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[2011] ZAGPJHC 171
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Maroga v Eskom Holdings Ltd and Others (A5021/11) [2011] ZAGPJHC 171 (16 November 2011)
REPORTABLE
SOUTH
GAUTENG HIGH COURT, JOHANNESBURG
Case No. A5021/11
DATE:16/11/2011
In the matter between:
MR PHIRWA JACOB
MAROGA
..........................................................................
Applicant
and
ESKOM HOLDINGS
LIMITED
...............................................................
First
Respondent
MAKWANA,
MPHO
N.O.
...................................................................
Second
Respondent
MINISTER
OF PUBLIC ENTERPRISES
….........................................
Third
Respondent
JUDGMENT
MEYER, J
[1] This is an appeal against
the whole of the judgment and orders, including the order as to
costs, delivered by Masipa J on 10
December 2010. The Court
a
quo
dismissed
the application of the appellant, Mr PJ Maroga. The relief which he
sought against the first respondent (Eskom) and the
third respondent
(the Minister) was an order for specific performance of his
employment contract – for re-instatement as
the Chief Executive
Officer of Eskom retrospectively as from 2 November 2009 - or for the
payment of damages to him of nearly R86
mil.
[2] The Court
a
quo
found
that Mr Maroga had made a clear, unequivocal, and unconditional
resignation offer to the Eskom Board on 28 October 2009,
that the
Eskom Board had accepted Mr Maroga’s resignation, and that the
consensual termination of his contract of employment
had been
effective once the acceptance of his offer of resignation by the
Eskom Board had been communicated to him during the evening
on 28
October 2009.
[3] In making these findings
the Court
a
quo
adopted
a robust approach to the materially disputed issues of fact that had
arisen on the papers. The correctness of the affidavit
version of
Eskom on the relevant disputed issues was accepted and the version of
Mr Maroga, which
inter
alia
is
that he had
not ‘… by any stretch of the imagination …’
conveyed an intention to resign as Chief Executive
Officer and that
the Eskom Board had deliberately and unlawfully repudiated his
written contract of employment’, was rejected.
The Court
a
quo
found ‘…
that Mr Maroga’s version, taken as a whole on affidavit, was so
contradictory, unreliable and so demonstrably
lacking in credence
that it should be rejected out of hand on affidavit.’ The
factual background and conflicting versions
are extensively set out
in the judgment of Masipa J. I need only refer to Eskom’s
version tersely.
[4] On Eskom’s version,
Mr Maroga informed the board members present at the Eskom Board
meeting on 28 October 2009 that he
had thought long and hard about
the matter and that he had concluded that he could not continue to
work with Eskom’s Chairperson,
Mr Godsell. He then made an
offer to resign. Following his offer to resign, Mr Godsell also
offered to resign. Mr Maroga and
Mr Godsell later recused themselves
from the board meeting so that the remaining members of the board who
were present could decide
whose offer of resignation to accept.
After due consideration, the Eskom Board resolved unanimously to
accept Mr Maroga’s
offer of resignation. Two directors were
mandated by the Eskom Board to convey its decision to Mr Maroga and
to Mr Godsell. A
dinner was arranged with them that evening at a
hotel. The Eskom Board resolution was communicated to them and Mr
Maroga did not
object to the communication that the board had
accepted his resignation. The four directors, including Mr Maroga,
parted ways
fully recognising that Mr Maroga’s employment
contract had been terminated by the Board’s acceptance of his
resignation
offer and it was agreed that the calculation of his final
payout would be done later. The next morning, 29 October 2009, Mr
Maroga
handed out copies of his letter to the Eskom directors present
at the resumed board meeting and to the Minister, who joined the
meeting, wherein he stated that, upon reflection overnight, his
‘remarks of frustration’ could not be construed as
an
offer to resign.
[5] Mr Maroga, in the Court
a
quo
and in
this Court, chose for the matter to be argued on the conflicting
affidavit evidence. The basis upon which the disputed issues
of fact
are to be approached was thus stated by Heher JA in
Wrightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA), at para [12]:
‘
Recognising that
the truth almost always lies beyond mere linguistic determination the
courts have said that an applicant who seeks
final relief on motion
must, in the event of conflict, accept the version set up by his
opponent unless the latter’s allegations
are, in the opinion of
the court, not such as to raise a real, genuine or bona fide dispute
of fact or are so far-fetched or clearly
untenable that the court is
justified in rejecting them merely on the papers:
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634E – 635C.’
[6] In the words of Cameron JA
in
Fakie NO v
CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA) para 56:
‘…
a
respondent’s version can be rejected in motion proceedings only
if it is ‘fictitious’ or so far-fetched and
clearly
untenable that it can confidently be said, on the papers alone, that
it is demonstrably and clearly unworthy of credence.’
[7] When the disputed issues
of fact are approached in accordance with these principles the Court
a quo
would, in my view, not have been justified in rejecting Eskom’s
version as not raising ‘real, genuine or bona fide’
disputes of fact or that its allegations and denials are ‘so
far-fetched or clearly untenable’ that they could confidently
be rejected on the papers as ‘demonstrably and clearly unworthy
of credence. I am satisfied that the affidavits of Eskom
extensively, ‘seriously and unambiguously’ addressed the
facts that are disputed by it. See:
Wrightman
,
para [13]. The reasons given by the Court
a
quo
for
accepting Eskom’s version and rejecting that of Mr Maroga are
convincing and lead me to conclude that the veracity of
the disputes
raised by Eskom can at face value not be questioned. It is clear
from a reading of the judgment that the Court
a
quo
was,
correctly in my view, not satisfied as to the inherent credibility of
the appellant’s factual averments on the disputed
issues. See:
Ripoll-Dausa
v Middleton NO and Others
[2005] ZAWCHC 6
;
2005 (3) SA 141
(CPD), at p 151 I – J.
[8] It was submitted on behalf
of Mr Maroga that even if Eskom’s version is accepted the offer
of resignation made by Mr Maroga
was not clear and unequivocal and is
accordingly not legally effective or that it was conditional.
Counsel referred to decided
cases, including
Kragga
Kamma Estates CC & Another v Flanagan
[1994] ZASCA 137
;
1995 (2) SA 367
(A),
Amazwi
Power Products (Pty) Ltd v Turnbull
(2008) 29 ILJ 2554 (LAC),
Fijen
v Council for Scientific and Industrial Research
(1994) 15 ILJ 759 (LAC), and
Chemical
Energy Paper Printing Wood and Allied Workers Union and Another v
Glass and Aluminium
2000 CC (2002) 23 ILJ 695 (LAC) in support of the legal propositions
that a voluntary resignation, which is accepted by an employer,
brings about the termination of the employment contract by mutual and
voluntary agreement between the parties, but to be legally
effective,
an employee, either by words or conduct, has to evince a clear and
unambiguous intention not to go on with his or her
contract of
employment - the employee has to lead a reasonable person to the
conclusion that he or she does not intend to fulfill
his or her part
of the contract - and resignations in the heat of the moment have
been held not to be effective. I need not review
these judgments.
On Eskom’s version, which must in these proceedings be
accepted, there is no room for finding that Mr Maroga’s
words
and conduct did not evince a clear and unambiguous intention on his
part not to go on with his contract of employment should
his offer of
resignation be accepted or that the Eskom Board’s conclusion
that he did not intend to fulfill his part of the
contract in such
event did not meet the reasonable person requirement or that Mr
Maroga’s offer to resign had been made in
the heat of the
moment. The undisputed facts also do not support the contention that
Mr Maroga’s resignation offer had been
a conditional one, and
such contention was, in my view, correctly rejected by the Court
a
quo
.
[9] Mr Maroga also contends
that the conduct of the Eskom Board and that of the former Minister
was inconsistent with the Constitution
of the Republic of South
Africa, Act 108 of 1996, and more particularly sections 10, 22, 33
and 195 thereof. This contention is
founded upon the facts set out
by Mr Maroga that are bona fide and on reasonable grounds disputed by
Eskom and the Minister. Again,
the undisputed facts do not support
such a case that Eskom or the former Minister acted in a way that is
inconsistent with the
Constitution and particularly the basic values
and principles governing public administration that are set out in
section 195(1)
thereof to which counsel for Mr Maroga limited his
argument before us. This finding makes it unnecessary to consider
the other
constitutional issues that arise from Mr Maroga’s
contention in this regard, such as whether or not section 195 of the
Constitution
is directly justiciable. The Court
a
quo
,
correctly in my view, also decided this matter without reaching the
constitutional issues. Kentridge AJ, in
S
v Mhlungu and Others
[1995] ZACC 4
;
1995 (3) SA 867
(CC), para [59], said this:
‘
I would lay it
down as a general principle that where it is possible to decide any
case, civil or criminal, without reaching a constitutional
issue,
that is the course which should be followed.’
[10] I interpolate to refer to
the striking out of paragraphs 32.2 – 32.7 of Mr Maroga’s
founding affidavit by the Court
a
quo
. It was
contended on behalf of Mr Maroga that the matter struck out was
relevant to the central question whether or not Mr Maroga
had offered
to resign. I disagree. A dispute about his consensual resignation
had only arisen on the morning of 29 October 2009.
The matter struck
out relates to mediation attempts initiated by the presidency since
then, which was after the termination of
Mr Maroga’s contract
of employment with Eskom. The paragraphs struck out are irrelevant
to the central question referred
to by Mr Maroga’s counsel.
[11] I now turn to the next
question, which is whether the Eskom Board had the authority to
accept Mr Maroga’s offer to resign.
It was contended on behalf
of Mr Maroga in the court
a quo
and
also in this Court that the Eskom Board did not have the power in law
to terminate his contract of employment. The high water
mark of this
contention was that Article 10.4 of the Eskom Articles of Association
vests the power to appoint its CEO in the Minister
and, because the
Eskom Articles are silent on the power to terminate the CEO’s
contract of employment, the principle laid
down by the Constitutional
Court in
Masetlha
v President of the Republic of South Africa and Another
[2007] ZACC 20
;
2008 (1) SA 566
(CC), paras [68] and [69], finds application, which
is that the person who has the power to appoint also has the power to
dismiss.
This contention, which was in my view correctly rejected by
the Court
a
quo
, is
refuted by the provisions of the Eskom Articles of Association and
particularly Article 16.1 thereof, by the conclusion of
a contract of
employment between Eskom and its CEO, by the distinction between the
CEO’s capacity as a director and his or
her capacity as an
employee (see:
Amazwi
Power Products (Pty) Ltd v Turnbull
[2008] ZALAC 8
;
(2008) 9 BLLR 817
(LAC), paras [12] – [15], and the unreported
decision of Malan J in
Daloxolo
Mpofu v South African Broadcasting Corporation Limited (SABC) and
Others
(WLD
2008/18386), para [23]), and by the fundamental distinguishing
features between
Masetlha
and the present matter.
[12] The Eskom Articles of
Association define ‘Minister’ as ‘… the
Minister of Public Enterprises in his
capacity as the representative
of the Republic, as the Member, or if any other Minister is
designated as being responsible to hold
the shares on behalf of the
Republic, then that Minister acting in such capacity’. It
defines ‘Member’ in turn
as ‘…the Minister.’
Article 10.4 provides that the ‘… Member shall appoint
the Chairperson as
well as the Chief Executive/Managing Director
after consultation with the board of directors.’ Article 16.1
reads:
‘
The management
and control of the company shall be vested in the directors who, in
addition to the powers and authorities by these
Articles expressly
conferred upon them, may exercise all such powers, and do all such
acts and things, as may be exercised or done
by the company and are
not hereby or by any Act expressly directed or required to be
exercised or done by the company in general
meeting but subject
nevertheless to such management and control not being inconsistent
with these Articles or with any resolution
passed at any general
meeting of the member in accordance therewith and directors shall not
have authority to perform any act which
falls outside the capacity of
the company, including any act referred to in clause 5 of the
Memorandum of Association but no resolution
passed by the company in
general meeting shall invalidate any prior act of the directors which
would have been valid if such resolution
had not been passed. The
general powers given by this Article shall not be limited or
restricted by any special authority or power
given to the directors
by any other Article.’
[13] Article 10.4 accordingly
empowers the Minister to appoint a CEO. This is a power given to the
shareholder to appoint a CEO
to the board of directors. The Minister
is not empowered to appoint a CEO as employee of Eskom or to conclude
an employment contract
with a CEO. Article 16.1 vests the board,
and not the shareholder, with all the powers of the company, except
those expressly
reserved to its members in general meeting. The
powers to appoint, implement, enforce and terminate contracts of
employment form
part of the usual management and control powers of a
board of directors, the exercise of which powers have not in this
instance
been conferred upon the shareholder, which is the Minister
in his representative capacity. The CEO of Eskom enjoys a dual
status
of director and of employee. His or her appointment as Chief
Executive/ Managing Director of Eskom falls within the prerogative
of
the member, who is the Minister, after consultation with the board of
directors and his or her appointment as such is followed
by the
conclusion of a contract of employment between Eskom and the CEO.
The Eskom Articles of Association do not contemplate
that the
Republic of South Africa, or its representative, the Minister,
becomes the employer of the CEO. Masipa J, in my view,
correctly
emphasised the fact that the contract of employment upon which Mr
Maroga’s cause of action is founded was one concluded
between
him and Eskom.
[14]
Masethla
was concerned with a special statutory power of appointment of the
Director-General of the National Intelligence Agency that was
required to be exercised by the President in pursuit of the interests
of national security. The powers of the Minister in this
instance to
inter alia
initially
have appointed the first board of directors upon the conversion of
Eskom into a company (Article 10.2) and the Minister’s
continued power to appoint the Chairperson as well as the CEO
(Article 10.4) are not constitutional or statutory powers, but powers
conferred upon the Minister by Eskom’s Articles of Association.
[15] In conclusion, I am
accordingly of the view that there would not have been any valid
basis for the Court
a
quo
to have
rejected the version of Eskom or of the Minister in these motion
proceedings on the materially disputed issues of fact.
The Eskom
Board, as was correctly held by the Court
a
quo
, had the
authority to accept Mr Maroga’s offer to resign. Masipa J
accordingly, in my view, correctly accepted the version
of Eskom that
Mr Maroga had made a clear, unequivocal, and unconditional offer to
resign to the Eskom Board, which offer had been
accepted by the Eskom
Board, and that the consensual termination of his contract of
employment had been effective once the acceptance
of his offer of
resignation had been communicated to him at the dinner during the
evening of 28 October 2009. These findings make
it unnecessary for
me to consider whether or not it is appropriate to order specific
performance on the facts of this matter or
whether Mr Maroga could
pursue a claim for damages in motion proceedings such as these.
[16] Finally, the matter of
costs. Counsel for Mr Maroga submitted that the costs order made by
the Court
a
quo
is
ambiguous. Mr Maroga was ordered to pay the costs and for such costs
to include the costs consequent upon the employment of
five counsel.
The first and second respondents were represented by three counsel in
the Court
a
quo
and the
third respondent by two counsel. I interpret the costs order made as
one in which Mr Maroga was ordered to pay the costs
of the first and
second respondents, including the costs consequent upon the
engagement of the services of three counsel, and he
was also ordered
to pay the costs of the third respondent, including the costs
consequent upon the third respondent having engaged
the services of
two counsel. Interference by this Court with the costs order made by
the Court
a
quo
, is in
my view, accordingly not warranted.
[17] Counsel for Mr Maroga
submitted that we should follow the approach laid down by the
Constitutional Court in
Biowatch
Trust v Registrar, Genetic Recourses, and Others
2009 (6) SA 232
(CC) for constitutional litigation matters and not
grant a costs order against Mr Maroga should he be unsuccessful in
this appeal.
In
Biowatch
,
Sachs J, at pp 56 I – 57, said this:
‘
I conclude,
then, that the general point of departure in a matter where the State
is shown to have failed to fulfil its constitutional
and statutory
obligations, and where different private parties are affected, should
be as follows: the State should bear the costs
of litigants who have
been successful against it, and ordinarily there should be no costs
orders against any private litigants
who have become involved. This
approach locates the risk for costs at the correct door – at
the end of the day, it was the
State that had control over its
conduct.’
[18] In my view the
Biowatch
approach
finds no application in this appeal. The state has not been shown to
have failed to fulfill its constitutional and statutory
obligations.
The Court
a
quo
concluded that Mr Maroga’s contract of employment had been
terminated by mutual consensus between him and the Eskom Board.
Such
finding, in my judgment, should be confirmed by this Court. I am
further of the view that the engagement of one senior and
of one
junior counsel on behalf of the first and second respondents and on
behalf of the third respondent was prudent and warranted.
[19] In the result the
following order is made:
1. The appeal is dismissed.
2. The appellant is ordered to
pay the costs of the first and second respondents, including the
costs consequent upon the employment
of two counsel, one being a
senior counsel.
3. The appellant is ordered to
pay the third respondent’s costs, including the costs
consequent upon the employment of two
counsel, one being a senior
counsel.
P.A.
MEYER
JUDGE
OF THE HIGH COURT
MAKHANYA J
I agree with my brother Meyer
J.
G.M.
MAKHANYA
JUDGE
OF THE HIGH COURT
COPPIN J
I agree with my brother Meyer
J.
P.
COPPIN
JUDGE
OF THE HIGH COURT
16
November 2011
Date
of hearing: 31 October 2011
Date
of Judgment: 16 November 2011
Counsel
for the appellant: Adv. I V Maleka SC
Adv.
V Ngalwana
Counsel
for the first and second respondents: Adv. T Bruinders SC
Adv.
K Pillay
Adv.
B Makola
Councel
for the third respondent: Adv. P Pretorius
Adv.
FA Boda
Adv.
P Khoza
Attorneys for the
appellant: Mkhabela Huntley Adekeye Inc.
Block
C
No
7 Eton Road
Sandhurst
2196
Johannesburg
Ref:
Mr Morris
Attorneys
for the first and second respondent: Bowman Gilfillan Inc.
165
West Street
Sandton
Johannesburg
Ref:
J Kaapu
Attorney for the third
respondent: The State Attorney
10
th
Floor, North State Building
95 Markiet Street, Cnr
Kruis Street
Johannesburg
Ref: Z Nhlayisi