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[2020] ZALAC 66
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Groom v Daimler Fleet Management (Pty) Ltd (JA39/20) [2020] ZALAC 66 (4 August 2020)
IN THE LABOUR APPEAL
COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: JA39/20
In the
matter between:
PHILLIP HENRY
GROOM Appellant
and
DAIMLER FLEET
MANAGEMENT (PTY)
LTD Respondent
Heard:
27
May 2021
Delivered:
Deemed
to be 4 August 2020.
Coram:
Davis
JA, Coppin JA et Savage AJA
JUDGMENT
COPPIN
JA
[1] This
is an appeal against the order of the Labour Court (Lagrange J)
granting a LC
[1]
Rule 11
application of the respondent, and specifically, (a) declaring the
appellant’s unfair dismissal claim against the
respondent to be
deemed abandoned, as contemplated in section 359(2)
(a)
of
the 1973 Companies Act
[2]
for
failing to give the requisite notice, and dismissing it; and (b)
striking from the roll the appellant’s conditional
counter-application in terms of section 359(2)
(b)
of
that Act to condone his late notice or failure to give a notice, and
(c) ordering the appellant to pay the costs of the respondent’s
application and its opposition to the appellant’s conditional
counter-application. Leave to appeal to this Court was granted
on
petition.
[2] LC
Rule 11 deals with interlocutory applications and other procedures
not specifically provided for in the
rules. Briefly, and to give
context to the order appealed against – after the appellant had
instituted an unfair dismissal
claim against the respondent in the
Labour Court, the respondent went into voluntary liquidation. Section
359(1) and (2) of the
1973 Companies Act, which are still valid and
applicable to the liquidation of companies in terms of the new
Companies Act of 2008
[3]
, reads:
“
359
Legal proceedings suspended and
attachments avoid
(1)
When
the court has made an order for the winding up of a company or a
special resolution for the voluntary winding up of the company
has
been registered in terms of
section 200
–
(a)
all
civil proceedings by or against the company concerned shall be
suspended until the appointment of a liquidator; and
(b)
any
attachment or execution put in force against the estate or assets of
the company after the commencement of the winding up shall
be void.
(2)
(a)
Every person who, having instituted legal proceedings against the
company which were suspended by a winding up, intends to continue
the
same, and every person who intends to institute legal proceedings for
the purpose of enforcing any claim against the company
which arose
before the commencement of the winding up, shall within four weeks
after the appointment of the liquidator give the
liquidator not less
than three weeks’ notice in writing before continuing or
commencing the proceedings.
(b)
if notice is not so given, the proceedings shall be considered to be
abandoned unless the court otherwise directs.”
[3] Issues
that arise in this case which will be dealt with in the judgment are,
whether (a) the respondent made
out the case at the appellant’s
unfair dismissal claim that it had been abandoned as contemplated in
section 359
; and assuming so, whether the appellant’s claim had
indeed been abandoned as contemplated that section. As part of both
issues
the question of the Labour Court’s jurisdiction to
determine the issue of abandonment will be dealt with.
Essential
background facts
[4] The
appellant was employed by the respondent on 29 June 1981. On 8
December 2015, following lengthy negotiations,
the respondent
terminated his employment, allegedly, due to operational
requirements.
[5] Aggrieved
by this, the appellant referred an unfair dismissal dispute to the
Commission for Conciliation, Mediation
and Arbitration (CCMA). When
conciliation failed, the appellant instituted a claim for unfair
dismissal in the Labour Court. He
filed a statement of claim on 1
April 2016, and the respondent delivered its response to the claim on
21 April 2016.
[6] In
his statement of claim, the appellant alleges,
inter
alia
, that his dismissal by the
respondent was both procedurally and substantively unfair; that it
was not for operational reasons at
all and had resulted,
inter
alia
, in a reduction of his lump sum
pension fund entitlement in the amount of about R 2 million, as well
as in the forfeiture of his
entire severance package, allegedly
because he refused alternative employment. Needless to say, the
respondent disputed all these
allegations and sought a dismissal of
the appellant’s claim.
[7] Before
November 2016, rumours were circulating that the respondent was
considering liquidation. A notice addressed
to its customers had been
posted on the respondent’s website to the effect that it would
be ceasing its business activities
by 1 November 2016.
[8] At
the time attorneys acting for the appellant had sought confirmation
of the truth of the rumours and also
applied for an urgent allocation
of a trial date. On 4 November 2016, the respondent replied to the
appellant’s attorneys
to the effect that it was not obliged to
inform the appellant of its intentions regarding liquidation, and
that the appellant would
have an opportunity to exercise his rights
if and when the respondent was liquidated.
[9] Unbeknown
to the appellant, in December 2016, the respondent passed a special
resolution for its voluntary
liquidation. Unaware of that fact, the
appellant’s attorney addressed two further emails to the
respondent during, respectively,
December 2016 and January 2017,
enquiring whether the respondent was to be liquidated. The appellant
only received notification
of the respondent’s voluntary
liquidation in July 2016.
[10] The
liquidator, Mr Barnard, was (allegedly) appointed on about 21
February 2017. Ignorant of this fact, the
appellant of his own accord
continued to try and establish whether the respondent had been
liquidated, including searching on its
website and the Government
Gazette.
[11] Notice
of the respondent’s liquidation and Mr Barnard’s
appointment as the liquidator was only
published in the Government
Gazette of 10 July 2017, and it is only then that the appellant
acquired actual knowledge of those
facts.
[12] The
appellant engaged new attorneys to represent him and they promptly
contacted the respondent on 12 July
2017 to enquire about the
liquidation and Mr Barnard’s appointment. Further
correspondence between them ensued.
[13] On
25 August 2017, about six months after the liquidator’s
appointment, the appellant, through his attorneys,
gave the
liquidator a notice contemplated in
section 359(2)
(a)
to the effect that he would be
continuing with the unfair dismissal claim that he had instituted in
the Labour Court before the
respondent’s voluntary liquidation.
[14] On
6 October 2017 attorneys representing the liquidator informed the
appellant (i.e. through his attorneys)
that the section was not
applicable. On 12 October 2017, the appellant requested that the
matter (i.e. his unfair dismissal claim),
which was set down to
proceed to trial in the Labour Court on 23 October 2017, be removed
from the trial roll and, instead, be
set down for 27 October 2017.
[15] On
6 December 2017, the respondent’s attorneys by email addressed
to the appellant’s attorneys
enquired with reference to the
matter that had been removed from the trial roll to “[k]indly
advise whether your client intends
to pursue the referral, and if so,
the date on which the referral will be heard.’’ The
appellant’s attorneys
confirmed that the matter was to proceed
and was to be enrolled for trial on 4 March 2019.
[16] In
May 2018, the respondent set the matter down for trial on 4 March
2019. In a letter dated 23 May 2018 the
respondent’s attorneys
acknowledged the notification of the set down by the registrar of the
Labour Court and requested the
registrar to forward the set down to
them.
[17] On
5 July 2018, the respondent’s attorneys informed the
appellant’s attorneys by letter,
inter
alia
, that the appellant had failed to
comply with
section 359(2)
(a),
and
in particular, had failed to give the liquidator the notice
contemplated in that section and that the appellant’s claim
was
“deemed abandoned” as contemplated in that section.
[18] The
appellant addressed various items of correspondence in response to
clarify the position, in particular,
since the letter of 5 July was a
volte face in respect of the position the respondent, or more
particularly, the attitude Mr Barnard
took earlier when he advised
that the section did not apply. To these there was no reply.
[19] The
appellant proceeded in December 2018 to institute another action
against the respondent, and others, including
Mr Barnard, for breach
of his employment agreement. Amongst other things, the appellant
contemplated consolidating the actions
and joining the respondents in
the second action as respondents in the first matter, but,
ultimately, did not act upon some of
those ideas.
[20] On
28 February 2019, the Friday before the trial of the unfair dismissal
matter, the respondent caused a practice
note to be filed in which
it, for the first time, raised as a preliminary point to be decided
that the appellant’ claim was
deemed to be abandoned as
contemplated in
section 359(2)
(a).
[21] The
appellant’s attorneys took issue with those contentions and
argued that the appellant had indeed
complied with the section, but
that, in any event, the Labour Court would be requested to declare
that the appellant’s claim
had not been abandoned.
[22] At
the trial hearing on 4 March 2019, when the respondent raised the
issue of the abandonment of the claim
as a preliminary point, it was
directed to deliver a
Rule 11
application dealing with the point.
[23] Following
an exchange of affidavits, which included a conditional
counter-application brought by the appellant,
effectively, seeking an
order that his claim had not been abandoned, the
rule 11
application
was argued. In its replying affidavit the respondent,
inter
alia
, asked for the dismissal of the
appellant’s claim and for the striking –off of the
counter-application, on the ground,
inter
alia
, that the Labour Court did not
have jurisdiction to consider it (presumably in light of section 12
of the 1973
Companies Act).
The
court a quo’s judgment
[24] The
court
a quo
described the situation confronting it as a “paradox”.
This is what it said: “[23] The somewhat paradoxical situation
this presents is that this court is being asked to consider and
determine whether Groom’s manifest non-compliance with
section
359
means that his referral should be dismissed because it is deemed
to be abandoned, but to refuse to deal with his application to
obtain
an indulgence to be allowed to continue to prosecute his claim on
grounds of lack of jurisdiction. If this court should
rule that
Grooms referral ought to be dismissed because his non-compliance with
section 359
means he is deemed to have abandoned it, that effectively
will prevent him proceeding with an application before the High
Court,
which does have jurisdiction to entertain his application for
indulgence.”
[25] The
court a quo then referred to a decision of the Labour Court in
Direct
Channel KwaZulu-Natal (Pty) Ltd (in liquidation) v Naidoo &
others
[4]
(“
Direct
Channel
”)
and held that, even though there were factual differences between the
cases, the central tenet applicable to both, was
that compliance with
section 359
was peremptory, and the failure to file the required
notice meant that the claim was deemed to be abandoned. It then went
on to
find that it did not have the jurisdiction to entertain the
appellant’s counter-application because “the court”
contemplated in that section only referred to the High Court.
[26] The
court
a quo
returned to consider the paradox, reasoning that one possibility was,
instead of dismissing the appellant’s claim, to postpone
the
rule 11
application to dismiss the claim pending the appellant
launching an application in the High Court in terms of
section
359(2)
(b)
to
establish that his claim had not been abandoned, but was dissuaded
from taking such a course.
[27] It
held: “However, as things presently stand, his claim is
abandoned and the application to dismiss
it was properly placed
before this court. The situation might have been different if he had
already launched an application in
the High Court under
section
359(2)
(b),
and
if the outcome of that application was pending. Under those
circumstances, he might feasibly have sought to stay the application
to dismiss his referral.” The court
a
quo
finally held that the respondent’s
objection to its entertainment of the appellant’s conditional
counter- application
had to be upheld.
[28] In
respect of the costs, the court
a quo
held that there was no justification for the appellant not to have
acted expeditiously in bringing an application in the High Court
to
direct that his claim in the Labour Court was not abandoned; that it
would have been inclined to make a punitive costs order
against the
appellant if the respondent persisted in seeking such an order, but
since it did not, an ordinary “limited costs
award” was
justified.
[29] The
court
a quo
then proceeded to make the following order:
[1]
The application to condone the late filing of the applicant’s
replying affidavit in the dismissal application
is condoned.
[2] The
referral of the respondent’s unfair dismissal claim under case
number JS166/16 is deemed abandoned,
by virtue of the operation of
section 359 of the Companies Act, 61 of 1973, and accordingly is
dismissed.
[3] The
respondent’s application for an order declaring that his unfair
dismissal claim should be declared
not to be abandoned is struck off
the roll for lack of jurisdiction.
[4] The
respondent must pay the costs of the drafting, preparation and
argument of applicant’s application
and its opposition to his
counter-application on 26 March 2019.
[5]
Each party must bear their own costs of the hearing on 4 March 2019.’
Arguments
on appeal
[30] In
heads of argument filed on behalf of the appellant, the following is
essentially contended: firstly that,
while it is correct that only
the High Court has jurisdiction to direct in terms of section
359(2)
(b)
that
a claim is not abandoned, the court
a
quo
“should have gone no further
than to hold that, absent condonation from the High Court, Mr Groom’s
claims in the Labour
Court are deemed abandoned”, which would
have enabled the appellant to obtain the required “condonation”
from
the High Court and to have proceeded to prosecute his claim in
the Labour Court. However, having dismissed the unfair dismissal
claim the court
a quo
,
in effect, went further and determined that claim in the respondent’s
favour, thereby purporting “to tie the hands
of the High Court
if and when it was approached for an order condoning non-compliance”,
because the claim is already dismissed.
It is submitted that the
court
a quo
’s
approach and order “constitute an unwarranted limitation”
of the appellant’s right in terms of section
34 of the
Constitution of the Republic of South Africa, 1996 to have his
dispute fairly determined by a court or other relevant
tribunal.
[31] Secondly,
it is argued that the respondent (represented by Mr Barnard) had
explicitly, implicitly or tacitly
waived his right to rely on section
359 when it was stated unequivocally by him, or by his attorneys on
his behalf, that the section
was not applicable, when a notice was
first given by the appellant to Mr Barnard in terms of that section
and pertaining to the
claim in question.
[32] Thirdly,
it is submitted that it was not possible for the appellant to comply
with section 359 because he
was not notified of the respondent’s
liquidation and the appointment of Mr Barnard as and when it
occurred, and that this
was also a fact that distinguished the
present matter from those in
Direct
Channel
, where the claimant was
timeously aware of the dates of the liquidation and the appointment
of the liquidator.
[33] Fourthly,
it is argued that the appellant did not unreasonably delay the
prosecution of his claim against
the respondent and the delay that
occurred was not prejudicial to the respondent and/or outweigh the
prejudice of the appellant
because of the dismissal of his claim.
[34] Lastly,
in respect of the costs, it is submitted in the said heads of
argument of the appellant that there
were no exceptional
circumstances that warranted a departure from the general rule in
labour matters that costs do not as a matter
of course follow the
result. Further, the court
a quo
should not have focussed exclusively on the appellant’s
perceived omissions, but ought to have considered all the facts,
including the following: that the respondent wilfully and
deliberately concealed the fact of its liquidation and the
appointment
of the liquidator, Mr Barnard, from the appellant. These
facts were (seemingly deliberately) only published many months after
the
actual dates of those events, and inconsistently with the
Companies Act; that the liquidator first informed the appellant in
response
to the notice given by the appellant that section 359 was
not applicable, and then on “the eleventh hour” purported
to invoke the section again; that the appellant was an individual,
proverbially, a “David” against a “Goliath”,
who had suffered a huge reduction in his pension fund benefits and
the loss of the entire severance package that was due to him.
[35] The
respondent’s arguments were essentially in support of and
confirmatory of the correctness of the
court
a
quo
’s
judgment and order. Its arguments, basically, were that the
respondent was entitled to the effective and speedy resolution
of its
dispute with the appellant; the appellant failed to litigate in
accordance with the applicable law, i.e. section 359 of
the 1973
Companies Act; the court
a
quo
correctly determined that, despite having been forewarned to do so
and despite an indication that he would, the appellant failed
to
apply to the High Court for the relief contemplated in section
359(2)
(b);
and
that the court
a
quo
“determined the rule 11 application on the basis it considered
expedient in the circumstances to achieve the objectives”
of
the LRA
[5]
.
[36] The
respondent relied, in defence of the court
a
quo
’s
dismissal of the appellant’s claim, on selected portions of an
unreported decision of the Supreme Court of Swaziland
in
Mkhatshwa
v Stewart and Others
[6]
((‘
Mkhatshwa
’)
where it dealt with the deemed dismissal of an appeal deemed
abandoned for failure to comply with the applicable rules.
Reliance
was placed in particular on a
dictum
[7]
where that court seemingly answered the question: “Why bother
to dismiss a ‘dead’ appeal?” and posed the
following questions: “… is it that the appeal is not
really ‘dead’ notwithstanding abandonment, so that
the
dismissal is to ensure that it is truly dead and buried and unlikely
to resurrect? Or is the dismissal intended to secure the
applicant’s
costs?”
[37] It
also relied in support of the dismissal on
dicta
of this court in
Macsteel
Trading Wadeville v Van der Merwe & others
[8]
(‘
Macsteel’
),
where this court dealt with the rationale of Rule 11 and the powers
of the court in terms of that rule, more particularly the
powers or
discretion afforded to the court by Rule 11(4) “to take any
course of action to achieve the objects of the [LRA].
“
[38] It
was argued on behalf of the respondent that there was no reason for
the court
a quo
“to have left the door open for the [appellant] to proceed to
the High Court in terms of section 359’’; and that
it was
not required of the court
a quo
to determine whether the appellant “showed good cause why the
claim for unfair dismissal should be considered to be not abandoned”;
that the court
a quo
correctly determined that the appellant had “failed to
prosecute his unfair dismissal claim in terms of the requirements
in
law and that no reason has been advanced for such failure, despite
being forewarned; and that section 359(2)(a) “ is peremptory”.
[39] Rather
surprisingly, as the contrary seems to be stated in its supporting
affidavit in the Rule 11 application,
counsel for the respondent
argued further that the deeming provision was not for the benefit of
the liquidator; and that the liquidator
does not have the discretion
to waive compliance with the section and/or to elect not to invoke
the section. It was also submitted
that the respondent did not raise
“the requirement in section 359 as a nominal defence”;
that the requirement, i.e.
to bring a substantive application in the
High Court for it to direct that the claim is not abandoned, if not
complied with, in
respect of a claim deemed to be abandoned, will
result in the liquidator not being confronted with litigation in
respect of that
claim; and that the appellant was the author of his
misfortune, in pursuing the litigation in the Labour Court in the
manner that
he had done. In respect of costs, the respondent argued,
in essence, that the order was justified.
[40] Two
further aspects were raised and dealt with in argument before us,
namely, the issue of jurisdiction and
whether the respondent had made
out a case in its Rule 11 application, i.e. that the appellant’s
claim had been abandoned
as contemplated in section 359. Briefly, in
respect of the former issue, senior counsel for the appellant, who
did not draft the
heads of argument for that party, submitted that
the concession made in those heads that the court
a
quo
did not have the jurisdiction or
power to consider the appellant’s counter application, ie for
the relief contemplated in
section 359(2)
(b),
was possibly wrong and that the court
a
quo
had the power. Further, he
submitted that the respondent did not make a case on its papers in
the Rule 11 application for invoking
the deeming provision.
[41] The
respondent’s counsel referred to section 12 of the 1973
Companies Act in support of his argument
that the court
a
quo
did not have the requisite power or
jurisdiction to direct that the claim was not abandoned, as
contemplated in section 359(2)
(b).
While
pressed to concede the glaring defects in the supporting papers of
the respondent in its rule 11 application, in particular
those caused
by a certificate of the Master of the High Court pertaining to the
appointment of the liquidator, the respondent’s
counsel
(unsuccessfully) sought leave to replace the defective certificate
with a new, allegedly corrected one, on appeal, by merely
transmitting a copy of such document to the Court.
Discussion
[42] The
arguments raised by the parties in their heads, as summarised above,
save for the issue of costs, will
first be evaluated, and thereafter
whether a case had been made out by the respondent in its Rule 11
application for invocation
of the deeming provision. The issue of
jurisdiction will then be considered, and lastly, the costs aspect.
[43] The
appellant’s arguments relate in particular to the issue of
jurisdiction and the powers of the court
a
quo
in respect of the determination of
the section 359 aspects, and shall be evaluated when dealing with
that topic. The arguments
made by the respondent, as summarised
above, are capable of swift disposal with reference to general or
trite principles, including
those pertaining to section 359
specifically.
[44] Both
the
Mkhatshwa
and
Macsteel
decisions
are distinguishable on the facts. In addition, in respect of the
former, it is a foreign judgment,
dicta
of which should not readily and without caution be marshalled in
resolution of legal issues in South African domestic law. Having
said
that, in any event, the respondent’s reliance on the dicta from
those cases is misplaced.
[45] The
court in
Mkhatswa
did not conclude that an appeal that was deemed to be abandoned had
to be dismissed. On the contrary, it seemed to be questioning
the
utility of such an order in respect of an appeal that was deemed to
be abandoned. In
Macsteel,
this Court never implied that the expediency contemplated in the LRA
excluded fairness. A key purpose of the LRA, if not one of
the
foundational values it espouses, is fairness.
[46] Contrary
to the argument of the respondent, it is trite that the deeming
provision in section 359(2)
(a)
is
purely for the benefit of the liquidator and he is at liberty to
waive, or to dispense with its compliance
[9]
.
[47] The
object or purpose of the section is to prevent the liquidator from
being overwhelmed or inundated with
legal proceedings without having
sufficient time within which to consider properly whether the company
in liquidation should resist
or settle them
[10]
.
[48] Section
359 is intended to regulate, not only the termination of the
suspension of claims against the company
in liquidation, but also the
deemed abandonment of proceedings in the absence of the required
notice. Hence it was necessary to
fix the date of the termination of
the suspension period and the date of the deemed abandonment, i.e.
four weeks after the date
of the appointment of the liquidator
[11]
.
[49] The
defence that the liquidator has to a claim in terms of section
359(2)
(a),
namely,
that the claim is deemed abandoned, is not an absolute defence,
because the court may direct in terms of section 359(2)
(b)
that notwithstanding non-compliance
with subsection (2)(a), the claim is not abandoned.
[50] Against
that background we turn to consider the court
a
quo
’s approach and conclusion.
[51] It
seems logical that where the defence, namely, that the claim is
deemed abandoned, is invoked by the liquidator,
and in response to
it, the claimant seeks a direction that the claim is in fact not
abandoned, it would require the court to determine
whether the claim
has indeed been abandoned. The defence and its response, ultimately,
do not entail two disparate enquiries.
[52] After
all the provision in section 359(2)
(a)
is
a “deeming” provision, implying, as in the case of all
other deeming provisions, that it is a provisional assumption
of a
fact
[12]
. In light of the
provisions of subsection (2) (b) it is capable of ‘rebuttal’.
In other words, according to the section,
the claim, in respect of
which notice was given as contemplated in that section, is presumed
(in terms of the law) to have been
abandoned, but that presumption is
capable of being rebutted by evidence showing that the claim in fact
had not been abandoned.
The ultimate actual question the court has to
resolve is whether the claim has indeed been abandoned. The
assumption may only be
taken to have been established as a fact if
there is no countervailing evidence destroying that assumption
[13]
.
[53] Hence,
it appears incongruous that a court, faced with the invocation of the
deeming provision (i.e. as the
defence) and in response to it, an
application in which evidence is adduced that the claim has not been
abandoned, would find that
it has jurisdiction to determine the
former, but not the latter, notwithstanding the fact that these two
aspects are not merely
ancillary to each other, but are interlinked.
As mentioned, the defence of the liquidator, is not a complete
defence
;
it is merely a presumption that he can rely on, but it is capable of
rebuttal.
[54] The
court
a quo
’s
finding, effectively, that it only had the power or jurisdiction to
determine (effectively, a portion) of the Rule 11 application
(which
was the vehicle used by the liquidator (respondent) to raise a
defence to the appellant’s unfair dismissal claim instituted
in
that court), but that it did not have the power to determine the
conditional counter-application of the appellant, (that the
claim was
not abandoned), appears to be incorrect. This is especially so when
viewed in light of the incidental jurisdictional
powers of the Labour
Court.
[55] The
decision in
Direct Channel
is
distinguishable on the facts, not merely because the claimants there
were aware of the date of the liquidation and when the liquidator
in
that matter had been appointed, but because there was no application
in terms of section 359(2)
(b)
to
declare that the claim there had not been abandoned; and the court
there did not have a jurisdiction issue with which to contend
.
In that situation the presumption, that the claim was abandoned was
not rebutted, and the actual abandonment, arguably, became
an
established fact.
[56] As
pointed out above, the respondent’s counsel tried to justify
that the finding of the court
a quo
with reference to section 12 of the 1973 Companies Act. The section
reads as follows: “The Court which has jurisdiction under
this
Act in respect of any company or other body corporate, shall be any
provincial or local division of the High Court of South
Africa within
the area of jurisdiction whereof the registered office of the company
or other body corporate or the main place of
business of the company
or other body corporate is situate.”
[57] The
respondent’s counsel and, presumably, the appellant’s
counsel who drafted the heads of argument,
seem to be of the view
that in terms of section 12, the Labour Court had no jurisdiction to
determine the appellant’s counter–application
for a
direction that his unfair dismissal claim had, in fact, not been
abandoned, even though the Labour Court could determine
the Rule 11
application – and that the only court that had jurisdiction to
determine the issue raised in the counter-application
was a
provincial or local division of the High Court (more particularly,
the Gauteng Division and/or Local Division of the High
Court, in
light of the situation of the respondent’s registered office).
[58] While
one accepts that the Labour Court would not have jurisdiction to
determine a self-standing application
for such relief in light of the
literal meaning of section 12, it cannot hold true where an
application is brought in proceedings
ancillary or incidental to
other proceedings in respect of which the Labour Court has
jurisdiction in terms of the LRA.
[59] There
is no doubt that the Labour Court had jurisdiction to determine the
main claim of the appellant. The
defence involving the invocation of
the deeming provision, albeit by way of a rule 11 application, and
the counter-application,
which is also interlinked to that
application, are ancillary or incidental to the Labour Court’s
determination of the main
claim.
[60] Section
12 of the 1973 Companies Act does not preclude the Labour Court from
assuming and exercising jurisdiction
in respect of any ancillary
aspects to a claim that is before it, and in respect of which it has
jurisdiction. It is also a trite
principle that if a court has
jurisdiction in the main action it also has jurisdiction in any
ancillary matter to that main claim
[14]
.
[61] Convenience
is a key consideration. In terms of the common law principle of
causae
continentia
,
for example, in order to avoid duplication of proceedings, or
conflicting decisions in the same matter, or in order to dispose
of
cases more conveniently: “(a) more than one claim against
different persons or in respect of different things in different
jurisdictional areas may be joined in one process before one court if
it could be said that together they really constituted one
case in
that the one began where the other ended”; and “(b) one
indivisible obligation in respect of an indivisible
thing which was
situated in two different jurisdictional areas may be enforced in any
of the areas concerned.”
[15]
[62] The
jurisdiction of a High Court, and equally that of the Labour Court,
may be extended by application of
the principle of
causa
continentia
[16]
.
Those
courts are also equally obliged in terms of the Constitution to
develop the common law, including the common law relating
to
jurisdiction in order to promote the spirit, purport and objects of
the Bill of Rights
[17]
.
[63] Section
151(2) of the LRA provides that “[t]he 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.”
[64] In
terms of section 158(1)
(j)
of
the LRA the Labour Court has the power to “deal with all
matters necessary or incidental to performing its functions in
terms
of [the LRA] or any other law.”
[65] Effectiveness
is another consideration in the exercise of incidental jurisdiction.
Beside the fact that the
court
a quo
’s
obligation to give an effective judgment on the issue of the
abandonment of the claim, had been undermined by its finding
on
jurisdiction, it seems to create significant inconvenience if a
litigant is expected to approach another court in respect of
part of
a matter, that is actually ancillary or incidental to the main claim
pending before the Labour Court, or to deal with such
matters
piecemeal in different fora. The concession that the Labour Court did
not have the jurisdiction to determine the issue
raised in the
conditional counter-application, despite the circumstances of its
incidence, does not appear to have been correctly
made.
[66] Once
the court
a quo
was satisfied that it had jurisdiction in respect of the main claim,
i.e. the unfair dismissal claim, and accordingly also in respect
of
the defence raised by the respondent (or liquidator) in terms of
section 359(2)
(a),
it
also had jurisdiction or the power to determine the conditional
counter-application which was essentially interlinked and not
merely
ancillary to the issue raised by the defence, namely, whether the
claim had been abandoned.
Failure
to make out a case invoking the deeming provision
[67] LC
Rule 11 requires that the applications envisaged there be brought on
notice, supported by affidavit(s),
unless the application only deals
with procedural aspects. It is trite that where relief is claimed in
an application, the supporting,
or founding affidavit, must contain
all the averments necessary for the relief claimed
[18]
.
It also trite that it may be necessary to file more than one
affidavit where circumstances require it, for example where
confirmation
is needed of an averment from someone with personal
knowledge of that fact, in compliance with the rules for the
admission of evidence,
including hearsay.
[68] From
a perusal of the respondent’s Rule 11 application, and in
particular the supporting affidavit attested
to by the liquidator, it
is apparent that a proper case for the invocation of section 359 had
not been made out. This is apparent
in at least two respects,
firstly, in that it failed to adduce admissible evidence regarding
the date of registration of the special
resolution for the
liquidation of the respondent and, consequently, for the appointment
of the liquidator, Mr Barnard, and secondly,
by failing to establish,
on its own version, that the liquidator (assuming his appointment was
a regular) had not waived compliance
with that section.
[69] In
terms of section 350 of the 1973 Companies Act, no voluntary
winding-up of a company shall be of any force
and effect unless the
special resolution to that effect has been registered in terms of
section 200 of that Act. And section 350(1)(6)
(which is similar to
section 80(1) of the new Companies Act) specifies the formalities
that have to be complied with. In terms
of section 80(2) of the new
Companies Act, the voluntary winding up of the company commences when
the special resolution is filed
(registered) with the Companies and
Intellectual Property Commission (‘the Commission”).
[70] In
support of his averments relating to the voluntary winding up of the
respondent and his appointment as
the liquidator, Mr Barnard, on
behalf of the respondent, relies on the copy of a certificate,
purportedly issued and signed by
the Master of the High Court, which
is attached to his affidavit. The certificate obviously does not
support Mr Barnard’s
version concerning the dates of the
winding-up of the respondent and the regularity of his appointment.
Mr Barnard declares that
the certificate is erroneous in those
respects, and instead of having procured a corrected certificate, or
an authoritative affidavit
from the Commission, or the Master of the
High Court, appears content with his own version concerning the
facts, which, by their
nature could only truly be within the personal
knowledge of the Commission, or the Master of the High Court.
[71] The
differences between his version and those in the certificate are
significant. The certificate which bears
a date stamp of 21 February
2017, for example, does not reflect the date upon which the
liquidator was appointed. It further appears
to certify, at once,
that the respondent was provisionally liquidated by the High Court,
and that a special resolution was a registered
on 15 December 2017,
apparently long after that date upon which the liquidator, on his
version, was appointed. The liquidator,
on the other hand, avers that
the special resolution was registered on 15 December 2016 and that he
was appointed on 21 February
2017.
[72] What
emanates from the certificate itself is most concerning since it
suggests that the liquidator was appointed
before the registration of
the special resolution of the company, i.e. before the winding-up
even commenced. The correct dates
of the registration of the special
resolution and of the liquidator’s appointment are facts with
the personal knowledge of
the Commission and of the Master,
respectively, and accordingly the facts as certified are be assumed
as correct unless and until
those functionaries certify or attest to
the contrary.
[73] Even
if the special resolution itself may have made provision for the
appointment of a liquidator, a fact
which is unknown, the appointment
of a liquidator may only legally take place after the registration of
the special resolution
and after a meeting of creditors and members
of the company had been called by the Master (section 364
(a)
of the 1973 Companies Act). In this instance, it is also not known
whether a meeting of creditors had been called, or if the members
at
a general meeting had attended to those aspects as contemplated in
section 349 of the old Companies Act.
[74] As
things stand, on the affidavit relied upon the respondent, in the
absence of admissible evidence to the
contrary, the regularity of the
liquidator’s appointment and the correct date thereof, as well
as the date of the commencement
of the winding-up of the respondent
is not established, bearing in mind that inadmissible hearsay is to
be excluded, and that the
establishment of those facts are crucial
for the successful invocation of the deeming provision in section
359(2)(a).
[75] The
appointment of the liquidator is not only dependent upon the
registration of the special resolution, but
follows from there
(section 359(1)). Further, a person who instituted proceedings to
enforce a claim against the company, which
were suspended by the
winding-up, who intends continuing those proceedings, is required to
give the liquidator notice to that effect
within four weeks of the
appointment of the liquidator (section 359(2)(a).
[76] There
was no basis established upon which the court a quo could exercise
its discretion to admit Mr Barnard’s
hearsay evidence.
Consequently, crucial facts that had to be established by the
respondent (or liquidator) had not been established
for the
invocation of section 359(2)(a) and that in itself should have
resulted in the dismissal of the Rule 11 application.
[77] Secondly,
it appears
ex facie
the respondent’s application, and in particular the supporting
affidavit to that application, that the liquidator had not
insisted
promptly and from the outset that the appellant comply with section
359(2)
(a).
But,
instead he started off evincing an intention not to invoke the
section, or to enforce any right conferred on him by that section,
but allowed the claim to be prosecuted further, and only purported to
invoke it much later after the claim was no longer subject
to a
suspension.
[78] It
was not open to the liquidator, having waived compliance, to then
insist on compliance at his own whim.
He could not approbate and
reprobate. Thus, even in that regard the respondent (or the
liquidator) had failed to make out a case
that the appellant’s
unfair dismissal claim before the court a quo was deemed to be
abandoned as contemplated in section
359(2)
(a)
of the old Companies Act.
[79] It
follows that the appeal must succeed. The question, however, is what
is to be ordered in respect of the
conditional counter-application of
the appellant. As pointed out above, it should not have been struck
from the roll. Since the
counter- application was conditional upon
the court
a quo
finding that that the appellant’s delivery of a late notice
constituted an abandonment of his claim, the court a quo did
not have
to decide it since it could not find on the papers that the
respondent (or more, particularly, the liquidator) had made
out a
case for invocation of section 359(2)
(a).
[80] There
is no reason why the respondent should not have been mulcted with the
costs occasioned through its abortive
Rule 11 application. However,
taking the law and fairness into account, including the novelty of
the issues raised, no costs are
to be ordered in respect of the
appeal.
[81] In
the result, the following order is made:
81.1
The appeal is upheld;
81.2 The order of
the Labour Court is set aside and substituted with the following
order: “The Rule 11 application for
an order declaring that the
respondent’s unfair dismissal claim under case number JS 166/16
is deemed abandoned, and related
relief, is dismissed with costs.”
P
Coppin
Judge of the Labour
Appeal Court
Davis
JA and Savage AJA concur in the judgment of Coppin JA.
APPEARANCES
FOR
THE APPELLANT: Advs. Snider SC, G Bekker
(heads having been
prepared by CE Watt-Pringle SC and G Bekker)
All
instructed by Du Toit Attorneys
FOR
THE RESPONDENT: Adv PH Kirstein
Instructed
by Adams & Adams Attorneys
[1]
Labour
Court.
[2]
Companies
Act 61 of 1973.
[3]
See
item 9 of Schedule 5 of the Companies Act 71 of 2008.
[4]
(2015)
36 ILJ 2611 (LC).
5
The Labour Relations Act 66 of 1995.
[6]
(3/2016)
[2017] SZSC 3 (05 May 2017).
7
See para 7 of the judgment.
[8]
(2019)
40 ILJ 798 (LAC) paras 18-20.
[9]
See,
inter
alia
,
Gilbert
Hamer & Co Ltd v Icedrome Promotions (Pty) Ltd
1962 (3) SA 372
(D) at 373;
Van
der Harst v Wells NO
1964 (4) SA 362
(W) at 363;
Michaels
v Wells NO
1967 (1) SA 46
© at 53;
Barlows
Tractor Co (Pty) Ltd v Townsend
[1996] ZASCA 3
;
1996
(2) SA 869
(A) at 884F-G; PM Meskin et al
Henochsberg’s
Commentary on the Companies Act 61 of 1973
(Lexis Nexis; 5ed) Commentary on section 359.
[10]
See,
inter alia,
Ronbel
108 (Pty) Ltd v Sublime Investments (Pty) Ltd (in Liquidation)
2010 (2) SA 517
(SCA) at 343;
Umbogintwini
Land and Investment Co (Pty) Ltd v Barclays National Bank Ltd
1987 (4) SA 894
(A) at 910;
Henochsberg’s
Commentary on section 359 of the Companies Act 61 of 1973
(above).
[11]
See
Ronbel
(above)
at 342.
[12]
See
18 LAWSA (3 ed) para 236.
[13]
Ibid.
[14]
See
11 LAWSA (2ed) para 527and the cases cited there.
[15]
See:
NCS
Plastics (Pty) Ltd v Erasmus
1973 (1) SA 275
(O) at 278A; and Joubert et al (eds) LAWSA (First
Re-Issue) Vol 11 para 451 –
Jurisdiction
.
[16]
See,
inter alia,
Permanent
Secretary Department of Welfare, Eastern Cape v Ngxuza
(493/2000) [2001] ZACSA 85 (31 August
2001); 2001 (4) SA 1184
SCA-
at 1201D-F and
Roberts
Construction Co. Ltd v Wilcox Bros. (Pty) Ltd
1962
(4) SA 326 (A).
[17]
Section
39(2) of the Constitution of the Republic of South Africa, 1996.
[18]
See,
inter
alia
,
Hart
v Pinetown Drive-Inn Cinema Pty Ltd
1972 (1) SA 464
(D) at 469C-E.