IN
THE INDUSTRIAL COURT OF APPEAL OF SWAZILAND
BAGSHAW
HARRIS & ASSOCIATES (PTY) LTD
Appellant
Vs
THOMAS
LAWLAR ANDREWS
Respondent
Appeal
Case No. 24/2001
Coram Sapire,
JP
Matsebula,
JA
Maphalala,
JA
For
Appellant M.SIBANDE
For
Respondent P.R. DUNSEITH
JUDGMENT
29-10-2003
The
appellant conducts the business variously known as claims adjuster or
insurance assessor. It is a private company in which at the relevant
times Mr. Brian Bagshaw was the majority shareholder and his wife a
minority shareholder. It appears that it was Mr. Bagshaw who because
of his experience and qualifications on behalf of the company
performed the professional services, which required his expertise,
while his wife was largely responsible for administration.
A
time came when Mr. Bagshaw foresaw to ease himself out of the
business and to this end sought a younger person to introduce to the
business who, as an employee would initially take over and perform
part of his duties. At a later stage this person if he proved
suitable would acquire equity in the company, and eventually succeed
to the entire business.
2
The
appellant advertised for such a person. Respondent, who was resident
in Ireland, saw the advertisement, responded thereto, and consequent
upon which discussions took place and correspondence passed between
the parties. This culminated in the respondent coming to Swaziland to
join the appellant as an employee, with a view to eventually
receiving equity in the company, and thereafter taking over the
business for him.
Before
respondent left his home for Swaziland, he was offered a written
contract that dealt with his terms of employment but did not mention
the respondent's entitlement to shares in the company. Some of the
benefits that he had been offered and indeed received were also not
provided for in the contract. The parties signed the employment
agreement in this form without amendment.
The
respondent commenced employment with the applicant on and continued
in employment until he left. Differences between Mr. Bagshaw and the
respondent caused the severance. The respondent then commenced
proceedings in terms of the Labour Legislation and the application in
the court a quo was initiated on a certificate of non-resolution of a
dispute.
The
respondent's case was that the conduct of the employer towards him
was such that he could not reasonably be expected to continue in such
employment. Accordingly in terms of Section 37 of the Employment Act1
which reads.
Termination
of services due to employer's conduct.
37.
When the conduct of an employer towards an employee is proved by that
employee to have been such that the employee can no longer reasonably
be expected to continue in his employment and accordingly leaves his
employment, whether with or without notice, then the services of the
employee shall be deemed to have been unfairly terminated by his
employer.
Because
he left for this reason he was to be deemed to have been unfairly
dismissed.
1
Act 5 of 1980
3
The
respondent complained that.
a) In
breach of the contract between the parties Mr. Bagshaw had refused to
transfer to him shares representing 20% of the capital of the
company.
b) The
appellant had, to the respondent's detriment miscalculated the
respondent's entitlement to a bonus provided for in the agreement.
c) Mr.
Bagshaw had made a scarring attack on the respondent's work
performance, character and integrity.
The
court a quo found on the facts that the appellant was in breach of
its contract with respondent in one or more or all of these respects
and on this basis held that the appellant was to be deemed to have
dismissed the respondent unfairly. The correctness of this finding is
a cardinal point of issue in this appeal. I will consider the
complaints both seriatim and conjunctively.
The
court a quo found that three documents read together contain the
terms upon which the respondent took up his employment with the
appellant. The documents are the formal employment agreement read
with two letters that preceded it. While the appellant contended that
only the formal employment agreement was relevant. I am satisfied
that the court a quo properly treated all three documents as
contractual. In these documents the court found a positive consensus
binding on the parties that the respondent would after two years
service be as of right entitled to have 20% of the issued shares in
the company transferred to him. Is this, as a question of law
supportable on a proper construction of the documents?
Portion
of the letter containing the offer reads.
"I
would suggest that initially we enter into a two year
employer/employee type contract, with the option of a minority
partnership thereafter, on a 20/30/50% basis as between you, my wife,
and myself, if we both feel that our association should continue,
with the further guarantee that on the occasion of my retirement you
will take over the practice, subject to minor provision for my wife.
4
My
wife and I would retain 60% shareholding in the business for life,
thereafter you would take over the company completely."
Respondent's
acceptance of this suggestion did not give rise to a contract binding
on the parties. The words "with the option of a minority
partnership thereafter, on a 20/30/50% basis as between you, my wife,
and myself, if we both feel that our association should continue."
are
contrary to any intention on the part of the offeror to be bound .
What is in contemplation is that if after two years of trial the
parties wished to continue their association, 20% of the shares would
be conferred on the Respondent. An undertaking or promise, such as
this which remains in the discretion of the parties or either of
them, cannot be binding.
The
very structure of the arrangement indicates that the initial two-year
employment contract was to be a probationary period, and that the
shares would be transferred only if the parties were then agreed that
the respondent would be admitted as a shareholder. Clearly the
parties were at that stage, that is, at the end of the two years, not
in agreement that they suited each other. Bagshaw's letter that gave
rise to complaint "c" is clear indication of his negative
assessment of the situation. This being so he was not obliged at that
stage to admit the respondent as a shareholder and his failure to do
so does not constitute a breach of contract.
It
must also be born in mind that any contract for the transfer of
shares to the respondent whether for consideration or not, involved
the shareholders, Bagshaw and his wife, and did not create any
obligation on the part of the appellant. Even though Bagshaw
controlled and was the alter ego of the company, the difference and
separation between the company and its shareholders cannot be
completely overlooked. Any breach of contract that there may have
been would have given the respondent rights against the Bagshaws
personally, but not against the appellant. It follows that any such
breach would not have been conduct on the part of the appellant as
employer that made continued employment impossible.
5
The
court correctly found that complaint "b" justified and that
the appellant had indeed miscalculated the bonus to the disadvantage
of respondent. The court also found that if anything this was a
genuine mistake based on a misreading or misinterpretation of the
contract. This mistake is capable of monetary adjustment and cannot
be construed as repudiation of the contract or in itself, or as
conduct on the part of the employer, leaving the respondent with no
other course but to sever his relationship so as to constitute an
unfair dismissal.
Complaint
"c" came as an afterthought. The strictures and criticism
of respondent and what were said to be his shortcomings may have been
harshly expressed. On the other hand Bagshaw's letter, is on the
whole conciliatory. This complaint even if the strictures were not
fully justified does not constitute in itself, or taken in
conjunction with the other complaints, constitute conduct
contemplated in Section 37.
For
these reasons the court a quo misdirected itself in regard to the
application of Section 37 and its judgment in this respect is to be
reversed. This does not affect the judgment or order of the court a
quo as far as order 4 and 5 is concerned. To this extent the appeal
succeeds and orders 1, 2 and 3 are set aside.
SAPIRE,
JP
I
agree
MATSEBULA,
JA
I
agree
MAPHALALA,
JA
