IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG

                                                                   CASE NO: J638/06

In the matter between
PRISCILLA EVERSON	Applicant
and
MORAL REGENERATION MOVEMENT	Respondent
_________________________________________________
J U D G M E N T
_________________________________________________

NEL AJ:

[1]   This is an application by the applicant for an order that the respondent should pay the applicant a sum of    R144 223.30. The claim arises out of a contract of employment, which is alleged to have been breached.  It is further an allegation that the contract in question is a fixed term contract and the claim of R144 223.30 is accordingly for the remainder of the months of the contract of employment, namely August, September, October, November and December 2005. The most pertinent allegation on which the applicant basis her claim is to be found in paragraph 8.1 of the applicant’s founding affidavit in which the applicant says: “In July the respondent breached the condition of employment contract between itself and me in that the respondent failed to pay myself monthly remuneration in the sum of R27 500.00.”  I believe that it will be correct accordingly to say that the alleged repudiation by the respondent relates to the failure by the respondent to pay the applicant’s remuneration of R27 500.00 when it became due and payable on 25 July 2005
.
[2]  The respondent’s reply to the allegation, found in paragraph 16 of the answering affidavit,  is the following: “Save for admitting that in July 2005 the respondent failed to pay the applicant her salary, the remaining allegations are denied.  In amplification hereof I reiterate the contents of paragraphs 6.1 to 6.5 above.”  These paragraphs in turn read as follows:
“6.1 The respondent is a non-profit making    organisation which receives its funding from funders, mainly the Department of Arts and Culture.
6.2   Between April and August 2005 the Department of Arts and Culture delayed in allocating funds to the respondent, which resulted in the respondent encountering difficulties in paying salaries to its staff.  All the staff, including the applicant, were well informed of this fact by the respondent.
6.3   Nevertheless salaries for April, May and June 2005 were paid timeously from reserves of the respondent.
6.4   No salaries were paid to anybody at the end of July 2005 as the reserves of the respondent had completely dried up.
6.5	However at the end of August 2005 all the staff, including the applicant, were paid all their salaries for the months of July and August 2005.  Annexed hereto marked “ZM2” is proof of payment to the applicant.”

[3]     It should perhaps be mentioned that the last mentioned allegations are not strictly speaking correct and that is with reference to the fact that it says that, at the end of August 2005, all the staff were paid and the reason for that is that ZM2 is a deposit slip, which is dated 5th September 2005, and it also contains the bank stamp
         dated 5 September 2005.  

MECHANICAL INTERUPPTION

[4]    This is the continuation of a judgment in matter J638/06 which I was busy giving yesterday when we had an electrical failure.  I will attempt to start where I ended.  The stenographer advises me that as a result of the new system she cannot assist me by just playing it back.  I therefore simply recap that I was busy dealing with the pleadings, having read into the record what the applicant’s paragraph 8.1 stated and having then referred to the respondent’s answer to paragraph 8.1.  I was then also reading into the record the relevant parts of paragraphs 6.1 through to paragraph 6.5 of the reply.  

[5]   What is relevant, particularly as far as paragraph 6.2 of the respondent’s answering affidavit is concerned, is that with reference to the difficulties the respondent was experiencing with paying salaries, the allegation is made that all the staff, including the applicant, were well informed of this fact by the respondent.  

[6]   In turn the replication to the allegation contained in the respondent’s papers (which as I have said a moment ago is to the effect that there is an admission that the respondent did not pay the applicant’s salary of         R27 500.00 on 25 July 2005, but that this was done with the knowledge of the applicant) reads as follows:
“Save to admit demand, I deny the truthfulness of the allegation made in this paragraph and wish to point out that the respondent made an admission of failure to perform timeously or as agreed in terms of the contract employment.  In this regard see paragraph 6.4 and 6.5 of the opposing affidavit.”

[7]     The rest of the reply is not relevant, but obviously what is important is that it effectively is a total denial of the allegations contained in the paragraphs it is replying to.  I will revert to the situation I am now confronted with in respect of the matter having been brought on application and how I am obviously enjoined to deal therewith.

[8]     What is of further relevance is that part of the papers before me contains two letters.  The one, which is an annexure as I said to the pleadings, is a letter written from the applicant’s attorneys of record on 25 August 2005.  This letter is of such relevance that I believe it is necessary that I read the whole into the record.  It is
         headed: 
“Re payment of arrear wages: REV P.J. Everson” (that is the applicant.)  
“We refer to the above matter and advise that we act on behalf on Reverend Everson.  We have also been advised by our client that she is contracted to your movement for a period of three years which will expire in January 2006 at an agreed monthly salary of R27 500.00.  Our client advises us that you have failed to pay her salary for the month of July despite the fact that she has rendered her services during that period.  It is our contention that you have repudiated the said agreement.  Our client has as a result of such repudiation suffered the inconvenience.  It is therefore our instruction to advise you as we hereby do that our client demand payment of an amount of R160 000.00 being for her arrear wages and wages for the remainder of her contract within 7 (seven) days from date hereof failing which we will have no option but to take legal actions without further notice.”
And then the normal ending.

[9]     The reply to this from the respondent is a letter dated 7 September 2005 and I also believe that it is sufficiently relevant that I need to read that into the record. It reads as follows:
“Dear Ms. P. Khekane,
1. Your letter dated 25 August 2005 refers.
2. While your client, Reverend P. Everson, rendered her services to the Moral Regeneration Movement (the MRM) in respect of the period set out in your letter, she has been paid for those services rendered.
3. It is denied that the MRM has repudiated any terms of the contract of employment entered into by your client and the MRM.
4. I note with concern that your client has not reported for work from 25 August 2005 to date, despite having a contractual obligation to do so.  Accordingly we look forward to hearing from you and/or your client on when she will report for work.
5. I have referred your letter to MRM’s Board of Directors and my failure to deal with each and every allegation contained in your letter should not be construed as an admission of liability.
6. In future please address all correspondence to me.
7. MRM’s rights are strictly reserved including the right to supplement the contents of this letter.”

[10]   What is relevant is that as I have indicated yesterday, it is quite clear that the breach, which the applicant relies on, is the action of the respondent of having failed to pay the applicant’s salary on 25 July 2005.  I am satisfied that the non-payment by an employer in a reciprocal contract, where the employee is to tender and render services in exchange for which the employer is to pay the agreed remuneration, constitutes a breach of contract or probably more correctly put a repudiation.  However, a mere repudiation of a contract does not in and by itself found a claim in contract by reason of such breach.  

[11]    Before I entertain the facts further, it is perhaps useful to refer to what the learned authors De Wet and van Wyk have to say in their handbook “Die Suid Afrikaanse Kontraktereg & Handelsreg Vyfde Uitgawe Volume 1” at page 216:

“Waar die onskuldige mag terugtree, kan hy terugtree as hy wil, maar hy hoef dit nie te doen nie.  Moet hy nou dadelik te kenne gee dat hy van terugtredingsreg gebruik maak?  Om op hierdie vraag te kan antwoord, moet mens repudiëring van ander vorms van kontrakbreuk onderskei. Soos reeds aangetoon, het repudiëring geen invloed op partye se regte en verpligtings nie, indien dit deur die teenparty genegeer word.  Hieruit skyn vanself te volg dat solank die onskuldige nog nie te kenne gegee het dat hy die repudiëring aanvaar nie, dit die ander partye nog vry staan om in weerwil van sy repudiëring te presteer of prestasie aan te bied.  Eers as die onskuldige die repudiëring aanvaar, word die verbintenisse ontbind.  As die onskuldige partye dus nie te kenne gee dat hy die repudiëring aanvaar nie, loop hy gevaar dat die ander partye se repudiëring deur aanbod van prestasie suiwer, en sodoende die onskuldige die moontlikheid van terugtrede deur aanvaarding van die repudiëring ontneem.  Gee hy te kenne dat hy die repudiëring aanvaar, is sy aanvaarding meteens terugtrede.  Hy kan sy voorneme te kenne gee in ‘n verklaring te dien effekte, of deur sy gedrag, of selfs deur dagvaardiging.  Gee hy te kenne dat hy die repudiëring negeer, kan hy nie meer op grond van die repudiëring na die ooreenkoms terugkeer nie.”

[12]     Quite a number of all of these propositions made by the learned authors are obviously supported by case law contained in the foot notes.  It is accordingly quite clear that the fact that there was a repudiation by the respondent does not in and by itself constitute sufficient conduct for a party to approach a Court for a claim, as is the case herein, of damages as opposed to specific performance.  Repudiation in and by itself does not terminate the contract.  If a party ignores a repudiation, the repudiation has no influence or effect on the rights and obligations of the parties.  Only once a party indicates to the other that he or she accepts the repudiation does it constitute a cancellation of the contract.  If you indicate either expressly or by your conduct that you are ignoring the repudiation, you may no longer on the grounds of repudiation of the contract cancel the contract and sue for damages.

[13]   What are the facts herein?  It is quite apparent, and not in  dispute, that on or soon after 25 July 2005, when the respondent party did repudiate the contract or act in breach thereof by way of not paying the applicant her salary, the applicant did nothing.  In fact the applicant continued to render and tender her services.  It would appear that she continued to do so at least until 24 August 2005.  

[14]    It is fairly trite, and as I have just read with reference to what is contained in De Wet and van Wyk, that where a party to a contract is in a situation where the other performing party in the contract or relationship is nor performing and therefore has repudiated the contract, the party needs to accept the repudiation and make an election, namely either to seek specific performance or to regard the contract as cancelled and then seek damages.  It is as I have said therefore an essential act of a party that it must accept the repudiation and that act will then cancel the contract and enable a party to sue for damages.  
[15]   In the first instance, as I have also further indicated, herein the applicant did nothing soon after, and in fact for a period of a whole month after the repudiation, she did nothing.  What did the applicant do when she eventually, through her lawyers, sent a letter to the respondent?  The high water mark of divining from that letter what the applicant elected to do is that it says that it was the contention that the respondent had repudiated the said agreement.  It further stated that the applicant had as a result of such repudiation suffered the inconvenience. I must then from the last paragraph, where a demand is made, infer that at this point in time the applicant elected to accept the repudiation.  

[16]   However I am satisfied that through her conduct, and the fact that she did not accept the repudiation at an appropriate time, this does not justify me in concluding that the contract was breached, that the repudiation was properly accepted and that the contract accordingly came to an end.  Of course the relevance of this is, as I have indicated, that when a party does not reasonably soon after the repudiation has taken place indicate whether it wishes to demand specific performance or whether it wishes and elects to accept the repudiation and seek damages, therefore bringing the contract to an end, the other party is able to rectify the default.  

[17]   In this instance, what is also of relevance is that the allegation is made by the respondent party that its failure to pay the July 2005 remuneration of the applicant and the circumstances surrounding that were known to all employees of the respondent, including the applicant.  That allegation is met simply by a bald denial by the applicant party.  The applicant having elected to bring this claim by way of motion proceedings, I am bound to then decide factual disputes on the basis of accepting the respondent’s version, together with the allegations of the applicant not disputed by the respondent.  That being the case, having a dispute of fact on a very important and relevant factor, namely whether the actual conduct, namely the failure to pay the applicant’s salary on 25 July 2005, was done with the full knowledge of the applicant, I am bound to rely on the allegations of the respondent.

[18]  It is further of course relevant that, through the conduct of the applicant, as I have indicated, by continuing to tender her services and working until 24th August, I believe that further supports the allegation made that the failure by the respondent to pay the remuneration of all its employees on 25 July 2005 was done with the knowledge of the applicant and that the applicant had in fact accepted, and so to speak condoned, that act.

[19] I am satisfied that there has not been a proper acceptance of the repudiation and a cancellation of the contract.  By the conduct and actions of the applicant, and based on the allegation, which I am bound to rely on, namely that the failure to pay in effect was agreed to by the applicant party, I am not satisfied that the applicant herein has succeeded in making out a case that there was a repudiation followed by a proper acceptance, which then in law would have had the result of the contract having been cancelled.  Under those circumstances the applicant may have become entitled to payment of the remainder of her fixed term contract as well as the arrears which she claimed.  Incidentally, as I have indicated yesterday when I commenced with the judgment, the respondent had paid the July and August salaries shortly after it had received the letter of demand, which I have referred to.

[20]   It also is perhaps in conclusion necessary to just say that a further requirement of a party who seeks damages in respect of a claim based on a breach of contract is that evidence must be presented as to what the party had done to mitigate his or her damages.  A party cannot simply sit back under circumstances such as in the present instance where there is alleged to have been a breach and a fixed term contract and then claim for the whole of the period without adducing evidence of what he or she did to mitigate his or her loss.  That is not necessary to further consider in light of the fact that I am satisfied herein that the applicant has not made out a proper case of a breach, which was accepted, which lead to the cancellation of a contract and therefore enabling the party to claim.

[21]  As far as costs are concerned, I do not believe that there are any reasons why costs should not follow the result and accordingly the end result is that the application is dismissed and the applicant is ordered to pay the respondent’s costs of suit.  

__________________________
DEON NEL
Acting Judge of the Labour Court

Date of Hearing and Judgment: 30 November 2006 & 1 December 2006
Appearances:
For the applicant: S SUKWANA of KEKANA HLATSWAYO RADEBE ATTORNEYS.
For the respondent: Adv N BHAGWANDEEN
Instructed by MASEKO & ASSOCIATES.