#MoyovsOldMutual – Round 6: Why Old Mutual’s non-executives, chair are not in contempt of court

PUBLISHED: Tue, 08 Oct 2019 18:04:54 GMT

By Fifi Peters, CNBC Africa reporter and anchor

Old Mutual says its decision to fire Peter Moyo for the second time was lawful and that the board followed legal advice when they barred him from returning to work three times so the company can’t be in contempt of court.

This was the argument the insurer made in court documents filed on Tuesday in the final hour of its ten day deadline to respond to Moyo’s contempt of court application against it and its 13-member board.

Moyo’s application, in which judgement has been delayed, is centred around the July 30 ruling in which the High Court overturned Old Mutual’s decision to fire Moyo for the first time and ordered he be temporarily reinstated as CEO. Its implications are so severe that should Old Mutual be found to have acted in contempt of court, it could face a hefty fine and its non-executive directors, chaired by Trevor Manuel, may be sentenced to jail for up to six months.

Why directors are not in contempt of court?

When Old Mutual’s Board served Moyo with a letter on the afternoon of July 30, which said he was not permitted or allowed to return to work the next day, despite the High Court ruling, the directors say they acted on legal advice from legal counsel Bowman Gilfillan.

Old Mutual says it was advised that the July 30 ruling which 1) ordered Moyo’s temporary reinstatement as CEO and 2) blocked Old Mutual from appointing a new CEO pending further legal action, was final in nature and could be blocked by Old Mutual’s decision to appeal.

Furthermore, Old Mutual says in court papers that it was told by its legal counsel that it could not allow Moyo to resume his duties while its urgent application to declare the July 30 ruling as final or suspend its orders through a Section 18 application was underway.

“(Old Mutual’s) genuinely believed on the strength of the legal advice in which they had confidence, that the order was suspended as a matter of law,” the company said in court papers

“(Old Mutual’s) attitude was clearly one of a desire to respect the court’s authority, and not to disregard its order.” 

The company has since sought further independent legal counsel to work alongside Bowman Gilfillan.

Old Mutual denies that this was a vote of no confidence in the Sandton based law firm, whose current score against Moyo’s lawyers , Mabuza Attorneys in court is 4 – 1 against.

It says the decision to seek further counsel re-enforced the board’s commitment to the law by only acting on tested legal guidance.

Why second firing was lawful?

Old Mutual relies on arguments made by Moyo’s counsel to back legally its decision to fire him for the second time on August 21.

It says the concessions made by Moyo’s legal team that it was within its right to fire him again meant the directors could not have acted in contempt of court.

“Mr Moyo’s senior counsel conceded explicitly that , if Mr Moyo were to be reinstated pending the determination of Part B, there would be nothing to stop Old Mutual from properly invoking the notice clause again, in which case Mr Moyo would have no leg to stand on,” the company said in court documents quoting arguments made by Advocate Thembeka Ngcukaitobi.

Moyo has  gone ahead with Part B of his application in which he seeks permanent reinstatement as CEO, contractual damages to the tune of R250m and declaring the 13-member Old Mutual board as delinquent directors.

Old Mutual argues the second firing was independent of the first and that its timing, which happened while judgment on the Section 18 application and leave to appeal process was still outstanding, could not be perceived as being in contempt of court because it had no effect in law on the pending court decisions.

But the insurer may face an uphill battle in proving the independence of the second firing, if the September 23 judgement from Judge Mashile, the presiding Judge over this matter, is anything to go by.

Judge Mashile described as “unreasonable” Old Mutual’ s assertion that Moyo had to challenge his second firing through a separate application, saying it would lead to duplication of the same proceedings founded on similar facts.

“The second termination letter seeks to incorporate the 18 June 2019 termination letter, which I had ruled unlawful in my judgement of 30 July 2019,” Judge Mashile said in court documents.

“Were this court to entertain the respondents (Old Mutual’s) assertion in this point, it would amount to piecemeal litigation resulting in extravagant legal costs and a wastage of valuable time.”

Noticeable in Old Mutual’s court papers filed yesterday, was the exclusion of board chair Trevor Manuel’s inference towards Judge Mashile at a September 13 press briefing, in which he said:

“If you take a board imbued with the responsibility and accountability and you get that overturned by a single individual who happens to wear a robe, I think you have a bit of difficulty.”

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