Kgethe and Others v LMK Manafacturing (Pty) Ltd and National Rubber Products CC (JA66/97) [1998] ZALAC 1 (13 February 1998)

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[1998] ZALAC 1
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Kgethe and Others v LMK Manafacturing (Pty) Ltd and National Rubber Products CC (JA66/97) [1998] ZALAC 1 (13 February 1998)

IN THE LABOUR APPEAL COURT OF SOUTH AFRICA
(HELD AT JOHANNESBURG)
CASE NO: JA 66/97
IN THE MATTER BETWEEN:
MIRIAM KGETHE AND OTHERS APPELLANTS
AND
L.M.K. MANUFACTURING (PTY) LTD FIRST RESPONDENT
NATIONAL RUBBER PRODUCTS CC SECOND RESPONDENT
______________________________________________________________________________
JUDGMENT
______________________________________________________________________________
KROON JA
:
[1] The appellants instituted application proceedings in the Labour
Court against the present two respondents and two further persons
who
were, respectively, one Kriel, the director and one Fraser, the
general manager of the first respondent. LANDMAN AJ (as he then
was)
dismissed the application with costs. He thereafter refused the
appellants leave to appeal. A petition to this Court for such
leave
was, however, granted subject to the rider that the appeal would
proceed as against the present two respondents only. The
reason for
the rider was that the other two persons referred to above had no
legal interest in the proceedings and should not have
been joined as
respondents in the Court
a quo
.
[2] Wide ranging aspects were canvassed on behalf of the appellants
in the papers filed in the Court
a quo
and in the petition for
leave to appeal. It is fortunately unnecessary to consider a large
number of these aspects.
[3] The appellants are members of the National Entitled Workers’
Union (“NEWU”), a registered trade union. Up until 30 June
1997
they were employees of the first respondent, some being permanent
weekly paid employees and others casual employees in terms
of fixed
term contracts.
[4] The first respondent is a company which up until 30 June 1997
carried on business as a manufacturer of rubber products.
[5] The second respondent is a close corporation which, pursuant to
an agreement concluded between it and the first respondent
- an
aspect dealt with below - commenced business with effect from 1 July
1997.
[6] During the first half of 1997 the first respondent experienced
serious financial difficulties. Its liquidation was in the
offing.
To stave off the liquidation, so the management of the first
respondent decided, there were three options open to it,
viz., (a)
the sale of the shares in the first respondent; (b) the sale of the
business of the first respondent as a going concern;
(c ) the sale
of all or part of the assets of the first respondent.
[7] In the result, so it was alleged by Fraser, only the third
option materialised and on 26 May 1997 the first and second
respondents
concluded an agreement styled “Agreement Sale of
Assets”, the implementation of which was made subject to the
fulfilment of
certain suspensive conditions. According to Fraser
the subject of the sale was the “bulk” of the first respondent’s
assets
and neither the business of the first respondent nor any part
thereof was sold to the second respondent as a going concern.
[8] Subsequent to 26 May 1997 a number of meetings took place
between Fraser and shop stewards at the workplace and/or one
Nomvela,
a representative of NEWU, and certain communications passed
between the first respondent and Nomvela.
[9] On 13 June Fraser apprised the shop stewards of the financial
difficulties facing the first respondent, the alleged reasons
giving
rise thereto and the options open to the first respondent, stated to
be:
“(a) liquidation
(b) sale (take over of debts).”
He further advised them as follows:
“Negotiations are underway for the sale of the business with final
detail and conclusion to be reached on Tuesday 17 June 1997.”
Fraser further stated that the first respondent was doing its best
to secure employment for the employees and that it was hoped
that
the majority of workers would have “job security”. It may be
noted that at that stage Fraser did not disclose that any
agreement
had in fact been concluded between the two respondents, and his
allegation that he informed the shop stewards “of the
details of
the sale” is not borne out by the minutes of the meeting, which he
confirmed were correct.
[10] On 17 June Nomvela sent a telefax to Fraser in which the
complaints were raised that the first respondent had entered into
negotiations with the prospective buyers of the business without
prior consultation with NEWU, that details of the buyers and of
the
terms of the proposed agreement had not been disclosed and that the
jobs of NEWU members had been placed at risk. Under pain
of an
urgent application to Court Nomvela demanded an undertaking from
Fraser that the sale of the business would be suspended
until the
first respondent had complied fully with the provisions of section
189 of the Act (which imposes on an employer contemplating
the
dismissal of any employee on the grounds of operational
requirements, to conduct certain consultations) and had furnished

certain information relating to the buyers. A repeat of that demand
on 18 June was coupled with the comment that the first respondent
appeared to be in the process of selling its business. The
communication of 17 June further requested Fraser to furnish the
agenda
for a meeting which Fraser had earlier proposed.
[11] The response of Fraser dated 18 June recorded that the agenda
of the proposed meeting was
“The Takeover of L.M.K. Manufacturing (Pty) Ltd.”
The comment by Nomvela that the first respondent “appeared to be
in the process of selling its business” was then not challenged
by
Fraser.
[12] At the proposed meeting, held on 19 June, Fraser advised
Nomvela that the subject to be discussed was not a “takeover”,
but the sale of the first respondent’s assets. He revealed, in
confidence, the name of the purchaser, viz., the second respondent,
and showed Nomvela the first page of a document styled “Agreement
Sale of Assets”, which reflected the second respondent as
the
purchaser. He, however, refused, on the grounds of alleged
confidentiality, to allow Nomvela sight of the remainder of the
agreement, or to disclose the exact nature of the transaction
embodied therein or any further particulars concerning the
purchasers.
In response to Nomvela’s request that he confirm that
employment for all of the existing employees had been secured with
the
second respondent, he handed Nomvela a letter from the second
respondent dated 19 June 1997 and headed “TO WHOM IT MAY CONCERN”
which read as follows:
“This serves to confirm that the weekly paid permanent employees
presently employed at LMK Manufacturing (Pty) Ltd will be
re-employed
subject to acceptance of new employment contracts and
working conditions.”
Fraser further advised Nomvela that the casual workers, whose names
appeared on a list later furnished to NEWU, would not be re-employed
by the second respondent.
[13] On 20 June NEWU received a telefax from a firm styled Massprac
(apparently a labour consultancy acting on behalf of the first
respondent). It recorded,
inter alia
, that:
(a) the meeting of 19 June had been held in order to discuss “the
sale of the company”;
(b) NEWU had been apprised of the reasons urgently necessitating
“the sale of the assets of LMK”, which reasons were repeated
in
the letter;
(c ) NEWU had been advised that an application for the liquidation
of the first respondent had been put on hold pending “the
sale of
LMK and payment of creditors by 30 June 1997";
(d) for liquidation to be avoided it was crucial that the sale “take
place” on 30 June;
(e) NEWU had been informed that “the sale of the assets” had
been agreed upon between the first respondent and another company,
the agreement being that the new owners would acquire the assets of
the first respondent and would in turn pay the creditors of
the
latter;
(f) in order to distance itself from the bad name of the first
respondent in the market place the purchaser was starting a new
company;
(g) a copy of the sale agreement with the heading “Sale of Assets”
reflecting the name of the new company and the names and
addresses
of its directors had, in confidence, been handed to NEWU;
(h) NEWU had been advised that jobs had been secured for all
permanent wage employees as from 1 July on the same conditions and
at the same wages as then prevailed and that a letter to that effect
had been handed to NEWU, and that different provisions - the
details
need not be set out - relating to the termination of the employment
of the casual workers (who were divided into two categories)
and
their possible re-employment would operate;
(i) NEWU’s request that severance pay be paid to the employees
could not be acceded to because the first respondent did not have
the funds therefor.
[14] As appears from [12] above the letter from Massprac did not
accurately reflect what had occurred at the meeting of 19 June
in
that much of what had allegedly been conveyed to NEWU had in fact
not been disclosed, the full contents of the alleged sale
agreement
had not been revealed, it had not been stated that the re-employment
of the permanent workers would be on the same terms
and conditions
as then applied and, as regards the casual workers, it had simply
been stated that they would not be re-employed.
[15] On 21 June Fraser telefaxed to NEWU a further letter from the
second respondent, also dated 19 June and headed “TO WHOM
IT MAY
CONCERN”. The first paragraph coincided with the earlier letter.
A further paragraph read as follows:
“The remuneration will not be less than that presently paid by
LMK. The hours of work and other benefits will be in line with
the
Basic Conditions of Employment Act. Any benefits presently enjoyed,
which do not comply with the Basic Conditions Of Employment
Act,
will be brought in line with the requirements of this Act, whether
this means reducing or improving such benefit.”
[16] By letter dated 21 June NEWU requested Massprac to furnish it
with,
inter alia
, certified copies of the first respondent’s
current bank statements and a list of its assets and debts; a copy
of the agreement
relating to the sale of the first respondent’s
assets - as this had in fact not previously been handed to NEWU;
full particulars
of the creditors of the first respondent and the
amount owed to each; certified proof from the Registrar of Companies
relating
to the change of the company’s name; details of the
existing contracts relating to casual workers; proof that the
agreement of
sale stipulated that the purchasers undertook to retain
all permanent wage employees on the same working conditions and at
the
same wages as then prevailed.
The letter further recorded that NEWU had not accepted the automatic
termination of the employment of a group of the casual workers,
as
had been alleged by Massprac in its earlier letter.
In regard to severance pay it was contended that NEWU had simply
pointed out that in terms of the Act retrenched employees were
at
least entitled to one week’s severance pay.
There was no response to this letter.
[17] At a further meeting on 23 June Nomvela again voiced the demand
that all employees be retained by the purchasers on terms
not less
favourable than those then prevailing. According to Nomvela Fraser
refused to discuss this “repeated request”. Fraser’s
version,
as contained in the minutes of the meeting drawn up on behalf of the
first respondent and confirmed by him as being correct,
was that he
stated that he could not bind the purchasers, but that he would
speak to them about the demand and the further demand
that the sale
agreement contain a clause providing that the employment contracts
be continuous so as to safeguard the employees’
long service
awards, and thereafter revert to NEWU.
The minutes do not bear out Fraser’s further averment that he
stated that the second respondent was not prepared to take over
the
appellants’ employment contracts in that it was not purchasing the
business as a running concern.
[18] Save as is set out in [20] and [21] below Fraser did not revert
to NEWU in regard to the second respondent’s attitude in
respect
of the continued employment of the employees, notwithstanding a
further threat by NEWU, contained in a letter dated 23
June and
headed “Sale or Take-Over of LMK Manufacturing (Pty) Ltd”, that
if the first demand referred to above was not met,
the court would
be approached for appropriate relief.
[19] A further dispute relating to the meeting of 23 June was the
following. Fraser alleged that, as was recorded in the minutes
of
the meeting, he offered to let Nomvela have sight of the agreement
relating to the sale of the assets of the first respondent’s
business together with a list of its liabilities, subject to same
remaining confidential, but that Nomvela declined the offer with
the
comment that he was a unionist, not an economist. Nomvela denied
that such an offer was made and averred that the comment
referred to
was made in another context. He averred that Fraser had
consistently refused to make the agreement available, claiming
that
it was confidential. The fact remains that on either version
Nomvula did not peruse the document in question.
[20] On 23 June Fraser distributed a “Notice To All Staff Members”
reading as follows:
“Please be advised that LMK Manufacturing (Pty) Ltd has been sold
and we hereby give you one week’s notice.
LMK Manufacturing (Pty) Ltd was faced with the option of either
liquidating the company or selling the company. With the sale
of
the company we have been able to secure the employment of all
permanent weekly paid staff. Should the company have been
liquidated,
everybody would have lost.
Please be advised that the new owners will be taking over on the 1st
July 1997.
We thank you for your service and loyalty during the period that you
were employed by LMK Manufacturing (Pty) Ltd and wish you
the best
for the future.”
[21] On 25 June Fraser responded to NEWU’s letter of 23 June as
follows:
“With reference to the above fax please take notice of the
following points.
We have sold the assets of LMK Manufacturing (Pty) Ltd. It is not a
takeover.
At the last meeting held at our offices on the 23/6/97, we gave you
the opportunity to read the “Sale of Assets Agreement”
and a
schedule of the liabilities of the company. From this you would
have seen for yourself that LMK cannot continue to trade
and that
there are not any funds available for severance packages.
We have done everything in our power to ensure that as many
[employees] as possible are given employment with the new buyers.
All [employees] of LMK Manufacturing have been given a [week’s]
notice on the 23/6/97. They will be paid this week’s
notice/severance
plus all leave pay outstanding. This is in terms
of the
Labour Relations Act No 66 of 1995
which you refer to in your
fax of 21st June 1997.
We sincerely hope that you do not find it necessary to take this
matter to the Labour Court in view of the above information, but
should you do so, we will defend the matter.”
[22] The appellants thereupon, on 27 June, launched the proceedings
in the Court
a quo
, on the basis of urgency, for relief in
the form of a rule
nisi
together with an interim order. By
agreement the matter was postponed to 1 July, presumably to allow
certain answering and replying
papers to be filed, which was duly
done.
[23] At the time of the postponement, so Nomvela averred in his
replying affidavit, “the respondents” gave an undertaking to
do
nothing and not to allow anything to take place which would
prejudice the applicants’ rights as envisaged in the notice of
motion.” The reference to “the respondents” did not include a
reference to the present second respondent, which did not
oppose the
proceedings in the Court
a quo
.
[24] On 30 June the second respondent caused those employees whom it
had “re-employed” to sign contracts of employment effective
as
from 1 July, an example of which was annexed to Nomvela’s replying
affidavit. The extent, if at all, to which the terms and
conditions
of employment provided for in these contracts differed from those
which obtained prior to 1 July was not elucidated
in the papers.
Clause 1 of the contracts did, however, specifically provide that
the employee
“understands and accepts that it is an express condition of this
contract that no service with any previous employer, or any
obligations of any previous employer are transferred to this
employment relationship.”
[25] Certain of the relief contained in the appellant’s notice of
motion was abandoned during the hearing in the Court
a quo
.
What remained thereof, as paraphrased by me, was relief in the form
of an order that:
(1) the first, second and third respondents (the latter two being
Kriel and Fraser) forthwith make disclosure to the applicants
of:
(a) a copy of the notice of the first respondent’s intention to
alienate its business and/or the assets thereof published by
the
first respondent as envisaged in
section 34
of the
Insolvency Act,
No. 24 of 1936
;
(b) details of:
(I) all its assets before the alleged sale;
(ii) all the assets allegedly sold to the fourth respondent (the
present second respondent);
(iii) all its liabilities and creditors at the time of the alleged
sale;
(2) the fourth respondent forthwith make disclosure of the forenames
or initials and surname of every member of the fourth respondent
reflected on any business letter bearing that respondent’s
registered name;
(3) all the respondents forthwith make disclosure to the applicants
of the original of the alleged agreement of sale and/or furnish
the
applicants with a certified copy thereof;
(4) the first, second and third respondents be interdicted from
carrying out the sale of the business and the fourth respondent
be
interdicted from taking over the first respondent’s business
and/or assets, alternatively, all the respondents be interdicted
from carrying out the alleged agreement of sale, until such time as
written proof of the validity of the agreement was produced
to the
Court and a certified copy thereof was furnished to the applicants,
alternatively, until such time as a valid agreement
of sale was
concluded between the first, second, third and fourth respondents.
(5) all the respondents forthwith produce to the Court written proof
(including but not limited to what is sought in (1) above)
of any
alleged valid sale agreement and to furnish certified copies thereof
to the applicants, alternatively, in the event of no
valid sale
agreement having been concluded, that all the respondents
renegotiate and conclude a valid sale agreement in compliance
with
the provisions of
section 189
of the Act;
(6) the already implemented transfer of the contracts of employment
and the already given offers of new employment to some of the
applicants be declared invalid and/or null and void;
(7) all the respondents forthwith incorporate the statutory
safeguards provided for in subsection (2)(a) of
section 197
of the
Act in the valid sale agreement and further incorporate therein the
following provision:
“The purchaser undertakes to retain all the employees of the
seller on terms and conditions of employment not less favourable
than those applicable before the sale.”
(8) all the respondents forthwith incorporate in such valid sale
agreement the organisational rights (but not limited to recognition
rights) of the applicants’ trade union;
(9) the costs of the application be borne by the first respondent
provided that the costs of any opposition thereto be paid by
such
respondents as oppose the application, jointly and severally.
[26] In addition the applicants gave notice,
via
the replying
affidavit deposed to by Nomvela, that a further order would be
sought declaring the contracts of employment dated 30
June 1997,
concluded between the then fourth respondent and those employees who
were “re-employed” by it, to be invalid and
of no force and
effect.
[27] It merits mention that notwithstanding that it was Fraser’s
contention that he had at one meeting offered to permit Nomvela
to
peruse the sale agreement allegedly concluded between the two
respondents and a schedule of the first respondent’s liabilities,
and despite the fact that it was common cause that no such perusal
was in fact undertaken, Fraser did not, on behalf of the first
respondent, annex to his affidavit either of the said documents or
any of the other documents disclosure of which was sought by
the
appellants, nor did he tender to produce same. Instead, relying
essentially on the allegation that the agreement allegedly
concluded
between the two respondents embraced no more than a disposition of
assets and did not constitute a disposition of the
first
respondent’s business or any part thereof as a going concern,
Fraser contested that the appellants were entitled to any
of the
relief sought.
[28] Similarly, the second respondent, which did not oppose the
proceedings in the Court
a quo
, did not produce or tender any
of the documentation disclosure of which was sought by the
appellants.
[29] LANDMAN AJ’s interpretation of the appellants’ papers in
the Court
a quo
was that, as regards the disclosure of
documentation, what was being sought was information which related,
firstly, to the retrenchment
or termination of the services of the
appellants and, secondly, to an alleged duty to comply with
section
197
of the Act insofar as there was a sale or transfer of the
business of the first respondent.
[30]
Section 197
, insofar as is relevant, provides as follows:
“(1) A contract of employment may not be transferred from one
employer (referred to as “the old employer”) to another employer
(referred to as “the new employer”) without the employee’s
consent unless-
(a) the whole or any part of a business, trade or undertaking is
transferred by the old employer as a going concern;
------------
(2) (a) If a business, trade or undertaking is transferred in the
circumstances referred to in subsection (1)(a), unless otherwise
agreed, all the rights and obligations between the old employer and
each employee at the time of transfer continue in force as
if they
had been rights and obligations between the new employer and each
employee, and everything done before the transfer by
or in relation
to the old employer will be considered to have been done by or in
relation to the new employer.
------------
(4) A transfer referred to in subsection (1) does not interrupt the
employee’s continuity of employment. That employment continues
with the new employer as if with the old employer.
-------------”
[31] The essential foundation of LANDMAN AJ’s refusal to order
the disclosure of the documentation in question was his finding
that
despite the use, at various stages during the discussions between
Fraser and the shop stewards and/or NEWU, of loose language,
such as
the references to “the sale of the company” or the “takeover”
thereof, it was in fact clear that neither the business
of the first
respondent nor any portion thereof had been transferred to the
second respondent as a going concern; what had occurred
was the
conclusion on 26 May 1997 of an agreement in terms of which portion
of the assets of the first respondent was sold to the
second
respondent.
[32] Consequently, so it was held,
section 197
was not of
application and no entitlement to any information bearing on an
alleged non-compliance with the provisions of the section
aimed to
the appellants.
[33] The further corollary of that finding, so LANDMAN AJ
recorded, was that a contention on behalf of the first respondent

that it was obliged to terminate the services of the appellants with
effect from 30 June 1997, was correct. In respect of that
termination (or retrenchment) it might well have been that the
appellants were entitled, in terms of
section 189
, to the disclosure
of certain documents, but a dispute regarding such disclosure would,
in terms of
section 189(4)
read with
section 16
, have to be referred
for conciliation by the Commission and, if there is no settlement,
the Commission must arbitrate the dispute.
[34] With respect, I am unable to endorse the above approach.
Without the alleged agreement between the respondents and certain
of
the other information sought by the appellants being placed before
the Court
a quo
, it was not permissible for that Court to
determine if and when an agreement was in fact concluded or what the
effect of the agreement
was. The evidence relating to these aspects
that was placed before the Court
a quo
was secondary evidence
and, in the absence of an acceptable explanation for the
non-production of the written agreement itself,
was inadmissible as
not being the best evidence. The matter should accordingly have
proceeded on the basis that the true nature
of the agreement had not
been disclosed.
[35] It should also be pointed out that whatever may have been said
on behalf of the appellants in the papers filed in the Court
a
quo
concerning the purported retrenchments or dismissal of the
employees by the first respondent, the appellants did not in fact
seek
the disclosure of any information in connection therewith. The
question whether an order for the disclosure of such information
should be made accordingly did not in fact arise.
[36] A number of reasons were present why the appellants
legitimately apprehended that the agreement concluded between the
first
and second respondent might in fact have had the effect of a
transfer of the business of the first respondent or a part thereof
as a going concern. Despite the clear statement by Fraser at times
that the effect of the agreement was not such a transfer, on
a
number of occasions various descriptions were applied to the
agreement and its effect which were quite appropriate if in fact
a
transfer as a going concern had been effected. At one stage NEWU
was advised that not only was the second respondent acquiring
the
assets of the first respondent but would also discharge its
liabilities. The second respondent immediately commenced business
at the same premises where the first respondent had conducted
operations and utilised the same telephone number. Finally,
although
NEWU voiced concern regarding the appellants’ interests
in safeguarding their continuity of service, and registered the
complaint
that the agreement had not been made available for
perusal, the first respondent, through Fraser, remained throughout
coy about
disclosing the full terms of the agreement and information
concerning its liabilities. Even it be accepted that Fraser did on

one occasion in fact offer perusal of the agreement and the schedule
of the first respondent’s liabilities to Nomvela, the response
of
the latter in effect conveyed that he would not be able to make head
or tail thereof, and on Fraser’s own version he would
not have
allowed Nomvela to take copies of the documents away with him.
Even after proceedings had been instituted and production
of the
agreement was demanded, neither of the respondents saw fit to comply
such demand. One asks the question, why?
[37] If in fact a transfer as a going concern had been effected, the
appellants would be entitled to the benefits accorded to them
in
terms of
section 197
, and they would be entitled to reject any other
benefits which either of the respondents sought to accord them
in
lieu
thereof. In the event of non-recognition by the
respondents of the entitlement to the firstmentioned benefits and an
insistence
that the lastmentioned benefits be accepted the
appellants could, in terms of
section 158(1)
(a) (iv), approach the
Labour Court for an appropriate declarator.
[38] If on the other hand no transfer as a going concern was
effected, but the effect of all that transpired was a transfer of
the contracts of employment of the appellants without their consent
- and on the evidence that possibility cannot be excluded -
such
transfer would have fallen foul of the provisions of
section 197.
Again, if need be, the appellants could approach the Labour Court
for the appropriate declarator.
[39] As demonstrated above, there is good reason to apprehend that
in fact a transfer as a going concern was effected or,
alternatively,
that a transfer of employment contracts in
contravention of
section 197(1)
had been effected, and that the
rights of the appellants are being infringed. In such circumstances
and in order to enable the
effective exercise of its jurisdiction to
issue the declarators referred to, the Labour Court has the power to
order the disclosure
of information bearing on the existence or
otherwise of those rights. Such an approach not only promotes
fairness, but is also
practical in that its facilitates the
determination of what rights exist and may have the effect of
obviating unnecessary litigation.
See, too,
section 158(1)(j)
of
the Act which empowers the Labour Court to deal with all matters
necessary or incidental to performing its functions in terms
of the
Act or any other law.
[40] Although at certain stages during the negotiations between NEWU
and Fraser the latter adopted the stance that certain of the
information demanded was confidential, neither of the respondents
raised the defence of confidentiality in the Court
a quo
as a
counter to the appellants’ application. That the information in
question is in fact not confidential is borne out by Fraser’s
alleged offer to Nomvela to disclose same and the second
respondent’s attempt informally to place portion of the alleged
information
before this Court (as to which see [41] - [44]
infra
).
Indeed, at the hearing of the appeal. Mr COETSEE, on behalf of the
first respondent, pertinently stated that he had no objection
to the
disclosure of the information in question.
[41] After the noting of the appeal, and in response to the notice
of set down sent to the second respondent, that respondent (which,
again, did not seek to oppose the appeal proceedings) addressed a
letter to the Registrar of this Court reading as follows:
“We refer to your fax dated the 16 October 1997 in connection with
the above case, and enclose the following for your consideration.
(1) The purchase and sale agreement between National Rubber Products
cc and L.M.K. Manufacturing (Pty) Ltd, with particular reference
to
page 4 paragraph 1.15.4 and page 5 paragraph 6, and the fact that
only the assets of the business were purchased.
(2) A copy of the contract of employment signed by all employees
with particular reference to Page 1 paragraph 1.”
[42] In a subsequent letter the second respondent confirmed that it
was not seeking to oppose the appeal and stated that its intention
in sending the documents to the Registrar was “purely to point out
to the hearing the relevant paragraphs pertaining to the case
our
point of view.”
[43] It need hardly be stated that documents informally placed
before this Court in this manner cannot be taken into account.
I
would, however,
en passant
, mention the following: the
heading of the sale agreement submitted does not correspond to that
to which reference was made during
the discussions set out earlier
in this judgment; the close corporation reflected in the agreement
as the purchaser is not the
second respondent (although the
registration number is the same as that reflected on the letterhead
of the second respondent),
and in this regard it may be noted that
the evidence was that on a date well after 26 May, the date on which
the agreement submitted
by the second respondent was signed, a
document was produced by Fraser which reflected the second
respondent as the purchaser;
contrary to what Massprac conveyed to
NEWU, as recorded earlier in this judgment, the alleged agreement
provided that the first
respondent would discharge its liabilities
to its creditors; neither the schedule setting out the assets
purchased nor the schedule
of liabilities referred to in the
agreement as annexures thereto, accompanied the document submitted
by the second respondent.
[44] In the circumstances this Court is not called upon to consider
what the effect of the alleged agreement as submitted by the
second
respondent,was, nor indeed would it be proper for it to do so.
[45] I turn now to consider the relief sought by the appellants in
the Court
a quo
.
[46] As already indicated earlier in this judgment Kriel and Fraser
had no legal interest in the proceedings, no relief was claimable
against them and they should not have been joined as parties. The
remarks that follow are subject to this comment.
[47] For the purposes referred to earlier I consider that the
following information should have been disclosed by the first and/or
the second respondent as the case may be:
(1) a copy of the notice of intention to alienate its business
and/or assets published by the first respondent in terms of section
34 of the Insolvency Act, No. 24 of 1936 (if in fact there was such
a publication);
(2) details of all the first respondent’s assets and liabilities
immediately prior to the alleged sale concluded between the
two
respondents;
(3) the original or a copy of the alleged agreement concluded
between the two respondents together with all annexures thereto

(which would have disclosed details of the assets sold, information
which the appellants sought separately).
[48] I am not persuaded that there was any reason why the appellants
should have been favoured with information as to the forenames
or
initials and surnames of the members of the second respondent or
with “written proof of any alleged valid sale agreement”
(whatever that may mean).
[49] The appellants were not entitled to an order interdicting the
respondents from carrying out any agreement concluded between
them
or the second respondent from taking over the business or assets of
the first respondent, whether on the basis contended by
the
appellants as set out in [25 (4)] above or on any other basis. The
rights of the appellants will be governed by what, in the
result, it
transpires did occur in relation to and flowing from the agreement
concluded between the respondents.
[50] On the present papers the appellants were not entitled to any
order that “the already implemented transfer of the contracts
of
employment” be declared invalid and/or null and void. That there
was such a transfer was not established on the papers.
If, on the
disclosure of the information referred to above and on further
investigation, it transpires that such a transfer took
place, the
appellants may take such steps as they are advised to do.
[51] There was no basis in law on which the Court
a quo
could
have declared the “already given offers of employment” to some
of the appellants to be invalid and/or null and void.
[52] The appellants were not entitled to an order that the
“statutory safeguards provided for in section 197(2)(a)” be
incorporated
in the agreement concluded between the respondents or
that the agreement incorporate a clause providing that the purchaser
retain
all the employees of the seller on terms not less favourable
than those applicable prior to the sale. The rights of the
appellants
will be dependent on the precise nature and effect of
the agreement concluded between the respondents read with the
applicable
statutory provisions. When that has been determined the
appellants may take such steps as they are advised to do for the
safeguard
of their rights.
[53] There was no basis in law on which the respondents could have
been ordered to incorporate into their agreement provision for
the
organisational rights of NEWU. Those rights either exist or they do
not.
[54] On the present papers there was no basis in law on which an
order declaring the contracts of employment concluded on 30 June
1997 between the second respondent and the employees which it
“re-employed” to be invalid and of no force and effect, could
have been granted by the Court
a quo
. If in due course it
transpires that in fact these contracts fell foul of the provisions
of section 197, it will be open to the
appellants, if so advised, to
seek appropriate relief in that regard. Insofar as reliance was
sought to be placed on the undertaking
allegedly given at the time
the application in the Court
a quo
was postponed, suffice it
to say that the second respondent was not a party thereto.
[55] The question of costs remains.
(1) The appellants have achieved substantial success on appeal and,
subject to what follows, are entitled to the costs thereof
as
against the first respondent. The record on appeal contained a
transcription of the oral argument presented in the Court
a quo
.
That transcription ran to 82 pages. Rule 5(12)(b) of this Court
provides that, unless the merits of the appeal are affected
thereby, the record of oral argument in the court below must not be
included in the record on appeal. The only portion of the
record of
oral argument which was of assistance in the appeal was the 4 pages
reflecting the amended relief being sought by the
appellants. The
costs of appeal will accordingly not include the costs of 78 pages
of the record of oral argument. The costs
of appeal will also not
include the costs of the aspects referred to in [59] and [60] below.
(2) Kriel and Fraser should not have been joined as parties in the
Court
a quo
. On the other hand those two persons, while not
raising a plea of misjoinder, actively opposed the application. In
the circumstances
it would be fair that no costs order be made in
respect of the suit between the appellants and them.
(3) The effect of the order to be made on appeal is that the
appellants should have been substantially successful in the Court
a quo
. The appellants are accordingly entitled to the costs of
those proceedings. An order to that effect can, however, only
properly
be made against the first respondent. The appellants’
notice of motion in terms gave notice that only in the event of any
of
the other respondents opposing the application would a costs
order be sought against them. The second respondent was accordingly
entitled to sit back secure in the knowledge that whatever order was
made on the merits of the application its failure to oppose
the
application rendered it immune to a costs order against it.
[56] Two further aspects require to be considered. The appellants
failed timeously to deliver a power of attorney authorising
NEWU to
prosecute the appeal on their behalf as required by Rule 6(1) of
this Court. The point was taken in the heads of argument
filed on
behalf of the first respondent, it being contended that the appeal
was on that basis fatally defective. In response thereto
the
appellants (per the first appellant) filed an affidavit confirming
that in fact NEWU had been duly authorised to prosecute
the appeal
on their behalf. The purpose of Rule 6(1) is to prevent appeals
being prosecuted by a representative purportedly on
behalf of a
litigant while that representative in fact has no mandate to do so.
The affidavit referred to sufficiently establishes
the required
authority on the part of NEWU and in fact constitutes a power of
attorney. The explanation for the failure to file
a power of
attorney timeously or, indeed, at all prior to receipt of the first
respondent’s heads of argument - said to be due
to considerations
of urgency and geographical distances - is in fact no explanation.
Nevertheless, fairness dictates that the
late filing of the power of
attorney be condoned.
The costs of the affidavit referred to cannot, however, be for the
account of the first respondent.
[57] It was also necessary for the appellants to seek an extension
of the time within which to file the record on appeal. The
failure
to file the record timeously was not due to the fault of any of the
parties, but to an administrative error. The costs
of the
application for the extension must accordingly lie where they fall.
[58] In the result the following order will issue:
(1) The appeal is upheld to the extent set out in paragraph (2).
(2) The order of the Labour Court is set aside and for it is
substituted the following:
“1. The first respondent is ordered forthwith to furnish the
appellants’ trade union, National Entitled Workers’ Union, with
(a) a copy of the notice of intention to alienate its business
and/or assets to the fourth respondent published by the first
respondent
in terms of
section 34
of the
Insolvency Act, No. 24 of
1936
, alternatively, and in the event of no such notice having been
published, to advise the said trade union accordingly;
(b) full details of all the first respondent’s assets and
liabilities immediately prior to the sale agreement concluded
between
the first and fourth respondents;
(2) The first and fourth respondents are ordered forthwith to
furnish the appellants’ said trade union with the original or,
alternatively, a copy of the, sale agreement concluded between the
said respondents.
(3) The applicants’ costs will be paid by the first respondent.”
(3) The costs of the appeal will be paid by the first respondent;
provided that such costs shall not include:
(a) the costs of the inclusion in the record on appeal of 78 pages
of the oral argument in the Court
a quo
;
(b) the costs of the affidavit filed on behalf of the appellants
relating to their failure to file a power of attorney authorising
NEWU to prosecute the appeal on their behalf;
(c ) the costs of the appellants’ application for an extension of
time within which to file the record on appeal.
____________
KROON JA
I agree
_____________
MYBURGH JP
I agree
_______________
FRONEMAN DJP
DATE OF HEARING: 11 February 1998
DATE JUDGMENT DELIVERED: 13 February 1998
FOR APPELLANTS: M. D. Maluleke
FOR RESPONDENTS: D. Coetsee
This judgment is available on the Internet at Website:
www.law.wits.ac.za/labour crt.