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[2017] ZALCJHB 28
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Barloworld Transportation (Pty) Ltd v Unitrans Supply Chain Solutions (Pty) Ltd and Others (J2967/16) [2017] ZALCJHB 28 (26 January 2017)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case no: J2967/16
In
the matter between:
BARLOWORLD
TRANSPORT (PTY) LTD
Applicant
and
UNITRANS SUPPLY CHAIN
SOLUTIONS
(PTY)
LTD
First Respondent
SATAWU
Second
Respondent
GARETH
WARD AND 46 OTHERS
Third
to Forty Seventh Respondents
XINERGISTIX
(PTY)
LTD
Forty
Eighth Respondent
Heard:
19
January 2017
Delivered:
26 January 2017
Summary:
Review – Urgent application
–
Section 197
of the
Labour
Relations Act 66 of 1995
.
JUDGMENT
GUSH
J
Introduction
[1].
The applicant in this matter applies for an order declaring the
takeover by the—
“
first or
forty eight respondent, as the case may be, of the business
activities presently conducted by the applicant at the premises
of
PPC Cement (Pty) LTD at 218 Ferguson Rd., Deal Party, Port Elizabeth
and in the town called Slurry in the vicinity of Mahikeng,
respectively, each constitutes the transfer of the business or part
of a business as a going concern as contemplated in
section 197
of the
Labour Relations Act 66 of 1995
; and ordering the 1
st
of 48 respondent to comply with its obligations in respect of each of
the 3
rd
to 47
th
respondents in accordance with
section 197
of the LRA as their
new employer as contemplated in
section 197
pursuant to such
transfers”
[1]
.
[2].
In the original application the applicants had not cited the forty
eighth respondent. By agreement between the parties the
applicants
filed an application to join the forty eighth respondent and agreed
that such joinder application should be granted.
[3].
At the commencement of the hearing I granted the application to join
the forty eighth respondent. The parties were at
idem
that should the applicant succeed in its application the draft order
as set out above was the appropriate order.
[4].
In its founding affidavit the applicant explains that some 20 years
ago PPC Cement (Pty) Ltd (a cement manufacturer) (PPC)
outsourced the
distribution of its products to Barloworld Logistics (Pty) Ltd and
subsequently to the applicant. The applicant,
Barloworld Transport
(Pty) Ltd, was established as an entity as a result of a merger
between a division of Barloworld Logistics
(Pty) Ltd and Manline
(Pty) Ltd.
[5].
PPC has a number of manufacturing sites from which deliveries of its
cement are made in accordance with a system the applicant
describes
in its affidavit.
[6].
In order to give effect to these deliveries the applicant established
business units at each site with dedicated fleets of
vehicles and
drivers and administrative and management staff. PPC provides office
space parking facilities and at the Slurry site
a workshop and
refuelling facilities.
[7].
In setting out the background to the matter the applicant records
further that during this time a division of Barloworld Logistics
called Transport Management Systems (TMS) (clearly a separate entity
from the applicant) was established taking responsibility
for
managing the distribution of PPC’s products to its customers.
[8].
According to the applicant TMS receives an instruction from PPC to
deliver consignment from her TMS determines with reference
to
proximity of the various PPC facilities to the customer, the
availability of stock in the availability of transport, which of
PPC’s facilities will supply the customer. TMS instructs the
appropriate unit to give effect to the delivery. The actual
distribution of PPC’s products was undertaken by the applicant
from PPC’s various sites from which it delivered the
products
in accordance with the instruction from TMS.
[9].
The applicant explains that the “business unit”
established in each of the PPC sites generates revenue from
deliveries
undertaken from that site and that these units are
“self-contained revenue, cost and profit centres”.
[10].
During April 2016 PPC invited tenders for the provision of transport
services from its various factories. This was for the
services the
applicant was rendering to PPC at its various factories. The outcome
of the tender process was that the applicant’s
tender was
unsuccessful in respect of two factories, namely, Port Elizabeth and
Slurry and the first respondent was successful
in its tender to
distribute PPC’s products from the factories in Port Elizabeth
and Slurry.
[11].
It is the contract to supply transport from these factories that is
the subject of this application.
[12].
The effective date from which the first respondent/forty eighth
respondent is to commence the distribution is 1 February 2017.
It is
for this reason that the applicant has brought this application as a
matter of urgency.
[13].
In its founding affidavit the applicant sets out in some detail the
discussions that took place, from the time of its unsuccessful
tender, with the first respondent regarding a “seamless
transition” from the applicant to the first respondent. The
applicant to a large extent relies on this as demonstrating that the
transaction is covered by
section 197
of the
Labour Relations Act.
[2
]
[14].
It is clear from the affidavit and the documents attached thereto
that the first respondent expressed interest in taking over
as many
of the facilities currently operated by the applicant as it could in
order to successfully provide the service.
[15].
It is equally clear that despite the applicant’s insistence
that this evidenced an appreciation on the part of the first
respondent that the transfer was one envisaged by
section 197
of the
LRA, that the first respondent at all times made it clear that it did
not regard the transaction as one falling within the
provisions of
that section. The papers show that the first respondent repeatedly
denied that the employees would be transferred
as envisage by
section
197
of the LRA.
[16].
The First respondent repeatedly responds to the applicant’s
insistence that the transaction is a transfer of a business
as a
going concern by emphasising that it does not regard it as such and
whilst it is prepared to take on some or all of the employees
they
will not transfer in accordance with the
section 197.
[17].
What appears to have brought the matter to a head was the indication
by the first respondent in November to the applicant
that the forty
eighth respondent would be responsible for assuming responsibility
for giving effect to the contract awarded to
the first respondent.
[18].
The forty eighth respondent in its dealings with the applicant
appears to have been more circumspect in its willingness to
take over
any of the applicants facilities at the two factories and in
particular the employees.
[19].
At all times it is apparent from the papers that no assets are to be
transferred in terms of the contract and in particular
not
the vehicles.
[20].
The first and forty eighth respondents in opposing the application
basically record that they do not regard the awarding of
the tender
for the transport of PPC products from the two factories to be a
transfer of a business or part thereof as a going concern.
The
respondents aver that all that is to be transferred is the delivery
service rendered by the applicant.
[21].
There is nothing in the papers to suggest that in terms of the
contract the first or forty eighty respondent would be unable
to
render the service to PPC on 1 February 2017 in the absence
of the transfer of the applicant’s “business
or part
thereof”.
Legal
Principles
[22].
In the matter of
NEHAWU
v University of Cape Town
[3]
the Constitutional Court set out the test that is now routinely
applied in determining whether a business (including the whole
or
part of any business, trade, undertaking or service) has been
transferred “by one employer to another employer as a going
concern”.
[4]
[23].
The Court said the following:
“
The phrase
“going concern” is not defined in the LRA. It must
therefore be given its ordinary meaning unless the context
indicates
otherwise. What is transferred must be a business in operation
“so that the business remains the same but
in different hands”.
Whether that has occurred is a matter of fact which must be
determined objectively in the light of the
circumstances of each
transaction. In deciding whether the 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 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 is being carried on
by the new employer. What must be
stressed is that this list of factors is not exhaustive and that none
of them is decisive individually.
They must all be considered in the
assessment and therefore should not be considered in isolation.”
[5]
(Footnotes omitted).
[24].
It is clear that the determination of whether or not a transfer has
taken place is an objective exercise examining the facts
of each
matter and that this inquiry must be directed at the examining the
substance of the transaction.
[25].
Neither the applicant nor the respondents have provided the Court
with any of the details of the contract or tender awarded
to the
first respondent. The affidavits simply suggest that the contract
only requires the contractor to give effect to an instruction
from
TMS to undertake a delivery in accordance with TMS’s system.
The instruction requires the contractor to convey PPC products
from
the factory to the customer. This instruction is received not from
PPC. TMS gives instruction on behalf of PPC to the service
provider.
[26].
There is no indication of any factor relating to the “substance”
of the transaction that a business or part thereof
is being
transferred. Save for the requirement to give effect to the
instruction to deliver and that the service provider must
provide
vehicles for this, there is no information regarding the number or
nature of the vehicles required or any specific duties
or services
the service provider might be required by the contract to provide in
giving effect to the instruction from TMS.
[27].
What is apparently being transferred is the delivery service now
rendered by the applicant and to be rendered by the first/forty
eighth respondent.
[28]
It is common cause that the vehicles are not being taken over by the
first or forty-eighth respondents and in fact, despite
the
discussions between the applicant and the first respondent regarding
furniture and the like, no assets are being transferred.
[29].
The judgments of the Constitutional Court, the Labour Appeal Court
and this Court emphasize that the determining factor in
deciding
whether a transfer of a business part thereof is taken place are the
specific circumstances of each transaction.
[30].
In this matter, there is nothing in the papers to indicate that the
specific circumstances of the transaction or the contract
involves
anything other than the responsibility for giving effect to
deliveries in accordance with instructions from TMS.
[31].
The question that then arises from the facts of this matter is
whether it is “the business that supplies a service”
that
is being transferred or “the service itself”. The
Constitutional Court in the
Aviation
Union
[6]
said the following:
“
It must be
emphasized that what is capable of being transferred is a business
that supplies the service and not the service itself.
Were it to be
otherwise, the termination of a service contract by one party and its
subsequent appointment of another service provider
would constitute a
transfer within the contemplation of the section. That is not what
the section was designed to achieve as is
apparent from its scheme,
historical context and its purpose.”
[7]
[32].
What is clear from the papers in this matter and in particular the
absence of any further detail what is being taken over
by the
forty-eighth respondent (via the first respondent) is the obligation
to provide a delivery service from the factory in question
to its
customers.
[33].
Equally clear is the fact that no assets are being transferred or
required to be transferred to enable the forty-eighth respondent
to
perform the service. In the absence of the transfer of assets there
is nothing in the papers to suggest that it would not be
possible for
the forty-eighth respondent to seamlessly continue to provide the
service previously provided by the applicant, in
accordance with the
instructions from TMS, without any of the assets of the applicant.
[34].
It is also equally clear that there is nothing to suggest that the
nature of the transaction requires the transfer of either
assets or
employees as a precondition for the respondents to render the
delivery service.
[35].
It might well be so that the first respondent in particular in its
discussions with the applicant created an impression that
the
transaction fell within the definition of
section 197
, particular
insofar as it indicates that it was interested in employing the
applicants’ employees and acquiring some of the
furniture. This
however is not a determining factor.
[36].
Taking the above into account I am not persuaded that the facts of
this particular transaction constitutes a transfer of a
distinct
business or part thereof and accordingly the transaction does not
fall within the ambit of
section 197
of the LRA.
[37].
There is no reason why costs should not follow the result. Both
parties suggested that the costs should include the costs
of two
counsel.
Order
[38].
I therefore make the following order:
1.
The applicants’ application is dismissed with costs, the costs
to include
the costs of two counsel.
D H Gush
Judge of the Labour Court
of South Africa
Appearance:
For
the Applicant:
C Watt-Pringle SC and H van der Merwe
Instructed
by: Redfern and Findlay (N Cluckie)
For
the First and
Forty
eighth Respondents:
A Redding SC and G Fourie
Instructed
by: Cliffe Dekker Hofmeyr
[1]
Agreed draft order handed up by the
applicant.
[2]
66 of 1995. (LRA)
[3]
National Education Health &
Allied Workers Union
(
NEHAWU) v University of
Cape Town and Others
2003
3 SA 1
(CC) para 56. (
NEHAWU
)
[4]
Section 197(1)
of the LRA.
[5]
NEHAWU
above
n 3 at para 56.
[6]
Aviation Union of SA v SA Airways
(Pty) LTD & Others
2012 (1) SA 321
(CC);
2012 (2) BCLR 117
(CC);
[2012] 3 BLLR 211
(CC); (2011) 32 ILJ 2861. (
Aviation
Union
)
[7]
Id at para 52.