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[2012] ZAKZDHC 26
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Putini v Edumbe Municipality (11700/2011) [2012] ZAKZDHC 26 (15 May 2012)
IN THE KWAZULU-NATAL
HIGH COURT, DURBAN
REPUBLIC OF SOUTH
AFRICA
CASE NO. 11700/2011
In the matter between:
THABO PUTINI
….....................................................................
APPLICANT
and
EDUMBE MUNICIPALITY
…...............................................
RESPONDENT
JUDGMENT
Delivered
on 15 May 2012
______________________________________________________
SWAIN J
[1] In issue is the
enforceability of a settlement agreement, which it is common cause,
was concluded between the applicant and
a representative of the
respondent, which is a local municipality duly constituted in terms
of the Municipal Structures Act No.
117 of 1998.
[2] The applicant seeks
an order compelling the respondent to perform its obligations in
terms of the agreement by payment of an
amount of R3,5M less any
amount due to SARS , to be determined by way of a further order
directing the respondent to obtain a tax
directive from SARS in this
regard.
[3] The respondent by way
of a counter-application seeks an order declaring the settlement
agreement to be unlawful and in consequence
to be set aside.
[4] In order to place the
conclusion of the settlement agreement in context, it is necessary to
briefly set out the background facts
to its conclusion.
[4.1] The applicant was
employed by the respondent in the capacity of Municipal Manager. His
period of employment was due to terminate
on 31 December 2011.
[4.2] The applicant was
suspended on 01 December 2010. The respondent alleges that this
followed a forensic audit conducted by KPMG
which raised
prima
facie
irregularities with regard to
procurement, revenue management, financial management irregularities,
irregular appointments and promotions,
salary increases and
consistent absence by the applicant from Council meetings. The
applicant however alleges that his suspension
arose from untrue and
defamatory allegations made against him by certain individuals within
“the employ and/or Council”
of the
respondent.
[4.3] The applicant
challenged his suspension in the South African Local Government
Bargaining Council, which was set down for hearing
on 04 June 2011.
[4.4] The local
Government elections took place on 18 May 2011 as a result of which a
new Council was elected and sworn in. There
was a change of power in
the Municipality as the majority was now held by a newly established
political party.
[4.5] At the first
meeting of the newly elected Council, held on 30 May 2011, the
Council had to consider the position of the applicant
and the
proceedings initiated by him. The respondent alleges that the
proceedings before the Bargaining Council related only to
the
applicant’s suspension and not to the substance of the
allegations against him. From the request by the applicant to
the
South African Local Government Bargaining Council for arbitration,
the issues that the applicant defined as being in dispute,
were
whether his suspension was fair and whether the person who suspended
him had the authority to do so. The relief he sought
was that the
suspension be uplifted immediately and that the maximum compensation
be paid to him. The applicant alleges that he
also asked his
attorneys to institute action against the respondent and its
employees and/or Councillors for defamation.
[4.6] The respondent
alleges that when the newly elected Council considered the suspension
of the applicant, there was concern that
the applicant’s
suspension may be unlawful, as the applicant had by that time already
been suspended for more than sixty
days. Clause 14 of the applicant’s
employment contract provided that the applicant could be suspended,
if it was alleged
that he had committed a serious offence, but the
respondent was obliged to hold a disciplinary hearing within sixty
days of the
suspension, unless that period was extended by the
chairperson. No decision was taken by the Council and it was resolved
that the
matter be referred to the Council’s Executive
Committee for consideration. The Executive Committee met and resolved
to uplift
the applicant’s suspension. It also resolved that he
should return to work with immediate effect and that a settlement
agreement
be signed with him in that regard. According to the
respondent it was never resolved or discussed, that the applicant
would receive
any financial settlement and no amount was discussed.
The intention was that the applicant return to work and a settlement
agreement
be signed to that effect.
[4.7] The Executive
Committee reported to the full Council the next day and a resolution
in terms of the Executive Committee resolution
was adopted by the
full Council on 31 May 2011, the relevant portion of which reads as
follows:
“
1. To uplift
the suspension of the Municipal Manager and return to work with
immediate effect.
Settlement Agreement be signed with
Municipal Manager with immediate effect.
Municipal Manager should return to
work immediately after conclusion of Settlement Agreement."
[4.8] Mdlazi, the acting
Municipal Manager, was given a letter signed by the Mayor,
authorising her to sign a settlement agreement
with the applicant,
which is annexed to the applicant’s affidavit as annexure “C”.
The letter also authorised
her to delegate an official to attend to
the matter if she was unable to do so. Because she was unable to do
so, the personal assistant
of the Mayor drafted the letter which was
annexure “D” to the applicant’s papers, authorising
one Nathi Makhoba,
to sign the settlement agreement.
[4.9] As a consequence
Makhoba met with the applicant’s attorney on 01 June 2011 who
according to the applicant, asked for
confirmation of the authority
of Makhoba to act on behalf of the respondent. The applicant’s
attorney accordingly received
annexures “C” and “D”
as well as a further letter, being annexure “E” to the
applicant’s
papers. Annexure “E” is a letter
written by Mdlazi to the applicant informing him that the Council of
the respondent,
had resolved that a settlement agreement be concluded
with him with immediate effect and that he should return to work
immediately
after
“conclusion of settlement”.
It
also stated that Makhoba had been instructed to sign the settlement
agreement with
“your attorneys on 01 June 2011”.
[4.10] The respondent
points out that none of these letters make mention of any financial
consideration to be paid to the applicant,
as part of any settlement
agreement. The respondent alleges that neither the Executive
Committee, nor the Council of the respondent,
approved the payment of
any financial settlement to the applicant, and that the intention was
that the settlement was to deal only
with the issue of the
applicant’s re-instatement.
[5] It is common cause
that the settlement agreement, being annexure “A” to the
applicant’s papers, was subsequently
concluded between the
applicant, represented by his attorney and the respondent,
represented by Makhoba, in terms of which the
respondent agreed to
pay to the applicant an amount of R3.5M, on or before 15 June 2011.
[6] It is therefore clear
that the respondent denied that Makhoba was authorised to agree to
pay the sum of R3.5M, or any other
amount, to the applicant, as part
of the settlement agreement. The respondent accordingly placed in
issue that Makhoba possessed
actual authority, to conclude such a
settlement agreement.
[7] The case advanced by
the applicant in his founding affidavit, was that Makhoba possessed
actual authority to agree to a settlement
figure of R3.5M, by virtue
of the contents of annexures “C”, “D” and “E”
to his affidavit.
The applicant states that
“my attorney
was confident that Makhoba …….. was duly authorised to
conclude the agreement”.
The applicant in his
replying affidavit re-iterated this assertion, stating the following
“
The
settlement agreement was duly authorised and was properly concluded
for and on behalf of the respondent”
and
that
“The
resolution certainly authorised Makhoba to conclude the settlement
agreement”.
[8] It is therefore clear
that no case was advanced by the applicant, that Makhoba possessed
apparent authority to conclude such
an agreement on behalf of the
respondent, and that the respondent was consequently
estopped
from denying his authority to do so. In
argument Mr. Pillay, who appeared on behalf of the applicant,
submitted that this issue
was raised by the applicant in reply, where
he states the following
“
16.3 We have
every reason to believe that he was so authorised. My attorney will
confirm this much”.
[9] This statement must
however be read in context, forming part of the applicant’s
reply to the following allegation made
by the respondent:
“
Similarly
the applicant’s attorney could not have believed that the
resolution or annexures “C”, “D”
or “E”
were ever authority for the settlement agreement”.
This allegation by the
respondent followed an allegation by the respondent that the
applicant was the Municipal Manager for three
years and was well
conversant with the affairs of Council and the rôles and
responsibilities given to local government employees
by the
applicable local government legislation. It was further alleged by
the respondent that the applicant could not have construed
annexures
“C”, “D” and “E” to have
authorised the settlement agreement and that the applicant
abused the
lack of knowledge of Makhoba, whom he was aware was a housing clerk.
[10] The passage relied
upon by Mr. Pillay, in reply to these allegations by the respondent,
was made in the context of the following
averments:
“
16.1 The
resolution certainly authorised Makhoba to conclude the agreement.
16.2 Makhoba made various telephone
calls to high ranking officials within the employ of the respondent
in the course of these negotiations.
16.3 We have every reason to believe
that he was so authorised. My attorney will confirm this much”.
[11] It is therefore
quite clear that the respondent’s reply re-iterates his
assertion that Makhoba possessed actual authority.
The only reason
why reference is made to any belief by the applicant, or the
applicant’s attorney, in this regard, is to
deny the
respondent’s assertion that the applicant’s attorney
could not have believed that annexures “C”,
“D”
or “E” could have authorised Makhoba to pay an amount of
R3.5M to the applicant.
[12] The passage
accordingly offers no support for Mr. Pillay’s submission, that
the applicant sought to rely not only upon
the actual authority of
Makhoba, but also his apparent authority, to agree to pay the
applicant R3.5M.
[13] It is quite clear
that there is a dispute of fact on the papers, as to whether Makhoba
was authorised to conclude such an agreement.
Such a dispute of fact
was raised by the respondent as a point
in
limine
in its answering affidavit, on the
basis that in a letter written by the respondent’s attorneys,
in response to a letter of
demand from the applicant’s
attorneys (annexure “H” to the applicant’s founding
affidavit) the authority
of Makhoba to conclude the settlement
agreement was raised. However, it is apparent on reading annexure “H”
that the
authority of Makhoba was denied simply on the basis that he
was not the Legal Officer of the respondent, but only a clerk. The
issue of the agreement to pay R3.5M, was disputed on the basis that
the respondent never intended to pay this amount to the applicant
and
consequently there could be
“no meeting of the minds”
and hence no agreement. The authority of Makhoba was not
however challenged on the basis set out in the respondent’s
answering
affidavit.
[14] Be that as it may, I
am nevertheless faced with a dispute of fact, in this regard on the
papers. In the absence of a referral
of this issue for the hearing of
oral evidence, it must be dealt with on the basis of the respondent’s
averments.
Plascon-Evan Paints
Ltd. v van Riebeeck Paints (Pty) Ltd.
1984 (3) SA 620
(AD) at 634 E – 635 C
[15] The fact that no
financial compensation was discussed by the Executive Committee or
Council of the respondent, supports the
respondent’s contention
that there was never an intention to pay compensation to the
applicant, which is supported by the
terms of the resolution adopted
by the Council. It is clear that the object was to ensure that the
applicant returned to work immediately.
I find it grossly improbable
that if the Council of the respondent, intended to financially
compensate the applicant, it would
not have placed a limit upon any
amount to be paid, or at the very least, stipulated that any amount
agreed upon, would be subject
to the approval of the Council. The
applicant would have it that the authority of Makhoba, a housing
officer in the Infrastructure
and Technical Services Department, to
agree to pay compensation to the applicant, was unlimited. When I put
it to Mr. Pillay, during
argument, that on the applicant’s
case, whatever Makhoba agreed to pay to the applicant as
compensation, even if it was R100M,
the respondent would be bound to
honour, he quite fairly found difficulty in denying. That the
authority to conclude the settlement
agreement was delegated to an
officer in the housing department of the respondent, also supports
the respondent’s contention
that the object was simply to get
the applicant to return to work immediately, without the payment of
compensation. How would Makhoba
be qualified to quantify the
applicant’s alleged claims for unlawful suspension and
defamation, when the applicant was represented
by an attorney?
Although the applicant in reply alleges that Makhoba made
“various
telephone calls to high ranking officials within the employ of the
respondent in the course of these negotiations”
,
no details are furnished as to how the applicant was aware who
Makhoba was phoning. No details are furnished as to who these
officials were. On the basis of the respondent’s averments, it
is clear that Makhoba was never authorised to agree to pay
any
financial compensation to the applicant.
[16] Mr. Pillay however
submitted that if I found that there was an irresoluble dispute of
fact on the papers, then I should refer
the issue of Makhoba’s
authority for the hearing of oral evidence. Mr. Dickson S C, who
appeared for the respondent, submitted
however that the applicant was
not permitted, as it were, in the alternative, to apply for the
referral of this issue for the hearing
of oral evidence, and was
bound to elect at the outset of argument, to refer the issue for the
hearing of oral evidence.
[17] As stated by Harms D
P in the case of
Law Society,
Northern Provinces v Mogami
2010 (1) SA 186
(SCA) at 195 C – D
“
An
application for the hearing of oral evidence must, as a rule, be made
in
limine
and not once it becomes clear that the applicant is failing to
convince the court on the papers or on appeal. The circumstances
must
be exceptional before a court will permit an applicant to apply in
the alternative for the matter to be referred to evidence
should the
main argument fail
(De
Reszke v Maras and
Others
2006 (1) SA 401
(C) ([2005] All SA 440) at paras 32 – 33”.
In De Reszke’s
case, Comrie J had the following to say at page 413 F – H
“
It is my
impression in this division, however, that the pendulum has swung too
far the other way. Some younger counsel, in particular,
seem to take
it half for granted that a court will hear argument notwithstanding
disputes of fact and, failing success on such
argument will refer
such disputes, or some of them, for oral evidence. That is not the
procedure sanctioned by the Supreme Court
of Appeal. On the contrary,
the general rule of practice remains that an application to refer for
oral evidence should be made
prior to argument on the merits. The
Supreme Court of Appeal has widened the exceptions to this general
rule, but they remain exceptions”.
[18] In the present case,
it was quite clear from the respondent’s answering
affidavit, that the actual authority of Makhoba to conclude the
agreement
to pay the applicant R3.5M, was disputed. It should have
been apparent to the applicant and the applicant’s legal
representatives,
that this dispute could not be resolved on the
papers, particularly as this issue was pertinently raised by the
respondent as a
point
in limine.
There
are accordingly no exceptional circumstances present, which would
justify a departure from the general rule, that the applicant
was
bound to elect to refer this issue to oral evidence, prior to
argument on the merits. I accordingly decline to refer this factual
dispute for the hearing of oral evidence.
[19] I accordingly find
that the said Makhoba was not authorised to conclude a settlement
agreement, in terms of which the respondent
was obliged to pay the
sum of R3.5M to the applicant. As regards the counter-application to
declare the settlement agreement unlawful
and to be set aside, Mr.
Dickson submitted that if I resolved the dispute of fact, as to the
authority of Makhoba, by considering
the averments of the respondent,
in accordance with the
“Plascon Evans”
test,
I should make no order on the counter-application. He submitted that
in any event, the grant of an order in terms of the
counter-application was unnecessary, if the application was
dismissed. I understood the basis of his argument to be that in so
far as the counter-application was concerned, the respondent would
bear the
onus
of
establishing the lack of authority on the part of Makhoba, and in
such a case the application of the Plascon Evans test would
result
only in a consideration of the applicant’s averments. If I have
understood the basis of his argument correctly, I
disagree with it.
Having found on the application that Makhoba did not possess the
necessary authority from the respondent, to
conclude the agreement,
this conclusion must apply with equal vigour to the
counter-application, otherwise inconsistent conclusions
may be
reached on the same facts. In addition, it is in the interest of all
concerned that the validity of the settlement agreement
be determined
in these proceedings.
[20] The respondent
submits that the applicant should be ordered to pay the costs of the
application on the attorney and client
scale, because the applicant
as the previous head of the respondent’s administration, would
have been aware that specific
authority was required and it was never
intended that he should be paid R3.5M. In addition, it is alleged
that neither he nor his
attorney, could have construed annexures “C”,
“D” and “E” as authority for the settlement
agreement
which was concluded. Although there may be some validity in
this criticism of the applicant’s behaviour, it is clear that
the respondent’s conduct is not above reproach. If the
respondent had taken the trouble to clearly define the ambit of any
settlement agreement to be concluded, the present dispute would never
have arisen. In addition, the conduct of the respondent in
delegating
authority to an individual not qualified to conclude such an
agreement, is deserving of censure. Taking all of this
into
consideration, I am not satisfied that the applicant should be
ordered to pay the respondent’s costs on an attorney
and client
scale.
The order I make is the
following:
The application is
dismissed.
The settlement agreement
attached to the applicant’s founding affidavit as annexure
“A”, is declared invalid
and unenforceable.
The applicant is ordered
to pay the respondent’s costs of the application and the
counter-application.
___________
K. SWAIN J
Appearances: /
Appearances:
For the Applicant :
Mr. I. Pillay
Instructed by
:
Garlicke & Bousefield Inc.
Durban
For Respondent :
Mr. A.J. Dickson S C
Instructed
by :
PKX
C/o
Luthuli Sithole Attorneys
Durban
Date of Hearing
:
07 May 2012
Date of Filing of
Judgment :
15 May 2012