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[2010] ZALAC 10
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Jordaan v Commission for Conciliation, Mediation and Arbitration and Others (PA1/09) [2010] ZALAC 10; (2010) 31 ILJ 2331 (LAC) ; [2010] 12 BLLR 1235 (LAC) (11 May 2010)
16
JUDGMENT
2010-05-11
PA1/09
- D K DE JAGER
IN THE
LABOUR APPEAL COURT OF SOUTH AFRICA
HELD AT
:
BRAAMFONTEIN
CASE NO
: PA1/09
DATE
: 2010-05-11
In the matter between
CHRISTIANA JACOBA JORDAAN APPELLANT
And
COMMISSION FOR CONCILIATION
MEDIATION AND ARBITRATION FIRST
RESPONDENT
COMMISSIONER J A VAN DER WALT SECOND RESPONDENT
HOMENET CORNERSSTONE THIRD RESPONDENT
CORNERSTONE HOMENET FOURH RESPONDENT
LANCE DEREK GOUWS FIRTH
RESPONDENT
CORNERSTONE GRAPHICS CC CK96/51361/23
t/a HOMENET CORNERSTONE BEACON BAY SIXTH RESPONDENT
LANCE DEREK GOUWS in his capacity as
MEMBER of CORNERSTONE GRAPHICS CC
CK96/51361/23 t/a HOMENET CORNERSTONE
BEACON BAY SEVENTH
RESPONDENT
D.T. GOUWS PROPERTIES CC
(Reg. No. 2003/077620/23)
t/a HOMENET CORNERSTONE EIGTH RESPONDENT
D.T. GOUWS PROPERTIES CC
t/a CORNERSTONE HOMENET NINTH RESPONDENT
CORNERSTONE ESTATES TENTH RESPONDENT
HOMENET CORNERSTONE BEACON BAY ELEVENTH RESPONDEN
_____________________________________________________________
Cor
am:
WAGLEY DJP,
DAVIS JA, MUSI AJA
,
_____________________________________________________________
J U D G M E N T
_____________________________________________________________
DAVIS JA
: This is an appeal against the court
a
quo’s
refusal to review and set aside an arbitration award
of the second respondent. In terms of that award, the second
respondent held
that the appellant had established a case of
constructive dismissal in terms of Section 186(1)(e) of the Labour
Relations Act,
66 of 1995 (LRA).
The court
a quo
per Cele J, determined the matter on the
basis that the appellant’s review application was late and that
she had failed to
apply for condonation. This point was not
persisted with by the sixth respondent on appeal. It appears that the
merits of the
dispute were not canvassed in full by the court
a
quo
. However, the notice of application for leave to appeal sets
out as the grounds of leave to appeal; inter alia that the court
a
quo
erred in its application of the facts to section 145 of the
LRA. Accordingly I propose to deal with this matter on the merits of
the case as opposed to the issue of condonation.
Briefly the facts are as follows:
The appellant commenced employment with the sixth respondent on 1
July 2002 in a position of an estate agent. She initially worked
out
of the Southern Wood office of the sixth respondent (“the
company”), working under the direct supervision of Mr
Lance
Gouws, the majority shareholder of the company. In early July 2004,
after a request, she went to work at the Beacon Bay
office of the
company which was managed by her husband Mr Jacques Jordaan, who held
34 percent shareholding in the Beacon Bay business
of the company.
It is common cause that the relationship between Mr Gouws and
Mr Jordaan deteriorated. At a meeting on 22 July 2004, Mr Gouws
invoked powers possessed by him as a two third majority shareholder
of the company and removed Mr Jordaan from his position as
manager.
Mr Jordaan continued to be an employee of the company and continued
to hold his minority shareholding. From this moment,
negotiations
proceeded between Messrs Gouws and Jordaan to ensure the resignation
of Mr Jordaan, the purchase of his shares,
the calculation of
the value of those shares and any dividends which might have been
forthcoming.
An important issue raised at a meeting on 22 July 2004 was
that of a restraint of trade agreement. It appears that
the
following was recorded as part of the proceedings of that meeting:
“Given the current market conditions there is a necessity to
protect the proprietary interests of the corporation in order
to
protect the goodwill. Therefore, it becomes an operational
requirement to put into place a restraint of trade. Be aware that
any choosing not to sign it run the possible\conceivable risk of
having their employment terminated for operational reasons. This
would be a last resort to protect the business”.
On 27 July, Mr Gouws met staff members including appellant. It
appears that, at that meeting, notwithstanding disputes in the
evidence, the employees were to be granted a 30 period to consider a
restraint of trade agreement which had been prepared. Mr
Gouws
informed the meeting that he had decided to require the employees to
sign a restraint of trade, after having taken advise
from his
attorney.
The question arose from appellant as to what would happen, were she
to decline to sign the restraint of trade agreement. It appears,
notwithstanding various differences in the evidence particularly
between her and Mr Gouws, that the latter indicated that he would
not
fire her but there was a possibility that she would be retrenched.
The appellant was then asked the following question:
“I also asked what will happen if I do not sign the restraint
of trade … He said sorry, if you do not sign you will
have to
leave the company. I said okay, he said you will have to leave the
company, then I said to him, okay Lance that is fine
I will go no
problem. I said to him, are you going to fire me. Yes, I asked him
if he is going to fire me and he said, no I will
retrench you”.
That was the evidence of appellant.
Mr Gouws’ testimony was to the effect that he considered the
possibility of retrenchment.
It was common cause that appellant then asked Gouws for a letter,
either dismissing or retrenching her. Gouws was not prepared
to
provide the appellant with such a letter, indicating that he had
first a need to consult further with his attorney. In this
connection, Mr Gouws testified that he did not intend to enforce the
restraint and was not intent on providing the appellant with
the
letter from his attorney. In fact, he testified thus:
“After your meeting with Mrs Jordaan on or about 27 August,
what was on this document as far as you understood? Well
it was
plain that she was determined to try and get from me some sort of a
letter to be used against me at a later stage. I had
no intention at
that stage of enforcing the restraint of trade, because by that stage
a number of staff members had already left.
So I was not going to
enforce her, I did not want to tell her that at that stage. The fact
that I told her I had to consult with
my attorney was to fob her off,
because I was never going to give her that. The letter of
retrenchment? Well as I understand
it, only paid employees may be
retrenched, so I never ever used the word retrenched because I did
not believe it applicable to
our industry whatsoever, and I never
used the word fire, I constantly and repeatedly used the word here
termination, and that the
employment terminated for operational
reasons. That is the wording I used again and again and again. I was
very careful not to
use any other terminology whatsoever”.
On 31 August, the appellant persisted as to whether she was to
obtain a letter which Gouws had indicated will be generated from
his
attorney. He responded that he had not as yet had the opportunity to
speak to his attorney and it was at this point according
to appellant
that she felt compelled to resign. She prepared a letter of
resignation which she handed to Gouws. That letter
of resignation
referred to a meeting of 27 August 2004 and then records the
following:
“As I refused to sign the restraint of trade, you then said I
must leave Homenet… I then said I will only if my bond
commissions were paid out to me. You agreed to pay this only if I do
not contact Errol Theron about any future business,
which I did
not accept. You were going to give me a letter by 31 August
2004 stating that I am retrenched because I do not
want to sign to
the restraint of trade. As I have not yet received this letter I am
now resigning with immediate effect”.
Following this resignation, appellant commenced employment with a
business which was run by her husband and which, it is common
cause,
was in competition with that of the Company.
So much therefore for the facts. The case turned on appellant’s
argument that this was an instance of a constructive dismissal,
as
defined in terms of Section 186(1) (e) of the LRA which defines
dismissal to include the case:
“where an employee terminated a contract of employment with or
without notice because the employer made continued employment
intolerable for the employee”.
Constructive dismissal therefore, amounts to a position where the
employee terminates the employment contract in circumstances
where
the conduct of the employer compels the termination by the employee.
Accordingly, it is treated as if the termination had
taken place by
way of an act of the employer.
In
Minister of Home Affairs v Hambibge N.O. & Another,
(1999) 20 ILJ 2632 (LC), Landman J said:
“Section 186(1) (e) of the LRA recognises the concept of
constructive dismissal. Constructive dismissal occurs when an
employee
terminates a contract unilaterally because the employer has
made continued employment intolerable.
The termination of the
contract is in these circumstances deemed not to be a voluntary
termination by the employee but an act of
dismissal by the employer.
The concept is capable of embracing many different factual situation
…
The circumstances (of constructive dismissal) are so infinitely
various that there can be, and is, no rule of law saying what
circumstances justify and what do not. It is the question of fact
for the tribunal of fact”.
The point, however, is that the law, since this dictum, has set out
a fairly clear set of guidelines of how to approach a dispute
predicated on a constructive dismissal. Thus, in
Sappi Kraft
(Pty) Ltd t/a To Gain Mill v Majake N.O. & Other,
(1998)
19 ILJ 1240 at 1250, the court set out a two stage approach which was
required to be followed in these disputes. In the
first place, an
employee who leaves a place of employment bears the onus of showing
that the employer effectively dismissed the
employee by making her
continued employment intolerable. Once this is established, a second
stage must be applied and this concerns
an evaluation of whether the
dismissal was unfair. The court, however, said correctly:
“The two stages that I have set out above are however not
independent stages. They are two stages in the same journey and
the
facts which are relevant in regard to the first stage may also be
relevant in regard to the second stage”.
In short, when faced with a case of constructive dismissal, an
employee, such as appellant, bears an initial onus of showing,
on an
objective standard, that the employer has rendered the employment
relationship so intolerable that no other option is reasonably
available to an employee, save for termination of their relationship.
The point is perhaps best set out in a judgment of this Court by
Conradie JA in
Old Mutual Group Schemes v D Dreyer
& Another
, (1999) 20 ILJ 2030 (LAC) 2036:
“
Buitendien sou so ʼn werknemer wat uit
die bloute bedank dit gewoonlik moeilik vind om ʼn hof te oortuig
dat hy werklik
konstruktief ontslaan is. Die bewyslas rus op die
werknemer ... Die bewyslas is nie ʼn ligte een nie ... Dit is
nie vir
ʼn werknemer maklik om aan te toon dat ʼn werkgewer
die voortsetting van sy diesn onuithoudbaar gemaak het nie. Hy kan
hom nie maar net op frustrasies en irritasies verlaat en hom bekla
oor reels wat vir all werknemers geld, maar hom nie aanstaan
nie.
Net soos ontslag is ʼn gedwonge bedanking ’n alle laaste
opsie. Dit is ʼn uitweg wat ʼn werknemer nie
mag volg terwyl
daar no gander uitweë is nie.”
This dictum represents a salutary
caution that constructive dismissal is not for the asking. With an
employment relationship, considerable
levels of irritation,
frustration and tension inevitably occur over a long period. None of
these problems suffice to justify constructive
dismissal. An
employee, such as appellant, must provide evidence to justify that
the relationship has indeed become so intolerable
that no reasonable
option, save for termination is available to her.
Mr Klem who appeared on behalf of appellant, based his case on a
series of a central propositions. He contended that the sudden
“compulsion” to ensure that all employees of the company
should sign a restraint of trade agreement was designed essentially
to rid the company of Mr Jordaan.
Secondly, when Mr Gouws addressed the employees and placed the
restraint of trade before them, it was done in circumstances where
they were to be given 30 days to sign the agreement. Mr Gouws never
disclosed to any of his employees that his motivation was
in effect
to rid the company of Mr Jordaan.
Thirdly, Mr Klem submitted that Mr Gouws, by virtue of the fact that
he produced the restraint of trade unannounced and informed
the
employees that they had 30 days to consider and then sign the
agreement on pain or on threat of a loss of employment, had used
oppressive measures which rendered the position of each employee
precarious.
Fourthly, because Mr Gouws had exercised this level of compulsion,
and because the threat he uttered concerned a loss of security
of
employment by all employees, his conduct rendered the relationship
with the employer intolerable. Hence Gouws’s conduct
could
legitimately and justifiably be classified as a form of constructive
dismissal as I have set out that concept out in this
judgment.
I stated earlier that the onus, at the first stage of the inquiry was
borne by the appellant. When the critical evidence of appellant
and
Mr Gouws, is examined, it reveals a different story from that urged
upon us by Mr Klem.
That story can be summarised thus:
The relationship between Mr Jordaan and the company, via Mr Gouws
as a majority shareholder had unquestionably deteriorated.
By 14
July the agenda of the meeting prefigured the course of conduct on
which Mr Gouws was intent insofar as Mr Jordaan
was concerned.
By 22 July, Mr Jordaan had been stripped of his managerial position
and it was clear that he was now living on
“borrowed time”.
Mr Gouws was concerned, as a result of these developments, with the
possibility of Mr Jordaan setting
up business in competition to the
company.
None of his employees had entered into a restraint of trade agreement
with the Company. He explained that he was anxious that these
particular employees could leave his employ. A few passages from Mr
Gouws’ evidence suffice:
“The situation in the office is obviously tense.
Jacques Jordaan was cajoling and having private meetings with
all
and sundry in an effort to get them to go with him”.
“Further, I was led to believe that he (Jacques Jordaan) was
opening up in competition, and I was tempting to protect my
business
as best I could, which is why I took the steps I did. I said what I
said is that it is a very awkward having a wife as
a competing estate
agent in your office. Notwithstanding that fact, that Rina is an
honest person, I would have kept her had she
wanted to stay”.
The evidence shows that Mr Gouws consulted with his attorney to
determine how best to protect the business assets of the Company.
As he said:
“The assets of an estate agent are intellectual properties, and
database of clients, and the relationship one builds up with
them.
It is common practice that the estate agency spends an awful lot of
money branding itself in order to get people to come
to them. But
once an agent has a client, the client follows the agent,
notwithstanding the fact that in most events the agency
was the one
responsible for that action to happen”.
This evidence, together with much of the balance of his evidence,
indicates a legitimate apprehension that, were Gouws to have
done
nothing, he would have lost key staff. The organisational rationale
for ensuring that employees, not I might add, only employees
affected
by the Jordaan connection, was to ensure loyalty to the Company and
to obviate the possibility that it could have been
denuded
dramatically of intellectual assets, namely employees who, by the
making of the business held the value of the Company.
In my view, notwithstanding differences between the testimony of the
witnesses, the clear narrative that emerges from the record,
supports
the version of the company. It is a plausible and justifiable cause
of action,to obtain a restraint of trade, when faced
with the
position confronted by Mr Gouws. There is no justification, other
than in some imaginative conspiracy theory, to conclude
that the real
issue concerned the subversion of the Role of Mr Jordaan. True, Mr
Jordaan’s deteriorating relationship with
Mr Gouws triggered
off the latter’s action, but, as stated, that was designed to
protect the assets of the company, no more
and no less.
There is, further evidence which renders appellant’s case
even more problematic. Mr Gouws testified that appellant was
ultimately determined to leave. It is correct, as Mr Klem submitted,
that Mr Gouws never took the appellant into his confidence
by
suggesting that if she had not signed the restraint he would have
done nothing. But objectively speaking, her own evidence
is
instructive in this regard:
“So he would go and discuss it where after he would make a
decision. There was no ultimatum, was there? Well I had to sign
the
restraint of trade otherwise I would have had to leave the company,
that was his words, we would be asked to leave the company.
No, but
you now putting a different version, you say you asked him to fire
you and he said he would go and talk to his lawyer,
you said will you
fire me, he said, I will talk to his lawyer. That never happened.
So you never knew what was going to happen
did you? No”.
Furthermore, when appellant was exposed to cross examination, she
conceded that, while she might have had subjective apprehensions
as
to the consequences of a refusal to sign, there was no objective
justification for the conclusion that she would have lost her
job in
circumstances if she had refused to so sign the restraint. That
itself, accords with Mr Gouws’ own evidence
that he was
trying to play “a game of bluff” to ensure that she
signed, but that she was far too valuable a member
of his staff to be
let go were she not to have signed the restraint.
In summary, the evidence in this case falls significantly short of
that, where it could be concluded “the employer behaved
in a
deliberately oppressive manner and left the employee with no option
but to resign or to protect his or her own interests”
See
Grogan, Workplace Law (4
th
edition at
105)”.
Furthermore, given Conradie JA’s approach in
Old Mutual
Group Schemes,
with regard to the onerous burden placed upon an
employee, there is not, on a proper analysis of the evidence, a
justifiable conclusion
that appellant’s employment became
intolerable. There was no evidential basis by which to justify, on
the probabilities
that there was a clear, objective and immediate
threat of dismissal. To be sure, there may well have been some
tension but that
was to be explained by the Jordaan departure and by
the decision that employees should sign a restraint of trade
agreement. On
its own, that can never justify constructive dismissal.
Were to do so, these courts would be flooded with constructive
dismissals
from employees who had had some form of controversial
engagement with their employer but which does not amount to
constructive
dismissal.
For those reasons, I would dismiss the appeal. Mr Klem
submitted that the appellant came to the Labour Court in good faith
and that therefore should not be muleted with costs. But, Mr Wade
who appeared on behalf of the sixth respondent correctly noted,
that
argument is hardly a basis by which not to award an order of costs,
particularly in a case in which it was sought to stretch
the law
relating to constructive dismissal in a manner which, in my view, has
not yet been nor should it be contemplated by the
courts.
For these reasons, I would dismiss the appellant’s appeal with
costs.
___________________
DAVIS JA
WAGLAY DJP
: )
MUSI AJA
: ) Concur
---oOo---
APPEARANCES:
For the appellant: Adv. H.G. Klem SC
Instructed by: W.H. Opperham Attorneys
For the Respondent: Mr R.B. Wade
Instructed by: Russel Inc.
Date of Hearing: 11 May 2010
Date of Judgement:11 May 2010
APPEARANCES:
For the appellant: Adv. H.G. Klem SC
Instructed by: W.H. Opperham Attorneys
For the Respondent: R.B. Wade
Instructed by: Russel Inc.
Date of Hearing: 11 May 2010
Date of Judgement:11 May 2010