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[2008] ZALCD 22
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Goddard v Metcash Trading Africa (Pty) Ltd (D581/2005) [2008] ZALCD 22 (5 May 2008)
IN
THE LABOUR COURT OF SOUTH AFRICA
(HELD
IN DURBAN)
CASE
NO: D581/2005
In
the matter between
R
GODDARD
APPLICANT
And
METCASH
TRADING AFRICA (PTY) LTD
RESPONDENT
JUDGMENT
AC BASSON, J
[1] The Applicant in this
application is Mr. R Goddard (hereinafter referred to as “the
Applicant”) and the Respondent
is Metcash Trading Africa (Pty)
Ltd. The Applicant brought an application to this Court to set aside
the settlement agreement entered
into by the parties on 15 February
2005 in terms of which he agreed to accept the retrenchment package
offered to him. This agreement
was in full and final settlement of
all claims and/or disputes arising from the termination of his
contract of employment.
[2] The gist of the
Applicant’s case was as follows: He was employed by the
Respondent as a Divisional Training Manager until
31 May 2005 when
his contract of employment came to an end by virtue of a retrenchment
process which had been initiated by the
Respondent. At the time of
the dismissal the Applicant had 19 years of service with the
Respondent. The retrenchment process was
concluded by the Applicant
entering into a settlement agreement on 15 February 2005 which set
out the terms of the termination
of employment. It was the
Applicant’s case that he had entered into the agreement
principally on the strength of representations
made to him namely
that his position would be made redundant. The Applicant accordingly
accepted the Respondent’s offer of
the retrenchment benefits as
set out in the settlement agreement. The Respondent’s case (as
it appears from the papers) was
materially different. It was denied
by the Respondent that the position of the Applicant had become
redundant. According to the
Respondent’s papers the Applicant
was struggling to meet and maintain the Respondent’s required
performance standards
and that that had led to performance counseling
meetings during which the compatibility and/or inability to cope with
his role
were dealt with. During these meetings it became apparent
that the relationship between the Applicant and his immediate
superiors
was suffering due to the fundamental differences in opinion
which the Applicant had regarding his role as training manager.
During
a subsequent meeting the incompatibility and differences of
opinion were discussed. Various alternatives were also discussed. In
February 2005 the Applicant advised the Respondent that it was not
prepared to accept any of the alternative positions offered
to him
and that he would like to discuss a separation package. As a result
the settlement agreement was concluded.
[3] From the aforegoing
it is clear that there existed a dispute of fact on the papers. It
was the Applicant’s case that he
had signed the settlement
agreement because he was advised by the Respondent that his position
became redundant. When he subsequently
found out that his position
was not redundant and that someone else was appointed to his post, he
decided to approach this court
to set aside the contract (settlement
agreement). According to the Respondent, the Applicant’s
position never became redundant.
The Respondent alleged that it had a
discussion with the Applicant in respect of his incapability and that
alternatives suggested
by the Respondent were rejected. It was the
Respondent’s contention that it was the Applicant who had
suggested a separation
package. It was in light of these disputes of
fact that the matter was referred to oral evidence.
[4] The following four
issues were before this Court:
(i)
Whether there was an incompatibility / performance issue that
gave
rise to the agreement being concluded;
(ii)
Whether the Applicant signed the agreement on the basis of there
being
a representation by the Respondent of his post being made
redundant.
(iii)
Whether the Applicant proposed a separation package in the form of a
retrenchment.
(iv)
The circumstances which gave rise to the agreement being signed.
Evidence of the
Applicant
[5] The gist of the
evidence of the Applicant was that there were no incompatible issues
and that no procedure was followed in respect
of the alleged
incompatibility issues.
[6] The first time the
Applicant received anything in writing about a possible retrenchment
was on 15 February 2005 when he was
handed his notice of
retrenchment. He testified that he signed the letter because he was
informed that his job was redundant. The
Applicant disputed the
allegation that he was consulted on poor workperformance and that
this severance agreement was as a result
of that process. The
following appears from the notice of retrenchment:
“
NOTICE OF
RETRENCHMENT; RATIONALIZATION OF OPERATIONS
As you know,
management has had several consultation meetings with yourself
regarding the abovementioned exercise. The consultation
meetings have
now been concluded. Due to the implementation of the aforementioned
exercise it has become impossible for us to maintain
the existing
staffing compliment and retrenchments have therefore become
necessary.
It is with regret that
we have to advise you that your position with the company has been
affected by this decision and your services
will be terminated with
effect 31 May 2005.”
[7] The Applicant
testified that Mr. Le Roux, the HR Director of the Respondent,
discussed the retrenchment agreement with him.
[8] The Applicant
testified that the retrenchment process commenced on 18 January 2005
and that there were three meetings with representatives
of the
Respondent. A meeting was held on 18 January 2005 with Mr. Gys du
Plessis (Du Plessis did not give evidence). It was during
this
meeting that the Applicant was informed that he no longer had a job.
The possibility of him relocating to Bloemfontein was
also mentioned.
The Applicant testified that he had asked for reasons for his removal
but that none was forthcoming. A second meeting
was held on 4
February with Le Roux. The Applicant was not certain but stated that
Mr. Loots may have been present at the meeting.
Following this
meeting, the Applicant sent an e-mail to Le Roux in which he stated
the following:
“
With regards to
our meeting and discussion on Friday 04.02/2005 at Trade Center Mt
Edgecombe I hereby wish to reply. As I have regrettably
and
forcefully been placed in a position with no alternative I therefore
have no option but to be forced to negotiate a retrenchment
package.
I do, however, require a written explanation as to the reasons of the
removal of me from my current position as indicated
by Gys du Plessis
on 18/01/05 at a meeting with him at the Blue Waters Hotel in Durban.
This was also requested from him in writing
but has to date not been
received.”
[9] The Applicant
conceded that he did not refer to a “
redundancy
”
in this e-mail and that he merely referred to a “
removal
”
and conceded that this e-mail was not consistent with his version of
a retrenchment. He, however, insisted that he was told
that he no
longer had a job.
[10] A third meeting (the
final meeting) was held on 15 February 2005 when the Applicant signed
the settlement agreement.
Allegations of poor
workperformance
[11] In response to the
allegation that he was being counseled for poor workperformance, the
Applicant referred to two recent assessments.
He testified that the
assessment showed him to perform generally above average and in one
instant excellent. He conceded that there
was a complaint of
incompatibility in 2004. It was, however, common cause that he was
found not guilty. The Applicant also admitted
that Van Wyk was
brought down to do some of his functions in November/ December 2004.
He also admitted that he was upset and that
he felt left out. He,
however, denied that by bringing in Van Wyk, that fact was indicative
that there were problems with his performance.
[12] In
cross-examination, the Applicant admitted that at the meeting of 4
February 2005, mention was made of incapability and that
he had asked
them to put that in writing. He also admitted that at that meeting it
was discussed that he should relocate to Bloemfontein.
He, however,
requested that the Respondent explain to him in writing why he was
taken out and why he was removed to Bloemfontein.
This is consistent
with the e-mail dated 8 February 2005 in which he requested written
information about the reasons for his “removal”
which was
not forthcoming. He also conceded that Le Roux had told him that he
would go back and that he would look for another
post. He, however,
denied that Le Roux came back with another suggestion about a post in
Natal and that he was unhappy about that.
E-mail dated 5
April 2005
[13] The Applicant
testified that he was astounded when it came to his attention that
there was an e-mail stating that a certain
Mr. Mansoor Mohamed was
appointed as the training manger of the Natal region. This e-mail
specifically stated that “
Mansoor replaces Rob Goddard as
Training manager for this area
.” This e-mail is dated 5
April 2005 and was sent by Mr. Gys du Plessis. The Applicant left the
Respondent’s employ
in February 2005. The Applicant testified
that he was astounded because Mohamed was more junior than him and
had less experience.
What made matter worse was the fact that he was
informed that this position was redundant only to find out that
someone else was
appointed in his position. On 7 April 2005 the
Applicant referred a dispute to the CCMA in which he described the
dispute as follows:
“
I was retrenched but I don’t
believe that there existed an operational requirement because someone
was appointed in my position
after I left
.”
[14] The Applicant
subsequently applied for condonation for the late filing of his
dispute to the CCMA. In the founding affidavit
(in the
application for condonation before the CCMA) the Applicant explained
that he “
was retrenched on 15/02/05 and my position was only
replaced on 04/04/05. That only when I became aware that my dismissal
for operational
requirements was substantively unfair in that the
position was still available.”
In the answering affidavit,
Le Roux stated that “
[a] full and final settlement
pertaining to applicant’s termination as a retrenchment was
reached.
” No mention was made in this affidavit that the
real reason for reaching this agreement was because of performance
problems
and that the Applicant was the one who wished to negotiate a
retrenchment package.
Evidence of Le Roux
[15] Le Roux, the HR
Executive for the training centre confirmed that he had invited the
Applicant to a meeting on 4 February 2005
together with Loots. He
testified that he spoke to the Applicant about incapability. Le Roux
stressed that the Applicant was regarded
as being incapable by the
Respondent and that his position was never redundant. He also
testified that it was the Applicant who
had requested a retrenchment
package. He suggested the alternative of Bloemfontein but this was
rejected by the Applicant who stated
that he did not wish to leave
Natal. He then told the Applicant that he will look at alternatives
in Natal. According to him the
Applicant then informed him that they
should talk about retrenchment. Le Roux told him that he did not have
a mandate and that
he will take it up with the Respondent. He
confirmed that he received an e-mail from the Applicant. He testified
that he offered
the Applicant an alternative position in Natal under
a certain Mr. Venter. Le Roux denied that the position of the
Applicant was
ever redundant. He testified that the Applicant wanted
a retrenchment letter because that would look better for future job
prospects.
In respect of the terms of the settlement agreement, Le
Roux confirmed that they did negotiate about the terms of the
settlement
and that this was reflected by the fact that the package
gave the Applicant more than the normal: He received three months
notice
and the shares due to him. Le Roux testified that he had to
make a few calls to obtain a mandate to settle on these terms. He
also
confirmed that it was taxwise better for the Applicant to have
opted for a retrenchment package.
[16] It was put to Le
Roux that if the Respondent’s version was that there was no
retrenchment, this agreement constituted
fraud and that the Court may
refer the issue to the Receiver of Revenue for investigation. Le Roux
insisted that the agreement
was termed as such because the Applicant
insisted on it.
[17] Le Roux was not able
to comment on whether or not the Applicant was indeed incapable as he
had no personal knowledge. He was
only told about the incompatibility
issues. He could therefore not dispute the fact that the Applicant
was found not guilty of
incompetency the previous year.
Evaluation
[18] I cannot, on the
evidence presented to this Court, make a finding that there existed a
competency issue. Le Roux, the only
witness on behalf of the
Respondent, could not comment as he did not have any first hand
knowledge about the Applicant’s
performance. No one else was
called as a witness to testify about the performance standard of the
Applicant and more specifically
about whether or not the Applicant
had performed below standard. The mere fact that the competency of
the Applicant was raised
during the meetings does not persuade me
that it was the performance issue that prompted the Applicant to sign
the settlement agreement.
Also, the mere fact that the Applicant
conceded that Le Roux did mention the issue of incapability to the
Applicant during the
meeting of 4 February 2005 does not take the
matter any further for the Respondent as no evidence was presented to
this Court to
support the fact that there was an issue about the
Applicant’s performance.
[19] What was, however,
common cause on the papers is the fact that Van Wyk took over the
Applicant’s external leadership
programme for the Kwa-Zulu
Natal region. Although Le Roux who deposed to the Answering Affidavit
on behalf of the Respondent stated
in the Answering Affidavit that
there were problems with the performance standard of the Applicant
and that this had led to the
hiring of Van Wyk to manage the external
leadership programme, Le Roux (as already pointed out) conceded in
his evidence that he
was merely briefed about the incapability. It
must be pointed out that the Applicant in the replying affidavit
disputed that this
was as a result of poor workperformance. He
insisted that he was told that retrenchment was his only alternative
in light of the
fact that he was made to understand that his post was
redundant.
[20] I am therefore on
the evidence satisfied that there is no evidence before this Court to
show that the Applicant was in fact
incapable and that that was the
central issue of the discussion. It was also not disputed that the
Applicant was found not guilty
the previous year of incompetence. The
Respondent elected not to call any witnesses to substantiate the
claims of incompetence.
The Respondent must therefore stand and fall
by the evidence of Le Roux who admitted that he was merely briefed
about the alleged
incompetence of the Applicant.
[21] The next crucial
question to consider is whether or not the Applicant was mislead
about the fact that his post was redundant
and that this information
had led to him negotiating a severance package and sign the
settlement agreement. It is trite that a
misrepresentation
effectively removes the Applicant’s assent thereby resulting in
a situation in which no agreement exists.
The agreement will
accordingly be void
ab initio
. In order to be successful the
complaining party must show that he was induced by a
misrepresentation to enter into a contract.
In other words, he must
show that he would not have entered into the contract but for the
misrepresentation. The Court was referred
to the following passage
from RH Christie in
The law of Contract in South Africa
(3
rd
edition page 316 – 317):
“
The victim of a
misrepresentation cannot be permitted to rescind the contract unless
he can show that he was induced by the misrepresentation
to enter
into the contract… then requirement has been expressed in
different ways: he must have acted upon the misrepresentation
in
entering into the contract; he would not have entered into the
contract but for the misrepresentation; acting with ordinary
prudence
and discretion, he would not have entered into the contract if he had
know the truth…
A person who knew the
truth all along, or to whom it was revealed by the maker of the
misrepresentation or who discovered it in
some other way before the
contract was entered into cannot claim to have been induced by the
misrepresentation; nor can a person
who would still have signed the
contract if he had known its true nature… nor can a person who
does not care where the truth
lies because he does not regard the
representation as material…”
See also
Bowditch v
Peal and Magill
(1921) AD 161
at 572-573 where the Court pointed
out that the person who has been induced must make an election as to
whether he stands by the
contract or claims damages:
“
A person who
has been induced to contract by the material and fraudulent
misrepresentation of the other party may either stand by
the contract
or claim rescission… It follows that he must make his election
between these two inconsistent remedies within
a reasonable time
after knowledge of the deception. The choice of one necessarily
involves the abandonment of the other. He cannot
both approbate and
reprobate.”
[22] It was submitted on
behalf of the Applicant that the representation in this matter was
fundamental and that it existence went
to the heart of the
Applicant’s consent to the contract. It was further
argued that the Applicant has, through his
conduct indicated that he
wishes to set aside the agreement and to continue with the employment
relationship. It was submitted
that, in light of the fact that the
misrepresentation was made on the basis of an operational requirement
issue, that proved to
be false, there appears to be no reason why the
employment relationship should not be allowed to continue especially
also in light
of the fact that another employee has filled the
Applicant’s post.
[23] I am satisfied that
the conduct of the Respondent amounted to misrepresentation and that
the Respondent concealed crucial facts
from the Applicant. I am also
satisfied that the Applicant would not have entered into the contract
had he known the true facts.
His conduct immediately after he
discovered that he was mislead and that his position was not
redundant as conveyed to him by Le
Roux strongly underscores his
version that he was told that his position was redundant. In summary
therefore:
(i)
The Applicant asked for written reasons for his “removal”.
None was forthcoming. If the reasons were so obvious, namely poor
workperformance, it does beg the question why the Respondent
was not
willing to state that in writing. Le Roux is an HR executive, surely
one would have expected him to provide the Applicant
with the reasons
for his removal. If it was so clear to the Applicant that there were
problems with his capability and that it
was discussed with him, it
does beg the question why the Applicant in his e-mail was so adamant
about the fact that he needed reasons
for his removal.
(ii)
It was not disputed that the Applicant received good performance
reviews
and that he was not found guilty of poor workperformance the
previous year. Le Roux was not able to shed any light on the alleged
incapacity problems as he did not have any first-hand knowledge of
such problems.
(iii)
This is an employee with 19 year’s service with the Respondent.
(iv)
The e-mail of the Applicant dated 8 February 2005, immediately prior
to him
signing the settlement agreement, is instructive. In this
e-mail the Applicant specifically stated that he has been
“
regrettably and forcefully [been] placed in a position with
no alternative. I therefore have no option to be forced to negotiate
a retrenchment package
.” This e-mail, in my view
underscores the fact that the Applicant was placed in a position
where he had no alternative but
to negotiate a retrenchment package
which is consistent with his evidence in Court (and his Founding
Affidavit).
(v)
Although it was the case for the Respondent that the Applicant
initiated
the discussions about the settlement agreement, the
contents of the settlement agreement does, in my view, support the
Applicant’s
contention that he was informed by the Respondent
that his post was redundant.
(vi)
Lastly, the moment the Applicant found out about the fact that
someone else
was placed in his position, he referred a dispute to the
CCMA reiterating the fact that he only found out later that his post
was
in fact not redundant. The manner in which the Applicant
described the nature of his dispute is also consistent with the
version
presented to this Court namely that he was told that his post
was redundant.
[24] I am thus, on the
probabilities, satisfied that the Applicant was induced to believe
that his post was redundant and that that
was the reason why he had
signed the agreement. As a result, the agreement is void
ab
initio
.
[25] In the event I am of
the view that the settlement agreement should be set aside. I can
find no reason why costs should not
follow the result.
ORDER:
1.
The settlement agreement entered into between the parties on or about
15 February
2005 is set aside.
2.
The Respondent is directed to appoint the Applicant in his position
as Divisional
Training Manager as from 1 June 2005 with benefits.
3.
The Respondent is ordered to pay the costs.
_______________________________
AC
BASSON, J
Date
of Judgment:
17 June 2009
Date
of proceedings:
5 May 2008
For
the Applicant:
Mr.
B Mcgregor of Deneys Reitz
For
the Respondent
:
D
Woodhouse of Perrot, Van Niekerk & Woodhouse Inc