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[2018] ZALCJHB 171
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National Union of Metalworkers of South Africa and Others v Migromega (Pty) Ltd (JS779/15) [2018] ZALCJHB 171; (2018) 39 ILJ 2048 (LC) (8 May 2018)
Of
interest to other judges
THE
LABOUR COURT OF SOUTH AFRICA,
HELD
AT JOHANNESBURG
C
ase no: JS 779/15
In
the matter between:
NATIONAL
UNION OF
METALWORKERS
OF SOUTH
AFRICA
First Plaintiff
MONAISA CLEMENT & OTHERS
Second and further Plaintiffs
and
MICROMEGA (PTY) LTD
Defendant
Heard
:
7 May 2018
Delivered
:
8 May 2018
Summary:
(Jurisdictional ruling-ex gratia offer of payment by holding company
to changed employees of wholly owned
subsidiary-whether enforcement
of claim justiciable by Labour Court-section 77 of BCEA – s 157
of LRA – claim not a
matter concerning a contract of
employment)
JUDGMENT
LAGRANGE
J
Background
[1]
This dispute originates in a retrenchment dispute between the
plaintiffs’ former employer, Kolbenco (Pty) Ltd (‘Kolbenco’),
and the plaintiffs. An offer of a cumulative retrenchment package
amounting to R 10.5 million was made by Kolbenco on 6 February
2009.
The defendant company (‘Micromega’), which owned Kolbenco
at the time, guaranteed the offer made by Kolbenco
up to the value of
R 3 million. A payment of R 3 million was made by Micromega to the
plaintiffts in fulfilment of that guarantee.
However, Kolbenco
did not fulfil its obligation to pay the balance of the retrenchment
package amounting to R 7.5 million.
[2]
It also appears to be common cause that in the various interactions
of the two companies with Numsa, both companies were represented
by
Mr I Morris, who was a director of both the subsidiary and the
holding company.
[3]
It is common cause that in April 2013 Micromega made an
ex gratia
offer of payment to the Plaintiffs of R 1.5 million on behalf of
Kolbenco. There is a dispute whether or not this was accepted.
Micromega maintains that the offer was rejected by the applicants,
whereas the Plaintiffts maintain it was verbally accepted. The
applicants have brought this action against Micromega to enforce
payment of the R 1.5 million. Before that dispute can be entertained
the jurisdictional question must be determined.
[4]
On 13 October 2015, the Plaintiffs claimed R 7.5 million, or
alternatively the R 1.5 million, from Micromega. On 6 May 2016,
the
Labour Court found that the claim for R7.5 million was had
prescribed.
[5]
Somewhat belatedly, on 12 April 2018, following a further pre-trial
conference on 23 February 2018, Micromega filed a notice
of intention
to amend its statement of response. The plaintiffs did not oppose the
application to amend, but are opposing the jurisdictional
objection
raised by Micromega in the notice of amendment.
The
jurisdictional issue
[6]
Micromega maintains that the Labour Court has no jurisdiction to
determine its liability to pay the R 1.5 million. The basis
for this
court’s jurisdiction is found in section 157 of the Labour
relations act, 66 of 1995 (‘the LRA’), which
states:
157. Jurisdiction of Labour Court
(1)
Subject to the Constitution and section 173, and except where
this
Act provides otherwise,
the Labour Court has exclusive
jurisdiction in respect of all matters that elsewhere in terms of
this Act or in terms of any other
law are to be determined
by the
Labour Court.
(2)
The Labour Court has concurrent jurisdiction with the High
Court in
respect of any alleged or threatened violation of any fundamental
right entrenched in Chapter 2 of the Constitution of
the Republic of
South Africa, 1996, and arising from -
(a) employment and from labour
relations;
(b) any dispute over the
constitutionally of any executive or administrative act or conduct,
or any threatened executive or administrative
act or conduct, by the
State in its capacity as an employer; and
(c) the application of any law for the
administration of which the Minister is responsible.
(Emphasis added)
[7]
Section 77 of the Basic Conditions of Employment Act, 75 of 1997 (‘
the BCEA’) is one of the other laws referred
to in S 157 (1),
which confers jurisdiction on the Labour Court to determine certain
issues arising under that act. The pertinent
provision for the
purposes of this application is s77(3), which states:
77 Jurisdiction of Labour Court
(3) The Labour Court has
concurrent jurisdiction with the civil courts to hear and determine
any matter
concerning a contract of employment
,
irrespective of whether any basic condition of employment constitutes
a term of that contract.
(emphasis added)
[8]
Further, S 77A sets out the powers of the Labour Court to make
orders and provides that :
“
. . . the Labour
Court
may make any appropriate order, including an order
–
(e) making a
determination that it considers reasonable on any matter concerning a
contract of employment
in terms of section 77(3), which
determination may include an order for specific performance, an award
of damages or an award
of compensation.”
(emphasis added)
[9]
Micromega argues that the claim is not one for which a remedy is
provided in the LRA and does not concern a contract of employment.
The starting point is to consider the basis on which Numsa pleaded
that Micromega is liable for the payment. In the statement of
case,
Numsa claims that Micromega “in its capacity as the parent
company of Kolbenco, assuming the liability of Kolbenco,
alternatively
offered to make payment of R1.5 million to the
plaintiffs in full and final settlement of Kolbenco’s debt.”
Numsa then
alleges that a union official telephonically informed
Morris that the R1.5 million offer was accepted, but despite demand,
Micromega
had refused to make the payment.
[10]
The portion of the claim in respect of which it was alleged Micromega
assumed the liability of Kolbenco referred to the payment
of 7.5
million. As mentioned, that was the subject of a special plea of
prescription which was upheld. In relation to the remaining
claim for
R 1.5 million, Micromega admits that it made the offer on behalf of
Kolbenco but the offer was rejected in writing on
30 May 2013 and
accordingly, no legal obligation to make the payment arose.
[11]
In essence, Numsa’s claim for payment of the R 1.5 million is
based simply on the existence of a purported contractual
agreement
between it and Micromega.
[12]
In argument, Numsa contended that this agreement was ‘a matter
concerning a contract of employment’ and accordingly
this court
has jurisdiction to hear it under section 77 (3) of the BCEA. Another
argument advanced at the hearing of this application
was that, as the
parent company and controlling mind of Kolbenco, Micromega could be
held liable for the obligations of Kolbenco
as the employer of the
individual plaintiffs under
section 20(9)
of the
Companies Act 71 of
2008
. A further alternative argument was that, Micromega as the
parent company could be held liable for the payment on the basis that
it owed a ‘duty of care’ towards the employees of its
subsidiary.
[13]
The first point to mention is
that the plaintiffs did not state in their pleading that their claim
was a matter concerning a contract
of employment, nor were the two
last mentioned claims foreshadowed in any form in the plaintiffs’
statement of case. In so
far as either of the principles mentioned
might conceivably have provided a basis for holding Micromega liable
for the payment
they are distinct from any direct contractual
obligation owed by Micromega to the plaintiffs, which was the pleaded
basis of liability.
Even if the phrase ‘in its capacity as the
parent company of Kolbenco’ was intended also to apply to the
offer to pay
R1.5 million, the plaintiffs should have specifically
pleaded their reliance on
section 20
(9) of the
Companies Act or
their reliance on a duty of care it wished to rely on those legal
principles to establish liability.
[1]
Accordingly, the statement of case does not disclose a cause of
action falling within this court’s jurisdiction.
[14]
Even the failure to specifically plead a case based on a matter
concerning a contract of employment might be overlooked, I
am not
persuaded that the case can be brought under that part of the court’s
jurisdiction for the reasons below.
[15]
The leading case on
interpreting what is meant by the phrase ‘a matter concerning a
contract of employment’ in
s 77
(3) of the BCEA is
Rand
Water v Stoop and others
.
[2]
In that case, the LAC found that an employer’s counterclaim for
fraud arising from an alleged breach of an employee’s
contractual obligation to act in good faith could be entertained
simultaneously with a claim for unfair dismissal. Importantly,
the
LAC held that in that case, the appellant employer’s
“counterclaims are pleaded as arising out of and related to
the
contract of employment that existed between the appellant and the
respondents”.
[3]
The LAC, amongst other findings stated:
[21] Generally the Labour Court and
this Court have held that if an issue in dispute relates to; is
linked to; or connected with
an employment contract then the Labour
Court does have jurisdiction in terms of
section 77(3)
of the BCEA to
entertain such a dispute.
[4]
[30] … The word “concerning”
while conveying a cause and effect does not convey a meaning that
some causes and
effects are acceptable and others not or that there
has to be a direct or indirect link between the contract of
employment and
the claim.
[5]
[16]
The court also held that:
[39] I am satisfied that
section 77(3)
read with
section 77A(e)
favours an interpretation bringing within
its ambit the type of claim instituted by the appellant in this
matter as;
39.1
The word “concurrent” in
section 77(3)
places the Labour Court in exactly the same position as
the High Court with the same powers and authority in relation to
matters
concerning a contract of employment.
39.2
The last part of the
section 77(3)
provides the Labour Court with jurisdiction irrespective of whether
any basic condition of employment constitutes a term of the
employment contract. This demonstrates that the Labour Court has
jurisdiction over any claim as long as it involves a contract
of
employment
39.3
The words “concerning a contract
of employment” mean about or in connection with an employment
contract. The pleaded
claim clearly falls within this categorisation.
39.4
The words “any matter” in
section 77(3)
are broad and the literal interpretation does not limit
the claims, in relation to a contract of employment, to a specific
category.
Damages, both liquid and illiquid, are included.
[17]
What is important to notice in all of the above is that the issue in
dispute must in some way be linked causally, whether directly
or
indirectly, to an employment contract. It is also noteworthy that in
all of the cases cited in the judgement, the claims sought
to be
enforced were between an employer and employee or where it was
alleged an employment relationship had existed between the
parties.
[18]
Applying those considerations to the case at hand, the only
employment contracts to which the claim might conceivably be linked
are with the employment contracts the individual plaintiffs had with
their former employer Kolbenco, in the sense that if they
had not
been employees of Kolbenco whose services were terminated by it, they
would not have had a legal interest in the outcome
of this claim
because they would not have been potentially eligible to receive
any portion of the
ex gratia
payment made by a non-party to
the employment relationship.
[19]
Further, that legal interest does not arise directly or indirectly
from any obligations or duties related to their contracts
of
employment or the termination thereof, but simply relates to the fact
that Micromega made an
ex gratia
offer of a payment when their
former employer Kolbenco failed to honour its obligation to pay the
agreed global severance package.
The offer was made quite
independently of the obligations undertaken by Kolbenco arising from
the termination of the plaintiffs’
employment contracts. Any
obligations incurred by Micromega to pay the R1.5 million to the
plaintiffs arose entirely from whether
or not Micromega made that
offer and if it was accepted. That is all the plaintiffs needed to
establish to succeed with their claim.
Merely because their
employment relationship with Kolbenco was an antecedent fact in the
genesis of the offer by a third party
who was never their employer,
it does not follow that their claim is a matter concerning their
contracts of employment. In this
case, the link between their claim
to the R 1.5 million and their contracts of employment is too tenuous
to make it a ‘matter
concerning a contract of employment’.
[20]
Consequently, the jurisdictional objection must succeed.
Costs
[21]
Although the defendant is
successful it only raised this issue after several months had elapsed
since the first part of the claim
was dismissed on account of
prescription and this claim should have been raised and dealt with at
the same time. Strictly
speaking it also should have been
raised by way of an exception rather than a special plea.
[6]
In the circumstances, law and fairness do not warrant an award of
costs in its favour.
Order
[1]
The plaintiffs claim is dismissed for lack of jurisdiction.
[2]
No order is made as to costs.
_______________________
Lagrange
J
Judge
of the Labour Court of South Africa
APPEARANCES
PLAINTIFFS:
S
Chetty of Serena Chetty Inc.
DEFENDANT:
S
Collett instructed by Di Siena
Attorneys
[1]
See
Gcaba v Minister for
Safety and Security and others
[2009] 12 BLLR 1145
(CC) at para [75]
[2]
[2013] 2 BLLR 162 (LAC)
[3]
At 168, para [16].
[4]
At 170
[5]
At 172.
[6]
See Makhanya v University of Zululand
[2009] 8 BLLR 721
(SCA) at
paras [28]-[31].