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[2012] ZAGPPHC 225
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Bodigelo v Public Investment Corporation Ltd (A1070/2010) [2012] ZAGPPHC 225 (10 October 2012)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
CASE
NUMBER: A1070/2010
DATE:10/10/2012
In
the matter between:
KAGISO
GERALD
BODIGELO
.............................................................................
APPELLANT
and
PUBLIC
INVESTMENT CORPORATION
LTD
.....................................................
RESPONDENT
JUDGMENT
MAVUNDLAJ:
The
appellant appeals, with the leave of the Court a quo, against the
whole judgment and order of Msimeki J, delivered on 2 July
2010, in
terms of which the [appellant's] claim against the respondent for
payment of an amount of R2, 345, 534. 00 was dismissed
with costs.
[2]
It is common cause that the appellant was in the employ of the
respondent. The appellant was employed by the defendant as a
junior
manager; private equity and corporate finance with effect from 12
January 2004. He was promoted to a post of senior manager:
private
equity and corporate finance with effect from 1 December 2006. He was
nominated and appointed by the respondent as a non-executive
director
on the board of directors of each of the following companies:
2.1
DCD-Dorbyl ((Pty) Limited ("Dorbyl");
2.2
Blue Label Investments (Pty) Limited;
2.3
Kulungile Metals Group (Pty) Limited;
2.4
Global Roofing Solutions (Pty) Limited.
[3]
It is also common cause that the aforesaid four companies paid
individually director's fees and bonuses the sum total which
amounted
to R2, 345, 534. 00 in respect of the appellant's directorship in
these companies. The aforesaid amount was appropriated
by the
respondent. It is this sum total amount appropriated by the
respondent that the appellant claimed, contending that it was
paid to
him and the respondent had no basis to appropriate it to itself.
[4]
The respondent, in its plea, pleaded, inter alia, that the appellant,
when he was appointed as, and performed his functions
and duties as a
nominee non-executive director of the said respective companies, was
performing his functions and duties as a manager:
private equity and
corporate finance and employee of the respondent, as such was not
entitled to receive the aforesaid amounts
for his benefit, because he
was not entitled to additional remuneration in addition to that which
he was entitled to as set out
in the written contract of employment
concluded between the parties on 5 July 2006, attached to the
particulars of claim as annexure
"POC1".
[5]
in the matter of Imprefed (Pty) Ltd v National Transport Commission
1
the Appellate Court said :
"At
the outset it need hardly be stressed that:
The
whole purpose of pleadings is to bring clearly to the notice of the
Court and the parties to an action the issue upon which
reliance is
to be placed.'
(Durbach
v Fairway Hotel Ltd
1949 (3) SA 1081
(SR) at 1082.)
This
fundamental principle is similarly stressed in Odgers' Principles of
Pleading and Practice in Civil Actions in the High Court
of Justice
22nd at 113:
'The
object of pleading is to ascertain definitely what is the question at
issue between the parties; and the object can only be
attained when
each party states his case with precision.
The
degree of precision obviously depends on the circumstances of each
case. More is required when the claims are based upon the
provisions
of a detailed and complex contract, in which numerous clauses confer
the right to additional payment in differing circumstanced
- a
contract, moreover, in which such payment are to be determined,
calculated and claimed in different ways depending on which
clause is
relied upon, in addition, as already pointed out, the contract may
choose to base the clause of action on some common
law ground (breach
of contract, enrichment or delict) quite unrelated to any additional
payments for which the contract provides.
Particularly in this
context, it goes without saying that a pleading ought not to be
positively misleading by referring explicitly
to certain clauses of
the contract as identifying the cause of action when another is
intended or will at some later stage—in
this case as the last
possible moment—be relied upon, As it was put by Milne J in
Kali v Incorporated General Insurance Ltd
1976 (2) SA 179
(D) at
182A:
'...a
pleader cannot be allowed to direct the attention of the other party
to one issue an then, at the trial, attempt to canvass
another.'
[6]
The crisp point to be decided in this matter, in my view, is whether
the appellant when he performed his duties to the companies
nominated
to as a non-executive director, did so as an employee of the
respondent, and if so, was he not entitled to receive the
director's
fees and bonuses paid by the relevant companies, and whether the
respondent was entitled to appropriate for itself such
director's
fees and bonuses intended for the appellant.
[7]
I am conscious of the forceful submissions made by counsel for the
respective parties. The mere fact that I am not pertinently
referring
to their respective submissions in this judgment does not necessarily
mean that I have completely ignored same.
[8]
It is common cause that the respondent did not have a policy
entitling it to retain the director's fees and bonuses paid by
a
company to which a person had been nominated to as a non-executive
director. The Sibaya policy document on this issue did not
exist
prior to September 2006. It is also common cause that the appellant
was not subject to Public Service Act No. 103 of 1944.
It is also
common cause that the contract of employment of the parties did not
regulate nor address the issue of director's fees
and bonuses.
2
It however needs to be noted that the respondent did not plead
entitlement to appropriate for itself the director's fees and bonuses
because of the Sibaya policy document.
[9]
It is common cause that at the commencement of the trial, the Court
directed that the main issue to be decided and proceeded
with, was
whether the board fees and bonuses received by the respondent (as the
director's fees and bonuses for the Appellant)
should be paid to the
appellant or respondent. The matter per agreement proceeded only on
the merits and on the narrow issues identified
by the Court.
[10]
The Court a quo found that the appellant was (i) nominated by the
respondent to the non-executive directorship of the receptive
companies; (ii) was acting as an employee of the respondent in his
directorship; and (iii) as such was not entitled to receive
the
respective director's fees and bonuses over and above his agreed
remuneration.
[11]
It is trite that an employee owes fiduciary duty to his or her
employer and must not act against the interest of the employer.
He or
she cannot earn for himself or herself secret profits in the course
of his employment without the consent of the employer.
The employer
may claim for himself such secret profits earned by the employee;
vide Ganes and Another v Telcom Namibia Ltd
2004 (3) SA 615
(SCA) at
626 paragraphs [25], [26].
[12]
It is common cause that the appellant was nominated to the relevant
companies by the respondent as the non-executive director.
It is also
common cause that the relevant companies paid director's fees and
bonuses to their respective non-executive directors
with the full
knowledge of the respondent, in casu, it is not the respondent's case
that the director's fees and bonuses were secretly
earned in breach
of his fiduciary duty.
3
The principle flowing from the Ganes matter referred to herein above,
does not come into play.
[13]
The appellant had to establish the cause of action. It is not in
dispute that he was a non-executive director to the four companies,
with the approval of the respondent, who fully knew that there are
director's fees and bonuses to be paid to the appellant. In
my view,
the appellant had prima facie established the cause of action. In the
circumstances, the respondent bore the onus to prove
on a balance of
probabilities its defence to the plaintiff's claim. The defence
pleaded was that, the appellant acted as an employee
in the
respective directorship in the four companies and was not entitled to
the director's fees and bonuses. The respondent, in
my view, had to
prove that it was entitled to appropriate for itself the aforesaid
amount. It is common cause that, there was no
written agreement
placed before the Court a quo to show that the parties had
specifically agreed that the appellant would be acting
in the
nominated directorship, strictly as an employee and would not be
entitled to the director's fees and bonuses.
[14]
In law, the respondent, as a nominee director could not have been
acting as an employee of the respondent, although having
been
nominated by the latter. In this regard the position was, with
respect, eloquently stated by Margo J in the matter of Fisheries
Development Corporation v AWJ Investments
4
as follows:
"The
director's duty is to observe the utmost good faith towards the
company, and in discharging that duty he is required to
exercise an
independent judgment and to take decisions according to the best
interests of the company as his principal. He may
in fact be
representing the interests of the person who nominated him,- and he
may even be the servant or agent of that person,
but in carrying out
his duties and functions as a director, he is in law obliged to serve
the interests of the company to the exclusion
of the interests of any
such nominator, employer or principal. He cannot therefore fetter
his vote as a director, save in so far
there may be a contract for
the board to vote in that way in the interests of the company, and,
as a director he cannot be subject
to the control of any employer or
principal other than the company."
[15]
On the strength of the Margo J's cited authority herein above, the
appellant, although nominated by the respondent to the respective
directorship, could not have been acting in such directorship as an
employee of the respondent. He owed fiduciary duty not to the
respondent but to the respective companies to which he was directly
accountable by virtue of his non-executive directorship. In
my view,
the Court a quo misdirected itself in its factual finding and in law
when it held that the appellant acted as an employee
of the
respondent in the respective companies.
[16]
If the appellant was not serving in the relevant companies as an
employee of the respondent, as I have found, it stands to
reason that
the respondent had no legal basis to appropriate to itself the
director's fees and bonuses that was intended for the
appellant. The
onus rested on the respondent to prove its right to entitlement of
the director's fees and bonuses.
[17]
it is significant to note that Dorbyl paid the non-executive
director's fees and bonuses after deductions of PAYE with an IRP5
tax
form.
5
It brooks no argument that the respondent, as a legal entity, is not
subject to PAYE tax deduction. Neither can the respondent,
in my
view, be legally entitled to retain an employee's moneys coming from
outside source already having been subjected to PAYE
tax deductions.
There is no legal basis for the respondent, in my view, to have
appropriated for itself the respective director's
fees and bonuses.
[18]
It is common cause that the relevant amounts were paid by the
respective companies as the director's fees and bonuses, and
nothing
else. In my view, the Court a quo, misdirected itself in finding that
the appellant was not entitled to the director's
fees and bonuses,
when such moneys were paid precisely as such. It was for the
respondent to place evidence showing that it was
entitled to
appropriate to itself such amounts. In this regard, there was no
evidence at all placed before the Court a quo.
[19]
In my view, this Court is at large to set aside the decision of the
Court a quo in so far as it has misdirected itself.6 In
my view, the
Court a quo should have found that the defendant has not, on a
balance of preponderance of probabilities, discharged
the onus
resting on it to show that the appellant was not entitled to receive
and keep for himself the director's fees and bonuses,
and that it was
legally entitled to appropriate for itself the said director's fees
and bonuses. The Court a quo should have dismissed
the defence of the
respondent and found in favour of the appellant.
[20]
It is common cause that the appellant in the Court a quo was
represented by senior counsel assisted by a junior counsel. I
am of
the view that having regard to the fine point in issue and the amount
involved, the matter deserved the attention of both
senior and junior
counsel. The appellant was entitled to the costs of the trial
inclusive the costs of the aforesaid two counsel.
[21]
In the result, I make the following order:
1.
That the appeal is upheld with costs of two counsel;
2.
That the decision of the Court a quo of 2 July 2010 is set aside and
substituted with the following order:
"That
judgment against the defendant is made for:
(a)
Payment in an amount of R2 345 534, 00;
(b)
Interest on the aforesaid amount of R2 345 534, 00 at the rate of
15,5% per annum a tempore morae to date of payment;
(c)
Costs of suit which shall include costs of two counsel."
N
MAVUNDLA
JUDGE
OF THE HIGH COURT
I
agree
E.
M. MAKGOBA.
JUDGE
OF THE HIGH COURT
I
agree
P.M.
MABUSE
JUDGE
OF THE HIGH COURT
DATE
OF JUDGMENT : 10 OCTOBER 2012
APPELLANTS ATT : FLUXMANS INC
C/O
FRIEDLAND HART & PARTNERS
APPELANTS ADV : ADV I.A.M. SEMENYA
SC
RESPONDANTS'
ATT : WERKMANS INC
C/O
MABUELA ATTORNEY RESPONDANT'S ADV : ADV P L MOKOENA SC
1
1993
(3) SA 94
(AD) at 107C-H
2
Vide
paginated page 420 line 20- 421 line 1 of the judgment.
3
Vide
Ganes and Another v Telcom Namibia Ltd (supra)
at
627E-F].
4
1980
(4) SA 156
(WLD) at 163D-H
5
Vide
paginated page 397 of the Court a quo's judgment.