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[2015] ZALCD 55
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Ethekwini Municipality v IMATU obo Naidoo (D933/13) [2015] ZALCD 55 (13 August 2015)
THE
LABOUR COURT OF SOUTH AFRICA, DURBAN
JUDGMENT
Not Reportable
Case no: D933/13
ETHEKWINI
MUNICIPALITY
Applicant
and
IMATU obo VIJAY
NAIDOO
Respondents
Heard:
12 August 2014
Delivered:
13 August 2015
JUDGMENT
TLHOTLHALEMAJE,
AJ
Introduction:
[1]
In
this application, the applicant seeks an order to declare a
settlement agreement entered into between it and Ms. Vijay Naidoo
on
26 August 2013 to be invalid and be set aside. The respondents oppose
the application.
Background:
[2]
Vijay
Naidoo has been in the employ of the applicant for 29 years, and also
a senior manager for over 15 years. For three years
she acted as
Deputy Head, Sub-District South. Two positions of Deputy Head which
fell within the Community and Emergency Services
unit of the
applicant were formally advertised and Naidoo had applied together
with three other individuals.
[3]
The
interview panel established to conduct the interviews included the
Deputy City Manager: Community and Emergency Service, Mr.
Musa
Gumede. He is also the deponent to the founding affidavit and the
convener of the panel: Dr Nomakhosi Gxagxisa, the Head of
Health
Unit; Mr. Bonginkosi Mshengu, the Deputy Head of HR Department within
the Community and Emergency Services Department; and
Mr. V Ngwenya,
the Chief Legal Advisor to the Department.
[4]
Four
candidates including Naidoo were interviewed. The majority of the
panel had after the interview and evaluation process, found
that
another candidate, Van Heerden was the best to be appointed to one of
the Deputy Head positions. Gxagxisa had however favoured
Naidoo. The
interview panel then took a decision to re-interview the three
remaining candidates before making a recommendation
as to who should
be appointed in the remaining position. This decision was taken in
view of the three candidates having scored
close to each other. The
panelist had then agreed and signed off on the scores determined in
respect of the candidates.
[5]
Aggrieved
at the panel’s decision to re-interview them, Naidoo and
another candidate had lodged a grievance, and requested
an
explanation for the need for the second interview. The interviews
nevertheless took place, and Gumede explained to the candidates
the
reasons they were called to be re-interviewed.
[6]
Following
this second round of interviews, another candidate, Buthelezi scored
higher than Naidoo and the remaining candidates.
The panel resolved
to recommend Buthelezi. Again, Gxagxisa was in favour of Naidoo being
appointed, but had submitted to the consensus
of the panel.
[7]
Naidoo
lodged an unfair labour practice dispute with the SALGBC, which was
set down for conciliation on 19 July 2013. Mshengu attended
the
conciliation meeting which had failed to yield a resolution.
[8]
On 26
August 2013 Gumede received a text message from Gxagxisa in terms of
which the latter had said that he wished to offer Naidoo
a post that
had become vacant. Gumede had informed her it was fine, as long as
the paper work was done properly to indicate a promotion.
Gumede’s
contention was that his understanding was that Gxagxisa would ensure
that Naidoo was fit and proper for the post
and satisfied its
requirements and the job description.
[9]
Gumede
further contended that the remuneration in regards to the position
would be discussed with the relevant authorities, and
he did not
understand Gxagxisa to have already offered the position to Naidoo.
At a meeting held on 29 August 2013, Naidoo was
introduced by
Gxagxisa as the new Deputy Head of Social Development, which came as
a surprise to Gumede.
[10]
Gumede then
made enquiries with Mshengu about how Naidoo was appointed, and he
was informed that Gxagxisa had enquired from him
whether it was
possible to settle the Naidoo matter. Gxagxisa was informed that
formal processes had to be followed including approval
from Gumede.
Mshengu had however informed Gxagxisa that he was not in favour of
entering into a settlement with Naidoo.
[11]
Gumede
further averred that at no stage did Gxagxisa contact him or Mshengu
to discuss the terms of Naidoo’s employment, the
salary, her
job description or the settlement agreement. He denied having agreed
with Gxagxisa and Mshengu that a settlement agreement
should be
negotiated with Naidoo. He contended that as Mshengu had been dealing
with the matter even at the level of conciliation,
any settlement
with Naidoo should have been driven by him, and if not, his input
should have been sought on the terms of the settlement.
[12]
Gumede’s
further contention was both Gxagxisa and Naidoo were aware that
Mshengu had declined to place Naidoo in any other
vacant position in
the absence of proper processes being followed. Naidoo’s
experience was in nursing and health sciences,
and was not qualified
in the social sciences sphere. Gxagxisa according to Gumede, was not
authorized to bind the applicant to
appoint Naidoo at her current
salary when the position was at a lower salary. Shabane and Mshengu’s
confirmatory affidavits
accompanied Gumede’s founding
affidavit.
[13]
In her
answering affidavit, Naidoo contended that it was not the function of
this Court to make a finding whether or not the decision
to settle a
matter was a good one or not, and further to enquire into the merits
of a case that has been settled between the parties.
[14]
In regards
to the circumstances leading to the settlement agreement, Naidoo
submitted that in August 2013, Gxagxisa had mentioned
to her that
they should settle the dispute between the parties. A meeting was
held on 26 August 2013 attended by her, her union
representative and
Gxagxisa. The latter had again at that meeting reiterated that she
wished the matter to be resolved, and that
the vacant position of
Deputy Head (Social Development) was a suitable alternative.
[15]
During
discussions held with Gxagxisa and also where Shabane of the Human
Resources was present, Naidoo’s union representative
had
prepared a draft settlement agreement using the standard SALGBC
agreement. Having done so she had then read the contents of
the draft
agreement and presented it to Gxagxisa. Gxagxisa then informed Naidoo
and her representative that she would need to bring
in Mshengu and
Gumede on board prior to signing the agreement and left the meeting.
[16]
When
Gxagxisa came back, she told Naidoo and her representative that
having communicated with Mshengu and Gumede, she was ready
to sign
the agreement offering her a promotion. They had all signed the
agreement and Shabane was advised to send a copy to SALGBC
to confirm
that the dispute had been resolved. The union had also sent a copy to
SALGBC to confirm that the dispute was resolved.
[17]
According
to Naidoo, the settlement agreement was negotiated and concluded in
good faith, with someone who either had the authority
to settle the
dispute, or purported to have authority. She denied having acted in
common purpose with anyone in securing the settlement.
She further
denied that settling the dispute in circumstances where an unfair
labour practice dispute had been referred was irregular,
as this was
common practice within the applicant to resolve disputes once
referred to SALGBC.
Legal
framework and evaluation:
[18]
Central to
this application is whether Gxagxisa had the necessary authority to
conclude the settlement agreement. The applicant
contends that she
did not, whilst Naidoo holds the view that she did. Naidoo further
contends that the agreement was made into
an award by SALGBC on 13
October 2013.
[19]
It however
needs to be stated that the settlement agreement despite a dispute
having been referred was not facilitated by SALGBC
as it was
concluded internally. Only the SALGBC
pro
forma
settlement agreement was utilized to conclude and formalize the
agreement. As Naidoo however correctly pointed out, the agreement
makes provision under its clause 5 that the parties consented to the
agreement being made an arbitration award in terms of the
provisions
of section 142A (1) of the Labour Relations Act.
[20]
Naidoo’s
further contention was that the parties were
ad
idem
when the agreement was concluded in good faith, and further that the
agreement constituted a contract for the purposes of contract
law.
She further submitted that at no stage during the meeting leading to
the agreement did Gxagxisa, who was the head of the unit,
indicate
that she did not have the authority to conclude the agreement.
[21]
It is trite
that actual authority may be express or implied. In
Hely-Hutchinson
v Brayhead Ltd & another
[1]
,
the
Court expressed the distinction as follows:
‘
[Actual authority] is
express when it is given by express words, such as when a board of
directors pass a resolution which authorises
two of their number to
sign cheques. It is implied when it is inferred from the conduct of
the parties and the circumstances of
the case, such as when the board
of directors appoint one of their number to be managing director.
They thereby impliedly authorise
him to do all such things as fall
within the usual scope of that office. Actual authority, express or
implied, is binding as between
the company and the agent, and also as
between the company and others, whether they are within the company
or outside it.’
[22]
To the
extent that Naidoo may have argued that Gxagxisa had ostensible
authority, her argument as I understand it is that the applicant
is
bound by the agreement on the basis that she was a
bona
fide
third party, and Gxagxisa had represented the applicant even without
actual authority, but that the applicant had allowed her to
represent
it as if she did have authority. It was however common cause that
Naidoo had not pleaded estoppel.
[23]
In
Northern
Metropolitan Local Council v Company Unique Finance
[2]
,
the Court stated that in order to hold the applicant liable on the
basis of ostensible authority the respondents had to prove
the
following:
(a)
A representation by words or
conduct;
(b)
Made by the appellant and not
merely by the agents that they had authority to act as they did;
(c)
A representation in a form such
that the appellant should reasonably have expected that outsiders
would act on the strength of it;
(d)
Reliance by the respondents on
the representation;
(e)
The reasonableness of such
reliance;
(f)
Consequent prejudice to the
respondents.
[24]
Thus in
order to render the applicant liable, it is apparent that more is
required than mere reliance on the representation of the
claimed
agent alone. Assurances by an agent as to the existence or extent of
his authority are therefore of no consequence when
it comes to the
representation of the principal inducing a third party to act to his
detriment
[3]
. Furthermore, no
representation is made if the representee is aware that the
transaction he is engaging in is not of the kind a
particular
official will ordinarily transact with an outsider
[4]
.
It is further trite that extra-judicial statements, conduct and
admissions of the 'agent' himself cannot be relied upon to establish
authority when that is the very fact in issue
[5]
.
[25]
Depending
on the legislation involved and the nature and functions of the body
concerned, a public body may not only be entitled
but also duty bound
to approach a court to set aside its own irregular administrative
act
[6]
. Thus Naidoo’s
contentions that it is not the function of this court to make a
finding whether or not the decision to settle
was a good one or not,
and further that it was not the function of this court to enquire
into the merits of a case that has been
settled between the parties
is misplaced.
[26]
Further
applying the above legal principles to the facts of this case, the
starting point in determining whether the agreement should
be set
aside is the acknowledgement that the applicant is a local
municipality governed by the Local Government: Municipal Systems
Act
[7]
(The MSA). Section 55 of
this Act makes provision in regards to the responsibilities of a
Municipal Manager. Pertinent in this
regard is that as head of
administration the municipal manager of a municipality is, subject to
the policy directions of the municipal
council, responsible and
accountable for
inter
alia
,
the management of the municipality's administration in accordance
with this Act and other legislation applicable to the
municipality
[8]
; the appointment
of staff other than those referred to in section 56 (a), subject to
the Employment Equity Act, 1998 (Act 55 of
1998)
[9]
;
the management, effective utilisation and training of staff
[10]
;
the maintenance and discipline of staff
[11]
;
the promotion of sound labour relations and compliance by the
municipality with applicable labour legislation
[12]
.
[27]
The
Municipal Manager is also empowered within a policy framework
approved by the Municipal Council and subject to any applicable
law,
to approve a staff establishment for the municipality and provide a
job description for each post on the staff establishment
[13]
.
The MSA therefore
envisages that the municipal manager will manage day-to-day staff
matters.
[28]
Naidoo
therefore needs to demonstrate that the act of Gxagxisa as an agent
was authorized by the applicant
[14]
.
In this case, and by nature of the legislative framework within which
municipalities and municipal managers operate insofar as
matters of
appointment of staff are concerned, it has to be demonstrated by
Naidoo, that indeed Gxagxisa was accordingly delegated
to enter into
the impugned settlement agreement as contemplated in section
59(1)
[15]
of the MSA.
[29]
It is
accepted that a
bona
fide
third
party such as Naidoo may in certain circumstances reasonably assume
that Gxagxisa was able to bind the applicant. This however
would not
apply where it can be shown that Gxagxisa acted on her own without
the necessary authority as sub-delegated to her, and
accordingly,
Naidoo bears the onus of proving that Gxagxisa like any other agent
of the applicant, had the necessary authority,
either actual or
implied, to bind it
[16]
.
[30]
Gxagxisa
despite her vehement support for Naidoo throughout the latter’s
quest to be appointed and/or to resolve the dispute
has not in any
manner or form confirmed Naidoo’s averments that she indeed had
the necessary authority or mandate as conferred
in terms of the
provisions of section 59 of the MSA, and the question that remains in
the absence of express authority is whether
a case has been made out
on the basis of ostensible authority. Contrary to the submissions
made on behalf of Naidoo, it was not
for the applicant to prove by
way of a confirmatory affidavit from Gxagxisa that she lacked the
necessary authority.
[31]
Naidoo’s
main contention was that the applicant by conduct had conferred
ostensible authority on Gxagxisa to enter settlement
agreements on
its behalf. She relied on a motivation sent by Gxagxisa to
Gumede
[17]
, in which the
latter indicated that the matter was discussed with Gumede and
Mshengu, where after the settlement was then negotiated
and agreed
upon with her. As already indicated however, mere reliance on
extra-judicial statements, conduct and admissions of the
'agent'
himself is not sufficient, and to this end, little value is attached
to the motivation addressed by Gxagxisa to Gumede.
[32]
Furthermore,
Naidoo’s reliance on the motivation however is belied by
Gumede’s e-mail of 11 September 2013 to Mshengu
[18]
wherein the former had clearly instructed the latter to withhold the
agreement until everyone was on board and all processes were
followed
as led by HR. Needless to say however, it has already been stated
that reliance of a representation by words or conduct
in reference to
Gxagxisa’s memorandum is not sufficient. Furthermore, Gumede’s
contentions were that Shabane had also
signed the settlement
agreement after being informed by Gxagxisa that he (Gumede) had
agreed to the settlement when this was not
the case.
[33]
As conceded
by Naidoo, Gxagxisa had always been supportive of her appointment to
the advertised posts, and had openly showed her
displeasure at her
non appointment following the two interviews. In these circumstances,
it cannot be said that any representation
made by Gxagxisa was in a
form such that the applicant should reasonably have expected that
Naidoo in particular would act on the
strength of it.
[34]
Naidoo by
virtue of her position and service with the applicant, could not
reasonably have formed the view that Gxagxisa had any
authority to
conclude the settlement agreement, more specifically since she should
have been aware of powers of delegation, the
processes to be
followed, and most importantly, the requirements of the post in
question. Furthermore, it cannot be said that a
representation was
made by the applicant when Naidoo was or should have been aware that
the negotiations or conclusion of the agreement
were not of the
kind Gxagxisa would ordinarily engage with her. At most, she would
have been aware that Mshengu and Gumede
had to have a say in that
regard, and her reliance on Gxagxisa’s motivation has been
dealt with. Furthermore, Naidoo would
have known that any such
promotion should have been in terms of established processes and
procedure, and not merely at the behest
of Gxagxisa, who incidentally
had been seeking and supporting her promotion for whatever reason
known to her.
[35]
Naidoo by
virtue of Gxagxisa’s support of her appointment had merely
relied on Gxagxisa’s representation as it was suitable
and
convenient for her. As the applicant has correctly pointed out, any
prejudice and inconvenience to be suffered by Naidoo with
the setting
aside of the agreement is solely as a consequence of her unreasonable
reliance on Gxagxisa’s representation,
which found no support
in law as per the prescripts of the MSA, or on any other basis.
Furthermore, any prejudice suffered by Naidoo
as a consequence of the
agreement being set aside can be ameliorated by pursuing the unfair
labour practice dispute lodged with
SALGBC.
[36]
In the
light of the above, it follows that it has not been established as a
fact that Gxagxisa had actual or implied authority to
make a
representation, by entering into and signing the agreement, that she
had authority to bind the appellant. From the facts,
it is apparent
that Gxagxisa went on a frolic of her own and without due regard to
established processes and procedures, entered
into the settlement
agreement. She further did so with a misplaced view that Naidoo was
entitled to a promotion. In these circumstances,
the settlement
agreement stands to be set aside. I have further had regard to
considerations of law and fairness, and even though
there was no
basis for opposing the application, I am of the view that no order
should be made as to costs.
Order:
i.
The
settlement agreement dated 26 August 2013 concluded between Dr
Gxagxisa and Vijay Naidoo is invalid and is accordingly set aside.
ii.
There
is no order as to costs.
_________________
Tlhotlhalemaje, AJ
Acting
Judge of the Labour Court of South Africa
APPEARANCES:
On
behalf of the Applicant:
Adv. J Nxusani
Instructed
by:
Kathy James Attorneys
On
behalf of the Respondent:
Ms C Soni of IMATU
[1]
[1968] 1 QB 549
(CA); ([1967] 3 All Eng ER 98]) at 553 A-G). See also
NBS
Bank Ltd v Cape Produce Co. Ltd
(2002 (1) SA 396
(SCA)
;
Northern
Metropolitan Local Council v Company Unique Finance (Pty) Ltd
2012 (5) SA 323
(SCA) at para [24] at 332H-333A
[2]
2012 (5) SA 323
(SCA). See also
NBS
Bank Ltd v Cape Produce Co (Pty) Ltd and Others
[2002] 2 All SA 262
(A) at para [26] at 412C - E)
[3]
Glofinco v Absa
Bank Ltd t/a United Bank
2002 (6) SA 470
(SCA) at para [13]
[4]
Glofinco
at para [20]
[5]
See
Venter
v Credit Guarantee Ins Corp of Africa Ltd
[1996] ZASCA 50
;
1996 (3) SA 966
(A) at page 978 D-E
[6]
See
Pepcor
Retirement Fund v Financial Services Board
2003 (6) SA 38
(SCA) para 10
[7]
32 of 2000
[8]
Section 55 (1) (b)
[9]
Section 55 (1) (e)
[10]
Section 55 (1) (f)
[11]
Section 55 (1) (g)
[12]
Section 55 (1) (h)
[13]
Section 66(1)
[14]
See
Joel
Melamed and Hurwitz v Cleveland Estates (Pty) Ltd
1984 (3) 155 (A) 164G-165G:
[15]
s59 (1)
(a)provides that:
Delegate
appropriate powers, excluding a power mentioned in section 160 (2)
of the Constitution and the power to set tariffs,
to decide to enter
into a service delivery agreement in terms of section 76 (b) and to
approve or amend the municipality’s
integrated development
plan, to any of the municipality’s other political structures,
political office bearers, councillors,
or staff members;
s59 (2) A delegation or instruction
in terms of subsection (1)-
(b) Must be in writing;
s59 (4) any delegation or
sub-delegation to a staff member of a power conferred on a municipal
manger must be approved by the
municipal council in accordance with
the system of delegation referred to in subsection (1).’
[16]
See
Zelpy
1780 (Proprietary) Limited v Mudaly and Another
(10995/2009) [2014] ZAKZPHC 63 (19 December 2014)) at para [37]
[17]
Annexure “FA3”
to the founding affidavit
[18]
Annexure “FA2”