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[2017] ZALCJHB 299
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Fraser Alexander (Pty) Ltd v Tswelopele Beneficiation Operation (Pty) Ltd and Others (J1368/17) [2017] ZALCJHB 299; [2017] 12 BLLR 1251 (LC) (16 August 2017)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case no:
J
1368/17
In
the matter between:
FRASER
ALEXANDER (PTY) LTD
Applicant
and
TSWELOPELE
BENEFICIATION OPERATION
(PTY)
LTD
First Respondent
AMCU
Second Respondent
NUM
Third Respondent
PERSONS
LISTED IN ANNEXURE “A”
TO
NOTICE OF MOTION
Fourth to Sixty-Eighth Respondents
INTASOL
TAILINGS (PTY) LTD
Sixty-Ninth
Respondent
Heard:
25 July 2017
Delivered:
16 August 2017
Summary:
Transfer of a business - Section 197 of the
LRA - M
otion proceedings -
Final relief sought -
Plascon-Evans
applied
JUDGMENT
WHITCHER
J
Introduction
[1] This is an urgent
application for an order,
inter alia
, that the termination of
the tailings dam agreement (“the agreement”) between the
applicant and the first respondent
constitutes the transfer of a
business from the applicant to the first respondent,
alternatively
Intasol, with effect from 1 June 2017,
alternatively
8 June
2017, as contemplated in terms of section 197 of the LRA. (This
relief is sought in terms of the amended notice of motion).
The
application is opposed by the first and sixty ninth respondent.
Background
Facts
[2]
Fraser Alexander was contracted by Tswelopele to perform maintenance
and management work at a tailings dam in terms of a Tailings
Dam
Agreement. This two year contract came to an end on 30 June 2017.
[3]
The functions that Fraser Alexander was obliged to perform in terms
of the Tailings Dam Agreement encompassed general maintenance
work on
– and management of – the dam.
[4]
Before termination of the Tailings Dam Agreement, Tswelopele put the
future maintenance and management work out to tender.
[5]
However, on Intasol’s version, given the failing condition of
the tailings dam, the tender process was put on hold.
This
remained the position at the time of the present application. For a
week after Frazer Alexander left the site, limited remedial
work was
carried out by Tswelopele’s foreman and a few labour broker
employees. Intasol was then commissioned to do remedial
work on the
tailings dam.
[6]
Fraser Alexander alleges that “this so-called “
remedial
work
” forms part of the general maintenance work at the
Tailings Dam and therefore fell within the scope of the work
contemplated
in the Tailings Dam Agreement”.
[7]
Fraser Alexander further states that, in any event, “it would
still be necessary for Tswelopele or Intasol to continue
with such
general maintenance work and management for as long as the Mine
remained operational.” They contend that routine
maintenance
and operation of the tailings dam must continue for as long as slurry
is flowing into it.
[8]
Fraser Alexander conclude “accordingly, the so-called “
remedial
work
” currently being done by Intasol is nothing more than
the maintenance and management of the Tailings Dam it previously
performed.
[9]
Both Intasol and Tswelopele contend, as respondents, that the work
Intasol has been contracted to do is not the work contemplated
in the
Tailings Dam Agreement. It is not the normal management and
maintenance work the Applicant did. Rather, it is short-term
repair
and remedial work aimed at restoring the tailings dam to a normal
operating condition and standard. Indeed, Intasol points
out that it
is not in a position to perform routine maintenance work with half
the key machinery necessary to operate the dam (the
cyclones) being
broken.
[10]
Intasol states that whatever work other than remedial work it may be
performing is entirely incidental to and a tiny fraction
of its
remedial work it is performing. This extra-remedial work will also
cease once the remedial work is concluded. When the problems
with the
tailings dam are remedied by Intasol, its work will be finished.
[11]
Intasol contests the allegation that it manages the flow of slurry
into the tailings dam in the same manner that Frazer Alexander
did.
The slurry is used to repair defects and gaps in the dam wall and not
for the normal construction of the wall of the dam.
Intasol goes into
considerable detail to distinguish the uses to which it puts the
slurry as compared Frazer Alexander.
[12]
The business conducted by Fraser Alexander comprised the construction
of the tailings dam, in particular the dam wall, on a
long-term and
ongoing basis according to a planned schedule. The goal of this was
to ensure that the wall rose consistently and
evenly over time. This,
if properly done, would prevent the dam from overflowing.
[13]
This is achieved principally by the correct placement, movement and
utilization of “cyclones” in a co-ordinated,
scheduled
and planned manner. The cyclones separate the slurry or tailings
pumped into the cyclones into coarse particles –
which are used
to construct the wall; and fine particles and liquid - which are
deposited into the inside of the dam. The
cyclones deposit the
coarse particles onto the perimeter of the dam and then onto the dam
wall in order to construct the gradually
rising dam wall.
[14]
As the material in the dam rises, the wall must continue to be built
to contain that content adequately. This is a long-term
process which
will ultimately result in a structure which may be referred to as a
mine dump. The work described above is done according
to strict
specifications as set out in an operating manual.
[15]
This manual prescribes a host of other activities that the applicant
was required to undertake in discharge of its duties in
terms of the
Tailings Dam Agreement. In performing these functions according to
specifications, it was necessary for Frazer Alexander
to monitor
operations, retain data and plan the movement and deployment of
cyclones in “banks”.
[16]
Intasol states that, on the contrary, its work is to repair the
defects it identified in the existing structure and composition
of
the dam. For example, there were parts of the dam perimeter where the
wall had not been constructed to specifications contained
in the
operating manual; parts of the wall which had been constructed
mechanically (not with cyclones) which had to be removed
and properly
constructed using cyclones and coarse particles; parts of the wall
which contained inappropriate fine material, the
extent of which is
still unknown. This remedial work is the essence and focus of
Intasol’s business at the tailings
dam.
[17]
The nub of the respondents’ case is that whereas Fraser
Alexander’s remedial work, minor as it was, was incidental
to
its main business, remedial work is practically speaking, the
totality and essence of Intasol’s business. When this
remedial work is done, Intasol’s business will be complete and
it will leave the site.
In
summary, the purpose of routine maintenance is to prevent defects or
problems occurring. The purpose of remedial work is
to repair
defects or address problems that should not have occurred in the
first place.
[18]
Both respondents contend that, only once the remedial work is done,
will the future of the tailings dam be determined. If it
is viable,
the work contemplated in the Tailings Dam Agreement may, dependent
upon the circumstances then present, be once again
put out to
tender. According to the Tswelopele, there is no certainty who
the successful tenderer may be.
[19]
Intasol states that when Fraser Alexander’s contract ended no
tools, machinery or other assets of Fraser Alexander’s
business
were transferred to Tswelopele and then onwards to Intasol.
[20]
Intasol disputes that data relevant and necessary to conduct and
continue the business contemplated in the Tailings Dam Agreement
was
transferred to Intasol from any source.
[21]
No personnel of Fraser Alexander of whatever seniority have been
transferred to Intasol. Intasol has deployed 17 labour staff
and 8
management staff to undertake what it contends is the strictly
remedial tasks it is required to perform on a short-term basis.
It points out that Fraser Alexander seeks to transfer the employment
of approximately 65 personnel, who constitute part of the
work-force
it employed to execute the Tailings Dam Agreement.
Accepted
Facts
[22]
Frazer Alexander elected to advance its case for a transfer of
business by way of motion proceedings. Given that Fraser Alexander
seeks final relief, the principles established in
Plascon-Evans
Paints Ltd v Van Riebeeck Paint (Pty) Ltd
[1]
apply to the resolution of disputes of fact on the papers.
[23]
As such, final relief can be granted to Fraser Alexander against the
respondents only if the facts alleged by Tswelopele and
Intasol,
together with the facts alleged by Fraser Alexander and admitted by
the Respondents, justify the grant of such relief.
[24]
The affidavits before the court reveal that Fraser Alexander based
its case in its founding papers on the premise that Tswelopele
insourced the maintenance and management of the dam, engaged
personnel from a local rigging company to perform the functions of
the employees, and that the dam has been ordinarily operational “
on
a daily basis”
. It subsequently
expanded its case to include the contention that its maintenance and
management business at the tailings dam was
transferred to Intasol.
[25]
However, the facts which the court must accept, on the application of
the
Plascon-Evans
principle, are that
the dam was
not left in an operable condition by Fraser Alexander when it
departed, thus necessitating remedial work and the dam
has therefore
not been in routine operation since 1 June 2017, with more than half
of the key machinery at the dam (the cyclones)
being dysfunctional.
[26]
Further to this, the court must accept that limited remedial work was
carried out from 1 to 6 June 2017 by Tswelopele’s
foreman and a
few labour broker employees. As from 8 June 2017, Intasol performed
essentially remedial work at the dam, and has
been performing such
remedial work to the date of the application in terms of a short-term
appointment.
[27]
The court must also accept that Tswelopele will not be taking over
the maintenance and management functions at the dam after
the
remedial work is complete, and these will be contracted to a third
party yet to be identified through a tender process.
[28]
There is nothing before the court, besides a leap of suspicion, to
suggest that the new service provider to do the work contemplated
in
the Tailings Dam Agreement will be appointed by Tswelopele in a
manner designed to evade the provisions of s197 of the LRA.
While
such an inference is not impossible to draw, it cannot be drawn on
the evidence before this court.
The
Law as applied to the facts
[29]
In
Rural
Maintenance
,
the Constitutional Court
[2]
endorsed the approach to transfers of business of the European Court
of Justice in
Sodexho
,
the logic of which is also present in
Aviation
Union
.
The general test remains:
‘
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 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.’
[3]
[30]
In the present matter no assets of Fraser Alexander have been
transferred, no data, necessary to continue the implementation
of the
Tailings Dam Agreement as a going concern, has been transferred and
no employees have been transferred.
[31]
On the papers, the “business” being conducted by Intasol
is not the same work that Fraser Alexander was conducting
in terms of
the Tailings Dam Agreement and the applicable operating manual.
[32]
Any similarities in work, such as Intasol’s necessary handling
of the slurry, is a matter of form and not substance.
The coarse
particles of slurry are needed to rebuild walls as opposed to
maintaining and expanding them.
Intasol’s
right of use of the dam infrastructure, transferred from Frazer
Alexander, was functional to Intasol performing
an overlapping but
substantively different line of work and thus business for
Tswelopele.
[33]
Moreover, as pleaded by the respondents, the arrangement between
Tswelopele and Intasol is a once-off engagement of short-term
duration.
[34]
I agree with counsel for Intasol that where a contract is cancelled
for non-performance to the extent present in this case,
it cannot be
said that any business or service is transferred as “a going
concern”. It was not possible on the termination
of the
Tailings Dam Agreement to continue the operation of the business
contemplated in that agreement in a seamless or “as-is”
fashion, or at all. On the evidence before this court,
extensive work was and is required to restore the tailings dam to
a
state where its routine functioning can commence or continue at a
future date.
[35]
I agree that the applicant’s contentions in favour of a
transfer of business are unworkable. In its schema, there would
have
had to be a transfer of employees to Tswelopele for approximately one
week, thereafter a transfer of employees to Intasol
for approximately
3 months and thereafter an anticipated transfer of those same
employees to a new service provider, once Intasol
leaves the site and
if indeed a new service provider is appointed. To seek a
transfer of contracts of employment to a remote
and theoretical
future employer who might resume the work of the Frazer Alexander and
whose operations at that point might justify
the employment of the
full complement of transferred employees, in my view, stretches the
obligationary chain beyond the point
intended by the legislature.
This underscores a criticism made during argument by counsel for
Intasol that this application
is, in addition to its factual
deficiencies, also premature.
[36]
In the above circumstances I find that S197 is not applicable. Where
a contract is cancelled for non-performance of the nature
and extent
present in this case, it cannot be said that any business or service
is transferred as “a going concern”.
It was not
possible on the termination of the Tailings Dam Agreement for either
of the respondents to continue the operation of
the business in a
seamless or “as-is” fashion, or at all. Before this
can possibly occur extensive work is required
to restore the tailings
dam to a state where its routine functioning can commence or
continue.
[37]
It remains to distinguish a decision of Van Niekerk, J, relied upon
the applicant involving two of the same parties, namely,
Fraser
Alexander (Pty) Ltd v Intasol Tailings (Pty) Ltd and the others.
[4]
[38]
In Fraser Alexander (1) 84 employees were contemplated to be taken
over by Intasol, limited assets were taken over by Intasol
and the
work done by Intasol was materially the same as that previously done
by Fraser Alexander and in terms of a similar agreement.
The court
noted that the business transferred to Intasol was not “one-off
or short-term”.
[5]
[39]
In Fraser Alexander (1), the court stated:
[6]
“
[28]
On
these admitted facts, there are already strong indications that s 197
is applicable –
the
same services
are to be conducted on the same premises for the same client.
In the words of the authorities referred to above,
the
operation that comprises the management of tailings dams and the
hydraulic re-mining of slimes dams previously conducted by
the
applicant continues in the hands of the transferee employer, Intasol
.
In other words, there is an organised group of employees dedicated to
a contract and activity prior to the transfer
in
circumstances where the contract award is not a one-off or short
term
,
nor does it relate to the supply of goods. What remains to be
determined is whether after any transfer, there exists an economic
entity which despite changes, remains identifiable though not
necessarily identical”
(own
emphasis)
[40]
The accepted facts in Frazer Alexander (1) are thus insufficiently
similar to persuade me that the previous finding of this
court that a
transfer of business between Frazer Alexander and Intasol occurred
should be followed in the matter at hand.
Conclusion
[41]
For the reasons set out above, there has been no transfer in terms of
S197. Accordingly, the application should be dismissed.
However, an adverse cost order is not appropriate considering the
importance of the matter and the application was aimed at securing
the employment of many employees.
Order
[42] The application is
dismissed with no order as to costs.
________________________________
B Whitcher
Judge
of the Labour Court of South Africa
APPEARANCES:
For
the Applicant:
A Myburgh SC and M Van As instructed by Webber Wentzel
For
the First Respondent:
R Itzkin instructed by Edward
Nathan Sonnenberg
For
the Sixty Ninth Respondent:
P.J.
Pretorius SC, A Snider and N Thokoane
instructed
by Cliffe Dekker Hofmeyr Inc
[1]
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634D-635C.
[2]
Rural Maintenance (Pty) Ltd
v Maluti-A-Phofung Local Municipality
[2017]
3 BLLR 258 (CC).
[3]
See; Rural (CC) at para [33].
[4]
(unreported, case number J2718/2016)(Fraser Alexander (1)).
[5]
See; paragraph [28] of Fraser Alexander (1).
[6]
See; para [22] of the judgement.