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IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT DURBAN
Case no: D757/06
In the matter between:
MHLATUZE WATER BOARD Applicant
and
COMMISION FOR CONCILIATION
MEDIATION AND ARBITRATION 1
st Respondent
DORASAMY N.O 2 nd Respondent
JAMES BARNARD 3 rd Respondent
JUDGMENT
MOLAHLEHI J
Introduction
[1] This is an application in terms of which the applicant seeks an order to
review and set aside the arbitration award issued by the second
respondent under case number KNRB883-06 and dated 7 November
2006.
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Background facts
[2] The facts in this matter are fairly common cause. The third
respondent, hereafter referred to as "the employee" was charged and
dismissed for dishonesty. The employee who also served as trustee
and chairman of the Mhlatuze Water (1998) Pension Scheme (the
Fund) was charged with conduct relating to dishonesty in that that he
signed the withdrawal form of Mr Graham (Graham) indicating that
he (Graham) had retired when he was in fact dismissed.
[3] It is common cause that Graham who had been dismissed and had
referred his allege unfair dismissal dispute to the CCMA, addressed a
letter to the employee as the chairperson of the Fund and indicated that
he was entitled to withdraw the value of his benefit from the Fund and
to invest it in a separate annuity. He further indicated that if the Board
was not prepared to allow him to keep the money in the Fund he
requested that a declaration form regarding retirement which had been
issued to him by Simeka Consultants, the official consultants of the
Fund be completed and be signed. The letter reads as follows:
“Withdrawal from Mhlathuze Water Pension Fund
With the termination of my services as an employee at
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end November 2005, my membership of the Mhlathuze
Water Pension Fund was also, in terms of the rules of the
fund, terminated with effect from this date.
As a consequence of this, I must now withdraw the
value of my benefit in the fund and re-invest the money in
a separate annuity. I wish to take the tax free portion
permitted in terms of the Income Tax Act. The Board may,
however, decide to allow me to continue keeping the
money in the fund in which case r will be entitled to all the
benefits offered by the fund, namely, group life and
disability cover.
Should this not be the case, then r would be most
grateful if you could sign the Declaration Regarding
Retirement farm sent to you recently by Simeka
Consultants, and forward this to Sanlam. Whilst my
services were terminated and I did not actually ret ire
from service, I would appreciate you signing this form so
as to minimize the tax implications. The Pension Fund
rules allow employees to retire after age 55, an ag e which
the Receiver of Revenue also recognizes for retirement.
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I acknowledge that signature of this form applies
only to the Mhlathuze Water Pension Fund and that
no other benefits which I enjoyed as an employee
of the Board, will be a
ffected thereby,
Yours Faithfully,
X.Gra ham.”
[4] The employee testified that he was contacted by Graham during the
middle of February 2006, and informed him that his dismissal was
pending before the CCMA and that he had no income. The
employee then referred Graham to Simeka Consultants and the
applicant's human resource department.
[5] During April 2006, Graham reverted back to the em ployee and
informed him that he had been advised by Simeka Consultants
that they would release his funds once the declaration regarding
retirement was signed. This form was completed on the 11 April
2006, and the employee signed the form in his capacity as
chairperson of the Fund. The employee further testified that he
was also advised by Simeka that Graham was close to
"retirement, being 63 years of age, he was entitled to take a
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maximum of one-third of his funds in cash. The employee also
believed that the amount of R120 000, 00 which Graham wanted
to withdraw from his scheme was in conformity with the Pensions
Fund Act 24 of 1956 and the Income Tax 103 of 1976.
[6] It was as result of the above and in particular the advice he received
from Simeka that the employee, claim to have held the view that
Graham's retirement from the scheme was above board and that the
applicant would not suffer any harm as a result. He believed that
Graham was preserving the bulk of his funds for retirement and after
signing the form he submitted it to Simeka. It was for this reason
that the applicant charged the employee with the following:
"(a) Serious dishonesty in that on 11 April 2006 the employee
knowingly and fraudulently misrepresented the reason
of Mr Theo Graham's withdrawal from the employment
of the employer by signing a declaration of retirement;
(b) Abuse of trust, authority and position in that by signing a
declaration as the finance manager and chairperson of
the pension fund, the employee used his position to
contradict the employer's position in respect of Mr
Graham's termination".
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[7] At the disciplinary hearing the employee was found guilty of serious
dishonesty in that on 11 April 2006 he fraudulently misrepresented
the reasons for Graham’s exist from Fund as being retirement instead
of dismissal. He was also found guilty in that he abused his position
of trust and authority in that he used his position as the finance
manager and chairperson of the Fund to require Ms Berning to fill the
declaration form incorrectly and thereafter submitting the same to
Simeka.
The award
[8] The parties at the arbitration hearing agreed that issues to be determined
by the commissioner were the following:
"1 Whether the signing of the Declaration Form
as a
retirement and not dismissal constituted an act of
misrepresentation. If it was/was not an act of
misrepresentation, what would be the tax implications.
2 Whether the applicant abused or misused his posi tion of
trust and authority in making the recording on the
declaration Form.
3 Whether the applicant is guilty / not guilty of acting in
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the best interest of the company.
4 Whether the sanction of dismissal of the applica nt was
appropriate or not".
[9] It is apparent from the reading of the award that the commissioner
accepted the version of the employee that he was contacted by
Graham on his return from sick leave regarding the money he
wanted to have from his pension fund. He further found that the
amount of R120 000.00 in the form was filled in by the Graham
who also indicated that the remainder would be invested in the
retirement annuity. The version of the applicant was rejected on
the basis that the charge did not “ speak of potential losses suffered
as a result of the fraudulent behaviour of the applicant.”
[10] It was for this reason that the commissioner found that there was no
“no misconduct at least to the degree, which warranted dismissal.
The applicant was directed to reinstate the employee whose dismissal
was found to be unfair.
Grounds for review
[11] The applicant contended that the commissioner failed to apply
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his mind, misconducted himself, committed a gross irregularity,
and exceeded his powers by acting unreasonably in:
“9.1.1 Finding that Barnard had not acted dishonestly in
circumstances where he had endorsed the withdrawal
form on the basis that Graham had retired in
circumstances where Graham had been dismissed. This
is factually incorrect;
9.1.2 The Arbitrator failed to take into consideration that this
misrepresentation is profound in that Graham, as a
consequence, would receive benefits he would not have
been entitled to if he had been dismissed.
9.1.3 An employee who acts dishonestly in a fiduci ary
capacity, albeit indirectly related to the duties provided
to the Applicant, clearly impacts on the trust
relationship, especially in circumstances where
Barnard was the Accounting Officer within the
9.1.4 The Arbitrator makes findings regarding the fact that the
matter before him was a case of fraud when this was not
so because the misrepresentation was not against the
Applicant but against the Pension Fund. Notwithstanding
this, the nature of the misrepresentation would have been
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fraudulent with respect to the Provident Fund;
9.1.5 The Arbitrator has overlooked the fact that Barnard was
obliged to act in concert with the trustees and failed to
do so as he effectively proceeded on a dishonest frolic of
his own;
9.1.6 It is noted that the Arbitrator makes refe rence to the fact
that Barnard was influenced by Graham's age which is
an irrelevant factor to take into consideration.
9.1.7 Finally, the Arbitrator seems to infer that Barnard could
be excused from the advice he received from Simeka.
Barnard wished to act dishonestly and relied on the
advice of a third party which would also have been
dishonesty and cannot be an excuse.
[12] Vahad Sc for the applicant argued that the case before the
commissioner was not about the employee defrauding the
applicant but concerned the duty of care which the employee
owed the applicant in the manner in which he dealt with the
issue of signing the form for Graham. The commissioner was
also criticised for relying on the version of an unqualified expert
witness, Mr Strydom. In this regard the commissioner was
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accused of failing to apply the rules of the Fund and understand
how the law of taxation should apply.
Evaluation of the award
[13] In considering whether or not to review and set aside the decisions
of the CCMA commissioners this Court is enjoined to apply the
reasonable decision-marker test which was formulated by the
Constitutional Court in Z Sidumo v Rustenburg Platinum
Mines 2007 (28) ILJ 2405 (CC) and subsequently endorsed by
the Labour Appeal Court in Fedelity Cash Management v
CCMA and others DA10/05.
[14] In following its earlier decision of Bato Spar Fishing (PTY) v
Minister of Environmental Affairs and Tourism 2004 (7)
BCLR 687 (CC), where it was held that the provisions of section
145 of the Labour Relations Act 66 of 1995, were suffused by the
criterion of reasonableness, the Constitutional Court per Navsa
AJ in Sedumo (at para 110) formulated the review test as
follows:
“The better approach is that s 145 is now suffused by the
constitutional standard of reasonableness. That standard is
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the one explained in Bato Star: Is the decision reached by the
commissioner one that a reasonable decision maker could not
reach? Applying it will give effect not only to the
constitutional right to fair labour practices, but also to the
right to administrative action which is lawful, reasonable and
procedurally fair.”
[15] In assessing the reasonableness of an arbitration award, the
Court should do so in the context where there is recognition that
the primary function of determining whether or not the dismissal
is fair rests with the commissioner and not itself. In this regard
the Court should guard against substituting the decision of the
commissioner simply on the basis that it would have dealt with
the matter differently . See Fidelity Cash Management (supra).
[16] In my view the decision of the commissioner in the present
instance cannot be said to be one which a reasonable- decision-
maker could not reach because the decision was arrived at after
analysing the evidence which was presented and taking into
account the circumstance of the case. The circumstances which
the commissioner took into account is that after receiving the
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request from Graham, the employee took the necessary step of
seeking advice from Simeka as to how he should deal with the
request. There is no evidence that despite knowing that the advice
was wrong he proceeded to implement it regardless.
[17]
I am also unable to agree that the commissioner in arriving at
the conclusion that the dismissal was unfair was influenced or
placed reliance on the evidence of the so-called expert witness-
Strydom, in relation to the interpretation of the rules of the Fund.
The commissioner does record in his award what Strydom, said
about the rules of the Funds but the analysis of the award does
not reveal the commissioner having relied on his testimony in
arriving at his decision.
[18]
The employee as indicated earlier was charged with fraud and
the commissioner after considering all the evidence before him
and the circumstance of the case came to the conclusion that the
employee did not commit fraud. The commissioner gives his
reasons which, in my view, are not unreasonable.
[19]
Whilst it is correct that the employee knew that Graham’s
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employ with the applicant was terminated due to dismissal, it is
equally true that he sought the advice of the applicant’s
consultants as to how he should approach the query which was
raised by the Graham. The argument of the applicant that issue
before the commissioner was about the duty of care which the
employee owed to it would have probably been sustainable had
the employee been charged with negligence. The employee
would have probably been guilty of an offence had he been
charged with gross negligence for the issue would have been why
did he not satisfy himself as to the correctness of the advice
received from Simeka by reading the rules of the Fund.
[20]
In my view there is no basis upon which the decision of the
commissioner should be interfered with. It is also my view that
the dictates of both law and fairness requires that costs should
follow the results.
[21]
For the foregoing reasons the review application was dismissed
with costs.
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MOLAHLEHI J
DATE OF HEARING: 05 JUNE 2008
DATE OF ORDER: 06 JUNE 2008
DATE OF JUDGMENT: 23 JUNE 2003
APPEARANCES
F or the Applicant: Adv Vahad SC
Instructed
by: Deneys Reitz INC
F or the Respondent: Adv Hutchinson
Instructed
by: Fluxman Attorney