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Van Den Berg v Tshwane University of Technology (16704/2012) [2019] ZAGPPHC 60 (14 March 2019)

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Labour Law
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Brief Summary

Contract — Breach of employment contract — Plaintiff claimed damages from Tshwane University of Technology for alleged breach of contract following dismissal for financial misconduct — Court found no breach of contract as plaintiff did not dispute the guilty finding and waived his right to appeal — Plaintiff's claim dismissed with costs, as procedural breaches did not result in damages due to the serious nature of the misconduct.

Comprehensive Summary

Summary of Judgment


1. Introduction


This judgment concerns an application for leave to appeal brought in the High Court of South Africa, Gauteng Division, Pretoria. The application followed an earlier judgment in which the court dismissed a contractual damages claim arising from the termination of an employment relationship.


The plaintiff/applicant, Mr Charles van den Berg, had instituted action against the defendant/respondent, Tshwane University of Technology (TUT), claiming damages in the amount of R8 126 735.00 (alternatively R10 241 336.00) allegedly suffered due to breach of contract by his former employer. The trial court dismissed the action with costs, finding that the plaintiff had not proved breach of contract in respect of the pleaded complaints that remained in dispute at the end of the evidence.


The leave to appeal application was pursued on a limited basis. The applicant contended that the court erred in concluding that TUT had not breached the employment contract by denying him a right of internal appeal, particularly because the court found that he had waived/abandoned that right in circumstances where waiver had not been pleaded. The subject-matter of the dispute was therefore not the fairness of dismissal in labour-law terms, but whether the applicant could establish contractual liability in damages based on alleged procedural breaches associated with disciplinary proceedings culminating in dismissal.


2. Material Facts


The applicant was dismissed on 5 August 2009 after being found guilty at a disciplinary hearing that proceeded in his absence. The charges related to several financial irregularities associated with the Hartebeeshoek training facility used for practical training by the Department of Horticulture. The judgment records that the guilty finding stood and had not been successfully challenged in any forum.


In the High Court action, the applicant confined his damages claim to alleged procedural breaches of his employment contract during the disciplinary process. The dispute in the action was thus not directed at whether he was guilty of the underlying misconduct; rather, it focused on whether TUT failed to comply with certain contractual procedural requirements, and whether any such failure could found a claim for damages.


In relation to the internal appeal issue specifically, the court’s findings in the leave to appeal judgment proceeded from the factual premise that there was no evidence that the applicant (or those representing him) had disputed the instruction that TUT did not have an appeal process in place or that no right of internal appeal existed. The court also relied on the fact that the applicant had been legally represented throughout the disciplinary process, yet he did not pursue contractual enforcement through section 77(3) of the Basic Conditions of Employment Act 75 of 1997, which the court described as providing a remedy in the form of specific performance, including compelling the convening of an appeal hearing.


Chronologically, after dismissal, the applicant elected to refer an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA), alleging that the dismissal was substantively and procedurally unfair. The judgment records that the unfair dismissal dispute was heard by the CCMA on 2 October 2009, and that CCMA arbitration is a de novo hearing of the issues.


3. Legal Issues


The application raised two interlinked legal questions.


The first was whether the trial court’s conclusion that the applicant had waived/abandoned his right to an internal appeal (and that TUT therefore did not breach the contract by not affording an appeal) could stand where waiver was not expressly pleaded. This issue concerned primarily the application of legal principles to the established facts, including the inferences the court considered permissible from the applicant’s conduct and litigation choices.


The second was whether there were reasonable prospects of success on appeal, applying the statutory threshold for leave to appeal under section 17(1)(a)(i) of the Superior Courts Act 10 of 2013. This required a value judgment by the court about the likely success of an appeal on the limited ground advanced, in light of the case’s contractual framework, causation and damages requirements, and the context of serious misconduct.


4. Court’s Reasoning


The court located the dispute within its proper contractual and remedial context. It stressed that, although an employee may pursue common-law contractual damages for alleged procedural breaches, such claims must be assessed against the surrounding facts, including the nature of the misconduct and whether the alleged procedural non-compliance was material or causative of loss. The court reiterated that employees owe duties of good faith, and that misconduct involving dishonesty or financial mismanagement typically destroys the trust relationship, entitling an employer at common law to terminate employment.


Central to the reasoning was the Labour Appeal Court’s approach in SA Football Association v Mangope (2013) 34 ILJ 311 (LAC). The High Court adopted the principle that procedural breaches in a contract of employment, even if established, are not necessarily material at common law and will be “of no contractual consequence unless it results in damages”, particularly where the employee’s own conduct constitutes a material breach or repudiation justifying termination. The court emphasised the requirement of a causal nexus between breach and damages: the claimant must show that the loss claimed was factually caused by the breach by comparing the post-breach position with the position that would have existed absent the breach.


Applying those principles to the applicant’s complaint about denial of an internal appeal, the court highlighted factual features that, in its view, were inconsistent with a live assertion of an enforceable contractual entitlement to an appeal. It relied on the absence of evidence that the applicant, his trade union, or his legal representatives ever disputed the statement that no internal appeal existed. It further relied on the applicant’s election not to seek specific performance under section 77(3) of the BCEA, which the court treated as an available mechanism to compel performance of contractual procedures (including an appeal). Instead, the applicant pursued the CCMA route, represented by counsel, seeking a full rehearing of the dismissal dispute in a forum where arbitration proceeds de novo.


On the applicant’s contention that waiver/abandonment was not pleaded, the court held that this omission was not consequential on the facts of the case. The court’s conclusion was that the combination of the applicant’s knowledge of his procedural rights, his representation, his failure to place the employer on terms to perform, and his election of alternative remedies supported the finding that TUT had not breached the contract in relation to the internal appeal complaint. In addition, the court reasoned that even if a procedural breach had existed (which it did not accept), the breach had to be evaluated in the context of the applicant’s dismissal for serious financial misconduct and the contractual requirement of proof of damages caused by the alleged breach.


The court also referred to the Constitutional Court’s explanation in Steenkamp and Others v Edcon Ltd 2016 (3) SA 251 (CC) of the Labour Relations Act’s design: where the LRA creates rights, it also creates specific processes, fora, and remedies for their enforcement. The court used this to underline the risks inherent in electing to frame an employment dispute as a common-law contractual damages claim rather than using the dispute-resolution architecture of the LRA, particularly where the complaint is procedural in nature.


Finally, turning to the leave to appeal test under section 17(1)(a)(i) of the Superior Courts Act 10 of 2013, the court was not persuaded that an appeal would have reasonable prospects of success, nor that any other compelling reason justified the appeal being heard.


5. Outcome and Relief


The application for leave to appeal was dismissed.


The court ordered the applicant to pay costs, including the costs of two counsel where employed.


Cases Cited


Van Den Berg v Tshwane University of Technology (16704/2012) [2019] ZAGPPHC 60 (14 March 2019).


SA Football Association v Mangope (2013) 34 ILJ 311 (LAC).


Steenkamp and Others v Edcon Ltd 2016 (3) SA 251 (CC).


Zuma and Another v Public Health and Social Development Sectoral Bargaining Council & Others (2016) 37 ILJ 257 (LC).


South African Transport and Allied Workers Union v MSC Depots (Pty) Ltd (2013) 34 ILJ 206 (LC).


Potgietersrus Platinum Ltd v Commission for Conciliation, Mediation and Arbitration and Others (1999) 20 ILJ 2679 (LC).


Legislation Cited


Basic Conditions of Employment Act 75 of 1997, section 77(3).


Labour Relations Act 66 of 1995, sections 185, 186, 187, 188 and 191.


Superior Courts Act 10 of 2013, section 17(1)(a)(i).


Rules of Court Cited


No rules of court were cited in the judgment.


Held


The court held that leave to appeal should be refused because the proposed appeal lacked reasonable prospects of success under section 17(1)(a)(i) of the Superior Courts Act 10 of 2013.


On the merits of the limited ground advanced, the court maintained that TUT did not breach the applicant’s employment contract by denying an internal appeal in the circumstances. It relied on the absence of any contemporaneous challenge to the alleged absence of an appeal process, the applicant’s legal representation, his failure to pursue specific performance under section 77(3) of the BCEA, and his choice to proceed through the CCMA.


The court further held that, in any event, procedural non-compliance in a contract of employment does not found contractual damages unless it is shown to be causative of damages, particularly where the employment contract was lawfully terminated due to serious misconduct. The fact that waiver was not specifically pleaded was treated as not affecting the outcome on these facts.


LEGAL PRINCIPLES


A claim for contractual damages based on alleged procedural breaches in an employment context requires proof of a causal nexus between the breach and the damages claimed. The claimant must prove factual causation by comparing the actual position after breach with the position that would have obtained had the breach not occurred.


Procedural non-compliance with an employment contract will not necessarily be treated as material or causative at common law, and will generally be “of no contractual consequence” unless it results in damages, especially where the employee’s conduct amounts to a material breach or repudiation entitling the employer to cancel the contract. This approach was applied with reference to SA Football Association v Mangope (2013) 34 ILJ 311 (LAC).


The Labour Relations Act 66 of 1995 provides a statutory scheme in which labour rights are paired with dedicated enforcement mechanisms, dispute-resolution procedures, designated fora, and remedies. The judgment relied on Steenkamp and Others v Edcon Ltd 2016 (3) SA 251 (CC) to emphasise the risks to employees in electing common-law claims in circumstances where statutory processes may be more directly aligned to the nature of the complaint.


Leave to appeal may be granted only where the court is satisfied that the appeal would have reasonable prospects of success, in accordance with section 17(1)(a)(i) of the Superior Courts Act 10 of 2013.

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[2019] ZAGPPHC 60
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Van Den Berg v Tshwane University of Technology (16704/2012) [2019] ZAGPPHC 60 (14 March 2019)

REPUBLIC OF SOUTH
AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
CASE
NO:
16704/2012
14/3/2019
In
the matter between:
CHARLES
VAN DEN BERG
PLAINTIFF
(Applicant
in the application for leave to appeal)
and
TSHWANE
UNIVERSITY OF TECHNOLOGY
DEFENDANT
(Respondent
in the application for leave to appeal)
JUDGMENT:
APPLICATION FOR LEAVE TO APPEAL
AC BASSON, J
[1]
The
plaintiff (Mr. Charles van den Berg) instituted action against and
claims damages from the defendant in the sum of R8 126 735.00
(eight
million one hundred and twenty six thousand seven hundred and thirty
five rand) (alternatively R10 241 336.00 (ten million
two hundred and
forty one thousand three hundred and thirty six rand)), being damages
allegedly suffered by him as a result of
an alleged breach of
contract by his former employer (the Tshwane University of Technology
- the “TUT”).
[2]
This
Court concluded as follows:
“
[127]
The plaintiff has not succeeded in proving that the TUT has breached
his employment contract in respect of the complaints
raised in
paragraph 6.4, 6.5, 6.6, 6.7 and 6.8 of the particulars of claim. The
claim of the plaintiff therefore falls to be dismissed.
I can find no
reason why costs should not follow the result.”
[3]
The
plaintiff now seeks leave to appeal on the limited basis that this
Court concluded that the defendant had not breached the plaintiff’s

contract by denying him the right to appeal against the guilty
finding,
inter
alia
,
on the basis that the plaintiff
had
waived/ abandoned his right to an appeal in circumstances were this
was not pleaded.
Context
[4]
The
plaintiff was dismissed by the TUT on 5 August 2009, after he was
found guilty by a disciplinary hearing that was held in his
absence,
on various charges relating to several financial irregularities in
respect of the Hartebeeshoek training facility utilized
by the
Department of Horticulture for practical training purposes.
[1]
[5]
The
guilty finding pertaining to these severe financial irregularities
stands and has not been successfully challenged in any forum.
[6]
In
this Court the plaintiff confined his claim for damages to alleged
procedural breaches in that the defendant had not followed
certain
procedural requirements during the disciplinary process and which
culminated in his dismissal.
[7]
The
issue before this Court therefore was not whether the plaintiff was
in fact guilty of the charges preferred against him. In
fact, as
already pointed out, the plaintiff has elected not to challenge the
guilty finding preferred against him following a disciplinary

enquiry. This Court pointed out that this
election
not to dispute the reason for his dismissal, is not without
consequence and is particularly significant in light of the
fact that
the charges preferred against the plaintiff (and of which he was
found guilty by a disciplinary hearing) are undoubtedly
of a serious
nature especially in so far as they relate to financial mismanagement
and dishonesty.
[2]
[8]
Although
an employee has the contractual right to pursue a claim for damages
pertaining to alleged procedural breaches of his contract
of
employment, such claims must be considered in its proper context in
determining the merits pertaining to alleged procedural
breaches.
[9]
Firstly,
an employee owes a duty to act in good faith towards his or her
employer. Where an employee has been found guilty of conduct

involving dishonesty, financial mismanagement or conduct amounting to
a conflict of interest (as in this case) the relationship
of trust
will usually be destroyed. In terms of the common law, an employer
will generally have the right to terminate the contract
of employment
(dismissal) as such conduct, as already pointed out, usually destroys
the relationship of trust that is inherent
and fundamental to the
employment relationship.
[10]
Secondly,
the mere fact that there was
non-compliance
with certain procedures prior to dismissing an employee, particularly
where there has been a material breach or repudiation
by the employee
which justified the employer to cancel the contract (as there was in
this case), non-compliance with a procedural
requirement prior to
such a termination will not necessarily be considered as material or
causative at common law and unless a
procedural breach results in
damages, such breach will normally be of little consequence. (See the
decision of the Labour Appeal
Court in
SA
Football Association v Mangope
).
[3]
[11]
The
question before this Court was whether the plaintiff had demonstrated
that, having regard to all the elements necessary to succeed
with the
claim for damages, he should succeed with his claim.
[12]
The
plaintiff initially approached this Court alleging a breach of
contract on eleven different grounds.  After evidence was
led
only five remained contentious. This Court concluded that the
plaintiff has not succeeded in proving that the TUT has breached
his
employment contract in respect of the complaints raised in paragraph
6.4, 6.5, 6.6, 6.7 and 6.8 of the particulars of claim
and dismissed
the claim with costs.
[13]
The
only issue under consideration in this application for leave to
appeal is this Court’s finding that, having regard to
the facts
of this case, that the applicant had waived/ abandoned his right to
an appeal in circumstances were this was not pleaded.
[14]
T
his
Court concluded firstly, that no evidence was placed before the Court
indicating that the plaintiff disputed at any time the
instruction
that the TUT did not have an appeal process in place. In fact, the
evidence before the Court showed that neither the
plaintiff nor his
trade union or trade union representative disputed the information
conveyed to the plaintiff that no right to
an appeal existed.
Although the plaintiff was represented by an attorney, neither did
they dispute the denial of the plaintiff’s
right to an internal
appeal hearing. Secondly, and despite the fact that the plaintiff had
been legally represented throughout
the entire disciplinary process,
the plaintiff elected not to make use of the remedy provided for in
terms of section 77(3) of
the Basic Conditions of Employment Act
[4]
(the “BCEA”) for an order for specific performance (which
includes an order compelling the employer to convene an appeal

hearing). Thirdly, the plaintiff elected to refer his unfair
dismissal dispute to the Commission for Conciliation, Mediation and

Arbitration (“the CCMA”) for conciliation and arbitration
on the basis that his dismissal constituted a substantively
and
procedurally unfair dismissal. The plaintiff’s unfair dismissal
dispute was heard by the CCMA on 2 October 2009.
[15]
In paragraph
[123] this Court posed the question whether the TUT breached the
employment contract by not affording the plaintiff
his right to an
appeal under these circumstances set out in the previous paragraph
and concluded that the TUT did not, to recap
briefly: The plaintiff
was at all times aware of his procedural rights, is borne out by the
facts. He was represented throughout
and at all times during the
disciplinary process that stretched over many months. He was also
represented by counsel during the
CCMA proceedings. At no stage did
the applicant made any attempt to enforce his contractual right.
Instead he approached the CCMA
(whilst being represented by counsel)
and sought a full rehearing of the matter by the CCMA
[5]
.
Under these circumstances it can hardly be said that the TUT had
breached the contract. Even if had, (which is not the case in
my view
in the present matter), the breach must be viewed in light of the
fact that the plaintiff had been dismissed for serious
financial
misconduct which ordinarily entitles an employer to terminate the
contract in terms of the common law. As was pointed
out by the Labour
Appeal Court in
SA
Football Association v Mangope
:
where a contract had been lawfully terminated on account of an
employee’s conduct,
he
would have suffered no contractual damages arising from the
procedural breaches.
I,
reiterate what the Labour Appeal Court held in respect of procedural
non-compliance in such circumstances:
“
[39]
The respondent and the court a quo placed much store on the
appellant's failure to follow the evaluation procedure in clause
5
of the contract prior to terminating the contract. The reliance
is to a certain extent misplaced in a suit for breach of
contract as
opposed to one for unfair dismissal.
Accepting
that the appellant did not properly evaluate the respondent's work
performance or provide reasonable instruction or opportunity
to
improve, such breaches of contract by the employer would not
necessarily be construed as material or causative at common
law.
Non-compliance with procedural provisions in a contract of employment
ordinarily will ground a claim for unfair dismissal
in terms of the
LRA, even where there is a justifiable substantive reason for
dismissal; but at common law a procedural breach
will be of no
contractual consequence unless it results in damages, particularly
where there has been a material breach or repudiation
by the employee
entitling the employer to cancel
.
[6]
In the law of contract there must be a causal nexus between the
breach (procedural or otherwise) and the actual damages suffered.
A
contractant must prove that the damage for which he is claiming
compensation has been factually caused by the breach. This involves a

comparison between the position prevailing after the breach and the
position that would have obtained if the breach had not occurred.

Accordingly, if the respondent's contract is found to have been
lawfully terminated on account of his repudiation of the warranty
of
competence, he would have suffered no contractual damages arising
from the procedural breaches. As I have just explained,
he may have
been entitled to compensation (not damages) in terms of the LRA for a
procedurally unfair dismissal, but then he needed
to refer an unfair
dismissal dispute to the CCMA in terms of s 191 of the LRA.”
[16]
It is therefore in light of
these facts that the Court held that there was no breach of contract.
The fact that the waiver was not
specifically pleaded is of no
consequence in this particular matter. The fact of the matter is that
the plaintiff committed a material
breach of the contract; he has
never placed the TUT on terms to perform in terms of the provisions
of the code in circumstances
where he had alternative remedies at
this disposal to enforce the terms of the contract and lastly, where
a contract has been lawfully
terminated, as it has been done in this
case, he would not have suffered contractual damages arising from
procedural breaches,
even if there had been any.
[17]
I must lastly also briefly
point out that this matter confirms the dangers an employee faces
when he elects to craft a cause of
action relying on the common law
(although he has the right to do so) instead of pursuing his employee
rights through the dispute
resolution mechanisms provided for in the
Labour Relations Act.
[7]
This much was pointed out by the Constitutional Court in
Steenkamp
and Others v Edcon Ltd
[8]
:
“
[130] The
scheme of the LRA is that if it creates a right, it also creates
processes or procedures for the enforcement of that right,
a dispute
resolution procedure for disputes about the infringement of that
right, specifies the fora in which that right must
be enforced
and specifies the remedies available for a breach of that right. A
well-known example is every employee's right not
to be unfairly
dismissed which is provided for in s 185. In s 186 there is a
definition of what dismissal means. In s 187 there
is a special
category of dismissals, namely automatically unfair dismissals.
In s 188 other categories of dismissals are created,
namely
dismissals that lack a fair reason and procedurally unfair
dismissals.”
Should leave to appeal be granted?
[18]
In
deciding whether to grant leave to appeal, this Court has to take
into account the provisions of section 17(1)(a)(i) of the Superior

Courts Act.
[9]
The legal position is that leave to appeal may only be granted where
the Court is of the opinion that the appeal would have reasonable

prospects of success in respect of its findings.
[19]
I am
not persuaded that this appeal would have a reasonable prospect of
success or that there is any other compelling reason why
this appeal
should be heard.
[20]
In
the event, the application for leave to appeal is dismissed with
costs, such costs to include the costs of two counsel where
so
employed.
AC BASSON
JUDGE OF THE HIGH
COURT
Appearances:
For
the plaintiff
:
Adv. E van As
Instructed
by:
Len Dekker &
Associates Attorneys.
For
the defendant:
Adv. H Gerber (SC)
Adv. U Lottering
Instructed
by
:

Gildenhuys

Malatji Incorporated.
[1]
See the judgment ad paragraphs [44] – [51] in respect of the
forensic investigation conducted by the TUT.
[2]
Ad para [4] of the judgment.
[3]
(2013) 34 ILJ 311 (LAC). Referred to
in
para [115] of the judgment.
[4]
Act 75 of 1997.
[5]
It is trite that arbitration proceedings before the CCMA constitute
a
de novo
hearing of all charges.  See
inter alia
,
Zuma and Another v Public Health and Social Development Sectoral
Bargaining Council & Others (2016) 37 ILJ 257 (LC); South

African Transport and Allied Workers Union v MSC Depots (Pty) Ltd
(2013) 34 ILJ 206 (LC) at para [19]; Potgietersrus Platinum
Ltd v
Commission for Conciliation, Mediation and Arbitration and Others
(1999) 20 ILJ 2679 (LC) at para [67.3].
[6]
My emphasis.
[7]
Act 66 of 1995.
[8]
2016 (3) SA 251 (CC).
[9]
Act 10 of 2013.

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