Metcash Trading Africa (Pty) Ltd v Goddard (DA 14/2010) [2011] ZALAC 36 (14 December 2011)

Republic of South Africa

THE LABOUR APPEAL COURT OF SOUTH AFRICA, DURBAN

Case Number: DA 14/2010

Not Reportable

In the matter between:

METCASH TRADING AFRICA (PTY) LTD .......................................................Appellant

and

R GODDARD .................................................................................................Respondent

Date of hearing : 24 November 2011

Date of judgment : 14 December 2011

__________________________________________________________________

JUDGMENT

ZONDI, AJA:

INTRODUCTION

[1] This is an appeal against the judgment and order of Basson, J delivered on 17 June 2009 in which the learned Judge found that the appellant had misrepresented to the respondent (“Goddard”) that his job had become redundant and thereby induced him to conclude a settlement agreement regulating termination of his employment.

[2] On the basis of the aforementioned finding the learned Judge set aside the settlement agreement and ordered the reinstatement of Goddard. The appellant was ordered to pay the costs.

[3] The findings and orders made by the Court a quo are challenged on various grounds by the appellant.

[4] The key question raised in this matter is whether the settlement agreement concluded by the parties on or about 15 February 2005 should be set aside on the basis that it was fraudulently induced.

[5] The evidence which forms the basis of the Court a quo’s findings is briefly to the following effect.

The facts

[6] Goddard started working for the respondent in about October 1985. At the time of termination of his services he was a regional training manager in the KwaZulu-Natal region and operationally he reported to Gys du Plessis, the general manager of training. It is common cause that Goddard left the appellant’s employ during February 2005 but the reasons for his departure are in dispute.

[7] According to Goddard he was told by the appellant that his employment was terminated because his position had become redundant. This is disputed by the appellant. It contends that Goddard’s employment was terminated due to incompatibility and for poor work performance. In support of the contention that the termination of his employment was for operational reasons Goddard referred to and relied on the letter forming basis of the agreement of settlement he concluded with the appellant on 15 February 2005 (“the settlement agreement” or “the retrenchment letter”).

[8] The relevant portion of the retrenchment letter states:

“Notice of Retrenchment: Rationalization of Operations

As you know, management has had several consultations meeting with yourself regarding the abovementioned exercise. The consultation meetings have now been concluded. Due to the implementation of the abovementioned exercise it had become impossible for us to maintain the existing staffing compliment and retrenchments have therefore become necessary.

It is with regret that we have to advise you that your position with the company has been affected by this decision and your services will be terminated with effect 31 May 2005.”

[9] Thereafter the letter goes on to give details of what his retrenchment benefits would be. According to Goddard he concluded the settlement agreement following various meetings he held with the appellant’s national industrial relations manager, Oscar Le Roux and du Plessis during which they represented to him that his position had become redundant. The process to retrench him commenced when du Plessis told him in the meeting on 18 January 2005 to take the retrenchment because his job had become redundant and there was “no job for (him)”. Du Plessis told him to agree to either a retrenchment or a transfer to Bloemfontein. Goddard asked for reasons for his removal which he never received until he received a retrenchment letter.

[10] The second meeting was between Goddard and Le Roux on 4 February 2005. At that meeting which he believed was also attended by Jan Loots, he asked du Plessis why he was removed from his position. He admitted that an incompatibility issue also came out in the discussion with du Plessis, but according to him du Plessis was unable to substantiate the claims that he (Goddard) was incompatible with his colleagues. Following the meeting he had with Le Roux on 4 February 2005 Goddard sent an email to Le Roux stating:

“With regards to our meeting and discussion on Friday 04/02/05 at Trade Centre Mt. Edgecombe I hereby wish to reply.

As I have regrettably and forcefully been placed in a position with no alternative I therefore have no option but to be forced to negotiate a retrenchment package. I do however, require a written explanation as to the reasons of the removal of me from my current position as indicated by Gys Du Plessis on 18/01/05 at a meeting with him at the Blue Waters Hotel in Durban. This was also requested from him in writing but has to date not been received.”

[11] Goddard says he wrote this email in which he negotiated a package after it had become clear to him that his position had been made redundant. He says he accepted the retrenchment package offered by the appellant on the basis that he had been told that his position had become redundant.

[12] Goddard alleges that he was shocked when he later discovered through the email circulated by du Plessis on 5 April 2005 that the appellant had appointed a certain Mansoor Mahomed to replace him. In light of the announcement made in the email it dawned on him that the appellant had fraudulently misrepresented to him when it told him that his position had become redundant. He contends that he accepted retrenchment on the strength of this misrepresentation, which he would not have accepted but for the misrepresentation. It is for these reasons that Goddard approached the Court a quo for the setting aside of the settlement agreement.

[13] In the answering affidavit deposed to by Le Roux the appellant denies that the termination of Goddard’s employment was effected because his position had become redundant. It alleges that prior to the conclusion of the settlement agreement Goddard’s performance standards had become a concern to it. He was struggling to meet and maintain the appellant’s required performance standards. It held performance counselling meetings with him during which issues of his incompatibility and/or inability to cope with his role were dealt with. In particular this related to Goddard’s inability to accept the requirements for the appellant’s external learnership training programme and it became apparent that the relationship between Goddard and his immediate supervisor was suffering due to the fundamental differences in opinion which Goddard had regarding his role as Training Manager. In an effort to address the issue the appellant hired Andre Van Wyk, its regional training manager in the Gauteng region, to manage the external learnership programme for the KwaZulu-Natal region.

[14] The appellant further alleges that a meeting was held on 4 February 2005 between Le Roux, Goddard and Loots. It points out that at this meeting it became apparent that a continued relationship between Goddard and his immediate supervisors had become intolerable, largely due to Goddard’s incompatibility and serious differences of opinion which he had regarding the external learnership programme.

[15] Various options were explored in an attempt to resolve the problem, one of which was the suggestion that Goddard take up an alternative training position in Bloemfontein without the additional responsibility of external learnership programmes. The other option was to find him alternative position within KwaZulu-Natal. There were further discussions between Goddard and Le Roux regarding the alternative positions proposed.

[16] The appellant says on 8 February 2005 Le Roux received an email from Goddard in which he proposed a retrenchment package and on 11 February 2005 Goddard telephonically advised Le Roux that he was not prepared to accept any of the alternative positions which the appellant had offered. Goddard wanted to discuss a retrenchment package.

[17] In his oral testimony Goddard maintained his denial that his poor work performance had anything to do with the termination of his employment. He pointed out that in his recent assessment he was found above average. He denied the suggestion that he had a problem working with either his juniors or supervisors. He said that he had a normal working relationship with his colleagues. However, he conceded that during 2004 du Plessis lodged a complaint against him regarding incompatibility but it was dismissed.

[18] During cross-examination Goddard testified that during the meeting he held with Le Roux on 4 February 2005, he asked Le Roux for the reason for his removal from his position but Le Roux did not have answers for him. Goddard confirmed that he was upset that the appellant had brought in Van Wyk to perform his functions without having discussed the matter with him. He also conceded that there was no mention of the fact that his position was made redundant in the email which he forwarded to Le Roux on 8 February 2005.

[19] The appellant called Le Roux to testify on its behalf. Le Roux was briefed in about December 2004 or early January 2005 regarding incompatibility issues which Dr Hans Momberg, one of the appellant’s directors, and du Plessis had with Goddard. The appellant requested him to meet with Goddard to discuss these issues. To this end he and Loots met with Goddard on 4 February 2005.

[20] When he met Goddard he confronted him about incompatibility issues pointing out to him that the appellant did not believe that he “was compatible on his role”. Le Roux emphasised to Goddard that the external learnership programme as a means to develop people to prepare them for managerial positions, was very much important to the appellant and that Goddard’s perceived incompatibility undermined the appellant’s attempt to achieve this goal. Goddard was very much upset about the allegations against him and he wanted to know what he had done wrong. Le Roux suggested to Goddard that he take up a position in Bloemfontein which he was not keen to do as he felt that he was well settled in KwaZulu-Natal to be uprooted to Bloemfontein. Le Roux undertook to find him an alternative position within the KwaZulu-Natal region. He says at a certain point in time Goddard suggested retrenchment but Le Roux had no mandate from the appellant

to discuss it. Le Roux denied that the redundancy issue was discussed in the meeting of 4 February 2005. He says at the end of the meeting he told Goddard that he did not have to take any part in the external learnership programme as the appellant would at its cost, bring over Andre Van Wyk to run it.

[21] Some few days later Le Roux received an email from Goddard proposing retrenchment. Le Roux asked Goddard to wait as he was confident that he would be able to find him a position somewhere else in KwaZulu-Natal but Goddard was adamant that he wanted retrenchment as he did not want to leave the appellant on a sour note. Le Roux thereupon met with Goddard to discuss retrenchment package. Le Roux thereafter prepared the retrenchment letter which he says is a standard letter the appellant uses in finalising retrenchment terms. Le Roux says the appellant concluded the retrenchment agreement with Goddard because it felt that its management could not work with him anymore. It believed Goddard was incompatible.

The proceedings in the Court a quo

[22] The main issue for consideration by the Court a quo was whether the settlement agreement fell to be set aside on the ground of misrepresentation. The determination of the main issue involved the consideration inter alia of the following issues:

(i) Whether Goddard’s alleged incompatibility/poor performance was the reason for the termination of his employment; and

(ii) Whether Goddard was fraudulently induced to conclude the settlement agreement.

The Court a quo referred these issues for oral evidence as there existed in the affidavits fundamental factual disputes between the parties which could not be resolved on papers. The appellant presented the oral evidence of Le Roux and Goddard also testified.

[23] In relation to the question whether the termination of Goddard’s employment was due to incompatibility or incompetence, the Court a quo held that it could not make a finding because Le Roux’s evidence regarding Goddard’s alleged incompatibility could not be relied upon as Le Roux did not have first hand knowledge about the nature of Goddard’s performance. It reasoned that the “mere fact that the competency of the applicant was raised during the meetings” did not persuade the Court that it was the performance issue that prompted Goddard to sign the settlement agreement.

[24] As regards the question whether or not Goddard was misled into concluding the settlement agreement the Court a quo, after setting out the legal principles relating to misrepresentation and the effect thereof on the contract, found that the appellant’s conduct constituted misrepresentation. It found the appellant to have concealed crucial facts from Goddard and concluded that the latter would not have entered into the settlement agreement had he known the true facts. It further found that his conduct in seeking rescission of the settlement agreement immediately upon becoming aware of the true facts to have been consistent with his averment that he had been duped into the settlement agreement. He was made to believe that his position had been made redundant when it had not.

[25] The question is whether the factual findings forming the basis of the Court a quo’s conclusion, were correct.

[26] This appeal is purely upon fact and this Court sitting as a Court of Appeal will not interfere with a trial Court’s factual findings in the absence of misdirection (Rex v Dhlumayo and Another 1948 (2) SA 677 (A) 705 – 706).

Contentions of the Parties

[27] In argument before us Mr Myburgh SC submitted on behalf of the appellant that the Court a quo erred in finding that there was no evidence to establish that Goddard was incompatible and that this was the central issue of discussion between Goddard and the appellant’s representatives. He argued that there was no need whatsoever for the appellant to call

witnesses to establish Goddard’s incompatibility as the question was not whether Goddard was in actual fact guilty of poor

performance/incompatibility, but rather whether concerns about Goddard’s performance informed the settlement agreement.

[28] I disagree with Mr Myburgh’s submission. The question of Goddard’s incompatibility/incompetence as a reason for concluding the settlement agreement was one of the issues on which the parties disagreed. It was for this reason that the Court a quo decided to refer it together with others for oral evidence for resolution. It was therefore expected of the parties to call factual witnesses to testify on the issue on which they disagreed. The appellant did not call a witness to give evidence regarding Goddard’s

incompetence/incompatibility. I agree with Mr Watt-Pringle SC, who appeared for the respondent, that the appellant needed to lay at least a factual basis for the contention that incompatibility was a reason for the termination of Goddard’s employment. In the absence of the appellant’s evidence on this issue the Court a quo was thus correct in making a finding which it did.

[29] It is clear from Le Roux’s evidence that the main reason for the appellant to remove Goddard from an external learnership programme function is because the appellant perceived him to have been incompatible to that function. When Le Roux was asked about the appellant’s reasons for concluding the settlement agreement which Goddard sought to have set aside, he said:

“The reason for concluding this agreement was simple, that the company believed, rightly or wrongly, that the bosses of Rob couldn’t

work with him any more, they believed he was incompatible, specifically to the external learnership programme...”

[30] It is also clear from Le Roux’s evidence that Goddard “was very upset about the fact that the guys were talking about incompatibility and that, ... he wanted to know what did he do wrong, where did he go wrong...”

[31] In my view it was incumbent upon the appellant to call a witness to give evidence why it perceived that Goddard was incompatible. Le Roux was not qualified to give that evidence as he was not directly involved with Goddard. The Court a quo’s finding that there was no evidence to establish that Goddard was incapable can therefore not be faulted.

[32] It was also submitted by Mr Myburgh that the Court a quo’s finding that Goddard was misled into believing that his job was redundant and thus induced into settlement, was wrong. He argued that implicit in the Court a quo’s reasoning is a finding to the fact that Le Roux lied to Goddard by telling him that his job was redundant. He submitted that such finding is, however, entirely inconsistent with the common cause facts.

[33] It is correct that the Court a quo was confronted with two conflicting versions regarding the circumstances leading to the conclusion of the settlement agreement and that it was obliged to resolve the factual dispute by undertaking a balanced assessment of the credibility, reliability and

probabilities associated with the evidence of the respective witnesses (Stellenbosch Farmers’ Winery Group Ltd & Another v Martell ET CIE & Others 2003 (1) SA 11 (SCA) at paragraph 5).

[34] Mr Myburgh submitted that the Court a quo erred in disregarding the appellant’s evidence regarding the circumstances under which the settlement agreement was concluded, in particular that the conclusion of the settlement agreement was Goddard’s idea. He argued that Goddard’s version of misrepresentation was plainly contrived.

[35] In my view the attack on the Court a quo’s findings is unjustified and is rejected for three reasons. First, the fact that the Court a quo did not mention in its judgment certain points raised by the appellant does not necessarily follow that it did not take them into account. It would be most unsafe invariably to conclude that everything that is not mentioned by trial Court was overlooked. It is implicit in the Court a quo’s findings that it rejected the appellant’s version and the facts upon which its version was based.

[36] Secondly, it was Goddard’s evidence that the process to retrench him commenced when du Plessis told him in a meeting on 18 January 2005 to take retrenchment because his job was redundant and there would be no job for him. He said du Plessis told him to agree either to a retrenchment or a transfer to Bloemfontein. His evidence regarding what was communicated to him by du Plessis was not challenged. Du Plessis was not called to contradict him. In order to resile from the agreement the onus rested on Goddard to prove that he was induced to enter into it. Goddard says he opted for retrenchment as he did not want to be

transferred to Bloemfontein. Goddard’s version of the facts appears to me to be more probable and reliance can be placed upon it. The fact that a resultant settlement agreement was concluded on terms testified to by Goddard seems to provide a strong support for his version.

[37] Thirdly, the appellant’s version on how the settlement agreement came about is untenable in that it seeks to suggest that the settlement agreement is nothing else but a simulated transaction. The appellant contends that the document embodying the terms regulating Goddard’s employment termination was characterised as retrenchment for the benefit and convenience of Goddard. In reality, so the appellant’s argument continued, the parties did not intend to terminate their employment relationship on the basis of operational requirements. It avers that his termination related to incompatibility issues. Before the Court can find that a transaction is a simulated transaction, it must be satisfied that there is some unexpressed agreement or tacit understanding between the parties because prima facie, the nature of a transaction is what it purports to be, and the onus rests upon the party who asserts that it is something different to prove that fact. (Zandberg v Van Zyl 1910 AD 258). In the instant matter, I am unable to find, having regard to the language of the settlement agreement and the unchallenged evidence of Goddard, that the parties, in concluding the settlement agreement, did not intend to conclude an agreement regulating the terms of termination of Goddard’s employment for operational requirements. The appellant’s contention must therefore fail.

[38] In conclusion I hold that the Court a quo was correct in setting aside the settlement agreement on the basis that Goddard was fraudulently induced to conclude it and that he would not have entered into it had he been aware of the true facts.

The Order

[38] In the result the appeal is dismissed with costs.

______________

ZONDI AJA

(Jappie and Ndlovu JJA concur in the judgment of Zondi AJA)

Appearances:

For the appellant : Mr A Myburgh SC

Instructed by : Perrot Van Niekerk Woodhouse Matyolo Inc

For the respondent : Mr Watt-Pringle SC

Instructed by : Macgregor Erasmus Attorneys

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