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[2017] ZALCJHB 278
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De Lucia v Bester and Another (JS947/13) [2017] ZALCJHB 278 (1 August 2017)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case
no: JS 947/13
In
the matter between:
NEVILLE
DE LUCIA
Applicant
and
ETIENNE
BESTER
First Respondent
KAT DE BEER TRAINING (PTY)
LTD
Second Respondent
Heard:
21 April 2017
Delivered:
01 August 2017
JUDGMENT
TLHOTLHALEMAJE,
J:
Introduction:
[1]
With this
interlocutory
application, the applicant (De Lucia), seeks to join the second
respondent, Kat De Beer Training (Pty) Ltd (‘KDBT’)
in
the trial proceedings initiated by the first respondent, Etienne
Bester (Bester). Bester had approached this Court by way of
a
statement of case in October 2013, alleging that his dismissal by De
Lucia was automatically unfair within the meaning of the
provisions
of section 187(1)(g)
[1]
read with those of section 197(8)
[2]
of Labour Relations Act
[3]
(LRA).
[2]
Initially, Bester had also cited KDBT as the second respondent, and
both De Lucia and KDBT had opposed his claim. In July 2016,
Bester,
withdrew his claim against KDBT. He nonetheless did not seek leave to
amend his statement of claim. On 6 October 2016,
De Lucia launched
this application to join KDBT to the trial proceedings, on the basis
that it had substantial interest in the
subject matter of the
proceedings. Bester filed his intention to oppose that application,
but as at the hearing of this matter
he had not filed an answering
affidavit. Substantive heads of argument were nevertheless filed on
his behalf and he was accordingly
represented in these proceedings.
KDBT had however opposed that application by filing an answering
affidavit. De Lucia had not
filed a replying affidavit.
[3]
Bester’s statement of claim and De Lucia’s application to
join KDBT in the main proceedings came about against the
background
as summarised below.
Background:
[4]
Bester commenced his employment with KDBT as a Financial Director
during March 2001. He left its employ in 2005 and was
re-employed in the same position on 1 April 2009. De Lucia held 50%
shares within KDBT which he had bought during 2005, and had
also
become its Director. From 1 March 2012, Bester was appointed as
KDBT’s Financial Director, and from February 2013, he
worked
via a so-called ‘virtual office’.
[5]
In June 2013, an agreement was signed between De Lucia and the
shareholders of KDBT, in terms of which the former purchased
the
latter’s franchise in respect of KDBT’s territories as a
going concern, excluding its operations within the KwaZulu-Natal.
According to Bester and KBDT, the parties agreed on the transfer of
contracts of employment in accordance with the provisions of
section
197 of the LRA.
[6]
Bester’s intentions since May 2013 had always been that he
would continue to work for De Lucia after the transfer. On
3 July
2013, De Lucia dispatched an e-mail to Bester, indicating that his
current employment was with KDBT and not with him, and
was further
advised to deal directly with KDBT. The email
inter alia
recorded the following:
“…
I have purchased the right to sale
Dale Carnegie business in Gauteng, North West, Free State, Limpopo,
Mpumalanga, Northern Cape
and Namibia from Joan Deer Beer.
I have resigned from KdBT as a
director and have sold my shares back to de Beers in KdBT effective
1
st
July 2013.
I have signed the new franchise
agreement with DC&A through my company PDP which I own 100%.
It was agreed between Neil and myself
that any business that has a signed training agreement will be
invoiced through KdBT and all
costs, trainers’ fees and
commission will be for KdBT. It was also agreed that the current
public process due to start this
month will be invoiced under KdBT
and that the costs for these classes will be for KdBT.
…
I did ask what your intention was to
your possible involvement with me, should I be successful in my bid
to purchase the right to
sale Dale Carnegie training in my territory.
Your reply was that Neil and my business agreement could cover your
future involvement.
Consequently as per the earlier comments your
current employment is with, and through KdBT and I advise that you
deal directly
with KdBT in this regard moving forward.
…”
[7]
Bester thereafter referred an unfair dismissal dispute to the
Commission for Conciliation Mediation and Arbitration for
Conciliation
(CCMA) on 11 July 2013, alleging that he was dismissed,
which dismissal was automatically unfair. When conciliation failed on
8
August 2013, the matter was then referred to this Court for
adjudication.
[8]
The basis of Bester’s claim was that;
a) Since De Lucia
had purchased the business of KDBT as a going concern, the contracts
of employment of employees
of KDBT, and all rights and obligations of
KDBT were taken over by De Lucia as a going concern in terms of the
provisions of section
197 of the LRA;
b) De Lucia had
further not accepted his services, and had thus terminated his
services because of operational
requirements emanating from the
provisions of section 197 of the LRA transfers;
c) Notwithstanding
the above, the dismissal was substantively unfair as it was not based
on operational requirements,
and further that there was no commercial
rationale justifying his dismissal;
d) De Lucia ignored
aspects of section 197 of the LRA transfer procedures by failing to
consult with him;
[9]
KDTB did not contest the correctness of the factual allegations made
by Bester in his statement of case, and had conceded that
the sale
agreement concluded with De Lucia was always intended to and had the
effect of transferring its business as a going concern,
and that the
parties had intended that the provisions and legal consequences of
section 197 of the LRA would apply.
De
Lucia’s submissions in seeking a joinder:
[10]
Contrary to Bester’s contentions as summarised above, De Lucia
denied that he had purchased the rights, titles and obligations
of
KDBT as a going concern and disputed that the provisions of section
197 of the LRA were applicable. He contended that only some
of the
marketing rights that KDBT held to a specific geographical area were
taken over by him. He had further denied having employed
Bester or
ever having dismissed him, and denied liability for any claims.
[11]
De Lucia had further pointed out that KDBT in its statement of
defence prior to the claim being withdrawn against it, had contended
that its agreement with him was intended to have the effect of
transferring the business as a going concern, and had denied
liability
to Bester either individually, alternatively jointly and
severally. He pointed out that KDBT had however admitted that in the
event
that the Court found that there was a transfer of a business
between, and if it were further found that he had dismissed Bester
for operational requirements within 12 months of the date of the
transfer of the business, then there would be joint and several
liability for the sums contemplated in section 197 (8) of the LRA.
[12]
De Lucia further submits that the crux of the dispute revolves around
the agreement entered into between him and KDBT, and
whether it had
resulted in the sale of KDBT’s business as a going concern. He
submitted that KDBT has a substantial interest
in the subject matter
of this case, and that in the event of the Court finding that the
agreement did not provide for the transfer
of the business as a going
concern, then KDBT would be indebted to Bester for compensation for
dismissal, and the balance of the
relief claimed by him.
[13]
De Lucia further submitted that in the event of the Court making a
finding that there was a transfer of a business, and that
Bester was
dismissed for operational requirements within 12 months of the date
of the transfer, KDBT would be liable to Bester,
jointly and
severally with him, for payment of leave pay, severance pay and all
other payments which had accrued to Bester.
KDBT’s
response to the joinder application:
[14]
KDBT opposed the application to join it to the proceedings on the
basis that;
a) It has no direct,
indirect or substantial interest in this dispute, and there was no
basis upon which its joinder
to the proceedings should be ordered;
b) To join it would
merely result in it being obliged to endure the costs of a trial in
circumstances in which
no order would be made against it in favour of
Bester, and further that the interests of justice would not be served
by obliging
it to be joined in proceedings and incur costs in a trial
the outcome of which it has no interests in;
c) It has at all
times agreed with Bester that the transfer of the business between it
and De Lucia was intended
to be and was in fact a transfer of a
business as a going concern governed by the provisions of section 197
of the LRA, but had
however disagreed with the conclusions contended
for by Bester in his statement of claim as to the effects and
consequences of
the transfer;
d) Since Bester’s
claim was that he was dismissed by De Lucia on a date after the
transfer of the business,
and his other claims for payment related to
claims which allegedly arose after the transfer of the business, the
provisions of
section 197 (2) (c) of the LRA which were applicable
only to acts performed by an old employer prior to the transfer were
immaterial
to the claim;
e) Bester’s
claim was not predicated upon any term or condition of his employment
which arose prior to the
transfer of the business and thus the
provisions of section 197 (9) of the LRA were not also applicable
f) Bester’s
claim was that he was dismissed as a result of the transfer of the
business and not for
operational requirements, and therefore no
liability arose under the provisions of section 197 (7) of the LRA
since there
was no issue before the Court about whether or not
Bester’s services were terminated for operational requirements,
and also
since the issue was whether or not he was dismissed.
g) It was only if it
were to be found that Bester’s services were terminated by way
of De Lucia’s
operational requirements that KDBT could under
section 198 (8) read with 198 (7) (a) of the LRA be found to be
jointly and severally
liable. This was however unlikely in view of
Bester’s pleaded case that De Lucia refused to take him into
service and that
he was therefore dismissed, as opposed to the
latter’s case that it had no obligation to take him into its
service and that
he therefore was not dismissed;
h) Furthermore,
Bester had not pleaded in the alternative that KDBT itself was to be
found directly liable for
his dismissal in the event that his primary
cause of action against De Lucia was dismissed. Regardless of the
fact that Bester
claimed leave and severance pay, which were amounts
KDBT would be liable to pay under section 197 (7) (a) (ii) of the LRA
read
together with section 197 (8) of the LRA, jointly and severally
with De Lucia if his services were found to have been terminated
for
operational reasons, his pleaded case was not that his services were
terminated for operational requirements, and KDBT could
therefore not
be found to be jointly and severally liable;
i) Even if
Bester was found to be correct, he would be entitled to certain
relief he sought against De Lucia,
and except for payment of
severance pay, this did not affect KDBT. If it was found that De
Lucia was correct, then Bester would
be entitled to nothing, and this
also did not affect KDBT.
[15]
Submissions made on behalf of Bester in regard to the joinder
application were to the effect that his dismissal by De Lucia
was
substantively and procedurally unfair emanating from a transfer as a
going concern as contemplated in sections 187 (1) (g)
and 197 of the
LRA. Having had regard to the provisions of section 197 of the LRA,
he had a choice as to whom he wanted to pursue
a claim against as his
position was similar to that of a creditor who was entitled to
proceed against co-debtors individually or
jointly. He could
therefore not be forced to proceed against both parties in the
current action, and that furthermore, in the absence
of proceeding
against KDBT, the latter’s rights did not stand to be
prejudicially affected.
Evaluation:
[16]
This application was brought
before the Court in terms of Rule 22 (1) of the Rules of this
Court
[4]
.
The legal principles regarding applications for a joinder were
confirmed by Nkabinde J in a dissenting judgment in
National
Union of Metalworkers of South Africa v Intervalve (Pty) Ltd and
Others
[5]
as follows;
‘
The
test for joinder at common law is governed by the following
principles:
(a)
There must be a legal
interest in the proceedings and not merely a financial interest.
(b)
A party has a right to
ask that someone be joined as a party “if such a person has a
joint proprietary interest with one or
either of the existing parties
to the proceedings or has a direct and substantial interest in the
Court’s order” and
“to avoid a multiplicity of
actions and . . . a waste of costs”.’ (Authorities
omitted)
[17]
The above principles were
followed in this Court by Molahlehi J in
Wallejee
v FCSA Organisation Service (Pty) Ltd
[6]
,
who had held as follows;
“
It
is trite that the test to apply in considering whether a party should
be joined in proceedings is whether the party sought to
be joined has
“substantial interest in the subject matter of the
proceedings”. The test was explained in
Gordon
v Department of Health: Kwazulu-Natal
in the following terms:
“…
The
issue in our matter… is whether the party sought to be joined
has a direct and substantial interest in the matter. The
test is
whether a party, who is alleged to be a necessary party, has a legal
interest in the subject matter, which may be affected
prejudicially
by the judgment of the court in the proceedings concerned. In the
Amalgamated Engineering Union case, supra, it was
found that “the
question of joinder should not depend on the nature of the subject
matter but on the manner in which, and
the extent to which, the
court’s order may affect the interests of third parties”.
[18]
Whitcher AJ (as she then was)
also had an opportunity in
Strydom
v T-Systems SA (Pty) Ltd
[7]
to determine
an application for a joinder within the context of a section 197 of
the LRA claim. Having had regard to
the
principles enunciated in
Gordon
v Department of Health: KZN
[8]
,
the
learned Judge held that
the
position in our civil law was that the mere fact that a third party
was jointly and severally liable for a debt did not qualify
as a
direct and substantial interest in the right that is the subject
matter of the dispute, and further that joint liability for
a debt
did not trigger the joinder of such a party by necessity, and that
mere
financial interest or prejudice has been held to be secondary and
indirect
[9]
.
[19]
In determining whether KDBT should be joined to the trial
proceedings, the first observation as made on behalf of KDBT is that
it is not clear from the joinder application as to in what capacity
De Lucia seeks its joinder. For the sake of convenience however,
and
more particularly in view of the nature of Bester’s claim, I
will accept that De Lucia seeks to join KDBT as the second
respondent
in the main claim.
[20]
It can further be accepted that once Bester had withdrawn his case
against KDBT, and irrespective of the fact that he had not
formally
amended or sought leave to amend his statement of claim, his case
against De Lucia and the relief claimed remains the
same, as is the
latter’s response thereto.
[21]
As to whether KDBT should be joined needs to be determined within the
context of Bester’s claim, the relief he seeks
and De Lucia’s
responses thereto. To recap, Bester’s claim was that he was
dismissed by De Lucia on a date after the
transfer of the business,
and as a consequence of that transfer. His other claims for payment
of severance and leave pay are related
to those which arose after the
transfer of the business. As it was correctly pointed out on behalf
of KDBT, Bester’s claim
was not predicated upon any term or
condition of his employment which arose prior to the transfer of the
business. It therefore
follows that the provisions of section 197 (9)
of the LRA would not find application in this case. His further claim
was that he
was dismissed as a result of the transfer of the business
and not for operational requirements, as there was no commercial
rationale
for the dismissal.
[22]
De Lucia’s principal defence to claim was that KDBT was never
taken over as a going concern in terms of the provisions
of section
197 of the LRA. He had further denied that he had ever employed
Bester, and accordingly could not have dismissed him.
He further
contended that if the Court in the main action was to find that he
did in fact take over KDBT as a going concern, and
that Bester was
dismissed for reasons related to operational requirements within 12
months of the transfer, then in that event,
KDBT would be jointly and
severally liable with it for leave and severance pay due to Bester.
[23]
Having had regard to De Lucia’s contentions, it is indeed
apparent that they missed the nub of Bester’s argument,
which
was that the termination of his services arose from the transfer of
the business as a going concern within the meaning of
automatically
unfair dismissal as contemplated in section 187 (1) (g) of the LRA,
which presents a different proposition if the
argument was that the
dismissal was based on operational requirements within the meaning of
section 189 of the LRA. A second point
which De Lucia missed is that
Bester’s claim is not based on the provisions of section 197
(9) of the LRA.
[24]
In the light of the above observations, the first point to be made is
that to the extent that the claim against KDBT was withdrawn,
and
since no relief is sought against it, it would not be possible for
its legal interests to be prejudicially affected by any
order, which
could be made in due course. The fact that the question of joint and
several liability may arise as contemplated within
the provisions of
section 197 of the LRA does not in itself automatically give rise to
an apportionment of liability, moreso since
Bester had not claimed
it, as evident from the withdrawal of his claim against KDBT.
[25]
Further on De Lucia’s own submission, joint
and several liability merely pertains to a claim under section 197 of
the LRA
and particularly in respect of leave or severance pay that
may be payable to Bester.
In line with the principles set out
in
Gordon
and as further applied in
Intervalve
,
Strydom
and other authorities referred to
,
these financial considerations are
clearly incidental to the primary relief sought by Bester, and cannot
on their own lead to a
conclusion that KDBT has a direct and
substantial interests in the main proceedings.
[26]
To the extent that Bester may be successful with
the incidental claim, it would then be up to De Lucia to
exercise
his right of recourse against KDBT in a separate action, if he is of
the view that some amounts may be recoverable from
it. The mere fact
that KDBT in its statement of defence as contended by De Lucia had
conceded that it might be jointly and severally
liable to the extent
that Bester is successful with his claim does not further imply that
it has a direct or substantial interest
in the subject matter of the
trial proceedings. It is merely an acknowledgement of the
consequences of a finding that could be
made as contemplated in
section 197 (8) of the LRA. Be that as it may, the implications of
Bester specifically abandoning his claim
against KDBT is that he does
not in any event seek such relief.
[27]
To the extent that De Lucia had
for mere convenience wished to avoid future litigation with KBDT (in
the event that he held the
view that the provisions of section 197
providing for joint and several liability found application, even
though this is not Bester’s
case), it was correctly pointed out
on behalf of Bester and KDBT that he could have issued a third party
notice to KDBT in the
main application by way of a Rule 13
[10]
application, and could at this stage of the proceedings compel KDBT
to be a party to proceedings it has no interests in.
[28]
A further factor to be considered is that of questions pertaining to
whether Bester was an employee or not, or whether he was
dismissed or
not are matters for oral evidence, which KDBT clearly has no
interests in. In the event that evidence would indicate
that Bester
was not employed nor dismissed by De Lucia, that would be the end of
the matter, and I fail to appreciate how it can
be said that KDBT has
any substantial interest in that outcome. Furthermore, to the extent
that Bester had withdrawn his claim
against KDBT, that is a choice he
would have to live with if his claim against De Lucia was
unsuccessful.
[29]
To summarise then, De Lucia has not demonstrated that KDBT has
or
may have a direct, substantial or legal interest in any order that
the Court may make or if such order cannot be carried into
effect
without affecting or prejudicing it. KDBT is therefore not a
necessary party and there is no basis upon which it can be
joined in
the trial proceedings
. To hold otherwise would unnecessarily
burden it with costs of a litigation which Bester as
dominus litis
had made a choice to avoid.
[30]
It was correctly pointed out on
behalf of KDBT that an employee is not obliged to proceed against
both the old and new employer,
and could choose which of the
employers he wanted to pursue his or her claim
[11]
.
Furthermore, it being apparent that De Lucia seeks to join KDBT as
the second respondent in the main claim, the consequences for
Bester
if his claim was to be unsuccessful would be dire, as he may be
burdened with the costs of two legal teams which he did
not bargain
for. To this end, it is further concluded that it would not be in the
interests of justice to grant the application.
[31]
What remains to be determined is the question of costs. This Court in
accordance with the provisions of section 162 of the
LRA is required
to have regard to the requirements of law and fairness in awarding
costs. Given the circumstances of this case,
it is my view that based
on the legal principles dealt with elsewhere in this judgment, this
application was clearly ill-conceived.
Accordingly, KDBT should not
have been burdened with its costs. Bester nevertheless had not
opposed the application despite his
intentions to do so and it would
not be in the interests of fairness to award him costs, specifically
since the dispute between
him and De Lucia is ongoing.
Order:
[32]
In the premise I make the following order:
1. The application
to join the Second Respondent is dismissed.
2. The Applicant,
Neville De Lucia is ordered to pay to the Second Respondent, the
costs of this application.
3. There is no order
as to costs made in favour of the First Respondent.
4. The Registrar of
the Court is directed to set-down this matter for trial for three
days.
________________
E
Tlhotlhalemaje
Judge
of the Labour Court of South Africa
Appearances:
For
the Applicant:
Adv. C.J
Moreno
Instructed
by:
Minnie & du
Preez Inc.
For
the First Respondent:
Adv. J Lourens
Instructed
by:
Len Dekker
& Associates
For
the Second Respondent:
Adv. K Allen
Instructed
by:
Kenny
Verhage & Associates
[1]
Section
187.
Automatically unfair dismissals
(1) A
dismissal
is
automatically unfair if the employer, in dismissing the
employee
,
acts contrary to section 5 or, if the reason for the
dismissal
is
–
…
(g)
a transfer,
or a reason related to a transfer, contemplated in section 197 or
197A;
[2]
Section:
197.
Transfer of contract or 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.
…
(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;
(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;
…
(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.
[3]
Act 66 of 1995.
[4]
Which
provides that;
“
22
Joinder of parties, intervention as
applicant or respondent, amendment of
citation and
substitution of parties
(1) The court may join
any number of persons, whether jointly, jointly and severally,
separately, or in the alternative, as parties
in proceedings, if the
right to relief depends on the determination of substantially the
same question of law or facts.”
[5]
(2015)
36 ILJ 363 (CC)
at para 186. See also
Klaase
and Another v van der Merwe N.O. and Others
2016 (9) BCLR 1187
(CC)
at para 45, where Matojane AJ held that;
“
The test for
joinder is that a party must have a direct and substantial legal
interest that may be affected prejudicially by the
judgment of the
court in the proceedings concerned. In ITAC, this Court
confirmed the test and said that a party seeking
joinder must have a
direct and substantial interest in the subject matter. The
Court held that the overriding consideration
is whether it is in the
interests of justice for a party to intervene in litigation.”
(citations omitted)
[6]
(2015)
36 ILJ 1943 (LC) at para 14.
[7]
(2012)
33 ILJ 2978 (LC)
[8]
(2008)
29 ILJ 2535 (SCA)
at para 9, where the SCA held that;
‘
In the
Amalgamated Engineering Union case, it was found that the ‘question
of joinder should not depend on the nature of
the subject matter but
on the manner in which, and the extent to which, the court’s
order may affect the interests of third
parties’. The court
formulated the approach as, first, to consider whether the third
party would have locus standi to claim
the relief concerning the
same subject matter, and then to examine whether a situation could
arise in which, because the third
party had not been joined, any
order the court might make would not be res judicata against him,
entitling him to approach the
courts again concerning the same
subject matter and possibly obtain an order irreconcilable with an
order made in the first instance.
This has been found to mean that
if the order or judgment sought cannot be sustained and carried into
effect without necessarily
prejudicing the interests of a party or
parties not joined in the proceedings, then that party or parties
that have a legal interest
in the matter must be joined’.
[9]
At
para 11.
[10]
Of the Uniform Rules.
[11]
In
reference to
Almazest
(Pty) Ltd v Alexander and Others (P03/2013) [2015] ZALCPE 33 (14 May
2015).