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[2023] ZAECMKHC 42
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MEC for Education, Eastern Cape Province v Malao (CA229/2021) [2023] ZAECMKHC 42 (14 March 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN CAPE DIVISION,
MAKHANDA
CASE
NO: CA229/2021
In
the matter between:
MEC
FOR EDUCATION, EASTERN CAPE PROVINCE
Appellant
and
THABO
HERMAN MALAO
Respondent
JUDGMENT
Bloem
J
1.
This appeal has its origin in the failure
of the Eastern Cape Department of Education (the department),
represented herein by the
member of the executive council responsible
for education in the Eastern Cape (the MEC), to make payment to the
respondent, Thabo
Herman Malao, for services rendered by him as an
educator. By notice of motion dated 5 December 2016 Mr Malao
issued an application,
as a matter of urgency, for hearing on 24
January 2017 for an order
inter alia
:
“
2.
directing [the MEC] to pay [the
respondent’s] salary forthwith and continue to pay it at
the
end of each month.
3.
directing [the MEC] to pay the costs of this application on a scale
as between
attorney and own client
”
.
2.
On 24 January 2017 the application was
struck off the roll for,
inter alia
,
lack of urgency. Mr Malao was ordered to pay the costs of the
hearing of that day. On 7 February 2017 the MEC delivered
a
notice of intention to oppose the application.
3.
By notice of motion dated 27 February 2017,
accompanied by his supporting affidavit, Mr Malao purported to launch
another urgent
application against the MEC, under the same case
number (the second application), wherein he sought exactly the same
relief set
out in the notice of motion of the first application,
which had been struck off the roll. In his affidavit in support
of
the second application, Mr Malao said that the affidavit was filed
in support of the reinstatement of the earlier application. The
notice of opposition remained in full force and applied to the second
application.
4.
Before the delivery of the MEC’s
answering affidavits, the parties entered into settlement
negotiations and on 5 May 2017
they concluded a settlement in terms
whereof Mr Malao was paid R1 353 023.89 for salary owed to
him from November 2010
to 31 October 2016. The department
undertook to also pay his salary from November 2016 to April 2017
“
pending the release of the arrear
salary code from the Department of Treasury
”.
5.
However, by notice of motion dated 13
September 2017, Mr Malao delivered yet another notice of motion (the
third application), again
supported by his supporting affidavit,
under the same case number. In that notice of motion he gave notice
of his intention to
seek an order that the MEC should pay interest on
his arrear salary, calculated from 20 November 2010 to date of
payment, and costs
of the application on an attorney and client
scale. In his affidavit in support of the third application, Mr
Malao said that
on 5 May 2017 the MEC had “
agreed
to pay the arrear salary but refused to pay interest thereon and
costs
”.
6.
The MEC opposed the third application.
That application was heard by Mfenyana AJ, who declared that Mr Malao
was “
entitled to interest from the
date when the payment fell due to date of the final payment
”
and ordered the MEC to pay Mr Malao’s costs of the
application. It is against these findings that the MEC appeals,
with the leave of the Supreme Court of Appeal.
7.
The primary issue is whether or not the MEC
was liable to pay interest to Mr Malao in respect of the late
payment of his salary.
The MEC contended that Mr Malao was not
entitled to interest as he had failed to collect his salary, and that
he had, in any event,
failed to make out a case for the payment of
interest to him. However, the thrust of the MEC’s case
was that the issues
of interest and costs had formed part of the
settlement negotiations and he contended that “
the
matter had effectively settled in accordance with our settlement
agreement
”. The failure to
provide in the settlement agreement for the payment of interest and
costs was in accordance with the
department’s denial of such
liability, it was contended.
8.
T
he
question which arises is what the effect of the settlement agreement
is. A settlement agreement is a compromise. A compromise
is a
contract between two or more persons which has as its object the
prevention, avoidance or termination of litigation.
[1]
A
compromise brings about a final settlement of the dispute and ends
the uncertainty that accompanies litigation. It is usually
a
sign that the hostilities between the litigants or prospective
litigants have ended.
[2]
A
compromise is a full defence to any action based on the original
claim, because a settlement agreement operates as
res
judicata
.
9.
It
is undisputed that before the delivery of the answering affidavit
filed on behalf of the MEC, the parties entered into, what
the
deponent of that answering affidavit described as, “
rigorous
settlement negotiations
”
for purposes of “
the
settlement of the matter
”,
which resulted in a settlement agreement.
10.
The
agreement reached between the parties is headed “
Settlement
Agreement
”.
It records that the parties had agreed that “
the
matter must be resolved amicably out of Court
”.
The “matter” was Mr Malao’s claim for unpaid
salary, interest thereon and costs under the case number
of the
initial and second applications.
11.
Mr
Notshe, counsel for Mr Malao, submitted that the settlement agreement
did not extinguish Mr Malao’s claim for interest
on the unpaid
salary. That is so, the submission continued, because the
settlement agreement did not reflect that it was
in full and final
settlement of all Mr Malao’s claims. Where, in a case like the
present, an employer and employee negotiate
about unpaid salary and
interest thereon, the entire cause of action, including the claim for
interest, would be extinguished if
they conclude a settlement
agreement, or compromise. This is so even when the compromise
agreement provides for the unpaid
salary only, unless the employer
and employee specifically reserve the employee’s right to
proceed thereafter with a claim
for interest or costs. It is not
necessary for the settlement agreement to state that the agreement is
in full and final settlement
of the employee’s claims because,
by its very nature, it represents a settlement of their dispute.
Thus, it was said
in
Georgias
and another v Standard Chartered Finance Zimbabwe Ltd
:
[3]
“
The
purpose of compromise is to end doubt and to avoid the inconvenience
and risk inherent in resorting to the methods of resolving
disputes.
Its effect is the same as res judicata on a judgment given by
consent. It extinguishes ipso jure any cause
of action that
previously may have existed between the parties, unless the right to
rely thereon was reserved
.”
12.
On
Mr Malao’s own admission, despite the capital amount, interest
thereon and costs having been discussed during the course
of the
settlement negotiations, “
[t]here
was no agreement in respect of interest and costs
”.
He said that, although the MEC “
agreed
to pay the arrear salary, [he] refused to pay interest thereon and
costs
”.
The inescapable conclusion is that during the course of those
negotiations, the representatives of the MEC adopted the
stance that:
“
The
MEC will pay all your arrear salary, but will not pay interest
thereon or costs
”.
That was the deal. This is information of which the parties had
knowledge at the time of the conclusion of the settlement
agreement.
[4]
13.
Once
the settlement agreement was concluded on the basis that the MEC was
unwilling to pay interest or costs, it was not open to
Mr Malao
to then institute a new application to claim a head of damages, which
had been compromised. That compromise constituted
the settlement, by
agreement, of the MEC’s disputed obligations to pay the arrear
salary, interest thereon and costs.
[5]
The
court
a
quo
was accordingly wrong when it found that Mr Malao was entitled to the
payment of interest on the unpaid salary.
14.
In
the circumstances, the appeal must be upheld. Costs must follow
the result. Mr Quinn, counsel for the MEC who appeared
with Mr
Malunga, submitted that it was a reasonable precaution for the MEC to
employ two counsel and that the costs of the appeal
should therefore
include the costs of two counsel. Counsel submitted that the issue at
stake, namely whether or not, in all the
circumstances, interest on
the unpaid salary should be paid by the MEC to Mr Malao, was
important to the parties, particularly
to the MEC, and accordingly
justifies the making of such an order. In my view, although the
matter was indeed important to
the parties, that is, in all the
circumstances, an insufficient reason for allowing the costs of two
counsel. The matter
was not complex. It involved the
application of trite law to a set of straightforward facts.
Under the circumstances, it
would be unreasonable and unfair to
burden Mr Malao with the payment of the costs of two counsel.
15.
In
the result, it is ordered that:
1.
The
appeal be and is hereby upheld with costs, such costs to include the
applications for leave to appeal to the court
a
quo
and the Supreme Court of Appeal.
2.
The
order of the court
a
quo
is hereby set aside and replaced with the following:
“
1.
The application is dismissed.”
GH BLOEM
Judge of the High
Court
I agree.
JW EKSTEEN
Judge of the High
Court
I agree.
A GOVINDJEE
Judge of the High
Court
For the appellant:
Mr
RP Quinn SC with Mr Y Malunga, instructed by the State Attorney,
East London and Mgangatho Attorneys, Makhanda.
For the respondent:
Mr
VS Notshe SC, instructed by Dyushu Majebe Attorneys NN Dullabh and
Co, Makhanda.
Date of hearing:
6 March 2023.
Date of delivery of
the judgment:
14 March 2023.
[1]
Gollach
and Gomperts (1967) (Pty) Ltd v Universal Mills and Produce Co (Pty)
Ltd and others
1978
(1) SA 914
(A) at 921A-D and
Lawrie
v Nursing Response CC and others
[2016] 3 All SA 186
(ECG) at par 8.
[2]
Moraitis
Investments (Pty) Ltd and others v Montic Dairy (Pty) Ltd
2017 (5) SA 508
(SCA) at 511C.
[3]
Georgias
and another v Standard Chartered Finance Zimbabwe Ltd
2000
(1) SA 126
(ZSC) at 139A-C.
[4]
Natal
Joint Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at 604A-B.
[5]
Absa
Bank Ltd v van de Vyver NO
2002
(4) SA 397
(SCA) at 402G-H.