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[2012] ZALCJHB 85
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Morgan v Central University of Technology, Free State (J244/2011) [2012] ZALCJHB 85; [2013] 1 BLLR 52 (LC); (2013) 34 ILJ 938 (LC) (28 August 2012)
REPUBLIC OF SOUTH AFRICA
T
HE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Reportable
Case no: J244/2011
In the matter between:
NICHOLAS ISMAEL MORGAN
............................................................................
Applicant
and
CENTRAL UNIVERSITY OF
TECHNOLOGY, FREE STATE
..........................
Respondent
Heard: 06 July 2012
Delivered: 28 August
2012
Summary: Contractual
damages for breach of contract- Contract of employment stipulates
termination of employment upon three months
notice-Employer
terminates employment without notice-Employee entitled to damages
equivalent to three months remuneration as he
cannot prove damages
beyond the notice period.
JUDGMENT
DANIELS AJ
This is an application
brought in terms of section 77(3) of the Basic Conditions of
Employment Act as amended (the BCEA).
1
The applicant alleges
that his fixed term contract of employment was unlawfully terminated
by his employer, the respondent, and
he seeks contractual damages
resulting from such breach. The applicant seeks damages in the
amount of R4 396 031,04 being the
equivalent of 48 months’
salary which he would have earned but for the alleged unlawful
termination of his contract, alternatively
he seeks damages in the
amount of R274 751.94 being the equivalent of 3 months’ salary
in lieu of three calendar months’
notice of termination of
employment.
Material facts
The applicant was
employed by the respondent as its deputy vice-chancellor: resources
and operations, with effect from 1 January
2010 in accordance with a
written employment contract. His employment contract provided for
its automatic termination five years
later, on 31 December 2014. In
addition, the applicant’s employment was subject to a one year
probation period.
The applicant lodged an
unfair dismissal claim with the Commission for Conciliation,
Mediation and Arbitration (the CCMA). The
court was informed, at the
outset, that those proceedings had been postponed pending the
outcome of these proceedings.
Clauses 5, 12 and 13 of
the applicant’s employment contract are relevant and are
therefore quoted in full below:
‘
Probation
5.1 In accordance with the relevant
CUT policy, a probation period of 1 year shall apply. This includes a
mid-term review after
6 months from the date of assumption of duty.
5.2 If the probation period proves
unsuccessful, the employee shall undergo the relevant process as
determined by the Conditions
of Service.
5.3 The clauses above notwithstanding,
CUT reserves the right to terminate the contract at any other time
during the probation period,
should the circumstances so suggest. In
such cases, due procedure, the rule of law and Conditions of Service
as may be applicable
shall apply.
Termination of employment
12.1 This contract shall terminate
automatically on the end date as stipulated above and with written
notice from CUT of 1 (one)
calendar month only as a reminder of the
automatic termination.
12.2 Either party may terminate this
contract with 3 calendar month’s written notice to that effect.
Should CUT terminate
this contract, it shall be done in accordance
with the principles of substantive and procedural law.
12.3 Notwithstanding the above
provisions, either party may terminate this contract within (sic) 72
hours notice during the first
4 weeks of employment.
12.4 Employment can also be terminated
on statutory grounds of misconduct, medical unfitness, operational
requirements or incompetence.
12.5 In cases where an employee does
not adhere to the contractual notice periods as stipulated above, CUT
shall hold back the salary
of the employee (up to a maximum of the
required notice period) or any other monies payable to the employee
and also reserves the
right to take any such actions, legal or
otherwise to remedy such breach of contract and/or to recover any
monies owed by the employee
to CUT.
13. Resolutive Condition
13.1 Should any information supplied
by the employee in the employee’s application for employment be
found to be incorrect
or false, this contract may be terminated in
accordance with the disciplinary procedure as determined by CUT
Council and/or in
terms of any other remedy applicable by law.’
On 20 December 2010, the
respondent gave the applicant written notice of the termination of
his employment, to take effect from
31 December 2010.
Prima facie
the reason for termination of the applicant’s contract relates
to his performance during his probation period, but I am
not
required to decide this issue.
The parties’
submissions
It is noteworthy that
the applicant alleges only that the respondent has breached his
employment contract by failing to give him
three calendar months
notice of termination, provided for in clause 12.2. The applicant
does not allege that the respondent breached
his contract by failing
to comply with any other procedural obligations (contained in the
contract) relating to his probation
or that the respondent was not
entitled to cancel the contract for reasons relating to his
performance. Presumably these issues
will be raised and determined
by the CCMA.
Counsel for the
applicant Mr.
Snyman
argued,
among
other things, that the applicant was denied three calendar months
notice of termination but, because the employment contract
was for a
fixed period, the applicant is entitled to damages equivalent to the
remaining period of the fixed term. In support
of this proposition,
he relied on
Mangope
v South African Football Association
2
where the learned Judge
said the following:
‘…
damages in an unlawful
termination of an employment contract is calculated on the basis of
what would have been due to the employee
for the unexpired period of
the contract less whatever amount he or she may have received after
the termination of the contract,
constituting mitigation of his or
her damages.’
The
Mangope
case
is distinguishable. There the applicant challenged his dismissal
because the employer failed to comply with its obligations,
relating to the
applicant’s performance, during the probation period (which
obligations were set out in the contract). In
casu,
the applicant says that
his employment contract was not properly terminated
only
because the respondent
failed to give him the required notice.
Our courts have held
that where an employment contract provides for the termination of
the contract by notice, the measure of
damages is the loss of salary
for the notice period.
3
Indeed,
this must be so where
the harm allegedly suffered by the employee relates to the
employer’s giving inadequate notice or
its failure to give
notice at all. In addition, contractual damages must arise from and
be related to the breach of contract.
In any event, even if this is
incorrect, the applicant has failed to prove any damages beyond the
notice period.
It is trite that
plaintiffs have a duty to mitigate their damages. In
Myers
v Abrahamson
,
4
the court held that the
plaintiff was entitled to damages ‘…less any sum he
earned or could reasonably have earned
during such latter period in
similar employment.’ Respondent contends that applicant had
failed to tender any evidence
that he had taken steps to mitigate
his damages. In his replying affidavit, applicant states that he was
in the process of finalizing
his future employment at the University
of the Free State. Applicant does not however tender any evidence as
to the commencement
date of such employment or the remuneration
attached to it. What is clear, however, is that the applicant was
unemployed following
his dismissal, at least until 23 March 2011
when he deposed to his replying affidavit.
The applicant tenders
his services to respondent and, under oath, states that he does not
accept respondent’s repudiation
of his contract. However,
engaging in alternative employment is incompatible with an election
to abide by the contract.
5
Instead,
it evidences an election
by the applicant to accept the respondent’s repudiation of his
contract and mitigate his damages.
Counsel for respondent,
Mr. Grobler contends that the applicant was prevented from seeking
relief in this Court, on the basis
of contract, because the ‘LRA
constitutes a complete package and affords employees all the
protection they require by means
of its unfair dismissal
jurisdiction’. This argument cannot be sustained, in light of
the authorities and the provisions
of the Labour Relations Act 66 of
1995 (the LRA) itself.
6
Mr. Grobler relied on
SA
Maritime Safety Authority v McKenzie
(2010)
31 ILJ 529 (SCA) for the aforementioned proposition.
McKenzie
is
distinguishable on the facts and, in any event, that court did not
find that employees could not simultaneously challenge the
fairness
of their dismissal under the LRA together with a claim for breach of
contract under the BCEA. In
McKenzie,
the plaintiff claimed
damages (arising from an alleged breach of contract) because his
dismissal was without “just cause”.
The plaintiff
contended that his employment contract provided,
expressly or impliedly,
that he may only be
dismissed with “just cause“. The court found that the
contract contained no such provision and
there was no need to
develop the common law so as to import constitutional protection
against unfair dismissals into the common
law of employment.
Mr. Grobler submitted
that the applicant could not be seen as a permanent employee because
his services were terminated during
the course of his probation
period. He argued that confirmation of the applicant’s
employment following probation was a
necessary condition for the
continued existence of the contract beyond the probation period.
This submission only assists the
respondent insofar the applicant
claims damages calculated on the outstanding period of the fixed
term contract.
Mr. Grobler submits
further that the three month notice period is not applicable to the
termination of employment during the probation
period. His argument
is based on the fact that clause 5, which pertains to the probation
period, does not provide for the giving
of notice in the event of
termination. This submission is explored in detail below.
Analysis and findings
The applicant must prove
the following to succeed
7
:
The existence of a
contract;
Breach of the contract
or repudiation of the contract;
He has suffered
damages;
A causal link between
the breach and the alleged damages; and
That the loss was not
too remote.
The issues raised in
paragraph 17 are examined below. But first the legal principles
pertaining to the interpretation of contracts
must be set out. Where
there is ambiguity or vagueness, contracts must be interpreted in
order to ascertain the common intention
of the parties.
8
The intention of the
parties is to be sought in the language they used to express
themselves in the contract and the meaning of
words should be
understood in their context. Where words used are ambiguous, a court
will lean toward an interpretation that
is equitable and does not
give an advantage to one party over the other.
9
Before continuing, it
should be borne in mind that the employment contract specifically
permitted the respondent to terminate
it on the basis of misconduct,
medical unfitness, operational requirements or incompetence. This is
not the same state of affairs
the court dealt with in
Buthelezi
v Municipal Demarcation Board
(2004)
25 ILJ 2317 (LAC) where the court was prepared to award compensation
for the balance of the period of the contract, subject
to the date
when the applicant secured alternative employment.
Taking the above factors
into account,
I
find that, properly interpreted,
the
employment contract required the respondent to give applicant, in
the present circumstances, no less than three months notice
of the
termination of his contract. The following factors are germane:
The language used in
the contract as well as its context lends itself to the above
mentioned interpretation. Clause 12.2 of
the contract makes
provision for three months written notice of termination and it is
not limited to any particular factual
scenario. Clause 12.2 must
therefore be understood to apply to all instances other than those
specifically provided for, such
as: (i) notice of termination at
the end of the contract, which is specifically provided for in
clause 12.1, or (ii) notice
during the first four weeks of
employment which is specifically provided for in clause 12.3.
Clause 12 must be read
in light of the background facts, including the statutory
framework. Section 37 of the BCEA requires,
among other things,
employers to give employees notice of termination of their
employment except where a collective agreement
provides otherwise
or for “any cause recognized by law”.
The interpretation of
clause 12.2, read with clause 12.3, contended for by the respondent
is nonsensical. Why would notice be
required during the first four
weeks of employment (also part of the probation period) but not for
the remainder of the probation
period?
The purpose of the
notice period is, among other things, to afford employees an
opportunity to secure alternative employment
following their
dismissal. The interpretation of the contract contended for by the
respondent offends the ordinary rules of
interpretation as well as
the principles of equity.
In assessing the quantum
of damages to the applicant:
I find that, for the
reasons set out above, there is no basis to award damages to the
applicant in excess of the notice period.
The applicant’s
conduct in taking up alternative employment is inconsistent with a
continued tender of his services to
respondent – for the
balance of the contract.
I have taken into
account the fact that the applicant secured alternative employment
at some point after 23 March 2011 and he
cannot demonstrate harm
beyond the notice period.
I have taken into
account the notice actually given by the respondent.
The applicant was
entitled to three calendar months notice of termination. A calendar
month must be given its ordinary grammatical
meaning, namely a
period beginning on the first day of a particular month and ending
on the last day of that same month. Had
the respondent given notice
at the end of December 2010, or on the first day of January 2011,
the notice period would have expired
at the end of March 2011. Given
that the applicant deposed to his replying affidavit on 23 March
2011, he has failed to prove
any damages after that date.
In the premises, I find
that the applicant was entitled to three calendar months written
notice of his termination and the respondent
acted unlawfully in
giving him shorter notice. The applicant is therefore entitled to
damages in the amount of R204 399, 67 -
being the equivalent of his
salary for three months less the salary he would have earned during
the period of the notice actually
given and
less
his salary
for the last week of March 2011. There is no reason why costs should
not follow the result. In the premises, I make
the following order:
The respondent is
ordered to pay the applicant R204 399, 67 within 14 days of this
order;
The respondent is
ordered to pay the applicant’s party and party costs.
_____________________
Daniels AJ
APPEARANCES:
FOR THE APPLICANT:
Advocate Snyman
Instructed by Horn &
Van Rensburg Attorneys
FOR THE RESPONDENT: Adv
Grobler
Instructed by Phatshoane
Henny Inc
1
No
75 of 1997.
2
[
2011]
4 BLLR 391
at 398 G.
3
Parry
v Astral Operations Ltd
[2005] ZALC 15
;
[2005] 10 BLLR 989
(LC) at 1008,
National Entitled Workers Union v Commission for Conciliation
Mediation and Arbitration
(2007) 28 ILJ 1223 (LAC) at 1229 C-E,
Harper v Morgan Guarantee Trust Co of New York, Johannesburg
and Another
2004 (3) SA (W) 253
at 258 D-G
4
1952
(3) SA 121
(C) at 127.
5
Myers
v Abrahamson
(supra) at 128
6
In
Parry v Astral Operations
[2005] ZALC 15
;
[2005] 10 BLLR 989
(LC) the court
awarded compensation for the unfair dismissal of the applicant as
well as damages arising from the respondent’s
breach of the
Basic Conditions of Employment Act, 1997. In
Fedlife Assurance v
Wolfaardt
2002 (1) SA 49
(SCA) the court made it clear that the
provisions of the LRA do not limit common law rights to enforce
contractual rights. Furthermore,
section 195 of the LRA provides
that ‘An order or award of compensation made in terms of this
Chapter is in addition to,
and not a substitute for, any other
amount to which the employee is entitled in terms of any law,
collective agreement or contract
of employment.’
7
Tsoanyane
v University of South Africa
(2009) 30 ILJ 2669 at 2675.
8
Jonnes
v Anglo-African Shipping Co (1936) Ltd
1972 (2) SA 827
(A) at
834.
9
Van
der Merwe et al
Contract: General Principles
(Juta, 2007 3rd
Ed) at 307; In
Everfresh Market Virginia (Pty) Ltd v
Shoprite Checkers
(Pty) Ltd
2012 (1) SA 256
(CC) at 276 the
court stated that “it is highly desirable and in fact
necessary to infuse the law of contract with constitutional
values,
including values of ubuntu, which inspire much of our constitutional
compact. On a number of occasions in the past this
court has had
regard to the meaning and content of the concept of ubuntu. It
emphasizes the communal nature of society and 'carries
in it the
ideas of humaneness, social justice and fairness' and envelopes 'the
key values of group solidarity, compassion, respect,
human dignity,
conformity to basic norms and collective unity'.