About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2008
>>
[2008] ZALCJHB 76
|
|
South African Municipal Workers Union v North West Housing Corporation and Another (J420/08) [2008] ZALCJHB 76 (29 April 2008)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT JOHANNESBURG
CASE
NO: J 420/08
In
the matter between:
SOUTH
AFRICAN MUNICIPAL
Applicant
WORKERS
UNION
And
NORTH
WEST HOUSING
CORPORATION
1
st
Respondent
MEC
FOR LOCAL GOVERNMENT,
HOUSING,
PLANNING AND
DEVELOPMENT
(NORTH
WEST
PROVINCE)
2
nd
Respondent
JUDGMENT
MOLAHLEHI
J
Introduction
[1]
On the 31
st
March 2008, this Court issued an interim order interdicting the first
and second respondents from terminating the employment of
the
applicant’s members for operational reasons. The factual
dispute that had arisen from the papers before the court
was referred
to oral evidence. The nature of the dispute to be determined was as
follows:
“
Whether
the first respondent intends to transfer its powers, functions,
assets and liabilities to the Department of Development
and Local
Government and Housing”.
[2]
The applicant had also prayed for a
declarator on the following terms:
“
Declaring
that the winding up of the first respondent and the transfer of its
powers, functions assets and liabilities to the North
west Province
Department of Development Local Government and Housing or any other
statutory body constitutes a transfer of a business,
or part thereof,
as a going concern as contemplated in section 197 read with section
197A of the LRA.”
[3]
The return date for the interim order was
the 15
th
April 2008. On that day although the former acting Chief Executive
Officer (CEO) of NWHC, who was subpoenaed by the applicant,
was in
Court he was not called as a witness by any of the parties.
[4]
Mr Van Der Riet SC, counsel for the
applicant, indicated that it had been decided not to call the former
acting CEO because he was
uncooperative. He accordingly closed
the case of the applicant without leading any oral evidence on the
disputed fact. The
respondents also closed their case without calling
any witness.
Background facts
[5]
The first respondent, North West Housing
Corporation (NWHC) is a statutory body established by the North West
Housing Corporation
Act of 1982. Its portfolio consists of
instalment sale and rental housing. Presently it employs about 105
employees of whom
92 are members of the applicant. It is
governed by a board of directors which reports to the second
respondent, the Member
of the Executive Committee (MEC) for Local
Government Housing Planning and Development.
[6]
At some point in the late 90’s the
Provincial
Legislature began in a substantial way reducing the funding of the
NWHC, and advised during that period that NWHC should
develop
strategies to ensure that it is self-sustainable. Following this
announcement, the Provincial Legislature expressed a desire
to
disestablish the NWHC and this was to be done through the North West
Repeal Bill of 2001. To date this has not been carried
forward.
[7]
Subsequent to an audit and investigation
into the financial affairs of NHWC, the MEC issued a policy statement
in the Provincial
Legislature in terms of which he indicated that
NHWC would be wound up because of its precarious financial position.
[8]
The financial situation of the NWHC became
worst resulting in it not being able to pay its employees on time.
During May 2007
the department of housing planning and development
(the department) began channelling money to the NHWC to ensure
payment of future
wages.
[9]
During June 2007 the NHWC established a
task team consisting of employee representatives, union delegates,
including the applicant
and senior management, for the purpose of
finding a solution to the challenge facing the NHWC.
[10]
After its formation, the task team
requested and NHWC agreed to the appointment of an independent
facilitator to facilitate the
process of engagement between the
parties with the view to finding an amicable solution to the
challenge facing the NHWC.
[11]
The task team under the facilitation of the
independent attorney appointed by consensus focused on the possible
retrenchments. In
this regard by the end of 2007, NWHC had secure
alternative jobs of 18 (eighteen) employees with the North West
Provincial Government
but 8 (eight) of these employees declined the
offer.
[12]
A meeting was convened between the parties
during January 2007, the main agenda item being, and severance
packages for the employees
who were to be retrenched. The parties
were unable to reach an agreement on this issue. This was then
followed by a letter
dated 18 February 2008 where in the applicant
requested certain information including copies of the resolution
regarding the winding
up of NHWC. This included information
concerning which company or institution would perform the statutory
duties of the NHWC
after the 31 March 2008.
[13]
The issue of the requested information
regarding the transfer of the powers, functions, assets and
liabilities of the NHWC was raised
again by the attorneys of the
applicant on the 21 February 2008 after the NHWC failed to respond to
the letter of the applicant
dated the 18 February 2008.
[14]
In as far as this matter is concerned the
key paragraph of this letter is paragraph 4.4 which reads as follows:
“
4.4
Is it intended that the powers, functions, assets and liabilities
will be transferred to the Provincial Government, local authority
or
a housing infrastructure and delivery company that has been or will
established? If so, kindly provide us with the full details
of such
transfer”.
[15]
The NWHC, responded to the applicant’s
letter on the 26 February 2008 where in amongst others the then
acting CEO said:
“
4
It is intended that the powers, functions, assets and liabilities
will only be transferred to the department of developmental
local government and housing at the time the corporation is
wound up”.
[16]
The letter also indicated that the Act that
established the NWHC would be repealed.
[17]
The applicant’s attorneys sent
another letter to the respondent dated 27 February 2008, wherein it
demanded that:
“
5
Accordingly, we are instructed to demand an unconditional written
undertaking by 12:00 on 3
rd
March 2008 that non of the corporation’s employees will be
retrenched but transferred to the department.
6
If we do not receive the undertaking reflected in paragraph 5 above,
we are instructed to apply to the Labour Court for an urgent
interdict to seek an order, amongst other things, interdicting the
corporation from dismissing its employees”.
The interim relief
[18]
The test to be applied in an urgent
interdict is to establish on the papers before the court a
prima
facie
right, which may though be in
doubt,
see CB Prest, Law and Practice of
Interdicts, Juta
1996 Page 57.
[19]
The requirements for an urgent interdict
are: a well grounded apprehension of irreparable harm to the
applicant if the interim relief
is not granted and he or she
ultimately succeeds in establishing the right; and the balance of
convenience favours the granting
of interim relief and the applicant
has no alternative remedy. For details consideration of this
requirement see
LF Boshoff Investment
(Pty) Ltd v Cape Town Municipality
1969 (2) SA 256
(LPD) at page 267
A-F.
[20]
In the present case whilst I was mindful of
the dispute of fact which had arisen as a result of the averment in
the respondents’
papers and conceded to by the applicant, I was
satisfied that the applicant had established a
prima
facie
case warranting the granting of
an interim relief. I did have some doubts in my mind about the
rights that were sought to
be protected by the applicant but what
tilted the case in favour of the applicant for an interim relief was
the contents of the
letter from the then acting CEO. In this letter
as indicated above he stated that the assets and function of NHWC
would be transferred
to the department.
[21]
Although the phrase “
as
a going concern
” was not used in
the letter this is not conclusive that business would not be
transferred as such. Based on the objective
facts, and
circumstances of the case, this Court was satisfied that
prima
facie
there existed a reasonable
apprehension on the part of the applicant that the respondent
intended to retrench its members by the
end of 31
st
March 2006 and thereafter transfer the assets and functions of NWHC
as a going concern to the department.
[22]
Whilst mindful of the dispute of fact that
had arisen I was of the view that the balance of convenience favoured
the granting of
the interim relief taking into account the fact that
the disputed fact would be resolved through the referral to oral
evidence.
In taking this approach, the Court was influenced
more particularly by the contents of the letter written by the then
acting
CEO who at the time was the most senior employee of the NWHC
who was also an
ex officio
member
of the board. Failure to respond to the letter of demand tilted the
scales even further at the level of the
prema
facie
case.
[23]
In summary the interim relief was granted
for two basic reasons. The first being that a
prima
facie
right which admittedly had some
doubts was established, largely because of what was said by the then
acting CEO and failure to respond
to the letter of demand by the
respondents. There was secondly a manifestly serious question
to be tried and could only be
resolved through oral evidence.
Final interdict
[24]
In the case of a final interdict the
onus of showing on a balance of probabilities the existence of a
clear right which is sought
to be protected rests on the applicant.
The other prerequisite for the granting of a final interdict is for
the applicant
to prove that there is no other satisfactory remedy
available. See
Numsa & Others v
Comark Holdings (Pty) Ltd (997) 18 ILJ 516 (LC).
[25]
As indicated earlier on the return day the
issue of the disputed fact remained, both parties having closed their
cases on this issue
without calling any witnesses. In this
regard this Court found itself in no different position then it was
when it considered
the urgent application. Thus in absence of oral
evidence the rights which the applicant sought to protect remained in
doubt as
they were at the end of the urgent application.
[26]
The applicant argued that in the absence of
evidence rebutting its averments, set out in its papers, the court
must accept its version
and grant the final relief prayed for.
It argued further that the issue arising from the letter of the then
acting CEO was
not whether he had authority to write the letter but
whether he had the requisite knowledge about the information which he
provided
regarding the transfer of functions and assets of NHWC to
the department.
[27]
Before dealing with the issue of the
dispute of facts and failure to address it through the oral evidence,
I need to point out that
I agree with Mr van der Reit SC that the
fact that a business is insolvent does not mean that it cannot
be transferred as
a going concern.
[28]
In relation to the issue of leading
witnesses to deal with the disputed fact, Mr van Riet argued that a
negative inference should
be drawn from the fact that the respondent
failed to call witnesses, either the then acting CEO or the acting
Deputy Director General
(DDG), now the acting Director General (DG),
to rebut the averment in the applicant’s papers that the
respondent intended
to embark on a transfer of business as a going
concern in terms of s197 of the LRA.
[29]
The respondents in their answering
affidavit contended that it was always envisaged that after the
process of placement of employees
and the retrenchment of those that
they could not place the second respondent depending on the legal
advice, would either wound
up or disestablish the NWHC by liquidation
or by legislative disestablishment. The applicant’s
application came before
this stage was reached.
[30]
The respondent further contended that it is
not the intention of the second respondent to take over the affairs
of NWHC after the
disestablishment or liquidation. The second
respondent being the main shareholder is according to the respondents
responsible
for liquidating or disestablishing the NWHC and ensuring
that creditors are paid whatever is due to them.
[31]
In as far as the contents of the letter
written by the then acting CEO during February 2008 the respondents
contended that the interpretation
of the letter that the
transfer will take place as a going concern was incorrect as this was
never the intention of the second
respondent.
[32]
Mr Vally, counsel for the respondents
argued that the assessment whether or not there exists an intention
to transfer a business
as a going concern must be done within the
context and the circumstances where parties had engaged in extensive
consultation which
had reached a stage where a draft agreement had
already been prepared and sent to the applicant for consideration.
[33]
In support of his argument regarding
failure to present oral evidence by the respondents, Mr Van der
Riet relied on
the decision in
Galante
v Dickenson
1950 (2) SA 460
(A) 465
where in dealing with failure of a driver of a vehicle to testify
in an action resulting from an accident in which he was
involve in,
Schreiner JA said:
“
In
the case of the party himself who is available, as was the defendant
here, it seems to me that the inference is, at least, obvious
and
strong that the party and its legal advices are satisfied that,
although he was obviously able to give very material evidence
as to
the case of the accident, he could not benefit and might well,
because of the facts known to himself, damage his case
by
giving evidence and subjecting himself to cross examination.”
[34]
The approach which was adopted in
Galante’s case does not constitute a rule which should be
followed in every given situation
where a party fails to give
evidence on the issues that are within his or her knowledge. In
relation to the facts of this
case Mr van der Riet relied on that
part of the dicta in Galente’s case which says:
“
That
it seems fair at all event to say that in an accident case where the
defendant was himself the driver of the vehicle the driving
of which
the plaintiff alleges was negligence and cause the accident, the
court is entitled, in the absence of evidence from the
defendant to
select out of the two alternate explanation of the cause of the
accident which are more or less equally upon on the
evidence, that
one which favours the plaintiff as opposed to the defendant”.
[35]
I understand the argument of the applicant
to be that an adverse inference should be drawn because the
respondent has failed to
call either the former acting CEO or the
acting DG both of whom were available to testify about the fact in
dispute on the day
this matter came before this court. In
essence the argument was that the respondents should have presented
oral evidence
to rebut the version of the applicant that they
intended transferring the assets and functions of NWHC as a going
concern.
[36]
I do not with due respect agree with this
approach. The facts and circumstances of the present case
are distinguishable
from those in Galante’s case
and as Zeffert
et all
in the South African Law of Evidence (5
th
edition Juta) page 129, cautioned that the fundamental consideration
as set out in
Titus v Shield Insurance
company Ltd 1980(3) 119 (a) 133 E-F
was
that
:
“
It
is clearly not an invariable rule that an adverse inference be drawn;
in the final result the decision must depend in large measure
upon:
the particular circumstances of the litigation in which the question
arises. And one of the circumstances that must
be taken into
account and given to weight, is the strength of weaknesses of the
case which faces the party who refrain from calling
the witness”.
[37]
The key difference between Galente and the
present case is that in that case the matter came before the court as
a trial case and
the defendant failed to call the driver to refute
the evidence of the plaintiff. In the present case on the other
hand the
matter came before this court on motion proceedings.
Thus, the evidence of the parties was by way of affidavits and other
supporting documentation.
[38]
The aspect of these motion proceedings
which would have taken the form of trial proceedings failed when the
parties closed their
cases without calling any witnesses. As
indicated earlier the issue which was referred to oral evidence arose
when the respondent
in the answering affidavit categorically denied
the intention to transfer the assets and functions of NWHC as a going
concern.
[39]
The allegations that the respondents
intended to engage in a transfer of business as a going concern in
terms of s197 of the LRA
was made by the applicant and therefore the
burden of proof rested with it.
[40]
The fundamental question that has arisen
in this matter is whether the applicant at the point of closing
its case (regarding
the oral evidence) had discharged its onus or it
had made a prima facie case which called upon the respondent to
reply.
[41]
The Galente’s principle as explained
in Zeffert (at page 129) includes the notion that:
“
The
failure of the respondent to reply or lead evidence in rebuttal of a
fact peculiar within his knowledge is taken in account
when one
decides whether the prima facie case has been made out”.
See
Hasselbacher
Papier Import & Export
“
Body Corporate”
& Another v Staff Stavroul
1987 (1) SA 75
9(C) at 79 F.
In the present case the issue must be understood within the context
in which the applicant stated in his heads of argument
that:
“
9
It is respectfully submitted that there is (sic) clear dispute of
fact between the parties
relating to whether the first respondent intends to transfer its
business within the contemplation of section
197 (read with section
197A) of the LRA. In the circumstances, this issue should be
referred to oral evidence so that the
matter can be resolved after
the relevant witnesses have been cross examined”.
[42]
In my view at the time the applicant closed
its case it had not discharged the onus which rested on
it in the sense
of showing the existence of the intention on the part
of the respondents to engage in a transfer of business as a going
concern.
Therefore there was no case for the respondent to
answer or explain its failure to lead evidence on this issue.
[43]
In the light of the above what remains
before this court for consideration is what the parties have pleaded
on their respective
papers. Thus as the saying goes, the
parties must stand or fall on their own papers. The dispute of
fact which had
arisen as a result of the answering papers of the
respondents and conceded to by the applicant, still remains.
[44]
The approach to be adopted when confronted
by a dispute of facts in motion proceedings was set out in
Plascon-
Evans Paints v Van Riebeck Pains
[1984] ZASCA 51
;
1984 (3) SA 623
at page 634 H-I
by
Corbett JA as follows:
“
It
is corrected that, where in proceedings on notice of motion disputes
of fact have arisen on the affidavit, a final order, whether
it
be an interdict or some other form of relief, may be granted if those
facts averred in the applicant’s affidavit
which have been
admitted by the respondent, together with the facts allege by the
respondent justify such an order. The power of
the Court to give such
final relief on papers before it is, not confined to such a
situation. In certain instances the denial by
respondent of a fact
alleged by the applicant may not be such as to raise a real, genuine
or bona fide dispute of fact.”
[45]
In the light of the above I am satisfied
that a genuine dispute of fact exists. It is for this reason
alone that the application
of the applicant stands to be dismissed.
[46]
I accept that should the respondents fail
to comply with the provision of s197 of the LRA the applicant’s
members may suffer
financial harm. The Court in
University
of the Western Cape Academic Staff Union & Others v University of
the Western Cape (1999) 20 ILJ 1300 (LC)
at 1304,
the
case which Mr Van der Riet relied on in seeking to pursued this Court
that special circumstances exist in this case for
an interdict,
Mlambo J as he then was, held that:
“
With
regard to the notion of irreparable harm it needs to mentioned that
loss of income as a result of dismissal is inevitable consequence
and
as such provides no good ground for granting of urgent interim
relief. Special circumstances must be advanced to persuade a
court to
oblige. Loss of accommodation has been found to be a special feature
accepted by the courts in order to grant urgent interim
relief. …In
considering the issue of irreparable harm the court will also
consider the adequacy or not of any alternative
remedy that may be
available.
[47]
In the first instance I am not persuaded
that special circumstances exist in this case requiring the granting
of the interdict and
secondly the applicant’s members would
have alternative remedies should the respondents act in breach of the
provisions of
s197 of the LRA.
The declarator
[48]
The applicant prayed for a declarator that
upon the transfer of a business by NWHC to the department or any
other statutory body
the applicant’s members’ contracts
of employment be regarded as automatically transferred to the
department or any
other statutory body.
[49]
In my view what the applicant seeks to
achieve with this prayer is already provided for by the law. The
determination whether a
transfer has taken place in terms of s197
read with s187 (1) (g) of the LRA, entails both a legal and factual
enquiry.
In order to ascertain whether a dismissal
constitutes an automatically unfair dismissal in terms of s187 of the
LRA, one must ascertain
the true reason for such a dismissal. See
Kroukam v SA Airlink (Pty) Ltd
[2005] 12 ILJ 2153 (LAC) at 2162F; .
NUMSA
& Others v Driveline Technologies (Pty) Ltd & Another
2000 ILJ 142 (LAC) at 152J;
SA
Chemical Workers Union (SACWU) & Others v Afrox Ltd
1999 ILJ 1718 (LAC) at 17260;
Van
der Velde v Business Design Software (Pty) Ltd & Another
(2) 2006 ILJ 1738 (LC) at 1745 I;
Jabari
v Telkom SA (Pty) Ltd
2006 ILJ
1854 (LC) at 927A-B.
[50]
The approach that has been adopted in
dealing with automatically unfair dismissal is one in which an
objective inquiry is conducted
into the reasons for the dismissal.
This inquiry as stated above entails both a factual and legal
causation
.
See
Kroukam(supra) and
SA
Chemical Workers Union & others v Afrox Ltd
(1999)
20 ILJ 1718 (LAC) (at para 32),
[51]
The starting point in this inquiry
according Davis AJA,
Kroukam(supra)
is to determine whether the
employee has produced sufficient evidence to raise a credible
possibility that an automatically unfair
dismissal has taken place.
Having discharged the evidentiary burden of showing that the
dismissal was for an impermissible reason,
it is upon the employer to
discharge its onus of proving as provided for in terms of s192 of the
LRA that the dismissal was for
a permissible reason as provided for
in terms of s188 of the LRA.
[52]
The employee discharges his/her evidentiary
burden by: (a) advancing evidence pertaining to the existence of the
dismissal in terms
of s192 (1) of the LRA; (b) showing that the
transfer of the whole or part of the business was a going concern in
terms of s197
and; (c) presenting evidence that points to a causal
connection between the dismissal and the transfer.
[53]
All relevant facts and circumstances must
be taken into account in conducting the objective test of determining
the causal connection
between the dismissal and the transfer as a
going concern, and the enquiry into the factual causation entails
answering the question;
would the dismissal have taken place but for
the transfer as a going concern-the “
but
for”
test. In the absence of
cancellation by the employer, this enquiry can only be conducted
through hearing of oral evidence.
[54]
The legal causation is applied once the
factual causation is satisfied. The legal causation is established
through an objective
test of determining whether the transfer is the
“
main,” “dominant,”
“prominent,” “proximate likely cause” of the
dismissal.
[55]
In my view granting a declarator in the
circumstances of this case would not only amount to anticipating and
probably prejudging
the above enquiry but also would deny the
respondents an opportunity to ventilate their case once the transfer
has taken place
if it ever does. It would seem to me also that the
applicant would be given an unfair advantage in that its evidentiary
burden
would be discharged through the declarator.
[56]
It is evidently clear from the papers that
NWHC is bound to be liquidated or disestablished through legislation
in the near future.
What remains uncertain is how the
respondents will deal with the function, assets and liabilities of
NWHC. It can only but be expected
that when such an event occurs, the
respondents as government and as a statutory body will lead by
example by ensuring compliance
with the law. Should there be
failure to comply with the law as stated earlier the applicant would
have alternative remedies
to challenge such unlawful conduct.
[57]
In the light of the above reasons I am of
the view that the applicant’s application stands to be
dismissed. I do not
however believe that it will be fair to
allow the costs to follow the results. In this regard I am of
the view that this
matter would not have gone so far but for the
failure of the respondents to respond promptly to the applicant’s
letter of
demand.
[58]
In the premises the following order is
made:
1. The interim order
issued on the 31
st
March 2008 is discharged.
2. The application for a
declarator is dismissed.
3.
There is no order as to costs.
______________
Molahlehi
J
Date
of Hearing: 15 April 2008
Date
of Judgment: 29 April 2008
APPEARANCES
For
the Applicant: Advocate J G Van der Riet SC
Instructedby:
CHEADLE THOMPSON & HAYSON
For
the Respondent: Advocate B Vally
Instructed
by: THE STATE ATTORNEY