THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
CASE NO: 13/2003
In the matter between :
DENEL (PTY) LIMITED Appellant
-and -
D P G VORSTER Respondent
_________________________________________________________________________
Before: HARMS, FARLAM, NUG ENT, CONRADIE JJA & VAN
HEERDEN AJA
Heard: 19 FEBRUARY 2004
Delivered: 5 MARCH 2004
Summary: Employment contract incorpor ating disciplinary code – whether
breached by employer
_________________________________________________________________________
J U D G M E N T
_________________________________________________________________________
NUGENT JA
2
NUGENT JA:
[1] For many years the respondent wa s employed by the appellant. On 9
September 1996 he was summarily dismi ssed. Aggrieved at his dismissal
the respondent sought redress in the I ndustrial Court in terms of s 46(9) of
the now repealed Labour Relations Act 28 of 1956 but those proceedings
were abandoned before they reached their conclusion. The respondent then
sued the appellant in the Pretoria Hi gh Court for damages for breach of his
employment contract and for damages for injuria.
[2] Before the trial commenced the par ties agreed that the ‘merits’ of the
claims should first be tried and that the ‘quantum’ should be held over for
later decision. The trial judge (Shongw e J) made no formal ruling to that
effect but the trial nevertheless proceeded in accordance with the
agreement and ultimately the responde nt’s claims were dismissed. On
appeal to the Full Court (Van de r Walt J, Mynhardt and De Vos JJ
concurring) the trial court's decision in relation to the first claim was
reversed and its order wa s substituted with an order declaring that the
plaintiff ‘succeeded on the merits’. Th e appeal relating to the claim for
damages for injuria was dismissed. This appeal is confined to the claim for
damages for breach of contract and it comes before us with the special
leave of this court.
3
[3] Before turning to the substance of the appeal it is appropriate to
make a few remarks about separating issues. Rule 33(4) of the Uniform
Rules – which entitles a court to try issues separately in appropriate
circumstances – is aimed at fac ilitating the convenien t and expeditious
disposal of litigation. It should not be assumed that that result is always
achieved by separating the issues. In many cases, once properly considered,
the issues will be found to be inextri cably linked even though at first sight
they might appear to be discrete. And even where the issues are discrete the
expeditious disposal of the litigation is often best served by ventilating all
the issues at one hearing, particularly where there is more than one issue
that might be readily dispositive of the matter. It is only after careful
thought has been given to the anticipated course of the litigation as a whole
that it will be possible properly to dete rmine whether it is convenient to try
an issue separately. But where the trial court is satisfied that it is proper to
make such an order – and in all cases it must be so satisfied before it does
so – it is the duty of that court to en sure that the issues to be tried are
clearly circumscribed in its order so as to avoid confusion. The ambit of
terms like the ‘merits’ and the ‘quantum’ is often thought by all the parties
to be self-evident at the outset of a trial but in my experience it is only in
the simplest of cases that the initial consensus survives. Both when making
rulings in terms of Rule 33(4) and wh en issuing its orders a trial court
4
should ensure that the issues are circumscribed with clarity and precision. It
is a matter to which I shall return later in this judgment.
[4] There was no dispute in the presen t case that the appellant had proper
substantive grounds for summar ily terminating the respondent’s
employment. The respondent’s complain t is confined to the process that
was adopted.
[5] The procedures that had to be followed when disciplinary action was
taken against an employee, and th e identities of the persons who were
authorised to take such disciplinar y action, were circ umscribed in the
appellant’s disciplinary code. The te rms of the disciplinary code were
expressly incorporated in the conditio ns of employment of each employee
with the result that they assumed contractual effect.
[6] Clause 7 of the disciplinary code deals with the various forms of
disciplinary action that might be take n against an employee in progressive
order of severity commencing with a verbal warning and culminating with
dismissal. For each progressive step provision is made for a greater degree
of formality and oversight.
[7] Thus a verbal warning may be gi ven to an employee by a supervisor
on a stipulated level of seniority with no formality required at all. A written
warning may only be given after th e supervisor has held a formal
disciplinary enquiry. At the next level of disciplinary action – a ‘serious
written warning’ – and all the levels that follow, the code purports to
5
introduce two stages into the disciplinary process. A serious written
warning may be issued only by a se nior manager on job level 5 on the
recommendation of a disciplinary co mmittee. Similarly a final written
warning may only be given to an employee by a senior manager on job
level 6 on the recommendation of a disciplinary committee.
[8] When it comes to the dismissal of an employee that two-stage
process is repeated and in addition th e person who is authorised to approve
the recommendation is required to c onsult with the Assistant General
Manager: Human Resources. Clause 7.9 – the clause that is relevant to this
appeal – provides as follows:
‘Dismissal is the most severe punishmen t that can be imposed on an employee.
An Employee on job level 5 and lower may on the recommendation of the Disciplinary
Committee be dismissed by an assistant ge neral manager in consultation with the
Assistant General Manager: Human Res ources in the case of a very serious
infringement in terms of the code . . . .’
[9] The disciplinary code does not have express requirements for the
composition of a disciplinary committee. Whatever the position might be in
relation to the composition of a disc iplinary committee in other cases the
table in clause 9.2 – which reflects 'the disciplinary actions that may be
used as well as the handling and decision making powers’ – seems to
contemplate that in the case of dismissal the person who approves the
recommendation (an assistant general manager) will not be a member of
6
the disciplinary committee for he is not ‘involved in the disciplinary
enquiry’.
[10] Thus on an ordinary reading of cl ause 7.9 of the code together with
the table to clause 9.2 an employ ee who faces dismissal can expect to
attend an enquiry before a disciplinary committee comprising at least a
senior manager on job leve l 6. (That is provided for in the table in clause
9.2.) The table, and clause 8.3.5.2, provide for the enqui ry to be attended
by a member of the human resources department (whose function, it seems,
is to act in an advisory capacity). After investigating the matter the
disciplinary committee must decide whether the employee should be
dismissed. If so, it must recommend that course of action to an assistant
general manager. The assi stant general manager, in consultation with the
Assistant General Manager: Human Resources, must decide whether to
approve the recommendation. Two quite independent decisions are thus
required in order to effect a dismissal.
[11] That is not what occurred in the present case. The disciplinary
enquiry was conducted by Mr Schutte who was himself an assistant general
manager. Amongst those who attended the enquiry was Mr Matela from the
human resources department. Mr de Wet, the Assistan t General Manager:
Human Resources, acted as the pro form a prosecutor. After Mr de Wet had
presented the case against the respondent and the respondent had replied all
the participants except Schutte and Ma tela left the room . Schutte discussed
7
the matter with Matela to satisfy hi mself that he had acted correctly and
Schutte then decided that the responde nt was guilty of the conduct that had
been alleged against him. Those invol ved in the enquiry then reassembled
and Schutte announced his conclusion – and gave his reasons – and asked
the respondent if there was anything further he wished to say. The
respondent had nothing further to sa y. According to Schutte all the
participants, except Schutte and Ma tela, again left the room. (The
respondent disputed that the enquiry was divided into two parts but the
dispute is not material). Schutte and Matela discu ssed an appropriate
sanction and both were of the vi ew that the respondent should be
dismissed. Once more the particip ants assembled and Schutte announced
the decision to terminate the responde nt’s employment. (The disciplinary
code allowed for an appeal against that decision – which was exercised by
the respondent without success – but that is not relevant to the present
enquiry.)
[12] Whether Matela ought to have participated in Schutte’s decisions is
not material to the outcome of this appeal for in two other respects the
process is said by the respondent to ha ve been flawed. First, Schutte was
himself the ‘disciplinary committee’ with the result that he did not purport
to approve a recommendation made by a separate body. Secondly, Schutte
did not consult with De Wet before making his decision. (Indeed, De Wet
8
probably precluded himself from being consulted by adopting the role of
pro forma prosecutor.)
[13] It was submitted on behalf of the appellant that, on a proper
construction of clause 7.9, a recommendation from a disciplinary
committee was required only if an assistant general manager did not
conduct the disciplinary enquiry himsel f, and that the Assistant General
Manager: Human Resources was en titled to delegate a person to be
consulted in his stead (the suggesti on being that Matela had fulfilled that
function) or that such a construction is properly to be arrived at with the
assistance of appropriate tacit terms.
[14] The language of clause 7.9 does not allow for that construction. The
language expressly requires a r ecommendation by a disciplinary
committee, approved by an assistant ge neral manager, which contemplates
two decisions arrived at independently. That construction is also supported
by the table in clause 9.2, which cont emplates that the assistant general
manager will not participate in the e nquiry. Moreover, the final decision is
expressly required to be taken in c onsultation with the specified person in
the human resources department.
[15] Nor is the appellant’s constr uction capable of being achieved by
resorting to tacit terms. As pointed out by Corbett AJA in Alfred McAlpine
& Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA 506
(A) at 532H-533A:
9
‘The Court does not readil y import a tacit term. It cannot make contracts for
people; nor can it supplement the agreement of the parties merely because it might be
reasonable to do so. Before it can imply a ta cit term the Court must be satisfied, upon a
consideration in a reasonable and businesslike manner of the terms of the contract and
the admissible evidence of surrounding circum stances, that an implication necessarily
arises that the parties intended to contract on the basis of the suggested term.’
There is nothing in the disciplinary code, when read in that way, to indicate
that the appellant (who caused the doc ument to be drafted) intended clause
7.9 to be qualified in the manner s uggested. On the contrary, the language
of clause 7.9, when seen in its cont ext, and in the context of the table in
clause 9.2, indicates that the qua lifications contended for were not
intended: to read such qualifying terms into the document would be in
conflict with its unambi guous express terms (cf South African Mutual Aid
Society v Cape Town Chamber of Commerce 1962 (1) SA 598 (A) 615D-
E). It might be that the construction advanced by the appellant would create
a disciplinary regime that was equally acceptable (whether that is so is by
no means certain) but that is not the test: through its disciplinary code, as
incorporated in the conditions of employment, the appellant undertook to
its employees that it would follow a specific route before it terminated their
employment and it was not open to the appellant unilaterally to substitute
something else.
[16] The real thrust of the appellant’s argument, however, went in another
direction. Section 27(1) of the Inte rim Constitution – which was in force at
10
the time that is relevant to this a ppeal – guaranteed to everyone the right to
fair labour practices and that has been perpetuated by s 23(1) of the present
Constitution. Moreover, s 39(2) of th e present Constitution requires the
courts, when developing the common law, to promote the spirit, purport
and objects of the Bill of Rights. In the appellant’s heads of argument it
was submitted that the procedure that was adopted by the appellant was one
that respected the respondent’s constitu tional right to fair labour practices
with the result that it would be an in fringement of the appellant’s right to
fair labour practices if the dismissal we re to be regarded as unlawful. The
effect of that submission, as it was developed in argument, and as I
understand it, was that the relations hip between employer and employee is
governed by only a reciprocal duty upon the parties to act fairly towards
one another, with the result that c ontractual terms requiring anything more
must necessarily give way. I do not think that is correct and it is also in
conflict with what was recen tly said by this court in Fedlife Assurance Ltd
v Wolfaardt 2002 (1) SA 49 (SCA) para 15. If the new constitutional
dispensation did have the effect of introducing into the employment
relationship a reciprocal duty to act fa irly it does not follow that it deprives
contractual terms of their effect. Such implied duties would operate to
ameliorate the effect of unfair terms in the contract, or even to supplement
the contractual terms where necessary, but not to deprive a fair contract of
its legal effect. The procedure provide d for in the disciplinary code was
11
clearly a fair one – it woul d hardly be open to the appellant to suggest that
it was not – and the respondent was en titled to insist that the appellant
abide by its contractual undertaking to apply it. It is no answer to say that
the alternative procedure adopted by the appellant was just as good.
[17] In the course of developing hi s submissions the appellant’s counsel
also submitted that to apply the or dinary principles relating to the
assessment of contractual damages w ould lead to an unfair result in the
present case and that those common law principles need to be adapted so as
to accord to the appellant the ‘fair labour practices’ to which it is entitled in
terms of the Bill of Rights. It is by no means certain that the application of
the ordinary principles for assessi ng contractual damages will produce an
unfair result but it is in any event pr emature to consider that submission.
Earlier in this judgment I drew atten tion to the fact that the trial was
confined to the ‘merits’ of the claim and the parties accepted before us that
the trial was thus confined to determining whether the respondent’s
employment was terminated in breach of his employment contract. It
remains to be determined whether the respondent’s position would have
been different if the appellant had fulfilled its contractual obligations –
which is the usual basis for determ ining contractual damages: see for
example Trotman & Another v Edwick 1951 (1) SA 443 (A) 449B-C – and
if so what value to place upon the lo ss. Only after that enquiry has been
12
undertaken can it be determined whet her the result is unfair (if that is
relevant at all).
[18] There is a further matter relating to the costs. The material facts in
this matter were limited and they we re never in dispute. This was pre-
eminently a matter in which Rule 8 of the rules of this court could have
been used in order to contain the co sts, particularly bearing in mind the
observation by the court a quo that the appeal to it could have been dealt
with as a stated case. That observati on, and the provisions of Rule 8, seem
to have gone quite unnoticed when the eight volume record – most of
which is irrelevant – was filed in this court. This is an appropriate case in
which a special order for costs ought to be made as provided for in Rule
8(c) for the failure to utilise the ru le to the financia l advantage of the
litigants. In my view the appropriate or der is to deprive both attorneys of a
portion of the fees to which they w ould otherwise have been entitled for
perusing the record.
[19] Finally, when setting aside the or der of the trial court, the court a quo
substituted an order to the effect th at the plaintiff ‘succeeds on the merits’.
It is desirable to circumscribe with precision the issues that have been
disposed of by this appeal in orde r to avoid later misunderstanding (cf SA
Eagle Versekeringsmaatskappy Bpk v Harford 1992 (2) SA 786 (A) 792B-
E) and I intend to amend the order of the court a quo accordingly. The
13
respondent is nevertheless the successful party and is entitled to the costs of
this appeal.
The following orders are made:
1. Paragraph 2 of the or der made by the court a quo is set aside and the
following is substituted:
‘The order of the trial court is se t aside and the following orders are
substituted:
“(a) It is declared that the de fendant terminated the plaintiff’s
employment in breach of the terms of his contract of
employment.
(b) Claim 2 is dismissed.
(c) The defendant is to pay the co sts associated with determining
the issue referred to in (a).”'
2. Save as aforesaid the appeal is dism issed with costs. It is ordered that
the attorneys for the appellant a nd the attorneys for the respondent
shall not be entitled to recover (w hether from their clients or from
the opposing party) 60% and 40% resp ectively of the fees to which
they might otherwise have been entitled for perusing the record in
this appeal.
14
_________________
NUGENT JA
HARMS JA)
FARLAM JA)
CONRADIE JA) CONCUR
VAN HEERDEN AJA)