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[2017] ZALCJHB 317
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Metal Industries Benefit Funds Administrator v Myburgh (JS854/13) [2017] ZALCJHB 317 (29 August 2017)
Of
interest to other Judges
THE
LABOUR COURT OF SOUTH AFRICA,
HELD
AT JOHANNESBURG
C
ase No: JS
854/13
In
the matter between:
METAL
INDUSTRIES BENEFIT FUNDS ADMINISTRATOR
Applicant
and
BRANHAM MYBURGH
Respondent
Heard
:
14 August 2017
Delivered
:
29 August 2017
Summary:
(Default judgement-contractual damages - contract terminable on
conclusion of work – employee resigning
during course of the
contract - determination of damages)
DEFAULT
JUDGMENT
LAGRANGE
J
Introduction
[1]
This has been an unopposed matter since the inception of proceedings
and there was no appearance for the respondent on the date
of the
hearing.
[2]
The respondent was employed in terms of his contract dated 1 March
2013 as “a fixed term employee... for the purpose of
MIBFA
distributing the pension and Provident fund surplus as contemplated
by the pension funds act, 1956.” The duration of
the contract
was to be determined by the occurrence of an event rather than a
predetermined date. Thus clause 3.1 of the contract
provided that
“... once the surplus has been distributed (i.e. the event)
your employment with the applicant will automatically
terminate.”
[3]
Before the work contemplated in the contract had been completed and
therefore before the event which would have ended the contract
had
occurred, the respondent resigned from the applicant on 1 July 2013
in a letter dated 26 June 2013 which was only submitted
to the
applicant on 28 June 2013.
[4]
The respondent had been recruited through an agency to which the
applicant had paid an agency fee in the amount of R 15,916.57.
Following the abrupt resignation of the respondent, the applicant
employed a replacement through the same agency on or about 17
July
2013 and paid a similar agency fee for that service amounting to R
15,914.40.
[5]
The applicant accepted the respondent’s breach of the contract
and now seeks damages incurred as a result of the respondent’s
failure to fulfil his obligation to continue working until the fund
surplus had been distributed. Initially, the applicant identified
these damages as comprising the original agency fee incurred in
recruiting the respondent and the additional fee incurred in
obtaining
a replacement when he resigned on short notice. Initially,
the applicant appeared to concede that the initial recruitment fee
was
incurred prior to the breach and it was only the second
recruitment fee, which it incurred as an additional cost as a result
of
the respondent’s breach. In written heads submitted later,
it pursued the contention that the respondent was also liable to
it
for his original recruitment costs.
[6]
In
Air
Traffic and Navigation Services v Esterhuizen
[1]
,
the SCA stated:
“
[17]
A contract of employment is generally entered into for a fixed period
or
for an indefinite period. Where no
date has been fixed upon which the contract will terminate, it will
continue indefinitely until
terminated or will be terminable by
either party on the giving of notice.
[2]
In such a contract, resignation is a
unilateral act permitted by the specific terms of the contract for
bringing the contract to
an end.
[3]
When the contract is for a fixed period, none of the parties has the
right to terminate the contract prior to the expiry of the
fixed
period.
[4]
Cheadle AJ in
Lottering
v Stellenbosch Municipality
[5]
endorsed
this principle in the following terms:
‘
If the contract is for a fixed
term, the contract may only be terminated on notice if there is a
specific provision permitting termination
on notice during the
contractual period – it is not an inherent feature of this kind
of contract and accordingly requires
specific stipulation.’
[6]
And later,
‘
In a fixed term contract, a
notice to bring the contract to an early end is a repudiation because
it does not in itself constitute
a contractually permissible act of
termination. Being a repudiation, the employer has an election to
hold the employee to the contract
or to accept the repudiation and
cancel the contract.’
[7]
This court has held that a premature
termination of a fixed term contract of
employment gives rise to a claim for
damages for breach of contract.
[8]
”
(original footnotes-footnote numbering
altered)
Consequently, it follows that in this
instance, where no provision was made for giving notice, that the
respondent’s resignation
prior to the happening of the
resolutive event that would have brought an end to the contract
amounts to a breach.
[7]
Ordinarily, under a fixed term
contract, the employee could be held liable for the value of the
outstanding services he failed to
render, subject of course to the
employer’s duty to mitigate the damage caused by
inter
alia
employing somebody
else, which is what the applicant did in this case.
[9]
The only damages claimed in this instance are the expended
recruitment fees, and accordingly it is not necessary to consider if
the respondent is liable for any other damages.
[8]
Clearly, there is a direct connection between the respondent
terminating his services and the applicant having to replace him.
In
my view, it would have been reasonably within the contemplation of
both parties that the applicant would have recruited his
replacement
in the same manner he was engaged and that this would have attracted
an additional recruitment fee. As such, this was
a cost the
respondent ought to have realised the applicant would bear in
replacing him. In effect, it meant that the original fee
it had paid
to recruit him had to be paid twice. However, the original fee is one
which the applicant had already incurred as an
expense on the
assumption that it would secure an employee for the duration of the
contract. That was not a cost which it sought
to recover from the
applicant, or which he had agreed to reimburse the applicant for in
the event he breached the contract. Hypothetically,
even if he had
agreed to repay it in the event that he prematurely terminated his
employment, it is difficult to see how the respondent
would have been
able to persuade a court that it suffered a loss when it had to
expend the amount refunded, in recruiting his replacement.
The amount
he would have been undertaken to pay the applicant would have placed
it in the same position as it would have been if
he had not
prematurely terminated his employment, leaving aside the question of
other damage it may have suffered by any work interruption
caused by
his termination. I mention this conjectural situation merely to
demonstrate that it is difficult to see how the applicant
can justify
its claim to recover both the initial recruitment fee and the
recruitment fee it paid for the respondent’s replacement.
It is
only the second recruitment fee which is an expense which can
reasonably be attributed to the respondent’s breach.
[9]
In the circumstances, I am satisfied that the respondent is liable to
the applicant for the unnecessary expense caused by his
premature
termination.
[10]
The applicant has not sought an order of costs as the matter is
unopposed, but in passing, it should be mentioned that if a
cost
order had been warranted, the court would have been compelled to
consider if it would be appropriate that the High Court scale
of
costs should apply, given that the value of the amount claimed falls
well within the Magistrate’s Court jurisdiction.
Order
[1]
The respondent is liable to the applicant for damages arising from
his breach of contract
in the amount equivalent to the recruitment
fee paid by the applicant for his replacement, namely R 15,914.30.
[2]
The respondent is also liable to the applicant for payment of
interest on the above amount
at the prescribed rate of interest,
namely 15.5 % per annum for the period 29 July 2013 until 31 July
2014 and 9 % per annum thereafter.
[3]
Both the amounts must be paid by the respondent within 15 days of
receipt of this judgment.
_______________________
Lagrange
J
Judge
of the Labour Court of South Africa
APPEARANCES
APPLICANT:
I
I Mahomed of Hogan Lovells (SA) Inc.
RESPONDENT:
No
appearance.
[1]
(668/2013)
[2014] ZASCA 138
(25 September 2014)
[2]
See generally M J D Wallis Labour and Employment Law para 33 at
5-10; Tiopaizi v Bulawayo Municipality
1923 AD 317
; Lawsa 2 ed Vol
13 Part 1 para 94
[3]
Lottering & others v Stellenbosch Municipality (2010) 19 LC and
12 BLLR 1306
(LC); 2923 (LC) (7 May 2010) para 20; Rustenburg Town
Council v Minister of Labour & others
1942 TPD 220
;
Potgietersrust Hospital Board v Simons
1943 TPD 269
at 274; Rosebank
Television & Appliances Co (Pty) Ltd v Orbit Sales Corporation
(Pty) Ltd
1969 (1) SA 300
(T) at 302.
[4]
Lawsa para 94.
[5]
Supra
[6]
Paragraph 14.
[7]
Paragraph 20
[8]
Fedlife Assurance Ltd v Wolfaardt
2002 (1) SA 49
(SCA) para 18.
[9]
See SA
Football Association v Mangope (2013) 34 ILJ 311 (LAC) at 332, paras
[43] and [44].