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[2018] ZALCJHB 395
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Xaba and Others v I G Tooling & Light Engineering (Pty) Ltd and Others (JR 200/16) [2018] ZALCJHB 395; (2019) 40 ILJ 638 (LC) (28 November 2018)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JR 200/16
SIBUSISO
XABA
First
Applicant
VUSUMUZI
DLAMINI
AND
144 OTHERS
Second Applicant
Third
Applicant
and
I
G TOOLING & LIGHT ENGINEERING (PTY)LTD
First Respondent
NUMSA
Second Respondent
SOLIDARITY
Third
Respondent
INDEPENDENT
REPRESENTATIVE EMPLOYEE’S
Fourth Respondent
FORUM
M
A AUTOMATIVE TOOL & DIE (PTY) LTD
Fifth Respondent
CCMA
Sixth Respondent
Heard:
8 November 2018
Delivered:
28 November 2018
Summary:
Review of a settlement agreement. No merit in the application. Costs
granted
de
bonis propriis.
JUDGMENT
PRINSLOO,
J
Background
facts
[1]
The First Respondent (the
employer) contemplated the retrenchment of its affected employees and
embarked on a large scale retrenchment
process, as provided for in
section 189A of the Labour Relations Act
[1]
(LRA).
The Second Respondent (NUMSA) was the majority representative trade
union in the workplace, the Third Respondent (Solidarity)
represented
14 of the affected employees and the employer requested the remainder
of the affected employees who were neither members
of NUMSA nor
Solidarity, to create the independent Representative Employee’s
Forum (IREF), cited herein as the Fourth Respondent,
and to appoint a
representative. The matter was referred to the Commission for
Conciliation, Mediation and Arbitration (CCMA) for
facilitation in
terms of section 189A of the LRA and the parties engaged in four
facilitation meetings between the period 16 July
and 12 August 2015.
[2]
On 13 August 2015, a
retrenchment settlement agreement (the agreement) was signed and
entered into by the employer, NUMSA, Solidarity
and the IREF. It
appears from the agreement that it was specifically recorded that the
parties reached an agreement on the retrenchment
of the employees and
the terms of the agreement were recorded.
[3]
The Applicants were all
employed by the employer and their services were terminated on 27
November 2015.
[4]
On 3 February 2016, the
Applicants filed this application seeking
inter
alia,
the
review and setting aside of the settlement agreement.
[5]
The First, Third and
Fifth Respondents opposed the matter. I will refer to the First and
Fifth Respondent collectively as ‘the
Respondents’ where
appropriate to do so.
[6]
Before I deal with the
relief sought and the merits of the application, it is necessary to
mention the events that transpired in
Court when the matter was set
down for hearing, as it will provide context to some of the findings
in this judgment.
[7]
The matter was set down
for hearing on 8 November 2018, and Mr Mashele, instructed by Ehlers
Fakude Inc Attorneys, appeared for
the Applicants. Mr Mashele made it
clear that his instruction was to remove the matter from the roll and
effectively Mr Mashele
was seeking a postponement. Mr Searle for the
First and Fifth Respondents opposed the application and submitted
that if the Court
was inclined to grant the postponement, the
Applicants should not be burdened with the costs, but that their
legal representatives
should be ordered to pay the costs. The Second
and Third Respondents also opposed the application for postponement.
[8]
In considering the
application for postponement, I indicated to Mr Mashele that the
Practice Manual of the Labour Court
[2]
provides that applications will generally not be postponed and that
it could only be done with the permission of the presiding
Judge,
more so where the other parties to the matter oppose the application
for postponement. In order to assess the application
for
postponement, I enquired from Mr Mashele what the purpose of the
postponement would be and what the Applicants seek to achieve
by
postponing the matter. Mr Mashele indicated that the purpose of the
postponement was to amend the Applicants’ papers to
bring it in
line with the applicable law. I asked Mr Mashele what was it that the
Applicants intend to amend, as I was of the view
that the Applicants
case had no merit in law and no amount of amendment could cure the
fatal defects of the case. Surprisingly
Mr Mashele, in seeking a
postponement to amend the papers, was unable to tell me what the
amendments would be and what the Applicants
intend to place before
this Court, should a postponement be granted. I was not satisfied
that any purpose would be served by postponing
the matter and the
application to postpone was refused.
[9]
I invited the parties to
make submissions on the merits, whereupon Mr Mashele indicated that
he had no instructions to do so, as
he came to Court only to postpone
the matter.
Relief
sought and analysis
[10]
In the notice of motion,
the Applicants seek relief in the form of review and declaratory
orders. I will deal with the relief sought
infra.
The
review
[11]
The Applicants seek to
review and set aside the agreement signed on 13 August 2015.
[12]
The Applicants brought
the review application in terms of the provisions of section
158(1)(g) of the LRA and the gist of their case
is that at the time
that the agreement was entered into, crucial information was unknown
or not divulged and had this information
been known or divulged, the
Applicants would not have been party to, and agreed to the agreement.
The agreement constituted a waiver
of the Applicants’
constitutionally entrenched rights and the waiver of these rights was
not voluntarily, freely expressed
and with a clear understanding of
the true consequences and effects of doing so, thus not an effective
waiver of rights.
[13]
Section 158(1)(g) of the
LRA provides, this Court may ‘subject to section 145, review
the performance or purported performance
of any function provided for
in the LRA on any grounds that are permissible in law’.
Consistent with the wording of section
158(1)(g), this Court’s
powers under the said section are limited to the review of the
performance or purported performance
of statutory functions provided
for in the LRA, undertaken by statutory bodies or functionaries, such
as the CCMA, bargaining councils,
Ministers etcetera
[3]
.
[14]
Section 158(1)(g) of the
LRA provides for a review on any grounds permissible in law and what
constitutes permissible grounds of
review is dependent on the nature
of the decision taken or the function performed and three grounds are
potentially available namely:
A review based on section 6 of the
Promotion of Access to Justice Act
[4]
(PAJA), the principle of legality or common law grounds.
[15]
It is within this context
that the Applicants’ application for review is to be decided.
[16]
In my view there are
three difficulties with the relief sought in respect of the review
filed under section 158(1)(g) of the LRA.
The first and the most
obvious is that the Applicants seek the review and setting aside of a
settlement agreement that was entered
into between the parties.
Review proceedings must be directed at the conduct or performance of
statutory functions, provided for
in the LRA, undertaken by statutory
bodies or functionaries.
[17]
In casu,
there
is no arbitration award but a settlement agreement signed by the
parties and recording the terms of their settlement. The
settlement
agreement did not come about as a result of a decision or ruling made
by an arbitrator or any other statutory functionary.
[18]
In
Malebo
v Commission for Conciliation
,
Mediation
and Arbitration and Others
[5]
,
it was held that:
'[u]ntil the
agreement is made an award it remains simply a settlement agreement.
Any legal force it carries is derived from the
ordinary binding power
of a contractual arrangement between the parties. Even though the
agreement may have come into being through
the facilitation of the
commissioner, his role in the conclusion of the agreement does not
entail the exercise of any statutory
decision-making powers on his
part to make an award or ruling which is binding on the parties. The
document embodying the settlement
simply records what the parties to
the dispute have agreed.'
[19]
A
settlement agreement that has not been made an arbitration award in
terms of section 142 of the LRA cannot be reviewed and there
is no
basis upon which the settlement agreement entered into between the
parties can be reviewed.
[20]
Secondly, and even if I
am wrong in my finding that a settlement agreement cannot be reviewed
and set aside in terms of the provisions
of section 158(1)(g) of the
LRA, the Applicants have not set out any grounds for review in
respect of the agreement. Their case,
that they were not aware of all
the facts at the time of signing the agreement, is not a ground for
review, but rather a ground
to set it aside on the grounds of
misrepresentation, duress or whatever other reason there may be. If
the Applicants have a case
and if they are entitled to relief, they
are certainly not so entitled on the basis of the provisions of
section 158(1)(g) of the
LRA and on the facts that they have placed
before this Court.
[21]
Thirdly, the Applicants
were paid in accordance with the terms of the agreement and to date
they made no tender whatsoever to repay
the monies they received.
[22]
The principle that where
a party accepts payment, it is bound by the acceptance was enunciated
in
Makiwane
v International Healthcare Distributors
as
follows
:
[6]
‘
It
is common cause between the parties that the applicant has been paid
all the monies set out in the settlement agreement, that
he has kept
such monies and has made no tender to return them to the respondent.
To my mind this clearly signifies his acceptance
of such monies in
full and final settlement of his claims against the respondent.
Our
law is trite that where a party accepts the benefits under any
settlement agreement in full and final settlement of the benefits
owing to him by his former employer arising from the termination of
his employment relationship with such employer, and has abided
by
such acceptance of those benefits, he has placed
himself
beyond the jurisdiction of this court (see
United
Tobacco Co Ltd v Baudach
(1997)
18 ILJ 506 (LAC))
.’
[23]
The
doctrine of peremption is well established in our law and was
explained in
Hlatshwayo
v Mare and Deas
[7]
as
follows:
'[A]t bottom the doctrine is based
upon the application of the principle that no person can be allowed
to take up two positions
inconsistent with one another, or as it is
commonly expressed to blow hot and cold, to approbate and reprobate.'
[24]
For the above reasons,
the Applicants’ review application in terms of section
158(1)(g) of the LRA has to fail.
Declaring
the agreement void ab initio
[25]
The Applicants seek an
order declaring the agreement void
ab
initio
and
as being of no force and effect.
[26]
The relief sought in
prayer 2 of the notice of motion is problematic for a number of
reasons. Firstly, the relief is not sought
as an alternative to
prayer 1, where the review and setting aside of the agreement is
sought and it is mutually destructive of
the relief sought in prayer
1. The Applicants seek the review and setting aside of the agreement,
which relief is not possible
or competent if the agreement is void,
as it needs to exist to be set aside. Equally so, if the agreement is
void, it cannot be
reviewed and set aside.
[27]
Secondly, and as already
alluded to
supra,
the
Applicants were paid in accordance with the terms of the agreement
and to date they have made no tender whatsoever to repay
the monies
they received. Without any tender to repay the monies received, the
Applicants are not in a position to seek that the
agreement be
declared void.
[28]
Thirdly, it is evident
from the Applicants papers that they are effectively seeking the
rescission of the agreement because facts
were misrepresented at the
time that the agreement was entered into. For the Applicants to
succeed on this aspect, they must show
that they were induced or
coerced into signing the agreement as a result of a material
misrepresentation. The Applicants have not
placed any facts before
this Court that would support such a claim and in the absence of such
evidence, the Applicants are bound
by the agreement reached by their
representatives.
Section
197 of the LRA
[29]
The Applicants seek an
order declaring that they are employees of the Fifth Respondent (MA
Automotive) in terms of the provisions
of section 197 of the LRA and
an order that they are retrospectively reinstated by MA Automotive
with effect from 1 December 2015,
alternatively with immediate
effect.
[30]
Section
197
(1)
and (2) of the LRA provide that:
'(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.
(2) If a transfer of a business takes
place, unless otherwise agreed in terms of subsection (6) -
(a)
the new employer is
automatically substituted in the place of the old employer in respect
of all contracts of employment in existence
immediately before the
date of transfer;
(b)
all the rights and
obligations between the old employer and an employee at the time of
the transfer continue in force as if they
had been rights and
obligations between the new employer and the employee;
(c)
anything done
before the transfer by or in relation to the old employer, including
the dismissal of an employee or the commission
of an unfair labour
practice or act of unfair discrimination, is considered to have been
done by or in relation to the new employer;
and
(d)
the transfer does
not interrupt an employee's continuity of employment, and an
employee's contract of employment continues with
the new employer as
if with the old employer.'
[31]
The
question whether or not there has been a transfer of a business as a
going concern entails an enquiry into (1) the existence
of a business
(is there an economic entity capable of being transferred) (2)
whether there was a transfer of a business and (3)
whether the
business is transferred as a going concern
[8]
.
For
section 197 to be triggered, the three discrete requirements must be
met and if the transfer meets these requirements, the transferee
is
substituted automatically and by operation of law for the transferor
as the employer of those of the transferor's employees
engaged in the
business on the date of the transfer. Whether there has been a
section 197 transfer is a matter of fact to be determined
objectively.
[32]
A
peru
sal
of the Applicants’ papers show that the only allegation made in
respect of section 197 is that between 2010 and 2011 MA
Automotive
bought shares from the employer and it became a 100% shareholder in
the employer. A vague and generic statement is made
that the transfer
of the business was a transfer as a going concern.
[33]
The Applicants’
averments are without merit. Firstly, a change in ownership of shares
is nothing but a change in shareholding
and that does not
automatically result in the transfer of the business.
[34]
Secondly, the employer
and MA Automotive explained that MA Automotive is part of an
international group of companies and in South
Africa this group
consists of separate companies that manufacture and supply components
to the motor vehicle manufacturing industry.
The employer and MA
Automotive are sister companies and wholly owned by MA Automotive
South Africa (Pty) Ltd. It is denied that
there was any transfer of
the business of the employer to MA Automotive Tool & Die (Pty)
Ltd in 2011 or thereafter and no employees
were ever transferred to
MA Automotive. The Applicants failed to put any facts before this
Court to rebut this version and I accept
that the employer and MA
Automotive are separate legal entities, operating separate businesses
and that they form part of the same
group of companies, known as the
MA Group.
[35]
Thirdly, in order to
succeed with this claim, the Applicants have to show
the
existence of a business, that there was a transfer of a business and
that the business was transferred as a going concern. The
Applicants
dismally failed to make any averments to support this claim.
[36]
The
Applicants’ application has to fail for lack of merit.
Costs
[37]
The
last issue to be decided is the issue of costs.
[38]
In so far as costs are
concerned, this Court has a broad discretion in terms of section 162
of the LRA to make orders for costs
according to the requirements of
the law and fairness.
[39]
Considering the merits of
this application and the attempt made by the Respondents to avoid
further costs when they indicated to
the Applicants’ attorneys
that the application should be withdrawn, there is no reason in law
or fairness not to make a cost
order in favour of the Respondents. I
can see no reason why the Respondents should be burdened with the
legal costs incurred as
a result of the Applicants’ conduct and
in defending a meritless application.
[40]
The Respondents are
entitled to costs. The question is who should be ordered to pay the
costs.
[41]
Mr Searle argued that the
Applicants should not be ordered to pay the costs, but that a cost
order
de
bonis propriis
should
be made. This argument was supported by correspondence Mr Searle
referred to. The first letter from the Respondents’
attorneys
is dated 23 February 2016 and was addressed to the Applicants’
attorneys shortly after the application was filed
on 3 February 2016.
In this letter the Applicant’s attorneys were invited to
withdraw the application, with a tender for
costs, failing which the
attorneys would attend to serving the Respondents’ answering
affidavit. In the letter of 23 February
2016, the Applicant’s
attorneys were warned that the Respondents would seek the dismissal
of this application with costs
de
bonis propriis.
This
letter was sent to the Applicants’ attorneys prior to the
filing of opposing papers and before costs were incurred in
that
regard.
[42]
On 2 March 2016, another
letter was addressed to the Applicants’ attorneys, indicating
that no response was received to the
letter of 23 February 2016. The
Respondents subsequently filed an answering affidavit on 4 April
2016.
[43]
On 18 April 2016,
Solidarity addressed a letter to the Applicants’ attorneys
wherein reference was made to the Respondents’
opposing
affidavit and it was specifically brought to the Applicants’
attorneys attention that a settlement agreement cannot
be the subject
of a review application in terms of section 158(1)(g) of the LRA.
Solidarity also urged the attorneys to withdraw
the application. On
22 April 2016, Solidarity went further and provided the Applicants’
attorneys with the latest case law
on this issue which was to
convince the Applicants to withdraw the misconceived application.
[44]
This did not spark any
consideration of the merits of the case or the way forward. Instead,
the Applicants filed a replying affidavit,
clearly signifying the
intention to proceed with the application.
[45]
Notwithstanding the legal
position as set out in the case law that was provided to the
Applicants’ attorneys in April 2016
and notwithstanding pleas
from the Respondents and Solidarity that the application be withdrawn
as far back as 2016, the Applicants’
attorneys instead filed
heads of argument on 1 February 2017. The attorneys waited for the
matter to be enrolled for hearing on
8 November 2018, on which
occasion they briefed counsel with the only instruction to remove the
matter from the roll so that the
papers could be amended. In view of
my findings on the law and the merits of this application, there is
no prospect that an amendment
would change the outcome of this
matter.
[46]
Mr Searle submitted that
the Applicants’ attorneys were warned two and a half years ago
about the fatal flaws in the application
and they were responsible to
advise the Applicants, their clients and laypersons, about the flaws
in the application and they ought
to have acted accordingly. The
Applicants, as laypersons who relied on the advice and assistance of
their attorneys, should not
be burdened with costs in this instance.
[47]
In
SA
Liquor Traders' Association and others v Chairperson, Gauteng Liquor
Board and others
[9]
the
Constitutional Court ordered costs
de
bonis propriis
on
a scale as between attorney and client and held that
:
'An order of costs
de bonis
propriis
is made against attorneys where a court is satisfied
that there has been negligence in a serious degree which warrants
an order
of costs being made as a mark of the court's
displeasure. An attorney is an officer of the court and owes a court
an appropriate
level of professionalism and courtesy.’
[48]
In
Indwe
Risk Services (Pty) Ltd v Van Zyl
[10]
the Court considered
circumstances where a
de
bonis propriis
cost
order was warranted and held that:
‘
I
am also mindful of the fact that an order for costs
de
bonis propriis
is
only awarded in exceptional cases and usually where the court is of
the view that the representative of a litigant has acted
in a manner
which constitutes a material departure from the responsibilities of
his office. Such an order shall not be made where
the legal
representative has acted
bona
fide
or
where the representative merely made an error of judgment. However,
where the court is of the view that there is a want of
bona
fides
or
where the representative had acted negligently or even unreasonably,
the court will consider awarding costs against the representative.
Because the representative acted in a manner which constitutes a
departure from his office, the court will grant the order against
the
representative to indemnify the party against an account for costs
from his own representative. (See in general Erasmus
Superior
Court Practice
at
E12-27.) ‘
[49]
In casu,
it
is evident that the Applicants’ attorney filed an application
without any reflection as to the provisions of the LRA, without
any
consideration of the applicable case law and without any attention to
the question whether the Applicants have prospects of
success and
whether the matter should indeed be pursued. One could reasonably
accept that a practising attorney assisting a paying
client, should
at least consider the law, the applicable legislation and the merits
of a case before an application is filed and
before other parties are
dragged to Court.
[50]
It is further aggravating
that the Applicants’ attorneys were provided with the
applicable case law and were aware of the
issues raised in the
Respondents’ answering affidavit as far back as April 2016, yet
it did not trigger them to reconsider
the case. Instead, they pursued
the matter and it proceeded on an opposed basis, on which occasion a
postponement was sought.
[51]
To
persist with this application in the face of the applicable
authorities and defects as indicated in the Respondents’
opposing
papers, is not merely an error of judgment and does not
indicate
bona
fides
.
Ehlers
Fakude Inc Attorneys acted in a manner that constitutes a departure
from their office by persisting with a meritless application
and when
allocated a date in a Court with limited resources and a substantial
backlog, to instruct counsel not to proceed with
the matter but to
remove it from the roll. This Court’s displeasure should be
known to the attorneys.
[52]
This is an exceptional
case where the Applicants’ representatives acted in a manner
that justifies an order for costs
de
bonis propriis
[53]
I am of the view that
Ehlers Fakude Inc Attorneys should be ordered to pay the Respondents’
costs
de
bonis propriis.
I
am guided by the principles set out by the Courts in making such an
order, being mindful that it is awarded only in exceptional
cases.
[54]
The Applicants have not
placed any compelling reason before this Court as to why cost should
not be ordered as aforesaid. I invited
Mr Mashele to make submissions
in reply to the Respondents’ submissions, but he declined to
make any submissions.
[55]
In the premises I make
the following order:
Order:
1.
The
application is dismissed;
2.
Ehlers Fakude Inc
Attorneys are ordered to
pay
the First and the Fifth Respondent’s costs
de
bonis propriis.
Connie Prinsloo
Judge of the Labour Court
of South Africa
Appearances:
For the
Applicant:
Advocate M Mashele
Instructed
by: Ehlers
Fakude Incorporated Attorney
For the First and Fifth
Respondents:
Mr N Searle of Fasken Martineau
Attorneys
For the Second
Respondent:
Mr T T Modisane
For the FourthRespondent:
Mr H Perry of Solidarit
[1]
Act 66 of 1995, as
amended.
[2]
April 2013.
[3]
Myburg and Bosch,
Reviews
in the Labour Courts
,
Lexis Nexis, 2016 at p 123 – 140.
[4]
ACT 3 of 2000.
[5]
(2010) ZALC 97
(15
April 2010) at para 12, referred to in
Cindi
v CCMA
(2015)
36 ILJ 3080 (LC).
[6]
(2003) 24 ILJ 2150
(LC) at paras 18-19.
[7]
1912 AD 242.
[8]
See:
Fnman
Services (Pty) Ltd v Simba (Pty) Ltd and Another
(2013) 34 ILJ 897
(LC).
[9]
2009 (1) SA 565
(CC) at para 54.
[10]
(2010) 31 ILJ 956 (LC) at para 39..