THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable

Case No: 1154/2022

In the matter between:

MHLONTLO LOCAL MUNICIPALITY

First Appellant
THE SPEAKER: MHLONTLO LOCAL MUNICIPALITY
Second Appellant
THE MUNICIPAL MANAGER:
MHLONTLO LOCAL MUNICIPALITY

Third Appellant

and

GCINIKHAYA NGCANGULA

First Respondent
MALIBONGWE NQEKETHO

Second Respondent

Neutral citation:
Mhlontlo Local Municipality & 2 others v Ngcangula and
Another (Case no 1154/2022) [2024] ZASCA 5 (January 2024)
Coram:
NICHOLLS, CARELSE and MATOJANE JJA and CHETTY and
TOKOTA AJJA
Heard:

24 November 2023

Delivered:

This judgment was handed down electronically by circulation to
the parties’ representatives via email, publication on the Supreme Court of Appeal
website and release to SAFLII. The date and time of hand-down is deemed to be 11:00
am on 17 January 2024.

Summary: Jurisdiction of the high court – whether withdrawal of salary increment
constitutes a breach of contract of employment – jurisdiction of civil courts in terms of
s 77(3) of the Basic Conditions of Employment Act. Analysis of pleadings – decisive
in determining jurisdiction. Whether subsequent payment to the respondents after
obtaining leave to appeal results in the appeal being perempted.

ORDER

On appeal from: Eastern Cape Local Division of the High Court, Mthatha (Nhlangulela
DJP sitting as court of first instance):
The appeal is reinstated with no order as to costs.
The appeal is upheld with costs, save that no costs are to be paid by the
respondents for the preparation of the appeal record.
The order of the high court is set aside and substituted with the following order:
‘The applications in case numbers 1343/2021 and 1466/2021 are dismissed
with costs.’

JUDGMENT

Chetty AJA (Nicholls, Carelse and Matojane JJA and Tokota AJA concurring):
[1] The first and second respondents instituted proceedings against their
employer, the Mhlontlo Local Municipality (the municipality), in the High Court, Eastern
Cape Division, Mthatha contending that the deductions made from their salary were
unlawful in terms of s 34(1) of the Basic Conditions of Employment Act 75 of 1997 (the
Employment Act). These deductions related to a ‘notch increase’ initially granted in
terms of a resolution passed by the municipality, only to be subsequently revoked. The
high court determined that it had the necessary jurisdiction to adjudicate the matter
and upheld the claim. It ordered the reinstatement of the amounts deducted. The
municipality applied for leave to appeal that order. The matter comes before this Court
with leave of the high court.

Factual background

[2] The background facts are largely undisputed. Two applications were launched
separately by the first and second respondents, both of whom contended that their
employer had effected unauthorised deductions from their salaries in or about
February 2021.1 The first respondent, Mr Gcinikhaya Ngcangula, who was employed
by the municipality as the Chief Traffic Officer, contended that in February 2021 his
basic salary and his essential use allowance were reduced without his consent. The
second respondent, Mr Malibongwe Nqeketho, was employed in the position of Deputy
Director: Economic Development. He contended along similar lines that his basic
salary and his essential use allowance were also reduced, without his consent. It is
not disputed that both respondents were contractually entitled to their basic salaries,
residential allowances, cellular allowances and essential use allowances as set out in
their contracts of employment.
[3] On 25 March 2019 the municipality passed Resolution No. 01-18/19 to pay its
employees a 2.5% notch increase on their basic salaries, retrospective to 2015. Both
respondents benefitted from the notch increase. Mr Ngcangula then received a letter
from the municipality dated 24 November 2020 informing him that the 2.5% increment
to his salary paid in accordance with Resolution No. 01-18/19 must be repaid as it was
identified by the Office of the Auditor-General as an irregular expense. Mr Ngcangula
was directed to repay the amount of R218 306.33 before 30 June 2021. Mr Nqeketho
received a similar demand to repay the amount of R 216 582.95 before 30 June 2021.
In the high court
[4] In the high court, the municipality contended that the decision to recover monies
paid to the employees (including the respondents) was lawful as they were ‘overpaid’
because they had not been placed on salary scales in terms of an ongoing job
evaluation process which was considered a qualifying condition for the notch
increment.  Accordingly, it was contended that they were never entitled to the 2.5%
notch increase. It was uncertain whether the two respondents had reached the top of
the applicable salary scales.
[5] The municipality contended that the decision to cease paying the notch
increase was both lawful and justifiable as it was aimed at correcting its earlier
decision. It alleged that its conduct did not constitute a ‘deduction’ as contemplated in

1 The judgment of the high court erroneously refers to the deductions taking place in January 2020.

sub-secs 34(1) and 34(2) of the Employment Act. The respondents however
contended that the decision to cease paying their notch increase was made without
any representations being sought from them. The decision was therefore unlawful and
in breach of s 34(1) of the Employment Act as there was no agreement from either of
the respondents for such deductions to be effected. 2
[6] The high court dismissed the various grounds of opposition advanced by the
municipality, finding that it had jurisdiction to deal with the matter on the basis of
s 77(3) of the Employment Act which grants concurrent jurisdiction to the Labour Court
and the ‘civil courts to hear and determine any matter concerning a contract of
employment, irrespective of whether any basic condition of employment constitutes a
term of that contract’. The high court was satisfied that the dispute as framed by the
employees implicated a breach of their contracts of employment. As to the merits, the
high court concluded that the municipality’s decision to unilaterally reduce the
employees’ remuneration, without due process, was unlawful, of no force and effect
and was a resort to unfettered self-help.3 The fact that the salary grading system had
not yet been completed did not dissuade the high court to disentitle the employees to
the ‘benefits’ of the 2.5% notch increment. The municipality was ordered to re-instate
the ‘terms and conditions’ of the employees’ employment contracts which prevailed
prior to the deductions.
Application for condonation and reinstatement of the appeal

2 Section 34 of the Employment Act provides
(1) An employer may not make any deduction from an employee’s remuneration unless—
(a)
subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt
specified in the agreement; or
(b)
the deduction is required or permitted in terms of a law, collective agreement, court order or
arbitration award.
(2) A deduction in terms of subsection (1) (a) may be made to reimburse an employer for loss or
damage only if—
(a)
the loss or damage occurred in the course of employment and was due to the fault of the
employee;
(b)
the employer has followed a fair procedure and has given the employee a reasonable
opportunity to show why the deductions should not be made;
(c)
the total amount of the debt does not exceed the actual amount of the loss or damage; and
(d)
the total deductions from the employee’s remuneration in terms of this subsection do not
exceed one-quarter of the employee’s remuneration in money.
3 Public Servants Association obo Ubogu v Head of Department of Health, Gauteng and Others [2017]
ZACC 45; 2018 (2) BCLR 184 (CC); (2018) 39 ILJ 337 (CC); [2018] 2 BLLR 107 (CC); 2018 (2) SA 365
(CC).

[8] The appellants applied for condonation for the late filing of the notice of appeal.
Leave to appeal was granted on 22 September 2022. The application for condonation
was filed on 9 November 2022. The delay is not excessive, but blame for this is entirely
attributable to the appellants’ attorneys for not being diligent in ensuring compliance
with the time periods in this Court.
[9] A further application for condonation was sought owing to the failure to lodge
the appeal record within three months of the filing of the notice of appeal as required
by rule 8(1) of this Court’s rules. No extension of the time period was agreed upon
between the parties or requested from the Registrar in terms of rule 8(2).
Consequently, the appeal lapsed. The record ought to have been lodged no later than
13 March 2023. The application for the reinstatement of the appeal was only filed on
10 May 2023. As with the late filing of the notice of appeal, blame is again attributed
to the appellants’ attorney.
[10] It is trite that applications for condonation must contain a proper explanation for
the period(s) of delay.4 This Court held in Dengetenge Holdings (Pty) Ltd v Southern
Sphere Mining and Development Company Ltd and others5 that other factors to be
considered in determining whether to grant condonation include:
‘. . . the degree of non-compliance, the explanation therefor, the importance of the case, a
respondent’s interest in the finality of the judgment of the court below, the convenience of this
court and the avoidance of unnecessary delay in the administration of justice (per Holmes JA
in Federated Employers Fire & General Insurance Co Ltd & another v McKenzie 1969 (3) SA
360 (A) at 362F-G).’6
[11] Although both applications were opposed, I considered that it would be in the
interests of justice to grant condonation as the delay was not excessive and the
respondents have not been financially or otherwise prejudiced. I took into account the
prospects of success, which is an important, though not decisive consideration.7
Counsel for the appellants accepted that the appellants’ attorney’s non-compliance
with the time periods could be sanctioned with an appropriate order for costs.

4 SA Express Ltd v Bagport (Pty) Ltd [2020] ZASCA 13; 2020 (5) SA 404 (SCA); para 34.
5 Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd and Others
[2013] ZASCA 5; [2013] JOL 30158 (SCA); [2013] 2 All SA 251 (SCA).
6 Ibid para 11.
7 Commissioner for South African Revenue Services, Gauteng West v Levue Investments (Pty)
Ltd [2007] ZASCA 22; [2007] 3 All SA 109 (SCA) para 11.

Peremption
[12] The respondents alleged that the appeal before this Court had become
perempted in that after filing its application for leave to appeal in September 2022, the
municipality paid all its employees, including the respondents, the ‘amounts due to
them in terms of the applicable SA Local Government Bargaining Council (SALGBC)
wage agreement with retrospective effect’. Their attorney, Mr Winter Mdlangazi,
deposed to an affidavit in opposition to the condonation application and said the
following:
‘9.  I emphasise that this was to my surprise because in January 2023 I received notice that
the Second Respondent had resolved to “condone” payment of the back-pay which was the
subject of the Respondent’s application in the High Court and which was paid to all the First
Appellant’s employees, including the Respondents. This decision was taken in compliance
with a resolution taken at a special council meeting on 14 December 2022, the resolution and
minutes of which are annexed marked “A”.8
10. Since this payment to the respondents fully satisfied their monetary claims, which the
appellants had unsuccessfully sought to resist in the proceedings a quo, I naturally thought
that the present appeal and the decision to defend an appeal against a conflicting judgment
on the same issues of the Labour Court had been abandoned.
11. By way of background, I interpose to mention that it was strongly argued in the
Respondent’s application for leave to appeal, heard remotely by his Lordship Nhlangulela DJP
on 21st September 2022 that the right to appeal had been abandoned (perempted) on the
strength of letters by the Mayor and the Acting Municipal Manager . . . which stated that the
First Respondent would not be pursuing an appeal against the High Court judgment.’

8 Annexure A refers to Resolution No. 05-2022/2023 issued by the Mhlontlo Local Municipality dated
14 December 2022 entitled ‘Employees back pay’. It records that ‘the council resolved that the money
taken from savings to pay the employees be condoned’.
The minutes of the Council meeting pertaining to the relevant Resolution read as follows:
“Employees back pay
Hon. Mayor Cllr Jara presented the report as follows:
There were two judgments on the issue of employees where their money was deducted by the
municipality and there was a resolution that the Acting Municipal Manager must seek legal opinion from
a senior counsel and the advice was requested from Mr NZ Mtshabe who is the senior counsel and he
advised that all the employees must be paid.
RECOMMENDATION: The Exco recommended to council that the money taken from savings to pay
the employees be condoned.”’

[13] The principle of peremption safeguards the integrity of the judicial process by
preventing litigants from oscillating between contradictory positions, ensuring judicial
consistency and fairness.9 It ensures finality and stability in legal proceedings,10 which
is essential for maintaining public trust in the justice system.11 The underlying principle
of the doctrine of peremption is that a litigant cannot take two inconsistent positions.
Accordingly, an unsuccessful litigant cannot appeal a judgment it has acquiesced to.
In order to succeed on peremption a respondent must demonstrate with reference to
the facts before court that an appellant’s unequivocal conduct after having obtained
leave to appeal, is inconsistent with an intention to appeal.12 In Qoboshiyane NO v
Avusa Publishing Eastern Cape13 the test to determine whether an appeal had
become perempted was set out as follows:
‘Where, after judgment, a party unequivocally conveys an intention to be bound by the
judgment any right of appeal is abandoned. The principle can be traced back to the judgment
of this court in Dabner v South African Railways & Harbours, where Innes CJ said:
“The rule with regard to peremption is well settled, and has been enunciated on several
occasions by this Court. If the conduct of an unsuccessful litigant is such as to point indubitably
and necessarily to the conclusion that he does not intend to attack the judgment, then he is
held to have acquiesced in it. But the conduct relied upon must be unequivocal and must be
inconsistent with any intention to appeal. And the onus of establishing that position is upon
the party alleging it. In doubtful cases acquiescence, like waiver, must be held non-proven.”’14

[14] The appellants submitted that the payments to the respondents were made in
error and should not be construed as an indication that the municipality abandoned

9 Hlatshwayo v Mare and Deas 1912 AD 242 at 259.
10 Minister of Defence v South African National Defence Force Union [2012] ZASCA 110 para 23.
11 Zuma v Secretary of the Judicial Commission of Inquiry into Allegations of State Capture,
Corruption and Fraud in the Public Sector Including Organs of State and Others [2021] ZACC
28; 2021 (11) BCLR 1263 (CC) para [101] :
“It is trite that the doctrine of peremption finds application across our legal landscape.  The doctrine tells
us that “[p]eremption is a waiver of one’s constitutional right to appeal in a way that leaves no shred of
reasonable doubt about the losing party’s self-resignation to the unfavourable order that could otherwise
be appealed against”. The principle that underlies this doctrine is that “no person can be allowed to take
up two positions inconsistent with one another, or as is commonly expressed, to blow hot and cold, to
approbate and reprobate”.
12 Government of the RSA & others v Von Abo [2011] ZASCA 65; [2011] 3 All SA 261 (SCA) para 15
13 Qoboshiyane NO and Others v Avusa Publishing Eastern Cape (Pty) Ltd and Others [2012] ZASCA
166; 2013 (3) SA 315 (SCA).
14 Ibid para 3.

or waived its right to proceed with the appeal. In South African Revenue Service v
Commission for Conciliation, Mediation and Arbitration and others15 it was held that:
‘Peremption is a waiver of one's constitutional right to appeal in a way that leaves no shred of
reasonable doubt about the losing party's self-resignation to the unfavourable order that could
otherwise be appealed against.’16

[15] Peremption, like waiver, is not lightly presumed and the onus rests on the party
alleging peremption to establish conduct that clearly and unconditionally demonstrates
acquiescence to abide by a judgment or order.17 There are no outward manifestations
on the part of the municipality, whether in the form of words or some other conduct,
from which the intention to waive its right to appeal can be inferred.18
[16] The respondents have not adduced any evidence to substantiate the contention
that the municipality, through its resolution in December 2022, has effectively settled
the matter and paid to the employees all of the amounts awarded in terms of the high
court’s order. More importantly, there is nothing on record indicating that subsequent
to the resolution in December 2022, the respondents received and continue to receive
their salaries (inclusive of the 2.5% notch increment). One would have expected the
employees to have annexed copies of their salary advice slips following upon the
municipality’s decision to pay them. There is no evidence of this on record.  I am
accordingly not persuaded that the appeal has been perempted.
Mootness
[17] The high water mark of the respondents’ case on mootness rests on the
inference to be drawn from the wording of the resolution taken on 14 December 2022
and the accompanying minutes of the Council meeting in terms of which the
municipality paid the respondents the amounts due to them in terms of the wage
agreement with the South African Local Government Bargaining Council (SALGBC).
On this basis, the respondents contend that the payment by the municipality
constitutes an ‘admission’ that their claim was well founded and that no purpose would

15 South African Revenue Service v Commission for Conciliation, Mediation and Arbitration and others
2017 (1) SA 549 (CC) .
16 Ibid para 26.
17 President of the Republic of South Africa v Public Protector [2017] ZAGPPHC 747; 2018 (2) SA 100
(GP).
18 National Union of Metal Workers of South Africa v Intervalve (Pty) Ltd and Others [2014] ZACC 35;
2015 (2) BCLR 182 (CC); [2015] 3 BLLR 205 (CC); (2015) 36 ILJ 363 (CC) paras 60-61

be served by any judgment of this Court as the matter has now become academic.
In National Coalition for Gay and Lesbian Equality and Others v Minister of Home
Affairs and Others19 Ackermann J said the following regarding mootness:
‘A case is moot and therefore not justiciable if it no longer presents an existing or live
controversy which should exist if the Court is to avoid giving advisory opinions on abstract
propositions of law.’
[18] In the present matter, the interests of justice justify looking past the issues of
mootness and peremption. This is particularly so as there are two judgments
subsequent to the decision of the high court in which the resolution which authorised
the payment of the 2.5% notch increment to the employees was set aside and declared
null and void. To that end, the underlying edifice on which the high court arrived at its
decision has been found wanting in both the Labour Court and the Labour Appeal
Court. It cannot therefore be said that the appeal will have no practical effect, or has
become academic. The ‘live controversy’ is very much extant, especially as the
municipality is obliged in terms of the high court’s order to continue paying the
respondents the 2.5% notch increase until that judgment is set aside. In the result, I
am not persuaded that the argument based on mootness and peremption can be
sustained.
In this Court
[19] The thrust of the appellants’ case is that the high court erred in finding that the
decision to cease payment of the 2.5% notch increment to its employees, including
the respondents, was unlawful. Its case rests on two main pillars – first, that the high
court had no jurisdiction to entertain the claim of the two employees under section
77(3) of the Employment Act, and second, that the employees failed to establish that
the non-payment of their 2.5% notch increment constituted a breach of their contracts
of employment. Success on either of these grounds would be dispositive of the appeal
in favour of the appellants.

19 National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others
[1999] ZACC 17; 2000 (2) SA 1 (CC) para 21 fn 8.

Jurisdiction of the high court
[20]  In assessing whether the high court lacked jurisdiction, the starting point is that
the high court has jurisdiction to adjudicate on any matter, except where the legislature
has assigned jurisdiction to another court, similar in status to the high court.20 The
legislative framework which underpins the exclusive jurisdiction of the Labour Court in
labour-related matters21 is located in s 77 of the Employment Act which reads as
follows:
‘(1) Subject to the Constitution and the jurisdiction of the Labour Appeal Court, and except
where this Act provides otherwise, the Labour Court has exclusive jurisdiction in respect of all
matters in terms of this Act.
(1A) The Labour Court has exclusive jurisdiction to grant civil relief arising from a breach of
sections 33A, 43, 44, 46, 48, 90 and 92.
(2) . . .
(3) The Labour Court has concurrent jurisdiction with the civil courts to hear and determine
any matter concerning a contract of employment, irrespective of whether any basic condition
of employment constitutes a term of that contract.
(4) Subsection (1) does not prevent any person relying upon a provision of this Act to establish
that a basic condition of employment constitutes a term of a contract of employment in any
proceedings in a civil court or arbitration held in terms of an agreement.
(5) If proceedings concerning any matter contemplated in terms of subsection (1) are instituted
in a court that does not have jurisdiction in respect of that matter, that court may at any stage
during proceedings refer that matter to the Labour Court.’

[21] As stated in Baloyi v Public Protector and others22 (Baloyi) ‘the provisions
of section 77(1) do no more than confer a residual exclusive jurisdiction on the Labour
Court.’ A plain reading of s 77(3) of the Employment Act makes it clear that the Labour
Court and the civil courts have concurrent jurisdiction to determine any matter
concerning a contract of employment irrespective of whether any basic condition of

20 Section 151(2) of the LRA provides: ‘The Labour Court is a superior court that has authority, inherent
powers and standing, in relation to matters under its jurisdiction, equal to that which a court of a Division
of the High Court of South Africa has in relation to matters under its jurisdiction.’
21 See Amalungelo Workers’ Union and Others v Philip Morris South Africa (Pty) Limited and Another
[2019] ZACC 45, 2020 (2) BCLR 125 (CC); (2020) 41 ILJ 863 (CC) (Amalungelo) para 20: ‘The section
tells us in unambiguous terms that the Labour Court has exclusive jurisdiction over matters arising from
the Basic Conditions Act’, with the exception being in section 77(3).
22 Baloyi v Public Protector and others [2020] ZACC 27; 2021 (2) BCLR 101 (CC) para 26.

employment constitutes a term of that contract.23 Baloyi held further that ‘disputes
arising from contracts of employment do not, without more, fall within the exclusive
jurisdiction of the Labour Court is further made clear by section 77(4) of the
Employment Act, which emphasises that the exclusive jurisdiction of the Labour Court
referred to in section 77(1).’24

[22] In determining whether the high court had the necessary competence to
adjudicate the matter, the starting point is whether the claim is of such a nature that it
is required, in terms of the LRA or the Employment Act, to be determined exclusively
by the Labour Court. Gcaba v Minister for Safety and Security and Others25 set out
the approach to be followed where the jurisdiction of a court is challenged. The position
was articulated as follows:
‘In the event of the Court’s jurisdiction being challenged at the outset (in limine), the applicant’s
pleadings are the determining factor. They contain the legal basis of the claim under which
the applicant has chosen to invoke the court’s competence. While the pleadings – including in
motion proceedings, not only the formal terminology of the notice of motion, but also the
contents of the supporting affidavits – must be interpreted to establish what the legal basis of
the applicant’s claim is, it is not for the court to say that the facts asserted by the applicant
would also sustain another claim, cognisable only in another court. If however the pleadings,
properly interpreted, establish that the applicant is asserting a claim under the LRA, one that
is to be determined exclusively by the Labour Court, the High Court would lack jurisdiction.’26

[23] If regard is had to the pleadings in the present matter, the notice of motion
makes no mention of an employment contract or the breach of any terms thereof.27
The employees adopted the terminology used by the municipality in referring to the
decision taken on 25 March 2019 and the steps to recover the 2.5% notch increment

23 Amalungelo para [21] declared that the Labour Court has jurisdiction ‘in respect of all matters’ arising
from the Employment Act.
24 Ibid para 28.
25 Gcaba v Minister for Safety and Security and Others [2009] ZACC 26; 2010 (1) BCLR 35 CC.
26 Ibid para 75.
27 The National Prosecuting Authority v PSA obo Meintjies and 55 others and Others and The Minister
of Justice and Correctional Services and Director-General: DoJCD v PSA obo Meintjies and 55 others
and Others [2021] ZASCA 160; [2022] 1 All SA 353 (SCA) para 61, which noted: ‘Thus, the notice of
motion and founding affidavit has to be analysed to ascertain whether the enforcement of employment
contract terms was relied upon. In performing this exercise, substance must prevail over form and
proper regard must be had to context.’

as an ‘over payment’. The remaining paragraphs of the notice of motion are directed
at the demand for payment of the amounts deducted from their salaries.

[24] In Lewarne v Fochem28 (Lewarne) this Court held that where the dispute relates
to, is linked to, or is connected with an employment contract, s 77(3) of the
Employment Act which confers concurrent jurisdiction on the civil courts and the
Labour courts, applies. In overturning the decision of the high court that the Labour
Court had exclusive jurisdiction in such matters, this Court concluded that the
appellant’s claim was for money due to her in terms of her employment contract and
affirmed the competence of the high court to determine the matter.

[25] The focus of the founding affidavit is directed at addressing the deductions
having been made without consent and that such conduct was in breach of s 34(1) of
the Employment Act. According to the appellants, this alone would ensure that the
matter should fall under the exclusive jurisdiction of the Labour Court. In order for the
civil courts to acquire concurrent jurisdiction with the Labour Court, the respondents
would have had to plead that the 2.5% increment formed a term for their employment
contract. While no specific reference is made in the founding affidavit of Mr Ngcangula
to any term of his contract of employment, Mr Nqeketho attached a copy of his contract
of employment to his affidavit. The respondents’ case was that the conduct of the
municipality in deducting the 2.5% notch increment from their salaries constituted a
breach of their employment contracts. They considered the notch increment to form
part of their salary, despite the appellants’ view to the contrary. As stated in Makhanya
v University of Zululand29
‘When a claimant says that the claim is to enforce a right that is created by the LRA, then that
is the claim that the court has before it, as a fact. When he or she says that the claim is to
enforce a right derived from the Constitution then, as a fact that is the claim. That the claim
might be a bad claim is beside the point.’30

28 Lewarne v Fochem International (Pty) Ltd [2019] ZASCA 114; [2020] 1 BLLR 33 (SCA). The
appellants cause of action in that case arose out of and was related to her contract of employment, a
term of which provided that she would be paid a 13th cheque in December of each year. When her
employer only paid a portion of her 13th cheque, she launched proceedings in the high court under
s 77(3) of the Employment Act.
29 Makhanya v University of Zululand [2009] ZASCA 69; [2009] 4 All SA 146 (SCA).
30 Ibid para 71.

On this basis, I am satisfied that the high court correctly, on the basis of the
respondent’s pleadings, determined that it had jurisdiction to adjudicate the dispute.
Whether or not the cause of action was well founded is entirely a different enquiry and
has no bearing on the question of a court’s jurisdiction. Accordingly, the argument
relating to the high court’s lack of jurisdiction is without merit.

Was the notch increment a term of the employment contract
[26] The position adopted by the appellants, which it maintained throughout, was
that the respondents were never entitled to the 2.5% increment in the first instance,
as this was a payment erroneously made to all municipal employees as opposed to
only those who qualified for the benefit. More importantly, the appellants contended
that the respondents failed to establish a contractual entitlement to a 2.5% increment
in their salary.

[27] The issue of the notch increase is not a red herring as the respondents contend,
but is critical in determining the merits of the appeal. As stated earlier, the employment
contract adduced by Mr Nqeketho does not contain any reference or entitlement to a
notch increment. Mr Ngcangula did not adduce his contract of employment as part of
his papers. His founding affidavit is silent regarding the notch increment being a term
of his contract of employment. If the increment formed a component of either of their
contracts of employment, such terms should have been pleaded in the respondents’
founding
affidavits,
alternatively
should
have
been
self-evident from a perusal of their contracts. On both fronts the respondents fail to
overcome this hurdle.

[28] On Mr Ngcangula’s own version he attached a letter to his founding affidavit
from the SALGBC dated 20 February 2019 which states that the notch increase would
apply ‘to employees who have been placed on salary scales (in terms of the erstwhile
Industrial Council) and who have not yet reached the top of the said salary scales.’
Implicit in this is the recognition that the increment was not to be paid to all employees.
Apart from the absence of the notch being a term of their contracts of employment,
there is no averment from either of the respondents that they qualified for the notch
increment or otherwise met the criteria to benefit under the resolution No. 01-18/19 of
25 March 2019. To the extent that Mr Ngcangula understood that his entitlement to

the 2.5% increment stemmed from an agreement concluded in the SALGBC, this is
contrary to the conditional wording in the Circular from the SALGBC dated 20 February
2019.

[29] Once the municipality ascertained that it had mistakenly paid all employees the
2.5% increment instead of only those who qualified for the increment, it set about to
recover such monies to reverse the illegality. It passed Resolution No. 01-18/19 on 25
March 2019 authorising it to take measures to recover amounts paid to employees
who did not qualify for the notch increment. Mr Ngcangula and Mr Nqeketho fell within
this category of employees. No challenge was mounted by the respondents against
the lawfulness of the resolution directing the municipality to take steps to recover
monies improperly paid to employees or to them specifically.

[30] The high court erred in concluding that the ‘breaches pleaded by the applicants
read together with the evidence show[ed] that [the] 2.5% increment was applied to all
employees of the Municipality and actually paid the increased nomination over a
period of time . . . amounts to the acceptance by conduct on the part of the Municipality
that payments were lawful’. Firstly, the ‘evidence’, even on the documents attached to
the founding affidavit of Mr Ngcangula, establish that the notch increment was payable
only to those employees who met the qualifying criteria. The respondents were not in
that category. Secondly, this conclusion suggests that because the respondents
received the notch increment over a ‘considerable period of time’, this amounted to an
‘acceptance by conduct’. Payment made erroneously to the respondents cannot give
rise to a contractual entitlement. Moreover, to hold otherwise would effectively
entrench an illegality and permit the respondents to enforce continued payment into
the future.

[31] Prior to the hearing of this matter, the Registrar of this Court received two
judgments from the appellant’s attorney, one from the Labour Court and another from
the Labour Appeal Court. The Labour Court judgment31 by Lallie J was handed down
on the same day as the judgment by Nhlangulela DJP. The applicant in the Labour

31 Independent Municipal and Allied Trade Union (IMATU) v Mase and Others [2022] ZALCPE 39;
[2022] 12 BLLR 1107 (LC).

Court, the trade union IMATU sought to hold the municipal manager of the Mhlontlo
Municipality in contempt for failing to comply with an arbitration award. The award
sought to be enforced concerned the 2.5% notch increment. The Labour Court noted
that the municipality ceased paying the 2.5% increment and sought to challenge its
legality. IMATU sought a declaratory order that the notch increment was a term and
condition of all qualifying employees’ contracts of employment. The issue before the
Labour Court was whether the implementation of the 2.5% notch increment was a term
and condition of the contracts of employment. The Labour Court found that the
municipality acted outside the scope of its powers in awarding the notch increment to
all employees – without regard to the qualifying criteria. Its Resolution No. 01-18/19
dated 25 March 2019 was reviewed and set aside.

[32] IMATU then appealed the decision to the Labour Appeal Court (LAC), which
confirmed the decision of Lallie J that only those employees who met the qualifying
criteria for the 2.5% notch increment were entitled to the benefit.32 The LAC noted that
‘it does not appear to be in dispute that the notch payments to employees who did not
qualify in terms of the Evaluation Agreement were irregular.’33 The LAC noted that the
municipality was ‘constitutionally obligated’ to ‘put in motion a process to ensure that
the monies were recovered.34 The LAC concluded that
‘…there can be little doubt that the resolution adopted by the Municipal Council to pay the 2.5
% notch increase to all employees was not only fundamentally irrational and illegal, but also
reckless. At no time could the Municipality reasonably have laboured under the
misapprehension that all its employees were entitled to the increase. IMATU itself has been
at pains to point out that it accepts that the increase only applies to qualifying employees...’.35

[33] In the high court there was a dispute as to whether the two respondents in the
present matter had been placed on salary scales, or whether their job evaluations had
been completed. Nhlangulela DJP found that it was through no fault on the part of the
respondents that the TASK grading system had not been implemented by the
municipality, and accordingly found that they could not be ‘disentitled’ from enjoying

32 IMATU v T Mase and Others (ZALAC, Gqeberha) case no. PA11/2022, unreported, 26 October 2023,
para 53.
33 Ibid para 51.
34 Ibid para 61.
35 Ibid para 62.

the benefits of the 2.5% notch increment. As the respondents had no lawful entitlement
to the benefit from inception on the basis that they did not meet the qualifying criteria,
there can be no complaint of ‘disentitlement’ thereafter. As set out above, the LAC
confirmed the setting aside of the resolution in terms of which all municipal employees
received the 2.5% notch increase on the basis that it offended the principle of legality.
Accordingly, the decision of the high court cannot stand.

Costs
[34] The high court awarded costs against the municipality on an attorney-client
scale, concluding that there was no ‘legal reason’ for the municipality to reduce the
remuneration of the respondents. It is trite that the high court has a wide discretion to
decide on the issue of costs which may only be interfered with where the court below
misdirected itself as to the facts and legal principle. In the present matter there is no
suggestion that the conduct of the municipality was dishonest or fraudulent, justifying
a punitive order for costs. The fact that employees elect to litigate against their
employer and incur costs in the process, is no justification for a punitive order for costs.
The high court erred in considering this as a basis for awarding punitive costs against
the municipality. In this Court it was conceded by the appellants that in light of the
delays incurred in the late filing of the notice of appeal and non-compliance with rule
8(2), the costs of the preparation of the appeal record should be excluded from any
costs order granted.

Order
[35] In the result, I make the following orders:
The appeal is reinstated with no order as to costs.
The appeal is upheld with costs, save that no costs are to be paid by the
respondents for the preparation of the appeal record.
The order of the high court is set aside and substituted with the following order:
‘The applications in case numbers 1343/2021 and 1466/2021 are dismissed
with costs.’

________________

CHETTY AJA

Acting Judge of Appeal

Appearances:

For appellant:
A Katz SC (with him L Haskins)
Instructed by:
Mvuzo Notyesi Incorporated, Mthatha

Phalatsi and Partners, Bloemfontein

For respondent:
N van der Sandt (heads of argument drawn by J G
Grogan)
Instructed by:
W Mdlangazi Attorneys, East London

Webbers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:

17 January 2024
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Mhlontlo Local Municipality & 2 others v Ngcangula and Another (Case no
1154/2022) [2024] ZASCA 5 (January 2024)

Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Eastern Cape Division of the
High Court, Mthatha (high court). The order of the high court was set aside and replaced with one
dismissing the applications. The appeal revolved around certain deductions of employee salaries by
their employer, the Mhlontlo Local Municipality (municipality). The deductions were related to a notch
increase, initially granted retrospectively to 2015, in terms of a resolution taken by the municipality in
2019, but subsequently revoked, contrary to the provisions of s 34(1) of the Basic Conditions of
Employment Act 75 of 1997 (the Employment Act).

Two applications were launched separately in the high court by the first and second respondents, both
of whom contended that their employer had effected unauthorised deductions from their basic salaries
and their essential use allowance. Both received letters from the municipality in 2020 informing them
that the notch increase was identified as an irregular expenditure by the Office of the Auditor-General,
and both had to ensure repayment of the amounts by 2021. The municipality contended that the
decision to recover the money was lawful as both employees had not been placed on salary scales as
their job evaluation processes were still ongoing, the completion of which was considered a qualifying
condition for the notch increment. As such, they were overpaid. The municipality contended that the
decision to cease paying the notch increase was both lawful and justifiable and it alleged that its conduct
did not constitute a ‘deduction’ as contemplated in sub-sections 34(1) and 34(2) of the Employment Act.
The respondents however contended that the decision to cease paying their notch increase was made
without any representations being sought from them. The decision was therefore unlawful and in breach
of s 34(1) of the Employment Act as there was no agreement from either of the respondents for such
deductions to be effected.

The high court was satisfied that the dispute as framed by the employees implicated a breach of their
contracts of employment and concluded that the municipality’s decision to unilaterally reduce the
employees’ remuneration, without due process, was unlawful, of no force and effect and was a resort
to unfettered self-help. The municipality was ordered to re-instate the ‘terms and conditions’ of the
employees’ employment contracts which prevailed prior to the deductions.

In this Court the respondents alleged that the appeal had become perempted in that after filing its
application for leave to appeal in September 2022, the municipality paid all its employees, including the
respondents, amounts due in terms of a SA Local Government Bargaining Council (SALGBC) wage
agreement, with retrospective effect. In order to succeed on peremption a respondent must have
demonstrated with reference to the facts that an appellant’s unequivocal conduct after having obtained
leave to appeal, is inconsistent with an intention to appeal. This Court reiterated that peremption is not
lightly presumed and the onus rested on the party alleging peremption to establish conduct that clearly

and unconditionally demonstrates acquiescence to abide by a judgment or order. This Court was not
satisfied that the respondents provided any evidence to conclusively prove that the appellant waived its
rights in this regard. The Court found that the appeal was not perempted.

Furthermore, the respondents claimed the matter has become moot and was based on the repayment
of money in terms of the SALGBC wage agreement. The respondents contended that this repayment
constituted an admission that their claim was well founded and that the judgment of this Court would
serve no purpose. However, this court found that the matter was still live as there were real
consequences attributable to the high court order until the judgment was set aside.

Lastly, the appellants contended that the high court was wrong when it found that the municipality’s
decision to cease paying the notch increase was unlawful. They submitted firstly, that the court did not
have the requisite jurisdiction to entertain the claim and secondly, the employees failed to establish that
the non-payment of the notch increase constituted a breach of the employment contracts. However,
this Court found that the first contention was without merit and, as to the second, it confirmed that only
employees who met the qualifying criteria of a notch increment were entitled to the accompanying
benefits. In light of the respondents having no legal entitlement to the notch increase, it could not be
held that they were disentitled by the municipality.

In the result, the SCA upheld the appeal and replaced the order of the high court with one dismissing
the appeal.

~~~~ends~~~~