George v MEC of Health, Eastern Cape (179/2008) [2010] ZAECMHC 1 (4 February 2010)

IN

THE HIGH COURT OF SOUTH AFRICA

[EASTERN CAPE, MTHATHA]

Case No.: 179/2008

In the matter between:

NONTOBEKO GEORGE Applicant

and

MEC FOR HEALTH, EASTERN CAPE Respondent

J

U D G M E N T

SANGONI J:

Applicant is seeking an order against the respondent in the following terms:-

1. “That the deduction of one thousand three hundred and ten rand (R1310.00) from applicant’s salary be and is hereby declared unlawful and accordingly set aside.

That the status quo ante in respect of applicant’s salary be and is hereby restored.

That the Respondent be and is hereby ordered to repay applicant all monies sp unlawfully deducted including interest at the legal rate of 15.5 % per anum from the date of the first deduction to the date of the final payment.

That Respondent pays costs of this application on an attorney and client scale.

Granting applicant such other further or alternative relief as the above Honourable Court deems fit.”

Applicant is an adult female employed by the Department of Health in the Province of the Eastern Cape (department) as a general worker who was earning an annual salary of Forty five thousand nine hundred and ten rand (R45-910,00) as at February 2008 when the application was brought.

The respondent is the Member of the Executive Council for the department.

Background Facts

It is not in dispute that on 18 September 2006 the bank account of the applicant was credited with an amount of R42,937.33, that being money deposited into her account by the respondent.

The respondent avers, however, that the total amount deposited was R47,160.60 which included an amount of R4,223.27 representing pension money. The respondent disputes that an amount of R47,160,60 was paid. The said amount is not reflected on her bank statement.

For purposes of this application nothing much turns on this discrepancy because in terms of the notice of motion applicant seeks repayment of whatever has been paid by the monthly deductions of R1,310.00 from her salary. It is common cause that the amount in dispute is R42,937.33.

[6] The respondent attributes the payment to an error the department made. Instead of effecting payment to Halu T, the deposit was made in favour of the applicant, a wrong person. Then as from December 2007 the respondent started deducting a sum of R1,310,00 every month from the salary of the applicant as a pay back of the amount of R42, 937,33.

[7] The version presented by the respondent is that during October 2006 Mr Mehlo, the deponent to the respondent’s answering affidavit, then acting as the Assistant Director in the respondent’s Human Resource section, had discussions with the applicant on becoming aware of the erroneous deposit. The outcome of these talks was that the appellant acknowledged that she received the amount of R47,160.60 and, she promised to seek assistance from her children for payment and that she would revert to Mr Mehlo within a week. She did not do so.

[8] When the week lapsed Mr Mehlo addressed a letter to the applicant on 6 November 2006 in the following terms:

“It has been discovered that an amount of R47,160.60 (pension inclusive) was deposited into your banking account No 635668084: Standard Bank. The said amount was supposed to be deposited into one Halu T of this complex.

Subsequent to this discovery, you were called and the above was explained to you. You were among other things, advised to withdraw the money from your bank and pay it back to the department. During the deliberations you indicated that, you have withdrawn all the money and had used it and you are not in a position to reimburse the department.

It is the policy of the department to recover any monies due to it within 12 months from date of discovery of such monies.

You are therefore required to indicate the manner in which this amount will be settled by you within 14 days of receipt of this letter.

Failure to comply will leave the department with no option but to deduct the said amount from your salary.”

[9] The applicant through her attorney, had responded to the letter referred in 7 above on 16 November 2006 to the effect that even though the applicant was not challenging that the payment to her was not due but the point she was making was that the department had a duty to establish the debt i.e by explaining how it occurred and that to be determined in an inquiry where the applicant would be invited to participate.

[10] These averments were not challenged. There was no replying affidavit filed. It appears correct that when nothing was done by the applicant regarding payment the department proceeded to effect deductions regardless of the attorney’s letter.

[11] The applicant alleges that she had not been given a hearing before the deductions were effected. The allegation in this regard is two-fold, in the first instance, she claims that the department had a duty to establish the debt. In establishing the debt the process would inevitably address the question of whether the deposit into her bank account was erroneously done or it was an ‘undetermined’ amount she claims she was expecting as remuneration following a salary adjustment, known as ‘second and third notch’, that she and her colleagues had applied for.

[12] In addition to what had been said above, regarding the appellant’s failure to reply to the alleged meeting with Mr Mehlo and the promises she allegedly made relating to the proposed reimbursement attempt, it is noted that even as regards the issue of second and third notch the appellant has not replied. In its answering affidavit the respondent alleges that the applicant did not even qualify for the ‘second and third notch’ and could not therefore have anticipated remuneration.

[13] The applicant also states that she was not given a hearing to determine affordability regarding the amount to be deducted. She states that she has a big number of dependants but has however not indicated what amount would suit her circumstances in reimbursing the department. This leaves the court not knowing whether the monthly deduction is affordable for a person earning in the region R45,000,00 per annum, The deduction seems heavy. The applicant is however not focusing on supplying information which turns to show that she can ill-afford to have a monthly deduction of R1,310,00 from her salary.

[14] The respondent’s stance is that the applicant was invited to indicate how she proposed to pay back the money and she did not utilise that opportunity. She therefore cannot be heard to say the audi alteram partem rule was not observed. It may well be so but still the amount of R1,310,00 per month for a person in the stated salary bracket looks heavy and can hardly be said to be affordable.

[15] The applicant seeks reliance on the provisions of section 34(1) of the Basic Conditions of Employment Act 75 of 1997. It provides:

“(1) An employer may not make any deduction from an employee’s remuneration unless-

subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt specified in the agreement ;or

the deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award.”

[16] A similar provision is found in section 34 of the Public Service Act of 1994 which reads:

“The salary of an employee shall not be reduced without his or her consent expect in terms of section 38, an Act of Parliament or a collective agreement.”

[17] The respondent, on the other hand, relies on the provisions of section 38 of the Public Service Act 1994. The amendment Act 30 of 2007 which amended this section came into effect in 2008. This section is headed “wrongly granted remuneration” and it reads as follows:

“(1) (a) If an incorrect salary, salary level, salary scale or reward is awarded to an employee, the relevant executive authority shall correct it with effect from the date on which it commenced.

Paragraph (a) shall apply notwithstanding the fact that the employee concerned was unaware that an error had been made in the case where the correction amounts to a reduction of his or her salary.

2. If any employee contemplated in subsection (1) has in respect of his or her salary, including any portion of any allowance or other remunerating or any other benefit calculated on his or her basic salary or salary scale or awarded to him or her by reason of his or her basic salary.

….

been overpaid or received any such other benefit not due to him or her…………

an amount equal to the amount of the overpayment shall be recovered from him or her by way of the deduction from his or her salary of such instalments as the relevant accounting officer may determine if he or she in the service of the State, or, if he or she is not so in service, by way of deduction from any moneys owing to him or her by the State, or by way of legal proceedings, or partly in the former manner and partly in the latter manner.

……….”

(my underlining)

[18] In the light of what I have said above, namely, that the applicant has not replied to the allegations made on behalf of the respondent in the answering affidavit, particularly, that the applicant was offered an opportunity to make representations regarding the payment but did not utilise that opportunity, the version of the respondent amount be preferred. The question to be considered nonetheless is whether the court can order repayment of money already paid when in fact the money is not due to the applicant.

[19] Be that as it may it is necessary to establish whether the defence set out by the respondent falls within the parameters of this section which, it would appear, gives the relevant accounting officer the power to determine the amount to be deducted.

[20] As the heading of the section indicates the power to determine is given only in cases where remuneration is wrongly granted. In subsection (1) (a) it is specifically prescribed that the correction in terms of section 38 only applies where the award of an incorrect salary, salary level, salary scale or reward is the issue.

[21] In the answering affidavit filed on behalf of the respondent it is stated that the “error has occurred in that an amount of R47,160,60 (inclusive of pension) was deposited to her account instead of that of Halu T”. This says nothing about overpayment of a salary, “including any portion of allowance or other remuneration or any other benefit calculated on his or her (applicant’s) basic salary or scale of salary or award to him or her (applicant) by reason of his or her basic salary” as subsection (2) prescribes. Subsection (2) (b) to any “such other benefit”.

[22] The payment to the applicant may have been erroneous but there is nothing to suggest on the papers it related to a salary or was by reason of her basic salary. This makes the court to focus on the alleged deposit of R47,160,60 whereas the applicant has exhibited a bank statement of account which reflects a deposit of R42,937,33. Even though on the bank statement the word “salary” appears, there is nothing to suggest by way of evidence, that it had anything to do with salary, salary overpayment to the applicant or that it would have been paid to Halu as a salary for that matter. The differential of R4,223,27, described by the respondent as pension money does not appear to have been paid to the applicant, if at all, together with the amount in issue in this matter. The amount of R42,937,33 has not been shown to bear any relationship to the amount of R4, 223,27. They could have been separate transactions. The question of overpayment cannot therefore arise from the fact that the two amounts were paid and therefore one of them creates an overpayment over the other. On the respondent’s version, it should be treated simply as erroneous payment to the applicant of an amount that was due to Halu.

[23] As shown above, the respondent might have properly invited the applicant to make representations as to how to refund the amount owing but that would not give the respondent any entitlement to simply make deductions from the applicant’s salary when the scenario does not fall within the parameters of section 38 of the Public Service Act. The conduct of the respondent is therefore unlawful.

[24] The question is whether it is proper to make an order for repayment of the money already deducted when in fact the amount is not due to the applicant. If the act committed is not covered by the law it would be tantamount to condoning self help if the return of the amount is not ordered. The issue of interest is however difficult to resolve at this stage as the amount(s) to be refunded are in fact not owed to the applicant. There does not appear to be any reason why costs should be on attorney and client scale.

In the result the application is granted in terms of paragraphs 1 and 2 of the notice of motion. The applicant is ordered pay costs of the application.

_______

C.T.

SANGONI

JUDGE

OF THE HIGH COURT

MATTER HEARD ON : 10 September 2009

Judgment delivered on : 4 February 2010

Counsel for the Applicant : Adv Jozana

Attorneys for the Applicants : B.MAKADE INCO.

IDK BUILDING OFFICE 1

92 SUTHERLAND STREET

MTHATHA

Counsel for the Respondent : Adv Sishuba

Attorneys for the Respondent : V.GWEBINDLALA & ASS

SUITE 201,2ND

FLOOR

MEEG BANK BUILDING

60 SUTHERLAND STREET