Matteus v Octagon Marketing (Pty) Ltd (J 2264/13) [2013] ZALCJHB 317 (17 September 2013)

REPUBLIC

OF SOUTH AFRICA

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

JUDGMENT

Case no J 2264/13

DATE: 17 OCTOBER 2013

In the matter between:

MATTHEUS,

STEFANUS GERHARDUS............................................APPLICANT

And

OCTAGON MARKETING (PTY) LTD..............................................RESPONDENT

Application heard: 15 October 2013

Judgment delivered: 17 October 2013

VAN

NIEKERK J

Introduction

[1] This is an urgent application for an interim order inter alia interdicting the respondent from proceeding with a disciplinary

enquiry against the applicant, pending the outcome of a dispute concerning the application of the Protected Disclosures Act, 26 of 2000 (PDA). These are my brief reasons for the decision to which I have come.

Factual background

[2] The material facts appear from the papers, and are not the subject of any significant dispute. Since April 2007, the applicant has been employed by the respondent as its group finance director. On 2 October 2013, he was given notice to attend a disciplinary enquiry. The applicant contends that his being subjected to disciplinary action constitutes an occupational detriment for the purposes of the PDA.

[3] The basis for the applicant’s claim can be traced to a report prepared by him during March 2013 for presentation to the

respondent’s board. The report, framed as a draft resolution, summarises nine instances where specific allegations are made against the respondent’s chief executive office, Mr Qondisa Ngwenya. These include allegations of financial mismanagement, unauthorised expenditure, breaches of company policy and procedure in relation to the advancement of loans to executive staff and travel, and allegations of misconduct amounting to bribery and fraud. The board meeting was scheduled to consider the report was postponed. Thereafter, in April 2013, the applicant met with the respondent’s chairman, Mr Sfiso Buthelezi, when the report was discussed. The chairman undertook to convene a meeting with the applicant and Ngwenya. That meeting did not take place.

[4] Between May 2013 and early October when notice of the disciplinary enquiry was given, there were a number of exchanges between the applicant and Ngwenya. During May 2013, there was a series of meeting between Ngwenya and the applicant, and Ngwenya and the chairman. During June 2013, Ngwenya expressed his discontent to the applicant at the fact that the applicant had gone ‘over his head’, directly to the chairman. During July 2013, Ngwenya advised the applicant that in his view, the relationship of trust and confidence between them had broken down. This culminated in a meeting between the applicant and the respondent’s attorney. The applicant regarded the outcome of this meeting as a de facto suspension, and referred an unfair labour practice dispute to the CCMA. This dispute was later consolidated with a second dispute concerning an alleged unfair suspension, referred after a meeting between the applicant and Ngwenya and a subsequent notice of suspension issued on 5 August 2013.

[5] On 2 October 2013 the respondent’s attorney gave notice to the applicant’s attorney of the disciplinary hearing, incorporating a charge sheet on which four charges of misconduct are reflected. The first is a charge of financial misconduct in which it is contended that the applicant in his capacity as financial director committed serious misconduct by recklessly negligently failing to conduct the financial affairs of the respondent appropriately. The second charge concerns bonuses paid to staff in December 2012, where it is alleged that the applicant, without authority, instructed the human resources manager to process the bonus payments. The third charge relates to an instruction given on 25 January 2013, relating to the payment of one of the respondent’s creditors. The fourth charge relates to what is contended to be the sabotage of electronically held data, which the respondent claims was deleted from a laptop computer in the possession of the applicant.

The applicable legal principles

[6] The PDA was enacted with the express purpose of creating a culture that will facilitate the disclosure of information by employees

relating to criminal and other irregular conduct in the workplace (see the preamble to the PDA). As The Supreme Court of Appeal

recently observed, “The preamble records that employees bear a responsibility to disclose criminal and other irregular conduct in the workplace, and that employers have a responsibility to take all necessary steps to protect employees who make disclosures from reprisals as a result of making such disclosures” (see City of Tshwane Metropolitan Municipality v Engineering Council of SA [2007] ZALC 74; [2010] 3 BLLR 229 (SCA), at paragraph [33] of the judgment).

[7] Section 3 of the Act provides that an employee may not be subjected to any occupational detriment by his or her employer, on account or partly on account of having made a protected disclosure. A ‘disclosure’ is defined in the PDA to include

‘ … any disclosure of information regarding the conduct of an employer , or of an employee of that employer, made by an employee who has reason to believe that the information concerned shows or tends to show one or more of the following:

(a) That a criminal offence has been committed, is being committed or is likely to be committed;

(b) That a person has failed, is failing or is likely to fail to comply with any legal obligation to which that person is subject..’

[8] An ‘occupational detriment’ is defined to include ‘being subjected to any disciplinary action’ (see s 1). Section 6 of the PDA regulates discloses made to an employer. For a disclosure in these circumstances to be protected, the disclosure must be made in good faith in accordance with any applicable procedure, or in the absence of a procedure, by the employee to an employer. To the extent that the respondent contends that the disclosure that the applicant claims to have made must be assessed with reference to the requirements contained in s 9 of the PDA, s 9 is clearly not applicable. Section 9 concerns general disclosures, made in circumstances other than those contemplated by s 5 to s 8. All that the applicant need show to obtain final relief is that he made a disclosure, in good faith, to his employer. The test to be applied in the present instance is, of course, one in which the bar is set somewhat lower remedy (see CWU v Mobile Telephone Networks (Pty) Ltd [2003] 8 BLLR 1320 (LC), Greve v Denel (Pty) Ltd (2003) 24 ILJ 551 (LC)).

The issues

[9] The respondent opposes the application on a number of grounds, most of them set out, inappropriately, in the answering affidavit. First, the respondent contends that the applicant did not make a bona fide protected disclosure. In particular, it is contended that the abbreviated report prepared for presentation to the respondent's board of directors does not expose any criminal activities, failures to comply with legal obligations and the like, and that it is unsigned document which had as its purpose the obtaining of a resolution from the board. There is no merit in this submission. The PDA does not require a disclosure to be made in writing, or in any prescribed format. It is also not disputed that the content of the memorandum was discussed by the applicant and the respondent’s chairman, when they met during April 2003. It is clear that at least some of the matters raised in the memorandum prepared by the applicant fall into one or more of the categories of conduct in respect of which disclosures may be protected. For example, the allegation to the effect that Ngwenya gave instructions for payments to be made to Buyu Investments, a company effectively owned by Ngwenya, and that these amounts were utilised to make payments to officials in the Department of Arts and Culture pursuant to a tender issued in favour of the respondent, on the face of it, discloses an act of

corruption. These are matters that ordinarily oblige reports to be made to the appropriate authorities. In the answering affidavit, it is not disputed that Ngwenya owns Buyu Investments, nor is it disputed that the payments were made to the department by Buyu Investments. Indeed, the conflict of interest is expressly acknowledged. Further, Ngwenya acknowledges taking personal loans from the respondent, on terms that do not accord with existing policy. He also does not dispute that certain projects were used to recoup costs incurred on others, in one instance, where funding came through the National Lottery and the Sports Trust which was used to approve expenses in relation to other projects. Ngwenya has provided explanations of his conduct by way of extracts from a memorandum prepared by him for some other purpose, but the merits (or otherwise) of his explanations are not at issue in these proceedings. For present purposes, the issue is whether the information disclosed by the applicant ‘shows or tends to show’ criminal or other misconduct, and whether the disclosure was made by the applicant in good faith. In my view, both questions stand to be answered in the affirmative.

[10] The respondent further submits that when preparing the document, the applicant did not subjectively entertain the intention to make a protected disclosure. The respondent contends in effect that this was an afterthought, conceived after the applicant had consulted with his attorney, for the purpose of avoiding legitimate disciplinary action. While it is correct that the applicant’s attorney addressed a letter to the respondent only in August 2013 in which it was contended that the applicant had made a protected disclosure, what matters is not the point at which the applicant asserted his rights under the PDA, the issue is whether or not the information he conveyed to the respondent’s chairman amounts to a disclosure that attracts protection in terms of the PDA. This is a matter that must be determined objectively, in the right of all the relevant facts. If the applicant was ignorant of his rights at the time of the preparation of his report and his conversation with the chairman, this is not a basis on which to deny him his rights. Similarly, the fact that the applicant may have at that stage primarily been concerned to elicit a response from the board to his memorandum, does not mean that the memorandum and the information verbally conveyed to the chairman can never amount to a protected disclosure.

[11] It is apparent from the papers that the applicant was acutely aware of his responsibilities as a director and in particular, of the fiduciary duties conferred by that office. It is clear to me that these considerations are what ultimately drove him to draft the memorandum and to seek the board’s intervention. Ngwenya has manifestly failed to appreciate the nature and extent of the duties of a director, preferring instead to regard the applicant’s actions as a personal affront and a challenge to his authority. This much is apparent from the transcript of the interview held with the applicant prior to his suspension. The transcript also reveals that Ngwenya’s conception of good corporate governance is an impoverished one; it regards the office and interests of the CEO as paramount, according little if any respect to the fiduciary duties of directors and the best interests of the respondent.

[12] The respondent further contends that there is no casual nexus between the any disclosure that the applicant may have made and the decision to bring disciplinary charges against him. As I understand the argument, none of the charges brought against the applicant relate to his alleged protected disclosure and in any event, there is no nexus between the allegations of misconduct and the alleged protected disclosure. The first part of the argument is easily disposed of. The requirement of a causal nexus between a disclosure made and the occupational detriment contended for is seldom. Most cases such as the present concern allegations of misconduct removed from the act of making a disclosure, in circumstances where an unrelated act of misconduct or poor performance is alleged but where the real reason for disciplinary action is the making of the disclosure. Of course, there must always be a nexus between the occupational detriment claimed and the disclosure – that nexus is established by s 3 of the PDA. Section 3 prohibits employers from subjecting employees to occupational detriments ‘on account, or partly on account’ of having made a protected disclosure. What is required to establish the necessary link is to determine whether the disclosure is the proximate cause, even partially, of the occupational detriment, be it a disciplinary hearing, a suspension a transfer or any

other act contemplated by the PDA. Put another way, it is sufficient for an applicant to show, on balance, that the prejudice suffered by him or her is wholly or partially attributable to the protected disclosure made. This will ordinarily require an examination of the degree of temporal proximity between the disclosure and the detriment, the reasons proffered for the occupational detriment, and the like.

[13] It is not disputed that the charges brought against the applicant were filed only after Ngwenya insisted that there had been a breakdown of trust between him and the applicant. The temporal coincidence between the meetings with Ngwenya and later the respondent’s attorneys, the decision to suspend the applicant on the one hand and the convening of a disciplinary enquiry speaks for itself. So do does the undisputed fact that at least two of the charges brought against the applicant in October 2013 relate to events that occurred in 2012. The respondent’s explanation, that the charges emanate from investigations conducted by it, without

any reference to the timing of those investigations, is hardly credible.

[14] In so far as the respondent contends that interim relief should be denied on the basis of a suitable alternative remedy, the absence of irreparable harm and a balance of convenience in favour of the respondent, the submissions made on the respondent’s behalf make assumptions about the future course of events , in particular, the prospects and consequences of a dismissal. As I understand the present state of play, the applicant contends that the respondent has committed an unfair labour practice in terms of s 186 (2) (d) of the LRA, that dispute has been referred to the CCMA for conciliation and in the absence of a resolution of the dispute at that stage, it may be adjudicated in terms of s 191 (13) (a). At that stage, the court will have the benefit of evidence at trial, and will be in position to establish whether the applicant has proved his claim. For present purposes, the applicant seeks the protection of an interim order since he anticipates (quite reasonably, given the respondent’s contentions) that his claim will be rendered academic should the pending disciplinary enquiry proceed. It should be recalled that the fact of being subjected to an enquiry, not the outcome or possible outcome of that enquiry, is what is in issue in these proceedings. To the extent that the respondent contends that in the event that the applicant is dismissed he has remedies under the LRA, these overlook

the applicant’s claim that it is the enquiry itself, which is contended to be the occupational detriment against which he seeks protection. In my view, there are no adequate alternative remedies available to the applicant. To the extent that the balance of convenience is in issue, and to the extent that the respondent relies of what it claims to be a breakdown in trust between the applicant and Ngwenya, any breakdown that might exist is of Ngwenya’s own making, and is not a basis for denying the applicant his statutory rights.

[15] In short: I am satisfied, on balance, that the respondent’s version does not cast any serious doubt on that proffered by the applicant and that on the face of it, the charges brought against the applicant are contrived, and that the disciplinary enquiry that the respondent has convened is a consequence brought about by information disclosed in good faith by the applicant to the respondent’s chairman. That information tends to show that criminal or other irregular conduct has been committed and that the respondent and its CEO have failed to comply with legal obligations to which they are subject. The applicant has accordingly made out a case for preserving the status quo.

[16] Finally, there is no reason why the applicant should not be entitled to his costs.

For these reasons, I make the following order:

1. Pending the outcome of the referral of a dispute referred to the CCMA and any adjudication of that dispute by this court, the respondent is interdicted from proceeding with any disciplinary action or enquiry against the applicant on the basis of the charges listed in the charge sheet served on 2 October 2013.

2. The respondent is to pay the costs of these proceedings.

ANDRÉ

VAN NIEKERK

JUDGE

OF THE LABOUR COURT

APEPARANCES

For the applicant: Adv. P Buirski, with him Adv. M Mgcina, instructed by Deon de Bruyn Attorneys

For the respondent: Adv. E Van Graan SC, with him Adv. P Kirstein, instructed by De Swardt Vogel Myambo Attorneys.