Brief Summary

Review — Misconduct — Gross negligence — Dismissal of employee for gross negligence found to be unfair — Employee not informed of executive decision to process salaries without budget — Arbitrator's finding of no gross negligence upheld — Award not reviewable. Costs — Applicant's attorney ordered to pay costs occasioned by postponement de bonis propriis on a punitive scale.

Comprehensive Summary

Summary of Judgment

1. Introduction

This was a review application brought in the Labour Court in terms of section 145 of the Labour Relations Act 66 of 1995 (LRA). The applicant was the Eastern Cape Treasury Department (Treasury). The first respondent was the General Public Service Sectoral Bargaining Council (GPSSBC), cited because it was the statutory arbitration forum. The second respondent was Mr Solomzi Mpiko N.O., the arbitrator who issued the award under review. The third respondent was Ms Mendoe Dukada, the employee whose dismissal was challenged.

The procedural history was that Treasury dismissed Ms Dukada for alleged gross negligence. She referred an unfair dismissal dispute to the GPSSBC, where the arbitrator found the dismissal substantively unfair and ordered reinstatement. Treasury then approached the Labour Court to have the arbitration award reviewed and set aside.

The general subject-matter of the dispute concerned whether the arbitrator’s finding (that Ms Dukada was not grossly negligent and that dismissal was unfair) was reviewable under section 145 of the LRA, and whether the remedy of reinstatement was competent in the circumstances. In addition, a significant part of the judgment dealt with costs, specifically the wasted costs occasioned by an earlier postponement and whether those costs should be borne personally by Treasury’s attorney de bonis propriis and on a punitive scale.

2. Material Facts

Ms Dukada occupied a senior position as Deputy Director General: Asset and Liability Management in the Eastern Cape Treasury. She faced disciplinary charges on two counts. At the disciplinary hearing, she was found guilty only on count two, described as being “grossly negligent in not being aware of the Executive decision and thus failing to comply with it.”

The “executive decision” referred to a decision taken at a meeting on 24 May 2012, where an “extraordinary decision” was taken to process teachers’ and healthcare workers’ salaries despite there being no budget to pay them. It was common cause at arbitration that Ms Dukada did not attend that meeting and was not required to attend it.

It was also not disputed that the relevant departmental head, Ms Tibelo Mbina‑Mthembu, did not convey the decision taken at that executive meeting to Ms Dukada. On the evidence accepted by the arbitrator, Ms Dukada did not receive a direct instruction to deviate from the norm or to act contrary to her understanding of the law.

The arbitrator accepted that Ms Dukada refused to process payment in the absence of budget, relying on her understanding of obligations under the Public Finance Management Act. Treasury’s case on review was framed as if Ms Dukada had ignored an instruction (or had been grossly negligent in failing to comply with it). However, in argument before the Labour Court, Treasury’s representative was unable to point to record evidence that the Head of Department or another official had actually instructed Ms Dukada to pay salaries without a budget.

The matter also had a distinct costs-related factual history. The review application had initially been enrolled on 24 November 2016 before Golden AJ. Treasury’s attorney, Mr Ike Motloung, applied for a postponement supported by affidavit, stating, among other things, that he had only seen the answering affidavit for the first time when he inspected the court file in Port Elizabeth on 7 November 2016, and that the answering affidavit had not been provided to him earlier. Golden AJ granted the postponement but ordered that costs stand over, required Treasury to address punitive wasted costs, and required Mr Motloung to explain certain averments about his receipt and knowledge of the answering affidavit.

Subsequently, further affidavits were filed dealing with whether the answering affidavit had been emailed to Mr Motloung on 25 August 2016. The employee’s attorney, Mr Minnaar Niehaus, stated under oath that the answering affidavit was attached to that email, and produced an annexure reflecting a PDF attachment titled “ANSWERING AFFIDAVIT 28JUNE2016.pdf”. Mr Motloung persisted in stating that the answering affidavit had not been attached and that he only saw it later in the court file.

3. Legal Issues

The central issue on the merits was whether the arbitration award was reviewable under section 145 of the LRA on the ground advanced by Treasury, namely that the arbitrator allegedly committed misconduct in relation to his duties (in substance, a contention that the arbitrator misdirected himself and failed properly to evaluate the evidence).

A related remedial issue arose during argument: whether the arbitrator erred by ordering reinstatement without considering section 193 of the LRA, and in particular whether the arbitrator was obliged to engage with the limitations in section 193(2) (which lists circumstances in which reinstatement may be precluded).

These issues primarily concerned the application of law to fact under the review standard. The court had to evaluate whether any alleged irregularity demonstrated either a misconception of the enquiry or an unreasonable outcome in the sense required for review, rather than reassessing the matter as an appeal on factual correctness.

A further issue, separate from the merits, concerned the appropriate costs order arising from the prior postponement. This required the court to determine, on affidavit, whether Mr Motloung had been candid with the court and whether the circumstances justified a de bonis propriis costs order on a punitive (attorney and client) scale, as well as the proper allocation of wasted costs between the litigant (Treasury) and its legal representative.

4. Court’s Reasoning

On the merits, the court approached the review application by examining whether Treasury’s allegations of “misconduct” by the arbitrator amounted to a reviewable irregularity. The judgment treated the review grounds as essentially attacking the arbitrator’s factual findings and evaluation of the evidence, rather than identifying a reviewable defect in the arbitration process.

The court dealt directly with Treasury’s argument that, because Ms Dukada held a senior position, she ought to have made enquiries and discovered the executive decision even if it was not communicated to her. The court considered that the arbitrator’s conclusion to the contrary was not unreasonable. The arbitrator’s reasoning, as understood by the Labour Court, was that the employee could not be found grossly negligent for failing to comply with an instruction that was not given to her, particularly where she understood her obligations to require adherence to lawful budgeting constraints.

Treasury also contended that the brevity of the arbitration award demonstrated that the arbitrator failed to apply his mind. The court rejected this inference. It reasoned that the evidence may have been lengthy, but the material facts relevant to the determination were simple; the mere fact that an award is brief did not, without more, show that the arbitrator ignored material issues.

The judgment emphasised that Treasury’s submissions depended on the proposition that the employee ignored (or negligently failed to comply with) an instruction. However, in oral argument Treasury could identify no record evidence that an instruction to pay salaries without budget had been conveyed to Ms Dukada. The court treated this as undermining the premise of Treasury’s review case. On the arbitrator’s accepted factual platform—namely that no direct instruction was given—the arbitrator’s conclusion that there was no gross negligence was held to fall within the bounds of reasonableness.

In stating the governing review test, the court relied on the Labour Appeal Court’s formulation in Head of Department of Education v Mofokeng (2015) 36 ILJ 2802 (LAC); [2015] 1 BLLR 50 (LAC), which in turn draws on Herholdt v Nedbank Ltd and Goldfields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v CCMA and others. The court applied that approach by asking whether any alleged failure to apply the mind revealed a misconception of the true enquiry or resulted in an unreasonable outcome. It found that the arbitrator did not misconceive the enquiry, considered the evidence, and arrived at an outcome that was not unreasonable.

The court also addressed a further ground raised in argument, namely that the arbitrator allegedly failed to consider section 193 when ordering reinstatement. The court rejected this contention by distinguishing the authorities relied upon, particularly the Constitutional Court decision in SARS v CCMA [2016] ZACC 38; [2017] 1 BLLR 8 (CC); (2017) 38 ILJ 97 (CC); 2017 (1) SA 549 (CC); 2017 (2) BCLR 241 (CC). It noted that in SARS the employee had admitted misconduct and the employer had led evidence about the intolerability of continued employment, which triggered a need for careful consideration of section 193(2). In contrast, in this case the arbitrator found that Ms Dukada did not commit misconduct. On that footing, the court treated reinstatement as the default remedy and, relying on Moodley v Department of National Treasury [2017] ZALAC 5 (10 January 2017), held that none of the statutory exceptions in section 193(2)(a)–(d) were shown to apply. Reinstatement was therefore considered a reasonable remedy on the arbitrator’s factual findings.

On costs, the court’s reasoning proceeded from Golden AJ’s earlier postponement order, which expressly required an explanation from Mr Motloung regarding statements made about receipt of the answering affidavit, and foreshadowed punitive costs. The court noted that despite the clarity of Golden AJ’s directive, Mr Motloung did not initially file the required explanatory affidavit, and only did so after the court’s further instruction at the subsequent hearing.

In resolving the factual dispute about whether the answering affidavit had been emailed as an attachment, the court referred to the Plascon‑Evans rule as formulated in Plascon‑Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A). Applying that approach to the affidavits and annexures, the court concluded, on a balance consistent with that rule, that Mr Motloung had not been candid with the court when he sought the postponement and advanced the assertion that he had not received the answering affidavit and only saw it later in the court file.

Given that the postponement was granted on the basis of Mr Motloung’s version, and given the court’s finding that he did not “play open cards,” the court considered it inappropriate for Treasury (and ultimately the taxpayer) to bear the wasted costs. It regarded the circumstances as justifying an order that Mr Motloung personally pay the wasted costs de bonis propriis and on an attorney and client scale, and it directed that the judgment be sent to the relevant Law Society for consideration of the events described under the costs heading.

5. Outcome and Relief

The Labour Court dismissed Treasury’s review application, holding that the arbitration award was not reviewable under section 145 of the LRA on the grounds advanced. The award of reinstatement was left intact.

Treasury was ordered to pay costs, including the wasted costs occasioned by the postponement of 24 November 2016. However, the court further ordered that the wasted costs occasioned by that postponement be paid by Treasury’s attorney, Mr Ike Motloung, de bonis propriis on an attorney and client scale.

The court also ordered that a copy of the judgment be sent to the Law Society of the Northern Provinces for it to consider the events set out in the costs section of the judgment.

Cases Cited

Head of Department of Education v Mofokeng (2015) 36 ILJ 2802 (LAC); [2015] 1 BLLR 50 (LAC).

Moodley v Department of National Treasury [2017] ZALAC 5 (10 January 2017).

SARS v CCMA [2016] ZACC 38; [2017] 1 BLLR 8 (CC); (2017) 38 ILJ 97 (CC); 2017 (1) SA 549 (CC); 2017 (2) BCLR 241 (CC) (8 November 2016).

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A).

Legislation Cited

Labour Relations Act 66 of 1995.

Public Finance Management Act (as referenced in the factual context of the dispute).

Rules of Court Cited

No specific Labour Court or Uniform Rules of Court provisions were cited by rule number in the judgment; the court referred to the Plascon‑Evans rule for resolving factual disputes on affidavit.

Held

The court held that the arbitrator’s finding that the employee was not guilty of gross negligence, in circumstances where it was common cause that she was not part of the executive meeting and was not instructed of the decision taken there, was not an unreasonable outcome and disclosed no reviewable misconduct or material irregularity under section 145 of the LRA.

The court held that the arbitrator’s reinstatement order did not disclose a reviewable defect on the basis of section 193 of the LRA, because on the arbitrator’s factual finding that no misconduct was committed, reinstatement remained the default remedy and none of the statutory exceptions to reinstatement were shown to apply.

The court held that the wasted costs occasioned by the earlier postponement should not be borne by Treasury, and that Treasury’s attorney should personally bear those costs de bonis propriis on an attorney and client scale, given the court’s conclusion that he had not been candid regarding receipt of the answering affidavit.

LEGAL PRINCIPLES

A review under section 145 of the LRA does not succeed merely because a party contends that the arbitrator’s factual findings were wrong; an award will be set aside only where a material irregularity reveals a misconception of the true enquiry or results in an unreasonable outcome, consistent with the approach articulated in Head of Department of Education v Mofokeng (2015) 36 ILJ 2802 (LAC); [2015] 1 BLLR 50 (LAC) (with reference to the principles in Herholdt and Goldfields as discussed there).

The brevity of an arbitration award is not, without more, proof that the arbitrator failed to apply his or her mind; the question remains whether the decision reflects a misconceived enquiry or an unreasonable result on the material facts.

In relation to remedies, section 193(2) of the LRA establishes reinstatement as the default remedy for substantively unfair dismissal unless one of the listed exceptions applies. Where an arbitrator finds that the employee did not commit the misconduct relied upon, and where no evidence establishes any of the section 193(2) exceptions, reinstatement may be treated as an appropriate and reasonable remedy, as reflected in the reasoning endorsed in Moodley v Department of National Treasury [2017] ZALAC 5 (10 January 2017) and distinguished from the context addressed in SARS v CCMA [2016] ZACC 38; [2017] 1 BLLR 8 (CC); (2017) 38 ILJ 97 (CC); 2017 (1) SA 549 (CC); 2017 (2) BCLR 241 (CC).

In determining costs disputes on affidavit, the court applied the approach associated with Plascon‑Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A). Where the court concludes that a legal practitioner has not been candid in circumstances that caused wasted costs, it may order such costs against the practitioner personally de bonis propriis, and may do so on a punitive scale such as attorney and client, in order to prevent the client (and, in this case, the public fiscus) from bearing costs occasioned by the practitioner’s conduct.

Eastern Cape Treasury Department v GPSSBC and Others (PR175/15) [2017] ZALCPE 4 (28 March 2017)