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FORM A

FILING SHEET FOR TRANSKEI DIVISION JUDGMENT

PARTIES:

DIRK HERMANUS CROUS APPLICANT

And

THE BLUE CRANE ROUTE MUNICIPALITY 1ST RESPONDENT

CAPE JOINT RETIREMENT FUND 2ND RESPONDENT

6. Case Number: 1399/2008

7. High Court: EASTERN CAPE DIVISION

DATE HEARD: 16/10/08

DATE DELIVERED: 6/11/08

JUDGE(S): PLASKET J

LEGAL REPRESENTATIVES –

Appearances:

• For the Applicants(s): Mr I. Smuts S.C.

• for the Respondent(s): Mr R. Quinn S.C. and Mr R. Wade

Instructing attorneys:

1. Appellant(s): Wheeldon, Rushmere and Cole Grahamstown

2. Respondent(s): Mc Callums Grahamstown and Smith, Tabata and Van Heerden, East London

CASE INFORMATION -

• Nature of proceedings :

• Topic:

• Key Words:

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION)

CASE NO: 1399/2008

DATE HEARD: 16/10/08

DATE DELIVERED: 6/11/08

NOT REPORTABLE

In the matter between:

DIRK HERMANUS CROUS APPLICANT

and

THE BLUE CRANE ROUTE MUNICIPALITY 1^ST RESPONDENT

CAPE JOINT RETIREMENT FUND 2^ND RESPONDENT

______________________________________________________________

The applicant claimed that he had reached agreement with his employer, the first respondent, that he would be retrenched, but that the first respondent had failed to meet its obligations in terms of the agreement. He applied for an order directing the first respondent to pay him an amount as severance pay and also to pay a further amount to the second respondent, for his benefit. The first respondent denied that an enforceable agreement had been concluded with the applicant to retrench him, contending that, instead, when he left its employ, he had resigned and was on that account not entitled to the amounts claimed. The court held the minutes of a meeting of the first respondent established that it had agreed to retrench the applicant and its subsequent conduct was also consistent with it having agreed to do so. The relief claimed by the applicant was granted with costs.

JUDGMENT

PLASKET J

[1] The applicant was employed by the first respondent and its predecessors for some 17 years when, he believed, he reached an agreement concerning his retrenchment. He has applied for an order that he be paid an amount of R279 423.33 plus interest by the first respondent and that the first respondent pay the amount of R1 162 751.87 plus interest to the Cape Joint Pension Fund, the second respondent, for his benefit. The second respondent plays no part in these proceedings but the first respondent opposes the application. (I shall refer to the first respondent as the municipality.)

[A] THE FACTS

[2] The applicant commenced his career as in local government as Assistant Town Clerk in the Somerset East Municipality in January 1991. In 2003, when the Somerset East Municipality had been subsumed into the present municipality pursuant to the restructuring of local government after 1994, the municipality began to re-organize its staff complement. In May of that year, the applicant was informed that he had not been fitted into the new structure but that his employment would continue. He was informed that he could no longer use the title he held at that stage, namely Town Secretary, as this position had been abolished. He continued to work ‘without portfolio’ as he put it, with unaltered salary and benefits.

[3] He was invited to apply for appropriate new posts that were created through the re-organization. He did so without success. During the early part of March 2006, the applicant received from the municipality a notice in terms of s 189(3) of the Labour Relations Act 66 of 1995. It informed him ‘with regret’ that the municipality ‘contemplates the possible termination of contracts of employment, based upon its present operational requirements’. It stated that the ‘direct cause of such contemplation is based upon the amalgamation of the municipalities into one municipality with the name of Blue Crane Municipality which was previously Somerset East, Cookhouse and Pearston Municipalities’. The applicant was the only employee whose retrenchment was contemplated.

[4] The following statements in the notice are significant: first, the notice stated that attention had already been given to alternatives to the applicant’s retrenchment but that they had been ‘unsuccessful to implement’; secondly, it was proposed that the applicant’s last effective working day would be 30 April 2006; thirdly, it stated that severance pay would be ‘calculated in terms of clause 12 of the Collective Agreement on Conditions of Service for South African Municipalities, which consists of three weeks remuneration for each completed year of service capped to the equivalent of nine months remuneration, thereafter one week’s remuneration for every completed year of service’, that the applicant would be paid notice pay for May 2006 instead of working that month and that he would be paid for accrued annual leave.

[5] The applicant and the Municipal Manager, Mr Darren Claassen, then met and reached agreement on the terms of the applicant’s retrenchment. Those terms are contained in a document, styled a ‘Consensus Agreement in terms of Section 189 of the Labour Relations Act’, which was signed by both men on 26 April 2006. The document purports to be an agreement between the applicant and the municipality.

[6] It claims that the parties had reached agreement on the terms and conditions that it contains ‘surrounding the retrenchment of the employee’. It records that agreement was reached on such matters as appropriate measures to avoid the dismissal of the applicant, the method used to select him for retrenchment and severance pay.

[7] The crux of the agreement is paragraphs 5 and 6 which deal with the benefits of be paid to the applicant. These paragraphs provide:

‘5. The employee acknowledges and accepts that the employer will pay the following to the employee in equal instalments over a period of four months, the first payment will be effected on or about 30 June 2006, and every month thereafter on the last day of that month, which comprising (sic) of:

1. Notice pay (May 2006), subject to normal and lawful deductions;

2. Leave pay due (53 working days);

3. All bonuses in terms of the employer’s policy, if applicable;

4. Severance pay calculated according to clause 12 of the Conditions of Service of the employee;

5. Full pension benefits, which will be paid to the applicable Pension Fund.

6. The above-mentioned payment comprises of the following:

(i) Notice pay (May 2006) R26 691.00 (cost to employer)

(included herein is benefits)

Subject to normal and lawful deductions

(ii) Severance pay (41 weeks) R252 732.33

(13 years @ 3 weeks = 39 weeks plus

2 years @ 1 week = 2 weeks, total

15 years of service

(iii) Bonuses R 6161.25

(iv) Leave pay R36199.12

6. Employer’s liability towards R

Pension Fund’

It will be noted that the final amount – for the employer’s liability towards the pension fund – was left blank. The reason was that Claasen and the applicant did not know the figure at the time: it would be ascertained through enquiries directed to the second respondent.

[8] In paragraph 7 it is recorded that the applicant ‘acknowledges that this agreement is accepted freely, voluntarily and without duress’. Paragraph 8 states that the payment of the applicant’s benefits would be effected in four equal instalments, the first to be paid at the end of June 2006 and the last to be paid at the end of September 2006.

[9] Despite the terms of the agreement, the applicant did not leave the employ of the municipality at the end of April 2006. On 15 May 2006, his situation and that of one other person who had won an arbitration award against the municipality, was discussed in a meeting of the municipal council. The minutes record the following concerning the ‘packages’ due to both men:

‘The Manager of Finance highlighted that when she had discussions with the Municipal Manager around packages, he requested that provision to be made on the budget, however it was commented in Bhisho of the one package of R1.7 million and the other one of R1 million. She indicated that these packages are part of the turn-around strategy and it should not come from rate-payers, Council should be lobbing (sic) funds from Government to assist in this regard. She further indicated that if Council is going to pay for these packages, provision should be made on the budget for these packages.

In response to a question from Cllr Brown regarding the packages, the Manager Finance highlighted that Council is running short of a R500 000.00, for paying out of these packages.’

[10] The twin issues of the settlement of the arbitration award in favour of a Mr Callie Du Preez and the retrenchment of the applicant arose again in a meeting of the municipal council on 8 June 2006. In respect of the first issue, the minutes record:

‘CASE OF MR C.F.B (CALLIE) DU PREEZ

The Council had discussed this issue of a possible reinstatement of the abovementioned person, but with the history of his case in mind, it was clear that this avenue is not possible.

The only other option was to meet his claim of R1.7 million, because the possibility is very good that a Court verdict can cost Council a lot more. At this stage Mr Du Preez has been called in and Council explained to him what their option is and explained to him that, because of the financial position it will not be in a position to make a once off payment. He was then asked if he will be prepared to accept to be paid over a period by way of instalments. He said that he was not mad at the present Council and would like to see this issue to be resolved in a friendly manner. Further to this he explained that Council will have to keep in mind that they will be responsible for the contribution to SARS, but that he will discuss this offer with his lawyer and report back.

RESOLVED

3. That the case between Council and Mr C.F.B. du Preez be settled for the amount of R1.7 million.

4. That Mr Du Preez and the Manager: Finance work out acceptable instalments after Mr Du Preez has consulted with his attorney.

5. That Council finds out from SARS what the amount will be on this payment and how Council can pay them and that this be reported back to Council.’

[11] In respect of the second issue, the applicant’s retrenchment, the minutes record the following:

‘RETRENCHMENT OF MR D.H. (DIRK) CROUS

The Council put it to Mr Crous if he will be prepared to rather take a permanent position instead of being retrenched. On this Mr Crous explained to Council that after all he had to go through, his health and family, he will stick to the retrenchment option, but because he is still loyal to the new Council and aware of their financial and skills shortage problems, he will compromise as follow, namely;-

• He is prepared to stay on at his current benefits until such time as Council has the amount to pay over to the pension fund and his retrenchment package even if it takes a couple of months.

Mr Crous pointed out that after retrenchment, he will still be available if Council needs his duties from time to time. Further he pointed out to Council that in both his case and that of Mr Du Preez, it will be more beneficial to Council if they can settle this as soon as possible.

RESOLVED

1. That Council accepts Mr Crous’ point of view and that he and the Manager: Finance should work out how they will save the money over a period to make good for his retrenchment package and pension fund contribution and that this arrangement be reported back to Council.

2. That in meantime Mr Crous will stay on at his present conditions of service.’

[12] The municipality then applied to the South African Revenue Service (SARS) for a tax directive in respect of the applicant. The reason for doing so, according to the relevant documents, is given as his retrenchment. The tax directive was valid for the period 1 March 2006 to 28 February 2007 – the 2007 tax year. The first of two documents to embody the tax directive is dated 5 June 2008, but the year is obviously an error and should be 2006. The second document on an official letterhead is dated 5 July 2006. Both give, as the responsible person in the municipality, the name L Koekemoer. The deponent to the answering affidavit, Ms Delphine Sauls alleged that the tax directive ‘was prepared on the instructions of the applicant himself’. She attached an application, dated 15 June 2006, which is signed by a person by the name of Gowar. It refers to L. Koekemoer, presumably as the contact person. The applicant denied that the application for a tax directive was made on his instructions. He points out that no affidavit is deposed to by Ms Gowar who the applicant has identified as ‘a duly authorised financial officer acting in the deponent’s stead while she was on pregnancy leave’. (Similarly, the first respondent has not filed an affidavit deposed to by L. Koekemoer.) On the face of the document, there is certainly no indication that it was completed on the instructions of the applicant as alleged by Ms Sauls. I resolve this conflict of fact below when I analyse the facts.

[13] The Du Preez matter had been finalised towards the end of 2006. On 8 January 2007, the applicant wrote to the Municipal Manager to ascertain when he could leave the municipality’s employ. It is noteworthy that, in this letter, he referred to ‘a Special Council Resolution taken on 8 June 2006’ when he reminded the Municipal Manager that ‘the Finance Department is supposed to make provision for my retrenchment package for the new financial year 2007/2008’. The remainder of the letter was to the following effect:

‘I am not trying to put unnecessary pressure on Council, but want Council to keep it in mind that there is six months left before the start of the new financial year and that I am losing on investment growth at this stage and would like this to be finalised as soon as possible. As previously stated I will still be available on a contract basis after the retrenchment for certain tasks, but you must accept the fact that I have to start planning my future and investment portfolio.

It will therefore be appreciated if I can get a commitment for a specific date, say latest end September 2007, but if it can be earlier that will be all right with me. As you know I am still loyal to Council and the community as a whole, but have reached a stage where I must give serious attention to my health and my future.

I believe you will find this in order and to hear (sic) from you soon, in order for me to start finalising my future planning.’

[14] There was no response to this letter. The applicant wrote a second letter dated 19 July 2007 which he addressed to both the Municipal Manager and the councillors of the municipality. In it, after he set out his travails over the five years previous, he stated:

‘To my relief it was then decided to retrench me on 31 May 2006 with an agreement to pay my package at the end of September 2006 (agreement attached). Then the problem came of the pay-out to Mr Du Preez and again I offer to stay on at my present conditions till the next financial year to help council to first get out of their cash-flow problems in a Special Council Meeting on 8 June 2006.’

[15] Then, after referring to his letter of 8 January 2007, he continued:

‘Lately the Acting Municipal Manager has requested me to do a follow-up with my pension fund on the present status of my retrenchment, and the total package is as follows: the Blue Crane Route Municipality (Employer) are now officially informed that I the (employee) want the retrenchment date to be the latest 31 October 2007. The employer liability to the Retirement Fund amounts to R1 117 190 as at 31 July 2007 and this amount can still change monthly until the time of ending the service.’

He then reminded the Municipal Manager and councillors ‘to keep the severance pay in account’ and he indicated how much this totalled, as well as how much he was owed as a bonus and in leave pay.

[16] Still no response was forthcoming, so the applicant addressed another letter, dated 15 August 2007, to the Municipal Manager and the councillors. In it he referred to his previous letters and stated that ‘I believe that you are in agreement that you want to retrench me on 31 October 2007 as agreed, which will therefore also be my last working day’. He asked for a letter confirming this as soon as possible ‘in order for me to finalise my investment portfolio and new medial aid scheme’.

[17] On 16 October 2007, the applicant wrote yet another letter to the Acting Municipal Manager and councillors. This letter stated:

‘It is with shock that I had to learn that Council is busy obtaining legal options to try and reverse the resolutions and agreements regarding the retrenchment, which was not my choice, but totally yours and the previous Council’s.

The most shocking part is that since January I had written several letter and sent them to Council via management, but I have received no response from you on any of letters aforesaid. I had a big understanding for Council’s financial position in the past, but with people flying all over the place and attending meetings and workshops instead of attending to what is important to the community, and with the unacceptable treatment that I am receiving, I have lost my patience and loyalty and expect an answer before 12:00 on 17 October 2007 in writing with copies of the relevant Council Resolutions.’

[18] It was only on 24 October 2007 – some eight days later – that the applicant was favoured with a reply. In it the Acting Municipal Manager, Ms Sauls, stated:

‘We have now had the opportunity to take legal advice in respect of your letters dated 15 August 2007 and 19 July 2007. We do not agree that council has resolved to ratify the agreement entered into between yourself and the then municipal manager, Mr Darren Claassen (who was not authorised to conclude the said agreement).

The municipality’s position remains that it will offer you a permanent position within its staff structures on similar terms and conditions to those which you currently enjoy, if not the same terms and conditions.

Your attitude to the foregoing is invited, so that immediate steps can be taken to formalise the agreement in the event of it being acceptable to yourself.

We believe it prudent to indicated that should you not accept the offer particularised aforesaid, we will be left with no alternative but to initiate a formal retrenchment process.

We look forward to receiving you urgent reply in this regard.’

[19] In correspondence that followed, the municipality repeated that it had never agreed to retrench the applicant and neither had it ratified the agreement between him and Claassen, and that if he did not accept the unspecified position that he was offered, a retrenchment process in terms of s 189 of the Labour Relations Act would be initiated. He was threatened that if he rejected the offer of employment, the municipality would have no obligation ‘to make any payments to your pension fund as a result of your potential retrenchment’.

[20] Eventually, on 21 April 2008, the applicant wrote a letter to the Municipal Manager in which he ended his services. The letter reads:

‘Hiermee gee ek kennis van die beëindiging van my diensverhouding met die Blue Crane Route Munisipaliteit met my laaste werksdag op die laaste werksdag van Mei 2008. Hiermee word dit duidelik op rekord geplaas dat hierdie aksie deur myself geensins geag word as ʼn bedanking nie.

Ek plaas egter verder op rekord dat ek nie afstand doen van enige regte in terme van ʼn verdere eis om die re-organisasie voordeel soos gedefineer in terme van die reëls van die Cape Joint Aftreefonds waarop uirdruklik ooreengekom is met u die werkgewer nie.

Ek onderneem om alle remedies tot my beskikking uit te oefen ter verhaling van die ooreengekome werkgewerverpligting met betrekking tot die re-organisasievoordeel betaalbaar aan my volgens die bogenoemde ooreenkoms.

Tot tyd en wyl die re-organisasie voordeel ten volle aan my betaal is, sal die Raad nog verantwoordelik wees vir 50% van my mediese bydrae.’

[21] Although the applicant received no acknowledgement of receipt of this letter he received, at the end of May 2008, payment of his bonus and leave pay (as contemplated by paragraph 6 of the agreement of 26 April 2006). He also received a letter from the SARS which stated that he would be taxed on amounts which appear to be notice pay and severance pay (as contemplated by paragraphs 6.1 and 6.2 of the agreement of 26 April 2006). On the tax directive, the reason for the retrenchment is given as ‘retrench’ and the contact person from the municipality is given as L. Koekemoer. The tax directive is dated 27 May 2008.

[22] The applicant has attached to his founding affidavit the municipality’s 2006/2007 amended operating budget and its 2007/2008 operating budget. Item 135 of the first document makes special provision for ‘packages’ and item 135 of the second document budgets an amount of R1.4 million alongside the heading ‘Provision for package’. The singular form is noteworthy.

[23] With the exception of the issue concerning the tax directive, I have set out the facts that are either not in dispute or are contained in documents that are not in dispute. I shall now set out the municipality’s version. In so doing, I shall concentrate on the answering affidavit deposed to by Ms Sauls.

[24] The municipality admits that the applicant was given notice that his retrenchment was contemplated, that he met with Claassen and that the negotiations with Claassen were finalised on 29 March 2006. The municipality denies that the agreement with Claassen was ever authorised, as alleged by the applicant. Sauls says in this regard:

’22.2 I admit that Claassen was not authorised to himself conclude any agreement with the applicant, his mandate being to explore the possibilities of a consensual termination of the applicant’s employment. This with a view to submitting draft proposals to the first respondent’s council for approval.

22.3 While I do not dispute that an “in principle agreement” was reached with the applicant, I specifically deny that the first respondent’s council resolved to either adopt, authorise or ratify that agreement.’

Turning to the meeting of 15 May 2006, she denies that this supports the allegation that the municipality authorised the agreement, although she admits that the packages referred to were those of the applicant and Du Preez.

[25] As to the meeting of 8 June 2006, she admits the correctness of the minutes but, having sketched the background of a lack of funds as the motivation for what happened at the meeting, she said that no resolution was adopted to retrench the applicant. Instead, she says, it was intended that further investigations were to be made as to the ‘affordability of the severance proposals before taking a final decision on the matter’. She points out that the resolution ‘contemplates a report back’. She insists that ‘[a]t no stage during the course of the meeting did the first respondent’s council resolve to “make good” on the terms of the “settlement agreement”’. Instead a process directed at determining affordability was initiated. She denied that the resolution evidenced a variation of the initial agreement.

[26] Sauls denies the applicant’s averment that he then accepted that the Financial Manager was ‘attending to the necessary budgetary issues to ensure my package was paid out when I retired’. She says that she told the municipality that it could not effect sufficient savings to pay the amount contemplated by the agreement. (It is not clear when she gave this advice or how it can be consistent with the fact that the applicant’s retrenchment package was budgeted for.) She states further that the applicant never communicated with her with a view to investigating how the necessary funds would be raised. She claims that the application for a tax directive was ‘prepared on the instructions of the applicant himself although it was signed by one Ms Gowar, the acting Chief Financial Officer, an allegation that was denied by the applicant in reply.

[27] Sauls admits that the case of Du Preez was settled on 8 June 2006 as the applicant states, and as the minutes of that day’s meeting reflect. She admits that the letters written by the applicant between 8 January 2007 and 16 October 2007 were received by the municipality. Save to say that, in relation to the first, the municipality did not ‘formally respond’, no explanation is given for the failure to respond. She denies the contents of the letters in a manner broadly consistent with the denials that have been mentioned above. She states, however, with reference to the letter of 19 July 2007, that it was not open to the applicant to ‘unilaterally determine his retrenchment date’ or to ‘intimate that the first respondent’s liability in respect of either pension or severance was in a specified amount’.

[28] The applicant had stated that he suspected that the municipality had given its attorneys authority to ascertain from the second respondent how much it would have to pay in when it retrenched him. The letter in which this authority was given is dated 27 September 2007. Sauls, in her response to this allegation, claims privilege while admitting having given the attorneys the authority to approach the second respondent. She then explains – without waiving privilege, she says – that the purpose was to enable the municipality to ‘assess its potential liability in the event that the applicant sought to initiate litigation on the strength of the agreement he says existed’.

[29] Sauls claims that the applicant’s final letter was a letter of resignation. In answer to the applicant’s statement that he received no acknowledgment of receipt, Sauls replies with ill-considered and inappropriate legalism that the municipality ‘is not required to respond to a letter of resignation, given that it represents a unilateral act which does not require to be either accepted or rejected’. (I shall have more to say about the municipality’s conduct below.) She admits that the applicant was paid his bonus and leave pay at the end of May 2008 but denies that this was done in terms of any agreement.

[30] Finally, concerning the allegation that the municipality budgeted for the applicant’s retrenchment, Sauls says that the municipality is required by legislation to budget. She then deals with the nub of the applicant’s allegation as follows:

• ‘Neither document is proof of any resolution taken by the first respondent to effect payment. It had at a far earlier stage been specifically raised that the issue of the applicant’s possible payment had to be budgeted for.

• Had the first respondent in fact been possessed of sufficient funds the possibility existed that the first respondent would have resolved to retrench the applicant against the payment of the defined severance package.’

From this it can be concluded that the applicant’s assertion that his retrenchment was budgeted for is not in dispute.

[B] THE ISSUE

[31] The principal issue that arises from the facts that I have set out is whether a valid, enforceable agreement was entered into between the applicant and the municipality, either embodied in the agreement of 26 April 2006 and amended subsequently on 8 June 2006 or embodied in the resolution of 8 June 2006. If an agreement was reached and it is valid and enforceable, then it follows that the amounts claimed by the applicant are due. That much is not in dispute.

[32] The municipality’s case is that Claassen was never authorised to conclude a retrenchment agreement with the applicant and that the ‘in principle agreement’ is not enforceable for this reason. The crux of its case, as set out by Sauls, is that the municipality never resolved to ‘adopt, authorise or ratify’ the agreement. It takes the view that the applicant resigned from his employment and is not entitled to severance pay or to the pension benefits that he claims.

[33] On the face of it, disputes of fact arise: the applicant alleges that the agreement was authorised or that it was subsequently ratified while the municipality alleges that the agreement was not authorised and was never subsequently ratified. Before proceeding further, it is necessary to set out the law on how a court ought to determine factual disputes in motion proceedings.

[34] The way in which a court is to determine whether to grant final relief in motion proceedings has been set out by Corbett JA in the well-known matter of Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd¹ as follows:

‘It is correct that, where in proceedings on notice of motion disputes of fact have arisen on the affidavits, a final order, whether it be an interdict or some other form of relief, may be granted if those facts averred in the applicant's affidavits which have been admitted by the respondent, together with the facts alleged by the respondent, justify such an order. The power of the Court to give such final relief on the papers before it is, however, not confined to such a situation. In certain instances the denial by the respondent of a fact alleged by the applicant may not be such as to raise a real, genuine or bona fide dispute of fact … . If in such a case the respondent has not availed himself of his right to apply for the deponents concerned to be called for cross-examination under Rule 6(5)(g) of the Uniform Rules of Court … and the Court is satisfied as to the inherent credibility of the applicant's factual averment, it may proceed on the basis of the correctness thereof and include this fact among those upon which it determines whether the applicant is entitled to the final relief which he seeks … . Moreover, there may be exceptions to this general rule, as, for example, where the allegations or denials of the respondent are so far-fetched or clearly untenable that the Court is justified in rejecting them merely on the papers … .’

[35] The Plascon-Evans rule was commented on by Botha JA in Administrator, Transvaal and others v Theletsane and others² when he held:

‘For my purpose it is enough to say that in motion proceedings, as a general rule, decisions of fact cannot properly be founded on a consideration of the probabilities, unless the Court is satisfied that there is no real and genuine dispute on the facts in question, or that the one party's allegations are so far-fetched or clearly untenable as to warrant their rejection merely on the papers, or that viva voce evidence would not disturb the balance of probabilities appearing from the affidavits. This rule, which is trite, applies to instances of disputes of fact … and also in cases where an applicant seeks to obtain final relief on the basis of the undisputed facts together with the facts contained in the respondent's affidavits … .’

[36] In South African Veterinary Council and another v Szymanski,³ Cameron JA outlined the development of the modern approach to disputes of fact in motion proceedings. He said:

‘[23] It is an elementary rule of motion proceedings that an applicant cannot succeed in the face of a genuine dispute of fact that is material to the relief sought. Conflicting averments under oath cannot be tested on affidavit but only by oral evidence. Nearly 80 years ago Innes CJ explained that

“(t)he reason is clear; it is undesirable in such cases to endeavour to settle the dispute of fact upon affidavit. It is more satisfactory that evidence should be led and that the Court should have an opportunity of seeing and hearing the witnesses before coming to a conclusion.”

[24] Innes CJ added a significant qualification:

“(W)here the facts are not really in dispute . . . there can be no objection, but on the contrary a manifest advantage in dealing with the matter by the speedier and less expensive method of motion.”

This qualification, endorsed in the subsequent classic expositions on the subject, led to a gradual but not inconsiderable relaxation of the criteria for determining whether despite a factual dispute relief can be granted in affidavit proceedings. Most notably, Corbett CJ in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd amplified the ambit of uncreditworthy denials that would not impede the grant of relief. He extended them beyond those not raising a real, genuine or bona fide dispute of fact, to allegations or denials that are “so far-fetched or clearly untenable that the Court is justified in rejecting them merely on the papers”.’

Cameron JA then stated that, in the motion courts of the various Provincial Divisions of the High Court, the practice, in applying Corbett JA’s category of ‘far-fetched or clearly untenable’ denials ‘may sometimes be robust (in my view, often rightly so)’.⁴

[37] Finally, mention must be made of the judgment of Eloff AJ in Truth Verification Testing Centre CC v PSE Truth Detection Centre and others.⁵ He held as follows on the way in which disputes of fact may be resolved on the papers:⁶

‘I am mindful of the fact that a court should be loath to determine disputed issues on affidavit on the basis of the probabilities as they present themselves from an analysis of the respective conflicting versions of the parties. (De Mata v Otto NO 1972 (3) SA 858 (A) at 865 in fin.) I am also mindful of the fact that the so-called “robust, common-sense, approach” which was adopted in cases such as Soffiantini v Mould 1956 (4) SA 150 (E) in relation to the resolution of disputed issues on paper usually relates to a situation where a respondent contents himself with bald and hollow denials of factual matter confronting him. There is, however, no reason in logic why it should not be applied in assessing a detailed version which is wholly fanciful and untenable. The version of the second respondent as to the permission allegedly granted by the applicant for the entry to be made in the Johannesburg Telephone Directory … must be read and considered against the background of incontrovertible surrounding circumstances.’

[C] ANALYSIS OF THE EVIDENCE

[38] The municipality, prior to March 2006 (when a new council took office) resolved to retrench the applicant and gave Claassen the task, as it was put by Mr Mjadu, the mayor at the time, to ‘oversee’ the retrenchment. That process was initiated and resulted in the agreement of 26 April 2006 between Claassen and the applicant. These facts are not in dispute. The significance of the agreement for the municipality is that it clarified the applicant’s position: he, as the only employee that it wanted to retrench, agreed to be retrenched.

[39] The agreement also quantified what was due to the applicant. It is noteworthy that the figures that appear in the agreement were all mechanically determined and no discretion came into play on the part of Claassen: the figures themselves were not the subject of negotiation as a month’s pay was owed for notice pay, a formula contained in a collective agreement was applied to determine severance pay, and the bonuses and leave pay appear to have been similarly calculated. The only figure not provided was that for the employer’s liability to the second respondent for the benefit of the applicant. That figure was, however, calculable on the basis of a formula provided for in the second respondent’s rules, so there too, no discretion and no negotiation came into play: if the applicant agreed to be retrenched, he was entitled to whatever amount the application of the formula in the rules produced.

[40] In other words, once the municipality had decided to retrench the applicant, Claassen had been given the task of overseeing it, the preliminary processes of labour law had been complied with and the applicant agreed to be retrenched and to the timing of the retrenchment, nothing more was required but implementation: the municipality itself wanted the retrenchment and the figures were not subject to negotiation.

[41] Section 189 of the Labour Relations Act 66 of 1995 requires consultation between an employer and employees whom the former contemplates retrenching. It prescribes the issues on which the parties should attempt to reach agreement. These include appropriate measures to avoid the retrenchment.⁷ Prior to the negotiations, however, the employer must issue a notice inviting consultation and in which it must ‘disclose in writing all relevant information, including … (b) the alternatives that the employer considered before proposing the dismissals, and the reasons for rejecting each of those alternatives’.⁸

[42] In the s 189 notice given to the applicant he was informed that he was the only employee in danger of being retrenched and the municipality stated that it has ‘given attention to, inter alia, alternatives, which alternatives has been unsuccessful to implement’. The meeting between the applicant and Claassen obviously did not identify further alternatives so nothing changed the initial decision to retrench: instead, the agreement confirmed it. The s 189 notice also proposed that the applicant’s last working day would be 30 April 2006. In respect of benefits, it proposed that severance pay would be calculated in accordance with a provision of a collective agreement, notice pay would be paid for May 2006, as it had to in terms of the law if the applicant’s last day was to be 30 April 2006, and that accrued annual leave would be paid.

[43] It is from this starting point that the events subsequent to the agreement of 26 April 2006 have to be considered. I have set out the version of both sides concerning those events. In my view, these events do not raise a genuine dispute of fact that cannot be resolved on the papers: the differences between the applicant and Sauls are largely concerned with the interpretation of the minutes of 15 May 2006 and 8 June 2006 and the conclusions to be drawn from facts such as that a tax directive was applied for and the applicant’s retrenchment package was budgeted for. In other words, in this case, it is possible to resolve factual disputes on the papers because they can be tested against the incontrovertible surrounding circumstances provided by the admitted and undisputed facts concerning the background to the agreement, the agreement itself and its purpose, the minuted council meetings of 15 May 2006 and 8 June 2006 and the documentary evidence of events thereafter. Against these facts and documents the versions of the parties can be determined to be either untenable or fanciful, or tenable and probable. To the extent that this constitutes an application of the robust approach of Soffiantini v Mould⁹ as expanded by the cases that I have cited above, it is, in my view, justified in the present instance.

[44] The assertions of the applicant, on the one hand, that the municipality agreed to retrench him, and of the municipality, on the other, that it did not are, to a large extent, both conclusions that are drawn from their respective interpretations of the documents upon which reliance is place.

[45] It is clear from the minutes of 15 May 2006 that the municipality had not altered its stance on the retrenchment of the applicant. The discussion of the ‘Special Provision Packages’ focused on the need to budget for the packages – that the Municipal Manager ‘requested that provision be made on the budget’, that as these packages were not part of the ordinary running expenses of the municipality, funds from sources other than rate-payers had to be tapped and that other spheres of government had to be lobbied for financial assistance; and that, of that the municipality was only R500 000.00 short of the estimated R2.7 million that it required. In other words, it had about R2.2 million with which to pay the packages at that stage. I must be noted that the municipality did indeed budget for the retrenchment package of the applicant, as envisaged by the meeting of the 15 May 2006.

[46] These minutes form part of the backdrop to the meeting of 8 June 2006, in which Du Preez’s case and the applicant’s case were dealt with. The municipality decided to proceed to pay Du Preez R1.7 million to settle his case but spoke to him about payments being made in instalments.

[47] Then, in relation to the applicant, he was asked ‘if he will be prepared to rather take a permanent position instead of being retrenched’. This is consistent with the background I have sketched – that the municipality wanted to retrench the applicant and that he had agreed to be retrenched. At the meeting of 8 June 2006, he was not told that the municipality had not agreed finally to retrench him, as one would have expected if it had not decided to accept the agreement of 26 April 2006, or to ratify it. Indeed, the contrary inference is warranted as, rather than him being told that he would not be retrenched, he was being asked if he wanted to change his mind from deciding that he wanted to be retrenched. The choice was his, not that of the municipality. This, in my view, is the only interpretation of what is contained in the minutes that is consistent with the facts that preceded the meeting.

[48] It is clear from the minutes that the applicant elected not to change his mind – ‘he will stick to the retrenchment option’. He was prepared to compromise by staying on for ‘a couple of months’ so that the municipality could find the money to pay to the second respondent and to him as a retrenchment package. It was resolved to accept the applicants’ point of view. The Manager: Finance and the applicant were to ‘work out how they will save the money’ to ‘make good for his retrenchment package and pension fund contribution’ and this was to be reported on.

[49] In my view, the minutes are clear: the applicant informed the municipality that he was not changing his mind about being retrenched and the municipality accepted that decision: if it had not previously resolved to retrench the applicant, it did so on 8 June 2006. The averments of Sauls to the contrary – that the municipal council never resolved to retrench the applicant – is simply at odds with what was resolved.

[50] This conclusion is strengthened by what followed. First, the municipality applied for a tax directive in which it stated that the reason for the directive was that the employee referred to it – the applicant – was to be retrenched. The assertion that the applicant himself gave instructions to apply for the tax directive appears, to me, particularly in the light of the detailed denial by him, the absence of an affidavit by Gowar who would have had direct knowledge of this, and the absence on the face of the document of any indication of the applicant’s hand in it, to be sufficiently unlikely to warrant its rejection on the papers. It is a factual allegation that is clearly untenable.

[51] Secondly, provision was made for the payment of the applicant’s retrenchment package in the budget at the time when only he faced retrenchment and Du Preez’s case had been settled. If the municipality had not agreed to retrench the applicant on 8 June 2006 at the latest, it would not have made provision for the payment of his retrenchment benefits. It will be recalled that at the meeting of 15 May 2006, it was stressed that this item had to be including in the budget.

[52] Thirdly, the applicant wrote three letters to the Municipal Manager and the municipal councillors, over the period from 8 January 2007 to 15 August 2007, in which he referred to the resolution of 8 June 2006 and endeavoured to get an answer as to when he could leave his employment. He received no reply to any of these letters. If the municipality knew that it had not agreed to retrench him, one would have expected a reply within days of the first letter being written. It was only when, on 16 October 2007, he wrote to say that he had knowledge that the municipality ‘is busy obtaining legal options to try to reverse the resolutions and agreement regarding my retrenchment’ that he was favoured with a reply. It was only then that the lack of authority was raised for the first time. He was also presented in this letter with an offer that can only be described as Kafka-esque: he was offered an unspecified position ‘on similar terms and conditions to those which you currently enjoy’ and if he chose not to accept it, the municipality would ‘be left with no alternative but to initiate a formal retrenchment process’!

[53] My conclusion from the foregoing is that the municipality did, indeed, ratify the agreement reached between Claassen and the applicant that he be retrenched, but that when it did so, on 8 June 2006, it agreed to extend the date of the applicant’s retrenchment for a reasonable period. When on 21 April 2008, the applicant gave notice that he intended leaving his employment on the last day of May 2008, he in effect gave notice that the reasonable period for the delay of his retrenchment had passed. Given the fact that the municipality chose not to respond to his letters from 8 January 2007 to 24 October 2007, the applicant’s attitude can hardly be criticised.

[54] In the result, the applicant has established that a valid and enforceable agreement had been entered into between him and the municipality in terms of which he was to be retrenched. He is entitled to the relief that he has claimed in the Notice of Motion, and I shall make an order to reflect this.

[55] Before doing so, however, it is unfortunately necessary for me to comment on the conduct of the municipality and the treatment that it meted out to the applicant.

[56] The municipality, through its officers and employees, is charged with public administration in the local sphere of government. In terms of s 6(1) of the Local Government: Municipal Systems Act 32 of 2000, a municipality’s administration ‘is governed by the democratic values and principles embodied in section 195(1) of the Constitution’. That means that, inter alia, it is required to promote and maintain a ‘high standard of professional ethics’,¹⁰ it must act accountably¹¹ and it must cultivate ‘[g]ood human resource management’.¹² The importance of these and the other values that give effect to the Constitution’s vision of accountable, responsive and open democratic governance was highlighted in President of the Republic of South Africa and others v South African Rugby Football Union and others¹³ in which the Constitutional Court spoke of the Constitution’s commitment ‘to establishing and maintaining an efficient, equitable and ethical public administration which respects fundamental rights and is accountable to the broader public’.

[57] The higher duty that is imposed on organs of state by the Constitution means that they are not free to litigate as they please.¹⁴ The Constitution has subordinated them – and this includes municipalities -- to what Cameron J, in Van Niekerk v Pretoria City Council,¹⁵ called ‘a new regimen of openness and fair dealing with the public’. In short, it is expected of organs of state that they behave honourably. Their decisions and their conduct must be ‘informed by the values of our Constitution’.¹⁶

[58] The municipality, in this case, behaved contrary to the constitutional duties imposed on it and contrary to the values of the Constitution. It treated the applicant, whom it admits was a loyal employee of long standing, appallingly. After he had agreed to delay his retrenchment because he understood that the municipality was experiencing financial difficulties, he was treated with a lack of respect and with a level of disdain that reflects very poorly indeed on an organ of state bound by the Constitution. When he began to write letters to his employer to obtain clarity, the letters were simply ignored. Not a word of explanation for this unacceptable conduct, much less an apology, is to be found in the answering papers. When, some ten months later, the municipality deigned to reply, it raised for the first time the assertion that the retrenchment of the applicant was not authorised. That was a spurious defence and must have been known to be one by anyone who was present at the meeting of 8 June 2006. In all of its dealings with the applicant that I have outlined, it acted unethically: anyone with a basic sense of fairness would have realised that whatever the legal niceties of the situation, the applicant was being treated in a grossly unjust manner.

[D] THE ORDER

[59] I turn now to the relief that the applicant is entitled to. An order is made in the following terms.

(a) The first respondent is ordered to pay R279 423.33 to the applicant within 14 days of the date of this order, together with interest on that amount at the rate of 15.5 percent per annum, from the date of service of the Notice of Motion until the date of full and final payment.

(b) The first respondent is ordered to pay R1 162 751.87, for the benefit of the applicant, to the second respondent within ten days of the date of this order, together with compound interest on that amount at the rate of 17 percent per annum, from 1 June 2008 until the date of full and final payment.

(c) The first respondent is ordered to pay the applicant’s costs of suit.

_____________________

C. PLASKET

JUDGE OF THE HIGH COURT

APPEARANCES

For the applicant: Mr I. Smuts S.C. instructed by Wheeldon, Rushmere and Cole, Grahamstown

For the first respondent: Mr R. Quinn S.C. and Mr R. Wade instructed by Mc Callums, Grahamstown and Smith, Tabata and Van Heerden, East London

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