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[1992] ZASCA 115
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Adminstrator of Natal and Another v Sibiya and Another (100/91) [1992] ZASCA 115; 1992 (4) SA 532 (AD); [1992] 2 All SA 442 (A) (20 August 1992)
Case No 100/91
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
ADMINISTRATOR OF NATAL
1st Appellant
DIRECTOR-GENERAL, NATAL PROVINCIAL
ADMINISTRATION
2nd
Appellant
and
SAKHAYEDWA AMBROSE SIBIYA
1st Respondent
FUMANEKILE MTSHIYWA
2nd Respondent
CORAM:
HOEXTER, E M GROSSKOPF, NESTADT, GOLDSTONE JJA et HARMS
AJA
HEARD:
25 May 1992
DELIVERED:
20
August 1992
JUDGMENT
HOEXTER, JA
2
HQEXTER JA,
The two respondents were employed by the Natal
Provincial Administration ("the NPA"). Their employment was governed by the
Public
Service Act, No 111 of 1984 ("the Act") and the Public Service Staff Code
("the Code") promulgated under the Act. Each respondent
was an employee employed
temporarily in a full-time capacity, his contract of service being terminable on
notice of one month.
The respondents were members of a large workforce engaged upon the building
of hostels at Glebe in the . Durban area ("the project").
The project was funded
by the National Housing Fund. Due to a shortage of money, and upon instructions
from the central government,
the project was abandoned in 1990. As a result 29
members of the work-force, including the respondents, became redundant and the
NPA decided that they should be retrenched. The
3
respondents were given the requisite one month's notice and their employment
ended on 31 December 1990. Neither respondent was given
a hearing at any stage
by the appellants.
In the Durban and Coast Local Division the respondents obtained a rule nisi
calling upon the appellants to show cause why their dismissals
should not be
declared invalid. On the return day the application was resisted by the
appellants. The matter came before Didcott
J. The sole issue argued before him,
which counsel agreed was decisive of the case, was whether the NPA could
lawfully dismiss the
respondents without having observed the audi alteram partem
rule by giving them a hearing and an opportunity to make representations
with
regard to their dismissals. In due course Didcott J delivered a judgment in
which the rule nisi was confirmed with costs, including
the costs of two
counsel. The
4
judgment of the court a quo has been reported sv Sibiya and Another v
Administrator, Natal, and Another 1991(2) SA 591 (D). With leave
of the court
below the appellants appeal to this court against the whole of the judgment of
Didcott J.
At the time of the application the circumstances of each of the respondents
were as follows. The first respondent, aged 54 years,
occupied the position of
"foreman general", and he had been employed by the NPA for ten years, during
which period he had received
regular salary increases. His gross monthly salary
at the time of the termination of his employment was R1 077,25. He was a married
man and his wife and eight children were dependent upon him. The first
respondent was a member of the Temporary Employees Pension
Fund; the second
respondent was not. The second respondent, who had been in the employment of the
NPA since March 1989, was 21 years
old
5
and unmarried. His monthly salary was R530. Both
respondents were members
of the Natal Provincial
Administration Staff Association ("NPASA").
The second appellant is the Director-General of
the NBA ("the D-G"). On 5 December 1990 NPASA wrote a
letter to the D-G in connection with the termination of the
employment of a number of its members who had lost their
employment at Glebe. NPASA voiced concern thereat and
requested an urgent meeting with the D-G's office "to
discuss the matter". Mr J A Creeke ("Creeke") is a Deputy
Director (Personnel Management) in the NPA. By letter
dated 6 December 1990 Creeke responded to NPASA's request
for a meeting. While recording his appreciation of the
concern shown by NPASA Creeke intimated that the proposed
meeting would serve no purpose. Creeke's letter stated,
inter alia:-
"Before the decision was taken to serve notice of termination
of services, the Community Services
6
Branch made all reasonable attempts to absorb the employees concerned in other
posts. Their dismissals were not considered lightly
- quite the contrary.
However, if alternative employment is not available and if funds are exhausted,
one cannot reasonably argue
that the Administration has been
unfair."
A Durban firm of attorneys,
Yunus Mahomed &
Associates ("M & A"), acting on behalf of NPASA, wrote a
letter to the
D-G on 12 December 1990. This letter
expressed concern at "the manner in
which the matter has
been handled by your Administration" including the
fact
that the decision to effect retrenchment had been taken
without consultation with either the employees concerned
or NPASA. In this connection the following was said:-
"In failing to take this essential step your
Administration missed a valuable opportunity
to
inform itself of what was fair and reasonable
in
the circumstances."
M & A's letter further invited answers by the NPA to seven
different questions, the last of which was couched thus:-
"(vii) Was the decision maker aware of the
7
provisions relating to the treatment of personnel in case of termination,
reduction or alienation of state activities? (We are here
referring to the
circular dated 21 July 1987 and sent out to all Departments and Administrations
by the Secretary: Commissioner for
Administration.)"
On the same date the questions posed by M & A were promptly
answered
in writing by Creeke. His response to the
seventh question was recorded thus:-
"(vii) Not relevant."
Appended to the first
respondent's founding affidavit there is a copy of the circular by the
Commission for Administration ("the circular")
to which reference was made in M
& A's letter to the D-G. The circular sets forth guidelines for the
treatment of personnel involved
in activities about to be "terminated, reduced
or alienated." Under the heading "General Policy" it says that in all such
situations
"the point of view is that .... the dismissal of personnel should be
avoided where possible." The circular
8
goes on to state that where dismissal appears to be
unavoidable it should
be handled in the manner calculated
to achieve "the greatest degree of
acceptability"; and
that "The State as employer undertakes to treat
all
personnel in a fair and reasonable manner." In the
concluding paragraph of the circular the Commission for
Administration
calls upon departments to -
"(a) bring the content of this circular to the attention of all members of
management, as well as the staff who stand to be affected
by the termination,
reduction or alienation of activities; and (b) to assure those concerned that
every situation will be handled
with circumspection and that all actions will be
aimed at fairness and reasonableness."
In opposition to the application a number of
answering affidavits were filed on behalf of the
appellants. The deponent to the main answering affidavit
was Creeke. In the course of his affidavit Creeke
9
explained that the list of staff to be retrenched had been drawn up by the
site clerk at Glebe and the artisan
superintendent in consultation with the regional engineer
in the Directorate of Community Services. In compiling
the list of 29 names:-
"....the so-called LIFO principle (last in first out) was strictly applied with
one exception, namely, certain qualified employees
with less years of service
were retained in preference to unqualified employees with longer
service."
Creeke went on to say that every effort
had been made to
act fairly in the matter by attempting to place the
respondents in employment elsewhere; and, when this proved
impossible, by terminating their services with due regard
to qualifications and periods of service.
Creeke denied that there was any obligation upon
the appellants to afford the respondents a hearing. To
this he added:-
"All the information relevant as to whose services were to be terminated was
to be found in
10
the respective staff files."
The application of the
audi alteram partem rule in relation to the dismissal of workers in the public
service who are employed temporarily
in a full-time capacity was considered
recently by this court in Administrator, Transvaal, and Others v Zenzile and
Others 1991(1)
SA 21 (A) ("the Zenzile case"). The service contracts of the
workers in that case were terminable on 24 hours notice on either side.
Without
having been afforded any hearing the workers concerned were summarily dismissed
on the grounds of alleged misconduct. In
dismissing the appeal in the Zenzile
case this court held that the decision of the appellants summarily to dismiss
the respondent
workers had prejudicially affected the rights of the latter; and
that therefore the failure of the appellants to apply- the audi
principle
constituted a procedural impropriety vitiating the decision to dismiss.
11
On the facts there are the two points of distinction between the Zenzile case
and the present appeal: (a) the workers in the Zenzile
case were summarily
dismissed while here the workers were given due notice of termination of their
employment; (b) the workers in
the Zenzile case were dismissed for alleged
misconduct whereas here the workers were retrenched. As to what was actually
held in
the Zenzile case it is further to be borne in mind, first, that the
court refrained from making any finding in regard to the position
of a worker
whose contract of service had been ended by the giving of notice, and, second,
that (at 30 E-F) stress was laid on the
disciplinary and punitive character of
the power exercised in summary dismissal for alleged misconduct, it being stated
(at 361)
that "when .... the exercise of the right to dismiss is disciplinary,
the requirements of natural justice are clamant."
12
In the instant case argument in the court below
was
largely devoted to the question of the applicability or
otherwise of the
decision in the Zenzile case to the facts
in the application before Didcott J. The learned judge
concluded (at 594A) that in principle the matter before him
was
indistinguishable from the Zenzile case. He reasoned
thus (at 593 E-J):-
"The contemplated invasion of an existing right is, by and large, sufficient
in the field of employment to bring the [audi alteram
partem] rule into
operation. And that right is surely threatened once a dismissal by notice is on
the cards, no less than when a
summary dismissal happens to be. That the action
proposed is punitive or disciplinary may no doubt serve sometimes to emphasise
or
illustrate the threat it presents to an existing right, or to the liberty or
property of the individual which the rule likewise protects.
It may also have a
bearing on the nature, scope and content of the hearing that must be given.
Otherwise, however, the significance
of the characterisation is not obvious. In
itself, at any rate, such is not the test.
The respondents' counsel argued that the rule had not come into operation
because the applicants
13
had lacked existing rights. Their rights, he maintained, had necessarily to
be rights to continued employment. And an employee whose
employment was
terminable on a month's notice had no right to continue employment, or none, at
all events, to an employment continuing
beyond the period of notice, during
which it was not in any event invaded. By the same token, however, an employee
guilty of misconduct
sufficient to justify his dismissal has no right to
employment continuing beyond the commission of the misconduct. Yet the rule
operates
in his favour. The Zenzile judgment said so. The argument lost sight of
the distinction between the Administration's right under
the contract and the
Code to terminate the employment of the applicants on the one hand, and its
exercise of that right, on the other.
The lawful exercise of the right depended
on the way in which it was exercised, on the procedure that was then followed.
In the meantime
the existing rights of the applicants remained intact."
Before turning to the argument advanced on behalf
of
the appellants in the present appeal it is necessary to
make a few general
remarks concerning the compass of this
court's decision in the Zenzile
case:-
(A) Although the finding in the Zenzile case was
confined, on the facts of
that matter, to the applicability
14
of the audi rule to the summary dismissal on the grounds of
alleged
misconduct of a public sector employee, the
conclusion at which this court arrived nevertheless
involved the affirmation of certain legal principles of
general application to the dismissal of an employee by a
public authority. See what was said at 34B - 36A; 35H -
36A; and the following statement (at 36H):-
"The fact that by the law of contract an
indisputable right may have accrued to an
employer to dismiss his employee does not, for
the purposes of administrative law, mean that the
requirements of natural justice can have no
application in relation to the
exercise of such
right."
(B) The Zenzile judgment contains a lengthy quotation (at
31E - 32D) from the remarks made by Van Coller J in
Mokopanele en Andere v Administrateur, Oranje Vrystaat, en
Andere 1989(1) SA 344(0) at 440G - 441H. This court (at
32D - E) proceeded to-signify its agreement with the view
expressed by Van Coller J that the decision in Le Roux v
15
Minister van Bantoe-Administrasie en -Ontwikkeling 1966(1) SA 481(A) did not
support the argument advanced on behalf of the employer
in the Mokopanele case.
This court, however, neither considered nor approved the suggestion made by Van
Coller J (in the passage
quoted at 31F - G of the Zenzile judgment) that where
the services of a public sector employee had been terminated by notice - leaving
aside the matter of such employee's pension rights - there could not be "'n
aantasting van regte ... in die sin van 'n aanspraak
om in diens te bly
nie."
(C) The conclusion of this court in the Zenzile case (1) in no way depended
upon the fact that the workers concerned were members
of the pension fund (see
39D - E) ; and (2) involved no reliance upon the doctrine of legitimate
expectation (see 39G).
I turn to the ground upon which it was sought to attack the judgment of
Didcott J. The heads of argument
16
filed on behalf of the appellant included a submission that in the case of
the respondents the provisions of the Act excluded, by
necessary implication,
the operation of the audi rule. At the hearing of the appeal the abovementioned
submission was - in my opinion
wisely - jettisoned. Counsel limited his argument
to the contention advanced by him in the court below. As I understand the
argument
it amounts to the following. It is said that a public sector employee
whose contract of service is terminable on notice has no legal
right, after such
notice has been duly given, to remain in his employment beyond the expiration of
the period; and that from this
it follows that here no existing right of such
employee has been affected. In my opinion this argument is untenable, and it was
rightly
rejected (at 593 I-J) by Didcott J. The argument misconceives the
requirements of the audi rule. The rule does not require that the
decision of
the public body
17
should, when viewed from the angle of the law of contract, involve actual
legal infraction of the individual's existing rights. It
requires simply that
the decision should adversely affect such a right. No more has to be
demonstrated than that an existing right
is, as a matter of fact, impaired or
injuriously influenced.' Here the contract of service created reciprocal
personal rights for
the respective parties. Of immediate significance for the
respondents was their right to receive regular remuneration in exchange
for
their services. The existence of that right was linked to and depended upon the
duration of the contract. The appellants' right
under the contract to give
notice terminating it cannot alter the fact that the decision to give notice
palpably and prejudicially
affected the existing rights of the respondents. In
approaching the court below the respondents in no way challenged the appellants'
contractual right to give them notice. They
18
did no more than to assert their claim to be treated in a
procedurally fair manner before the appellants exercised !
such right.
For the sake of completeness the following
further considerations may be mentioned. The classic
formulation of the audi rule encompasses not only "existing
rights" but also "the property" of an individual when it is
prejudicially affected by the decision of a public
official. The word "property" would ordinarily tend to
connote something which is the subject of ownership. In
my view, however, the concept of "property" to which the
audi rule relates is wide enough to comprehend economic
loss consequent upon the dismissal of a public sector
employee. To workers in the position of the respondents
(and more particularly the first respondent, an elderly
individual with eight dependants) the immediate financial
consequences of dismissal are likely to be very
19
distressing.
As in the Zenzile case, here too the employer was a public
authority whose decision to dismiss involved the exercise of a public power.
Such a power has to be exercised regularly and in accordance with the principles
of natural justice.
In South African Roads Board v Johannesburg
City
Council 1991(4) SA 1 (A) Milne JA in delivering
the
judgment of this court observed (at 13B - C) that the audi
principle -
"....applies where the authority exercising the power is obliged to consider the
particular circumstances of the individual affected.
Its application has a
two-fold effect. It satisfies the individual's desire to be heard before he is
adversely affected; and it provides
an opportunity for the repository of the
power to acquire information which may be pertinent to the just and proper
exercise of the
power."
In the instant
case a just and proper exercise of
the power to dismiss involved an inquiry into the
20
individual circumstances of each of the workers whose retrenchment was being
considered. The necessity for such a careful appraisal
seems to have been
present to the minds of the appellants, but mistakenly they conceived the
inquiry to be a one-sided affair. Creeke
expressed the belief that all the
information relevant to the inquiry was to be found in his staff files. But,
given the opportunity
of a hearing, the respondents might have been able to call
attention to relevant facts and circumstances of which the appellants
were
unaware; or to make suggestions as to a solution of the problem of the redundant
workers which had not occurred to the appellants.
In my view this was a case in
which elementary fairness required that the respondents should have been
accorded a hearing before
the appellants took their decision to dismiss the
respondents.
21
The appeal is dismissed with costs, including the costs of two counsel.
GG HOEXTER, JA
E M GROSSKOPF JA )
HARMS AJA )