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[2024] ZALCJHB 107
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Solidarity obo Putter v Anglo Black(Pty) Ltd and Another (J 52/2024) [2024] ZALCJHB 107; (2024) 45 ILJ 1084 (LC); (2024) 45 ILJ 1108 (LC) (4 March 2024)
THE LABOUR COURT OF SOUTH AFRICA,
JOHANNESBURG
Reportable
Case
no: J 52/2024
in the matter between:
SOLIDARITY obo
PUTTER Applicant
And
ANGLO BLACK (PTY)
LTD
First Respondent
DEON
MARIUS BOTHA
N.O
Second Respondent
Heard:
22 February 2024
Delivered: 04
March 2024
This
judgment was handed down electronically by consent of the parties’
representatives by circulation to them by email. The
date for
hand-down is deemed to be 04 March 2024.
JUDGMENT
PRINSLOO, J
Introduction
[1]
Mr Putter was employed by the First
Respondent (Respondent) in November 2022 as a site manager. On 5
December 2023, all employees
of the Respondent received a notice that
due to the current financial and market-related constraints,
management decided that the
mine, Groenvlei Colliery, be placed “
on
care maintenance (sic) till further notice”.
The employees were further informed that “
once
offtake agreements have been concluded, all employees will be
notified to return to site and resume their responsibilities”.
[2]
Mr
Putter was never invited to consult regarding the possibility of
dismissal due to the Respondent’s operational requirements,
but
he became aware of the fact that other employees were invited to a
consultation meeting as part of the retrenchment process
initiated in
terms of section 189A of the Labour Relations Act
[1]
(LRA). The said invitation however did not provide a date or time for
the proposed consultation meeting.
[3]
On 20 December 2023 ‘all affected
employees’, including Mr Putter, received a ‘notice of
redundancy / retrenchment’.
Mr Putter was informed that his
position became redundant and that his employment would terminate on
31 December 2023. Mr Putter
was dismissed for operational reasons,
with no process being followed and no compliance with the provisions
of sections 189 and
189A of the LRA.
[4]
The Applicant, Solidarity acting on behalf
of Mr Putter, addressed a letter to the Respondent on 3 January 2024,
recording that
no consultation process was followed and demanding
that the Respondent withdraws Mr Putter’s termination notice by
Monday
8 January 2024, and that he be reinstated, and if the
Respondent wanted to proceed with retrenchment, that a proper
retrenchment
process be followed in accordance with the applicable
legal prescripts and that consultations be held. An undertaking was
sought
from the Respondent, by close of business on 8 January 2024,
that the termination notice would be withdrawn and that a proper
retrenchment
process would be undertaken, failing which the Applicant
would approach the Labour Court for relief.
[5]
No undertaking was provided by close of
business on 8 January 2024 and on 10 January 2024, Mr Putter
consulted with the Applicant’s
legal representatives. On 10
January 2024, the Applicant’s attorneys addressed a letter to
the Respondents, seeking an undertaking
that Mr Putter would be
allowed back in its service until a proper retrenchment process was
followed. The Respondent was granted
an opportunity to provide a
written undertaking by 12 January 2024, failing which the Applicant
would launch an urgent application.
[6]
No response was received and on 19 January
2024, an application in terms of section 189A(13) of the LRA was
filed. The section 189A(13)
application was served and filed within
the 30-day period prescribed in section 189A(17)(a) of the LRA. The
matter was enrolled
for hearing on 25 January 2024.
[7]
A
notice of opposition was subsequently filed by the Respondent’s
attorneys, Stroh Coetzee Inc., on Monday, 22 January 2024.
Attached
to the notice of opposition was confirmation that the Respondent was
placed in business rescue in terms of Section 129
of the Companies
Act
[2]
.
The business rescue was registered at CIPC on 10 January 2024 and the
effective date of commencement of the business rescue proceedings
was
recorded as being 8 January 2024.
[8]
The Second Respondent, Mr Deon Marius Botha
(BRP), was appointed as business rescue practitioner, effective from
17 January 2024.
[9]
After becoming aware of the fact that the
employer was placed in business rescue, it became prudent to join Mr
Botha as a Respondent
and an application for joinder was served and
filed on Wednesday, 24 January 2024 when it became apparent that the
BRP did not
apply to intervene and/or be joined as a party to the
urgent application.
[10]
On 25 January 2024, the BRP was joined to
the application as the Second Respondent and the matter was postponed
and set down for
hearing on 22 February 2024 to afford the BRP an
opportunity to consider the matter and to make a decision in terms of
section
141 of the Companies Act. Should the BRP decide to oppose the
application, he was afforded an opportunity to file an answering
affidavit.
[11]
On 20 February 2024, the BRP indicated that
Mr Putter’s retrenchment was completed during December 2023
whilst the “
company was only
formally placed in business rescue on 10 January 2024”
and he stated that he “
is not
prepared to consent to the current application in terms of Section
141”
.
[12]
The matter was heard on 22 February 2024
without the BRP filing an answering affidavit.
This application
[13]
The Applicant approached this Court in
terms of the provisions of section 189A(13), challenging the
procedural fairness of Mr Putter’s
dismissal. The relief sought
is
inter alia
an
order to declare that the Respondent has acted in a procedurally
unfair manner when it dismissed Mr Putter for operational reasons,
that the Respondent be ordered to reinstate Mr Putter and to initiate
and continue with a meaningful joint consensus-seeking process
as
envisaged by section 189 of the LRA, alternatively that Mr Putter be
compensated for his procedurally unfair dismissal. As the
BRP was
appointed and joined in these proceedings, any order to consult with
Mr Putter, as envisaged in section 189 of the LRA,
will be an order
for the BRP to comply with.
[14]
The Respondent’s case is that this
Court is divested of jurisdiction to entertain the current matter
because it was placed
in business rescue.
[15]
The
BRP’s position is that, in terms of section 133 of the
Companies Act there is a moratorium on legal proceedings. The BRP
relied on
Marques
and Others v Group Five Construction (Pty) Ltd and Others
[3]
(
Marques
),
where
the court found that ‘legal proceedings’ included labour
claims in the CCMA and other labour courts and that the
Labour Court
has no jurisdiction to uplift the moratorium on legal proceedings.
It
was also found that the moratorium in terms of section 133 was not in
conflict with any of the terms of the LRA. While business
rescue
practitioners would need to ensure that, for example, any
retrenchments are fair and compliant with the LRA and other
applicable
legislation, any retrenched employee would not be able to
challenge the fairness of such dismissal or take any other legal
action
for as long as the employer remains in business rescue. The
BRP is therefore not prepared to consent to the current application
in terms of section 141.
[16]
This is where the conundrum lies. On the
one hand, the Companies Act provides for a moratorium on legal
proceedings against a company
under business rescue and on the other
hand, the LRA provides for a
sui generis
remedy to approach this Court, within
30 days after retrenchment, in respect of procedural unfairness in a
section 189A retrenchment.
The Labour Relations Act
[17]
Section
189A(13)
of the LRA
provides as follows:
‘
If an
employer does not comply with a fair procedure, a consulting party
may approach the Labour Court by way of an application
for an order —
(a)
compelling the employer to comply with
a fair procedure;
(b)
interdicting or restraining the
employer from dismissing an employee prior to complying with a fair
procedure;
(c)
directing the employer to reinstate an
employee until it has complied with a fair procedure;
(d)
make an award of compensation, if an
order in terms of paragraphs
(a)
–
(c)
is not appropriate.’
[18]
In
Banks
and another v Coca-Cola SA - A Division of Coca-Cola Africa (Pty)
Ltd
[4]
the Court summarized the role of the Court in a section 189A(13)
application as follows:
‘
In short,
the conclusion to be drawn from the wording of s 189A is that this
court appears to have been accorded a proactive and
supervisory role
in relation to the procedural obligations that attach to operational
requirements dismissals. Where the remedy
sought requires
intervention in the consultation process prior to dismissal, the
court ought necessarily to afford a remedy
that accounts for the
stage that the consultation has reached, the prospect of any joint
consensus-seeking engagement being resumed,
the attitude of both
parties, the nature and extent of the procedural shortcomings that
are alleged and the like. If it appears
to the court that little or
no purpose would be served by intervention in the consultation
process in one of the forms contemplated
by s 189A(13)
(a)
,
(b)
and
(c)
, then
compensation as provided by para
(d)
is the more apposite remedy.’
[19]
In
SA
Society of Bank Offices on behalf of Fourie v Nedbank Limited
[5]
(SASBO),
the
Court held that:,
‘
The preamble
to s 189A (13) makes clear that the court’s intervention is
limited to instances of a refusal or failure by the
consulting
employer to comply with a fair procedure. What the subsection seeks
to accomplish, in the face of a prohibition on the
right to strike
over any dispute that concerns the procedural fairness of a
retrenchment and the limitation on the right to refer
a dispute of
that nature to this court for adjudication in terms of s 191, is to
extend to this court a supervisory role over the
consultation
process, with powers to intervene if and when necessary, and to craft
remedies designed to address any procedural
shortcoming that are
found to exist. The section is not an invitation to consulting
parties to use this court to micro-manage a
consultation process –
intervention ought to be limited to a substantial failure or refusal
to comply with the relevant statutory
requirements.’
[20]
In
Steenkamp
and Others v Edcon Limited
[6]
(Steenkamp II),
the
Constitutional Court dealt
inter
alia
with
the questions of whether claims for relief for procedural unfairness
in large-scale retrenchments can be dealt with
ex
post facto
and
whether
compensation for procedural unfairness can be claimed as a
self-standing remedy in the context of large-scale retrenchments
in
terms of section 189A(13)
(d)
of
the LRA.
[21]
The Constitutional Court held that the
LRA specifically provides for a dispute-resolution mechanism
designed to deal with procedural
flaws that arise during or
immediately after the consultation process and to allow the Labour
Court, acting as the guardian of
the process, to set the consultation
process back on track. T
he legal principles
that emerged from
Steenkamp II
are clear and apply to all retrenchments in terms of section 189A of
the LRA.
[22]
What are those legal principles that
emerged? The Constitutional Court, considering the nature, purpose
and functioning of section
189A(13) held that:
‘
[45] The LRA
provides for a consultative framework within which employees facing
possible retrenchment may participate in the consultation
process in
an attempt to either avoid a possible retrenchment or, where
retrenchments are unavoidable, to participate in attempts
to
ameliorate the adverse effects of such a retrenchment.
[46] Where a retrenchment
exercise involves a large number of employees, s 189A of the LRA
applies. This section not only strives
to enhance the effectiveness
of the consultation process by providing for the appointment of a
facilitator, but also provides for
mechanisms to pre-empt and resolve
disputes about substantive and procedural unfairness issues as and
when they arise during the
consultation process.
[47] A distinctive feature of s
189A(13) of the LRA is the separation of disputes about procedural
fairness from disputes about
substantive fairness. Disputes about
substantive fairness may be dealt with by resorting to strike action
or by referring a dispute
about the substantive fairness of the
dismissals to the Labour Court in terms of s 191(11) of the LRA.
[48] Disputes about procedural
fairness have been removed from the adjudicative reach of the Labour
Court and may no longer be referred
to the Labour Court as a
distinctive claim or cause of action that a dismissal on the basis of
operational requirements was procedurally
unfair.’
[23]
The Constitutional Court made it clear that
although a clear policy decision has been made to remove claims of
procedural unfairness
from the
ex post
facto
jurisdictional competence of the
Labour Court, employees are not left without a remedy as they may
approach the Labour Court in
terms of section 189A(13) of the LRA for
an order compelling the employer to comply with a fair procedure.
Where employees have
already been dismissed, the Labour Court has the
additional power in terms of section 189A(13)(c) of the LRA to
reinstate such
an employee to allow for the consultation process to
run its course. Only where these orders are not appropriate, may the
Labour
Court, where it is appropriate to do so, order compensation in
terms of subsection (d).
[24]
Where procedural irregularities arise, the
process provided for in section 189A(13) of the LRA allows for the
urgent intervention
of the Labour Court to correct any such
irregularities as and when they arise so that the integrity of the
consultation process
can be restored and the consultation process can
be forced back on track. Where the prescribed time limits set out in
section 189A(17)
are not adhered to, the Labour Court may, on good
cause shown, condone the failure to adhere to the strict time limits.
[25]
The primary purpose of section 189A(13) is
to allow for early corrective action “
to
get the retrenchment process back onto a track that is fair
”.
Paragraphs (a)-(d) establish a hierarchy of appropriate relief and
only where it is not appropriate to grant an order in
terms of
paragraphs (a)-(c) may an order for compensation be granted in terms
of paragraph (d).
[26]
The Applicant approached this Court on an
urgent basis in terms of the provisions of section 189A(13) of the
LRA, seeking an order
that the Respondent /BRP be ordered to
reinstate Mr Putter and to initiate and continue with a meaningful
joint consensus-seeking
process as envisaged by section 189 of the
LRA, alternatively that he be compensated for his procedurally unfair
dismissal.
[27]
The Applicant must establish facts to show
that there has been a substantial failure or refusal to comply with
the requirements
of section 189 of the LRA before he can seek
intervention in terms of section 189A(13).
[28]
The Applicant’s version, that Mr
Putter was never invited to consult about the possibility of
dismissal due to the Respondent’s
operational requirements and
that he was merely informed that his position became redundant and
that his employment would terminate
on 31 December 2023, is not
disputed. The version that Mr Putter was dismissed for operational
reasons, with no process being followed
and no compliance with the
provisions of sections 189 and 189A of the LRA is not challenged and
I cannot but find that Mr Putter
is entitled to approach this Court
for relief, as provided for in section 189A(13).
[29]
The question is: what relief can this Court
grant Mr Putter in view of the fact that the Respondent has been
placed in business
rescue? This question calls for a consideration of
the provisions of the Companies Act.
The Companies Act
[30]
Section 5 of the Companies Act provides for
the general interpretation of the said Act and provides
inter
alia
that it must be interpreted and
applied in a manner that gives effect to the purposes set out in
section 7.
[31]
Section 7 provides for the purposes of the
Companies Act and section 7(k) provides for the efficient rescue and
recovery of financially
distressed companies, in a manner that
balances the rights and interests of all relevant stakeholders.
[32]
Business rescue is regulated under Chapter
6 of the Companies Act and it refers to proceedings that are carried
out for the rehabilitation
of a financially distressed company by
providing
inter alia
for the temporary supervision of the company, its management,
affairs, business and property, for an automatic and general
moratorium
on the rights that any claimant may have against the
company and for the development and implementation of a plan to
rescue the
company.
[33]
The
purpose of Chapter 6 is to provide for the “
efficient
rescue and recovery of financially distressed companies, in a manner
that balances the rights and interests of all relevant
stakeholders”,
[7]
whilst
the fundamental purpose of business rescue is to “
prevent
a debtor from going into liquidation, with an attendant loss of jobs
and possible misuse of economic resources
”
[8]
.
[34]
Once
business rescue proceedings commence, there is an automatic and
general moratorium on legal proceedings or executions against
the
company.
[9]
[35]
Section 133 of the Companies Act provides
as follows:
(1)
During business rescue proceedings, no
legal proceeding, including enforcement action, against the company,
or in relation to any
property belonging to the company, or lawfully
in its possession, may be commenced or proceeded with in any forum,
except—
(a)
with the written consent of the
practitioner;
(b)
with the leave of the court and in
accordance with any terms the court considers suitable;
(c)
as a set-off against any claim made by
the company in any legal proceedings, irrespective of whether those
proceedings commenced
before or after the business rescue proceedings
began;
(d)
criminal proceedings against the
company or any of its directors or officers; or
(e)
proceedings concerning any property or
right over which the company exercises the powers of a trustee….
(2)
During business rescue proceedings, a
guarantee or surety by a company in favour of any other person may
not be enforced by any
person against the company except with leave
of the court and in accordance with any terms the court considers
just and equitable
in the circumstances.
(3)
If any right to commence proceedings or
otherwise assert a claim against a company is subject to a time
limit, the measurement of
that time must be suspended during the
company’s business rescue proceedings.’
[36]
Reference to ‘court’ in section
133(1)(b) has been interpreted to mean ‘High Court’
specifically and exclusively.
[37]
The
Companies Act does not define the phrase “
legal
proceedings
”
as provided for in section 133, however, academics have expressed the
view that the clear intention of the provision is
to “
cast
the net as wide as possible in order to include any conceivable type
of action against the company
…”
[10]
[38]
The
Supreme Court of Appeal (SCA) in
Chetty
t/a Nationwide Electrical v Hart and Another NNO
[11]
,
held as follows in respect of its analysis of the meaning of the
phrase “
legal
proceedings
”
in terms of section 133:
‘
To conclude
this analysis, the phrase 'legal proceeding' may, depending on the
context within which it is used, be interpreted restrictively,
to
mean court proceedings or, more broadly, to include proceedings
before other tribunals, including arbitral tribunals. The language
employed in s 133(1) itself suggests that a broader interpretation
commends itself, an approach with which academic commentators
concur.
Contextual indications in s 142(3)(b), and the importance of reading
these provisions consistently, also support this interpretation.
And
finally, the purpose of the provision, which is to give breathing
space to the practitioner to get the company's financial
affairs in
order, also requires it to be construed widely because arbitrations,
like court proceedings, also involve diversion
of resources —
both time and money — that may hinder the effectiveness of
business rescue proceedings. To construe
it narrowly, as the court
a
quo
did, and as the respondent contends
we should, would be at odds with its language, defeat its purpose and
lead to insensible and
impractical consequences.’
[39]
In
Timasani
(Pty) Ltd and another v Afrimat Iron Ore (Pty) Ltd
[12]
(Timasani):
‘
Section 133
must be read as a whole: the different subsections of a provision
dealing with the same subject matter must not be considered
in
isolation but read together so as to ascertain the meaning of the
provision. Section 133 (1) is a general moratorium provision
that
applies in relation to the assets and liabilities of the company at
the stage when business rescue comes into effect. It protects
the
company against legal action in respect of claims in general, save
with the written consent of the business rescue practitioner
and
failing such consent, with the leave of the court. This Court has
stated the purpose of section 133 (1) as follows:
“
It is
generally accepted that a moratorium on legal proceedings against a
company under business rescue is of cardinal importance
since it
provides the crucial breathing space or a period of respite to enable
the company to restructure its affairs. This allows
the practitioner,
in conjunction with the creditors and other affected parties, to
formulate a business rescue plan designed to
achieve the purpose of
the process.”’
[40]
Academics
have also theorised that ‘legal proceedings’ would
conceivably include proceedings before bodies such as the
Consumer
Commission and the Competition Commission.
[13]
Conflict between the Companies Act
and the LRA
[41]
The relevant provisions of section 5 of the
Companies Act provide as follows:
‘
(4) If there
is an inconsistency between any provision of this Act and a provision
of any other national legislation—
(a)
the provisions of both Acts apply
concurrently, to the extent that it is possible to apply and comply
with one of the inconsistent
provisions without contravening the
second; and
(b)
to the extent that it is impossible to
apply or comply with one of the inconsistent provisions without
contravening the second—
(i)
any applicable provisions of the –
…
(bb)
Labour
Relations Act, 1995 (Act No. 66 of 1995);
prevail in the case of an
inconsistency involving any of them, except to the extent provided
otherwise in section 49(4).
[42]
Section 210 of the LRA provides that, if
any conflict arises relating to matters dealt with in the LRA and the
provisions of any
other law, save for the Constitution, the
provisions of the LRA will prevail.
[43]
The question of whether the provisions of
section 133 of the Companies Act conflict with the dispute resolution
procedure set out
in the LRA has been considered by the Courts.
[44]
In
Burba
v Integcomm (Pty) Limited
[14]
(
Burba
)
,
the
applicant employee had referred an unfair dismissal dispute following
his dismissal for operational requirements. His referral
was served
and filed in June 2012. In July 2012 the respondent employer
delivered its statement of defence opposing the applicant’s
claim and on 11 September 2012, by way of court order, the respondent
employer was placed in business rescue in terms of Chapter
6 of the
Companies Act. The referral to this court was made some three months
before the High Court order was made. The High Court
inter
alia
ordered that “
during
business rescue proceedings no legal proceedings, including
enforcement action against [the respondent employer]…
may be
commenced or proceeded with in any forum except… with the
written consent of the aforesaid [BRP]; with the leave
of the court
and in accordance with any terms the court considers suitable
…”
[45]
The Labour Court in
Burba
,
having considered the contents of the High Court order, the wording
and purpose of section 133 and the interpretation of the phrase
‘legal proceedings’ as contained in
Henochsberg
held that:
‘
In the
circumstances, the unfair dismissal proceedings cannot be proceeded
with except with the written consent of the business
rescue
practitioner or with the leave of the Court.’
[15]
And further that:
‘
It follows
then that as the unfair dismissal proceedings in this Court are
covered in the words “legal proceedings …
in any forum”
in section 133(1) of the Companies Act, the proceedings must be
stayed and not proceeded with except…
with the written consent
of the BRP; or with the leave of the High Court that granted the High
Court order…’
[16]
[46]
The unfair dismissal proceedings in
Burba
were therefore stayed pending fulfilment of the exceptions as set out
in section 133(1), which included a High Court order granting
leave
to proceed with the litigation.
[47]
Shortly
after
Burba
was decided, the Labour Court in
National
Union of Metal Workers of South Africa obo Members v Motheo Steel
Engineering
[17]
(
Motheo
Steel
)
was again approached to determine whether an application brought
against a company in business rescue was stayed in accordance
with
section 133. The Court (per Lagrange J) held that:
‘
In terms of
s 210
of the
Labour Relations Act, 66 of 1995
a matter dealt with in
that Act prevails over the provisions of any other law save the
Constitution or any Act expressly amending
it. I am satisfied that
s
133(1)
of the
Companies Act 71 of 2008
does not expressly amend the
provisions of the LRA, and insofar as it might otherwise prevent
legal proceedings without the leave
of a court or the relevant
business rescue partner, it does not prevent the applicant bringing
this application.’
[48]
In effect, in
Motheo
Steel
the Court accepted that the
provisions of
section 133
did not prevent the applicant from
approaching the Labour Court on application.
[49]
Although
not decided in the context of dismissal,
Sondamase
and Another v Ellerine Holdings Ltd and Another
[18]
(
Sondamase
),
provided guidance in determining labour disputes in the case of
business rescue proceedings. In
Sondamase,
the
applicant employees had lodged a grievance alleging discrimination,
victimisation and unfair labour practices and referred their
dispute
to the CCMA in July 2014. Their dispute was unresolved at
conciliation and the employees referred their matter to the Labour
Court on 8 August 2014. On 7 August 2014, Ellerines Furnishers
commenced with business rescue proceedings and on 21 August 2014,
Ellerines Holdings did the same. The respondents raised a special
plea that
section 133
of the
Companies Act had
placed a general
moratorium on all legal proceedings, including the proceedings before
the Labour Court and that, as no consent
has been provided by the BRP
nor had the High Court granted an order allowing the employees to
proceed with their dispute, the
dispute before the Labour Court had
been suspended.
[50]
The Court agreed with the judgment of
Burba
and upheld the special plea. On the issue of whether
section
133(1)(a)
gives rise to a conflict with the dispute resolution
provisions of the LRA, the Court answered this in the negative:
‘
[15] It does
not appear to me that there is any conflict between
s 133(1)(a)
of
the
Companies Act and
the dispute resolution provisions set out in
the LRA. And in so far as there has been conflicting jurisprudence on
the application
of
s 133
of the
Companies Act to
dispute arising out
of the LRA, it appears to have been settled by the recent decision of
the [SCA] in [
Chetty
].
In that case, the SCA interpreted
s133
to place a moratorium, not
only on legal proceedings in court, but even arbitration proceedings.
Cachalia JA took a purposive approach:
“
[26] But the
question the respondent is unable to answer is why the lawmaker would
want the company to provide details of all proceedings,
including
arbitration proceedings, to a practitioner, but exclude arbitrations
from the ambit of the moratorium and the obligation
to obtain a
practitioner's consent in
s 133(1)(a).
After all the outcome of an
arbitration by way of award is usually that the losing party has to
pay a sum of money, which is the
outcome of most court actions
involving commercial disputes. In my view the answer lies in properly
understanding the purpose of
these provisions as they apply to
business rescue proceedings and the consequences that flow from the
parties' contending interpretations.
[27] Section 5(1) of the Act directs
that its interpretation and application must give effect to the
purpose stated. Section 7(k)
is relevant here. It says that one of
these purposes is to:
“
...provide
for the efficient rescue, and recovery of financially distressed
companies, in a manner that balances the rights and
interests of all
relevant stakeholders…”
[28] Section 128(1)(b) of the Act
defines business rescue to mean proceedings that facilitate the
rehabilitation of a financially
distressed company by providing,
amongst other things, for the temporary supervision and moratorium on
the rights of claimants,
and the development and implementation of a
plan to rescue the company. The obvious purpose of placing a company
under business
rescue is to give it breathing space so that its
affairs may be assessed and restructured in a manner that allows its
return to
financial viability. The requirement for the practitioner's
consent to be obtained is to give him the opportunity, after his
appointment,
to consider the nature and validity of any existing or
pending claim and how it is to be dealt with, for example by settling
it
or continuing with the litigation. In particular, the
practitioner's concern is directed at assessing how the claim will
impact
on the well-being of the company and its ability to regain its
financial health. A general moratorium on the rights of creditors
enforcing their rights against the company is therefore crucial to
achieving this objective. And given the ubiquitous use of
arbitrations
to resolve commercial disputes, an interpretation of s
133(1) that excludes them from the moratorium on legal proceedings
against
financially distressed companies would significantly hinder
its attainment.
[29] In my view once this purpose of
business rescue - to give the practitioner breathing space - is
properly understood, it becomes
apparent that only an interpretation
that includes arbitrations within, instead of excluding them from,
the meaning of legal proceedings
in s 133(1), allows this provision
to be read harmoniously with s 142(3)(b). Such a reading is in line
with the well-known canon
of statutory construction, which is that if
by any reasonable construction the two can be made to be compatible,
not contradictory,
that is the interpretation that should be given.
There can be no reason why s 142(3)(b) obliges the company to provide
details
of arbitrations to the practitioner other than because they
are also legal proceedings - as contemplated in s 133(1) - that may
have a bearing on its financial viability and of which the business
rescue practitioner must be cognisant."
[16] By suspending the legal
proceedings in this case and giving the respondents the breathing
space contemplated by the
Companies Act, the
employees are not
deprived of their right to continue with their claim against the
company at a later stage. The claim is only
suspended during the
period of business rescue proceedings. That does not appear to me to
be in conflict with the provisions of
the LRA.’
[51]
The court concluded that the suspension of
the applicant employees' claims did not leave them without remedies
as, once the moratorium
is lifted, they could pursue their claims.
[52]
The
applicants in
Marais
and 56 others v Shiva Uranium (Pty) Limited (in business rescue) and
others
[19]
(Marais),
approached
the court seeking leave to uplift the moratorium placed in terms of
section 133(1)(b)
and in the main application, the applicants sought
an order directing the respondent to pay all unpaid remuneration and
employment
benefits. The applicants argued that
section 157
clothed
the Labour Court with jurisdiction to uplift the moratorium as their
claims against the respondent were rooted in the fundamental
right
which was offended by the non-payment of their remuneration and
employment benefit contributions. In the alternative, they
argued
that where there existed a conflict between the provisions of
section
133
and the LRA, the provisions of the LRA would prevail.
[53]
On the issue of a conflict between the
provisions of
section 133
of the
Companies Act and
the LRA, the
Labour Court in
Marais
agreed
and aligned itself with the position adopted in
Sondamase,
which held that there existed no conflict between
section 133
of the
Companies Act and
the LRA.
[54]
The Court followed the positions set out in
Burba
and
Sondamase
and concluded that:
‘
In the
circumstances, this Court has no jurisdiction to lift the moratorium
in accordance with
section 133(1)(b)
and grant the applicants leave
to litigate against the first respondent during the business rescue
proceedings. However, to the
extent that this Court has jurisdiction
to deal with the applicants' claims in terms of the Basic Conditions
of Employment Act
("the BCEA"), the application stands to
be struck off the roll and could only be re-enrolled with the leave
granted in
terms of section 133(1)(a) or (b).’
[20]
[55]
In
Marques
[21]
,
Lagrange J acknowledged that in view of further judicial
pronouncements and the decisions in
Chetty
,
Burda
,
Sondamase
and
Marais,
the
weight of authority is against this court assuming the mantle of the
High Court to lift the moratorium on legal proceedings
imposed by
section 133(1). The aforesaid authorities did not support the dictum
in
Motheo
Steel.
The court held further: “
that
is not to say that justified circumstances may exist for the High
Court to do so in instances where permission to lift the
moratorium
has been refused by the business practitioner. But that is not a
claim that can be pursued in this court
”.
[56]
In
NUMSA
and another v South African Airways SOC Ltd and others
[22]
(
SAA
),
the Labour Court per Van Niekerk J (as he was then) considered the
effect of the section 133 moratorium on legal proceedings.
In
SAA,
the BRPs had not been approached for consent to uplift the
moratorium, the High Court had not been approached to grant leave to
that effect and the notice of motion in the proceedings did not seek
an order uplifting the moratorium. The court considered the
aforementioned authorities, including
Motheo
Steel
and held as follows:
‘
[16] The
weight of authority thus suggests that a party seeking to initiate
proceedings that concern an employment-related claim
against a
company in business rescue, over which this Court has jurisdiction,
must secure the written consent of the business rescue
practitioner
or obtain the leave of the High Court to institute those proceedings,
even if this Court has exclusive jurisdiction
to entertain the merits
of the claim. To the extent that the applicants rely on
NUMSA
v Motheo Steel
J271/2014 (7 February
2014), where the court held that
s 133(1)
of the
Companies Act did
not preclude a party from bringing an application in the Labour
Court, that is not a position that has been followed; indeed, the
same judge decided
Marques
,
which as indicated above, takes a contrary view. I am not persuaded
that, as the applicants submit, all of these cases were wrongly
decided.
[17] … The applicants contend
that in any event the issue in dispute lies within the employment
sphere, given that the primary
cause of action is located in
s 32
of
the BCEA, with the remaining causes of action (including the reliance
on
s 135
of the
Companies Act) being
secondary. While it is correct
that
s 77(1)
of the BCEA provides that this Court has exclusive
jurisdiction in respect of all matters in terms of the BCEA, it does
not necessarily
follow that this Court, even as a court with equal
standing and status as the High Court, is empowered to lift the
moratorium on
legal proceedings against the company in business
rescue as contemplated by
s 133
of the
Companies Act. The
definition
in
s 128
makes a clear and specific reference to the High Court and
to designated or assigned judges of that court. Chapter 6 of the
Companies Act makes
clear that the supervision of business rescue
proceedings falls within the jurisdiction of the High Court. Had the
legislature
intended that in an employment-related matter involving a
company in business rescue this Court was empowered to lift the
moratorium
by granting leave for the institution of proceedings, this
Court would have been so empowered. The demarcation established by ch
6 recognises that business rescue proceedings affect the rights of a
number of parties beyond the employment relationship, and
in
particular shareholders and other creditors. The High Court is best
placed to balance the rights and interest of all the relevant
parties
in any application for leave to commence legal proceedings or
enforcement action against a company in business rescue.
Contrary to
what the applicants submit, ch 6 of the
Companies Act does
not
insulate labour-related matters and claims, to be treated as if the
provisions of the Chapter relating to business rescue and
its
management do not apply. The Chapter should be read in harmony with
labour legislation, so as to best achieve both the purposes
of
business rescue and the primary objects of labour legislation.’
[57]
In summary: The position accepted by this
Court is that there is no conflict between the
Companies Act and
the
LRA that would bring
section 210
of the LRA into play. Chapter 6 of
the
Companies Act does
not oust the jurisdiction of the Labour Court
where this Court has jurisdiction in respect of claims arising under
the LRA as it
does no more than impose a general moratorium on legal
proceedings against a company in business rescue. Employees remain at
liberty
to institute proceedings in the Labour Court against an
employer that has been placed in business rescue and in respect of
which
this Court has jurisdiction, but they must do so subject to
section 133
of the
Companies Act.
Analysis
[58]
Mr Bekker on behalf of the Applicant
submitted that should relief not be granted to Mr Putter, he would be
forever non-suited. This
is so because the aim of
Section 189A(13)
is
to bring the consulting parties into a negotiation phase and to
ensure compliance with a fair procedure during such a consultation
process.
In casu
,
Mr Putter was retrenched shortly before the Respondent was placed in
business rescue and he had to approach this Court within
a period of
30 days. There would be no use in “
suspending”
the application during the period of business rescue proceedings
since the horse would then have bolted.
[59]
The BRP did not give consent for the
current proceedings and the only other available option is for the
Applicant to approach the
High Court, for an order to lift the
general moratorium. Mr Bekker further submitted that
section 133
of
the
Companies Act effectively
prevents the Applicant from bringing a
section 189A
application directly to the Labour Court, without the
consent of the BRP or the leave of the High Court. According to Mr
Bekker,
this creates an obvious dichotomy and results in a situation
where
section 133
of the
Companies Act conflicts
with the provisions
of the LRA.
[60]
The Applicant’s argument is that the
general moratorium afforded to a company in business rescue should
not be extended to
procedural challenges under
Section 189A(13)
of
the LRA. This will allow employees to exercise their rights in terms
of
Section 189A(13)
expeditiously and without incurring the
additional burden of approaching the High Court to lift the
moratorium. Mr Putter seeks
reinstatement in order for a fair process
to be followed after his procedurally unfair retrenchment. The
current issue does not
relate to any unpaid amount of remuneration or
reimbursement for expenses or any other amount owed relating to
employment that
becomes due and payable during a business rescue
process. It relates to procedural unfairness and this Court’s
jurisdiction
to ensure compliance with the general scheme of the
LRA.
[61]
Where
Section 189A
applies, employees are
precluded from raising procedural fairness challenges in a dispute in
terms of
section 191(5)
of the LRA.
Section 189A(13)
is a specific
avenue for dealing with disputes concerning an employer’s
non-compliance with a fair procedure.
[62]
The arguments advanced by Mr Bekker cannot
be accepted for a number of reasons.
[63]
Firstly, this Court cannot ignore the
aforesaid authorities, and where the authority is from a higher
Court, this Court is bound
by it. This Court can deviate from the
authorities when the facts are clearly distinguishable or when the
authorities are clearly
wrong.
In casu
the facts are not distinguishable, in
any event not to the extent that it warrants a deviation from the
existing authorities and
in my view, the authorities are not wrong.
[64]
Secondly, this Court cannot ignore the
purpose of
section 133
, namely to give breathing space to the BRP to
get the company's financial affairs in order, with the intended
suspension of legal
proceedings, which inevitably involve the
diversion of resources — both time and money — that may
hinder the effectiveness
of business rescue proceedings. Although Mr
Bekker argued that the current issue does not relate to any amount
owed relating to
employment that becomes due and payable during a
business rescue process, instead it relates to procedural unfairness
and this
Court’s jurisdiction to ensure compliance with the
general scheme of the LRA, the reality is that Mr Putter seeks
retrospective
reinstatement, with full remuneration and benefits, and
for the BRP to consult with him in a joint consensus-seeking process,
as
envisaged in
section 189
of the LRA. The relief sought, if
granted, will inevitably involve the diversion of resources (time and
money) and would undermine
the purpose of
section 133
of the
Companies Act.
[65
]
Thirdly, the court in
Marais,
Marques
and
SAA
have made it clear that the Labour
Court does not have the jurisdiction to uplift a moratorium placed on
labour-related legal proceedings
in terms of
section 133
as such
jurisdiction rests solely with the High Court. The court in
Marais
,
quoted with approval in
SAA
,
stated as follows:
[17] The legislature has made express
provision for a forum to deal with litigation emanating from the
business rescue proceedings.
Section 128(1)(e)
not only defines
‘court’ to mean the High Court that has jurisdiction over
the matter, but a judge of the High Court
as designated or assigned
by the Judge President. The Judge President of the High Court has
power to designate any judge of the
High Court as a specialist to
determine issues relating to,
inter alia
, business rescue in
terms of
s 128(3).
It is without doubt that when it comes to matters
relating to business rescue proceedings, the High Court, not any
other court,
has exclusive jurisdiction.
…
.
[19] In the same manner that
s 157(2)
should not be understood to extend the jurisdiction of the High Court
to determine issues which have been expressly conferred upon
the
Labour Court by the LRA, it should also not be understood to extend
the jurisdiction of the Labour Court to deal with any other
statutory
remedies, pertinently,
s 133(1)(b)
…
[20] In the present
case, chapter 6 specifically constitutes a set of carefully-crafted
rules to provide for efficient business
rescue proceedings and
central to that object is the moratorium in terms of
s 133(1).
Therefore, the High Court or designated specialist or assigned judge
of the High Court has exclusive jurisdiction.’
[23]
[66]
In
Gcaba v
Minister for Safety & Security & others,
the Constitutional Court held that:
‘
[70]
Section
157(1)
confirms that the Labour Court has exclusive jurisdiction over
any matter that the LRA prescribes should be determined by it. That
includes, amongst other things, reviews of the decisions of the CCMA
under
s 145.
Section 157(1)
should, therefore, be given expansive
content to protect the special status of the Labour Court, and
s
157(2)
should not be read to permit the High Court to have
jurisdiction over these matters as well.
[71]
Section 157(2)
confirms that the
Labour Court has concurrent jurisdiction with the High Court in
relation to alleged or threatened violations
of fundamental rights
entrenched in chapter 2 of the Constitution and arising from
employment and labour relations, any dispute
over the
constitutionality of any executive or administrative act or conduct
by the state in its capacity as employer and the application
of any
law for the administration of which the minister is responsible. The
purpose of this provision is to extend the jurisdiction
of the Labour
Court to disputes concerning the alleged violation of any right
entrenched in the Bill of Rights which arise from
employment and
labour relations, rather than to restrict or extend the jurisdiction
of the High Court. In doing so, s 157(2) has
brought employment and
labour relations disputes that arise from the violation of any right
in the Bill of Rights within the reach
of the Labour Court. This
power of the Labour Court is essential to its role as a specialist
court that is charged with the responsibility
to develop a coherent
and evolving employment and labour relations jurisprudence. Section
157(2) enhances the ability of the Labour
Court to perform such a
role.
[72] Therefore, s 157(2) should not be
understood to extend the jurisdiction of the High Court to determine
issues which (as contemplated
by s 157(1)) have been expressly
conferred upon the Labour Court by the LRA. Rather, it should be
interpreted to mean that the
Labour Court will be able to determine
constitutional issues which arise before it, in the specific
jurisdictional areas which
have been created for it by the LRA, and
which are covered by s 157(2)(a), (b) and (c).
[73] Furthermore, the LRA does not
intend to destroy causes of action or remedies and s 157 should not
be interpreted to do so.
Where a remedy lies in the High Court, s
157(2) cannot be read to mean that it no longer lies there and should
not be read to mean
as much. Where the judgment of Ngcobo J in Chirwa
speaks of a court for labour and employment disputes, it refers to
labour and
employment related disputes for which the LRA creates
specific remedies. It does not mean that all other remedies which
might lie
in other courts like the High Court and Equality Court, can
no longer be adjudicated by those courts. If only the Labour Court
could deal with disputes arising out of all employment relations,
remedies would be wiped out, because the Labour Court (being a
creature of statute with only selected remedies and powers) does not
have the power to deal with the common law or other statutory
remedies.’
[67]
In the same manner that section 157(2) of
the LRA should not be understood to extend the jurisdiction of the
High Court to determine
issues which have been expressly conferred
upon the Labour Court by the LRA, it should also not be understood to
extend the jurisdiction
of the Labour Court to deal with any other
statutory remedies specifically reserved for the High Court,
pertinently,
section 133(1)(b)
of the
Companies Act.
[68
]
Fourthly, the moratorium on legal
proceedings provided for in subsection (1) (
a
)-(
e
)
is not an absolute bar to legal proceedings but merely serves as a
procedural limitation on a party's rights of action.
[69]
Chapter 6 of the
Companies Act does
not
oust the jurisdiction of the Labour Court where this Court has
jurisdiction in respect of claims arising under the LRA as it
does no
more than impose a general moratorium on legal proceedings against a
company in business rescue. Employees remain at liberty
to institute
proceedings in the Labour Court against an employer that has been
placed in business rescue and in respect of which
this Court has
jurisdiction, but they must do so subject to
section 133
of the
Companies Act.
[70
]
It is clear that the general moratorium
created by this section applies only for the duration of the
company's business rescue proceedings.
[71]
In
Timasani,
it was confirmed that:
‘
The general
moratorium in
section 133(1)
is a defence
in
personam
:
it is a personal, temporary benefit in favour of a company undergoing
business rescue that cannot be utilised indefinitely to
delay the
claims of creditors or result in the extinction of their claims.
Indeed, and as stated, legal proceedings in relation
to those claims
may be initiated or continued with the consent of the BRP or leave of
the court.’
[24]
[72]
Fifthly, the Applicant’s argument
that the general moratorium afforded to a company in business rescue
should not be extended
to procedural challenges under
Section
189A(13)
of the LRA, is not sustainable as the Court made it clear
that in
SAA
that
the demarcation established by Chapter 6 recognises that business
rescue proceedings affect the rights of a number of parties
beyond
the employment relationship, and in particular, shareholders and
other creditors. The High Court is best placed to balance
the rights
and interest of all the relevant parties in any application for leave
to commence legal proceedings or enforcement action
against a company
in business rescue. Chapter 6 of the
Companies Act does
not insulate
labour-related matters and claims, to be treated as if the provisions
of the Chapter relating to business rescue and
its management do not
apply. The Chapter should be read in harmony with labour legislation,
so as to best achieve both the purposes
of business rescue and the
primary objects of labour legislation. If it was the intention of the
legislature to insulate labour-related
disputes, it would have been
stated so in the applicable legislation.
[73]
Lastly, the Applicant’s argument is
that should relief not be granted to Mr Putter, he would be forever
non-suited because
the aim of
Section 189A(13)
is to ensure
compliance with a fair procedure during a peremptory consultation
process. This argument does not hold water.
[74]
Section 189A(13)
provides for an order to
reinstate an employee to allow for the consultation process to run
its course but it also provides, where
such an order is not
appropriate, for the Labour Court, to order compensation in terms of
subsection (d). If legal proceedings
are suspended for the period of
business rescue, Mr Putter is not forever non-suited. The LRA
provides for an order for compensation
for procedural unfairness,
when appropriate. In fact, Mr Putter prayed for compensation as an
alternative remedy.
[75]
In the circumstances, this Court has no
jurisdiction to lift the moratorium in accordance with
section
133(1)(b)
and effectively grant the Applicant leave to litigate
against the Respondent or BRP during the business rescue proceedings.
However,
to the extent that this court has jurisdiction to deal with
Mr Putter’s claim in terms of
section 189A(13)
of the LRA, the
application stands to be struck off the roll and could only be
re-enrolled with the leave granted in terms of
section 133(1)(a)
or
(b), alternatively after the conclusion of the business rescue
process.
[76]
I am mindful of the fact that the outcome
of this application is unfortunate for Mr Putter and that creates an
awkward situation,
where there is an obvious conundrum. This kind of
conundrum arises where the laws overlap and the possibility exists
that all the
labour law ramifications (especially where procedural
fairness is challenged in a large-scale retrenchment) in the case of
business
rescue might not have been anticipated, thought through or
considered. Unfortunately, the legislator did not insulate or
ringfence
a dispute in terms of
section 189A(13)
in the
Companies Act
and
until there is an amendment to the law, the position will remain
as unsatisfactory as it currently is.
[77]
In the premises, I make the following
order:
Order
1.
The application is struck off the roll;
2.
There is no order as to costs.
Connie Prinsloo
Judge of the Labour Court of South
Africa
Appearances:
For the Applicant:
Advocate W Bekker
Instructed by:
Serfontein Viljoen and Swart Attorneys
[1]
Act
66 of 1995, as amended.
[2]
Act
No. 71 of 2008, as amended.
[3]
[2019]
ZALCJHB 330; (2020) 41 ILJ 677 (LC).
[4]
[2007]
ZALC 175
; (2007) 28 ILJ 2748 (LC) at para 18.
[5]
[2019]
ZALCJHB 317; (2020) 41 ILJ 500 (LC) at para 14.
[6]
(2019)
40 ILJ 1731 (CC).
[7]
Section
7(k)
of the
Companies Act.
>
[8]
FH
Cassim, MF Cassim, R Cassim et al, ‘
Contemporary
Company Law
’,
2ed, Juta at p 862.
[9]
Cassim
et al
Contemporary
Company Law
at p 878.
[10]
P
Delport, ‘
Henochsberg
on the
Companies Act 71 of 2008
’,
LexisNexis
South Africa at p 526.
[11]
[2015]
ZASCA 112
;
2015 (6) SA 424
(SCA) at para 35.
[12]
[2021]
3 All SA 843
(SCA) at para 25.
[13]
Henochsberg
ibid at p 526.
[14]
Unreported
judgment under case no JS539/13 delivered on 29 November 2013.
[15]
Ibid
at para 14.
[16]
Ibid
at para 17.
[17]
[2014]
ZALCJHB 315 (7 February 2014) at para 1.
[18]
[2016]
ZALCCT 53 (22 April 2016) at paras 15 – 16.
[19]
[2018]
ZALCJHB 346 (LC); (2019) 40 ILJ 177 (LC).
[20]
Ibid
at para 24.
[21]
Marques
ibid
at para 13.
[22]
[2021]
ZALCJHB 6 (LC);
2021 (4) SA 575
(LC) at paras 16 – 17.
[23]
Marais
supra
at paras 17 and 19 – 20.
[24]
Timasani
supra
at
para 28.