Langa and Others v Active Packaging (Pty) Limited (JA76/99) [2000] ZALAC 23 (3 November 2000)

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[2000] ZALAC 23
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Langa and Others v Active Packaging (Pty) Limited (JA76/99) [2000] ZALAC 23; [2001] 1 BLLR 37 (LAC); (2001) 22 ILJ 397 (LAC) (3 November 2000)

IN THE LABOUR APPEAL COURT OF
SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO: JA76/99
In the
matter between:
MICHAEL LANGA
1
st
Appellant
SOLOMON
NDLANGAMANDLA
2
nd
Appellant
AND
32 OTHERS
3
rd
to 32
nd
Appellant
and
ACTIVE PACKAGING (PTY)
LIMITED
Respondent
JUDGMENT : 3 NOVEMBER 2000
TRAVERSO,
A.J.A. :
[1]
This case involves the dismissal of the appellants for
operational reasons.
[2]
The
appellants are former employees of the respondent and former members
of the majority union in respondent’s plant, namely, the
Paper
Printing Wood and Allied Workers Union.
[3]
The appellants have pursued this matter on their own without the
assistance of the union.
[4]
The respondent is Active Packaging (Pty) Limited, a wholly owned
subsidiary of Kohler Limited, and a manufacturer of corrugated
boards
and cartons.
[5]
Before summarising the facts I will deal with two preliminary
issues, namely:
5.1 the
application for a postponement of the appeal on 29 August 2000;
5.2 the
question of the costs of the postponement on 27 June 2000 which stood
over for later determination.
THE
APPLICATION FOR THE POSTPONEMENT ON 29 AUGUST 2000:
[6]
6.1 This
appeal was initially enrolled for 27 June 2000. For reasons that
will be discussed in more detail later, it was postponed
and the
costs of the postponement stood over for later determination.
6.2 The
appeal was re-enrolled for 29 August.
6.3 On 28
August 2000 a facsimile transmission was transmitted to the Registrar
of the Labour Appeal Court by Messrs. Roestof, Venter
& Kruse,
the respondent’s attorneys, in which they informed the Registrar
that the parties had agreed to postpone the appeal
to the next
available date in the fourth term. The only reason advanced for the
postponement was the unavailability of the respondent’s
counsel.
6.4 Thereupon
the Registrar, on the instructions of the Judge President, informed
both parties’ attorneys that, if either party
wished to postpone
the appeal, a substantive application for a postponement would have
to be made on 29 August 2000.
6.5 At the
hearing an affidavit deposed to by Mr. van Graan, the respondent’s
counsel, was handed up setting out the reasons for
the application
for a postponement.
6.6 From
this affidavit it appears that the parties’ attorneys had embarked
on negotiations amongst themselves to arrange dates
which suited them
or their counsel without in any way acknowledging the fact that an
Appeal Court had been constituted to hear the
matter. In addition it
seems that these arrangements had been made with the Registrar only,
without in any way consulting the Judge
President, who is ultimately
responsible for compiling the Roll.
6.7 It is
apparent from Mr. van Graan’s affidavit that he had been aware of
his unavailability since 26 July 2000. While one appreciates
that
Mr. van Graan had been previously briefed to appear in the matter and
that it would be desirable for him to remain on brief,
that is not
the only consideration. There are other considerations which, in my
view, outweigh the non-availability of counsel.
6.8 If
parties were to be free to postpone matters and to arrange dates
amongst themselves as and when they wished without the concurrence
of
the Judge President, it would interfere with the smooth flow of the
hearing of appeals by this Court. It is the duty not only
of this
Court, but also of counsel and attorneys to uphold the smooth flow of
litigation. This is so, particularly, if one has regard
to the
nature of the cases with which this Court deals. If litigants were
left to the mercy of the availability of busy counsel
one of the
primary objects of the Act, namely the effective determination of
cases, would never be achieved. By the same token, if
counsel or
attorneys were permitted to set down appeals at their convenience
without reference to the Judge President, chaos would
soon reign in
this Court. The notion that justice delayed is justice denied is of
equal application in this Court as labour cases
(including appeals)
can only be resolved effectively if they are resolved expeditiously.
Accordingly we were of the view that there
was no valid reason for
the postponement and the application was accordingly refused.
THE
COSTS OF THE POSTPONEMENT ON 27 JUNE 2000:
6.9 At the
hearing on 27 June 2000 Mr. Memani, who was briefed to appear for the
appellants, did not appear. It is common cause that
prior to the
hearing neither the appellants’ attorney of record nor the
respondent’s counsel and attorney of record were informed
that
Mr. Memani would not appear at the hearing. Accordingly on the day
of the hearing Mr. Memani’s instructing attorney,
who had by chance
found out that Mr. Memani would not be appearing at the hearing, was
obliged to apply for a postponement based
on Mr. Memani’s, at that
time, unexplained absence.
6.10 It is
common cause that Mr. Memani at no stage informed his instructing
attorney that he would not be able to argue the appeal
on 27 June
2000. Mr. Memani’s explanation for this is that his father passed
away on 12 June 2000. When granting the postponement
on 27 June
2000 the Court ordered that Mr. Memani furnish an explanation for his
conduct.
6.11 His
explanation was the following:
“
Firstly
I wish to apologise to everyone concerned, including the parties and
their legal representatives for any inconvenience which
my absence
caused.
As
it has already been mentioned my absence was the result of my
bereavement. My father passed away on 12 June 2000. On 13 June
2000
I telephoned the Group receptionist and informed her that I would be
away and would return only after 24 June 2000, the funeral
date. I
asked her to inform anyone who phoned.
I
anticipated that attorneys including, Mr. Maribana, would phone and
would be informed. They would phone me and I would advise them
that
I would not be active for at least a week after the funeral because
of psychological and traditional factors relating to mourning
practices.
I
have learned with surprise that the Group receptionist did not tell
Mr. Maribana of my bereavement when he phoned on 23 June 2000.
The
situation was compounded by the fact that I lost my cell phone on 23
June 2000 while I was travelling to the Eastern Cape.
As a result
attorneys including Mr. Maribana would not get hold of me over the
phone. I only got a replacement phone on 30 June
2000.”
6.12 At
the hearing of the appeal he was taxed on his explanation and it was
indicated that we were considering an order directing
Mr. Memani to
pay the costs of the postponement
de
bonis propriis
.
6.13 Mr.
Memani requested an opportunity to have representations made on his
behalf. A direction was issued after the hearing giving
Mr. Memani
leave to file written submissions by not later than 19 September
2000. Subsequently Mr. Memani was granted an extension
until noon 21
September 2000. He filed his written submissions. These submissions
take the matter no further. They do not detract
from the fact that
Mr. Memani adopted a passive attitude. Whether any of the parties
concerned would become aware of his unavailability,
depended on
factors over which Mr. Memani had no control. In addition, the steps
that he took were based on a mere assumption that
his instructing
attorney
might
phone his secretary. Mr. Memani did not even inform the secretary in
which matters he was due to appear during his absence or who
the
instructing attorneys were in each case. The only person who was
responsible for the appeal not proceeding on 27 June 2000 was
Mr.
Memani. Accordingly the appellants should not be burdened with the
costs incurred. This is accordingly an appropriate case
for an order
that Mr. Memani pay the costs of the postponement
de
bonis propriis
.
FACTS:
[7]
I turn to the merits of the appeal. The background facts which
gave rise to the appellants’ retrenchment are set out fully
in the
judgment of the Court
a
quo
.
I do not believe that it is necessary for me to give more than a
brief summary of those facts.
[8]
During 1997 the respondent experienced financial difficulties due
to various factors that were prevalent in the market place.
This
resulted in the respondent having to investigate means whereby it
could restructure its business to render it financially viable.
[9]
This in turn gave rise to negotiations with the union which
commenced during September 1997. During these negotiations the
reasons
for the restructuring and the rationalisation of the
appellants’ activities were explained in detail. In addition, it
was indicated
to the union that the process of rationalisation would
result in approximately sixty employees becoming redundant. In order
to avoid
retrenchments, early retirement and voluntary retrenchment
packages were offered to those employees who were interested.
[10]
On
11 November 1997 the respondent issued a notice to all employees in
terms whereof the final date by which application for the voluntary
retrenchment packages could be made was again stressed. In addition
the notice contained the following warning:
“
We
regret to inform you that should the required number of employees not
take this voluntary package, that we will have no other option
but to
go the redundancy route, which will be less than the voluntary
package.”
[11]
Thirty-six employees took the voluntary retrenchment package when
the respondent closed for the Christmas recess.
[12]
The respondent reopened on 18 January 1998. On 15 April 1998 the
respondent received a report from its auditors from which it
became
apparent that it would not be viable for the respondent to continue
its operations at the production unit.
[13]
During the period 18 January 1998 to 15 April 1998 there were
ongoing informal discussions between the respondent and the union.

It is common cause that, pending the auditor’s report, it would not
have been possible to conduct formal negotiations as that
would have
been a self-defeating process.
[14]
Upon receipt of the auditor’s report the respondent immediately
scheduled a meeting with the union for 20 April 1998. At this
meeting the union was informed of the anticipated closure of the
respondent’s production unit at the end of April 1998. The
critical
financial position in which the respondent found itself was
outlined.
[15]
Subsequent to the meeting the respondent wrote a letter to the
union stating,
inter
alia
,
the following:
“
...
for a period of some nine months, we have been sharing information
regarding the critical nature of the competitive situation
and the
financial situation that the company finds itself in, as well as the
need to reduce employees. Part of this process to find
solutions,
the company embarked on voluntary retrenchments during 1997. Since
this period, as you are aware, the economic situation
has
deteriorated necessitating further restructuring.
...
As
the financial situation of the company is critical, the closure of
Active’s production unit will take place at the end of April
1998.
We are available on a daily basis to meet regarding suggestions or
alternatives that you may propose.
The
package for the employees affected is two weeks per completed year of
service capped at a maximum of 10 years or 20 weeks. In
addition,
pro rata leave pay and bonuses will be paid out. In terms of the
current legislation R30 000,00 of such retrenchment
will be tax
free.
...
Furthermore,
we undertake that should any vacancies arise at Kohler Corrugated in
Brakpan in the future, first option will be given
to our retrenched
Active employees, who possess the necessary skills. Our personnel
department will assist affected employees to
find alternative skills
and will be available to counsel individuals on an ongoing basis.”
[16]
This letter was followed by several meetings at which attempts
were made to resolve the dispute between the parties. Various
proposals and counter proposals were put forward including an
invitation by the respondent that the union appoint its own financial
expert to verify the financial information which the respondent had
made available, and to examine the financial statements once
the
financial statements of the Kohler Group had been published. In my
view it is not necessary to go into these negotiations in
any detail.
Suffice it to say that these negotiations were unsuccessful and the
employees were dismissed. On 14 May 1998 the union
referred the
question of the fairness of these dismissals to the Commission for
Conciliation, Mediation and Arbitration (“CCMA”)
on behalf of
sixty-seven of its members. Attempts at conciliation failed and on
30 June 1998 a certificate was issued by the CCMA
to the effect that
the matter remained unresolved.
[17]
On or about 18 August 1998 the thirty-two appellants resigned
from the union. Three days later they referred the dispute to
the
Labour Court. The matter came before Jali, A.J. who found that the
consultative process had commenced as early as September
1997 and not
on 20 April 1998 as contended by the appellants. He also found that
adequate financial information had been made available
to the
appellants and that the respondent’s refusal to make available
financial statements prior to the publication of the Kohler
Group’s
results was in the circumstances justified.
[18]
This appeal, in essence, lies against the abovementioned
findings.
[19]
Mr. Memani, who appeared for the appellants, confined his
argument to the following:
19.1 that
the consultative process should be divided into two separate stages,
the one unrelated to the other. He argued that the
negotiations
which took place between September 1997 to December 1997 were
separate and distinct from the negotiations which commenced
at the
meeting of 20 April 1998. Accordingly he argued that inasmuch as the
respondent gave notice on 20 April 1998 that it intended
closing its
production plant at the end of April 1998, a mere ten days were
allowed for consultations. Accordingly he argued that
there had not
been adequate compliance with section 189 of the Act.
19.2 that
the respondent failed to disclose sufficient information to the union
about its financial affairs.
I
will deal with these two points under separate headings.
WHEN
DID CONSULTATIONS COMMENCE:
[20]
In my view Mr. Memani’s submission that the consultative
process should be viewed as two separate and distinct processes is
artificial and based on a mistaken understanding of the evidence and
of the provisions of section 189 of the Act. The wording of
section
189 makes it plain that the section will take effect as soon as an
employer
contemplates
the dismissal of one or more employees. This, self-evidently, means
that the consultative process will begin
before
the final decision to retrench has been taken. This principle has
now become trite.
[21]
Applying this principle to the present facts it is in my view
clear that the consultative process started in September 1997 when
the respondent first realised that it was facing a financial
predicament. This fact is demonstrated in clear and unequivocal
terms
by not only the oral evidence which was presented in the Court
a
quo,
and which remained largely unchallenged, but also by the
documentation. The correspondence indicates that the meeting of 20
April
1997 was called on the premise that it was part of the ongoing
consultative process. It is clear that all attempts to make the
respondent
financially viable again and thereby to limit and/or avoid
further retrenchments had failed, and that this fact culminated in
the
decision to close the production unit with the consequential
retrenchment of the appellants.
[22]
Mr. Memani’s submission that because “
nothing
happened
”
between the reopening of the factory in January 1998 and the meeting
on 20 April 1998, and that therefore the employees were entitled
to
assume that all was well, flies in the face of the evidence that
there were ongoing informal discussions between the respondent
and
the union throughout this period, during which meetings the union
representatives were kept abreast of the respondent’s position.
It
was never disputed that the continued operation of the production
unit was not brought about by an improvement in the market
conditions, but by a lifeline which was extended by the respondent’s
holding company - a lifeline which it was not prepared to
extend once
the preliminary auditors report became available.
[23]
In view of the aforegoing, the finding of the Court
a
quo
that the ongoing consultative process commenced in September 1997
can, in my view, not be faulted and should be upheld.
WAS
SUFFICIENT INFORMATION ABOUT RESPONDENT’S FINANCIAL AFFAIRS
DISCLOSED
:
[24]
The
Court
a
quo
found that sufficient financial information had been made available
to the appellants. It is common cause that the union was given
an
opportunity to appoint their own auditor to verify financial
information. In addition an offer was extended to the union to have
their expert examine the financial statements after 7 June 1998, the
date upon which the results of the Kohler Group were due to
be
published. The respondent was of the view that, as it was a wholly
owned subsidiary of a public company, it was incumbent
on
management not to release information to individuals prior to the
publication of the Kohler Group’s results. Pursuant to this
invitation the appellants appointed a certain Mr. Maurice Wainwright
of the Logistics Bureau (Pty) Limited to investigate the respondent’s
financial situation.
[25]
The
Court
a
quo
found that the respondent was justified in not making available
copies of the financial statements prior to the publication of the
Kohler Group’s results. This finding cannot, in my view, be
faulted. It was not disputed that financial statements of public
companies are, for obvious reasons, confidential until their
publication. The Act recognises the notion that confidential
information
need not be disclosed. (See section 16(5)(c) of the Act.)
Confidential information should be disclosed only if such
information
is necessary to enable effective consultation to take
place. Mr. Wainwright reported back to the union on completion of
his investigation.
It is apparent that he had sufficient information
to satisfy himself that there was an economic rationale for the
closure of the
respondent’s operation.
[26]
It
is therefore self-evident that no additional information was required
for effective consultation.
[27]
In the premises I agree with the finding of the Court
a
quo
that the provisions of section 189(3), read with section 16 of the
Act, had been substantially complied with, and the appeal must
accordingly fail.
THE
REMAINDER OF THE COSTS OF APPEAL:
[28]
The only outstanding issue is that of the remainder of the costs
of the appeal. This aspect was not addressed by Mr. Memani
in his
heads of argument, but he made oral submissions in this regard. In
my view there is nothing to suggest that the Court
a
quo
did not exercise its discretion fairly, judicially and properly in
considering the question of costs. In any event Mr. Memani was
not
able to properly motivate his submission that the costs order of the
Court
a
quo
should be set aside. He was unable to direct our attention to any
misdirection on the part of the Court
a
quo
,
and I am satisfied that there is no basis in law for this Court to
interfere with the costs order.
[29]
In
view of the aforegoing, the following order is made:
The
appeal is dismissed with costs;
The costs
of the postponement on 27 June 2000 are to be paid by Mr. Memani
de
bonis propriis
.
______________________
JHM
TRAVERSO
Acting
Judge of Appeal
I
agree:
_____________________
RMM
ZONDO
Judge
President
I
agree:
_____________________
MM
JOFFE
Acting
Judge of Appeal
Counsel
for Appellants : Advocate Memani
Attorneys
for Appeallants : Mabunda Maribana & Partners
Counsel
for Respondent : Advocate Heystek
Attorneys
for Respondent : Roestoff, Venter & Kruse
Date
of Hearing : 29 August 2000
Date
of Judgment : 3 November 2000