Summary of Judgment

Introduction

The proceedings were an appeal to the Labour Appeal Court against an order of the Labour Court dismissing an application for civil contempt of court. The contempt application arose from an alleged failure to comply with a settlement agreement that had been made an order of court in earlier Labour Court proceedings.

The appellants were the National Union of Metalworkers of South Africa (NUMSA) and Bhekabantu Mbatha and 32 others, who were dismissed employees. The respondents were Vulcania Reinforcing Company (Pty) Ltd (the employer) and Sean Greve (cited as second respondent).

The procedural history was material. In 2014, following an unprotected strike linked to disciplinary steps taken against a shop steward, the employer dismissed employees who participated in the strike. The dismissals were challenged in the Labour Court, but on the hearing date, 21 August 2014, the parties concluded a settlement agreement that was made a consent order. Years later, on 22 October 2018, the appellants launched an ex parte application in the Labour Court seeking contempt relief for alleged non-compliance with the reinstatement undertaking in the consent order. A rule nisi was granted on 26 March 2019. The application was argued on 30 October 2020, and on 17 November 2020 the Labour Court (Prinsloo J) dismissed it with no costs order. Leave to appeal was granted, and the appeal was heard on 17 February 2022 and delivered on 22 March 2022.

The dispute concerned whether the respondents had failed to comply with paragraph 5 of the consent order, which required the employer to take steps to reinstate listed employees by offering available jobs within the employer or an affiliated company with effect from 1 September 2017, and whether such alleged failure justified contempt relief.

Material Facts

The court treated as common cause that the first respondent operated as a manufacturer of mesh wire for the construction and hardware industry and that NUMSA was active at the workplace. It was also common cause that an unprotected strike occurred in 2014 and that the striking employees were dismissed, and that the dismissal dispute was resolved by a settlement agreement made an order of court on 21 August 2014.

A central undisputed fact was the content of the relevant consent order provision. Paragraph 5 recorded an undertaking that the respondent would reinstate, without retrospective effect, the individual applicants listed in an annexure by offering them available jobs within the respondent or an affiliated company at the same or similar rates with effect from 1 September 2017.

It was also material that, after the consent order, the employer did not reinstate all the dismissed employees. The appellants asserted non-compliance with paragraph 5, whereas the respondents’ explanation was that they had taken reasonable steps to effect placement but that circumstances constrained the ability to employ all individuals.

On the respondents’ version (summarised by the court as part of the context to the contempt enquiry), the first respondent underwent a winding-down process and could no longer employ the relevant employees. The respondents stated they sought placements for the individuals at an affiliated company, Vulcania Reinforcing Solutions (Pty) Ltd, but that this company also restructured and reduced staff. Despite this, it identified eight positions, five individuals were employed, and three did not respond to offers.

Communications between the parties were part of the factual narrative relied on by the court to the extent that they contextualised the alleged compliance. The judgment recorded that a representative of the first respondent, Mr Jarrod De Lange, signed the settlement agreement. On 8 January 2018, an email was sent to NUMSA indicating the individuals had not reported for duty and asking that they be urged to do so. On 9 March 2018, another email requested more time to find suitable employment. NUMSA responded that it had not received the 8 January email and undertook to inform employees to report the following day.

In the appeal proceedings, a further fact became material to the disposal of the appeal. On the hearing date, appellants’ counsel indicated from the bar that the first respondent had been liquidated, contending this rendered the case against it moot and also grounding a submission that the Labour Court order should be regarded as a nullity because it was made after liquidation. The second respondent opposed aspects of this narrative, including whether liquidation had been brought to the attention of the court a quo. The Labour Appeal Court treated the liquidation issue as relevant both to mootness and to the statutory requirement of notice to a liquidator in terms of section 359 of the Companies Act.

The appellants also abandoned, at the hearing of the appeal, the proceedings against the second respondent and sought that no costs order be made, although the judgment nevertheless addressed the merits relating to the second respondent in explaining why the appeal could not succeed.

Legal Issues

The central legal questions were whether the appellants had established civil contempt of court arising from alleged non-compliance with paragraph 5 of the consent order, and whether the Labour Court erred in dismissing the contempt application on the basis that the requisites for contempt had not been proved.

The appeal also raised questions of justiciability and mootness, particularly whether liquidation of the first respondent meant that deciding the appeal would have no practical effect, engaging the court’s discretion under section 16(2)(a)(i) of the Superior Courts Act.

A further issue concerned procedural compliance in liquidation: whether the appellants were required to give notice to the liquidator in terms of section 359(2)(a) of the Companies Act, and the consequence of failing to do so.

In relation to the second respondent, the issues were whether he could competently be subjected to contempt proceedings when he was not a party to the original consent order proceedings and whether the failure to join him in his personal capacity was fatal.

The dispute largely concerned the application of legal principles to facts (whether the founding papers established the requisites of contempt and whether joinder and notice requirements were met), alongside an evaluative determination of mootness and whether it was in the interests of justice to decide the merits.

Court’s Reasoning

The court approached the appeal by first addressing the practical effect of any decision against the first respondent. It referred to section 16(2)(a)(i) of the Superior Courts Act, which permits dismissal of an appeal where the decision sought will have no practical effect or result. The court also referred to Constitutional Court authority explaining that mootness is not an absolute bar; the governing consideration is the interests of justice, including whether the court’s order will have any practical effect and whether determination would serve the public interest by providing legal certainty or addressing issues likely to recur.

Applying those principles, the court concluded that no interests of justice would be served by deciding the merits against the first respondent. It found no novel issues warranting determination for the benefit of the public at large. On that basis, it held that the appeal against the first respondent fell to be dismissed as moot.

The court then dealt with liquidation-related procedure. It reasoned that the appellants were aware of liquidation and the appointment of a liquidator but failed to give the liquidator notice of their intention to proceed as required by section 359(2)(a) of the Companies Act. The judgment recorded the statutory consequence that if notice is not given, the proceedings are considered abandoned unless a court directs otherwise. The court further noted that, apart from counsel’s submissions, there was no evidence before it establishing that the liquidator was aware of the proceedings, reinforcing the procedural deficiency.

As regards contempt generally, the court reaffirmed that an applicant seeking committal for civil contempt must prove the requisites beyond a reasonable doubt. It identified the requisites as the existence of a court order, service or notice of the order, and non-compliance. Once these are proved, the respondent bears an evidential burden in relation to wilfulness and mala fides, with contempt established beyond reasonable doubt if the respondent fails to create a reasonable doubt as to wilfulness and mala fides.

The court emphasised the principles applicable to motion proceedings: affidavits constitute both pleadings and evidence, and a respondent is entitled to know the case it must meet, which must be set out clearly in the founding affidavit. It reiterated the general rule that an applicant is not permitted to make or supplement its case in replying papers, with only limited exceptional relaxation, typically accompanied by an opportunity for the respondent to address new matter.

On that basis, the court upheld the Labour Court’s conclusion that the appellants had failed to make out a contempt case in their founding affidavit. The deficiency in the founding papers meant that the application was doomed from inception and could not be cured later. The court recorded that when this was put to appellants’ counsel in argument, he could not dispute that no case was made in the founding affidavit.

In respect of the second respondent, the court added an independent reason why contempt relief could not succeed. It reasoned that the second respondent was not a party to the proceedings when the consent order was made. Although he had been called upon to file an affidavit explaining non-compliance and to face contempt relief, he had not been joined in the proceedings in his personal capacity. The court viewed this failure to join as fatal to the contempt case against him, and it drew an analogy to the procedure discussed in Matjhabeng Local Municipality v Eskom Holdings Ltd and Others.

The court also addressed the appellants’ application for condonation for late filing of heads of argument. It noted the timeline: heads were due by 6 August 2021 but were filed on 2 September 2021, with condonation sought on 3 September 2021. The explanation advanced was that the appellants had been advised of voluntary liquidation, had received a letter proposing a stay and compliance with section 359, had accepted that suggestion, and later reconsidered after reading certain authorities. The court characterised the explanation as poor, and, critically, considered that there were no prospects of success on appeal. Condonation was therefore refused.

Finally, on costs, the court invoked the labour-law approach that costs do not automatically follow the result and must be determined according to law and fairness. It concluded that fairness dictated that there should be no order as to costs.

Outcome and Relief

The Labour Appeal Court dismissed the application for condonation for the late filing of heads of argument. It dismissed the appeal. It made no order as to costs.

Cases Cited

Van Wyk v Unitas Hospital (Open Democratic Advice Centre as Amicus Curiae) 2008 (2) SA 472 (CC) (2008 (4) BCLR 442; [2007] ZACC 24).

Fakie NO v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA).

Secretary, Judicial Commission of Inquiry into Allegations of State Capture v Zuma and Others 2021 (5) SA 327 (CC).

Matjhabeng Local Municipality v Eskom Holdings Ltd and Others 2018 (1) SA 1 (CC) ([2017] ZACC 35).

Pheko v Ekurhuleni City 2015 (5) SA 600 (CC) (2015 (6) BCLR 711; [2015] ZACC 10).

Uncedo Taxi Service Association v Maninjwa and Others 1998 (3) SA 417 (E) (1998 (2) SACR 166; 1998 (6) BCLR 683).

Mostert and Others v FirstRand Bank Ltd t/a RMB Private Bank and Another 2018 (4) SA 443 (SCA).

Minister of Land Affairs and Agriculture v D & F Wevell Trust and Others 2008 (2) SA 184 (SCA) ([2007] ZASCA 153).

Shephard v Tuckers Land & Development Corporation (Pty) Ltd (1) 1978 (1) SA 173 (W).

Groom v Daimler Fleet Management (Pty) Ltd (JA39/20) [2020] ZALAC 66 (4 August 2020).

Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State v Zuma and others (CCT 52/21) [2021] ZACC 18 (29 June 2021).

MEC for Finance, Kwazulu-Natal, and another v Dorkin NO and Another (2008) 29 ILJ 1707 (LAC).

Zungu v Premier of the Province of KwaZulu-Natal and Others (2018) 39 ILJ 523 (CC) (2018 (6) BCLR 686; [2018] ZACC 1).

Union for Police Security And Corrections Organisation v S A Custodial Management (Pty) Ltd and Others (2021) 42 ILJ 2371 (CC).

Legislation Cited

Superior Courts Act 10 of 2013, section 16(2)(a)(i).

Companies Act No. 61 of 1971, section 359(2)(a) (as referenced in the judgment).

Companies Act No. 61 of 1973, section 359 (including section 359(2)(b), as referenced in the footnotes and condonation discussion).

Rules of Court Cited

No specific rules of court were expressly cited in the judgment. The court referred to general principles governing motion proceedings and affidavits as pleadings and evidence.

Held

The appeal against the first respondent was dismissed on the basis that, due to liquidation, the dispute was moot and no interests of justice justified determination of the merits. The court also held that the appellants failed to comply with the statutory requirement to give notice to the liquidator in terms of section 359(2)(a) of the Companies Act, with the consequence that the proceedings were treated as abandoned unless otherwise directed.

In relation to the second respondent, the court held that the appellants failed to establish contempt in their founding affidavit and, in any event, contempt relief could not succeed because the second respondent was not a party to the original consent order proceedings and was not properly joined in his personal capacity.

Condonation for the late filing of heads of argument was dismissed due to an inadequate explanation and an absence of prospects of success. No costs order was made, applying the fairness-based approach to costs in labour litigation.

LEGAL PRINCIPLES

Civil contempt of court in motion proceedings requires proof beyond a reasonable doubt of the existence of the court order, service or notice of the order on the alleged contemnor, and non-compliance with the order. Once these elements are proved, the alleged contemnor bears an evidential burden to raise a reasonable doubt as to whether non-compliance was wilful and mala fide; failing that, contempt is established beyond a reasonable doubt.

In motion proceedings, affidavits serve as both pleadings and evidence, and the respondent is entitled to know the case to meet from the founding affidavit. As a general rule, an applicant may not cure defects or supplement its case in the replying affidavit, save in exceptional circumstances and typically subject to allowing the respondent an opportunity to respond to new matter.

An appeal may be dismissed where the decision sought will have no practical effect or result, and mootness is assessed under an interests of justice discretion that considers practical effect and whether a determination serves public interest or legal certainty.

Where a party is in liquidation, statutory requirements such as notice to the liquidator under section 359 of the Companies Act may affect the continuation of proceedings, with failure to give notice carrying the consequence that proceedings are regarded as abandoned unless directed otherwise by a court.

In labour matters, costs are not automatically awarded to the successful party; costs orders are guided by law and fairness, and the norm is that costs are not ordered unless fairness and the statutory standard justify it.