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[2018] ZALCJHB 30
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ARWYP Medical Centre (Pty) Ltd v Harris (JS79/14) [2018] ZALCJHB 30 (6 February 2018)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
no: JS 79/14
In
the matter between:
ARWYP MEDICAL CENTRE (PTY)
LTD
Applicant
and
HELENA HARRIS
Respondent
Heard:
24 - 26 April 2017
Delivered:
6 February 2018
JUDGMENT
TLHOTLHALEMAJE,
J:
Introduction:
[1]
In its statement of claim, the applicant sought an order setting
aside a settlement agreement entered into between the parties
under
the auspices of the Commission for Conciliation Mediation and
Arbitration (CCMA). The applicant further seeks the repayment
of an
amount of R378 000.00 plus interest paid to the respondent in
satisfaction of the settlement agreement.
[2]
The agreement was concluded pursuant to a constructive dismissal
claim having been referred by the respondent to the CCMA. The
basis
of seeking a cancellation of the settlement agreement was that it was
entered into based on a misrepresentation by the respondent.
Background:
[3]
The applicant is a private company, which operates as a private
healthcare centre and hospital. The respondent, Ms Helena Harris
(Harris) commenced her employment with the applicant from 1 April
2008 as the Director of Operations, having signed a contract
of
employment on 18 March 2008.
[4]
This dispute has a protracted history dating back to 2009. In April
2009, Harris was suspended from the employ of the applicant.
This led
to an alleged unfair labour practice dispute being referred to the
CCMA. On 15 July 2009, Commissioner Ravi Naidoo of
the CCMA issued an
arbitration award, wherein he found that the suspension of Harris was
unfair. She was awarded compensation in
the amount equivalent to two
weeks’ remuneration. The applicant subsequently lodged an
application to review and set aside
Commissioner Ravi’s award.
[5]
In a letter dated 12 June 2009, Harris had tendered her resignation
from the employ of the applicant. The letter essentially
details
numerous instances of alleged unfair treatment meted out by the
applicant, leading Harris to conclude that her working
conditions had
been made intolerable.
[6]
On or about 10 July 2009, Harris referred an alleged constructive
dismissal dispute to the CCMA. Midstream the arbitration proceedings,
the parties agreed to resolve the dispute. A settlement agreement was
duly entered into on 4 August 2010, in terms of which the
applicant
had agreed to pay Harris an amount of R378 000.00. The agreement
also covered the withdrawal of the review application
initially
lodged by the applicant in respect of Commissioner Ravi’s
award, and the withdrawal of summons issued against Harris
(in the
sum of R500 000.00) in respect of an alleged breach of contract after
her resignation.
[7]
Harris was paid the amount of R378 000 in satisfaction of the
settlement agreement. The applicant alleges that in January
2013,
some 17 months after the settlement agreement was concluded, it
become aware of a misrepresentation by Harris pertaining
to the
circumstances that led to her leaving her previous employment prior
to joining it in April 2008. It was alleged that the
said
misrepresentation had the effect of inducing the applicant to enter
into the settlement agreement, hence the claim before
the court,
which was lodged in January 2014.
The
evidence:
[8]
The applicant’s contention is that throughout Harris’
employment with it, and until January 2013, it had belaboured
under
the impression that at the time she was employed, she had resigned
from her previous employ with Netcare Group. It was contended
that
had it been known before the settlement agreement was concluded that
Harris was instead retrenched by Netcare Group, the applicant
would
not have entered into a settlement agreement with her, and would have
instead dealt with the matter differently.
[9]
It was further the applicant’s view that Harris’
misrepresentation was material and persistent, as she had confirmed
at all times including at the alleged constructive dismissal
arbitration proceedings that she had indeed resigned from the Netcare
Group. According to the applicant, the misrepresentation was also
deliberate as Harris knew that had the true state of affairs
been
known at the time the agreement was concluded, it would have resulted
in it pursuing its defence of the alleged constructive
dismissal
dispute.
[10]
The evidence of Ms Margaret Ireland (Ireland), the applicant’s
Hospital Manager in support of its claim is summarised
as follows:
10.1
Because of the nature of the industry and competitiveness, there is
constant
movement of professionals between different
hospitals, which not only compete for clients or patients, but also
for skilled
professionals like doctors, nurses and pharmacists. The
difficulties are compounded by the fact that retrenchment of
professional
staff in the industry is uncommon.
10.2
At the time that Harris was employed, Ireland was the Human Resource
Manager,
and had assisted with the conclusion of her employment
contract. No reference checks were conducted at the time of the
conclusion
of the employment contract with Harris, as the Chief
Executive of the applicant had specifically instructed that such an
exercise
should not be undertaken. When Harris was employed, all that
was known it was that she had resigned from Netcare Group due to
transport problems, and the need to improve her quality of life.
10.3
Harris was employed within the Nursing Division, and was responsible
for
inter alia
the management of the quality division,
marketing, nursing school and the pharmacy. She reported directly to
the Chief Executive.
10.4
On 6 April 2009, Harris was suspended pending investigations into the
circumstances
that led to her leaving the Netcare Group. The Chief
Executive, Mr Otto Wykema sent an email to the representatives of the
Netcare
Group on 7 April 2009 to ascertain the real reasons Harris
had left. Mr Peter Warrener (Warrener), the Human Resource
Manager
of the Netcare Group in a written response stated that Harris
had left the employ of Netcare “on her own volition”.
10.5
Pursuant to the clarification by Warrener, the applicant in a letter
dated
15 April 2009 uplifted Harris’ suspension, and further
recorded
inter alia
that any allegations of substantial
misrepresentation on her part were unfounded and could not be proven.
10.6
On 12 June 2009, Harris had submitted her resignation letter and
thereafter
referred an alleged constructive dismissal dispute to the
CCMA. During the arbitration proceedings, Harris had reiterated that
she had indeed resigned from Netcare Group.
10.7
During or prior to the arbitration proceedings, copies of Harris’
IRP3
form were obtained from South African Revenue Services which
however indicated that she was retrenched from the Netcare Group.
This was despite the fact that there was a copy of her resignation
letter from Netcare. Furthermore, a copy of Harris’ salary
advice from Netcare was also obtained, which indicated that she was
paid a severance pay.
10.8
The applicant also came into possession of a letter addressed to
Harris by
Netcare. The letter recorded
inter alia
that Harris
had requested voluntary retrenchment during the period of Netcare’s
restructuring. It further recorded that ‘
All communication
with regards to your departure will reflect the reason as a
resignation due to you wishing to adopt a more family
focus
lifestyle.”
10.9
A conclusion was then reached based on the above documents that
indeed Harris
was retrenched by Netcare Group, and that she had not
resigned as she had persistently maintained. According to Ireland,
these
revelations were significant in that, if in fact Harris was
retrenched from Netcare, the implications are that she had skills
deficiency,
and could not have been accommodated anywhere else. Thus,
had the applicant known that Harris was retrenched, it would not have
employed her, especially in a senior position.
[11]
Harris’ evidence in response to the allegations against her are
as follows:
11.1
She is a registered nurse and has held a number of senior position in
various
private health facilities. She commenced employment with
Netcare after the Netcare Group acquired her erstwhile employer,
Maddox.
Her job at Netcare required extensive travelling between her
place of residence and the hospital she was based at. She was also
required to travel to other hospitals as well. The travelling was
taxing, especially taking into account her age at the time (52
years
of age). She had worked for Netcare for 17 years.
11.2
In 2007, her life partner became ill, and her work became
overwhelming because
of the long working hours. She therefore decided
to adopt a more relaxed life style. She intended to resign from
Netcare,
in order to spend more time with her life partner and
grandchildren.
11.3
At some point, she had a conversation with a Dr du Plooy, who was the
Hospital
Superintendent of the applicant. Dr du Plooy was also her
nephew. It was during one of these conversations that Dr du
Plooy
had extended an invitation to her to join the applicant as its
employee. When she informed Dr du Plooy of her intentions to resign
from Netcare, the latter offered her a position even before she had
not yet been interviewed.
11.4
On 18 February 2008, she had a meeting with the Group Human Resource
Director
of Netcare, Mr Warrener. In that meeting, she informed
Warrener of her intention to resign. Netcare was aware of the reasons
she
wanted to resign. At the time, Netcare was undergoing a
restructuring process and she had asked and was granted a generous
severance
package. She then resigned on 19 February 2008.
11.5
On 18 March 2008, Dr du Plooy interviewed her for the position.
Further interviews
were held with the applicant’s Chief
Executive, Ireland and the applicant’s clinical
psychologist, Dr Carr.
11.6
On 1 April 2008, she commenced her employment with the applicant, and
the Chief
Executive had informed her that her position would be
changed from what she was originally offered, but that this would not
affect
her salary.
11.7
On 25 March 2009 she was called to attend a meeting with Ireland and
the applicant’s
attorneys of record (Mr Bouwer). In that
meeting Bouwer
inter alia
produced a letter, and instructed
her to report for a counselling meeting with the Chief Executive. She
was also offered an exit
package and threatened that if she did not
accept package, “they” would ensure that she did not work
in the private
health service again. Allegations of poor work
performance were also levelled against her, and she was subsequently
placed on special
leave of absence.
11.8
She was suspended on 6 April 2009, pending the finalisation of an
investigation.
She was not informed of any allegations against her.
It was only when the suspension was uplifted that she was informed
that it
related to the circumstances under which she had left the
employ of Netcare.
11.9
After her resignation, and during the constructive dismissal
dispute
proceedings, Bouwer, the applicants’ attorneys of
record had issued a subpoena for her personal employee file from
Netcare.
A representative of Netcare brought the file to the
proceedings. Bouwer took possession of the file and inspected it
together with
Ireland and others before it was handed to the
Commissioner. In the file was a letter dated February 2008, which
made reference
to the severance package offer from Mr Warrener of
Netcare. At that point, Bouwer requested that the matter be
postponed.
Harris further testified that Bouwer had made attempts to
also subpoena her medical files.
11.10
The settlement offer came about after she had finished her testimony
in chief and when she was
to be cross-examined by Bouwer. It was the
applicant that had initiated the settlement discussions. She denied
that there was any
basis for the agreement to be cancelled as she had
not misrepresented anything to the applicant. She further contended
that she
had resigned from Netcare and was instead granted a
voluntary package. This led to her agreement with Netcare being
confidential
and there was no reason to disclose it to the applicant
at the time of her employment. The settlement agreement concluded at
the
CCMA according to her had nothing to do with her resignation from
Netcare.
The
legal principles:
[12]
A compromise is a contract
between two or more persons which has as its object the prevention,
avoidance or termination of litigation
[1]
.
Contractual principles apply to any agreement entered into between an
employer and employee, including an agreement of compromise
in terms
of which parties agree to settle any dispute, or claims, that may
exist between them
[2]
.
[13]
It is further 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 the
misrepresentation was intended to induce him or her to enter into the
contract and; and had in fact succeeded
in doing so
[3]
.
[14]
A further requirement is 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
[4]
.
It is further trite that a misrepresentation, once established,
effectively removes the applicant’s assent thereby resulting
in
an agreement being non-existent. The agreement will accordingly be
void
ab initio
[5]
.
[15]
In this case, the agreement
concluded at the CCMA as per its terms and conditions was entered
into in full and final settlement
of all disputes between the parties
at the time, hence the withdrawal of the summons at the magistrate
court, and the review application
before this court. To the extent
that this is the case, the Constitutional Court has held that when
parties settle an existing
dispute in full and final settlement, none
should be lightly released from an undertaking seriously and
willingly embraced
[6]
.
Evaluation:
[16]
The basis upon which the applicant seeks to have the settlement
agreement between it and Harris cancelled is disconcerting
in the
extreme. I am even astonished by the relentless manner with which
this claim was pursued. My concerns at the applicant’s
conduct
in pursuing this claim should be viewed within the context of the
following evidence and conclusions;
16.1
On the applicant’s version, when Harris was employed, no
reference checks
were done into her background upon the instructions
of its own Chief Executive. The failure to conduct these checks can
only imply
that the applicant was prepared to take risks with every
candidate it had interviewed and employed.
16.2
On Ireland’s version, in April 2009, and after Harris was
suspended,
investigations were done on the instructions of the CEO
into the circumstances surrounding her departure from Netcare. These
investigations
had revealed that was granted a voluntary severance
package.
16.3
Essentially, there was no reason to believe that Netcare had lied, or
the fact
that it went through a restructuring process, resulting in
Harris being offered a voluntary package. This evidence was not
challenged.
The applicant nonetheless sought to rely on documentation
which did not assist its case, as Harris had satisfactorily explained
the circumstances that led to her resignation and how she was offered
a severance package.
16.4
It was therefore belated for the applicant in its closing arguments
to challenge
the veracity of the arrangements between Harris and
Netcare at the time that she left the latter’s employ. If the
applicant
was not satisfied with Harris’ version of events,
nothing prevented it from obtaining the evidence of anyone from
Netcare
to dispute that of Harris. As correctly submitted on behalf
of Harris, negative inferences should be drawn from the failure by
the applicant to subpoena witnesses from Netcare to rebut Harris’
version.
16.5
Ireland had further conceded that Harris had offered to resign at
Netcare but
was instead offered a voluntary retrenchment. There was
therefore no inconsistency between the fact that Harris had resigned,
and
the fact that she was offered a voluntary retrenchment.
16.6
The applicant’s contention that Harris had misrepresented the
facts surrounding
her departure from Netcare in the light of her
explanation is spurious in the extreme and obviously fallacious. None
of the elements
of misrepresentation, let alone fraud, were
demonstrated in this case. This is further borne out by the fact that
the offer to
settle the dispute at the arbitration proceedings was
not initiated by Harris. On her version, she was convinced to settle
the
matter by her partner who had accompanied her to those
proceedings. At the time that the settlement discussions were
initiated,
she had completed her evidence in chief and or was about
to be cross-examined. If the applicant was of the view that it had a
water-tight
defence against her alleged constructive dismissal claim,
nothing prevented it from proceeding with the matter. It however
willingly
chose to enter into a compromise, and I am having
difficulties in appreciating the basis upon which it seeks to resile
from that
compromise.
16.7
As Ireland correctly conceded under cross-examination, and further
under re-examination,
the settlement agreement was reached not as a
result of any misrepresentation, but was purely based on an
assessment of the risks
of the merits of the constructive dismissal
dispute before the CCMA. That assessment was made by herself, the
applicant’s
CEO and the applicant’s attorneys of record.
She further conceded that other than the documents in the applicant’s
possession from Netcare, there was nothing to suggest that Harris had
lied about the circumstances pertaining to her leaving Netcare.
16.8
The further contention by Ireland, and by implication, the applicant,
that
because Harris was allegedly retrenched can only imply that she
had skills deficiencies is equally ludicrous. She conceded under
cross-examination that the taking up of a voluntary package within
the context of a restructuring process is not a reflection on
one’s
performance. She also conceded that Harris wanted to resign when she
was offered a voluntary severance pay, and that
it was not as if the
retrenchment was forced upon her. Ireland further under
cross-examination conceded that there was no
reason why an employee
could not resign and thereafter enter into a voluntary retrenchment
agreement with an employer.
16.9
It is trite that a retrenchment exercise cannot be based on alleged
skills
deficiencies or poor performance. A retrenchment exercise
leads to a no fault dismissal, and any suggestion that a retrenched
employee
is unemployable on account of alleged skills deficiencies
ought to be rejected as being nonsensical.
16.10
Significant with the dispute between the parties at the CCMA was that
it had nothing to do with
Harris’ alleged skills deficiencies.
Ireland’s contentions that Harris had work performance issues
during her employ
by the applicant was not an issue before the CCMA,
and I fail to appreciate how that issue could have become relevant at
the time
that the settlement agreement was concluded. Equally so, the
issue before the CCMA was not in regard to whether Harris had
resigned
from Netcare or whether she was retrenched.
Conclusions
and Costs:
[17]
The applicant has hopelessly failed to lay a basis for the order that
it seeks. The settlement agreement concluded between
the parties is
binding upon them as it was seriously and willingly entered into. The
sole reason that the applicant had initiated
the settlement of the
dispute was purely on the merits of Harris’ constructive
dismissal claim and nothing else.
[18]
Harris sought a punitive cost order in the event that the applicant’s
claim was unsuccessful. It was submitted on her
behalf that the
applicant’s evidence in regard to its claim fell woefully short
of even beginning to prove the allegations
of fraudulent
misrepresentation. I have already indicated my dismay at the
relentlessness with which this claim was pursued, some
17 months
after the settlement agreement was concluded. In her evidence, Harris
testified that she was a pensioner, and had to
pay the costs of
defending this claim out of her pension savings.
[19]
False and unwarranted allegations were made against her, compelling
her to defend this claim which was a non-starter in the
first place.
It is not correct as suggested on behalf of the applicant that Harris
was not an innocent party in this debacle, and
there is no evidence
to suggest that her departure from Netcare was not above board.
Harris was enjoying her retirement when 17
months after the
settlement agreement was concluded, the applicant had resuscitated a
buried dispute. Having had regard to the
circumstances of this case,
it is my view that the considerations of law and fairness dictate
that Harris should not be burdened
with any costs in respect of this
spurious claim. She should thus be entitled to all her costs, and the
applicant should thus carry
that burden in its entirety.
[20]
In the premises, the following order is made:
1.
The applicant’s claim is dismissed;
2.
There is no order as to costs in respect of the costs reserved by
Gush J on 04
December 2015;
3.
The applicant is ordered to pay the costs of this action, on a scale
as between
attorney and own client.
__________________
E
Tlhotlhalemaje
Judge
of the Labour Court of South Africa
APPEARANCES:
For
the Applicant:
Adv. T Venter
Instructed
by:
Bouwer Cardona Inc.
For
the Respondent:
Adv. A Lamplongh
Instructed
by:
Telfer & Associates Inc.
[1]
Gollach and Gomperts (1967)
(Pty) Ltd v Universal Mills and Produce Co (Pty) Ltd and Others 1978
(1) 914 (AD)
at 921A-D,
where it was held that;
“
A transaction is an agreement
between two or more persons either to end litigation or to prevent
litigation resulting from the
differences between them. It is most
closely equivalent to consent judgment.
Whether extra- judicial or embodied
in an order of Court, it has the effect of res judicata and, like
any other contract and any
order of court, made by consent, it may
be set aside on the grounds that it was fraudulently obtained or on
the grounds of justus
error, provided the error vitiated true
consent and did not merely relate to motive or the merits of a
dispute which it was the
very purpose of the parties to compromise.”
[2]
Gbenga-Oluwatoye v Reckitt
Benckiser South Africa (Pty) Ltd and Another (JA95/2014)
[2016] ZALAC 4; (2016)
37 ILJ 902 (LAC);
[2016] 5 BLLR 425
(LAC)
at para 12
[3]
See
Karroo & Eastern
Board of Executors & Trust Company v Farr and Others
1921 AD 413
at 415.
[4]
Novick and Another v Comair
Holdings Limited and Others
1979 (2) SA 116
(W) at 149C-150D
[5]
See
Goddard v Metcash
Trading Africa (Pty) Ltd
[2010] 2 BLLR 186
(LC)
at
para 21
[6]
Gbenga-Oluwatoye v Reckitt
Benckiser South Africa (Pty) Limited and Another (2016) 37 ILJ 2723
(CC);
2016 (12) BCLR 1515
(CC);
[2017] 1 BLLR 1
(CC)
at para 24