Malcolm Sayles v Tartan Steel CC (JA31/99) [1999] ZALAC 26 (9 November 1999)

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[1999] ZALAC 26
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Sayles v Tartan Steel CC (JA31/99) [1999] ZALAC 26; [2000] 2 BLLR 161 (LAC) (9 November 1999)

IN THE LABOUR APPEAL COURT
OF SOUTH AFRICA
HELD AT JOHANNESBURG
Case no.: JA31/99
In the matter between:
MALCOLM
SAYLES
Appellant
and
TARTAN STEEL
CC
Respondent
4
JUDGMENT
4
CONRADIE JA
[1] The appellant was in the
labour court before Mlambo J adjudged to have been unfairly
dismissed. He was nevertheless awarded no
compensation. The appeal is
against that order. There is a cross appeal against the order that
the appellant had been unfairly dismissed.
[2] The appellant was employed
by the respondent as the works manager of its slitting division.
Without putting too fine a point on
it, ‘slitting’ involves the
processing of steel in a manner which makes it suitable for further
processing by customers of the
respondent. The respondent was a small
business. There were at the time – September 1997 – only thirteen
employees. One of them
was the managing member, a Mr V. B. Gardner.
The other was the son of the previous manager, Mr Douglas Ferguson.
Together they managed
what was referred to as the respondent’s
‘cash-and-carry division’. This was a retail outlet specialising
in steel products.
There was another department, the cutting
division, which cut steel to the sizes required by customers.
Gardner, Ferguson and the
appellant formed the management team of
this modest enterprise with its three departments.
[3] The slitting division did
not prosper. In fact, it fared so badly that Gardner began thinking
of shutting it down. He said in
evidence that the appellant was aware
of the division’s unsatisfactory performance. The parties were
agreed on this although they
differed on the nature of the malaise.
On 29 July 1997 Gardner wrote one letter to the trade union
representing the unionised employees
and another to the Bargaining
Council of the Iron Steel and Metallurgical Industry. In these
letters he notified the bodies concerned
of the intended closure of
the slitting division and invited discussion with the union. Four
employees were targeted for retrenchment.
The group did not include
the appellant who was the fifth employee in the slitting division. He
was omitted from the group because
it was not intended to dismiss
him.
[4] Gardner said in evidence
that on 24 July 1997 (a date which his diary allowed him to identify)
he had a discussion with the appellant
in the course of which he
advised the latter of the proposed closure of his division but
invited him to remain in the appellant’s
employ at the same
remuneration in order to assist with the running of the
cash-and-carry and cutting divisions. Gardner said that
the business
needed the appellant’s expertise and, anyway, he considered that in
view of the appellant’s age and family commitments
keeping him on
would be the honourable thing to do. The appellant, he said,
gratefully accepted the offer.
[5] The appellant’s version
was dramatically different. He testified that he first learnt of the
impending closure of the slitting
division during late August or the
first week of September 1997. He heard about it from the employees in
his department who were
to be retrenched. According to the appellant,
the first communication in this regard from Gardner was on 4
September when he was
called in just before the end of the day’s
work and in the course of a two minute conversation told that ‘on
19 September the
work force in the slitting division would finish but
I would be okay, I could move over to the cash-and-carry side’. He
was so
shocked that he could think of nothing to say.
[6] The day after the
dismissals for operational reasons took effect on 18 September 1997,
the appellant wrote to the respondent informing
it that since it
could not offer him a position commensurate with his skills and
qualifications he had no alternative but to ‘request
retrenchment
as has been carried out with the rest of the workforce on the
slitting side.’ He wished the respondent to put forward
a
severance package to be discussed on 26 September 1997. On 25
September 1997 Gardner wrote to say that since the appellant had
been
offered (and had accepted) another position with the respondent, he
was not entitled to demand retrenchment. On the same day
the
appellant responded by reiterating that he was not obliged to accept
the position offered to him. This letter was followed by
a meeting
the following day as the appellant had proposed. This led the
appellant to put forward in a letter dated 29 September 1997
certain
factors which he suggested should be taken into account in
formulating a retrenchment package. The respondent’s answer,
which
came a day later, was to suggest that the appellant either take up
the alternative employment, or that he accept a retrenchment
package,
the details of which were set out in the letter. The appellant did
not return to work after that . On 6 October 1997 the
respondent
wrote to him that unless he accepted the retrenchment package he
should report for work immediately. In response the appellant
the
next day wrote to say that he was prepared to accept neither the
position offered to him nor the retrenchment package and that
he was
consulting his lawyer.
[7] It cannot be overlooked
that the appellant nowhere in the correspondence expresses his dismay
at not having been advised of the
impending closure of the division
which he controlled. There is also no evidence that the appellant
took any steps to debate with
Gardner what he must have believed was
the loss of his job between the first week of September when he says
he (at the latest) learnt
of the closure and 18 September when the
retrenchment of the other employees in that division took effect.
[8] In the light of these
facts, it is probable that the appellant was informed of the pending
retrenchments some days before the
letters to the union and the
bargaining council were written. It seems in the highest degree
improbable that the appellant, as manager
of the slitting division,
would have been the last to be told that the division was to cease
operations. There was no reason to withhold
this intelligence from
the appellant. There certainly was no hope of concealing it from him.
He was on amicable terms with Gardner.
He was
de facto
part of
the management team in a closely knit small business. I would say
that, on a balance of probabilities, the appellant was
advised, as
Gardner says he was, of the respondent’s intention before that
intention was communicated to the other employees. If
this is so, it
leads to the strong inference that Gardner’s evidence that the
appellant accepted the offer of a job in the cash-and-carry
and
cutting divisions was more reliable than that of the appellant which
was that he had not. The only thing the appellant could
have done if
he had later regretted having taken the new job was to resign. It
follows that the cross-appeal should succeed and that
the appeal
fails.
[9] The respondent’s counsel,
Mr Beaton, submitted that success on the cross-appeal should carry
with it an award of costs in the
court
a quo
. Although the
result which Mlambo J reached was for practical purposes the same as
that which has now been reached, he did hold that
the appellant had
been dismissed when his position was made redundant by the closure of
the slitting divisions. It was conceded by
the respondent’s counsel
at the pre-trial conference that, if there had been a dismissal of
the respondent, it would have been
unfair for lack of consultation.
The concession was correct. Since the respondent was not considered
to form part of the group of
potential retrenchees, he was not
consulted on any of the matters envisaged by
s 189
of the
Labour
Relations Act 66 of 1995
. The respondent’s defence was that even
if the appellant was found to have been dismissed, he would not be
entitled to severance
pay because he had failed to accept the
respondent’s offer of alternative employment. In the nature of
things it was not quite
the same work he had done before, but I am
persuaded that it was close enough to it to have been an acceptable
alternative. This
is what Mlambo J held and I think, with respect,
that he was quite right in this. The respondent, as a small
enterprise, could offer
nothing else.
[10] On the premise that the
appellant had been unfairly dismissed, he was also quite correct in
holding that although the appellant
may have forfeited his right to
severence pay, he still had a potential claim for compensation for
the invasion of his right to a
fair procedure (See
Johnson &
Johnson (Pty) Ltd v CWIU
[1998] 12 BLLR 1209
(LAC) p 1219 [40]).
In the exercise of his discretion, he awarded no compensation
4
[11] The appellant was,
therefore, left with the cold comfort of a declaration that he had
been procedurally unfairly dismissed. The
respondent was not ordered
to perform any obligation. The result was not a ringing success; but
the small success which the appellant
did achieve was sufficient, it
seems, to have persuaded Mlambo J that he ought not to be ordered to
pay costs. The conclusion of
this court that the appellant should
have lost on all counts means in my view that he should pay the costs
also in that court. There
is no employment relationship to be
nurtured. The respondent behaved perfectly properly throughout. The
harm which befell the appellant
was entirely self-inflicted. It is
not inequitable that he should pay the costs of a case which he could
so easily have avoided.
The appeal is dismissed with
costs.
The cross-appeal is upheld with
costs.
The orders of the court
a
quo
are set aside and replaced by an order reading ‘the
application is dismissed with costs to be taxed on scale B of table A
of annexure
2 to the
Magistrates’ Courts Act 32 of 1944
.’
____________
CONRADIE JA
I agree
___________
ZONDO AJP
I agree
_____________
MOGOENG AJA
Date of Hearing: 2 November
1999
Date of Judgment: 9 November
1999
Appellant’s
attorneys: Gillian Lieberman Katz
Appearance for
Appellant: Adv. B Jackson
Respondent’s
attorneys: Yusuf Nagdee
Appearance for
Respondent: Adv. R G Beaton
4