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[2021] ZAECPEHC 19
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LLP Investments (Pty) Ltd t/a Microcare v de Lange (2474/20) [2021] ZAECPEHC 19 (23 March 2021)
IN THE HIGH COURT OF
SOUTH AFRICA
EASTERN CAPE LOCAL
DIVISION, PORT ELIZABETH
Case
No: 2474/20
In
the matter between:
LLP
INVESTMENTS (PTY) Ltd T/A
MICROCARE
APPLICANT
and
CORNELIUS
FREDERICK DE
LANGE
RESPONDENT
JUDGMENT
MULLINS AJ:
[1]
On 16 October 2020 the Applicant launched an application on an urgent
basis to compel
the Respondent to comply with the terms of an
agreement concluded between the parties (“the Settlement
Agreement”).
The Respondent opposes the application.
[2]
The background to the dispute, as set out in the Applicant’s
founding affidavit,
may be summarised as follows:
(a)
During 2006 the Respondent commenced employment with an entity known
as Microcare. During
2019 the Applicant purchased Microcare and the
Respondent’s employment continued as before, subject to the
fact that he also
became a shareholder of the Applicant;
(b)
The Applicant designs, develops and manufactures products such as
inverters, solar regulators,
solar pump controllers and a range of
solar monitoring devices and accessories;
(c)
the Respondent was in charge of the Applicant’s research and
development division
and, inter alia, was responsible for the
development of what is described as a Mini Grid (“the MG”),
a Geyser Controller
(“the GC”) and an Electric Vehicle
Charger (“the EV”). (Unless it is necessary to specify
one or other
of the above products they will be referred to
collectively as “the Products”);
(d)
The Applicant says that it purchased Microcare on the basis of the
development of the Products,
which are central to the financial
sustainability of the Applicant;
(e)
The relationship between the Respondent and the Applicant, in
particular one of the Applicant’s
directors, Mark Stemmett, was
clearly an unhappy one from the start. The on-going friction
eventually resulted in the conclusion
of the Settlement Agreement,
dated 22 May 2020, which is described in the preamble thereto in the
following terms:
“
WHEREAS
the parties have reached consensus in order to fully and finally
settle the termination of employment and any alleged dispute on
the
following terms and conditions contained herein:…”;
(f)
The relevant portion of clause 6 of the Settlement Agreement records
that:
“
The
Employee shall be paid remuneration ordinarily due to him (for days
worked) up to and including date of signature. The Employee
shall
render a notice period of one month after which his services shall
terminate due to operational requirements.
During
the notice period the Employee shall complete the Geyser Controller,
Mini Grid and shall proceed to complete the EV Charger…
”
(My underlining);
(g)
The Respondent duly gave notice, his employment with the Applicant
terminating on 22 June
2020, having failed to complete the Products
and to provide the Applicant with the software related thereto;
(h)
Despite being approached on numerous occasions and, despite
negotiations, the Respondent
refused to settle the dispute by
completing the Products.
[3]
The Applicant goes on to allege that its shareholders have invested
in excess of R12
million in
the Applicant, which they would not have done but for the expectation
that the Products would be completed by the Respondent.
[4]
According to the Applicant the Products are incomplete in that the
Respondent:
(a)
In respect of the MG he has failed to provide the Applicant with the
completed software
required to make it functional and operable;
(b)
In respect of the GC he has failed to provide a fully functional unit
together with the
user interface, user manual and technical drawings;
(c)
In respect of the EV he has failed to complete the final submission
for the project
to be presented to the local university.
[5]
It is the Applicant’s case that only the Respondent is capable
of doing the
above.
[6]
Finally, the Applicant submits that as a direct result of the
Respondent’s breach
of the Settlement Agreement the Applicant
is suffering severe financial hardship, which may result in it having
to close its doors,
hence the urgency.
[7]
In the notice of motion the Applicant prays final relief relief as
follows:
“
2.
That the Respondent is ordered to comply fully with the terms of
clause 6 of the Settlement
Agreement, attached hereto as annexure
“NoM1”, and, particularly, that the Respondent shall,
within ten days, of the
date of this Order, ensure that the Applicant
is furnished with the following:
2.1.
a completed, fully functioning and fit for purpose Mini Grid,
together with all software, technical
drawings, user documentation
and related documentation associated therewith;
2.2.
a completed, fully functioning and fit for purpose Geyser Controller,
together with all software,
technical drawings, user documentation
and related documentation associated therewith;
2.3.
all software, technical drawings, user documentation and related
documentation associated with
the Electric Vehicle Charger project.”
[8]
In his answering affidavit the Respondent takes issue with urgency
largely on the
basis that it is self-created. In respect of the
merits the Respondent alleges:
(a)
He and one of the Applicant’s directors, Mark Stemmett, had
what can only be described
as a toxic relationship, as a result of
which the two clashed on numerous occasions, which eventually
resulted in the conclusion
of the Settlement Agreement;
(b)
He was pressurised by the Applicant’s legal advisers to sign
the Settlement Agreement
which, in hindsight he should not have done
without legal advice and it should be set aside;
(c)
He admits that he was head of the Applicant’s research and
development division
and that as such he was tasked with developing
and completing the Products, but gave no warranties concerning their
performance;
(d)
He goes in to great detail as to the steps taken to complete the
Products and attaches numerous
emails back and forth, which did not
get the desired results, nor co-operation from the individuals
concerned;
(e)
Insofar as the allegation is concerned that the Products are unique
and that only he can
finalise them, he alleges that he has never been
advised as to what is outstanding and in any event:
(i)
with regard to the GC, it is functional and he demonstrated this to
one Fourie
and others, but that Stemmett was reluctant to go ahead
with this product for some reason;
(ii)
with regard to the MG, the Applicant has been provided with the
software pertaining
thereto, although on completion of his notice
period “…
there were still conceivable difficulties
with production relating to the MG’s”
, which he had
tried to resolve;
(iii)
with regard to the EV, he states that it was not possible to complete
this product within
his notice period and that he had advised
Stemmett and the Applicant’s legal advisers of this fact, which
is reflected in
the wording of the Settlement Agreement. In this
regard he points out that the EV was treated differently to the other
two products,
the word “
proceed”
being inserted in
clause 6 of the Settlement Agreement at his specific request;
(iv)
Furthermore, there was a change of supplier, which resulted in
numerous significant delays;
(f)
The Respondent alleges that the MG and GC had been completed, as had
the EV, insofar
as his involvement was concerned;
(g)
In the result the Respondent alleges that he has complied with clause
6 of the Settlement
Agreement.
[9]
The Respondent also refers to a CCMA complaint which he laid, in
which he alleged
that the Applicant had failed to comply with certain
financial obligations in the Settlement Agreement.
[10]
The Applicant’s reply to the Respondent’s answering
affidavit is voluminous, consisting
of 188 pages, much of it
comprising annexures of a highly technical nature. For example,
the Mini-Grid User Manual is attached.
It comprises 30 pages of
technical data and specifications which the Applicant alleges was the
Respondent’s responsibility
to deal with. That may be so,
but it is not possible for me (or any court) to make sense of this
document without oral evidence
of an expert nature.
[11]
The Respondent’s complaint that he was pressured into signing
the Settlement Agreement
is not borne out by the objective facts.
It is clear that it was the result of negotiations between the
parties, aided by
an advocate, one Oliver Smith. The Settlement
Agreement was discussed with Smith and at his request (i.e., the
Respondent’s)
it was amended in a certain respect. The
Respondent even referred the matter to the CCMA. Furthermore,
the Settlement
Agreement contains,
inter alia
, the following
provisions:
“
19.
The Employee is familiar with the consequences of this agreement and
was offered the right to seek legal
advice and assistance before
entering into this agreement.
…
22.
This agreement was well considered and not done in the heat of the
moment.”
[12]
Despite alleging that the Settlement Agreement should be set aside,
there is no counter-application
in this regard.
[13]
I therefore find that the Respondent’s allegations of pressure
can safely be rejected as
false.
[14]
The question is therefore: is he, the Respondent, in breach
thereof.
[15]
Before considering that issue it is necessary to deal with the
challenge to urgency. Not
only was there a long delay in
launching the application, it is a commercial dispute, the
Applicant’s case being that
its very survival is dependant on a
speedy resolution thereof.
[16]
The Respondent’s last day of work was 22 June 2020. The
application was launched
on 16 October 2020, some four months later.
It is so that the Applicant made demand of the Respondent to perform,
failing
which it would approach court for “
appropriate
relief”.
The demands are dated on 22 September 2020
and 30 September 2020. Yet the Applicant waited another two
weeks after
the second demand before launching the application.
[17]
In the circumstances there is merit in the Respondent’s
argument that urgency was self-created
(if it ever existed) and was,
due to the passage of time, lost.
[18]
A further problem is that the dispute is, in effect, a commercial
one: the Respondent’s
alleged failure to complete the
Products is causing the Applicant to suffer financial hardship.
That may be so, but the authorities
on the point are clear.
There must be a marked degree of urgency and/or special circumstances
to justify “commercial
urgency”. See
IL &
B Marcow Caterers (Pty) Ltd v Greatermans SA Ltd & Another; Aroma
Inn (Pty) Ltd v Hypermarkets (Pty) Ltd & Another
1981
(4) SA 108
(WLD)
and the unreported judgment of
Caledon
Street Restaurants CC v D’Aviera
1998 JDR 0116 (SE)
.
[19]
I therefore find that the matter was not such as to have been brought
on an urgent basis.
[20]
Even if I am wrong on the question of urgency, there are two further
problems facing the Applicant.
[21]
The first is the material disputes of fact on the papers. The
Applicant alleges that the
Respondent has not complied with his
obligations in terms of the Settlement Agreement. The
Respondent says that he has.
Applying the Plascon-Evans rule,
unless I find that the Respondent’s denial is without
foundation and/or a mere bald denial
it is not possible to determine
the dispute on paper. The Applicant’s problem is
exacerbated by the fact that
the dispute is of a highly technical
nature. What the Respondent was supposed of done and what it is
alleged he failed to
do will require evidence of an expert nature.
There is no such evidence on the papers, nor would such evidence be
appropriate
in application proceedings.
[22]
The second difficulty is that the Applicant is seeking specific
performance. A court has
a discretion, to be judicially
exercised, whether or not to order specific performance. The
locus classicus
in this regard is
Haynes v
Kingwilliamstown Municipality
1951 (2) SA 371
(AD)
,
which decision has been followed countless times. The issue
arises in particular in relation to contracts of employment,
or where
a service has to be rendered. See
National Union of
Textile Workers & Others v Stag Packaging (Pty) Ltd
1982 (4) SA 151
(T)
. While all the authorities on the point
are at pains to emphasize that there is no general rule that a
contract of employment
will not be enforced, there is not doubt the
courts take a long hard look at the surrounding circumstances before
ordering specific
performance in an employment environment.
In
National Airlines (Pty) Ltd v Roediger & Another
2008 (1) SA 293
a pilot in the employ of an airline was obliged to
give three months’ notice of termination of his employment.
He gave
one month. The Court held (at para [20]) that the
following factors must be taken into account:
“
[20]
Such factors may, for example, be:
1.
The particular
relationship between the employer and the employee.
2.
The nature of
the employment contract.
3.
The nature of
the service or work which is to be performed in terms of the contract
.
4.
The prejudice or
hardship to be suffered by the innocent party should specific
performance not be ordered, compared to the prejudice
that will be
suffered by the employee, should it be granted.
[21]
The general rule should still be that where a party wrongfully
breaches a contract it should
entitle the innocent party to enforce
the contract, and that should no less be so even in employment
contracts. After all
as the authorities have laid down, each
case must be decided on its own facts.”
[23]
In
Roediger
the Court ordered the pilot to work the
three month notice period. It is relevant that there was no
suggestion that the parties
were in a conflict situation.
[24]
To return to the present matter. The relationship between the
Applicant and the Respondent
is exceedingly poor on anyone’s
version. The parties were determined to see the back of each
other as soon as possible.
Despite the Settlement Agreement,
which can best be described as a stop-gap measure, within weeks of
the termination of his employment
the Respondent referred the matter
to the CCMA, alleging a breach thereof by the Applicant on the basis
that his severance pay
was being withheld. That matter is
opposed by the Applicant and the Commissioner ordered the parties to
file papers.
As far as I am aware that dispute has yet to be
resolved. (I was not advised to the contrary at the hearing).
[25]
In these circumstances I am of the view that enforcing specific
performance is not appropriate.
Even if I were to order the
Respondent to comply with prayer 2 of the notice of motion, how would
compliance therewith be policed?
If the Respondent was intent
on not completing the Products no amount of threats would force him
to do so. In addition, a
dispute as to whether he has completed
the products or not would inevitably arise again.
[26]
In the circumstances, and for all the reasons stated above, I am of
the view that the application
must fail.
[27]
Insofar as costs are concerned, although the Respondent has
successfully opposed the Applicant,
he has done so on essentially
technical grounds. It cannot be said that the exceedingly poor
relationship between him and
Stemmett was one-sided, which
relationship is at the root of the whole matter. He was also
less than frank when it came to
the circumstances surrounding the
conclusion of the Settlement Agreement. Accordingly, I intend
to make no order as to costs.
[28]
I make the following order:
1.
The application is dismissed.
2.
There will be no order as to costs.
__________________________
N.J. MULLINS
ACTING
JUDGE OF THE HIGH COURT
Obo the
Applicant:
Adv A. Moorehouse
Instructed
by:
TN & Associates
137
Water Road
Section
B, Walmer
PORT ELIZABETH
Obo the
Respondent:
Adv. P.E. Jooste
Instructed
by:
Stuart Hodgkinson Attorneys
89
Cape Road
Mill
Park
PORT ELIZABETH