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[2016] ZALAC 36
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Temba Big Save CC v Kunyuza and Others (JA40/2015) [2016] ZALAC 36; [2016] 10 BLLR 1016 (LAC); (2016) 37 (ILJ) 2633 (LAC) (28 June 2016)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: JA40/2015
TEMBA BIG SAVE CC
Appellant
and
MLAMLI KUNYUZA AND
ANOTHER
First
Respondents
ACE WHOLSALERS (PTY)
LTD
Second Respondent
BIG SAVE (PTY)
LTD
Third Respondent
Heard:
01 March 2016
Delivered:
28 June 2016
Summary: Practice and
Procedure – party objecting to the late filing of the statement
of response without a condonation application
in a replying affidavit
- other party contending that objection not proper as contemplated by
the Labour Court Practice Manual
– court finding a notice of
objection needs not be formal document – any manner in which
any party is made aware of
its intention to object sufficient –
Labour Court correct in accepting the notice of object and dismissing
the statement
of response.
Joinder –
employer contending that employees’ joinder application should
be dismissed because there was no conciliation
- principle restated
that referral for conciliation is indispensable and a precondition to
the Labour Court’s jurisdiction
over unfair dismissal disputes
–employee alleging s197 transfer -
in
the context of an alleged s197 transfer,
there is no need to
refer the new employer to conciliation - the new employer takes the
place of the old employer in all material
respects – Labour Court correct in joining the employer –
Appeal dismissed with costs.
Coram:
Waglay JP, Tlaletsi DJP
et
Davis JA
JUDGMENT
WAGLAY JP
[1]
This
is an appeal against the decision of the Labour Court (Steenkamp J)
in terms of which he: (i) condoned the late filing of the
statement
of case by the first respondent; (ii) refused to allow the
appellant’s answering affidavit because it was filed
outside
the prescribed time limits; and, (iii) joined the appellant as a
party to the action instituted by the first respondent.
[2]
The
first respondent, who constitute two employees (hereafter
“employees”) aver that they were dismissed, which
dismissal
they allege amounts to an automatically unfair dismissal.
They seek compensatory relief for such wrongful dismissal.
[3]
This
appeal is against the Labour Court’s refusal to allow the
appellant’s answering affidavit and the ordering of the
appellant to be joined as a party to the action.
[4]
The
employees instituted action against two parties Ace Wholesalers (Pty)
Ltd (Ace Wholesalers) and Big Save (Pty) Ltd (Big Save).
They alleged
that they were employed by Ace Wholesalers, a wholesale and retail
business which was sold to Big Save in and during
August 2011 and in
September, they were dismissed. They allege that their dismissal
constitutes an automatically unfair dismissal
as there was
non-compliance with
s197
and
197A
of the
Labour Relations Act 66 of
1995
.
[5]
The
employees allege that the sale of Ace Wholesalers to Big Save
constituted a transfer of a business as a going concern as
contemplated
by
s197.
[6]
At
some time,
[1]
the Labour Court
granted default judgment against Ace Wholesalers and Big Save
ordering them to pay the respondents an amount in
excess of R1.5
million A warrant of execution was issued and the sheriff attached
the property of the appellant, Temba Big Save
CC, (who was not cited
as a party to the proceedings) to meet the judgment debt.
[7]
The
appellant did not institute an interpleader but together with Big
Save applied to have the judgment rescinded.
[8]
In
its founding affidavit in support of the application to rescind the
default judgment, the deponent Joao Antonio Da Silva Ferreira
had
this to say:
(i)
that
he was a director and shareholder of Big Save and a member of the
appellant (the appellant is a close corporation)
[2]
(ii)
that
Big Save and the appellant are two separate entities who do not share
the same directors, shareholders and members;
[3]
(iii)
that
Big Save had taken over all the assets of Ace Wholesalers in
liquidation of Ace Wholesalers indebtedness to it;
(iv)
after
the assets were taken over, the appellant was formed and the
appellant purchased the assets from Big Save;
(v)
having
purchased the assets, the appellant started operating a retail and
wholesale business which was a similar business as the
one run by Ace
Wholesalers, this business was conducted from the premises from which
Ace Wholesalers operated;
(vi)
that
the appellant did employ some of the staff who had worked for Ace
Wholesalers, which it did because it felt socially responsible
to do
so;
(vii)
that
the business in operation was that of the appellant and not Big Save;
(viii)
that
Big Save had on 29 September and 25 October 2011(after the appellant
had purportedly started running the business) addressed
a letter to
the trade union representing employees of Ace Wholesalers
stating that it was Big Save which was running the
business and which
had employed some of the erstwhile staff of Ace Wholesalers: adding
that Big Save had not purchased the business
from Ace Wholesalers as
a going concern but only its assets and that the erstwhile employees
of Ace Wholesalers whom it did employ
were employed on a fixed term
contract.
[9]
As
is evident, the founding affidavit in support of the rescission
application is replete with contradiction and confusion, so much
so
that it is impossible to ascertain the true position. It appears that
persons controlling Big Save and the appellant used the
names of
these entities interchangeably or were themselves unsure as to the
functions of each entity; who purchased what; who sold
what; and, who
in fact was conducting the business.
[10]
The
above factors are in my view relevant when considering the issue of
joinder because while Big Save and the appellant deny any
s197
transfer, they continue to make contradictory statements relating to
which entity had purchased what, when they were formed, and,
whether
they were separate entities.
[11]
The
further point taken in support of the rescission application was that
the employees had not served their statement of claim
on Big Save.
This appeared to be fatal and the rescission of the default judgment
was granted.
[12]
After
the rescission was granted and further time consumed with all kinds
of legal processes, the employees filed an application
to condone the
late filing of their statement of claim. The appellant while not a
party to the action nevertheless opposed the
application together
with Big Save. In the event, the application was dismissed because
the employees had yet to serve their statement
of case upon Big Save.
[13]
The
employees then launched an application which sought condonation for
the late filing of their statement of case and to join the
appellant
as co-respondent with Ace Wholesalers and Big Save. Condonation for
the late filing of the statement of case was granted
and there is no
appeal against this decision.
[14]
In
opposing the employees’ application, the appellant filed its
answering papers 17 days after the period within which to
do so. The
employees objected to the late filing of the answering affidavit and
did so by way of a point
in
limine
contained in their replying papers.
[15]
The
appellant did not see the need to apply for condonation and argued
that it did not have to do so because the employees had failed
to
file a proper notice of objection as provided for in the Practice
Manual that sets out the Judge President’s directive
with
regard to practice in the Labour Court.
[16]
The
Practice Manual provides as follows:
‘
11.4.2
Where the respondent or the applicant has filed its opposing or
replying affidavits outside the time period set out in the
rules,
there is no need to apply for condonation for the late filling of
such affidavits unless the party upon whom the affidavits
are served
files and serves a Notice of Objection to the late filing of the
affidavits. The Notice of Objection must be served
and filed within
10 days of the receipt of the affidavits after which time the right
to object shall lapse.’
[17]
The
court considered the “
point
in
limine
”
in the employees’ reply and found that that was sufficient to
constitute a notice of objection to the late filing
of the answering
affidavit and held that, in the absence of an application to condone
the late filing of the answering papers,
it was entitled not to
receive the answering affidavit.
[18]
I
agree with the Labour Court that a notice of objection does not need
to be a document in the formal sense of a notice. The purpose
of
paragraph 11.4.2 is for the party upon whom affidavits are filed
outside the prescribed time limit to inform the offending party
and
the court that it is not prepared to accept such affidavit so that
the offending party is aware thereof and considers its options.
This
avoids the practice that, on the date of a hearing, a party for the
first time is made aware that the papers filed outside
the prescribed
time limits are unacceptable resulting often in the matter being
delayed unnecessarily.
[19]
In
the absence of the application for condonation and any request by the
appellant to be granted an opportunity to apply for condonation,
the
Labour Court considered the matter and refused to allow the answering
affidavit.
[20]
I
see no basis on which to interfere with that decision of the Labour
Court. It is a discretion which the Labour Court is entitled
to
exercise and it did so properly exercise.
[21]
The
above notwithstanding, I have considered the averments made in the
answering affidavit with respect to the appellant’s
opposition
to the joinder application. Essentially, the appellant raises four
issues:
(i)
that
Ace Wholesalers had in fact closed its business and therefore the
employees had lost their jobs by virtue of such closure;
(ii)
Big
Save was a creditor of Ace Wholesalers and took over all of Ace
Wholesalers stock in settlement of the debt. This stock was
then sold
to the appellant;
(iii)
the
premises from which Ace Wholesalers operated its business remained
closed for about three months: thereafter the appellant started
conducting a similar or a more expanded business from the same
premises; and that,
(iv)
there
was no sale of a business as a going concern by Ace Wholesalers to
either Big Save or the appellant.
[22]
As
against this, we have the averments made by the employees: they only
became aware of the appellant once the appellant launched
the
rescission application. In their view, the negotiation for the sale
of business commenced while they were still working for
Ace
Wholesalers; that there was not a closure of a business as if the
business was coming to an end but that the business was closed
for
the premises to be renovated, to bring in changes that the new owners
wanted to bring. When the business operated under the
new name, it
was still a wholesale and retail business but expanded to include a
butchery and a bottle store.
[23]
Based
on the averments made by the parties, I would have had no hesitation
in granting the joinder as quite properly, it is for
the trial court
to determine whether there was a
s197
transfer. The application was
not without merit. Hence even if the answering affidavit were
admitted, in my view, it would not
have resulted in the joinder being
refused.
[24]
The
other ground of appeal is that the Labour Court was wrong in granting
joinder because the employees had not referred their automatically
unfair dispute against the appellant for conciliation.
[25]
The
appellant, relying on paragraph 40 read with its footnote number 53
in the Constitutional Court’s judgment
National
Union of Metal Workers of South Africa v Intervalve (Pty) Ltd and
Others (Intervalve )
[4]
,
argued that it was not permissible for the Labour Court to grant the
joinder because the employees had not referred their dispute
to
conciliation. Paragraph 40 and footnote 53 state as follows:
‘
[40]
Referral for conciliation is indispensable. It is a
precondition to the Labour Court’s jurisdiction over unfair
dismissal disputes.
NUMSA
therefore had to refer the dispute between the employees and
Intervalve and BHR for conciliation. The question is whether
it
did so.’
Footnote
53
The
Labour Appeal Court was therefore right (at paras 15-22) to
distinguish the factual circumstances in
Mokoena
and
Selala …
and to disapprove of the erroneous view, expressed in both those
judgments, that the Labour Court has a discretion to condone
non-compliance with the conciliation requirement. The Labour
Appeal Court noted that the party joined in
Mokoena
was a transferee who had taken over the going concern of another
business. Judgment against the old business was therefore
effective against the transferee, who would be jointly and severally
liable for any claim. The transferee therefore had an
interest
in the outcome of the dispute. The joined party in
Selala
also had an interest in the outcome of the case, as he was a
co-employee currently employed in a position the applicant claimed
should have been his. By contrast,
SACCAWU
…at
para 10 rightly held that an applicant in the Labour Court “cannot
rely on a joinder in terms of
rule 22
to avoid its obligations to
comply with
section 191
of the LRA.’
[26]
In
considering the submissions, the court
a
quo
had regards to the
Intervalve
judgments of the Constitutional Court and this Court.
[5]
The court
a
quo
agreed with the appellant on the principle recorded in the above
quote that a party cannot be joined in proceedings if it was not
party to a conciliation process. However, the court
a
quo
disagreed with the appellant’s interpretation of footnote 53 in
the Constitutional Court judgment.
[27]
The
court
a
quo
found that the appellant’s interpretation of paragraph 40 with
footnote 53 of the judgment of the Constitutional Court was
misconceived and correctly so. The reading of footnote 53 evinces
that the Constitutional Court had agreed with the Labour Appeal
Court
in distinguishing the facts in
Intervalve
with those in
Mokoena
v Motor Component Industry (Pty) Ltd
(2005) 26 ILJ (LC) (
Mokoena
)
and
Selala
and Another v Rand Water
(2000)
21 ILJ 2102 (LC) confirming, inter alia, that where
s197
transfer was
in play there was no need to refer both the old and the new employer
to conciliation in an unfair dismissal dispute.
[28]
The
appellant’s interpretation of
Intervalve
’s
judgment of both the LAC and the Constitutional Court is spurious. A
judgment should be read in
toto
not as in a piecemeal fashion like the appellant seeks to do. It does
not help the appellant to extract in the judgment what it
believes
advances its case and leaves out the essence of the judgment.
[29]
Having
said that a referral for conciliation is indispensable and a
precondition to Commissioner’s or the Labour Court’s
jurisdiction over unfair dismissal disputes means that if a party is
not part of the conciliation proceedings it cannot be joined
at a
later stage. The question that arises however is whether the general
principle is applicable in a case a where a dismissed
employee,
having referred his/her employer to conciliation for an unfair
dismissal dispute, later discovers that his/her employer
has changed
because the business in which they were employed has changed hands.
[30]
In
answering this question, the LAC in
Intervalve
held that:
‘
In
Mokoena
,
the Labour Court allowed the joinder of one of the parties. The party
joined was a party that the Labour Court held had taken
over the
respondent’s business in circumstances that invoked
s197
of the
LRA. In terms of this section where a business is transferred as a
going concern the transferee takes over the employment
responsibilities of the transferor. The joinder was thus granted not
on the basis of any exercise of a discretion of joining a
party not
taken to conciliation but because
s197(9)
of the LRA
placed
the new employer in the shoes of the old employer. In the
circumstances, there was no need to refer both the new and
the old
employer to conciliation any one would suffice as judgment against
one was effective against the other.’
[6]
[31]
This
quote illustrates that, in the event of a party invoking the
provision of
section 197
of the LRA, there is no need to refer the
old and the new employer to conciliation. Any one of the parties will
suffice because
in terms of the section, the new employer takes the
place of the old employer in all material respects, including but not
limited
to contracts of employment and any pending litigations.
Hence, where the old employer was taken to conciliation there is no
need
to also take the new employer because one is not dealing with
two employers but only one. Clearly, the appellant wrongly
interpreted
the
Intervalve
judgments.
[32]
In
this matter, the employees allege that the appellant has taken over
the business of the former employer and for that reason they
sought
to join the appellant. Since the appellant is alleged to have
stepped into the shoes of the old employer it may be joined to the
proceedings
.
I therefore agree with the court
a
quo
’s
conclusion that in the context of an alleged
s197
transfer, a
successful applicant would have to hold the transferee accountable
because not only has that transferee an interest
in the outcome of
the dispute, it may be held liable to satisfy the relief, if any,
that is granted against the old employer.
[33]
In
the result, I make the following order:
The
appeal is dismissed with costs.
________________
Waglay JP
I
agree
_______________
Tlaletsi DJP
I agree
________________
Davis
JA
APPEARANCES
:
FOR THE
APPELLANT:
Adv W P Bekker
Instructed by Nothnagel
Attorneys
FOR THE FIRST
RESPONDENTS
Adv A L Cook
Instructed
by Crawford and Associates Attorneys
[1]
I see no need to
recall the long and sorry history of the matter which results in the
appeal being heard five years after the
respondents were dismissed.
[2]
Paragraph 1.1 of
the founding affidavit.
[3]
Paragraph 1.2 of
the founding affidavit.
[4]
[2015]
3 BLLR 205
(CC); (2015) 26 ILJ 363 (CC).
[5]
The
judgment is reported as
Intervalve
(Pty) Ltd and Another v National Union of Metalworkers of South
Africa obo Members
(2014)
35 ILJ 3048 (LAC).
[6]
At para 16.