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[2016] ZAGPPHC 78
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Zulu v Mbombela Housing Association (41676/13) [2016] ZAGPPHC 78 (5 February 2016)
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IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
CASE NO: 41676/13
DATE: 5/2/2016
NOT REPORTABLE
NOT OF INTEREST TO OTHER
JUDGES
REVISED
In the matter between:
BHEKUYISE ABSANIA
ZULU
Plaintiff
and
MBOMBELA HOUSING
ASSOCIATION
Defendant
JUDGMENT
Baqwa J
[1]
The
plaintiff herein is
Bhekuyise Absania Zulu an adult male of [...], Ka Nyamazane, and the
defendant is the Mbombela Housing Association,
a public institution
of corner Brown and Paul Kruger streets, Nelspruit.
[2] This is an action for
the payment of monies outstanding to the plaintiff for the period the
plaintiff served as an employee
of the defendant from 2007 to 31 May
2011 when he resigned.
[3] The plaintiff was
employed as a general manager and in that capacity was the highest
ranking official subject to the authority
of the Board.
[4] At the time of his
resignation these were sums of money owing to him in respect of
accrued leave, pension deducted from his
salary but not paid over to
the pension fund, retirement annuity premiums deducted but not
transmitted to Metropolitan Life and
salary underpayment.
[5] After his resignation
the defendant engaged the services of an independent consultant, one
George Luputa to assess whether there
were any monies due to the
plaintiff and the quantity thereof.
[6] Mr Luputa duly
compiled a report which he entitled the termination package and which
has been the pivotal point on which this
case has revolved.
Pleadings
[7] The pleadings
encapsulate a claim of these monies which the plaintiff avers are due
to him and which the defendant by and large
denies.
[8] The plaintiff averred
initially that the defendant owed him the sum of R489 230.00 of which
R47 865.21 has since been paid leaving
a balance of R441 364.79.
[9] The defendant admits
that an amount was paid to the plaintiff but further states that
amounts of R15 000.00 and R40 000.00 were
also paid as outstanding
salary. The plaintiff admits these amounts but submits that they were
not part of the termination package
but were merely
ex gratia
payments.
The Issues
[10] What this court has
to determine therefore is whether there were outstanding monies
payable to the plaintiff and if so, the
quantum thereof.
The Evidence
[11] The plaintiff
testified regarding matters which are in the main common cause
namely:
11.1 That he was employed
by the defendant from 2007 to May 2011. He testified that even though
he was offered a contract of employment
in 2007 this remained
unsigned as they were negotiating terms which were acceptable to him.
A written contract was therefore only
signed on 25 March 2010. He was
however given a letter of employment.
11.2 What was also common
cause was the fact of his resignation in May 2011 as he was then to
become a councillor of the Mbombela
Municipal Council.
[12] The plaintiff also
testified about his termination package which was compiled by the
independent consultant commissioned by
the Board and presented to the
Board by means of a power point presentation in his presence.
[13] The plaintiff also
presented the evidence of the independent consultant. His evidence
was about the termination package which
took him about five months to
compile.
[14] It is pertinent to
capture the executive summary of the presentation he made to the
Board which is as follows:
“
Executive
Summary
Chairperson of the
Board, this is a summarised version of the termination package for
the outgoing General Manager of the Association.
According to the
record submitted to my office, in the last 4 years the General that
the manager served the association, he never
took his leave,
resulting in leave accumulation of 84 days in line with the contract
that stipulate the general manager is entitled
to 24 days per annum.
Upon termination of
employment, it is a requirement that leave days accrual should be
paid out.
Leave days
84 Days leave
accrual 152,136
Pension
Chairperson, I further
take notice, that from December, 2009, the Association was deducting
pension from the General Manager, which
was not submitted to the
pension fund.
161,331
Retirement Annuity
The General Manager
also took a retirement annuity with metropolitan life to the value of
R1 583 per month, which was being deducted
from his salary but not
paid to the fund.
30,077
Underpayment
145,686
Reference is drawn
from annexure A, when the General Manager Salary was revised by the
Board and approved as an underpayment.
Based on the scenario
highlighted above, the association owes the General Manager, upon
verifying the HR policies of the association
an amount
489,230
Recommendation
Chairperson,
I recommend that the final decision on how the outstanding amount
should be paid should discussed by your office and
the outgoing
General Manager, and please let my office be aware of the decision
taken.
”
[15] According to Mr
Luputa the leave days were calculated on the basis of leave days not
taken by the plaintiff. He further testified
that the underpayment
was due to the delayed finalisation of the employment contract which
was only signed on 25 March 2010 and
also due to a 6% increase
approved by the Board that was not implemented.
[16] The termination
package was according to this witness submitted to the Board of the
defendant during or about May – June
2011. It was approved and
signed at that meeting by the persons whose signatures appear on the
signatories’ page of the termination
package appearing as page
19 in Exhibit “A”. More particularly the signatures of
the chairperson of the Board, Mr Chirwa,
the then additional member
of the Board and current CEO of the defendant, Mr Mathebula, the
plaintiff and Mr Luputa.
[17] A former Board
member and chairperson of the Finance Committee Mr Alex Nkosi also
testified on behalf of the plaintiff. He
confirmed that the
termination package compiled by Mr Luputa was submitted to the Board
in May – June 2011. He also confirmed
that Mr Luputa presented
the termination package at the defendant’s Board meeting and
that it was approved and signed as
already stated above.
[18] He further testified
that the underpayment resulted from the late finalisation of the
employment contract and remuneration
increase that was not
implemented. He further stated that he was aware of the SARS and
pension payments not being paid over as
resolved by the Board. Mr
Nkosi further stated that even though the Board had approved the
termination package, the acting General
Manager had to communicate
with the plaintiff regarding payment thereof.
[19] The defendant called
two witnesses, namely, M. E. Mathebula who is the current CEO and a
former Board member and Mr Chirwa,
the current chairperson of the
Board.
[20] Mr Mathebula
testified that he was an additional member of the Board during the
plaintiff’s tenure and that he was appointed
as acting General
Manager after the plaintiff’s resignation. Later he was
appointed as General Manager and later the title
changed to CEO of
the defendant. His duties include,
inter alia
, ensuring the
proper financial management of the defendant, implementation of the
defendant’s policies and attending to transfer
payments to
entities such as SARS and the pension fund.
[21] He is aware of the
termination package which was compiled by Mr Luputa and presented to
the Board but he denies that the package
was approved by the Board.
When referred to the page containing his signature which was
part of Mr Luputa’s executive
summary he stated that it should
not be accepted in the absence of a date. He however admitted his own
signature even though he
was unable to explain how it got appended on
that document.
[22] According to Mr
Mathebula, the Board did not approve the termination package and the
Board instructed him instead to submit
it to Stabilis, external
auditors of the defendant.
[23] He admitted payments
of amounts of R15 000.00 and R40 000.00 which were paid to
the plaintiff on 20 December 2011
as “
ex gratia
”
payments. He further stated that according to him those were
provisional payments even though explicitly excluded from the
termination package.
[24] He confirmed that
the amount of R47 865.21 paid to the plaintiff was part of the
underpayment and as such part of the
termination package. He further
elucidated that the payment was as per instruction or advice of the
external auditors.
[25] Mr Chirwa testified
that he has been a member of the Board initially as deputy
chairperson since 2001. He was later appointed
a chairperson, a
position which he currently still holds.
[26] Mr Chirwa stated
that he is aware of the termination package but according to him this
was never approved by the Board. He
acknowledged his signature on
page 19 of exhibit “A” but could not say what it was
except for its reference to a termination
package. He was adamant
that upon a proper reading of page 21 of exhibit “A” it
is clear that the termination package
was never approved.
[27] Mr Chirwa admitted
that the termination package was presented by Mr Luputa during about
May – June 2011.
Evaluation
[28] Mr Boshoff for the
plaintiff submits that the plaintiff has proved its case on a balance
of probabilities. It is correct as
submitted by counsel for the
defendant, Mr Luvuno that a pivotal point in deciding all the issues
in this case is whether the termination
package presented to the
Board during May – June 2011 was approved or not.
[29] He further submits
and I accept that the versions presented by the parties, save for the
facts which are common cause; are
mutually exclusive.
[30] He also submits and
I accept that the decision of this court is not made easier by the
submission of documents which are open
to different interpretations.
[31] It is trite law that
the onus is on the plaintiff to prove his case and equally trite that
the defendant bears evidentiary
burden of rebuttal.
[32] From the evidence
presented it is common cause that the termination package was
compiled by Mr Luputa, an independent consultant
who had been
employed by the defendant to execute different tasks such as the
adjustment of their tax tables and running their
payroll from time to
time over a number of years. He had also been requested to compile
termination packages by the defendant on
no less than two occasions.
[33] Upon acceptance that
the termination package was approved by the Board, I do not deem it
necessary to analyse the different
heads which comprise the
termination package but if such approval is not accepted it would be
necessary to analyse the contents
of the termination package
individually.
[34] The claim with
regard to the pension fund has been abandoned by the plaintiff during
the course of this trial and does not
therefore need to be considered
further in this judgment.
[35] It is trite law that
the test to be applied in civil trials is proof on a balance of
probabilities.
[36] It is a well-known
principle of good corporate governance, that an organisation such as
the defendant which has a Board as
part of its governing structures
ought not only to have structured meetings of the Board but that such
meetings should be minuted.
[37] Despite this
well-known principle, neither the plaintiff saw it necessary to have
such minutes discovered in terms of Rule
35 of the Uniform Rules of
Court nor did the defendant see it fit in terms of the fiduciary
duties of its Board members, whom it
called to testify to provide the
relevant minutes as part of its case or testimony.
[38] This has resulted in
witnesses embarking into a speculative arena of trying to recollect
dates and events from memory regarding
the facts of this case thus
putting this court into the invidious position of having to work with
the bare minimum of evidence.
[39] Be that as it may,
what I have before me is the testimony of the plaintiff, who as
stated is the former General Manager of
the defendant, the testimony
of the former Board member and chairman of the Finance Committee and
that of an independent consultant
who had been extensively utilised
in its operations by the defendant.
[40] This is against the
evidence of the chairman of the Board and the then additional member
of the Board and current CEO.
[41] The defendants’
denial of Board approval is made with reference to page 21 of exhibit
“A” which is a payment
document authored by Mr Mathebula,
the then acting General Manager.
[42] I have had to
juxtapose this document with the termination package as signed by the
parties mentioned in page 19 of exhibit
“A”. Regarding
the testimony of Mr Luputa, the plaintiff and Mr Nkosi, I found their
testimony credible in that regard.
Even the chairman, Mr Chirwa did
not contest that the font in page 19 was consistent with the font
from page 1 of exhibit “A”.
In other words one could
infer that the document was consistent.
[43] As against this
there are aspects on which I do not find Mr Mathebula’s
evidence credible. For example, he testifies
that the payments in
exhibit “A” page 21 were
ex gratia
and this is
confirmed in that document yet at the same time testifies that these
were provisional payments regarding the termination
package. This
same postulate has even been included in the defendant’s plea.
This is factually and legally not tenable. In
my view, these payments
are a tangible admission by the defendant that more was owed to the
plaintiff even if one were to accept
that the amount of R47 865.21
was paid at the suggestion of their external auditors.
[44] To therefore suggest
that the
ex gratia
payment should be accepted by the plaintiff
as having been a provisional payment and that that was all that was
owing to him is
factually and legally untenable especially in the
light of their exclusion from the termination package by the specific
wording
of exhibit “A” page 21.
[45] It has been argued
that the words “
pending the professional handling of my
termination package which presently remains unresolved
” is
proof that that package was not approved by the Board. As long as the
package remained unpaid after Board approval, it
was an unresolved
matter. Moreover, from an evidential point of view, to override
evidence given by the chairman of the Finance
Committee and others
because of a document authored by a former additional board member
ex
post facto
the board meeting would be inappropriate.
[46] I cannot fathom how
the plaintiff could conduct a scheme in which he could swindle not
just the defendant but also the board
which is a structure that
operates through meetings and keeps records of its meetings, by
suggesting that they resolved to approve
his termination package
after a presentation by an independent consultant who had been
commissioned by them to give input regarding
the plaintiff’s
termination package.
[47] On a conspectus of
all the pleadings, the evidence and submissions by counsel, I have
come to the conclusion that the plaintiff
has proved his case on a
balance of probabilities.
[48] In the result I make
the following order:
Judgment is granted in
the plaintiff’s favour as follows:
1)
Payment of the
amount of R280 033.79 to the plaintiff.
2)
Interest on the
above amount at the rate of 15.5% per annum as from 4 September 2012;
3)
That the defendants
pay costs of this action on an attorney and client scale which costs
shall include the costs of counsel.
___________________________
S. A. M. BAQWA
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
Heard
on
:
2-4 February 2016
Delivered
on
:
5 February 2016
For the
Plaintiff:
Advocate G. M. Boshoff
Instructed
by:
Eunanda
Fourie Incorporated
For the
Defendant:
Advocate J. Luvuno
Instructed
by:
Nomaswazi
Shabangu Attorneys