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[2020] ZALCJHB 21
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Mogapi v Commission for Conciliation, Mediation and Arbitration and Others (JR2014/17) [2020] ZALCJHB 21 (29 January 2020)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
reportable
Case
no
J
R 2014-17
In
the matter between:
PHINEAS MOGAPI
Applicant
and
COMMISSION
FOR CONCILIATION, MEDIATION AND ARBITRATION
LAWRENCE
NOWOSENETZ
N.O
SMALL
ENTERPRISE FINANCE AGENCY
First Respondent
Second
Respondent
Third
Respondent
Application
heard: 5 December 2019
Judgment
delivered: 29 January 2020
JUDGMENT
VAN
NIEKERK J
[1]
The applicant seeks to review and set aside an arbitration award
issued by the second
respondent (the arbitrator) on 29 August 2017.
In his award, the arbitrator upheld the fairness of the applicant’s
dismissal
by the third respondent (the employer) on a charge of gross
negligence.
[2]
The material facts are apparent from the terms of the arbitrator’s
award. The
third respondent lends money to small businesses. The
applicant was employed by the third respondent in December 2014 as an
investment
officer. His duties included, amongst other things,
originating applications for funding and facilitating and signing the
relevant
documents relating to loan applications. During March 2015,
the applicant submitted a proposal made on behalf of GABS
Construction
and Maintenance CC (the client) for a loan to fund the
purchase of specific equipment, being a motor grader and a backhoe
loader.
On 25 March 2015 the third respondent’s management
committee approved funding for the transaction. On 31 March 2015, a
letter
drafted by the applicant was sent to the client by the third
respondent’s Ms Melane, a post investment officer. The letter
stated that funding had been approved for the purchase of three
pieces of equipment, a hydraulic excavator, soil compactor and
backhoe loader. The excavator compactor had not been the subject of
approval by the management committee, and certain conditions
relating
to security for the loan had been omitted from the revised approval
letter.
[3]
Three charges of misconduct were brought against the applicant. He
was found guilty
of two and dismissed. The two charges were both of
gross negligence; first, that the applicant failed to bring to the
third respondent’s
intention the deviation from the decision of
record which stipulated the machinery that was the subject of the
loan, and secondly,
that the applicant had facilitated and signed
documents relating to the loan application for funding even though he
knew it was
contrary to the decision record of the management
committee approval to indicate any authorisation of the
deviation from
the original approval by the credit committee. The
applicant disputed the fairness of his dismissal and ultimately
referred the
matter to arbitration.
[4]
The issue before the arbitrator as recorded in paragraph 4 of his
award. In that paragraph,
he states the following:
The applicant alleges was
substantively and procedurally unfairly dismissed by the respondent.
He disputed the existence of a rule
standard, if it existed he
disputed being aware of it and he disputed the reasonableness of it.
They allege that discipline was
applied inconsistently. The sanction
was also in dispute…
[5]
The arbitrator heard evidence from witnesses of the third respondent.
It is not necessary
for present purposes to repeat that evidence, but
in essence the third respondent averred that the deviation
represented by the
second letter of approval had not been approved by
the management committee and that the applicant had failed to bring
the deviation
to the committee’s attention. Evidence was led
that any deviation from approved terms and conditions had to be
approved by
the person delegated by the committee approving the
transaction. In the present instance, no such person was delegated
and the
appropriate body to approve the deviation was the management
committee itself. The applicant’s manager testified that she
had no knowledge of the letter dated 31 March 2015 and that the
procedure for the deviation required a memorandum to be drawn up
by
the investment officer with recommendations for changes to the loan,
for submission ultimately to the management committee.
The
post-investment officer who signed the approval letter prepared by
the applicant on 31 March 2017 stated that she had been
charged with
negligence and disciplined on account of her having signed the letter
without preceding due diligence. In response
to a question put in
cross-examination to the effect that she and the applicant should
bear the blame equally, she stated that
the applicant had drafted the
letter, that she was under pressure at the financial year end, and
about to go on maternity leave.
The third respondent’s chief
executive officer testified that any change in the assets of a
proposed plan changed the risk
profile of the loan and was to be
approved by the management committee. While the policy for deviations
was not in writing, there
was a policy in place known by all
investment officers. The applicant’s conduct created an
unacceptable risk.
[6]
The applicant testified that at the relevant time, there was no rule
or standard for
a memorandum to be submitted about deviations to
loans – it was introduced only in July 2015. Accountability lay
with the
line management and in particular, Ms Moemi and Ms
Melane. There is no dispute at that point, the applicant became
unruly
and engaged in disruptive behaviour, after which he as
suspended. The applicant contended that his behaviour was the real
reason
for his dismissal, rather than the apparent reason that formed
the subject of the charges of misconduct brought against him. The
applicant denied that he could no longer be trusted – he
insisted that the third respondent’s management still trusted
him and testified that the sanction of dismissal was too harsh. The
applicant’s immediate supervisor testified that he had
no
knowledge of any disruptive behaviour by the applicant, and that in
his view, the relationship of trust and not been broken
between him
and the applicant.
[7]
The arbitrator found the applicant guilty on the second charge
brought against him.
At paragraph 26 of the award, he states:
The Applicant’s
conduct regarding charge 2.2 flies in the face of the Credit Policy
in that he prepared the letter of approval
for the loan dated 31
March 2015 despite it being a material deviation from the decision
record of MANCOM, and without its approval.
The Applicant argued that
the deviation was not material as the value of the loan was the same
and only the assets were different.
The Respondent’s witnesses
including the CEO explained that the assets are evaluated as to
sustainability of the loan and
the risk profile. The CEO emphasised
that it is not inconsequential to change the assets under lying alone
but requires analysis.
Factually not only the assets changed. The
security and the initiation fee was removed. The Applicant has
wrongly attempted to
minimise the deviation and his contention must
file. The Respondent has proven that the applicant violated a
workplace standard
and is guilty of misconduct.
[8]
The arbitrator went on to find that no explanation had been proffered
for the deviation
and the unauthorised letter drafted by the
applicant, who had acted outside his authority. In doing so he had
undermined the third
respondent’s management committee and
corporate governance. In the arbitrator’s view this was wilful
and reckless conduct
and amounted to gross negligence. On the issue
of consistency and the appropriateness of the sanction of dismissal,
the arbitrator
noted that the applicant behaving in an unruly manner
was a factor to be taken into account in determining an appropriate
sanction
– it was not in itself the reason for dismissal. The
arbitrator said the following:
There is nothing sinister
about the respondent seeking a harsher sanction at the hearing (the
fairness of which was not in dispute).
The inference ought to be
drawn that trust was not broken because he was not suspended
immediately after the incident and (on his
version) only after he
asked to be put on special leave is not warranted. Suspension is
applicable in limited circumstances which
operates as a precautionary
measure and is not per se indicative of the existence or lack of
trust at all… To put it plainly
- he was not charged dismissed
for unruliness but it was a relevant and fair aggravating
circumstance. Even if he had not been
unready the sanction of
dismissal was fair and reasonable in my view.
[9]
In relation to the applicant’s averment is regarding the
inconsistency of the
penalty of dismissal, the arbitrator said the
following:
Regarding the question of
inconsistency there is a clear difference in moral blameworthiness
between the conduct of the applicant
and the other officials. He
initiated and drafted a letter of approval dated 31 March 2015 which
she knew was an unapproved deviation.
The others did not create or
initiate the deviation. They simply failed to check documents and
failed to discover the deviation.
[10]
In summary, the arbitrator rejected each of the defences put up by
the applicant – that
he had been dismissed for a reason
unrelated to the reason recorded, that there was an absence of any
applicable rule or standard,
that the charges had not been proved,
that discipline had been inconsistently applied, that dismissal was
not an appropriate sanction
and that the relationship of trust and
confidence had not been irreparably harmed.
[11]
The applicant has raised grounds of review that
correspond to each of the findings made by the arbitrator.
First, he
contends that the arbitrator ignored evidence to the effect that the
reason for his dismissal was apparent rather than
real; secondly,
that the third respondent failed to discharge the onus of proof;
thirdly, that discipline against him was the subject
of inconsistent
application; fourthly, that the arbitrator incorrectly found that the
trust relationship between him and the third
respondent had broken
down, that the arbitrator ignored or incorrectly applied evidence
that the applicant had prepared a letter
of arrival for a loan
without approval, and finally, that that the arbitrator committed an
irregularity by allowing another witness
to testify while the
applicant was still on the stand giving his evidence. These grounds
were supplemented by way of an affidavit
filed in terms of Rule 7A
(8).
[12]
The test to be applied is one that recognises and reinforces the
distinction between a review
and an appeal. This court must be
particularly cautious not to blur the line, especially where the
grounds for review smack off
no more than a disagreement with the
arbitrator’s findings. This court is entitled to intervene if
and only if the arbitrator’s
decision is one that falls outside
of a band of decisions to which a reasonable decision-maker could
come on the available material.
In
Head of Department of Education
v Mofokeng & others
[2015] 1 BLLR 50
(LAC)
,
the LAC
said the following:
[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.
[13]
In other words, arbitrators are allowed to be incorrect, and this
court is not entitled to intervene
only because it would have come to
a different conclusion on the same evidence. What matters is whether
the conclusion the arbitrator
reached on the evidence is so
unreasonable that no reasonable decision-maker could come to the
decision he did.
[14]
I am unable to find that the arbitrator’s decision falls
outside of the bounds of reasonableness
having regard to the evidence
before him. In relation to the reason for dismissal, it not
unreasonable for the arbitrator to find,
as he did, that the
applicant’s dismissal was fair on the basis of the misconduct
that he had been found to have committed.
As the arbitrator observed,
even if the applicant’s unruly behaviour was to be discounted,
his misconduct was sufficiently
serious to warrant dismissal in its
own right. There is nothing unreasonable about this conclusion, and
contrary to what the applicant
submits, the inference that he was
dismissed for an ulterior reason is not the only inference to be
drawn from the evidence. The
primary factual dispute between
the parties (which the applicant perceives in these proceedings)
concerned the internal controls
and procedures that applied at the
relevant time. The conclusions drawn by the arbitrator from the
evidence where that none of
the witnesses but for the applicant had
denied that there was a deviation procedure in place during March
2015. This procedure
provided that any material change in the terms
of the loan had to be submitted by the investment officer by means of
a memorandum
to the management committee. The arbitrator recorded the
existence of two policies regulating deviations, the credit and
lending
policy issued in 2013 with which the applicant said he had
complied. Further, the internal controls and procedures provided that
where there are material changes, the investment officer’s
compiler memorandum outlining the changes and forwarded to the
regional manager for signoff, the latter then required to present the
changes to the relevant authority. The arbitrator found that
it was
common cause that this policy came into effect after the fact.
However, the third respondent’s witnesses, including
its chief
executive officer, had stated unequivocally that prior to the formal
adoption of the policy it was practice for an investment
officer to
prepare a memorandum for approval by the management committee. He
found that the ‘overwhelming and credible evidence’
was
that the policy did not exist in writing at the time it was known and
applied. The arbitrator rejected the applicant’s
version, as
well as his evidence that he was not aware of such a practice. The
arbitrator’s reasoning is reflected in paragraph
23 of the
award where he finds that the rationale for the deviation rule is
intrinsic to good corporate governance and risk management
and that
it was ‘not only improbable but inconceivable’ the
applicant should be unaware of this. Further, the arbitrator
reasoned
that there was evidence that the applicant had previously submitted a
memorandum to the management committee regarding
the changing
conditions on which the loan was approved. That’s the
arbitrator finding on the probabilities that the rule
on which the
third respondent relied indeed existed, and that the applicant was
aware should have been aware of it. However, as
reflected in
paragraph 24 the award, the finding that the rule is formulated did
not place a duty on the investing officer to submit
the memorandum to
the sanctioning authority (in this case, the management committee)
and this is the basis on which the found the
applicant not guilty of
the first charge brought against him. In other words, neither the
policies referred to required the applicant
to submit the memorandum
to the management committee. The arbitrator, as indicated above, then
found as a fact that the applicant
had prepared the letter of
approval for the loan dated 31 March 2015 despite there being a
material deviation from the decision
record of the management
committee, and without it approval. On this basis, the arbitrator
held that the third respondent had established that the applicant had
violated workplace standards and was guilty of misconduct. There is
nothing unreasonable about the conclusion
to which the arbitrator
came, nor is there anything unreasonable about the manner in which
the arbitrator came to this conclusion.
Insofar as the applicant
avers that the third respondent failed to discharge the onus of
proof, there is no basis for this contention.
The applicant’s
explanation that he was not required to report the deviation by way
of a memorandum because there was no
material change in the terms and
conditions was considered by the arbitrator and rejected. The basis
on which he came to the conclusion
he did is not unreasonable and is
clearly sustained by the evidence proffered by the third respondent’s
witnesses. He considered
the evidence, he applied the correct test to
determine the dispute of fact or that served before him and came to
the conclusion
that was reasonable in the circumstances. In regard to
inconsistency, this was also a matter considered by the arbitrator in
the
light of the evidence before him. He concluded that while others
in the approval chain had been negligent, the applicant as the
originator of the loan application carried a greater degree of moral
culpability; the fact that others had received warnings did
not
detract from the fairness of the penalty of dismissal imposed on the
applicant. While the applicant obviously disputes the
correctness of
that decision, I fail to appreciate how it can be said that it is so
unreasonable that no reasonable decision-maker
could come to it. In
regard to the trust relationship, the arbitrator clearly applied his
mind to the evidence of those witnesses
who testified about the
breakdown of the trust relationship. Moemi’s evidence in
relation to the breakdown of the trust relationship
was unchallenged
and Mchunu’s evidence that he could no longer trust the
applicant to engage with clients with due care and
skill was properly
considered and decided.One of the issues before the arbitrator were
decided, as the applicant’s representative
put it, at a tangent
to the evidence that served before him.
[15]
In short, the arbitrator’s decision is not unreasonable by
reference to the evidence that
served before him and the application
for review thus stands to fail.
[16]
Finally. in relation to costs, the court has a broad discretion in
terms of s 162 of the LRA
to make orders for costs according to the
requirements of the law and fairness. This court conventionally does
not make orders
for costs against aggrieved individuals who pursue
disputes against their employers in good faith. This case falls into
that category
and there is no reason why the general should not
apply.
I
make the following order:
1. The
application is dismissed.
André
van Niekerk
Judge