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[2012] ZALCCT 38
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Ferguson v Basil Read (Pty) Ltd (C 708/10) [2012] ZALCCT 38; [2013] 3 BLLR 274 (LC); (2013) 34 ILJ 1163 (LC) (29 August 2012)
REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN
JUDGMENT
Not reportable
Of
interest to other judges
case
no: C 708/10
In the matter between:
CLINTON GEORGE WILLIAM FERGUSON
Applicant
and
BASIL READ (PTY) LTD
Respondent
Heard
:
20-23 August 2012
Delivered
:
29 August 2012
Summary:
Operational requirements – parties entering
into settlement agreement – agreement not induced by
misrepresentation
-- employee not dismissed.
judgment
STEENKAMP J
Introduction
Confronted with the spectre of possible dismissal for operational
requirements, the applicant (Ferguson) entered into an agreement
in
full and final settlement with the respondent (Basil Read). In terms
of that agreement, the applicant was paid severance pay;
one month’s
notice pay; and an
ex gratia
payment. He waived any claim
that he might have regarding the termination of his service.
Subsequently, the applicant learnt that the respondent had commenced
a new building project at Saldanha. He claims that he entered
into
the settlement agreement based on a misrepresentation by the
respondent and that the agreement is null and void. He claims
that
he was dismissed; that it was substantively and procedurally unfair;
and that he is entitled to compensation equivalent
to 12 months’
remuneration.
The pertinent question to be decided is whether the parties entered
into a valid agreement in full and final settlement of the
termination of the applicant’s services; if so, he was not
dismissed and fairness does not arise. If, however, the applicant
was induced to enter into the agreement by misrepresentation, the
question arises whether the agreement is void or voidable;
if so,
whether he had been dismissed; and if so, whether the dismissal was
fair.
Background facts
Much of the background to the dispute is common cause. The applicant
started working for Basil Read on 21 November 2007 as a
foreman,
grade 10. At the time when the parties signed the settlement
agreement on 26 February 2010, he had been promoted to
grade 12. His
monthly remuneration package at that time was R17 500, 00.
The applicant received good performance reports during the currency
of his employment. He was initially employed as a foreman
at the
building of the West Coast Mall in Vredenburg, where he lived. When
that project came to an end, he was transferred to
Paarl on 8
February 2010 to assist in the building of the Paarl hospital.
The applicant was unhappy with the accommodation that was provided
for him in Paarl. However, he only spent eight days in total
on the
Paarl site. He was on sick leave from 11 to 15 February 2010 and on
annual leave from 16 to 21 February 2010. The accommodation
was
refurbished and repainted on 22 or 23 February 2010. On 26 February
2010, the applicant signed the agreement with the respondent.
The agreement reads as follows (
verbatim
):
“
Full
and Final Settlement
between
Clinton Ferguson
(the employee)
and
BASIL READ (PTY) LTD
(the company)
Both parties agree:
The
services of the employee being fairly terminated upon mutual
agreement based on the company’s operational requirements.
Monies
due being:
The company shall pay the
employee the amount of
R30 583,00 (less PAYE).
This amount consists of:
1 Month Notice :R17 500, 00
Ex Gratia Payment :R5 000,
00
Leave Pay : R0 (write off)
Severance Pay (2 weeks) :R
8 083, 00
This amount being inclusive of
any statutory monies due to the employee.
The
employee, wavering [
sic
] any claim that he might have a
really is services and/or termination of services.
By
signing this agreement, the employee confirms that he understands
the contents of this agreement, that the contents of the
agreement
has been interpreted to him, that he sided of his own free will and
that such agreement is legally binding.”
The agreement was signed by the
applicant; Mtshali, the employee relations manager; and two
witnesses.
The respondent was awarded a contract to build a reverse osmosis
plant at Saldanha (“the Saldanha project”). However,
at
the time that the applicant’s employment came to an end, work
on the Saldanha project had not commenced. The respondent
was
waiting on the results of an environmental impact assessment at the
record of decision had not been signed. A “kick
off meeting”
was held at Saldanha on 26 March 2010 and it was recorded that
construction work was due to commence on 13
April 2010.
Disputed facts: the evidence before the Court
The applicant testified and called one further witness, Mr Julian
Swartz. The respondent called three witnesses: Messrs De Bruin,
Mtshali and De Sousa.
Apart from the common cause facts, the applicant testified that De
Sousa, the contracts director, phoned him on 26 February 2010
and
told him that the Saldanha project had been cancelled and that he
would, therefore, be retrenched. He also testified that
Mtshali, the
Employee Relations Manager, told him in their meeting on 26 February
2010 that the Saldanha project had been cancelled.
This is why he
signed the termination agreement. He believed that the real reason
why he was earmarked for retrenchment was because
he had complained
about his living conditions.
Julian Swartz was a senior site manager. He was employed by Basil
Read but was dismissed for misconduct. He worked with the applicant
and De Sousa on the West Coast Mall project. When the project came
to an end, he was transferred to KwaZulu Natal. In mid-March
2010 he
was recalled to Cape Town for the Saldanha project. He was initially
deployed to the respondent’s office in Bellville,
but started
working on the West Coast from 6 April 2010.
The respondent’s first witness, Phillip de Bruin, was the
contract manager in charge of the Paarl Hospital site. He met
Ferguson in February 2010, when De Sousa asked him to accommodate
Ferguson on the Paarl site as there was no more work for him
at the
West Coast Mall. He acknowledged that there were problems with
Ferguson’s accommodation. He gave instructions for
the flat to
be cleaned and repainted. That was eventually done. Du Plessis
testified that he no longer required a foreman’s
daily diary
to be used at the Paarl site. The format was more suited to civils
work than to the building industry. Instead, he
developed a daily
activity sheet in a different format that could be used by the
quantity surveyor to do costings. He provided
examples to the court.
He could not dispute that Ferguson may have continued to make
annotations in his own foreman’s diary,
but he stressed that
it was not a requirement; that copies of the daily entries were not
given to him; and that there was no
need for Ferguson to keep such a
diary. He saw Ferguson’s entries for the first time the week
before trial when Ferguson’s
attorney provided them to the
respondent’s attorney. De Bruin was not involved in the
respondent’s retrenchment exercise
and was merely informed
that the parties had entered into a mutual separation agreement.
The respondent’s employee relations manager, Mandla Mtshali,
met the applicant on 26 February 2010 after he had been advised
by
the respondent’s building director that Ferguson could be
affected by retrenchment. At that stage, the only projects
that
remained for the respondent were Paarl Hospital – where the
applicant was not needed – and the Gautrain. Mtshali
travelled
to Paarl from Johannesburg in order to consult Ferguson on the
perceived need for dismissal due to operational requirements;
possible alternatives; and possible ways to avoid dismissal. He
denied that he told Ferguson that the Saldanha RO project had
been
cancelled. Ferguson understood that there was no work for him and he
elected to sign the termination agreement in full and
final
settlement of all claims, instead of proceeding with a consultation
process as envisaged by s 189 of the Labour Relations
Act.
1
Apart from the statutory severance pay and a month’s notice
pay, the respondent paid Ferguson an
ex gratia
amount of
R5000 and agreed to write off the leave that Ferguson owed the
respondent.
The respondent’s building contracts director, George de Sousa,
worked with the applicant at the West Coast Mall. He described
Ferguson as diligent and tried to accommodate him when the project
came to an end by asking De Bruin to use him at Paarl while
he
could. He conceded that he may have told Ferguson and others that
there may be work for them at the Saldanha project in order
to
motivate them when the West Coast Mall project came to an end;
however, by February 2010 – when it became apparent that
there
was no more work available for Ferguson – the Saldanha project
had not started. The respondent had been awarded the
contract, but
they were waiting for the environmental impact assessment to be
concluded and could not enter into a record of
decision. The
respondent had no building work in the Western Cape left. On 26
February 2010 he did telephone the applicant as
he knew that Mtshali
was going to meet with him and he wanted to wish him well; however,
he did not tell him that the Saldanha
project had been cancelled.
Evaluation/ Analysis
Credibility and probabilities
The main dispute of fact between the parties is whether or not De
Sousa and Mtshali pertinently told the applicant that the Saldanha
project had been cancelled.
The technique to be employed by courts in resolving factual disputes
when confronted with two irreconcilable versions was summarised
by
the SCA in
Stellenbosch Farmers’ Winery Group Ltd v Martell
et cie
2
:
“
To
come to a conclusion on the disputed issues a court must make
findings on
(a)
the credibility of the various factual witnesses;
(b)
their reliability; and
(c)
the probabilities. As to
(a)
,
the court's finding on the credibility of a particular witness will
depend on its impression about the veracity of the witness.
That in
turn will depend on a variety of subsidiary factors, not
necessarily in order of importance, such as (i) the witness's
candour
and demeanour in the witness-box, (ii) his bias, latent and blatant,
(iii) internal contradictions in his evidence, (iv)
external
contradictions with what was pleaded or put on his behalf, or with
established fact or with his own extracurial statements
or actions,
(v) the probability or improbability of particular aspects of his
version, (vi) the calibre and cogency of his
performance compared to
that of other witnesses testifying about the same incident or events.
As to
(b)
,
a witness's reliability will depend, apart from the factors mentioned
under
(a)
(ii),
(iv) and (v) above, on (i) the opportunities he had to experience or
observe the event in question and (ii) the quality, integrity
and
independence of his recall thereof. As to
(c)
,
this necessitates an analysis and evaluation of the probability or
improbability of each party's version on each of the disputed
issues.
In the light of its assessment of
(a)
,
(b)
and
(c)
the court will then, as a final step, determine whether the party
burdened with the
onus
of proof has succeeded in discharging it. Thehard case, which will
doubtless be the rare one, occurs when a court's credibility
findings
compel it in one direction and its evaluation of the general
probabilities in another. The more convincing the former,
the less
convincing will be the latter. But when all factors are equipoised
probabilities prevail.”
In order to assess the respective parties’ credibility,
reliability and the probabilities, the court will have to consider
the contradictory versions with regard to the daily activity sheets
or foreman’s daily diary; and what Mtshali and De Sousa
told
the applicant.
Much was initially made by Ms
Duvenage,
who appeared for the
respondent, about the fact that the applicant’s legal
representatives only discovered the daily diary
allegedly kept by
the applicant the week before trial. This is despite the fact that
the parties – represented by the same
attorneys – had
had a pre-trial meeting more than a year earlier in which the
discovery and exchange of documents was pertinently
addressed. Ms
Duvenage
went so far as to describe the diary as a
“fabrication”. In the end, though, much of the dispute
around the diary
turned out to be a red herring.
De Bruin and De Sousa were both adamant that the use of the diary –
in the format used by the applicant – had been
discontinued by
February 2010. On the probabilities, I find that to be more probable
than not. De Bruin made the daily activity
sheets that were
subsequently used by the respondent available to the court. De Bruin
and De Sousa acknowledged that they had
initially disagreed about
the phasing out of the foreman’s diary, but De Bruin had
persuaded De Sousa. The annotations
made by Ferguson in February
2010 differed markedly from the notes he kept at the West Coast Mall
– in the latter case,
it dealt with the lack of tools and
labour and other foreman’s concerns; at Paarl, it centred
mainly on his initial unhappiness
with his accommodation and musings
on his own feelings and activities, such as going to see movies in
Cape Town..
It cannot be discounted that the applicant did keep a diary at the
time, even if it was not necessary and even if the daily sheets
were
not given to De Bruin. It appears from the entry on 24 February 2010
that Swartz gave him the impression that he would be
used at
Saldanha; however, it is common cause that the project had not
started by then and it could have created no more than
a
spes
.
The more pertinent entry is the very last one in the diary, where
the applicant states:
“
George
(de Sousa) called this morning to say Mr Mandla Mtshali from HR is on
his way to retrench me. He said it was good working
with me and that
which are only told him last night and that he did not want to phone
me, after work. I asking what happened to
Saldanha job and he said
they lost it and would have to re-tender for the job. I thank him and
he wishes me well. Meet Mr Mtshali
and he gives me package to sign. I
ask him what happened to Saldanha job and he tells me the same thing
as George that they would
have to re-tender. So I signed package. He
promised to give me my money by the 03/03/10. I was on my way to
sending my CV to power
in December 19, 2000 and told me I had new
jobs in Saldanha, but now I have to look for work.”
Although this purports to be a contemporaneous note, I find the
version of events that the applicant recorded there improbable
in
the light of the evidence tendered by Mtshali and De Sousa. It is
common cause that the Saldanha project had not, in fact,
been
cancelled. It is also common cause that the project only –
literally – got off the ground in mid-April 2010.
Even when
the respondent had a kick-off meeting with the contractor on 26
March 2010, although the contract had been signed,
they could not
commence with the building work as the environmental specifications
still had to be approved. Both Mtshali and
De Sousa struck me as
credible witnesses. They made concessions when needed and never
overstated their case. The applicant knew
many of the people working
on the Saldanha project. It is highly unlikely that either Mtshali
or De Sousa would blatantly have
lied to the applicant, telling him
that the Saldanha project had been cancelled, when it would have
been very simple to establish
that this was not the case. Given the
common cause facts relating to the Saldanha project that only
commenced after the applicant
had signed the termination agreement,
it is more likely that Mtshali and De Sousa would simply have told
the applicant that Basil
Read had to consider his retrenchment
because there was no more work available in the Western Cape at that
time. (It should be
noted that the applicantstated in court that he
was only prepared to work in the Western Cape, and not on any
available projects
in, for example, KwaZulu-Natal, Gauteng or
Mpumalanga).
The applicant’s credibility is further stretched by his
adamant submission that the only reason that he was earmarked for
retrenchment was because he had complained about his accommodation.
When he complained, De Bruin made sure that the accommodation
was
made habitable, even though it took a while. It is also apparent
from the applicant’s notes in his foreman’s
diary at the
West Coast Mall and his own evidence that he was not afraid of
speaking his mind and that he confronted his superiors
when he
thought it necessary. Despite that, De Sousa valued him as a
diligent foreman and prevailed upon De Bruin to accommodate
him at
Paarl. The simple fact is that the respondent’s operational
requirements necessitated, at the very least, that it
consult with
the applicant on the possibility of his dismissal for operational
requirements; but the applicant elected to enter
into a mutual
separation agreement instead.
Misrepresentation?
The applicant’s claim is based on an allegation that the
settlement agreement is void and unenforceable because it was
based
on misrepresentation by the respondent.
The legal principles regarding a plea of misrepresentation were
summarised in
Novick & ano v Comair Holdings & ors
3
.
The applicant would have to show that:
The representation relied upon was made;
It was a representation as to a fact;
It was false;
It was material, in a sense that it would have induced a reasonable
person to enter into the agreement; and
It was intended to induce the person to whom it was made to enter
into the agreement sought to be avoided.
The basis for the applicant’s claim shifted somewhat during
the trial: during argument, Mr
Chitando
also submitted that
there could have been misrepresentation by omission, in that neither
Mtshali nor De Sousa told the applicant
that the Saldanha project
would still go ahead at a later stage, even if they did not
pertinently tell him that it was cancelled.
The applicant cannot have his cake and eat it. Either he was able to
establish that his version – that he was pertinently
told the
project was cancelled – was true, or he was not. On the
probabilities, I have found that neither Mtshali nor De
Sousa would
have made that patently false allegation. Given that finding, there
was no misrepresentation upon which the applicant
acted when he
elected to enter into the settlement agreement.
And even if the alternative claim – that had not been pleaded
– were to be considered, the simple question would
then be why
the applicant did not enter into a consultation process during which
he could have raised any questions he had about
the Saldanha
project; if and when it would commence; whether he could be
accommodated there; and if not, why not.
The consultation process envisaged by s189 of the LRA is meant to be
a joint consensus-seeking exercise. The applicant elected
not to
take part in such an exercise. In my view, given the evidence and
the probabilities, he entered into the settlement agreement
with
open eyes. It was not based upon misrepresentation and the
respondent did not dismiss him; the question of fairness, therefore,
does not arise.
Conclusion
The applicant entered into a termination agreement with the
respondent in full and final settlement of any disputes arising from
his employment. He did so voluntarily, waiving the opportunity to
engage in a consultation process in which he could have requested
the respondent to consider alternatives to dismissal, such as future
employment at the Saldanha project once it commenced. He
was not
induced to enter into the agreement by misrepresentation. Hence he
was not dismissed.
With regard to costs, I take into account that the applicant lost
his employment through no fault of his own, but because of
the
operational requirements of the respondent and the downturn in the
building trade. It will no doubt be difficult for him
to find
employment in that industry in the near future, given the continued
economic difficulties that the industry faces. He
was not acting
frivolously in continuing with the litigation; it may well be that
he subjectively felt that he had been treated
unfairly when he saw
the Saldanha project proceeding, as it were, next door to him after
he had agreed to a mutual termination
and severance package. In law
and fairness, though he was not the successful party, he should not
be held liable for the respondent’s
costs.
Order
The applicant’s claim is dismissed. There is no order as to
costs.
_______________________
Steenkamp J
APPEARANCES
APPLICANT:
S Chitando
Instructed by Parker
attorneys, Cape Town.
RESPONDENT:
ME Duvenage attorney,
Pretoria.
1
Act
66 of 1995 (“the LRA”).
2
2003
(1) SA 11
(A) para [5].
3
1979
(2) SA 116
(W).