United Transport and Allied Trade Union obo Hatttingh v Gaylard NO and Others (JR 1643/08) [2013] ZALCJHB 241 (3 October 2013)

Not reportable

REPUBLIC OF SOUTH AFRICA

THE LABOUR COURT OF SOUTH AFRICA,

IN JOHANNESBURG

JUDGMENT

Case no: JR 1643/08

In the matter between:

THE UNITED TRANSPORT AND ALLIED TRADE UNION First Applicant MR J HATTINGH Second Applicant and JEANNE GAYLARD (N.O.) First Respondent TRANSNET RAIL ENGINEERING Second Respondent

Heard: 24 July 2012

Delivered: 03 October 2013

Summary: (Review – alleged failure to consider evidence –arbitrator did not fail to consider relevant evidence – sufficient evidence to support arbitrator’s conclusion - Admissibility of hearsay – outcome not materially affected by irregularity – Grounds of review not established – application dismissed).

LAGRANGE, J

Introduction

The applicants in this matter applied to review and set aside a pre-dismissal arbitration award in which the arbitrator found that the second applicant, Mr J Hattingh, should be summarily dismissed.

I am in agreement with the view expressed by Van Niekerk J in Chetty v Transnet Bargaining Council & another (case no JR 2668/11 dated 27 March 2013), in which he confirmed the applicable review standard in such cases:

"[2] I deal first with the test to be applied in the present proceedings. The parties were in agreement that although Tokiso had been appointed to conduct the first respondent’s dispute resolution functions (the arbitrator was drawn from a panel

maintained by that organisation, a private dispute resolution agency), the proceedings under review were conducted under the auspices of the first respondent in the exercise of its statutory powers. The consequence, of course, is that the grounds for review extend beyond those established in terms of s 33 of the Arbitration Act, Act 42 of 1965, and that the provisions of s 145 of the LRA apply, infused as they are with the constitutional consideration of reasonableness (see Sidumo & another v Rustenburg Platinum Mines

& others [2007] ZACC 22; 2008 (2) BCLR 158 (CC)). It bears mentioning that the proceedings under review were conducted in terms of s 188A. Hearings conducted under that provision are identical to arbitration hearings conducted in terms of s 136 of the LRA. Indeed, s 138 of the Act, read with any changes required by the context , is directly applicable to any arbitration conducted in terms of s 188A (see s 188A (6)), and an arbitrator appointed in terms of s 188A has all of the powers conferred on a commissioner by s 142 of the Act (see s 188A (7). The Sidumo test contemplates that this court will be entitled to interfere with an arbitrator's award if and only if the award falls outside of a band of decisions to which reasonable people could come on the available evidence, or if the arbitrator conducted him or herself other than as a reasonable arbitrator would, in circumstances where there is potential prejudice to the applicant party.”

The charges against Hattinghwere as follows:

"Negligence in executing your duties in that:

1. During the period 28 September 2000 to 17th of June 2005 you approved purchase requisitions without the required quotations, knowing that there was no written contract between Pesticon and Transwerk; and

2. During the period September 2000 to 17 June 2005 you approved purchase requisitions after work has been completed or executed."

The arbitrator's award

The arbitrator summarised the evidence of the witnesses. In essence, the material evidence of the company witnesses was that:

4.1. An independent audit revealed that between September 2000 and June 2005 approximately R 2, 1 million was paid to Pesticon.

4.2. The purchase orders had been signed by Hattingh.

4.3. The audit had been unable to locate a contract between Pesticon and Transwerk and Mr Swanepoel, Pesticon’s owner, had told the auditor there was no contract.

4.4. Hattingh had been given time to find a contract with Pesticon that had been unable to do so.

4.5. The auditor who had conducted the investigation, Mr Kepkey, interviewed the owner of Pesticon, Mr Swanepoel, who informed him that he did not have a contract with Transwerk.

4.6. Pesticon was not registered for VAT.

4.7. Mrs Holtzhausen, who worked in the procurement department, confirmed that where she had written on a document "agreement

for garden services" that meant that she was confirming that there would have been a contract. Although Holtzhausen said she knew about the contract and that was why she made such an endorsement, she could not remember any details of the contract and could only say that she was "either told (about in agreement) or that there was an agreement". She also testified that contracts were usually of a 12 month or 24 month duration.

4.8. In the absence of a contract, three quotations were supposed to be obtained where the value of the work was between R 3,000 and R 15,000. This was in order to test the market price of a product or service. Above that amount a local private tender would be called for. However, if the amount of work exceeded R 150,000 then an open tender was required.

4.9. Where a contract did exist, it defined the service and the going rates. If there had been a contract in place with Pesticon, there would have been uniformity in the amount of payments made and payments would have been consolidated.

Hattingh’s evidence, in brief, was that:

5.1. When he was appointed plant engineer at Germiston in April 2001 the contract was already in place and he only had to approve

requisitions. He could not recall if he had confirmed that there was a contract and had never seen one himself, but the procurement

department had written that there was an agreement in place.

5.2. He had always worked on the basis that there was a contract and the procurement department terminated at in 2004/2005.

5.3. He did not check the documentation because the procurement department was the custodian of the contract and he “needed to get the work done”. Even though he could not confirm the contract period he believed that the contract lasted between two and three years.

5.4. His explanation for issuing a purchase requisition only after an invoice was received instead of the other way around, was that this was the way it was done in Germiston. Likewise, the practice of issuing a purchase requisition even though a contract was in place was a practice in Germiston.

5.5. He did not know the specifications of the contract but said that it would have been to cut lawns, water flowers and carry out normal garden services. He did not request quotations for cutting trees or painting lines because there was a contract in place with Pesticon and they were busy at the time with a NOSA audit.

5.6. In explaining the variance in the amount of payments he said there was a "straight fee", which he thought was R 2,000, but there had also been other work like tree felling and planting.

The previous engineering manager, Mr Nieman, also testified for Hattingh. His evidence was that he recalled preparing a draft

contract before he left Transwerk and that the Pesticon contract had been agreed to, but still had to be finalised at that stage. He confirmed that an endorsement reading "agreement for garden services" meant that procurement had followed the procedure and that the procurement department had endorsed this. He also said that many documents had been lost when the office had moved to or three times. He believed that there must have been an agreement with Pesticon.

The following points stand out in the arbitrator's analysis of the evidence. She stated:

"Thus while Mr Hattingh's version was that there was a contract in place between the company and Pesticon, his evidence was

that he knew very little about this contract. His evidence was that:

i) he had never seen the contract;

ii) he did not know the specifications of the contract;

iii) he did not know the duration of the contract;

iv) he could not explain the variances in the amounts paid to Pesticon that he thought that the straight fee was under R 2,000.

Mr Hattingh was in this position for some five years but he did not check to see that this contract was in place. Thus from Mr Hattingh's own version, I am of the view that he failed to give proper care and attention and he did not establish whether there was a contract. From Mr Hattingh's own version the impression was cleaned that he merely signed the invoices as a formality."

The arbitrator further found that Hattingh’s payment for services such as painting lines and felling trees, which clearly

would have fallen outside of the alleged contract, also showed that he was neglectful even if it had happened at a busy time of the year.

In relation to the evidence of Holtzhausen, the arbitrator appeared to have accepted the submission made by the employer that her endorsement on the recommendation portion of the form would only have taken place after the requisitions had been signed and submitted by Hattingh. In the circumstances, it was easy for her to have assumed that the contract had been concluded given Pesticon's prolonged presence at the premises.

The arbitrator found that Mr Kepkey’s evidence was detailed and compelling and he gave "direct evidence” of his meeting with Swanepoel. Moreover, as Kepkey was from an external firm of auditors she clearly regarded him as more independent. She also implicitly endorsed the inference to be drawn from the evidence of Mr Mogadine, the Head of the Contracts Department concerning the lack of uniformity in the value of payments made to Pesticon which was inconsistent with the existence of a contract.

She further accepted the evidence that Hattingh had approved purchases once work had been completed, which was contrary to the

policies and practices of the company according to the company witnesses. Consequently, she found him guilty of the second charge

as well.

Having found Hattingh guilty of both charges she noted as mitigating factors that he had 30 years of service with the company, that he held a BSC degree and engineering degree and had a clean disciplinary record, as well as the fact that he had two children

and at the age of 57 would not be able to secure employment easily elsewhere. Against this she considered the submissions made by the company to the effect that he ought to have known the rules relating to payment for such services given that he was an educated senior manager. As a result of his actions other suppliers had been denied the opportunity to work for the company, contrary to its policy of rotating suppliers. Although the code provided for demotion as an alternative to dismissal that could only be done with Hattingh’s consent and he had shown no remorse.

The arbitrator found that Hattingh’s personal circumstances weighed heavily with her but did not outweigh the seriousness of his actions. In the absence of any remorse shown by Hattingh, and in the absence of him consenting to a lesser sanction of demotion, she found that summary dismissal was an appropriate sanction.

Evaluation of grounds of review

The applicant raised limited grounds of review, which mostly concern an alleged unreasonable failure on the arbitrator's part to apply her mind to relevant considerations. Other grounds of review were raised in argument apart from those contained in the founding papers, but the court must confine itself to the latter submissions.

Inferring the existence of a contract

The first consideration is that she failed to consider that the applicant had inherited an existing situation when he was appointed,

under which Pesticon was an established supplier of Transwerk. Accordingly, she failed to take account of the fact that it was

reasonable of Hattingh to infer the existence of the contract.

It is readily apparent from the award that the arbitrator was very mindful of this issue. She balanced the evidence for the existence

of a contract and Hattingh’s belief that it existed against his own evidence to the effect that: he had never seen it; he did not know its specifications; he did not know its duration, and he was unclear about the rates of payment it contained. Insofar as the evidence of other witnesses such as Holtzhausen are concerned, none of them could confirm having ever seen the contract nor could they confirm its alleged terms.

Considering that the situation persisted for five years without Hattingh making any attempt to obtain certainty on any of these

issues, it can hardly be said that the arbitrator's conclusion was that he was negligent in failing to confirm any of these details was an unreasonable one.

The arbitrator should have excluded the hearsay evidence of Kepkey

The applicants submit that the arbitrator erred in admitting and taking into account the forensic auditor’s evidence on his interview with Swanepoel. It is correct that even if the arbitrator believed that Kepkey’s account of Swanepoel confirming that there was no contract was an accurate reflection of what Swanepoel told him, the significance of that evidence was tendered in order to confirm the non-existence of a contract and accordingly was hearsay evidence. Further, it was clearly one of the factors which the arbitrator weighed up in considering the applicants’ claim that there was a contract.

The employer points out that the applicants never objected to the introduction of this evidence at the hearing. At the hearing,

Hattingh was represented by a senior office bearer of the union, who questioned Kepkey about his conversation with Swanepoel, without challenging the admissibility of his evidence as such. The rule against the admission of hearsay is not absolute.1 Nonetheless, unlike the situation facing the court in Foschini, the hearsay evidence did not involve the auditors’ interpretation of data prepared by others, but a statement made to

him by Swanepoel. While it is possible that an argument might have been made for the admission of this evidence in terms of s 3 of the Law of Evidence Amendment Act 45 of 1988, it is apparent that this was not considered by the arbitrator.

However, it appears from the arbitrator's reasons that, it was but one of many pieces of evidence supporting the inference that no written contract existed. It seems clear to me that she was satisfied that the absence of any other responsible person being

able to positively confirm the existence of the contract and the absence of any knowledge of its alleged terms by any of the

witnesses coupled with the evidence that the payment amounts were not uniform, as might be expected if a contract existed, was

sufficient to justify the inference that there was no contract.

In the circumstances even if the arbitrator ought not to have admitted the evidence in question, that irregularity does not detract from her consideration of the remainder of the evidence. That's, even if I were to set aside her finding on the basis of this irregularity, the remaining evidence was sufficient to support a reasonable inference that there was no written contract

betweenTranswerk and Pesticon.2

Responsibilities of the procurement department and the absence of financial loss

Another consideration the arbitrator allegedly neglected was that it was the responsibility of the procurement department as the custodian of the contract to alert Hattingh of the possibility that procurement procedures were not been followed. Further, she failed to consider that there was no evidence that Transwerk had not received value for money for the work done by Pesticon.

The arbitrator's determination of dismissal as an appropriate sanction

The applicants also claim that the arbitrator failed to consider the significance of her finding that Hattingh was not found guilty of gross negligence, but only negligence. They allege further that she also failed to consider Hattingh’s challenge to the fairness of dismissal as an appropriate sanction, and in particular whether additional training and instruction could have resulted in him not repeating the conduct. Further, they say that the arbitrator failed to consider his service or disciplinary record and, in particular, the lack of any evidence to suggest that the continued employment relationship would have been intolerable. Lastly, it is claimed she also failed to consider the importance of security of employment as a core value of the Constitution as reflected in the LRA.

All of these complaints were only canvassed specifically in the applicants’ heads of argument, and properly speaking, do not fall to be specifically considered. Nevertheless, the applicants did claim that the sanction of dismissal was excessive in the circumstances and also claimed that the ‘partiality of the evidence’ could not support the arbitrator's findings of guilt. The basis for the last mentioned criticism was unsupported and does not warrant further consideration.

In the arbitrator's award she sets out all the grounds of mitigation advanced and acknowledged that the personal circumstances of Hattingh weighed heavily on her, but concluded "these do not outweigh the seriousness of his actions". She also clearly entertained the possibility that a demotion could have been entertained as an alternative sanction, but in the absence of any indication from Hattingh that he would have consented to such an alternative it was simply not open for her to consider.

It is also apparent that another factor affecting her judgement was that Hattingh had not admitted to any wrongdoing on his part. In this regard, it must be remembered that even if Hattingh might have initially continued with an existing arrangement when he first started approving payments to Pesticon, he allowed the practice to continue for five years without once checking that his ongoing approval of payment requisitions was within the scope of the policy governing payment of suppliers. Even if the word of gross had not been used to describe his negligence, it is difficult to escape the inference that the allegation of negligence was a very serious one given the duration of his neglect and the total value of payments made to Pesticon during the five-year period under consideration. In evaluating his conduct, the arbitrator had regard to the effect that even if there was no evidence of any improper benefits being obtained by Pesticon or Hattingh from the arrangement, the practice of continuing to use Pesticon meant that there was no rotation of suppliers, which is not an insignificant policy consideration in a large parastatal.

I accept that it is possible that another arbitrator might have chosen to issue Hattingh with a final written warning, but this

possibility as a reasonable alternative sanction was not even canvassed with any of the employers’ witnesses. Even if I

accept that another more lenient sanction might have been imposed by a different arbitrator, it cannot be said that the sanction of dismissal was one that no reasonable arbitrator could have arrived at.

However, as other reasonable outcomes might have been possible, I am disinclined to order costs against the applicant.

Order

[29] In light of the above evaluation,

29.1. The review application is dismissed, and

29.2. No order is made as to costs.

_______________________

R LAGRANGE, J

Judge of the Labour Court of South Africa

APPEARANCES

APPLICANT: W Hutchinson instructed by Fluxmans Inc.

FIRST RESPONDENT: P M Masebo of Maserumule Inc.

1See Foschini Group v Maidi & others (2010) 31 ILJ 1787 (LAC) at 1797,paras [33]-39].

2In this regard, see also the judgement of Molahlehi, J in Mosima v SA Police Service & others (2012) 33 ILJ 1225 (LC) at 1232,par [24], where the learned judge concluded that even though the arbitrator had admitted hearsay evidence that the decision had been made on the totality of the evidence before the arbitrator.