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[2008] ZALAC 21
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University of the North v Wiltshire and Others (JA31/2006) [2008] ZALAC 21 (12 March 2008)
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IN THE LABOUR APPEAL COURT OF SOUTH AFRICA
JOHANNESBURG
CASE NO
: JA31/2006
2008-03-12
In the matter between
THE UNIVERSITY OF THE NORTH Appellant
And
J M WILTSHIRE & OTHERS Respondent
_________________________________________________________
J U D G M E N T
_________________________________________________________
DAVIS JA
:
[1]
In this matter, the respondents were members of the
administrative staff of appellant. On 15 August 2000, the appellant,
by way
of Professor N C Golele, produced a memorandum which was
distributed to all of appellant’s staff in which a voluntary
retrenchment
package was offered (‘the Golele offer’).
The offer read as follows:
“The council of universities approved that voluntary
retrenchment be offered to all permanent members of staff. This
offer
is made with effect from 15 August 2000 which shall
expire on 15 September 2000.
The severance/retrenchment package offered is as set out in policy G5
and T4 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 a retrenchment. Document explaining
this
policy will be circulated shortly.
Before you decide to accept this offer, you must carefully consider
all the implications it may have on you, these include the
possibility of finding alternative work, the income tax effects and
the fact that once you accept this, the university will not
consider
reemploying you for a minimum of two years and only under extreme
circumstances thereafter.
Other factors you should consider are financial position of the
university, the staff levels of the department/section etc. Should
you elect to accept this offer and you are a staff member working
under academic conditions, you will terminate services after
the
required three months, i.e. 30 November 2000. However,
should you have no teaching load this semester or not direct
student
contact, this may be shortened at your request and agreement (in
writing) by your HOB, dean and directorate. If you are
an
administrator service staff member, you will terminate services on
30 September 2000.
In order for the necessary process occur, including obtaining tax
directives, you are requested to put in your application as soon
as
possible. The university cannot guarantee that all the necessary
payments (i.e. severance package) will be made by the termination
date but all attempts will be made to do so. Should you wish to
accept this offer, you are requested to complete the attached
form at
your earliest convenience and submit personally to the human
resources department.”
[2] A further document was attached, entitled acceptance of voluntary
retrenchment offer. It read to the extent necessary, for
the
purposes of judgment:
“I …. employee number …. hereby accept the
council’s offer of voluntary retrenchment as set out in the
personnel policy and procedure manual (of retirement over 55). I
have given serious consideration of the implications to the
acceptance and will seek financial advise …[indistinct]
utilisation of the funds I receive. I further acknowledge that
by
accepting this offer, I have taken irreversible step and once this
acceptance is acknowledged by the university, it cannot be
reversed
unless by mutual agreement”
[3] All of the appellants furnished an acceptance of the voluntary
retrenchment offer to the human resources department in terms
of this
document. On 22 October 2000, the appellant circulated a further
memorandum in which the appellant sought to set out its
approach to
restructuring in greater detail. On 4 September 2000 and after
respondents had accepted the voluntary retrenchment
package in terms
of the completion of the document to which I have made reference,
appellant circulated a further memorandum to
appellant’s staff
members in which it purported to withdraw and indeed rescind the
previous offer. This document read thus:
“Reference is made to the two circulars on the above subject
matter dated 15 and 22 August 2000. At extraordinary
meeting of 31 August 2000, exco result to visit all the 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 on 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 being clarified, an external agency will
properly embark on this process and therefore a further circular
will follow in due course, to inform the university accordingly;
However, the university is the final auditor (SRC) will consider and
decide on the applications already submitted.”
[4] One final document deserves mention. On 2 October 2000,
the appellant circulated the following memorandum:
“A circular from the acting chairperson of council dated
4 September refers.
Subsequent to the circular, some staff members took the university to
the Labour Court, the court ruled that the matter was not
urgent and
the application was therefore not successful. The circular referred
to above is still valid.
We have since noticed that some of the staff members submitted their
“acceptance of voluntary offer” forms and decide
to leave
the employ of the university without a valid resignation. These
staff members will be considered to have absconded from
the
university unless they provide an acceptable explanation.”
[5] It is common cause that all of the employees continued in the
employ of the appellant, beyond the date of 30 September 2000.
The first respondent retired from the employ of the appellant during
September 2001. The second respondent retired in July
2001 and
third respondent in July 2002. It is also common cause that until
their retirement each of the respondents continued
to earn their full
salaries and other benefits.
[6] The question of the validity of the severance agreement is then
the subject of the litigation which culminated in a judgment
in the
court
a quo
. In that judgment the following conclusion is
reached:
“I accept the evidence of the applicant that they had accepted
the offer made by the respondent that they have communicated
their
accepted in accordance with the respondent’s requirements and
that therefore a valid agreement was entered in to.
The respondent argued there was no agreement between the parties,
averse that the offer and acceptance of voluntary retrenchment
must
be interpreted to mean, it was merely an invitation to all university
staff to apply for voluntary retrenchment and early
retirement and
that the acceptance, the offer was an application to respondent’s
counsel which would consider all applications
with particular regard
to retention of necessary skills.
The respondent’s counsel argued this interpretation based on
the evidence of Mr Negota, clearly established that there
had
not been an acknowledgement the application and as the applications
had not been considered and approved, accordingly no agreement
was
concluded.”
[7] It was against this finding that the respondents were entitled to
rely on the severance agreement, that an appeal was lodged
against
the judgment of the court
a quo
.
[8] In the application for leave to appeal to this court was clear a
range of arguments were raised regarding the question of the
validity
of the severance agreement. In the heads of argument which were
prepared by the appellant, a range of arguments were
put up as to why
the judgment of the court
a quo
was incorrect, including the
fact that the offer was not unequivocal and unambiguous that the
appellant lacked the
animus contrahendi
, that there was a lack
of
bona fide
and reasonable belief by the respondent, that the
council of appellant had acted
ultra vires
, that the court
a
quo
had considered inadmissible evidence and not admissible
evidence.
[9] All of these questions which essentially turned on the issue of
the validity of the agreement and whether the respondents had
completed the form, to which I have made reference, had therefore
accepted an offer, as a result of which a binding agreement between
the parties had been concluded, were the subject of intense previous
litigation, which culminated in a judgment of Van Dijkhorst
AJA, in
The University of the North v Franks and Others
, 2002 (23) ILJ
1252 (LAC). In a comprehensive and typically studious and well
researched judgment, Van Dijkhorst AJ,
in which judgment,
Zondo JP and Nicholson JA, concurred, examined each of these
arguments which I have listed.
In summary, the court there found:
“Counsel mandated exco to restructure and implement voluntary
retrenchment. Exco left the voluntary retrenchment discretion
of
management … One must therefore conclude that the offer was
properly authorised and was a valid offer.” Para 41.
[10] To the extent that the court took the approach that that
construction of the resolution was incorrect. Van Dijkhorst AJ,
applying the so called Turquand rule in
Royal British Bank v
Turquand
, (1856) 6E&B 327, held that this doctrine did not
only apply to companies but to all corporations including
universities.
On that basis the appellant was bound by the offer
which it had made, to which I have already made reference.
[11] Insofar as the question of whether the offer could be withdrawn
was concerned, after carefully analysing the applicable law,
Van Dijkhorst AJA made two points which are relevant for
the present dispute. In the first place, he offered a
jurisprudential
insight into the nature of this area of law:
“The law must be clear, it must also be effective and practical
and in 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 in the efficacy
and pure theory, the
latter will have to be …[indistinct]. This is in my view such
a case.”
The learned judge then went on to say:
“It must therefore be held that the offer could not be revoked
before its exploration date. The acceptance to the offer
by the
second respondent after 5 September 2000 and before
15 September 2000, was therefore valid.”
Paras 54 to
56.
[12] Wisely, Mr Woudstra, who appeared on behalf of the appellant
together with Mr Hulley, did not seek to pursue any of these
arguments. However, I should say the following: this court examined
each and every one of these arguments in preparation for the
hearing.
This was a time consuming exercise which required the careful
thought and research by three judges of this court. It
was clear
that there was no possibility that any of these arguments could meet
to success, given the judgment of the Labour Appeal
Court in the
Franks case. I regret to say that we were not informed prior to this
hearing that none of these arguments were to
be abanded. I place it
on record that this practice of informing the court of an abandonment
of arguments of this kind, should
indeed be resurrected. If
possible, the court should be informed timeously of these changes
which will alleviate considerable
measure of pressure placed upon a
court dealing with many appeals.
[13] I turn to deal with the arguments which were raised by Mr Hulley
in particular on behalf of the appellants. The essence
of this
argument which was pursued vigorously in this court was that nothing
precluded the respondents from instituting action
prior to the
disposal of the Franks matter, which was evident in the fact that the
respondents only demanded relief on 19 June
2002, after the Labour
Appeal Court handed down its judgment in the Franks case.
Furthermore, Mr Hulley submitted that the
court
a quo
should not have found that the conduct of the respondents after
rescission was reasonable or could, on any reasonable basis, be
interpreted as amounting to more than an acceptance to the
repudiation. All three of the respondents had continued in their
employment
and consequently, in Mr Hulley’s view, at their
risk. He submitted that there was no reason why the appellant should
be
penalised or prejudiced as a result of the actions of the
respondents in continuing to tender their services and be paid
accordingly,
after September 30, 2000.
[14] In a somewhat bold statement, he submitted the respondents’
conduct best be described as “cynical and opportunistic”.
I shall return to opportunism presently.
[15] In dealing with this particular issue, the court
a quo
held as follows:
“In the face of the respondents purported decision of all of
the agreement reached in its stated intention not to be bound
by it
as evidence, vic the defence of the Franks application, coupled with
the threat issued by the respondent’s acting vice
chancellor
and principal Machette, I am of the view that the applicants were
entitled to and justify in deciding to continue to
tender their
services.” At para 84.
[16] The argument as it evolved in this court could be described
thus: unlike the Franks case, where the employees all terminated
their services by 30 September 2000 pursuant to the severance
agreement, in this case all of the respondents continued in the
employ of the appellant. Each of them was obliged to perform in
terms of the agreement which they allege was valid and accordingly
they should have left the employ of the appellant by
30 September 2000. They failed to perform their side of
the bargain
and to comply with the obligations which were imposed
upon them. Accordingly they were now no longer entitled to rely on
the severance
agreement which they allege was valid. Furthermore,
they did not, on the evidence, provide sufficiently cogent evidence
to indicate
that they did not accept the appellant’s
repudiation of the severance agreement.
[17] I shall deal first with that question: it is correct that if one
examines the record, the attitude of the respondents is not
articulated with the jurisprudential precision which can be expected
by lawyers. But, as an example of their approach, the following
passage from the evidence of first respondent is in my view
illuminate:
”Now Mr Wiltshire, why did you continue with the university
after you had accepted that retrenchment offer? Why did you
not as
Franks and Steyn had done also just leave and issue or institute an
action against the university immediately? Because
there was a
loyalty to the university, it was not you know, it had taken a long
time to get to the stage, you had a job to do,
you continued in your
job but you also made it plain that there was no ruling on this and
we were waiting for the court ruling
to see whether this was valid or
not. If the court had ruled it valid, obviously you would have had
to rethink but we stayed there
waiting for the court ruling and that
was made perfectly plain to everyone.
Did you at any stage indicate to the university or to the members of
the executive council, executive committee or council that
you did
not intend pursuing this matter any further? Absolutely not.”
[18] Similar approaches can be found in the evidence of the other two
respondents who indicated that they too did not accept the
fact that
the severance agreement had been properly repudiated. Second
respondent for example said this:
“
En wat sê u toe vir Makwela? Dat ek
gaan volstaan waar ek staan, hulle het die ding aangebied, hulle het
die pakket aangebied
en ek gaan nie van my standpunt af weg vat nie.”
[19] There was no evidence to gainsay the insistence by the
respondents that they were intent on relying on the severance
agreement.
Mr Hulley also relied in considerable detail on the
failure of the respondents to perform their side of the bargain of an
agreement
which they claimed to be valid.
[20] I earlier mentioned a notion of opportunism which was levelled
against the respondents. The facts in this case indicate the
following: A severance agreement was proposed by the appellant, was
accepted by the respondents. Admittedly, two days after the
expiry
of the period for termination by the employee, the circular of 2
October 2000 was generated informing any employee that
a failure to
perform would be treated as if that employee had absconded, the
severance offer notwithstanding. There is also evidence
which was
produced, that rumours to this effect had been circulating through
the university prior to the generation of that memorandum.
[21] The appellant had taken the view that it was entitled to
repudiate the agreement. It took the decision of the Labour Appeal
Court in the Franks case to put an end to this approach and find it
to be convinced that its approach was incorrect. Therefore,
employees were faced; 1) with an employer insisting on the validity
of a repudiation and; 2) circulating a clearly worded threat
which
put them in a very difficult position: Had the employees left on
30 September, as Mr Hulley insists they had to,
and the
appellant had been successful in the Franks case, they would have
been left with nothing for their efforts. The appellant
in effect
said this: you must perform your side of a bargain at a time when I
deny that there was a bargain and failure to perform
your side of a
bargain, when I insist there is no bargain, is fatal to any rights
that you may have pursuant to that bargain.
[22] There is no case from the researches that I have been able to
conduct in the limited time available to me, nor was Mr Hulley
able
to point to any in his argument which deals with a case of a
severance agreement and reciprocal obligations attendant thereon.
There are only two obligations when a severance agreement is
concluded, 1) an employee must leave and; 2) an employer must pay.
In this case, the employer announced prior to the period in terms of
which the employees were obliged to leave, that it was not
going to
pay. The employees took the attitude that there was no reason for
them to perform their side of the bargain.
[23] When all the authorities which had been placed before this
court, are stripped to their essence, the following remains the
law:
An innocent party may withhold performance only in circumstances
where his or her obligations are reciprocal to those of
the guilty
party who refuses to perform, ie where he cannot perform without the
co-operation of the repudiating party. See
GNH Office Automation
CC v Provincial Tender Board
, Eastern Cape
1998 (3) SA 45
(A) at
51F
. See also
Erasmus v Pienaar
,
1984 (4) SA 9
(T) at
24D-E
,
Moodley & Another v Moodley &
Others,
1990 (1) SA 427
(D) at
431D-I
.
[24] In this case, the respondents were put in a position where their
obligations to terminate were reciprocal to those of the
appellant,
which was to pay pursuant to the severance agreement. The appellant
having announced that it refused to perform, it
appears to be that
the authorities which I cited support the proposition that, in the
specific context of the present dispute,
respondents were entitled to
withhold performance in circumstances where they did not lose their
rights.
[25] To the extent that this may be a slightly novel proposition, for
which there is no direct authority, I again refer to the
passage that
I cited from the judgment of Van Dijkhorst AJA, at para 54,
namely (the law) “must also be effective
in practical, it must
as far as possible conform to the sense of justice of the community
which it is intended to regulate.”
I consider that particular
statement to be congruent with the conclusion to which I have
arrived.
[26] In summary, the appellant repudiated the agreement and prior to
any of the respondents being able to enforce their rights,
after
electing to abide the agreement, placed the respondents under a
threat of sanction for absconding should they leave the employ
of the
appellant without tendering a formal resignation. In my view, under
such a threat the respondents were entitled to continue
in the employ
of the appellant and having taken the attitude, that they continued
to insist that their rights were guaranteed under
a contract,
subsequent events proved them to be correct. The appellant was the
sole author of this entire state of affairs. It
cannot in effect
approbate and reprobate and then be heard to rely on its conduct,
which resulted in the very circumstances which
gave rise to the
respondents conduct.
[27] In my view, the respondents were entitled to claim specific
performance. The court
a quo
found correctly that they were
so entitled and its order was correctly and legally granted.
In the result the appeal is dismissed with costs
.
JAPPIE & TLATETSI AJJA
: Concurs.
---oOo---
On behalf of the Appellant: Advocate Woudstra/Mr Hulley
On behalf of the Respondents: Advocate Kruger