Brief Summary

Labour Law — Amendment of pleadings — Application to amend statement of opposition — Respondent sought to withdraw admission that applicants' strike was protected — Legal principles governing amendments considered, including absence of mala fides and potential prejudice to the other party — Court's discretion to grant amendments emphasized — Respondent's application to amend granted, allowing for proper ventilation of issues regarding the nature of the strike and the reasons for dismissal.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings were an interlocutory application in the Labour Court in which the respondent employer sought leave to amend its statement of opposition by withdrawing an earlier admission that the applicants’ strike action was protected, and substituting an allegation that the strike was unprotected/illegal. The matter also raised a further procedural issue concerning an agreement recorded in the pre-trial minute that the Labour Court would sit as an arbitrator in terms of section 158(2)(b) of the Labour Relations Act 66 of 1995 (“LRA”).

The parties were the South African Transport and Allied Workers Union (first applicant) and W Masina and 42 others (second and further applicants), on the one hand, and Collett Armed Security Services (respondent), on the other.

The procedural history reflected that the applicants instituted the main action by filing a statement of case on 26 November 2009, alleging an automatically unfair dismissal on the basis that they were dismissed for participating in a protected strike. The respondent delivered its statement of opposition on 11 December 2009, which, read with the later pre-trial minute of 14 November 2012, treated the strike as protected but asserted that the dismissals were for misconduct. Shortly before trial, the respondent brought the present amendment application to withdraw that admission. The hearing was affected by the respondent’s request for a stand-down/postponement because its main witness was unavailable, with a tender of costs, and the matter stood down to allow the exchange of affidavits in the amendment application.

The general subject-matter of the dispute in the main action concerned whether the applicants’ dismissals were automatically unfair (dismissal for participation in a protected strike) or were instead misconduct dismissals related to conduct during the strike. The interlocutory application concerned whether the respondent could change its pleaded position on the protected nature of the strike, and whether the parties could effectively bind the Court to proceed as an arbitrator under section 158(2)(b).

2. Material Facts

The Labour Court treated the following as materially established from the pleadings and the pre-trial minute for purposes of the amendment application.

In the applicants’ statement of case, the applicants alleged that they were dismissed for engaging in a protected strike action. In response, the respondent’s statement of opposition admitted the dismissals but pleaded that the dismissals were for misconduct, and further pleaded that it was not required to issue an ultimatum because the dismissals were not for strike participation but for misconduct.

The parties’ pre-trial minute dated 14 November 2012 recorded a chronology as common cause, including that the respondent met with the union on 19 August 2009, that the union sent a 48-hour strike notice later that day regarding rotation, that on 20 August 2009 the union sent a further letter notifying of members’ intention to embark on a protected strike commencing on 22 August, and that on 22 August 2009 the union’s members embarked on protected strike action. The pre-trial minute also recorded that on 1 September 2009 the respondent succeeded in interdicting misconduct during the strike action.

The issues for determination in the main action were framed in the pre-trial minute as whether the dismissals were for reasons related to misconduct (respondent’s case) or for participating in a protected strike (applicants’ case).

The respondent’s amendment application sought to withdraw its admission that the strike was protected and to replace it with a denial that the strike action on 22 August 2009 was protected. The respondent explained this on the basis that when preparing its response to the statement of case it had erroneously admitted that the strike was protected.

In evaluating the explanation advanced, the Court considered that the concession regarding protection of the strike ran throughout the pleadings and was recorded in the pre-trial minute, and that the respondent’s counsel characterised the error as “perpetual” rather than isolated. The Court also considered that, prior to the unfair dismissal litigation, the respondent had brought two urgent interdict applications seeking to interdict the strike on the basis that it was unprotected (case numbers J1873/09 and J1808/09), and that those applications were unsuccessful in showing that the strike was unprotected. The Court treated those earlier steps as showing that the respondent previously took the position that the strike was unprotected, but found that this did not explain how the respondent came to make (and maintain) the later admission and recorded common-cause position in the pleadings and pre-trial minute.

The respondent contended (in support of the proposed amendment) that the strike was unprotected because the dispute related to rotation had allegedly been resolved in a settlement agreement dated 14 August 2009, rendering a later referral invalid, and because the dispute allegedly fell within refusal to bargain requiring an advisory award under section 64(2) of the LRA. The Court treated these contentions as part of the respondent’s asserted justification for seeking to ventilate the issue, but the interlocutory decision turned on whether an amendment should be allowed, not on finally deciding strike protection.

3. Legal Issues

The first central legal question was whether the respondent had made out a proper case for the Court, in the exercise of its discretion, to permit an amendment withdrawing an admission—particularly an admission that had become entrenched in the pleadings and the pre-trial minute—so as to place the protected/unprotected nature of the strike in dispute.

This issue required the Court to apply established procedural principles governing amendments to the specific context of a withdrawal of a significant admission recorded not only in pleadings but also in the pre-trial minute. It therefore involved the application of law to fact and a discretionary evaluative judgment concerning bona fides, the adequacy of the explanation for the admission, and prejudice.

The second legal question concerned the status and effect of the parties’ agreement (recorded in the pre-trial minute) that the Labour Court should sit as an arbitrator in terms of section 158(2)(b) of the LRA, and specifically whether such an agreement could validly determine that the Court would proceed by way of arbitration, or whether the decision is one for the Court’s discretion under the statute. This issue was primarily one of statutory interpretation and jurisdiction, coupled with the Court’s characterisation of its power to deal with employment-related matters and matters incidental to its jurisdiction.

4. Court’s Reasoning

The Court restated that it has a discretion when dealing with applications to amend pleadings. In exercising that discretion, the Court identified the established considerations as including whether the application is mala fide, whether granting or refusing it would cause an injustice, whether the amendment would cause prejudice to the other party, and whether any prejudice could be cured through a postponement and/or a costs order. The Court emphasised that where a party seeks to withdraw an admission, a full and satisfactory explanation of how the admission came to be made and why it should be withdrawn is required, and the explanation must demonstrate the applicant’s bona fides and disclose a triable issue.

In applying these principles, the Court treated it as significant that the admission the respondent sought to withdraw was not confined to a single passage but was effectively embedded throughout the litigation record, and, critically, was embodied in the pre-trial minute. The Court located the amendment application within the purpose of pre-trial procedures, namely to narrow issues and curb costs, and it relied on authority emphasising that pre-trial admissions are binding and that allowing a party to resile from deliberate pre-trial agreements without special circumstances undermines the purpose of pre-trial management.

On the explanation offered by the respondent, the Court held that the respondent had not provided a satisfactory explanation for what was described as a “perpetual” error. Accepting the respondent’s characterisation of the error as enduring across pleadings and pre-trial minute, the Court found that the respondent did not explain why the concession persisted through the litigation process up to and including the pre-trial minute. The Court considered that the respondent’s reliance on its earlier stance (including its prior interdict proceedings and contemporaneous correspondence indicating the strike was unprotected) did not explain why the respondent later pleaded and agreed that the strike was protected. Those prior events were thus not treated as curing the absence of an explanation; rather, they showed that the respondent’s stance had shifted during the litigation without a properly explained basis.

The Court further reasoned that the amendment application was brought late in the run-up to trial and would affect the applicants’ trial preparation. It rejected the respondent’s contention that prejudice had not been properly pleaded by the applicants, holding instead that the respondent bore the burden of showing that granting the amendment would not cause prejudice (or that it could adequately be addressed). While the respondent argued that any prejudice could be cured by a costs order, the Court was not persuaded on the facts that the respondent had made out a case meeting the threshold for withdrawing such a crucial admission embedded in the pre-trial minute.

On costs for the amendment application, the Court accepted that costs should follow the result but declined to order punitive costs in respect of the amendment application. It nevertheless held that the costs should include the wasted costs of the stand-down on 29 April 2013, because the late filing of the amendment application occasioned the need for additional steps.

Turning to the section 158(2)(b) issue, the Court analysed the statutory provision as conferring a discretion on the Court to continue with proceedings while sitting as an arbitrator only if it becomes apparent after referral to the Labour Court that the dispute ought to have been referred to arbitration, and then only with the consent of the parties and where it is expedient to do so. The Court accepted (as common ground between the legal representatives) that the Court is not bound by the parties’ agreement and that section 158(2) confers a discretion on the Court; the Court emphasised that it will sit as arbitrator only when it finds it expedient, not merely because the parties desire it.

The Court additionally explained its approach to jurisdiction by stating that the Labour Court has power to deal with employment-related matters within its jurisdiction and matters incidental thereto, particularly in the context of strike-related conduct, so as to avoid piecemeal dispute resolution. It distinguished this from cases where the main cause of action falls within the jurisdiction of the CCMA or a bargaining council, in which event section 158(2)(b) becomes relevant as a mechanism for conversion (but still one controlled by the Court’s discretion). On this basis, the Court concluded that the “conversion” process under section 158(2)(b) is initiated by the Court when the statutory conditions are met, and is not something the parties can pre-determine by agreement in the pre-trial minute.

5. Outcome and Relief

The Court declared that the agreement between the parties (recorded in the pre-trial minute) that the Court should sit as an arbitrator in terms of section 158(2)(b) was of no force and effect.

The Court dismissed the respondent’s application to amend its statement of defence, including its attempt to withdraw the admission that the strike was protected, and ordered the respondent to pay the applicants’ costs of that application, including the costs occasioned by the matter standing down on 29 April 2013.

The Court postponed the main action to 2 September 2013 and ordered the respondent to pay the costs of the postponement on the attorney and client scale.

Cases Cited

Transport & Allied Workers Union & another v SA Airways (Pty) Ltd (2010) 31 ILJ 1938 (LC).

Moolman v Estate Moolman & another 1927 CPD 27.

MacDuff & Co v Johannesburg Consolidated Investment Co Ltd 1923 TPD 309.

Twani and Others v Premier for the Province of the Eastern Cape and Others (460/99) [2008] ZAECHC 169.

CEPPWAWU v CTP Ltd and Another [2013] 4 BLLR 378 (LC).

MEC for Economic Affairs, Environmental & Tourism, Eastern Cape v Kruizenga and Another 2010 (4) SA 122 (SCA); (2010) 31 ILJ 1629 (SCA).

Price NO v Allied-JBS Building Society 1980 (3) SA 874 (A).

Filta-Matix (Pty) Ltd v Feudenberg and Others [1997] ZASCA 110; 1998 (1) SA 606 (SCA).

NEHAWU v University of Cape Town (2000) 7 BLLR 819 (LC).

Legislation Cited

Labour Relations Act 66 of 1995, section 64(1).

Labour Relations Act 66 of 1995, section 64(2).

Labour Relations Act 66 of 1995, section 158(2)(b).

Labour Relations Act 66 of 1995, section 191.

Rules of Court Cited

Uniform Rules of Court, Rule 37.

Held

The Court held that the respondent failed to provide a satisfactory explanation, consistent with the requirements for withdrawing an admission, for why it admitted (and maintained through the pleadings and pre-trial minute) that the strike action was protected and why it should now be permitted to plead the opposite. Given the binding character of pre-trial minutes and the heightened duty to explain the withdrawal of a crucial admission, the amendment was refused.

The Court also held that an agreement by the parties that the Labour Court should sit as an arbitrator under section 158(2)(b) cannot bind the Court and is ineffective, because the statutory power to proceed as arbitrator is exercised at the Court’s discretion when it becomes apparent that the dispute ought to have been arbitrated and when it is expedient to do so. The Court declared the parties’ recorded agreement to that effect to be of no force and effect.

LEGAL PRINCIPLES

The Labour Court applies a discretionary test to applications to amend pleadings, considering bona fides, the avoidance of injustice, the presence and curability of prejudice, and whether any prejudice can be addressed by postponement and/or costs. Where an amendment entails the withdrawal of an admission, a party bears a heavier burden to provide a satisfactory explanation for the making of the admission and the need to withdraw it, and must show that the amendment raises a triable issue.

Admissions and agreements recorded in a pre-trial minute serve the purpose of narrowing issues, shortening trials, and curbing costs, and they are generally binding on the parties. A party may be relieved from that binding effect only with the other party’s consent or by the Court exercising its discretion on good cause shown; absent special circumstances, allowing a party to resile from deliberate pre-trial agreements undermines the purpose of pre-trial procedure.

Section 158(2)(b) of the LRA does not permit the parties, by agreement, to require the Labour Court to sit as an arbitrator. The decision to proceed as arbitrator depends on the Court’s assessment that the dispute ought to have been referred to arbitration and that it is expedient to continue in that form, with party consent operating as a statutory requirement once the Court is otherwise satisfied. The Labour Court also recognised a broad jurisdictional approach in which it may determine matters incidental to issues properly before it, particularly in strike-related disputes, to avoid fragmented litigation.

South African Transport and Allied Workers Union and Others v Collett Armed Security Services (JS1280/09) [2013] ZALCJHB 111 (2 May 2013)