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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG  DIVISION, PRETORIA

DATE: 15/3/2017

CASE NO: 13216/16

REPOTABLE: NO

OF INTEREST TO OTHER JUDGES: NO

In the matter between:

SENTLETSE DIAKANYO                                                                                 APPLICANT.

and

NEDBANK LIMITED                                                                                    RESPONDENT.

JUDGMENT

Coram: RE Monama,  J.

Introduction.

[1] During 18 December 2001, the  parties  created  an  employment relationship. The applicant was appointed as an Executive Head of Risk, Compliance and the South African Reserve Bank Liaison in the Group Finance Clusters

[2] The position of the applicant entitled him  to  receive  certain  the  incentives. The incentive were in the form of the share and options . They were allocated  in terms of their  the share  schemes.

[3] During 2008 he was granted Option Shares and Restricted Shares. This grant was made under the scheme known as the Nedbank Eyethu Black Executive Trust ("the Trust Deed".) In or during 2011 and  2012  was granted further incentive shares under the Nedbank Group (2005) Share Option Matched Share and Restricted Share  Scheme  ("the  2005  Scheme").

[4] The Eyethu Trust Deed and the 2005 Schemes are governed by their respective rules. These rules govern various aspects  of  the  relationship such as vesting of the allocations and the consequences of the dismissals prior  to  the   vesting.   The   applicant's   entitlement      in   respect   of  the Restricted Shares were scheduled to vest during 8 and 9 March 2014 and 8 and 9 March 2015. At the time of the dismissal the relevant Restricted Shares had not vested as yet. These are the shares that form the subject matter of this application. The allocation vested in tranches and the applicant claims the 2014 and 2015 tranches.

The material  background

[5] During 25 February 2014 the applicant was dismissed from  his  employment. The dismissal followed a disciplinary hearing process. The dismissal dispute was referred to the Commission  for  Conciliation Mediation and Arbitration ("the CCMA")  in  terms  of  the  provisions  of the Labour Relation Act. The applicant alleged that the  dismissal  was unfair.

[6] The Commissioner at the CCMA  found  in his  favour.  It was found  that the dismissal was substantially unfair.  The  Commissioner  found  that  in the circumstances of this case, there was a break-down of the trust relationship between  the parties.  Accordingly,  it was held  that  it would  be  inappropriate  to  order  the  respondent  to  reinstate  the  applicant.  The Commissioner ordered the respondent to pay  a  monetary  compensation. The applicant  received  the compensation  in terms of the ruling.

[7] On 19 February 2016 the applicant launched these proceedings. He  seeks  an order in the following  terms:

"that the respondent is ordered to reinstate the invested shares to the applicant."

There notice of motion contains an is an ancillary prayer for cost in the  event  of non-opposition by  respondent.

The grounds for  the reinstatement

[8] The applicant relies on the outcome of the order of the Commissioner of at Commission for Conciliation Mediation and Arbitration that the dismissal was substantially unfair.

The issue.

[9] The issue for the determination as I understand it, is whether the verdict of  the CCMA renders   dismissal  of the applicant   or certain  consequences   a nullity. In other words whether the dismissal should be interpreted to mean that notwithstanding the acceptance of the compensation the applicant is nonetheless still entitled to certain incentives which admittedly had not vested at the time of his termination of employment. In short the issue is whether the termination was by non fault or by fault termination. The Trust Deed Agreement contains a provision that:

" - Options may be exercised by the beneficiary at anytime during the exercise period."

Consequently, the exercise period can only follow the vesting.

The provisions in terms of the agreements.

[10] As stated above, there are two sets of rules which govern the subject matter at hand. The 2005 Scheme is governed by the rules attached as annexure to the applicaton. The 2008 Eyethu Trust arrangements are governed by and subjected to the rules attached to the record. The dismissal procedure is in annexure CR2 to the application [1] . Paragraph 26 thereof provides:

"-TERMINATION  OF EMPLYMENT

If a Participant is granted a Restricted Award, and before the Vesting Date, the Participant is no longer employed by any member of the Group by reason of a:

1     No Fault  Termination:  Death ...

2          No Fault Termination Other, then the Vesting Date in respect of his/her Restricted Award shall be unaffected and remain the first day following the third anniversary of the Restricted Award Date:

26.3 Fault Termination, then the Participant shall forfeit all rights to such Restricted Shares to the trust."

[11] The Trust Deed allocations are governed by the rules contained in the Deed of Trust attached to the record. It provides for Options Share in clause 12.4.1 and states that:

"-If a beneficiary is granted an Option, and before the Vesting Date the employment of such Beneficiary terminates:

1      by reason of a No Fault Termination, such Option shall be deemed to vest in the beneficiary on the Termination Date and shall be capable of being exercised until the last day of the 1 (twelve) month period following the Termination Date, failing which it shall lapse and shall cease to have any further force or effect, provided the RemCom may determine in its sole discretion (which discretion shall be exercised by not later than the Termination Date) that the Option shall lapse automatically on the termination Date; and

2        by reason for a Fault Termination, shall lapse automatically on the day which is 30 (thirty) days immediately following the Termination Date and shall cease to have any further force or effect, provided that RemCom may determine in its sole discretion (which discretion shall be exercised by not later than the Termination Date) that the Option shall lapse automatically on the Termination Date."

[12] The Restricted Shares which are the subject matter of this application are governed by the provisions of clause 13 which provides that:

"-If a Beneficiary is granted a Restricted Share, and before the Vesting Date the employment of such Beneficiary terminates:

1        by reason of a Fault Termination, the Beneficiary shall forfeit all rights to such Restricted Share(excluding any Vested Portion) and shall be deemed to have ceded all its rights, title and interest in and to such Restricted Shares (excluding any Vested Portion); or

2        by reason of a no Fault Termination, the Beneficiary shall, at the discretion of RemCom be regarded as remaining in the employ of the Group and the Restricted Shares may be released to him in terms of clause 13.1."

The rules attached to the  record[2].

[13] As stated above the two schemes are somewhat different from one another but have certain common features. The prominent same features relate the certain critical terms. These phrases are the non fault termination of employment , non fault termination of employment : others,  discretionary  non  fault  termination  of  employment,   fault

  termination of employment and discretionary fault termination. The discretionary  fault or non fault termination  of employment  occurs  when  is classified as such by the board and / or remuneration committee of the respondent.

[14] The fault termination is the termination which follows a  disciplinary hearing for the misdemeanour or  infraction  of the employment  code  of  the respondent. The two no fault phrases refer to non  fault such  as  in  death , no fault others refer to the retrenchments, retirements  and  disabilities   as defined or so classified.

The consequences of the ruling.

[15] The commissioner ruled that the dismissal of the applicant was substantively unfair. He order compensation payment to the applicant. However the Commissioner ruled against reinstatement and held the trust relationship between the parties has broken down. The applicant accepted the award. The acceptance of the award has consequences. One such consequence is to confirm the dismissal. It 1s correct  that  the  commissioner  found  the dismissal  to  be  unfair.  The  commissioner  has a discretion to address the situation. The remedies are contained in Section 193 of the Labour Relations Act. He ordered compensation. He advanced cogent reason why he cannot order the reinstatement.  This decision  cannot be faltered. Any termination of employment contrary to the prov1s10ns of the Labour Relations Act remains dismissal. The Constitutional Court the majority judgment   held that:

".. the absence of a provision in the LRA for a right not to be dismissed unlawfully is an indication that the LRA does not contemplate an invalid dismissal  as a consequence of  a dismissal effected in a breach of a provision of the LRA."[3]

[16] The contention of the applicant is that the ruling of unfair dismissal amounts to the no fault termination. This contention is disputed by the respondent. I find the interpretation of the applicant to be misplaced.

[17] The parties derive their rights and obligations from the documents constituting the 2005 Scheme and the Eyethu Trust Deed Scheme. Therefore, the consequence of the termination of the employment relationship must be determined in terms thereof. This matter therefore involves the interpretation of the terms or phrases termination of employment   referred  to  in paragraph  13 above.   The correct  approach is settled.[4] The process is subjective and not objective. In Natal Joint Municipality  Pension Fund[5]  it was held  that:

The primary rule if interpretation is stated in Natal  Joint  Municipal  Pension  Fund v Endumeni  Municipal  as follows

"The present state of the law can be expressed as follows: interpretation is the process of attributing meaning to the words used.  In a  document,    be  it  legislation,  some   other  statutory instrument or contract, having regard to the context provided by reading the particular provision of provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more  than  one  meaning  is  possible   each  possibility must  be weighed in the light of all these factors. The process is objective not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to and guard against, the temptation to substitute what they regards as reasonable sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation; in a contractual context it is to make a contract for the parties other than the one they  in  fact  made.   The  'inevitable' point  of  departure  is  the language of the provision itself, read in context and having regard to  the  purpose of  the  provision   and  the  background to  the preparation and production of the document."(emphasis added)

Accordingly, the court when seized with such an assignment  must look at  all  the facts and determine what the document   means.

[18] The parties created these documents to govern their affairs. The contract documents have clearly itemed and categorised what constitute a no fault termination. In the context of the 2005 scheme the no fault termination means termination of employment by death, by reason of retrenchment, permanent disability or a fault termination and in respect the Eyethu Trust Deed the no fault termination means termination of the employment by reason of retrenchment, permanent disability, permanent incapacity or retirement.  On the facts the only interpretation to be given to the nature   of of   the   termination is   the   fault   termination. The   fault   is   the insubordination.

[19] The applicant's dismissal falls outside the agreed  circumstances of no  fault termination.  Accordingly,  the dismissal  of the applicant terminated the relationship. The termination occurred  before the vesting of the last  two tranches of  the Restricted  Shares.  Therefore the were no shares   that vested and as a result there are no shares to be   reinstated.

[17]   During the oral submissions the applicant primarily  argued  that  the decision not reinstate the shares was taken by wrong person.[6] This submission is misplaced because such case was no pleaded. It is always helpful to note the primary functions of the affidavits. The general rule is that  a  party  must  or  fall  by  the  founding  affidavit.  The  applicant was

expected to make his case in the founding affidavit. In the application proceedings these affidavits constitute the evidence  and  the  pleading.[7]  The point was not made out in the  pleadings.

[20] As stated  above the affidavits  constitute  an important  piece of  evidence.

There should be drafted with care in order to include all information necessary to sustain the claim. The founding affidavit is lacking in information. Be that as it may, the essence of the claim  is  based  on  finding of the commissioner that the dismissal was unfair because the respondent follow a fair procedure.

[21]   The applicant did not sufficiently articulate the kind of shares that he was entitled to have reinstated. In fact the applicant's case is made out by the respondent in the answering    affidavit wherein the     respondent meticulously give the background, the details of the incentive scheme in which the applicant participated. It also deals with the issues of the disciplinary  hearing and the award.

[22] Notwithstanding the meticulous exposition referred to above the respondent persisted that the unfair dismissal cannot amount to no fault employment termination. This aspect has already been dealt with above.  The submissions is well made and   has merit and I agree.

Conclusion

[23] In the circumstance the applicant stand to be dismissed. Counsel for the respondent requested the costs of two counsel. He submitted that the respondent regarded this matter to have some importance.  I  cannot  dispute the view of the respondents.  As  far as the  costs  are  concerned  this matter is not complex and certainly does not  justify, the participation  of two counsel junior. I am satisfied that the service  of  senior  counsel alone was sufficient.

Order.

In the circumstances  the following order is made:  namely

a.     The application  for the reinstatement of shares is  dismissed.

b.     The applicant  is ordered to pay the costs of senior counsel only.

REMONAMA

JUDGE OF THE HIGH COURT

GAUTENG DIVISION

Appearances:

For the Applicant:                Adv E Masumbuka .

Instructed by:                      AK Nkome Attorneys, Pretoria.

 

For the Respondent:           Adv. A Cockrell SC ,

                                                 Adv Z Ngwenya.

Instructed by:                      Cliff Dekker Hofmeyer Inc, Johannesburg,

                                                 Friedman Hart Solomon and Nicholson  Pretoria.

Date of judgment:                15 March 2017.

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