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[2011] ZALCJHB 171
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Cachalia and Others v Vinning (J 2291/10) [2011] ZALCJHB 171; (2012) 33 ILJ 611 LC) (21 October 2011)
REDDY AJ
1
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT BRAAMFONTEIN
Reportable
CASE NO. J 2291/10
In
the matter between:
FIROZ
CACHALIA
....................................................................................
First
Applicant
BLUE
CATALYST INVESTMENTS (PTY) LTD
....................................
Second
Applicant
BLUE
IQ INVESTMENTS (PTY) LTD
.......................................................
Third
Applicant
THE
INNOVATION HUB MANAGEMENT
COMPANY
(PTY) LTD
..........................................................................
Fourth
Applicant
and
DOUGLAS
M VINNING
.
................................................................................
Respondent
Date of Hearing: 8 September 2011
Date of Judgment: 21 October 2011
________________________________________________________________
JUDGMENT
REDDY
AJ
Introduction
[1] This is an application for:
1 the subpoena issued under case
number JS 213/10 to be set aside;
2. the respondent pays the costs of
this application on an attorney client scale;
3. a decision on the wasted costs
occasioned by the postponement of the trial under case number JS
213/10 on 15 November 2010.
[2] This application is opposed by the
respondent.
Factual background
[3] The respondent was employed by the
second applicant (“Blue Cat”) as a Chief Technology
Officer. One of his tasks
was to build and maintain a virtual network
portal (the portal). The employment relationship commenced on 1 July
2003.
[4] It is alleged by the respondent
that during 2007, the second respondent (“Blue IQ”) took
over the assets and removable
property of Blue Cat. The respondent
continued to be employed by Blue IQ without any change to his terms
and conditions of employment.
This is disputed by Blue Cat and Blue
IQ.
[5] A network portal agreement was
entered into between the Blue Cat, Blue IQ and the fourth applicant
(“The Innovation Hub”)
to the effect that the network
portal would be transferred from Blue Cat and Blue IQ to The
Innovation Hub and the respondent’s
services would also be
transferred. The respondent received written notification in this
regard in April 2009. The transfer of
the portal was to take place in
July 2009.
[6] Blue Cat and The Innovation Hub
are fully owned subsidiaries of Blue IQ. The Gauteng Provincial
Government is a 100% shareholder
of Blue IQ. At the relevant point in
time, the first applicant (Cachalia) held the position of Member of
the Executive Committee
(MEC) for the Department of Economic
Development (DED) of the Gauteng Provincial Government.
[7] Prior to the transfer of the
portal taking place but after being informed that his services would
be transferred to The Innovation
Hub, the respondent was informed
that his employment contract would not be extended and that his
services would be terminated 30
June 2009. Another employee, Brian
Brown (Brown) who worked with the respondent, also received a similar
notification of termination
of employment, albeit some time earlier
than the respondent.
[8] Brown and the respondent referred
separate unfair dismissal disputes to the CCMA. Brown proceeded to
refer his dispute to arbitration.
The respondent did not and waited
for the outcome of Brown’s arbitration hearing.
[9] Brown received an award
reinstating his services with Blue Cat and Blue IQ.
[10] Following the receipt of this
award and on 15 October 2009, Blue Cat informed the respondent that
his services had been reinstated.
A further letter also dated 15
October 2009 was sent by Blue Cat to the respondent informing him
that he had been selected for
retrenchment.
[11] The reasons for the retrenchment,
according to Blue Cat and Blue IQ, was that Blue Cat had not achieved
its objectives and
was being dissolved; the transfer of the network
portal was subject to approval by Cachalia, which was not given and
the funds
that were available for the operation of Blue Cat were
handed back to the Gauteng Provincial Government’s treasury.
The respondent
disputed these reasons and sought to enforce his
transfer to The Innovation Hub along with the network portal. Blue
Cat and Blue
IQ despite this request proceeded with retrenchment
consultations with the respondent. The retrenchment was effected on
30 November
2009.
[12] The substantive and procedural
fairness of the retrenchment are in dispute.
[13] The following key issues are in
dispute and they are recorded as they appear in the response to the
statement of claim (the
first, second and third respondents referred
to below are the second, third and fourth applicants respectively in
this application):
“
12.
There were discussions among the Respondents at that time about
transferring the portal to the Third Respondent, but that process
was
never finalised. There was however a transfer of assets from the
First to the Third Respondent.
Any
discussions between the Respondents on the matter were in any event
subject to the suspensive condition of the prior approval
by the MEC
for Economic Development in the Gauteng Province in terms of s 54(2)
of the PFMA and that s 6 of the Blue IQ Act.
No such approval for a
transfer was given. The portal is currently inoperative.
30.
The First Respondent’s dismissal of the Applicant was
substantively fair.
30.1
The First Respondent is in the process of winding up.
68.2
The dismissal is substantively fair in that:
68.2.1.
there was no transfer of the operations of the business of the First
Respondent to the Third Respondent;
68.2.2.
the portal is no longer operative;
68.2.3.
the First Respondent has transferred its funds back to the fiscus and
68.2.4
the MEC never approved the transfer of the First Respondent to the
Third Respondent as required by the Blue IQ Act and the
PFMA.”
[14] In the
addendum
to the
pre-trial conference minute dated 3 November 2010 and at paragraph
2.2, the second to fourth applicants repeat paragraphs
12 and 13
above. This is in response to the pre-trial issue calling on the
employer to respond to the employee’s response
to the question
whether he admits in general that there was a need to retrench.
[15] Among the issues in dispute in
the pre-trial minute are:
“
3.11
Whether or not the transfer of the portal was subject to suspensive
[sic] condition of the prior approval by the MEC for Economic
Development in the Gauteng Province in terms of section 54(2) of the
PFMA and s 6 of the Blue IQ Act, under the circumstances of
this
matter [sic].
3.12
Whether or not the Portal remains fully operational at the time of
preparing the Applicant’s statement of claim [sic]
or
afterwards or whether or not the portal, whether in the same or
similar form exists or has been shut down by the Second and
or Third
Respondent.
3.16
Whether or not the MEC approved the transfer of the portal to the
Third Respondent.
3.19
Whether or not the funds already allocated to the First Respondent
for its operations and to conduct its business was legally
capable to
be returned to the fiscus, which resulted in the alleged retrenchment
of the Applicant.
3.20
Whether or not the First Respondent had adequate funds to continue
with its operations as was budgeted.”
[16] Among the issues to be decided by
the trial Court (as recorded in the pre-trial minute dated 1 June
2010) are:
“
4.13
Whether the suspensive condition (the MEC’s approval), if any
is found to exist under these circumstances, permitting
[sic] a
transfer of the portal was satisfied.
4.14
Whether there was a transfer of the portal as envisaged in terms of
section 197 to the Third Respondent.”
[17] Although paragraph 4.13 quoted
above is somewhat clumsily worded it is clear that the parties intend
the trial Court to decide,
among other issues, whether the alleged
suspensive condition existed as a term to the agreement amongst Blue
Cat, Blue IQ and The
Innovation Hub, and if it did exist whether it
was satisfied.
[18] These issues are fundamental to
the question of whether there was a need to retrench the respondent.
The respondent alleges
that his services were to be automatically
transferred to The Innovation Hub and that there was no suspensive
condition to be met.
The second to fourth applicants allege that the
transfer of the network portal could not take place until the MEC
approved it and
in any event he did not give his approval, therefore
the portal was not transferred and remains inoperative.
[19] The import of these issues is
plain. The trial Court will have to decide these material disputes of
fact. If the trial Court
finds that the suspensive condition was not
part of the agreement then there was no need for MEC to approve the
transfer of the
portal and the respondent’s services could
accordingly have been transferred. The respondent may thus be able
establish that
the retrenchment was unfair. If the trial Court finds
that the suspensive condition was part of the agreement and if it
finds further
that the approval by the MEC was in fact given then, on
the second to fourth applicants’ version, there was no need to
retrench
the respondent as his services should have been
automatically transferred with the network portal. If the approval
was not given
by the MEC, the second to fourth applicants will have
to establish why despite the agreement between them (they are fully
owned
subsidiaries of the Gauteng Provincial Government) the approval
by the MEC was withheld. Further issues regarding the dissolution
of
Blue Cat and whether the portal remains operational must also be
decided by the trial Court.
[20] These issues and the supporting
documentary proof are pivotal to the determination of the
retrenchment dispute and whether
the respondent is entitled to the
relief he claims.
[21] The pleadings in the main trial
have been filed under case number
JS 213/10. The pleadings have closed.
The parties have filed a pre-trial minute and an
addendum
to
the pre-trial minute. The trial was set down for hearing for five
days from 15 November 2010.
[22] Shortly before the trial could
commence and on 3 November 2010, the Registrar of this Court issued,
at the instance of the
respondent, a subpoena
duces tecum
. The
subpoena called on
1. The Gauteng Provincial Government
and
2. Cachalia
“
to
appear in person before court on the 15
th
day of November 2010 at 10:00 and to remain in attendance until
excused by the court, in order to testify on behalf of the Applicant
in regard to all the matters within his knowledge relating to the
action pending in the court” in which the respondent claims,
inter
alia
,
relief for an unfair dismissal.
[23] The subpoena further directed the
Gauteng Provincial Government and Cachalia to bring and produce to
Court documents, but more
on this issue later.
[24] The issuing of the subpoena
resulted in the second to fourth applicants applying for a
postponement of the trial on 15 November
2010 pending an application
to set aside the subpoena.
[25] The application for postponement
was granted. The application to set aside the subpoena was later
filed which application is
the subject of this judgment.
Application to set aside the
subpoena
[26] The application is made on the
ground that the issuing of the subpoena was an abuse of process and
should be set aside for
the following reasons:
1. The documents required in terms
thereof are vague and it is left to Cachalia to determine what
documents are relevant to the
issues. The applicants submit that the
subpoena is not a
bona fide
legal process used by the
respondent. Rather it is being used as a “fishing expedition”
to gather information that may
assist the respondent in the trial.
The timing of the subpoena was too
close to the trial which would have necessitated an adjournment for
the second to fourth applicants
to prepare on the documents
subpoenaed.
Cachalia cannot give evidence as he
has nothing to add and he is no longer the MEC.
The documents ought to have been
obtained through the discovery process.
The documents have no bearing on the
pleaded issues and are not relevant.
[27] The grounds under items 1, 4 and
5 above relate to the relevance of the documents to the trial issues
and will be dealt with
simultaneously. The grounds under items 2 and
3 will be dealt with separately.
Cachalia cannot give evidence as he
is no longer the MEC and has nothing to add.
[28] The applicants submit that it is
not clear from the respondent on exactly what Cachalia is expected to
testify. On the applicants’
version, he can only testify as to
a section 197 transfer from Blue Cat and Blue IQ to The Innovation
Hub. As no transfer took
place, he has nothing of value to add to the
trial issues. It is also submitted that it is not the respondent’s
case that
Cachalia made a decision regarding his future employment
and his evidence will be of no relevance to the trial issues.
[29] Further, the applicants submit
that as the respondent has not pleaded that a section 197 transfer is
applicable, he cannot
rely on this issue during the trial.
[30] The respondent submitted that the
evidence of Cachalia is fundamental to the trial issues for the
following reasons:
1. The trial issues are wider than
simply whether a section 197 transfer occurred. The issues relate to
the fairness of a retrenchment
in circumstances where the respondent
was informed that his services would be transferred with the network
portal that he had created
and there was agreement amongst Blue Cat,
Blue IQ and The Innovation Hub that the portal would be transferred
along with the respondent’s
services.
2. R100 million was made available by
the Gauteng Provincial Government for the creation of the portal.
After it was created, the
portal was to be transferred to The
Innovation Hub. There was an agreement between Blue Cat, Blue IQ and
The Innovation Hub to
this effect. Prior to the transfer taking
place, the funds for the operation of the portal were withdrawn and
returned to the fiscus.
The decision to withdraw the funds was made
by the Gauteng Provincial Government. The withdrawal of the funds led
to the retrenchment
of the respondent.
3. There were a number of meetings and
various items of correspondence between the Gauteng Provincial
Government and Blue Cat and
Blue IQ which canvassed the issue of the
funds and the withdrawal thereof.
4. The bundle that will be used at
trial contains documents which are signed by Cachalia.
[31] Having regard to those
submissions listed in paragraph 30 and the pleadings as recorded in
paragraphs 5 to 16 above, I am persuaded
that Cachalia was involved
in his capacity as MEC in the discussions and the decisions that
ultimately led to the respondent’s
retrenchment. He has
knowledge of issues relating to the return of the funds to the
fiscus, to the existence of the suspensive
condition that he was
required to approve the transfer of the portal and if he did not
approve the transfer the reasons therefore.
The fact that he is no
longer the MEC is of no import to the relevance of the evidence that
he will be able to place before the
trial Court. Of relevance are his
knowledge of and participation in the events that led to the
respondent’s retrenchment.
[32] Insofar as the applicants’
submissions that it is not the respondent’s case that a section
197 transfer applied
and that Cachalia made a decision regarding his
future employment are concerned, these are issues that are pleaded by
the Blue
Cat, Blue IQ and The Innovation Hub and can be seen at
paragraphs 12, 13, 19, 30.2, 31, 51.1, 52, 59.1 and 68.2.4 of the
response
to the statement of case. They are clearly part of the
issues before the trial Court and require evidence to be led.
[33] I am persuaded that Cachalia will
be a useful witness to the trial. His evidence is relevant and he
will make a meaningful
contribution to the issues that must be
decided by the trial Court.
[34] The applicants submitted further
that Cachalia’s evidence is of relevance to Blue Cat and Blue
IQ’s defence to
the unfair retrenchment claim. If he is
subpoenaed as the respondent’s witness, he can only be led in
evidence in chief by
the respondent. The fact that Cachalia may be
able to explain why the retrenchment was fair implies that he should
be a witness
for the defence rather than for the respondent and that
he should be cross-examined by the respondent. By subpoenaing him,
the
respondent will not be able to cross-examine him.
[35] It is not Blue Cat, Blue IQ and
The Innovation Hub’s case in opposition to the subpoena that
they will call Cachalia
as their witness. It is not clear to this
Court why Blue Cat, Blue IQ and The Innovation Hub are resisting
Cachalia’s being
subpoenaed when he would, on their version,
assist in their defence to the respondent’s claim. The
respondent was within
his rights as a litigant to have Cachalia
present at the trial Court.
[36] Insofar as the evidentiary
context in which Cachalia’s evidence is to be dealt with, this
is a matter that the trial
Court is best placed to decide. The trial
Court will be guided by the rules of evidence in obtaining the best
evidence. This issue
is not pertinent to the question of whether
Cachalia’s evidence is relevant to the trial issues –
which is the issue
before me. As stated above, I am persuaded that he
is a relevant witness to the trial issues.
The documents that are subpoenaed
[37] The subpoena further directed the
Gauteng Provincial Government and Cachalia to bring and produce to
Court:
“
1.
the
1
st
,
2
nd
and/or
3
rd
Respondent’s
submissions to the Department and the Department’s response to
such submissions regarding the returning
of all “surplus funds”
which formerly financed the 1
st
Respondent
and the subsequent creation of the new entity under the 2
nd
Respondent,
referred to as the Gauteng Motorsport Company, that led to the return
of the 1
st
Respondent’s
“
surplus
funds” to the Department / Treasury; and
The
MEC’s memorandum to Chairpersons and Chief Executive Officers
of DED Public Entities dated 29 May 2009 and minutes of
meetings and
all relevant reports to show what consultation occurred or processes
were followed, if any, regarding the alleged
closing down of the 1
st
Respondent. “
[38] There are several grounds of
attack on the documents that are subpoenaed. I will deal with them in
turn.
The documents have no bearing on
the pleaded case and are not relevant:
[39] The documents identified in
paragraph 1 of the subpoena are limited to submissions by Blue Cat,
Blue IQ and The Innovation
Hub to the DED and its responses on the
issue of returning the surplus funds. As one of the reasons for the
respondent’s
retrenchment is the return of the surplus funds
these documents are relevant to the fairness of the dismissal. As can
be seen from
paragraphs 3.19 and 3.20 of the pre-trial minute
(recorded at paragraph 16 above) the issue regarding the transfer of
the surplus
funds is in dispute.
[40] The documents identified in
paragraph 2 of the subpoena are limited to the issue of the winding
down of Blue Cat. This is another
reason, submitted by Blue Cat and
Blue IQ, for the retrenchment of the respondent, as recorded in
paragraph 30.1 of the response
to the statement of case (see
paragraph 13 above).
[41] I find that the documents have a
bearing on the pleaded case and they are relevant to the trial
issues.
The documents are vague and
Cachalia is left to determine which documents to bring to Court
[42] The issues before this Court are
whether the Blue Cat was dissolved; whether the agreement to transfer
the portal was subject
to the approval of Cachalia; whether that
approval was withheld and the reasons therefore; whether the funds
were and could have
been validly returned to the treasury.
[43] I have already concluded that
Cachalia played an important role in the above decisions and that his
knowledge of the issues
is vital to the trial proceedings. Blue Cat,
Blue IQ and The Innovation Hub have cemented Cachalia’s
involvement in the issues.
There is no doubt in my mind that Cachalia
(through his participation in the processes that, on the applicants’
version,
led to the retrenchment of the respondent) must know what
these documents are.
[44] Whilst I do not find that the
subpoenaed documents are vague, even if Cachalia is unaware of what
those documents are, he would
be more than entitled during his
testimony to declare to the trial Court that the documents were vague
and explain any difficulties
he may have had in identifying them [See
Davis v Additional Magistrate, Johannesburg
1989 (4) SA 299
(W) at 305 and Nico
Harris and Five Others v CCMA and Others
unreported JR 2019-11 and J1748-11].
Cachalia cannot produce the
documents as he is no longer the MEC
[45] The subpoena does not cite
Cachalia in the capacity MEC. Although he is not longer the MEC, he
remains an employee of the Gauteng
Provincial Government, which is
also directed in the subpoena to bring the relevant documents to
Court.
[46] Whether Cachalia himself or
another member of the Gauteng Provincial Government brings those
documents to Court, is immaterial.
Given Cachalia’s intimate
knowledge of the issues there is no reason for him not to assist any
other member of the Gauteng
Provincial Government in identifying the
documents.
The documents should have been
obtained through the discovery process
[47] The respondent submitted that
despite attempts to obtain the documents through the discovery
process, they were unsuccessful.
[48] The respondent further submitted
that the subpoenaed documents are not documents that belong to Blue
Cat, Blue IQ and The Innovation
Hub so they would not have been in a
position to release them. In response to this it was submitted that
Blue Cat, Blue IQ and
The Innovation Hub have all the documents in
their possession.
[49] It is unclear to me how Blue Cat,
Blue IQ and The Innovation Hub can on the one hand state that the
documents are vague and
they have no idea what documents Cachalia is
required to bring and on the other hand submit that they have all the
documents. Clearly,
there is no confusion in the minds of Blue Cat,
Blue IQ and The Innovation Hub as to the identity of the relevant
documents. Further,
if they are in possession of them, they should
have been discovered when called upon to do so.
[50] In the matter of
Binash
v Wixley
1
it was held that a Court must be
cautious in exercising powers to set aside a subpoena. It must be
clear that there is an abuse
of power and it must be a certainty that
the witness subpoenaed will be of no assistance to the Court in
determining the issues
raised at trial. If there is a
bona
fide
attempt to pursue and
ventilate the truth in the dispute between the parties, then the
subpoena is not to be set aside.
[51] In this matter, I find that the
respondent’s issuing of the subpoena is
bona
fide
and that he is not
abusing any rights he has as a litigant. I am satisfied that the
subpoena is not vexatious and when effected
will assist the trial
Court in ventilating the truth in the dispute between the parties.
[52] Should the subpoena be set aside,
the dispute between the parties will not be properly ventilated. The
respondent’s right
to be heard will be infringed.
[53] I am persuaded that the interests
of justice direct that the subpoena should not be set aside.
Costs of the postponement of the
trial on 15 November 2010
[54] The subpoena was issued on 3
November 2010 and served on Cachalia on 4 November 2010. The trial
was set down for five days
from 15 November 2010. The applicants
brought the application to postpone the trial pending the outcome of
this application.
[55] The applicants submitted that the
subpoena ought to have been issued at the time the trial was set down
for hearing. It was
further submitted that the late issuing of the
subpoena had necessitated the postponement of the trial as Cachalia
was not available
on such short notice and Blue Cat, Blue IQ and The
Innovation Hub would not have been properly prepared to proceed with
the trial
if the documents per the subpoena had to be used at the
trial. They would have required time to prepare on these further
documents.
[56] The respondent was under no
obligation to inform Blue Cat, Blue IQ or The Innovation Hub that he
intended calling Cachalia
as a witness. Cachalia was not employed by
any of them and he was only after the service of the subpoena,
represented by their
representatives. Further, it was reasonable for
the respondent to believe that Cachalia’s testimony would be
welcomed by
Blue Cat, Blue IQ and The Innovation Hub as it would have
assisted in the ventilation of the disputes.
[57] There is also no applicable time
limit for the issuing of subpoenas. In the matter of
Building
Industry Bargaining Council Cape Of Good Hope (Boland Area) V Hatlin
T/A The Homestyles Co,
2
it was held that a party must be
served with a subpoena at least five days before he is required to
appear in court. In this case,
Cachalia was served more than five
days before he was required to appear in court.
[58] The time that was available to
Cachalia to gather the documents was sufficient given his knowledge
of the issues. It is not
a reasonable explanation that Cachalia was
too busy to avail himself to assist the Court.
[59] It was conceded by the
applicants’ representative that the trial need not have been
postponed
sine die
as the matter could have stood down for
Blue Cat, Blue IQ and The Innovations Hub to consider the subpoenaed
documents. If on their
previous submission they were in possession of
all the relevant documents, they would not have been taken by
surprise. If however
they had not seen the subpoenaed documents
before, and required more time to prepare, they would have been
entitled in fairness
to a short postponement of the matter for a day
or two to give them sufficient time to prepare and the trial could
have proceeded
thereafter.
[60] For the above reasons I am not
persuaded that Blue Cat, Blue IQ and The Innovation Hub were entitled
to a postponement of the
trial. This application could have been
brought on 15 November 2010 for decision before the trial commenced.
If the subpoena was
set aside, the respondent would have had to
continue with the matter. If it was not set aside, time could have
been given to Blue
Cat, Blue IQ and The Innovation Hub to prepare on
the documents.
[61] After having considered all the
facts, the issues and the legal principles, I make the following
order:
the application to set aside the
subpoena issued under case number JS 213/10 is dismissed;
the applicants are to pay the costs
of the respondent in this application;
the wasted costs occasioned by the
postponement of the trial on 15 November 2010 are to be paid by Blue
Catalyst Investments (Pty)
Ltd, Blue IQ Investment Holdings (Pty)
Ltd and The Innovation Hub Management Company (Pty) Ltd.
_______________________
Reddy AJ
Appearances:
1. For the applicants: Mr Orr
instructed by Mkhabela Huntley Adekeye Inc
2. For the fourth respondent: Mr
Scheepers of Marius Scheepers and Co Attorneys.
1
[1997] ZASCA 32
;
1997
(3) SA 721
SCA page 734 D.
2
(
2001)
22 ILJ 1143 (LC).