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THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case no: 2024-146579

 

In the matter between:

NATIONAL EDUCATION, HEALTH AND

ALLIED WORKERS UNION (NEHAWU)                                                     First Applicant

 

MEMBERS OF NEHAWU EMPLOYED BY NHBRC                               Second Applicant

 

and

 

NATIONAL HOME BUILDERS REGISTRATION

COUNCIL (NHBRC)                                                                                First Respondent

 

N C CHILUVANE                                                                                 Second Respondent

 

SONGEZO BOOI                                                                                    Third Respondent

 

THE MINISTER OF HUMAN SETTLEMENTS                                     Fourth Respondent

 

Heard:                    20 December 2024

 

Delivered:    23 December 2024

 

This judgment was handed down electronically by consent of the parties’ representatives by circulation to them by email. The date for hand-down is deemed to be 23 December 2024.

JUDGMENT

PRINSLOO, J

Introduction

[1]             It is necessary to set out who the dramatis personae are, as that would provide the necessary context to this application. The First Respondent (NHBRC or Council) is a regulatory body for the home building industry, established as a juristic person in accordance with section 2 of the Housing Consumers Protection Measures Act[1] (HCPMA). Section 4 of the HCPMA provides that the Council shall consist of at least seven but not more than 15 members, including a chairperson and deputy chairperson, appointed by the Fourth Respondent (Minister) for the period determined by the Minister, but not exceeding three years at a time.

 

[2]             Section 6 of the HCPMA provides for the appointment of staff of the Council and section 6(1) specifically provides that the Council shall appoint a person as Chief Executive Officer (CEO) who shall be responsible for the day-to-day management of the affairs of the Council.

 

[3]             The Third Respondent (Mr Booi) is the Council’s CEO. He was suspended in November 2024. This application does not concern Mr Booi’s suspension per se, but the events that followed after he was suspended as CEO, are relevant for purposes of this judgment.

 

 

[4]             The Second Respondent (Respondent) was appointed by the Minister as a member of the Council on 26 November 2021, for a period of three years. Her term as a member of the Council came to an end on 25 November 2024. She is currently the acting CEO of the NHBRC and it is her appointment in the said capacity which triggered this application. She deposed to an answering affidavit on behalf of the NHBRC.

 

[5]             The Respondent took issue with urgency. I do not intend to set out in detail the attack on urgency, as I am of the view that the application should be heard urgently. This Court has a discretion in this regard and I exercised my discretion to deal with the merits on an urgent basis.

 

Background facts

[6]             It appears to be common cause that a task team, comprising four members of Council, was established by Council resolution to consult with attorneys who would investigate the conduct of Mr Booi. On 15 November 2024, the Council took the decision to suspend Mr Booi and it is undisputed that the Respondent was present at all the meetings that took the decision to suspend Mr Booi as CEO.

 

[7]             The Respondent explained that at all times when Council was contemplating the suspension of the CEO, the question arose as to who would be appointed as acting CEO. On her version, this issue caused a serious dilemma as Council was of the view that the NHBRC does not have sufficient capacity in its executive management structure and there was nobody suitable to hold the position of acting CEO. The Council then came up with the plan that “one of its members should resign as a Council member and be appointed as an acting CEO. This idea was communicated to the Minister”. It is evident from the letter addressed to the Minister on 19 November 2024 that the Council was advised by the Company Secretary that Council members are precluded from acting in any position at the NHBRC. The Council indicated that upon receipt of the said advice, it was reconsidering the decision to appoint a Council member as acting CEO. The Minister was informed that should the Council decide to appoint an internal employee, as per the prescripts of the Acting Policy, it would have to consider the appointment of either the Chief Financial Officer (CFO) or the Executive Manager: Corporate Services as acting CEO.

 

[8]             It is evident that on 19 November 2024, the Council and the Minister were well aware of the provisions of the NHBRC’s ‘Acting Policy’ which specifically disqualifies members of Council from acting in any position at the NHBRC and that the Council was able to identify at least two internal employees who could be considered for appointment as acting CEO.

 

[9]             The Minister wasted no time to respond and she responded on the same day (19 November 2024) and concurred with the decision to place Mr Booi on precautionary suspension pending an investigation into allegations of misconduct. The Minister went further to state that:

 

‘I concur with the Council Resolution of the 15 November 2024 (sic) to appoint a suitably qualified Council member as an interim CEO until the investigation is finalised and disciplinary hearing concluded. I note that you have been advised against implementing this resolution as it is against your current Acting Policy. I am of the view it is within the powers of the Council to waive this particular clause of the policy. I expect the council to understand the gravity of this matter and exercise these powers because in our recent interaction Council brought it to my attention that NHBRC does not have sufficient capacity at executive level…’

 

[10]         After receipt of the Minister’s letter and during deliberations, members of the Council were requested to submit CVs for consideration. The Respondent was the only member who submitted a CV and the Council reached a decision that she be recommended to the Minister as acting CEO.

 

[11]         On 22 November 2024, the Minister concurred with her appointment by Council and the Respondent relinquished her position as a Council member, with the proviso that “should the Minister appoint me as a member of Council for the next term in a non-executive capacity, I will oblige and will be available to resume duties as a Council member at the end of this acting stint”.

 

[12]         On 26 November 2024, an internal NHBRC communication was circulated, confirming that the Respondent has been appointed as the acting CEO with immediate effect, in light of the Council’s resolution to suspend Mr Booi.

 

[13]         On 28 November 2024, NEHAWU addressed a letter to the Respondent, demanding her immediate resignation as acting CEO as her appointment constituted a “blatant violation of governance principles, NHBRC policies and organisational integrity. Your appointment contravenes clause 6.29 of the NHBRC Acting Policy, which explicitly prohibits temporary employees and (former) Council members from being considered for acting appointments. This clause exists to ensure impartiality, prevent conflicts of interest and maintain governance integrity. By disregarding this policy, the defunct Council has acted in blatant abuse of its powers, thereby undermining the governance framework it was mandated to protect”.

 

[14]         On 2 December 2024, NEHAWU met with representatives of the NHBRC, including the Executive Manager: Corporate Services, and ventilated its demands in respect of the Respondent’s appointment as acting CEO. The NHBRC responded on 5 December 2024 to the union’s demands and the response was inter alia that following the resolution to suspend the CEO, the Council resolved that “it was in the best interest of the organisation to do so, as the policy maker, waived clauses 3.1 and 6.29.1 of the Acting Policy” and that this was done with the concurrence of the Minister.

 

[15]         After this response, NEHAWU procured the services of its attorneys of record and an urgent application was filed on 11 December 2024.

 

[16]         On 5 December 2024, a statement was released, following a Cabinet meeting of 4 December 2024, wherein it was revealed that the appointment of the new NHBRC Board was confirmed during the Cabinet meeting of 4 December 2024 and that the Respondent was appointed as a Council member.

 

[17]         As already alluded to, Section 4 of the HCPMA provides that the Minister appoints Council for the period determined by the Minister but not exceeding three years at a time. It is common cause that notwithstanding the fact that the appointment of the new Board was confirmed during the Cabinet meeting of 4 December 2024, the Minister has not yet appointed the new Council members after the ending of the term of the previous Board on 25 November 2024.

 

This application

[18]         This application concerns the legality of the Respondent’s appointment as the Council’s acting CEO, with effect from 26 November 2024.

 

[19]         The Applicant’s case is that the Respondent’s appointment as acting CEO is in contravention of the NHBRC’s own policies, it encroaches upon the union members’ constitutional right to fair labour practices and it violates section 195 of the Constitution[2]. The said appointment was made in disregard of the basic values and principles governing public administration.

 

[20]         The Applicant’s case is that acting appointments within the NHBRC are governed by the Acting Policy, as approved by Council. It is evident from the Acting Policy’s provisions that it should be read in conjunction with other policies, inter alia the recruitment and selection policy.

 

[21]         I will first deal with the averment that the Respondent’s appointment as acting CEO is in contravention of the applicable policies and more specifically, the Acting Policy.

 

[22]         For purposes of this judgment, the relevant parts of the Acting Policy are clauses 3 and 6 and more specifically the sub-clauses as set out infra.

 

[23]         The relevant part of clause 3 of the Acting Policy provides that:

 

‘3.          Scope

3.1.        This Policy is applicable to all NHBRC employees.’

 

[24]         The Applicant’s case is that the Acting Policy applies to employees of the NHBRC only. It is common cause that the Respondent was never an employee of the NHBRC and that she only became associated with the NHBRC when she was appointed as a member of Council in November 2021.

 

[25]         The relevant parts of clause 6 provide that:

‘6.        Policy Principles

6.4.1    That the acting employee is a permanent employee fulfilling duties at a higher or similar graded position;

…

6.6.      First preference of acting appointments should be considered to employees reporting directly to the applicable division, guided by competence, succession plan of the business unit as well as employment equity plans….

…

6.29.    Exclusions

6.29.1. Temporary employees and Council members are excluded from the provisions of this policy.’

 

[26]         The Applicant’s case is that the application of the Acting Policy is restricted to permanent employees only and that temporary employees and Council members are explicitly excluded from the application of the said policy. It is common cause that the Respondent is not a permanent employee of the NHBRC and even if she was employed on a temporary basis, she would not have been entitled to appointment as acting CEO, as both temporary employees and Council members are excluded.

 

[27]         It is evident that the appointment of the Respondent as acting CEO is in direct contravention of the NHBRC’s Acting Policy. The Respondent is not disputing that her appointment is not compliant with the provisions of the Acting Policy. Instead, the Respondent’s defence for the non-compliance with the Acting Policy is that the Council, as the custodian of the policies of the NHBRC, waived the provisions of the Acting Policy and that in the best interest of the NHBRC, because there were exceptional circumstances that compelled the Council to “appoint one of its own as an acting CEO”.

 

[28]         The Respondent’s defence calls for closer consideration.

 

[29]         First, the Respondent’s case is that the Council, as the custodian of the policies, is at liberty to waive the provisions thereof. This is wrong. As the custodian of the policies, the Council’s obligation is quite the opposite – the Council has to ensure compliance with the applicable policies and must take action rather to ensure that policies are complied with and adhered to.

 

[30]         Second, the Council must ensure compliance with the NHBRC’s policies and cannot itself act in contravention or violation of the applicable policies, believing that it has the power to waive certain provisions of policies when it deems it necessary to do so. There is no provision in the Acting Policy that allows the Council to waive certain provisions or to cherry-pick which provisions to comply with and which to ignore or ‘waive’. Mr Baloyi for the Respondent conceded that there was no provision which permitted the Council to waive provisions of the Acting Policy.

 

[31]         The Council has no authority to waive provisions of the Acting Policy and the fact that the Minister too believes that the Council has the power to waive the provisions of the policy, is shocking. Furthermore, the fact that the Minister concurred with the decision to appoint the Respondent as acting CEO, which decision was in direct contravention of the provisions of the Acting Policy and the advice the Council received from the Company Secretary, cannot and does not validate the ultra vires and unlawful decision taken by the Council.

 

[32]         The ‘waiving’ of a clause of a policy as and when it suits the Council, without any empowering provision or authority to do so, is highly irregular and unlawful.

 

[33]         It can never be in the best interest of the NHBRC to act in contravention of its policies and procedures and to take decisions which undermine the principles of good governance and responsible decision taking. Policies are there to provide clear direction, to ensure a uniform approach and understanding of what is permissible and what is not and to ensure that decisions are taken based on sound prescripts and accepted principles, rather than being based on considerations which are inconsistent and arbitrary and ultimately unfair or unlawful. The flouting of rules and policies in favour of arbitrary decisions in contravention of the prescripts and policies does not belong in the running of a state entity. It will undermine the rule of law and will create chaos and uncertainty. It is astonishing that the Respondent is defending such conduct.  

 

[34]         The ‘exceptional circumstances’ are that there is a lack of capacity for the executive management to act in the position of CEO. This is so because the person occupying the position of COO has been seconded from the Department of Human Settlement and the other two executive managers are on probation and their probation would come to an end during the course of December 2024. The Applicant denied this and referred to a number of individuals on management level who are able to act as CEO and I cannot accept the Respondent’s version that there is such a lack of capacity. In fact, the Applicant stated that besides the COO, there are five other executive managers and several of them have been in the employ of the NHBRC for a substantive period and they are suitably qualified to be considered for appointment as acting CEO.

 

[35]         The other exceptional circumstance is that the Council’s term was coming to an end and it was important that continuity and stability within the organisation be maintained. There is no merit in this. The Council’s term will always end upon expiry of the term of the appointment of the members of the Board and that does not justify the flouting of applicable policies. Furthermore, the Cabinet has already approved the members of the Council on 4 December 2024 – all that remains is for the Minister to appoint the members. The appointment of the new Board for a new term would certainly bring stability, and it is for the Minister to prioritise and expedite the appointment of the members of Council if she is so concerned about the stability of the organisation.

 

[36]         Second, I will deal with the Applicant’s averment that the Respondent’s appointment as acting CEO violates section 195 of the Constitution and disregards the basic values and principles governing public administration.

 

[37]         It is the Applicant’s case that the Respondent has a substantive conflict of interest. Section 4 of the HCPMA, read with clause 6.1 of the Board Charter, requires a non-executive council member to be independent.

 

[38]         Section 6(1) of the HCPMA provides for the appointment of a CEO, who is responsible for the day-to-day management of the affairs of the Council.

 

[39]         The Respondent was appointed as acting CEO and at the same time, Cabinet approved her appointment as a member of Council on 4 December 2024 and the only outstanding action is the formal appointment by the Minister.

 

[40]         The Respondent disputed that she has a conflict of interest. She does not dispute that her term as a member of Council has been renewed by Parliament but stated that the Minister has not officially appointed any of the members recommended by Parliament. Her case is that she is not serving as a member of Council and will not do so until her acting stint has come to an end. The Respondent “believe that my appointment as member of Council will be delayed due to the position I currently hold at the NHBRC.” The roles, responsibilities and functions of a member of Council and the CEO differ significantly and for the Applicant to fulfil both, albeit not simultaneously, is far from ideal or in accordance with what the intention of the policy makers was. In my view, the conflict of interest is obvious.

 

[41]         The Respondent cannot be appointed as acting CEO without being employed by the NHBRC. It is common cause that she is not an employee of the NHBRC and it is unclear how she could be appointed as acting CEO in the first place. The only possible answer is that she was appointed as acting CEO in flagrant disregard for the provisions of the Acting Policy. An employee should have been appointed to act, but instead and in contravention of the applicable policy, the Respondent is appointed to act as CEO. The Respondent’s appointment is not only procedurally flawed but violates the principles of good governance and undermines the efficient and economic use of resources. A permanent employee of the NHBRC should have been appointed to act as the CEO, not a non-employee at additional cost.

 

[42]         In my view, there was no compliance with the provisions of section 195 of the Constitution in the appointment of the Respondent as acting CEO.

 

The relief sought

[43]         The Applicant seeks an order to declare the Respondent’s appointment as acting CEO to be unconstitutional and inconsistent with the principles of legality and therefore null and void and for her appointment to be set aside.

 

[44]         In my view, there is merit in the Applicant’s case and I am inclined to grant the relief sought. The defence put up by the Respondent is not sustainable in law.

 

Costs

[45]         The last issue to be decided is the issue of costs. This Court has a wide discretion in respect of costs, considering the requirements of law and fairness.

 

[46]         The Applicants seek a punitive cost order against the NHBRC and any other Respondent opposing this application. Mr Deeplal submitted that the Respondent flouted the policies and ignored the Applicants’ demands, which forced the union to bring this application to Court and therefore a punitive cost order would be appropriate.

 

[47]         Mr Baloyi for the Respondent did not seek a cost order if the application was not successful. He submitted that the Applicants are not entitled to a punitive cost order as such was not motivated for in the Applicants’ application.

 

[48]         In Zungu v Premier of the Province of KwaZulu-Natal and Others[3], the Constitutional Court confirmed the rule that costs follow the result does not apply in labour matters. The Court should seek to strike a fair balance between unduly discouraging parties from approaching the Labour Court to have their disputes dealt with and, on the other hand, allowing those parties to bring to this Court cases that should not have been brought to Court in the first place.

 

[49]         This is a case where the Court has to strike a balance. The generally accepted purpose of awarding costs is to indemnify the successful litigant for the expense he or she has been put through by having been unjustly compelled to initiate or defend litigation. Considering the facts placed before me, this is a matter where the granting of a cost order is justified.

 

[50]         The NHBRC and the Minister acted ultra vires when they held that the Council is at liberty to waive the provisions of the Acting Policy. The conduct of the NHBRC compelled the union to bring this application and the First Applicant is entitled to cost, but I am not convinced that cost is to be ordered on a punitive scale.

 

[51]         In the premises, I make the following order:

 

Order

               1.     The Second Respondent’s appointment as the First Respondent’s acting chief executive officer is declared unconstitutional and unlawful;

 

               2.    The Second Respondent’s appointment as the First Respondent’s acting chief executive officer is set aside;

 

               3.    The First Respondent is to pay the First Applicant’s costs on a party and party scale.

 

 

Connie Prinsloo

Judge of the Labour Court of South Africa

 

Appearances:

For the Applicant:	Advocate N Deeplal
Instructed by:	Schöltz Attorneys
For the First and Second Respondents:	Advocate F Baloyi
Instructed by:	Molatudi Attorneys

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