Lawful employment termination: compliance with contract

Note: Footnotes omitted and emphasis added

1. On 31 March 2017, pursuant to a written agreement Mr Moyo the plaintiff was appointed CEO of Old Mutual Emerging Markets Ltd. The appointment was effective 1 June 2017. Mr Moyo took up his position. Subsequently, under clause 1.2 the position became that of CEO of Old Mutual Ltd, the first defendant.

2. The second defendant is a related company in the Old Mutual fold. The pleadings, the documentation and the witnesses in their oral evidence refer, for the most part simply to “Old Mutual” and I shall do the same. For present and practical purposes, nothing turns on the specific difference in identity between the first and second defendants.

3. The third to fifteenth defendants are and have been directors of Old Mutual at the relevant times. Unless the context indicates otherwise, I shall include the director defendants in my references to Old Mutual. The current CEO of Old Mutual, Mr Williamson is not a party to this action.

4. On 17 June 2019, Old Mutual terminated Mr Moyo’s employment by giving him six months’ written notice. Whatever differences there had been between Mr Moyo and Old Mutual prior to the termination were immediately compounded and much litigation flowed. The dispute was widely covered in the media.

THE PLEADINGS

5. Before me is an action in which Mr Moyo pleads three breaches by Old Mutual of the employment and related agreements. In short, he says firstly that he had been wrongly suspended on 23 May 2019 without a hearing. Secondly, his employment was wrongfully terminated in the letter of 17 June 2019 after Old Mutual had failed to give him a hearing and accused him publicly of gross misconduct. Thirdly, Old Mutual breached an alleged implied term of the employment agreement that Old Mutual would not victimise Mr Moyo for having made protected disclosures. The first protected disclosure is alleged to be the revelation by Mr Moyo of a triple conflict of interest by the third defendant, Mr Manuel who is the Chairperson of Old Mutual. The second protected disclosure is alleged to be that Old Mutual paid for the private legal fees of Mr Manuel in certain litigation.

6. The impact of these alleged breaches is pleaded on behalf of Mr Moyo to entitle Mr Moyo to re-instatement, alternatively to damages in the sum of R230 million in respect of lost earnings, bonuses, share incentives and related sources of lost remuneration. This is the first claim.

7. The second claim is based in delict “ in the execution of the contractual relationship between the parties “and is also in the sum of R230 million, the cause of action being an alleged breach by Old Mutual of section 159 of the Companies Act 71 of 2008 and section 3 of the Protected Disclosures Act 26 of 2000 by victimising Mr Moyo on account of his disclosures. In short, Section 159 of the Companies Act protects employees where they make whistleblowing disclosures in good faith and in reasonable circumstances.

8. The third claim is based in delict and relies on the wrongdoing alleged above and on allegations that Old Mutual, together with the other defendants violated the right to dignity of Mr Moyo by making racial, xenophobic and Afro-phobic slurs against him. The basis for this claim is alleged to consist in the defendants’ referring to Mr Moyo’s Zimbabwean origins, casting aspersions on his professional integrity, giving false reasons for his termination, portraying him as dishonest and unethical, falsely representing that he was party to a delay in the payment of certain preferential dividends to Old Mutual, falsely claiming that certain dividends on preference shares had not been declared when in fact they had, making misleading statements about what Mr Moyo had said to the Board of Old Mutual and suggesting that Mr Moyo had lied when he had said that the Chair of Old Mutual, Mr Manuel was out to get him. Mr Moyo claims R20 million in this claim.

9. In their plea, the defendants deny wrongdoing and deny having made most of the allegedly defamatory statements. In their responsive statement under the Commercial Court Directives they plead that the allegations they did make were made truthfully and in the public interest and were justified in the circumstances.

10. In an exchange of pre-trial documents, Mr Moyo appears to have limited his case regarding dignity impairing statements to those having been made in a Johannesburg Stock Exchange SENS statement issued by Old Mutual on 18 June 2019 and statements made in a radio interview on 1 July 2019 by Mr Paul Baloyi, the sixth defendant.

11. The defendants raised the defences of res judicata and issue estoppel, read with the principle of stare decisis in their responsive statement under the Commercial Court Directives. The litigation between the parties had started when Mr Moyo launched an urgent application for his re-instatement soon after his employment had been terminated. Mashile J found for Mr Moyo, ordering re-instatement. That order was set aside on appeal to a Full Court which found that the termination of employment had been lawful.

THE TRIAL

12. Mr Moyo was represented by Mr Mpofu SC, Mr Ngcukaitobi SC, Ms Motloenya-Modise and Ms Gaba briefed by Mabuza attorneys. The first two defendants were represented by Mr Maleka SC and Ms Mayet briefed by Bowmans. The directors of Old Mutual were represented by Mr Trengove SC and Ms Rajah briefed by Bowmans.

13. Before the trial started, Mr Mpofu abandoned the main claim for re-instatement. He did so as the current CEO of Old Mutual, Mr Williamson had not been joined as a party to the action.

14. The defences of res judicata, issue estoppel and the principle of stare decisis remain to the balance of the claims. This is because the particulars of claim are framed to allege that all claims pleaded after the main claim for re-instatement rely at least partly on the wrongdoing pleaded above them. The suspension of 23 May 2019 and the termination on 17 June 2019 remain part of the alleged wrongdoing as a basis for all claims.

15. It was agreed that the witness statements filed for all witnesses before the hearing would have no evidential value until the witness had testified, including cross-examination.

16. It was agreed that there would be no splitting of issues.

17. The action is a mixture of traditional pleadings under the Uniform Rules and the Judge President’s Directives in the Commercial Court. The particulars of claim were signed on 27 September 2019. The plea was signed on 30 October 2019. The matter was designated as a Commercial Court matter on 19 March 2020. Thereafter, various requests for further particulars and admissions were made and answers given by 29 September 2021.

18. On 27 September 2021, through my clerk, I ordered that full witness statements for all witnesses, expert and lay be prepared and given to the other side. I specified, in line with the Commercial Court Directives that examination in chief would consist in each witness confirming her statement. On 17 November 2021, Mr Moyo delivered his full witness statements and statement of case and on 10 December 2021 the defendants delivered their responsive statement and then their full witness statements.

19. Chapter 6.2 of the Commercial Court Practice Directive of 3 October 2018, requires any party wishing to lead evidence at the trial outside that contained in a witness statement to make written application to the judge. Under Chapter 5.2, the leave of the judge is required before a party may lead evidence outside the witness statement. Under Chapter 2.8, all proceedings in the Commercial Court will be subject to management by the court.

20. At the outset, before any evidence had been led, Mr Mpofu indicated that he wished to lead the evidence of Mr Patel, who is not a defendant and for whom Mr Mpofu did not have a witness statement as Mr Patel had not wished to consult with Mr Moyo’s legal team.

21. I understand the practical difficulties faced by Mr Moyo and his legal team. That does not take away from the obvious purposes of the applicable Commercial Court directives, which is to do away with the element of surprise and shorten proceedings. Another consideration is that, regarding Mr Patel, the defendants’ legal team may have wished to modify their witness statements consequentially, depending on what the Mr Patel might have said in evidence.

22. One accepts that most if not all trials involve at least some degree of surprise at some stage in the proceedings. This is inevitable even in a closely regulated trial in the Commercial Court. However, on balance it would have been unfair to the defendants if I had allowed Mr Patel to be called without more. The prejudice to the defendants, with reference to the Commercial Court directives is manifest.

23. The question was resolved by agreement as set out below.

WITNESSES

24. Mr Moyo testified. His evidence was consistent with his views as set out in the chronology below.

25. Mr Blair, a management consultant in remuneration testified, saying that Mr Moyo’s loss is R213 047 198, calculated from 1 July 2019 until a date in 2023 when Mr Moyo would have retired. Mr Blair said that he calculated no loss between 23 May 2019, when Mr Moyo was suspended and the end of June 2019, that is some thirteen days after the letter of dismissal of 17 June 2019. Mr Blair calculated Mr Moyo’s loss from 1 July 2019 onwards. Mr Blair confirmed that Mr Moyo received R4.2 million by way of salary from 1 July 2019 for the next six months. This figure is not included in the R213 047 198. This figure is before the application of tax.

26. Mr Patel testified. His evidence finds context in the chronology below. I allowed Mr Ngcukaitobi to call Mr Patel even though no witness statement had been prepared for Mr Patel. Instead, by agreement between the parties a list of questions was sent by Mr Moyo’s legal team to Mr Patel on the first day of trial and Mr Patel answered these questions the next day while the trial proceeded.

27. Mr Patel had been an Old Mutual employee and the Old Mutual nominee on the Board of NMT Capital from a date that preceded Mr Moyo’s becoming CEO of Old Mutual. The significance of NMT Capital is dealt with below. Mr Patel resigned as an employee of Old Mutual and as a non-executive director of NMT Capital on 31 August 2018. Mr Patel was aware of the relevant shareholders’ agreement and that it “provided for certain conditions relating to the declarations of dividends.” Mr Patel did not report any conflict of interest or impropriety on the part of Mr Moyo to Old Mutual. Mr Patel could not recall voicing any objection to the declaration of ordinary dividends by NMT Capital. Mr Patel could not recall if he voiced any governance concerns to Mr Moyo.

28. After these three persons had testified, Mr Mpofu closed his case. Mr Maleka and Mr Trengove applied for the absolution of the defendants from the instance. The test is whether or not a court could find for Mr Moyo on the evidence presented.

29. I set out below, a chronology of the main facts which shows with sufficient clarity what happened and when. It is not necessary for me to set out further the evidence of any witness. The evidence of Mr Moyo is encapsulated in the chronology. The evidence of Mr Blair and Mr Patel is dealt with above. The picture emerges from the chronology.

30. The documents in the lengthy trial bundle, many of them of an accounting nature, do not always distinguish with perfect clarity between Mr Moyo’s direct ownership of twenty percent of the ordinary shares in NMT Capital, on one hand and on the other hand, his indirect ownership of a percentage of ordinary shares in NMT Capital via one or more of Mr Moyo’s own investment companies. In some instances, the author of a document runs together the direct and indirect ordinary shareholdings of Mr Moyo in NMT Capital. Reference is made in the documents, interchangeably to Mr Moyo benefiting by R23 million, R30 million or R30,6 million and other figures. Nothing turns on this.

31. For the sake of simplicity, I shall limit my findings below to references only to Mr Moyo’s dividends received directly as owner of twenty percent of the ordinary shares in NMT Capital.

CHRONOLOGY OF MAIN FACTS

. . . . .

MAIN FINDINGS

131. The chronology of facts shows that ordinary dividends were paid by NMT Capital before preference dividends were paid. This was in breach of the agreement not to do so. Mr Moyo benefitted directly and personally, to the extent of R2 million from the declaration of the R10 million ordinary dividend on 8 March 2018 and R21 million from the payment of the R105 million ordinary dividend on 11 July 2018 when preference share dividends were not yet paid. Mr Moyo chaired at least one meeting when the distribution of ordinary dividends was made.

Mr Moyo is a highly qualified, experienced businessperson at the top of the corporate ladder. His defence that he was a non-executive person at NMT Capital at the relevant times does not hold water. At a minimum, he had a strong contractual duty to keep his eye on the ball and to make sure that the relevant agreements were not breached. Mr Moyo, in his email to Mr Manuel on 30 April 2019 candidly stated that NMT Capital should not have made the requests to Old Mutual which it made.

132. It is no defence for Mr Moyo that Old Mutual had a person, Mr Patel on the Board of NMT Capital whose job it was to keep a lookout. It is irrelevant what Mr Patel knew or did not know and what he told Old Mutual or did not tell Old Mutual. None of the agreements, nor any of the relevant facts suggest that Mr Moyo was relieved of his obligations on the basis that Mr Patel was the agent of Old Mutual for the receipt of information by Old Mutual.

133. As time passed, Mr Moyo found himself pressed more and more between the time needed by NMT Capital to pay preference dividends and his own contractual obligations. NMT Capital was pressed for cash, at least until it received R311 million from the sale of its shares in Growthpoint, by the latest 3 July 2018. Mr Moyo hoped that Old Mutual would keep deferring the evil day. He used the extra time provided by Old Mutual, until 30 June 2018, plus the few days from then until the declaration of the R105 million ordinary share dividend on 11 July 2018 to receive ordinary dividends of R23 million from NMT Capital for his own personal benefit. But at the same time, his contractual and disclosure obligations hung over his head. The squeeze placed Old Mutual in a position where it was entitled to act as it did.

134. The declaration by NMT Capital of an ordinary share dividend in the amount of R105 million when it had the cash to pay the full amount then owing on the preference shares of R65,9 million, in breach of a strict agreement, is difficult to understand and impossible to justify. At a minimum, it was in breach of contract for Mr Moyo to proceed on an assumption that Old Mutual would keep extending the date for redemption of the preference dividends.

135. Mr Moyo had an extra incentive to keep a close watch on the declaration of dividends by NMT Capital. His own family trust had bound itself as surety to Old Mutual for the debts arising out of the preference share obligations of NMT Group, a company related to NMT Capital.

THE FIRST ALLEGED BREACH

136. The first breach relied on by Mr Moyo is the alleged unlawfulness of the suspension of Mr Moyo on 23 May 2019. On the facts, the suspension was warranted as a matter of substantive law. Mr Moyo had breached his employment and related agreements and benefitted personally in doing so. Mr Moyo was aware, by the latest the end of February 2019 that Old Mutual had serious concerns about him. It was at the end of February 2019 or late March 2019 or thereabouts when Mr Ntsaluba asked Mr Moyo if he knew that Old Mutual wanted “ to get rid of ” him because of matters relating to NMT Capital.

From Mr Du Toit’s email of 11 March 2019 alluding to upcoming questions from Mr De Klerk of Bowmans up and until 23 May 2019, Mr Moyo had ample opportunity, which he used, to put his side of the story. Mr Moyo’s email to Mr Manuel on 30 April 2019 is one example.

137. Clause 4 of the Disciplinary Code relating to suspension appears in its terms to confine suspension to a situation where a disciplinary hearing is going to take place. As at 23 May 2019, the date of suspension, Old Mutual had not made up its mind whether or not to charge Mr Moyo. This is apparent from the words “ pending further decision” in the letter of suspension immediately after the mention of suspension.

138. It would appear that Old Mutual relied for its decision to suspend Mr Moyo without a formal hearing before the suspension, on the words “ An employee may be suspended under the following circumstances ( not an exhaustive list ): … where the continued presence of the employee on the premises could jeopardise … the functioning of the office or result in prejudice to Old Mutual. “ As recorded in the chronology, suspension was at managerial discretion.

139. Given that Old Mutual never relied on its right to terminate for breach, the suspension never preceded an enquiry that actually took place. In any event, no damages, special or general flowed from the suspension.

THE SECOND ALLEGED BREACH

140. The second breach relied on by Mr Moyo is the alleged unlawfulness of the termination on 17 June 2019. The letter of termination, in express terms says, in paragraph 13,

“ Nevertheless, to mitigate the adverse effect on you of the termination of your employment, the Board has resolved to terminate your employment on notice as provided for in clause 24.1.1 of your contract of employment.“

This, in my view makes it clear that the employment ended by the exercise by Old Mutual of its right to terminate on notice, just as Mr Moyo could have done had he so wished. One of the obvious purposes of clause 24.1.1 is to allow either side to terminate on six months’ notice and thereby avoid a debate about fault.

141. Clause 4.3 of the disciplinary code does not assist Mr Moyo on the question of termination.

It clearly applies only where dismissal is dependent on prior wrongdoing.

It does not apply where Old Mutual grounds its termination on clause 24.1.1 to terminate on six months’ notice without fault on the part of Mr Moyo.

142. The second notice of termination, given on 21 August 2019 had no legal effect, given the finding that the first notice of termination was lawful. The second termination letter contained the words “ Without detracting from the June notice”.

143. These findings put paid to the main claim’s alternative for damages.

THE THIRD ALLEGED BREACH

144. The third breach is based on an implied term that Old Mutual would not victimise Mr Moyo for making protected disclosures. I shall assume in favour of Mr Moyo, but without deciding the question, that the employment agreement included the alleged implied term.

145. The main facts show that there was no impropriety by either Mr Manuel or Old Mutual regarding the alleged triple conflict on the part of Mr Manuel. At all relevant times, Mr Manuel had disclosed what he had to, Mr Manuel was absent from meetings when he had to be absent, the Board of Old Mutual knew what it needed to know and consciously, lawfully and reasonably decided to assume the guarantee obligations of Old Mutual plc to give effect to the managed separation.

146. Mr Moyo, on 27 March 2018 had signed the guarantee under which Old Mutual assumed the relevant obligations of Old Mutual plc. This guarantee had been at the heart of Mr Moyo’s assertion that Mr Manuel was triple conflicted.

147. Similar considerations apply to the decision by Old Mutual regarding the payment of certain legal fees of Mr Manuel to protect the good name of Old Mutual.

148. Neither Old Mutual, Mr Manuel nor any director of Old Mutual had any reason to hide anything. Mr Moyo played a significant role in approving the decisions on which he later blew the whistle.

149. It is clear that the steps taken by Old Mutual, Mr Manuel and the directors and employees of Old Mutual were measured, restrained and based only on objective facts and after Mr Moyo had been given ample time and opportunity to explain his side of the story. It cannot be said that on the evidence, Mr Moyo was in any way a victim of any kind. Mr Moyo was not a whistle blower. Mr Moyo’s decision to blow the whistle appears to be based more on an afterthought, when the shoe began to pinch regarding the payment of preference dividends than on an objectively based need to disclose alleged wrongdoing by Mr Manuel, Old Mutual or its directors.

150. In these circumstances, Mr Moyo has not demonstrated that he had reason to believe, as opposed to actual belief, such as to bring himself within the definition of a person making a “ disclosure” as defined in section 1 of the Protected Disclosures Act. The word “disclosure” is not defined in the Companies Act. However, section 159(3)(b) of the Companies Act requires a reasonable belief on the part of the potential whistle blower that what is to be disclosed “ showed or tended to show “ wrongdoing as defined. It seems therefore that both the Protected Disclosures Act and the Companies Act require an objectively assessed correct basis as a launch pad for the further application of either Act.

151. Claim 3 is for loss of dignity caused at least partly by alleged defamatory statements. There is no evidence supporting this claim. This claim, pared down in Mr Moyo’s answer to the directors’ request for further particulars, limits the defamatory allegations to:

• a. what was stated in that part of the Sens notice of 18 June 2019 which mentions the conflict of interest of Mr Moyo relating to the declaration of ordinary dividends of R115 million, his own benefit in the sum of R30,6 million and that the ordinary dividends were paid contrary to the agreement not to pay ordinary dividends until preference share dividends had been paid.
• b. the answers by Mr Baloyi, the sixth defendant in his interview on 2 August 2019.

152. Old Mutual was obliged to issue the Sens notice under the Rules of the JSE as it related to something which might affect the share price of Old Mutual. The Sens contains no more than a bland, measured and reasonable setting out of objective facts, pursuant to a legal duty to do so. In the public spat that followed termination, it was Mr Moyo who was direct, forceful and combative.

Mr Baloyi, in his interview with CNBC on 2 August 2019 spoke lawfully, reasonably and fairly.

153. The third claim falls to be dismissed.

CONCLUSION ON THE MAIN ISSUES

154. Mr Moyo has failed to produce any evidence on which it could be held that Old Mutual has done anything wrongful.

155. I make no credibility finding against any of the three persons who testified. In the main, my task has been to examine whether or not Mr Moyo’s interpretation of events amounts to causes of action as he alleges. For the reasons stated above, Mr Moyo’s case is not one which could lead to a finding for him.

RES JUDICATA, ISSUE ESTOPPEL and STARE DECISIS

156. The abandonment by Mr Moyo of his main claim for re-instatement did not do away with the need to deal with res judicata, issue estoppel and stare decisis. This is because the alternative claim for damages in the main claim is premised on the alleged unlawfulness of the termination. The subsequent claims rely, as pleaded, at least partly on the alleged wrongfulness pleaded in the preceding claims.

157. The requirements for the defence of res judicata are the same parties, the same matter and the same cause of action. It was common cause between the parties that the slight difference in the parties before the Full Court on appeal and in the present action would make no difference to this question. The main issue decided by the Full Court was that the termination on 17 June 2019 was lawful.

The present claim for damages for wrongful termination is the obverse of the now abandoned main claim for re-instatement. Both are predicated on the alleged wrongfulness of the termination on 17 June 2019.

The requirements for res judicata are met.

It follows that the defence of issue estoppel, a relaxed discretionary form of res judicata are fulfilled. I am bound by the decision of the Full Court with which I respectfully agree.

158. This finding provides a defence to all claims to the extent that they rely on wrongful termination of employment.

COSTS

159. Both sides employed two senior and two junior counsel, in my view a reasonable precaution, given the issues, the number of documents and their complexity, the need to canvass related litigation, the amount involved, the issues at stake and the importance to both sides of the case.

ORDER

1. The defendants are absolved from the instance.
2. The plaintiff is to pay the defendants’ costs, including those of two senior and two junior counsel.

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