Smith and Associates v Libertinova-Lines and Others (C405/2019) [2021] ZALCCT 34 (15 March 2021)

IN THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN

Not Reportable

Case no: C405/2019

In the matter between:

CRAIG SMITH AND ASSOCIATES

Applicant

and

HERMINA LIBERTINOVA-LINES

1st Respondent

THE COMMISSION FOR CONCILATION

MEDIATION AND ARBITRATION

2nd Respondent

COMMISSIONER STEPHEN BHANA

3rd Respondent

Date heard: 19 November 2020 on the papers Delivered: 15 March 2021 by scanned email

JUDGMENT

RABKIN-NAICKER J

[1] This is an opposed application to review an arbitration award under case number WECT201786-18. In terms of the Award, the third respondent (the Commissioner) found that the first respondent had proved that she was constructively dismissed. The applicant was ordered to pay outstanding leave pay and an amount equivalent to two months’ salary as compensation.

[2] Given the nature of the dispute before the Commissioner, who had to determine whether a dismissal took place or not, this Court shall decide whether the Commissioner was correct in law and fact. [1]

[3] The background to the dispute is set out in the Award as follows:

“3. The respondent had employed the applicant as an attorney, for approximately

7 months. The applicant earned R34 500.00 per month as salary plus commission. She resigned on 3 December 2018.

4. The applicant averred that the relationship with Smith and the secretary deteriorated with Smith siding with the secretary. He refused to deal with her complaints and issues and did not pay her outstanding commission for 3 months. She was accused of non-performance and removed from her office. Her work environment was hostile and humiliating.

5. The respondent denied that the applicant was dismissed. He conceded that the relationship had deteriorated, but denied that he made the work environment intolerable.

6. It was common cause that the applicant resigned with immediate effect.”

[4] In Centre for Autism Research & Education CC v Commission for Conciliation, Mediation & Arbitration & others[2] the Court considered the test for determining whether a constructive dismissal has taken place:

“[33] The Labour Appeal Court has observed that inherent in employment relationships are often considerable levels of irritation,

frustration and tension (see Jordaan v Commission for Conciliation, Mediation & Arbitration & others (2010) 31 ILJ 2331 (LAC)). Generally speaking, these are insufficient in themselves to establish the intolerability of continued employment. Something more is required. As the court observed in Experian Regent Insurance, at para 53 of the judgment:

‘The court’s function is to look at the employer’s conduct as a whole and to determine whether its effect, judged reasonably and sensibly, was such that the employee could not be expected to put up with it. The conduct of the parties is to be looked at as a whole and its cumulative impact assessed.’

[34] In broad terms, the key elements of the test are that the contract of employment must have been terminated by the employee, the employee must not have terminated the contract voluntarily (in the sense that he or she would have continued in employment indefinitely but for the unbearable situation created by the employer), continued employment must, objectively, be intolerable, the intolerable circumstances must have been of the employer’s making, and the employer must be culpably responsible for the conduct that created the intolerable conditions (see Myburgh & Bosch Reviews in the Labour Courts (Lexis Nexis 2016) at 364-5).”

[5] In his analysis of the evidence before him the Commissioner records that:

“36. It is common cause that the applicant resigned with immediate effect. There was no evidence to suggest that she had another post waiting when she resigned. In this case the applicant’s claim rests on the employer’s lack of intervention between her and her colleague as well as his accusations and actions against her. It is undisputed that there was friction between the applicant and Shawe, that she was moved out of her office and that commission was not paid to her. She raised these issues with her employer but to no avail. The respondent’s constant defence was that he wanted the two employees to work together but there is nothing to show that he constructively addressed the issues. Instead he favoured one employee over the other. Ironically the one who has the credentials equal to his, received the short end of the stick. He averred that he intended to deal with the applicant’s alleged lack of performance once he came back from some unknown journey. He acknowledged that he was aware of the issues but failed to demonstrate any decisive action to address same. The respondent was therefore responsible for the unbearable conditions. The applicant had no other means of addressing the matters as the respondent was the ultimate decision maker in the

business.

37. In summary the applicant has proven that her working conditions were so intolerable that she had to resign as a last resort. It follows then that she has discharged the onus of the existence of a constructive dismissal.”

[6] The first respondent gave evidence at arbitration which explained the genesis of the problems she experienced. This appears to have been an agreement on a commission pay structure between herself and Mr Smith (Smith) of the applicant. The record reads as follows:

MS LIBERTINOVA-LINES:……. my relationship with Mr Smith is based on my employer/employee relationship and as such it is entirely based on the relationship I have with him solely and to the exclusion of other members of staff, which Mr Smith seems to keep crossing over.

When I started with Mr Smith the understanding was that he wants me to succeed, prosper, make money, that’s why he is in that

business. I did not have a three months honeymoon phase as Mr Smith put it, I probably had a month, if even, and I started working on files.

The three months was when Mr Smith wanted to introduce the commission based structure and discussed it with me. He gave me the option of taking an assistant, which in this case was Lindia Shawe, as it’s difficult to do it by myself.

COMMISSIONER: To do what?

MS LIBERTINOVA-LINES: To do the work on my own. I didn’t know Ms Shawe that well. The staff is very small. I was only too happy to work with somebody who had more experience than me in that field and at that stage Ms Shawe was working for Mr Smith to the best of my knowledge for two years.

Mr Smith had a meeting outside the office with me where we discussed the commission structure. Those negotiations were solely between him and I, it did not include Ms Shawe. She was not party to the negotiations, nor was she ever part of any agreement I had with Mr Smith. As a matter of fact I was advised by Mr Smith that Ms Shawe was a problem child and by giving her an incentive to work with me and make more money, it will perhaps control her….

COMMISSIONER: Could you maybe just elaborate on what the details of those were?

MS LIBERTINOVA-LINES: Yes, certainly. My salary we calculated at 35 roughly. Ms Shawe’s salary was about 18 and I was to absorb 50% of her salary because she was going to work for both myself and Mr Smith. And then that we times by 2.5 roughly, which gave us 100 000 breakpoint.

COMMISSIONER: So she earned 15 000? MS LIBERTINOVA-LINES: She earned 18. COMMISSIONER: Okay.

MS LIBERTINOVA-LINES: Of which 9 000 was attributable for assisting me into my break-even point.

COMMISSIONER: Okay.

MS LIBERTINOVA-LINES: The agreement further was that over 100 000, Mr Smith will share 50/50.

MS LIBERTINOVA-LINES: Ms Shawe’s commission, Mr Smith stated that it would be between her and I and it’s for me to sort out with her, as she will be working under me.

MS LIBERTINOVA-LINES: Which I then discussed with Ms Shawe and I asked her to give me the percentage or a number that she wants to earn extra a month, you know to work out what her commission will be.

COMMISSIONER: Ja?

MS LIBERTINOVA-LINES: We agreed on her commission and I thought that settled the matter. Mr Smith was not privy to those discussions that I had with Ms Shawe.

COMMISSIONER: And what was the figure you agreed on?

MS LIBERTINOVA-LINES: I think it was 15%, 15 to 20, somewhere there, depending on how much we make a month because remember that the first month’s commission works out to R20 000. That was my 50% of it and I asked the accountant to give Ms Shawe R4 000, which amounted to 20% of the commission.

COMMISSIONER: So this was 20% of your 50%?

MS LIBERTINOVA-LINES: Yes, it’s only of my 50, not of Mr Smith.

COMMISSIONER: Alright, carry on.

MS LIBERTINOVA-LINES: Later that day I went to lunch. I came back and was called in to Mr Smith’s office where Ms Shawe was present. Mr Smith was in a rush to leave and he advised me that he has decided that it’s fair for her to share 50/50 commission with me and we were

each going to be getting R10 000 commission.

MS LIBERTINOVA-LINES: There was very little said afterwards, except that I was very upset and shocked. I would say because it literally just sandbagged me. However, as I said Mr Smith was literally out the door, so he left.”

[7] After the meeting which took place on the 8 August, the evidence at arbitration reflects that the first respondent and Smith exchanged ‘whats app’ messages. Smith sent one at 5.37 pm which stated:

“Herminia I did not want to undermine anybody I’m sorry it went a bit pear shaped I sometimes think I should just have me and two staff members in little office but ultimately not the way to go.”

[8] In reply later that evening the first respondent sent a reply as follows:

“ Craig you not only undermined me with Lindia, but you sandbagged me…How am I supposed to “manage” her from now on when you have put her on a par with me. And completely railroaded me. I am the attorney after all am I not? I have studied and worked hard to get to where I am I don’t deny that Lindia works hard, but despite what you might think, cos of my hours, so do I. I am the one dealing with clients, checking her work and doing all my work ever since we started working together she leaves either with me or soon thereafter She doesn’t work from home or come in on weekends anymore So I am pulling my weight, no one does my work for me I really feel betrayed today….”

[9] It was Smith’s case at the arbitration that the first respondent was not in an intolerable situation as far as her employment relationship with him was concerned. He stated in his opining address that : “The intolerable situation was one in which it fermented and festered between her and a staff member.” Under cross-examination he stated that he did not give the first respondent carte- blanche to oversee the commission and:

“… the reason I stepped in was because out of one of the commissions of R20,000.00, when the witness will show[3] that she did all the work, you were going to give her four or R5000.00 because you felt that all she deserves, because you’re the Attorney. And I stepped in, and said that I not fair, it’s not fair to deal with fellow colleagues, and give her four R5 000.00..”

[10] Smith insisted that it was very clear from correspondence he received from the first respondent that her “gripe, which is 80% of her gripe, was about Lindia.” After the meeting which he called with first respondent and Lindia Shawe on 23 October 2018, the first respondent wrote him a long email which she read out at the arbitration. The transcript records the first respondent reading out her correspondence to Smith:

“Hi Craig

I don’t like the way things were left, but after sleeping on it I feel that I must clear the air so to speak.

As much as I am trying not to always speak my mind, it is just not in my nature to leave things unresolved.

Firstly, I do apologise for my tone in my SMS to you. It was a bad day and I reacted as I felt treated more like a secretary than a colleague. Things have been a bit off and I am not sure why, but I thought it was best to leave you alone as you have enough to deal with at the present.”

I don’t know whether I should bring this up but for now I will leave it, what Mr Smith was dealing with.

“I hope by now you have gotten to know me a little bit better and know that I am not an unreasonable person. However, I have low tolerance for manipulative back stabbing and self-serving people who would use every turn to further their own agenda, like Lindia. I was more than willing to be a team and extended even a hand of friendship, which got bitten off. Irrespective, I thought and I suppose you and I know what the bigger picture is. I need not bother with Lindia. However, I was very sad that the attack was on me as opposed to setting things straight and defining lines.

I really am not perturbed if Lindia worked from home – has pretty much worked from home the entire week most of the way. But I do take offence to her using her son’s condition to manipulate the situation. Stomach bug and snotty nose as she described it are certainly not medical conditions relating to her child’s medical condition and precisely the type of blatant manipulation

irritates me.

The first week she was off her father was in town visiting. Just a coincidence I guess but again I really don’t care as long as the work is done, but it is not always and then she has the audacity to point fingers. Lindia never does what I ask. She decides what’s important to her and does that. It’s my work and my clients and your pay day comes. She has gone as far trying to order me around and tell me what to do and what not to do, as she did yesterday.

Vivian asked her permission - [Vivian is our runner, messenger, clerk, office assistant, she goes to court for us to submit papers and so forth, amongst other things] – Vivian asked her permission a few days ago to go home early and after having to explain why to Lindia, she was allowed to leave at 3.30. Am I not aware of Lindia’s office manager position then?

Lindia’s attitude has always been with me: I will do as I please and there is nothing you can do about it, because Craig needs me. (And I quoted that because that’s her words). Again I am not trying to interfere with dealings with Lindia, but when I constantly have to deal with her attitude problems and have to always watch my back and cannot count on her, it is an issue for me.

Lindia never does anything out of the goodness of her heart, there is always ulterior motives and agenda. If she ‘helps’ then the whole office knows about it because she is the only one who works in Cape Town and Joburg offices – [inverted commas, again her comments]. The rest of us are stupid and useless. On the statement that she works at home and all that, she only works at home when she was off work and most of it was not done properly and she lost a file at home for which then I took the blame with client for

delaying the visa application, after having offered to do it for him.

I must also state that I was offended that you asked her if I am correct in saying that I am on top of my work, which I am and you are welcome to go through my files.

Yes, there will be always things left to do with all of us. If there weren’t, then I would worry because then I clearly don’t

have enough work. I have been begging Lindia to get onto bill of costs, to no avail. But enough of that. The bottom line is that I can work with her but she must know her boundaries with me. I hope you understand my position……”

[11] The first respondent made a couple of remarks during the arbitration as to why her employer, Smith, could not do without Lindia Shawe. Initially these were coy, but the gloves did come off when the first respondent, believing that Smith was attacking her character, revealed that Smith was at the time of the arbitration, out on bail facing 1300 charges of fraud:

“I don’t lie Mr Smith, I don’t make it a habit. But when somebody mistreats me, lies to me about job opportunities, and then decides to degrade me, because the secretary is doing his personal work for him, to cover him, I’m sorry I take offense to that, and I can’t stand for it. Is it not true, Mr Smith, that Ms Shawe was busy for over a month with forensic ….(indistinct)

investigators assisting you, also preparing fake bills of costs for clients, which the Auditor wanted, to prove that amounts were not put into trust find, when they should be for clients, and were paid directly to business account. Isn’t that what was happening with

…(indistinct) you and Ms Shawe against me”.

[12] Smith denied that this issue was relevant or accurately described but did not deny that Shawe was assisting him in regard to this work. The first respondent continued her cross-examination:

“MS LIBERINOVA-LINES : The cyber forensic investigators that you and Ms Shawe were busy with.

MR SMITH: And…(intervention)

MS LIBERTINOVA-LINES: And she wasn’t in the office And she was working on it from home as well, and during working hours And I was sitting there dealing with clients, and everybody else that decided to …(indistinct).

MR SMITH: So, if I may ask, is that because you having an issue with Ms Shawe? MS LIBERTINOVA-Lines: I don’t have an issue with Ms Shawe, Mr Smith.

MR SMITH: Well, you’ve, then you are ……(indistinct) ….(intervention)

MS LIBERTINOVA-LINES: I’ve got an issue with you, and not delivering on what you promised me this job to be. That is my issue.

Ms Shawe is nobody to me another disgruntled, miserable secretary what is she to me? She is not my future But…….”

[13] The first respondent then went on to state that the firm was meant to be her future and that Smith gave her false security: “which you then reneged on, and you turned your back on me. And not only, you humiliated me.” In her argument before the Commissioner she submitted that Smith degraded her in front of the secretary, called her mediocre and alleged that she did not do any work that the secretary does all the work, and threatened her with a disciplinary hearing: “ïf I don’t try and work with the secretary and pretty much get on with it.”

[14] Under cross-examination, the first respondent conceded that the meeting called by him at which she and Ms Shawe were present was terminated by Smith “because of the personality issues and the accusations flying from both sides.”

[15] It appears from the record that the relationship between the first respondent and Smith further deteriorated when her baby became ill on November 21 2018. First Respondent presented a medical certificate which recorded that she attended at the doctor on 27 November 2018, and that she had informed him that she was unable to work from 21 November, the date on which she had taken her child to the doctor. She was booked off until December 3 2018. Smith questioned the validity of her claiming sick leave for this whole period which according to first respondent further made her work situation more intolerable.

[16] First respondent conceded that she did come to the office during the period when a client had contacted her although she was booked off sick. Under-cross examination the following exchange is transcribed:

“MR SMITH: Ja and you do recognize that if you were so sick you still came to the office?

MS LIBERTINOVA-LINES: Yes because….(intervention) MR SMITH: Well you didn’t come to the office.

MS LIBERTINOVA-LINES: The stress of being sick and not knowing what is happening at work that I really rely on the income, and everything

else and the decision that I was taking, this will be my future, and that I had a long-term future and I’ve told you on many

occasions that I see this firm as my future.”

[17] It appears therefore that during the period she was booked off, the first respondent was considering the decision as to whether to resign. She had already removed all her belongings from her desk on the 26 November 2018 when she came to the office to meet with Smith but he was not at the office. She testified she did so because Shawe had been going through her personal things including her emails on her lap top. On the 27th, she came to deal with a client and requested to meet Smith but without success. On the 29th November 2018 she sent Smith the following email:

Herewith my medical certificate

In light of the fact that you have refused to communicate with me this week, I would like to know what is the current position and whether I should be returning to work on Monday or not.”

Thanks Hermina”

[18] In reply to this Smith confirmed that she was obliged to tender her services and inter alia stated:

“Finally can I ask you if your sms’s and your medical letter you sent me of late relating to work opportunities and your illness are most definitely the truth?”

[19] The first respondent tendered her resignation on the 3 December 2018 and it was accepted by Smith on the same day. This was in the wake of a meeting called by Smith with first respondent and Shawe in the boardroom:

“MR SMITH: Yes. Then you came back to the office on the 3rd of December because now you are booked off sick. Did I not, is it not correct that I asked you and Lindia to kindly see me in the boardroom?

MS LIBERTINOVA-LINES: You asked me to wait for you in the boardroom, which I did, and then you came in with Lindia to my amazement.

MR SMITH: Okay well I can tell you that was certainly not orchestrated but would you agree that we endeavoured to have a meeting?

MS LIBERTINOVA-LINES: Yes.

MR SMITH: Right, and in that meeting did I not point out that we need to work together?

MS LIBERTINOVA-LINES: If I recall you said in the meeting- that is the second time I asked you to let me work on my own and if I need to get my own assistant, because Lindia and I cannot obviously work together, and you told me that I need to work with Lindia and that you’re going away so you are not going to deal with me, but if needs be you’re going to have a disciplinary hearing for me.

MR SMITH: I made it clear, yes I needed the two of you to work together. Was my solution then: You had cleared all your stuff out for ten days or whatever, Lindia have been carrying out all the work whilst you were away on her own, and didn’t that meeting seem to turn out the same as the first meeting where you and Lindia once again had a go at each other but that is how I understand that?

MS LIBERTINOVA-LINES: I can’t remember if Lindia and I had it quite as bad as we had a first time go at each other, because the evidence was pointless and….(intervention)

MR SMITH: Yes, what was pointless?

MS LIBERTINOVA-LINES: She and I talking to each other about what is true and what is not.”

[20] In Murray v Minister of Defence[4] , the Supreme Court of Appeal considered the development of jurisprudence on constructive dismissal and referred to:

[12] the carefully considered jurisprudence the labour courts have evolved in dealing with unfair employer instigated resignations under the labour relations legislation of the past three decades. These cases have established that the onus rests on the employee to prove that the resignation constituted a constructive dismissal: in other words, the employee must prove that the resignation was not voluntary, and that it was not intended to terminate the employment relationship. Once this is established, the enquiry is whether the employer (irrespective of any intention to repudiate the contract of employment) had without reasonable and proper cause conducted itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust with the employee. Looking at the employer's conduct as a whole and in its cumulative impact, the courts have asked in such cases whether its effect, judged reasonably and sensibly, was such that the employee could not be expected to put up with it.

[13] It deserves emphasis that the mere fact that an employee resigns because work has become intolerable does not by itself make for constructive dismissal. For one thing, the employer may not have control over what makes conditions intolerable. So the critical circumstances 'must have been of the employer's making'. But even if the employer is responsible, it may not be to blame. There are many things an employer may fairly and reasonably do that may make an employee's position intolerable. More is needed: the employer must be culpably responsible in some way for the intolerable conditions: the conduct must (in the formulation the courts have adopted) have lacked 'reasonable and proper cause'. Culpability does not mean that the employer must have wanted or intended to get rid of the employee, though in many instances of constructive dismissal that is the case.”

[21] The applicant’s submissions before me emphasize that the Commissioner failed to have any regard to First Respondent’s conduct as a contributory factor to the circumstances that prevailed at the time of her resignation. On applicant’s submission, the Commissioner should have had regard for the fact the conflict between First Respondent and Shawe was not a situation created by Smith, but rather that first respondent had played an active role in the breakdown of her relationship with Shawe. Smith, it is argued, made bona fide attempts to address the situation in a manner that would cater for everyone’s interest, including that of the business.

[22] It appears to the Court that given the undisputed evidence that Shawe was assisting Smith with a forensic audit of the business, it is probable that it was not his professed ‘flat management’ style, but rather that particular function that Shawe was performing, that led him to call the first respondent in and inform her that she should share her commission 50/50 with Shawe. In other words, Shawe was able to exert pressure on Smith.

[23] The first respondent has emphasized her shock at being put on a par with a secretary when she was the professional in the business along with Smith. She felt humiliated when her work was criticized in front of the secretary, and claims were made that Shawe was doing more work than her. Smith asked her to give him a full report on all her files. In certain of her correspondence with Smith, she defends her work ethics and standards and reminds him that he agreed that she work a shorter day when he took her on because she had a small baby. In addition Smith questioned whether first respondent was being truthful about her need for sick leave.

[24] Despite the fact that the first respondent was very clear that she could not be regarded as an equal to Shawe, due to her professional status, it has to be said that she was involved in a slanging match with Shawe on more than one occasion. Her disdain for the lower status of Shawe is clearly reflected in the evidence and does not reflect well on her.

[25] However, I have no doubt that the way that Shawe held sway, and the applicant’s failure to pay commission to the first respondent for a number of months, made working conditions very difficult for the first respondent. She testified that she was considering her position during the 10 days she was not in the office. When she returned on the 3 December 2018, the fact that Smith called her and Shawe into the boardroom together and advised her that she was to be offered an office (“a storeroom”) while Shawe was to work in the space she had been allocated, was the final straw. The conduct of Smith that led first respondent to resigning boils down to his ‘one sided’ approach to the conflict between first respondent and Shawe. Smith had allowed Shawe to gain such power in his business that he dealt with the relationship with first respondent and Shawe in a way that completely undermined any authority first respondent could reasonably exert on a member of the administrative staff of the firm.

[26] In all these circumstances, the Commissioner was correct in finding that the first respondent’s termination of the employment relationship was not voluntary. She repeated in her evidence that she saw her future as part of the applicant. She came back to work on the 3 December 2018 expecting to talk over problems with Smith, but was confronted with a situation that confirmed her view that Smith was not going to be even-handed in dealing with the compatibility problems between Shawe and herself.

[27] Did the conduct of Smith have reasonable and proper cause? The instruction he initially made to divide the commission equally between an attorney and her caseworker/secretary was unreasonable. This was the more so, because he announced this in front of both of them, thus removing any vestige of authority that first respondent had over Shawe. Smith was culpable for this intolerable situation. He continued to conduct himself in a way that piled the pressure upon first respondent until her eventual resignation.

[28] In these circumstances, I am of the view that the Commissioner was correct in finding that a constructive dismissal had taken place and his Award must stand. In labour related disputes, the general rule that costs follow the event finds no application. Rather, costs are governed by s 162 of the LRA which provides that an order for payment of costs may be granted in accordance with the dictates of the law and fairness.[5] Litigants such as the applicant in this case should not be discouraged from bringing a review application to this court. The application was not frivolous. I am of the view that no cost order should be made.

[29] I make the following order:

Order

The review application is dismissed.

H. Rabkin-Naicker

Judge of the Labour Court of South Africa

Representation

Applicant: Masermerule Attorneys

First Respondent: J. Cook instructed by Esmeraldo & Associates

[1] Solid Doors (Pty) Ltd v Theron (2004) 25 ILJ 2337 (LAC) ; SARFA & Others (PTY) Ltd & Others (2015) 29 ILJ 2218 (LAC)

[2] (2020) 41 ILJ 2623 (LC)

[3] Referring to Lindia Shawe who was expected to testify at the arbitration

[4] 2009 (3) SA 130 (SCA); (2008) 29 ILJ 1369 (SCA)

[5] Stokwe v Member of the Executive Council, Department of Education, Eastern Cape & others (2019) 40 ILJ 773 (CC)