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[2019] ZALCJHB 294
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Free State Development Corporation v Public Servant Association of South Africa obo Kgokotli and Others (JR1403/15) [2019] ZALCJHB 294 (29 October 2019)
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case
no:
JR1403/15
In the matter between:
FREE
STATE DEVELOPMENT CORPORATION
Applicant
and
PUBLIC SERVANT
ASSOCIATION OF SOUTH
AFRICA
OBO MR MORAKE KITH KGOKOTLI
First
Respondent
COMMISSION FOR
CONCILIATION
MEDIATION AND
ARBITRATION Second
Respondent
MINNETTE VAN DER MERWE
N.O
Third
Respondent
Heard:
15
October 2019
Delivered:
29 October 2019
Summary: Review
application – misconduct for causing appointment of incorrect
service providers and contrary to the board
resolution –
failure to discover the audio recording of the Board meeting was
fatal to the applicant’s case.
JUDGMENT
NKUTHA-NKONTWANA, J
Introduction
[1]
This
is an application in terms of section 145(1)(a) of the Labour
Relations Act
[1]
(LRA). The
applicant, the Free State Development Corporation (FDC), seeks an
order reviewing and setting aside the arbitration
award dated 29 June
2015 with case number FSBF481-15, issued under the auspices of the
second respondent, the Commission for Conciliation
Mediation and
Arbitration (CCMA). The third respondent, Ms Minnette Van der Merwe
(commissioner), found that the dismissal of Mr
Morake Kith Kgokotli
(Mr Kgokotli), a member of the first respondent, Public Servant
Association of South Africa (PSA), was substantively
unfair.
[2]
The PSA is the only respondent opposing the
application.
Background
facts
[3]
Mr Kgokotli was employed by the FDC as a Chief
Financial Officer (CFO). On 5 February 2014, the Board of Directors
of the FDC (Board)
held a meeting which dealt,
inter
alia
, with the appointment of the two
services providers consequent to an open tender process. The first
company is 1@Consulting and
was appointed to conduct valuations on
investment properties. The second company is Equity Property
Professionals (Equity) which
was appointed to conduct valuations on
equities and securities. Mr Kgokotli was directed to draft the
appointment letters as per
the Board resolutions.
[4]
On 6 February 2014, Mr Kgokotli presented the
appointment letters to Mr Ikhraam Osman (Mr Osman), the Chief
Executive Officer (CEO)
for his signature, which he did. The service
providers were appointed accordingly.
[5]
It later transpired that the appointment did not
accord with the Board resolutions. The mandates and scope of work for
the two service
providers were transposed. 1@consulting was appointed
to valuate equities and securities, whilst Equity was appointed to
valuate
investment properties. This error was picked up by the
internal auditors.
[6]
Mr Kgokotli was charged as follows:
‘
During
February 2014 you unlawfully, wrongfully and contrary to the Board
resolution presented incorrect appointment letters for
the CEO’s
signature or cause the CEO’s incorrect signatures, resulting in
wrongfully appointments of 1@Consulting and
Equity Property
Professionals’.
[7]
Mr Osman testified that the Board never resolved
to swap the service providers. He conceded, however, that he did sign
the erroneous
appointment letters, but he did not check the contents.
He had trusted Mr Kgokotli’s
bona
fides
and expected him to exercise
diligence in his work as the CFO. During the disciplinary enquiry, Mr
Osman testified that his overall
impression of Mr Kgokotli was that
he was professional, committed to his job, and applied himself
diligently to his tasks. He would
not have been opposed to keeping
him within the FDC if the air was cleared and matters were resolved.
This evidence was confirmed
during the arbitration proceedings.
[8]
Mr David Nkaiseng (Mr Nkaiseng), the Company
Secretary, testified that he was the one who prepared the Board
resolutions and that
they are a true reflection of what was resolved.
The Board never resolved to swap the service providers. He conceded
that the PSA
did request the audio recording of the Board meeting
during the disciplinary enquiry. Also, it was possible that Mr Osman
could
have instructed his office to give the audio recording to the
PSA. However, he did not deem it necessary to do so because the audio
recording contained all the Board’s deliberations and
resolutions on many other issues that were on the agenda which had
nothing to do with the appointment of the service providers. Had the
PSA requested to listen to the audio recording, he would have
been
amenable.
[9]
Mr Kgokotli testified that the appointment letters
were drafted in accordance with the Board resolution to swap the
services providers.
The appointment letters were drafted on the
morning after the Board meeting, using his own personal notes taken
during the Board
meeting. At that time, he had not received to the
extract from the minutes of the Board. He was under pressure to
prepare the appointment
letters hence he could not wait for the
minutes of the Board.
[10]
Mr
Kgokotli’s evidence during the disciplinary enquiry was that:
‘In this meeting to my recollection, it was resolved
that we
appoint 1@Consulting for securities and Equity Professionals for
investment property’.
[2]
He was adamant during cross-examination that the appointment letters
were prepared as per the resolution of the Board; and until
proven
otherwise, he was not prepared to accept that he made a mistake.
[11]
Mr Kgokotli denied that the appointment of service
providers was an irregular expenditure or could have given the FDC a
qualified
opinion by the Auditor General (AG). That is so because the
FDC did not disclose the transaction as an irregular expenditure in
the financial statement and the AG did not pronounce on this
transaction. Also, since there was value for money, it could not have
been a fruitless expenditure. In any event, there was no prejudice to
the service providers because they tendered for both projects
and
each was appointed for the amount they tendered for, so he further
testified.
[12]
Mr Kgokotli was found guilty and dismissed on 30
June 2014, a decision he only became aware of on 24 July 2014.
Review
test and application
[13]
It is well
accepted that the line between a review and an appeal must be
maintained. In the context of labour law, the drafters
of the LRA
deliberately preferred a review process as they thought that it would
be a simple, quick, cheap and non-legalistic approach
to the
adjudication of unfair dismissals in accordance with the objectives
of the LRA.
[3]
Consequently,
mere errors of fact or law may not be enough to vitiate the award.
The authoritative pronouncement in this regard
remains the Labour
Appeal Court’s (LAC) decision in
Head
of the Department of Education v Mofokeng,
[4]
where it was stated that:
‘
[30]
The failure by an arbitrator to apply his or her
mind to issues which are material to the determination
of a case will
usually be an irregularity. However, the Supreme Court of Appeal
(“the SCA”) in
Herholdt v
Nedbank Ltd
and this court in
Goldfields Mining South Africa (Pty) Ltd
(Kloof Gold Mine) v CCMA and others
have held that before such an irregularity will result in the setting
aside of the award, it must in addition reveal a misconception
of the
true enquiry or result in an unreasonable outcome…
[32]
…Mere errors of fact or law may not be enough to vitiate
the award. Something more is required. To repeat: flaws in the
reasoning
of the arbitrator, evidenced in the failure to apply the
mind, reliance on irrelevant considerations or the ignoring of
material
factors etc. must be assessed with the purpose of
establishing whether the arbitrator has undertaken the wrong enquiry,
undertaken
the enquiry in the wrong manner or arrived at an
unreasonable result.
Lapses in lawfulness, latent or patent
irregularities and instances of dialectical unreasonableness should
be of such an order (singularly
or cumulatively) as to result in a
misconceived inquiry or a decision which no reasonable decision-maker
could reach on all the
material that was before him or her.
[33]
Irregularities or errors in relation to the facts or issues,
therefore, may or may not produce an unreasonable outcome or provide
a compelling indication that the arbitrator misconceived the inquiry.
In the final analysis, it will depend on the materiality
of the error
or irregularity and its relation to the result. Whether the
irregularity or error is material must be assessed and
determined
with reference to the distorting effect it may or may not have had
upon the arbitrator’s conception of the inquiry,
the
delimitation of the issues to be determined and the ultimate outcome
.
If but for an error or irregularity a different outcome would have
resulted, it will
ex hypothesi
be material to the
determination of the dispute. A material error of this order would
point to at least a
prima facie
unreasonable result.
The
reviewing judge must then have regard to the general nature of the
decision in issue; the range of relevant factors informing
the
decision; the nature of the competing interests impacted upon by the
decision; and then ask whether a reasonable equilibrium
has been
struck in accordance with the objects of the LRA. Provided the right
question was asked and answered by the arbitrator,
a wrong answer
will not necessarily be unreasonable
. By the same token, if an
irregularity or error material to the determination of the dispute
may constitute a misconception of
the nature of the enquiry so as to
lead to no fair trial of the issues, with the result that the award
may be set aside on that
ground alone.
The arbitrator however must
be shown to have diverted from the correct path in the conduct of the
arbitration and as a result failed
to address the question raised for
determination
.’ (Emphasis added)
[14]
In the present case, the whole matter turned on the audio recording
of the Board meeting.
Mr Kgokotli was willing to accept an error on
his part had the audio recording proved that the Board never resolved
that the service
providers be swapped. The reason provided by Mr
Nkaiseng for his refusal to avail the audio recording is untenable.
Indeed, the
Board must have deliberated on other matters that did not
concern Mr Kgokotli. However, the request was limited to the
deliberations
on the appointment of the service providers and that
extract should have been made available, especially, since the
correctness
of the unsigned minutes and the resolutions as drafted by
Mr Nkaiseng were disputed.
[15]
Mr Osman clearly had no problem with availing the audio recording of
the Board meeting
to Mr Kgokotli. In fact, it was his evidence that
he had no problem with Mr Kgokotli’s work ethics as he
diligently attended
to his tasks; and they had a cordial professional
relationship. It also was his evidence during the disciplinary
enquiry that he
would be able to work with Mr Kgokotli if issues were
resolved.
[16]
Clearly, the audio recording of the Board meeting could have easily
and conclusively put
this issue to rest as soon as the discrepancy
was picked up by the internal auditors. It is not correct that Mr
Kgokotli’s
version of defence that the Board had resolved to
swap the services providers only emerged during arbitration as
submitted by counsel
for the FDC. The applicant was adamant
throughout the disciplinary enquiry and arbitration proceedings that
he drafted the letters
as per the resolution of the Board to swap the
service providers.
[17]
Nothing much turns on the applicability of the
caveat subscriptor
principle. The essence of the commissioner’s finding is that Mr
Osman ought to have satisfied himself that the appointment
letters
were in line with the resolution of the Board before appending his
signature. That is so because Mr Nkaiseng testified
that he had
communicated the extract from the minutes of the Board meeting to
him. The commissioner opined that, unlike Mr Kgokotli
who did not
have the copy of the extract from the minutes of the Board meeting,
Mr Osman ought to have been more circumspect.
[18]
Notwithstanding, I still maintain that the audio recording of the
Board meeting could have
disposed of this issue on the spot and
spared everyone the agony of going through all the legal processes
undertaken to date. Therefore,
the FDC’s failure to discover
the audio recording of the Board meeting was fatal to its case since
it had the
burden of proof.
[19]
It is disquieting that no regard was had to the career of Mr
Kgokotli, a second senior
employee in the FDC. There was no evidence
that he was negligent in his duties. Clearly, there was an element of
error in either
the drafting of appointment letters or the minutes of
the Board meeting. Even though the FDC wanted to exaggerate the
extent of
the error in order to justify a sanction of dismissal, it
did not succeed. Mr Kgokotli was clear in his evidence that the
swapping
of service providers by the Board was not atypical.
[20]
In this instance, both service providers had tendered for both tasks.
Despite the swapping
of the scope of work, the amount they tendered
for was never changed. There was no complaint lodged by the service
providers and
both performed as per the appointment letters. Also, it
was his evidence that the FDC never reported the incident to the AG
as
an irregular expenditure and there was no pronouncement as such by
the AG. Since there was value for money, the swapping of the
service
providers could not have been a fruitless expenditure. Ultimately, it
remained an internal issue that had no adverse implications
on the
FDC. This evidence was not earnestly challenged.
[21]
In the absence of an allegation of dishonesty, the commissioner was
spot on in her finding
that, even if Mr Kgokotli was guilty as
charged, the circumstances of this matter support the application of
progressive discipline
rather than dismissal. There was no evidence
that the employment relationship was intolerable as submitted by
counsel for the FDC.
Conversely, as stated above, Mr Osman was not
opposed to reinstatement as he had a cordial and professional
relationship with Mr
Kgokotli. The same applies to Mr Nkaiseng, who
was in any event, new at the FDC when the whole incident
happened.
[22]
To my mind, the commissioner carefully considered the evidence that
was before her and
properly applied her mind to the substantive
issues and, alternatively, the question of the appropriateness of the
sanction.
Conclusion
[23]
In all the circumstances, I am satisfied that the
commissioner properly conceived the enquiry and rendered a reasonable
outcome
. Clearly, there is no basis to interfere with the
award
.
Costs
[24]
This is a typical case where it accords with
the
requirements of the law and fairness that
costs should follow
the result. The
PSA has incurred costs not only in
opposing the application, but also in prodding the applicant to take
further steps in prosecuting
the matter. In any event, the
FDC
ought to have been advised about the prospects of challenging the
award.
[25]
In the circumstances, I make the following order:
Order
1.The
review application is dismissed.
2.
The applicant is ordered to pay the first respondent’s costs.
_________________
P. Nkutha-Nkontwana
Judge
of the Labour Court of South Africa
Appearances
For the Applicant:
Advocate R Tulk
Instructed
by:
Khirshen Naidoo and Company Inc.
For the
Respondents: Advocate
P Venter
Instructed
by:
Adrie Hechter Attorneys
[1]
Act
66 of 1995, as amended.
Section
145(1) (a) of the LRA provides that ‘[a]ny party to a dispute
who alleges a defect in any arbitration
proceedings
under the auspices of the Commission may apply to the Labour Court
for an order setting aside the arbitration award…
within six
weeks of the date that the award was served on the applicant…’
[2]
See: Transcript page 475, lines 7-9.
[3]
See:
Sidumo
and Another v Rustenburg Platinum Mines Ltd
and
Others
[2007] 12 BLLR 1097
(CC); (2007) 28 ILJ 2405 (CC) paras 78 and 79.
[4]
[2015] 1 BLLR 50
(LAC) at paras 30-33; see also
Goldfields
Mining SA (Pty) Ltd (Kloof Gold Mine) v CCMA
[2007] ZALC 66
;
[2014]
1 BLLR 20
(LAC).
Herholdt
v Nedbank Ltd (Congress of South African Trade Unions as amicus
curia)
[2013] 11 BLLR 1074
(SCA).