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[2018] ZALCCT 15
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National Union of Metalworkers of South Africa and Another v Spine Industries (Pty) t/a Truck Chairman and Another (C465/17) [2018] ZALCCT 15 (3 May 2018)
THE
LABOUR COURT OF SOUTH AFRICA,
CAPE
TOWN
Not Reportable
Case no: C465/17
In the matter between:
NATIONAL UNION OF
METALWORKERS
OF
SOUTH AFRICA
First
Applicant
JACQUELINE
SIEBRITZ
Second
Applicant
and
SPINE
INDUSTRIES (PTY) LTD T/A
THE
TRUCK CHAIRMAN
First
Respondent
JAQUELINE KEARLEY T/A
CHAIRMAN
Second Respondent
Heard:
8 March 2018
Delivered:
03 May 2018
Summary:
Correction of the citation of a party aimed at addressing a misnomer
and there is no prejudice
to the second respondent.
Substituting
the second respondent for the first respondent as the employer in
accordance with section 197 of the LRA.
JUDGMENT
NKUTHA-NKONTWANA. J
Introduction
[1]
In
this matter, the first applicant (‘NUMSA’) and the second
applicant (‘Ms Siebritz’) seek an order correcting
the
citation of the first respondent and to simultaneously substitute it
with the second respondent. The application is brought
in terms of
Rule 22 (4)
[1]
and Rule 22
(5)
[2]
of this Court’s
Rules read with the section 197 of the Labour Relations Act
[3]
(‘the LRA’).
[2]
Ms
Siebritz was employed by the Truck Chairman CC and was dismissed on
15 August 2015. She successfully challenged her dismissal;
save that
the employer party was cited as the Spine Industries (Pty) Ltd t/a
Truck Chairman. A default arbitration award dated
11 February 2015
was issued in terms of which the dismissal of Ms Siebritz was found
to be unfair and a compensation of R22 500.00
was awarded.
[3]
The
arbitration award was served on the first respondent on 12 February
2015 and certified in terms of section 143 (3) of the LRA
on 3 March
2016. On 26 September 2016, having obtained the writ of execution
issued by the registrar of this Court, the Sheriff
attached some
immovable property found at 12 Green Street in Paarl, being the
premises from which the first respondent conducted
its business. The
attached goods included four industrial machines that had been used
by the first respondent to conduct its business.
The Sherriff
subsequently received a sworn statement from the second respondent,
distancing herself from the first respondent and
claiming that the
attached goods belong to her son.
[4]
The
Sheriff instituted interpleader proceedings on 17 March 2017, which
was postponed to 30 March 2017 in order to allow the second
respondent to file her particulars of claim by not later than 29
March 2017. In her particulars of claim filed in the interpleader
proceedings, Ms Siebritz contended that the goods were rightly
attached for the following reasons:
4.1.
The
goods attached were found at 12 Green Street in Paarl, the same
premises that the first respondent conducted its business from
and
was then used by the second respondent to trade, and
4.2.
The
business had changed hands from the first respondent to the second
respondent. It was trading from the same premises, using
the same
equipment and servicing the same clients with the same staff
compliment. Therefore, the business had been transferred
as a going
concern in terms of section 197.
[5]
As
at the hearing of the interpleader on 30 March 2017, the second
respondent had not filed her particulars of claim. The Court,
as per
Rabkin- Naicker J, ordered that Ms Siebritz had a valid claim against
the attached goods and directed the Sheriff to continue
with the sale
in execution. The second respondent was ordered to pay Ms Siebritz’s
costs and sheriff’s fees.
[6]
The
Sherriff realised R7 600.00 from the sale in execution. Ms
Siebritz was paid R2 054.85 and the rest was deducted as
the
Sherriff’s fees. The outstanding balance is R20 445.15.
Now the applicants seek to substitute the first respondent
with the
second respondent as the employer and the judgement debtor.
The legal principles
and application
[7]
The
applicants claim is hinged on section 197
[4]
.
The parties accept the interpretation accorded to section 197 in
National
Education Health and Allied Works Union v University of Cape Town &
Others (NEHAWU)
,
[5]
where the Constitutional
Court stated the following:
‘
The proper approach to the
construction of section 197 is to construe the section as a whole and
in the light of its purpose and
the context in which it appears in
the LRA. In addition, regard must be had to the declared purpose of
the LRA to promote economic
development, social justice and labour
peace. The purpose of protecting workers against loss of employment
must be met in substance
as well as in form. And, as pointed out
earlier, it also serves to facilitate the transfer of businesses. The
section is found
in a chapter that deals with unfair dismissal.
Construed against this background, the section makes provision for an
exception
to the principle that a contract of employment may not be
transferred without the consent of the workers. Subsection (1) says
so
and it makes it possible to transfer the business on the basis
that the workers will be part of that transfer. This will occur if
the business is transferred “as a going concern”.’
[8]
Emphasising
the dual purpose of Section 197, the Constitutional Court further
stated that:
‘
Section
197 strikes at the heart of this tension and relieves the employers
and the workers of some of the consequences that the
common law
visited on them. Its purpose is to protect the employment of the
workers and to facilitate the sale of businesses as
going concerns by
enabling the new employer to take over the workers as well as other
assets in certain circumstances. The section
aims at minimising the
tension and the resultant labour disputes that often arise from the
sales of a businesses and impact negatively
on economic development
and labour peace.
In this
sense, section 197 has a dual purpose, it facilitates the commercial
transactions while at the same time protecting the
workers against
unfair job losses
.’
(Emphasis added)
[9]
The
second respondent disputes that section 197(2) is applicable in the
circumstances of this matter. She argued that there was
no sale
agreement or transaction that could have facilitated the transfer of
the business. This argument is clearly untenable.
T
he
question whether section 197(2) applies to a particular case cannot
be determined with reference to the intricacies of the transaction
effecting the transfer. The existence of a contract is not a
pre-condition for the application of section 197(2) in a particular
case.
[6]
In
Aviation
Union of South Africa & Another v South African Airways (Pty) Ltd
& Others
,
[7]
the Constitutional Court stressed that the key event which brings
section 197 (2) into play is the transfer of a business as a
going
concern. Accordingly, its application must always be determined with
reference to three requisites, namely, ‘business’,
‘transfer’ and ‘going concern’.
[10]
The
definition of ‘business’ provided in section 197(1)(a)
refers to ‘the whole or part of any business, trade,
undertaking or service’. Whilst section 197 (1)(b) defines
‘transfer’ as ‘the transfer of a business by
one
employer (‘the old employer’) to another employer (‘the
new employer’) as a going concern’.
[11]
In
NEHAWU
,
the Constitutional Court defined the words “going concern”
to mean the following:
‘
The phrase ‘going
concern’ is not defined in the LRA. It must therefore be given
its ordinary meaning unless the context
indicates otherwise.
What is transferred must be a business in operation ‘so that
the business remains the same but
in different hands.’
Whether that has occurred is a matter of fact which must be
determined objectively in the light
of the circumstances of each
transaction.
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.
They must all
be considered in the overall assessment and therefore should not be
considered in isolation.’
[8]
(Emphasis added)
[12]
Interestingly,
in the present case, the second respondent readily conceded that she
had been leasing the same premises that the
first respondent had been
trading from; that she purchased the machinery that the first
respondent utilised in its business, albeit,
from the landlord; that
she employed two of the previous employees of the first respondent;
and that she is servicing the same
clientele that was serviced by the
first respondent. In fact, in her answering affidavit, the second
respondent explicitly states
that:
‘
The business I conduct is
similar to that previously conducted by the close corporation, as
such, it stands to reason that some
close corporation’s
erstwhile clients would also became the clients of mine. There is
nothing neither strange nor untoward
in obtaining clients for my
business, especially since I had done marketing on a contract basis
for the close corporation it stands
to reason that I would approach
these potential clients in an attempt to expand my business.’
[9]
[13]
Clearly,
the first respondent’s operation continued, alternatively
resumed, with similar activities under the new employer,
being the
second respondent. Besides, the second respondent is also trading as
Chairman.
[14]
Nothing
turns on the second respondent’s argument that the first
respondent had ceased trading when she commenced with the
business.
Firstly, it is inconsistent with the applicants’ undisputed
evidence that the employment contracts of the first
respondent’s
employees taken by the second respondent were never interrupted. They
were paid by the first respondent up until
end of February 2016 and
commenced with the second respondent on 1 March 2016. Secondly, even
if there was an interruption, the
first respondent’s operation
did resume under the second respondent, the new owner.
[15]
In view of
the above, it is evident that the components of the first
respondent’s business did pass to the second respondent
as a
going concern in accordance with section 197(2). As a result, the
dismissal of Ms Siebritz by the first respondent is considered
to
have been done by the second respondent, the new employer.
[10]
[16]
Turning to
the issue of correction of the citation of the first respondent, the
second respondent initially opposed this application.
During oral
arguments in Court, she, however, backtracked, submitting that she
shall abide the Court’s decision.
[17]
The
applicants argued that the correction sought is aimed at addressing a
misnomer in the citation of the first respondent with
no prejudice to
the second respondent.
[11]
I
agree. In any event, the second respondent has since prudently
abandoned her contestation in this regard.
Conclusion
[18]
In
all the circumstances, I am persuaded that the applicants have a made
a case for granting the order correcting the citation of
the first
respondent and substituting it with the second respondent.
Costs
[19]
The
Constitutional Court made it clear
in
Zungu v
Premier of the Province of KwaZulu-Natal and Others
[12]
that the rule of practice that costs follow the result does not apply
in matters before this Court as orders of costs in this Court
are to
be made in accordance with the requirements of the law and fairness.
In this instance, it would not be fair and just to
award costs. In
any event, the applicants did no persist with their claim for costs.
Order
[20]
I,
therefore, make the following order:
1.
The
citation of the first respondent is corrected as ‘The Truck
Chairman CC’.
2.
The second
respondent is substituted for the first respondent.
3.
There is no
order as to costs.
__________________
P. Nkutha-Nkontwana
Judge
of the Labour Court of South Africa
Appearances:
For the applicants:
Ms T Ralehoko
of Cheadle Thompson and
Haysom Inc.
For the second
respondent:
Advocate J Rysberg
Instructed by
Duvenage & De Villiers Hogan attorneys
[1]
Rule 22(4)
provides
that: ‘if a party to any proceedings has been incorrectly or
defectively cited, the court may, on application and
on notice to
the party concerned, correct the error or defect and may make an
order as to costs.’
[2]
Rule 22(5) provides that: ‘If
in any proceedings it becomes necessary to substitute a person for
an existing party, any
party to such proceedings may, on application
and on notice to every other party, apply to the court for an order
substituting
that party for an existing party and the court may make
such order, including an order as to costs, or give such directions
as
to the further procedure in the proceedings as it deems fit.’
[3]
Act 66 of 1995 as amended.
[4]
‘
197. Transfer of contract of
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.
(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.’
[5]
[2002] ZACC 27; 2003 (3) SA 1 (CC);
2003 (2) BCLR 154 (CC)
[6]
Nokeng Tsa Taemane Local
Municipality v Metsweding District Municipality
(2003) 24 ILJ 2179 (LC) at 2183 referred with approval in the second
judgment of the Constitutional Court in
Rural
Maintenance (Pty) Limited and Another v Maluti-A-Phofung Local
Municipality
[2016] ZACC
37
;
2017 (1) BCLR 64
(CC); (2017) 38 ILJ 295 (CC);
[2017] 3 BLLR 258
(CC) at para 87.
[7]
2012 (1) SA 321
(CC);
2012 (2) BCLR
117
(CC);
[2012] 3 BLLR 211
(CC); (2011) 32 ILJ 2861 (CC) at para
44.
[8]
NEHAWU
above n 11 at para 56.
[9]
Answering affidavit, pages 98 and 99 para 69.
[10]
See section 197(2)(c), in particular.
[11]
Lamprecht v Pienaar Brothers (Pty)
Ltd
[1998] JOL 2171
(LC)
at para 6 and 7.
[12]
[2018] ZACC 1
at para 24 to 26.