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[2017] ZALCJHB 167
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Thorp v National Homebuilders Registration Council (JS845/2014) [2017] ZALCJHB 167 (6 April 2017)
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THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not
reportable
Case
no JS845/2014
In the matter between:
COURTNEY THORP
Plaintiff
and
NATIONAL HOMEBUILDERS
REGISTRATION COUNCIL
Defendant
Trial: 17-19 October 2016; 7
November 2016
Judgment delivered: 6 April
2017
Summary:
Claim in contract for payment of performance bonus and ‘golden
handshake’. On the facts - bonus payment
discretionary,
and cannot form basis of claim in contract, plaintiff failed to prove
agreement in terms of which he would be paid
a lump sum at
termination of fixed term contract in the event of non-renewal.
JUDGMENT
VAN
NIEKERK J
[1] The
plaintiff was initially employed by the defendant on 1 February 2003
as an executive director in terms of a five-year fixed
term contract,
to expire on 31 January 2008. The termination date of that contract
was later extended to 31 July 2008. On 28 July
2008, the parties
concluded a further five-year fixed term contract, to expire on 31
July 2013. The present dispute concerns a
subsequent contract
concluded on 30 June 2010, in terms of which the prior contract was
superseded by a five-year contract deemed
to have commenced on 1
January 2009, to terminate on 31 December 2013. (The contract reads
31 December 2014, but the parties accept
that this is a typographical
error and that nothing turns on it.) In terms of the contract, the
defendant advised the plaintiff
that his services would no longer be
required after 31 December 2013.
[2] The
present dispute concerns a term of the contract that terminated on 31
December 2013. The plaintiff seeks to enforce a clause
to the effect
that in the event of the contract not being renewed, the defendant
would pay the plaintiff a sum equivalent to two
years remuneration,
some R 4.1 million. The plaintiff also claims some R150 000 as the
balance of a payment owing to him in terms
of the defendant’s
bonus scheme, and a further amount in respect of outstanding leave
pay. The latter claim was settled by
the parties during the trial.
The defendant denies that it is obliged to pay the plaintiff any
further amounts in respect of the
bonus scheme, and denies that it
ever agreed to a term of his contract entitling the plaintiff to a
gratuity should his contract
not be renewed.
[3] I
deal first with the claim for the outstanding portion of the
performance bonus. It is not in dispute that the defendant operates
a
performance bonus scheme. The applicable policy provides for a
performance management system based on the approved strategic
corporate plan, key performance indicators, monitoring mechanisms and
performance measurement activities. The policy expressly
provides
that the final decision to pay performance incentives is at the
discretion of the defendant’s council. The methodology
of
determining performance rewards is dependent on the performance of
the organisation as a whole, and on individual performance.
It
provides for a core incentive pool, calculated as the percentage by
which business has exceeded target multiplied by the budgeted
incentive pool.
[4] On 29
November 2013, the defendant’s remuneration committee resolved
to recommend to council for approval a 7% performance
bonus pool
(i.e. 7% of the salary bill) for deserving employees with excellent
performance in terms of the performance reviews
conducted. It is not
in dispute that the plaintiff scored a 3.8 on his scorecard, which in
terms of the applicable definitions
meant that he exceeded targets.
[5] On 17
March 2014, the defendant’s remuneration committee resolved
that it should recommend to council for approval a 3.5%
performance
bonus for the 2012/2013 financial year for the plaintiff and another
executive employee. It is also not in dispute
that the defendant’s
council resolved on 30 April 2014 that a 3% incentive bonus payment
be made to the two executives for
the 2012/2013 financial year.
Pursuant to this resolution, the plaintiff was paid an amount of R 34
280.65 on 2 June 2014.
In effect, the plaintiff claims the difference
between this amount and what he would have earned that his
participation extended
to the 7% performance bonus pool recommended
by the remuneration committee, or at least, the 3.5% recommended by
the remuneration
committee in March 2014 (i.e. the 0.5% difference).
[6] It is
not necessary for me to decide whether the terms of the defendant’s
performance bonus scheme or the resolutions
adopted by its
remuneration committee or council entitle the plaintiff to the
performance bonus that he claims. The plaintiff’s
claim is
clearly one brought in terms of contract (see paragraph 5 of the
statement of case) and that being so, it is incumbent
on him to
establish a contractual right to payment of the bonus. The plaintiff
did not dispute that the terms of the performance
bonus scheme are
such that any right to a bonus is subject ultimately to the
discretion of the defendant’s council. The evidence
is clear -
the council exercised a discretion and it resolved to pay the
plaintiff the bonus that he has been paid. That is not
to say that
the actions of the defendant’s council may not have been
arbitrary or unfair in one sense or another, but that
is not a claim
that is justiciable by this court. The plaintiff has elected to sue
in contract, and he has no contractual right
to the bonus. For that
reason, his claim must fail.
[7]
Turning next to the plaintiff’s claim for the equivalent of two
years’ remuneration, the evidence discloses the
following. As I
have mentioned, the plaintiff was initially employed as chief
executive: finance and supply chain for a fixed term
of five years,
to terminate on 31 January 2008. On 14 January 2008, the plaintiff
was advised by the defendant’s then chief
executive officer
that his contract of employment had been extended by six months, to
expire on 31 July 2008. On 24 July 2008,
the defendant’s chief
executive officer addressed a letter to the applicant are advising
him that he had been appointed as
executive director: finance on a
further five-year fixed term contract, from 1 August 2008 to 31 July
2013.
[8]
During the course of 2010, after the then chief executive officer had
left the defendant’s employer, discussions took
place between
the plaintiff and the acting chief executive officer, Mr S Mashinini.
The plaintiff’s evidence was that Mashinini
requested him to
remain in the defendant’s employ for a further 18 months, i.e.
until December 2014. The purpose of this
proposal, according to the
plaintiff, was that Mashinini was aware that he was ‘in the
market’ for alternative employment
and given the plaintiff’s
qualifications, skill and experience, Mashinini wished to bring a
degree of stability to the defendant.
The plaintiff was amenable to a
discussion on these terms and Mashinini forwarded to him a copy of
his existing contract on the
basis that it would serve as a working
draft for the revision. An attached note by Mashinini reads as
follows:
Please
peruse the proposed contract and suggest changes for negotiation and
finalisation of this contract as discussed.
Thanx
Sipho
[9] The
plaintiff testified that he effected handwritten amendments to the
document provided to him. One of the amendments reflects
an insertion
to the effect that the defendant would ‘incentivise’ the
plaintiff by paying him the equivalent of one
years’
remuneration, on a cost to company basis, should the contract not be
renewed.
[10] The
plaintiff testified that he made a copy of the document and left it
with Mashinini, assuming that Mashinini would consider
the document
and finalise its terms. The plaintiff testified that he indeed
received a document for his signature, delivered in
hardcopy by a
member of the human resources department. The document provided for a
fixed period of employment of five years, deemed
to have commenced on
1 January 2009 to terminate on 31 December 2014. (As I have
mentioned, it was not in dispute that the contract
or to have
reflected the termination date of 31 December 2013, and that the
reference to 2014 was a typographical error.)
In clause 19 (c)
of the document, the following is stated:
(c)
The NHBRC recognises the fact that the term of employment is for five
(5) years and
will incentivise Mr Thorp for the fixed term contract
with a two-year total cost to company payment in the event that the
fixed
term contract is not renewed.
[11] The
plaintiff’s testimony was that he regarded this term, which
effectively provided for a payment of double the amount
that he had
proposed in the event that the contract was not renewed, as a ‘gift’.
The plaintiff testified that he initialled
all of the pages and
signed the document in the space provided. He signed the document
first – when he received the hard
copy of the document, it was
a clean copy with no manual adjustments, deletions or the like, nor
had any representative of the
defendant signed or initialled the
document. He did not dispute that none of his previous contracts had
contained a clause of this
nature, or that the defendant’s
policies made no provision for gratuities in the event that a fixed
term contract was not
renewed. He was also aware that to the extent
that the defendant is a statutory organisation, the terms and
conditions of the employment
of its employees are subject to
regulation and in particular, the approval of council. The
plaintiff’s attitude was that
it was for the chief executive
officer to ensure that the approval and authorisation of the
defendant’s remuneration committee
and council was obtained for
the terms of his contract. In other words, while he knew that the
defendant’s policy did not
make provision for the payment of
gratuities in the event of the non-renewal of a fixed term contract,
it was not his concern.
[12] The
circumstances in which the plaintiff’s contract of employment
terminated, by the effluxion of time, are not in dispute.
The
plaintiff testified that on 29 November 2013 the termination of his
contract with effect from 31 December 2013 was confirmed
by way of a
letter from the chief executive officer, without him having been
given any prior indication that there was any prospect
of the
contract being renewed, or any invitation to him to reapply for his
position.
[13] In
the copy of the contract furnished to the court, clause 19 (c) has
been deleted by a manual striking through of the clause.
The deletion
is initialled by Mashinini, as is every page but for the last page,
which contains the full signatures of both parties.
The explanation
for the deletion was provided by the defendant’s witnesses. The
defendants erstwhile executive director:
corporate services, Ms
Laurie Less, testified that a draft agreement that did not include
clause 19 (c) was emailed to the plaintiff
for him to peruse and
sign. She testified that the plaintiff inserted clause 19(c), and
then initialled and signed the document.
When the document was
brought to her by the human resources manager, Mr Anton Wolmarans,
they ‘had a laugh’ and advised
Mashinini that the clause
was inappropriate since it was not in keeping with the defendant’s
policies which made no provision
for gratuities or ‘golden
handshakes’ and that when presented with the two originals of
the document, One for the plaintiff,
the other for the defendant)
Mashinini deleted clause 19 (c), initialled the deletion and signed
the document. When the plaintiff
was thereafter asked to countersign
the document by initialling the deletion, he refused to do so. Less
was an impressive witness,
which cannot be said for Wolmarans. He
seemed simply unable to provide evidence as to facts rather than his
own views, opinions
and interpretation of facts and indeed, proffered
more than one version of the facts.
[14]
There is obviously a material dispute of fact in relation to the
circumstances in which clause 19 (c) came to be inserted into
the
draft document and deleted. However, it is not necessary for me to
make any decision as to which is the more probable since
in my view
the plaintiff has failed, on his own version, to discharge the onus
of proving the existence of a binding contractual
term that entitles
him to the sum claimed. To succeed in his claim, it is incumbent on
the plaintiff to prove an offer, and a clear,
unambiguous and
unequivocal acceptance of that offer by the offeree.
[15] The
plaintiff’s evidence regarding his discussion with Mashinini
regarding a revised contract of employment did not extend
to a
payment of 24 months’ remuneration in the event of a
non-renewal of the contract. At best for the plaintiff, there was
a
discussion over the prospect of a payment equivalent to 12 months’
remuneration in those circumstances. The plaintiff did
not dispute
that the copy of his existing contract, accompanied by Mashinini’s
handwritten note, comprised no more than an
invitation to the
plaintiff to make proposals for the revised contract. Specifically,
the plaintiff was requested to ‘suggest
changes for
negotiation’ using his existing contract of employment as a
base document.
[16] In
other words, the plaintiff was invited to make proposals on new terms
and conditions of employment on which agreement might
be reached. It
is not disputed that the plaintiff made such proposals, including the
proposal of a 12-month payment to him
should the contract not be
renewed. The plaintiff testified that he did not know what happened
to the document after it was left
with Mashinini - his assumption was
that Mashinini would have the draft typed and peruse it.
[17] On
his version, the plaintiff then received a clean, hard copy of the
document from the human resources department. That document
was not
an offer of employment on the terms that it reflected – it was
not signed by the CEO as were offers of employment
made in the normal
course. The document did not reflect any oral agreement reached
between him and Mashinini. In other words,
the document was not an
offer made by the defendant
animo contrahendi
. At best for the
plaintiff, on his version, the document amounted to a typed version
of the proposal that he had been invited to
make and which he
submitted, with the exception only of the quantum reflected in clause
19 (c). He initialled and signed the document,
thus making an offer,
in writing, to the defendant, to contract on the terms contained in
the document. The plaintiff made no enquiry
thereafter as to whether
his offer had been accepted. On his version, the plaintiff did not
even request a copy of the document
as signed by the defendant.
Indeed, the plaintiff appears to have remained in a state of
self-imposed ignorance until the dispute
over the terms of his
contract some three years later. On the plaintiff’s version
therefore, he was unaware of any acceptance
by the defendant of his
proposal regarding the payment of a gratuity on the non-renewal of
his contract, nor was any acceptance
of such a proposal later
communicated to him. In short, there was never any agreement between
the parties on any contractual term
that the plaintiff would be paid
a gratuity should his contract not be renewed. It does not
assist the plaintiff that he
believes, as he appears to do, that
clause 19 (c) remains valid and enforceable because he did not
countersign the deletion. On
the plaintiff’s version, the
deletion of clause 19 (c) by Mashinini (which the plaintiff does not
seriously dispute) indicates
no more than Mashinini’s
rejection, in graphic terms, of his proposal. The plaintiff’s
claim to the equivalent of 24
months’ remuneration must
therefore fail.
[18]
Finally, in relation to costs, the court has a broad discretion in
terms of s162 to make orders for costs according to the
requirements
of the law and fairness. In the present instance, it should be
recalled that the plaintiff was successful in at least
one of the
elements of his claim, that of leave pay. As I indicated above, that
issue was resolved only during the course of the
trial. While that
claim does not amount to a significant portion of the whole of the
plaintiff’s claim, he was nevertheless
obliged to approach the
court to recover what was ultimately his due. Further, this court
does not conventionally make costs orders
in circumstances where
genuinely aggrieved individuals seek redress against their employers.
I will give the plaintiff the benefit
of the doubt in so far as his
bona fides
are concerned. In those circumstances, it seems to
me that the interests of the law and fairness would be best served by
each party
bearing its own costs.
I make
the following order:
1.
The plaintiff’s claim is dismissed.
ANDRÉ
VAN NIEKERK
JUDGE
OF THE LABOUR COURT
REPRESENTATION
For the
plaintiff: Adv M Lennox, instructed by Eversheds Attorneys
For the
defendant: Adv X Matyolo, instructed by mkhabela Huntley Adekeye Inc