Groom v Daimler Fleet Management (Pty) Ltd (JA39/20) [2021] ZALAC 23; (2021) 42 ILJ 2179 (LAC); [2021] 11 BLLR 1079 (LAC) (4 August 2021)

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Groom v Daimler Fleet Management (Pty) Ltd (JA39/20) [2021] ZALAC 23; (2021) 42 ILJ 2179 (LAC); [2021] 11 BLLR 1079 (LAC) (4 August 2021)

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.