University of the North v Franks and Others (JA11/01) [2002] ZALAC 13 (29 May 2002)

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[2002] ZALAC 13
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University of the North v Franks and Others (JA11/01) [2002] ZALAC 13; [2002] 8 BLLR 701 (LAC); (2002) 23 ILJ 1252 (LAC) (29 May 2002)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA
(HELD
AT JOHANNESBURG)
Case
No:
JA 11/01
Labour
Court Case No:
J 4122/00
In
the matter between:
THE
UNIVERSITY OF THE NORTH
Appellant
vs
PETER
HAMILTON FRANKS
First Respondent
MOSHE
MOSES KEKANA
Second Respondent
NELIA
PATRICIA STEYN
Third
Respondent
JUDGMENT
VAN
DIJKHORST, AJA:
This appeal is against a declaratory order by
the Labour Court which held that
an offer of voluntary
retrenchment contained in a memorandum of 15 August 2000 by
the appellant to its
staff was valid and that the respondents were entitled to accept it
in
the manner prescribed
therein and were accordingly entitled to the retrenchment
benefits provided for
therein.
The appellant, respondent in the Labour Court,
is the University of the North,
established in terms of
section 2 of the University of the North Act, 47 of 1969.
The
respondents were all employed by the appellant: the first respondent
as the
Executive Director:
Human Resources, the second respondent as Deputy Director:
Information Technology
Division and the third respondent as Director Research
Development and
Administration.
In June 2000 the appellant conducted an
investigation and surveys with regard
to a possible voluntary
staff retrenchment programme as part of its restructuring
brought about by a
drastic reduction in government subsidy. In a memorandum on the
subject to the
university council dated 7 June 2000 the first respondent proposed
that
a call be issued for
volunteers to accept retrenchment as the beginning of a process to
cut staff numbers
drastically. It was pointed out that the main disadvantage of the
scheme is the damage of
losing key staff, but that nothing could be done to avoid this.
On
5 August 2000 the council mandated its executive committee “to
handle the
matter
of voluntary retrenchments” as part of its restructuring process.
In a
memorandum on voluntary
retrenchment by acting vice-chancellor and principal Prof
M C P Golele presented
to the executive committee (Exco) meeting of 11 August
2000 she sketched the
financial crisis which made it imperative that staff costs be
drastically reduced by
a reduction of staff. She stated that two key elements for
restructuring to be
successful were swift action and a holistic process. To this end
Management recommended
that the restructuring process be started off by offering
staff voluntary
retrenchment and to encourage staff over 55 to leave, to offer them
retirement as well. The
attraction would be retrenchment benefits as well as retirement
benefits.
She set out as the main disadvantage the fact
that staff the university did not
want
to loose may take voluntary retrenchment, but that the advantages of
the scheme
outweighed the
disadvantages. She stated that the second phase which should begin
during the above process was the actual restructuring.
This would
require a complete review of the staff requirements. A survey had
indicated the estimated number of possible applicants.
Their
retrenchment would cost approximately R25 million, the equivalent of
their salaries for 9 months. Should the matter be delayed
for that
period and they then be retrenched, the cost would have more than
doubled.On that basis the report recommended that “
the process of
voluntary retrenchment is approved for immediate implementation and
that the overall restructuring begins as soon
as possible.”
At
its meeting of 11 August 2000 Exco dealt with “the matter of
Restructuring
of the University”.
Under the sub-heading “The matter of Voluntary Retrenchment”
the relevant portions
of the minute read:
“5.4.1.1 The report
was tabled at the meeting. (Refer CEXCO 2000/303 - 304)
CEXCO2000/288
“5.4.1.2 Exco was mandated by Council on 5
August 2000 to handle the matter due
to its urgency.
“5.4.1.3 Exco
approved the recommendation that the process of voluntary
retrenchment and early
retirement be implemented and that the overall restructuring
begins as soon as
possible.
“5.4.1.4
Exco further resolved:
(i) that Management should work out mechanisms
for implementation i.e.
outlining
clear steps to be followed re 5.4.1.3 above – how will the
process be managed, in order to ensure that essential services and
departments are not disadvantaged.”
Sub-paragraph (ii)
instructed the acting deputy vice chancellor Prof Machethe to
draw up new terms of
reference for “Productivity Assignments”.
Sub-paragraph
(iii) instructed him to contact Dr SS Mncube for assistance by the
Development Bank of South Africa regarding the restructuring
process
as a whole.
Sub-paragraph (iv)
stated that the Qwaqwa campus and Giyani Teaching Centre should be
included in the restructuring exercise.
In paragraph 5.4.1.5
the minutes read:“Exco cautioned Management to the effect that no
organization was able to restructure itself
effectively. It was
essential to have an outside agent to assist in this process.”
7 On 15 August 2000
Professor N C P Golele issued a memorandum to the university staff
headed “voluntary retrenchment”. It
inter alia stated “the
council of the university has approved that voluntary retrenchment be
offered to all permanent members of
staff.
This
offer is made with effect from 15 August 2000 and shall expire on 15
September 2000. The severance/retrenchment package offered
is as set
out in policy G 5 and T 4 of the personnel policy and procedure
manual. In addition, council has approved that staff over
the age of
55 may elect to retire as well as accept the retrenchment package. A
document explaining these policies will be circulated
shortly.
.............
Should you wish to
accept the offer, you are requested to complete the attached form at
your earliest convenience, and submit it personally
to the Human
Resources department.”
The attached acceptance form inter alia
contains the following statement to be signed by the acceptor. “ I
further acknowledge that
by accepting this offer, I have taken an
irreversible step and once this acceptance is acknowledged by the
university it cannot be
reversed unless by mutual agreement.”
8 On 22 August a
further memorandum on the same subject was issued by Prof Golele to
all university staff. The relevant portions
read as follows:
“This
is a follow-up to my memo of the 15
th
August on voluntary
retrenchment.
This
offer is the first phase in the process of restructuring the
university and entails offering retrenchment on a voluntary basis
to
permanent members of staff. As an incentive to staff over the age of
55, they are allowed to retire (and hence get university
retirement
benefits such as medical aid etc.) as well as acceptor retrenchment
packages. It must be clearly understood that this
(severance package
and
university retirement benefits) is a once off offer to the
over fifty fives and may not be available in the subsequent phases of
this restructuring process.
The
second phase of the restructuring will involve a critical review of
the university’s activities which will result in the viable
departments and activities being retained and non-viable departments
being reorganised and if this is not possible, phased out.
This process of
restructuring should not be perceived as an indication of the demise
of the institution but rather as an honest attempt
at a regeneration
of a new and viable university. With this in mind you are urged to
carefully consider your future and the future
of the university
before accepting the offer.
This should be viewed
as a new beginning for the university and is a positive move”
9 An
extraordinary volteface occurred on 4 September 2000. Mr G M Negota,
acting chairperson of the council of the university signed
a
communiqué addressed to “The University Community” which was
issued the next day. It read:
“Reference
is made to the two circulars on the above subject matter dated 15 and
22 August 2000.
At its extraordinary
meeting of 31 August 2000 Exco resolved to revisit the whole issue of
retrenchment. It is therefore with great
regret that the two
circulars mentioned above are hereby withdrawn and rescinded
forthwith for the following reasons:
They:
Erroneously did not comply with Council
Resolution on the matter;
Offend the principles enshrined in the
Personnel Policy and Procedure of this institution;
Did not consider inputs from structures which
contributions have now been taken into account;
The above position having been clarified, an
external agency will properly embark on this process and therefore a
further circular
will follow in due course to inform the University
community accordingly;
However, the University, as the final arbiter,
will consider and decide on the applications already submitted”.
10 By this time the
first and third respondents and some 139 others had accepted the
offer. The second respondent contends that the
offer – stated to
be open till 15 September – could not be revoked on 5 September and
that his acceptance thereof on 7 September
is valid, entitling him
to claim the benefits contained in the offer.
11 Of
the communique the respondents say in the founding affidavit that
they do not accept the so-called reasons as valid. They as
employees
are not privy to council meetings and do not receive copies of
minutes. Voluntary retrenchment was approved by both the
council and
Exco. The Vice-Chancellor has delegated authority to terminate
employment and to deviate from the personnel policy and
procedure.
Employees can validly act on representations made by her and actions
taken by her as she is the institution’s chief
executive officer.
The fact that “inputs”
were made after the offer cannot be relied on by the council in an
attempt to escape its liabilities in
terms of contracts that came
into existence as a result of acceptance of the offer. There is no
legal or even “in-house” regulation
requiring consultation with
“structures” before the council makes an offer to its employees
nor to their knowledge has the university’s
personnel policies and
procedure manual been “violated”. There is no specific policy on
voluntary retrenchment and it is only
mentioned as an alternative to
“forced” retrenchment. These allegations by the respondents
stand undisputed.
12 The
respondents on 11 September 2000 launched this matter as an urgent
application in the Labour Court and set it down for 29 September
2000. On 21 September 2000 the council of the appellant discussed the
matter and after having heard Prof C L Machethe “the person
who has
been in charge of the process of restructuring” and Prof N C P
Golele the acting Vice Chancellor and Principal at the relevant
time,
resolved as follows:
“Council ratifies the
termination of Prof N C P Golele’s services in her acting position
as Vice Chancellor and Principal, and
that she returns to her former
position, as a result of the fact that she has deliberately acted
contrary to the decisions of council
and its executive committee on
the retrenchment issues.
Council ratifies the
appointment of Prof C L Machethe as Acting Vice Chancellor and
Principal, with the proviso that it approaches
the minister to second
a person to beef up the Acting Vice Chancellor’s office as an
interim measure, until the reports of the
assessor and the council
bosberaad are out”.
“Council endorses
that the voluntary retrenchment circulars dated 15 August 2000 and 22
August 2000 be withdrawn and further ratifies
other decisions of Exco
on voluntary retrenchments.”
13 The
answer of the appellant to this case is set out in the affidavit of
Professor C L Machethe who succeeded Prof Golele as Acting
Vice
Chancellor and Principal. The answer boils down to this:
Exco Resolution 5.4.1.4 means and was
understood to mean that the process must take into account
appellant’s needs to retain
certain skills that it would require
for its survival.
That Machethe as Deputy Vice Chancellor was
to drive the restructuring process.
Machethe instructed the first respondent
verbally to draft a circular inviting members of staff to apply for
voluntary retrenchment
packages, but to make certain that he
reserved the right of the appellant to accept or reject any
particular application.
Contrary to these instructions the first
respondent drafted an open ended circular and caused the Acting
Vice Chancellor Prof
Golele to sign it and have it distributed to
employees.
At the Executive Management Meeting of 15
August 2000 some members had raised their concerns about the
open-endedness of the draft
invitation but the first respondent had
answered that should the appellant approach the matter on the basis
that it could refuse
to ratify some acceptances of voluntary
retrenchment, it would experience numerous legal problems of
discrimination and that
such approach would not be valid. This
advice was incorrect.
This indicates that the first respondent did
not serve the interests of the appellant but his own. This is
confirmed by the fact
that he was the second person to lodge his
acceptance of the offer of a voluntary retrenchment package.
The memorandum of 15 August was not in
keeping with the spirit of the mandate of Exco to management
contained in the resolution
of 11 August quoted above and that the
first respondent and Prof Golele acted outside their powers.
This is “contrary to the regulations” of
the appellant as only the Vice Chancellor has the authority to bind
the university
in any contract and even then only in terms of the
council’s mandate. The Acting Vice Chancellor (Golele) did not
have any
mandate whatsoever to bind the university. The Acting
Deputy Vice Chancellor (Machethe) in particular and the entire
management
were mandated by council to deal with the issue of
voluntary retrenchments.
The appellant was entitled to withdraw the
alleged offer as it was unauthorised and was ab initio void,
alternatively voidable.
The Acting Vice Chancellor had no authority
to make any offer relating to voluntary retrenchments. Machethe
was the only person
mandated by council to “carry forward the
issues relating to voluntary retrenchments”.
The order for a declarator is inappropriate.
14 In
his replying affidavit the first respondent admits that he was
instructed by Machethe to draft the circular but denies that
he was
instructed to reserve the right of the appellant to accept or reject
any particular application. He distributed his draft
to Prof
Machethe, Prof Golele and all deans of the various faculties of the
appellant at the management committee meeting of 15 August.
At this
meeting Machethe was not present but Golele was. The draft circular
was discussed, certain minor amendments were effected,
Golele signed
it and it was circulated on her instructions to the staff. He sent
copies to Machethe and Golele. He received no
indication that the
circular was not in accordance with the approval granted by the
management committee and the deans. He attaches
to his replying
affidavit the official delegations of authority from the council to
various functionaries of the appellant, approved
at a council meeting
of 28 June 1996 and still in force. These show that the vice
chancellor was authorised to terminate the services
of staff and to
scrap posts..
15 The
first respondent denies that there is any policy or regulation
prescribing the manner in which voluntary retrenchments should
be
done. He reiterates that it was the intention of the appellant to
issue the open ended invitation to all members of staff. A
large
number of employees accepted the offer of voluntary retrenchment and
await the outcome of this case. Prof Golele in a supporting
affidavit confirms the facts set out by the first respondent and that
she was properly authorised as Acting Vice Chancellor and Principal
of the appellant to make the offer.
16 The
matter was heard on 19 December 2000 by the Labour Court after full
heads of argument on all issues were filed. In limine
a
jurisdictional point raised on behalf of the appellant was argued.
It was that the Labour Court did not have jurisdiction to hear
the
application in terms of section 157 of the Labour Relations Act, 66
of 1995 (the LRA) and neither did it have jurisdiction in
terms of
section 77 of the Basic Conditions of Employment Act, 75 of 1997
(the BCEA), as the dispute was not about a contract of
employment.
The court reserved judgment on the jurisdictional issue and on 6
February 2001 held that it had jurisdiction in terms
of section 77 of
the BCEA and granted the order sought by the respondents without
hearing oral argument on the real issues. Leave
to appeal to this
Court was granted.
17 On
appeal the appellant applied for condonation of its non-compliance
with rule 5 and reinstatement of the appeal which had lapsed.
The
respondents applied for condonation of the late filing of their
answering affidavits in this application. The appellant further
applied for leave to lead “the further evidence set out in the
affidavit of Patrick Fitzgerald ” attached to the notice of motion,
alternatively for an order setting aside the order of the Labour
Court and remitting the matter to that Court to “hear oral evidence
in relation to any dispute of fact that may have arisen from the
affidavits ... in this application”. We heard argument on both
these applications and the appeal and reserved our judgment.
18 This
appeal itself raises the following issues:
(1) Did
the Labour Court have jurisdiction to hear the matter?
(2) Is it a valid
ground of appeal that an opportunity for oral argument on the merits
was not afforded the parties?
(3) Are there such
disputes of fact on the papers that the matter can be resolved
without oral evidence?
(4) Was the offer of 15
August 2000 a valid offer?
(5) Alternatively, is
the appellant by estoppel precluded from alleging that
it is not?
(6) Could the offer be
accepted after its purported withdrawal by notice issued on 5
September 2000?
Re-instatement:
19 The
record was filed some 15 days late. The appellant’s attorneys were
negligent. Their services were terminated and new attorneys
appointed. Neither this Court nor the respondents were
inconvenienced. The period is relatively short. It is an important
case to
the university, its staff and the respondents. Justice
demands that it be decided on its merits. The delay is condoned and
the appeal
is re-instated.
Re-opening:
20
Section
174
(a) of the
Labour Relations Act 66 of 1995
, in terms whereof it
is sought to introduce further evidence on appeal, is modelled on and
similar to section 22 (a) of the Supreme
Court Act 59 of 1959 which
deals with the powers of the Supreme Court of Appeal and the High
Courts exercising their appellate jurisdiction
to admit such
evidence.. It is highly advisable that this Court applies the same
test in such situations as those Courts.
21 It is imperative
that there should be finality in litigation. This power will
therefore only be exercised in exceptional circumstances.
The failure
to adduce this new evidence must not be due to the applicant’s
negligence. He must show that it could not have been
obtained by him
if he had used reasonable diligence. The tendered evidence must be
weighty and material and presumably credible and
if allowed be
practically conclusive. If real prejudice to the respondent will be
caused by the admission of the fresh evidence,
it will be disallowed.
See the cases referred to in Lawsa Reissue Vol 3 (1) para 369
footnotes 1 to 5.
22 The test set out
above is stringent. The appellant’s application fails it miserably.
Mr Patrick Fitzgerald has no personal knowledge
of the alleged facts
to which he deposes. He is the new administrator of the appellant who
came on the scene after the matter had
been decided by the Labour
Court. The previous deponent for the appellant, Prof Machethe, now
merely files a cursory supporting affidavit.
But he does not explain
why this evidence which was available throughout was not presented.
He had 16 days in which to draft his
previous answering affidavit and
did not request more time. The contention that the appellant had
insufficient time is rejected.
The fact that the appellant has a new
administrative head who takes a different view of the facts and
thinks that there are additional
facts which will bolster his case,
is irrelevant. So is the fact that it is an important matter. Most
appeals are. These are the
only grounds advanced for the application.
The point made that oral argument was omitted in the Labour Court is
no reason to reopen
the appeal for further evidence. It will be dealt
with below. Fitzgerald attempts to influence this Court by a
statement that the
offer was “a nefarious plot and self-serving
exercise by the first respondent to financially benefit from public
monies”. He
has no personal knowledge of the facts. He bases this
statement on his view that the “ process initiated by Golele
bordered on
the irrational” which would have an enormous negative
impact on the university in view of the acceptance of the offer by a
large
percentage of executive and middle management. Whatever the
position may be, it is not a sufficient reason for reopening the
appeal.
Fitzgerald sets out the history of events
leading up to 11 August 2000, coloured by his own interpretation of
the relevant resolutions.
He states that according to Mr Negota
(acting chairperson of the council) and Ms Nhlane (acting registrar )
the council on 5 August
2000 expressly rejected the recommendation by
Golele and first respondent that the voluntary retrenchments be
effected immediately.
This is not borne out by the minute annexed.
Negota told Fitzgerald that Golele had informed him on 31 August 2000
that she had
intended to leave as her department had no students.
.Negota inferred that she had contrived the offer in order to take
advantage
of it. Though Negota confirms this in a cursory formal
affidavit, he omits to mention why he (an attorney) had failed to
mention
these facts previously. Golele denies the conversation and
the statement about council’s rejection of her recommendation.
It will be evident from the above extracts from
Mr Fitzgerald’s affidavit that the evidence which it is sought to
adduce will be
hotly contested. and unlikely to be conclusive. In
fact, in the light of my approach to the merits it will not even be
material.
The application to
reopen the matter has to be dismissed.
Jurisdiction:
23 In
terms of section 158 (1) (a) (iv) of the L R A the Labour Court is
empowered to make declaratory orders, provided of course
they fall
within its jurisdiction which is set out in section 157. The
relevant portions thereof read:
“157(1) Subject to
the Constitution and section 173, and except where this Act provides
otherwise, the Labour Court has exclusive
jurisdiction in respect of
all matters that elsewhere in terms of this act or in terms of any
other law are to be determined by the
Labour Court.
(2) The Labour Court
has concurrent jurisdiction with the High Court in respect of any
alleged or threatened violation of any fundamental
right entrenched
in Chapter 2 of the Constitution of the Republic of South Africa
1996, and arising from –
(a)
employment and from labour relations
(b)
in respect of any dispute over the constitutionality of any
executive or administrative act or conduct, or any threatened
executive
or administrative act or conduct, by the State in its
capacity as an employer;
(c) the application of
any law for the administration of which the Minister is responsible.”
24 It was not held by
the Labour Court nor contended for by any of the parties that the
Labour Court’s jurisdiction in this case
was founded on the section
quoted above. Instead, the Labour Court held that it was empowered
to grant the declaratory order sought
by the provisions of
section
77(3)
of the
Basic Conditions of Employment Act 75 of 1997
which
reads:
“The
Labour Court has concurrent jurisdiction with the civil courts to
hear and determine any matter concerning a contract of employment,
irrespective of whether any basic condition of employment constitutes
a term of that contract”.
25 The Labour Court
held that the appellant’s challenge to its jurisdiction was without
substance. The respondents were in a contractual
employment
relationship with the appellant and the withdrawal of the circulars
of 15 and 22 August 2000 did not alter their status
as employees.
If, as they contend, the appellant is bound on a contractual basis by
reason of the acceptance of the offer, their
contracts of employment
would in due course ipso facto terminate. The dispute therefore
concerns a contract of employment any breach
of which would vest the
civil courts with jurisdiction to adjudicate it and, as the statute
provides, so does the Labour Court concurrently
have jurisdiction.
26 In
this Court it was argued that the question to be answered is whether
a dispute as to the existence or validity of a contract
of
retrenchment (the effect of which would be to terminate the contract
of employment), is a dispute concerning a contract of employment.

After observing that
section 77(3)
of the BCEA is couched in very
wide language as it refers to “any” matter “concerning” a
contract of employment two allegedly
crucial and inter related
observations are made. Firstly that the dispute must not be about a
matter concerning an employment
relationship
; it must be a
matter concerning a “contract of employment”. Secondly the
dispute must be concerned with an actual contract
of employment
(whether it be written or not). Relying upon the dictionary
definition of “concerning” in Collins English Dictionary
(Millennium edition): “about; regarding; on the subject of” it is
submitted on behalf of the appellant that the present dispute
is
about the validity of a contract of retrenchment and that it is not
the contract of employment which is in issue. Whilst it is
so that
the outcome of the dispute will impact upon the contract of
employment in as much as it will determine the continued operation
or
termination thereof, the dispute is not about “a matter concerning
a contract of employment”. In support of this proposition
we were
referred to Langeveldt vs Vryburg Transitional Local Council and
Others (2001) 22 ILJ 1116 (LAC) 1135 A-B. It was pointed
out that
the Court there held that whilst the High Court had no jurisdiction
to determine a dispute concerning the fairness of a
dismissal, it
would have jurisdiction where the dispute related not to the fairness
of the dismissal, but its lawfulness. The relief
of the complainant
would be in contract.
There
must be a direct relationship between the matter to be adjudicated
and the employment contract.
Section 4
of the BCEA incorporates the
statutory basic conditions into all contracts of employment (with
exceptions) and therefore
section 77(3)
was enacted to avoid
litigation in two courts about the same contract eg in respect of
basic conditions in the Labour Court and in
respect of other terms in
the civil courts. All
section 77(3)
does is deal with the dual claims
problem. Had it been intended to do more, it would have been situated
elsewhere e.g. in the LRA.
Thus far the argument for the appellant.
27 The
nettle of overlapping jurisdiction of the Labour Court and the High
Court was discussed in Langeveldt’s case
supra
by this Court
and by the Supreme Court of Appeal in Fedlife Assurance Ltd v
Wolfaardt
2002 1 SA 49
(SCA). Neither of these judgments gives an
answer to the present problem.
28
I deal with the appellant’s last argument first. Parliament is
not known for its logic and lucidity in draftmanship. One
should not
read too much into the situation of a provision within a statute if
it is in itself clear.
Section 77
of the BCEA is the section in the
act which deals with jurisdictional aspects. Sub-section (3) is
certainly not out of place.
29
There is no indication that
section 77(3)
of the BCEA was enacted
solely to solve the so-called dual claims problem.
Section 77(1)
,
with certain exceptions, grants exclusive jurisdiction to the Labour
Court “in respect of all matters in terms of this act”.The
act
seeks “to give effect to the right to fair labour practices
referred to in section 23(1) of the Constitution by establishing
and
making provision for the regulation of basic conditions of
employment...” In those matters exclusive jurisdiction is
conferred.
Section 77(3) goes much wider. It expressly also deals
with employment contracts which have no statutory basic conditions
and thus
fall outside the scope of the act. Consequently the
legislature had in mind that the Labour Court should also have
jurisdiction in
such matters. Even if there is no dual claims
problem. In short, the Labour Court is to have jurisdiction in
respect of all employment
contracts and exclusive jurisdiction in
respect of some. But the jurisdiction is even wider. It is in respect
of
any matter concerning
a contract of employment.
30
In this appeal it is not necessary to decide exactly how wide
the jurisdictional net is cast. The termination of an employment
contract and the terms and conditions upon which this is to occur are
clearly matters concerning such contract. The Labour Court
correctly
held that it had jurisdiction.
Absence
of Oral Argument:
31 The
Labour Court decided the merits of the case without hearing oral
argument thereon. On behalf of appellant it is submitted
that in
such a case an appeal should succeed on that basis alone.
Particularly as it was still open to either party to seek leave
to
supplement any evidence already presented. Reference is made to
Kauesa v Minister of Home Affairs and Others,
1996 4 SA 965(NMSC)
973I-974A. That case however differs from the present in an
important respect. There the judge decided the issue without any
argument
(written or oral) at all. In the present case the parties
both filed full heads of argument. I don’t think the principles
set
out in Kauesa’s case are necessarily applicable in the present
one.
32 As
far as the argument is concerned that it was open to either party to
seek leave to supplement any evidence already presented,
that has to
be rejected on the facts. There was no such application and the
matter was ripe for hearing and set down for hearing
on the merits.
In any event, the appellant has an insuperable difficulty in respect
of its complaint that oral argument was omitted.
It was never raised
as a ground in the application for leave to appeal and we do not have
the benefit of the view of the Court a
quo thereon. Furthermore it is
not a ground of appeal in the notice of appeal.
33 Lastly, as this
appeal is a full rehearing on the record I fail to see what prejudice
the appellant suffers by the fact that in
addition to full written
argument in both Courts its oral argument is only heard by this
Court.
Disputes of Fact:
34 In
my view there are no substantive disputes of fact which preclude us
from resolving the matter. Such disputes as are raised
by Prof
Machethe are based on his interpretation of resolutions, evidence of
what was discussed in meetings of the council and Exco
and alleged
general consensus thereon and hearsay evidence by Prof Machethe
himself unsubstantiated by any confirmatory affidavits
or
documentation. In my view there is no real dispute of fact and no
oral evidence is required.
35 I say this for the
following reasons. His interpretation of resolutions of the council
and Exco is irrelevant and inadmissible.
The resolutions are minuted
and before Court and he does not attack the correctness of the
minutes. The university is a body corporate,
a juristic person. It
is governed by its council and its principal is its chief executive
officer. The council may appoint committees
and assign any of its
powers to them. See sections 3, 4, 7 and 8 of the University of the
North Act 47 of 1969. A body corporate
does not act through mere
discussions by its members. It acts through resolutions properly
passed. Its decisions are to be sought
in its resolutions. If these
are clear, cadit quaestio. If there is no resolution, there is no
decision. The words of Centlivres
CJ in Commissioner for Inland
Revenue v Richmond Estates (Pty) Ltd
1956 1 SA 602
(A) 606 in respect
of a company are equally applicable here: “a company is an
artificial person with no body to kick and no soul
to damn and the
only way of ascertaining its intention is to find out what its
directors acting as such intended. Their formal acts
in the form of
resolutions constitute evidence as to the intentions of the company
of which they are directors ...” See also Van
Tonder v Pienaar and
Others
1982 2 SA 336
(SE) 341; James North (Zimbabwe) (Pvt) Ltd and
Others v Mattinson
1990 2 SA 228
(ZHC) 237C; Cilliers et al:
Korporatiewe Reg # 15.48; Lawsa reissue Vol 4 (3) #93. It is not
necessary to consider whether the
doctrine of unanimous assent could
be invoked here as the facts alleged do not go so far.
36 The statements of
Machete that he was to drive the restructuring process and “to
carry forward the issues relating to voluntary
retrenchments” are
not borne out by the relevant minutes. He is only referred to in
paragraphs 5.4.1.4 (ii) and (iii) of the Exco
minutes of the meeting
of 11 August 2000 where specific tasks are allocated to him. In my
view the description of Machete “as the
person who has been in
charge of the process of restructuring” in the minutes of the
council meeting of 21 September 2000 held
after this matter commenced
bears little weight. In any event, when the process is seen as having
two components, namely voluntary
retrenchment and restructuring as
set out in Professor Golele’s report, this minute does not support
his claims.
37 Machete’s
statement that Golele acted “contrary to the regulations”is
devoid of any particularity. It was denied that any
regulations were
applicable. Counsel for the appellant did not argue that this vague
statement could create a genuine dispute of
fact. Upon re-reading
this part of Machete’s evidence I gained the impression that his
view is that as Golele was acting principal
and not the principal she
did not have the powers a principal would have. If this is his view,
it is clearly wrong as far as this
matter is concerned..
There is no genuine material dispute of fact on
the affidavits and the matter must be adjudicated on the papers as
they stand.
The Validity of the
Offer:
38 The
offer contained in the circular of 15 August 2000 and repeated in the
circular of 22 August 2000 was made by the Acting Vice
Chancelor and
Principal of the university. Prima facie she would be authorised to
make such offers, being the principal executive
functionary of the
university. In terms of the University of the North Act, 47 of 1969
the control, government and executive power
of the university is
vested in the council of the university of which inter alia the
principal and vice principal are members. The
university council may
appoint a vice chancellor (who is the principal) and he is a member
of each committee of the council and of
the senate as well as a
member of every joint committee of the council and senate. Prof
Golele was at all relevlant times the acting
vice chancellor and
principal of the university. At all relevant times Prof Mashethe was
an acting deputy vice chancellor.
39 Prof
Golele by virtue of her appointment as acting vice chancellor and
principal occupied the highest administrative authority
of the
university and was thus fully entitled and authorised to give
instructions to the first respondent in respect of any matter
falling
within the ambit of her duties as vice chancellor and principal. The
first respondent by virtue of his appointment as Executive
Director
Human Resources was duty bound to carry out instructions emanating
from Prof Golele. Prof Golele was the appropriate functionary
to
have made the offer contained in the circulars of 15 and 22 August
2000. There is no evidence at all that somebody else was deputised
by the council, Exco or Management Committee to make an offer. The
respondents and the other members of the staff were well within
their
rights to accept that the offer made by Prof Golele had been duly
authorised. She says so herself in the papers before court.
40 But
even should one lift the corporate veil and study the resolutions of
the council and Exco there is no clear indication that
the offer was
unauthorised. On the contrary, the council authorised restructuring
and voluntary retrenchment and mandated Exco
to take the matter
further. In a memorandum to the council the first respondent and in
a memorandum to Exco Prof Golele set out
the disadvantage of
voluntary retrenchment in that the university might lose staff it
could not miss. Both advised that there was
no other way. In the
light of this background the minutes of the Exco meeting of 11 August
2000 which inter alia contain the phrase
“management should work
out mechanisms for implementation i.e. outlining clear steps to be
followed re 5.4.1.3 above – how will
the process be managed, in
order to ensure that essential services and the departments are not
disadvantaged” cannot be read as
an unequivocal instruction that
the equality principle in respect of the acceptance of voluntary
retrenchments must be jettisoned.
Both these memoranda which
were before the council and Exco emphasised as a disadvantage “the
damage of loosing key staff”
and “staff we do not want to loose
may take it”. Had both the council and Exco intended to
drastically differ from these two
memoranda one would have expected a
clear indication thereof in the resolutions, especially by the use of
the phrase key staff.
Nothing approximating such phrase is to be
found in the resolutions quoted.
41 In summary, council
mandated Exco to restructure and implement voluntary retrenchment.
Exco left the voluntary retrenchment in
the discretion of management.
Management decided upon the terms of the offer set out in the
memorandum of 15 August 2000. One must
therefore conclude that the
offer was properly authorised and was a valid offer.
42 But
even if this construction of the resolutions is incorrect and one
were to hold that Exco resolved that the process of voluntary
retrenchment be implemented and that management should work out
certain guidelines for the management of the process and that
management
without formulating these guidelines made the “blanket”
offer, the appellant would still be bound. In company law a managing
director, acting in that capacity, acts as the company itself, just
as the board of directors would. Lawsa reissue Vol 4 (2) #10.2

Anyone dealing with the managing director may assume that the
directors have conferred on him all the powers normally conferred
if
the articles do not restrict the powers of the directors to delegate.
The company is bound by contracts with third parties within
this
ostensible authority even if it turns out that the managing director
had no actual authority.. Lawsa reissue Vol 4 (2) # 104.
In terms of
the Turquand rule ( Royal British Bank v Turquand (1856) 6 E&B327
) where there is a general authorisation, but
subject to some act of
internal organisation, a third party is entitled to assume that
everything necessary has been done. See Lawsa
reissue Vol 4 (2) # 184
The Turquand rule is not confined to companies. It is applicable to
all corporations. Mine Workers Union
v Prinsloo
1948 3 SA 831
(A)
The
rule is not based on estoppel but on policy considerations of
efficacy. Lawsa op cit #185; Cilliers et al op cit # 6.28. There
is
no reason why the principles set out above should not apply to
corporations like universities. On this basis also the appellant
is
to be held bound by its offer.
The
First Respondent’s acceptance
43 The first
respondent’s letter of acceptance is dated 14 August 2000 whereas
the offer was dated 15 August. On this basis
counsel for the
appellant argued that it was ineffective.
In
principle this approach is correct. An offer cannot be accepted
before it is made. Bloom v The American Swiss Watch Company
1915 AD 100
; Kotze v Newmont South Africa Ltd
1977 3 SA 374
(NCD)
374.
First
respondent, however, states in the founding affidavit that he
accepted the offer on 16 August but erroneously inserted the
incorrect
date. This cannot be gainsaid. The argument has no merit.
Could the Offer be
Withdrawn before 15 September?
44
The offer states that it is made with effect from 15 August 2000
“and shall expire on 15 September.” It is therefore clear
that
the offer was to stand for a period of one month, which was regarded
as a reasonable period. And for good reason. There were
many aspects
to consider. Any member of staff seriously contemplating the offer
would therefore be entitled to take the university
at its word and
accept that it would be open for one month. In these circumstances
one would raise an eyebrow if it was open to
the university to slam
the door in the face of those who were seriously considering
acceptance of the voluntary retrenchment and
early retirement set out
therein.
45 The law is not as
clear as one would wish. Had this been a classic option, namely an
offer accompanied by an agreement that it
would stand for a
specified period, there would be no debate. cf Boyd v Nel
1922 AD
414.
But here there is no agreement between offeror and offeree
that the offer will be kept open. At least no express agreement.
There
is merely a statement by the offeror as to the duration of the
offer. There is no evidence on record from which one can deduce a
tacit acceptance by the offeree of the “offer” to keep the offer
open, if such it was, which acceptance was conveyed to the offeror.
46 Before grasping the
legal nettle one has to decide whether the statement that the offer
“shall expire on 15 September 2000"
amounts to an offer to
keep the offer open for the given period or merely determines the
reasonable time within which the offer is
to be accepted, without any
implied undertaking not to exercise the offeror’s normal right of
withdrawal before acceptance. In
my view it was the former, for the
following reasons: This was not a simple statement in a one-on-one
contractual situation. It was
made by the (acting) principal of a
university to a big staff. The offer, if accepted, would have vast
personal repercussions for
each of them. It would entail deep
thought, investigation of alternative positions and family
discussions. Probably serious soul-searching.
Seen in this light it
is inconceivable that either the principal
or
any of the staff would have contemplated that this offer could be
withdrawn before the date set. I hold that the statement implied
an
undertaking to keep the offer open till 15 September 2000.
47 This brings me to
the law. A number of questions arise for consideration:
(1) Must such implied (
or for that matter an express ) undertaking to keep the offer open
for a specified time be accepted by the
offeree or can in certain
circumstances the undertaking in its context contain a waiver of the
normal requirement of acceptance by
the offeree?
(2) If acceptance is a
prerequisite, must it be communicated to the offeror?
(3) Can the offer be
unilaterally revoked at any time before acceptance?
48
Coetzee J in Anglo Carpets (Pty) Ltd v Snyman
1978 3 SA 582
(T)
585G had no doubts about the law. He held: “ It is trite that an
offer can at any time before acceptance be revoked and that
the mere
statement that it is irrevocable or not revokable for a certain
period is ineffective. The only way in which this result
can be
achieved is if there is indeed a binding agreement on this aspect.
Such an agreement is usually referred to as an option or
a
pactum
de contrahendo
“ The learned judge was in good company. De Wet
and Yeats
Kontraktereg en Handelsreg
3
rd
ed 30 held
the same view and so did Van den Heever J in Kotze v Newmont South
Africa Ltd
1977 3 SA 368
(NC) 374E who also referred to the same
authors. In neither of these cases nor the handbook was the question
of waiver of acceptance
or of communication thereof considered. In an
article
The Irrevocable Offer
in
100 (1983) SALJ 441
K M
Kritzinger supports this view in the case of non-gratuitous offers
but submits that in the case of gratuitous offers a mere
mental
acceptance of the offer would be sufficient to conclude a contract
(of option).
49 There is,
however, Appellate Division authority which qualifies the decisions
referred to. In Phillips v Aida Real Estate (Pty)
Ltd
1975 3 SA 198
(A) clause 16 in a standard Offer to Purchase form read: “This
offer is open to acceptance until and including ...... before which
date I/we shall not be entitled to withdraw or cancel same and for
which period it shall be irrevocable and shall be binding on
acceptance.” The date had been omitted and the offer was withdrawn
before it was accepted.. The claim was by the estate agent for
damages for breach of contract by withdrawal of the offer “before
acceptance”. It was based inter alia on clause 14 in which
the
offeror agreed to pay to the agent liquidated damages should he
“cancel or withdraw this offer before acceptance”. The Court
held
that in order to determine when the breach in terms of clause 14 is
committed the parties required a date in clause 16. “When
the
seller receives the offer he accepts the right granted to him, viz.
to exercise the “option” at any time within the period
stated in
para. 16. No authority is needed for the statement that an open offer
can be withdrawn at any time before acceptance. Hence
if no time is
fixed in para. 16 and the offeror withdraws his offer before
acceptance he has not committed any breach of his undertaking.
....... If a date is fixed in para. 16 the undertaking which he
breaches by withdrawing the offer before that date is the withdrawal
of the offer before he is entitled to do so. If no date is fixed in
para.16 he is free to withdraw at any time before acceptance.”
It does not appear that
either acceptance or communication of the acceptance of the rights
granted by a properly completed clause
16 were at all relevant to the
reasoning of the Court.
50
In Musa v Fischat NO and Others
1980 2 SA 167
(SECLD) the
Court held that there was no difference between an “irrevocable
offer to sell” and an option for the purpose of preference
in the
case of double sales. The part of the judgment dealing with the facts
has been omitted from the report but can be found in
an article by
Professor Kerr
Offers, Offers Said to be Irrevocable , Options,
Rights of Pre-emption and Double Sales
98 (1981) SALJ 6.
It is
clear that the question whether the undertaking not to revoke the
offer to sell had been accepted, was not considered relevant.
51
Building Material Manufacturers Ltd v Marais NO
1990 1 SA 243
(OPD) concerned an application form issued together with a prospectus
offering shares to the public. The form contained the words:
“Ek
... doen hiermee onherroeplik aansoek om ondergemelde aantal gewone
aandele...” The prospectus had declared that “applications
are
irrevocable”. The application was revoked before acceptance. The
Court rejected an argument based on De Wet en Yeats
Kontraktereg
en Handelsreg
that despite the wording that the offer was
irrevocable it still could be revoked as the company had not informed
the offeror that
it accepted his undertaking that the offer was
irrevocable. The Court held at 249B: “Dit was nooit beoog deur die
partye dat eiser
eers moes antwoord om te sê dat hy die
onherroeplikheid van die aanbod aanvaar nie. ‘n Onherroeplike
aanbod het tot stand gekom
toe die aansoekvorm deur die eiser ontvang
is.” The Court referred to Christie
The Law of Contract in South
Africa
43. In the circumstances therefore neither acceptance
nor communication thereof was held necessary to constitute
irrevocability.
The relevant fact was here undoubtedly the prior
demand that offers be irrevocable. In such circumstances it would be
highly artificial
to set further prerequisites for irrevocability.
One may conclude that a prospective shareholder who sends in an offer
under these
conditions has waived any right he may have to withdraw
the offer.
In Reich v Stone 1949
SR 178 (HC) 182 the Rhodesian High Court obiter remarked that an
offer to buy at a given date was irrevocable
before that date. The
question of acceptance of the undertaking of irrevocability was not
considered.
Dhanalutchmee v Naidoo
1975 1 PH A30 (D) did not concern an option or an offer to keep an
offer open, although the words “irrevocably
agree” were used in
the document. The Court held that the document recorded a concluded
contract of sale (which was invalid for
want of compliance with
statutory provisions). See Prof L Tager thereon in 1975 Annual Survey
of SA Law 66/7
52
There is no paucity of learned thought on this issue. Apart from
the articles by Kritzinger and Kerr abovementioned, there
are amongst
others Prof Ellison Kahn
Some
Mysteries of Offer and Acceptance
(1955)
72 SALJ 246
at 272 and Prof B Beinart
Offers
Stipulating a Period for Acceptance
1964 Acta Juridica 200
at 202 who hold the view that a unilateral
declaration that an offer is irrevocable is not sufficient in our law
to make it irrevocable.
However Beinart op cit 206 and Prof D
Zeffertt
Some Thoughts on Options
(1972) 89 SALJ 152
at 156 hold the
view that silence coupled with non- rejection of the irrevocability
creates an option .in the case of a gratuitous
offer.[ It is not
clear why this should be limited to gratuitous offers. Perhaps
because the discussion centred around offers without
consideration as
those for consideration create options, where the problem does not
arise.] Beinart favours the view that where an
offeror has undertaken
to keep the offer open, he is bound, as the offeree can be assumed to
accept the offer by implication “
and it is important that he
should be saved from the risks attendant on relying on the
undertaking and possibly incurring trouble
and expense or arranging
his business in reliance on the undertaking. Any other rule would be
undesirable and contrary to business
practice.... It is submitted
that there is adequate authority in Roman and Roman-Dutch Law, and in
Romanistic jurisprudence generally
to support a rule that were a
person makes an offer, undertaking to keep it open or not revoke it
for a period or until the happening
of a certain event a valid option
is constituted unless the offeree in fact rejects the option. Equity
favours this rule as far as
the offeree is concerned, and the offeror
really suffers no prejudice. The concept of bilaterality of contract
should not be driven
too far in cases where acceptance would merely
be an empty form and a foregone conclusion.” He points out that the
Codes of Germany,
Switzerland and Austria go further and hold the
offeror bound to keep open any serious offer as a legally binding
unilateral declaration
of will for a certain period, express or
implied. See also
Wessels’ Law of
Contract in South Africa
2
nd
ed para. 231, 232 .
Prof
Kerr op cit 9 and in his
Principles of the Law of Contract
3
rd
ed 56/7, 66/7 holds the view that no hard and fast rule should be
laid down but that the facts of each case should determine whether
the requirement of acceptance and /or notification thereof is
dispensed with. The intention of the offeror should be established.

Kritzinger op cit 443, 450, 452 would rather let the facts determine
whether there was tacit acceptance and communication or whether
the
latter is dispensed with and mere mental acceptance is adequate.
Professors
Oosthuizen and Reinecke in an article
Die Herroepbaarheid van ‘n
Inskrywingsaanbod op Aandele
1990 TSAR 332
commenting on the
Building Material case point out that the Court on the sole authority
of Christie departed from the traditional
view that an offer cannot
unilaterally be made irrevocable by the offeror but that a contract
to that effect is required. They add
that for practical reasons such
approach is desirable in these circumstances but advise
circumspection. The case of Rose and Rose
v Alpha Secretaries Ltd
1948 1 SA 454
(A) to which Christie refers does not support his view.
I agree. The learned authors seek to give the Building Material
judgment
a theoretical foundation on which the Court did not build.
It is that the company offered in its prospectus and application form
to accept from the public irrevocable offers for shares. By
completion of the form the member of the public accepts this offer
and
upon receipt of the form by the company a contract of option
comes into being. Pure theory leads one on devious ways to fit its
straight
jacket.
53
The view of Prof R H Christie in
The Law of Contract in South
Africa 2
nd
ed 56 is that a distinction must be drawn
between an option and an irrevocable offer. The learned author relies
on the Rose and Rose
case
supra,
which, as stated, does not
support his view, and on Beinart op cit who holds the view that an
obligation exists on either of two bases:
the offeror cannot as a
matter of law be permitted to withdraw the irrevocable offer or there
is a tacit acceptance by the offeree
of the offer to keep the offer
open. The first basis is German law and not our own and the second
basis will in practice be difficult
to demonstrate. Christie
concludes that this is perhaps “one of those situations where the
view of the courts may be accepted
and welcomed without too close an
inquiry into its theoretical foundation.”
Prof
Carole Lewis, discussing the Building Material case in 1990 Annual
Survey of South African Law 33, is critical of the Court’s
rejection of the defendant’s argument that an offer cannot be made
irrevocable otherwise than by the agreement of the parties.
She
rejects Oosthuizen and Reinecke’s theoretical basis for the
judgment as that was not intended in the situation.
Prof
J G Lotz in
Is Kontrakbreuk Moontlik by ‘n Opsiekontrak?
1988
THRHR 237
, 238 can see no objection in principle to an offeror
unilaterally creating irrevocability of an offer.
Quot
professores tot sententiae.
54 The law must
be clear. It must also be effective and practical. It must as far as
possible conform to the sense of justice
of the community which it is
intended to regulate. If it conforms to logical theory, so much the
better. The law is a vibrant system,
ever changing to adapt to the
needs of society. Should a situation arise where a choice has to be
made between efficacy and pure
theory the latter will have to be
jettisoned. This is in my view such a case.
55
In my view the approach of professors Beinart, Christie, Lotz and
Zeffert which is (mostly tacitly) reflected in the judgments
in the
cases of
Reich, Phillips, Musa
and
Building Material
discussed above,
is to be preferred to that of the De Wet and Yeats (van Wyk) set out
in the judgments in the cases of
Kotze
and
Anglo
Carpets.
Where
an offer is (either expressly or tacitly) stated to be irrevocable
for a given period and communicated to the offeree it becomes
irrevocable upon receipt unless the offeree rejects the
irrevocability. To require a mental acceptance would be meaningless
in practice
as that cannot be evidenced. Such requirement would
merely pander to theory. To require notification of acceptance of the
irrevocability
would set a standard which in normal business practice
will not be followed and will be regarded as rather foolish. To use
the present
case as an example: Who of all the parties involved would
have thought that the addressees of the principal’s offer were to
notify
her that they accept her undertaking to keep the offer open
till 15 September?
56
It must therefore be held that the offer could not be revoked
before its expiration date. The acceptance of the offer by the
second
respondent after the 5
th
of September 2000 and before 15
September 2000 was therefore valid.
Estoppel
57
The Labour Court decided the matter on the basis of estoppel. In
respect of acceptances of the offer prior to 5 September 2000
estoppel does not come into play. In respect of acceptances after 5
September 2000 and before 15 September 2000 estoppel might be
invoked
in the alternative by those employees who because the offer had been
stated to be open till 15 September 2000 were considering
it at their
leisure and failed to accept prior to 5 September 2000.
In
view of the conclusion reached above it is not necessary to deal with
this aspect. Suffice it to say that had we come to a different
result
on the law and should facts be presented to found such plea it may
in the circumstances be invoked. Cf Christie op cit
Conclusion:
58
It follows from the above that the decision of the Labour Court
was correct.The appeal is dismissed with costs.
Van
Dijkhorst AJA
I concur
Zondo JP
I concur
Nicholson JA
For Appellant Adv P J Pretorius SC
and adv G I Hulley
instructed by Hlatshwayo Du Plessis
Van Der Merwe
For
Respondents Adv M E D Moyses
instructed by Frese Moll and
Partners
Date
of hearing 20 March 2002
Date of judgment 29 May 2002