Khumalo v Industrial Development Corporation of South Africa and Another (J1233 /2020) [2023] ZALCJHB 303; (2024) 45 ILJ 123 (LC) (27 October 2023)

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Reportable

Case no: J 1233 /2020

In the matter between:

BUSISIWE PETUNIA KHUMALO Applicant And INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA First Respondent BONGANI LUTHULI Second Respondent

Heard: 5 October 2023

Delivered: 27 October 2023

This judgment was handed down electronically by consent of the parties’ representatives by circulation to them via email. The date for hand-down is deemed to be 27 October 2023.

JUDGMENT

PRINSLOO J

Background facts

[1] The First Respondent (employer) employed the Applicant in 2007 and in November 2013 she was appointed as head: facilities management. In September 2019, she was suspended pending the finalisation of a disciplinary hearing. On 4 October 2019, the Applicant was issued with an amended notice to attend a disciplinary hearing on 23 October 2019. Three charges of misconduct were levelled against the Applicant, relating to financial misconduct and breach of the Public Finance Management Act[1], exceeding of authority and failure to act in the best interests of the IDC and gross dishonesty or deliberate concealment of information and obstructive behaviour. A supervisor and manager in the security unit of the Applicant’s department were charged with similar misconduct and they were dismissed.

[2] The Applicant instructed the Second Respondent (Mr Luthuli) a practising attorney, to represent her at her disciplinary hearing.

[3] The disciplinary hearing became a protracted matter and at the last sitting of the hearing on 28 September 2020, the employer had already called 5 witnesses and the Applicant had called three witnesses. The Applicant’s last witness had to be cross-examined and she had to testify. The disciplinary hearing was postponed to 12, 13 and 18 November 2020 for that purpose.

[4] The disciplinary hearing was not finalised as the Applicant’s employment was terminated in October 2020 on account of a mutual termination agreement between the parties. The said agreement is the subject of this application.

This application

[5] The Applicant approached this Court for relief in the following terms:

1. Declaring that the Applicant is still employed by the First Respondent;

2. That the settlement agreement that the Second Respondent entered into with the First Respondent and/or its attorneys on 23 October 2020 be declared null and void ab initio, in the alternative that the settlement agreement be set aside.

[6] The Respondents opposed the application.

[7] The Applicant seeks to declare the settlement agreement null and void, alternatively to set it aside on the ground that Mr Luthuli acted against her instructions and without authorisation when he accepted a settlement of six months’ compensation in a mutual separation agreement, which ended her employment with the IDC. Based on the relief sought, this Court accepts that there cannot be a dispute as to the existence of the settlement agreement. The Applicant seeks an order to declare the settlement agreement null and void, alternatively to set it aside, which relief will not be possible or competent if the existence of the agreement is denied - the agreement must exist to be declared null and void, alternatively to be set aside.

[8] In short: the Applicant does not dispute the existence of the settlement agreement, but she questions the mandate of her (erstwhile) attorney to enter into the agreement on her behalf.

[9] The issue to be decided is whether Mr Luthuli had a mandate to settle the dispute on behalf of the Applicant and to accept the mutual separation agreement, offering 6 months’ compensation.

The Applicant’s version

[10] The Applicant instructed Mr Luthuli to represent her at the disciplinary hearing and on 2 August 2020, on the Applicant’s instructions, Mr Luthuli addressed a letter to the employer’s attorneys, proposing that a mutual separation be agreed upon on the basis that the employer pays her 12 months’ remuneration and a university bursary for her daughter. It is evident from Mr Luthuli’s letter that the disciplinary hearing was protracted and that it was emotionally exhausting for the Applicant.

[11] It is evident from the facts placed before this Court that there were settlement negotiations as a result, but it reached a stalemate by October 2020.

[12] Werksmans Attorneys, the employer’s attorneys of record, in a letter dated 21 October 2020 indicated that the disciplinary hearing was set to continue on 12, 13 and 18 November 2020, but that the employer was willing to resolve the matter amicably to “enable the parties to avoid what has clearly been a prolonged disciplinary hearing”. The proposal made was that the Applicant be paid the equivalent of three months’ salary on the basis that she resigns with immediate effect.

[13] On 22 October 2020 and subsequent to Mr Luthuli informing the Applicant of the employer’s offer, a conversation on WhatsApp ensued between the Applicant and Mr Luthuli. The Applicant informed Mr Luthuli in no uncertain terms that she could not accept a settlement of three months. Mr Luthuli asked ‘if I push for 6 months can you take it?” to which the Applicant replied “I think not hey” and she expressed the belief that the employer could meet the “12 months request”. The Applicant’s last message to Mr Luthuli on 22 October 2020 was “Let’s say they eventually put 9 months… That’s [sic] can be palatable even”.

[14] On 23 October 2020, the Applicant received a phone call from Mr Luthuli, indicating that he had settled for six months. The Applicant’s version is that she expressly informed Mr Luthuli on 22 October 2020 that she was not willing to settle for six months and that her instruction ultimately was that she was willing to settle for nine months. According to the Applicant, Mr Luthuli admitted in the phone call that he made a mistake by making an offer for six months to the employer.

[15] On 23 October 2020 at 13:03, the employer’s attorneys accepted the offer of six months and indicated that they were in the process of drafting a settlement agreement.

[16] On 26 October 2020, Mr Luthuli withdrew as the Applicant’s attorney of record. On the same date and after Mr Luthuli’s withdrawal, the employer’s attorneys sent a letter to the Applicant confirming that Mr Luthuli’s withdrawal came at a point where the counteroffer for payment of six months’ salary was accepted by the employer, meaning that there is a binding contract between the parties, the matter is thus settled and it brought an end to the employment relationship.

[17] On 27 October 2020 the Applicant addressed a letter to Werksmans attorneys, informing them that Mr Luthuli exceeded his mandate when he entered into a settlement agreement on her behalf as she did not instruct Mr Luthuli to negotiate or accept a six months’ settlement and as such, Mr Luthuli “acted on a frolic of his own”. The Applicant rejected the termination of her employment and indicated that she wanted to continue with the disciplinary hearing which was set down for 12, 13 and 18 November 2020.

[18] On 28 October 2020 Werksmans attorneys, in a letter to the Applicant, denied that Mr Luthuli was acting on a frolic of his own, indicated that a binding agreement came into existence on 23 October 2020 and that there would not be a continuation of the disciplinary hearing on 12 November 2020.

The employer’s version

[19] In its opposing affidavit, the employer disputes that the Applicant is entitled to the relief she seeks, as the settlement agreement between the parties is valid and binding and her only remedy, should she be of the view that Mr Luthuli acted without her mandate, is to take legal action against him.

[20] The employer stated that the Applicant was at all material times represented by Mr Luthuli and the Applicant and its representatives were entitled to rely on the representations Mr Luthuli, as her legal representative, made on her behalf. The offer made by Mr Luthuli was accepted and a binding offer came into being.

[21] The employer explained that after its initial offer of three months was rejected, there was toing and froing between the attorneys as to what would be acceptable to the Applicant and her attorney reverted in a formal letter, dated 23 October 2020, in which the counter-offer of six months was formally made. Acceptance of the Applicant’s counter-offer was communicated to Mr Luthuli on 23 October 2020. Once the offer was accepted, a valid and binding agreement was concluded.

[22] The employer’s case is that the Applicant had a change of heart on the settlement amount after she heard from an ‘inside source’ that the employer would have been prepared to settle for more than the six months Mr Luthuli proposed. The change of heart was motivated by a hope to get more money from the employer and that is not a reason to set aside the settlement.

[23] The employer’s version is that at the time when Mr Luthuli withdrew, the counteroffer he had made, was already accepted and that is the reason why he withdrew as the Applicant’s attorney of record – he could not continue to represent her in the face of the Applicant’s attempt to recant from the settlement agreement.

Mr Luthuli’s version

[24] Mr Luthuli’s version is that the Applicant had instructed him in December 2019 to act for her in her disciplinary hearing. The Applicant mandated him to enter into settlement discussions with the employer’s attorneys. The Applicant wanted 12 months, but ultimately came down to six months and the employer was offering three months and at the time (before 23 October 2020), they were at a stalemate as no party was willing to move.

[25] On 22 October 2020, the parties continued with settlement discussions and the employer was still offering three months. Mr Luthuli obtained instructions from the Applicant and she declined the offer of three months. Mr Luthuli asked the Applicant if she would only accept 12 months, not even six months, given that in the previous bout of negotiations, they were at six months. The Applicant responded that “I’m hoping that they can even try middle ground, say between 6 and 9.” She later stated that “12 would be ideal. Let’s say they eventually put 9 months… that’s [sic] can be palatable even”.

[26] Mr Luthuli explained that it was clear from the correspondence that the Applicant had given him a mandate of between 6 and 9 months, 12 would be ideal and 9 would be ‘palatable’. It was on this basis that he responded to the employer’s attorneys on 23 October 2020, stating that the Applicant rejected the offer of three months and instead counter-proposed at least six months.

[27] Mr Luthuli’s version is that his letter to the employer’s attorneys, indicating a settlement of “at least six months” was consistent with his mandate, which was for anything between 6 and 9 months and which would fall within the Applicant’s ambit of ‘middle ground’.

[28] The employer’s attorneys accepted the counter-proposal of six months and after Mr Luthuli informed the Applicant about it, she rejected it and said that she would not accept six months as there was a person on ‘the inside’ who told her that the employer was indeed willing to offer 12 months, but the attorney was refusing to make that offer on behalf of the employer. Mr Luthuli withdrew as the Applicant’s attorney, given the fact that he was the one who proposed six months, after obtaining a mandate from the Applicant, which offer she subsequently rejected.

[29] Mr Luthuli stated that he never said to the Applicant that he had made a mistake, as he is adamant that he had received a mandate of six months as a minimum, and that it was indeed the Applicant who had apologised for what she had termed a ‘misunderstanding’. He expressly denied that he had acted without a mandate or that he had “acted on a frolic of his own”.

Analysis of the facts and applicable legal principles

[30] A compromise is a contract between two or more persons which has as its object the prevention, avoidance or termination of litigation.[2] 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.[3]

[31] In casu, it is common cause that the Applicant had instructed Mr Luthuli in December 2019 to act for her, as her legal representative, in her disciplinary hearing. It is further common cause that the Applicant mandated him to enter into discussions regarding settlement with the employer’s attorneys. In fact, such was initiated by the Applicant and at the time the settlement was reached, the Applicant was still represented by Mr Luthuli.

[32] The Applicant seeks to declare the settlement null and void, alternatively to have it set aside.

[33] The argument advanced in the Applicant’s heads of argument is that the agreement was entered into by Mr Luthuli without a mandate, alternatively, there was no agreement between the parties as the employer failed to submit the proposed settlement agreement to the Applicant for her consideration and signature.

Was there an agreement to settle?

[34] I will deal with the alternative argument first. The Applicant submitted that the employer’s attorney accepted the counteroffer of six months and stated that “they were in the process of drafting the settlement agreement”. Her argument is that this was indicative of the fact that the matter would only become finally settled once the proposed agreement has been drafted by the employer’s attorneys, the terms thereof accepted by the Applicant and the agreement signed by the parties.

[35] There is no merit in this argument for a number of reasons.

[36] Firstly, the argument does not accord with the Applicant’s pleaded case and is at odds with the relief she seeks. As already alluded to supra, the Applicant seeks an order to declare the settlement agreement null and void, alternatively to set it aside, which relief is not

possible or competent if the existence of the agreement is denied. If that was indeed the Applicant’s case, she should have prayed for different relief than what is prayed for in her notice of motion.

[37] Secondly, in Myburgh and others v Minister of Public Service & Administration and others[4] the second respondent was represented by the state attorney at the time the settlement agreement was concluded, but contended that he

had not mandated the state attorney to settle the various disputes on his behalf, that he did not sign the agreement and that he is not bound by it. The second respondent argued that the agreement was subject to his signing it and that he had to first consider the proposed settlement agreement and indicate concurrence with it by signing it before a final settlement agreement could have come into place. The Court considered the fact that the legal representatives reached consensus on the terms of the settlement

agreement and that it was common cause that the second respondent had instructed the state attorney to act on his behalf in the litigation instituted by the applicants. It was held that:

‘[19] An attorney has the ostensible authority to conclude a settlement agreement on his or her client's behalf. Once clothed with such ostensible authority, it is irrelevant that the attorney did not have the client's actual mandate to conclude a settlement

agreement. The exception — where the other party induced the agreement by misrepresentation — does not arise in this case.

[20] An important further consideration in this case is that the applicants rely on the ostensible authority of the state attorney. It is common cause that the state attorney acted on behalf of both respondents up to the point of settlement. The Supreme Court of Appeal has held that the state attorney has an even wider general authority than an ordinary attorney, as the state attorney derives its authority from statute. Thus, even if a senior government official is unaware of and has not expressly approved of a settlement agreement, it does not entitle the government to avoid that agreement[5]:

“The proper approach is to consider whether the conduct of the party who is trying to resile from the agreement has led the other party to reasonably believe that he was binding himself. Viewed in this way it matters not whether the attorney acting for the principal exceeds his actual authority, or does so against his client's express instructions. The consequence for the other party, who is unaware of any limitation of authority, and has no reasonable basis to question the attorney's authority, is the same. That party is entitled to assume, as the respondents did, that the attorney who is attending the [pretrial] conference clothed with an "aura of authority" has the necessary authority to do what attorneys usually do at a [pretrial] conference — they make admissions, concessions and often agree on compromises and settlements. In the respondents' eyes the State attorney quite clearly had apparent authority.”

[21] The same holds true for the case before me. The state attorney, represented by Kopman, acted for both respondents when

they entered into the settlement agreement. There was no doubt in his mind that the dispute had been settled. It is on that basis that the first respondent signed the agreement…

[22] The fact that the second respondent did not sign the settlement agreement does not, in the circumstances, invalidate it. As Innes CJ held in Woods v Walters[6]:

“The broad rule is that writing is not essential to the validity of a contract; the consensus of parties need not be so evidenced. There are certain definite exceptions to that rule, but none which affect the present dispute. The parties may of course agree that the contract shall not be binding until reduced to writing and signed, and if they so agree there will be no vinculum between them until that has been done. But the mention of a written document during the negotiations will be assumed to have been made with a view to convenience of record and facility of proof of the verbal agreement come to, unless it is clear that the parties meant that the writing should constitute the contract. That was the rule laid down by this Court in Goldblatt v. Fremantle (1920, A.D. p. 128), and it is based on ample authority. It follows of course that where the parties are shown to have been ad idem as to the material conditions of the contract, the onus of proving an agreement that legal validity should be postponed until the due execution of a written document, lies upon the party who alleges it.”

[23] Even though the written agreement in this case refers to 'signatories' and makes provision for both respondents to sign it, it simply embodies the agreement already reached between the state attorney and the applicants' attorney.’

[38] There was no evidence placed before this Court to show that there was an agreement that the settlement would not be valid and binding until it was reduced to writing, considered and signed by the Applicant. As such, the fact that the agreement was not in writing and not signed by the Applicant did not invalidate it and does not mean that there was no agreement between the parties.

[39] The Applicant’s averment that there is no agreement between the parties has no merit.

Is the agreement null and void?

[40] Having found that there is an agreement existing, the next issue to be considered is whether the Applicant is entitled to the relief she seeks.

[41] The Applicant seeks an order to the effect that the settlement agreement concluded on 23 October 2020 be declared null and void ab initio.

[42] A contract or agreement exists if there is acceptance of an offer made between parties who have the intention and the capacity to enter into an agreement. In contract law, the term "null and void" means the contract was never valid or put differently, it was dead on arrival and therefore it has no legal effect. There can be no performance by either of the parties.

[43] Contracts may be considered null and void for various reasons, inter alia if there was no animus contrahendi, if the subject of the contract is illegal, the terms are vague or impossible to fulfil.

[44] In casu, the Applicant’s case is that the settlement is null and void because Mr Luthuli did not have a mandate. In the Applicant’s heads of argument, it is submitted that the Applicant had mandated Mr Luthuli to settle for “at least 9 months’ remuneration” but instead Mr Luthuli informed the employer’s attorneys that she was willing to settle for six months, without having a mandate to that effect and he entered into the settlement agreement on her behalf without a proper mandate.

[45] There is a difference between acting without a mandate and having a mandate but acting ‘without a proper mandate’, thus outside of the scope of the mandate. In my view the Applicant’s case is the latter - it is common cause that the Applicant mandated Mr Luthuli to enter into discussions regarding settlement with the employer’s attorneys, with the view to settle the matter. It cannot be said that Mr Luthuli acted without a mandate when he settled the matter on the Applicant’s behalf. At best for the Applicant Mr Luthuli did not act ‘properly’ in accordance with her instructions to settle for nine months when he entered into the settlement agreement for six months.

[46] In my view, the issue of whether Mr Luthuli properly executed the Applicant’s instructions in the conclusion of the settlement

agreement, is not an issue for this Court to decide.

[47] The employer submitted that there is no dispute that there was an offer by Mr Luthuli, acting in his capacity as the Applicant’s legal representative and an acceptance of the offer by Werksmans, acting in their capacity as the employer’s legal representatives. The parties were ad idem that the settlement agreement was valid and binding and to the extent that Mr Luthuli did not have the actual or implied authority to have concluded the agreement, the employer was entitled to rely on Mr Luthuli’s ostensible authority.

[48] Mr Luthuli’s argument is that the Applicant mandated him to negotiate a settlement with the employer, within specific compensation parameters (of 6 – 9 months) and he acted in accordance with the mandate he was given.

[49] In Ras v Liquor Licensing Board, Area No 11, Kimberley[7], the court said as follows on the issue of a legal practitioner acting outside of the scope of his mandate:

‘…it is clear that a client is not bound by the actions of his legal representative—attorney or counsel—where such representative has exceeded the mandate given him and he has achieved an object that had not been intended by his principal. An order made by any court or quasi-judicial tribunal under these circumstances is ipso jure void and can be set aside upon review.’

[50] It is evident that Mr Luthuli had a mandate to settle between 6 and 9 months and in my view, it cannot be said that in settling the matter, he had achieved an object that was not at all intended by the Applicant.

[51] In Dlamini v Minister of Law and Order and another[8] (Dhlamini), the court held that a legal practitioner has the implied authority to conclude a settlement agreement and stated as follows:

‘It would seem to be reasonably clear that counsel, who had been properly instructed to appear on behalf of a litigant, has implied authority to conclude a settlement or compromise of the litigation on behalf of his client, provided he acts bona fide in the interests of his client. This proposition appears to be well entrenched in England.’

[52] In Hlongwane v Cisco Systems South Africa (Pty) Ltd & another[9] (Hlongwane), the Court had regard to the dicta in Dlamini and held that:

‘It is clear from the above authorities that in the absence an instruction to the contrary by a client, a counsel or an attorney has implied authority as between himself or herself and the client to compromise the client's claim. The other principle is that counsel or attorney of a client has ostensible authority as between himself or herself and the other party to settle or compromise a client's claim without the need of actual proof of the existence of such authority.’

[53] Ostensible or apparent authority is the authority of an agent as it appears to others.[10]

[54] In Unicab Taxis (Pty) Ltd v Kammies,[11] the Court considered a similar question regarding an allegation about no authority and held that:

‘[14] The second leg of the applicant's argument is that Mullins had no authority to bind its predecessor. In this regard Kahn alleges in his affidavit that he only instructed Mullins to enter into an agreement with the intention that the respondent should return to 'sort out' the monies owed. He goes on to allege that reinstatement was never the intention and that Mullins never had the authority to enter into the agreement reinstating respondent.

[15] It is clear from the papers that Mullins was sent by Kahn to represent Unicab Taxis and that he signed the agreement on the latter's behalf. The legal principle in this regard had been established as far back as 1929 in the case of Monzali v Smith 1929 AD 382 at 385:

“Where any person, by words or conduct, represents or permits it to be represented that another person has authority to act on his behalf, he is bound by the acts of such other person with respect to anyone dealing with him as an agent on the face of any such representation, to the same extent as if such other person had the authority which he was so represented to have.”

Also see Southern Life Association Ltd v Beyleveld NO 1989 (1) SA 496 (A).

[16] In the present case Mullins, who was the fleet manager at the time, was designated to represent applicant's predecessor at the CCMA proceedings. The simple question is whether a reasonable man in the position of the respondent would have believed that Mullins had the authority to sign and enter into the settlement agreement. I find no reason to believe that respondent could not rely on the fact that Mullins was duly authorized to do so. Accordingly applicant cannot escape the consequences of the agreement on this ground either.’

[55] Actual and ostensible authority were matters canvassed by the Constitutional Court in Makate v Vodacom (Pty) Ltd[12]. The court said the following:

[45] Actual authority and ostensible or apparent authority are the opposite sides of the same coin. If an agent wishes to perform a juristic act on behalf of a principal, the agent requires authority to do so, for the act to bind the principal. If the principal had conferred the necessary authority either expressly or impliedly, the agent is taken to have actual authority. But if the principal were to deny that she had conferred the authority, the third party who concluded the juristic act with the agent may plead estoppel in replication. In this context, estoppel is not a form of authority but a rule to the effect that if the principal had conducted herself in a manner that misled the third party into believing that the agent has authority, the principal is precluded from denying that the agent had authority.

[46] The same misrepresentation may also lead to an appearance that the agent has the power to act on behalf of the principal. This is known as ostensible or apparent authority in our law. While this kind of authority may not have been conferred by the principal, it is still taken to be the authority of the agent as it appears to others…

[56] The Supreme Court of Appeal in MEC for Economic Affairs, Environment and Tourism Eastern Cape v Kruizenga and Another[13] (Kruizenga) held as follows:

‘To summarise, it would appear that our courts have dealt with questions relating to the actual authority of an attorney to transact on a client’s behalf in the following manner: Attorneys generally do not have implied authority to settle or compromise a claim without the consent of the client. However, the instruction to an attorney to sue or defend a claim may include the implied authority to do so, provided the attorney acts in good faith. And the courts have said that they will set aside a settlement or compromise that does not have the client’s authority where, objectively viewed, it appears that the agreement is unjust and not in the client’s best interests. The office of the State Attorney, by virtue of its statutory authority as a representative of the government, has a broader discretion to bind the government to an agreement than that ordinarily possessed by private practitioners, though it is not clear just how broad the ambit of this authority is.’

[57] The Applicant does not dispute Mr Luthuli’s authority to have entered into discussions with the employer on her behalf, with the view to settle the matter. She only disputes that Mr Luthuli was authorised to settle for six months.

[58] Even if I were to accept the Applicant’s version, that Mr Luthuli was mandated to settle for nine months and that he failed to act within the scope of his mandate when he settled for six months, the question that arises is whether the employer established that he had ostensible authority to conclude the settlement agreement in question. That question must be assessed by reference to the facts that emerge from the evidence placed before me.

[59] The facts placed before this Court indicate that the Applicant instructed and mandated Mr Luthuli to settle with the employer and in the communication between them, she initially wanted to settle for 12 months, but later stated that “I’m hoping that they can even try middle ground, say between 6 and 9.” She later stated that “12 would be ideal. Let’s say they eventually put 9 months… that’s [sic] can be palatable even.”

[60] In my view, Mr Luthuli settled the matter within the parameters of his mandate. He had the authority to represent the Applicant at her disciplinary hearing and he was mandated to settle the matter on her behalf, and as such he was entitled to enter into the agreement on the Applicant’s behalf, within the parameters of his mandate.

[61] The employer’s attorneys entered into negotiations, on the premise that Mr Luthuli was mandated to settle the matter, and the employer could not have known that Mr Luthuli acted without authority, as alleged by the Applicant. In any event, in view of the conclusion to which I have come, it is not necessary for the Court to decide the issue of ostensible authority.

[62] The Applicant has failed to make out a case for the settlement agreement concluded on 23 October 2020 to be declared null and void ab initio.

The setting aside of the agreement

[63] Having found that there is an agreement existing and that such an agreement is not null and void, the next issue to be considered is whether the agreement should be set aside.

[64] A contract may be set aside inter alia on the grounds of misrepresentation, duress, undue influence, fraud or iustus error. In Cindi v Commission for Conciliation, Mediation and Arbitration and others[14] it was held that:

‘[17] …It is in this regard trite that the validity of an agreement in terms of the general principles of contract can be challenged on the following grounds:

(a) Impossibility of performance.

(b) Duress and/or undue influence.

(c) Misrepresentation and/or fraud.

[18] The head note in Gollach & Gomperts (1967) (Pty) Ltd v Universal Mills & Produce Co (Pty) Ltd & others is apposite:

“A transactio 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 ground 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 to the merits of a dispute which it was the very purpose of the parties to compromise.”’

[65] The Applicant has failed to make out a case for the setting aside of the settlement agreement, on the grounds permissible in law. There is however another difficulty facing the Applicant.

[66] An aggrieved party to an agreement has an election between rescinding and upholding the agreement. Where a party seeks to declare an agreement null and void or to have it set aside, in other words, where the election is not to uphold the agreement, the aggrieved

party becomes entitled to restitution of performance already tendered, with the concomitant duty to return what he or she may have

received.[15]

[67] The acceptance of an offer of compromise may usually ‘be inferred from the retention of the money which accompanies the tender or the offer[16].’

[68] On 30 October 2020, the employer indicated to the Applicant that the settlement would be set in motion, that her services would be terminated and that the settlement amount would be paid into her banking account on 30 October 2020.

[69] On 30 October 2020, the settlement amount was indeed paid into the Applicant’s bank account. The Applicant returned all the employer’s gadgets in her possession and on 23 December 2020 the Applicant submitted her provident fund withdrawal form.

[70] The Applicant did not return the funds paid to her in respect of the settlement, nor has she tendered to do so.

[71] The employer submitted that by accepting the settlement amount and not returning it, by returning the employer’s gadgets and by withdrawing her benefit from the provident fund, the Applicant indicated her acceptance of the termination of her employment and as such, she is not entitled to challenge the validity of the settlement agreement.

[72] It is undisputed that the Applicant was paid in accordance with the terms of the agreement and that to date she has made no tender whatsoever to repay the monies she received.

[73] In Makiwane v International Healthcare Distributors:[17]

‘[18] It is common cause between the parties that the applicant has been paid all the monies set out in the settlement agreement, that he has kept such monies and has made no tender to return them to the respondent. To my mind this clearly signifies his acceptance of such monies in full and final settlement of his claims against the respondent.

[19] Our law is trite that where a party accepts the benefits under any settlement agreement in full and final settlement of the benefits owing to him by his former employer arising from the termination of his employment relationship with such employer, and has abided by such acceptance of those benefits, he has placed himself beyond the jurisdiction of this court (see United Tobacco Co Ltd v Baudach (1997) 18 ILJ 506 (LAC)).’

[74] The doctrine of peremption is well established in our law and was explained in Hlatshwayo v Mare and Deas[18] as follows:

'At bottom the doctrine is based upon the application of the principle that no person can be allowed to take up two positions inconsistent with one another, or as is commonly expressed to blow hot and cold, to approbate and reprobate.'

[75] The same principles apply in casu. The Applicant was paid in accordance with the terms of the agreement and she made no tender to repay the monies she received, and without any tender to repay the monies she had received, she is not in a position to seek that the agreement be declared null and void or be set aside.

[76] The Applicant failed to make out a case for any of the relief sought and her application has to fail.

Costs

[77] The last issue to be decided is the issue of costs.

[78] In so far as costs are concerned, this Court has a broad discretion in terms of section 162 of the Labour Relations Act[19] to make orders for costs according to the requirements of the law and fairness.

[79] In Zungu v Premier of the Province of KwaZulu-Natal and Others,[20] the Constitutional Court confirmed that the rule that costs follow the result does not apply in labour matters. The Court should seek to strike a fair balance between unduly discouraging parties from approaching the Labour Court to have their disputes dealt with and, on the other hand, allowing those parties to bring to this Court (or oppose) cases that should not have been brought to Court (or opposed) in the first place.

[80] Mr Manchu for the employer submitted that a cost order should be made against the Applicant, considering her conduct in the prosecution of this application as well as the fact that this application patently lacks merit. This is an application that should not have been brought in the first place. Mr Venter who appeared for Mr Luthuli submitted that the application was misconceived and that it should be dismissed with costs.

[81] Mr de Heus for the Applicant argued that, if the Applicant is successful with her application, cost should be granted in her favour, but if she is unsuccessful, there should be no order as to costs.

[82] Effectively all the parties are seeking a cost order.

[83] This is a case where the Court has to strike a balance, considering the requirements of law and fairness. The generally accepted purpose of awarding costs is to indemnify the successful litigant for the expense he or she has been put through by having been unjustly compelled to initiate or defend litigation. In Public Servants Association of SA on behalf of Khan v Tsabadi NO and Others,[21] it was emphasized that:

“…unless there are sound reasons which dictate a different approach, it is fair that the successful party should be awarded her costs. The successful party has been compelled to engage in litigation and compelled to incur legal costs in doing so. An appropriate award of costs is one method of ensuring that much earnest thought and consideration goes into decisions to litigate in this court, whether as applicant, in launching proceedings or as respondent opposing proceedings”.

[84] In my view, this is a case where it is appropriate to make a cost order. A cost order is a method of ensuring that decisions to litigate in this Court are taken with due consideration of the law and the prospects of success.

[85] In casu, the application was wholly misguided and lacked merit. The Respondents had to defend a meritless application and fairness dictates that they cannot be expected to endure costs defending litigation that ought not to have been brought in the first place.

[86] The Applicant did not come to Court as an unrepresented layperson, she was legally represented and therefore in a position to consider the consequences of instituting meritless litigation and she had to put in some earnest thought and consideration into the merits of this case before filing and pursuing this application.

[87] I am alive to the fact that the Applicant is an individual. This Court’s reluctance to make cost orders against individual litigants is not an immutable rule. I cannot ignore the fact that the Applicant ultimately initiated this application and persisted with it in circumstances when she should not have done so.

[88] In the present circumstances, the interests of justice require that the Applicant pays at least a portion of the Respondents’ costs. In my view, a sum equivalent to 50% of the Respondents’ costs will best serve those interests.

[89] In the premises, I make the following order:

Order

1. The application is dismissed;

2. The Applicant is to pay the First and Second Respondent’s costs, limited to 50% of the taxed costs.

Connie Prinsloo

Judge of the Labour Court of South Africa

Appearances:

For the Applicant:

Mr C De Hues from R Masilo Attorneys

For the First Respondent:

Advocate T Manchu

Instructed by:

Werksmans Attorneys

For the Second Respondent:

Advocate F Venter

Instructed by:

Mbokota Attorneys

[1] Act 1 of 1999.

[2] In the headnote appearing in Gollach & Gomperts (1967) (Pty) Ltd v Universal Mills and Produce Co (Pty) Ltd and Others 1978 (1) 914 (AD) at 921A-D, the position in respect of a compromise was summarised as follows: ‘A transactio 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 ground 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 to the merits of a dispute which it was the very purpose of the parties to compromise.’

[2] In the headnote appearing in Gollach & Gomperts (1967) (Pty) Ltd v Universal Mills and Produce Co (Pty) Ltd and Others 1978 (1) 914 (AD) at 921A-D, the position in respect of a compromise was summarised as follows:

‘A transactio 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 ground 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 to the merits of a dispute which it was the very purpose of the parties to compromise.’

[3] Gbenga-Oluwatoye v Reckitt Benckiser South Africa (Pty) Ltd and Another [2016] ZALAC 4; (2016) 37 ILJ 902 (LAC) at para 12.

[4] [2015] ZALCCT 16; (2015) 36 ILJ 2090 (LC).

[5] MEC for Economic Affairs, Environment & Tourism, Eastern Cape v Kruizenga & another 2010 (4) SA 122 (SCA) paras 9-20.

[6] 1921 AD 303. See also Pillay and another v Shaik and others 2009 (4) SA 74 (SCA); [2009] 2 All SA 435 (SCA); SOS-Kinderdorf International v Effie Letin Architects 1991 (3) SA 574 (NM).

[7] 1966 (2) SA 232 (C) at 237E-F.

[8] 1986 (4) SA 342 (D) at 346I – 347A.

[9] [2010] JOL 26265 (LC) at para 31.

[10] Hely-Hutchinson v Brayhead Ltd and Another [1968] 1 QB 549.

[11] [2000] ZALC 150; (2000) 21 ILJ 2478 (LC) at para 14 - 16.

[12] [2016] ZACC 13; 2016 (4) SA 121 (CC) at paras 45 – 46.

[13] 2010 (4) SA 122 (SCA) at para 11.

[14] (2015) 36 ILJ 3080 (LC) at para 17 – 18.

[15] Van der Merwe, Huyssteen, Reinecke et al ‘Contract: General Principles’, (Juta) 4th ed, p 116.

[16] Paterson Exhibitions CC v Knights Advertising and Marketing CC 1991 (3) SA 523 (A).

[17] (2003) 24 ILJ 2150 (LC) at paras 18 - 19.

[18] 1912 AD 242.

[19] Act 66 of 1995, as amended.

[20] (2018) 39 ILJ 523 (CC) at para 24.

[21] (2012) 33 ILJ 2117 (LC) at 2119 I-J.