Taylor v De Vries and Another (CA1/2000) [2000] ZALAC 14 (14 June 2000)

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[2000] ZALAC 14
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Taylor v De Vries and Another (CA1/2000) [2000] ZALAC 14; (2000) 21 ILJ 1993 (LAC) (14 June 2000)

IN THE LABOUR
APPEAL COURT OF SOUTH AFRICA
(HELD
AT CAPE TOWN)
CASE
NO: CA 1/2000
In
the matter between:
CRAIG
TAYLOR Appellant
and
PETER DE
VRIES 1
st
Respondent
SHERIFF
OF THE HIGH COURT, CAPE TOWN 2
nd
Respondent
JUDGMENT
NUGENT,
AJA:
[1] This
appeal highlights the difficulties that can ensue if an arbitration
award is not directed against an identified legal persona.
[2] An
arbitration award that is made in terms of the
Labour Relations Act
1995
is not enforceable directly by execution of the award itself.
It is enforceable instead by converting the order of the arbitrator
into an order of the Labour Court, as provided in
s.143
of the Act,
and then executing that order of the Court.
[3] In
terms of
s.163
of the Act, an order of the Labour Court may be
executed as if it was an order of the High Court.
Rule 45
of the
Rules of the High Court, in turn, provides that a person in whose
favour an order has been made may, at his or her own risk,
“sue out
of the office of the registrar one or more writs for the execution
thereof ...”. Such a writ authorises the Sheriff
to attach assets
of the judgment debtor, and sell them in execution of the judgment
debt.
[4] The
present appeal arises from an arbitration award that was made by a
commissioner of the Commission for Conciliation, Mediation
and
Arbitration on 27 May 1998. The commissioner ordered a firm,
identified only as “Macs Computer Shop”, to pay to the first
respondent an amount equal to his remuneration for a period of three
months and seven days.
[5] Shortly
after the award had been made, the first respondent received a letter
from the firm’s attorney, advising him that their
client had ceased
trading on 14 June 1998 and had no funds at all.
[6] The
first respondent thereupon applied to the Labour Court for the award
to be made an order of that Court. The application,
and the
affidavit that was deposed to by the first respondent in support of
the application, were in a standard from that is used
in that court.
[7] While there
can be no objection to an arbitration award, and consequently an
order of the Labour Court, being made against a firm,
it must be
borne in mind that such an order is only capable of being executed
against the assets of the firm. (
Vorster
v John Jack Ltd
1925 TPD 793
;
Rees
v Feldman
1927
TPD 884
at 890;
Xakana
v Elliot Brothers (Queenstown) (Pty) (Ltd)
1967 (4) SA 724
(E) at 727 F). As pointed out in
Farm
Fare (Pty) Ltd v Fairwood Supermarket
1986 (4) SA 258
(C) at 262 D:
“
...
nothing prevents judgment being given against the firm as cited. A
judgment in that form limits to the assets of the business
the source
from which plaintiff may recover the judgment debt. That was held as
far back as 1927 by Tindall J in
Rees
v Fedlam
1927 TPD 884
at 890.”
[8] An inherent
difficulty arises if the firm is no longer trading, or if it has
insufficient assets to satisfy the writ, at the time
that execution
is sought to be levied. For while the judgment creditor might be
entitled to have the judgment satisfied by execution
against the
assets of the proprietor, a writ may not be issued against the
proprietor until judgment has been entered against him
or her (
Rees
v Feldman
,
supra, at 891;
Xakana’s
case, supra, at 727 H - 728 A).
[9] However, a
person who has obtained a judgment against a firm is not without a
remedy in those circumstances, for it lies within
the inherent power
of a court, upon a proper case being made out, to declare an
individual to be the proprietor of the firm and thus
liable to
satisfy the judgment that has been granted against the firm (
Rees
v Feldman
,
supra, at 889;
M.
Rauff (Pty) Ltd v Pietersburg Coal Agency
1974 (1) SA 811
(T);
Roamer
Watch Co SA & Another v African Textle Distributors also t/a MK
Patel Wholesale Merchants & Direct Importers
1980 (2) SA 254
(W) at 267 E - G), whereupon a writ may be sued out
against the person concerned.
[10] In
the application that was made in the present case for the arbitration
award to be made an order of the Court, the appellant
was cited as
the respondent. Bearing in mind that all that was sought was an
order converting the arbitrator’s order (which had
been made
against the firm) into an order of the Court, the firm, and not the
appellant, ought to have been cited in the proceedings,
for no
relief was being sought against the appellant. Nor, I might add, did
the supporting affidavit make out any grounds for an
order to be made
against the appellant.
[11] On
18 August 1998 the appellant’s attorney wrote a letter to the
Labour Court advising that “our client is incorrectly cited
as the
respondent in this matter,” because, so it was alleged, the first
respondent had been employed by a close corporation, and
not by the
appellant personally. Later the appellant gave notice formally that
he intended to oppose the application, and he filed
an affidavit in
support of his opposition.
[12] In
that affidavit, the appellant alleged that the proprietor of the firm
which had employed the first respondent, and against
which the award
had been made, was a close corporation known as Macs Computer Shop
CC, of which he (the appellant) was the sole member.
He pointed out
that although he had been cited as the respondent in the proceedings,
he was not a party to the award, and added
that the close corporation
had ceased trading on 14 June 1998 and had no assets other than a few
items of nominal value. He deposed
to a supplementary affidavit on
11 November 1998, to which were attached the first appellant’s
letter of appointment, and his terms
and conditions of employment,
both of which bore out his earlier allegations that the first
respondent had been employed by the
close corporation. No reply to
those allegations was filed by the first respondent.
[14] The
application came before Basson J on 18 November 1998. The learned
judge declined to hear the appellant, on the grounds that
his
opposition had been entered out of time, and no application had been
made to condone his default. While the learned judge might
have been
quite correct in the approach that he took, it is nevertheless
unfortunate that he did not mero motu consider the misjoinder
of the
appellant (and the non-joinder of the firm), for it might have
avoided the confusion which then ensued.
[15] The
learned judge made an order in the following terms:
“
The
arbitration award dated 27 May 1998 and attached hereto as annexure
“A” is made an order of court in terms of
section 158(1)(c)
of
the
Labour Relations Act 66 of 1995
.”
That order, in
its terms, is unexceptional. When read together with the arbitration
award that was attached, it did no more than
to order the firm known
as Macs Computer Shop to pay to the first respondent the amount which
had been awarded, to which neither
the firm nor the appellant could
have raised any objection. But insofar as that order was subsequently
interpreted, by the appellant
and the first respondent alike, to mean
that the appellant was obliged to satisfy the award, that is not
correct. Nor, might I add,
would such an order have been competent
in proceedings in which an order in these terms was never sought, and
no evidence was tendered
to justify such an order being granted.
[16] I
have already indicated that a party in whose favour an order of the
Labour Court has been made may, at his or her own risk,
sue out of
the office of the Registrar a writ of execution. On 24 February
1999 a writ of execution was issued by the Registrar,
directing the
Sheriff of the High Court to “attach and take into execution the
movable goods of Craig Taylor” and to cause the
same to be sold in
execution.
[17] Quite
clearly, in my view, a writ in those terms ought not to have been
applied for, nor issued, for a writ may only be issued
in the terms
in which it is authorised by the judgment of the court (
Rees
v Feldman
,
supra, at 891). The order in the present case had been made against
the firm, albeit in proceedings in which the appellant was
cited as
the respondent, but no order had been made against the appellant. In
Xakana
v Elliot Brothers,
supra,
the following was said at 728 F-H:
“
Such
a writ was not in accordance with the judgment entered and was
therefore invalid and void
ab
initio
(
Kaplan
v Union Government,
1924
T.P.D. 532
;
Emms
v Viljoen, supra)
.
The mere fact that the respondent may or may not have been satisfied
in his own mind that the appellant was the sole proprietor
of A.I.
Butchery, cannot, to my mind affect the matter one way or the other.
As was pointed out in
Rees’
case,
supra
,
he might conceivable have been wrong, and to allow a writ to be sued
out which does not accord with the summons or with the judgment
entered simply because the plaintiff thinks he knows who should be
held responsible for the judgment debt, could lead to grave prejudice
and is something which the court should not allow unless the Rules
compel it.”
If the first
respondent alleged that the appellant was the proprietor of the firm,
and thus liable to satisfy the terms of the order,
his proper course
was to seek and obtain a declaration to that effect, in proceedings
in which that issue would properly be determined.
[18] Nevertheless,
the Sheriff of the High Court, as he was directed to do by the writ,
proceeded to attach the appellant’s interest
in a close corporation
known as DTP World CC, and gave notice that it would be sold in
execution on 5 May 1999.
[19] On
15 March 1999 the appellant applied to the Labour Court for an order
setting aside the writ. That application came before
before Wagley J
on 26 April 1999, but no order was made, apparently because the
application was in some way defective.
[20] The
appellant then launched the application which is the subject of this
appeal. In those proceedings the appellant sought the
following
orders as a matter of urgency:
“
2.1 That
the Order issued by this Honourable Court on 18 November 1998 be
varied in terms of
Section 165
of the
Labour Relations Act 66 of 1995
to reflect the Respondent as Macs Computer Shop CC on the basis that
there is an ambiguity or obvious error or omission.
2.2 That
the Writ of Execution dated 23 February 1999 be set aside.”
In support of
that application, the appellant related the history of the matter,
much as I have outlined it.
[21] The
first respondent opposed the application and deposed to an affidavit
in support of his opposition. He attached to his affidavit
the
letter appointing him to his employment, with its attached terms and
conditions, which were the same documents that the appellant
had
tendered in the earlier application. It is quite apparent from the
face of the letter that the proprietor of the firm was a close
corporation, and the attached terms and conditions make it equally
clear that the first respondent was employed by a corporate body,
albeit that it was incorrectly referred to as a company. The first
respondent pointed out that the letter of appointment, which was
signed by the appellant as “owner/manager”, constituted a
“legally binding document”, but provided no realexplanation for
why the appellant was liable for the debt.
[22] The
application was dismissed by the Labour Court on 3 May 1999, and the
appellant now appeals against that decision, with leave
granted upon
petition to the Judge President of this Court.
[23] In
my view the foundation for the application was misconceived from the
outset, with the result that the Labour Court erred in
the conclusion
that it reached.
[24] The
principal relief sought by the appellant was to “vary” the order
made by Basson J, so as to “reflect the Respondent
as Macs Computer
Shop,” on the grounds that the order contains an ambiguity, or
error, or omission. The order made by Basson J
requires no
“variation”, for in any event it was directed against that firm,
and not the appellant. It has simply been misconstrued,
by the
appellant and the first respondent alike. Although the order was
made in proceedings in which the appellant was the respondent,
no
order was made against the appellant. The order, when read together
with the award which was attached, did no more than to convert
the
arbitrator’s order that had been made against the firm into an
order of the Court. That much is plain from the terms of the
order.
There is accordingly no error or ambiguity that falls to be
corrected. If there was an error at all in those proceedings,
it was
only that the appellant ought not to have been joined, but that has
had no material consequence, except to introduce some
confusion. The
real difficulty is that a writ of execution was issued which did not
coincide with the terms of the order.
[25] I
might only add that the learned judge concluded that it was apparent
from the award that the arbitrator had intended his order
to be made
against the appellant personally. It was never suggested in the
application before Basson J that the arbitrator’s intention
was not
expressed in the terms of the award, not in any event, in my view,
the terms of the award do not justify the inference which
the Court
sought to draw. On the contrary, the fact that the arbitrator
referred to the appellant interchangeably as the owner of
the
business, and the owner of the “company,” suggests that he never
pertinently directed his attention to that issue, probably
because
he was never called upon to do so.
[26] Nevertheless,
in my view the learned judge was correct to refuse that relief,
albeit on other grounds, and in that respect the
appeal must fail.
[27] In
my view the same cannot be said for refusing the second part of the
relief that was sought. I have already indicated that,
properly
construed, Basson J ordered Macs Computer Shop to pay to the first
respondent the amount stipulated in the award, which
did not
authorise the issue of a writ against the appellant. In the
circumstances, the writ was invalid, and an order ought to have
been
made to that effect.
[28] I
must emphasise that the first respondent is not without a remedy for
the dilemma in which he finds himself. If those are proper
grounds
upon which the appellant is liable to satisfy the terms of the order
that was made against the firm, the first respondent’s
proper
course is to seek a declaration to that effect. On the other hand, if
the close corporation has dissipated assets in order
to avoid the
consequences of the award, then the first respondent’s proper
course is to utilize the various remedies that are provided
by the
common law and the Insolvency Act to recover those assets. However,
he may not cause a writ to be issued other than in the
terms that
have been authorized by a court.
[29] As
far as the costs are concerned, both in this court and in the court
below, the appellant’s dilatoriness throughout this
matter,
together with his misconception of his own remedies, has contributed
in no small measure to the necessity for the application
to have been
made at all, and for the necessity of the consequent appeal. In my
view it would be just and equitable that no order
should be made with
regard to the costs of the proceedings in either court.
Accordingly
the appeal is upheld to the extent that the order of the court a quo
is set aside and the following is substituted in
its stead:
“
The writ of
execution issued on 23 February 1999 is declared to be invalid and is
set aside. Save as aforesaid, the application is
dismissed. No
order is made with regard to the costs of the application.”
No
order is made with regard to the costs of the appeal.
R.W. NUGENT
ACTING JUDGE OF
APPEAL
R.M.M. ZONDO
JUDGE
PRESIDENT
C.R.
NICHOLSON
JUDGE
OF APPEAL
For
the appellant: Mr A. de Vos, Appellant’s Attorney
Cape Town.
For
the Respondent: In person
Date
of Hearing: 13 June 2000
Date
of Judgment: 14 June 2000