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[2015] ZALCJHB 54
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Kunyuza and Another v Ace Wholesalers (Pty) Ltd and Others (JS27/12) [2015] ZALCJHB 54; [2015] 7 BLLR 683 (LC); (2015) 36 ILJ 1895 (LC) (24 February 2015)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Case no: JS27/12
DATE: 24 FEBRUARY
2015
Reportable
In the matter
between:
MLAMLI KUNYUZA
AND
ANOTHER
.......................................................................
APPLICANTS
And
ACE WHOLESALERS
(PTY)
LTD
.................................................................
FIRST
RESPONDENT
BIG SAVE (PTY)
LTD
..................................................................................
SECOND
RESPONDENT
TEMBA BIG SAVE
CC
....................................................................................
THIRD
RESPONDENT
Heard: 6
February 2015
Delivered: 24
February 2015
Summary:
Application for joinder –
applicability of Constitutional Court judgment in
Intervalve
considered in context of s 197 transfer.
JUDGMENT
STEENKAMP J:
Introduction:
[1]
The
applicants, Messrs Kunyuza and Maluleka -- former employees of the
first respondent (Ace Wholesalers) -- wish to join the third
respondent, Temba Big Save CC, to trial proceedings before this
Court. That entity was not part of the failed conciliation
proceedings
before the CCMA before the applicants referred the
dispute to this Court. The applicants say that the second and third
respondents
have a direct and substantial interest in the context of
a transfer of the business of the employer as contemplated in s 197
of
the LRA
[1]
.
[2]
The applicants also have to overcome a
preliminary hurdle, and that is condonation for the late referral of
their statement of claim.
Their prospects of success in the joinder
application and in the main referral will be a factor in the
condonation application.
[3]
At the hearing of this matter on 6 February
2015 I ruled that the answering affidavit is not properly before
court in the absence
of any application for condonation by the
respondents. That constituted an irregular step and therefore Mr
Gerber
,
for the second and third respondents, argued the applications for
joinder and condonation on the applicants’ papers.
Condonation
[4]
In
considering the application for condonation, I shall apply the
well-known principles in
Melane
v Santam Insurance Co Ltd.
[2]
Extent
of the delay
[5]
The delay is excessive. The employees
referred an unfair dismissal dispute to the CCMA on time.
Conciliation was unsuccessful. The
CCMA issued a certificate to that
effect on 14 October 2011. The 90 days by which the employees had to
deliver their statement
of claim expired on 12 January 2012. They
initially filed it on time, but served it on an employers’
organisation and not
on the first and second respondents directly.
They only did so on 7 August 2014, two years and seven months late.
[6]
This apparently excessive delay must be
considered against the explanation therefor and the factual
background to the litigation.
Explanation
for the delay
[7]
The matter has an unfortunate and
complicated history. The employees referred a dispute to conciliation
in time, alleging an automatically
unfair dismissal in terms of s
187(1)(g) of the LRA in that the first and second respondents (the
old and new employers, respectively)
had not complied with ss 197 and
197A of that Act.
[8]
Conciliation having failed, the employees
initially referred a dispute to arbitration on the same day that the
CCMA issued a certificate
that it remained unresolved. It was set
down for arbitration a month later, on 18 November 2011. On that day,
the first and second
respondents sought a postponement and raised a
point
in limine
that the CCMA did not have jurisdiction over a claim for an alleged
automatically unfair dismissal. The CCMA agreed and issued
a
jurisdictional ruling to that effect on 23 November 2011.
[9]
On 11 January 2011 – i.e. within the
prescribed time period – the employees delivered their
statement of claim to the
employers’ organisation that
represented the first and second respondents at arbitration.
[10]
The employees heard nothing further. They
applied for default judgment. The Court [Molahlehi J] granted it on
15 August 2012 and
varied the order on 29 August. The first and
second respondents applied for rescission on 28 September 2012. It
was only heard
on 5 June 2013. At the hearing the respondents’
attorneys raised the late filing of the statement of claim. The
employees’
erstwhile attorney, Andrew Goldberg, advised them to
apply for condonation. They did so on 21 June 2013. It should also be
noted
that the third respondent, Temba Big Save, formed part of the
rescission application together with the second respondent.
[11]
That first condonation application served
before Lagrange J on 6 November 2013. He handed down judgment on 29
July 2014. He ruled
that the condonation application was premature,
as the employees had served the statement of claim on the employers’
organisation
and not on the respondents.
[12]
The employees could only get a copy of the
judgment on 5 August 2014. In terms of that judgment, they had to
serve the statement
of claim on the second and third respondents.
They did so two days later, on 7 August 2014. Of course, they also
had to seek
condonation. As they were based in different provinces,
telephonic consultations had to be arranged and affidavits had to be
exchanged
between the employees and their attorneys by email. They
delivered this (second) condonation application on 2 September 2014.
[13]
The reason for the delay is an
extraordinary one. The employees did act with alacrity, firstly by
referring a dispute to the CCMA
and then, when the respondents’
jurisdictional point was upheld, to this Court. The mistake they made
was to serve the referral
on the employers’ organisation and
not on the respondents individually. They did so in the
bona
fide
belief that the employers’
organisation continued to represent the respondents. That was not
unreasonable. It is a good and
acceptable reason for the delay.
Prospects
of success
[14]
I
shall address the merits of the joinder application below. Regarding
the prospects of success at trial in the main dispute, the
evidence
before the Court on affidavit at this stage of the proceedings is
that they were dismissed on 1 September 2011, ostensibly
because the
first respondent (Ace Wholesalers) had ceased operations. But most of
its staff and stock were taken over by either
the second
[3]
or third
[4]
respondents who
continued to trade from the same premises, doing the same business
with the same customers.
[15]
The
employees thus argue that the business was transferred as a going
concern in terms of s 197 of the LRA and that the new employer(s)
stepped into the shoes of the old employer. If that is the case, they
say, their dismissal was automatically unfair in terms of
s 187(1)(f)
read with s 197A of the LRA.
[5]
[16]
The
Constitutional Court held in
Nehawu
v UCT:
[6]
“
In
deciding whether a business has been transferred as a going concern,
regard must be had to the substance and not the form of
the
transaction. A number of factors will be relevant to the question
whether a transfer of a business as a going concern has occurred,
such as the transfer or otherwise of assets both tangible and
intangible, whether or not workers are taken over by the new
employer,
whether customers are transferred and whether or not the
same business has been carried on by the new employer. What must be
stressed
is that the list is not exhaustive and none of them is
decisive individually…”
[17]
Taking account the factors outlined by the
Constitutional Court and the evidence before this Court at this
stage, the applicants
have excellent prospects of success at trial.
Prejudice and
importance of the case
[18]
The applicants will evidently be prejudiced
if they are non-suited. But that is the case for all employees. What
sets this case
apart, is that the legislature has seen fit to
designate dismissals in terms of the cited sections as automatically
unfair, i.e.
attracting an enhanced degree of opprobrium; and the
applicants did act swiftly in delivering their initial claim, albeit
to the
wrong (and in their mistaken belief, representative) entity.
[19]
The respondents, on the other hand, will
still be able to state their defence at trial. If they are
successful, they could obtain
a costs order. And even if they are not
and compensation is ordered, the amount of compensation is capped
regardless of the time
it took to be heard.
Conclusion:
condonation
[20]
In conclusion, I believe that it is in the
interests of justice, taking into account all of the factors outlined
above, that condonation
be granted for the late filing of the
applicants’ statement of claim.
Joinder
[21]
The applicants seek to join the third
respondent, Temba Big Save cc, to the proceedings because it joined
the fray in the rescission
application and it seems, according to the
employees, that it had stepped into the shoes of the other
respondents. It appears,
say the applicants, that the third
respondent is indeed their “new employer” in terms of s
197(9). The third respondent,
therefore, has a direct and substantial
interest in the proceedings, including the relief they seek, and
should be joined.
[22]
The
third respondent relies
inter
alia
on
the Constitutional Court’s recent judgment in the matter of
National
Union of Metalworkers of South Africa v Intervalve (Pty) Ltd and
Others,
[7]
(“
Intervalve”
)
for its opposition to the application to join it as a party.
[23]
The Constitutional Court’s judgment
in
Intervalve
held
that conciliation is a precondition for the adjudication of any
dispute by the Labour Court and that the effect of a failure
to cite
all employers in a referral to conciliation is that section 191 of
the LRA has not been complied with. Therefore, an alleged
employer
who has not been part of conciliation proceedings with dismissed
employees cannot be joined to an action in the Labour
Court dealing
with the alleged unfairness of a dismissal after conciliation.
[24]
During argument, I raised the question with
counsel that footnote 53 in the Constitutional Court’s judgment
in
Intervalve
might
indicate that the failure to cite a party in a referral to
conciliation is not a bar to join such party to Labour Court
proceedings
when that party is the “new employer” after a
section 197 takeover. I requested counsel to submit supplementary
heads
of argument on this issue.
[25]
Mr
Gerber
,
for the third respondent, argued in his supplementary submissions
that footnote 53 or any other part of the judgment in
Intervalve
does
not hold that it is not necessary to cite an alleged employer in a
referral to conciliation before that alleged employer can
be joined
in unfair dismissal proceedings in this Court. He argued that the
Constitutional Court held that a party cannot be joined
to
proceedings in this Court -- under any conditions -- unless
that party was part of conciliation proceedings with the referring
party and that there are no exceptions to this rule.
The
Constitutional Court’s judgment in I
ntervalve
:
[26]
The Court in
Intervalve
was split 6-5
.
In
paragraphs 26 to 40, Cameron J, writing for the majority, deals with
the question of whether a referral for conciliation is a
precondition
to the Labour Court’s jurisdiction. In paragraph 40 he holds as
follows:
‘
[40]
Referral for conciliation is indispensable. It is a precondition to
the Labour Court’s jurisdiction over unfair dismissal
disputes.’
Footnote
53 follows the above
dictum.
Footnote
53 reads as follows:
‘
53.
The Labour Appeal Court was therefore right (at paras 15 – 22)
to distinguish the factual circumstances in
Mokoena
and
Selala
(above n14) and to disapprove of the erroneous view, expressed in
both those judgments, that the Labour Court has a discretion
to
condone non-compliance with the conciliation requirement. The Labour
Appeal Court noted that the party joined in
Mokoena
was a transferee who had taken over the going concern of another
business. Judgment against the old business was therefore effective
against the transferee, who would be jointly and severally liable for
any claim. The transferee therefore had an interest in the
outcome of
the dispute. The joined party in
Selala
also had an interest in the outcome of the case, as he was a
co-employee currently employed in a position the applicant claimed
should have been his. By contrast
SACCAWU
above, n14 at paragraph 10 rightly held that an applicant in the
Labour Court “cannot rely on a joinder in terms of rule
22 to
avoid its obligations to comply with section 191 of the LRA.’
[27]
Reference
to the Labour Appeal Court (“LAC”) is that Court’s
judgment in Intervalve (
Intervalve
(Pty) Ltd and Another v National Union of Metalworkers of South
Africa obo Members
.
[8]
The Labour Appeal
Court’s judgment in
Intervalve
:
[28]
As
is apparent from footnote 53 of the CC’s judgment, it agreed
with the LAC in distinguishing the facts in
Intervalve
with
those in
Mokoena
[9]
and
Selela
.
The latter need not concern us any further.
Mokoena
,
though, is important as it also deals with an alleged contravention
of s 197.
[29]
In paragraph 16 of the LAC judgment, Waglay
JP stated (relating to
Mokoena
):
‘
The
party joined was a party that the Labour Court held had taken over
the respondent’s business in circumstances that invoked
s 197
of the LRA. In terms of this section, where a business is transferred
as a going concern, it takes over the employment responsibilities
of
the transferor. The joinder was thus granted not on the basis of any
exercise of a discretion of joining a party not taken to
conciliation
but because s 197(9) of the LRA places the new employer in the shoes
of the old employer. In the circumstances, there
was no need to refer
both the new and the old employer to conciliation; any one would
suffice as judgment against one was effective
against the other. The
party joined in
Mokoena
was in the same position as the respondent. In fact the Court in
granting the joinder said:
“
Section
197(9) of the Act stipulates that, in such a transfer situation, the
old and new employer are jointly and severally liable
in respect of
any claim concerning any term or condition of employment that arose
prior to the transfer. Section 197(2)(a) provides
that the new
employer is automatically substituted in the place of the old
employer in respect of all contracts of employment in
existence
immediately before the date of transfer. If the applicants, in the
present matter, succeed in proving that they were
unfairly dismissed,
any reinstatement order or compensation order made in their favour
would be enforceable against the transferee,
the third respondent. In
those circumstances the third respondent is an interested party.
(Halgang Properties CC v Western Cape
Workers’ Associations,
[2008] ZALAC 5
;
[2002] 10
BLLR 919
(LAC) at 927J – 928C) and should be joined to the
proceedings.”’
[30]
Exactly
the same considerations apply in the case before me. As the
Constitutional Court pointed out in
Intervalve
[10]
,
that distinguishes it from the facts in that case. In these
circumstances and in the context of s 197, the third respondent must
be joined.
The
various judgments in
Halgang
[11]
:
[31]
In
this matter, the employer (Halgang) dismissed two employees due to
its operational requirements. The dismissals took place nine
days
before the transfer of Halgang’s business as a going concern to
Wembley. The Labour Court held that the dismissals were
both
procedurally and substantively unfair and ordered Halgang to
reinstate the two employees.
[12]
[32]
Halgang
appealed to the Labour Appeal Court, which granted the appeal on the
basis that Halgang’s business had been transferred
to Wembley
as a going concern and that having regard to the provisions of
section 193(2)(c) of the LRA, it was inappropriate for
the Labour
Court to have ordered reinstatement against Halgang. Halgang had
disposed of its business and had no other business,
and that it was
therefore not reasonably practicable for Halgang to reinstate or
re-employ the two employees.
[13]
Wembley was not a party to the proceedings and the LAC rejected the
“springboard” argument argued by the Union that
a
reinstatement order against Halgang could be used as a springboard in
subsequent proceedings against Wembley. As there was no
waiver of
joinder by Wembley, no order of reinstatement would be binding on
Wembley unless Wembley had been joined to the proceedings.
[33]
The
matter ended up before the Constitutional Court (
Western
Cape Workers Association v Halgang Properties CC,
[14]
on an application for leave to appeal by the Union. The CC did not
grant leave to appeal on the basis that it is no longer possible
for
Halgang to reinstate the two employees as Halgang’s business
had been transferred to Wembley. The CC held that the Union
had to
join Wembley as a party in the proceedings if it was seeking an order
for reinstatement that would be binding on Wembley.
[34]
It seems clear, therefore, that in the
current circumstances the third respondent – who, it seems at
this stage, has stepped
into the shoes of the old employer –
must be joined to the proceedings.
[35]
The
same conclusion is apparent from the judgment of the LAC in
Anglo
Office Supplies (Pty) Ltd v Lotz
[15]
:
‘
The
legal position enunciated in the above authorities [the LAC and CC
judgments in
Nehawu v UCT
]
makes it clear that the new employer steps into the shoes of the old
employer by operation of law. Unless there is agreement with
the
employees or their representatives to the contrary, the new employer
assumes liability for all the actions done by the old
employer in
relation to each employee. This means that if an employee is
dismissed before the transfer of a business or the relevant
part of
the business, the new employer is liable for such dismissal even
though it is the old employer who actually dismissed the
employee.
Indeed, all the rights that the dismissed employee had against the
old employer at the time of the transfer of the business,
including
the right to institute or pursue legal proceedings in a dismissal
dispute, becomes a right that he has against the new
employer.
Accordingly, such an employee must, where he has instituted
proceedings against the old employer, pursue those proceedings
against the new employer instead of the old employer. The result
would be that if the dismissal is found, after the transfer of
the
business, to have been unfair, any order of reinstatement would
probably have to be made against the new employer.’
Conclusion
[36]
Having
regard to these authorities, the facts in the present case are
clearly distinguishable from those in
Intervalve
.
Indeed, as the Constitutional Court pointed out in that judgment
[16]
,
in the context of an alleged s 197 transfer – such as the
situation in
Mokoena
– a successful applicant would have to hold the transferee
accountable. That transferee – such as the third respondent
before this Court – has an interest in the outcome of the
dispute.
[37]
In these circumstances, the third
respondent has a clear and substantial interest in the proceedings by
virtue of the operation
of s 197 of the LRA. It must be joined to the
proceedings.
Costs
[38]
Although the applicants have been
successful and they may have won this battle, the war is far from
over. Much of what is said in
this judgment is premised on the
applicants’ apparent prospects of success – based only on
their own affidavits –
in the ultimate trial and the question
whether there has indeed been a transfer of the employer’s
business in terms of s
197 of the LRA. It seems fair to me to order
that the costs of both these applications should follow the order of
costs, if any,
in the ultimate trial.
Order
[39]
I therefore make the following order:
40.1
Condonation is granted for the late filing of the applicants’
statement of claim.
40.2
The third respondent, Temba Big Save cc, is joined as a party to
these proceedings.
40.3
Costs of these applications are to be costs in the trial.
STEENKAMP
J
APPEARANCES
APPLICANTS:
A L Cook
Instructed
by Crawford & associates.
SECOND
AND THIRD RESPONDENTS: Hein Gerber
Instructed
by: Nothnagel attorneys.
[1]
Labour Relations Act 66 of 1995
.
[2]
1962 (4) SA 531
(A) 532 C-F.
[3]
Big Save (Pty) Ltd.
[4]
Temba Big Save cc.
[5]
This section reads:
“
Section
197
Transfer of contract of employment
(1) In this
section and in
section 197A
—
(a) “business”
includes the whole or a part of any business, trade, undertaking or
service; and
(b) “transfer”
means the transfer of a business by one employer (“the old
employer”) to another employer
(“the new employer”)
as a going concern.
(2) If a
transfer of a business takes place, unless otherwise agreed in terms
of subsection (6)
(a) the new
employer is automatically substituted in the place of the old
employer in respect of all contracts of employment in
existence
immediately before the date of transfer;
(b) all the
rights and obligations between the old employer and an employee at
the time of the transfer continue in force as if
they had been
rights and obligations between the new employer and the employee;
(c) anything
done before the transfer by or in relation to the old employer,
including the dismissal of an employee or the commission
of an
unfair labour practice or act of unfair discrimination, is
considered to have been done by or in relation to the new employer;
and
(d) the transfer
does not interrupt an employee’s continuity of employment, and
an employee’s contract of employment
continues with the new
employer as if with the old employer.
(3) (a) The new
employer complies with subsection (2) if that employer employs
transferred employees on terms and conditions that
are on the whole
not less favourable to the employees than those on which they were
employed by the old employer.
(b) Paragraph
(a) does not apply to employees if any of their conditions of
employment are determined by a collective agreement.
(4) Subsection
(2) does not prevent an employee from being transferred to a
pension, provident, retirement or similar fund other
than the fund
to which the employee belonged prior to the transfer, if the
criteria in section 14(1)(c) of the Pension Funds
Act, 1956 (Act No.
24 of 1956), are satisfied.
(5) (a) For the
purposes of this subsection, the collective agreements and
arbitration awards referred to in paragraph (b) are
agreements and
awards that bound the old employer in respect of the employees to be
transferred, immediately before the date
of transfer.
(b) Unless
otherwise agreed in terms of subsection (6), the new employer is
bound by—
(i) any
arbitration award made in terms of this Act, the common law or any
other law;
(ii) any
collective agreement binding in terms of section 23; and
(iii) any
collective agreement binding in terms of section 32 unless a
commissioner acting in terms of section 62 decides otherwise.
(6) (a) An
agreement contemplated in subsection (2) must be in writing and
concluded between—
(i) either the
old employer, the new employer, or the old and new employers acting
jointly, on the one hand; and
(ii) the
appropriate person or body referred to in section 189(1), on the
other.
(b) In any
negotiations to conclude an agreement contemplated by paragraph (a),
the employer or employers contemplated in subparagraph
(i), must
disclose to the person or body contemplated in subparagraph (ii),
all relevant information that will allow it to engage
effectively in
the negotiations.
(c) Section
16(4) to (14) applies, read with the changes required by the
context, to the disclosure of information in terms of
paragraph (b).
(7) The old
employer must—
(a) agree with
the new employer to a valuation as at the date of transfer of—
(i) the leave
pay accrued to the transferred employees of the old employer;
[Page LRA 8-120]
(ii) the
severance pay that would have been payable to the transferred
employees of the old employer in the event of a dismissal
by reason
of the employer’s operational requirements; and
(iii) any other
payments that have accrued to the transferred employees but have not
been paid to employees of the old employer;
(b) conclude a
written agreement that specifies—
(i) which
employer is liable for paying any amount referred to in paragraph
(a), and in the case of the apportionment of liability
between them,
the terms of that apportionment; and
(ii) what
provision has been made for any payment contemplated in paragraph
(a) if any employee becomes entitled to receive a
payment;
(c) disclose the
terms of the agreement contemplated in paragraph (b) to each
employee who after the transfer becomes employed
by the new
employer; and
(d) take any
other measure that may be reasonable in the circumstances to ensure
that adequate provision is made for any obligation
on the new
employer that may arise in terms of paragraph (a).
(8) For a period
of 12 months after the date of the transfer, the old employer is
jointly and severally liable with the new employer
to any employee
who becomes entitled to receive a payment contemplated in subsection
(7)(a) as a result of the employee’s
dismissal for a reason
relating to the employer’s operational requirements or the
employer’s liquidation or sequestration,
unless the old
employer is able to show that it has complied with the provisions of
this section.
(9) The old and
new employer are jointly and severally liable in respect of any
claim concerning any term or condition of employment
that arose
prior to the transfer.
(10) This
section does not affect the liability of any person to be prosecuted
for, convicted of, and sentenced for, any offence.
[6]
2003 (3) SA 1
(CC) para 56.
[7]
(CCT
72/14)
[2014] ZACC 35
(12 December 2014) as yet unreported and
available at http://www.saflii.org/za/cases/ZACC/2014/35.html.
[8]
(JA
24/2012)
[2014] ZALAC 29
(29 March 2014), as yet unreported and
available at http://www.saflii.org/za/cases/ZALAC/2014/29.html.
[9]
Mokoena
v Motor Component Industry (Pty) Ltd
(2005) 26
ILJ
277
(LC).
[10]
Supra
at
fn 53.
[11]
Halgang
Properties cc v Western Cape Workers’ Association
[2008] ZALAC 5
;
[2002] 10 BLLR 919
(LAC).
[12]
The
Labour Court’s judgment is reported as
Western
Cape Workers Association v Halgang Properties CC,
(2001)
22
ILJ
1421 (LC).
[13]
Id
at paras 44 – 45.
[14]
[2003] ZACC 14
;
2004
(3) BCLR 237
(CC).
[15]
(2008)
29
ILJ
953 (LAC) at para 22.
[16]
At footnote 53.