About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2009
>>
[2009] ZALCJHB 105
|
|
Inspektex Mmamaile Construction & Fire Proofing (Pty) Ltd v Coetzee and Others (J1264/08) [2009] ZALCJHB 105 (1 September 2009)
IN
THE LABOUR COURT OF SOUTH AFRICA
(HELD
AT BRAAMFONTEIN)
CASE NO J1264/08
In the
matter between:
INSPEKTEX MMAMAILE
CONSTRUCTION & FIRE
PROOFING
(PTY)
LIMITED
Applicant
and
JACOBUS
COETZEE
First
Respondent
JACOBUS
COETZEE
NO
Second
Respondent
LYNETTE
COETZEE
NO
Third
Respondent
THE
KOLARUCH FAMILY TRUST
Fourth
Respondent
COMMISSIONER
GLEN CORMACK NO
Fifth
Respondent
COMMISSION
FOR CONCILIATION MEDIATION
AND
ARBITRATION
(WITBANK)
Sixth
Respondent
JUDGMENT
FREUND
AJ:
Introduction
1
The applicant, a private company, applies
for a declaratory order that a written settlement agreement which it
entered into with
the first respondent, its former general manager,
is void
ab initio
,
alternatively voidable at its instance. The applicant’s
case is that it was induced to conclude the settlement agreement
on
the basis of a misrepresentation made to it by the first respondent.
2
The first respondent was dismissed by the
applicant. He referred a dispute to the CCMA alleging that his
dismissal had been
unfair. The fifth respondent, a commissioner
of the CCMA, conciliated the dispute. The conciliation was
successful
and resulted in the conclusion of a written settlement
agreement, which is the subject of the present application.
3
The settlement agreement recorded the terms
on which the parties had agreed to settle the dispute between them.
It provided
that the applicant was, in instalments, to pay the first
respondent R520,000.00. It recorded that, in the event of the
applicant
failing to comply with its obligations in terms of the
agreement, the applicant consented to the agreement being made an
order
of Court by the Labour Court in terms of section 158(1)(c) of
the Labour Relations Act No 66 of 1995 (“the LRA”).
It provided for the transfer of certain properties to the first
respondent; for continued use by the first respondent of
his
“company vehicle”; and for certain related
matters.
4
Of particular importance for present
purposes is clause 4 of the agreement, which provided as
follows:
“
The
[first respondent]
will
cede
his shares
in
[the applicant]
company
(Inspektex / Mmamaile) on receipt of the first payment as in clause
1.1 as above.
” (my
emphasis)
5
It is common cause that:
5.1
at the time that the agreement was
concluded, the first respondent did not own any shares in the
applicant;
5.2
at the relevant time, each of the following
three parties, namely Mr SHP Mmamaile (“Mmamaile”), Mr FG
Fourie (“Fourie”)
and the Kolaruch Trust (“the
Trust”), owned one third (33.33%) of the shares in the
applicant, Mmamaile and Fourie
being directors of the applicant;
5.3
the founder (“oprigter”) of the
Trust was the first respondent. Its trustees are the first
respondent and his
wife, Lynette. The beneficiaries of the
Trust are the first respondent, his wife and his two children;
when the Trust
is wound up, the beneficiaries are the same, save that
the first respondent will be precluded from benefiting.
6
The gist of the applicant’s case is
that the settlement agreement is void or voidable because the first
respondent allegedly
misrepresented to it that he was the owner of
shares in the applicant.
Jurisdiction
7
Mr van der Merwe, who appeared on behalf of
the first respondent, submitted that this Court lacks jurisdiction to
entertain the
application, the only body having such jurisdiction
being the CCMA. As I understood his argument, this was because
the settlement
agreement settled a dismissal claim falling within the
exclusive jurisdiction of the CCMA and, if the settlement agreement
is not
valid, that dispute will still fall to be determined by the
CCMA. Mr van der Merwe also referred to the power of the CCMA,
in terms of section 142A of the LRA, to make an agreement between the
parties an arbitration award, and submitted that the power
to declare
a settlement agreement invalid was incidental to the CCMA’s
power in terms of section 142A.
8
The issue in this case is, in my view, not
whether the CCMA has jurisdiction to determine the validity or
otherwise of the present
settlement agreement, but whether the Labour
Court has jurisdiction to entertain the applicant’s application
for the declaratory
relief which it seeks. For the reasons
which follow, I have concluded that the Labour Court does have the
necessary jurisdiction:
8.1
In my view, the Labour Court has
jurisdiction to entertain the application in terms of section 77(3)
of the Basic Conditions of
Employment Act No 75 of 1997 (the “BCEA).
That subsection provides:
“
The
Labour Court has concurrent jurisdiction with the civil courts to
hear and determine
any matter
concerning a contract of employment
,
irrespective of whether any basic condition of employment constitutes
a term of that contract.
”
(my emphasis)
In my view, this case is
comparable to
University of the North v Franks and Others
(2002) 23 ILJ 1252 (LAC), in which the Labour Appeal Court held that
the Labour Court had jurisdiction to entertain a case regarding
whether an offer by an employer of a voluntary retrenchment agreement
remained open for acceptance by employees. The Court
held (at
para [30]) as follows:
“
The
termination of an employment contract and the terms and conditions
upon which this is to occur are clearly matters concerning
such a
contract. The Labour Court correctly held that it had
jurisdiction.
”
If the
dispute in
Franks
was a “
matter concerning a
contract of employment
”, I
believe the same applies to the present dispute. The first
respondent disputed the fairness of his dismissal, and
reinstatement
was a potential remedy for his claim. That claim was
compromised by the settlement agreement, which (if valid)
brought
about a final termination of the employment relationship. If
the agreement is not valid, the dispute about the fairness
of the
dismissal and the resultant claim for reinstatement remain to be
determined. In my view, a dispute about whether an
agreement
ostensibly bringing about an agreed termination of a contract of
employment is valid is a “
matter
concerning
” a contract of
employment, as contemplated in section 77(3) of the BCEA.
8.2
There is a second independent basis upon
which I believe that this Court also has jurisdiction, namely section
158(1)(j) of the
LRA, which provides that the Labour Court may “
deal
with all matters necessary or incidental to performing its functions
in terms of this Act or any other law
”.
There are various situations in which it may be necessary for this
Court to determine whether or not a settlement
agreement is valid in
the course of determining matters manifestly within its
jurisdiction. Two examples will suffice.
First, in terms
of section 158(1)(c) of the LRA, the Labour Court may make a
settlement agreement an order of the Court.
Nduli
v SA Commercial Catering & Allied Workers Union
(2001) 22 ILJ 198 (LC) illustrates that, in exercising this power,
the Court is entitled to determine whether a settlement agreement
which it is asked to make an order of Court is a valid agreement.
In that case, the Court held that the person who purported
to
represent one of the parties to a settlement agreement was not
authorised to do so and accordingly declined to make the agreement
an
order of Court. A second example would be where, in an unfair
dismissal claim before the Labour Court, an employer raises
a defence
that the dispute between it and the dismissed employee has been
resolved by a settlement agreement. If the employee
were to
assert the invalidity of the agreement, the Court would plainly be
empowered to determine whether the settlement agreement
was valid and
binding.
8.3
The Labour Court has the power, in terms of
section 158(1)(a)(iv) of the LRA, to make a declaratory order.
Such an order may
in my view be made in respect of any matter over
which the Labour Court has jurisdiction. Where an issue, such
as the validity
of an agreement settling a dismissal dispute, is
relevant to issues over which the Labour Court has jurisdiction, it
is my view
that determining such an issue is “
necessary
or incidental to
” the performance
by this Court of its functions (as contemplated in section
158(1)(j)). Had the first respondent sought
a declaratory order
that the agreement is binding, coupled with an application that, if
so, it should be made an order of Court,
the Court would in my view
have had jurisdiction. I do not think that the mere fact that
the declaratory order is sought
on its own, without being coupled
directly to an application for other relief falling within the
jurisdiction of the Court, has
the consequence that the Court lacks
jurisdiction.
9
In my view, it is not necessary to
determine whether the CCMA might also have jurisdiction to entertain
a claim by the applicant
for the relief sought from this Court.
The merits
10
The case for the applicant is that the
first respondent represented to it that he had shares in the
applicant and that it was induced
by this representation to conclude
the settlement agreement.
11
I am not persuaded by the applicant’s
argument. The case made out in the founding affidavit is
essentially that the
consultant who represented the applicant in
negotiating (but not signing) the settlement agreement at the offices
of the CCMA laboured
under a misapprehension that the first
respondent owned one-third of the shares in the applicant. He
alleges that the failure
to disclose
to
him
that the first respondent did not
hold any shares at all in the applicant and that the Trust held
one-third of the shares in the
applicant constituted a
misrepresentation. He alleges further (in paragraph 14.5 of the
founding affidavit):
“
As
a result of the failure by first respondent to disclose the
aforementioned information to me, I advised Mr Fourie telephonically
that the first respondent was prepared to cede all ‘his shares’
to the applicant’s directors. The aforementioned
misrepresentation resulted in the settlement agreement which is
prejudicial to the applicant and its directors.
”
12
However, quite a different picture emerges
from the first respondent’s answering affidavit. This
being an opposed application
for final relief, disputes of fact fall
to be determined in accordance with the well-known principles laid
down in
Plascon-Evans Paints Limited v
Van Riebeeck Paints (Pty) Limited
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634E-635C. There is in my view nothing in
those portions of the answering affidavit referred to below that is
so farfetched
or clearly untenable that the Court would be justified
in rejecting them. On the contrary, since no replying affidavit
was
filed by the applicant, they must be taken to have been admitted.
13
In his answering affidavit, the first
respondent alleges that, at the time of the establishment of the
applicant, he agreed with
Messrs Fourie and Mmamaile, ie the other
two shareholders, that his and his wife’s shares in the
applicant would be transferred
to the Trust. He accordingly
alleges that Messrs Fourie and Mmamaile were at all relevant times
aware of this fact.
He adds that Mr Fourie indicated that he
also wanted to transfer his shares to a trust.
14
The first respondent also states that, when
the settlement agreement was negotiated, the parties did not deal
directly with each
other; they were in different rooms, with
the fifth respondent acting as a go-between. He states that, at
one stage
during the negotiations, his wife pertinently asked the
fifth respondent: “
Wat van
haar aandele?
” The fifth
respondent left the room to consult with the applicant’s
consultant and returned saying: “
I
could not understand, but they are not interested in her shares but
only in yours
” (referring to the
first respondent’s shares).
15
The first respondent also alleges in his
affidavit that the applicant was at all times aware that his and his
wife’s shares
“
deur die
vierde respondent
[ie the Trust]
gehou
word
”, and alleges that a
reference to “
his
”
shares in the agreement had to be construed as a reference to his
shares which had been transferred to the Trust.
16
The founding affidavit annexes a copy of a
document signed by Messrs Mmamaile and Fourie on behalf of the
applicant, which represented
that the shares in the applicant were
held by Messrs Mmamaile (33.33%), Fourie (33.33%) and by the Trust
(broken down into shares
in the name of the first respondent
(16.667%) and of his wife (also 16.667%). The founding
affidavit states that this document
was a representation to Sasol for
“BEE” purposes. Although this is not explicitly
stated, it seems that this
document may have been signed by Messrs
Mmamaile and Fourie before the date of the settlement agreement.
If that is the case,
I fail to understand how it can be suggested
that Messrs Mmamaile or Fourie were misled by any representation
allegedly made by
the first respondent when undertaking in the
agreement to transfer “
his
shares
”.
17
It is, in any event, common cause that the
applicant’s share register reflects Messrs Fourie, Mmamaile and
the Trust as the
Company’s three shareholders, each holding
33.33% of the shares. It is the applicant company which was the
relevant
party to the settlement agreement, not its consultant, Mr
Pretorius, nor even Mr Fourie (who signed the agreement on behalf of
the applicant). Since the applicant’s share register
correctly reflects the identity of its shareholders, I do not accept
that the applicant could have been or was misled by any
misrepresentation from the first respondent that he was a shareholder
in his personal capacity.
18
In order to succeed, the applicant had to
show that it had been induced to enter into the settlement agreement
by a misrepresentation
of an existing fact which was material, was
intended to induce it to enter into the contract and did so induce
it. See
Karroo & Eastern Board
of Executors & Trust Company v Farr and Others
1921 AD 413
at 415;
Novick and
Another v Comair Holdings Limited and Others
1979 (2) SA 116
(W) at 149C-150D. I am not persuaded that
these requirements have been shown by the applicant. In
particular,
I am not persuaded that it has been shown that the third
respondent intended to induce the applicant to conclude the
settlement
agreement by making a misrepresentation. It appears
to me that, if the applicant laboured under any misapprehension as to
whether the first respondent personally owned any shares in it, it
had only itself to blame.
19
I should make clear that it is common cause
that, after the settlement agreement was concluded, and in compliance
with what he contends
to be his obligation under the settlement
agreement, the first respondent instructed auditors that, upon
receipt of the first payment
provided for in the agreement, they
should transfer from the Trust to the relevant parties “his”
16.667% shareholding
in the applicant. It appears to me that
the applicant’s real complaint is that it was also entitled to
the further
16.667% shareholding transferred to the Trust by the
first respondent’s wife. In my view, the real dispute
pertains
to what shares the first respondent is obliged to cede in
terms of clause 4 of the agreement; ie what does clause 4 mean
when it provides that the first respondent will cede “his”
shares in the applicant? Do these shares include those
originally held by the first respondent’s wife? Nothing
said in this judgment is intended to influence a decision on
that
question.
20
In my view, there is no merit in the
argument advanced on behalf of the applicant that, because the first
respondent does not directly
own any shares in the applicant, this
shows that he made a material misrepresentation when agreeing in
clause 4 of the agreement
to cede “his” shares. It
is my view that, in agreeing to cede “his” shares, the
first respondent
consented to a term that was legally inaccurate,
since the relevant shares were not strictly speaking “his”,
but I
do not accept that the term itself amounts to a
misrepresentation by the first respondent. The argument for the
applicant
that the term proves the misrepresentation relied upon
rests, in my view, on the legally erroneous view that a party cannot
contractually
bind himself to transfer what he does not own. It
is trite that a seller need not be the owner of the thing he sells –
see LAWSA Volume 24 (1
st
reissue) para 82, and the authorities there cited. I can see no
reason why the first respondent could not lawfully undertake,
in the
settlement agreement, to transfer such of the shares owned by the
Trust as the parties had in mind when they agreed that
he would
transfer “his” shares.
21
I am accordingly of the view that the
applicant has not made out a case entitling it to the relief it
claims.
Conclusion
22
For the reasons set out above, I make the
following order:
1.
The application is dismissed.
2.
The applicant is to pay the costs of the
application.
________________________
AJ FREUND
Acting
Judge of the Labour Court
Date of
argument:
15 July 2009
Date of
judgment:
1 September 2009
For
applicant:
Mr CJ Geldenhuys of
Geldenhuys
CJ at Law Inc
For
respondents :
Adv CdeW van der Merwe
Instructed
by:
MD Swanepoel