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[2012] ZALAC 17
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Tshongweni v Ekurhuleni Metropolitan Municipality (JA 47/2010) [2012] ZALAC 17; (2012) 33 ILJ 2847 (LAC) (15 June 2012)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Reportable
Of Interest to the other Judges
Case No: JA 47/2010
In the matter between:
MONGEZI TSHONGWENI
….......................................................................
Appellant
and
EKURHULENI METROPOLITAN
MUNICIPALITY
…............................
Respondent
Heard: 23 February 2012, 1 June
2012
Delivered: 15 June 2012
JUDGMENT
______________________________________________________________
MURPHY
AJA
1. The appellant appeals against a
decision of the Labour Court (van Niekerk J) in which it held that
the dismissal of the appellant
in July 2006 was procedurally fair but
substantively unfair. It however limited the relief awarded to the
appellant to the payment
of compensation equivalent to nine months
remuneration and ordered the appellant to pay the costs of the trial
proceedings excluding
the costs of preparation.
2. After his dismissal, the appellant
referred an unfair dismissal dispute to the Commission for
Conciliation, Mediation and Arbitration
(“the CCMA”).
When conciliation failed, the applicant applied to have the matter
referred to the Labour Court for adjudication
in terms of section
191(6) of the Labour Relations Act
1
(“the LRA”). Presumably,
on the basis that the dispute was of some complexity, the Director of
the CCMA granted the
application and referred the dispute to the
Labour Court.
3. The respondent has filed a notice
of cross appeal against the finding of the Labour Court that the
dismissal was substantively
unfair. The notice of cross appeal was
filed late and the respondent accordingly has filed an application
for an order condoning
the late delivery of the cross appeal. The
application for condonation is opposed by the appellant.
4. The appellant was employed in the
capacity of Executive Director: Public Safety in terms of section 56
of the Local Government:
Municipal Systems Act,
2
on a fixed term contract commencing 1
April 2002 for a period of five years ending 30 March 2007. His
dismissal arose out of alleged
transgressions on his part in relation
to the procurement of certain outsourced services. The respondent’s
department of
public safety, of which the appellant was the head, had
responsibility to appoint service providers to serve summonses in
criminal
matters falling within its jurisdiction. Clause 9.4 of the
appellant’s written contract of employment provided:
‘…
.
the Executive Director will at all times comply with the
Municipality’s performance management, quality and teamwork
standards,
systems and/or policies as agreed upon from time to time
between the City Manager and the Executive Director in writing.’
Clause 9.5 obliges the Executive
Director to assist the City Manager in effective, efficient and
accountable administration in accordance
with the applicable
municipal finance and procurement legislation. The appellant was
furthermore bound by the provisions of section
217 of the
Constitution which provides that when an organ of state contracts for
goods and services, it must do so in accordance
with a system that is
“fair, equitable, transparent, competitive and cost effective”.
It was unquestionably part of
the appellant’s responsibility to
ensure compliance with the respondent’s procurement and tender
policy in so far as
it affected his department.
5. After a disciplinary hearing which
lasted 20 days, the appellant was found guilty of misleading the City
Manager with regard
to the appointment of the companies selected to
serve summonses for the municipality; and of appointing the companies
in March
2003 without having proper authority to do so, without
following proper procedures and without having regard to the stated
tender
requirements for the prospective appointees. He was dismissed
on 5 July 2006, more than three years after the appointments were
made, and approximately nine months before his contract of employment
was due to expire.
6. Shortly before the appointment
process which is the subject of the dismissal dispute, the respondent
had cancelled a previous
tender process to appoint service providers
to serve summonses on its behalf for a period of 24 months.
7. On 26 February 2003, the Tender and
Procurement Committee of the respondent adopted the following
resolutions in relation to
the appointment of contractors to serve
summonses:
‘
2.That
the tender BE RE-ADVERTISED to ensure compliance of the Tender and
Procurement Policy …. (sic)
4.That
the Executive Director: Public Safety BE AUTHORIZED to deal with the
issuing of summons by inviting quotations on a month
to month basis,
for a maximum period of three (3) months.’
8. The appellant’s subordinate,
Mr. Sam Sibande, formulated a specification outlining the
requirements that prospective bidders
had to comply with in order to
be appointed. Original tax clearance certificates from the South
African Revenue Service not older
than six months had to be attached
to the quotation, and the contractor was required to have telephone
and fax facilities for communication
during office hours, as well as
the necessary infra-structure and resources to serve summons. All
prospective bidders were to tender
at the same price, namely R25 for
personal service and R15 for non personal service. The documentation
also required the bidders
to complete information relating to
directorships, financial information , including bank accounts,
authorities for signature,
information relevant to infra-structure
and resources available, plant and equipment, size of the enterprise,
staffing profile,
previous experience, financial ability to execute
the project, equity ownership, SMME status, local content, use of
sub-contractors
and job creation.
9. The quotation bids were opened in a
public process on 5 March 2003. Five service providers were appointed
from a total of 22
bidders. The respondent’s case is that the
bids of the successful service providers did not meet with the
requirements of
the specifications and that other bids, which did
comply, were rejected.
10. The appellant was suspended from
his employment about 18 months after the bidding process on 4 October
2004. As mentioned, he
was dismissed on 5 July 2006, that is, three
years after the appointment of the service providers.
11. The respondent called only one
witness in support of its case in the proceedings before the Labour
Court, namely Mr. Khanye
who was employed by it as a chief
accountant. It is unnecessary to canvass his evidence in any detail.
It established that the
quotations of the five successful bidders
were defective in certain respects. The defects took the form of a
failure to supply
information regarding bank details, telephone and
fax facilities, authorised signatories, job creation, infra-structure
and the
like. Most did not provide tax clearance certificates, though
the record shows that these were in fact provided a few days later.
Mr. Khanye testified that the failure to comply with the
specifications was generally fatal, and normally would result in the
disqualification of the bid. He denied that it was competent for the
department requiring the services to waive compliance with
the
specifications in cases where the bid documentation supplied
incomplete information.
12. After Mr. Khanye had been
cross-examined by counsel for respondent, the court
a quo
posed certain questions for clarification to him. It had emerged
during his evidence that the specifications were put together
by the
tender and procurement department and that the tender documentation
was standard. The following exchange is of some importance:
‘
Court
:
Now
do you know anything about the applicant’s role in this
process, and by this process I am referring to the award of the
tender for the provision of services on a month to month basis
subject to a maximum of three months and I am also referring to
the
request for the extension of that arrangement?
Khanye
:
No.
Court:
Do you have personal knowledge of the applicant’s involvement
or role in that process?
Khanye:
No, my Lord.’
This testimony in effect amounted to
an admission by the respondent’s sole witness that he had no
knowledge of any conduct
by the appellant pertaining to the
procurement, quotation and appointment processes in respect of the
invitations to bid, and thus
he was not able to pronounce on whether
the appellant had committed any misconduct.
13. With full comprehension of the
difficulty such an admission posed to its case, the respondent has
sought to argue on appeal
that the documentary evidence alone is
sufficient to establish that the appellant was guilty of misconduct.
It is common cause
that on 10 March 2003, the appellant signed a
letter addressed to the City Manager which was prepared by Mr.
Sibande in support
of the recommendation that the preferred bidders
be appointed. The letter records that quotations were invited through
the respondent’s
tender and procurement office on 28 February
2003 and the closing date was 5 March 2003. It records further that
twenty-two prospective
companies submitted their quotations for the
project, that all quotations were opened in public in an auditorium
on the respondent’s
premises and that the quotations were then
taken to the tender and procurement office for registration. The
letter notes that a
meeting was held on 10 March 2003 attended by
officials of the respondent’s departments of corporate services
and public
safety, including Mr. Sam Sibande, but not the appellant,
where, according to the letter ‘it was resolved that Public
Safety
must go ahead to appoint companies to deliver the
aforementioned service without using any form of criteria’.
14. The meeting was attended by Mr.
Malcolm Myeza of the finance department who advised the public safety
department that the quotation
system should be used but that it could
go ahead and “pin-point” companies and that there was “no
need to follow
any form of criteria to pin-point the companies”.
He also advised that the pin-pointed companies who had not supplied
tax
clearance certificates should be phoned to do so and that no
company should be appointed without submitting the required
certificates.
It is common cause, as I have said, that all the
successful bidders submitted tax clearance certificates within days
of the meeting.
15. The letter sets out a motivation
for why the successful bidders were found to be suitable to supply
the services.
16. The letter essentially sought
approval and authorisation from the City Manager to go ahead in the
way proposed, and further
intimated that approval for the process had
been given by the Executive Director Corporate and Legal Services and
the Strategic
Executive Director. It is common cause that the City
Manager signed the letter and granted approval. It is therefore not
disputed
that the department had sought and obtained authorisation
from three of the appellant’s superiors, before appointing and
contracting with the successful bidders. At some stage all three
added their signatures to the letter as a means of signifying their
approval.
17. The respondent contends that the
letter was misleading in that it did not point out the defects in the
information supplied
by the bidders and did not point out that there
were other bidders that had been disqualified despite satisfying the
requirements
by supplying fuller information and completing the
documentation properly. It also denied that “pin-pointing”
without
following any criteria was an acceptable way of procuring
services for the municipality.
18. In his evidence before the Labour
Court, the appellant explained that the letter had been drafted by
Sibande who had taken full
responsibility for the procurement
process. He had not attended the meeting of 10 March 2003 where the
decision to pin-point had
been taken. He maintained that had the bids
not been approved by his superiors he would not have made the
appointments. Throughout
his testimony he insisted that he had played
a minimal role in the process. He had not seen the advertisement for
quotations, nor
was he given the bid documentation submitted by the
bidders to scrutinise. He played no immediate part in the assessment
and evaluation
of the bids. He conceded that he had been the person
authorised by the Tender and Procurement Committee in terms of the
resolution
of 26 February 2003 to invite the bids, but he understood
his involvement to be limited. As far as he was concerned, the
advertising
and the evaluation of the bids was “an
administrative process… not a process that is run by me
personally, but it
is run by Sam Sibande who is responsible for
tender and procurement activities in my department”. Despite
some suggestion
in argument that it was improbable, this evidence was
not disputed or contradicted in any meaningful or convincing way.
19. The appellant described the
specification as being a “standard form that is issued by
tender and procurement office that
falls under finance” and
reiterated that these had not been brought to his attention at any
stage. When asked if he had considered
the relevant quotations, he
replied emphatically:
‘…
in
this case this document … did not come to my office for my
consideration. It has nothing to do with me. Any executive
director,
any city manager, any strategic executive director has nothing to do
with these documents, thus tender and procurement
office is
responsible for these processes.’
20. The appellant accepted
unequivocally that the bid documentation was defective and
problematic, but he qualified his concession
by stating:
‘
If
I may repeat ... it is not my domain to look at tender or bid
documents, it is not my function.’
In response counsel for the respondent
referred him to clause 7.2.1 of the respondent’s procurement
policy and put it to the
appellant that he had a duty to consider the
quotations which he had failed to do. The clause reads:
‘
After
all the tenders or quotations addressed to the Municipal Manager have
been opened and recorded on a list, it shall be forwarded
to the head
of the relevant department concerned. After the tenders or quotations
have been entered on a comparative list and evaluated
by the head of
the relevant department shall return (
sic
)
the tender documents together with a recommendation to the Tender and
Procurement Committee for consideration.’
The appellant accepted that in the
final analysis he was accountable but reiterated that the
responsibilities, functions and powers
had been delegated to Sam
Sibande.
21. No evidence was led by the
respondent to show that the appellant’s conduct was in breach
of the rules of procurement or
that he had acted improperly by
delegating his responsibilities to Sam Sibande. Khanye, it will be
re-called, was unable to comment
on the appellant’s conduct. No
other official testified that it was the policy and practice of the
respondent that the Executive
Director of a department was obliged
personally to determine the specifications and to evaluate each bid,
or that delegation was
in breach of the rules to the extent that a
valid and fair reason existed for the appellant’s dismissal. At
best for the
respondent, therefore, on the evidence before the court,
the only wrongdoing of which the appellant might have been guilty was
his negligence in relying upon Sibande’s recommendation and in
appending his signature to the letter of 10 March 2003 without
properly checking the information and documentation upon which the
recommendation was based. And even then, there is no direct
evidence
by any of his superiors which confirms that he breached the rules by
relying on Sibande’s representation that all
was in order.
Moreover, the evidence does not disclose whether or not the
appellant’s seniors perused and considered the
bid
documentation prior to approving the proposal and giving
authorisation for it to be actioned. Consequently, if there was
indeed
any negligence on the part of the appellant, it is not
possible to determine whether his conduct was the proximate cause of
an
irregular or improper appointment of any service provider.
22. As already mentioned, the court
a
quo
held that the dismissal was substantively unfair. It did so
on the basis that Khanye’s admission and the absence of any
other
evidence meant that the respondent had failed to establish
either that the applicant had committed the misconduct he was alleged
to have committed, or that his dismissal was the appropriate sanction
in the circumstances. It held that the respondent had failed
to
discharge its onus to prove that the dismissal was substantively
fair.
23. That finding, as stated earlier,
is the subject of the cross appeal, the late noting of which requires
condonation.
24. In terms of rule 5(5) of the Rules
of the Labour Appeal Court, a notice of cross appeal must be
delivered within ten days, or
such longer period as may on good cause
be allowed, after receiving notice of appeal from the appellant. The
appellant was refused
leave to appeal in the court
a quo.
The
appellant then petitioned and obtained leave to appeal from this
court. In both proceedings the respondent expressly reserved
its
rights to institute a cross appeal against the court
a quo’s
findings in relation to substantive fairness. After the appellant was
granted leave, counsel for the respondent reminded the instructing
attorney to deliver a notice of cross appeal within 10 days. The
attorney simply forgot to do so. The omission of the attorney
was
discovered only when the Registrar issued a directive for heads of
argument to be filed. Leave to appeal was granted on 2 December
2010.
The notice of appeal was delivered on 23 December 2010. The cross
appeal was delivered on 29 June 2011, 171 days late.
25. Whether condonation should be
granted depends on the degree of lateness, the explanation for it and
the applicant’s prospects
of success in order to establish the
existence or otherwise of good cause. Where, as in this case, the
degree of lateness is lengthy
and the only excuse being the
negligence of the legal representative, the applicant for condonation
is required to make out a strong
case that the cross appeal has good
prospects of success.
26. For reasons that appear from the
preceding analysis, the respondent’s prospects of reversing the
finding of substantive
unfairness are not good. The evidence
presented on behalf of the respondent at the trial was simply
insufficient to establish that
the appellant breached the procurement
policy. As explained, there is no evidence that contradicts the
appellant’s testimony
that the responsibility had been properly
delegated or supporting the conclusion that it was against practice
and policy for the
appellant to have relied on the report made by
Sibande. There is equally no basis for concluding that the letter of
recommendation,
incomplete as it may have been, was the sole causal
factor leading to the appointments. To the extent that the appellant
neglected
his duties by not checking whether the recommendation was
justifiable with reference to the bid documentation, it is doubtful
whether
that misconduct, if indeed such, would justify dismissal.
27. The misconduct, if that, was not
shown to have been deliberate or wilful, and in so far as it may have
been negligent, there
is no evidence that the respondent or any of
the unsuccessful bidders suffered undue prejudice or harm as a direct
result of the
flawed process or supporting the conclusion that it was
against practice and policy for the appellant to have relied on the
report
made by Sibande. It is not sufficient to assert, as the
respondent does, that the unsuccessful bidders must have suffered
harm.
There needed to be evidence that but for the irregularity they
in fact suffered harm. To hold otherwise is to venture into the realm
of speculation.
28. In a final attempt to find
substantive fairness, counsel argued that the appellant had not shown
himself to be remorseful for
his negligence. It contended that the
appellant’s testimony revealed that faced with the same
situation, he would have acted
similarly. By that token, it was
submitted, the appellant demonstrated his unreliability and hence
that the continuation of the
relationship became intolerable to the
point that dismissal was an appropriate sanction. Counsel founded
this submission upon a
rather limited dialogue during
cross-examination. After counsel had demonstrated the deficiencies of
the bid of a company called
Ubhoko Financial Services, the following
exchange occurred:
‘
Counsel
:
Based on what is contained in this document which you see now, would
you have appointed Ubhoko or not?
Appellant
:
I would have appointed them on the basis of the meeting and the
advice that I got from my seniors and the approval thereof.’
I do not consider the appellant’s
response to signify an obdurate attitude. The appellant was merely
seeking to exculpate
himself by saying that he had acted on advice
and with authorisation.
29. In the final analysis, the court
a
quo’s
finding of substantive unfairness cannot be faulted.
The issue is best disposed of by refusing the application for
condonation for
the late delivery of the notice of cross appeal on
the grounds that good cause has not been shown.
30. In his notice of appeal the
appellant lists no less than 39 grounds of appeal. In summary, they
challenge the court
a quo’s
findings on procedural
fairness, the remedy granted and the award of costs. Since the
exhibits dealing with procedural issues in
the court
a quo
did
not form part of the record on appeal, counsel for the appellant
wisely conceded during argument that the court was not in
a position
to properly assess the findings of the court
a quo
in relation
to procedural fairness. The appellant accordingly abandoned the
grounds of appeal pertaining to those issues.
31. With regard to the question of
remedy, there was much debate in the court
a quo
concerning
the implications of the appellant’s contract of employment
being one of fixed duration, which in the normal course
would have
expired nine months after he was dismissed. As a general rule, in
terms of section 193 of the LRA, but subject to the
exceptions listed
in section 193(2), where an employee’s dismissal is
substantively unfair the court must grant reinstatement
or
re-employment. Where the court does not order reinstatement or
re-employment then in terms of section 193(1)(c) of the LRA it
may
order the employer to pay compensation to the employee. Section 194
limits the amount of compensation payable to an amount
which is just
and equitable in all the circumstances, but not more than the
equivalent of 12 months remuneration in the case of
ordinary unfair
dismissals or 24 months where the dismissal is categorised as
automatically unfair.
32. Section 193(2)(c) of the LRA
allows the Labour Court or the arbitrator, on finding a dismissal to
be unfair, to decline to order
the employer to reinstate or re-employ
the employee where it is not reasonably practicable for the employer
to do so. The question
which exercised the court was whether it was
competent to reinstate an employee when the contract had expired
through the effluxion
of time, on the basis that despite the
cessation of the contract the employee had a reasonable expectation
that the initial contract
would have been renewed for a further fixed
term. For reasons that will appear presently, it was unnecessary for
the court to decide
this question because there was another
compelling ground which the court correctly recognised as an adequate
basis for refusing
reinstatement.
33. In my opinion, but without
deciding the point, there is merit in the proposition that it rarely
will be reasonably practicable
to reinstate an employee whose fixed
term contract of employment has expired, where, as in this case, the
renewal of the contract
for a second fixed term requires statutory
authorisation (in terms of section 57 of the Local Government
Municipal Systems Act)
and the employee has expressly agreed in the
initial contract that he would not entertain any expectation of
renewal or extension
beyond the initial fixed period. The purpose of
such a term is to ensure that renewal of the contract will take place
by means
other than mere expectation. The intention is for the
parties to embark upon further negotiations directed at assessing
previous
performance, setting new targets and objectives, and
imposing new conditions premised upon past experience. It aims at
ensuring
efficiency at the highest level of local government. In the
face of such an explicit intention, neither party could reasonably
assume the existence of an expectation of automatic renewal. By the
same token, the employment of senior managers in local government,
governed by section 57, must be done in terms of a written contract,
and renewal for a fixed period depends on the prior satisfactory
attainment of identified performance objectives and targets. The
reluctance of the court
a quo
to create a new contract for a
municipal manager on the basis of legitimate expectation accordingly
reflects prudent and appropriate
deference to the contractual
requirements applicable to senior managers in the local government
sector.
34. The proper reason for refusing
reinstatement though is that the appellant made it abundantly clear
in his testimony that he
did not want to be reinstated. Section
193(2)(a) of the LRA provides that reinstatement will be required
unless the employee does
not wish to be reinstated. The appellant
obtained a new job and commenced employment in a senior position with
the Gauteng Provincial
Government in February 2010, almost four years
after his dismissal. It was put to the appellant during
cross-examination that although
he sought reinstatement, if he
succeeded in his claim he no longer had any intention of
re-commencing employment with the respondent
because he preferred to
remain in his new position. The appellant conceded without hesitation
that such was indeed his intention.
In argument before us, counsel
for the appellant submitted that notwithstanding such concession it
would be permissible for the
court to order reinstatement for the
period between 5 July 2006 (the date of dismissal) and 31 January
2010 (the day before the
appellant commenced employment with the
Gauteng Provincial Government). He argued that reinstatement is “a
multifaceted remedy”
and that nothing in the LRA prevented the
Labour Court from making a qualified order of reinstatement, which
did not oblige the
appellant to tender his services for the future.
The effect of such an order, were it to be granted, would be that the
appellant
would be paid his remuneration for the stipulated period,
but he would be excused from tendering his services.
35. Counsel’s submission is
founded upon a fundamental misconception regarding the nature of the
statutory remedies available
for unfair dismissal in terms of the
LRA. Reinstatement, re-employment and compensation, as the exclusive
remedies for unfair dismissal,
(now provided for in section 193(1) of
the LRA), were introduced into labour legislation to remedy the
absence of satisfactory
relief for the unfair termination of the
contract of employment by employers. At common law the only remedy
available to a dismissed
employee was an action for wrongful breach
of contract. As in all cases of breach of contract, the injured party
could elect to
sue for specific performance or for damages. A claim
for specific performance in terms of a reciprocal obligation will
succeed
only where the party claiming performance has performed or at
least tenders performance. In the context of an employment contract,
a claim for specific performance is a claim for reinstatement on the
same terms and conditions of employment that existed at the
date of
dismissal and must be accompanied by a tender by the employee to
resume services or at least to fulfil the principal obligation
under
the contract to make his or her services available. The employee’s
entitlements under a contract of employment are
dependent on the
availability of his or her services to the employer and not the
actual rendering of services.
3
36. Prior to the 1980’s our
courts rarely awarded specific performance of a contract of
employment on the ground that it was
inadvisable to compel one person
to employ another whom he does not trust in a position which imports
a close relationship.
4
This meant that an employee in the
event of a wrongful termination of employment was restricted to a
claim for damages to remedy
the breach. Where damages are sought as a
surrogate for performance they relate to the monetary value of the
performance agreed
upon but not received. Such damages in the
employment context were normally of a limited amount because of the
application of the
general principle that an injured party is only
entitled to his or her positive interest. The basic principle in the
assessment
of damages is that the plaintiff should be placed in the
position he or she would have been in had the contract been fully
performed.
All that is required for the lawful termination of a
contract of employment, for there to be full performance, is notice
of termination
in an indefinite term contract and the expiry of the
period in a fixed term contract. Damages for breach in the employment
context
accordingly will be either the amount payable as notice pay
in an indefinite term contract or the salary payable for the
unexpired
period of a fixed term contract, less any sum the dismissed
employee earned or could reasonably have earned during the notice
period
or the unexpired period of the contract, such being the actual
loss suffered by him.
5
Hence a plaintiff’s damages
could never be more than the notice pay due under the contract or the
salary owing in respect
of the unexpired fixed term.
37. The unfair dismissal regime was
introduced in the 1980’s, following the recommendations of the
Wiehahn Commission of Enquiry
into Labour Legislation, precisely in
recognition of the fact that contractual principles and remedies
offered employees paltry
protection. Since then employees can sue on
a wider cause of action (unfairness rather than wrongful breach) and
the statutory
remedies of reinstatement re-employment and
compensation are available. In
Equity
Aviation Services (Pty) Ltd v CCMA and Others
,
6
the Constitutional Court explained the
meaning of the word reinstate as follows:
‘
The
ordinary meaning of the word “reinstate” is to put the
employee back into the job or position he or she occupied
before the
dismissal, on the same terms and conditions. Reinstatement is the
primary statutory remedy in unfair dismissal disputes.
It is aimed at
placing an employee in the position he or she would have been but for
the unfair dismissal. It safeguards worker’s
employment by
restoring the employment contract. Differently put, if employees are
reinstated they
resume
employment
on the same terms and conditions that prevailed at the time of their
dismissal.’
(
Emphasis
supplied
)
Reinstatement may be ordered from a
date later than the date of dismissal (section 193(1)(a) of the LRA)
and thus may be of limited
retrospectivity. Re-employment implies
termination of a previously existing employment relationship and the
creation of a new employment
relationship, possibly on different
terms both as to period and the content of the obligations
undertaken. In both instances, as
in the case of the common law
remedy of specific performance, the employee must make his services
available if the remedy is to
be maintained; there must be a
willingness to resume employment. Aside from the requirements of the
common law, that much follows
in part, it would seem to me, as the
corollary arising from the provision in section 193(2)(a) of the LRA
that reinstatement or
re-employment should be ordered unless the
employee does not wish to be reinstated or re-employed.
38. Compensation is the remedy
available to an employee who is found to be unfairly dismissed but
not granted the remedy of reinstatement
or re-employment. As alluded
to earlier, in terms of section 193(2) read with section 193(1)(c) of
the LRA, compensation is payable
where the employee does not wish to
be re-instated or re-employed, where the continuation of the
employment relationship would
be intolerable, where reinstatement or
re-employment is reasonably impracticable or where the dismissal was
only procedurally unfair.
Importantly, the LRA does not grant an
employee a remedy to sue for damages for unfair dismissal. In most
cases an award of compensation
(capped at 12 months remuneration for
unfair dismissals, and 24 months remuneration for automatically
unfair dismissals)
7
will be more than an award of damages
at common law, especially where the contract is for an indefinite
period. On the other hand,
it could be less in the case of a fixed
term contract, depending on the balance of the period remaining after
dismissal. An employee
seeking damages for termination of employment
in excess of the statutory amount of compensation will accordingly
have to sue the
employer for a wrongful breach of contract.
39. The appellant’s claim for
reinstatement, in the guise he wants it, cannot be maintained because
he is not prepared to
make his services available to the employer and
he does not want to be put back in the job.
40. What the appellant really wants is
not reinstatement (the resumption of his employment) but his salary
for the period he was
unemployed between July 2006 and February 2010,
that is 43 months salary which would be an amount in excess of R2
million. Such
an amount would be his positive interest, which would
be the actual loss of his salary for the 9 months remaining as the
unexpired
period of his fixed term, as well as consequential losses
in respect of the salary he would have earned had his fixed term
contract
been renewed for at least 34 months. The foremost problem
with granting such a remedy is that, as already said, the LRA does
not
provide for damages for unfair dismissal. Where reinstatement is
not granted, the court is limited to granting compensation in a
maximum amount of 12 months.
41. It is also improbable that the
appellant would succeed at common law in recovering consequential
damages. Aside from the fact
that no case has been made in support of
a wrongful breach of contract, the appellant contractually warranted
that he had no expectation
of renewal and consequently on that ground
his loss might legitimately be held to be too remote. That conclusion
would be reinforced
by the fact of the breakdown of the trust
relationship in this case. It is more than arguable that the
appellant could not reasonably
have entertained any expectation of
renewal in the circumstances. It should also be kept in mind that the
dismissal here did not
consist of an expiry of a fixed term contract
in the face of a reasonable expectation of renewal.
8
The appellant was dismissed by the
employer terminating the contract on the grounds of alleged
misconduct. The irony, of course,
and this perhaps underlies the
appellant’s innovative formulation of his claim for damages as
a claim for reinstatement,
is that had the appellant been employed in
terms of an indefinite term contract, and had he wanted
reinstatement, he may possibly
have succeeded in his claim for back
pay – an apparent anomaly under the LRA perhaps. Whether he
would have received the
full amount would have depended on the court
favourably exercising its discretion to reinstate him retrospectively
to the date
of dismissal. But whatever the outcome he would still
have been obliged to tender his services.
42. To summarise, the appellant is not
entitled to reinstatement because firstly he was not prepared to make
his services available
to the respondent. Secondly, even had he
wanted reinstatement it might have been reasonably impracticable to
grant it considering
the requirements of the local government
legislation. And, thirdly, had he wanted reinstatement and the court
was bold enough to
grant it and write another fixed term contract for
the parties, most likely such reinstatement (or re-employment) would
have been
of limited retrospectivity. And finally, the appellant is
not entitled in terms of the LRA to the damages he seeks (which he
optimistically
labels as reinstatement).
43. In granting an amount of nine
months salary as compensation, the Labour Court was evidently guided
by the fixed contract having
nine months to run at the date of
dismissal. The court exercised its discretion properly. In the
absence of any misdirection or
error, there is no basis for
interfering with the award of compensation.
44. In the final analysis, the
appellant is not entitled to reinstatement in the guise that he seeks
it and there is no basis for
interfering with the compensation award,
with the result that the appeal against the remedy granted by the
Labour Court cannot
be upheld.
45. The appellant has also appealed
against the costs order of the Labour Court. It will be recalled that
despite the appellant’s
success the Labour Court refused to
grant him his costs for preparation and ordered him to pay the
respondent’s costs of
the trial. The court justified its orders
on two grounds: firstly, because the appellant had rejected an offer
of settlement in
the amount of nine months salary made on the morning
of the trial; and secondly, it felt that the manner in which the
appellant
had conducted the various proceedings (the disciplinary
hearing and the trial) permitted the refusal of costs.
46. When a successful party has been
deprived of his costs in the trial court, an appeal court will
enquire whether there were any
grounds for the departure from the
ordinary rule that costs should follow the result. If there are no
good grounds it should interfere.
However, it should be reluctant to
interfere with the discretion of the trial court merely on the
grounds that it might have taken
a different view of the sufficiency
of such grounds.
9
47. On the morning that the trial
commenced, counsel for the respondent submitted a written offer
purporting to be made in terms
of rule 22A, of the Rules of the
Labour Court, in terms of which the respondent undertook to pay the
appellant for the remaining
balance of the fixed term contract within
21 days of the acceptance of the offer, provided the offer was
accepted by 14h00 on the
first day of the trial. The offer was
rejected.
48. The Labour Court’s order in
respect of the costs of the trial was predicated on the rejection of
the offer and the provision
in rule 22A(7) that the court may take
into account any offer made by a party in terms of the rule in making
an order for costs.
The problem with the court’s finding is
that the offer was not made in accordance with the provisions of rule
22A. The appellant
was given insufficient opportunity to reflect as
required by rule 22A(3), which allows the recipient of the offer at
least 10 days
to consider it. Moreover, the offer did not make any
provision for costs and particularly did not state whether the
respondent
disclaimed liability for costs, as it was required to do
for obvious reasons in terms of rule 22A(2)(d). In the light of such,
it was unduly harsh and unjustified to deprive the successful
appellant of his costs for trial on the grounds that he refused a
last minute offer of this kind.
49. As regards the conduct of the
trial by the appellant’s counsel, the record reveals that
counsel was a source of exasperation
to the court. His
cross-examination was at times seemingly purposeless, and his
objections to the admissibility of evidence unfounded
and confused.
But it cannot be said that his conduct was vexatious, scurrilous or
dishonourable. Nor can it be said that any line
of cross-examination
was needlessly pursued. His questioning was sometimes long-winded and
occasionally repetitive. His responses
to the court’s guidance
were sometimes obdurate, unperceptive and at times bordering on
disrespectful. But I am unable to
conclude that the approach taken
was misguided to the extent that it justified depriving the
successful appellant of his costs.
Moreover, in fairness, counsel
presented the appellant’s case in an orderly and effective
manner. At the end of the day,
a trial which was set down for 10 days
was completed in 5 days. I also doubt whether it was legitimate for
the court to penalize
the appellant for the conduct of the
disciplinary hearing. There was insufficient evidence to establish
that it was objectionable
to the extent that it warranted denying the
appellant his costs of preparation or trial. In such circumstances,
the court erred
in making the orders it did. The appeal in respect of
costs should therefore be upheld.
50. The appeal and the application for
condonation for the late delivery of the cross appeal were originally
set down for hearing
on 23 February 2012. The respondent had filed
comprehensive heads of argument on 29 July 2011 dealing with the
application for
condonation, and the issues of substantive and
procedural fairness. The appellant had not filed heads dealing with
condonation
or the prospects of success on substantive fairness.
Prior to the hearing, I issued a directive to the parties informing
them that
it was necessary for the appellant to file supplementary
heads dealing with the application for condonation, and to furnish
the
court with the transcript of the disciplinary proceedings
admitted into evidence in order to prepare for the appeal against the
finding of procedural fairness. On 9 February 2012, the attorney for
the respondent addressed a letter to the attorney of the appellant
dealing with the directive. In it he stated:
‘…
should
the course of action elected by your client result in the Judges not
being prepared to hear the matter on the 23
rd
,
our client will insist that your client pay the wasted costs
occasioned by such failure.’
The appellant did not comply with the
directive and failed to deliver heads of argument on the outstanding
issues or the transcript.
This failure resulted in the appeal being
postponed to 1 June 2012. There can be no doubt that the appellant is
liable for the
wasted costs occasioned by the postponement.
51. As regards the costs of the
appeal, both parties have had a measure of success. Accordingly, it
is fair that there be no order
as to the costs of appeal.
52. In the premises, the following
orders are issued:
i) The application for condonation of
the late delivery of the notice of cross appeal is dismissed with
costs.
ii) The appeal partially succeeds but
only in respect of the award of costs. The orders of the Labour Court
are accordingly varied
to read as follows:
“
1. The dismissal
of the applicant was substantively unfair.
2. The applicant is
awarded compensation equivalent to nine months remuneration to be
calculated at the rate of remuneration earned
by the applicant on the
date of his dismissal.
3. The respondent is to
pay the costs of the adjudication proceedings.”
iii) The appellant is ordered to pay
the wasted costs occasioned by the postponement of the appeal on 23
February 2012.
iv) There is no order as to the costs
of the appeal.
_________________
JR MURPHY, AJA
Acting Judge of the Labour Appeal
Court
I
agree
__________________
P TLALETSI, JA
Judge of the Labour Appeal Court
I
agree
__________________
M MOLEMELA, AJA
Acting Judge of the Labour Appeal
Court
APPEARANCES:
For
the appellant: Advocate F Memani
Instructed
by: Lennon Moleele and Partners
For
the respondent: Advocate F Boda
Instructed
by: Malherbe Rigg and Ranwell Inc
1
Act
66 of
[1811] EngR 232
;
1995.
2
Act
32
of 2000.
3
Johannesburg
Municipality v O’Sullivan
1923
AD 201.
4
Schierhout
v Minister of Justice
1926
AD 99
at 153.
5
Myers
v Abramson
1952 (3) SA 121
(C) at 127C-D.
6
[2008]
12 BLLR 1129
(CC) at para 36.
7
Section
194 of the LRA.
8
Section
183 of the LRA defines a dismissal to include a termination of
employment arising from the non-renewal of a fixed term
contract
where the employee entertained a reasonable expectation of renewal.
Even where that situation applied, the court or
arbitrator will
always be required to assess the fairness of the non-renewal.
9
Merber
v Merber
1948 (1) SA 446
(A) at 453