This was the question which confronted the Labour Appeal Court in Wheelwright v CP de Leeuw Johannesburg (Pty) Ltd. In the case, the parties reached an agreement at the CCMA which resolved the unfair dismissal dispute and the dispute in respect of the calculation of the employee's severance pay which the employee had referred to the CCMA.

The agreement comprised two documents, the standard form CCMA agreement and a further written document prepared by the parties which was attached to the standard form as Annexure A.

The CCMA standard form agreement contained a clause stating –

"this agreement is in full and final settlement of the dispute referred to the CCMA as well as in full settlement all statutory payment due to the applicant as reflected at para 5 of this agreement."

The annexure had the following clauses –

"2. The parties have agreed to the full and final settlement of all matters between them and wish to record the terms of the settlement of this agreement.

...

5. This agreement is in full and final settlement of all and any claims which the parties may have against each other whether such claims arise from contract, delict, operation of law, equity, fairness or otherwise."

The employee had given restraint undertakings to the employer when he was employed. Following the conclusion of the settlement agreement, the employee acted in breach of those undertakings and the former employer sought to enforce the undertakings. When doing so, the former employer was confronted with the argument that the settlement agreement had settled all disputes between the parties, including any disputes relating to alleged breaches of the restraint undertakings.

There was no dispute that the employee had acted in contravention of the restraint undertakings and that the restraint undertakings, in the ordinary course, would have been enforceable (indeed they were enforced by the Labour Court). The question before the Labour Appeal Court was whether the terms of the settlement agreement had settled claims for future breaches of the restraint undertakings.

To this end, the employee argued that the settlement agreement included a standard form as well as a bespoke annexure. It was clear from the standard form agreement that the actual dispute referred to the CCMA, namely the unfair dismissal and severance pay disputes had been fully and finally settled. Had this been the only issue settled, so the employee contended, there would have been no need for the bespoke agreement set out in the annexure.

The employee then argued that clauses 2 and 5 of the annexure, when read together, make it clear that the intention of the parties was to settle all disputes between them, and that had the intention been to only settle the disputes before the CCMA there would have been no need for clauses 2 and 5, they would have been superfluous and without any purpose.

The former employer contended that annexure A, and so clauses 2 and 5 thereof, could not be regarded as a self-standing agreement, and that it had to be read as an annexure to the standard form agreement. Consequently, so the argument went, the "full and final settlement" provision could only have been referring to the two disputes referred to the CCMA. Based on this reading, the former employer argued, that there could be no basis to conclude that the former employer had abandoned the rights it enjoyed in terms of the restraint undertakings or that it had exhibited any intention to waive or abandon those rights.

The Labour Appeal Court, per Davis JA, confirmed that the task of judicial interpretation is not to divine a meaning of a contract which the court considers to be the contract that the parties might or ought to have entered into to which may be ethically preferable. The interpretative process cannot eschew a careful examination of the words and sentences that have been employed in the contested provision to determine how these words lead to the intended purpose of relevant clauses.

To this end, the court concluded that the wording of clause 5 went beyond a mere repetition of the words used in the standard form, but rather referred to "all and any claims which the parties may have against each other whether such claims arise from contract, delict, operation of law, equity, fairness or otherwise." Manifestly the clause extended beyond the specific dispute referred to the CCMA.

The Court then found that the agreement was concluded after the termination of the employee's employment. On the facts before the Court, the former employer was, at the time of concluding the agreement, aware that the employee may not adhere to the restraint undertakings. There was thus a possibility that the former employer's proprietary interests would be infringed. Within this context, a clause which referred to "all and any claims" which the parties may have and whose source would be "in contract, delict, operations of law, equity or fairness", must be sensibly interpreted to mean that it cannot be confined to the dispute before the CCMA. The parties must therefore have been settling any dispute about breaches of the restraint undertakings, no matter how they arose or when they arose.

The Court then found –

"Aware as it was of the existence of the restraint agreement, it behoved the representatives of the [employer], if the latter was so concerned, to carve out an exclusion so that the restraint of trade agreement continued to be operative, notwithstanding the conclusion of annexure A."

This case reminds us of the need to be extremely careful when entering into agreements that are in 'full and final settlement' of a dispute, and that you are not settling, waiving or abandoning rights or causes of action that you do not intend to. Be specific about what you are settling, or, if you are concerned that there may be uncertainly, clarify in the agreement what is not being settled. It is also a timely reminder, although not specific to the conclusion of this case, to carefully read the terms of any standard form agreement presented to the parties by the CCMA or any other dispute resolution body.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.