HELD AT MBABANE CASE NO. 679/09
In the matter between:-
PATRICK MAGONGO NGWENYA Applicant
And
SWAZI BANK RESPONDENT
Neutral citation: Patrick Magongo Ngwenya V Swazi Bank (679/09)
[2014] SZIC 14 (2014)
CORAM: D. MAZIBUKO
(Sitting with A. Nkambule & M.T.E. Mtetwa)
(Members of the Court)
Heard: 17 th October 2013
Delivered: 31 st March 2014
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Summary Labour law; Employee dismissed from employment following a disciplinary hearing in which he had been found guilty of an offence. Employee unsuccessful on appeal. Employee negotiates an out of court settlement with employer. Matter settled by written agreement in full and final. Days later, employee seeks to renege from the agreement in order to increase his claim, by introducing oral discussions which took place prior to the written agreement.
Held: matter settled in full and no further claims will be entertained thereafter.
Held further: settlement agreement is a compromise, the rights and demands of the parties are now governed by the compromise.
Held further: the Applicant’s claim is contrary to parol-evidence rule and is accordingly dismissed.
JUDGEMENT
1.
The Respondent is Swaziland Development and Savings Bank, a body corporate established in terms of King’s Order In Council No 49/1973, and operates a bank with several branches in the Kingdom of
Swaziland, trading as Swazi Bank.
2.
The Applicant is Patrick Ngwenya, a former employee of the
Respondent. The Applicant was employed on the 1 st November 1989 as an Administration Clerk. In March 2008 the Applicant was promoted to Auto Teller Machine Supervisor.
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As Supervisor the Applicant’s duty included supervising the custodians of the Auto Teller Machines, attending to customer and staff problems.
3.
About the 21 st May 2008 the Applicant accompanied a colleague named Charles Dlamini (at the latter’s request) to fetch money - in cash, from the Respondent’s commercial branch. The money was meant to stock up certain of the Respondent’s auto teller machines. A sum of E200, 000.00(Two Hundred Thousand Emalangeni) was released by the Respondent for the said purpose.
4.
According to the Applicant, the said sum of money was taken to the
Mbabane branch and the said Mr Dlamini retained custody thereof.
Upon arrival at the Mbabane branch, Mr Dlamini further confirmed the value of the money collected i.e. E200, 000.00 (Two Hundred
Thousand Emalangeni). This confirmation was made in the presence of the Applicant and another colleague named Zama Shongwe. The
Applicant together with the said Ms Shongwe proceeded to load the money into the auto teller machines. Shortly thereafter, the Applicant left the workplace to attend a trade union meeting in another town
(Pigg’s Peak), which meeting lasted ten (10) days.
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5.
About the 31 st May 2008, whilst attending the aforementioned meeting, the Applicant was summoned by a senior colleague to report urgently at work. The said senior colleague, namely Dudu Shongwe, informed the Applicant that the Respondent had discovered a discrepancy in the money which was held in the auto teller machines. The Respondent then instituted an investigation concerning the money that had gone missing. The Applicant together with Mr Dlamini and Ms Shongwe were questioned about that matter.
6.
At the completion of the investigation the Respondent preferred disciplinary charges against the Applicant, Mr Dlamini and Ms
Shongwe - based on the shortage of money in the auto teller machines.
The Applicant was called to a disciplinary hearing which began on the
22 nd October 2008 and was concluded on the 7 th January 2009.
7.
The Applicant faced three disciplinary charges namely:
7.1 Dishonesty, alternatively fraud.
7.2 Gross violation of procedures.
7.3 Gross neglect of duty.
The Applicant was found guilty on the first two(2) charges and acquitted on the third . The Applicant was summarily dismissed from work on the 20 th January 2009.
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8.
The Applicant appealed the decision of the chairperson at the disciplinary hearing. On the 20 th February 2009 the appeal decision was issued.
8.1 The conviction on both charges was confirmed.
8.2 The sentence of summary dismissal in respect of the first charge was also confirmed.
8.3 The sentence of dismissal in respect of the second charge was altered to final written warning.
9. The Applicant was dissatisfied with the outcome of the appeal. He made known to the Respondent his intention to challenge his dismissal at the Conciliation, Mediation and Arbitration Commission (hereinafter referred to as CMAC), failing which he would report a dispute in
Court. CMAC is established in terms of section 62(1) as read with
64(1) of the Industrial Relations Act No.1/2000 (as amended),
(hereinafter referred to as the Act). In order to avoid litigation, the
Respondent agreed to negotiate a settlement of the Applicant’s grievance - amicably. The negotiation culminated in an agreement which was written and then signed by the parties. The agreement is dated 25 th June 2009. A copy of that agreement is attached to the
Applicant’s particulars of claim marked annexure PN11. This agreement will be analysed later in this judgment.
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10.
About the 1 st July 2009 the Applicant wrote to the Respondent a letter in which he raised a concern that the agreement which the parties had concluded on 25 th June 2009 (annexure PN11) was null and void. By writing this letter the Applicant purported to cancel the agreement. A copy of this letter is attached to the Applicant’s affidavit and is marked annexure PN12, and it is dealt with later in this judgment.
11.
The Respondent did not agree to the proposed cancellation of the agreement (annexure PN11). Thereupon, the Applicant reported a dispute with CMAC( in accordance with the provisions of the Act), for resolution. An attempt to resolve the dispute failed, thereupon CMAC issued a certificate of unresolved dispute dated 15 th September 2009, under reference SWMB 357/2009. A copy of the certificate is attached to the Applicant’s particulars of claim marked annexure PN10.
12.
About the 8 th December 2009 the Applicant filed his claim in the present Court for relief based on an alleged unfair dismissal. The
Respondent opposed the application by filing its reply on the 19 th
January 2010. Pleadings were closed and the matter was ready for trial. A pre-trial conference took place on the 28 th April 2010.
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13.
Meanwhile the Applicant had another labour dispute with the
Respondent. In a separate incident the Applicant had been charged with the offence of insubordination. The Applicant was summoned to a disciplinary hearing. He was found guilty as charged. He was sentenced to a final written warning. The dates of these events do not appear in the pleadings. The Applicant was dissatisfied with that sanction. On the 10 th August 2008 the Applicant reported a dispute to
CMAC under reference SWMB 308/08. With the consent of the parties, the dispute was taken to arbitration under the auspices of
CMAC. The Commissioner who sat as arbitrator issued an award dated 23 rd June 2009 in which he substituted the sentence of; final written warning, with that of; verbal warning. Meanwhile the other dispute between the parties which the Applicant had filed before the
Industrial Court was duly allocated a trial date. The Applicant proceeded to set the matter down for trial.
14.
The trial was about to commence on the 13 th April 2012, when the
Respondent filed a point in limine
. The Respondent’s point can be paraphrased as follows:
14.1
The parties concluded a settlement agreement on the 25 th June
2009 namely, annexure PN11.
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14.2
That agreement took into consideration both or all of the claims which the Applicant had against the Respondent namely:
14.2.1
The unfair dismissal claim under reference SWMB 357/2009.
14.2.2
The matter which had been subject of arbitration under the auspices of the
CMAC under reference SWMB 308/08.
14.3
The payment that was agreed upon was in full and final settlement of all claims aforementioned.
14.4
Since the matter was settled, the Applicant is not entitled to raise the same matter before Court for adjudication,
(namely the unfair dismissal claim).
14.5
Respondents have prayed for a dismissal of the
Applicant’s claim with costs.
15.
The Court considers the legal effect of the agreement (annexure
PN11), to be central to the determination of the application before
Court. It is therefore apposite that the agreement be reproduced, and it reads as follows:
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“
MEMORANDUM OF AGREEMENT
Made and Entered into by and between:
SWAZILAND DEVELOPMENT AND SAVINGS BANK
T/A SWAZI BANK
“The Employer”
And
PATRICK NGWENYA
“The Former Employee”
It is recorded that: -
Whereas the Employer had employed the Former Employee as an ATM
Supervisor with effect from 1 st day of November 1989, and
Whereas the services of the Former Employee were terminated following a disciplinary hearing which found him guilty and
Whereas the Former Employee indicated his intention to challenge the dismissal through reporting a dispute with the Conciliation, Mediation and
Arbitration Commission (CMAC) and thereafter taking it to the Industrial
Court; and
Whereas the parties have since agreed to amicably settle their dispute.
It is agreed that: -
1.
The dispute hitherto existing between the parties be settled amicably between themselves on the grounds set out hereinbelow.
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2.
In furtherance of the said settlement, the employer undertakes to pay its former employee, Mr. Patrick Ngwenya a sum of E85,734.00 being a 9 months salary equivalent, in full and final settlement of all and any issues between the two parties arising from the employment of the said former employee by the employer.
3.
Without derogating from the generality of the foregoing, it is recorded that: -
3.1 The former employee shall not challenge his dismissal by employer which it is emphasized, is valid and appropriate for all intents and purposes;
3.2. The two matters, or any other such matter currently pending before any Court or CMAC either reported by the Former Employee or he being a party to anyone of them, shall be taken to have been settled simultaneously with this matter in so far as it concerns the former employee herein who shall no longer pursue them in whatever manner;
3.3. The former employee shall not institute any proceedings against the employer for whatever reason and in whatever form or forum for any issue arising from the
Employment relationship of the two.
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4. The settlement amount aforesaid shall be paid to the employee with fourteen(14) working days from the date of signature hereto, provided that if the Tax Directive referred to herein below shall not have been obtained by then, the said payment could be for a longer period as necessary in the circumstances.
5. The aforesaid amount shall be paid to the former employee less the amount of tax as set out in the tax directive to be sought by the employer from the Commissioner of Taxes.
6. Payment of the above stated sum shall constitute a full and final settlement of all and any claim the former employee has or may have against the employer arising from the employment of the Former Employee by the employer.
7. It is specifically agreed that the employer shall deduct from the sum due to the former employee, all monies owed [to] it by the said former employee arising from whatever cause, before paying out the said former employee.
8. The parties agree that the terms of this agreement shall remain confidential between the parties and their attorneys and none of them shall divulge the said terms to any third party.
9. This agreement constitutes the entire agreement between the parties.
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No amendment of any term thereof shall be of any force and effect unless reduced to writing and signed by both parties.
10. The parties agree that the amount payable to the employee in terms of this agreement shall be paid directly to the employee.
THUS MADE AND SIGNED BY THE FORMER EMPLOYEE AT
MBABANE ON THIS_________DAY OF JUNE 2009
AS WITNESSES
1.
[ Signed]
2.
[ Signed]
[ Signed]
FORMER EMPLOYEE
THUS MADE AND DONE BY THE EMPLOYER AT MBABANE
ON THIS 25 TH DAY OF JUNE 2009
AS WITNESSESS
1.
[Signed]
2.
[Signed] [Signed]
EMPLOYER”
( Record pages 92-95)
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16.
About the 1 st July 2009 the Applicant wrote the Respondent a letter in which the Applicant purported to withdraw or nullify the agreement
(annexure PN11). The letter is marked annexure PN12, and it reads thus;
“c/o Mr Patrick Ngwenya
P.O.Box A101
Swazi Plaza
1 July 2009
The Managing Director
Swaziland Development & Savings Bank
P.O.Box 336
MBABANE
Dear Sir
WITHDRAWAL/NULLIFICATION OF AGREEMENT ON TERMINATION
OF SERVICES OF PATRICK M. NGWENYA AND SWAZI BANK
(i) I refer to the above matter, which you will recall that our discussions were based on the fact that the other terminal benefits per the note I gave you were a given and the only thing that remained for negotiation was the 24 months wages.
(ii) With offer of 9 months’ wages in addition to all the other payments referred to above, the offer was acceptable to me as a full and final settlement.
(iii) Your officer who put the agreement for me to sign, can attest to the fact that after signature I then asked about the other monies at (i)
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above and only than did that this agreement being full and final and
[sic] did not include these monies.
(iv) I trust such payments will be made with the understanding we had.
I await your response.
Yours faithfully
Signed
PATRICK M. NGWENYA”
( Record page 96)
17.
The Respondent’s argument on the point in limine is that the Applicant has no locus standi to institute a claim in Court arising from an alleged unfair dismissal since that claim was by agreement, settled in full and final - of all the Applicant`s claims against the Respondent.
The Respondent’s defence was that the Applicant’s claim was compromised, and therefore the relationship between the parties is since then - governed by that compromise.
18.
Authorities have defined a compromise as follows;
18.1
“Compromise, transactio
, is a form of novation.
It is an agreement between parties to an obligation, the terms of which are in dispute,
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or between the parties to a lawsuit, the issue of which is uncertain, settling the matter in dispute, each party receding from his previous position and conceding something; either diminishing his claim, or increasing his liability. ...
A compromise may be effected by the parties themselves, or by their agents or attorneys; or it may be made judicially, by entry in the records of the Court. It may be made before or after the close of pleadings ( litis contestatio
) in a law suit, and its effect is the same as res judicata ”.
GIBSON JR: WILLE’S PRINCIPLES OF SOUTH
AFRICAN LAW, 6 th edition (Juta & Co.) 1970
ISBN (not available) at pages 366-367
18.2
“Compromise is, in the wide sense, an agreement between persons for the settlement of a matter in dispute (whether or not arising from a previous contract), each party abating some of his previous demands.
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If parties to a contract dispute each other’s rights in terms of the contract and subsequently compromise, their rights are then regulated by the compromise and not by the original contract, which falls away (Cachalia vs Harberer & Co.
1905 TS 457). In such a case, as the parties enter into a new contract which replaces the old one, it is clear that compromise is a form of novation …”
GIBSON JTR: SOUTH AFRICAN MERCANTILE
AND COMPANY LAW, 7 th edition, (Juta & Co) 1997,
ISBN 0 7021 4058 9 at page 113.
13.3. “Compromise, a mutual arrangement made between two or more persons for the settlement, by means of concessions, of the differences or disputes existing between them.”
BELL WHS: SOUTH AFRICAN LEGAL DICTIONARY,
2 nd edition (Juta & Co.), 1925 ISBN (not available)
at page 117.
19.
Based on the definitions aforementioned, the essential elements in a compromise can be summarized as follows:
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19.1
A compromise is an agreement that is concluded by parties who have an existing dispute or lawsuit.
19.2
The purpose of a compromise is to settle the dispute or lawsuit.
19.3
When settling their dispute the parties will abate some of their demands.
19.4
Once the parties have concluded the compromise, their relationship is governed by the new agreement viz. the compromise itself, and the original contract falls away. A compromise therefore, has the same effect as a plea of res judicata in respect to the parties’ previous claims, demands or lawsuit.
20.
At the time the parties signed the agreement (annexure PN11) there was an existing dispute between them. The Applicant had been dismissed from work following a disciplinary hearing. The Applicant had been found guilty on two (2) charges (aforementioned). The
Applicant appealed the conviction and the dismissal, but was unsuccessful. On the other hand the Respondent claimed that the
Applicant had been properly convicted and dismissed.
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In another incident the Applicant had been found guilty of insubordination and sentenced to a final written warning.
This is the dispute that was referred to arbitration. The Applicant was successful at arbitration. The final written warning was substituted with an oral warning. These were the issues between the parties which amounted to a dispute, and which was a subject matter of the compromise (annexure PN11).
21.
Thereafter the parties agreed to resolve their dispute by negotiation and settlement rather than have it decided by Court. Each of the parties agreed to forgo its claim or demand in order to settle the dispute. The agreement, annexure PN11, was concluded under those circumstances.
22.
The parties agreed in writing, that their agreement (annexure PN11) was the full and final settlement of their dispute and further that upon signing the agreement the parties cannot enter into discussion, negotiation or litigation concerning the subject matter of the agreement. This is what is meant by these phrases which have been extracted from the agreement:
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6.
“ Payment of the above stated sum shall constitute a full and final settlement of all and any claim the former employee has or may have against the employer arising from the employment of the former employee by the employer.
9. This agreement constitutes the entire agreement between the parties”
(Record page 94)
23.
The Court declares that; the agreement which the parties concluded on the 25 th December 2009 (annexure PN11), is a compromise, as defined by the authorities aforementioned. As stated by the authorities, the Court confirms that a compromise has the same effect as a plea of res judicata . That means upon signing the compromise, the parties can no longer revive and rely on the claims and rights which they enjoyed prior to signing; the matter is non governed by the compromise. In this case; the compromise was lawfully executed and it is binding on the parties.
24.
The Applicant argued that he subsequently cancelled the compromise by letter annexure (PN12).
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The Applicant added that upon cancellation of the agreement (the compromise) he was thereupon entitled to pursue his claim against the
Respondent for relief arising from an unfair dismissal. The question the Court is faced with is; whether there is a valid cancellation of the agreement (compromise) or not.
25.
The Applicant repeated his contention in his particulars of claim that he considered the compromise cancelled, alternatively void ab initio and therefore not binding between the parties. For the sake of completeness the Court considers it proper to reproduce the relevant portion in the particulars of claim.
“13.2 The applicant, however, cancelled the agreement because it did not comply with the statutory provisions, in that it sought to exclude payment of statutory benefits hence is an agreement entered into contrary to law.
13.2.1 The cancellation was done through a letter written and delivered to the respondent, a copy of which is attached hereto marked ‘PN12’.
13.2.2. The applicant will argue that he signed the settlement agreement on the understanding that,
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the settlement amount will include the lawful statutory benefits, which the respondent has refused to pay.
13.3. The applicant is advised and verily believes accept
[sic] that , the agreement is unlawful and therefore null and void in that it offends statutory provisions”
(Record page 11)
26.
The Court has noted that the Applicant is not challenging the manner the compromise was executed. The Applicant does not deny his signature on the compromise (annexure PN11). Furthermore, the
Applicant does not deny that he read and understood the contents of the compromise before signing.
27.
The Applicant has given two (2) reasons in his letter (annexure PN12) for his purported cancellation of the compromise. Firstly, the Applicant contended that the agreement (compromise) did not comply with statutory provisions. In the alternative, the Applicant claimed that the agreement did not provide for payment of terminal benefits. The Court has difficulty in following the Applicant’s argument for these reasons :
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27.1
The Applicant has failed to state which statutory provisions have been breached by the compromise, and how exactly were the said provisions breached.
27.2
Furthermore, the Applicant has failed to state which terminal benefits he alleges he was entitled to and same have been omitted in the compromise.
27.3
In addition, there is no indication as to the monetary value of the alleged payment of terminal benefits which the Applicant claims was omitted in the compromise.
28.
In the course of the negotiation and before signing the draft compromise, the Applicant had an expectation that he would be paid certain terminal benefits. With that expectation, the Applicant proceeded to negotiate with the Respondent for payment of a sum of money which is reflected on the compromise. The negotiation was successful and an agreement was concluded. In paragraph (ii) of his letter( annexure PN12), the Applicant stated as follows;
“(ii) With the offer of 9 months’s wages in addition to all the other payments referred to above, the offer was acceptable to me as a full and final settlement.”
(Underlining added)
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(Record paged 96)
29.
When the time arrived to sign the draft compromise, the Applicant read and understood the contents thereof, particularly that the only payment offered was E85,734.00 (Eighty five Thousand Seven Hundred and
Thirty four Emalangeni) which sum was equivalent to 9(nine) month’s salary. The draft compromise further contained other terms that are relevant to this enquiry, including the following:
29.1
That the sum of E85, 734.00 was in full and final settlement of all and any issues between the parties arising from the employment contract.
29.2
That upon acceptance of the sum of E85,734.00 the
Applicant will no longer challenge the fairness of his dismissal by the Respondent, and that such dismissal remains valid and appropriate.
29.3
On appending his signature on the draft document, an agreement (compromise) will come into existence. The terms of the compromise will constitute the entire agreement between the parties, and that no amendment shall be valid save where it is written and signed by the parties.
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30.
The Applicant was therefore made aware, before the draft compromise was signed, that there is no other payment being offered other than the sum of E85 ,734.00. The Applicant had no legal basis to assume (as he did in his letter) that there was another payment due to him other than that stated in the compromise of E85, 734.00. In the circumstances, the Applicant’s claim to any further payment and his purported cancellation of the compromise has no legal basis.
31.
The Applicant has stated in clear terms in his letter (annexure PN12), that he has based his purported cancellation of the compromise on a discussion which he held with the Respondent’s managing director prior to signing the draft compromise. The Applicant has not disclosed the date or the terms of the alleged discussion. When they signed the draft compromise, the parties agreed over their signature, that the compromise contains the entire agreement between them.
The discussion which the Applicant is referring to, has no effect on the validity of the compromise. The Applicant does not explain the reason he went ahead to sign a compromise whose terms he did not agree with. If there was a payment of money which the Appellant believed he was entitled to (either by contract or by operation of law), and which sum was not reflected in the draft compromise, the
Applicant was entitled to refuse to sign that document, and that
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refusal would have been both logical and reasonable in the circumstances. The Applicant was fully aware of the effect of his signature on the draft compromise.
32.
The legal position regarding signing a contract is that:
32.1
“The effect of appending a signature is, in general, that the party in question is bound:
‘It is a sound principle of law that a man, when he signs a contract, is taken to be bound by the ordinary meaning and effect of the words which appear over his signature.’
The rule is applied not only when the person signing studies the document but also when he appends his signature carelessly or recklessly and when he fails to avail himself of an opportunity to study provisions incorporated by reference. In such circumstances the person signing can be considered as taking the risk.”
KERR AJ: THE PRINCIPLES OF THE LAW OF
CONTRACT, 6 th edition 2002, (Butterworths),
ISBN 0409 03753 2 at pages 102-103.
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32.2.
“It is a matter of common knowledge that a person who signs a contractual document thereby signifies his assent to the contents of the document, and if these subsequently turn out not to be to his liking he has no one to blame but himself. The general principle is, in our law, usually traced back to Burger v Central SAR 1903 TS 571 .”
CHRISTIE RH: THE LAW OF CONTRACT 4 th edition
2001, (Butterworths) ISBN O 409 01836 8 at page 199.
32.3
“If a person signs a written agreement as being a party to it, a presumption arises that he is acquainted with its contents. The agreement is binding on him ...”
GIBSON JTR: WILLE’S PRINCIPLES OF
SOUTH AFRICAN LAW, 6 th edition, 1970
(Juta & Co). ISBN (not available) at page 315.
32.4
. “According to this rule [caveat subscriptor], a person who signs a document, thereby indicates that he or she assents to the contents of that document. From the caveat subscriptor rule comes the presumption that the signatory to a document is familiar with the contents of that document .”
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CORNELIUS SJ: PRINCIPLES OF THE
INTERPRETATION OF CONTRACTS IN SOUTH
AFRICA 2002 (Butterworths) ISBN 0 409 00343 3 at page 106.
33. There is abundance of authority as quoted above which supports the finding that the Applicant is bound by the contract (compromise) which he signed with the Respondent. The letter (annexure PN12) which the Applicant subsequently wrote the Respondent does not amount to a cancellation of the compromise. The letter contains no grounds for termination of the compromise. The contents of the letter appear to be an afterthought. It appears that the Applicant changed his mind on the 1 st July 2009 and sought to renege on a contract which he signed on the 25 th June 2009. However, the
Applicant’s subsequent change of mind cannot cancel a lawfully executed compromise.
34.
The Applicant can no longer institute a claim against the Respondent arising from an alleged unfair dismissal, since that claim was novated by the compromise. The Respondent`s point in limine is upheld and consequently the Applicant’s claim is dismissed.
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35. It is further noted that the Applicant’s letter (annexure PN 12) conflicts against the parol-evidence rule. The rule provides as follows;
“The parol-evidence rule prohibits evidence to add to, detract from, vary, contradict or qualify the terms of a contract once that contract has been reduced to writing.”
CORNELIUS SJ: ibid page 99.
36 The Applicant’s thinking is that by letter dated 1 st July 2009, he could vary the terms of a written contract (the compromise) by introducing a new claim which is not contained in the contract. The Applicant’s attempt to vary the compromise fails also on the ground that it conflicts against the parol-evidence rule.
37. The Respondent filed its point in limine very late in the proceedings.
The late filing caused the trial to be postponed and that incident delayed the finalisation of this matter. The Respondent’s conduct displayed a lack of diligence in prosecuting its defence. For that reason, the Respondent will be denied costs for successfully defending the matter.
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38. Wherefore the Court makes the following order;
38.1 The Respondent’s point in limine is upheld.
38.2 The application is dismissed.
38.3 Each party is to pay its costs.
The members agreed.
_______________________
D. MAZIBUKO.
INDUSTRIAL COURT JUDGE
Applicant’s Attorney: Mr. T. Maseko
T.R.Maseko
Attorneys
Respondent Attorney: Mr N. Mthethwa
Magagula Hlophe
Attorneys
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