Ponties Panel Beaters Partnership v National Union of Metal Workers of South Africa (JA 43/06) [2008] ZALAC 12; [2009] 2 BLLR 99 (LAC) (2 September 2008)

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[2008] ZALAC 12
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Ponties Panel Beaters Partnership v National Union of Metal Workers of South Africa (JA 43/06) [2008] ZALAC 12; [2009] 2 BLLR 99 (LAC) (2 September 2008)

IN
THE
LABOUR
APPEAL COURT OF SOUTH AFRICA
(
HELD
AT BRAAMFONTEIN, JOHANNESBURG)
Case
no: JA 43/06
In
the matter between:
Ponties
Panel Beaters Partnership Appellant
and
National
Union of Metal Workers
of
South Africa First Respondent
David
Mahlalela
&
Others Second to Further Respondents
Judgment
Tlaletsi
AJA,
Introduction
[1]
This is an appeal against a judgment that was handed down by
Ngcamu
AJ
sitting in the Labour Court in a dispute between the appellant and
the respondents concerning an alleged transfer of a business
in terms
of Sec 197 of the Labour Relations Act 66 of 1995 (“the Act”).
Before the appeal can be considered it is necessary
to set out the
factual background to the dispute. I propose to do so below.
The
facts
[2]
The first respondent is a registered trade union. The second and
further respondents are the employees who were at all relevant
times
members of the first respondent. They are 29 in total and were all
employed by
Ponties
Truck and Commercial CC
(“Ponties 1”). Ponties 1 conducted a business of panel
beaters at 25 Cruse Crescent, Vintonia, Nelspruit. On 28 February

1997 Ponties 1 dismissed the second and further respondents from its
employ for a reason based on its operational requirements.
[3]
The union together with the second and further respondents challenged
the fairness of the dismissal and instituted an action
against
Ponties 1 in the Labour Court in which they alleged that their
dismissal was automatically unfair. There is nothing on
the record to
inform us what the alleged reason for the dismissal was. Whilst the
action was still pending, Ponties 1 ceased trading.
Another entity
known as
Ponties
Truck and Trailer CC
(“Ponties 2”) commenced its operations as a panel beater
from the same premises, using the same personnel and the same

telephone and fax numbers that had been used by Ponties 1. Ponties 2
employed several of the workers who had been dismissed by
Ponties 1.
The precise date when Ponties 2 commenced its operations is not
provided. Nothing turns on this as the dispute does
not relate to
this employment relationship. It has not been disclosed in the papers
how Ponties 2 came about to conduct the business
as described above.
The relationship between Ponties 1 and Ponties 2 is also not
disclosed. The first respondent has attached a
copy of part one of
the “Amended Founding statement” of Ponties 2 to its
founding affidavit. Only the particulars of
the “Accounting
Officer” and the address of the Close Corporation are depicted.
The actual members of the corporation
are not reflected. It is common
cause that the respondents joined Ponties 2 as a respondent in their
then pending litigation with
Ponties 2.
[4]
It is not disputed that during the course of the litigation referred
to above, the employees of Ponties 2 were informed that
Ponties 2 was
changing its name to
Triponza
Trading
and that the employees were expected to enter into new contracts of
employment. The reason provided for this requirement was that
it was
necessary to do so because of the litigation in which Ponties 2 was
joined as a party. At the time the management of Ponties
2 comprised
Van Rooyen, Johan Barnard, Margherita Raubenheimer and Henriette
Brits. They were supervised by one Pontaleon Esterhuizen.
It has
since become apparent from the evidence that Triponza Trading was
officially registered under the name
“Triponza
Trading 455 CC”
(“Triponza”).
It is not disputed that Pontaleon Esterhuizen was the sole member of
Ponties 1 and Ponties 2.
[5]
During the latter part of 2002, Triponza began its business as a
panel beater under the trading name “Ponties Panelbeaters”.

It operated from the same premises, used the same postal address, fax
and telephone numbers previously used by Ponties 2. It also
employed
the same employees that were previously employed by Ponties 2. It
also operated under the supervision of Pontaleon Ersterhuizen.
The
names of the members of Triponza reflected on the “Founding
Statement” of the Close Corporation attached to the
founding
affidavit are Christian Johan Barnard and Margherita Susara
Raunbenheimer. It would appear that these are the same people
who
formed part of the management of Ponties 2 under the supervision of
Pontaleon Esterhuizen. They each held 50% interest in the
Close
Corporation. The Close Corporation was incorporated on 13 March 2002
and, according to the Registrar of Close Corporations’

endorsement on form CK 2, the “Amended founding Statement”
was registered on 28 May 2002 which is the same date provided
as the
date of the changes in the particulars of members of the Close
Corporation.
[6]
The matter between the respondents and Ponties 1 and Ponties 2 was
heard by
Zilwa
AJ
during May 2002. On 3 June 2003
Zilwa
AJ
handed down his judgment. He found the dismissal of the employees,
including second and further respondents, to be automatically
unfair
and ordered Ponties 1 and Ponties 2 jointly and severally to pay a
total amount of R706 113-84 to the individual employees
as well as
the costs of the action. It must be pointed out that the judgment by
Zilwa AJ indicate that the order made was by default
as the
application for condonation for the late filing of the exception was
dismissed. This application was preceded by an unsuccessful

application for condonation for late filing of the appellant’s
statement of defence before Ngcamu AJ.
[7]
On 9 June 2003 a notice was issued to all staff on behalf of
Triponza. The Notice read thus:
“
9
June 2003
Attention
ALL PERSONEL (
sic)
WE
RECEIVED A NOTICE FOR LIQUIDATION OF TRIPONZA. THE WORK IN PROGRESS
OF CURRENT VEHICLEs WILL BE CARRIED OUT UNTIL WORK IS COMPLETED.

(sic)
WE
HEREBY GIVE NOTICE THAT ON FRIDAY SOME OF THE PERSONAL(sic) WLL BE
TERMINATED.
NEGOTIATIONS
IS (sic) IN PROGRESS WITH OTHER COMPANIES TO SEE IF THEY ARE PREPARED
TO TAKE OVER THE COMPANY AND THE EMPLOYEES.
THANK
YOU
MANAGEMENT”
[8]
On 12 June 2003 the first respondent launched an urgent application
in the Labour Court for,
inter
alia
,
an order interdicting Triponza from terminating the employees’
services without proper compliance with Sections 189 and
189A read
with Section 197B of the Act. On 13 June 2003
Landman
J
granted an interim order interdicting Triponza from dismissing its
employees. The interim order was confirmed by
Gamble
AJ
on 6 August 2003.
[9]
It is common cause that on 15 July 2003 the appellant entered into a
written agreement with
“Pontie
Esterhuizen (Pty) Ltd”
in terms whereof the appellant purchased the assets belonging to
Pontie Esterhuizen (Pty) Ltd. The parties to the agreement are

reflected as ‘Pontie Esterhuizen EDM BPK (Verkoper)’ and
‘Ponties Panelbeaters Partnership (Koper).’ The
one page
agreement reflects that the purchaser was purchasing all the assets
necessary for the conduct of the business at a purchase
price of R500
000-00. It was further recorded that the said assets appeared on a
list attached to the agreement and that the aforesaid
assets were
still on the premises described as “25 Cruse Singel, Vintonia,
Nelspruit.” The particulars of the person
who concluded and
signed the agreement on behalf of ‘Pontie Esterhuizen EDMS BPK’
are not provided. It is also not
disclosed whether the close
corporation has connection to Pontaleon Esterhuizen who was the sole
member of Ponties 1 and Ponties
2. It is, however, not in dispute
that the assests referred to in the agreement are the same assets
that were used by Ponties 1
and Ponties 2 to conduct the panel
beating business on the same premises.
[10]
It is the respondents’ case that around June 2003 Pierre Johan
Potgieter (“Potgieter”)
─
who is conducting the business of the appellant as a sole proprietor
and also the deponent to the answering affidavit in the Court
a
quo
─
informed the employees of Triponza that he was taking over the
business of Trinpoza. The respondents state further that although

some of the employees (including Ngala) were retrenched during late
August 2003, the bulk of the employees of Triponza continued
to do
what was their normal work from the same address as Triponza. They
further state that Potgieter advised these employees of
their
dismissal.
[11]
In response to the above, Potgieter denied that he bought the
business of Ponties 1, Ponties 2 or Triponza as “appears
to be
alleged”. He stated that he only purchased the assets of a
panel beating business which were, according to Potgieter,

“apparently previously rented by Ponties 1, Ponties 2 and
Triponza from “Pontie Esterhuizen (Pty) Ltd.” He denied

ever advising the employees of their dismissal as alleged. He
mentioned that he already knew when he purchased the aforesaid assets

that he would require the services of ‘people’ in order
to operate the business. He stated that as a result he spoke
to a
number of the “former” employees of Triponza, who had
experience in the panel beating business. These employees,
he
continued, informed him of a history of “court cases” and
further told him that they would make it impossible for
him to run
the business if he did not employ them. He named a certain Mr Ngala
as one of the former employees he spoke to at the
time.
[12]
Potgieter stated that with the assistance of one Mr Melg Welmans
(“Welmans”) of NOMESA−an employer’s

organisation that was advising him− he approached the first
respondent in order to resolve the ‘outstanding issues’.

He mentioned that subsequent to the discussions with one Alfred
Mashegoane− the deponent to the founding affidavit and the

Regional Legal Officer of the first respondent− it was agreed
that:
“
(a)
[Potgieter]
would employ 23 people in order to continue with a retrenchment
process and pay them a package based on their years
of service;
(b)
that
the 23 “people” were the same 23 employees previously
employed by Triponza;”
(c)
that [Potgieter] would retain 10 employees and be entitled to
commence business on the 1
st
September 2003;
(d)
that the remainder of the 23 “people”, would receive
severance packages in full and final settlement of any dispute
which
the union may have had against him. It is not clear from the record
whether the “23 people” were the only employees
that were
employed by Ponties 2.
[13]
According to Potgieter the settlement agreement included an indemnity
in his favour against any judgment previously obtained
by the first
respondent against Ponties 1, Ponties 2 and Triponza, and that the
agreement was entered into specifically to avoid
the appellant
incurring any liability for their debts. Potgieter attached as
annexure “E”, a letter dated 2 September
2003 addressed
to the secretary of the first respondent. He states that the letter
sets out the agreement which was reached the
previous day with the
respondent. The body of the said letter dated 2 September 2003 and
addressed to the secretary of the respondent
reads thus:
“
TRIPONZA
In
pursuance to the meetings we had in the recent past regarding
Triponza, I wish to confirm that we reached agreement on the
following
issues:
1
Mr. Potgieter, further referred to as the investor, will be renting
the building with the intention to start a similar business
in the
same premises,
2
He consequently agreed to take over the contracts of employment of
all existing union members and consulted with the union in
their
presence on retrenchment.
3
The parties agreed on who would be offered a position in the said
business and who would be paid a severance benefit. (Refer to

Annexure A)
4
The union members who elected to take up a position in the new
business, will receive recognition for their years of service since

the time of Ponties Panel Beaters, and will be given a contract of
employment to sign.
5
Apart from the above, the investor takes no responsibility of
whatever nature for any claim whosoever (sic) arising out of the

employment relationship between Triponza or its predecessors. This
includes claim for leave against Triponza as well as the judgment
of
the labour court in the existing litigation between NUMSA and Ponties
Truck and Trailer.
This
letter will be referred to as annexure “E”
[14]
Potgieter stated further that Aaron Mahlalela, a shop steward of the
first respondent, at all relevant times confirmed the
veracity of the
agreement personally, and together with his fellow employees who were
employed in terms of the agreement. He stated
further that Mahlalela
obtained permission from these fellow employees to sign a
confirmatory affidavit attached to the answering
affidavit. In his
confirmatory affidavit Mahlalela confirmed the contents of
Potgieter’s affidavit insofar as it refers to
him.
[15]
In the replying affidavit, Mashegoane admitted that an agreement was
reached with the first respondent and Ponties Partnership
to the
effect that all Triponza employees would be “transferred”
to Ponties Partnership. He stated that this agreement
was not reached
with him personally but with a certain Mavi Ncongwane (“Ncongwane”)
who represented the first respondent.
Mashegoane denied that he had
any dealings with Potgieter and Welmans and as such could not have
been party to the agreement. Ncongwane
has filed an affidavit to
confirm the allegations made by Mashegoane about him.
[16]
Ncongwane confirmed the respondent’s version with regard to the
settlement agreement. He mentioned that two meetings
were held in
respect of the ‘transfer’ from Triponza to Ponties
Partnership; and
[16.1]
that at first Potgieter insisted that he be indemnified by the first
respondent against any claim the first respondent had
against
Triponza;
[16.2]
that first respondent refused to accede to the demand on the basis
that first respondent was of the view that the transfer
from Triponza
to Ponties Partnership was one of a going concern;
[16.3]
that Potgieter left the room;
[16.4]
that Ncongwane made it clear to Welmans that first respondent would
not “shift” on its view;
[16.5]
that at the second meeting which was only attended by Welmans on
behalf of the appellant, an agreement was reached to the
effect that
all Triponza’s employees were to be transferred to Ponties
Partnership and that in the event of any employee
being retrenched,
Ponties partnership would pay them a severance package which would
recognise their prior service period with
Triponza;
[16.6]
that the issue of “indemnification” was not raised at
this specific meeting;
[16.7]
that certain employees were retrenched and they indicated to him
(Ncongwane) that they did not intend to challenge the fairness
of
their retrenchments; and that they were paid retrenchment packages in
accordance with the agreement referred to above; and
[16.8]
that the agreement was not in full and final settlement of any claims
and that neither first respondent nor the individual
respondents,
ever, agreed to indemnify Potgieter or Ponties Partnership.
[17]
The respondents denied that first respondent received annexure “E”.
With regard to the participation of Mahlalela,
the respondents’
version is that Mahlalela only became a shop steward in 2004 and
could not have entered into any agreement
on behalf of the second and
further respondents in a representative capacity. At the time that
according to Potgieter, he entered
into an agreement with him,
namely, about September 2003.
[18]
Having considered the parties’ respective versions as well as
the documents on record, the following facts. emerge as
common cause:
(a)
the appellant conducts a panel−beating business which is the
same business that was conducted by Triponza, Ponties 1
and Ponties
2.
(b)
the appellant’s business is operated from the same premises
that Triponza, Ponties 1 and Ponties 2 conducted their business.
(c)
the appellant employs a substantial number of the employees who were
previously employed by Triponza, Ponties 1 and Ponties
2.
(d)
the appellant paid severance packages to employees of Triponza that
it did not employ and, in doing so, took into account their
period of
service with Triponza.
(e)
the employees employed by the appellant were paid at the same rate of
pay and using the same clock numbers and machinery as
were used
during Triponza time.
(f)
the former manager of Triponza, one Mr Van Rooyen, was retained by
the appellant and continued as manager of the business.
(g)
the appellant is using the same telefax and telephone
numbers that were used by Triponza.
(h)
the appellant is operating under a trading name which has some
striking similarity with that of Ponties 1 and Ponties 2.
Naturally
the appellant’s clientele is the same as that which used to be
Triponza’s clientele.
Proceedings
in the Labour Court
[19]
The respondents contended that the business of Ponties 2 was
transferred to the appellant as a going concern. This aspect was

denied by the appellant. A dispute arose between the parties. The
respondents thereafter approached the Labour Court for relief.
[20]
The respondents then brought an application in the Labour Court
seeking an interdict and declaratory orders to the effect that;
a)
the business of Ponties Trucks and Trailer CC [“Ponties 2”]
was transferred to Triponza Trading 455 CC (in liquidation)
as a
going concern in terns of section 197 of the Act;
b)
that the business of Triponza Trading 455 CC (in liquidation) was
later transferred to the appellant (Ponties Panelbeaters Partnership)

as a going concern in terms of sec 197 of the Act and;
c)
that the appellant be ordered to pay the second and further
respondents an amount of R706 113-84 plus interest in terms of the

judgment handed down against Ponties Truck and Trailer CC by the
Labour Court plus costs.
[21]
The defence raised on behalf of the appellant in the Labour Court,
was, in a nutshell, to the effect that there had not been
a transfer
of a business as a going concern as contemplated by sec 197 of the
Act from Ponties 2 to the appellant. In the alternative,
and in the
event that the Labour Court found that there was in law a transfer as
contemplated by the provisions of sec 197 of the
Act, the appellant
then contended that there was an agreement reached on or about 1
st
September 2003 in terms whereof the appellant would not be held
liable for whatever happened to Ponties 1, 2 and Triponza. The

appellant contended that the said agreement was in full and final
settlement of any claims and disputes and that the respondents
were
not entitled to claim any payment from the appellant.
[22]
After considering and analysing a number of decisions, the Court
a
quo
held,
inter
alia
,
as follows:
“
In
the light of the fact it is not the assets of Triponza that were
purchased, the argument that Ponties 3 only purchased the assets

cannot stand and I reject it. The fact that Triponza simply allowed
Ponties 3 to operate the business without any proper sale of
business
points to a donation by Triponza and therefore a transfer of
business. The business being carried on is that of Triponza.
This is
confirmed by the use of the same employees and the premises. These
point out to one thing that is, the transfer of business
as a going
concern. I have not lost sight of the fact that in selling the assets
Ponties Esterhuizen was attempting to defeat the
judgment.”
The
Labour Court found further that
“there
was no waiver by the applicants and that transfer of business in
terms of section 197 has taken place making Ponties
3 liable to
satisfy the order of court.” “
Ponties
3” by the Labour Court is to the appellant.
[23]
The Labour Court thereafter granted the orders sought by the
respondents. The appellant sought and was refused leave by the
Labour
Court leave to appeal to this Court. The application was refused. The
appellant thereafter petitioned the Judge President
of this Court and
was granted leave to appeal against the whole judgment of the Labour
Court.
The
appeal
[24]
Before us the appellant challenged the correctness of the decision of
the Labour Court. Firstly, it was argued that the Court
a quo erred
in finding that there had been a transfer as a going concern of the
business of Triponza to the appellant. This argument
was, on the
main, based on the contention that what was sold were the assets
belonging to an entity which was not itself conducting
the business.
It was further contended that the respondents had not shown that the
business had not been discontinued and that
it was a business still
in operation when the appellant commenced operations. The second
ground relied upon to challenge the judgment
of the Labour Court was
that, even if it could be found that there had indeed been a transfer
of Triponza business as a going concern
to the appellant, the Labour
Court erred in finding that the respondents had not “waived”
their rights to execute against
the appellant the judgment which they
had obtained against Ponties. In support of this ground the appellant
relied on paragraph
5 of Annexure “E”. I now turn to
consider the law.
The
Law on the transfer of business and contracts of employment
[25]
The relevant provisions of sec 197 read:
“(1)
In this section and in section 197A−
(a)
‘business’ includes the whole or a part of any business,
trade, undertaking or service; and
(b)
‘transfer’ means the transfer of a business by one
employer (‘the old employer’) to another employer
(‘the
new employer’) as a going concern.
(2)
If a transfer of a business takes place, unless otherwise agreed in
terms of subsection (6)−
(a)
the new employer is automatically substituted in the place of the old
employer in respect of all contracts of employment in
existence
immediately before the date of transfer;
(b)
all the rights and obligations between the old employer and an
employee at the time of the transfer continue in force as if
they had
been rights and obligations between the new employer and the
employee;
(c)
anything done before the transfer by or in relation to the old
employer, including the dismissal of an employee or the commission

of an unfair labour practice or act of unfair discrimination, is
considered to have been done by or in relation to the new employer;

and
(d)
the transfer does not interrupt an employee’s continuity of
employment, and an employee’s contract of employment
continues
with the new employer as if with the old employer.”
[26]
It is important to note that the word “business”,
per
se,
is not defined. It is however said to include the whole or any part
of any business, trade, undertaking or service (sec. 197(1)(a).

Likewise, the phrase “a going concern” is also not
defined but it has been the subject of judicial pronouncement. The

now authoritative and applicable interpretation is that enunciated by
Zondo
JP
in his minority judgment in
National
Education Health and Allied Workers Union v University Of Cape Town &
Others
(2002)
23 ILJ 306 (LAC.) The learned Judge President had the following to
say after reviewing the various relevant international
authority on
the subject (at 337f
─
338g):
“
Furthermore,
I am of the view that the question of whether in a particular case a
business has been transferred as a going concern
is a matter for
objective determination. This does not mean that the intentions of
the parties are irrelevant but it does mean
that the say-so of the
parties cannot be conclusive.
In
my view there are a number of factors that are relevant in
determining whether or not a business has been transferred as a going

concern. These may include what will happen to the goodwill of the
business, the stock-in-trade, the premises of the business,
contracts
with clients or customers, the workforce, the assets of the business,
the debts of the business, whether there has been
interruption of the
operation of the business and, if so, the duration thereof, whether
same or similar activities are continued
after the transfer or not
and others. I do not think that the absence of anyone of these will
on its own mean that the transfer
of the business has not been one as
a going concern.
I would align myself with the approach adopted by the European Court
of Justice when, in paras 11, 12 and 13 of its judgment in
the
Spijkers case, it said:
'[11] ...
It appears from the general structure of directive 77/187 and the
wording of Article 1(1) that the directive aims to
ensure the
continuity of existing employment relationships in the framework of
an economic entity, irrespective of a change of
owner. It follows
that the decisive criterion for establishing the existence of a
transfer within the meaning of the directive
is whether the entity in
question retains its identity.
[12] Consequently
it cannot be said that there is a transfer of an enterprise, business
or part of business on the (soul) ground
that its assets have been
sold. On the contrary, in a case like the present, it is necessary to
determine whether what has been
sold is an economic entity which is
still in existence, and this will be apparent from the fact that its
operation is actually
being continued or has been taken over by the
new employer, with the same economic or similar activities.
[13] To
decide whether these conditions are fulfilled it is necessary to take
account of all the factual circumstances of the
transaction in
question, including the type of undertaking or business in question,
the transfer or otherwise of tangible assets
such as buildings and
stocks, the value of intangible assets at the date of transfer,
whether the majority of the staff are taken
over by the new employer,
the transfer or otherwise of the circle of customers and the degree
of similarity between activities
before and after the transfer and
the duration of any interruption in those activities. It should be
made clear, however, that
each of these factors is only a part of the
overall assessment which is required and therefore they cannot be
examined independently
of each other.'
[65] In
my view the position is that there will be cases where the transferor
and the transferee agree that the workforce will be
taken over by the
transferee but the transaction cannot be described as a transfer of
the business as a going concern if many of
the other factors that are
relevant to a transfer being one as a going concern are absent and
there will be transactions where
the transferor and the transferee
will agree that the workforce will not be taken over but the
transaction will still amount to
a transfer of a business as a going
concern because of the presence of many or all of the other factors
that go to making a transfer
of a business to be one as a going
concern
.
Accordingly each transaction must, in my view, be considered on its
own merits in the light of all the surrounding circumstances
of the
transaction before a determination can be made whether it constitutes
a transfer of a business as a going concern.”
(my
emphasis)
[27]
The above approach was endorsed by the Constitutional Court on
further appeal in the same matter in:
National
Education Health and Allied Workers Union v University of Cape Town &
Others
(2003)
24 ILJ 95 (CC).
Ngcobo
J,
writing on behalf of a unanimous Court, had this to say (at
119E
─
120B):
“
[56] The phrase ‘going
concern’ is not defined in the LRA. It must therefore be given
its ordinary meaning unless the
context indicates otherwise. What is
transferred must be a business in operation ‘so that the
business remains the same but
in different hands.’ Whether that
has occurred is a matter of fact which must be determined objectively
in the light of the
circumstances of each transaction.
In deciding whether a business has been transferred as a going
concern, regard must be had to the substance and not the form of
the
transaction
. A
number of factors will be relevant to the question whether a transfer
of a business as a going concern has occurred such as
the transfer or
otherwise of assets both tangible and intangible, whether or not
workers are taken over by the new employer, whether
customers are
transferred and whether or not the same business is being carried on
by the new employer. What must be stressed is
that this list of
factors is not exhaustive and none of them is decisive individually.
They must all be considered in the overall
assessment and therefore
should not be considered in isolation. ”
(my
emphasis).
See
also:
SA
Municipal Workers Union & others v Rand Airport Management Co.
(Pty) Ltd & others
(2005) 26 ILJ 67 (LAC)
Was
Triponza’s business transferred to the appellant as a going
concern
?
[28]
It is clear from the above authorities that the fact that the
appellant did not purchase the business but only the assets is
one of
the factors that should be considered, together with many others, to
determine whether it can be said that it is the same
economic entity
that was conducted by Triponza which is now in the hands of the
appellant. Counsel for the appellant submitted
that in applying the
test to determine whether there has been a transfer of a business as
a going concern, we should also consider
the following factors:
[28.1]
that Triponza was liquidated on or about 9 June 2003;
[28.2]
that Potgieter only became involved in August 2003 ( 2 months later)
when he started talking to the employees of Triponza;
and
[28.3]
that appellant commenced his business on 1 September 2003 after
several discussions with the first respondent.
He
submitted that these factors, when considered together with the
others, lead to only one conclusion and that conclusion is that

Triponza’s business was not transferred as a going concern as
contemplated in sec 197 of the Act.
[29]
Counsel for the appellant could not state with certainty when the
business of Triponza was closed. We invited him to refer
us in the
record when and for how long the business was closed but he could not
do so. What he asked us to do though, was to draw
an inference that,
because Triponza was liquidated on 9 June 2003 and that the appellant
only commenced with the business on 1
September 2003, the business
should have been closed for the interim period. He argued that it was
for the respondents to have
shown that the business remained active
as an economic entity from 9 June 2003 until 1 September 2003.
[30]
In my view, the conclusion that the business of Triponza was closed
for some time is not the most plausible inference that
can be drawn
from the proven facts. Firstly, we already know that the respondents
had during that period instituted proceedings
in the Labour Court to
interdict Triponza from dismissing its employees. A rule
nisi
was granted on 13 June 2003 and was confirmed on 6 August 2003.
During this time the employees were still employed by the Triponza.

Secondly, on the appellant’s own version, the purchase of the
assets was concluded on 15 July 2003 on which day the rule
nisi
was still in operation. It has not been disclosed when Potgieter took
possession of the assets. However, the purchase of the assets
took
place whilst the employees were still employed and Potgieter was
aware of their employment relationship with Triponza at the
time.
Thirdly, the evidence by the respondents to the effect that, although
some of the employees were retrenched during August
2003, the bulk of
the employees of Triponza continued to operate a panel beating
business from the same address, has not been denied.
In these
circumstances I am of the view that the inference we were urged to
draw is one which cannot properly be drawn in this
case.
[31]
Even if it could be said that there was an interruption in the
business, same could not have been of such a long period that
it
could be said that it broke the connection between the business of
Triponza and that of the appellant. It is important to note
that on
the appellant’s own version it knew that when Potgieter
purchased the assets, his intention was to operate the same
business
as that of Triponza and that is why he approached the employees of
Triponza who he conceded, he knew they had experience
of operating a
panel beating business. The fact that the business was closed should
not in itself be a factor that would prevent
the applicability of sec
197 of the Act. There is also the fact that assets which the
appellant bought which it needed for the
business were bought not
from Triponza but “Pontie Esterhuizen (Pty) Ltd.” In my
view this does not change the picture
at all. The fact of the matter
is that Triponza had leased the same assets to conduct the business.
The appellant did not lease
them but bought them. Indeed, as stated
in paragraph 9 above the agreement between the appellant and Pontie
Esterhuizen (Pty) Ltd
reflects a provision to the effect that the
appellant was purchasing all the assets necessary for the conduct of
the business.
In that agreement it was stated that the assets in
question were still on the premises from which Triponza had conducted
the business
and from which the appellant sought to conduct its
business too. In my view the fact that the assets which the appellant
bought
in order to run the business were not bought from Ponties 2
but from a third party is no basis, on the facts this case, to
conclude
that Triponza’s business was not transferred to the
appellant as a going concern.
[32]
To answer the question whether Triponza’s business was
transferred to the appellant as a going concern one must have
regard
to the factors set out in the passage quoted in par 26 above from
Zondo
JP’s
judgment which, as I have said, were approved by the Constitutional
Court in
Nehawu
v University of Cape Town
.
It is not necessary to repeat them here. When one has regard to those
factors in that passage and has regard to the facts set
out in para
18(a) to (i) above there can only be one conclusion to be reached.
That is Triponza’s business was transferred
to the appellant as
a going concern. This means therefore that the finding of the Labour
Court that the business transferred as
a going concern as
contemplated in sec 197 of the Act is correct. The finding that
Triponza’s business was transferred as
a going concern to the
appellant means that the appellant stepped into the shoes of Ponties
2. I now proceed to consider the question
whether the respondents
“waived” their rights to enforce the judgment of the
Labour Court against the appellant.
The
waiver argument.
[33]
At the outset Counsel for the appellant submitted that there is a
dispute of fact on the parties’ versions of both the
appellant
and the respondents and that because the respondent had not requested
the Labour Court to refer the matter to oral evidence,
the version of
the appellant, which was the respondent in the Court a quo should be
preferred. The said dispute of fact relate
to the circumstances
around the terms of the agreement between Potgieter and the first
respondent purportedly captured in Annexure
E. As authority for the
submission, reliance was placed on the following decisions:
Plascon
Evans Paints v Van Riebeck Paints
[1984] ZASCA 51
;
1984 (3) SA 623
(AD) and
Fry’s
Metal Services Ltd v National Union of Metal Workers of South Africa
and Others
(2003)
24 ILJ 133 (LAC) at 150 F-J. In the light of the view that I take of
this matter I find it not necessary to discuss the two
authorirties
referred to above. I say this because the record bears testimony to
the fact that counsel for the respondents submitted,
in the court
a
quo,
that
the matter could be determined on the papers, “
but
in so far as [the Court] has concerns about the indemnity/ amnesty/
waiver agreement then the implications of that, that crisp
issue
should [be referred] to oral evidence to be dealt with in
cross-examination.
”
The submission made on behalf of the appellant therefore lacks merit.
[35]
During argument, counsel for the appellant was requested to address
us on the nature and or status of Annexure “E”
with
specific reference to paragraph 5 thereof. In response counsel for
the appellant submitted that the letter did not constitute
a waiver
but constituted a “settlement agreement” which is binding
on the union and all its members. He argued that
the respondents were
therefore barred by clause 5 from enforcing the judgment of the
Labour Court against the appellant. He submitted
that clause 5 is to
the effect that the first respondent and the appellant agreed that
the first respondent, acting on behalf of
the second and further
respondents, indemnified the appellant from the judgment which had
been obtained by the first and further
respondents against Ponties 1
and Ponties 2. The appellant’s case is therefore that the
agreement is not a waiver but an
agreement which according to counsel
may not have been properly drafted. He submitted that it however
records what the intention
of the parties was at the time, which must
be given effect to.
[36]
It is in my view imperative that the meaning of clause 5 of the
letter be understood first before deciding the issue whether
the
disputes of facts arising from the circumstances in which the letter
was written can be decided. The starting point is to consider
the
wording of the clause in order to ascertain what it conveys. When
reading Annexure E it is clear from the opening paragraph
that an
agreement was reached on ‘issues’ that followed the
information clause. The issues in paragraphs 1,2,3 and
4 are clear
and common cause. It is only paragraph 5 which has its own
information clause. The words “
apart
from the above
”
seems to remove the balance of the contents of paragraph 5 from the
issues that have been agreed upon “
in
pursuance to the meetings [the parties] held in recent past regarding
Triponza
”.
What follows thereafter is, in my view, a statement by Potgieter that
he was not accepting liability for any claim arising
out of the
employment relationship between Triponza or its predecessors and the
respondents. The claims included “leave claims”
and the
judgment of the Labour Court.
[37]
Nowhere in annexure “E” did the first respondent state
that Potgieter was being indemnified against any claims
and judgments
or where it was stated that the respondents accept that they would
not enforce the judgment of the Labour Court against
Potgieter or the
appellant. The letter merely recorded what, according to the writer
thereof had been agreed upon from the various
meetings which are the
issues listed in paragraphs 1,2,3 and 4 and thereafter informed the
addressee that, apart from that, the
“investor” was
“taking no responsibility” for the matters mentioned in
the balance of the paragraph. There
is nothing in paragraph 5 that
suggests that there was any agreement reached on the contents of
paragraph 5. It seems to me that
Potgieter or the appellant was
merely reserving to himself the right to dispute any claim by the
union to enforce the judgment
as well as any claim for leave against
him or the appellant.
[38]
Apart from the fact that annexure “E” is not signed there
is also no proof from the appellant that the letter was
transmitted
to the first respondent. There is no proof that the respondents
received the letter. Since it is the appellant’s
case that the
document is not a waiver it shall not be necessary to consider
whether the requirements for a valid waiver have been
met. By this I
am not being unkind to counsel for the respondents who had prepared
argument in his head of argument to persuade
us that the requirements
for a valid waiver have not been met should the appellant claim that
paragraph 5 of Annexure “E”
is a waiver. Suffice it to
say that the appellant would have carried the burden to prove that
paragraph 5 contains a waiver.
[39]
I therefore come to the conclusion that there is nothing in paragraph
5 of Annexure “E” that prevents the respondents
from
enforcing the judgment of the Labour Court against the appellant. I
further find that paragraph 5 of Annexure ‘E’
does not
amount to an agreement. Accordingly, the appeal must fail. In my view
the requirements of the law and fairness dictate
that no order as to
costs should be made in this case.
[40]
In the result I make the following order:
(a)
The appeal is dismissed.
(b)
Each party is to pay its costs.
__________
Tlaletsi
AJA
I
agree
_________
Zondo
JP
I
agree
__________
Jappie
JA
Appearances:
For
the appellant: Mr AP Brandmuller
Instructed
by: Brundmullers attorneys
Cheadle
Thompson & Haysom Inc
For
the respondents: Mr C Orr
Instructed
by: Cheadle Thompson and Haysom Inc
Date
of the judgment: 02 September 2008