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[2018] ZALCJHB 448
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Midway Two Contractors (Pty) Ltd and Another v South African Transport and Allied Workers Union and Another (JS711/13) [2018] ZALCJHB 448 (21 May 2018)
the
labour court of South Africa, johannesburg
judgment
Not
reportable
CASE
NO: JS711/13
In
the matter between:
MIDWAY
TWO CONTRACTORS (PTY) LTD
First
Applicant
DANNY
NAICKER
Second
Applicant
and
SOUTH AFRICAN
TRANSPORT AND ALLIED
WORKERS
UNION
First Respondent
A
NTIMANE & 8
OTHERS
Further Respondents
Application
heard: 28 March 2018
Judgment
delivered: 21 May 2018
Edited:
22 May 2018
JUDGMENT
VAN
NIEKERK J
[1]
This is an application in which an order is sought that the
respondents are estopped
from disputing the validity of a settlement
agreement concluded on 3 March 2016 and to have the settlement
agreement made an order
of court in terms of s 158(1) (c) of the
Labour Relations Act (LRA).
[2]
The matter has a long and chequered history. It has its origins in an
unfair dismissal
dispute in which the second and further respondents
(the employees) disputed the fairness of their dismissal by the first
applicant.
The first respondent, the union, referred the
dispute to this court for adjudication.
[3]
On 8 August 2014, Mohlahlehi J issued an order by default, in
chambers, granted the
following order:
1.
The dismissal of the applicant, by the respondent was automatically
unfair.
2.
The respondent is ordered to compensate the individual applicants in
the amount
equivalent to 24 (twenty four months) calculated at the
rate of their remuneration as at their dismissal.
3.
The respondent is ordered to reinstate the applicant retrospectively
to the date
of his dismissal without loss of any benefit that may
have accrued (sic).
4.
There is no order as to costs.
[4]
The union then instituted proceedings to enforce the order. These
culminated in an
order granted on 9 September 2015 in which the
applicants were ordered to appear 29 January 2016 and to explain
their conduct by
affidavit on or before that date. On 29 January
2016, after refusing an application for postponement, Coetzee AJ
declared that
the applicants were in contempt of court by failing to
reinstate the employees as required in terms of the order granted on
8 August
2014, and to comply with the order granted on 9 September
2015. Coetzee AJ directed the registrar to issue a warrant of
committal
to detain the second respondent, Mr Naicker. Present in
court on 29 January 2016 was Mr Vusimuzi Shongwe, the union’s
national
legal officer.
[5]
On 11 February 2016, the applicants’ then attorney of record
wrote to the union,
for the attention of Shongwe. The letter
confirmed the appointment of the attorney and a mandate to negotiate
a settlement agreement.
A meeting was proposed. That proposal was
ultimately accepted by Shongwe and a meeting was duly arranged for 22
February 2016.
[6]
Shongwe was present at the meeting, as was Naicker and his attorney.
Shongwe was advised
that the applicants were prepared to settle the
matter by making a payment of R100 000 to the union and the
employees, in full
and final settlement. Shongwe undertook to take
instructions. Further correspondence ensued between the attorney and
Shongwe, confirming
the offer and the undertaking to revert after
consultation with the employees.
[7]
On 1 March 2016, Shongwe sent a letter to the applicants’
attorney stating that
the employees were willing to accept the amount
that had been offered in settlement of the dispute. The letter
records that the
employees had agreed ‘
to
have their payment transferred to their legal representative’s
account for the purpose of a speedy recovery of such funds
’.
The letter records further that the employees ‘
are
currently having difficulties with their banks since they are not
permanently employed
’ and that
‘
previous experience relating to
procedure attached to having member’s funds released from
SATAWU’s account have made
this arrangement too costly to
them’
. Shongwe proposed that a
settlement agreement be prepared and forwarded to him for signature
on behalf of the employees.
[8]
Shongwe provided the banking account details into which the payment
was to be made.
It is common cause that the account was Shongwe’s
personal bank account.
[9]
On 2 March 2016, the applicants’ attorneys sent an email to
Shongwe, advising
him that the settlement had been accepted, and
attaching a settlement agreement. The agreement made provision for
the payment of
R100 000 to the union and the employees, in full and
final settlement of all rights and claims, including costs. The
amount was
to be paid by way of an electronic transfer of funds into
a bank account, which as I have indicated, was Shongwe’s
personal
bank account.
[10]
The agreement was duly signed, and the money transferred to the
designated bank account.
[11]
Consequent on the signature of the settlement agreement and payment
of the agreed amount, the
applicants did not attend at court on 4
March 2016. They assumed that Shongwe would do so, to have the
settlement agreement made
an order of court and the writ of committal
cancelled.
[12]
On 29 March 2016, Shongwe sent the applicants’ attorney an
email enclosing a copy of what
purported to be an order by Cele J
granted on 4 March 2016. In terms of the order, it was recorded that
the parties had reached
a full and final settlement, that the writ of
committal was uplifted, and that all current and future proceedings
against the applicants
were withdrawn, and the settlement agreement
made an order of court.
[13]
Some four and a half months later, on 11 August 2016, a union
official, Mr Zwelibanzi Maphanga,
wrote to the applicants’
attorney stating that the settlement agreement had been concluded by
Shongwe without a mandate from
the employees, or authorization by the
union. The letter recorded further that Shongwe had appropriated the
money for his personal
use, and that the union had opened a case of
fraud at the Hillbrow SAPS under case number CAS 668/7/2016. The
letter concluded
with what amounts to an expression of cautious
optimism – ‘
we look forward
to hearing from you soon
’.
[14]
The applicants’ attorneys replied on 12 August 2016, expressing
sympathy at the consequences
for the employees of Shongwe’s
conduct but at the same time denying any liability by the applicants
to the union or the employees,
on the basis that Shongwe had
represented himself to be a union official, that the applicant had
acted on that representation to
its prejudice and that the union and
its members were accordingly bound by the agreement.
[15]
On 13 March 2017, Cele J issued a directive requesting the parties to
attend a meeting in his
chambers. At the meeting, Cele J advised the
parties representatives that he had not issued the order dated 4
March 2016, that
the writ of committal remained valid and that the
parties were to appear on 5 May 2017, when Naicker was to answer to
the writ
of committal. On 5 May 2017, Cele J postponed the matter
sine die
to enable the applicants to file an answering affidavit.
[16]
On 27 October 2017, Lagrange J issued an order requiring the
applicants to appear on 8 December
2017 to show cause why they should
not be held in contempt on account of their failure to comply with
the order granted by Cele
J on 17 July 2017 and their non-compliance
with the order granted by Mohlahlehi J on 8 August 2014.
[17]
On 8 December 2017, Lagrange J postponed the application to 16 March
2018 and directed,
inter alia
,
that if the applicants wished to set aside the settlement agreement,
they should file an application to this effect by 30 January
2018. On
December 2017, the applicant filed the present application, in which
it seeks to have the settlement agreement made an
order of court and
the warrant of committal set aside. The employees have filed a
counter-application, in which they seek to have
the settlement
agreement set aside. They submit that the settlement agreement is
fraudulent and unlawful that they were not aware
of it and that they
would never have authorized Shongwe to enter into the agreement given
the default judgment granted in their
favour.
[18]
Section 158 (1) (c) confers the power on this court to make
settlement agreements orders of court.
The power to make a settlement
agreement an order of court is a discretionary power that must be
exercised judicially, having regard
to all of the relevant factors
(see
AB Civils (Pty) Ltd t/a Planthire v
Barnard
[1999] 12 BLLR 1233
(LAC)).
[19]
The applicants submit that the agreement is valid and remains so, on
the basis of ostensible
authority. In particular, they submit that
the conduct of Shongwe should not be viewed in isolation. He was
employed by the union
and held out that he had authority to act on
behalf of the employees, since the union was a party to the
proceedings. He corresponded
with the applicants using the union’s
stationary and he unconditionally represented that the employees had
accepted the proposed
settlement, this after he had consulted with
them. On this basis, the applicants contend that the union and the
employees are estopped
from disputing the validity of the settlement
agreement and that if there is any liability that flows from the
agreement, the union,
as Shongwe’s employer, remains
responsible to the employees on the basis of its vicarious liability.
The basis on which the
order making the settlement agreement an order
of court is sought is apparent from the founding affidavit. The
applicants submit
that such an order would protect them from
suffering and injustice, and that it is not in the public interest or
in the interests
of justice and fairness and that they, as innocent
parties, be punished for Shongwe’s conduct.
[20]
The misconception that underlies the applicant’s submissions is
that it does not automatically
follow that simply because a
settlement agreement is valid in contractual terms, the court is
obliged to make the agreement an
order of court. As the authorities
indicate, the discretion of the court is broad. Even if I were to
accept for present purposes
that the agreement is valid, in my view,
given the circumstances in which it was concluded, it is not in the
interests of justice
for the court to grant an order which would have
the effect of elevating an agreement concluded in circumstances
tainted by deceit
to the status of an order of court. The settlement
agreement is and remains tainted by Shongwe’s fraud and his
betrayal of
the employees whose interests he was employed to advance.
[21]
Further, it is clear to me that the only apparent purpose of the s
158(1) (c) application is
to head off the application by the
respondents to hold the applicants in contempt of the order granted
on 8 August 2014. This much
is apparent from paragraph 23 of the
heads of argument in which the applicants submit that should the
settlement agreement be made
an order of court, then the issues
pertaining to contempt would be extinguished.
[22]
After I had reserved judgment, I requested the parties to file
submissions on whether the order
granted on 8 August 2014, given the
judgment by the Constitutional Court in
Equity Aviation Services
(Pty) Ltd v Commission for Conciliation, Mediation and Arbitration &
others
[2008] 12 BLLR 1129
(CC), especially at paragraph 42 where
the court stated the following:
It follows that the sum
of money paid to an unfairly dismissed employee subsequent to an
order of reinstatement with retrospective
effect is not compensation
as contemplated in section 193(1) (c) or section 194. The remedies in
section 193 (1) (a) are thus in
the alternative and mutually
exclusive.
I
made this request because it appeared to me that on the face of it,
the judgment granted on 8 August 2014 had been erroneously
granted,
in that it afforded a remedy of both reinstatement with retrospective
effect and compensation. In terms of s 165 of the
LRA, the court is
entitled,
mero motu
,
to rescind any judgment or order erroneously granted in the absence
of a party, or in which there is an obvious error.
[23]
The applicant submits that the order granting both reinstatement and
compensation is bad in law,
is inconsistent with the Constitution and
thus invalid. However, they submit that the settlement agreement was
a
novus actus
which supersedes the order, and persist with the
application to have the settlement agreement made an order of court.
[24]
The respondents submit that the court was empowered to grant the
order it did on 8 August 2014
and pursue their contention that the
applicants are in contempt of that order.
[25]
The interpretation of s 193(1) by the Constitutional Court is clear.
Reinstatement may be granted
with back pay to a date not earlier than
the date of dismissal, or the employee may be re-employed or granted
compensation. These
are mutually exclusive remedies. The terms of the
order envisage reinstatement with full retrospective effect, to the
date of dismissal,
plus the maximum compensation that may be awarded
(24 months’ remuneration). To this extent, the order is
ultra
vires
s 193 (1) and for the purposes of
s 165, it was thus granted erroneously or in error. The order
therefore stands to be rescinded.
[26]
I fully appreciate that in these circumstances, the application to
hold the applicants in contempt
for their refusal or failure to
comply with the order is rendered academic. In regard to the merits
of that application, I would
observe that in any event, given the
test to be applied, it could not be said that the respondents in that
application (the applicants
in the present application), beyond
reasonable doubt, acted in willful default and were
mala fide
by not complying with the order concerned (see
Fakie NO v CCII
Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA)). It is clear from
the papers that the applicants were of the entirely reasonable view
that the matter had been settled
on the terms reflected in the
settlement agreement after negotiation with a person employed as a
union official and who held out
that he had authority to conclude the
agreement. It may be that the applicants’ attorney was naive to
accept Shongwe’s
explanation about why the employees preferred
to have the money transferred to a bank account other than that of
the union, but
naivety does not amount to
mala fides
or wilful
default. In short, there is no merit in the contempt application. It
follows that there is no basis on which to set the
settlement
agreement aside as the employees seek to do. The employees have a
remedy against the union and Shongwe.
[27]
It remains for me to comment on the conduct of Shongwe, which for
obvious reasons is of considerable
concern to this court. The terms
of the agreement that he concluded and his appropriation of the
settlement amount is nothing less
than a fraud perpetrated on the
union and the individual respondents. Indeed, given that Shongwe was
employed specifically to advance
the rights and interests of the
individual respondents, his conduct amounts to a betrayal of trust of
reprehensible proportions.
Further, there is the matter of the
order of this court that was forged by Shongwe. The forgery of court
orders is a serious offence
and remains a perennial problem in this
court and others. I intend therefore to direct the registrar to
forward a copy of
this judgment to the SAPS Hillbrow with a request
to report on progress in the investigation.
I
make the following order:
1.
The order granted by this court on 8 August
2014 is rescinded.
2.
The application in terms of s 158(1) (c) to
have the settlement agreement dated 3 March 2016 made an order of
court is dismissed.
3.
The application to hold the applicants in
contempt of court is dismissed, and any warrants of committal issued
against the second
applicant are set aside.
4.
The application to set aside the settlement
agreement is dismissed.
5.
The registrar is directed to forward a copy
of this judgment to the station commander SAPS Hillbrow, with a
request to report on
progress made in the investigation of the case
reported under CAS 668/7/2016.
6.
There is no order as to costs.
André van Niekerk
Judge
REPRESENTATION
For
the applicant: Mr AK Khan, Azgar Ally Khan & Associates
For
the first respondent: Mafenya Attorneys
For the second to further
respondents: J Malesoena instructed by T Nkuna Attorneys