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[2018] ZALAC 47
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Road Traffic Management Corporation v Tasima (Pty) Limited and Others; Road Traffic Management Corporation and Another v Tasima (Pty) Limited (JA77/2017; JA78/2017; JA28/2018; JA134/2017) [2018] ZALAC 47; [2019] 5 BLLR 434 (LAC); (2019) 40 ILJ 1036 (LAC) (21 December 2018)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
JA77/2017,
JA78/2017
and JA28/2018
In
the matter between:
THE
ROAD TRAFFIC MANAGEMENT CORPORATION
First Appellant
and
TASIMA
(PTY) LIMITED
First Respondent
DEPARTMENT
OF TRANSPORT
Second Respondent
DIRECTOR
GENERAL OF DEPARTMENT
OF
TRANSPORT
Third Respondent
MINISTER
OF TRANSPORT
Fourth Respondent
ALL
EMPLOYEES LISTED IN ANNEX "A"
TO
THE NOTICE OF MOTION
Fifth Respondent
And
JA134/2017
THE
ROAD TRAFFIC MANAGEMENT
First Appellant
CORPORATION
MAKHOSINI MSIBI
Second Appellant
and
TASIMA
(PTY)
LIMITED
Respondent
Heard:
08 November 2018
Delivered:
21 December 2018
Coram:
Waglay JP, Davis JA and Murphy AJA
JUDGMENT
THE
COURT
Introduction
[1]
On 03 December 2001, Tasima (Ply) Ltd,
the first respondent (respondent) and the Government of the Republic
of South Africa, acting
through the Department of Transport
('Department') entered into a Turnkey agreement (which was
subsequently amended and extended)
for the provision of the eNaTIS
system. This system realised the requirements provided for in the
National Road Traffic Act 43
of 1996 ('the Act'), namely to record,
administer and maintain a vast range of information required by the
Act and the National
Road Traffic Regulations as well as to perform
key functions pertaining to road traffic in South Africa. To a large
extent, it
is a self-financing system. Given the eNaTIS transaction
fees are paid by the public, the State receives in excess of R440
million
per year from these transaction fees. It appears that the
system administers over R14billion annually in road traffic revenue,
it processes more than 500 million transactions per year at an
average of 2million transactions per business day. It has more than
2400 sites nationwide, has up to 2700 live users logging transactions
on the system with over 27 million entity records. It manages
a
vehicle population in excess of 11,3million vehicles and a driver
population of approximately 9million.
[2]
Following the conclusion of the Turnkey
agreement, respondent was obligated to operate the eNaTIS system on
behalf of the Department
for a fee of R355 million over a period of
five years. The agreement ultimately came into force on 01 June 2002
for a fixed period
of five years terminating on 31 May 2007. It had
been agreed that, upon the termination of this Turnkey agreement,
respondent would
transfer the operation of eNaTIS to the Department.
Procedures were set out in the Turnkey agreement to effect the
contemplated
transfer. The first step was to be a written request
from the Department for a transfer-management meeting between it and
respondent.
This request was to be made within 90 days from the date
of termination at the agreement. At that meeting the parties would
agree
to a transfer-management plan which had to be completed within
30 days from the date of the request for the meeting.
[3]
The arrangements between the contracting
parties appear to have proceeded without any dispute until the
agreement terminated on
31 May 2007. On the eve of the termination of
the agreement, respondent addressed a letter to the Department
requesting that the
agreement be extended for another five years.
When the initial agreement came to an end on 31 May 2007, the parties
did not enter
into an written agreement. They did agree, however,
that respondent should continue to provide services that it had
rendered under
the expired contract on a month to month basis.
[4]
It was at this point in the relationship
between the parties that a litigation storm replaced the calm of the
previous five years.
Dozens of cases later, this court is now seized
with the consequences of much of this litigation. To prevent the
compilation of
a narrative which could justifiably be entitled 'War
and No Peace', suffice to say that in
Department
of Transport v Tasima
2017 (2) SA
622
(CC) at para 208, ('Tasima 1') the Constitutional Court ordered
that, within 30 days of its order, respondent was to hand over 'the
services and electronic National Traffic Information System to
appellant'.
[5]
Once
this order had been made, respondent demanded that
the staff employed by it in respect of the operation of
the eNaTIS
system be transferred to appellant, as employees of the latter
in terms of s 197 of the Labour Relations Act
66 of 1995
('LRA') (the appellant is the Road Traffic Management Corporation
(RTMC) the successor in title to the Department
in respect of
the eNATIS system).
[6]
h
As a consequence of this demand,
respondent approached the Labour Court for an order which
would declare that
the contracts of
employment of 5th to 84th respondents be transferred automatically
from respondent to first applicant in
accordance with the provisions
of s 197 of the LRA.
[7]
The Labour Court, (Steenkamp J) upheld
this application and made the following order:
'63.1
It is declared that, with effect from 5 April 2017, the contracts of
employment
of the 5th to 84th respondents transferred automatically
from the applicant (Tasima (Pty) Ltd) to the first respondent (the
Road
Traffic Management Corporation) in accordance with the
provisions of
s 197
of the
Labour Relations Act (Act
66 of 1995).
63.2
The RTMC is directed to pay the 5th to
84 the respondents from 05 April 2017 to the date of the final
determination of the order
in subparagraph 1 above:
63.2.1
on monthly basis on or before the 25th
of each month, the amounts set forth under the
column headed
"Monthly CTC excl 13
th
cheque, annual bonus, overtime, standby allowance, birthday voucher
and night shift allowance" as set out in Annexure "C"
to Annexure "FM 11.6" to the founding affidavit of Fannie
Lynen Mahlangu; and
63.2.2
on an annual basis, any additional
amounts making up the column headed "Annual Total CTC" as
set forth in that schedule.'
[8]
With the leave of this court, the
appellant appeals against the entire order.
Appeal
against Paragraph 63.1 of the order of the court a
quo
[9]
To fully analyse the judgment of the
court a
quo,
it
is necessary to consider further relevant facts subsequent to the
expiry of the Turnkey agreement on 31 May 2007. As indicated,
the
eNaTIS system and associated services were not immediately handed
back to appellant. The parties had concluded an interim arrangement
which ran on a month-to-month basis during which time respondent
continued to operate the system and to provide associated services
in
relation thereto.
[10]
With the appointment of Mr George
Mahlalela as Director-General of the Department with effect from
February 2010, respondent renewed
its request for an extension of the
expired agreement. Mr Mahlalela agreed to a further five year
extension but failed to follow
the procurement process as laid down
in s 217 of the Republic of South Africa Constitution Act 108 of 1996
read together with Treasury
Regulation 16.A6.4 and Treasury
Instruction 8 of 2007/2008. As a result, the Auditor-General queried
the extension of the contract
to respondent and declared it to be
irregular as the Department had failed to follow proper procurement
requirements.
[11]
In 2012, the Director-General initiated
negotiations with respondent relating to the termination
of the
extension and the
transfer of the eNaTIS to the Department.It was at
this point that
he advised respondent that the
Auditor General had declared the extension of the agreement to
the irregular.
[12]
It appears that at some point in this
process, respondent failed to attend the negotiations, following
which the appellant addressed
an email to respondent stating that,
since the negotiations had broken down, respondent must hand over the
eNaTIS to it. Respondent
reacted by applying to the High Court for an
order to enforce the purportedly extended contract which application
proved to be
successful. This triggered extensive litigation to which
reference has previously been made. Much of this litigation is
irrelevant
to the present case in that the Constitutional Court in
Tasima 1
granted
the order which has been referred to in this judgment, the effect of
which remains central to the present dispute.
[13]
A flurry of correspondence between the
parties then ensued. On 25 November 2016 attorneys, acting on behalf
of appellant, confirmed
that appellant had agreed to the transfer of
staff directly engaged in the system in terms of s 197 of the LRA. To
this letter,
attorneys for respondent wrote on 29 November 2016
attaching a draft Migration Scope Plan which provided that all of
respondent's
employees must be transferred to appellant and that the
transfers would occur simultaneously with those parts of the business
which
were individually transferred in a staggered fashion. On 05
December 2016 appellant's attorneys rejected the staggered hand-over
process but repeated appellant's commitment to take over respondent's
employees expeditiously.
[14]
Further correspondence was generated
between 07 December 2016 and 02 April 2017. In particular, a dispute
arose as to the meaning
of the order of the Constitutional Court in
Tasima 1.
Unsurprisingly,
this dispute also required resolution in the High Court. After
hearing argument, Tuchten J ordered that respondent
hand-over the
services relating to the eNaTIS system by no later than 22 December
2016.
[15]
Within hours of this order having been
delivered, respondent was evicted from its premises by the Sheriff of
the High Court. A further
dispute broke out with regard to the
relevant employee contracts and their details, all of which were
finally provided by respondent
on 20 April 2017 although there
remained a further allegation from appellant that the hard copies
were incomplete. A day earlier,
on 19 April 2017, respondent launched
an urgent application in terms of s197 of the LRA, which was the
application heard and decided
by the court a
quo.
[16]
In upholding the application and making
the order which it did, the court a
quo
found that the sole purpose of
respondent's business was the provision of eNaTIS services. In
the view of the
learned judge, that business
had been transferred to appellant in accordance with the order of the
Constitutional
Court; in
Tasima 1;
the appellant had taken control of
the premises previously occupied by respondent; it employed its
assets, information and property
which had previously been used by
respondent to render the same services; it liaised with the same
service providers and made the
same payments. In short, what had been
transferred, pursuant to the order of the Constitutional Court in
Tasima 1,
was
the business of respondent as a going concern.
Appellant's
case
[17]
Mr Redding, who appeared together with Mr Hopkins on behalf of
appellant, raised two essential criticisms against the
judgment and
thus in support of the appeal. In the first place, he contended that
what have been transferred was a regulatory authority
as opposed to a
business which had been transferred as a going concern within the
scope of s 197 of the LRA. Secondly, he contended
that the Turnkey
agreement was the only valid agreement which operated in the
circumstances of this case and that this agreement
expressly provided
that s 197 of the LRA was inapplicable in respect of employees
involved in the eNaTIS system.
The
regulatory argument
[18]
Mr Redding accepted that s197 (1) (a) of the LRA defined business to
include 'the whole or a part of any business,
trade,
undertaking or service.' Appellant's case however, was that, if a
system or service had been commissioned by a public authority
because
it required the system and service in order to perform a regulatory
function, the entity transferred was not a business
because it was
not an economic entity. In short, it represented a regulatory
facility as opposed to an economic entity. Because
the eNaTIS system
was thus a regulatory facility and not an economic entity, s197 of
the LRA did not apply.
[19]
In this connection Mr Redding referred
to a judgment of the European Court of Justice in
Henke
v Gemeinde Schierke ("Bracken')
[1996]
IRLR 701
(ECJ), in support of his submission that the transfer of
administrative services from a municipality to an administrative
entity
did not constitute the transfer of a business as a going
concern. The facts of Henke need to be considered before any analogy
can
be drawn between it and the present dispute. It appears that Mrs
Henke was appointed as secretary in the mayor's office of the
Municipality of Schierke on 01 May 1992. On 01 July 1994 the
Municipality of Schierke and other municipalities formed an
administrative
collective. Pursuant to provisions of the Local
Government Law for the Land of Saxony-Anhalt, the municipality
transferred certain
administrative functions to the collective. As a
result, the Municipality of Schierke terminated its contract of
employment with
Mrs Henke.
[20]
Mrs Henke argued that Article 1 (1) of
EU Directive 77/187/EEC applied to her case, because entities, such
as a municipality, carry
out, at least to some extent, activities of
an economic character. Accordingly, what had been transferred in this
case was a business
which fell within the scope of the Directive.
[21]
The court found, in the circumstances,
that the transfer carried out between the municipality and the
administrative collective
related only to activities involving the
exercise of a public authority, even if it assumed that these
activities included aspects
of an economic nature
these could only be ancillary to its principal
activities. From this Mr Redding contended
that a distinction could
be drawn between the organisation of appellant's operations and the
primary focus of earning of revenue.
In this case he contended that
the commercial or economic aspects were clearly ancillary to the main
objects of the organisation
which related to ensuring the efficient
regulation of road traffic and its management.
Evaluation
[22]
As
was emphasised by the Constitutional Court in
Rural
Maintenance (Pty) Ltd and another v Maluti-A-Phofung Local
Municipality
(2017)
38 ILJ 295 (CC) at paras 22-27, English and European jurisprudence
need to be treated with great care because of different
wording and
hence different tests which are applied to the transfer of a business
or undertaking under these legal dispensations.
Even if this Court
was prepared to embrace the European jurisprudence with less care
that the Constitutional Court has demanded,
which manifestly it
should not, the facts of Henke are different from those confronting
this Court, where, as will be shown,
there was a defined business in
the hands of respondent which was then transferred to a public
authority being appellant.
[1]
[23]
The judgment, in
Rural
Maintenance
together with the
earlier judgment of the Constitutional Court in
City
Power (Pty) Ltd v Grinpal Energy Management Services (Pty) Ltd and
others
(2015) 36 ILJ 1423 (CC) also
confirmed that our jurisprudence draws no distinction between a
business conducted by a public authority
and one performed by a
private enterprise. In dealing with the transfer of a business of a
provision of electricity from a private
enterprise to a municipality,
the court in City Power, supra at para 39 said the following:
'On
the present facts, there is no dispute that City Power took over the
full business 'as is',
with all of the complex network
infrastructure. assets. know how.
and technology required to
install and operate the prepaid electricity system with the clear
intention of maintaining uninterrupted electricity services to
Alexandra Township.
The project continued after termination of the
service level agreements and completion of the handover process. The
business is
identifiable and it is discrete. Ultimately a business of
providing a system of prepaid electricity to residents of Alexandra
continued,
save that it was now conducted by a different entity.'
(our emphasis)
[24]
No matter whether a court is dealing with a public authority
or a private organisation, the enquiry
as to the
applicability of s 197 of the LRA is critically dependent on
the facts. As Froneman J
said in the
majority judgment in
Rural Maintenance, supra
at
para 39:
'it is settled that the enquiry to determine whether the
business is transferred
as a
going concern
is a
factual
one. But the parameters of the factual enquiry are determined by the
legal cause from which
the
transfer stems from (sic)'.
[25]
In the present case it does not appear
to be contested that respondent was the entity responsible for
rendering eNaTIS services
to end users. It used its premises solely
to operate the system. When any faults were logged, it was required
to respond thereto.
It was required to develop, test and implement
any new functionalities required of the system, and to manage third
party service
providers, securing necessary services and equipment
from such parties and paying them.
[26]
All of respondent's employees were
employed for the sole purpose of providing these services. They
worked from eNaTIS premises with
assets which were those of eNaTIS,
accessing the eNaTIS system, code and infrastructure. The premises
were suitably furnished and
equipped to provide for the nece55ary
infrastructure to conduct the system. It is said that at least 80
persons were employed exclusively
to perform these necessary
functions. All assets were purchased and used solely to perform these
functions. Respondent negotiated
and entered into contracts solely to
perform these functions.
[27]
Examining these facts holistically, it
is clear that what was conducted by respondent was a business,
failing within the scope of
s197 of the LRA. The legal cause for the
transfer of this business, as defined, to appellant is to be found in
the order of the
Constitutional Court in
Tasima
1
at para 208. What was transferred,
pursuant to this order, was a business which until that point had
been conducted by respondent.
The fact that it was transferred to a
statutory authority cannot, on its own, convert that which was a
business as defined in s197
of the LRA to an enterprise that fell
outside of the scope of s197 of the LRA, simply because the system
supported a regulatory
function. In short, the facts of this case are
distinguishable from the European authorities, cited by Mr Redding in
support of
the appeal. The outcome of the mandated factual enquiry is
that a business operated by respondent was transferred to appellant
in terms of an order of the Constitutional Court which it handed down
in
Tasima
The
Turnkey contract argument
[28]
Clause 9.1 of the Turnkey contract
provided that respondent was obliged to employ 'suitably qualified
experienced and trained staff
to provide the eNaTIS system to the
State'. In terms of clause 9.2, an undertaking was given by
respondent that, after the contract
came to an end, it would allow
the State to access its skilled and qualified personnel for a period
of 36 months to enable the
State to seamlessly take over the
operation of the system once it had been delivered by respondent. No
provision was made for the
transfer of staff from respondent to
appellant.
[29]
In terms of the Turnkey contract,
respondent had been contracted to develop and implement the eNaTis
system. When the agreement
came to an end, respondent 'shall use all
reasonable efforts to affect the orderly and uninterrupted migration
of all the affected
Existing Service and Existing System (Clause 7.1
read with schedule 18 to the Turnkey Agreement).
[30]
he Turnkey Agreement terminated in 2007
and the five years extension to the agreement was invalid and had no
legal force and effect
(Tasima 1,
at
para s41 and 200). The Constitutional Court held that from 23 June
2015 any extension to the agreement no longer had any legal
effect.
[31]
On this basis Mr Redding submitted that the intention of the
Constitutional Court was that the Turnkey agreement continued
to
govern the transfer of the eNaTIS system. It was for this reason that
reference was made in paragraph 4 of the Constitutional
Court order
at para 208 of
Tasima 1
that, in the event that an alternative
transfer management plan was not agreed to by the parties within ten
days of this order 'the
handover was to be conducted in terms of the
migration plan set out in schedule 18 of the Turnkey agreement'. On
the basis of this
part of the Court's order, Mr Redding submitted
that the only contract which could possibly govern the transfer of
eNaTIS system
remained the Turnkey agreement. As the Turnkey
agreement eschewed the operation of s197 of the LRA, the appellant
was justified
in its contention that no transfer of a business had
taken place pursuant to s197 of the LRA.
Evaluation
[32]
This argument unfortunately is based on
a misreading of the order of the Constitutional Court. This order
clearly provided that
respondent was under an obligation, within 30
days of the grating of the order, to hand over the eNaTIS system to
appellant. It
provided for the possibility of an alternative transfer
management plan to be agreed between the parties within ten days of
the
granting of the order. In the event that such an agreement could
not be reached, provision was made for a default position namely
that
the mechanism for transfer would be the migration plan as set out in
Schedule 18 to the Turnkey agreement. This alternative
hardly
constituted a resurrection of the Turnkey agreement simply because
the Court provided that, absent an agreement to the contrary,
a
mechanism as had been set out in the Turnkey agreement was available
to ensure that the court order could be properly implemented.
[33]
It follows that the legal causa for the
transfer was the order of the Constitutional Court in
Tasima
1.
However, in a further judgment of
the Constitutional Court in
Department
of Transport and others v Tasima (Pty) Ltd and others
[2018]
ZACC 21
(Tasima 2) the Court was required to deal with further
applications which were launched pursuant
to
its earlier order. In
Tasima
2
the Constitutional Court made it
clear that, although the declaration of invalidity of the extension
to the Turnkey agreement which
had been made by the High Court on 23
June 2015 was only confirmed by the Constitutional Court in
Tasima
1
on 09 November 2016, this
confirmation had retrospective effect that is from 23 June 2015. See
para 59
of Tasima 2.
It
follows therefore that, as at 23 June 2015, respondent had a clear
obligation to transfer the entire business constituting the
eNaTIS
system to appellant in terms of s197 of the LRA.
[34]
To the extent that the court a
quo
declared the contracts of employment
of 5th to a4th respondents to be transferred automatically from
respondent to appellant in
accordance with s 197 of the LRA this is
correct however; it will be necessary to amend this order to the
proper date of the legal
cause of the transfer, which must be 23 June
2015. In the circumstances, the appeal under case number JA77/2017 in
relation to
paragraph 63.1 is upheld save that the date is amended
from
05 April 2017 to 23 June 2017.
Appeal
against Paragraph 63.2 of the order of the Court a
quo
[35]
In addition to seeking an order
declaring that the contracts of employment of the employees
transferred automatically to the appellant,
the respondent sought an
order in paragraph 3 of its notice of motion directing the appellant
to pay the employees their remuneration
for the period from 5 April
2017 to the date of "the final determination of the relief' on
appeal before this court. The only
averment made in support of such
relief is in paragraph 138 of the founding affidavit. The relevant
part reads:
"[The
employees] are required to be paid, and depend on being paid, on a
monthly basis. Tasima thus also prays for the Tasima
employees to be
paid by the RTMC with effect from 5 April 2017 ponding any final
determination, including appeals, in relation
to the section 197
dispute. This is obviously relief that needs to be granted as a
matter of urgency. I point out that the eNatis
system is completely
self-financing and, for years, the Tasima employees were paid with
funds which the RTMC and DoT [Department
of Transport] received from
eNatis transactions. The transaction fees more than amply cover the
costs of the running of the eNatis
system, including payment to
employees. The RTMC is still the recipient of all these transaction
fees, but is now refusing to apply
these fees to payment of the
salaries of the Tasima employees."
[36]
The appellant in its answering affidavit
did not deal with the prayer for interim relief, or respond
directly to the supporting
averment in paragraph 138 of the founding
affidavit.
[37]
The court a
quo
did not discuss prayer 3 of the
notice of motion or paragraph 138 of the founding affidavit in its
judgment. Nonetheless, after
making the order in paragraph 63.1 of
his judgment ("paragraph 63.1") declaring that the
contracts of employment of the
employees transferred
automatically to the appellant in terms of s197 of the LRA, the
judge granted the relief sought
in prayer 3 of the notice of motion
by making the order in paragraph 63.2 of his judgment ("paragraph
63.2") which reads:
"63.2
The RTMC [The appellant] is directed to pay the 5th to 84'h
respondents from 5 April 2017 to the date of the final determination
of the order in subparagraph 1 above:
63.2.1
on a monthly basis on or before that the
contracts of employment of the employees transferred automatically to
RTMC the 25th of
each month, the amounts set forth under the column
headed "Monthly CTC excl 13th cheque, annual bonus, overtime,
standby allowance,
birthday voucher and night shift allowance"
as set out in Annexure "C" to Annexure "FM 11.6"
to the founding
affidavit of Fannie Lynen Mahlangu; and
63.2.2
on an annual basis, any additional
amounts making up the column headed "Annual Total CTC" as
set forth in the that schedule"
[38]
The following day, 26 May 2017, the
appellant delivered a notice of application for
leave to appeal against the
entire judgment and order.
In relation to paragraph 63.2 it contended that the order
in paragraph
63.1 declaring that the contracts of employment had
transferred automatically is final in effect and
that the
ancillary order in paragraph 63.2 is
inconsistent with the order in paragraph 63.1 which is
final.
It accordingly contended that the order in paragraph 63.2 is
"either meaningless or
[39]
On
5 June 2017, the court a qou granted the appellant leave to appeal
against its order in paragraph 63.1 that s197 of the LRA was
applicable and that the contracts of employment had transferred
automatically, but refused leave to appeal against paragraph 63.2.
in
its judgment on the application for leave to appeal ,the court noted
that Tasima had not brought an application in terms of
section 18(3)
of the Superior Courts Act
[2]
(the SC ACT) but suggested that such was not necessary because the
order in paragraph 63.2 “is interim in nature” and
in
terms of section 18(2) of the SC Act the operation and execution of a
decision that is an interlocutory order not having the
effect of a
final judgment, which is the subject of an application for leave to
appeal, is not suspended pending the decision of
the application or
appeal.
[40]
In terms of its headnote, section 18 of
the SC Act governs the suspension of decisions pending appeal. The
relevant part of it reads:
"(1)
Subject to subsections (2) and (3), and unless the court under
exceptional circumstances orders otherwise, the operation
and
execution of a decision which is the subject of an application for
leave to appeal or of an appeal, is suspended pending the
decision of
the application or appeal.
(2)
Subject
to subsection (3), unless the court under exceptional circumstances
orders otherwise, the operation and execution of a decision
that is
an interlocutory order not having the effect of a final judgment,
which is the subject of an application for leave to appeal
or of an
appeal, is not suspended pending the decision of the application or
appeal.
(3)
A court may only order otherwise as
contemplated in subsection (1) or (2), if the party who applied to
the court to order otherwise,
in addition proves on a balance of
probabilities that he or she will suffer irreparable harm if the
court does not so order and
that the other party will not suffer
irreparable harm if the court so orders."
[41]
On 15 June 2017, the appellant petitioned this court for leave to
appeal against the order in paragraph 63.2, which petition
was
allowed and leave to appeal was granted on 16 August 2017. The appeal
has been noted under case number JA 78/2017.
[42]
The appellant correctly maintains that the order in paragraph 63.2 is
an interim execution order aimed at reversing the suspension
of the
final relief granted in paragraph 63.1. It quite explicitly puts into
operation the final relief granted in paragraph 63.1
for the duration
of the period in which an appeal may be pending. There can be no
doubt that the order in paragraph 63.1 is final
in that it disposes
of the issue in the main application in a final and definitive
manner. The order in effect substitutes
the appellant as the new
employer in the place of the respondent in respect of all the
contracts of employment in existence immediately
before the date of
transfer and delegates the obligations under the contracts to the
appellant. The purpose of the ancillary order
in paragraph 63.2 is to
permit the operation and execution of the final order in paragraph
63.1 pending the determination of the
appeal against it (being the
appeal filed under case number JA77/2108).
[43]
Prior
to the enactment of section 18(3) of the SC Act there was no
statutory provision regulating interim execution orders. In terms
of
the common law, the noting of an appeal automatically
suspends execution of the judgment appealed
against.
Where the successful party wishes to execute upon the judgment, it is
required to make an application for leave to do
so and bears the onus
to show why the judgment should be executed pending the appeal,
subject, in appropriate cases to the furnishing
of security
de
restituendo.
[3]
The court had a wide discretion to grant or refuse leave to execute
and was required to determine what was just and equitable in
all the
circumstances having regard to the potentiality of irreparable harm
or prejudice to the parties, the balance of convenience
and the
prospects of success on appeal.
[4]
At common law, an interim execution order is itself an interlocutory
order and was generally not appealable on the grounds that
such an
order may be varied by the court granting it in the light of changed
circumstances.
[5]
[44]
Section 18 of the SC Act has
significantly altered the common law in more than one respect. The
court no longer has a wide discretion
to do what is just and
equitable or to rely exclusively on the balance of convenience or the
appeal's prospects of success. Now,
before a court may order interim
execution, the applicant for that relief must prove three things on a
balance of probabilities.
Firstly, the applicant must show that
exceptional circumstances exist (perhaps including the balance of
convenience and prospects
of success) justifying the reversal of the
ordinary principle of suspension pending appeal. Secondly, it must
prove on the probabilities
that it will suffer irreparable harm if
interim execution is not ordered. Thirdly, it must prove that the
other party will not
suffer irreparable harm if an order of interim
execution is granted. Should the applicant fail to discharge its onus
in relation
to any one of these requirements, the court may not grant
an interim execution order. Additionally, in terms of section 18(4)
of
the SC Act, where an interim execution order is granted, the
aggrieved party has an automatic right of appeal against that order
to the next highest court and the order will be automatically
suspended, pending the outcome of such appeal.
[45]
In our view, the court
a
quo
clearly erred in granting the
order in paragraph 63.2 for two reasons. Firstly, the order was
granted in a manner impermissibly
circumventing the jurisdictional
requirements of section 18 of the SA Act. The order reversed the
principle of suspension on appeal
before an appeal was in fact noted
and pre-empted the appellant's right to address the issues of
suspension and interim execution
in an appropriate application.
[46]
The purpose of the statutory scheme
enacted by section 18 of the SC Act is to provide generally for the
suspension of final orders
pending appeal, but to allow exceptionally
for interim execution on the fulfilment of the strict criteria laid
down by the section.
The terms of section 18 of the SC Act intimate
that the principle of suspension pending appeal may only be reversed
where a specific
application addressing the evidentiary questions of
exceptional circumstances and the potentiality of irreparable harm is
brought
as part of the appeal process. It will be prejudicial to make
such an order simultaneously with the final order, prior to an
application
for leave to appeal being made, because it would require
the party opposing interim execution to address a hypothetical in the
main application and will deny it the opportunity to adduce evidence
regarding the circumstances and potential harm prevailing at
the time
of the application for leave to appeal. In any event, it is clear
from the wording and context of section 18 of the SC
Act (as well as
established practice) that such applications are to be heard as part
of the appeal process.
[47]
The court a
quo
thus lacked the jurisdiction to make
the interim execution order and erred in making it. The appeal under
case JA 78/2017 accordingly
must succeed and the order in paragraph
63.2 must be set aside.
[48]
But even were it permissible to regard
prayer 3 of the notice of motion as an application for interim
execution in terms of section
18(3) of the SC Act, and to determine
such before the aggrieved party has noted an appeal against the final
relief, the court
a quo
erred
in granting the interim relief because the respondent failed to
discharge its
onus
to
prove the requirements of section 18 of the SC Act.
The
averment in paragraph 138 of the founding affidavit, being the only
evidence adduced in support of the interim execution order,
is wholly
insufficient to establish that there were exceptional circumstances
justifying the reversal of the suspension of the
final relief on
noting an appeal. The averments in paragraph 138 say only that the
employees need their salaries and that the transaction
fees would
cover that expense. There is no compelling or substantiated
explanation for why the respondent could not continue to
pay salaries
until the determination of the appeal, nor any assessment of the
potentiality of harm to either party..
[49]
Turning
to the court a
quo's
categorisation
of an interim execution order as an interlocutory order:
[6]
What it overlooked is that, in terms of section 18(4) of the
)
SC Act, orders made under section 18 (1) of the SC Act
(unlike other interlocutory orders
[7]
are automatically appealable and suspended pending the outcome
of any appeal against such an order. Thus, if we were to accept
that
paragraph 63.2 was an interim execution order in terms of section
18(1) of the SC Act, albeit premature, then the noting of
an appeal
by the appellant on 26 May 2017 suspended its operation and execution
pending the outcome of the appeal by this court.
Such a finding would
have implications for the further litigation brought by the
respondent in its attempt to enforce paragraph
63.2, to which we now
turn.
Enforcement
of Paragraph 63.2 of the order of the Court a
quo
[50]
Four
days after the appellant petitioned this court to grant leave to
appeal against the order in paragraph 63.2, on 19 June 2017,
the
respondent brought an urgent application for an order that the
appellant reimburse it the salaries it had paid to the employees
for
the month of April 2017 in the amount of R3 208 307 which it claimed
was owing in terms of paragraph 63.2 on the understanding
that it had
not been suspended (and incidentally seeking an order of
contempt).
[8]
the appellant
responded to this application with a counter-application seeking an
order that the operation and execution of paragraph
63.2 be suspended
until the determination of its petition and the subsequent appeal if
any. The court a
quo
then
(Rabkin-Naicker J) handed down judgment on 13 July 2017. It ordered
the appellant to make payment of the salaries for April
2017 to the
respondent within five days. Despite not discussing the
counter-application in its judgment, or making any order in
relation
to it, the court ordered the appellant to pay the costs of the
counter-application and made no order as to the alleged
contempt or
costs in the application. The appellant has appealed against this
decision under case number JA 134/2017.
[51]
The
order directing the appellant to pay the
respondent the amount of R3 208 307
is
an appealable order if only because it is an order seeking to enforce
an erroneously granted interim execution order. But the
appeal should
succeed on a more fundamental ground. The application was incompetent
in that orders
ad
pecuniam solvendam
must
be enforced by writ of execution. Applications to obtain a court
order to enforce an earlier court order sounding in money
are not
competent in our law. Contempt proceedings are appropriate only in
respect of orders
ad
factum praestandum.
[9]
Accordingly,
even if the order of the court a
quo
were
considered to be an interlocutory order, as the respondent submits,
it would be appealable in the interests of justice. The
constitutional prescripts of legality and the rule of law demand that
nobody, not even a court of law, exercises powers
they do not have, and thus
improperly obtained interlocutory orders
are
appealable.
[10]
In the
premises, the appeal under case number JA 134/2017 must
be upheld.
Leave
to adduce additional and new evidence
[52]
On 9 March 2018, the appellant
petitioned for leave to adduce additional and new evidence concerning
the order to pay bonuses. The
appellant seeks an order setting aside
paragraph 63.2.2 and replacing it with an order requiring payment on
an annual basis of
the specified additional amounts, but excluding
the annual bonus as set forth in the schedule. The basis of the
application is
that the evidence will establish that the bonuses were
ex gratia
payments
which were discretionary and that the employees were not entitled to
such payments at all or on an interim basis pending
this appeal.
Considering our finding that the order in paragraph 63.2 was
erroneous in its entirety the application has become
moot and of no
practical effect. The application under case number JA 28/2018 should
therefore be dismissed.
Costs
[53]
Finally, with regard to the issue of
costs, notwithstanding the fact that this Court has dismissed the
appeal in respect of s197
transfer, the arguments presented by the
appellant were novel and deserving of consideration. In the
circumstances, it is only
appropriate that no order as to costs be
made in case number JA77/2017.
[54]
With regard to case numbers JA78/2017,
the respondent's insistence that monies be paid by the appellant in
respect of wages and
salaries knowing that the basis of that order
was subject to appeal with the Court which granted the order itself
expressing the
view that another court may well find differently and
the fact that if payment is made by the appellant which was in excess
of
R3million a month and the appeal is successful there was no
guarantee that the appellant would recover the monies paid, there is
no basis why costs here should not follow the result.
[55]
With regard to enforcement there was
simply no bases to launch the application under case number 134/17 as
the respondent could
and should have simply issued a writ of
execution. In the circumstances costs in this matter must follow the
result.
[56]
In case number JA28/2018, the appellant
sought leave to lead further evidence, this issue did not require a
decision to be made
by this Court because the issue is moot, but
again this was a matter which but for the upholding of the appeal in
JA78/2017 might
have been of same merit. The fact that the respondent
seeks to oppose the application on spurious grounds and decided to
file its
answer in thematic style rather than answering the
allegations
in seriatim
as
is required does not justify an order of costs in its favour, we
believe that they should be no order as to costs in this matter.
[57]
In the result, the following order is
made:
1
Case number: JA77/2017
The
appeal in respect to paragraph 63.1 of the order of the Labour Court
is dismissed with no order as to costs, save that the effective
date
of the transfer of the employee's contracts is amended from 05 April
2017 to 23 June 2015.
2
Case number: JA78/2017
The
appeal in respect of paragraph 63.2 of the order of the Labour Court
is upheld with costs.
3
Case number: JA134/2017
The
appeal is upheld with costs.
4
Case number: JA28/2018
Application
to lead further evidence is dismissed with no order as to costs.
Waglay
JP
Davis
JA
Murphy
AJA
APPEARANCES:
FOR
THE APPELLANT:
Case
no: JA77/17
A Redding SC and Adv K Hopkins
Case
no: JA78/17:
AJ Daniels SC and Adv P Verveen
Case
no: JA28/18
DC Mpofu SC and Adv KA Magan
Instructed
by Selepe Attorneys
FOR
THE RESPONDENTS:
Cases
no: JA77/17, JA78/17, JA134/17 and JA 28/18
AE
Franklin SC, JPV McNally SC and Adv WT Rowan
Instructed
by Webber Wentzel Attorneys
[1]
This
cautionary approach to comparative law surely applies even more when
dealing with an English VAT case of Institute of Chartered
Accountants in England and
Wales
v Customs and facise Commissioners
[1997]
STC 1155 (CA) which Mr Redding sought to apply to s 197 of the LRA
[2]
Act
10 of 2013
[3]
South
Cape Corporation (Pty) Ltd v Engineering Management Services (Ply)
Ltd
1977
(3) SA 534 (A)
[4]
The
common law was reflected in Uniform Rule 49(11)
[5]
Minister
of Health v Treatment Action Campaign (No 1)
[2002] ZACC 16
;
2002
(5) SA 703
(CC); and
N
v Government of Republic of South Africa (No 3)
2006
(6) SA 575 (N)
[6]
See
Minister
of Health v Treatment Action Campaign (No 1)
[2002] ZACC 16
;
2002
(5) SA 703
(CC); and
N
v Government of Republic of South Africa (No 3)
2006
(6) SA 575 (N)
[7]
Section
18(2) of the SC Act provides that interlocutory orders are not
suspended pending the appeal process unless the court under
exceptional circumstances orders otherwise in terms of an
application under section 18(3) of the SC Act.
[8]
RTMC has complied with paragraph 63.2 since June 2017 subsequent to
a further order by Saloojee AJ handed down on 2 June 2017
directing
it to do so.
[9]
Minister
of Water Affairs and Forestry v Stilfontein Gold Mining Co Ltd
&
others
2006
(5) SA 333
(W) at 344-345.
[10]
Tshwane
City v Afr/forum and Another2016
(6)
SA 279 (CC)
para
41