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IN THE LABOUR COURT OF SOUTH AFRICA

HELD IN BRAAMFONTEIN

CASE NO JR 791/07

Reportable

In matter between

SAMPSON ASSOCIATES (PTY) LTD

t/a: INTERBRAND SAMPSON APPLICANT

And

CITIES SHEPHERD FIRST RESPONDENT

E.L.E MYHILL NO SECOND RESPONDENT

CCMA THIRD RESPONDENT THIRD RESPONDENT

JUDGMENT

CELE J

Introduction

[1] The applicant seeks to have an arbitration award dated 15 February 2006 issued by the second respondent, as a commissioner of the third respondent, reviewed, set aside and substituted, in terms of section 145 of the Labour Relations Act No 66 of 1995 (“ the Act”). The arbitration award was issued in favour of the first respondent who has opposed this application, in his capacity as an erstwhile employee of the applicant.

BACKGROUND FACTS

[2] In April 2001 the first respondent, Mr Shepherd and a colleague of his founded a business called Brand Alive. They invited a Managing Director (MD) of the applicant, one Mr Sampson to become involved in their business as a founding shareholder. They saw Brand Alive as possibly complementary to applicant’s business. Another company known as Omnicom was in existence and it was a holding company for the applicant. Mr Sampson was obligated to Omnicom because of his share holding in it and for that reason, he did not accept the shareholding in Brand Alive. Instead, he accepted the position of a non executive chairman. The driving force behind these arrangements was that Brand Alive wanted to be associated with the applicant’s business and to provide it with complementary services to its client base. The applicant would then promote Brand Alive to its clients so that it could provide services to them. It was agreed that 20% of the gross value of any project achieved at the applicant’s client base would be paid to the applicant.

[3] The applicant was part of the Interbrand global network of companies that provided branding services to clients from about 30 offices in 20 countries.

[4] In July 2002 Mr Shepherd commenced his employment with the applicant. He was appointed to the Board of Directors of the applicant.

[5] In February 2005 Mr Sampson approached Mr Shepherd, seeking to acquire share in Brand Alive. The matter was open for a discussion between the two and Mr Shepherd undertook to present it to the other shareholders of Brand Alive. On 19 May 2005 Brand Alive shareholders signed a waiver of the first right of refusal to accommodate the offer for the shares. In August 2005 a restructuring in the applicant’s Executive Board took place resulting in the creation of a number of new positions. Mr Shepherd was appointed as a Group Managing Director and Mr Sampson become an Executive Chairman of the applicant. A Mr Victor Rangaka was appointed as a strategic Director in terms of the Black Economic Empowerment plan of the applicant. New business cards with new title produced and issued to all parties and the new structure change was announced to the staff.

[6] The applicant made a first draft of an offer to acquire 80% of the shares of Brand Alive. On 10 September 2005 Mr Shepherd told Mr Sampson that the shareholders of Brand Alive had considered the offer but had decided not to sell its shares. On 15 September 2006 Mr Shepherd attended a Board meeting of the applicant where the reason for Brand Alive’s decision not to sell its shares was discussed. The offer to purchase shares was then modified for reconsideration but still shareholders of Brand Alive declined to sell their shares. That resulted in there being strained relations between Mr Shepherd and Mr Sampson. Parties are in dispute as to whether or not there was a prior agreement between the applicant and Mr Shepherd that Brand Alive would permit the acquisition of its shares by the applicant and whether such agreement, if any, was linked to Mr Shepherd being given the position of a Group Managing Director. The applicant took a position that Mr Shepherd could not retain an independent interest in Brand Alive while he remained an employee of the applicant as that would result in a conflict of interest.

[7] In a letter dated 22 September 2005 the applicant informed Mr Shepherd of the perceived conflict of interest and called on him to make a choice between Brand Alive and the applicant. Mr Shepherd declined to respond within a day as requested by Mr Sampson. He felt that he was given an unreasonable time frame when then the implications of the letter were considered. In a letter dated 23 September 2005 Mr Shepherd indicated that he would provide a formal response to the Board on 1 October 2005.

[8] On 24 September 2005 Mr Shepherd left to attend to applicant’s work overseas. He forwarded his response to the applicant on 30 September 2005. He disputed that the proposed acquisition of shares by the applicant in Brand Alive was based on an attempt to resolve a conflict of interest but to obtain greater financial advantage from the increasing profitable Brand Alive business. He denied that there existed a conflict of interest, unless the applicant wanted to compete with Brand Alive or to acquire a company which was to provide the brand internalisation services of Brand Alive. According to him, the applicant had forgone its right to compete with Brand Alive in any manner as it would compromise his employment position and his directorial status as he held the interests of both the applicant and Brand Alive as Group Managing Director and Executive Director of the applicant on one hand and non-Executive Director and shareholder of Brand Alive. He contended that there was no legal basis for him choosing between the applicant and Brand Alive.

[9] Mr Shepherd discovered on 27 October 2005 that Mr Simpson has asked his personal secretary Ms Caryn Bennett to take steps in co-ordinating the applicant’s year end function. That was normally the role of Mr Shepherd, who at the time was working abroad. Mr Shepherd was not happy that his personal secretary had been given instructions by Mr Simpson. Mr Simpson did not back down and he met the secretary and gave her further instructions on 31 October 2005, for the end of year function to be held at Gilantro Restaurant as opposed to being held at another venue suggested to Ms Bennett by Mr Shepherd.

[10] On 28 October 2005 the applicant responded to Mr Shepherd’s letter identifying four points of dispute concerning the conflict of interest as being:

• the decision of Brand Alive’s shareholders including Mr Shepherd not to sell shares to the applicant in the foreseeable future;

• brand Alive’s stated intention of pursuing business in the Gulf and Middle East;

• brand Alive’s stated intention of pursuing business opportunities with competitors of the applicant;

• the current and future relationship of Brand Alive to the applicant.

[11] The applicant proposed alternative ways of resolving different views from those of Mr Shepherd, in the form of conventional or advisory arbitration or to obtain an opinion from senior counsel, as a way of determining whether or not a conflict of interest existed. Mr Shepherd was given until 4 November 2005 to respond. He responded in writing by saying that he did not agree that there existed a conflict of interest. He however agreed that counsel might be approached and that the selection of counsel was to be done before the end of the week commencing on 7 November 2007.

[12] On 3 November 2005 Mr Shepherd requested certain financial information from the Financial Manager and he did so in his capacity as a Group Managing Director. He wanted to prepare for a forth coming Exco meeting. Such information was not supplied to him as Mr Sampson had earlier given an instruction that that information was not to be given to him. Mr Shepherd was of the view that staff were being coerced to disobey his instructions and to prevent a flow of information to him that he required in order to do his work.

[13] On 4 November Messrs Shepherd and Sampson met. Mr Shepherd was informed that the applicant did not consider his title as a Group Managing Director to have taken effect because of the conflict of interest issue. The resolution to that effect had been taken by the applicant’s board members verbally but was yet to be adopted in writing. Mr Shepherd’s responsibilities and functions were however to stay the same and the adopted measure was not to be made known to the staff.

[14] Mr Shepherd then lodged a written grievance with the applicant on 7 November 2007, setting out a number of issues as his complaint. He also issued a letter in the form of an urgent notice to rectify, pointing out to the Board that the dispute relating to his Brand Alive shareholding was sub judice and unrelated to his title, role responsibility and lines of reporting and that the Board’s actions were designed to create discomfort and prejudice to him. He required of the Board to rectify his title as Group Managing Director, his associated roles, responsibilities and lines of reporting, failing which he would pursue his rights in law. The Board’s response was to be communicated to him within 48 hours of the receipt of his letter.

[15] As at the end of the day on 9 November 2005 no response had been furnished by the applicant to Mr Shepherd. On the evening of that day, he left a note in Mr Sampson’s office in which he indicated the extreme distress that he said he was experiencing. He also me Mr Rangaka on that evening and expressed his dismay to him on how the applicant was handling his grievance. Mr Rangaka said that the issue was being handled and dealt with by Mr Sampson. On 10 November 2005 Mr Sampson sent an e-mail to Mr Shepherd informing him that he had only seen the note left in his office, that morning and Mr Sampson undertook to talk to him later. Mr Shepherd did not wait for any further discussion with Mr Sampson. Instead, he tendered his written resignation from the employment of the applicant, explaining why he felt his position was made untenable. He then referred an unfair dismissal dispute for conciliation. When it could not be resolved, he referred it to arbitration.

[16] The second respondent found that Mr Shepherd’s resignation was a reasonable response to applicant’s management conduct and that a constructive dismissal had been proved. He ordered the applicant to compensate Mr Shepherd in an amount of money equivalent to 8 months of the remuneration that he was entitled to on the date of his resignation by the findings and the order made, thus initiating the present review application.

The arbitration hearing

[17] Most of the evidence led by the parties during the arbitration hearing was common cause. There are however points of difference worthy of note. These are about:

(1) a conflict of interest

(2) the year end work function issue

(3) the supply of the financial report

THE CONFLICT OF INTEREST

Mr Shepherd’s account

[18] The title Group Managing Director had not been given to him in the context of negotiations of the applicant to acquire Brand Alive. There were several developing aspects envisaged by the applicant to form group companies such as in the Middle East. Brand Alive was but just one of the potential components. He had, at the time, been busy promoting development of the though no formal group of companies had been formed and it therefore felt that the Group Managing Director title was appropriate for him. As at the time of the change of titles, an offer had not yet been made by the applicant to purchase shares of Brand Alive and that therefore the discussion of the title change was separate from the offer to sell shares of Brand Alive to the applicant. The title change took place in August 2005. The offer to sell shares was made in September 2005 after the Board of Directors of the applicant had already resolved the issue of the title changes. There was a memorandum of August 2005 pertaining to the take over of Brand Alive by the applicant. Mr Shepherd regarded it as a draft document with his comments, whose existence came about when he was already a Group Managing Director. The anticipated acquisition of Brand Alive by the applicant did not form any leverage used by him to demand the title given to him in August 2005.

[19] The alleged conflict of interest, the existence of which was denied, was not a ground for the removal of Mr Shepherd’s title. If it had indeed been an issue, the removal of his title would have been done much earlier between 2001 and 2005. As the alleged conflict had never been raised as an issue before, he regarded it as an act of retribution for Brand Alive shareholders deciding against the sale of their shares to the applicant.

[20] Mr Sampson had himself been a chairman of the Board of Directors at Brand Alive while he was the Chief Executive Officer of the applicant.

[21] Brand Alive was never a de facto subsidiary company of the applicant. Nor had Mr Shepherd represented to the applicant that Brand Alive would be taken over by the applicant. The two companies had an intimate relationship because of the revenue sharing deal they had, but retained their independence. He did not run Brand Alive. On the contrary, his title applied not only to Brand Alive but to other endeavours.

[22] In respect of attempts to resolve the issue, Mr Rangaka had not informed him that Mr Sampson was consulting a lawyer and had been with one on the evening of 9 November 2005. Mr Shepherd had received the e-mail of 10 November 2005 in which Mr Sampson had undertaken to speak to him later on that day. By 15h00 of that day Mr Shepherd had not heard from Mr Sampson. He regarded the email response as inappropriate in the circumstances of an extreme gravity of the situation. It was intolerable to remain under such circumstances where he had been wilfully demanded at every turn, leaving him no option but to resign. After he had resigned, the applicant had asked him to reconsider it. He did not do so because his position would have remained intolerable. He discovered after he had resigned that the resolution to appoint him as Group Managing Director had not been signed by some of the Directors of the Board.

Applicant’s version

[23] The Board of Directors of the applicant understood that the Brand Alive would become a subsidiary company of the applicant. Applicant shared intellectual property rights with Brand Alive and gave it full access to their intranet which included their office in London. The exact shareholding had not yet been established but Mr Smart of the applicant drew up figures and projections with Brand Alive representatives. It was a matter of course that Brand Alive would become part of the applicant as a subsidiary company. The applicant would not countenance a situation where Mr Shepherd had an interest in a competitor as the applicant had not forgone its right to enter into a trade competition with Brand Alive in the internalisation branding space. When the association with Brand Alive was entered into the intention was to add another offering from the applicant to meet its increasing demand as Brand Alive would be responsible for the development that service in association with the applicant.

[24] The appointment of Mr Shepherd as Group Managing Director was in anticipation that Brand Alive would become a subsidiary company of the applicant. The new structure of the applicant announced to the staff on 9 September 2005 was in anticipation of the offer to buy shares of Brand Alive to be accepted by shareholders of Brand Alive.

[25] The actions of the applicant were not intended to put pressure on Mr Shepherd to resign. An attempt was made to try to resolve the issue right to the end. It was not known to Mr Sampson that unless he responded to the request to rectify within the stipulated time, Mr Shepherd would resign. Legal advice was being sought from a senior counsel, who was consulted on the evening of Wednesday and on Thursday, the very day on which Mr Shepherd tendered his resignation. Such consultation process made it difficult to have to respond within time frames set by Mr Shepherd. The note left by Mr Shepherd on Wednesday only came to the attention of Mr Sampson on the following day and Ms Bennett was asked to contact Mr Shepherd, which was neither a flip nor a slow response. The resignation of Mr Shepherd came as a shock and an attempt to dissuade him from reconsidering same was not successful.

THE YEAR AND WORK FUNCTION ISSUE

Mr Shepherd’s version

[26] He had consulted Ms Bennett for an input on the function and a possibility of including a team building exercise. He had made it known to Ms Bennett that he did not prefer the venue to be the same as one used on previous year, namely the Cilantro Restaurant. He discovered, however on 27 October 2005 that Mr Sampson had asked Ms Bennett to coordinate the applicant’s year end function. He regarded it as his note to give Ms Bennett instructions for such a function. Contrary to his wish, Mr Sampson still continued to instruct Ms Bennett on 31 October 2005 on the year end function. On 2 November 2005 he and other staff members received an email from Mr Blake Anderson advising that the year function would be held at Cilantro Restaurant. This was contrary to his instructions to Ms Bennett. Referring to an email sent by Ms Bennett to Mr Sampson on this issue, he said that his staff was being coerced to disobey his direct instructions and to do what Mr Sampson told them. The manner he had been treated by Mr Sampson was part of Mr Sampson’s strong tactics to get him to decide differently about the shares of Brand Alive.

Applicants Version

[27] There had been no progress in making arrangements for the year end function and Mr Shepherd was away. Ms Bennett had had a loose discussion with him about having a team building exercise as part of the year end function. Mr Sampson told Ms Bennett that it was unnecessary to have a team building exercise and that a dinner was sufficient. He also asked her to check with the staff if they objected to going to Cilantro Restaurant again and as they had no objections, she went ahead to book the venue. When she informed Mr Shepherd of the arrangements, he reacted really badly, saying it was typical of Mr Sampson. Ms Bennett did not expect that by going against Mr Shepherds instructions, it would create animosity. She hen sent an e-mail to Mr Sampson as she felt uncomfortable about the outbursts of Mr Shepherd.

THE SUPPLY OF THE FINANCIAL REPORT

[28] On 3 November 2005 he requested certain financial information from Ms Elaine Maree, in his capacity as Group Managing Director, so that he could prepare for the executive committee meeting which was to be held on that afternoon: Such information should not be given to him as requested. He subsequently discovered that Mr Sampson had given the instruction that the information should not be given to him. Staff were thus being coerced to disobey him and prevent a flow of information to him that he required in order to do his job. He was forced to attend the executive committee meeting without that information which he usually requested and would receive. He felt that he had been compromised in the eyes of his staff by Mr Sampson’s communications to them and they were no longer taking instructions from him. These were the critical staff members.

APPLICANT’S VERSION

[29] There was a system whereby bookkeeper would be prepare figures such as of the cash flow which would be given to the Executive Manager who would present a report at the executive committee meeting. Mr Shepherd had asked for the figures earlier Mr Sampson did not know what motivated the writing of an e-mail by Ms Maree or any suggestions that he had instructed her not to give the information to Mr Sheperd. Ms Maree had never before distributed the financial documents before the meeting. When Mr Shepherd asked for the figures in advance, she contacted Mr Shepherd to check that that was in order. She could not recall what his response was. The request by Mr Shepherd was not normal procedure. No collusion on a refusal to give the report to Mr Shepherd, had taken place between her and Mr Sampson. The financial report with information sought by Mr Shepherd was ready at the time he asked for it.

CHIEF FINDINGS BY THE SECOND RESPONDENT

[30] Having taken into account the circumstances of this case I find that it was reasonable for him to feel aggrieved by the manner in which he was treated by the Board and, in particular, by Sampson after the attempt by the respondent to purchase the shares of Brand Alive had failed. It is understandable that Sampson would have been upset about this because he was clearly banking on the shareholders of Brand Alive selling their shares to the respondent. Even if the applicant had promised that the shareholders would sell their shares in Brand Alive to the respondent that would not justify the manner in which Sampson treated the applicant. Sampson was aware of the instructions that the applicant had given his PA concerning the year end function the arrangements for which had been and were still part of the applicant’s responsibility. If he did not approve of these of these he was free to discuss them with the applicant before any decisions were made. In this age of cell phones and internet communication I do not accept as an excuse that this was not done because the applicant had been away. It is reasonable for the applicant to have felt that his authority has been undermined when he received an email from Blake Anderson that informed staff that the year end function would be at a venue to which he had expressed opposition when he had discussed the matter with his PA.

It is common cause that the Financial Manager (Maree) did not give the applicant the financial information he requested prior to the EXCOM meeting on 3 November 2005. It was not disputed that as Group MD he was entitled to this information. In response to the applicants request Maree sent an email to Sampson in which she asked for his advice in this regard. She said she could not recall what he had advised but it is reasonable to infer from these facts that he advised her not to comply with his request. This clearly undermined his authority and his ability to perform his responsibilities effectively. This conduct by Sampson is consistent with Sampson’s view that the applicant could not function as Group MD as long as there was an alleged conflict of interest. Whether or not there was a conflict of interest had not yet been resolved. It seems to me that the reasonable approach would have been to allow him to retain his title as Group MD and to function as such until the dispute had been resolved.

I find that it was reasonable for the applicant to require the Board to notify him in writing that it acknowledged that his title as Group MD, together with associated roles, responsibilities and lines of report were in place and binding. I agree with Mr Stevenson that it was not necessary to resolve the alleged conflict of interest dispute before what the applicant required to be done. The applicant had functioned effectively as the Group MD for some time before the offer by the respondent to purchase 80% of the shares of Brand Alive. If an agreement had thereby been breached I would have expected the respondent to take legal action against whoever was in breach of such an agreement. There is no evidence of this having been done so it is reasonable to assume there was no breach.

Given the history of this matter and the fact that the applicant ad made his position very clear on 30 September 2005 it is reasonable for the applicant to have been anxious to receive a response from the Board by 9 September 2005. It is also reasonable for the applicant to be alarmed and upset when despite the applicant having underlined the negative effect the withdrawal of his title was having on him and the parties having agreed that the matter should be resolved as quickly as possible, there was no response from the Board by 9 September 2005. Despite this the applicant left a note for Sampson on the evening of the 9^th and informed Rangaka of his objections to the failure on the Board to respond to time. I agree with the applicant that if the Board was unable to meet the deadline owing to a delay caused by consultations with counsel then it should have advised him of this. I also agree with the applicant that the response he received from Sampson on 10 September 2005 that is that he had only received his note that morning and would talk to him later was inadequate in the circumstances. I would have expected Sampson to at least have acknowledged that the applicants deadline had not been met; to have explained why it had not been met; and given him some idea when a response would be forthcoming. Instead he was informed by Sampson that he would talk to him later. It was reasonable, in the circumstances, for the applicant to conclude from this that Sampson was not taking him seriously and confirmed his view that the board was not prepared to rectify the compromised position that he found himself in as a result of its unilateral conduct in withdrawing his title.

The applicant had the option to wait for the Board to respond to his Urgent Request to Rectify. At first glance it may seem that he acted unreasonably by resigning without first talking to Sampson. If one however takes into account the cumulative effect of Sampson’s conduct toward the applicant after the shareholders of Brand Alive decided not to sell 80% of the shares to the respondent then it was a reasonable option to resign because the applicant had good cause to have completely lost confidence in him and the Board. Sampson and the Board may not have intended for him to have responded to their treatment of him by resigning but that is not the test. As stated by the Labour Appeal Court in the Van Der Riet case.

“…it would also be sufficient if, whatever the employer’s subjective intention, its conduct is objectively calculated to coerce the employee into leaving.”

GROUNDS FOR REVIEW

[31] There appears to be no reason given by the Second Respondent for the relatively high compensation award, which the applicant submits is unjustifiable on the evidence before the Second Respondent;

[32] The arbitrator appears to have ignored the Applicant evidence on how financial statements were normally circulated. More specifically, the arbitrator failed to take into account that the First Respondent’s request for financial information constituted an exceptional request and that his evidence that there was no problem with previous requests for such information was contradicted by the evidence of the Applicant’s bookkeeper;

The arbitrator appears to have ignored the Applicant’s attempt to address the “ultimatum” , or alternatively, uncritically accepted the First Respondent’s subjective characterization of my response without properly considering all the evidence on this issue as he ought to have;

The arbitrator appears to have overlooked the problem of an unresolved conflict of interest if the First Respondent continued his association with Brand Alive. Instead, the arbitrator seized on the Applicant’s response to the situation as unreasonable, which shows that the arbitrator failed to apply his mind to the evidence properly before him;

The arbitrator ignored the evidence that explained why the First Respondent was not involved in the arrangement of the Christmas function;

[33] The arbitrator ignored the evidence that the First Respondent was advised that the Applicant was going to address the grievance;

Notwithstanding the arbitrator correctly citing Labour Appeal Court authorities on the proper test for constructive dismissal, the arbitrator, contrary to such authority, applied a subjective test in determining whether or not the First Respondent was constructively dismissed and in so doing committed a material error of law;

[34] having determined that the First Respondent was constructively dismissed, the arbitrator failed to consider if the First Respondent’s dismissal was substantively unfair or not and thereby committed a further material error of law.

[35] The arbitrator ignored evidence that the withdrawal of the first respondent’s title could not have impeded his ability to do his job. The arbitrator failed to access the credibility of witnesses in evaluating disputes of fact and in particular failed to take account of inconsistencies in the applicants own evidence.

[36] The second respondent thus committed misconduct in his capacity as a commissioner by ignoring relevant evidence and taking irrelevant considerations into account failing to justify the award of relatively high amount of compensation.

[37] The award is not rationally justifiable in terms of the reasons provided therefore and with reference to the evidence led at the arbitration proceedings.

[38] In response, the first respondent , in the main contended that the grounds relied upon by the applicant do not constitute either misconduct or gross irregularities on the part of the second respondent as contemplated in the provision of section 145 (2) (a) (i) or (ii) of the Act. Further, that the applicant has nowhere stated in the founding affidavit or supplementary affidavit the second respondent has committed a gross irregularity as contemplated in section 145 (2) (a) (ii) of the Act. The evidence had justified the amount of compensation further, that applicants criticisms raised against the second respondent, considering evidence adduced, is not correct and not justified.

EVALUATION

[39] I am indebted to both parties for the submissions they made in this application.

[40] This application is premised on the submission that the second respondent committed misconduct in his capacity as a commissioner in various outlined respect. Further it was contended that the arbitration award issued was not rationally justifiable in terms of the reasons provided therefore and with reference to the evidence led at the arbitration hearing.

MISCONDUCT

[41] It is trite that the interpretation of misconduct ought not to be limited to a narrow approach of acts committed in bad faith for which see NCWU v John & another [1997] 12 BLLR 1623 (LC) and County Fair Foods (Pty) LTD v Theron NO & others [2001] 2 BLLR 134 (LC). Misconduct may include mistakes of law as well as mistakes of fact. See Irvin & Johnson LTD v CCMA & others [2006] 7 BLLR 833 (LC). The misconstruction of evidence, as herein alleged by the applicant, has been held to constitute misconduct on the part of the commissioner see Metcash Trading LTD t/a Metcash & Carry v Fobb & others [1998] 11 BLLR 1136 (LC). Similarity, reaching a conclusion that is not supported by evidence in arbitration award was held to amount to misconduct in relation to the duties of the commissioner see Universal Product Network (Pty) LTD v CCMA & others [2004] 11 BLLR (LC).

THE RATIONAL JUSTIFICATION OF THE AWARD

[42] This ground of review was recognised in Carephone (Pty) LTD v Marcus NO & others [1998] BLLR 1093 (LAC). It is now trite that the better approach is that which was outlined in Sidumo & another v Rustenberg Platinum Mines LTD & others [2007] BLLR 1097 (CC) in the following terms:

“[110] To summarise, Carephone held that section 145 of the LRA was suffused by then constitutional standard that the outcome of an administrative decision should be justifiable in relation to the reasons given for it. The better approach is that section 145 is now suffused by the constitutional standard reasonableness. That standard is the one explained in Bato Star: Is the decision reached by the commissioner one that a reasonable decision-maker could not reach? Applying it will give effect not only to the constitutional right to fair labour practices, but also to the right to administrative action which is lawful, reasonable and procedurally fair.”

ASSESSMENT OF EVIDENCE

[43] In those instances where the versions of the parties were contradictory, the second respondent appears to have accepted the version of the first respondent over that of the applicant. However, no direct findings were made by the second respondent on the probabilities of matter, nor were reason given why the second respondent favoured the version of the first respondent. In the founding affidavit no submissions was made by the applicant in relations to this issue. The first time it is raised appears in the supplementary affidavit where the applicant stated that:

“ --- the Arbitrator failed to assess the credibility furtherses in evaluation disputed of fact and in particular failed to take account of inconsistencies in the applicant’s own evidence” (sic)

[44] Regrettably for the applicant, the “supplementary affidavit” is not signed by the deponent nor commissioned by the commissioner of oaths. As correctly pointed out by the first respondent, the applicant has failed to outline what otherwise in form would be a ground of gross irregularity, while in substance the applicant did outline the said ground of review, such a submission is not evidence, due to a failure to commission the “supplementary affidavit”. I therefore need not pursue this issue further.

MISCONDUCT CONSIDERED AGAINTS EVIDENCE LED

The arrangement of the annual year end party

[45] The applicant contended that the essence of Mr Shepherd’s complaint regarding this issue was that arrangements for the event had been divided without his approval and contrary to his instructions. Further, that this was one of only two instances could cite to justify his broader allegations that he “no longer had a contingent of staff who would take instruction from him because they had been persuaded otherwise by Jeremy Sampson”

[46] In making his findings in this regard, the second respondent took to account of the following evidence, some of which he himself recorded; that:

[35.1] after a survey of staff it was apparent that staff preferred to hold the function at the same venue as the previous year, namely Cilantro restaurant;

[35.2] Bennet’s testimony and her email that she did convey the final choice of restaurant to Shepherd prior to sending her email to Sampson on 30 October 2005, and that Shepherd did not become aware of it only when he read an email dated 2 November announcing the venue.

[35.3] Both Sampson and Bennet testified about the fact that Shepherd was not around. Moreover, Sampson was never asked why he did not contact Shepherd by cell phone or email;

[35.4] Bennet was never challenged about her bona fides in accepting instructions from Sampson, after he had discussed the arrangements for the annual function with her following his expression of concern about booking a venue;

[35.5] Bennet’s evidence that she could not understand why Shepherd took exception to the choice of restaurant and that she had no idea that going against Shepherd’s instructions would create a problem of some kind, and

[35.6] Shepherd’s claim that he was humiliated or demeaned by the conduct of Sampson in relation to this incident was never put to Bennet the only staff member who might have been aware that Shepherd’s preferences for the year end function had not been implemented.

[47] I am persuaded by the submission of the applicant in this regard and similarly hold that had the second respondent taken this evidence into account, he would have had to:

> balance the subjective view of the intentions attributed to Mr Sampson and Ms Bennett’s conduct by the first respondent with Ms Bennett’s own obvious surprise at his exaggerated reaction to the decision;

> re evaluate his conclusion that the first respondent only became aware of the decision when he read an email circulated to the staff on 2 November 2007 against Ms Bennett’s evidence that she had sent him an email on this issue even earlier;

> consider why the first respondent delayed until 7 November 2005 in lodging a grievance even though he knew of the decision by 30 October 2005;

> consider why he did not simply raise the matter with Mr Sampson directly on hearing of the decision or shortly thereafter, if indeed he felt it was such a grievous diminution of his status;

> consider and evaluate evidence of other staff about the first respondent’s claims about his humiliation and diminution of status in the company, and not just rely on the first respondent’s say-so, as he did.

[48] Indeed the second respondent failed to consider. These factors, which were clearly relevant in assessing whether or not, objectively speaking, the conduct of Ms Bennett and Mr Sampson, in relation to the arrangements of a Christmas party could reasonably be construed as a material factor in rendering the first respondent’s ordinary working conditions intolerable. The ordinary work performed by the first respondent was not centred around organising an end of the year function as obtaining a financial report to meaningfully participate in the executive committee meetings. The second respondent therefore failed to consider how the core function of the first respondent was affected by the two alleged incidents. By so doing, he ignored facts relevant to his findings that a constructive dismissal had occurred.

[49] The second respondent had to determine whether the applicant, without reasonable and proper cause conducted itself, inter alia, by usurping the first respondent of his core functions, in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between itself and the first respondent see Pretoria Society for the Care of the Retarded v Loots [1997] 6 BLLR 721 (LAC).

[50] An obligation to consider that evidence which the second respondent took no account of emanates from his legal obligation to consider the total probabilities of this matter. Any suggestion therefore that some or subject of cross-examination of Mr Sampson and Ms Bennett has no merits, since this evidence material was not dealt with by the parties during the arbitration hearing. To include such evidence in the award is not a sufficient indication that he took account of it. On the contrary, had he taken account of it, he would have mentioned it in the process of reasoning his award through its legal conclusion.

THE FAILURE TO PROVIDE THE FIRST RESPONDENT WITH FINANCIAL INFORMATION

[51] The second respondent found, inter alia, in this regard that:

> the first respondent was entitled to the information as Group Managing Director;

> Mr Sampson probably advised Maree not to comply with the request;

> this clearly undermined the first respondent’s authority and his ability to perform his functions effectively, and

> this conduct was consistent with Mr Sampson’s view that the first respondent could not function as Group Managing Director.

[52] It was just under 3 months that the first respondent had become a Group Managing Director when the meeting of 3 November 2005 was held. There is indication of how may occasions that the first respondent altered the executive committee meetings and would be furnished with financial figures. His evidence lacked the necessary details in that regard. Also, it is Ms Maree who report to Mr Sampson. Her evidence was that it was an unusual request. The second respondent to be given the formal respect to Mr Sampson. Her evidence was that it was an unusual request. The second respondent was, in the instant case, confronted by two contradictory versions, the resolution of which depended on the assessment of their credibility, which he did not do.

[53] The first respondent performed his duties for the applicant both in the country and abroad. Clearly therefore he would have been entitled to the group financial position. When he would be entitled to such information is however a different matter. His evidence was contradicted by that of the applicant in stating that such information was only made available, before the meeting, to the Executive Manager and to Mr Sampson. The first respondent attended the meeting on that day. His silence on how he dealt with this complaint in that meeting, if he did, as he ought to have, if it was a serious as he sought to make it, is conspicuous.

[54] It is difficult to understand the finding by the second respondent that failure to supply the information had the result of undermining the first respondent’s authority and his ability to perform his functions effectively. When the undisputed evidence of Ms Maree was that she reported to Messrs Sampson and Smart. The second respondent did not eve attempt to resolve this aspect before making finding in this regard. In my view the failure of the applicant to supply the first respondent with the financial information before the executive meeting of 3 November 2005, has not been shown to be conduct that could only reasonably be construed as aimed at making the position of the first respondent with the intolerable.

[55] In this regard the second respondent found, inter alia, that:

> the position of the first respondent had been compromised when his title as Group Managing Director was withdrawn,

> it was reasonable for him to require the applicant to acknowledge his title that with its associated roles, responsibilities, and lines of reporting were in place and binding,

> the first respondent had acted effectively as Group Managing Director for some time before the offer to purchase 80% of the shares in Brand Alive had been rejected, and according that he could return his title as Group Managing Director.

[56] I am persuaded by the submission made by the applicant that the second respondent must have completely ignored evidence that:

> the redesignation of the title would not have changed first respondent’s duties, roles or responsibilities in any way, and

> on 4 November 2005 the applicant’s board made it clear to the first respondent that staff were not to be told about the change in his effective title at that time and that he could continue to use his business cards showing his title.

[57] It is difficult to conceive how the position of the first respondent had been comprised by the withdrawal of title, in the circumstances. None of the ordinary staff members were to know of it. The first respondent was to continue to pose as the Group Managing Director both in South Africa and abroad. He was to continue doing the same job and was possessed of the same power and authority vis-à-vis third parties to the applicant. He never testified to the being any intention to reduce his salary. Effectively the withholding of his title had only academic consequences, and no practical effect. It must be borne in mind that at that stage no group of companies had yet been formed. Therefore that was nothing really consequential in the title itself.

[58] Between both parties there existed a serious dispute about the fiduciary allegiance of the first respondent. Both parties had to take part in an attempt to resolve it without a point scoring or ullimata setting exercise.

[59] The association of Brand Alive with the applicant and its client appears to have been economically viable to Brand Alive. That created an opportunity for the vulnerability of the applicant to the first respondent pursuing its interest in this country and abroad without delection by the applicant.

[60] Accordingly, the conclusion reached by the second respondent in this regard is devoid of reasonableness.

A FAILURE TO WAIT FOR A RESPONSE FROM THE APPLICANT BEFORE THE FIRST RESPONDENT SUBMITTED HIS RESIGNATION

[61] The second respondent found in this regard that it was reasonable for the first respondent:

> not to have waited for a response from the applicant before submitting his resignation on 10 November 2005, and

> to have expected an explanation from Mr Sampson, when he sent an email to the first respondent.

[62] It is the first respondent who set an ultimatum of 48 hours for the applicant. The basis on which 48 and not 72 or even 96 hours were set was never testified to by the first respondent. As the applicant has aptly put it, the deadline was not one contained or derived from a grievance procedure or policy. It was still within the set 48 hours that the first respondent was informed by Mr Rangaka that Mr Sampson was considering the matter. The evidence of the applicant is that Mr Sampson was consulting with a senior counsel on the evening of 9 November 2005. It must follow from this that the applicant took the subject of the grievance seriously to have decided to engage senior counsel.

[63] The evidence of Mr Rangaka was that he told the first respondent that a consultation process was underway with an attorney as he met the first respondent on that evening. According to Mr Rangaka, the first respondent was also told that there would be a response after that consultation process. The second respondent while knowing that such evidence was tendered chose not to utilise it in reasoning through the award. This evidence was available to be used by the second respondent whether or not only of it was used in the cross examination stage. It was open to the first respondent to wait for the outcome of such consultation or to shift the ultimatum to accommodate the measures taken by the applicant to address his plight. Again, the conclusion reached by the second respondent was in the circumstances unreasonable.

[64] Finally, section 186(1) (e) of the Act provides that dismissal means that an employee terminated a contract of employment with or without notice because the employer made continued employment intolerable for the employee.

[65] The reliance by the second respondent to the case of Jooste v Transnet LTD t/a SA Airways (1995) 16ILJ 629 (LAC) was certainly not a misdirection, see also Albany Bakeries LTD v Van Wyk (2005) 25 ILJ 2142 (LAC). In my view, this is not a case where it can be said that, whatever the subjective intention of the applicant, its conduct was objectively calculated to coerce the first respondent into leaving. On the contrary the first respondent ought reasonably to have been expected to wait for the outcome of a process he had initiated and ought not have been pressured by time frames set only by himself. Accordingly, the first respondent did not prove through acceptable evidence that he was constructively dismissed by the applicant.

[66] Therefore, the following order will issue:

1. The arbitration award dated 15 February 2006, issued by the second respondent in this matter, is reviewed and set aside;

2. The first respondent was not constructively dismissed by the applicant;

3. The first respondent is ordered to pay the costs of opposing this application.

_____________

Cele, J

Date of judgment 19 November 2009

Appearances

For the applicant: Adv R Lagrange

Instructed by: Goldman Judin Inc

For the respondent adv Van Graan SC

Instructed by: Van Huyssteens commercial attorneys

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