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HELD IN JOHANNESBURG

CASE NO: JR 1996/03

In the matter between:

THE FOSCHINI GROUP APPLICANT

and

MABEL MAIDI 1^ST RESPONDENT

EUNICE KHUNOU 2^ND RESPONDENT

SUSAN MASILO 3^RD RESPONDENT

BOYA SHIBE 4^TH RESPONDENT

MIRRIAM MOKEHENE 5^TH RESPONDENT

COMMISSIONER ERIC LOUW 6^TH RESPONDENT

COMMISSION FOR CONCILIATION,

MEDIATION AND ARBITRATION 7^TH RESPONDENT

JUDGMENT

CELE AJ

INTRODUCTION

[1] The applicant seeks leave to approach the Labour Appeal Court in terms of section 166 of the Labour Relations Act 66 of 1995 (“the Act”). The intention is to appeal against a final ex tempore judgment of this court dated 18 August 2006, in which a review application of the first to the fifth respondents was to be remitted to the seventh respondent for a de novo arbitration hearing before a commissioner other than the sixth respondent.

[2] The application for Leave to Appeal was filed on 8 September 2006 which fell on the 15^th court day after the judgment was delivered. The application was accordingly filed in time, when the time limit for an application for Leave to Appeal is considered against rule 30(2) of the rules of this court.

THE AWARD

[3] A brief background of the facts leading up to the issue of the arbitration award is inevitable. The applicant operated in a retail sector and had various shops in this country under Pages Stores. One such shop was in Mabopane where the first to the fifth respondents (“the respondents”) were placed by the applicant as its sales personnel. A financial stock taking at the Mabopane shop was carried out twice a year by applicant’s personnel based at its head office in Cape Town. On 11 August 1999 Mr Mike Wilson, applicant’s Operations Manager came to the Mabopane shop and did the financial stock taking. He submitted his report to applicant’s personnel for further processing through what the applicant referred to as a Finsas system. Mr Wilson did not himself work with the Finsas system but the results of the system were sent to his office. It came as a shock to him that the report he received reflected that 28,58% stock shrinkage or loss amounting to R207 516 had taken place at the Mabopane shop. Even as he had a suspicion that an administrative error had taken place, he went to the Mabopane shop to conduct further investigations and he followed these with a checking of the records at head office.

[4] The applicant decided to charge all the staff at the Mabopane shop with a misconduct of failure to secure the assets of the company. The disciplinary hearing for the second to the fifth respondents was scheduled for 15 October 1999 and that of the first respondent for 16 October 1999. All 5 respondents attended the hearing on 15 October 1999 but the first respondent was to be called as a witness for the other four. When it came to light that Mr Wilson would be the initiator, the respondents and their representative objected, saying they needed to cross-examine him. They asked for the hearing to be adjourned. According to the applicant, the request was not granted. All respondents and their representative walked out of the hearing. The hearing of the 4 respondents proceeded in their absence. On 16 October 1999 Mr Le Roux, the chairperson of the hearing attended at the venue of the hearing. Mr Wilson was on standby in case the first respondent attended. No hearing took place and Mr Le Roux left the venue. The first respondent’s version was that when she arrived at the venue, there was no one in attendance for the hearing. Mr Le Roux subsequently considered all the evidence led and the five respondents were found to have committed the act of misconduct they were charged with and all were dismissed.

[5] The respondents referred the dismissal dispute which had arisen for conciliation and arbitration. They successfully applied for a review of the arbitration award which was issued against them and the matter was remitted for a de novo arbitration hearing. The sixth respondent found that:

• Mr Wilson’s evidence that the documents submitted in respect of the stock loss were generated by the applicant’s Finsas system was not disputed.

• Mr Wilson had an intimate knowledge of the system. He was in a better position than either the representatives of the parties or the Commissioner to understand and explain the system.

• Documentary evidence was checked and rechecked by the applicant and no administrative error could be found in the system.

• Had first to fifth respondents wished to be provided with certain documents they could have addressed a formal request in that regard to the applicant.

• The applicant made a prima facie case to show that there was a massive stock loss at its Mabopane shop. In that regard, the applicant produced extensive comprehensive documentary evidence. The respondents did not provide any technical proof or called any expert witnesses to refute the applicant’s evidence with respect to the stock loss.

• Employees may be dismissed for stock losses where it was their responsibility to check and curb the losses. The case of misconduct of the respondents was so severe it warranted a dismissal for a first offender.

• An employer is entitled to proceed with a disciplinary hearing in the absence of an employee if that employee unreasonably refused to attend or participate in that hearing. The refusal by the respondents to proceed if Mr Wilson was to be the initiator was unreasonable and downright irrational

• The dismissal of the respondents was in all respects fair.

THE REVIEW APPLICATION

[6] While the review grounds were not set out in a clear form, the substance thereof was that the sixth respondent issued an award which was not justifiable, a review ground which was still then applicable.

THE JUDGMENT SOUGHT TO APPEAL AGAINST

[7] I found that the evidence of Mr Wilson was in the main, entirely on the report which had been generated by the Finsas system, which report he handed in at arbitration. Other than the report he compiled which was fed into the Finsas system, his other investigations did not reveal any wrongdoing by any members of the Mabopane shop.

[8] The report was itself of a hearsay nature. Hearsay evidential material could be admissible at arbitration hearing provided the reason for its admissibility was explained and such evidence is handled carefully in line with the applicable exception. At the hearing the admissibility of such hearsay evidence ought to be dealt with by the parties. No where in the award did the sixth respondent deal with the status of the report tabled by Mr Wilson. Mr Khoza had challenged the status of the report both at the arbitration hearing and during the review application. The sixth respondent dealt with the report as though it was authored by Mr Wilson. Yet it was common cause that Mr Wilson did not compile the report. The only evidence of the applicant which sought to prove the stock loss or stock shrinkage was this report which therefore was the crutial evidence of the applicant.

[9] In respect of substantive fairness of the dismissal I found that the evidence brought by the applicant before the commissioner or the sixth respondent was lacking in proving the misconduct alleged and that there was no rational and objective connection to the reasons given for the award. In addition and only for the first respondent, I found that, as no disciplinary hearing was held even in her absence, her dismissal was not fairly carried out. This case did not fall into an exception which justified a dismissal without a hearing.

GROUNDS FOR LEAVE TO APPEAL

[10] The submissions, in a nutshell, are that the court erred in finding that:

• Although the respondents’ representative challenged the truthfulness and reliability of the report presented by Mr Wilson, the commissioner made no particular finding in that regard.

• The commissioner did not really deal with the document or report convincingly.

• That the report presented at arbitration was of hearsay nature and weight had to be attached to the manner in which the commissioner dealt with it.

• The commissioner had failed to investigate carefully the question of the hearing granted to the first respondent.

• There was no evidence of a decision taken by the applicant to dispense with the holding of a formal hearing against the first respondent.

[11] The respondents filed their notice of intention to oppose the application for Leave to Appeal. Subsequent to that, they filed a notice to abide by the decision of the court.

ANALYSIS

[12] In this application, I am called upon to consider whether there is a reasonable prospect that another court might have come to a different conclusion then the one I reached – see Karbochem Sasolburg (A Division of Sentrachem Ltd) v Kriel And Others (1999) 20 ILJ 2889 (LC)

[13] In support of the first two grounds of appeal, the applicant submitted that the court erred in the findings there-under made, when it was dealing with a review application. The submission was that the focus had to be on the process and the way in which the decision maker reached the conclusion. I regrettably am unable to understand this submission. The truthfulness of the report and its reliability were under attack by a representative of the respondents. It was always common cause that Mr Wilson did not compile the report. It was never his evidence that he had worked with the Finsas system. His evidence was about a report which had been furnished to him after it had been generated by the system. The commissioner credited Mr Wilson as a witness, for things which had nothing to do with the reliability of the report. The commissioner was clearly at a loss in how to handle the report. No wonder he listed in paragraph 6, among what he described as background, the fact that “The August 1999 financial stock take at the Mabopane store reflected loss of 1,553 units of merchandise. This amounted to a loss of R207 516 at a single store. This represented a shrinkage level of 28, 58%”. Yet the admissibility of the contents and reliability of the report were placed in issue by the respondents, through Mr Khoza their representative.

[14] In paragraph 90 of the award, the commissioner made the following remarks

“Mr Wilson is the respondent’s erstwhile Operations Manager. He has an intimate knowledge of the system. He is in a better position than either the representatives of the parties or the commissioner to understand and explain the system.”

[15] When the commissioner made these remarks in his award, he had heard all the evidence. The conclusion that he had not understood the system he referred to and its product namely, the report, is inescapable. In the award, he did not deal with the said system nor the report. He simply threw the towel and accepted the say so of Mr Wilson. What Mr Wilson had intimate knowledge of, was the financial stock taking process which could hardly be described as a system. By failing to deal convincingly with the report, the commissioner failed to deal with evidential material upon which the respondents were dismissed.

[16] That the report was of a hearsay evidential nature was always beyond dispute. The commissioner had to satisfy himself on proper grounds of its reliability Naraindath v CCMA (2000) 21 ILJ 1151 (LC), a case on which the applicant has placed reliance. Regrettably, the commissioner did not deal with the hearsay nature of the report in his award. It can not be inferred, in the absence of any indication, that he applied his mind to its hearsay nature. He could therefore not have reflected on the reliability of the report. Rather, he relied on Mr Wilson’s evidence on what the report said.

[17] It has to be borne in mind that Mr Khoza, in his cross-examination of Mr Wilson, had pre-shadowed what the case of the respondents would be. The commissioner dealt with this in paragraph 56 of the award. The relevant portion reads:

“Mr Khoza also put it to Mr Wilson that there was no stock loss. The applicants would dispute that the stock loss ever exceeded 3%. He put it to Mr Wilson that the evidence he had given in respect of the 28% stock loss was false…”

[18] In respect of the fourth ground, it was submitted that Mr Le Roux was informed that the first respondent did not intend to participate in the scheduled enquiry and so she and her representative failed to attend the hearing, even when Mr Le Roux was present and Mr Wilson was available to attend. It was submitted that Mr Le Roux decided the case of the first respondent on the basis of the evidence which had been presented to him on the previous day against the other respondents. Against these submissions, the applicant conceded that there was no hearing against the first respondent on 16 October 1999. Not only was there no hearing on the 16^th, Mr Wilson, as the initiator also stayed away from the hearing. His absence was couched in the following terms:

“Mr Wilson was available to attend.”

[19] The commissioner did not deal with the non-holding of the disciplinary enquiry against the first respondent and the use of evidence of the previous day against the other respondents as a basis to find her also guilty and to dismiss her. It was only in the submissions made before me that Mr Jose Jorge for the applicant referred to those situations when the holding of a disciplinary hearing may be dispensed with. I pointed out to him then that there was no evidence that the applicant had taken such a decision. The evidence of the applicant on the events of 16 October 1999 went against any decision not to hold a hearing against the first respondent.

[20] After I had reviewed and set aside the arbitration award of the commissioner, I directed that a de novo arbitration hearing be held. The applicant may have been frustrated by yet a second remittal of the matter to the CCMA. Yet the remittal gave the applicant a second bite to the cherry, where identified shortfalls could be cured by a proper presentation of relevant evidential material. The order I issued was indeed of a final nature and therefore subject to an appeal. It is definitive of the rights of the arbitration proceedings and the review of the arbitrator’s award – see Qavile v CCMA And Others (2003) 1 BLLR 1 (LAC).

[21] All things considered, I am unable to share the, same view as that of the applicant, namely that there is a reasonable prospect that another court may come to a conclusion on the given facts and the law other than the one I reached.

Accordingly, the application for Leave to Appeal is dismissed. It was not opposed and there shall be no costs order.

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CELE AJ

22 February 2008

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