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[2015] ZAECMHC 58
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Bam v Alfred Nzo Development Agency (Pty) Ltd and Others (CA&R6/15) [2015] ZAECMHC 58 (11 June 2015)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MTHATHA)
Case
no: CA&R6/15
Date
heard: 5 June 2015
Date
delivered: 11 June 2015
In
the matter between
NANDIPA
BAM
Appellant
vs
ALFRED
NZO DEVELOPMENT
AGENCY
(Pty) LTD
First Respondent
THE
CHAIRPERSON, ALFRED NZO
DEVELOPMENT
AGENCY
Second Respondent
THE
MAYOR: ALFRED NZO
MUNICIPALITY Third
Respondent
NOLUBABALO
NCUME
Fourth Respondent
JUDGMENT
PICKERING
J
:
[1]
This is an appeal to the Full Bench of this Division against the
judgment of Goosen J dismissing the appellant’s application
with costs. The appeal is with the leave of the court a quo.
[2]
The appellant was employed as the Chief Executive Officer of Alfred
Nzo Development Agency (Pty) Ltd. She was, at first,
seconded
to act in that position during 2008. On 1 June 2011 she was
appointed, in terms of a written contract, as Chief
Executive Officer
(CEO) until 30 May 2012.
[3]
First respondent is Alfred Nzo Development Agency (Pty) Ltd.
Second respondent is the Chairperson (Alfred Nzo Development
Agency). Third respondent is the Mayor of Alfred Nzo District
Municipality. Fourth respondent is Nolubabalo Ncume,
an adult
female, cited as the person who had been selected for appointed of
the position of CEO of the first respondent.
[4]
In her notice of motion applicant seeks, inter alia, the following
orders:
“
1.
...
2.
...
3.
...
4.
That the First Respondent’s resolutions and/or decisions:
4.1
taken in its meeting of the 12 July 2013 and, in terms whereof the
Applicant’s employment
as First Respondent’s Chief
Executive Officer was extended for a period of 2 (two) years be and
is hereby declared valid
with effect from the 12 July 2013;
4.2
taken in its special meeting held on a date between the 12 July 2013
and the 25 July 2013
in terms whereof the First Respondent resolved
to offer to the Applicant an extension of contract of employment for
a period of
six (6) months reckoned from 01 June 2013 to 30 November
2013 be and is hereby reviewed, declared unlawful,
void
ab initio
and set aside;
4.3
and/or processes of the First Respondent taken and/or undertaken
after the 12 July 2013
in terms whereof the First Respondent
purported to engage in the appointment of a Chief Executive Officer
with effect from the
30 November 2013 be and is hereby reviewed,
declared
void ab initio
,
unlawful and set aside in terms of the Promotion of Administrative
Justice Act 3 of 2000 (PAJA) and the Principle of Legality.
5.
...
6.
That costs of this application be payable by the First Respondent and
any other
opposing Respondent, jointly and severally the one paying
the others to be absolved with the First Respondent.
”
[5]
The facts of this matter are largely common cause.
[6]
Appellant’s contract of employment was extended in writing
until 30 June 2012. Thereafter it was again extended
for a
further unspecified time period.
[7]
During this time a process was underway to appoint new non-executive
members to the Board of first respondent. These non-executive
members were appointed to the Board on November 2012 by the
municipality. The municipality also appointed two councillors
to serve as its representatives on the Board with effect from January
2013.
[8]
The newly constituted Board held its first meeting on 18 and 19
January 2013. At this meeting appellant was required to
present
a performance agreement for herself for the six months up until 30
June 2013. She duly did so. This was accepted
by the
Board and appellant continued to act as CEO.
[9]
The next meeting of the Board was held on 3 and 4 May 2013.
According to appellant the Board resolved at that meeting
to offer
her a contract extension for a period of one year commencing on 1
June 2013. The minutes of this meeting have not
been filed.
[10]
On 13 May 2013 appellant met second respondent who told her that
first respondent intended to extend her contract of employment
for a
further period of two years but that third respondent’s view
was that the extension should only be for a period of
six months.
According to appellant this came as a surprise in the light of the
Board’s resolution on 3/4 May 2013 to
extend her contract for
one year.
[11]
On 14 May 2013 appellant received a letter dated 13 May 2013
addressed to her by the second respondent. This letter states,
inter alia, as follows:
“
Re:
Extension of Employment Contract
We
are pleased to advise that the Board has approved the extension of
the existing contract on the same terms and conditions contained
therein for a period of six months from 1 June 2013 to 31 December
2013 subject to a conclusion of a performance agreement.
”
[12]
Appellant responded somewhat belatedly to this letter on 4 June 2013,
seeking clarification in light of the Board’s resolution
of 3/4
May and appellant’s conversation with second respondent on 13
May.
[13]
On 7 June second respondent wrote to appellant confirming the offer
of a six month extension of her contract from June to 30
November
2013.
[14]
Appellant then met second respondent on 25 June 2013 and requested an
opportunity to make a presentation to the Board to enable
her to
“
table a counter offer
”.
[15]
The Board then met on 12 July. It is common cause that
appellant was given the opportunity at this meeting “
to
motivate for my counter offer for extension of my contract of
employment for two years as opposed to excepting the offer of one
year extension.
”
[16]
The minutes of this meeting read, inter alia, as follows:
“
The
Chairperson informed the Board of matters which occurred since the
previous Board meeting held on 03 and 04 May 2013.
The
Chairperson informed the Board that subsequently she had met with the
Executive Mayor with regard to the offer of extension
of employment
of one year, which decision was taken at the previous meeting.
The
Executive Mayor has informed that
·
She has serious concerns regarding the
offer of one year;
·
That the matter is taking too long to be
resolved;
·
She is imploring the Board to review the
decision;
·
It is suggested that the CEO is offered
a six month contract.
The
Chairperson informs that subsequent to the meeting she had been in
contact with the Board members except for Mr. Mtimde, whom
she had
been unable to contact at the time. Consequently a letter
offering a extension for a period of six months has been
submitted to
the CEO.
”
[17]
The Board duly resolved as follows:
·
I
t is agreed
that the Board will invite the Executive Mayor to meet with members
today (12 July) during which meeting the Board will
convey to the
Executive Mayor its reasons for its intention to offer the CEO an
extension to her employment contract for a period
of two years.
·
It is advisable to seek an audience with
the Executive Mayor today during which meeting reasons for the
Board’s decision is
explained to her, should the Mayor not be
able to attend the meeting today it should be established when she
can avail herself
for a teleconference with the Board members today.
·
After the meeting with the Executive
Mayor, the Board must prepare a memorandum and submit to the
Executive Mayor in which the Board
motivates its reasons for the
decision to offer the CEO an extension of two years. This
period will align with the term of
office of the political
leadership; it will also contribute towards stability within ANDA;
assist in service delivery and focus
the energy of the Board.
”
Appellant
avers that it is clear from this resolution that her counter-offer of
an extension of her contract for 2 years had been
accepted by the
Board and that she had accordingly been validly appointed as CEO with
effect from 12 July 2013 up to 11 July 2015.
[18]
On 15 July 2013, however the following resolution was passed by the
Board after it had consulted with the Executive Mayor and
obtained
her opinion that an extension of no more than 6 months should be
granted:
“
RESOLUTION
BY WAY OF ROUND ROBIN PASSED BY THE BOARD OF DIRECTORS OF THE ALFRED
NZO DEVELOPMENT AGENCY
NOW
THEREFORE it is resolved as follows:
·
The Board offers the CEO an extension of
her current employment contract with the same conditions for a period
of six months, which
period commences on 01 June 2013 and terminates
on 30 November 2013.
·
The Board to initiate process of
recruitment within this period in order to attain the services of a
suitable candidate for the
position of CEO
·
The current CEO will be invited to apply
for the position and given equal consideration.
”
[19]
On 25 July 2013, second respondent advised appellant of the fact that
the Board had resolved to offer her a six month extension
of her
contract. The letter setting out the Board’s offer reads
as follows:
“
You
are hereby informed that the Board resolved that its offer remains
which offer is the extension to your current employment contract
for
a period of six months effective from 01 June 2013 terminating on 30
November 2013. You are kindly requested to indicate
your
acceptance hereof by appending your signature at the end of this
letter and submit same to the Chairperson of the Board on
or before
16h00 on Tuesday 30 July 2013.
”
[20]
Appellant did not sign her acceptance of this offer which, so she
stated, had been made in terms of an invalid and unlawful
resolution. She reiterated, in any event, that her contract of
employment had been validly extended for a period of two years
and
that in the light thereof she “
remained
the Chief Executive Officer of first respondent since 12 July 2013 to
11 July 2015.
”
[21]
According to appellant she continued in her employment until 12
December 2013 when she received a letter, dated 30 November
2013, in
which second respondent stated as follows:
“
It
has come to the attention of the Board that the erstwhile Chief
Executive Officer, Ms. Nandipa Bam is currently unlawfully occupying
the office of the CEO.
We
are informed that Ms. Bam insists that she is the CEO despite the
fact that her employment contract expired on 30 November 2013
and the
Board subsequently appointed Ms. Thabiso Ntsalla as Acting Chief
Executive Officer.
”
Appellant
was thereafter evicted from her office.
[22]
Appellant’s contentions concerning the alleged two year
extension of her contract were denied by the respondents who
submitted in response thereto that in terms of the Service Delivery
Agreement entered into between first respondent and the Alfred
Nzo
Municipality the first respondent was obliged to consult with the
Executive Mayor prior to any final decision being taken to
extend
appellant’s contract and that accordingly appellant’s
counter-offer had not been accepted.
[23]
In her replying affidavit appellant had stated that “
the
service level agreement is irrelevant and I do not even know why
relevance is placed on it. In fact it is non-existent
which
ever way one looks at and reads it.
”
[24]
In his submissions before us Mr. Bodlani stated that this somewhat
cryptic averment was in fact intended to be a reference
to the
following paragraph of the Service Delivery Agreement:
“
Notwithstanding
the date of signature of this agreement hereof the effective date of
this agreement is the first July 2009 and it
shall persist for a
period of three years reviewable annually.
”
He
submitted accordingly that by July 2012 the Agreement had come to an
end.
[25]
Mr. Dukada S.C., who appeared for the respondents, submitted,
however, that because the issue of the duration of the Agreement
had
never pertinently been raised by appellant the respondent had been
denied the opportunity of dealing with the status of the
Agreement
and with any possible extension thereof.
[26]
In my view, Mr. Dukada’s submissions must be upheld. In
circumstances where respondent placed direct reliance on
the
Agreement it would have been a simple matter for appellant in reply
to have set out clearly and pertinently the basis upon
which she
alleged that the Agreement was “
irrelevant
”
and “
non-existent
”.
I am accordingly of the view that it is not now open to appellant to
challenge the validity of the Agreement.
[27]
I turn therefore to deal with the terms of the Agreement relating to
the appointment of a CEO.
[28]
Section 93J(i)
of the
Local Government Municipal Systems Act 32 of
2000
enjoins the Board of directors of a municipal entity such as
first respondent to appoint a CEO of the entity. The Service
Level Agreement entered into between first respondent and the
Municipality provides as follows:
“
11.
Appointment of Chief Executive Officer
11.1. It
is recorded that Nandipa Nwabisa Sibongile Bam has been seconded to
act as Chief Executive Officer of the Agency
pending the appointment
of the Chief Executive Officer.
11.2
All future appointments of Chief Executive Officer shall be made by
the Board of Directors of the Agency
after
consultation with the Executive Mayor.
”
(My
emphasis)
[29]
In
Unlawful Occupiers, School Site v
City of Johannesburg
2005 (4) SA 199
(SCA) Brand JA stated as follows at page 206 D – F, para 13
with reference to the requirement of consultation:
“
Support
for this argument was sought in those cases where a distinction had
been drawn between
‘in
consultation with’
and
‘after
consultation with’.
According
to these authorities, a decision
‘in
consultation with’
another
functionary requires the concurrence of that functionary while a
decision
‘after consultation
with’
another functionary requires
no more than that the decision must be taken in good faith, after
consulting and giving serious consideration
to the views of the other
functionary (see eg
Premier,
Western Cape v President of the Republic of South Africa
[1999] ZACC 2
;
1999 (3) SA 657
(CC) and
President
of the Republic of South African and Others v South African Rugby
Football Union and Others
[1999] ZACC 9
;
1999
(4) SA 147
(CC)).”
[30]
This principle was reiterated in
McDonald
v Minister of Minerals and Energy
2007
(5) SA 642
(CPD) at 649D – E, para 18, where the following is
stated:
“
Likewise,
where the law requires a functionary to act
‘in
consultation with’
another
functionary, this too means that there must be concurrence between
the functionaries, unlike the situation where a statute
requires a
functionary to act
‘after
consultation with’
another
functionary, where this requires no more than that the ultimate
decision must be taken in good faith, after consulting with
and
giving serious consideration to the views of the other functionary.
”
[31]
The provisions of
s 11(2)
of the Agreement are couched in peremptory
terms, providing as they do that the appointment of a CEO
shall
be made
after
consultation with the Executive Mayor.
[32]
The Board of first respondent was therefore obliged, in terms of the
Service Level Agreement, to consult with the Executive
Mayor before
coming to a final or ultimate decision as to the extension of
appellant’s contract and it was required to give
serious
consideration to her views.
[33]
Put differently, until such time as the requisite consultation had
taken place any decision which purported to be final was
of no force
and effect. In the circumstances if the Board were to have
taken a final decision appointing appellant as CEO
before
having consulted with the Executive Mayor, that decision would have
been a nullity. Compare:
Gokal
v Moti
1941 AD 304
;
Government
of the Republic of South Africa and Another v Government of Kwa-Zulu
and Another
1983 (1) SA 164
(AD).
[34]
The resolution of 12 July 2013 therefore did not come into operation
and appellant’s contract was not extended for a
period of two
years.
[35]
In any event, even were I to be wrong in my conclusion as to the
applicability of the Agreement, I am of the view that the
Board’s
resolution of 12 July 2013 was clearly not an unequivocal offer of a
two year contract but was merely the expression
of an intention to
make such offer, subject to the views of the Executive Mayor having
first been elicited. Despite the submissions
of Mr. Bodlani to
the contrary the resolution is, in my view, unambiguous and can in no
way be construed as being an unequivocal
acceptance of appellant’s
alleged “
counter offer
.”
As was pointed out by Goosen J, if that were not the case, no purpose
would have been served at all in the Board
consulting with the
Executive Mayor.
[36]
The submission that appellant’s employment was extended by the
resolution of 12 July is therefore, in my view, devoid
of merit.
[37]
The relief sought by appellant in the application before Goosen J was
premised on the resolution of 12 July having constituted
a valid
acceptance of her “
counter-offer
.”
In my view, once the contrary conclusion has been reached and
appellant’s contentions with regard to the counter-offer
are
rejected, that should be the end of the matter.
[38]
Mr. Bodlani submitted further, however, that the so-called “
Round
Robin
” resolution of 15 July 2015
in terms of which appellant was offered a 6 months extension of her
contract, terminating on
30 November 2013, was invalid, inasmuch as
it did not meet the requirements of
section 74
of the
Companies Act
no 71 of 2008
which provides,
inter
alia
, that a decision that could be
voted on at a meeting of the board of a company “
may
instead be adopted by written consent of a majority of directors,
given in person, or by electronic communication,
provided
that each director has received a notice of the matter to be
decided
”. (My emphasis).
[39]
Mr. Bodlani referred in this regard to the preamble to the “
Round
Robin
” resolution set out in a
memorandum addressed by second respondent to the Board in which she
stated,
inter alia
,
that “
I telephonically spoke to
each of you (except Mr. Mtimkulu) whom I have not been able to
reach
.” He submitted that
inasmuch as it was common cause that Mr. Mtimkulu had not received
notice of the matter to be decided
the Round Robin resolution was
invalid.
[40]
In my view the immediate problem confronting appellant is that the
reliance on
s 74
, as opposed to s 73 of the Act, was never raised in
appellant’s founding affidavit nor, as appears from the
judgments of
Goosen J both on the merits and with regard to the
application for leave to appeal, was it relied upon by appellant when
the matter
was first argued before him. In this regard Goosen J
stated as follows in his judgment granting leave to appeal:
“
It
was argued that s 74 stipulates that a decision may only be taken in
terms of the section if all the directors are given due
notice of the
decision to be taken. Since that was not the case the
resolution of 15 July did not meet the requirements of
s 74.
The applicant did not rely upon s 74 in advancing her case. The
applicant’s contention was that the adoption
of the resolution
of 15 July did not comply with s 73(3). The full import and
effect of s 74 was therefore not addressed
in argument.
”
[41]
In these circumstances, as was stressed by Mr. Dukada, respondent
never had the opportunity of dealing in its answering affidavits
with
the issues arising from the applicability of s 74. The reasons
for second respondent’s inability to contact Mr.
Mtimkulu were
therefore never explored. Even if the provisions of s 74 are to
be construed as being peremptory in nature
respondent may have been
in a position to satisfy the court that exceptional circumstances
existed for her inability to have contacted
him and that, in the
circumstances, there had been substantial compliance with the
provisions of the section. In my view,
appellant has only
herself to blame for the inept manner in which her founding affidavit
was drafted. As matters stand, however,
any reliance on the
provisions of s 74 by appellant will occasion prejudice to the
respondent.
[42]
In any event, even if the Round Robin resolution were to be set aside
as being invalid for non-compliance with the provisions
of s 74 I am
at a loss to understand how this would be of any assistance to
appellant in the circumstances of this appeal.
[43]
In this regard Mr. Bodlani contended, if I understood him correctly,
that if it were to be found that appellant’s contract
had not
been extended for a period of two years and that the Round Robin
resolution was itself invalid then this Court should find
that
appellant had continued in her employment on the basis of a month to
month contract, which contract of employment, so he submitted,
had
never validly been terminated to date hereof.
[44]
The issue of the wrongful termination of appellant’s alleged
monthly contract during December 2013 was never canvassed
in the
application before Goosen J nor was any relief sought in the
alternative in that regard, appellant’s entire case being
premised, as I have said, on the basis that her counter-offer of a
two year contract had been accepted. If appellant has
any claim
arising out of the alleged wrongful termination of her monthly
contract during December 2013 then that is a matter for
another
Court. It is irrelevant to the present application.
[45]
Accordingly the following order will issue:
The
appeal is dismissed with costs.
_______________
J.D.
PICKERING
JUDGE
OF THE HIGH COURT
I
agree,
________________
D.
CHETTY
JUDGE
OF THE HIGH COURT
I
agree,
_______________
F.
DAWOOD
JUDGE
OF THE HIGH COURT
Appearing
on behalf of Appellant: Mr. Bodlani
Instructed
by: Messrs. Mnikelo Dalasile & Associates
Appearing
on behalf of Respondent: Mr. Dukada S.C.
Instructed
by: X.M. Petse Incorporated