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IN THE LABOUR COURT OF SOUTH AFRICA, DURBAN

Case No: D309/16

In the matter between:

SAMWU obo NOMASONTO LINAH MTHEMBU                                               Applicant

and

NDWEDWE MUNICIPALITY                                                                    First Respondent THEMBEKA CIBANE N.O                                                                   Second Respondent SOUTH AFRICAN LOCAL BARGAINING COUNCIL                               Third Respondent

Heard:           6 July 2021

Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email by the Registrar. The date and time for handing-down is deemed to be 10h00 on date on which the email is sent to the parties by the Registrar.

Summary:    Opposed Application. Setting aside settlement agreement

JUDGMENT

NAIDOO, AJ

Introduction

[1]                              This is an application in terms of Section 158(1)(a)(iv)   of   the Labour Relations Act 66 of 1995 (“the LRA”) to have a settlement agreement concluded under the auspices of the Third Respondent, declared void, invalid and set aside, alternatively be reviewed and set aside in terms of Section 145 of the LRA.

[2]                              The First Respondent does not oppose the setting aside of the settlement agreement but disputes this Court’s jurisdiction to grant consequential relief in the form of an order that the “The First Respondent is directed to reinstate the Applicant to the post of Communication and Special Operations Manager with effect from 30 March 2015, including payment of back pay and all applicable benefits up to the date of reinstatement, within 10 days of the granting of this Order.”[1]

[3]                              In opposing the application, the First Respondent brought a counter- application in which it seeks an order “Declaring the appointment of the Applicant as Public Participation Co-ordinator (“PPC”) to be unlawful and invalid”. The counter application is opposed.

Factual Background

[4]                              The matter has a long and unfortunate history.

[5]                              On 1 April 2009, the Applicant was promoted to the position of Public Participation Co-ordinator ("PPC") which is located within the office of the Municipal Manager.

[6]                              During November 2014, she successfully applied for the vacant position of Communication and Special Projects Manager (“CSPM”) which is also located within the office of the Municipal Manager.

[7]                              The Applicant   commenced   her   duties   in   the   post   of   CSPM   on 1 December 2014.

[8]                              On or about 30 March 2015, the Second Respondent issued the Applicant with a letter in the following terms:

“RE: POSITION OF THE MANAGER OF COMMUNICATIONS AND SPECIAL PROJECTS

The above matter refers.

Kindly be advised that there was a grievance hearing at the South African local Government Bargaining Council on the 10^th March 2015. The outcome was as follows;

·         That your appointment is null and void in that the proper recruitment policy was not followed.

·         The Ndwedwe Municipality was therefore ordered to start the recruitment process from scratch within 30 days of the settlement of the dispute for purposes of fully adhering to the recruitment process as per the Ndwedwe Local Municipality policy.

·         The process of filling the post shall be finalised within two months from the 10^th day of April 2015. Therefore shall be finalised on or about 10^th June 2015.

We therefore inform you to revert back to your old position as the Public Participation Officer, all benefits and salary thereof would be that of the Public Participation Officer.

You are further informed that the 31^st of March 2015 is your last day as a manager of communication. You are required to resume your duties as a Public Participation Officer as of the 1^st April 2015.

Kindly take notice that such post would be advertised and that you are at liberty to apply for the said post.

We hope the above is in order and we thank you in anticipation thereof.”[2]

[9]                              On 7 April 2015, the Applicant was provided with a copy of the settlement agreement entered into by the First and Fourth Respondents on 10 March 2015 and which forms the subject matter of this application.

[10]                         The settlement agreement[3] is a pro forma agreement issued by the Third Respondent with a number of standard and optional terms. The terms upon which the First and Fourth Respondents agreed to settle the dispute are recorded in the handwritten entry which reads as follows:

“3.1 Respondent acknowledges that the recruitment policy was not followed, therefore it shall be declared null and void within 30 days from today.

3.2       Respondent shall start the recruitment process afresh and shall finalize same and make an appointment in terms of the vacant position within two months from the 10^th April 2015. The appointment shall be finalized by 11 June 2015.”

[11]                         The standard terms applicable to the settlement agreement are recorded in clauses 4 and 5 as follows: 

“4.             The parties agreed that this is in full and final settlement of the said dispute and that no variation of this agreement will be legally binding unless reduced to writing.

5.              In the event of the employer failing to comply with its obligations in terms of this agreement, the employer, in terms of Section 142A(1) of the LRA, consents to this agreement being made an arbitration award.

[12]                         On 8 April 2015, the Applicant referred a dispute in terms of Section 186(2) of the LRA to the Third Respondent under case number KPD041511. Conciliation was unsuccessful as the First Respondent elected not to attend the hearing.

[13]                         On 15 May 2015, the Applicant instituted proceedings in this Court under case number D430/15, inter alia on the basis that the settlement agreement had been concluded improperly in that she was not joined as a party to the underlying dispute.

[14]                         On 22 May 2015, Gush J issued the following Order:[4]

“1.             The application is declared one of urgency dispensing with the provisions of the rules of the above Honourable Court relating to the time limits and the manner of service;

2.                   The First Respondent is ordered to place the Application in the position to which she was appointed being Communications and Special Projects Manager pending the outcome of an arbitration under case number KPD121401;

3.                   The First Respondent is ordered to pay the Applicant the commensurate remuneration for the position of Communications and Special Projects Manager together with all benefits and allowances pending the outcome of an arbitration under case number KPD121401;

4.                   The First Respondent is ordered to pay the costs of the application.”

[15]                         On 22 June 2015, the Third Respondent ostensibly scheduled an arbitration hearing jointly in respect case numbers KPD121401 and KND041511.

[16]                         The Applicant was notified by the Fourth Respondent of the hearing date in respect of the dispute under KND121401 although she had still not been joined as a party to those proceedings.

[17]                         On 22 June 2015, the Applicant arrived at the hearing late and after the Commissioner had dismissed her dispute under case number KND041511 and confirmed that the dispute under KPD121401 remain settled. This outcome of the hearing is recorded on the attendance register which reveals that the Fourth Respondent also did not attend the hearing on that date.[5]

[18]                         Believing that her dispute had been properly set down for hearing and subsequently dismissed in her absence, the Applicant made an application for a rescission of the “ruling” made on 22 June 2015. She subsequently withdrew such application pursuant to receiving legal advice.

[19]                         On 27 October 2015, the Fifth Respondent issued a Jurisdictional Ruling[6] under case number KPD121401 where the issue to be determined was ostensibly “Whether the Bargaining Council had jurisdiction to arbitrate this matter”.

[20]                        The Fifth Respondent concluded after considering “two files relevant to this matter” that “The Bargaining Council lacks jurisdiction to arbitrate this matter as it was settled on 10 March 2015”. This conclusion is premised on inter alia the following finding:

“3.1    It is apparent from the facts stated above that the current matter was settled in full on 10 March 2015. There was never a (re)view application before the Labour Court setting aside the settlement agreement. In view of that, the settlement agreement stands and the Bargaining Council lacks jurisdiction to arbitrate the matter. The Labour Court Order dated 22 May 2015 cannot be complied with in the absence of a review order setting aside the settlement agreement.”

[21]                         It is this ruling which prompted the Applicant to institute these proceedings and to seek the relief as set out in the notice of motion dated 7 March 2016. Such relief included an order that the settlement agreement concluded under case number KPD121401 be set aside as well as other relief relating to the review and setting aside of the Jurisdictional Ruling by the Fifth Respondent.

[22]                         The Applicant has supplemented her papers and has made subsequent amendments to the notice of motion culminating in the relief sought in its current form[7], namely that:-

“1.             The Settlement Agreement dated 10 March 2015 concluded between the First Respondent and the Fourth Respondent, under the auspices of the Third Respondent under case number KPD121401 is declared void, invalid and set aside;

2.                   Alternatively, that the Settlement Agreement dated 10 March 2015 concluded between the First Respondent and the Fourth Respondent, under the auspices of the Third Respondent under case number KPD121401 is reviewed and set aside;

3.                   The First Respondent is directed to reinstate the Applicant to the post of Communications and Special Operations Manager with effect from 30 March 2015, including the payment of back pay and all applicable benefits up to the date of reinstatement, within 10 days of the granting of this Order.

4.                   The First Respondent to pay the costs of the application, unless the application is opposed by other Respondent/s, wherein the Respondents are to pay the costs of the application jointly and severally liable with the one paying the other to be absolved.”

[23]                         The Applicant seeks to impugn the settlement agreement primarily on the basis that she was not joined to the proceedings under case number KND121401 and that the settlement agreement was concluded in her absence.

[24]                         The First Respondent delivered what purports to be an answering affidavit to the Applicant’s application as well as the founding affidavit in its counter application.

[25]                         The main ground of opposition is that this Court lacks jurisdiction to “adjudicate over and determine the issue of reinstatement in the absence of an application to review and set aside the dismissal ruling”. The “dismissal ruling” is a reference to the dismissal of the Applicant’s dispute under case number KPD041511 on 22 June 2015 as recorded on the attendance register for that day.

[26]                         The relief sought in the notice of motion to the counter application dated 21 September 2020 is as follows:

“1.             Declaring the appointment of NOMASONTO LINAH MTHEMBU to the position of Public Participation Co-ordinator to be invalid and unlawful.

2.              The Applicant in the main application to pay the costs hereof in the event of unsuccessful opposition.”

[27]                         The relief is premised on the contention that the Applicant had resigned from her PPC position in order to take up the CSPM position and that her resignation had never been retracted.

[28]                         In the replying affidavit to the counter application, the First Respondent contends further that the Second Respondent’s direction to the Applicant to revert to the PPC position was ultra vires her powers. It is alleged that such direction was not in accordance with the First Respondent’s recruitment policy and is therefore unlawful.

Analysis

[29]                         It is common cause that the settlement agreement concluded under case number KDP121401was not made an arbitration award in terms of Section 142A(1) of the LRA.

[30]                        

In Malebo v CCMA and Others[8], the court held the following:

“[12]   Until the agreement is made an arbitration award, it remains simply a settlement agreement. Any legal force it carries is derived from the ordinary binding power of a contractual arrangement between the parties. Even though the agreement may have come into being through the facilitation of the commissioner, his role in the conclusion of the agreement does not entail the exercise of any statutory decision making powers on his part to make an award or ruling that is binding on the parties. The document embodying the settlement simply records what the parties to the dispute have agreed. The arbitrator’s signature on it confirming that he conciliated it adds no more legal force to the document, in my view, except insofar as it affords some evidence of a third party witnessing the conclusion of an agreement.

[13]           In Shortridge v Metal & Engineering Industries Bargaining Council& Others (2007) 28 ILJ 2328 (LC), Ngulwana A.J dismissed an application to review and set aside a settlement agreement which also had not been made a CCMA award. In that case, the grounds on which the Applicant sought to set aside the settlement agreement was that the union that concluded it had no mandate to do so. The learned Judge held that a settlement agreement which has not been made a CCMA award cannot be reviewed under Section 145 of the LRA.”

[31]                         In those circumstances, it is not competent for the Applicant to seek to review and set aside the settlement agreement in terms of Section 145 of the LRA as foreshadowed in paragraph 1 of the Further Amended Notice of Motion.

[32]                         It is in any event unnecessary to do so in the light of the First Respondent’s concession that the settlement agreement falls to be declared unlawful and set aside ab initio consequent upon the failure to join the Applicant to the proceedings under case number KDP121401 which gave rise to the agreement.

[33]                         In the light of the judgment in PSA v Department of Justice and Others[9]

where the Labour Appeal Court held that a successful candidate to a promotion dispute must be joined as a party to the arbitration proceedings or should at least be afforded an opportunity to be heard, the concession is wisely made.

[34]                         The failure to join the Applicant to the promotion dispute is fatal to the proceedings which underpin the settlement agreement and as a consequence, the settlement agreement itself is void ab initio.

[35]                         The Applicant is accordingly entitled to the relief sought in paragraph 1 of the Further Amended Notice of Motion.

The consequences of setting aside the settlement agreement

[36]                         In paragraph 3 of the Further Amended Notice of Motion the Applicant seeks reinstatement to the post of CSPM, with effect from 30 March 2015, including the payment of back pay and all applicable benefits up to the date of reinstatement.

[37]                         The First Respondent contends that this Court lacks jurisdiction to grant reinstatement in the absence of an order reviewing and setting aside the ruling dismissing her dispute under case number KDP041511 in which the Applicant sought to challenge her demotion pursuant to the settlement agreement (“dismissal ruling”).

[38]                         The First Respondent’s objection is misplaced. It concedes that immediately prior to the conclusion of the settlement agreement, the Applicant occupied the position of CSPM. She was displaced from such position as a consequence of the settlement agreement.

[39]                       In those circumstances, once the settlement agreement is set aside, it follows that the status quo ante is restored.

[40]                         The dismissal ruling is accordingly not a bar to the relief sought and it is not necessary for the Applicant to review and set aside the dismissal ruling.

[41]                         A further objection is that reinstatement does not follow automatically and that it is subject to the considerations contained in Section 193 of the LRA. To this end, the First Respondent sought to argue that the position of CSPM no longer exists and that reinstatement would not be appropriate. Notably, the factual basis for these submissions is not apparent from the papers before me.

[42]                         I cannot however close my mind to the passage of time that has elapsed since the conclusion of the settlement agreement in March 2015. It is likely that circumstances could have changed since then which would need to be considered in determining the appropriate relief. I am accordingly in agreement with the First Respondent that it would not be prudent to grant an unqualified reinstatement order as sought in paragraph 3 of the Further Amended Notice of Motion, but I do so for different reasons.

[43]                         As indicated earlier, the consequences of setting aside the settlement agreement is that the status quo ante is restored. The status quo as at 9 March 2015, prior to the conclusion of the settlement agreement, is that:

43.1                         the Applicant occupied the position of CSPM;

43.2                       the Fourth Respondent’s dispute under KPD121401 was still pending and had not been determined.

[44]                         In those circumstances, any consequential relief must take into account both events listed above.

[45]                         Accordingly, an order for reinstatement must be subject to the outcome of the arbitration proceedings under case number KPD121401. This would also afford both parties an opportunity to deal with the factors listed in Section 193 to the extent that it is necessary to do so.

[46]                         Such an outcome would also resolve the jurisdictional hurdle identified in the Jurisdictional Ruling issued by the Fifth Respondent under case number KPD121401 on 27 October 2015.

The First Respondent’s counter application

[47]                        The counter application seeks an order declaring the appointment of the Applicant to the position of PPC to be invalid and unlawful[10] on two grounds, namely:

47.1                       That the Applicant had resigned from the PPC position and had not retracted her resignation;

47.2                       That the Second Respondent’s instruction to the Applicant to revert to the post of PPC pursuant to the settlement agreement was ultra vires her powers and accordingly unlawful and invalid.

[48]                         The notice of motion in the counter application did not form part of the indexed pleadings and notices in the court file and was not available at the time of the hearing. I was however assured by counsel for the First Respondent that the relief sought also included an order reviewing and setting aside the Second Respondent’s instruction to the Applicant to revert to the post of PPC with effect from 1 April 2015. On a subsequent consideration of the notice of motion when it did come to hand, it is apparent that such assurances are not consistent with the contents of the document which limits the relief to a declarator in relation to the Applicant’s position as PPC. There is no mention of the Second Respondent’s decision and/or instruction.

[49]                         The counter application is spurious. The Applicant resigned with effect from 1 December 2014 in order to take up the CSPM position. The resignation was elicited by the First Respondent’s officials ostensibly for this purpose. Such resignation was superseded by the Applicant’s employment in the position   of   CSPM   and   the   subsequent   instruction    by    the Second Respondent that she resume her duties as PPC with effect from 1 April 2015. This belated challenge to the Applicant’s position as PPC is accordingly disingenuous.

[50]                         It is in any event of no moment given that the setting aside of the settlement agreement has the effect of restoring the Applicant to the position of CSPM pending the outcome of the arbitration proceedings. There is accordingly no need to pronounce on her reversion to the PPC position.

[51]                         For this reason it is also not necessary to deal with the import of the Second Respondent’s instruction dated 30 March 2015. There is in any event no proper case made out nor any relief sought in this regard.

[52]                         The First Respondent’s counter application is accordingly dismissed.

[53]                         On a conspectus of my findings that the:

53.1                      the settlement agreement is void ab initio and falls to be set aside,

53.2                       the counter application is spurious and misconceived,

I can find no reason based on considerations of law and fairness why the First Respondent should not be liable for the costs of both applications.

[54]                         I make the following Order:

54.1                       The Settlement Agreement dated 10 March 2015 concluded between the First Respondent and the Fourth Respondent, under the auspices of the Third Respondent under case number KPD121401 is declared void and invalid and is hereby set aside.

54.2                       The First Respondent is ordered to restore the status quo ante

as at 30 March 2015 by placing the Applicant in the position to which she was appointed, being Communications and Special Projects Manager, pending the outcome of an arbitration under case number KPD121401, including the payment of back pay and all applicable benefits lawfully due to her within ten days of the granting of this Order.

54.3                       The First Respondent’s counter application is dismissed.

54.4                       The First Respondent is ordered to pay the costs of both applications.

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L R Naidoo

Acting Judge of the Labour Court of South Africa

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