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[2014] ZALCJHB 54
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Mkhulisi and Another v Hire All (Pty) Ltd (JS755/12) [2014] ZALCJHB 54 (6 February 2014)
REPUBLIC
OF SOUTH AFRICA
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not Reportable
Case no: JS 755/12
MKHULISI
NKOSINATHI First
applicant
MSENTI
MVUYISI Second
applicant
and
HIRE
ALL (PTY) LTD
Respondent
Heard:
31 October 2013 and 1 November 2013
Delivered:
6 February 2014
Summary:
Settlement agreement entered into as
a result of “innocent or simple” misrepresentation.
Agreement voidable and
should be set aside. Remedies applicable
JUDGMENT
TLHOTLHALEMAJE,
AJ
Introduction:
[1]
The applicants approached the Court to seek an order in the following
terms;
1.1
Declaring that they had signed the “settlement agreement”
on 8 June 2012 by
reason of fraudulent misrepresentation.
1.2
Declaring the “settlement agreement” invalid, null and
void
ab initio
.
1.3
Declaring the termination of the applicants’ contracts of
employment by virtue of
the “settlement agreement” as
unlawful and invalid.
1.4
Ordering the respondent to reinstate the applicants’ contract
of employment by reinstating
the applicants to their employment with
retrospective effect
to 4 April 2012, alternatively with retrospective effect to 8 June
2012.
Background and
common cause facts:
[2]
The applicants were arrested by members of the South African Police
Service on 4 April 2012 whilst tendering their services
at the
premises of the respondent. The arrests followed upon a robbery that
had taken place at the respondent’s premises
in March 2012.
They were released from custody on 31 May 2012.
[3]
On 4 June 2012, the applicants had reported at the respondent’s
premises to tender their services. They were however not
permitted to
resume their duties and were instead issued with notices of
suspension and notices to appear before a disciplinary
enquiry
scheduled for 8 June 2012. The applicants had presented themselves at
the scheduled disciplinary enquiry. The enquiry however
did not
commence, and the applicants were instead handed settlement
agreements which they had signed. The issue for determination
before
this Court as agreed between the parties in a signed pre-trial minute
is whether the settlement agreements are valid.
[4]
It was common cause that the applicants had signed two separate
agreements. The agreement in respect of the second applicant,
Msenti,
was handwritten, and the major difference between the two agreements
was that Msenti was to be paid an amount of R4000.00.
The typed
settlement agreement in respect of the first applicant, Mkhulisi read
as follows;
1. Preamble
Whereas
the Employee was employed by Hire All (Pty) Ltd
Whereas
the Employee was called to disciplinary hearing on 8
th
June 2012 for misconduct.
Whereas
the employee requested not to proceed with the enquiry.
Following
discussions between the parties, the parties have mutually agreed on
the following;
2. Terms
of the agreement
2.1
The employees employment terminates as at the signature of this
document
(sic)
2.2
The employee will be paid an amount of R2500,00 which is inclusive of
sdtatory monies as well as a settlement amount (sic)
2.3
The amount referred to in 2.1 will be paid on signature of this
document
(sic)
3. Full
and Final Settlement
This
agreement constitutes the full and final settlement of any and all
claims, which either party may have against the other of
whatsoever
nature arising from or in conjunction with the current dispute with
regards the employee’s employment with the
Company, the
subsequent termination thereof.
The agreement
constitutes the entire agreement concluded between the parties and no
variation, alteration or addition thereto shall
be of any force or
effect unless reduced to writing and signed by both parties.
(Signed)
The
evidence for the applicants:
[5]
Only the first applicant, Mkhulisi had testified in these
proceedings. The parties’ representatives had agreed that the
second applicant’s testimony would merely corroborate the first
applicant’s. Mkhulisi’s testimony was as follows;
[6]
They had attended the disciplinary enquiry as scheduled and were
presented with documents which they were told to sign. Mkhuseli
had
asked his supervisor, Patrick Mpiti, to explain to them what the
contents of the document meant and the purpose of the amount
of R2
500.00 which was reflected in the document. Mpiti informed had
them that as they were from jail, they should sign the
document in
order to receive money to support their families. He had further told
them that they should stay at home for a month
as the police were
still investigating the incident surrounding the robbery that took
place at the respondent’s premises.
Mpiti had further told them
that they would be called after a month.
[7]
Mkhulisi denied that Mpiti told them that by attaching their
signatures to the document it meant that their services were to
be
terminated. He denied that he had agreed to the termination of his
services. He testified that Mpiti did not fully and clearly
interpret
the document or the implications of their signature once attached to
the document. A month later they went back to the
respondent’s
premises as per their understanding, and were instead given documents
pertaining to their statutory money and
told that they had previously
agreed to the termination of their services. They then went to the
Department of Labour to claim
their UIF benefits and were informed
that they were not entitled to the benefits as they had resigned from
the respondent. The
UI-19 form attached to the applicants’
statement of claim reflects that the reason for termination of
employment was due
to “resignation”.
[8]
Under cross-examination, Mkhulisi had denied that he ever spoke in
English when communicating with his supervisors or anyone
whilst
still employed as he did not understand the language. On being asked
the reason that he had signed the agreement, his contention
was that
he did not understand the agreement to be to the effect that their
services were to be terminated. His understanding was
that he would
be paid to stay at home whilst the police investigated the robbery.
He denied when it was put to him that he and
the second applicant had
asked the chairperson of the enquiry not to proceed with that enquiry
as they were scared that they could
incriminate themselves. He
further denied that the settlement agreement came about as a result
of their request.
[9]
Mkhulisi had conceded that he had signed a copy of the notice to
attend the disciplinary enquiry and had understood its contents.
He
however contended that he did not understand the contents of the
settlement agreement hence he had called Mpiti to interpret
for them.
Mpiti as their supervisor had always interpreted on their behalf
before, and had interpreted the agreement to them by
saying that the
amount to be paid was for them to take whilst the police were
investigating the matter. He conceded at the time
that the criminal
case against them had been withdrawn, and that what he understood was
that the police were still to investigate
how those charges were
withdrawn.
Evidence
for the respondent:
[10]
Janet van Notten is an official of an employers’ association,
GDP. She was appointed to be the chairperson of the enquiry
scheduled
for 8 June 2012. Having introduced herself to the applicants and
further having explained her role, Mkhulisi had raised
concerns about
their arrests and had informed her that they did not wish to proceed
with the enquiry and only wanted money due
to them. She had then
consulted with one Craig of the respondent and asked him to look into
what the respondent owed the applicants
as there was a need to
negotiate a settlement agreement with them. Van Notten further
testified that a settlement agreement was
discussed, and she had then
drafted the agreements and given them to the applicants. The latter
had confirmed that they understood
the terms of the agreement. Van
Notten had nevertheless suspected that the applicants did not
understand what was going on and
she had called Mpiti to explain and
interpret on their behalf. Mpiti had explained the terms of the
agreement to the applicants
and they had thereafter attached their
signatures after stating that they understood what the agreements
meant.
[11]
In order to ensure that the applicants understood what the agreement
was all about, Van Notten had further informed them that
everything
was now “finished” by using the isiZulu term “
Phelile”
.
The applicants had responded by saying that they understood. Under
cross-examination, Van Notten testified that although Mpiti
might not
have been present when she drafted the settlement agreement, she
could recall that Mpiti had translated the agreement
to the
applicants. She conceded that one copy was typed whilst Msethi was
given a hand-written copy. She attributed this to the
fact that she
could not print all the copies as she was not connected to a server
at the time. She further testified that there
was an agreement on the
settlement amount, and she had explained the agreement in the
presence of Mpiti.
[12]
Mpiti’s testimony was to confirm that he was called upon to
translate for the applicants when they were issued with the
settlement agreements. He conceded that his understanding of isiZulu
was not perfect, but that he had translated the contents of
the
agreement word for word and asked the applicants whether they
understood what he had just explained. Under cross-examination,
he
conceded that as he was not isiZulu speaking, and that he may have
interpreted the contents of the agreements incorrectly. This
concession was repeated during his re-examination.
Evaluation:
[13]
The issue is whether the parties had entered into a valid agreement
in full and final settlement of the termination of the
applicants’
services. If the answer is in the affirmative, it cannot be said that
there was a dismissal. If however it is
found that the applicants had
entered into the settlement agreements having been induced by
fraudulent misrepresentation as they
had alleged, the next issue for
determination is whether the agreements are null and void, or
voidable, and if so whether there
was a dismissal which was fair or
unfair.
[14]
Van Notten’s evidence was hardly of assistance insofar as she
understood how the agreements were interpreted. She had
drafted the
settlement agreements on her own and presented them to the
applicants. She had confirmed that Mpiti was called to interpret
and
or translate the contents of the agreement. With her limited or no
understanding of the isiZulu language, she could not have
fully
appreciated what Mpiti had informed the applicants. Her inappropriate
and supercilious use of the isiZulu phrase “
Phelile”
to the applicants can hardly lead to a conclusion that the applicants
knew and understood what they had just been told, or in what
context
the phrase was used. Mpiti’s version in this regard was
to the effect that he did not understand in what context
Van Notten
had uttered the word “
Phelile”
. If Mpiti could
not have understood the context under which the phrase was used, it
is unlikely that the applicants could have
understood what Van Notten
meant.
[15]
Pivotal to the determination of the dispute in this case is clearly
the evidence of Mpiti in respect of how he had interpreted
the
contents of the settlement agreement, and how the applicants
understood the implications of attaching their signatures to those
agreements. Mpiti had conceded that isiZulu was not his home
language. He had further conceded that he could have misinterpreted
the terms of the agreement. His concessions can only add credence to
the applicants’ version that they clearly misunderstood
what
the settlement agreement was all about. The applicants’ version
and belief was that by signing the agreement, they were
to stay at
home for a month and thereafter come back as the police were still
investigating the circumstances that led to the withdrawal
of the
criminal charges against them.
[16]
The criminal charges against the applicants had been withdrawn, and
it is improbable that they could have asked for the disciplinary
enquiry not to proceed for fear that they might incriminate
themselves. In the applicants’ view, they were paid the amount
in question, and had accepted it on the basis that they would be back
at work the following month.
It can
therefore not have been odd for them to have reported back for duty a
month later as they had done and in accordance with
their
understanding. Van Notten’s version that the settlement
amounts were negotiated and agreed upon with the applicants
is hardly
probable in view of her earlier version that what she had asked Craig
to enquire was whether there were any statutory
amounts owed to the
applicants.
[17]
It is trite that for an applicant to succeed with a claim or plea of
misrepresentation, he/she must show that he or she was
induced to
enter into the settlement agreement by virtue of a misrepresentation
of fact; that the misrepresentation was material
and false; that it
was intended to induce him or her to enter into the contract and; had
succeeded in doing so
[1]
. The
Court in
ovick
and Another v Comair Holdings Limited and Others
[2]
,
had added a further requirement which was to the effect that it had
to be shown that the misrepresentation
was
material, in a sense that it would have induced a reasonable person
to enter into the agreement.
[18]
The applicants’ case was premised on the contention that a
fraudulent misrepresentation was made to induce them into
the
settlement agreement. Inasmuch as it should be concluded that there
was indeed a misrepresentation as evident from Mpiti’s
concessions, which had induced the applicants to attach their
signatures to the agreement, I am however of the view that the
misrepresentation
was not fraudulently made. This conclusion is
reached firstly on the basis that it was neither put to Mpiti in
cross-examination
nor even suggested to him that he had intentionally
or with malice, incorrectly interpreted the provisions of the
settlement agreement.
The allegation that the applicants were induced
by fraudulent misrepresentation was bare, and there is thus no basis
on the evidence
before the Court for any other conclusion to be
reached.
[19]
Secondly, the misrepresentation was to the extent that the terms and
conditions of the agreement were incorrectly interpreted
to the
applicants. On the basis of what was interpreted and what the
applicants came to understand, they had signed the agreements.
However, as already concluded, there was no intention on the part of
Mpiti to fraudulently make that misrepresentation. The
misrepresentation
in this case, as it was made without fraud or
negligence is of the nature that is commonly referred to as “innocent
or simple
misrepresentation”
[3]
.
To the extent that this was the case, the settlement agreements
signed by the applicants are therefore voidable at their instance.
[20]
Mr. Morgan had further argued that there was no dismissal as the
principles surrounding
caveat
subscriptor
were applicable. In my view, where a misrepresentation that induced a
party to enter into an agreement is proven, it would be iniquitous
to
still insist that the principle of
caveat
subscriptor
should apply. This is so in that if the applicants as in this case
signed those agreements whilst labouring under a wrong impression
as
a result of the incorrect interpretation of the terms and conditions
of those agreements by Mpiti, it cannot be said that they
should have
been aware of what they had signed. Furthermore, it has also been
held that the
caveat
subscriptor
principle will not be enforced if the terms of the contract have been
inadequately or inaccurately explained to an ignorant signatory
[4]
.
This principle is apposite to the facts of this case, where the
applicants, unsophisticated as they are, had relied upon what
Mpiti
had translated and explained to them.
Relief:
[21]
In the light of the conclusion that the misrepresentation in question
rendered the settlement agreements voidable, the only
issue for
determination is what type of relief the applicants should be
entitled to. The applicants sought an order of reinstatement,
and the
issue is whether such an order is appropriate in the circumstances.
Ordinarily, given the nature of the misrepresentation
in this case,
the common remedy would be that of restitution. Restitution within
the context of the remedies provided in section
193 (1) and (2) of
the Labour Relations Act would imply an order of reinstatement, or of
re-employment, or of compensation.
In considering the nature of
relief to be granted, the following principles set out in
Hoffmann
v South African Airways
[5]
are
relevant:
“
The
determination of appropriate relief, therefore, calls for the
balancing of the various interests that might be affected by the
remedy. The balancing process must at least be guided by the
objective, first, to address the wrong occasioned by the infringement
of a constitutional right; second, to deter future violations, third,
to make an order that can be complied with; and fourth, of
fairness
to all those who might be affected by the relief. Invariably, the
nature of the right infringed and the nature of the
infringement will
provide guidance as to the appropriate relief in the particular case.
Therefore, in determining the appropriate
relief, 'we must carefully
analyse the nature of [the] constitutional infringement, and strike
effectively at its source'
”
.
[22]
In line with the above principles, I have considered the fact that
but for the innocent misrepresentation, the applicants would
not have
signed the settlement agreements as it was not their intention to
terminate the employment relationship. Secondly, the
respondent
always believed, and reasonably so, that it had entered into a valid
settlement agreement with the applicants. In my
view, it was only
when Mpiti conceded during trial that he may have misinterpreted the
provisions of the settlement agreement to
the applicants that it can
be said that the respondent for the first time became aware that
there may have been problems with what
it had throughout, thought to
be a valid agreement . In these circumstances, it cannot be said that
the agreements were
void ab initio
, and that the respondent
was aware of that fact. To this end, considerations of fairness to
both parties dictate that the restitution
that the applicants should
be entitled to should be that of reinstatement in the ordinary sense.
However, since the termination
of the applicants’ services was
as a result of the misrepresentation already referred to, the order
of reinstatement cannot
be with full back-pay. In considering the
amount of back-pay, I have also, apart from the factors already
mentioned, taken into
account that the applicants were without an
income since 8 June 2012. Furthermore, they were unable to claim UIF
benefits as a
result of the respondent having incorrectly completed
their UI-19 forms as clearly they had not resigned. In the light of
these
factors, and bearing in mind the circumstances that led to the
termination of their services, it would be fair to limit the amount
of back-pay payable to the individual applicants to four months’
salary. To this end, the following order is made;
Order:
i.
The settlement agreements entered into
between the individual applicants and the respondent are set aside.
ii.
The respondent is ordered to reinstate the
individual applicants in its employ, retrospective from 8 June 2012,
and in the same
positions they used to
occupy
as at that date.
iii.
The respondent is further ordered to pay to
the individual applicants, back-pay limited to four months’
salary.
iv.
There is no order as to costs
________________
Tlhotlhalemaje, AJ
Acting Judge of the
Labour Court of South Africa
Appearances:
For
the Applicant:
Adv. K.
Lengane (Pro bono)
For
the Respondent: Mr.
D W Morgan (David Morgan Attorneys
INC)
[1]
See
Karroo & Eastern Board of Executors & Trust Company v Farr
and Others
1921 AD 413
at 415.
[2]
1979
(2) SA 116
(W) at 149C-150D
[3]
See
AJ Kerr. The Principles of the Law of Contract: 4th Edition.
[4]
Katzen
v Mguno [1954] 1 All SA 280 (T).
[5]
2000
ILJ 2357 (CC) at para 45