Gauteng Department of Human Settlements v Manong (J830/21) [2024] ZALCJHB 479 (25 November 2024)

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case no: J 830/21

In the matter between:

GAUTENG DEPARTMENT OF HUMAN SETTLEMENTS Plaintiff And ESTHER MOTJATJI MANONG Defendant

Heard: 21-25 October 2024

Delivered: 25 November 2024

Summary: Special plea re prescription. Special plea upheld.

JUDGMENT

DANIELS J

Introduction

1. The plaintiff claims that the defendant breached her employment contract, resulting in damages. The claim is brought in terms of section 77(3) of the Basic Conditions of Employment Act No. 75 of 1997 as amended (the “BCEA”). Initially, two special pleas were raised by defendant, jurisdiction and prescription, as explained below.

1.1. The special plea regarding jurisdiction precipitated an amendment by plaintiff. After hearing the argument, the amendment was granted. This was followed by the parties filing an amended statement of claim, and an amended plea. This delayed proceedings for the first two days of the trial, 21 and 22 October 2024. The plaintiff tendered the wasted costs for these days, including the costs of the consequential amended statement of defense. Following the amendment, the special plea relating to jurisdiction was abandoned.

1.2. The parties agreed that prescription could be determined on evidence to be presented by the plaintiff. The plaintiff led evidence for the purposes of prescription but, with the leave of the court, did not close its case. The defendant indicated that it did not intend to lead any evidence for the purposes of the prescription.

2. This judgment relates only to the special plea of prescription.

Material facts

3. The plaintiff called three witnesses: Ms. Dorothy Nkwanyana (“Nkwanyana”), Mr. Samson Radebe (“Radebe”), and Ms. Mpho Mokoena (“Mokoena”).

4. Nkwanyana, the Provincial Director at the Public Service Commission (Gauteng) testified first. Nkwanyana testified about the nature of the investigation conducted by the Public Service Commission (the “PSC”) and the outcome of the investigation, which she authored. Radebe, Director of Remuneration at the Department of Public Services and Administration, testified next. Finally, Mokoena, Finance Director in the Department of Human Settlements, testified. Mokoena testified that, because of the irregular increase in remuneration, the defendant would be paid an increased retirement benefit each month – to which she was not entitled.

5. Despite the intricacies of the evidence presented by plaintiff’s witnesses, the key facts were undisputed. Where the facts set out below were not common cause on the pleadings, I accepted the evidence presented by the plaintiff’s witnesses, which was not disputed through witnesses called by the defendant. The evidence upon which this judgment is based is summarized below.

5.1. The defendant, Ms. Esther Manong (“Manong”) was employed by the Department of Human Settlements (the “Department”) as its Chief Director: Human Capital Management. Manong was previously engaged by the Department of Social Development until her transfer to the plaintiff during 2006.

5.2. On or about 25 March 2013, Manong submitted a memorandum (the “memorandum”) to the Head of Department of Human Settlements, Mr. Mongezi Mnyani (“Mnyani”) in which she requested a salary review and upgrade from level 14 to level 15 notch 2.

5.3. In the memorandum, Manong represented to Mnyani that as the Head of Department (“HOD”) he possessed the necessary delegated authority to approve her salary upgrade. Manong was intimately involved with the delegations of authority applicable in the Department at that time. In fact, earlier, on or about 14 May 2012, Manong had addressed a letter to Mr. Zulu (of the Department of Local Government and Housing) titled “HR Delegations 2011 19 May 2011 (Draft)”.

5.4. Manong motivated for the salary upgrade based on her qualifications, experience, and effective performance. In addition, Manong suggested that she performed duties above her grade, she was critical to the effective functioning of the Department and she possessed scarce skills. In that respect, Manong referred to the “retention strategy and policy”.

5.5. Mnyani approved the salary upgrade on the same day it was submitted. There was no change to Manong’s position or her duties.

5.6. Manong was informed of the approval of her salary upgrade by letter, dated 8 April 2013, issued by the newly appointed Acting Head of Department, Mr. Bongani More (“More”). In the letter, More made no mention that the decision to grant the salary upgrade was taken in consultation with the MEC.

5.7. On 19 April 2013, Ms. Papadi Makhetha (“Makhetla”) the Director: Anti-Fraud and Corruption addressed a letter to More questioning whether the salary upgrade was regular. The letter led to further exchange of correspondence, and the referral of the matter to the PSC for investigation.

5.8. On 11 October 2013, then MEC, Ms. LH Mekgwe (“Mekgwe”) addressed a letter to the PSC. In her letter, Mekwge advised the PSC that the complaint by Makhetla was misguided. Mekgwe did not suggest that the salary upgrade had been made by the HOD after consultation with the MEC.

5.9. On behalf of the PSC, Nkwanyana conducted the investigation. She testified that:

5.9.1. She requested detailed information relating to Manong, particularly her qualifications and experience. She also requested the Department to provide her with the delegations of authority which authorized the HOD to approve the salary upgrades. However, the Department could only provide Nkwanyana with unsigned delegations of authority, most of which were undated, with one being marked “WEF 2010: MEC Mmemezi”.

5.9.2. The unsigned delegations purported to grant the HOD authority to approve wage increases for senior managers for “retention and recruitment purposes”.

5.9.3. In the public service, there is a practice that all delegations of authority must be signed. In the absence of signature, there is no proof that the policy was adopted or approved.

5.9.4. The recruitment policy was inapplicable to Manong because she was not a new employee. The retention policy was also inapplicable to her because it relates only to instances where an existing employee receives an offer of employment, with higher remuneration, from outside the public service.

5.9.5. Manong did not possess “scarce skills” because human resources related skills are not exceptional. Some Departments do treat particular skills as scarce where a vacant position is advertised, and suitable applicants (with the required skills) cannot be found. Nkwanyana, though unhappy with that practice, stopped short of saying that it was unlawful or irregular.

5.9.6. Circumstances in which the remuneration of public servants may legitimately increase include wage negotiations, cost of living increases awarded by the Minister, or performance related rewards following a performance assessment. None of these were applicable to Manong. If Manong was dissatisfied with her salary she could have requested that a job evaluation or performance assessment be conducted. This may have led to an increase in her salary.

5.10. Following an investigation, Nkwanyana provided a draft report to the PSC Provincial Commissioner, who engaged with the MEC at that time, Mr. J Mamabolo (“Mamabolo”).

5.11. On 18 September 2014, the PSC sent its final report to Mamabolo. The PSC found that the salary upgrade was irregular and recommended that disciplinary action be taken against Manong for misrepresentations she had made in the memorandum. The PSC also recommended disciplinary action against the former HOD and the DDG: Corporate Services for recommending the upgrade. The PSC believed that there was no valid delegation of authority to the HOD.

5.12. In its report, the PSC recorded that the Department had informed it that Manong was not the only employee who motivated for a salary upgrade and had been granted it by the HOD. It is clear that, for several years, the Department had been operating under the impression that proper delegations of authority existed which authorized the HOD to approve the salary upgrade.

5.13. During 2015, the Department sought an opinion from Advocate Terry Motau SC (“Motau”) as to the report of the PSC and its recommendations. In short, Motau found that the salary upgrade was irregular and recommended that the Department adopt the PSC recommendations.

5.14. Thereafter, the Department sought a further opinion from Advocate Muzi Sikhakhane SC (“Sikhakhane”) as to the PSC findings and recommendations. Sikhakhane recommended that the PSC be requested to provide clarity on the delegations of authority used, whether the PSC had interviewed all the relevant stakeholders, and other errors of law.

5.15. On 25 August 2016, the newest MEC for the Department, Mr. Paul Mashatile, addressed a letter to the PSC in which he requested it to provide clarity on which delegations of authority were applicable at the time of the salary upgrade.

5.16. On 10 October 2017, Manong was charged with committing various acts of misconduct related to the salary upgrade. The Department alleged that she had behaved dishonestly by submitting the memorandum, and it alleged that the HOD did not have the delegated authority to approve the salary upgrade. For reasons which are unclear, the disciplinary hearing did not proceed.

5.17. On or about 19 February 2020, Manong applied for early retirement. This was approved on 4 June 2020, though it would only take effect from September 2020.

5.18. On 4 September 2020, the Department placed a freeze on Manong’s salary because it believed the salary upgrade during 2013 to have been irregular.

5.19. On 15 June 2021, the High Court granted plaintiff an order interdicting the Government Employee Pension Fund from making full payment of the defendant’s pension benefit, to her pending the finalization of this matter. It is unclear whether that order was secured by the plaintiff asserting its rights under section 37D(1)(b) of the Pension Funds Act No. 24 of 1956.

5.20. The plaintiff instituted its action in this court, by filing a statement of claim, on 26 July 2021. In the claim, the plaintiff seeks contractual damages from the defendant.

Legal principles and analysis

6. To recap, the defendant alleges that the claim against her has prescribed. Plaintiff alleges that the defendant breached her employment contract by failing to act in the utmost good faith, by motivating for a salary upgrade when she knew (or should have known) that she was not entitled to seek a salary upgrade in the manner requested, from the Head of Department, and based on the motivation provided.

7. Prescription periods deal with the periods after which the right to claim a debt is extinguished. For prescription to begin to run, a “debt” must be due. The relevant provisions of the Prescription Act No. 58 of 1969 (hereafter the “Prescription Act”) are:

7.1. Section 11(a), (b) and (c) which provide for different periods of prescription in relation to different kinds of debts. In terms of section 11(d) all other debts, besides those in (a), (b) or (c), and save where legislation provides otherwise, prescribe after three years. In this matter, it is common cause that the applicable prescription period is three years.

7.2. Section 12(1) provides that: “Subject to the provisions of subsections (2), (3), and (4), prescription shall commence to run as soon as the debt is due.”

7.3. Section 12(3) provides that: “A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care”. (Own emphasis)

8. It is trite that the onus of establishing that a claim has prescribed rests on the party raising prescription. In this matter, the

defendant raises prescription, and it therefore bears the onus. To discharge the onus, the defendant must prove the date when the

plaintiff had knowledge of the material facts from which the debt arose or, put another way, the facts necessary to establish liability

of the debtor.[1]

9. In Electricity Supply Commission v Stewarts and Lloyds of SA (Escom)[2] the AD. held that the word 'debt' in the Prescription Act should be given the meaning ascribed to it in the Shorter Oxford English Dictionary:

“1. Something owed or due: something (as money, goods or service) which one person is under an obligation to pay or render to another. 2. A liability or obligation to pay or render something; the condition of being so obligated.”

10. Our courts have stated that: “A debt is due in this sense when the creditor acquires a complete cause of action for the recovery of the debt, that is, when the entire set of facts which the creditor must prove in order to succeed with his or her claim against the debtor is in place or, in other words, when everything has happened which would entitle the creditor to institute action and to pursue his or her claim”.[3] Prescription commences when plaintiff is in possession of the minimum facts necessary to institute action to recover the debt.[4]

11. For the purposes of section 12(3), knowledge is “not confined to the mental state of awareness of facts that is produced by personally witnessing or participating in events, or by being the direct recipient of first-hand evidence about them. It extends to a conviction or belief that is engendered by or inferred from attendant circumstances. On the other hand, mere suspicion not amounting to conviction or belief justifiably inferred from attendant circumstances does not amount to knowledge.”

12. The plaintiff’s claim is for contractual damages. In order to establish that claim, the plaintiff must prove: (1) the existence of the contract, (2) the breach of the contract by the defendant, and (3) the breach caused financial loss to the plaintiff. In general, fault is not a requirement in an action for contractual damages. The court must determine when the plaintiff had knowledge of these facts, alternatively when it could have acquired such knowledge by exercising reasonable care. In this regard:

12.1. The plaintiff had knowledge of the contract, and its terms, from the time of its conclusion. The employment contract provided that the defendant will observe the utmost good faith, that she will act with honesty, and she will act in the best interest of her employer.

12.2. In her motivation for a salary upgrade, the defendant advised the plaintiff that the Head of Department was authorized to approve her salary upgrade. She also stated that the upgrade could be justified based on the Department’s recruitment and retention policies. These representations were false.

12.3. On 18 September 2014, the PSC sent a copy of its final report to the plaintiff advising it that the Head of Department was not authorized to approve the salary upgrade. The PSC informed the plaintiff that the salary upgrade did not fall within the scope of its recruitment and retention policies, as the defendant had suggested. The PSC also made the Department aware that the practice in the public service was that all delegations of authority are signed.

13. Given the practice in the public service (that all delegations of authority are signed) the absence of a signed delegation must have signalled to the Department that the MEC had never delegated his powers to the MEC. Note I do not suggest that all delegations of executive authority must necessarily be signed,[5] only that the absence of a signed delegation coupled with the practice in the public service, were facts suggesting no delegation

had been approved. In the circumstances, plaintiff acquired a complete cause of action at the time it could not locate the necessary delegations of authority authorising the HOD to approve salary increases in respect of the Senior Management Service (“SMS”).

Accordingly, at the time the PSC issued its final report, on 18 September 2014, the plaintiff had knowledge of the minimum facts

necessary to institute an action against the defendant. Prescription commenced at that time.

14. As of 18 September 2014, the plaintiff was aware that the defendant had breached her employment contract by misrepresenting that the Head of Department was authorized to approve her salary upgrade. She had also misrepresented that the salary upgrade fell within the scope of the recruitment and retention policies. As Chief Director for Human Capital Management, being directly involved with both the delegations of authority, and the recruitment and retention policies, it was reasonable for the plaintiff to believe that the defendant had acted dishonestly and in bad faith, in breach of her employment contract.

15. Even if the plaintiff believed that the Head of Department had the delegated authority to grant salary upgrades to employees in the SMS (by virtue of the unsigned delegations of authority) the most basic perusal of the unsigned delegations would have revealed that such upgrades could only be granted to the SMS, by the HOD, for recruitment or retention purposes. The PSC informed the plaintiff that the recruitment and retention policies were not applicable. Furthermore, the unsigned delegations stated that salary upgrades for the SMS could only be granted by the Head of Department in consultation with the MEC. There was no indication that the MEC was consulted. In any event, such knowledge could easily have been acquired by exercising reasonable care.

16. It is unnecessary to determine whether the plaintiff adequately proved its damages. Nonetheless, it is important to bear in mind that, in our law of contract, the so-called “once and for all” rule applies. In short, a plaintiff is “not permitted to bring more than one action on the same cause of action”.[6] That being said, it is trite that a plaintiff is entitled to claim both accrued and prospective damages. The plaintiff was therefore not obliged to wait until all the damages, arising from the breach of contract, had manifested.

17. For the reasons set out above, I am of the view that the plaintiff’s action against the defendant for damages prescribed three years after the PSC issued its final report, by 18 September 2017, in terms of section 11(d) of the Prescription Act.

[1] See Zurich Insurance Co. SA Ltd v Gauteng Provincial Government 2023 (1) SA 447 (SCA) para 20

[2] 1981 (3) SA 340 (A) at 344 E – G

[3] Zurich Insurance Co. SA Ltd v Gauteng Provincial Government 2023 (1) SA 447 (SCA) para 20

[4] Minister of Finance and Others v Gore NO [2006] ZASCA 98; 2007 (1) SA 111 (SCA) para 17

[5] Section 42A (7) of the Public Service Act provides that any delegation of power from an executive authority to a head of department shall be in writing. This provision is not inconsistent with section 238 of the Constitution, which also deals with delegations of authority. The legislative provisions therefore do not require that delegations of authority must be signed.

[6] Christie The Law of Contract in South Africa (8 Ed) LexisNexis at p687

[7] (2018) 39 ILJ 523 (CC) at para 24