Highlands Security (Pty) Ltd v President of Labour Court and Another (LAC/REV 59 of 6) [2007] LSLAC 1 (10 January 2007)

IN THE LABOUR APPEAL COURT OF LESOTHO LAC/REV/59/06 IN THE MATTER BETWEEN: HIGHLANDS SECURITY (PTY) LTD APPELLANT AND PRESIDENT OF THE LABOUR COURT 1ST RESPONDENT RAMPOETSI TJELOANE 2ND RESPONDENT CORAM: HONOURABLE MR ACTING JUSTICE K. E. MOSITO ASSESSORS: MR. O. L MATELA MR. D. TWALA DATE Heard on 5 January 2007 Delivered on 10 January 2007 SUMMARY Review application treated as Appeal – Appeal from decision of the Labour Court. Employment law – Defence of Set-off in the context of employment law -Section 85(3) of the Labour Code Order 1992 and the Common Law principles of set-off considered and applied- Section 66 and 69 of the Labour Code Order No.24 of 1992 considered. –Respondent dismissed on operational requirements – Meaning of -Appellant challenging decision of the Labour Court dismissing its defence of set-off – Appeal dismissed with costs. Practice – Legal practitioner proceeding with a matter where payment already made by Appellant - Legal practitioners urged to resolved matters outside Court where appropriate – Legal practitioners warned against wasting Court‟s time – Possible future award of punitive costs. MOSITO AJ: JUDGMENT 1. This case arises out of an originating application in the Labour Court instituted by the 2nd Respondent as Applicant in that Court. The prayers were quite inelegantly drawn as will appear hereinbelow. We have attempted to reproduce them as they appear in the said originating application. This was an application for an order in the following terms: “(a) That the purported retrenchment of the 24th October 2005 be set aside and declared null and void. (b)Respondent be ordered to reinstate or compensate Applicant as per section 73(2) of the Labour Code Order 1992, and /or alternatively; © That the respondent be ordered to pay viz., notice pay, leave pay, public holidays worked but not paid and severance pay. All this (sic) claims are made in respect of the following benefits: (a)NOTICE PAY: the Applicant claims for payment of thirty days notice in terms of section 63(1) (a) of the Labour Code Order 1992 (b) LEAVE PAY: furthermore, the applicant claims for payment of 22 days leave that under some reasons he did not take whilst in the employ of respondent, this is supported under the provisions of section 120 (5) of the Labour Code Order (c) PUBLIC HOLIDAYS NOT PAID: In this claim the applicant seeks for payment of 30 public holidays the said claims appear in section 117 (2) of the Labour Code Order (d) SEVERANCE PAY: The applicant prays for payment of severance pay from 15th December 2001 to 24th October 2005 (3 years – 10 months) and 10 months are included in leave days to make 22 days in terms of section 79 (1).” 2. The Appellant admitted the claim but pleaded set-off as will appear hereinbelow. The facts that gave rise to the originating application in the Labour Court are not in dispute. They are that the respondent as a security guard was employed by the Appellant on the 15th day of December 2001. He was assigned to guard a supermarket store at Ts‟enola in Maseru. He was for that purpose, issued with a pump action shot gun and a two way radio. On the night of the 1st day of June 2005, he was attacked by some unknown persons who took away the said items from him. As a result, Mr Makutle, the operations manager, wrote him a letter in which he informed him that the company had decided to surcharge him for the said items. The items were valued at M6200.00 jointly. He was to be surcharged at the rate of M250.00 per month. The surcharge was apparently not affected because the board of the company was not in favour of it. 3. On the 24th day of October 2005, respondent was dismissed in writing from the employ of the company for “operations requirements (sic)”. He was promised to be paid his terminal benefits, and reminded that he still owed the company M6200.00. 4. Mr. Makutle testified on behalf of Appellant that, after the loss of the firearm and radio, the company no longer trusted respondent. It could therefore no longer deploy him. This is why his services were terminated as aforesaid. It is clear that the company viewed respondent as incompetent. Furthermore, Mr. Makutle testified that Appellant had a code of conduct that required respondent to signal when attacked so that he could be afforded some assistance. Respondent failed to do so. We have no doubt that in so doing; he exposed himself to disciplinary action. This was the sort of conduct that would necessitate disciplinary action. We pause here to observe that, although performance problems may be due to more than one factor, and may relate to misconduct as well as incompetence, an employer is not obliged to treat poor performance as misconduct. The employer must put the employee on terms and provide the employee with sufficient training and support - where appropriate – depending on the operational requirements and the status, function and contractual obligations of the employee. See Eskom v Mokoena [1997] 8 BLLR 965 (LAC) and compare with the South African Labour Appeal Court case of JDG Trading (Pty) Ltd t/a Price’n Pride v Brunsdon (2000) 21 ILJ 501 (LAC). 5. If we are right in observing as we do that respondent was dismissed for poor performance and/ or misconduct, then section 66 of the Labour Code Order 1992 would apply. It provides in part as follows: (1) An employee shall not be dismissed, whether adequate notice is given or not, unless there is a valid reason for termination of employment, which reason is (a) Connected with the capacity of the employee to do the work the employee is employed to do (including but not limited to an employee's fraudulent misrepresentation of having specific skills required for a skilled post); (b) connected with the conduct of the employee at the workplace; 6. If the dismissal was for the capacity of the employee to do the work, or the conduct of the employee at the workplace, then the right of the employee to be heard enshrined in section 66(4) of the Labour Code Order 1992 ought to apply. The section provides that: (4) Where an employee is dismissed under subsection (1)(a) or (b) of this section, he or she shall be entitled to have an opportunity at the time of dismissal to defend himself or herself against the allegations made, unless, in light of the circumstances and reason for dismissal, the employer cannot reasonably be expected to provide this opportunity. The exercise or non-exercise of this right shall not act as any bar to an employee challenging the dismissal pursuant to the terms of a collective agreement or contract of employment, or under the provisions of the Code. 7. However, as pointed out above, the company itself pointed out that the dismissal was one for operations (sic) requirements, by which we are of the view that what was intended was operational requirements. Section 69 of the Labour Code Order 1992 provides that: (1) The employer shall provide a written statement of the reason for dismissal, as defined in section 68(a) and (b), to any employee who is dismissed. Such statement shall be given to the employee either before dismissal, at the time of dismissal or within four weeks of the dismissal having taken effect. (2) Every such written statement shall be admissible in evidence in legal proceedings. (3) In the absence of a reasonable excuse, an employer will not be permitted in legal proceedings to contradict the statement he or she has given to the employee in accordance with subsection (1). (4) It shall be an offence punishable with a fine not exceeding three hundred Maloti for an employer, in the absence of reasonable excuse, to fail to give an employee the written statement referred to in subsection (1) above 8. This Court is therefore obliged to give effect to the reason provided by the Appellant, which is that of operational requirements. Section 66(1)(c) provides for operational requirements. However, the term operational requirements are not defined in the Labour Code Order 1992. Section 4(b) and (c), of the Labour Code Order 1992 provides that: (b) no provision of the Code or of rules and regulations made thereunder shall be interpreted or applied in such a way as to derogate from the provisions of any international labour Convention which has entered into force for the Kingdom of Lesotho; (c) In case of ambiguity, provisions of the Code and of any rules and regulations made thereunder shall be interpreted in such a way as more closely conforms to provisions of Conventions adopted by the Conference of the International Labour Organisation, and of Recommendations adopted by the Conference of the International Labour Organisation. 9. As pointed out above, the dismissal was one for operations (sic) requirements, by which we are of the view that what was intended was operational requirements. Section 66(I)( c) of the Labour Code Order 1992 provides that: (1) An employee shall not be dismissed, whether adequate notice is given or not, unless there is a valid reason for termination of employment, which reason is …………………………… …………………………… (c) based on the operational requirements of the undertaking, establishment or service 10. The term operational requirements as used in the above section denote reasons of an economic, technological, structural or similar nature in line with ILO Convention No. 158, Termination of Employment Convention, 1982. When a reason for termination is one for operational requirements, there are other guidelines to be followed. One such guideline relates to consultation. See Maphoto Elias Macholo v Lesotho Bakery (Blue Ribbon) (Pty) Ltd LAC/A/4/04. It was common cause that both in this Court and in the Labour Court that these guidelines were not followed in the present case. 11. Both in this Court and in the Labour Court, the Appellant conceded that the dismissal was procedurally flawed for want of consultation and/or a hearing. It however contended that, the Labour Court should grant compensation instead of reinstatement. It went on to say that, the amount of the said compensation should be set-off against the amount of loss of property as outlined above. The Labour Court rejected this defence. 12. The Appellant then filed an application in this Court for review. At the commencement of the proceedings before us, the Court asked Counsel whether regard being had to the fact that, the so called ground of review presented before us, was clearly a ground of Appeal, any prejudice would be occasioned to any of the parties by the Court treating the matter as an appeal. The parties agreed (and quite correctly so in our view) that this matter should be treated as an appeal. 13. The essence of the Appellant‟s case as contained in paragraph 8 of its founding affidavit is that, the Labour Court erred in not granting him set- off as requested. In his own words, Appellant says: The Court aquo erred and or misdirected itself by intervening in a matter in which there was no dispute between the parties, in particular the amount of money due by the Applicant in the Court aquo to the Respondent in the Court aquo thereby refusing to grant a set-off of the mutual indebtedness between the parties 14. Mr. Letsie, counsel for Appellant argued that, regard being had to the terms of section 85(3) of the Labour Code Order 1992, Appellant was entitled to a set-off, and that, therefore, the Labour Court erred in rejecting the said defence 15. Section 85(3) on which Counsel relies provides as follows: (3) Any employer may take fair and reasonable deductions from the wages of an employee in respect of but not exceeding the amount of loss or damage caused by the deliberate default or gross neglect of such employee to any tools, material or other property of the employer. No such deduction in respect of any one occurrence shall, without the prior approval of the Labour Commissioner, exceed an amount equal to one-third of the employee's wages for a period of one month. Such amount may be deducted in instalments so as to allow the employee to have sufficient means to maintain himself or herself and his or her dependants. (Emphasis added). 16. It follows therefore that, to succeed on this section, the Appellant has to establish, firstly that, the loss of the items aforesaid, was caused by the deliberate default or gross neglect of the respondent. Secondly, Appellant must show that, the deduction in respect of this one occurrence would not exceed an amount equal to one-third of the respondent's wages for a period of one month. In our view, these are questions of evidence. There was simply no evidence to establish any one of these issues. 17. Furthermore, the above section does not provide for set-off. It does not contain any of the essential features of set-off. In advance of considering the essence of the Appellant‟s case on set-off, it is important to begin by reminding ourselves of the principles of set-off. Set-off is a common law defence and not a creature of statute. 18. In Schierhout v Union Government (Minister of Justice) 1926 AD 286, at 289-290, Innes, C. J., practically repeated what he had said earlier in the Postmaster-General v Taute, 1905 T. S. 582 at p. 590. In the Schierhout‟s case (supra) at 289-290 the learned Chief Justice pointed out that: The doctrine of set-off with us is not derived from statute and regulated by rule of court, as in England. It is a recognised principle of our common law. When two parties are mutually indebted to each other, both debts being liquidated and fully due, then the doctrine of compensation comes into operation. The one debt extinguishes the other pro tanto as effectually as if payment had been made. Should one of the creditors seek thereafter to enforce his claim, the defendant would have to set up the defence of compensatio by bringing the facts to the notice of the Court as indeed the defence of payment would also have to be pleaded and proved. But, compensation once established, the claim would be regarded as extinguished from the moment the mutual debts were in existence together. 19. Thus in the present case, for the doctrine of set-off to apply, the Appellant‟s claim for the lost firearm and two-way radio must have been a liquidated debt due by the Respondent when the latter‟s claim for wages accrued. And in the absence of some special ground for excluding the operation of the doctrine, it could be compensated against, and would extinguish that claim. In Mahomed v Nagdee 1952 (1) SA 410 (A) at 416, GREENBERG, J. A. emphasised the procedural need that set-off should be pleaded. 20. For the purposes of compensatio or set-off a debt is liquidated when its exact money value is certain, or when the amount is admitted by the debtor, or, even if the claim be disputed by the debtor, when it is of such a nature that the accuracy of the amount can be clearly and promptly established by proof in Court (Wille, Principles of SA Law, 6th ed., p. 362; Lester Investments (Pty.) Ltd. v Narshi, 1951 (2) SA 464 (C) at p. 469F). 21. In Postmaster-General v Taute, 1905 T. S. 582 at p. 590, Innes, C. J., said that: 'Set-off, like payment should be pleaded and proved so that the Court may give effect to it; but its operation dates back to the moment when the two persons concerned were reciprocally liable to one another.' 22. The learned Counsel for Appellant further contended that, the Labour Court was not entitled to enter into the issue of set-off because there was no dispute thereon. He contended that the fact that respondent had been told by means of the letter styled annexure “Highlands 1” that the firearm cost M3200.00 and the radio cost M3000.00, which appellant neither disputed nor accepted, it meant that, there was no dispute on the amount to be set-off, and that, the Labour Court was therefore not entitled to enter into the issue. 23. We are unable to agree with the contention that the Labour Court was not entitled to enter into the issue of set-off. This issue had been specifically pleaded as a defence by the Appellant, thereby inviting the Labour Court to address it. 24. There is another reason why the defence of set-off would not succeed in casu. The exact money value for the set-off was neither certain, admitted by the debtor, nor of such a nature that the accuracy of the amount can be clearly and promptly established by proof in Court. On page 23 of the typed record of proceedings in the Labour Court, the following appears: “Court Potso e le „ngoe feela Ntate Makutle. U fane ka lipalo mona tsa theko ea sethunya sena sa pump-action seo molli a neng a se filoe ho ea mosebetsing, e ka sitana le eona two way radio ena, empa ke utloile eka ha u bua ene eka oa hakanya. Na lipalo tseo u tieang (sic) ka tsona kapa ehlile oa hakanya? A. Mohlomphehi, tabeng ea sethunya nakong eo sethunya sena ha se ne se rekoa ene ele R3000.00 empa hona joale tjena ha se sale joalo. Se se se le kaholimo ho moo. Haele radio Mohlomphehi eona ha re eso ka ba re reka radio hona joale esale re li reka lekhetlong leno entse e le R3200.00.” 25. It is clear that the witness has now under oath, purported to prove the amounts of the two items through his sworn testimony, but has swapped the amounts. His testimony on the prices of the items conflicts with the amounts pleaded in the Answer to the Originating Application. Apparently, faced with these conflicting versions, the Labour Court called for receipts of the items, and they were promised by Appellant, but were never ultimately furnished. Thus, there was a problem of the ascertainability of the sums to be set-off. 26. We are therefore unable to find fault with the Labour Court in rejecting this defence. We hold that it was correctly rejected. We therefore are of the view that this appeal should be dismissed with costs, and it is so ordered. 27. There is one other issue which we need to comment on. It is this that, during addresses by the respondent‟s Counsel in this Court, the court‟s attention was drawn to the fact that the present proceedings were an academic exercise because, the Appellant had already paid the judgement sum to respondent as far back as the 7th day of December 2006. That notwithstanding, Appellant still pressed ahead with the set-off case before us, thus wasting the Court‟s time with a matter already resolved. Respondent‟s Counsel Mr Nathane, informed the Court that this had been brought to the attention of the Appellant‟s Counsel by respondent the previous day but, to his dismay, Appellant‟s Counsel still pressed ahead with the case. Asked why the Court‟s time should be wasted in that way, the Appellant‟s Counsel said he had to forge ahead because his client told him to, as he never told him that the payment had already been made. Asked why he did not ask his client about the payment the previous day after hearing of it, Appellant‟s Counsel was unable to answer. 28. In our view, this should have not been allowed to occur. This Court has a heavy backlog of cases to dispose of, and it is the responsibility of Counsel as officers of this Court to help this Court to achieve this objective. The time of this Court should have not been wasted in this way. This Court issues a stern warning that, this kind of conduct will in future be met with punitive orders of costs. Practitioners are requested to ensure that matters that may be resolved without the involvement of this Court should be so resolved. 29. My Assessors agree. _______________________________ K. E. MOSITO JUDGE OF THE LABOUR APPEAL COURT For Appellant For Respondent : : Mr. K. Letsie Mr. H. Nathane