Mnquma Local Municipality v Mbongwana (CA86/2019) [2020] ZAECMHC 16 (19 May 2020)

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE LOCAL DIVISION, MTHATHA

Case No: CA86/2019

In the matter between:

MNQUMA LOCAL MUNICIPALITY Appellant

and

NANGAMSO MBONGWANA Respondent

JUDGMENT

BROOKS J:

[1] The appellant is a local municipality, an organ of state described in section 155(1) of the Constitution[1] and duly established in accordance with the provisions of the Local Government Municipal Structures Act[2]. It has its municipal offices at Butterworth, in the province of the Eastern Cape. There it employs the respondent, an adult female, in the position of Manager: Tourism Development.

[2] On 2 November 2018 the respondent approached the court a quo as a matter of urgency and with the commencement of motion proceedings which became opposed by the appellant. In due course and

after the initial postponement of the matter in its inchoate form, a full exchange of affidavits occurred. Argument was heard on 29 November 2018. On 28 February 2019 the court a quo gave judgment and issued the following order in favour of the respondent (as the applicant):

“[12] Consequently, I make the following order:

12.1 the decision of the respondent to discontinue payment of the applicant’s car allowance is reviewed and set aside;

12.2 the respondent is directed to resume payment of the applicant’s car allowance, in the sum of R5 000.00 per month, with effect from the date upon which the applicant is next paid her salary after delivery of this judgment;

12.3 each party is to pay her or its own costs of the hearing on 2 November 2018; and

12.4 the remainder of the costs of this application are to be paid by the respondent.”

[3] Dissatisfied with the outcome of the application brought against it, the appellant sought leave to appeal against the judgment and the order of the court a quo. Leave to appeal was refused, prompting an application to the Supreme Court of Appeal for special leave to appeal. On 21 October 2019, the appellant was granted leave to appeal to this court.

[4] The central issue in this appeal is whether the court a quo was correct in its conclusion that the cessation by the appellant of its payment of a monthly sum of R5 000.00 to the respondent

without her consent amounted to a deduction of the respondent’s remuneration in violation of the provisions of section 34 of the Basic Conditions of Employment Act[3] (“the BCEA”).

[5] The respondent sought final relief in her notice of motion. The correct approach to a determination of entitlement to final relief in motion proceedings has been restated in National Director of Public Prosecutions v Zuma[4] as follows:

“Motion proceedings, unless concerned with interim relief, are all about the resolution of legal issues based on common cause facts. Unless the circumstances are special they cannot be used to resolve factual issues because they are not designed to determine probabilities. It is well established under the Plascon-Evans rule that where in motion proceedings disputes of fact arise on the affidavits, a final order can be granted only if the facts averred in the applicant’s (Mr Zuma’s) affidavits, which have been admitted by the respondent (the NDPP), together with the facts alleged by the latter, justify such order. It may be different if the respondent’s version consists of bald or uncreditworthy denials, raises fictitious disputes of fact, is palpably implausible, far-fetched or so clearly untenable that the court is justified in rejecting them merely on the papers. The court below did not have regard to these propositions and instead decided the case on probabilities without rejecting the NDPP’s version.”

[6] In her founding affidavit the respondent contended that:

[6.1] An amount of R5000.00 (five thousand rand) had been paid to her since the year 2014 in terms of the appellant’s car allowance policy and formed a part of her gross salary;

[6.2] She was entitled to the monthly payment of the car allowance because she occupied a position in the appellant’s middle management.

[7] After setting out a thorough exposition in the answering affidavit of the appellant’s applicable policy provisions and the background pertaining to the appellant’s employment of the respondent, the appellant’s municipal manager contended that:

[7.1] The respondent’s conditions of service, established by the content of her letter of appointment read together with the appellant’s general conditions of service, make no provision for the payment of a car allowance to the respondent.

[7.2] The payment of the car allowance to the respondent was erroneous as, contractually, she had never been entitled to it.

[7.3] After a process of consultation with the relevant workers’ unions, including the one to which the respondent belonged, the appellant’s municipal manager consulted the respondent personally on the appellant’s decision to discontinue payment of the car allowance and the reasons therefor.

[8] On the issue that is central to the relief sought by the respondent, much of the factual matrix relating to the respondent’s employment history with the appellant and her past experience of receiving a payment in respect of a car allowance, is common cause. On the crisp issue of the entitlement to receive a car allowance it is clear that there are factual disputes. A reading of the answering affidavit reveals that the disputes emerging therefrom are neither farfetched nor fanciful. The grounds for the opposition to the relief sought by the respondent are set out clearly and succinctly and are not characterised by bare denials. They are not the kinds of disputes that would merit their rejection merely on the papers. Accordingly,

when the principles set out in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [5] are applied to those areas where there are disputes of fact, it is the appellant’s version which must prevail.

[9] Notwithstanding the fact that the respondent sought final relief in motion proceedings, the court a quo appears not to have embarked upon the sort of factual analysis which is prescribed by the Plascon-Evans rule. It is evident from the judgment that the dispute relating to the respondent’s entitlement to the car allowance was side stepped as being irrelevant, the judgment then being prefaced upon a mere acceptance that the car allowance formed part of the respondent’s remuneration. The approach adopted in the court a quo is demonstrated in the following extracts from the judgment, from which the footnotes have been omitted:

“[3] …….The applicant bases her entitlement to the relief sought upon the provisions of section 34(1) of the Basic Conditions of Employment Act 75 of 1997 (“the BCEA”), which provides:

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

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

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

In essence, section 34 prevents an employer from making deductions from an employee’s salary without the employee’s prior agreement or a court order. It is common cause that the applicant never consented in writing to the respondent’s decision to discontinue paying her the car allowance of which she had previously been the recipient.

[4] Remuneration is defined in the BCEA as being “any payment in money or in kind, or both in money and in kind, made or owing to any person in return for that person working for any other person, including the State”. It is clear from this that the payment of a car allowance thus falls within the definition of remuneration.

……………..

[7] The term ‘deduction’ is not defined in the BCEA. The terms ‘deduct’ is defined in the Concise Oxford English Dictionary as being to “subtract or take away from a total”. A deduction is thus an action in which something (in this case, an amount) is subtracted or taken away from a total (in this case, an amount) is subtracted or taken away from a total (in this case the applicant’s total remuneration). Accordingly, in my view, the refusal of the respondent to pay to the applicant the car allowance she previously received constitutes a deduction in terms of section 34 of the BCEA. Whether or not the applicant qualifies for a car allowance in terms of the respondent’s policy thereon does not, in my view, alter this conclusion. The respondent is not entitled to simply withhold the car allowance it previously paid to the applicant without her written consent or a court order entitling it to do so. To interpret section 34 otherwise would be to render meaningless the protections afforded an employee therein. These protections are important as one of the purposes of the BCEA seeks to achieve is to advance economic development and social justice by giving effect to the right to fair labour practices as enshrined in section 23(1) of the Constitution. It seems to me that fair labour practices demand that an employer not be entitled summarily and in the absence of agreement or a court order to reduce, by deduction, an employee’s remuneration.

[8] Furthermore, to permit an employer to unilaterally withhold a portion of an employee’s remuneration on the basis that the employee is not and was never entitled to receipt thereof, would be to promote self-help. This, as was held in Chief Lesapo v North West Agricultural Bank and Another, is “inimical to a society in which the rule of law prevails, as envisaged by s 1(c) of our Constitution…”. More recently, in Public Service Association obo Ubogu v Head, Department of Health, Gauteng and Others the Constitutional Court considered the provisions of section 38(2)(b)(i) of the Public Service Act 103 of 1994. It found that although the section constitutes “a statutory mechanism to ensure recovery of money wrongly paid to an employee without recourse to a court of law.” The section thus, the Constitutional Court held, permits the state to engage in “unfettered self-help” and “undermine the judicial process”. As a result, the section was declared unconstitutional. Consequently, to interpret section 34 of the BCEA as permitting self-help by defining a ‘deduction’ in the manner contended by the respondent, would be to ascribe an unconstitutional interpretation to its terms. This a court cannot do.”

[10] In essence, the court a quo found that the car allowance formed part of the respondent’s remuneration. This was a factual finding for which no acceptable foundation had been laid in the application papers. The respondent did not establish that the amount of R5 000.00 which had previously been paid to her erroneously formed part of her remuneration. A finding that it did constitutes a misdirection which entitles this court to interfere with the judgment.

[11] Now that the factual situation has been established, what must be ascertained is the legal position which pertains thereto. It is necessary to consider the provisions of section 34 of the BCEA, which read as follows:

“34 Deductions and other acts concerning remuneration

(1) An employer may not make any deduction from an employee's remuneration unless:

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

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

(2) A deduction in terms of subsection (1) (a) may be made to reimburse an employer for loss or damage only if-

(a) the loss or damage occurred in the course of employment and was due to the fault of the employee;

(b) the employer has followed a fair procedure and has given the employee a reasonable opportunity to show why the deductions should not be made;

(c) the total amount of the debt does not exceed the actual amount of the loss or damage; and

(d) the total deductions from the employee's remuneration in terms of this subsection do not exceed one-quarter of the employee's remuneration in money.

(3) A deduction in terms of subsection (1) (a) in respect of any goods purchased by the employee must specify the nature and quantity of the goods.

(4) An employer who deducts an amount from an employee's remuneration in terms of subsection (1) for payment to another person must pay the amount to the person in accordance with the time period and other requirements specified in the agreement, law, court order or arbitration award.

(5) An employer may not require or permit an employee to –

(a) repay any remuneration except for overpayments resulting from an error in calculating the employee’s remuneration.

(b) acknowledge receipt of an amount greater than the remuneration actually received.”

(emphasis added)

[12] All the subsections except for section 34(5) are concerned with deductions made in terms of section 34(1). Section 34(1) identifies two classes of deductions which may be made. The first class (section 34(1)(a)) is a class of deductions which may be made for an acknowledged debt and which specifically requires the employee to authorise the deduction in writing. The second class (section 34(1)(b)) is a class of deductions which does not require the employee to authorise the deduction personally in writing before it can be made. This second type of deduction may be mandated by other legal instruments such as legislation, an order of court or a collective agreement. This second class of deductions does not presume the existence of an acknowledged debt.

[13] When the definition of the term “remuneration” in the BCEA is considered in the context of the established facts of this matter, it is clear that the amount of R5 000.00 did not constitute “any payment in money or in kind, or both in money and in kind, made or owing to any person in return for that person working for any other person, including the State”. The payment would fall within the meaning of “remuneration” if it was part of the contractual arrangement between the parties. As set out elsewhere in this judgment, the factual position establishes that it was not.

[14] The application of section 34 (5) is different, not only because it has no bearing on deductions but because it concerns repayments. This subsection has been considered in a number of cases:

[14.1] In Jonker v Wireless Payment Systems CC[6] Molahlehi J held as follows:

“In support of her case that her right had been interfered with the applicant relied on the provisions of s 34(1) of the Basic Conditions of Employment Act. That section prohibits an employer from making any deductions from an employee's remuneration unless the employee agrees in writing. It is indeed correct that as a general rule the Basic Conditions Employment Act prohibits deductions from employees' salaries without their prior consent. However, deductions without consent are permitted where they are permitted by the law, a collective bargaining agreement and a court order or arbitration award. In these instances all that the employer needs to do is to advise the employee of the error in payment and the deduction made or to be made. See Papier & others v Minister of Safety & Security & others (2004) 25 ILJ 2229 (LC).”

[14.2] In Sibeko v CCMA[7] Revelas J, dealing with the issue of deductions, stated:

“It is indeed so that in terms of the Basic Conditions of Employment Act, an employer may not deduct amounts from the salary or remuneration of an employee without the employee's consent. Where an employee was however overpaid in error, the employer is entitled to adjust the income so as to reflect what was agreed upon between the parties in the contract of employment, without the employee's consent.”

[14.3] In Padayachee v Interpak Books (Pty) Ltd[8] Whitcher AJ (as she then was) observed:

“[27] It is noteworthy that the drafters of s 34 chose to identify and deal separately with a number of different types of deductions. This must mean that the purpose of the provision is to regulate these deductions.

[28] It thus follows that any enquiry into s 34 should commence by identifying the nature and purpose of the deduction in dispute and then ascertain whether the section requires employers to regulate such deductions in a particular manner.”

[14.4] Ngcukaitobi, AJ in SA Medical Association on behalf of Boffard v Charlotte Maxeke Johannesburg Academic Hospital & Others[9] also appeared to accept, albeit perhaps obiter, that the repayment of overpayments made in error could warrant deductions without the requirements of section 34 (1) (a) being met. In particular, commenting on Jonker and other decisions, he stated as follows:

“[39] It is apparent from these decisions that the view taken by the Labour Court is that an overpayment as a result of an administrative error does not constitute remuneration as defined in terms of the BCEA. Since it is outside the parameters of the BCEA, an employer is not required to obtain the consent of an employee before effecting the deductions as required by s 34(1) of the BCEA.”

[15] In my view, it is plain that section 34 of the BCEA is simply not applicable to the respondent’s circumstances because, at a factual contractual level, at no stage did her remuneration include the payment of a car allowance. Accordingly, the cessation in the payment thereof would not constitute a deduction within the meaning of the section and the court a quo erred in finding the section to be applicable in the circumstances.

[16] The argument advanced on behalf of the respondent in this appeal is supportive of the judgment of the court a quo. It too is based upon the unsubstantiated factual premise that the car allowance formed part of the respondent’s “gross salary”, or remuneration. In the light of the analysis set out elsewhere in this judgment, this factual premise is erroneous. The attack that is then mounted against the alleged unlawfulness of the appellant’s cessation of the monthly payment of the car allowance is also based upon the applicability of section 34 (1) of the BCEA to the respondent’s situation. For the reasons expressed elsewhere in this judgment, the attack cannot succeed. Closely associated therewith is the argument that the respondent enjoyed a legitimate expectation of the continuation of the payment by the appellant of the car allowance. For the same reasons, this argument lacks merit.

[17] It was also submitted on behalf of the respondent that she ought to have been given an opportunity to make submissions to the appellant prior to the latter taking a decision which adversely affected her rights. Given the finding of this court that the respondent had failed to show an entitlement to the car allowance, in my view this argument is misplaced. At the very best for the respondent, she was entitled to an informative consultation before the cessation in the payment of the car allowance. On the appellant’s version, set out in the answering affidavit, the respondent was afforded this informative consultation on 5 July 2018, when she met with the appellant’s municipal manager and it was explained to her that, with the concurrence of the labour unions who represented the appellant’s employees, including the respondent, the appellant had decided to implement a policy, or “remedial action”, to cease the irregular payments which had hitherto been made to employees (including the respondent in the form of the car allowance to which she was not entitled).

[18] The purpose of such consultation must not be mistaken for a purpose to solicit a necessary consent. The cessation of the payment of the car allowance did not have to be with the respondent’s consent. Rather, the cessation of payment had to occur after consultation with the respondent. This requirement was satisfied.[10] In Unlawful Occupiers, School Site v City of Johannesburg[11] Brand JA stated as follows:

“Support for this argument was sought in those cases where a distinction had been drawn between ‘in consultation with’ and ‘after consultation with’. According to these authorities, a decision ‘in consultation with’ another functionary requires the concurrence of that functionary while a decision ‘after consultation with’ another functionary requires no more than that the decision must be taken in good faith, after consulting and giving serious consideration to the views of the other functionary (see eg Premier, Western Cape v President of the Republic of South Africa [1999] ZACC 2; 1999 (3) SA 657 (CC) and President of the Republic of South African and Others v South African Rugby Football Union and Others [1999] ZACC 9; 1999 (4) SA 147 (CC)).”

[19] The principle was reiterated in McDonald v Minister of Minerals and Energy[12], where the following is stated:

“Likewise, where the law requires a functionary to act ‘in consultation with’ another functionary, this too means that there must be concurrence between the functionaries, unlike the situation where a statute requires a functionary to act ‘after consultation with’ another functionary, where this requires no more than that the ultimate decision must be taken in good faith, after consulting with and giving serious consideration to the views of the other functionary.”

[20] As a consequence of the error in finding, as a fact, that the car allowance formed part of the respondent’s remuneration, and the concomitant error of law in finding that the provisions of section 34(1) of the BCEA were applicable to the respondent’s circumstances, the judgment of the court a quo then placed reliance upon the decision of the Constitutional Court in Public Servants Association obo Ubogu v Head, Department of Health, Gauteng and Others[13]. In my view, such reliance was misplaced and, indeed, was misrepresentative of the issues that the Constitutional Court had to decide in the judgment. The issue before the Constitutional Court is revealed in the very first paragraph of the judgment, which reads as follows:

“[1] This case concerns the validity of a statutory provision that permits the State, as an employer, to recover moneys wrongly paid to its employees directly from their salaries or wages in the absence of any due process or agreement between the parties. It brings into sharp focus issues regarding self-help ­ an aspect of the rule of law ­ procedural fairness, and the common law principle of set-off. Key issues are whether the order of constitutional invalidity made in the Labour Court falls within the ambit of section 167(5) of the Constitution – for confirmation by this Court − or whether it is an interpretative order that need not be confirmed.”….

[21] That the decision in Ubogu is distinguishable on the facts from this matter is also clear from paragraphs 5 – 18 of the judgment. It is readily apparent from a reading of these paragraphs that:

[21.1] the applicant was entitled to the payment of a salary at Grade 11 level[14] but had been paid a salary at Grade 12 level.[15]

[21.2] after discovery of the error the applicant was told that she owed the employer the difference.[16]

[21.3] in September 2005, the employer deducted a sum of money from the applicant’s salary to compensate for a part of the erroneous payment.[17]

[21.4] in July 2016 the employer again withheld a part of her salary.[18]

[21.5] the lawfulness of the deduction from her salary was challenged on various bases including the argument that section 38(2)(b)(i) of the Public Service Act[19] was unconstitutional.

[22] On any construction of the facts in the present matter, the appellant did not recover any amount that had been wrongly paid to the respondent directly from her salary or wages in the absence of any due process or agreement between the parties. The appellant simply did not continue to pay an allowance that had previously been wrongly paid to the respondent. Accordingly, the decision of the Constitutional Court in Ubogu has no bearing on the facts in this matter.

[23] Moreover, when approaching the court a quo, the respondent did not seek a declaratory order of unconstitutionality in respect of section 34 of the BCEA. From this, it must be concluded that she accepts the provisions of section 34 of the BCEA as they are. Consequently, the court a quo did not have to exercise its mind on that question. Nor is such an approach adopted on behalf of the respondent in the argument before this court.

[24] It follows that in my view the appeal must succeed.

[25] What remains for determination is the issue of costs. The normal principle is that costs should follow the result. Nothing emerges in this matter as a reason to deviate from this approach.

[26] I would propose that the following order be issued:

“1. The appeal is upheld with costs, such costs to include the costs of the applications for leave to appeal brought both before the court a quo and the Supreme Court of Appeal;

2. The order of the court a quo is set aside and substituted with the following order:

“The application is dismissed with costs, such costs to include the costs which were reserved on 2 November 2018.””

----------------------------

R W N BROOKS

JUDGE OF THE HIGH COURT

BESHE J;

I agree, and it is so ordered.

------------------------------

N G BESHE

RUGUNANAN J:

I agree.

---------------------------------

M S RUGUNANAN

Appearances

Appellant: Adv A BODLANI

Instructed by T L Luzipho Attorneys

26 Victoria Street

MTHATHA

Respondent:Adv H van der LINDE SC and Adv SIMOYI

Instructed by Caps Pangwa & Associates

Suite 302, Offices Nos 311/312

City Centre Building

Date heard: 20 April 2020

Date delivered: 19 May 2020

[1] Constitution of the Republic of South Africa, 1996 (Act 108 of 1996).

[2] Act 117 of 1998.

[3] Act 75 of 1997.

[4] [2009] ZASCA 1; 2009 (2) SA 277 (SCA) para [26].

[5] [1984] ZASCA 51; 1984 (3) SA 623 (A) at 634 H-I.

[6] (J1137/09) [2009] ZALC 150; (2010) 31 ILJ 381 (LC) (23 June 2009) para [21].

[7] (2001) JOL 8001 (LC).

[8] (D234/12) [2014] ZALCD 4; (2014) 35 ILJ 1991 (LC) (3 March 2014).

[9] (J2469/13) [2014] ZALCJHB 78; (2014) 35 ILJ 1998 (LC) (20 March 2014).

[10] Record: para 14, p 62.

[11] 2005 (4) SA 199 (SCA) at 206 D-F.

[12] 2007 (5) SA 642 (CPD) at 649 D-E.

[13] 2018 (2) SA 365 (CC)

[14] Ubogu, para 5.

[15] Ubogu, para 6.

[16] Ubogu, para 7.

[17] Ubogu, para 8.

[18] Ubogu, para 9.

[19] Act 103 of 1994.