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[2018] ZALCJHB 346
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Marais and Others v Shiva Uranium (Pty) Ltd (In Business Rescue) and Others (J3049/18) [2018] ZALCJHB 346; (2019) 40 ILJ 177 (LC); [2019] 5 BLLR 472 (LC) (5 October 2018)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
No: J3049/18
In
the matter between:
IZAK
BOSMAN MARAIS AND 56 OTHERS
Applicant
and
SHIVA
URANIUM (PTY) LTD
(in
business rescue)
CLOETE
MURRAY
CRISTOPHER
MONYELA
NATIONAL
UNION OF MINEWORKERS
ASSOCIATION
OF MINEWORKERS AND
CONSTRUCTION
UNION
INDUSTRIAL
DEVELOPMENT CORPORATION OF
SOUTH
AFRICA
First
Respondent
Second
Respondent
Third
Respondent
Fourth
Respondent
Fifth
Respondent
Sixth
Respondent
Heard
:
20
September 2018
Delivered:
05 October 2018
Summary:
Section 133(1) of the Companies Act – this Court has no
jurisdiction to uplifting the moratorium on litigation against
a
company in business rescue.
JUDGMENT
NKUTHA-NKONTWANA.
J
Introduction
[1]
The
applicants approached the Court by way of urgency seeking leave to
institute these proceedings against the first respondent,
in business
rescue, in terms of section 133(1)(b) of the Companies Act
[1]
.
In the main application, the applicants seek an order directing the
first respondent to pay all unpaid remuneration and employment
benefit contributions due and payable to all the applicants.
[2]
The application is opposed by the second and
third respondents, who are the first respondent’s Business
Rescue Practitioners
(practitioners), who take two points
in
limine
. Firstly, the practitioners contend
that this Court lacks jurisdiction to entertain the application to
uplift the moratorium to
institute legal proceedings against a
company during business rescue proceedings in terms of section 131 of
the Companies Act.
Secondly, the practitioners contend that the
matter is not urgent and therefore should be struck off the roll.
Background
[3]
The first respondent is part of the broader
Oakbay Investment Group of companies with the Gupta family as a main
shareholder. Subsequent
to the pulling out of the four major banks
from any dealings with Gupta businesses, the Bank of Baroda was the
only institution
transacting with the first respondent. On 12
February 2018, the Bank of Baroda gave notice to leave South Africa
to the Registrar
of Banks, rendering the first respondent’s
continued business operations impossible. The first respondent’s
board of
directors resolved to place it in business rescue
proceedings as of 19 February 2018.
[4]
The applicants are the first respondent’s
employees and their main impugn is that they have not been paid their
remuneration
for the months of July and August 2018. The
practitioners concede the arrears in remuneration. The explanation
given to the applicants,
sent through text cell phone messages, for
non-payment of salaries is that the practitioners are involved in
attempts to secure
financial assistance that would enable them to pay
salaries. No further explanation is provided in these proceedings as
the practitioners
raised the legal points without filing an answering
affidavit. Nonetheless, some of the applicants have since been paid
30% of
the outstanding salaries.
Jurisdiction
of this Court
[5]
Chapter 6
of the CA which deals with business rescue proceedings
[2]
and section
128(1)(e) defines ‘court’ as follows:
‘…
depending on the
context, means, either –
(i) the High Court that has
jurisdiction over the matter; or
(ii) either –
(
aa
)
a designated judge of the High Court that has jurisdiction over the
matter, if the Judge President has designated any judges in
terms of
subsection
(3)
; or
(
bb
)
a judge of the High Court that has jurisdiction over the matter, as
assigned by the Judge President to hear the particular matter,
if the
Judge President has not designated any judges in terms of
subsection
(3)
’
[6]
Whilst
section 128(3) states that ‘[f]or the purposes contemplated in
subsection
(1) (e)
or in any other law, the Judge President of a High Court may
designate any judge of that court generally as a specialist to
determine
issues relating to commercial matters, commercial
insolvencies and business rescue.’
[7]
Pertinently, section 133 provides:
‘
133. General moratorium on
legal proceedings against company
(1) During business rescue
proceedings, no legal proceeding, including enforcement action,
against the company, or in relation to
any property belonging to the
company, or lawfully in its possession, may be commenced or proceeded
with in any forum, except –
(a) with the written consent of the
practitioner;
(b) with the leave of the court and in
accordance with any terms the court considers suitable;
…
(3) If any right to commence
proceedings or otherwise assert a claim against a company is subject
to a time limit, the measurement
of that time must be suspended
during the company's business rescue proceedings.’
[8]
It was accordingly submitted by the practitioners
that the reference to ‘court’ in terms of section
133(1)(b) must be
interpreted to mean High Court specifically and
exclusively.
[9]
The
applicants on the other hand were adamant that this Court has
jurisdiction to uplift the moratorium in terms of section 133(1)(b).
They assert that their claims for outstanding remuneration are rooted
in the fundamental right which is offended by non-payment
and as such
this Court has jurisdiction in terms of section 157(1) and (2) of the
Labour Relations Act
[3]
(LRA) which
states:
‘
157 Jurisdiction of the
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
constitutionality 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.’
[10]
The applicants submit, in the alternative, that
to the extent that there is a conflict between the Companies Act and
the LRA, section
210 of the LRA states that ‘[i]If any
conflict, relating to the matters dealt with in
this
Act
, arises between
this
Act
and the provisions of any other law save
the Constitution or any Act expressly amending
this
Act
, the provisions of
this
Act
will prevail.’
[11]
Let me
quickly dispose of the applicants’ submission that there is a
conflict between the Companies Act and the LRA. In
Sondamase
and Another v Ellerine Hodings Ltd and Another,
[4]
This Court, per
Steenkamp J, referred with approval to
the
judgment in
Fabrizio
Burda v lntegcomm (Pty)
Ltd,
[5]
stated:
‘
It does not appear to me that
there is any conflict between s133(1)
(a)
of the Companies Act
and the dispute resolution provisions set out in the LRA. And in so
far as there has been conflicting jurisprudence
on the application of
s133 of the Companies Act to dispute[s] arising out of the LRA, it
appears to have been settled by the recent
decision of the Supreme
Court of Appeal in
Chetty t/a Nationwide Electrical v Hart and
Another NNO
[2015 (6) SA 424
(SCA) paras 26-29]. In that case,
the SCA interpreted s133 to place a moratorium, not only on legal
proceedings in court, but even
arbitration proceedings.’
[12]
I align myself with the above interpretation.
[13]
That takes me to section 157 of the LRA. The
applicants’ submission that this Court has previously assumed
jurisdiction, particularly
with reference to
Ellerine
,
is untenable. Instead, in
Ellerine
the Court was never asked to uplift the moratorium. The applicants
failed to refer me to any authority where this Court pronounced
on
this issue and I have not come across any either.
[14]
The
principles of interpretation summarised in
Joint
Municipal Pension Fund v Endumeni Municipality
[6]
referred to by
Advocate Pottas, counsel for the practitioners, are trite. The
Supreme Court of Appeal (SCA), per Wallis JA stated:
‘
The present state of the law
can be expressed as follows. Interpretation is the process of
attributing meaning to the words used
in a document, be it
legislation, some other statutory instrument, or contract, having
regard to the context provided by reading
the particular provision or
provisions in the light of the document as a whole and the
circumstances attendant upon its coming
into existence.
Whatever
the nature of the document, consideration must be given to the
language used in the light of the ordinary rules of grammar
and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material known to
those
responsible for its production
. Where more than one meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective
not subjective.
A sensible
meaning is to be preferred to one that leads to insensible or
unbusinesslike results or undermines the apparent purpose
of the
document. Judges must be alert to, and guard against, the temptation
to substitute what they regard as reasonable, sensible
or
businesslike for the words actually used. To do so in regard to a
statute or statutory instrument is to cross the divide between
interpretation and legislation.
In a contractual context it is to
make a contract for the parties other than the one they in fact made.
The ‘inevitable point of departure is the language of the
provision itself’, read in context and having regard to the
purpose of the provision and the background to the preparation and
production of the document
.’ (Emphasis added)
[15]
In the
present case, the mechanism of business rescue proceedings is one of
the novelties introduced by the Companies Act and regulated
in terms
of chapter 6. The purpose is to ‘provide for the efficient
rescue and recovery of financially distressed companies,
in a manner
that balances the rights and interests of all relevant
stakeholders.
[7]
It is within this
context that the section 133(1) moratorium must be understood, that
is, to strike that balance or as eloquently
put by Court in
Ellerine
:
[8]
‘
The aim of this provision is
clear. It is to create some breathing space for the business to be
rescued and thus to put all legal
proceedings on hold until the
company may be brought back on track to continue with its business.
Henochsberg
explains:
‘
Section 133 makes provision for
a general moratorium (in some jurisdictions and moratorium is known
as a 'stay' or a 'stay of proceedings')
on legal proceedings ...
against the company ... while the company is subject to business
rescue proceedings. The moratorium granted
by this section is
designed to provide the company with a breathing space while the
business print rescue practitioner attempts
to rescue the company by
designing and implementing a business rescue plan. This is a crucial
element of any corporate rescue mechanism,
as it allows the company
sufficient breathing space to be able to find a solution to the
financial problems it is experiencing
at the time.’
[16]
The essence
of business rescue proceedings is to engender a rehabilitation of a
financially distressed company through temporary
oversight and
management of its affairs, business and property; temporary
moratorium on the rights of claimants against the company
or in
respect of property in its possession; and a business rescue plan
that will help to keep it afloat in a manner that balances
the rights
and interests of all relevant stakeholders.
[9]
[17]
The legislature has made express provision for a
forum to deal with litigation emanating from the business rescue
proceedings. Section
128(1)(e) not only defines court to mean the
High Court that has jurisdiction over the matter, but a judge of the
High Court as
designated or assigned by the Judge President. The
Judge President of the High Court has power to designate any judge of
the High
Court as a specialist to determine issues relating to,
inter
alia
, business rescue in terms of section
128(3). It is without doubt that when it comes to matters relating to
business rescue proceedings,
the High Court, not any other court, has
exclusive jurisdiction.
[18]
Now let me
explore the sustainability of the applicants’ submission that
in terms of section 157(2) this Court can exercise
its concurrent
jurisdiction with the High Court to grant the relief they are seeking
in terms of section 133(1)(b). In this regard
the applicants referred
to
Gcaba
v Minister for Safety and Security and Others,
[10]
to support their assertions. Interestingly, the Constitutional Court
in
Gcaba
decried
litigations typified in this case. It was stated:
‘
The consequence of the finding
that the conduct behind employment grievances like those of Ms Chirwa
and the applicant is not administrative
action, will substantially
reduce the problems associated with parallel systems of law,
duplicate jurisdiction and forum shopping.
As found in
Chirwa
,
the Labour Court and other LRA structures have been created as a
special mechanism to adjudicate labour disputes such as alleged
unfair dismissals grounded in the LRA and not, for example,
applications for administrative review. The High Court adjudicates
the alleged violations of constitutional rights, administrative
review applications, and of course all other matters. This
corresponds
with a proper interpretation of section 157(1) and (2).
Section 157(1) confirms that the
Labour Court has exclusive jurisdiction over any matter that the LRA
prescribes should be determined
by it. That includes, amongst other
things, reviews of the decisions of the CCMA under section 145.
Section 157(1) should, therefore,
be given expansive content to
protect the special status of the Labour Court, and section 157(2)
should not be read to permit the
High Court to have jurisdiction over
these matters as well.
Section 157(2) confirms that the
Labour Court has concurrent jurisdiction with the High Court in
relation to alleged or threatened
violations of fundamental rights
entrenched in chapter 2 of the Constitution and arising from
employment and labour relations,
any dispute over the
constitutionality of any executive or administrative act or conduct
by the state in its capacity as employer
and the application of any
law for the administration of which the minister is responsible. The
purpose of this provision is to
extend the jurisdiction of the Labour
Court to disputes concerning the alleged violation of any right
entrenched in the Bill of
Rights which arise from employment and
labour relations, rather than to restrict or extend the jurisdiction
of the High Court.
In doing so, section 157(2) has brought employment
and labour relations disputes that arise from the violation of any
right in
the Bill of Rights within the reach of the Labour Court.
This power of the Labour Court is essential to its role as a
specialist
court that is charged with the responsibility to develop a
coherent and evolving employment and labour relations jurisprudence.
Section 157(2) enhances the ability of the Labour Court to perform
such a role.
Therefore, section 157(2) should not
be understood to extend the jurisdiction of the High Court to
determine issues which (as contemplated
by section 157(1)) have been
expressly conferred upon the Labour Court by the LRA. Rather, it
should be interpreted to mean that
the Labour Court will be able to
determine constitutional issues which arise before it, in the
specific jurisdictional areas which
have been created for it by the
LRA, and which are covered by section 157(2)(a), (b) and (c).
Furthermore, the LRA does not
intend to destroy causes of action or remedies and section 157 should
not be interpreted to do so.
Where a remedy lies in the High Court,
section 157(2) cannot be read to mean that it no longer lies there
and should not be read
to mean as much. Where the judgment of Ngcobo
J in
Chirwa
speaks of a court for labour and employment
disputes, it refers to labour- and employment-related disputes for
which the LRA creates
specific remedies. It does not mean that all
other remedies which might lie in other courts like the High Court
and Equality Court,
can no longer be adjudicated by those courts. If
only the Labour Court could deal with disputes arising out of all
employment relations,
remedies would be wiped out, because the Labour
Court (being a creature of statute with only selected remedies and
powers) does
not have the power to deal with the common law or other
statutory remedies.’
[19]
In the same
manner that section 157(2) should not be understood to extend the
jurisdiction of the High Court to determine issues
which have been
expressly conferred upon the Labour Court by the LRA, it should also
not be understood to extend the jurisdiction
of the Labour Court to
deal with any other statutory remedies, pertinently, section
133(1)(b). As stated in
Gcaba
:
[11]
‘…
another principle or
policy consideration is that the Constitution recognises the need for
specificity and specialisation in a modern
and complex society under
the rule of law
. Therefore, a wide range of rights and the
respective areas of law in which they apply are explicitly recognised
in the Constitution.
Different kinds of relationships between
citizens and the state and citizens amongst each other are dealt with
in different provisions.
The legislature is sometimes specifically
mandated to create detailed legislation for a particular area, like
equality, just administrative
action (PAJA) and labour relations
(LRA). Once a set of carefully-crafted rules and structures has been
created for the effective
and speedy resolution of disputes and
protection of rights in a particular area of law, it is preferable to
use that particular
system.
’ (Emphasis added)
[20]
In the present case, chapter 6 specifically
constitute a set of carefully-crafted rules to provide for the
efficient business rescue
proceedings and central to that object is
the moratorium in terms of section 133(1). Therefore, the High Court
or designated specialist
or assigned judge of the High Court have
exclusive jurisdiction.
[21]
In my view, the
interpretation advocated by the applicants that this Court has
concurrent jurisdiction in terms of section 157(2)
to venture into
matters pertaining business rescue proceedings is untenable.
However,
this Court’s jurisdiction in employment related claims remains
intact.
Urgency
[22]
Alternatively, this application must fail on
urgency. The applicants have a substantial redress in due course. In
terms of
section 135 of the Companies Act, ‘any unpaid amount
of remuneration, reimbursement for expenses or any other amount
relating
to employment that becomes due and payable by a company to
an employee during that company’s business rescue proceedings,
the amount so owing is regarded as post-commencement finance’
and would be paid in priority to other claims.
[23]
In essence,
the applicants’ interests are not under any threat as the
provisions of chapter 6 confer better benefits than
those provided
for under the provisions of the Insolvency Act.
[12]
As it were, the practitioners have since made some payments towards
arrears in salaries. Therefore, to persist with this application
on
urgent basis is patently ill-conceived.
Conclusion
[24]
In the
circumstances, this Court has no jurisdiction to uplift the
moratorium in accordance with section 133(1)(b) and grant the
applicants leave to litigate against the first respondent during the
business rescue proceedings. However, to the extent that this
Court
has jurisdiction to deal with the applicants’ claims in terms
of the Basic Conditions of Employment Act
[13]
(BCEA),
the application stands to be struck off the roll and could only be
re-enrolled with the leave granted in terms of section
133 (1)(a) or
(b).
Costs
[25]
On the issue of costs, it is well known that
costs do not necessarily follow the result in this Court, especially
if the parties
are in a persisting relationship as typified in the
present case.
[26]
In the circumstances, I make the following order:
Order
1.
The application is struck off the roll.
2.
There is no order as to costs.
__________________
P Nkutha-Nkontwana
Judge of the Labour Court
of South Africa
Appearances
For
the Applicant:
Advocate A Mosam
Instructed
by :
Gani Mayet Attorneys
For
the Respondent:
Advocate R Pottas
Instructed
by:
JI Van Niekerk Inc
[1]
Act 71 of 2008 as amended.
[2]
Section
128(1)(b) states:
‘“
business
rescue
” means
proceedings to facilitate the rehabilitation of a company that is
financially distressed by providing for —
(i) the temporary supervision of the
company, and of the management of its affairs, business and
property;
(ii) a temporary moratorium on the
rights of claimants against the company or in respect of property in
its possession; and
(iii) the development and
implementation, if approved, of a plan to rescue the company by
restructuring its affairs, business,
property, debt and other
liabilities, and equity in a manner that maximises the likelihood of
the company continuing in existence
on a solvent basis or, if it is
not possible for the company to so continue in existence, results in
a better return for the
company’s creditors or shareholders
than would result from the immediate liquidation of the company;’
[3]
Act 66 of 1995 as amended.
[4]
(C669/2014) [2016] ZALCCT 53 (22 April 2016) at para 15.
[5]
Case no JS 539/12 (29 November 2013) (per Maenetje AJ) at
paras12-13.
[6]
[2012] 2 All SA 262
(SCA);
2012 (4) SA 593
(SCA) at para [18].
[7]
Section 7(k) of the Companies Act.
[8]
Supra
n
4 at para 12.
[9]
See section
128(1)(b) of the Companies Act.
[10]
[2009] ZACC 26
;
2010 (1) SA 238
(CC);
2010 (1) BCLR 35
(CC); (2010)
31 ILJ 296 (CC);
[2009] 12 BLLR 1145
(CC) at paras 69 -73
[11]
Supra
at para 56.
[12]
Henochsberg
on
the Companies Act, 71of 2008 (Vol 1).
[13]
Act 75 of 1997 as amended.