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[2016] ZALCJHB 46
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SATAWU obo Members v Command Security Services (Pty) Ltd and Others (JR437/01, J787/02) [2016] ZALCJHB 46 (10 February 2016)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Not
reportable
Case
no: JR 437/01 & J787/02
In
the matter between:
SATAWU
obo 212
MEMBERS
Applicant
and
COMMAND
SECURITY SERVICES (PTY)
LTD
First Respondent
MOHAMMED
IQBAL
PARKER
Second Respondent
KALMAN
GORDON
DRUKER
Third Respondent
MAURICE
MUSA
MDLOLO
Fourth Respondent
SIMON
BANDA
Fifth Respondent
WILSON
RICH and
ASSOCIATES
Sixth Respondent
STEPHEN
VAN
DIGGELE
Seventh Respondent
SUSANNA
HENDRINA
RENTZKE
Eighth Respondent
CHAGAN
JADAV
VAGHELA
Ninth Respondent
MARIUS
POTGIETER
Tenth Respondent
MOHAMMED
SHAFFIE MOWZER
Eleventh Respondent
IXIA
TRADING 234 (PTY)
LTD
Twelfth Respondent
Heard:
29 and 30 October 2015 and 7 December 2015
Delivered:
10 February 2016
Summary:
Dispute about the true identity of the employer referred to oral
evidence.
JUDGMENT
AC
BASSON, J
Parties
to the dispute
[1]
The 212 individual applicants were
dismissed on 6 and 7 November 2000. On 5 March 2001 the CCMA ordered
the first respondent (Command
Security Services (Pty) Ltd) to
reinstate all the individual applicants retrospectively to the date
of their dismissals. This award
was made an order of court by
Landman, J on 26 August 2003. The employer is cited as the first
respondent (Command Security Services
(Pty) Ltd) in the CCMA award
and in all subsequent legal proceedings instituted in this Court.
[2]
There are 12 respondents before this Court.
Mr Stelzner SC appeared on behalf of the first to ninth respondents
and the eleventh
respondent. There is no appearance on behalf of the
twelfth respondent. Mr Van der Riet SC appeared on behalf of the
applicants.
[3]
It is now some 15 years since their
dismissal and some 13 years after Landman, J made the award an order
of court. The applicants
instituted contempt proceedings against the
respondents and are seeking to have two of the directors of the first
respondent, -
the second and third respondents (who were directors at
the time of the contempt application but not directors at the time of
the
dismissals nor at the time of the court order) - incarcerated for
contempt unless the individual applicants are “reinstated”
into the employment of the first respondent with retrospective
effect.
[4]
The first respondent denies that it had at
any stage employed any of the individual applicants and also denies
that it is the responsible
employer in terms of the award and the
subsequent court order. I will return to the submissions on behalf of
the respondents in
more detail herein below.
[5]
The contempt application served before
Lagrange, J. After having heard argument on the papers, Lagrange, J
referred the matter to
oral evidence. The following two issues were
reserved for determination–
5.1
the true identity of the employer liable
for complying with the order of the Labour Court issued on 26 August
2003;
5.2
insofar as the first respondent might be
the employer party liable for complying with the said order, whether
or not the respondents
who are or were directors of the first
respondent knew of the said order before being served with the
contempt application. (The
contempt application was served on them in
August 2006).
[6]
The respondents have also brought a
counter-application in terms of which rescission of the court order
dated 26 August 2003 is
sought on the basis that it was fraudulently
obtained and erroneously granted. This application will stand over to
a further date.
In the event this Court decides the two questions in
favour of the applicants, the contempt application will also stand
over to
a later date.
[7]
I have already pointed out that this
dispute originated more than 15 years ago. The papers are voluminous
and contain the papers
that served before this Court in various
applications. I do not intend summarising the facts in detail. In his
judgment (referring
this matter to oral evidence) Lagrange, J
summarised the history in fair detail. I am in agreement with his
summary of the events
that culminated in these proceedings.
Brief
exposition of the chronology
[8]
In order to place the present issue before
this Court in its context, it is necessary to briefly refer to the
some events that preceded
the contempt application.
[9]
Mr Mowzer (the current CEO of the first
respondent’s holding company and the Command group) was the
witness on behalf of the
first respondent. He is also cited as one of
the respondents although no relief is sought against him other than
the costs of this
application.
[10]
The businesses of Highfield Security CC and
Ithuba CC were sold as going concerns to Celtic Holding Inc in 1999.
Celtic Holding
Inc in turn sold the business to Seventy-Seven
investments (Pty) Ltd later during that same year. Seventy-Seven
Investments (Pty)
Ltd sold the business to the first respondent with
effective date 15 December 2000.
[11]
The individual applicants were dismissed
for alleged misconduct in the course of unprotected strike action
between 6 and 7 November
2000. Command Security Services (Pty) Ltd
(the first respondent) was cited as the employer in the CCMA
proceedings. As already
pointed out, the CCMA ordered the first
respondent to reinstate all 212 employees retrospectively.
[12]
After the business was transferred to the
first respondent with effective date December 2000, the business was,
according to the
first respondent, again transferred to an entity
called Ixia Trading 234 (Pty) Ltd (the twelfth respondent –
“Ixia”).
In terms of this agreement the seller, Command
Security Services Pty Ltd (the first respondent), sold the business
(which is the
business of providing security and security related
services, industrial and commercial guarding) to Ixia. This
transaction is
of vital importance to deciding the questions referred
to oral evidence. I will return to some of the salient aspects of
this agreement
herein below.
[13]
The case for the first to ninth and
eleventh respondents (collectively referred to as “the
respondents”)
is that it did not
employ the dismissed employees when they were dismissed on 6 and 7
November 2000: The first respondent only became
the owner of the
business employing the individual applicants on 15 December 2000 when
the business was transferred to the first
respondent from
Seventy-Seven Investments (Pty) Limited. It appears to be common
cause that business was transferred to the first
respondent as a
going concern as contemplated in section 197 of the LRA with effect
December 1999.
[14]
The respondent’s main defence against
the claim that they are in contempt of court is that the business of
the first respondent
was sold to Ixia (the twelfth respondent) and
therefore Ixia stepped into the shoes of the first respondent and is
therefore liable
in terms of the court order. On behalf of the
respondents it was submitted that –
(i)
At the time when the applicants were dismissed (6 and 7 November
2000), the
first respondent did not employ the dismissed employees.
The first respondent became the owner of the business employing the
individual
applicants on 15 December 2000.
(ii)
The first respondent sold the business to the twelfth respondent
(IXIA) with effect
1 January 2001 and accordingly the business (in
which the individual applicants were employed by the first
respondent) was transferred
as a going concern to Ixia with effect
from 1 January 2001. Under these circumstances, so it was submitted,
Ixia automatically
and
ex lege
stepped into the shoes of the
previous employer in terms of section 197 of the LRA. Ixia therefore
became liable in respect of
the CCMA arbitration award and the
subsequent court order of the Labour Court (dated on 26 August 2003).
(iii)
Mr Nieuwoudt, the main shareholder and director of Ixia, conducted
the business in which
the individual applicants had been employed. He
was the person who dismissed them and he was the person who therefore
employed
the individual applicants at Ixia. However, Nieuwoudt
fraudulently continued to represent to this Court in various court
proceedings
that he was acting for the first respondent when he had
no authority to do so. This, according to the respondents, happened
without
their knowledge.
[15]
In respect of the second issue namely,
whether the director knew about the Labour Court order (26 August
2003), it would appear
from the evidence of Mowzer that, at the very
least, the directors knew about the order before the contempt of
court application
was served. In this regard the evidence confirms
that Mowzer was informed by Mr Howard (who represented the first
respondent at
a meeting on 7 July 2005) of the existence of the order
shortly after the meeting.
[16]
Turning now to the first issue namely the
identity of the employer. It appears to be common cause that there
was an agreement to
sell the first respondent to Ixia with effect
from 1 January 2001 although that agreement was only signed on 28
June 2001. I will
return to the submission on behalf of the
applicants to the effect that the mere fact that there was such an
agreement does not
mean that there was also a “transfer of the
business as a going concern” as contemplated by section 197 of
the LRA.
It was further also submitted on behalf of the applicants
that the suspensive conditions provided for in the sale of business
agreement
have in any event not been fulfilled as there is no
evidence thereof. The effect thereof is that the business was never
transferred
as a going concern to Ixia.
The
agreement between the first respondent and Ixia
[17]
On 28 June 2001 an agreement of sale was
concluded between the first respondent and Ixia. In terms of the
sales agreement Ixia acquired
from the first respondent ‘“the
business” of providing security and security related services
including but not
limited to the provision of guarding services,
asset and property protection, industrial and commercial guarding and
armed security
response previously conducted by Highveld Security CC
and Ithuba CC and currently being conducted by the seller (the first
respondent)
at its Witbank and Pretoria branches respectively.
[18]
At the time Ixia was controlled by
Nieuwoudt. Niewoudt also previously controlled Highveld Security CC
and Ithuba CC. Effectively
therefore Niewoudt bought back his two
businesses which were previously sold to Celtic Holding Inc, then
sold to Seventy-Seven
investments (Pty) Ltd and later sold to the
first respondent.
[19]
Although this agreement was effective from
1 January 2001 the agreement was subject to the fulfilment of various
suspensive conditions.
Clause 5.5 reads as follows:
‘
Unless
the suspensive conditions are fulfilled by no later than 31 July
2001, (or such later date as may be agreed in writing by
the seller
and the purchaser which agreement will not be unreasonably withheld)
the provisions of this agreement will be of no
further force or
effect, and save as specifically provided for herein neither the
seller nor the purchaser will have any claim
against the other in
terms of this agreement and the status quo ante shall be restored.’
[20]
Further in terms of this agreement between
the first respondent and Ixia, Ixia was entitled to use and trade
under a name incorporating
the word “Command” and shall
be entitled to use the logo “Command Security Services”
on the purchaser’s
(Ixia) uniforms, vehicles, letterheads,
business cards and the like for a period of 36 months from the date
on which this agreement
becomes unconditional.
[21]
In terms of clause 12.12 the purchaser
(Ixia) shall assume all liabilities of the seller to employees of the
business.
[22]
On 22 November 2000 the parties entered
into a third agreement (addendum). (The first and second addendums
are not attached to the
papers as they could not be found.) This
(third) addendum specifically refers to clause 5.5 of the sale of
business agreement (dated
8 December 1999). The date upon which the
suspensive condition had to be fulfilled was now amended to read 7
November 2011. The
date of third addendum is 31 October 2001. The
suspensive condition was “the passing of a resolution in terms
of Section
228 of the Companies Act … at a general meeting of
the seller authorising or ratifying in specific terms the transaction
contemplated in this agreement”. As already pointed out, clause
5.5 provides that if this suspensive condition is not fulfilled
by 31
July 2001 (and extended to 7 November 2001 in terms of the third
addendum), the agreement will be of no further force or
effect.
Mowzer could not dispute in his evidence that the date for the
fulfilment of the suspensive condition was changed to 7
November
2001.
[23]
There is no evidence before this Court to
confirm that the suspensive conditions have been fulfilled. It is
furthermore clear from
the evidence that Mowzer did not know whether
the suspensive condition was fulfilled. It was in fact put to Mowzer
that it could
be inferred from the facts that the suspensive
condition was not fulfilled as of 31 October 2001 because if it had
the parties
would not have entered into a further agreement extending
the date for the fulfilment to 7 November 2001. Mowzer stated that he
could not comment because he did not know.
[24]
I am in agreement with the submission
advanced on behalf of the applicants: The mere fact that there was an
agreement of sale in
terms of which it was contemplated that a
business (namely that of the first respondent) would be transferred
to the purchaser
(in this instance Ixia), does not mean that there
was an actual transfer of a business as a going concern. There is
simply no evidence
before this Court that there was fulfilment of the
suspensive condition. To restate - Mowzer testified that he did not
know whether
that had occurred. It cannot therefore be concluded that
there was a transfer as a going concern from the first respondent to
Ixia.
Furthermore, this conclusion is consistent with the common
cause fact that Ixia never traded nor has it ever used the “Command”
logo as it was entitled to do in terms of the agreement of sale.
Mowzer also acknowledged that he knew that Ixia has never traded
under the name “Command Security” even though it was
entitled to do so. This conclusion is further consistent with
the
evidence of Potgieter and Khambule who testified that they were at
all material times employed by the first respondent and
that they had
never been made aware that Ixia had taken over the business of the
first respondent.
[25]
In light of the aforegoing I am of the view
that the first respondent is the employer liable to comply with the
reinstatement order
issued by the Labour Court on 26 August 2003.
[26]
Apart from what has already been stated
there are also other indications that support the conclusion that the
first respondent was
the employer of the individual applicants (and
not Ixia) and in this regard, it is instructive to refer what has
happened after
the dismissal of individual applicants and after they
had been reinstated by the CCMA.
[27]
On 17 April 2001 the first respondent filed
a review application challenging the award. On 26 August 2003
Landman, J (under case
number JR 437/01) dismissed the review
application and also made the award an order of court in terms of
section 158(1)(c) of the
LRA.
[28]
On 21 February 2000 Maya, AJ dismissed a
rescission application by the first respondent noting that the first
respondent had failed
to make out a case for rescission. In a
judgment the Court described the first respondent as “extremely
tardy and lackadaisical”.
Undeterred the first respondent filed
an application for leave to appeal against this judgment but the
application was dismissed
on 9 June 2005.
[29]
After receipt of the judgment of Maya, AJ,
the applicant’s attorneys wrote a letter to the first
respondent’s then attorneys
of record informing them of the
judgment and requesting the company to indicate when and where the
individual applicants could
tender their services and when they could
expect payment of the salaries and benefits in terms of the CCMA
award. On 14 June 2005,
the attorneys representing the first
respondent wrote to the applicants’ attorneys requesting a
meeting on 27 June 20015
at the client’s offices.
[30]
A meeting took place on 7 July 2005.
Present at the meeting was,
inter alia
,
Mr Potgieter (apparently on behalf of Command Security Services) and
Mr Howard (“Howard” – a labour consultant
on behalf
of the first respondent). The minutes reflect that the meeting was
held between Command Security Services and SATAWU.
It is clear from
this meeting that the timeframe within which employees would return
to Command to work was discussed. Howard also
explained that Command
would need a detailed name list from the union setting out the number
of people actually intending to be
taken back. The minutes reflect
that various other issues regarding the return of the individual
applicants were discussed.
[31]
A further meeting between Command Security
and SATAWU was held at Witbank on 18 August 2005. Howard was again
present on behalf
of the first respondent as well as Potgieter. It is
instructive to point out that Howard played a very active role in the
meeting:
Howard,
inter alia,
noted that the cut-off date for employees to report had expired on 7
July 2005. He further, with reference to the original list
of 212
applicants, noted that only hundred and six employees were
effectively dismissed. He also wanted to know how many people
were
ready to render their services.
[32]
A third meeting was held between SATAWU and
Command Security Service SA (Pty) Ltd on 6 October 2005 in Witbank.
Potgieter and Howard
were present. It appears from the minutes that
Howard played an important and active role in the discussions. The
main topic at
this meeting was the list of dismissed employees. It is
further instructive that Howard asked Mr Mahlangu (from SATAWU)
whether
the union had considered any settlement proposals. Mahlangu
responded that the company had to make the first move. Potgieter then
suggested that the company could only consider a settlement proposal
on what it believed to be the correct number of people on
the list.
[33]
In a letter dated 14 November 2005 Mahlangu
(from SATAWU) recorded that no one had attended the follow up meeting
on 10 November
2005 and proposed a follow-up meeting on 15 November
2005. The letter also recorded that all members will report for duty
on 1
December 2005. On 5 December 2005, the legal officer of SATAWU
wrote a letter to Potgieter advising him that SATAWU and the company
(Command Security Services (Pty) Ltd) were busy discussing a
settlement proposal and that the settlement will include the
reinstatement
of some of the individual applicants as well as a
financial offer.
[34]
On 15 August 2006, the applicants launched
a contempt of court application.
[35]
Mowzer persisted in his claims that the
respondents (other than Potgieter) were completely unaware that other
entities controlled
by Niewoudt and Potgieter fraudulently traded
under the name Command Security. He also persisted with his claim
that he and the
other respondents had no knowledge of any Labour
Court proceedings which preceded the contempt application. According
to Mowzer
Nieuwoudt and Potgieter conducted litigation in the name of
the first respondent without the knowledge or authority of himself
and his co-respondents.
[36]
I have already referred to the minutes of
at least three meetings between Howard (representing the first
respondent), and SATAWU.
These minutes convey in no uncertain terms
that the reinstatement of 212 employees was discussed at length. The
minutes, however,
reflect that Howard (who acted on behalf of the
first respondent) played an active role in the discussions regarding
compliance
with the court order and the reinstatement of the
individual applicants. From the minutes it certainly does not appear
that Howard
was merely there to find out what was going on. In fact,
it is common cause that at some stage, a settlement proposal was
placed
on the table for SATAWU to consider. In terms of this proposal
all the members will report for work within 7 days. Those who did
not
report would not be accommodated nor would they receive financial
compensation.
[37]
Mowzer was asked to explain why the first
respondent was prepared to settle the matter in circumstances where
it (the first respondent)
did not consider themselves responsible for
the matter. He replied that they felt on humanitarian grounds that
they had to find
employment for the individual applicants. At the
time the first respondent anticipated a contract on a coal mine which
would have
required them to appoint approximately 300 new staff
members. I have several difficulties with the version Mowzer
presented to
the Court: Mowzer attempted to persuade the Court that
he had no idea what the meetings were about despite the fact that, on
his
own version, the first respondent (represented by Howard) was
engaged in ongoing discussions with SATAWU officials and that there
were various communications and meetings until May 2007. Mowzer
further states in his answering affidavit (in the contempt
application)
that ‘it was agreed by both parties that it was in
the interests of all concerned to settle this matter amicably without
resorting to the courts’. In fact, negotiations between Mowzer
and Mr Mokgalabone (of SATAWU) went as far as reaching a point
where
a Mowzer was handed a draft settlement agreement for signature. This
settlement agreement refers to case numbers JR437/01
and J787/02 and
purports to be an agreement between SATAWU obo 212 members and
Command Security Services. This agreement sets out
the chronology of
litigation in the Labour Court. In terms of this agreement, Comwezi
Security Services (Pty) Ltd would re-employ
all the applicants. I
have already referred to the fact that it was Mowzer’s evidence
that they merely engaged in settlement
discussions with the union on
humanitarian grounds as well as on practical grounds. I find this
version difficult to accept. In
terms of a court order 212 employees
were reinstated into the employment of the first respondent. If the
first respondent was not
the true employer of the applicants, it is
highly improbable that it would have entered into extensive
negotiations in respect
of settling a dispute that culminated in a
court order. I also find it difficult to accept that Howard, a labour
consultant engaged
by Mowzer, would engage in extensive negotiations
with SATAWU in respect of the reinstatement of the individual
applicants if the
first applicant had not been the employer.
Order
[38]
In the event, the following order is made:
38.1
The first respondent is the employer liable
to comply with the reinstatement order issued by the Labour Court on
26 August 2003.
38.2
The respondents before Court are ordered to
pay the costs of this application jointly and severally the one
paying the other to
be absolved.
_______________
AC
Basson, J
Judge
of the Labour Court
Appearances:
For
the Applicant:
Advocate
Van der Riet SC
Instructed
by:
Cheadle Thompson and Haysom
For
the Respondents:
Advocate Stelzner SC
Instructed
by:
T Erasmus & Associates c/o Goldberg Attorneys.