About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2010
>>
[2010] ZAGPJHC 133
|
|
Maroga v Eskom Holdings Limited and Others (00589/10) [2010] ZAGPJHC 133 (10 December 2010)
REPORTABLE
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
CASE NO
:
00589/10
DATE:
10/12/2010
In the matter between:
MAROGA
PHIRWA
JACOB
......................................................
Applicant
and
ESKOM
HOLDINGS
LIMITED
.......................................................
First
Respondent
MAKWANA
NO
MPHO
............................................................
Second
Respondent
MINISTER
OF PUBLIC ENTERPRISE
…..................................
Third
Respondent
______________________________________________________________
J
U D G M E N T
______________________________________________________________
MASIPA, J
:
INTRODUCTION
[1] The applicant (Mr Maroga)
was employed as the Chief Executive Officer of the first respondent
(Eskom) on a five year fixed
term contract from 1 May 2007 to 30
April 2012.
[2] In or during October 2009
his contract of employment was terminated. In this application Mr
Maroga is challenging the lawfulness
of that termination and seeks
re-instatement. Alternatively he seeks an amount of R85 716 830,00
as compensation.
[3] The relief sought as set out in the notice of motion constitutes
four claims and reads thus:
“
Claim 1:
Breach of contract
Declaring that:
the first respondent has unlawfully repudiated the contract of
employment concluded by or on behalf of the first respondent and
the applicant when it purported to terminate that contract in terms
of the letter dated 30 October 2009, which is annexed to
the
founding affidavit as “PJM1”, which repudiation the
applicant has elected not to accept;
the applicant is entitled to enforce the said contract of
employment;
Ordering the first respondent to re-instate the applicant as the
Chief Executive Officer of the first respondent retrospectively
with
effect from 2 November 2009.
Directing the first respondent to pay to the applicant all his
salary and other financial benefits he is entitled to, in terms of
the said contract of employment.
Insofar as is necessary ordering the second and third respondents
to ensure that the first respondent gives effect to the orders
sought in paragraphs 2 and 3 above.
Alternatively to paragraphs 2 to 4 above, ordering the first
respondent to pay to the applicant the amount described in annexure
“X” to the notice of motion, in the event that the Court
holds that it is not just or equitable to re-instate the
applicant
as the Chief Executive Officer of the first respondent.
Claim 2: Breach of corporate governance and company law
principles
Declaring that the first
and/or third respondents have acted unlawfully, and in breach of the
first respondent’s Articles
of Association and the provisions
of the Companies Act, when they purported to terminate and give
effected
(
sic
)
to the unlawful termination of the applicant’s contract of
employment in terms of a letter dated 30 October 2009.
Directing the first and/or third respondents to re-instate the
applicant as the Chief Executive Officer of the first respondent
retrospectively with effect from 2 November 2009.
Directing the first respondent to pay to the applicant all his
salary and other financial benefits he is entitled to in terms of
the said contract of employment.
Insofar as is necessary ordering the second and third respondents
to ensure that the first respondent gives effect to the orders
sought in paragraphs 7 and 8 above.
Alternatively to paragraphs 7 and 9 above, ordering the first
respondent to pay to the applicant the amount described in annexure
“X” to the notice of motion, in the event the Court
holds that it is not just or equitable to re-instate the applicant
as Chief Executive Officer of the first respondent.
Claim 3: Breach of the Constitution
Declaring that the purported termination of the applicant’s
contract of employment in terms of annexure “PJM1”
of
the founding affidavit, and the conduct of the respondents which
gave rise to that purported termination, is inconsistent
with the
provisions of sections 10, 22 and 33 read with section 195(1)(a) of
the Constitution of the Republic of South Africa
Act, 108 of 1996,
as amended.
Directing the first and/or
third respondents to re-instate the applicant as the Chief Executive
Officer of the first respondent
retrospectively with effect from 2
November 2009.
Directing the first respondent to pay to the applicant all his
salary and other financial benefits he is entitled to, in terms of
the said contract of employment.
Insofar as is necessary, ordering the second and third
respondents to ensure that the first respondent gives effect to the
orders
sought in paragraphs 12 and 13 above.
Alternatively to paragraphs 12 to 14 above, ordering the first
respondent to pay to the applicant the amount described in annexure
“X” to the notice of motion, in the event the Court
holds that it is not just or equitable to re-instate the applicant
as the Chief Executive Officer of the first respondent.
An order directing the
respondents to issue an appropriate apology to the applicant
.”
(During argument subparagraph 16
under claim 3 was abandoned and correctly so, in my view, as there
was no basis for it.)
[4] Mr Maroga also seeks costs
against such respondents as may choose to oppose the application.
[5] Although there are three
respondents the main relief is sought against only the first
respondent (Eskom).
[6] The second respondent is Mr
Makwana, the Acting CEO of Eskom. He is the deponent to Eskom’s
affidavits. The third respondent
is the Minister of Public
Enterprise. Only limited relief is sought against both the second and
the third respondent.
[7] The application is opposed
by Eskom on the grounds that Mr Maroga’s employment contract
was validly terminated because
he had offered to resign, his offer
was accepted and this was communicated to him, alternatively his
contract of employment was
validly terminated for poor performance
soon after he had reneged on his offer to resign. The application is
opposed by the Minister
on the grounds that the Minister has no power
either to re-instate Mr Maroga or to interfere in any way in the
dispute between
Mr Maroga and Eskom. The Minister also opposes
re-instatement on the basis that the relationship between her and Mr
Maroga has
broken down irretrievably.
FURTHER AFFIDAVITS – APPLICATIONS TO STRIKE OUT
[8] It is convenient at this stage to deal with applications to
strike out.
[9] Eskom brought two applications to strike out. The first
application relates to the averments contained in Mr Maroga’s
founding affidavit setting out the attempts initiated by the
Presidency to mediate the dispute between Mr Maroga and Eskom. The
second application relates to new matter contained in Mr Maroga’s
replying affidavit in this application.
[10] The second application was
brought only in the event that this Court did not grant Eskom leave
to file its supplementary affidavit
responding to the new matter.
[11] The parties eventually agreed that Eskom’s supplementary
affidavit be allowed in and that the application to strike
out be
abandoned.
[12] The court has a discretion to allow new matter to remain in the
replying affidavit, giving the respondents the opportunity
to deal
with it in a second set of answering affidavits.
[13] In
James
Brown & Hamer (Pty) Ltd (previously named Gilbert Hamer & Co
Ltd) v Simmons NO
1963
(4) SA 656
(A) the court held:
“
It is in the
interest of the administration of justice that the well-known and
well established general rules regarding the number
of sets and
proper sequence of affidavits in motion proceedings should ordinarily
be observed. That is not to say that those general
rules must always
be rigidly applied: Some flexibility, controlled by the presiding
judge exercising his discretion in relation
to the facts of the case
before him, must necessarily also be permitted
.
”
(My emphasis)
[14] In the present case even if
there was no agreement between the parties I would have granted such
indulgence on the basis that
it would have been in the interests of
the administration of justice to do so. Accordingly both the new
matter in Mr Maroga’s
replying affidavit and Eskom’s
supplementary affidavit responding to new matter are allowed.
[15] I now deal with the first
application to strike out averments made by Mr Maroga in his founding
affidavit relating to mediation
attempts initiated by the Presidency.
The averments are to be found in paragraphs 32.2; 32.3; 32.4; 32.5;
32.6; and 32.7 of the
founding affidavit.
[16] On behalf of Mr Maroga it
was argued that since the paragraphs concerned related to mediation
efforts of Mr Yunus Shaik between
Mr Maroga and Eskom they are
causally related to the termination of Mr Maroga’s employment
contract. It was argued that
this was so because in the answering
affidavit Eskom stated that “
it
was agreed
” at
the dinner meeting of 28 October 2009 that a final payout, to which
Mr Maroga’s resignation was subject “
would
be done later
”.
It was argued that this made the averments relevant and admissible.
I do not agree.
[17] I am of the view that the
application to strike out should succeed for a number of reasons,
namely,
inter alia
,
that
the
mediation attempts were initiated after the termination of Mr
Maroga’s contract with Eskom. They are, therefore, clearly
irrelevant to the issue whether the termination of Mr Maroga’s
employment was lawful or not.
[18] Furthermore these averments
relate to discussions and meetings which were held on a ‘
without
prejudice basis
’.
These discussions were, therefore, privileged and any averments
pertaining to such discussions are inadmissible.
[19] Lastly I am of the view that
to allow such averments would not only prejudice Eskom but would also
compromise the individuals
involved in those discussions. Most
importantly, however, I do not see how the averments in the
paragraphs sought to be struck
out can assist this Court in the
adjudication of the issues before it.
[20] In the premises I strike out
paragraphs 32.2; 32.3; 32.4; 32.5; 32.6; and 32.7 in the applicant’s
founding affidavit.
ESKOM’S PRELIMINARY
OBJECTION
[21] Eskom raised a preliminary
objection. It contended that the application was incompetent because
there were disputes of fact
which were material and which the
applicant knew of or should have anticipated. Eskom also contended
that it is incompetent to
bring a claim by way of application where
there are material disputes of fact or for unliquidated damages as is
the case in this
matter. For that reason counsel for Eskom argued
that the application ought to be dismissed.
[22] Counsel for Mr Maroga urged
this Court to dismiss Eskom’s “
preliminary
objection
” on
the basis that there were no factual disputes but only legal
disputes. He also submitted that Mr Maroga was not suing
for
unliquidated damages as alleged by the first respondent but was suing
for compensation.
[23] The fact, therefore, that
Mr Maroga denies that he resigned or offered to resign does not give
rise to a
bona fide
dispute of fact that cannot be resolved on the papers, it was argued.
It is so that the mere allegation of a dispute of fact is
not
conclusive of its existence for in every case the court must examine
the alleged dispute of fact and see whether in truth there
is a real
issue of fact which cannot be satisfactorily determined without the
aid of oral evidence. (Sewmungal and Another NNO
vs. Regent Cinema
1977 (1) SA 814
(N) at 820A-B. See also Peterson vs Cuthbert and
Company Ltd 1945 AD at 420 at 428.)
[24] My view is that there are
indeed factual disputes as well as legal disputes but the factual
disputes can satisfactorily be
determined on the papers. In fact I
do not find any profound disagreements or serious disputes that
cannot be resolved on the
papers.
FACTUAL BACKGROUND
[25] Circumstances which led to
this application are the following:
On 28 October 2009 Mr Maroga,
then Eskom’s Chief Executive Officer, attended an Eskom Board
breakaway meeting. Also in
attendance was Mr Godsell, the then
chairperson.
During the course of the meeting Mr Maroga and Mr Godsell recused
themselves from the meeting. The reason for such recusal is
in
dispute.
Later the same evening Mr Maroga
and Mr Godsell had dinner together. In their company were Mr
Josefsson and Mr Dube, two members
of the Eskom Board. They were
there to give feedback to Mr Maroga and Mr Godsell on discussions
and decisions taken by the Board
during their absence. Again there
is a dispute concerning what exactly took place at this dinner
meeting.
On the morning of 29 October
2009 Mr Maroga delivered a copy of his letter marked Annexure “
PJM3
”
to the Minister as well as to every member of the Board.
The relevant extract from “
PJM3
”
reads:
“
I
have not offered to resign and I am not offering to resign.
”
In response on 2 November 2009,
a letter, Annexure “
PMJ1
”,
from the Board, dated 30 October 2009, was delivered to Mr Maroga.
The letter stated that Mr Maroga had made a “
clear
and unambiguous
”
offer to resign at the Board meeting on 28 October 2009 which offer
had been accepted and the acceptance conveyed to him
that evening.
Mr Maroga had accepted this decision. However, in the light of his
denial that he had offered to resign, and if
there was any doubt
about his offer, the Board had resolved to terminate his contract of
employment with immediate effect for
poor performance.
[26] Because of the nature of
the dispute it is necessary to set out in detail the version of each
party. I shall proceed to deal
with each party’s version in
turn.
THE APPLICANT’S VERSION
[27] Mr Maroga’s version
where he deals with the events of 28 October 2009 is to be found in
his founding affidavit from
page 22 in paragraphs 26.4 to 26.31.
[28] Briefly his version is the
following:
[29] At the meeting Mr Godsell
presented
inter alia
,
his Roles Notes, after which Mr Maroga dealt at length with his
Power-point presentation of his strategy document. Later Mr Godsell
brought the debate back to his concern about his and Mr Maroga’s
respective roles. At this point Mr Godsell suggested that
“
maybe
he should step down as chairperson or maybe both of us should step
down
”.
[30] Mr Maroga “
expressed
surprise
” at Mr
Godsell’s suggestions of on-going differences of approach
between the two of them and regretted that the focus
of the session
had become their relationship rather than the future vision of Eskom.
Mr Maroga added that “
if
the clarity of his role and mine cannot be resolved then we may
consider other elegant and amicable solutions which will be in
the
best interest of Eskom and all involved
”.
[31] According to Mr Maroga he
and Mr Godsell then left the room on the understanding that the Board
was merely “
to
define the roles that the then chairperson and I would play going
forward
”.
[32] At the dinner later that
evening Mr Josefsson and Mr Dube informed him and Mr Godsell of the
Board’s decision. He had
expected that Mr Josefsson would
report back on the Board’s deliberations “
with
a clear indication to Mr Godsell and I of the respective roles,
responsibilities and duties entailed in the leadership positions
of
Chair and Chief Executive
”.
Instead what was conveyed to him was that the Board wanted Mr
Godsell to stay in the position of chair and wanted him
to “
vacate
the position of Chief Executive
”.
[33] It becomes necessary to
quote Mr Maroga
verbatim
:
“
26.28
Mr Josefsson said that the Board:
26.28.1 had concluded that the relationship between Mr Godsell
and me had irretrievably broken down. He did not suggest at all
that
the relationship between me and the entire board had broken down;
had considered my “generous offer” and had accepted
it. He did not say what “generous offer” he was
talking about. He certainly did not even mention the word
“resignation”;
had resolved that Mr Godsell should continue as chairman of the
Board, and that I would no longer be the Chief Executive; and
26.28.4 had resolved that Mr Godsell and should begin a process
of communicating that “decision”. Mr Josefsson presented
nothing in writing on that occasion as evidence of whatever Board
resolution he sought to convey me. I was shocked by this development
and left the dinner dumb-struck.
26.29 I was deeply perturbed
by the Board’s construction of events, as conveyed to me by
Josefsson, which attempted to create
the impression that I had either
resigned or that I had offered to resign. This was factually not
true. The Board’s action
indicated to me that I was being
dismissed and that they were shrouding that dismissal in an
opportunistic “resignation”.
”
[34] Mr Maroga concludes by
stating that he did not acquiesce in, nor in any way accept, what was
conveyed to him by Mr Josefsson
and that is why he drafted his letter
of 29 October 2009 to correct any misunderstandings of the events of
the day before.
ESKOM’S VERSION
[35] Eskom’s version of
the events of 28 October 2009 is from page 139 in paragraphs 66 to 95
of the answering affidavit.
The version is confirmed by all Eskom’s
directors other than Mr Maroga.
[36] At the meeting there were
two papers prepared by the chair, Mr Godsell. The first was a note
on “
Some Thoughts
on the Respective Roles of Shareholder, Board, Management in Eskom
(“the Roles Note”)
”.
This paper sought to obtain clarity on the roles of the chair and
the CEO by assigning particular functions to them. The
second note
was entitled “
Unfinished
Business
” (“
the
Unfinished Note
”).
It listed extracts from Eskom’s Board minutes over the
previous 16 months of “
issues
identified for action that are incomplete or late
”.
Mr Godsell said it illustrated his “
serious
and urgent concerns about management capacity
”.
[37] When Mr Maroga was asked to
respond to these matters he presented his Power-point presentation
which was a repetition of what
had been presented to the Board before
and did not address the issues raised by the Roles and Unfinished
Business Notes.
[38] After the lunch break the
meeting proceeded to discuss the roles of the chair and the CEO
respectively. One of the Board
members, Mr Modise, said that he
thought that the Board would be happy with Mr Godsell’s
proposal on the roles of the chair
and the CEO respectively. Mr
Maroga responded to Mr Modise by saying that he could not go along
with Mr Godsell’s proposals,
that he had thought long and hard
about the matter and that he could no longer work with Mr Godsell.
He concluded by saying that
“
he
was offering to resign and that he wanted his resignation to be
elegant and amicable in the interests of all the parties concerned
”.
[39] Mr Godsell also offered to
resign in the light of Mr Maroga’s statement that he could no
longer work with him. This
was to give the Board the opportunity to
decide with whom it preferred to work. At Mr Godsell’s
suggestion, he and Mr Maroga
left the meeting to allow the Board to
deliberate on the matter.
[40] During deliberations the
Board unanimously resolved to accept Mr Maroga’s offer to
resign and not to accept that of
Mr Godsell. According to Eskom the
reasons were that there was an irretrievable breakdown in Mr Maroga’s
relationship with
Godsell and with the Board. In addition Mr
Maroga’s performance as CEO was poor.
[41] The Board mandated two of
its members, Mr Josefsson and Mr Dube, to convey the decision to Mr
Maroga and Mr Godsell. They
did so over dinner that evening. Mr
Josefsson said he hoped that Mr Maroga’s separation would be
elegant as he had proposed.
Mr Maroga accepted the decision without
demur. He participated in the discussion that followed on the
implementation of the decision.
They agreed that he and Mr Godsell
would meet the following morning to prepare and agree on a public
announcement.
[42] The following morning as
the Board resumed its meeting Mr Maroga reneged on the agreement in a
letter he gave to Mr Godsell
and the Minister. This letter was also
distributed to the members of the Board. The letter is marked
Annexure “PJM3”.
In it Mr Maroga states
inter
alia
, “
I
have not offered to resign and I am not offering to resign
”.
He goes on to state that the Board had misconstrued “
remarks
of frustration
”
(presumably as an offer to resign) that he had made at the Board
meeting the previous day. He concludes that he is “
willing
to fight for whatever the consequences
”.
[43] The Board deliberated on Mr
Maroga’s letter and its implications. It was unanimous that
the letter was dishonest and
further proof that the trust in Mr
Maroga had irretrievably been destroyed. The Board again discussed
its dissatisfaction with
Mr Maroga’s performance discussed the
previous day. Members of the Board then resolved unanimously to
cancel his contract
with immediate effect for poor performance. This
was to ensure that any doubt regarding the termination of Mr Maroga’s
contract
was removed.
[44] The Board notified Mr
Maroga of its decision in a letter dated 30 October 2009. The letter
stated that Mr Maroga had made
a “
clear
and unambiguous
”
offer to resign at the Board meeting on 28 October 2009; the offer
was accepted; that this was communicated to him later
that evening
and he had accepted the Board’s decision and participated in
the ensuing discussion on its implementation.
[45] The letter also stated that
considering his denial that Mr Maroga had offered to resign, and if
there was any doubt with regard
to the offer to resign and its
acceptance, the Board had resolved to terminate his contract of
employment with immediate effect
for poor performance.
THE ISSUE
[46] The issue to be determined
is whether there was a valid termination of Mr Maroga’s
contract of employment. To determine
this issue several questions
must be discussed namely:
Did Mr Maroga offer to resign?
If yes, was the offer made conditionally?
Did the Board have the authority to accept the offer to resign?
Alternatively to subparagraphs 1, 2 and 3 above, did the Board have
the authority to dismiss Mr Maroga? If yes, was the dismissal
lawful?
[47] I proceed to deal with each
of these questions in turn.
Did Mr Maroga offer to resign?
[48] There is a dispute as to
what actually happened at the meeting of the Board on 28 October 2009
as well as at the dinner meeting
that evening.
[49] It is common cause that
during the course of the meeting Mr Maroga and Mr Godsell had to
recuse themselves. According to
Mr Maroga the recusal was necessary
to enable the Board to deliberate on the respective roles of the
chairperson and the CEO.
The version of Eskom, however, is that the
two gentlemen had both offered to resign and the Board had to
determine, in their absence,
whose offer to accept and whose offer to
reject.
[50] Eskom’s version has a
ring of truth for the following reason. At the dinner meeting that
evening, the two directors,
Mr Josefsson and Mr Dube gave feedback of
the decision taken after the recusal and it is this: The Board
accepted Mr Maroga’s
offer to resign and wanted Mr Godsell to
proceed as the chairperson.
[51] Mr Maroga does not dispute
the content of the feedback. His version amounts to this: The Board
misunderstood its mandate.
His statement is that he was shocked and
left the meeting dumbfounded. His conduct in this regard is
puzzling. It is also inconsistent
with his version that the mandate
to the Board had merely been to deliberate on the respective roles of
the chairperson and the
CEO and that nothing had been said about
anyone offering to resign. Surely if the Board had misunderstood its
mandate this was
the time to draw Mr Josefsson’s attention to
that fact. Mr Maroga’s statement that he did not know what
“
generous offer
”
Mr Josefsson was talking about as the word “
resignation
”
was not even mentioned is not worthy of belief. I say this because
the very next day in his letter he refers to his “
remarks
of frustration
”
having been misunderstood as an offer to resign. Strangely he does
not explain how and when he became aware that Mr Josefsson
had been
talking about an alleged offer to resign when he referred to the
generous offer. In the absence of such an explanation
this Court can
safely conclude that Mr Maroga’s version is a fabrication.
[52] In support of his case Mr
Maroga annexes “
PMJ3
”.
However, rather than assist him Annexure “
PMJ3
”
is supportive of Eskom’s version. It contains the following
significant
indicae
that Mr Maroga did make an offer to resign on 28 October 2009:
52.1 Mr Maroga claims to have
“
reflected
”
on the matter overnight. Why an overnight reflection was necessary is
not clear. He does not explain why, if his version
is correct, he did
not say at the dinner on the evening of 28 October 2009 that he had
not offered to resign.
52.2 Instead:
52.2.1 He agreed to meet with Mr
Godsell to produce a joint media communication to announce his
resignation to the public; and
52.2.2 He agreed to meet with Mr
Godsell and the Human Resources and Remuneration Committee the next
day in relation to the implementation
of his resignation. This, in
my view, is what seals his fate.
[53] Furthermore Mr Maroga’s
reference to his “
remarks
of frustration
”
which were allegedly construed to be an offer to resign are vague in
the extreme as there is no attempt whatsoever to explain
what they
were.
[54] Mr Maroga’s letter
indicates that he was stunned by the response of the Board in
accepting “
his
offer
”. If
indeed there was no such offer one wonders why Mr Maroga failed to
ask what Mr Josefsson was talking about. Mr Maroga’s
response
in his replying affidavit that he had said nothing because he
realised that the “
horse
had bolted
” is
absurd to say the least. It is worth repeating that if the Board had
really misunderstood its mandate the time and the
place to point this
out or to express shock was at the dinner meeting not the morning
after the meeting.
[55] Mr Maroga repeatedly denied
that he offered to resign. He contended that even if it was found
that he had offered to resign
the resignation was not effective for
the following reasons namely:
The offer was conditional and the conditions concerned were never
fulfilled.
The Board had no authority to terminate the employment contract.
If it was found that the Board had the authority concerned the
resignation was not effective because the acceptance of the offer
never occurred.
[56]
Did
the applicant offer to resign but subject to certain conditions?
[57] Although the applicant
denies there was any offer to resign he seems to be saying if it is
found that he did offer to resign
he did so subject to certain
conditions. He relies on Eskom’s version for this contention.
The passage relied on is to
be found at page 145 in paragraph 82.6 of
Eskom’s answer:
“
He
then said that he was offering to resign and that he wanted his
resignation to be elegant and amicable in the interests of all
the
parties concerned.
”
[58] On behalf of the applicant
it was argued that by stating the above Mr Makwana had effectively
agreed with the applicant that
there was no resignation since a
“
final payout
”
which was to be done later was never done.
[59] It is clear from the
wording that this is not a conditional offer to resign at all. A
conditional offer, if accepted, is one
in which the operation of the
contract brought about by acceptance depends upon fulfilment of the
condition.
1
[60] On a proper reading of the
statement attributed to Mr Maroga, his offer of resignation was
unconditional. He merely added
to his offer of resignation a desire
that it should be “
elegant
and amicable in the interests of all the parties concerned
”.
At best for Mr Maroga the statement is no more than a recordal of
the atmosphere in which he wanted his agreement to take
place –
i.e. “
elegant and
amicable and in the best interests of all parties
”.
It is evident the phrase refers to how to implement the agreement and
can never be a pre-condition for its implementation.
[61] Mr Maroga’s version
is further that his offer of an agreed termination also depended on
the “
condition
”
that the parties first agree on his severance package. According to
Mr Maroga this “
condition
”
was not fulfilled.
[62] This contention has no
merit at all. Mr Maroga could not have meant that he would resign
only if the parties reached agreement
on his severance package. A
payout consequent upon Mr Maroga’s agreed resignation is
regulated by his employment contract.
He is owed what has accrued to
him under his employment contract before termination. His payout is a
term of the agreed termination.
The contract imposes an obligation
on Eskom to pay him a severance or exit package when his agreed
resignation is implemented.
2
[63] However, even if the
resignation depended on certain conditions that would not have
assisted his case as Mr Maroga simply
denied that he had resigned.
[64] In view of the above I find
that Mr Maorga did offer to resign as alleged by Eskom, and that this
agreed termination of his
contract was effective when the Board
communicated its acceptance of his offer of resignation to him on the
evening of 28 October
2009. I also find that the offer to resign was
not dependent on any condition and that it was clear and
unequivocal.
3
Did the Eskom Board have the authority to accept the offer to
resign?
[65] One of the grounds upon
which Maroga seeks to establish that his employment has been
unlawfully terminated is the proposition
that his contract of
employment was terminated by a wrong entity. He states that he was
appointed by the Minister and that he
could, therefore, only be
dismissed by her. Mr Maroga argues that the Board has no power to
dismiss him (and by implication to
accept his resignation, if there
was any resignation) because that power is conferred on the Minister
in her representative capacity
for the government of South Africa
(Record 55/34.4.5; 421/10; 422/10.2).
[66] Counsel for Mr Maroga
submitted that the Board did not have the power to terminate Mr
Maroga’s contract of employment
for the following reasons:
1. Article 10.4 of Eskom
Articles vests the power to appoint its CEO in the Minister.
2. The articles are silent on the power to terminate the CEO’s
contract of employment.
3. The law presumes that the
person who has the power to appoint has the power to dismiss, and
4. Accordingly, the power to
dismiss the CEO vests in the Minister and not in the Board.
[67] In my view this submission
has no merit. It is so that article 10.4 vests the power to appoint
the CEO in the Minister.
4
Article 10.4 empowers the Minister to appoint the chair and CEO
after consultation with the Board. In my view this means that
the
Minister has the power to appoint the CEO to the Board. Article 10
after all regulates the appointment of directors to the
Board and is
not concerned with the employment of the CEO as an employee of Eskom.
[68] The power to enter into,
enforce or terminate the CEO’s contract of employment is
governed by article 16.1. The relevant
part thereof 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 …
”
5
[69] Articles 16.1 vests the
Board with all the powers of the company except those expressly
reserved for its members in a general
meeting. Its effect is
”
clearly to
delegate to the directors the power to do everything that the company
could do except where the authority of a general
meeting of the
company is expressly prescribed
”.
6
[70] What article 16.1 does is
to empower the Board to enter into, implement, enforce and terminate
Eskom’s employment contract
with its CEO because those powers
are not reserved for anybody else. Article 16.1 is in line with the
common law between directors
and shareholders and their respective
powers
7
and the general common law rule that, subject to Articles, directors
not shareholders conclude and terminate employment contracts
and
dismiss employees.
8
[71] This interpretation renders
the Articles compatible with ss 51(1)(c) and (e) of the Public
Finance Management Act 1 of 1999
(“
PFMA
”).
[72] On the other hand Mr
Maroga’s interpretation would render them incompatible with
those provisions:
1. Eskom is a public “
entity
”
listed in Schedule 2 of PFMA.
2. Section 46 makes the provisions of Chapter 6 comprising ss 46 to
62 applicable to all public entities listed in Schedule 2.
3. Eskom’s Board is its
“
accounting
authority
” in
terms of s 49(2)(a).
Section 51(1) provides
inter
alia
, that the
accounting authority of a public entity:
“
(c)
is responsible for the management … of the public entity;
(d) …
(e) must take effective and
appropriate disciplinary steps against any employee of the public
entity who (contravenes certain provisions
).”
[73] These provisions empower
and oblige Eskom’s Board, in appropriate circumstances, to
terminate its CEO’s employment
contract. They are thus
incompatible with Mr Maroga’s interpretation of Eskom’s
Articles.
[74] Mr Maroga’s
contention is contradictory and self-defeating for the following
reasons:
1. Mr Maroga’s claim is founded and dependent upon his
contract of employment with Eskom. The former chair of Eskom signed
the contract for and on behalf of Eskom and under the authority of
the Board.
2. It is significant that Eskom
has the power to enter into the contract upon which Mr Maroga’s
claim is based. It, therefore,
makes sense that the Board must have
the power to implement the contract, to enforce its provision, to
agree to its termination
and to cancel it in the event of material
breaches by Mr Maroga. In my view it would be illogical, impractical
and would also
not make business sense to empower the Board to enter,
conclude, implement and enforce Mr Maroga’s employment contract
but
not to empower it to terminate or cancel his employment contract
but to give such power to the Minister.
[75] The power of the Minister
to appoint directors to the Board of Eskom should not be confused
with the power of the Board to
employ and terminate the employment
contract of the CEO when such is warranted.
[76] In any event the
proposition on behalf of Mr Maroga flies in the face of a common
cause fact in this matter which is that
a written contract of
employment exists between Mr Maroga and Eskom. The Minister is not a
party to that contract and has no right
or power to interfere with
it. In fact the Minister herself has said as much.
[77] The issue of continued
employment or termination of the contract is regulated by the
contract of employment between the parties.
Although the Minister,
as shareholder, plays a significant role in the appointment of the
CEO, such appointment is, thereafter,
fully regulated by the contract
of employment and the related legal environment.
[78] The Minister performs no
executive functions within Eskom. The Articles
9
make it clear that the management and control of Eskom shall be
vested in the directors. The functions of the directors are broadly
framed and the termination of the employment of any employee,
including that of the CEO, would form a natural component thereof.
[79] The contract governed Mr
Maroga’s employment as CEO in all respects. This includes its
termination. In this regard
the contract contains express
provisions, in clause 18, thereof, that governs how Mr Maroga’s
employment might terminate.
Those provisions unambiguously declare,
inter alia
,
that it is Eskom which is entitled to summarily terminate the
contract. Nowhere in this contract is there any suggestion that
such
power has been placed in the hands of the Minister. Neither is there
any indication that the approval of the Minister is
a prerequisite
before the termination of employment by Eskom can become effective.
[80] It is worth repeating that
the proposition that the power to terminate the contract rests with
the Minister is incompatible
with the existence and content of the
employment contract. It is interesting and significant that Mr Maroga
has failed to address
this crucial fact anywhere in his papers even
though he clearly refers to it in the notice of motion. In fact his
cause of action
arises from such employment contract. Even in his
substantial replying affidavit in this application he has remained
silent on
this important aspect. This is strange since the relief
that is sought is based on his employment contract. The only
inference
to be drawn is that he has no answer and is in fact at a
loss how to deal with it.
[81] An interesting feature in
this matter is that it is apparent from the papers that there has, at
all times, been a common understanding
that the parties to the
employment contract were Eskom and Mr Maroga and that the Minister
did not form part of it. I say this
for the following reasons:
Both Eskom and the Minister have
clearly stated this to be the case.
Mr Maroga himself has clearly
always understood it so. This much is obvious from the following:
2.1 Paragraph 1 of the notice of
motion refers to a contract of employment between Eskom and the
applicant. It is significant that
the language of ‘
repudiation
’
has here been employed by him.
2.2 Mr Maroga correctly states
that he was appointed CEO in terms of the written contract of
employment. Not only does he thus
identify the contract, but he goes
on to cite its material terms, one of which is that Eskom may
terminate the contract without
notice, if there are reasons
justifying a summary dismissal.
Mr Maroga invokes the terms of
Eskom’s disciplinary code and procedure in support of his
contention that his employment
was not lawfully terminated.
When Mr Maroga deals with the
alleged undertaking by the Minister that she would ask the Board to
rescind the letter of dismissal,
there is no suggestion in that
paragraph or anywhere else in his papers that he conveyed to the
Minister that, in any event,
the Board had no right to terminate
his contract of employment as that was the prerogative of the
Minister.
On 30 November 2009, Mr Maroga
referred an unfair dismissal dispute to the CCMA. In that referral
he identified Eskom Holdings
Limited as the employer and in his
summary of the fact of the dispute he had this to say: “
The
Eskom Board dismissed me without following any procedure. There was
no good reason for the dismissal.
”
The Minister was not cited as a party and there is no suggestion
that she was the employer.
On behalf of Mr Maroga reliance
was placed on the contention that the Board acted in breach of the
disciplinary code and that
this code was incorporated in his
contract of employment with Eskom.
[82] The above considerations
traverse the facts of this application. They consistently point to
one conclusion, which is that
Eskom is the employer and that
disciplinary matters are fully governed in the usual way through an
employment contract.
[83] On behalf of Mr Maroga it
was further submitted that the use of the word “
appoint
”
in the Articles
10
was proof that the Minister was the only person responsible for
employing and dismissing Mr Maroga. In his replying affidavit Mr
Maroga further sought to rely on the Minister’s affidavit in
the interdict application, namely paragraph 11.2 thereof. It
is
clear, however, that the interpretation of “
appoint
”
in the articles by
Mr
Maroga misconstrues the correct position. In addition the Minister,
in her affidavit, succinctly set out the procedure leading
to the
appointment of the CEO, which begins with the Eskom Board conducting
the recruitment and interviewing process. This leads
to the selection
by the Board of a particular candidate, in respect of whom a
recommendation is then forwarded to the Minister
who makes a decision
with due regard thereto and that is noted by Cabinet. The submission
therefore is incorrect.
[84] It was submitted on behalf
of Mr Maroga that the words ‘
recommendation
’
and ‘
decision
’
were a clear indication that only the Minister could dismiss. This
argument ignores the remainder of paragraph 11.2 where
the Minister
goes on to state unambiguously that: “
The
Board on behalf of Eskom then enters into a contract of employment
with the CEO. I am not a party to that contract and the
newly
appointed CEO becomes an employee of Eskom, subject to its terms and
conditions
.” It
is clear in this case that part of those terms and conditions is that
the power to dismiss is in the hands of Eskom
and not the Minister.
[85] From both Article 10.4 and
from the Minister’s description of the employment process as
set out in paragraph 11.2 it
is clear that the appointment of the CEO
is effected by Eskom as his or her employer and recorded in a written
contract of employment
between those parties, to the exclusion of the
Minister.
[86] Mr Maroga cannot have it
both ways. On the one hand he relies on the written contract of
employment to found his claim against
Eskom. On the other hand he
seeks to avoid the fact of that contract to found his contention that
only the Minister can dismiss
him. The fact of the matter is that
only the written contract governs his position.
[87] It is significant that the
CEO holds office as an executive director only because he is the CEO.
It is an
ex officio
appointment. The appointment as CEO must hence be confirmed before
the consequential appointment as executive director can be
made. It
does not follow from this that the step of ‘
appoint
’
implies a degree of ongoing control or residual power.
[88] Clause 18.4 of the
employment contract obliges the CEO to immediately resign as
executive director on termination of the employment
agreement. Again
this requires no step on the part of the Minister and the fact that
she has made the appointment does not mean
that a removal can be
effected by her. Article 18 dealing with the disqualification of
directors is further support for this conclusion.
[89] Counsel for Mr Maroga
argued that since the correct party i.e. the Minister was not a party
to the termination of the employment
contract, Mr Maroga’s
dismissal was done in breach of corporate governance and company law
principles. He compared the present
case to the case of
Masetlha
v President of the Republic of South Africa and Another
[2007] ZACC 20
;
2008 (1) SA 566
(CC) at paragraphs [68] and [69].
[90]
Masetlha
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 the pursuit of national
security. That
Masetlha
is distinguishable from the present case is apparent from the court’s
finding in
Masetlha
that the dismissal by the President of Mr Masetlha as DG was not
subject to PAJA
11
and that he was not entitled to a hearing before his dismissal.
12
[91] The present case can,
therefore, be easily distinguished from the case of
Masetlha
on both the facts and
on the law. In that case the State President had dismissed the
Director-General of the National Intelligence
Agency, whom he had
initially appointed in terms of section 209(2) of the Constitution,
1996 read with
section 3(3)(a)
of the
Intelligence Services Act 65 of
2002
. These sections provided that the State President had to make
the appointment, but both were silent on the question of dismissal.
It was held that the provisions of the Public Service Act Proc 103 of
1994 relating to dismissal were not applicable. That left
a
lacuna
.
The Court was of the view that a power to dismiss was essential for
the effective business of government and that it was accordingly
necessary to hold that such power was implicit in the power to
appoint.
[92] Apart from the fact that we
are not here dealing with the exercise of constitutional and
executive powers, the huge difference
between these two cases is that
the present case has, at its heart, a written contract of employment.
There is no need, therefore,
to locate a home for an implicit power
to dismiss. The reason for this is simple – such power has
already been unambiguously
dealt with. Both parties agreed, by
signing the employment contract, that the power vests in Eskom as Mr
Maroga’s employer.
It is clear from the facts in Masetlha that
the court there was dealing with a special category of appointment
which is not the
case in the present case.
[93] Counsel for Mr Maroga
submitted that the employment relationship in the present case
between Mr Maroga on the one hand, and
the Board and the Minister on
the other, is similar to that described in
Litha
v Madonsela and Others
[2005] JOL 15694
(W). He argued that the
indicae
pointed out at paragraph [14] applied with equal force in this case
namely:
The applicant is employed by the government of the Republic of South
Africa represented by the Minister;
The employment of the CEO is
approved by cabinet. The Board recommends his appointment, the
Minister makes the decision to appoint
him and the cabinet approves
it;
By virtue of his employment as
Chief Executive, Mr Maroga serves as
ex
officio
member of the
Board;
Mr Maroga reports to the Board
which in turn reports to the government of the Republic of South
Africa through the Minister;
The Board acts only in a
supervisory capacity over Mr Maroga. In its supervisory capacity it
behoves it to report repeated failure
to perform duties or
misconduct to the Minister who then has the power to dismiss the CEO
after due process has been followed.
[94] In
Litha
supra
the applicant
was appointed as the Chief Executive Officer of the Railways Safety
Regulator by the Minister of Transport, the fourth
respondent. The
appointment was made in terms of
section 9(1)
of the
National Railway
Safety Regulator Act 16 of 2002
. Subsequent to a dispute between her
and the Regulator’s Board she was threatened with disciplinary
proceedings and suspended
for gross misconduct. In an urgent
application she sought,
inter
alia
, a declaratory
order that the Chairman of the Regulator’s Board and the Board
had acted beyond their authority in seeking
to bring the disciplinary
proceedings against her and that it was the Minister who had the
exclusive authority to discipline and
dismiss her.
[95] Granting the order, Tsoka J
held, on the facts, that the applicant was employed by the Government
of the Republic of South
Africa represented by the Minister. In
terms of a clause in her contract, the Minister was
inter
alia
, responsible for
instituting disciplinary proceedings against her. The Board had no
such authority. The learned judge held further
that the Chairman of
the Regulator’s Board and the Board did not have the authority
to institute disciplinary proceedings
against the applicant under
section 51(1)(e)
of the
Public Finance Management Act 1 of 1999
on
the grounds that she was an accounting authority.
[96] The case of
Litha
is clearly distinguishable from the present case on the facts. In
Litha
the parties to the contract were clearly the applicant and the
Minister. After the applicant had signed the employment contract
she
sent it to the Minister of Transport for signature. There the
learned judge stated the following at page 7 para [13]:
“
The
employment contract signed by the applicant is between the applicant
and the Government of the Republic of South Africa, represented
by
the fourth respondent. Clause 3.6 of the employment contract signed
by the applicant provides as follows:
‘
In
the case of inefficiency and misconduct, the employer may deal with
her, in accordance with the relevant labour legislation and
any
directive by the Minister.
’
”
The learned judge concluded that it appeared, therefore, that the
Government of the Republic of South Africa was the employer of
the
applicant.
[97]
In
casu
this is clearly
not the case. As can be seen from the facts, the Minister is not a
party to the employment contract and plays
no role in either
disciplining or dismissing the CEO. There can, therefore, be no
merit in the above submission.
[98] Counsel for Mr Maroga
further argued that in any event Mr Maroga’s employment did not
give the Board the power to dismiss
him as the employment contract
was between “
the
Company
” and him
and that the Board played no role at all. The meaning of “
company
”
as considered in
Shillings
CC v Cronje and Others
1988 (2) SA 402
(A) shows that a company comprises its members
in
solidum
i.e. members
of an organised body. Directors are not members of the company and
could, therefore, not be construed as “
the
Company
” within
the meaning of the employment contract. The Eskom Articles of
Association define a member as the Minister in her
capacity as
representative of the Republic of South Africa. Thus to the extent
that the employment contract empowers “
the
Company
” to
dismiss the CEO, that power is conferred expressly not to the Board
but to the Minister in her capacity as the representative
of the
Republic, was the argument.
[99] This argument has no merit.
To imply that the Minister has the power to dismiss in the present
case, would fundamentally subvert
the corporate identity of Eskom.
The Minister is indeed “
member
”
and holds the shares in Eskom on behalf of the Republic, whereas
Eskom as a corporate entity is controlled and run by its
Board of
Directors. A shareholder does not have the right to interfere in the
decision-making of the Board of Directors with respect
to the
company’s internal affairs (
Beuthens
Basic Company Law
, 2
nd
ed at 218-219).
[100] In his replying affidavit,
Mr Maroga argues that the Minister appointed the second respondent,
(“
Mr Makwana
”),
as ‘
acting
’
CEO and that this reinforces his contention based on Article 10.4
that only she could dismiss him. He cites the Minister’s
address to the National Assembly on 12 November 2009. This argument
has no foundation for the reason that Eskom made it clear that
Mr
Makwana was appointed by the Board to carry out the necessary
executive functions until such time as an acting or new CEO took
office. In addition, the Minister’s address on 12 November
similarly stated that it was the Board which had moved to resolve
matters,
inter alia
,
by appointing Mr Makwana as an interim Executive Chair.
[101] In the premises I find,
therefore, that the Minister has no power to dismiss in the present
case. As set out in the contract
of employment the employer is Eskom
with powers to employ and to dismiss the applicant.
Resignation not effective for
lack of acceptance
[102] Counsel for Mr Maroga
submitted that Eskom had failed to show that Mr Maroga’s
alleged resignation was in fact accepted
by the Board as there is no
valid resolution of the Board to that effect.
[103] There is no merit in the
above submission for the following reasons: Mr Maroga argues that
the “
round robin
resolution
” that
was belatedly introduced is not convincing as it was not produced at
the time when the response to Mr Maroga’s
Rule 35(12) notice
was produced.
[104] To resolve is merely to
settle or find a solution (see page 1219
Concise
Oxford Dictionary
10
th
ed). In my view, the validity of a resolution cannot be dependent on
whether such resolution has been reduced to writing. It is
common
cause that Board members met and took a decision. In other words they
resolved to take a certain course of action. It has
not been
suggested that to be effective a resolution must be in writing. A
written resolution is merely a recordal of a decision
already taken
just as minutes of a meeting are a recordal of the proceedings
including decisions taken at a meeting. The absence
of the minutes
does not, by any means, mean that the meeting never took place or
certain decisions at the meeting were never reached.
Similarly the
absence of a written resolution cannot be proof, in this case, that
the Board did not accept the resignation by
Mr Maroga. There is
reliable evidence that the Board accepted the resignation and
properly communicated this information to Mr
Maroga. I have not been
given any reason to reject this evidence and I accept it. I find,
therefore, that the resignation was
effective.
CONCLUSION
Termination of the employment contract by agreement
[105] Mr Maroga’s denial
that he resigned or offered to resign lacks plausibility and
credence. His first account (his denial
that he offered to resign)
is not creditworthy. His second version (admission that he offered
to resign but subject to conditions)
is implausible. It was argued on
behalf of the respondents that Mr Maroga’s version taken as a
whole on affidavits was so
contradictory, unreliable and so
demonstrably lacking in credence that it should be rejected out of
hand on affidavits.
13
I agree. His version that it is Eskom’s version that he
resigned conditionally is just not true. There was no condition
attached to his resignation. When one examines the affidavits as a
whole it is Eskom’s account that is probable and true.
This is
the account which is consistent throughout and I accept it as the
most probable.
[106] Eskom’s version is
that there was an agreed termination of Mr Maroga’s contract of
employment. Mr Maroga offered
to resign, the Board unanimously
resolved to accept the offer and conveyed its acceptance of the offer
to him.
[107] Having regards to all the
facts and argument by counsel I find that at the end of the dinner
meeting on 28 October 2009,
the employment contract of Mr Maroga was
properly terminated when the offer to resign was unconditionally
accepted by Eskom’s
Board and such acceptance was communicated
to Mr Maroga.
14
[108] I am also satisfied on the
facts, that Mr Maroga had the intention to relinquish, surrender or
give up his position as Chief
Executive Officer of Eskom.
15
To find otherwise would be to accept that all the Board members
present at the Board meeting of 28 October 2009 conspired against
Mr
Maroga by fabricating a version that he offered to resign when he had
not. This would be absurd in the extreme.
[109] In view of the above
finding it is not necessary to deal with the rest of the issues.
[110] In the circumstances I am
not persuaded that the applicant has made out a case for the relief
that he seeks.
COSTS
[111] The applicant and the
respondents had engaged both senior and junior counsel. All counsel
were in agreement that the employment
of more than one counsel for
each party was warranted. I am in agreement with this submission.
The matter is of national importance.
In addition the issues dealt
with were quite complex and the application was heard over two and a
half days.
[112] Accordingly I grant the
following order:
The application is dismissed.
The applicant is ordered to pay costs.
Costs are to include costs consequent upon the employment of five
counsel.
_____________________________
T
M MASIPA
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
COUNSEL FOR THE APPLICANT
..................
I
V MALEKA SC
…..........................................................................
V
NGALWANA
INSTRUCTED BY
COUNSEL FOR THE FIRST AND
SECOND RESPONDENTS
.............................
TIM
BRUINDERS SC
…..........................................................................
KAMESHI
PILLAY
…..........................................................................
BENNY
MAKOLA
INSTRUCTED BY
COUNSEL FOR THE THIRD
RESPONDENT
…........................................
K
S TIP SC
…............................................................................
P
KHOZA
DATES
OF HEARING
........................................
7-9
JUNE 2010
DATE
OF JUDGMENT
.......................................
10
DECEMBER 2010
1
Design and Planning
Service v Kruger
1974
(1) SA 689
(T) at 695C-D;
Thiart
v Kraukamp
1967 (3)
SA 219
(T) at 225A-C.
2
Design and Planning
Service v Kruger, supra
at 695D.
3
See
CGEE Alsthom
Equipments et Enterprises Electriques, South African Division v GKN
Sankey (Pty) Ltd
1987
(1) SA 81
(A) at 92A-F.
4
Articles BAH 13 p 834 at 395 article 10.4 Eskom’s articles
were adopted on 3 March 2003 and amended on 8 September 2003,
28
June 2005 and 27 August 2009.
5
Articles BAH 13 p 384 at p 400 article 16.1.
6
See Privy Council decision in
Campbell
v Rofe
[1933] AC 91
(PC) 99.
7
Letseng Diamonds Ltd
v JCI Ltd and Others; Trinity Asset Management (Pty) Ltd and Others
v Investec Bank Ltd and Others
2007 (5) SA 564
(W) at para [16].
8
Mpofu v SABC
(unreported) SGHC case no. 2008/18386 (Malan J) at [23]-[25].
9
Article 16.2 of the Articles of Association of the Eskom Board.
10
Article 2 of Eskom’s Articles of Association.
11
Promotion of Administrative Justice Act 3 of 2000
.
12
At [68], [75] and [77].
13
Fakie NO v CCII
Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA) at
[55]
-
[56]
.
14
Meyer v Provincial
Department of Health and Welfare
[2006] 27 (ILJ) 2055 (T);
Lou
Moran v Commission on Gender Equality
[2001] 22 (ILJ} (W) at 355-6.
15
See
Ex Parte Moodley
& Another
1968
(4) SA 622
(D) at 624-627B.