent and corrupt
activities that were allegedly taking place within the Third
Respondent. A firm of auditors, DeLoittes and Touche, was
commissioned
to conduct a broad investigation. On completion of
that investigation a report was submitted that purported to unearth a
number of alleged irregular activities which were attributed to the
applicant. He was put on suspension and was charged with 40
counts of
misconduct but he was found guilty of 31 counts and a sanction of
summary dismissal was imposed.
[9] He
referred an unfair dismissal dispute to the first respondent
challenging both the procedural and substantive fairness of
my
dismissal. The second respondent was duly appointed to arbitrate the
dispute. At the commencement of the arbitration proceedings
two
further counts of misconduct (counts 36 and 37) were withdrawn by the
third respondent. Therefore, in arbitrating the unfair
dismissal
dispute, the second respondent had to determine,
inter
alia
, whether the applicant
was guilty of the remaining 29 counts of misconduct. The second
respondent found that the applicant was
not guilty of all remaining
counts of misconduct except counts 2, 9 and 40. Based on the finding
that he was guilty of counts 2,
9 and 40 the second Rrespondent
concluded that the dismissal was substantively fair. This conclusion
and the findings incidental
thereto are the subjects of this review
application. Counts 2, 9 and 40 were described as:
Count
2
“
You
are guilty of Gross Dishonesty and/or gross misconduct in that during
January 2007 you manipulated the adjudication process
of the Tender
EKZNWL T/2006/12/1 by applying inconsistent procurement process and
thereby caused the work to be awarded to Nominya
Construction and not
Rapid Dawn 1099 cc even though Rapid Dawn submitted a lesser
quotation.”
Count
9:
“
You
are guilty of Gross Dishonesty and/or gross misconduct in that during
January 2007 you manipulated the adjudication process
of the Tender
EKZNWL T/2006/12/4 by applying inconsistent procurement and
evaluation process and thereby caused the work to be
awarded to Rapid
Dawn 1099 cc whilst the rates quoted by them for two items were
outside of that of the cost estimates.”
Count
40:
“
You
are guilty of gross misconduct and / or gross negligence in that you
failed to exercise due diligence and care in performance
of your
duties in that you prepared the initial payment assessment to Maziya
for the full tendered amount (less retention) whilst
all of the work
had not been performed according to the specifications per the Bills
of Quantities.”
Evidence
at arbitration
[10] Five
witnesses testified for the third respondent. The first witness was
Mr Clinton Ungerer, a Senior Manager in the Risk Advisory
Division of
Deloitte and Touche. He was involved in the said investigation
and he focused on the fraudulent conduct arising
from procurement
processes as well as the sourcing of various services and whether
those processes were actually rendered. Mr Sean
Webster, who was also
part of the Deloitte and Touche investigation team, was the next
witness and he testified in regard to the
issues surrounding the
Umlalazi Nature Reserve project. Mr Thembani Mzulwini was another
witness and as a Project Coordinator had
oversight of the Umlalazi
Project. He is the one who received the interim payment
certificate relating to the Umlalazi Project
that was signed by the
applicant. Mr Anandroy Ramdaw who chaired the disciplinary hearing
testified on procedural issues. The applicant
testified in defense of
himself.
[11] Most
of the evidence relating to the three outstanding charges was common
cause at arbitration. That evidence intended to show,
inter alia, the
following:
1.
The applicant admitted that he
prepared and signed the Interim Payment Certificate for the full
amount claimed by Maziya Electrical,
being a service provider, for
the work they claimed to have done, namely the renovation of chalets
1 to 5 at Umlalazi nature Reserve.
2.
Due to the nature of his job
which required him to be out of office most of the time, the
applicant took it as a normal and acceptable
practice to prepare and
sign payment certificates and other administrative documents, so that
if other supporting documents, like
the completion certificate which
was prepared by the Works Inspector after inspecting the works, are
done whilst he was out of
the office, the complete set of documents
could be put together and be submitted for processing without further
delay occasioned
by his absence from the office.
3.
The applicant advised the owner
of Maziya Electrical that the Works Inspector, Mr Duma would prepare
a completion certificate after
inspecting the works.
4.
The interim payment
certificate, without the supporting documents particularly the
completion certificate was submitted to Mr Mzulwini
whilst the
applicant was already on suspension. The third respondent’s
witnesses correctly conceded that without the supporting
documents
the interim payment certificate was meaningless and no payment could
be effected. Indeed no payment was effected because
of the absence of
the supporting documents.
[10] The
third respondent proved, through a bundle of documents admitted as
evidence during the cross-examination of the applicant,
that some
monies were transferred from the bank account of Ms Hlongwane to the
Absa Bank account of the applicant. The applicant
unsuccessfully
objected to the admissibility of that evidence as hearsay and as
irregular due to the absence of the necessary legal
basis for it
admissibility. An amount of R110 000 was paid by Ms Hlongwane to the
applicant in 2006. Then in 2007 further amounts
totaling R107 000
were also paid by Ms Hlongwane to the Absa Bank account of the
applicant. Most of the payments were made a few
days after Ms
Hlongwane was paid by the first respondent for projects in which the
applicant had procured and managed such projects.
[11] The
applicant testified that the transferred monies were the proceeds of
the sale of his motor vehicle to Mrs. Hlongwane who
came up with the
best offer which was slightly below the market value. He said that
she paid him intermittently and during that
period he retained the
log-book. He emphatically denied that the sale of the motor vehicle
to Mrs. Hlongwane played any role in
his decision to recommend
contracts in favour of Nominya Construction. He also denied that such
transfers were kickbacks flowing
from the tenders awarded to Nominya
Construction.
Chief
findings of the first respondent and grounds for review
[12] The
submissions by the applicant on the grounds for review include the
findings assailed. As examples I shall refer to some
but not all such
submissions.
Count
40
[13]
The submission was that crucial evidence ignored by the Commissioner
in this regard is that, due to the nature of his job which
required
him to be out of office most of the time, it was an accepted practice
for the applicant to prepare a payment certificate
in advance. The
Commissioner was said to have completely ignored or disregarded the
fact that this version was pertinently put
to the third respondent’s
witnesses at the disciplinary enquiry and at the arbitration. In
order to fairly convict the applicant
of Count 40 the third
respondent had to prove, among other things, the existence of the
workplace rule at the time. The applicant
said that since the third
respondent failed to rebut the applicant’s contention that the
pre-signing of the payment certificate
was an acceptable practice,
there was no basis whatsoever for the second respondent to conclude
that the applicant was guilty of
Count 40. It was further contended
that there was no evidence supporting the Commissioner’s
finding that there was potential
prejudice by signing the payment
certificate in advance. The third respondent’s witness Mr
Webster conceded that no payment
could be effected without a
completion certificate confirming the amount of work that had been
done.
Counts
2 and 9
[14]
The applicant’s conviction on Counts 2 and 9 was said to have
been entirely based on the ‘bank statements’
contained in
a bundle which was put to the applicant for the very first time
during cross-examination. The Commissioner effectively
stated that if
it was not for the bank statements the third respondent would have
failed to prove that the applicant was guilty
of these charges.
While
the sale of the motor vehicle to Ms Hlongwane by the applicant was
common cause,
at
the disciplinary enquiry, the amount paid and the manner of payment
by Ms Hlongwane were never an issue. Even at the arbitration
the
third respondent closed its case without leading any evidence
whatsoever about possible discrepancies in the amount paid by
Ms
Hlongwane for the vehicle.
[15]
Despite the CCMA subpoena calling upon a bank official to attend
arbitration to produce bank statements, nobody attended and
testified
about the bank statements. As a result, the ‘bank statements’
were not authenticated. Most of the statements
were electronic copies
without even a logo of the bank. The affidavits accompanying the bank
statements were in terms of section
36 of the Criminal procedure
Act
[2]
whereas the arbitration is conducted in terms of the LRA. Some of the
so-called affidavits were not even signed by the deponent.
The
inadmissibility of the ‘bank statements’ was pertinently
raised during cross-examination and re-examination of
the applicant,
as well as during argument. T
he
Commissioner’s admission of the copies of the bank statements
contained in the bundle was said to offend the Civil Proceedings
Evidence Act.
[3]
Sections 27 to 32 of the CPEA deals specifically with the procedure
of presenting banker’s books as evidence in civil proceedings.
[16]
The
Commissioner inferentially concluded that the monies allegedly paid
by Ms Hlongwane into the applicant’s bank account
in 2007 were
kickbacks based on the finding that the applicant testified that Ms
Hlongwane’s last instalment was at the end
of December 2006 and
he could not explain the 2007 payments.
Six
examples evincing several gross irregularities allegedly committed by
the second respondent relating to this aspect were identified
by the
applicant
Opposition
to the review application
[17]
In respect of count 40, pertaining to the pre-signing of payment
certificates the submission by the third respondent was that
e
ven
if such a practice existed, the applicant in his capacity as the
acting project manager:
1.
had a duty to oversee the
completion of projects and payment thereof ;
2.
had an obligation to refrain
from perpetuating such practice and to normalize the payment
procedures.
[18] The
submission was further that, as the acting project manager, the
responsibility lay with the applicant to truthfully represent
to the
third respondent’s finance department whether they should pay
the service provider and in this case the extent of
such payment. A
fundamental rule was that the service providers were not paid for
work that they had not completed. It was then
absurd to suggest that
the applicant was not aware of that rule. Further, the fact that he
contended that the finance ought to
have picked up the irregularity
suggested that he knew that the rule was in place.
[19] It
was contended that the third respondent was an organ of state and
that therefore it was duty bound to award the tender to
the tenderer
who scored the most points in accordance with the provisions of
section 2(1) of the Preferential Procurement Policy
Framework Act.
[4]
The third respondent said that it could not be emphasized enough how
important a factor price played in the award of a tender and
the
applicant perpetuated the same irregularity in the tender that formed
the subject of count 9, which tender was awarded to Rapid
Dawn.
[20] The
third respondent observed that t
he
second respondent further formed the view that the applicant was a
poor witness whose explanations were unsatisfactory; he gave
a range
of answers and changed his version and that the second respondent was
justified in drawing the inescapable inference that
those payments
were kickbacks from the respective tenderers.
Evaluation
[21] At
the commencement of this application both parties relinquished the
stance each adopted on condonation for the late filing
of the
founding and answering affidavits. It was a correct position as the
award came to the notice of the applicant much later
than the date of
the award. Condonation was not necessary. With the applicant
withdrawing his opposition to the late filing of
the answering
affidavit, a need to seek condonation was dispensed with.
[22] The
law governing the reviewability of an arbitration award is trite. It
has to be determined here whether the decision reached
by the second
respondent is one that a reasonable decision maker could not
reach.
[5]
In
Herholdt v Nedbank Ltd
[6]
the court stated that test in the following terms:
“
In
summary, the position regarding the review of CCMA awards is this: A
review of a CCMA award is permissible if the defect in the
proceedings falls within one of the grounds in s 145(2) (a) of the
LRA. For a defect in the conduct of the proceedings to amount
to a
gross irregularity as contemplated by s 145(2) (a) (ii), 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
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.
”
[7]
[23] The
success of this application lies in determining whether the
Commissioner misconceived the nature of the enquiry or arrived
at an
unreasonable result. It is appropriate to deal with each count of
misconduct as the parties did in the presentation of this
application. In similar vein as did the parties I commence with count
40 and then counts 2 and 9 simultaneously.
Count
40
[24]
The allegation facing the applicant was that he:
·
prepared the initial payment
assessment to Maziya;
·
for the full tendered amount
(less retention);
·
whilst all of the work had not
been performed according to the specifications per the Bills of
Quantities.
The
result of what was alleged was that the applicant:
Ø
was guilty of gross misconduct
and / or gross negligence
Ø
in that he failed to exercise
due diligence and care in performance of his duties.
[25]
Throughout the disciplinary and the arbitration hearings it remained
common cause that the applicant committed each of the
three
allegations identified herein . All he did was to deny that the two
identified results flew from his conduct and that he
was therefore
not guilty. The determination of the alleged results depends on the
consideration of the objective interests of society.
As alluded to by
Mr Saks for the third respondent, the third respondent was an organ
of state, which was obliged to adjudicate
tenders in accordance with
a system that was fair, equitable, transparent, competitive and
cost-effective. Any conduct that undermined
its constitutional
imperatives in the evaluation and adjudication of tenders undermined
the procurement process itself and exposed
the third respondent to
the risk of the review of the tender. Further, as an employer the
third respondent was entitled to set
standards for compliance by its
employees. It did not lie in the mouth of any employee to allege that
he contravened a clearly
stated, well known and reasonable rule
merely because there were other employees who were infringing the
rule. The applicant was
a senior employee on whom the third
respondent was entitled to rely for a proper observance of its rules.
The third respondent
was, for instance, entitled to be informed by
the applicant of any breach of the tender rules by applicant’s
supervisor,
Mr Khumalo.
[26] The
applicant’s
submission
that crucial evidence was ignored by the Commissioner in that, due to
the nature of his job which required him to be
out of office most of
the time, it was an accepted practice for the applicant to prepare a
payment certificate in advance in an
attempt to find a way of escape.
His was to comply with the clear precepts of his employer. His claim
that his job required him
to be out of office most of the time has no
factual basis. He was outside most of the time but was unable to
determine that the
projects for which he pre-signed were far from
completion stage. The payment stage was still far off. To confuse
matters more,
the applicant sought to introduce the issue of the
absence of prejudice, saying the chances of moneys being paid out
were none
existent. This element was never made part of the charge he
faced. It was an irrelevant consideration when his guilt was
considered.
It might have been a factor in mitigation.
[27]
In my view, the reasoning of the second respondent cannot be faulted.
He neither
misconceived
the nature of the enquiry nor arrived at an unreasonable result.
Counts
2 and 9
[28] The
allegations summarized, are that the applicant manipulated the
adjudication process of two tenders by applying inconsistent
procurement and evaluation process and thereby caused the work to be
awarded to incorrect tenderers. The applicant’s main
objection
was the admissibility of his bank statements, due to them amounting
to being hearsay evidence. A party against whom hearsay
evidence is
sought to be admitted can consent to its admissibility. Assuming for
a moment that this was hearsay evidence, the applicant
agreed to the
bank statements being procured and allegedly tried to get them
himself but failed. His representative came on record
as having no
problem in the statements being admitted into evidence. He well knew
long before that the third respondent wanted
to have the bank
statements admitted as evidence and was thus accorded the notice he
might have needed.
[29] Of
more importance though, is the fact that the truth of the contents of
the bank statements did not depend on the bank officials,
who
themselves would be giving hearsay evidence on the bank statements,
but it depended on him. They were his bank statement, giving
an
account of transactions by his or at his instance. He bore personal
knowledge of the contents of the bank statements. That he
might not
have a good memory of each transaction is a separate enquiry. The
second respondent was accordingly entitled to admit
the bank
statements into evidence without following the stringent legal route
proposed by the applicant, as he was not dealing
with hearsay
evidence.
[30]
Having admitted the bank statements the second respondent had a duty
to evaluate all evidential material before him. A further
challenge
on this would only be permitted on appeal and not on review. Again,
in in respect of these two counts the second respondent
has not been
shown to have misconceived the nature of the enquiry or arrived at an
unreasonable result.
[31]
Accordingly, the following order is to issue:
1.
The review application in this
matter is dismissed.
2.
No costs order is made.
________
Cele J.
Judge of the Labour Court of South
Africa.
APPEARANCES:
For
the Applicant: Mr B Mgaga
Instructed by Garlicke and Bousfield
Inc.
For
the third Respondent: Mr D J Saks
Instructed by Ndwandwe and Associates.
[1]
Act Number 66 of 1995.
[2]
51 of 1977
[3]
25 of 1965 (“CPEA”).
[4]
No. 5 of 2000
[5]
Sidumo
& another v Rustenburg Mines Ltd &
others
(2007) 28 ILJ 2405 (CC).
[6]
(2013)
34 ILJ 2795 (SCA) at paragraph 25.
[7]
See also
Gold
Fields Mining SA (Pty) Ltd (Kloof Gold Mine) v CCMA & others
(2014) 35 ILJ 943 (LAC) at
[14] to [21]