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[2014] ZAGPPHC 380
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Moore v Leamar Environmental Solutions (54987/2012) [2014] ZAGPPHC 380; - (18 June 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NUMBER: 54987/2012
DATE:
18/6/2014
In
the matter between:
HUGH
FINLAY
MOORE
................................................................................................
APPLICANT
and
LEAMAR
ENVIRONMENTAL
SOLUTIONS
...........................................................
RESPONDENT
JUDGMENT
TLHAPI
J
[1]
This is an application for the final or provisional winding up of the
respondent on the basis that the respondent was unable
to pay its
debts Companies Act, as contemplated by section 344(f) of the old
Companies Act and/ or that it was just and equitable
as contemplated
by section 344(h) of the same Act. The application was opposed.
Condonation
is granted for the late filing of the replying affidavit.
[2]
During 2001 the applicant designed and manufactured a product known
as a ‘jet mixer’. Since the intellectual in
the product
vested in him, the respondent indentified a mutual opportunity to
exploit and employed him . A written agreement
was entered into
on 1 May 2003.
[3]
The clause pertaining to the applicant’s remuneration read as
follows:
“
The
company offers a total cost to company package scheme of
R240 000.00 per annum, which will be paid monthly
in
arrears into a bank account of your choice. Pro rata bonuses might be
paid to you, on discretion of the director of the company,
based on
your performance and the performance of your company. The total cost
to company package scheme enables you to structure
your remuneration
in the best way possible to suit your needs at the discretion of the
company. The total cost to company include
the cost of medical aid
and provident fund contributions referred to below. .....
In
addition to the above cash payment you will also be entitled to an
annual bonus based on 5 (five) percent of sales turnover of
the
company.
Further bonuses on
installations will be discussed and agreed upon when you start
employment whereafter it will become part of
this contract.”
Furthermore,
the respondent had to contribute 7.28% towards the applicant’s
provident fund and he was entitled to full pay
in respect of the 20
working leave days in each 12 months completed service. The applicant
averred that there was a further oral
agreement with the
following terms:
1.
that the plaintiff would be entitled to 20%
per invoice of jet mixers sold and that same was payable on receipt
of payment from
a client.
2.
that the applicant would be entitled to a
13
th
cheque and that respondent would be liable for relocation costs from
the United Kingdom to South Africa;
[4]
The applicant averred that the respondent had breached the above
agreements and was indebted to him in the amount of R2 245 523.00,
made up as follows:
1.
failed to pay the 13
th
cheque for the years 2008, 2009, 2020 and
pro
rata
2011 and further failed to
contribute and was indebted in the amount of R77 227.00;
2.
failed to pay the 7.28% towards the
applicant’s provident fund after 2007;
3.
failed to pay the 5% bonus and was
indebted in the amount of R725 115.00;
4.
failed to pay the 20% installation bonus
and was indebted in the amount of R684 408.00;
5.
failed to pay relocation expenses and
was indebted in the amount of R548 490.00;
6.
failed to pay outstanding 15 days
annual leave pay at date of resignation and was indebted in the
amount of R5 500.00
The
applicant contends that some of the claims could result in factual
disputes therefore he decided to focus on those claims which
the
respondent could not dispute on
bona fide
and reasonable
grounds, these being the claim in respect of the 5% bonus and
contribution towards his provident fund.
[5]
The applicant denied he was ever paid the 5% bonus. From the
financial statements of the respondent in his possession ‘A3’
and ‘A4’ (year ending 28 February 2008, 2009 and 2010)
which were annexed he calculated that what was due to him amounted
to
R162 999.41. In respect of those years for which no financial
statements were available (year ending 28 February 2004 to
2007 he
estimated that the annual turnover would not be less than
R1 100 000.00 and in this regard he was owed R220 000.00.
The
respondent’s provident fund contributions not paid over a
period of 36 months amounted to R204 783.00.
[6]
A statutory demand in terms of section 345(1)(a)(i) in terms of the
old Companies Act, was served by Sheriff on the registered
office of the respondent on 28 November 2011. The respondent
acknowledged receipt of the demand but denied there were any amounts
due to the applicant and in particular denied ‘
that there
was any further agreement reached with regard to bonuses on
installation; ....
contended ‘
that it had paid the 5%
bonus on annual sales; ....
denied that applicant was entitled to
any leave days;.....denied that there was an oral agreement concluded
during 2003 regarding
installation bonuses;........ denied that
applicant was the inventor of the ‘
jet mixer’
and
entitled to a percentage on invoice price; ... denied agreement on
entitlement to a 13
th
cheque or entitlement to any
relocation expenses. The respondent did not deny its obligation
towards the provident contribution.
[7]
The respondent raised several points
in limine
. It contended
that this court lacked jurisdiction in terms of section 157 (1)
of the Labour Relations Act 66 of 1995 (the
‘LRA’)
because the dispute revolved around ‘non-payment of his salary,
bonuses, leave pay and contribution towards
his provident fund’.
The applicant had also failed to engage the dispute resolution
process under the LRA. The respondent
contended further that the
applicant was made aware prior to the application that the
indebtedness was unequivocally denied and
that this raised factual
disputes and also that the applicants claims were unliquidated in
several respects. Furthermore that since
this application was served
on 25 September 2009 that all claims preceding this date had
prescribed.
[8]
The respondent denied that it was insolvent or that it was indebted
to the applicant. It contended that its assets exceeded
its
liabilities and that it had traded at a profit prior to the
application being launched and as was evident from the financials
annexed to the founding affidavit.
Furthermore
the respondent :
1.
denied that the applicant was the designer
of the ‘jet mixer’ product
2.
denied that an oral agreement on the terms
alleged by applicant was entered into during June 2003;
3.
that from the remuneration clause in the
employment agreement it was made clear that the installation and
other bonuses including
the 13
th
cheque would be paid out at the discretion of the directors of the
respondent;
4.
admitted to having stopped contributions
towards the provident In November 2007 after reaching agreement at a
meeting attended by
the applicant, the respondent’s bookkeeper
and the deponent to the answering affidavit that the respondent would
no longer
be making contributions for its employees and that
applicant agreed and accepted such change; the applicant never raised
this issue
till receipt of the letter of demand and the applicant was
not entitled to any contribution after October 2007;
5.
that the respondent had paid all 5% bonuses
due;
6.
denied that applicant was entitled to any
relocation expenses or outstanding leave;
[9]
The respondent contended that the applicant had failed to mention the
dates when the said bonuses were allegedly not paid and
the
respondent was unable to determine which amounts were in dispute; the
applicant had failed to state the basis upon which claims
in
paragraphs 4.13.1, 4.13.3 and 4.13.4 were founded and had provided no
proof for the claims in paragraphs 4.13.5 or 4.13.6.
The
respondent contended that the claims were unproven, unliquidated and
disputed and, that a large portion of the claims had prescribed
The
respondent contended that the applicant failed to state what amounts
he had received with regard to the 5% bonus. A statement
by its
bookkeeper annexure ‘F’ indicated that the
applicant had received additional payments amounting to R1 381 692.
[10]
Preceding the replying affidavit the applicant served a Rule 35 (12)
notice on the respondent and obtained information which
applicant
contended assisted in properly formulating its claims as was
confirmed in the replying affidavit.
In
response to the points
in limine
the applicant contended that
this court had jurisdiction to determine the matter because he
launched the application as a creditor
who had an undisputed claim
against the respondent and not as an employee; furthermore, that
since the respondent contended that
it disputed the claims on
reasonable grounds, the court had to determine whether the applicant
had made out a case for winding
up by it proving that respondent was
indebted to him in the sum of more than a R100.00.
[11]
The alleged oral agreement of November 2007 regarding respondents
obligation to pay provident contributions did not comply
with the
terms of the non-variation clause in employment agreement, which
provided that, ‘
this contract may be amended in writing
only’.
While certain amounts may have
prescribed the respondent did not dispute the amount and obligation
to pay and still
remained indebted in the amount of R102 648.00
for no less than two years contributions (R4 277.00 x 24
months).
[12]
The respondent contended that prescription had been interrupted when
respondent alleged that it had paid all amounts due in
respect of the
5% bonus. Having regard to the information provided in response to
the Rule 35(12) notice the respondent was indebted
in the amount of
R470 484.00 calculated for each financial year ending February
for the years 2004 to 2012.
[13]
The applicant then dealt with payments by the respondent recorded in
annexure ‘F’ which did not constitute payment
of the 5%
bonus. In part one under the heading ‘Bonus’ and against
dates reflected were payments for the full or part
payments of his
13
th
cheque (
15/12/2003; 6/12/2004; 6/12/2005 ;
10/6/2005
); part payments of salary (
8/2/2007
); only one
and not two payments as reflected of R10 000.00 on
9/1/2008
was paid; the respondent conceded that an amount of R20 000.00
(
10/8/2008
) was never paid to applicant; an amount of
R20 000.00 (
11/8/2010
) was paid to applicant’s wife
for services rendered.
[14]
In part two and three payments reflected related to his overseas
business travel expenses, payment to the Department of Home
Affairs
for work permits; payments on behalf of applicant and other employees
for accommodation during a business trip; the respondent
never
contributed towards the applicant’s medical aid and payment for
medical purposes was never claimed from him and the
same applied to
alleged overpayments in respect of provident fund; the cellphone
costs related to office expenses and reflected
as overpayment for
medical aid; the Toyota LD Cruiser was donated to applicant’s
wife and was sold by the respondent on its
return for R120 000.00.
Points
in limine
[15]
Jurisdiction
: The submission for the applicant that this
matter was not related to a labour dispute presents difficulties in
my view, in relation
to only one of the claims, being the claim with
regard to the provident fund contributions.
Although
the application relates to an employment contract, in my view, the
issue that is raised in respect of the other claims
is about the
breach of the said employment contract, which resulted in the
applicant considering himself or becoming a creditor
of the
respondent. It is this court that has jurisdiction to deal with an
application for the winding up of the respondent by a
creditor and
not the CCMA or the Labour Court under the
Labour Relations Act
(‘LRA’). The issue to determine, therefore, is whether
the claims raised are claims that may result in the respondent
being
wound-up on account of it being unable to pay its debts.
[16]
Factual Disputes:
The applicant has conceded that there are
factual disputes relating to some of his claims. The applicant has
therefore confined
his claims to the one relating to his provident
fund contributions and the 5% bonus.
[17]
Prescription:
In my view the issue of prescription was still
relevant to the determination of this matter and can only be dealt
with when
there is clarity on what constitutes the claims of
the applicant as at the time when the demand was served on the
respondent .
[18]
Provident Fund:
It was common cause that the employment
contract provided for 7.28% contribution, which
represented a 100% contribution
by the employer (respondent). It is
not the case for the applicant that a portion of the contributions
were deducted from his salary.
The employment contract was subjected
to a non-variation clause and on the other hand, the provident fund
contribution constituted
a benefit of his employment.
According
to the applicant there was a unilateral change to his conditions of
employment which was denied by the respondent. In
my view, this is a
dispute that should have been dealt with under the
Labour Relations
Act, that
is, before the CCMA and a referral to the Labour Court on
failure by the CCMA to resolve the dispute. It is a dispute which is
distinct from the other claims and should have been dealt with
separately. In this regard the applicant was out of time and I am
not
certain that condonation would have been granted so many years after
the incident occurred or after the termination of his
employment with
the respondent.
[19]
Furthermore, I am not satisfied that the applicant has made out a
proper case why this contribution is due to him directly.
In ‘A1’
under Provident Fund membership was subject to the fund rules. The
employer was responsible for entering into
an agreement with the
provident fund on behalf of a group of employees. When the employer
ceased to make any contributions on behalf
of an employee then
certain consequences under the rules of the fund follow. The
applicant has not given any information relating
to the rules of the
fund, or if he endeavoured to resolve his complaint with the fund or
as to whether the fund at any stage dealt
with the respondent’s
failure to meet its obligations. As I see it, where an employer
contributes 100% (or even 50%)
the loss to the employee is not the
value of the contribution but the value of the benefit derived from
contributions from November
2007 and for 24 months thereafter. Even
if the value of the contribution was payable it does not in my view,
accrue directly to
the applicant. The answering affidavit does not
give clarity on the provident fund issue because even the respondent
in my view
cannot negotiate with its employees regarding the
contributions without engaging the rules of the fund.
[20]
According to the respondent an agreement was reached with a group of
employees during which they were informed that the respondent
would
no longer make any contributions towards the provident fund and that
each would be liable for his or her own contribution
towards their
respective provident funds. It is not clear whether the applicant did
so after November 2007. There is in my
view no clarity as to
what happened with the employee benefits from contributions made
prior to this change. This has to be determined
by the rules of the
Fund. The benefits derived could have been kept in a preservation
fund or transferred to another fund, or a
retirement annuity, that is
depending on the circumstances of each case. If it is a transfer to
another fund it may be that the
respondent would be responsible for
paying the equivalent of the contributions owing on behalf of the
applicant to that fund for
that period.
[21]
The 5% bonus:
It was common cause that in terms of the
agreement the respondent had to pay a 5% bonus. The respondent does
not deny such fact
and has stated in the answering affidavit that it
had complied with its obligations in this regard. Annexed
to the
founding affidavit were copies of some audited financial
statements of the respondent which formed the basis of applicant’s
calculations of the 5% bonus due on annual sales turnover.
The
applicant relied on figures in the financial statements available to
calculate what was due to him. In the financial statements
for 2009
the cost of sales for 2008 and 2009 are reflected as R1 126 923.05
and 896 887.25 respectively on page
33 of the papers (
under
notes
: Income statement for the year ended 28 February 2009). At
page 42 (
under heading
: Detailed Income statement for the year
ended 28 February 2009) the same amounts are reflected, but now these
related to sales
and services rendered. The question is how much of
the said amounts represent annual sales and how much income for
services rendered.
In response to the
Rule 35
(12) notice, annexure
‘F’ prepared by the respondent’s bookkeeper is an
exposition of its summary of payment
made in respect of the 5% bonus.
The bookkeepers affidavit gives no further explanation of the source
of the calculations and how
these are accounted for in the financial
statements. There is further no explanation why the payments
reflected in annexure ‘F’
should be considered as
constituting payment of the 5% bonus other than the contention in the
answering affidavit that all 5% bonuses
due have been paid. What is
evident though is that it would seem that some of the payments could
be payments over and above the
applicant’s salary in terms of
the employment agreement. What I find is that there is no unequivocal
acknowledgment of debt
in this regard by the respondent. The
applicant has in the replying affidavit given an explanation of what
the payments were for,
which is in contradiction to what the
respondent has put forward, but which in my view presents another
instance where it could
be said that there is a factual dispute.
[22]
The winding-up:
It was submitted for the applicant that the
respondent had failed to show that the claims were denied on
reasonable grounds and
that the applicant had
prima facie
established and proved that the respondent was indebted to him
in the amount of R100.00. I have given reasons why I have
problems
with the provident fund claim and on the calculation of the 5% bonus
allegedly owing. With regard to these two issues
and in the light of
uncertainty I find it necessary postpone the giving of an order for
the provisional winding up of the respondent
to and to refer oral
evidence the determination of certain issues.
[23.]
In the result I give the following order:
The
matter is referred to oral evidence for the following issues to be
determined:
1.
Provident Fund:
What were the circumstances prevailing
during November 2007 when contribution towards provident fund by the
respondent stopped.
2.
How was the issue resolved in terms of the rules of the fund;
3.
Why should the applicant be reimbursed directly;
4.
5% Bonus:
what constitutes the basis of calculation of the 5%
bonus and has this been paid by the respondent;
5.
Costs are reserved.
__________
TLHAPI
V.V
(JUDGE
OF THE HIGH COURT)
MATTER
HEARD ON : 22 MAY 2013
JUDGMENT
RESERVED ON : 22 MAY 2013
ATTORNEYS
FOR THE APPLICANT : WEAVIND & WEAVIND
ATTORNEYS
FOR THE RESPONDENT: VAN ZYL LE ROUX ATT