Buthelezi v MEC - Department of Education KZN and Others (D640/17) [2021] ZALCD 80 (14 December 2021)

IN THE LABOUR COURT OF SOUTH AFRICA

HELD AT DURBAN

Not Reportable

Case No.: D640/17

In the matter between:

C.T. Buthelezi Applicant

And

MEC- Department of Education KZN First

Respondent

Head of Department of Education KZN Second

Respondent

Education Labour Relations Council Third

Respondent

A.S. Dorasamy N.O. Fourth

Respondent

Heard: 30 June 2021

Delivered: 14 December 2021

JUDGMENT

Moodley AJ

1. This is an application for the review of the Fourth Respondent’s (‘Commissioner’) award in which he found that the dismissal of the applicant was procedurally unfair and substantively fair. The First and Second Respondents (‘respondents’) have launched a cross-review of the Commissioner’s finding that the dismissal was procedurally unfair. The respondents filed the cross-review application late and have applied for its late filing to be condoned. The applicants also filed the supplementary affidavit in this application seventeen days late and seek condonation for this delay. Counsel for the applicant sought condonation for filing her heads of argument two days late. I granted condonation at the hearing. The delay was short. The reason she gave for the delay was her ill-health. This explanation is reasonable.

BACKGROUND

2. At the time of his dismissal in July 2008, the applicant was employed as a principal at Isolemamba Senior Secondary School. He had been employed in the Department of Education KwaZulu-Natal (‘Department’) for 23 years.

3. This matter has a long history. The applicant was dismissed in July 2008. He was found guilty of misconduct in terms of various sub-sections of s18 of the Employment of Educators Act, 76 of 1998. His misconduct related to his misappropriation of R410,951; loans which he gave to educators in his school from the School Fund Account; cash cheques that he issued; and his failure to deposit into the school account various amounts of school fees.

4. The applicant challenged his dismissal by referring it to the Third Respondent and at an arbitration in or about 2010, Commissioner Lyster dismissed his claim that the dismissal was unfair. This award was set aside on review because no record was available. A second arbitration hearing which ran for several years was conducted by the Commissioner and he delivered his award in April 2017. This award is the subject of this application.

5. The Commissioner’s findings in relation to the applicant’s guilt on the four charges are open to criticism in several respects.

6. Charge 1 reads “in or about 2004 at or near Isolemamba High School you committed an act of misconduct by wilfully or negligently mismanaging finances of the State or School by misappropriating a total amount of R410,951.65 being funds intended for use in the activities of Isolemamba High School thereby contravening s18 (1) (b) of the Employment of Educators Act, as amended”.

7. The Commissioner found the applicant guilty on this charge. After a lengthy analysis of the legal issues, he concluded that the applicant did not take steps to prevent mismanagement of finances when he ought to have guided the School Governing Body (‘SGB’), in circumstances where it was not competent to perform its functions. In effect, the Commissioner found that the applicant was negligent in failing to prevent the SGB’s mismanagement of an amount of R 410,951 and he was therefore liable for such mismanagement. The Commissioner does not explain why he concluded that the Applicant ‘misappropriated’ the specified amount. Moreover, the Commissioner does not give any reason for finding that the amount that was found to be misappropriated was R 410 000.

8. Charge 2 reads ‘In that during or about the year 2004 to 2005….. you committed an act of misconduct by operating a money-lending scheme for employees during working hours…… by lending some of the educators in your school money from the School Fund Account thereby contravening s18(1)(w) of the Employment of Educators Act, as amended’.

9. The Commissioner’s reason for convicting the applicant on this charge was that he ought to have been aware as principal of the school, that the school fund account could not be used to lend monies to teachers, irrespective of the purpose for such request. He does not give any reason for why loans to educators amounted to a ‘money-lending scheme’, nor does he deal with the material issue contemplated in s 18(1)(w) that requires a finding that the applicant derived a “benefit” by granting such loans.

10. Such criticism does not in itself justify the review of the award, on the approach taken by the Labour Appeal Court in Golfields para 20. An award is not open to be set aside “where an arbitrator (i) fails to mention a material fact in his award; or (ii) fails to deal in his/her award in some way with an issue which has some material bearing on the issue in dispute; and/or (iii) commits an error in respect of the evaluation or considerations of facts presented at the arbitration.” [[1]]

11. Where these circumstances do arise in an arbitrator’s award, “this is considered on the totality of the evidence not on a fragmented, piecemeal analysis. As soon as it is done in a piecemeal fashion, the evaluation of the decision arrived at by the arbitrator assumes the form of an appeal. A fragmented analysis rather than a broad-based evaluation of the totality of the evidence defeats review as a process.” [[2]]. On this approach, it is necessary to evaluate the relevant evidence in respect of each charge.

12. The Department’s main witness was Ms Bathobile Mkhize (“Mkhize”) who was employed as a Senior State Accountant in the internal audit department. She was called upon to investigate complaints about financial mismanagement at the school, made by members of staff. Her investigation culminated in a report that led to the applicant being charged for misconduct.

13. It appears from the Mkhize report that the first charge involved an amount of R410 000 because expenditure of this amount in 2005 was not supported by any record of the invoices pertaining to such expenditure. The applicant was responsible for the safe keeping of the school’s financial records. His explanation for the missing invoices was that these were stolen during a burglary at the school.

14. The applicant gave this explanation to Mkhize in August 2006. Yet, when he reported the burglary to the police on 18th September 2006, his statement reflects that the burglary took place on the very same day that he reported the incident. The applicant was unable to provide other financial records because he claimed that these were stored in the boot of his car and were damaged by the spillage of battery acid. It is apparent that the applicant’s implausible version regarding the missing invoices led to the Department’s belief that he had misappropriated R410 000.

15. However, it is clear from the report that some of the cheques related to the expenditure of the R 410 000 are made to vendors who are clearly identifiable as the providers of items that a school would legitimately purchase, for example stationery. It follows, that the amount of R410 000 derived from missing invoices overestimates the amount that the applicant is accountable for. Moreover, missing invoices are insufficient evidence of misappropriation, despite the applicant’s implausible explanation for their loss. Consequently, the evidence does not support a conviction on charge 1.

16. In relation to charge 2, it was common cause that loans were made to educators at the school. Mkhize testified that clause 6.9.3 of the School Fund departmental regulations strictly prohibited loans being made from the school’s funds. The Applicant’s defence was that he had no knowledge of this rule. He also denied responsibility for these loans being given and claimed that the SGB took the decision to grant each loan. He claimed that he was merely an intermediary when he presented the educators’ requests for loans to the SGB. During cross-examination he testified that when presenting an educator’s request for a loan to the SGB, he motivated for it after first assessing whether the request was genuine. The applicant was more than an intermediary, he played the role of a gatekeeper by determining whose loans he should motivate. More tellingly, Mkhize gave evidence that during her investigation, she confronted him about these loans not being repaid. He responded by telling her that he would make the educators repay the loans. During cross examination he confirmed making this statement. By taking responsibility for the recovery of the loans, he tacitly acknowledged that he was accountable for making these loans. For these reasons, the applicant was instrumental in the loans, considerably amounting to R 37 000, being given to educators.

17. In the case of charge 2, however, insufficient evidence was adduced to justify a conviction on this charge. It characterises the loans made to educators from the school fund as a ‘money lending scheme’. While the respondents’ witnesses were consistently steadfast in maintaining that giving loans to educators from school funds was prohibited, it was fairly conceded that the loans given to educators did not constitute a money-lending scheme, given its ordinary meaning. Moreover, no evidence was adduced to establish an essential element of the charge that the applicant derived any “benefit”, in terms of s18(1)(w).

18. Consequently, the Commisioner’s findings in respect of charges 1 and 2 are unreasonable. But that is not the end of the matter. In, Quest Flexible, it was held that “our courts have repeatedly stated that in order to maintain the distinction between review and appeal, an award of an arbitrator will only be set aside if both the reasons and the result are unreasonable. In determining whether the result of an arbitrator’s award is unreasonable, the Labour Court must broadly evaluate the merits of the dispute and consider whether, if the arbitrator’s reasoning is found to be unreasonable, the result is, nevertheless, capable of justification for reasons other than those given by the arbitrator.” [[3]]

19. In the context of Quest Flexible, it must be borne in mind that the Commissioner’s justification for imposing the sanction of dismissal was not based solely on charges 1 and 2. He also found the Applicant guilty of charges 3 and 4. These findings may well be reasons that justify the Commissioner’s decision that the applicant’s dismissal was fair. I consider this next.

20. Charge 3 reads ‘in or about the year 2005…. You failed to comply with…..the School Fund Department Regulation 6 (15) which states that no cheques payable to cash may be issued but you issued cash cheques amounting to R 39,500 thereby contravening s 18(1)(a) of the Employment of Educators Act, as amended’. The Commissioner’s reason for convicting on this charge was that, as principal he ought to have been aware that cash cheques could not be issued in terms of departmental policy.

21. Charge 4 reads ‘in that on or about year 2004 to 2005… You committed an act of misconduct in that you mismanaged finances of the school by failing to deposit into the school account the amount of R 9 670 collected in 2004 and the amount of R65,681 collected in 2005 thereby contravening s 18(1)(i) of the Employment of Educators Act, as amended’. The Commissioner’s reason for upholding the conviction on this charge was that the applicant did not follow the Department’s policy on collection and depositing of school funds.

22. The applicant consistently relied on the defence that he had no knowledge of the rules which prohibited the conduct that he engaged in. The reason he gave for not knowing the rules was that he did not receive training. His evidence in general creates the firm impression that he was not a credible witness. On the other hand, while the respondents’ witnesses were steadfast in maintaining their versions, they made concessions when it was fair to do so. On the respondent’s version, newly appointed principals attended induction training. The applicant did not deny receiving such orientation. Furthermore, all schools were issued with so called “green and red books” that contained the respondents’ rules and regulations. To paraphrase Majosi’s evidence, no training was required to understand the rules in these books. She continued to say that all that was needed was an understanding of English. It would be reasonable for a commissioner to conclude that the applicant’s version that he did not know the rules is not sustainable on the evidence adduced.

23. Ms Naidoo submitted that the applicant cannot be held responsible for mismanagement of the school’s finances because the South African Schools Act, 84 of 1996 (‘SASA’) makes provision for the SGB to carry out the function of managing the school’s finances. In support of this proposition, she cites the case of Schoonbee [4]. I do not agree with the submission. The submission is counterintuitive. On her argument, in every case where a principal mishandles school funds, it is only the SGB that can be held accountable. Schoonbee does not support such a misconception.

24. Particular attention must be given to the facts in Schoonbee. The MEC suspended the SGB for not carrying out its function of financial management, after the Auditor-General raised concerns about the principal’s handling of the school’s finances. The MEC also suspended the principal and deputy-principal because they were ex-officio members of the SGB. The MEC acted under powers vested in him by SASA, when he suspended the SGB. It was held that the MEC did not have the power, in terms of SASA, to suspend the principal for financial mismanagement, as an ex-officio member of the SGB. However, the court expressly recognised that the employer has the power to discipline the principal, as an employee, under the Employment of Educator’s Act when there are concerns about the role of a principal’s handling of finances.

25. The reasonableness of the convictions for charges 3 and 4 must be determined in the light of the evidence. The foundation for Charge 3 is that the applicant issued cash cheques in contravention of Clause 6(15) of the School Fund Regulations. The applicant advanced a two-pronged defence. He was not aware of the prohibition and he did not issue the cheques. I dealt with his knowledge of the rules earlier and for those reasons I do not accept that he did not know this rule.

26. The central aspect of the evidence in respect of this charge was a single cash cheque. The recipient of this cheque was identified as Bios Computers because that was the name entered on the corresponding counterfoil. During Mkhize’s cross-examination, counsel for the applicant sought to differentiate this cheque from the other cash cheques because of the counterfoil entry. However, it remained undisputed that the cheque was made out to cash.

27. Mkhize’s report deals with the Bios cheque in her findings. The applicant did not contest this aspect of her report. She reported asking him why this cheque was made out to cash. His explanation was that Bios wanted a cash cheque because they were having problems with their bank account. The cash cheque was issued to pay for eighteen computers. Mkhize reported that those computers could not be located at the school. The applicant explained that these were with the Rotary club for upgrading. It is noteworthy that one of the complaints that gave rise to the investigation was that the computers did not work at all. In these circumstances, the issuing of that cash cheque resulted in wasted expenditure of school funds.

28. The applicant also relied on the defence that he did not issue the cheques. It was common cause that the applicant was not a signatory of the cheques issued by the school. The cheques were signed by Ngcobo and the chairman of the SGB, Kwela. However, the applicant initiated the process leading to cheques being issued, during the ordinary course of making payments to vendors and suppliers. A cheque payment was requisitioned in a “payment advice” which identified the payee. The most significant aspect of the evidence adduced establishes that it was either the applicant who prepared the payment advice, or Ngcobo, when the applicant instructed him to do so. In either case, it was the applicant who caused the cheques to be issued.

29. This could not be any clearer from the extreme example that emerged from Ngcobo’s testimony. He testified that he recalled the applicant coming to his home at 5am, on one occasion when he requested the applicant to sign blank cheques. Ngcobo did sign the cheques. Although it was put to him in cross-examination that the applicant will testify that he denies that such an incident took place, the applicant did not give any evidence about the blank cheques.

30. On this evidence, the applicant caused cash cheques to be issued. To make matters worse he caused the issuing of blank cheques. In these circumstances, the imputation arises that the applicant issued cash cheques. There is sufficient evidence to justify a conviction on charge 3.

31. Charge 4 relates to the applicant’s alleged misconduct arising from his failure to deposit school funds, during 2004 and 2005, amounting to approximately R75 000. The applicant admitted that school funds were not deposited. On his own version, he accompanied Ngcobo when bank deposits were made. He did not deny the amount, as charged. He did not deny Mkhize’s evidence that undeposited school funds were given to one Makhanya to pay for the funeral of a family member. The applicant wilfully circumvented a rule designed to prevent such wholly irregular payments from school funds. There is sufficient evidence to justify the Commissioner’s finding on charge 4.

32. Three other grounds of review have been advanced by the applicant. In my view, all of these grounds are in the nature of an appeal rather than a review. In any event, none of these grounds, in themselves upset the result that the applicant’s dismissal was fair, on the evidence adduced. First, it was contended that the Commissioner ignored the evidence in Thusi’s auditor’s report which declared that the school’s finances were in order. However, Thusi did not give evidence to establish the probative value of his report.

33. The second contention was that the arbitrator ignored the evidence of Kwela, the chairman of the SGB. He passed away before his cross-examination was completed. Even if the Commissioner mistakenly believed that there was an agreement between the parties to exclude his evidence, there was sufficient justification to do so for other reasons. The record shows that Kwela was being coached by the Applicant while he gave his evidence; its reliability was questionable in circumstances where he was clearly unwell while testifying; and much of his evidence in chief was elicited from leading questions.

34. The third contention was that it was procedurally unfair that the applicant was charged after a lengthy delay. The submission was made, despite the Commissioner finding that the dismissal was procedurally unfair. A finding of procedural unfairness for this additional reason is not justifiable, on the record.

35. This brings me to the Respondent’s condonation application for the late filing of the cross-review application challenging the Commissioner’s finding that the dismissal was procedurally unfair. Among the reasons given for the delay was the time taken in procuring the advice of the State attorney on this issue. This explanation is unreasonable because the advice that was given to the respondents was that the cross-review application was ill-advised. Insofar as prospects of success are concerned, the application is in essence an appeal against a monetary award and further, it challenges the correctness of the Commissioner’s assessment of the relevant evidence. I am inclined to dismiss the Respondents condonation application and accordingly, the cross review falls away.

36. Finally, it remains to consider whether the sanction of dismissal was fair. In support of the applicant’s contention that the result falls beyond the range of reasonableness, it was submitted that Commissioner did not consider the applicant’s long service, clean record and that the respondent was inconsistent in its application of the disciplinary procedure.

37. While the applicant’s long service is a mitigating factor in determining the fairness of a dismissal, in the instant case, this factor is outweighed by the capacity in which he rendered that service. The applicant held a position of trust as a school principal. The duration of his service adds to the implausibility of his version that he did not know the rules because it is inconceivable that he could have functioned as a principal for such a length of time in the absence of such knowledge.

38. The alleged inconsistency relates to the respondent’s failure to discipline Ngcobo. His rank was lower than that of the applicant who was ultimately accountable for the financial mismanagement. The evidence reveals that he followed the lead of the applicant, as his subordinate. It is the employer’s prerogative to impose discipline, and the reason given for not disciplining Ngcobo was that he co-operated with the investigators. It can be inferred that Ngcobo was contrite. In these circumstances, there was sufficient justification for the Respondent, in exercising its prerogative, not to take disciplinary action against Ngcobo.

39. The analysis of the evidence related to charges 3 and 4 leads to the conclusion that the Commissioner’s finding of guilt on both these charges is justified. The Commissioner’s findings in respect of these charges is sustainable. The finding of guilt for each of the two acts of misconduct are significant factors in assessing the fairness of the dismissal.

40. The nature of his misconduct was serious in that it involved the mismanagement of school funds amounting to approximately R150 000. The evidence shows that where the nature of the expenditure was identifiable it was wasteful expenditure. The significance of such a circumstance is that funds were diverted away from the statutory purpose for which it was intended, namely the benefit of learners. Consequently, the applicant’s misconduct was not just a breach of his employment contract but violated important public policy objectives.

41. Contrary to the submission of applicant’s counsel, the respondent did lead evidence that the employment relationship had broken down. It was submitted further that the failure to suspend the applicant indicated that the employment relationship had not broken down. In failing to suspend the applicant, the respondent did not condone the applicant’s misconduct. Evidence led by the respondent clearly established that the applicant’s misconduct was “wrong”. Moreover, disciplinary action was only contemplated upon completion of the investigation report in November 2007. Majosi testified that at that time, she believed that the applicant was suspended. She gave a plausible explanation for the lapse of three months, after allowing for the Christmas school vacation, between the investigators’ recommendation for disciplinary action and when the applicant was

charged. Consequently, from the time when the respondent formally commenced with the prosecution, with the intention to charge the Applicant, it cannot be said that the Respondent condoned the misconduct that was believed to have been committed by him. In these circumstances, the respondent’s belief that the employment relationship had broken down is not undermined by the continuation of the Applicant rendering services, while the process of bringing charges against him was underway.

42. There are ample aggravating factors in this case. The applicant failed to show any contrition. Instead, he resorted to fabricating his explanation for the missing financial records. During the hearing, he persisted in the untenable defence that he did not have knowledge of the rules relating to his misconduct. He obstructed the investigation, for example by preventing the investigators from interviewing teachers. At the arbitration, he went so far as to coach Kwela whilst he testified. He was instrumental in loans being given to educators from school funds. The aggravating factor in this respect is that the Applicant made no effort to recover these loans before the investigation, during which he implicitly acknowledged to Mkhize, that it was his responsibility to do so.

43. In these circumstances, it cannot be said that the Commissioner’s decision that the applicant’s dismissal was fair, is one that no other arbitrator could reach. The applicant has failed to satisfy the test for reviewing the Commissioner’s award. It follows that it is unnecessary to consider the applicant’s application for condonation for the late filing of the supplementary affidavit.

44. Having regard to the requirements of justice and equity, I consider this to be a matter in which there should be no costs order.

ORDER

1. The application for the review of the Fourth Respondent’s award is dismissed.

2. The condonation application for the late filing of applicant’s supplementary affidavit in this review application is dismissed.

3. The condonation application for the late filing of the First and Second Respondents’ cross-review application is dismissed.

4. The First and Second Respondents’ cross-review application is dismissed.

5. There is no order for costs.

I Moodley

Acting Judge of the Labour Court of South Africa

APPEARANCES:

For the Applicant: A

Naidoo, instructed by Angeni Naidoo Law Firm

For the First and Second Respondent: D Pillay, instructed by the State Attorney, KZN

[1]. GoldFields Mining SA (Pty) Ltd (Kloof Gold Mine) v CCMA [2007] ZALC 66; [2014] 1 BLLR 20 (LAC) at paragraph 20

[2]. Goldfields at para 21

[3]. Quest Flexible Staffing Solutions (Pty) Ltd v Lebogate ([2015] 2 BLLR 105 (LAC) at paragraph 12

[4]. Schoonbee and others vs. MEC for Education, Mpumalanga and another (2002) (4) SA 877 (T)