In Volvo (Southern Africa) (Pty) Ltd v Yssel (247/08) [2009] ZASCA 82 ; [2010] 2 BLLR 128 (20 August 2009) the Supreme Court of Appeal overturned the lower court decision and ordered Yssel to pay that amount with interest at the rate of 15.5 per cent per annum calculated from 12 September 2006 to date of payment and all legal costs.
Volvo (Southern Africa) (Pty) Ltd needed a manager in 2000 for its information technology division and appointed Mr Yssel to the position after being introduced to him by a personnel placement agent. Yssel did not want to enter into direct employment with Volvo, preferring to be employed by a labour broker with which he was associated, which would assign him to provide his services to Volvo. Volvo reluctantly accepted that arrangement and for the next 5 years or so Yssel did work for, as opposed to working for, Volvo on that basis.
In due course all the persons working in Yssel’s department were appointed on the same basis but Volvo did not know that Yssel received a secret commission of R775 107 from the labour broker.
The High Court Johannesburg (Berger AJ) dismissed Volvo’s claim to recover that money from Yssel finding that there was no employment relationship giving rise to any fiduciary duty nor any breach of trust.
Volvo’s cause of action was based on the breach of a fiduciary duty owed to Volvo by Yssel to act in its interests and not in his own. The question was whether such a duty was created by the nature of the relationship given that in law Yssel was not employed by Volvo but by the labour broker.
Nugent JA in delivering a unanimous judgment stated:
“[13] Over a century ago in Robinson v Randfontein Estates Gold Mining Co Ltd Innes CJ expressed, in general terms, the legal principle that is applicable in a case of this kind as follows:
‘Where one man stands to another in a position of confidence involving a duty to protect the interests of that other, he is not allowed to make a secret profit at the other’s expense or place himself in a position where his interests conflict with his duty. The principle underlies an extensive field of legal relationship. A guardian to his ward, a solicitor to his client, an agent to his principal, afford examples of persons occupying such a position. As was pointed out in The Aberdeen Railway Company v Blaikie Bros. (1 Macqueen 474), the doctrine is to be found in the civil law (Digest 18.1. 34.7), and must of necessity form part of every civilised system of jurisprudence’.” [Footnote omitted]
After discussing a number of earlier cases Nugent JA summed up the position in para [17]
“What is called for is an assessment, upon a consideration of all the facts, of whether reliance by one party upon the other was justified in the circumstances”.
It seems a good decision, illustrating an area not regulated by the LRA where judges can apply or develop the common law without competing with the legislature. It raises the question whether this can also work in reverse – i.e., whether the labour broker’s employees can assert the same right against the former’s client and there claim the protection which the LRA denies them? Following Cheadle’s argument they should be able to do so, having pleaded the deficiency of the common law in giving effect to their right to fair labour practices.
Darcy you are correct in pointing out that this is an area where the common law can be developed without undermining the legislature. However, it seems from the SCA judgment, more particularly the final summing up by Nugent JA, that the concept of reliance is fundamental. The other passage quoted above seems to require a position of confidence. It remains to be seen how the judges develop the common law in the future.