Kader v Sandvik Mining and Rock Technology (Pty) Ltd and Others (JR1575/19) [2021] ZALCJHB 129 (17 June 2021)

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case no: JR1575/19

In the matter between:

SHEIK

AHMED MUKTHAR

KADER

Applicant

and

SANDVIK MINING & ROCK TECHNOLOGY (PTY) LTD First Respondent

COMMISSIONER LARRY SHEAR N.O. Second Respondent

COMMISSION FOR CONCILIATION, MEDIATION

AND

ARBITRATION

Third Respondent

Heard: 03 June 2021

Delivered: This judgment was handed down electronically by circulation to the parties' legal representatives by email, publication on the Labour Court’s website and released to SAFLII. The date and time for hand-down is deemed to be 10h00 on 17 June 2021.

Summary: Section 145 of LRA review application – conflict of interest – employee failed to act in accordance with his contractual and fiduciary obligations – he held a senior position which required him to exercise significant responsibilities and discretion on behalf of his employer.

JUDGMENT

NKUTHA-NKONTWANA, J

Introduction

[1] It is not uncommon for this Court to be confronted with a matter where the controversy pertains to whether the actions of the employee amounts to a conflict of interest. While the employers expect employees to act in their best interests and this includes ensuring they do not pursue any interests that may conflict with the interests of the employer, this notion is anathema to employees.

[2] At heart in this matter is the dismissal of the applicant (Mr Kader) because the first respondent (Sandvik) claimed that he had breach his employment contract and was consequently charged as follows:

‘Misconduct in that in breach of clause 8 of your contract of employment, you have without Sandvik’s prior written permission been involved, either directly or indirectly with

· Buraaq Mining Services (Pty) Ltd since 27 March 2017;

· Baraaq Oil and Gas (Pty) Ltd since 31 March 2017;

· Mining Without Boarders (Pty) Ltd since 24 April 2017; and

· In Dep Mining Services (Pty) Ltd.

Misconduct in that you failed to disclose your interest in

· In Dep Mining Services (Pty) Ltd.’[1]

[3] Clause 8 of Mr Kader’s conditions of employment provides:

‘8. Other Work

During your employment with any of the Group Companies, including during any period of leave, employees shall not be engaged or take part, directly or indirectly, whether as an employee or in any other capacity, in any other business without management” [sic] prior written consent. Where such permission has been obtained, employees may not engage in such work during work hours or use company property kin [sic] the performance of such other work.’[2]

[4] Displeased with his dismissal, Mr Kader referred a dispute to the third respondent (CCMA) which was arbitrated by the second respondent

(Commissioner) consequent to a failed conciliation. The Commissioner issued the arbitration award under case number GAJB25739-17, dated 10 June 2019. He found the dismissal of Mr Kader procedurally and substantively fair. In these proceeding, Mr Kader seeks an order reviewing and setting aside the award in terms of section 145 of the Labour Relations Act[3] (LRA).

[5] Mr Kader impugns the award on the basis that the Commissioner committed a misconduct and/or a gross irregularity in the conduct of the arbitration proceedings by failing to consider material facts and evidence that was placed before him; and rendered a decision that a reasonable decision maker could not reach. Precisely, he submitted that the Commissioner failed to consider the following facts and evidence:

5.1. Mr Main and Ms Tsabedze’s evidence in regard to the Mr Kader’s business idea and the involvement Sandvik;

5.2. That it was the past practice and thus precedent of Sandvik that consent or feedback was acquiesced through non-communication, the evidence allegedly undisputed;

5.3. That the Chairperson of the disciplinary enquiry was biased and favoured the case of the Sandvik; and

5.4. That dismissal was not an appropriate sanction in the circumstances.

Review test

[6] The review test is trite.[4] In Sidumo & another v Rustenburg Platinum Mines Ltd & others,[5] the Constitutional Court underscored the difference between a review and an appeal, pertinently stated that:

‘…there may well be a fine line between a review and an appeal, in particular, where, as I will show later in this judgment, the reviewing court considers the reasons given by a tribunal, not to determine whether the result is correct, but to determine whether a gross irregularity occurred in the proceedings. At times it may be difficult to draw the line. There is however a clear line. And this line must be maintained. The drafters of the LRA were mindful of the distinction between review and appeal and they wanted this distinction to be maintained. What they sought to introduce was “a simple, quick, cheap and non-legalistic approach to the adjudication of unfair dismissals.[6] (Emphasis added)

[7] The above notion was endorsed in SA Rugby Union v Watson and Others,[7] where the Labour Appeal Court (LAC) remarked as follows:

‘[25] …A review of an award issued by second respondent is permissible if the arbitrator has misconceived the nature of the enquiry or arrived at an unreasonable result. A result will be considered to be unreasonable if it is one that a reasonable arbitrator could not reach on all the material presented to him or her. A material error of fact as well as the weight and relevance to be given to any particular fact is not in and of itself a justification for an award to be set aside on review...

[26] This approach was followed by Waglay JP in Gold Fields Mining SA (Pty) Ltd (Kloof Gold Mine) v Commission for Conciliation, Mediation & Arbitration and Others (Gold Fields):[8]

‘Where the arbitrator fails to have regard to the material facts it is likely that he or she will fail to arrive at a reasonable

decision. Where the arbitrator fails to follow proper process he or she may produce an unreasonable outcome. But again, 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. It follows that an argument that the failure to have regard to material facts may potentially result in a wrong decision has no place in review applications. Failure to have regard to material facts must actually defeat the constitutional imperative that the award must be rational and reasonable – there is no room for conjecture and guesswork.’ (Emphasis added)

Analysis

[8] The issues for determination before the Commissioner were crisp as the parties had concluded a detailed pre-arbitration minute. It was common cause that Mr Kader was familiar with his contractual obligations and that he had no written permission from Sandvik to engage or take part in all the business entities he had registered between 27 March 2017 and 24 April 2017 (the entities). The zenith of Mr Kader’s defence was that his engagement and participation in the entities were known to Sandvik, particularly, the Managing Director, Mr Simon Andrews (Mr Andrews) and Mr Kader’s direct manager, Mr Andrew Main (Mr Main).

[9] What then followed was an enquiry as to what was indeed communicated to and known by Messrs Andrews and Main pertaining to Mr Kader’s engagement and participation in the entities.

[10] It would seem that the genesis of this matter was the discussion between Messrs Kader and Andrews towards the end of 2016 about, inter alia, the labour hire component of Sandvik’s business which was no longer profitable at that time. Sandvik had been contemplating to cease that specific business offering activities at various mines such as Sibanye/Goldfields at South Deep and Anglo American at Bathophele.

[11] The outcome of that engagement is in dispute. According to Kader, Mr Andrews warmed up to the idea of him exploring that opportunity of a joint venture which could have been beneficial to the Sandvik from the perspective of, inter alia, a Broad-Based Black Economic Empowerment (BBBEE) and Small and Medium-Sized Enterprise (SME). At the end of the discussion, Mr Andrews advised that for him to proceed to ‘go and land his first contract’. On the other hand, while Mr Andrews conceded to having had the discussion, disavowed giving Mr Kader a go-ahead to execute the proposed business idea.

[12] It is not in dispute that in February 2017 Mr Kader informed Mr Main about the discussion he had had with Mr Andrews pertaining to the new business idea. Mr Kader testified that as part of the preparation to execute the proposed business idea, he registered the entities and was a director in all of them; pertinently, Buraaq Mining Services, registered on 27 March 2017, which he intended to be the company to service the proposed business idea. The other entities were merely shell companies which remained dormant.

[13] On 3 May 2017, Mr Kader accompanied by Mr Nico Roets (Mr Roets), a consultant he had sourced, presented a PowerPoint presentation to Mr Andrews in respect of the business idea that they had discussed in 2016. The contents pertained to the proposed joint venture with a SME/BBBEE entity that was not identified by name. Mr Andrews apparently approved of the PowerPoint presentation. The same PowerPoint presentation was also presented to Bathophele Mine and was limited to the labour hire component of Sandvik’s business.

[14] It is befuddling that, even though Mr Kader had already registered Buraaq Mining Services, he did not refer to it in the PowerPoint presentation and failed to give an explanation in his cross examination. Evidently, the language used in the PowerPoint presentation, authored by Mr Kader, suggests that the proposal was an exploration of the possibility and practicability of the offering labour hire by means of a third party to Bathopele Mine. In fact, that was Mr Andrews’ understanding as well. Still, Mr Kader was

adamant that it was in this meeting that he was allegedly given a permission to ‘go and land his first contract’. Mr Roes who was part on this meeting was not called as a witness during that the arbitration proceedings for reasons not apparent on the record. However, his evidence during the disciplinary enquiry was that:

‘It’s difficult to say – well I’ll give it in my words. Simon never said “yes go to Bathopele and go get a contract”, Simon never said “don’t go to Bathopele, don’t get the contract”. He agreed to what was presented to him as a package and said “that’s a good idea to work and there will be support from Sandvik side with regards to what the initiative is’.[9]

[15] Mr Malan, appearing for Mr Kader, bullishly submitted that the Commissioner unreasonably ignored the evidence of Ms Pakama Tsabedze (Ms Tsabedze), a Marketing Analyst in the employ of Sandvik, who testified that Mr Andrews confirmed to her that he was waiting for Mr Kader to land his first contract.

[16] Well, even if I accept, pro tempore, that Mr Andrews did suggest to Mr Kader to ‘land his first contract’, it is common cause that the discussion that led to the alleged suggestion was limited to the labour hire offering. Also, Mr Kader conceded that there was nothing concrete and binding between Sandvik and or Buraaq Mining Services that came out of the discussions.

[17] Notwithstanding the sheer abstractness of the outcome of the discussions on the business idea, between May 2017 and September 2017 and while in the employ of Sandvik, Mr Kader attend to the following activities pertaining to Buraaq Mining Services:

17.1. He prepared a business plan for Buraaq Mining Services with assistance of Ms Tsabedze, a task she also attended to during working hours. It is evident from the business plan that Buraaq Mining Services was set up to compete with Sandvik as it offered to provide maintenance services, technical services, field services, rental services, and part supplies to customers in the mining industry, a fact Mr Kader conceded it was accurate. However, his contention was that Buraaq Mining Services commenced trading in Februarys 2018, after his dismissal;

17.2. In July 2017, Mr Kader considered an offer to purchase land to the value of R1 600 000.00 for Buraaq Mining Services;

17.3. On 7 July 2017, Mr Kader deposited R54 000.00 into the bank account of Buraaq Mining Services;

17.4. On 20 July 2017, Buraaq Mining Services obtained a letter of good standing from the Department of Labour in respect of the Compensation for Occupational Injuries and Diseases Act, 1993;

17.5. On 18 July 2017, Mr Kader received confirmation from the South African Revenue Services (SARS) of the registration of Buraaq Mining Services for VAT;

17.6. On 18 July 2017, Mr Kader received confirmation from SARS of the registration of Buraaq Mining Services for Income Tax;

17.7. In September 2017, Buraaq Mining Services prepared a quotation to Gold One for trackless mining surface and underground ore hauling; and

17.8. In July 2017, Buraaq Mining Services approached Pal-Mach Engineering (Pty) Ltd with an offer of partnership, alternatively to acquire a stake. Pal-Mach Engineering is one of Sandvik suppliers.

[18] Both Messrs Andrews and Main disavowed any knowledge of the above activities. Mr Andrews testified that he saw the business plan for the first time during the Mr Kader’s disciplinary enquiry. He, Mr Andrews, was adamant that the contents of the business plan were not in line with their previous discussions as Buraaq Mining Services’ offering went beyond offering of maintenance services but was set up to be in direct competition with Sandvik.

[19] Despite being unwavering that he had been permitted to engage and participate in all the entities and particularly the activities pertaining to Buraaq Mining Services, on 2 August 2017, Mr Kader sent an email to Mr Theo Nel (Mr Nel) stating the following:

‘Hi

I would like to re-itterate [sic] our discussions held on 27 July 2017;

I have seen a gap in the market whereby Sandvik is currently getting out of certain Performance Maint [sic] Contracts (PMC) & therefore I feel that establishing a BBBEE, SME & offering the client an alternative solution would ensure that we keep the client base satisfied with the Sandvik product, & ensuring that we sustain the future business.

This opportunity can be investigated & viability thereof.

Upon investigation, We can decide on the way forward & my capacity thereof.’[10]

[20] Mr Kader averred that this email was his declaration in relation to the nature of business he wanted to pursue in partnership with Sandvik. It was his evidence further that this declaration was prompted by a feeling of discomfort following an incident pertaining to a colleague who had been suspended for failure to declare her interest when she contracted her sister’s business, supposedly, with the permission of her manager. Yet, Mr Kader conceded that he failed to disclose that he was a director in the entities he had registered between 27 March 2017 and 25 April 2017; the actions he had undertaken in setting up Buraaq Mining Services.

[21] It was only on 20 September 2017 that Mr Kader conceded to being involved in the entities when he was directly confronted by Mr Nel’s about them. That was so following a warning by an anonymous whistle-blower Mr Kader was involved in activities that constituted a conflict of interest, including recruiting Sandvik’s employees to join Buraaq Mining Services.

[22] Regardless of the common cause facts and Mr Kader’s concessions that he did not disclose his interest in Buraaq Mining Services and the other entities, his excuse was that Messrs Andrews and Main knew on every occasion what he was doing and, in essence, impliedly granted him permission. In fact, the ill-famed defence phrase is that he was permitted to ‘go ahead and land his first contract’.

[23] The Commissioner, having applied his mind to the above issues, held that:

‘37. I do not believe therefore, that the applicant did indeed disclose his interest in his various companies and businesses. The applicant did make a disclosure. He said he did so because he was nervous, not because he believed he had to do so. His disclosure is woefully inadequate and his explanation equally so.

38. The applicant was a senior manager and he was fully conversant with the respondent’s Rules and Protocols. A mere discussion concerning his intentions with the MD which were not reduced to writing, does not in my opinion, constitute either “written permission” or “disclosure”. It is therefore my conclusion that the applicant was indeed guilty of the allegations and that dismissal was an appropriate sanction.’[11]

[24] Mr Malan submitted that the Commissioner failed to consider Ms Tsabedze’s evidence that Mr Andrews had permitted Mr Kader ‘to go ahead and land his first contract’ hence he registered the entities and readied Buraaq Mining Services for operations. This submission is untenable. As mentioned above, the context is very pivotal in the present case. Ms Tsabedze testified that she was not conversant with the discussions that preceded the statement that Mr Andrews was waiting for Mr Kader ‘to land his first contract’. While Mr Andrews testified that he never gave Mr Kader a go ahead to register the entities, and specifically, Buraaq Mining Services, as it’s offering included services that were beyond the scope of their discussion which entailed provision of labour and was obviously setup to compete with Sandvik.

[25] Mr Main, on the other hand, conceded that his knowledge of Mr Kader’s business idea was limited to the provision of labour. He was not aware that there were entities that had been registered and the subsequent pertinent activities which included a tender by Buraaq Mining Services to Gold One to provide machinery that was swindled from Sandvik. Mr Main conceded that, Mr Kader’s action amounted to conflict of interest. Most pertinently, Mr Main conceded that he never discussed Mr Kader’s business idea with Mr Andrews. It was thus Mr Kader who informed him that Mr Andrews was fully aware of his business intentions.

[26] Accordingly, the Commissioner’s findings in this regard are beyond reproach.

[27] Mr Kader contented that it was past practice of Sandvik and thus precedent that consent or feedback was acquiesced through non-communication. This argument is fallacious. As correctly submitted by Mr Frahm-Arp, appearing for Sandvik, that even if this practice did exist, which is disputed by Sandvik, it could not have applied to Mr Kader as he did not disclose the full extent of his actions in relation to Buraaq Mining Services to Sandvik. Besides, on 02 November 2015, Mr Kader declared his interest in Transitel (Pty) Ltd, on of Sandvik’s suppliers, to Mr Nel and Sandvik responded on 12 November 2015. Therefore, the Mr Kader’s contention that non-communication amounted to permission is untenable.

[28] Mr Malan submitted with artifice that Mr Kader did not clearly comprehend what he was expected to disclose. It was common cause that Mr Kader had been aware of the rule and fully cognizant of what was expected of him. Moreover, as correctly contended by Sandvik, Mr Kader conceded that clause 8 of his contract of employment required a prior written consent.

[29] As regards the appropriateness of the sanction, I am perplexed by Mr Kader’s bold and importunate stance despite the copious evidence that justified his dismissal. Sandvik submitted that Mr Kader held a position of a Senior Business Development Manager/Accounts Manager and as such stood in a position of confidence in relation to Sandvik and owed a fiduciary obligation to always act in the best interest of Sandvik. He deliberately breached that duty when placed himself in a position where his personal interests were obviously in conflict with the interests of Sandvik.

[30] By way of example, Mr Kader had received information in his capacity as the senior employee of Sandvik that its client, Gold One, placed an order for a refurbished a bolter machine. Mr Kader approached Mopani Mine in Zambia with an offer to purchase the bolter machine on behalf of Buraaq Mining Services and lease it to Sandvik so that it could meet Gold One’s request. Mr Kader was also expecting Sandvik to assist Buraaq Mining Services with the funds to secure the machine. When quizzed as to why it was not Sandvik that offered to purchasing the bolter machine instead of Buraaq Mining Services, he repeated the disreputable phrase that he had been attending to the clandestine deal so that ‘he could land his first contract’.

[31] Tellingly, the breaches by Mr Kader, considered together, all related to his association and participation in the activities of the entities and, specifically, Buraaq Mining Services, a company that was setup to compete with Sandvik and is, in fact, its competitor as things stand. The breaches did not arise from a single act or omission. They arose from a course of conduct in which Mr Kader was in a position of conflict of interest and failed to act in accordance with his contractual and fiduciary obligations despite the fact that he held a senior position which required him to exercise significant responsibilities and discretion on behalf of

Sandvik.

[32] State otherwise, Mr Kader set up a business that competes with Sandvik using the privileged and confidential information he had received in his position as a senior employee of Sandvik. Certainly, as correctly submitted by Sandvik, Mr Kader’s actions amounted to gross misconduct and irreparably damaged the trust. [12] Likewise, the commissioner’s findings in this regard cannot be faulted.

[33] Lastly, I deal with the procedural impugn. The Commissioner reasonably found that, in the overall, Mr Kader had been afforded a right to be heard as contemplated in item 4 of the Code of Good Practice: Dismissal[13] and in line the authorities of this Court.[14]

Conclusion

[34] In all the circumstances, it is evident from the award that the Commissioner dealt comprehensively with the evidence and concluded

that Mr Kader failed to fully disclose his conflictual interests in his entities per clause 8 of his contract of employment. In the light of the Commissioner’s detailed treatment of the evidence, he properly conceived the nature of the enquiry. As well, taken as a whole, Mr Kader’s impugn which is based on the cherry-picking of facts cannot be sanctioned as it obviously blurs the line between review and appeal, contrary to the stern warning by the LAC in Gold Fields[15]. I am accordingly satisfied that, based on the totality of the evidence that was before the Commissioner, the award is unassailable

as it falls within the band of reasonable decisions.

Costs

[35] It is well accepted that costs do not follow the result in this Court in keeping with the dictates of law and fairness. However, in the present instance, even though Mr Kader is an individual litigant, his conduct was patently irrational. He dragged the Sandvik to court to defend a flagrantly unmeritorious litigation.

[36] In the premises, I make the following order:

Order

1. The application is dismissed

2. The applicant, Mr Kader, should pay the first respondent’s, Sandvik, costs.

______

P. Nkutha-Nkontwana

Judge of the Labour Court of South Africa

Appearances:

For the applicant: Mr F Malan of Edward Nathan Sonnenbergs

For the first respondent: Mr L Frahm-Arp of Fasken Martineau

[1] See: Notice to attend disciplinary hearing, Record Bundle page 190.

[2] See: Conditions of Employment, Record Bundle, page 136, clause 8.

[3] Act 66 of 1995, as amended.

[4] Herholdt v Nedbank Ltd (Congress of South African Trade Unions as amicus curia) [2013] 11 BLLR 1074 (SCA); Gold Fields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v Commission for Conciliation Mediation and Arbitration and Others [2013] ZALAC 28; [2014] 1 BLLR 20 (LAC); (2014) 35 ILJ 943 (LAC) at paras 14 to 16 and Department of Education v Mofokeng Head of the Department of Education v Mofokeng [2015] 1 BLLR 50 (LAC)

[5] 2008 (2) SA 24 (CC); (2007) 28 ILJ 2405 (CC)[2007] ZACC 22; ; [2007] 12 BLLR 1097 (CC); 2008 (2) BCLR 158 (CC) at para 79.

[6] Supra n 3 at para 244.

[7] (2019) 40 ILJ 1052 (LAC).

[8] (2014) 35 ILJ 943 (LAC) at para 21.

[9] See: Record Bundle, page 1349, line 19 to 25.

[10]See: Email declaration for Mr Kader, 2 August 2017, Record Bundle, page 584.

[11] See: Arbitration Award, Record Bundle, page 2039 at paras 37 and 38.

[12] Autozone v Dispute Resolution Centre of Motor Industry & others (2019) 40 ILJ 1501 (LAC).

[13] See: Schedule 8 of the LRA.

[14] See: Avril Elizabeth Home for the Mentally Handicapped v Commission for Conciliation,

Mediation & Arbitration & others (2006) 27 ILJ 1644 (LC); Dagane v Safety & Security Sectoral Bargaining Council & Others (2018) 39 ILJ 1592 (LC) at para 22-23.

[15] Supra n 4.