About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2014
>>
[2014] ZALCJHB 69
|
|
Porogo v Thoahlane and Others (JR69/12) [2014] ZALCJHB 69 (14 February 2014)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not reportable
CASE
NO JR 69/12
In
the matter between:
KANATI
MACDONALD
POROGO PLAINTIFF
and
PITSO
THOAHLANE 1
ST
DEFENDANT
SIKEME
LABOUR BROKERS
CC 2
ND
DEFENDANT
KABI
THOAHLANE
TRUST 3
RD
DEFENDANT
Trial
: 11-12 February 2014
Judgment
delivered: 14 February 2014
JUDGMENT
VAN
NIEKERK J
[1]
There is a well-known adage to the effect that family and business do
not mix. This case demonstrates the truth of that proposition.
It is
a dispute between two brothers-in-law. The plaintiff claims a total
of some R3.2 million from the defendants consequent on
his employment
by the second defendant in November 2007 and the termination of that
employment on 28 April 2010. The second defendant
is a close
corporation of which the first defendant was a sole member; the third
defendant is what has been described as the first
defendant’s
family trust.
[2]
The plaintiff’s claim was referred to this court for
determination in terms of s 77 of the Basic Conditions of Employment
Act, 1977. In terms of s 77 (3), this court has concurrent
jurisdiction with the civil courts to hear and determine any matter
concerning a contract of employment, irrespective of whether any
basic condition of employment established by the Act constitutes
a
term of that contract. This provision assumes some significance in
these proceedings, not least because the defendants contend
that the
plaintiff was never employed by the second defendant and secondly,
because the scope of the claims (and especially a counterclaim
filed
by the defendants) appear to raise matters that do not directly
concern any employment contract to which the plaintiff might
have
been party.
[3]
It is also necessary to record, by way of introduction, that these
proceedings have been fraught with animosity and that the
parties’
inability or unwillingness to cooperate in the conduct of this
litigation had the consequence that no pre-trial
conference was held,
nor was any pre-trial conference minute filed. At the outset, the
court attempted to identify the issues in
dispute. These extend to
the following:
a.
Claim for travelling allowance money in the sum of R1 238 290,
b.
A sum of R 468 948 being deductions from remuneration
c.
R 25 851, being cell phone expenses
d.
R 55 476 being an award of compensation issued by the CCMA.
e.
R 62 777 being “annual leave payment”.
f.
R45 800 being payment in lieu of notice.
g.
R 45 800 being “arrear payment”.
h.
R 64 590 being what the plaintiff contends is owing to him on the
basis of a
miscalculation of his rate of remuneration.
i.
R1 238 290 being remuneration to which the plaintiff contends he is
entitled.
[4]
Both the plaintiff and the second defendant gave evidence. The
material facts that are not in dispute are that the plaintiff
was
employed by the second defendant in November 2007. The terms of his
appointment described him as a clerk of works and in this
capacity,
it is not disputed that the plaintiff became a member of what has
been referred to as the Gautrain provincial support
team.
[5]
The terms of the agreement that the second defendant contends formed
the basis of the plaintiff’s engagement are described
as a
“subcontract agreement” the terms of the agreement do not
contemplate employment; on the contrary, they contemplate
the
engagement of a subcontractor to perform a specified scope of work.
It is not disputed that whatever the terms of the plaintiff’s
engagement, he was to be paid a rate of R100 an hour, an amount that
was in practice converted into a monthly salary by assuming
an
eight-hour workday. At the time of the termination of the contract,
the plaintiff was earning a gross salary of R 17 692 per
month.
[6]
The second defendant testified (and this was not disputed) that he
engaged the services of the plaintiff as an act of magnanimity.
The
plaintiff had been unemployed for some years at the time and
was unable to secure employment. He was engaged without
having the
necessary experience and qualifications. After the plaintiff’s
engagement, relations between the plaintiff and
the second defendant
became strained, especially in relation to issues of money. Details
in this regard will be discussed below,
in the context of an
evaluation of each of the plaintiff’s claims.
[7]
The first defendant testified that by December 2009, he became aware
that the project on which the plaintiff was engaged was
nearing
completion, and that he advised the plaintiff of this fact. In April
2010, he says that the plaintiff’s contract
was terminated for
that reason. The plaintiff contends that he was summarily dismissed
after a dispute between him and the first
defendant over the issue of
his remuneration (and in particular, the quantum of a travelling
allowance) remained unresolved.
[8]
First, the status of the plaintiff’s engagement needs to be
determined. Although the terms of the contract that the first
defendant says he prepared and forwarded to the plaintiff (it is
common cause that the contract was never signed) contemplate an
agreement between a contract and subcontractor, this court has long
held that the label the parties attach to an agreement is not
definitive of its status. In an employment dispute, what matters is
the nature of the relationship between the parties. For the
purposes
of the BCEA at least, s 83 A creates a presumption of employment in
circumstances where any one of more of seven factors
are established.
These include issues of control and direction of work, whether the
person is part of an organization, is economically
dependent on the
other and works or render services only to one person. The court must
necessarily consider these and other similar
factors. In the present
instance, it is not disputed that the plaintiff rendered services
only to the second defendant, that he
did so at a fixed and agreed
rate, that he was paid what amounted to a monthly salary, that he was
part of the second defendant’s
organisation, that his
activities were subject to the control of the second defendant (and
the first defendant as its sole managing
member), that he was
economically dependent on the second defendant and that he devoted
his full-time and attention to the second
defendant’s business.
In these circumstances, I have no hesitation in concluding that the
real nature of the relationship
between the plaintiff and the second
defendant was one of employment. That being so, the plaintiff is
entitled, as he does, to
seek to enforce the terms of his contract
read, where necessary, with s 4 of the BCEA which provides, as
I have indicated,
that a basic condition of employment
established by the Act constitutes a term of every contract of
employment.
[9]
I turn now to each of the plaintiff’s claims. In regard to the
claim for a travelling allowance, the plaintiff testified
that he
calculated the figure of R1 238 290 on the basis of the allowance
payable to other members of the Gautrain provincial support
team. The
plaintiff conceded in evidence that there was no agreement between
him and the second defendant in terms of which he
would be paid a
travelling allowance other than the agreement initially that he would
be paid R 800 per month, an amount later
increased to R 1000. The
first defendant explained in evidence that when the plaintiff
commenced employment, he did not have his
own transport. Transport
was essential for the execution of the plaintiff’s duties. In
these circumstances, the plaintiff
was given the use of a car owned
by the third defendant and was paid a travelling allowance. Other
employees who used their own
vehicles for company business were
similarly paid an allowance.
[10]
It is trite that a party seeking to enforce the terms of a contract
of employment must establish the existence of the term
on which he or
she relies. Further, a contractual claim by definition contemplates
the enforcement of an existing right. It does
not contemplate the
enforcement of rights enjoyed by other employees, or terms that the
employee concerned might legitimately consider
that him or herself
entitled.
[11]
On his own version, the plaintiff has failed to establish any
existing right to payment of a travelling allowance on the terms
claimed. His claim is no more than a reflection of what he considers
to be an entitlement, based on what employees employed by
another
employer earned. In these circumstances, the plaintiff’s claim
to payment of a travelling allowance stands to be
rejected.
[12]
Turning next to the claim for monies deducted, the basis of the
plaintiff’s claim in this regard would appear to be variations
in his net remuneration. The first defendant, in his evidence,
explained that during the course of the plaintiff’s engagement,
he had regularly requested advances against his salary. These are
captured in a spreadsheet compiled by the first defendant. The
plaintiff did not dispute that he had requested advances on his
monthly salary, or that these had been paid. The recovery of these
advances necessarily resulted in variations in the plaintiff’s
net remuneration from month to month and I am satisfied, having
heard
the explanation proffered by the first defendant and having
scrutinised the documentation to which he referred during the
course
of his evidence, that there is no basis for the plaintiff’s
claim as it is articulated in paragraph 71 of the statement
of claim.
[13]
The plaintiff’s claim in relation to cellphone expenses is one
that has a similar basis to his claim for a travelling
allowance. In
essence, the plaintiff testified that other employees on the Gautrain
provincial support team were in receipt of
expenses relating to
cellphone calls. The first defendant testified that the nature of the
plaintiff’s duties did not require
him to use a cell phone for
business purposes. This was not disputed during cross-examination.
More fundamentally however, in this
instance, the plaintiff again
lays claim to terms and conditions of employment to which he feels
entitled on the basis of the experience
of others. He was unable
during the course of his evidence to establish any existing term and
condition of employment in terms
of which he was entitled to be paid
expenses relating to a cell phone or the use of the cellphone. On the
contrary, the plaintiff
conceded that there was no such term. In
these circumstances, the plaintiff’s claim in regard to
cellphone expenses stands
to be rejected.
[14]
The amount claimed by the plaintiff in respect of a CCMA award that
he contends was issued in his favour must also be rejected.
While the
plaintiff might be in receipt of such an award, the first defendant’s
uncontested evidence was that the award is
the subject of an
application for review. In any event, a claim of this nature is not a
matter that concerns a term and condition
of any contract of
employment. The Labour Relations Act establishes a mechanism for the
enforcement of arbitration awards, either
by way of certification in
terms of s 143 or by way of an application to this court in terms of
section 158 (1) (c). The claim
for payment of R 50 5476 accordingly
stands to be rejected
[15]
Turning next to paragraph 74 of the plaintiff’s statement of
claim ( and first to the claim for ‘annual leave payment’)
section 20 of the BCEA provides that an employer must grant an
employee at least 21 consecutive days annual leave on full
remuneration
in respect of each annual leave cycle. In his evidence,
the plaintiff was unable to formulate a claim to the payment of leave
pay
with any precision. He conceded that in the construction
industry, it was customary for there to be an annual shutdown over
the
December holiday period. He also conceded that he had taken leave
of absence from work during this period to return to his family
in
Cape Town, and that he had been paid in full for that leave. In the
absence of any further particularity in relation to any
refusal by
the second defendant to grant leave in terms of the Act or to
remunerate the plaintiff for any period of leave, in my
view, the
plaintiff has failed to establish the basis for a breach of any term
that might be read into his contract regarding annual
leave and
payment for annual leave. In these circumstances, the claim stands to
fail.
[16]
Turning next to notice payment, the BCEA requires an employer to give
notice of termination of employment, or to pay remuneration
in leave
of a notice period. Since the plaintiff had been employed for more
than four weeks at the time that his employment was
terminated, he
was entitled to be paid not less than four weeks remuneration in lieu
of notice. The first defendant conceded that
the plaintiff’s
contract had been terminated summarily, and he proffered no basis on
which the plaintiff might forfeit his
right to notice. To the extent
that the first defendant suggested in his evidence that the plaintiff
had been engaged in terms
of a fixed term contract, this does not
appear from the documentation introduced into evidence. Although it
may well be that the
plaintiff’s employment was ultimately
dependent on the continuation of the Gautrain project, the contract
was not entered
into for a fixed term, nor do the terms of the
agreement provide that the plaintiff’s employment terminate
automatically
on the happening of a specified event. In these
circumstances, in my view, it was incumbent on the second defendant
to give the
plaintiff notice of termination of his contract, or to
pay him in lieu of notice. Given the plaintiff’s rate of
remuneration
at the time that his contract was terminated, he is
entitled to be paid the sum of R 17 692.00.
[17]
The plaintiff’s claim for the arrear payments is one based on
the second defendant’s failure to pay him for the
month of
April. As I have indicated above, it is common cause that the
plaintiff’s contract was terminated summarily on 28
April 2010.
In his evidence, the first defendant explained that the plaintiff was
indebted to the second defendant in respect of
loans advanced when
the plaintiff’s mortgage bond account was settled and for the
purchase of a vehicle. The subject of the
loans was a matter of
dispute, but it is not disputed that the plaintiff was advanced a
loan of R 50 000 and that he consented
to the recovery of that loan
from his salary. Section 34 of the BCEA provides that a deduction may
not be made except with the
consent of an employee, and then only in
respect of a date specified in the agreement. In the absence of any
written agreement
that entitled the second defendant to deduct what
it contended was owing to it by the plaintiff was a breach of this
provision,
and thereby the plaintiff’s contract of employment.
In any event, in terms of the Act, any deduction may not exceed one
quarter
of an employee’s remuneration in money. By failing to
pay the plaintiff for the month of April (and in effect by deducting
the whole of the net salary owing to him) the second defendant was
in breach of a contractual term to be read into the plaintiff’s
employment contract by virtue of the provisions of section 4 of the
Act. The plaintiff is accordingly entitled to payment in the
sum of
R17 692.00.
[18]
The final element of the plaintiff’s claim in terms of
paragraph 74 of his statement of claim relates to the calculation
of
his salary. The provision on which the plaintiff appears to rely is s
35, which establishes a mechanism for the calculation
of wages by
time. The section confers no substantive rights. The undisputed
evidence before the court, as I have recorded above,
is that while
the plaintiff’s notional rate was R100 per hour in terms of the
so-called sub-contractor agreement, he was
not called upon to account
for his time and was effectively paid a monthly salary. In these
circumstances, s 35 is of no assistance
to the plaintiff.
[19]
Finally, the plaintiff claims that in terms of an agreement between
the second defendant and the party to which it was contracted,
the
second defendant was obliged to pay him double the rate that was
paid. There is no evidence produced to establish this
claim,
which is fanciful to say the least. Even if there were terms in any
principal contract that related to the payment of employees
or sub-
contractors, the plaintiff may enforce only the terms of any existing
contract of employment. The plaintiff was unable
to point to any term
of any contract in terms of which he was entitled to be paid double
the rate he received. This part of his
claim therefore stands to be
dismissed.
[20]
In relation to the counterclaim brought by the defendants, the claim
is in effect one brought by the third defendant and which
mirrors the
claim instituted in the Randburg Magistrate’s Court. As I have
indicated above, this court’s jurisdiction
under s 77(3) is
limited to matters concerning the terms of employment contracts. The
subject of the counterclaim is more properly
one that relates to
damages that the third defendant (which is and has never been the
plaintiff’s employer) suffered
on account of unlawful
acts that it contends were committed by the plaintiff. This court has
no jurisdiction to entertain what
amounts to a delictual claim
instituted by the owner of property against a party that is alleged
to have damaged that property.
For that reason, the defendants’
counterclaim stands to be dismissed.
[21]
In the result, the plaintiff is entitled to judgment in the amount of
R 35 384.
[22]
In so far as costs are concerned, I intend to make no order as to
costs. The plaintiff claimed payment of R 3 273 184, and
has been
awarded a fraction of that amount. This plaintiff’s claim would
have been better dealt with by the Department of
Labour. In the main,
his claims are nothing less than speculative and fanciful, and his
decision to initiate this litigation was
misguided. I also take into
account the parties’ attitude in the conduct of this litigation
and the combative engagement
that characterised every interlocutory
step. This is not consistent with practice in this court, which
requires parties, as far
as possible, to co-operate in the conduct of
litigation and to fulfill the statutory imperative of expeditious
dispute resolution.
In these circumstances, I intend to make no order
as to costs.
[23]
Finally, there remains the question of the liability of the second
defendant. The second defendant was deregistered on 31 August
2010.
It no longer trades, but it does not follow from that fact or its
deregistration that the court may not enter judgment against
it. The
application for deregistration was made in May 2010, when the first
defendant says the Gautrain project was winding down,
and in
circumstances where increased pressure was being placed on labour
brokers, the business of the second defendant. The plaintiff
contends
that the second defendant was deregistered with the sole purpose of
frustrating his claim. He also contends that the business
of the
second defendant was carried on recklessly and with intent to
defraud, and that in these circumstances, the first defendant
should
be held personally liable for the liabilities of the second
defendant.
[24]
It is incumbent on the plaintiff to adduce sufficient evidence of
grossly negligent or fraudulent carrying on of a business
of the
second defendant, alternatively, gross abuse of the separate
corporate personality in terms of s 64(1) and s 65 of the Close
Corporations Act, the provision on which the plaintiff relies. I did
not understand the plaintiff to seek to hold the first defendant
liable on any other basis.
[25]
The applicable test was recently summarised by Steenkamp J in
Zeman
v Quickelberge & another (
C 45/2010). The court stated
(footnotes omitted):
“
[18]
In
Ebrahim
and another v Airport Cold Storage (Pty) Ltd
the Supreme Court of Appeal held that:
"Acting
recklessly consists in an entire failure to give consideration to the
consequences of one’s actions, in other
words, an attitude of
reckless disregard of such consequences. In applying the recklessness
test to the running of a close corporation,
the court should have
regard to amongst other
things the corporation’s
scope of operations, the members’
roles, functions and powers, the amount of the debts, the extent of
the financial difficulties
and the prospects of recovery, plus the
particular circumstance of the claim and the extent to which the
member has departed from
the standards of the reasonable man in
regard thereto."
[19]
The court held further that the transfer to the CC of the plaintiff’s
debt from another
CC without any
quid pro quo
showed reckless
disregard for the CC’s solvency, for its ability to repay the
debts it incurred and for its capacity as a
legal entity to
accumulate and preserve assets of its own.
[20]
In
L & P Plant Hire BK en Andere v Bosch en Andere
Supreme Court of Appeal elucidated the use of the terms “
reckless”
on the one hand and “
gross negligence”
on the
other hand. Essentially the court held that reckless conduct in
Section 424 of the Companies Act (the equivalent Section
to Section
64 of the Close Corporations Act) has been interpreted to mean gross
negligence. Therefore when Section 424 of the Companies
Act is said
to include conduct which evinces the lack of genuine concern for the
prosperity of the Company, such views can also
be accepted as correct
as regards to grossly negligent conduct in Section 64 of the Close
Corporations Act.
[21]
In
Philatex (Pty) Ltd and Others v Snyman and Others; Praitex
(Pty) Ltd and Others v Snyman and others
, after examining
authorities, the court held that the ordinary meaning of “
recklessly
”
includes gross negligence, with or without consciousness of risk
taking…
[23]
In relation to the provisions of s 424 of the Companies Act our
courts have held that proof of
a causal link between the relevant
conduct and the debts or liabilities in respect of which a
declaration of personal liability
is sought is not required.
[24]
However, in
Saincic v Industro-Clean (Pty) Ltd
2009
(1) SA 538
(SCA)
, at para 20, Farlam JA stated that the absence
of such a link is a factor to be taken into account by the court in
the exercise
of its discretion whether to grant the relevant
declaration. In the same case, Harms JA, making reference to the
dicta
in
L&P Plant Hire BK v Bosch
(
supra
)
at paras 39 and 40 in relation to the provisions of s 64 of the Close
Corporations Act (“the Act”), drew a distinction
between
creditors and members of the corporation.
[25]
The learned Judge was of the view that that when it came to
creditor’s claims the section
should be interpreted
restrictively so as to apply only where the result of the relevant
conduct is that it has a negative effect
on the creditor’s
claim against the corporation.’
[26]
The plaintiff has applied a literal interpretation to the provisions
of s 64.The high point of his submission is that the second
defendant
deducted PAYE and UIF contributions from his salary and failed to pay
these over to the relevant authorities, and that
the second defendant
failed to appoint an accounting officer as required by the Act. These
may be acts that are indicative of a
failure of governance, but they
are not
per se
acts of recklessness in the sense described
above, nor is there any evidence of the required causal link. The
first defendant did
not dispute that deductions in respect of PAYE
had been made from the plaintiff’s salary each month, and that
this money
was never paid over to SARS. He ascribed this to
‘administrative challenges’ faced by the business. This
is no excuse
for the second defendant’s failure to pay monies
deducted from the salaries of its staff to SARS, but as I have
indicated,
it does not by definition and in the absence of any
further evidence, amount to the reckless and fraudulent carrying-on
of
a business for the purposes of s 64 or any basis to exercise the
discretion conferred by s 65. In my view, the plaintiff has failed
to
adduce sufficient evidence to satisfy the threshold referred to
above, and in these circumstances, there is no basis on which
to hold
the first defendant personally liable for the liabilities of the
second defendant. I do however intend to direct that the
Registrar
forward a copy of this judgment to SARS, for any further
investigation that might be appropriate.
I
make the following order:
1.
Judgment is granted against the second defendant in the sum of R 35
384, together with interest at the prescribed
rate from date of the
statement of claim to date of payment.
2. The
Registrar is directed to forward a copy of this judgment to the South
African Revenue Services.
ANDRE
VAN NIEKERK
JUDGE
OF THE LABOUR COURT
APPEARANCES
For
the plaintiff: In person
For
the defendants: First defendant, in person