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[2019] ZALCJHB 36
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Tasima (Pty) Ltd v Road Traffic Management Corporation and Others (J890/17) [2019] ZALCJHB 36 (19 February 2019)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: J 890/17
TASIMA
(PTY) LTD
Applicant
and
ROAD
TRAFFIC MANAGEMENT CORPORATION
DEPARTMENT
OF TRANSPORT
First
Respondent
Second Respondent
DIRECTOR
GENARAL: DEPARTMENT OF TRANSPORT
Third Respondent
MINISTER
OF TRANSPORT
Fourth Respondent
EMPLOYEES
LISTED IN ANNEXURE “A” TO THE
NOTICE
OF MOTION
Fifth to
Eighty Fourth Respondents
MAKHOSINI
MSIBI
Eighty Fifth Respondent
Heard:
22 January
2019
Delivered:
19 February 2019
Summary:
Application in terms of section 18 of the Superior Courts Act to
enforce an order of the Labour Appeal Court in respect
of a section
197 of the LRA
transfer pending further appeal proceedings.
JUDGMENT
PRINSLOO,
J
Introduction
[1]
The
Applicant (Tasima) approached this Court on an urgent basis for an
order that paragraph 57.1 of the Labour Appeal Court (LAC)
order
[1]
,
read with paragraph 63.1 of the Labour Court order of 25 May 2017,
operates and is extant until the final determination of all
present
and future leave to appeal applications and appeals against the LAC
order. Tasima further seeks an order that the First
Respondent (RTMC)
is to take transfer of the Fifth to Eighty Fourth Respondents (the
employees) as its employees, on terms no less
favourable than their
contracts of employment with Tasima.
[2]
In the alternative, the Applicant seeks an order that,
notwithstanding
any application for leave to appeal, until the final
determination of all present or future leave to appeal applications
and appeals
against the LAC order, the RTMC be ordered to pay the
employees’ salaries on a monthly basis on or before the 25
th
of each month.
[3]
The RTMC opposed the application.
Background
[4]
This matter has a long and litigious history, of which the end is
unfortunately
not yet in sight.
[5]
A brief background of this matter is necessary to put the current
application
in proper context. The LAC correctly observed that the
relationship between the parties turned into a litigation storm and
that
a narrative entitled “War and No Peace” could be
compiled based on the litigation history of the parties. I do not
intend to deal with all the litigation, but will briefly refer to the
litigation that is relevant for the present application.
[6]
For a period of almost 15 years, Tasima was
responsible for the development, operation, management, control and
maintenance of the
electronic national traffic information system
(eNaTIS). The eNaTIS and the rendering of eNaTIS services was the
sole business
of Tasima, it represented the entirety of Tasima’s
business and revenue generation and all the employees employed by
Tasima,
were dedicated solely to the eNaTIS and the rendering of the
eNaTIS services. The said employees are the employees before this
Court.
[7]
The eNaTIS is self-financing through the
generation of transaction fees, which at all times have accrued to
the State through the
RTMC as the relevant state functionary. The
Tasima employees were paid for years with the funds the State
received from the eNaTIS
transaction fees. The RTMC receives the
transaction fees as part of its annual income.
[8]
On
9 November 2016, the Constitutional Court in
Department
of Transport and Others v Tasima (Pty) Ltd
[2]
ordered
Tasima to hand over and transfer the eNaTIS and services to the RTMC
within 30 days of the date of the order. This order
followed lengthy
litigation pertaining to the lawfulness of the extensions of the
agreement and contempt orders by various Courts.
[9]
The
Constitutional Court
[3]
ordered
Tasima and RTMC to ‘meet within 10 days to agree on how the
transfer is to be facilitated. Should this agreement
fail to
materialise, the transfer is to take place in accordance with a
default regime in terms of the underlying original Turnkey
Agreement’. In the course of negotiating the transfer, as per
the Constitutional Court order, the RTMC’s attorneys
sent
correspondence to Tasima’s attorneys during February 2017,
confirming that section 197 of the Labour Relations Act
[4]
(LRA) applies, that it would honour the provisions of the section and
that the RTMC was ready to receive the transferred employees
on the
same terms and conditions of their current employment.
[10]
On 1 March
2017, the RTMC’s attorneys confirmed that the RTMC has agreed,
without any reservation, to take over all of Tasima’s
employees
in terms of the provisions of section 197 of the LRA. It appears from
the correspondence that was exchanged between the
parties’
legal representatives that there was a dispute about the handing over
of the eNaTIS and services, the details of
which are not relevant for
purposes of this application. This however, appeared to have had a
hugely negative impact on the negotiations
between the parties.
[11]
What is evident is that on 2 March 2016, the
RTMC’s attorney confirmed that the issue of section 197 of the
LRA, the functions
to be transferred and handed over, and commitment
to an uninterrupted and expeditious handover, was settled on the part
of the
RTMC and that the RTMC had agreed to take over the Tasima
employees unreservedly, subject to compliance with the provisions of
the LRA.
[12]
It is clear from the correspondence between the
legal representatives, that it was understood by both Tasima and the
RTMC that the
Tasima employees would be transferring to the RTMC with
the transfer of the eNaTIS and services. This was also expressed in
the
affidavit deposed to by the RTMC’s Chief Executive Officer,
Mr Msibi, in papers before the Constitutional Court, where he
stated
inter alia,
that the RTMC would take over the employees of Tasima in terms of
section 197 of the LRA. Evidently the applicability of section
197 of
the LRA was not in dispute.
[13]
On 5 April 2017, the transfer of the eNaTIS
occurred when the RTMC took over Tasima’s premises. The RTMC
subsequently reneged
on the previous representations and refused to
give effect to section 197 of the LRA. This caused Tasima to launch
an urgent application
under case number J 890/17 to secure a
declaration that the employees had transferred to the RTMC by virtue
of section 197 of the
LRA.
[14]
The
said urgent application was heard on 16 May 2017 and on 25 May 2017
Steenkamp J handed down his judgment wherein he declared
that, with
effect from 5 April 2017, the contracts of employment of the
employees automatically transferred from Tasima to the
RTMC in
accordance with the provisions of section 197 of the LRA
[5]
.
An order was also granted that pending the final determination of the
matter, the RTMC was ordered to pay the employees their
salaries
etcetera, with effect from 5 April 2017.
[15]
The
RTMC filed an application for leave to appeal against the judgment of
Steenkamp J and also launched an application under section
18(2) and
(3) of the Superior Courts Act
[6]
,
for the interim relief granted by Steenkamp J to be suspended pending
the appeal. The application was not successful and as a
result the
RTMC made payment in respect of the employees’ salaries
etcetera for the period May 2017 until November 2018,
as per the
interim order.
[16]
The
appeal was heard by the LAC
[7]
on 8 November 2018 and on 21 December 2018 judgment was handed down.
The LAC upheld the declaration that the employees’ contracts
of
employment had transferred automatically from Tasima to the RTMC in
accordance with section 197 of the LRA. The order was however
amended
to reflect the proper date of the transfer to be 23 June 2015. The
appeal succeeded in respect of the interim order that
the RTMC had to
pay the employees’ salaries and the order in paragraph 63.2 of
Steenkamp J’s judgment was set aside.
[17]
On 21 December 2018, and following the LAC judgment, Tasima requested
the RTMC to confirm
whether it would be abiding by the LAC judgment
and order and if not, whether it would, pending any appeal thereof,
be paying the
employees’ monthly salaries.
[18]
The RTMC has indicated that it would approach the Constitutional
Court to appeal the LAC
judgment.
[19]
Tasima has approached this Court on an urgent basis for an order to
enforce the LAC judgment
and order of 21 December 2018 pending any
application for leave to appeal and subsequent appeal to the
Constitutional Court.
Points
in limine
[20]
In opposing this application, the RTMC has raised two points
in
limine.
It is unfortunate that the RTMC adopted this approach
rather than deal with the merits of this application, as it not only
burdened
Tasima to put up an answer to the points so raised, but it
also burdened this Court to, on an urgent basis, deal with meritless
points
in limine.
The points
in limine
caused lengthy
arguments to be presented in Court and required a substantial amount
of effort and time to be addressed in this judgment,
which was quite
unnecessary.
[21]
Be that as it may, in support for its points
in limine,
the
RTMC referred to paragraph 2 of the founding affidavit wherein it was
stated that ‘Webber Wentzel, Tasima and I are duly
authorised
by the relevant employees to bring this application on their behalf.
Indeed, the relief sought herein is sought fundamentally
in the
interest not of Tasima itself, but the interests of all of Tasima’s
erstwhile employees and thus Tasima litigates
herein in the interest
of the fifth to eighty fourth respondents and the public.’
[22]
According to the RTMC, the said paragraph 2 means that Tasima is the
applicant and that
it had been authorised to institute this
litigation on behalf of its employees and that Tasima is not seeking
relief for itself,
but that it does so in the interest of its
employees and the general public.
No
proper authority
[23]
The first point
in limine
is that there is nothing that
indicates that Tasima, Webber Wentzel attorneys and Mr Vabaza (the
deponent to the founding affidavit)
have been properly authorised to
litigate against the RTMC. According to the RTMC this is a fatal
defect and the application should
be dismissed on this basis alone.
[24]
In the replying affidavit, Mr Vabaza stated that it was unclear what
the basis of the challenge
was. He explained that Tasima, through
Webber Wentzel attorneys, has been litigating against the Department
of Transport and RTMC
since 2012, without there being any question
ever raised as to the issue of authority. During this period Mr
Vabaza has also deposed
to multiple affidavits on behalf of Tasima.
[25]
Mr Vabaza explained that there are 68 employees remaining as relevant
employees and Tasima
has filed confirmatory affidavits of 66 of the
said employees. Each of the 66 employees deposed to an affidavit
wherein they confirmed
the contents of the founding affidavit,
wherein it was recorded that that Tasima, Webber Wentzel attorneys
and Mr Vabaza had been
authorised to bring the application on the
employees’ behalf. Furthermore, each of the confirmatory
affidavits stated that
the relevant employee understands that in
seeking the relief sought in these proceedings, Tasima is acting on
his or her behalf
and in his or her interest. The employees confirmed
that they are not in a financial position to litigate in respect of
their rights
against the RTMC.
[26]
The basis of the challenge to authority became only clear during
argument.
[27]
In argument, Mr Hopkins for the Respondents, submitted that Tasima is
a private company
and it is trite that private companies may only
litigate if their boards of directors authorised them to do so. There
is no allegation
or evidence in this application that Tasima’s
board has authorised this application.
[28]
Tasima’s suggestion that the employees authorised the
application, is of no value
as only the board of directors and not
the employees can authorise a company to litigate. Mr Vabaza in his
founding affidavit merely
stated that he is authorised to depose to
the affidavit. Mr Vabaza should have been authorised to institute
litigation on Tasima’s
behalf and therefore the RTMC disputed
that Tasima and the deponent are properly authorised.
[29]
In his
argument, Mr Hopkins referred to Henochsberg
[8]
wherein it is explained that section 66 of the Companies Act
[9]
enables the company’s directors to cause the company to
participate in legal proceedings and for this purpose they must
authorise the institution of the proceedings and the prosecution
thereof. There must be evidence before the Court that the person
purporting to represent the company has been authorised accordingly
with regard to the particular proceedings.
[30]
Mr Hopkins
also relied on
Ganes
and Another v Telecom Namibia Ltd
[10]
(Ganes)
where
the Supreme Court of Appeal (SCA) held that the institution of the
proceedings and the prosecution thereof must be authorised.
He
submitted that
in
casu,
the
deponent stated that he is authorised to depose to the affidavit, not
that he is authorised to institute the litigation on Tasima’s
behalf. This is the exact shortcoming the SCA held to be fatal in
Ganes.
[31]
Mr Hopkins
referred to
Sibuya
Game Reserve and Lodge (Pty) Ltd and Others v Geoffrey Martin Cook
and Others
[11]
where
the lack of authority to bring an application on behalf of a private
company and close corporation applicants was raised as
a point
in
limine.
The
Court upheld the said point
in
limine
on
the basis that no evidence was placed before it to demonstrate that
the applicants had authorised the proceedings.
[32]
Mr Hopkins submitted that the lack of authority was raised in the
opposing affidavit and
Tasima could have and should have fixed it in
reply, but this was not done. The application as it stands, is
unauthorised and that
is fatal to the application.
[33]
In argument, Mr Franklin for Tasima, submitted that the point taken
on the issue of authority
is without merit and is bad in law.
[34]
This is so because Tasima, through Webber Wentzel attorneys, has been
litigating against
the RTMC since 2012, without any question ever
raised as to the issue of authority.
[35]
The challenge to authority, as raised in the opposing affidavit,
stated that there is nothing
that indicates that Tasima, Webber
Wentzel attorneys and Mr Vabaza have been properly authorised to
litigate against the RTMC.
Mr Franklin submitted that Tasima had
indeed been authorised by the affected employees, as is evident from
their confirmatory affidavits.
In respect of Mr Vabaza, Mr Franklin
submitted that as the deponent to an affidavit, he does not need to
be authorised. In respect
of the authority of Webber Wentzel
attorneys, it was submitted that they too had the authority to act on
behalf of Tasima.
[36]
Mr Franklin
submitted that if the RTMC wanted to challenge the authority to act,
the correct procedure was to file a notice in terms
of Rule 7 of the
Uniform Rules. Mr Franklin referred to
Unlawful
Occupiers, School Site v City of Johannesburg
[12]
(Unlawful Occupiers)
in
support of his submissions.
Analysis
[37]
In
Eskom
v Soweto City Council
[13]
(Eskom),
issue
was taken with the deponent’s authority to institute legal
proceedings, as the deponent was authorised to make the affidavit
and
not to bring the application and there was no resolution filed in
proof of the deponent’s authority. The Court held that:
‘
The
care displayed in the past about proof of authority was rational. It
was inspired by the fear that a person may deny that he
was party to
litigation carried on in his name. his signature to the process, or
when that does not eventuate, formal proof of
authority would avoid
undue risk to the opposite party, to the administration of justice
and sometimes even to his own attorney.
The
developed view, adopted in Court Rule 7(1), is that the risk is
adequately managed on a different level. If the attorney is
authorised to bring the application on behalf of the applicant, the
application necessarily is that of the applicant. There is
no need
that any other person, whether he be a witness or someone who becomes
involved especially in the context of authority,
should additionally
be authorised. It is therefore sufficient to know whether or not the
attorney acts with authority.
As
to when and how the attorney’s authority should be proved, the
Rule-maker made a policy decision. Perhaps the risk is minimal
that
an attorney will act for a person without authority to do so, proof
is dispensed with except only if the other party challenges
the
authority. See Rule 7(1) of the Uniform Rules. Courts should honour
that approach. Properly applied, that should lead to the
elimination
of many pages of resolutions, delegations and substitutions still
attached to applications by some litigants….’
[38]
The Court further held that insofar as the application was delivered
under the name and
signature of the attorney, he purportedly did so
on behalf of the party he represented and if he was authorised to do
so, the other
party was bound to accept that, irrespective of whether
the deponent was authorised to bring the application.
[39]
Of importance is the Court’s finding that if there were qualms
about whether the
application was authorised, the authority had to be
challenged on the level of whether the attorney held empowerment and
apart
from informal requests or enquiries, the remedy was to use Rule
7(1). It was not to hand up heads of argument, apply textual analysis
and make submissions about the adequacy of the words used by the
deponent about his own authority.
[40]
In
Ganes
[14]
the SCA
has held that:
‘…
The
deponent to an affidavit in motion proceedings need not be authorized
by the party concerned to depose to the affidavit. It
is the
institution of the proceedings and the prosecution thereof which
must be authorized. In the present case the proceedings
were
instituted and prosecuted by a firm of attorneys purporting to act on
behalf of the respondent. In an affidavit filed together
with the
notice of motion a Mr Kurz stated that he was a director in the firm
of attorneys acting on behalf of the respondent and
that such firm of
attorneys was duly appointed to represent the respondent. That
statement has not been challenged by the
appellants. It must,
therefore, be accepted that the institution of the proceedings was
duly authorized. In any event, rule 7 provides
a procedure to be
followed by a respondent who wishes to challenge the authority of an
attorney who instituted motion proceedings
on behalf of an applicant.
The appellants did not avail themselves of the procedure so
provided. (See
Eskom
v Soweto City Council
1992
(2) SA 703 (W)
at
705C-J.)’
[41]
It is
evident from
Ganes
[15]
that it supported the view taken in
Eskom
and
confirmed that the procedure to be followed to challenge authority,
is set out in Rule 7 of the Uniform Rules and where that
procedure is
not used, it must be accepted that the institution of the proceedings
was duly authorised.
[42]
In
Unlawful
Occupiers
[16]
the SCA
endorsed the approach adopted in
Eskom
and
Ganes
and held that:
‘
The
issue raised had been decided conclusively in the judgment of
Flemming DJP in
Eskom
v Soweto City Council
1992
(2) SA 703
(W),
which was referred to with approval by this court in
Ganes
and another v Telecom Namibia Ltd
2004
(3) SA 615
(SCA)
624I-625A. The import of the judgment in
Eskom
is
that the remedy of a respondent who wishes to challenge the authority
of a person allegedly acting on behalf of the purported
applicant, is
provided for in rule 7(1).
…
However,
as Flemming DJP has said, now that the new rule 7(1)-remedy is
available, a party who wishes to raise the issue of authority
should
not adopt the procedure followed by the appellants in this matter, ie
by way of argument based on no more than a textual
analysis of the
words used by a deponent in an attempt to prove his or her own
authority. This method invariably resulted in a
costly and wasteful
investigation, which normally leads to the conclusion that the
application was indeed authorised. After all,
there is rarely any
motivation for deliberately launching an unauthorised application. In
the present case, for example, the respondent's
challenge resulted in
the filing of pages of resolutions annexed to a supplementary
affidavit followed by lengthy technical arguments
on both sides. All
this culminated in the following question: Is it conceivable that an
application of this magnitude could have
been launched on behalf of
the municipality with the knowledge of but against the advice of its
own director of legal services?
That question can, in my view, only
be answered in the negative.’
[43]
The same question arises
in casu.
Is it conceivable that an
application, such as the present one, could have been launched
without the knowledge of Tasima and without
Webber Wentzel attorneys
being properly authorised?
[44]
The answer has to be no. The parties have been involved in litigation
since 2012 in a number
of Courts, including the Constitutional Court,
and in all those proceedings Tasima was represented by Webber Wentzel
attorneys.
As recent as November 2018, Tasima and RTMC appeared in
the LAC and obtained judgment in December 2018. The purpose of this
application
is to enforce the order made by the LAC, pending any
further appeal process and it is inconceivable that the RTMC would at
this
stage of the proceedings and for the first time ever challenge
the authority to litigate.
[45]
The RTMC had to follow the procedure set out in Rule 7 of the Uniform
Rules and as was
confirmed by the SCA, and should not have adopted
the procedure it did by raising it very briefly and scantly in the
answering
affidavit and dealt with it in the heads of argument.
[46]
A proper
reading of Henochsberg
[17]
also does not support the RTMC’s argument. Henochsberg stated
that there must be evidence before the Court that the person
purporting to represent the company has been authorised accordingly.
In motion proceedings the best evidence would be an affidavit
by an
officer of the company, annexing a copy of the relevant resolution of
the board, but such evidence is not necessary in every
case. Each
case must be considered on its own merits and the Court must decide
whether enough has been placed before it to warrant
the conclusion
that it is the company which is litigating and not some unauthorised
person on its behalf.
[47]
This
approach was also recorded in
Eskom
[18]
where
the Court held that in the absence of a prescribed mode of proof of
authority, it is a factual question whether a particular
person holds
a specific authority, which may be proved in the same way as any
other fact. Adjudication involves consideration of
what the credible
evidence means, the extent of, quality of, and sometimes the absence
of contradiction or other reason to remain
unconvinced.
[48]
Another difficulty for the RTMC is that in the opposing affidavit the
challenge to authority
was not properly set out. It was raised as a
blanket challenge, which caused Tasima to respond to the extent that
it was not sure
what the basis for the challenge was and an attempt
was made to address the challenge, as Tasima understood it.
[49]
In casu,
there is no proper challenge to the authority to
litigate, as provided for in Rule 7 of the Uniform Rules and absent
such a challenge,
I have to accept that the institution of the
proceedings was duly authorised. There is however another factual
reason why I accept
this and that is because the same parties have
been involved in litigation since 2012, where the same attorneys had
been representing
Tasima and in my view, the RTMC is very well aware
of the fact that Webber Wentzel attorneys have been duly authorised
to institute
these proceedings. Had this not been the case, the RTMC
would have raised the issue regarding authority as far back as 2012
or
soon thereafter.
[50]
There is no merit in the first point
in limine
raised by the
RTMC and I find the point raised and the arguments in respect of the
authority to act, unnecessary and wasteful, to
say the least.
No
locus standi
[51]
The second point
in limine
is that Tasima has no
locus
standi
and much is made of this in the RTMC’s opposing
affidavit.
[52]
It is telling that Mr Hopkins made no effort to address this issue
and he did not make
a single submission on this point in his heads of
argument.
[53]
I do not intend to deal with this point in detail in circumstances
where the party who
raised it, made no effort to address it in its
heads of arguments. In my view this is indicative of the lack of
merit in this point.
[54]
Be that as it may, there is no merit in this point as Tasima has an
obvious interest in
the matter and has pursued its interest before
the Labour Court and the LAC, where it secured judgments in its
favour. Tasima has
standing to litigate in its own interests and on
its own behalf and has a clear interest in having the orders it
secured, enforced
pending an appeal, as provided for in section 18 of
the Superior Courts Act.
The
section 18(3) application
The
applicable principles:
[55]
Section 18 of the Superior Courts Act regulates
the circumstances under which a party may apply for an order that
departs from the
ordinary consequence of filing an application for
leave to appeal.
The default position is
that ‘the operation and execution of a decision which is the
subject of an application for leave to
appeal … is suspended
pending the decision of the application or appeal’.
[56]
In
general terms the operation and execution of a decision (other than a
decision not having the effect of a final judgment) is
suspended
pending the outcome of an application for leave to appeal or appeal.
The court may however order otherwise if it is established
on a
balance of probabilities that the applicant will suffer irreparable
harm if the court does not so order, and that the other
party will
not suffer irreparable harm if the court so orders
[19]
.
[57]
Section 18 of the Superior Courts Act provides
that:
‘
18
Suspension of decision pending appeal
(1)
Subject to subsections (2) and (3), and
unless the court under exceptional circumstances orders otherwise,
the operation and execution
of a decision which is the subject of an
application for leave to appeal or of an appeal, is suspended pending
the decision of
the application or appeal.
(2)
Subject to subsection (3), unless the court
under exceptional circumstances orders otherwise, the operation and
execution of a decision
that is an interlocutory order not having the
effect of a final judgment, which is the subject of an application
for leave to appeal
or of an appeal, is not suspended pending the
decision of the application or appeal.
(3)
A court may only order otherwise as contemplated in subsection (1) or
(2), if the party
who applied to the court to order otherwise, in
addition proves on a balance of probabilities that he or she will
suffer irreparable
harm if the court does not so order and that the
other party will not suffer irreparable harm if the court so orders.
(4)
If a court orders otherwise, as contemplated in subsection (1) —
(i)
the court must immediately record its reasons for doing so;
(ii)
the aggrieved party has an automatic right of appeal to the next
highest court;
(iii)
the court hearing such an appeal must deal with it as a matter of
extreme urgency; and
(iv)
such order will be automatically suspended, pending the outcome of
such appeal.
(5)
For the purposes of subsections (1) and (2), a decision becomes the
subject of an application
for leave to appeal or of an appeal, as
soon as an application for leave to appeal or a notice of appeal is
lodged with the registrar
in terms of the rules.’
[58]
The provisions of section 18 of the Superior Courts Act introduced a
two-fold test of which
the requirements call for an enquiry firstly,
as to whether ‘exceptional circumstances’ exist and
secondly whether
the applicant showed the presence and the absence of
irreparable harm on a balance of probabilities.
[59]
The applicant must prove on a balance of probabilities that it will
suffer irreparable
harm should the order for leave to execute or
enforce the judgment or order not be granted pending the appeal and
that the respondent,
who seeks leave to appeal, will not suffer
irreparable harm if leave to execute is granted pending appeal.
Analysis
[60]
The question is whether or
not a proper case exists to grant leave to put the LAC order into
operation pending the appeal process.
[61]
In casu,
the
LAC confirmed that the contracts of employment of the employees
transferred automatically from Tasima to RTMC, in accordance
with the
provisions of section 197 of the LRA. The LAC confirmed that the date
of the legal cause of the transfer was 23 June 2015.
[62]
Tasima’s case is that
section 197 of the LRA applies by operation of law and as a result,
the employees have transferred to
RTMC by operation of law and they
must be paid by the RTMC. This Court, per Steenkamp J as well as the
LAC have found that by operation
of law, the employees have
transferred to the RTMC and there is no basis for the RTMC to allege
that Tasima remains the employer
or that it is liable to pay the
employees’ salaries. By virtue of the operation of law, the
employees have transferred to
the RTMC who, as the employer, is
liable to pay the employees’ their remuneration.
[63]
Tasima seeks an order that
the RTMC is to take transfer of the employees, alternatively pay the
employees their remuneration. Tasima
does not claim any payment from
the RTMC as its tenure came to an end and it performs no work.
Exceptional
circumstances
[64]
The first issue to be decided is whether there
are exceptional circumstances.
[65]
What
constitutes ‘exceptional circumstances’ had been
considered in
Incubeta
Holdings (Pty) Ltd and Another v Ellis and Another
[20]
and
the Court held that exceptionality must be fact-specific and
circumstances
which are or may be ‘exceptional’ must be derived from
the actual predicaments in which the given litigants
find themselves.
The Court held that:
‘
In
my view the predicament of being left with no relief, regardless of
the outcome of an appeal, constitutes exceptional circumstances
which
warrant a consideration of putting the order into operation. The
forfeiture of substantive relief because of procedural delays,
even
if not protracted in bad faith by a litigant, ought to be sufficient
to cross the threshold of ‘exceptional circumstances.’
[66]
Incubeta
[21]
has
been quoted with approval by the SCA
[22]
and it is clear that the determination of whether exceptional
circumstances exist, is a fact specific enquiry and each case has
to
be decided on its own facts as there is no definition of exceptional
circumstances.
[67]
Tasima submitted that there are a number of factors, each of which
suffices as an exceptional
circumstance, but cumulatively they
satisfy the test.
[68]
Those factors are firstly that the RTMC filed an application in terms
of section 18(2)
and 18(3) of the Superior Courts Act in July 2017
and the starting point for that application was that the facts of
this case constituted
exceptional circumstances.
[69]
Secondly, the RTMC has unequivocally represented to Tasima, the
employees, the High Court,
the Constitutional Court and Parliament
that section 197 of the LRA applies and that all employees would be
transferred accordingly.
The RTMC’s subsequent attempt to
resile from this position, is exceptional. Mr Franklin submitted that
the RTMC cannot be
permitted to run two diametrically opposed
versions before Court, depending upon which one suits its needs at
the time. The RTMC
must be held to its representations that section
197 of the LRA applies and that the employees would be transferred
accordingly.
[70]
Thirdly, the RTMC’s prospects of success on appeal are
negligible. Prospects of success
are to be considered as a factor in
deciding whether or not to grant the exceptional remedy of execution
of a judgment or order
pending appeal. Tasima’s case is that
the section 197 of the LRA issue had been through two layers of
specialist Labour Courts,
which both rejected the RTMC’s
arguments and it was evident that section 197 of the LRA applies and
that the RTMC has no
prospects of success on appeal.
[71]
Fourthly, Tasima was a special purpose vehicle, whose sole source of
income was payments
by the State for its management, maintenance
support and operation of the eNaTIS and thus the State effectively
always paid the
employees. Tasima has no business at all, cannot
employ the employees and receives no revenue with which to pay the
employees.
Tasima cannot afford to pay the employees’ salaries
and it has no obligation to do so.
[72]
Fifthly, if no enforcement or payment regime is ordered at this
stage, it may be many months
or even years before a final
determination on the application of section 197 of the LRA is made,
during which period the employees
will receive no salaries and their
livelihood will be in jeopardy in those circumstances. These
circumstances may eventually render
the actual order moot and the
relief ultimately received, may become academic.
[73]
Sixthly, a pending appeal without enforcement of the LAC order, will
undermine the legislative
intention behind section 197 of the LRA and
the employees might find themselves in a position which the section
was expressly designed
to prevent.
[74]
In the opposing affidavit, the RTMC submitted that, what was set out
in Tasima’s
founding affidavit (paragraphs 49 – 73) to be
exceptional circumstances, are not exceptional circumstances as
contemplated
in section 18(3) of the Superior Courts Act and that the
reasons for saying so, would be dealt with by the RTMC’s
counsel
in open Court. In the body of the opposing affidavit, the
RTMC’s response to paragraphs 49 – 73 of the founding
affidavit
is that the lack of exceptional circumstances was dealt
with and the deponent had nothing more to add. Surprisingly, in the
heads
of argument filed on behalf of the RTMC, Mr Hopkins made no
submissions in respect of exceptional circumstances and argument on
this aspect was not advanced in Court.
[75]
The RTMC in its opposing affidavit failed to mobilise any factual
attack on the exceptional
circumstances set out in the founding
affidavit, however it submitted that there are two exceptional
circumstances that militated
against an order to disturb the ordinary
position. Those are the fact that Tasima already benefitted
significantly from its own
unlawful actions at the expense of the
RTMC and the fact that the RTMC had for the past 17 months, picked up
the salary bill in
circumstances where the LAC made it clear that
Tasima should have done so.
[76]
The two issues have been disputed by Tasima, which submitted that
there was no finding
that it has acted unlawfully or benefitted from
unlawful actions, as alleged by the RTMC. All payments made to Tasima
were made
under contract or in terms of Court orders. Furthermore,
the payment of salaries for the past 17 months were made in
compliance
with an extant Court order and is irrelevant for purposes
of considering exceptional circumstances.
[77]
I do not intend to deal with the detail of the issues raised by the
RTMC as the issues
are unrelated to the questions this Court has to
consider. The Labour Court and the LAC ordered that the employees
transfer to
the RTMC and it is irrelevant what payments Tasima
previously received. Suffice to say, having considered the issues and
the response
thereto, they do not detract from or diminish the
existence of exceptional circumstances.
[78]
It is astonishing that the RTMC has left the material allegation that
it has presented
to the High Court, the Constitutional Court and
Parliament that section 197 of the LRA applies and that all employees
would be
transferred accordingly and that it subsequently sought to
resile from that position and run a diametrically opposed version,
unchallenged.
The RTMC’s attitude in respect of section 197 of
the LRA and its application is indeed remarkable.
[79]
The RTMC has not disputed that Tasima was a special purpose vehicle,
whose sole source
of income was payments by the State for its
management, maintenance support and operation of the eNaTIS, that it
has no other business
at all, cannot employee the employees elsewhere
and receives no revenue with which to pay the employees.
[80]
In casu,
I am satisfied that the factors listed
supra,
considered cumulatively, are sufficient to constitute exceptional
circumstances.
Irreparable
harm
[81]
I turn now to deal with the
second leg of the enquiry: ‘irreparable harm’.
[82]
Tasima must prove on a balance of probabilities that irreparable harm
will be suffered
should the order it seeks not be granted. Tasima has
to show that it will suffer irreparable harm should the order for
leave to
execute or enforce the judgment and order of the LAC not be
granted pending the appeal and that the RTMC will not suffer
irreparable
harm if leave to execute is granted pending appeal.
[83]
Tasima’s case is that it, the employees and/or the public will
suffer irreparable
harm should the LAC judgment and order not be
implemented in the immediate future, notwithstanding an appeal or
appeal process
by the RTMC. The irreparable harm goes beyond mere
loss of income or employment.
[84]
This is so for the following reasons: firstly, the employees’
livelihoods and those
of their dependents are compromised for as long
as the RTMC refuses to pay their salaries, notwithstanding the fact
that they are
the RTMC’s employees by operation of law. The
employees have structured their affairs to have monthly debit orders
which
go off their bank accounts after they are paid on the 25
th
of each month and they have other regular monthly expenses and
payments to make such as
inter alia,
groceries, school fees,
rates and taxes. If the employees are not paid, it will cause
irreparable harm to them, including action
by creditors against them,
the discontinuation of critical services to them, eviction from their
homes and will imperil the employees’
credit ratings should
they fail to make payments. The employees and their dependents depend
on being paid their salaries monthly
to service their debts and for
their very livelihood. Many are wholly reliant on their monthly
income and they will suffer extreme
prejudice if their salaries are
not paid.
[85]
The employees’ income, lives and livelihoods are at stake and
they cannot be expected
to endure months of non-payment of their
salaries, particularly where many are sole breadwinners for their
dependants.
[86]
Secondly, it was always understood that the eNaTIS and services,
including the employees,
would transfer to the RTMC and the employees
and Tasima were alive to the fact of such transfer and they
structured their affairs
accordingly. It was understood that by
virtue of the provisions of section 197 of the LRA as well as the
RTMC’s acceptance
that the section 197 of the LRA applies, that
the employees would transfer accordingly. The RTMC however reneged on
its undertakings
and seeks to ignore the provisions and application
of section 197 of the LRA and continues to do so, despite the LAC
judgment and
order.
[87]
Thirdly, by operation of law, the RTMC became the new employer and
the employees have no
legal claim to be paid their salaries by
Tasima.
[88]
Fourthly, the employees are left in the invidious position of
notionally being employed,
yet their new employer refuses to take
them over and to pay their salaries. They may in the interim be
forced to seek out alternative
employment, which is not assured and
may be on terms less favourable than those they are entitled to if
taken over and paid by
the RTMC. If alternative employment is found,
it would bind the employees into other employment obligations,
contrary to the intention
of section 197 of the LRA. Once the
employees have accepted alternative employment, it may not be
possible to return to the RTMC,
should the appeal be heard in due
course and this violates their rights under a successful section 197
of the LRA outcome. This
harm is no doubt irreparable.
[89]
Lastly, Tasima, as the employees’ old employer, was a special
purpose vehicle, which
has transferred the special purpose for which
it existed, it has no other business at all and receives no revenue
with which to
pay the employees. At the moment it faces financial
claims from a number of third parties and has not been paid for the
services
it rendered between October 2016 and April 2017. The RTMC on
the other hand is receiving the eNaTIS related revenue, which is
ample
to cover the salary bill for the employees. In fact, the RTMC
has been covering the salary bill for the past 17 months, which is
indicative of the RTMC’s ability to pay the employees.
[90]
In its opposing affidavit, the RTMC submitted that Tasima will not
suffer irreparable harm,
firstly because it has no standing and in
the event that it has standing, it has not put up any facts to
demonstrate that it will
suffer irreparable harm. I have already
found that Tasima has standing and therefore I will focus only on the
latter part of the
RTMC’s case.
[91]
In respect of Tasima, the RTMC’s case is that Tasima baldly
states that it cannot
pay the employees because it does not have the
money to do so, but the allegation that it has insufficient funds is
not backed
up by any evidence. Tasima had to put up its financial
statements to show its financial inability to pay and the failure to
produce
its financials or any other evidence to substantiate its
allegations, leads to the ineluctable inference that Tasima has the
funds
to pay the employees’ salaries.
[92]
The RTMC further submitted that Tasima has received in excess of R2,5
billion from operating
the eNaTIS over the past few years and the
question is where is that money and why there is no telling where it
is, which leads
to the inescapable inference that the money is still
in Tasima’s bank account.
[93]
This response has no merit for a number of reasons. Firstly, this
issue is irrelevant in
respect of showing the employees’ harm.
Secondly, the RTMC has not disputed that Tasima was a special purpose
vehicle, that
it has no other business at all, cannot employ the
employees elsewhere and generates and receives no revenue with which
to pay
the employees’ salaries. It is further not disputed that
Tasima faces financial claims from a number of third parties and
has
not been paid for the services it rendered between October 2016 and
April 2017. The RTMC disputes Tasima’s averments
that it is
unable to pay for the sole reason that Tasima has not disclosed its
financial statements.
[94]
The RTMC’s case is that because Tasima has not disclosed its
financial statements
or bank account statements, the inference must
be made that the money it received for operating the eNaTIS is still
available in
its bank account. This response is bizarre. Tasima
responded that the RTMC well knows that the funds it received
historically did
not simply accrue for its benefit but were used to
pay a network of dozens of service operators. Tasima’s case
that it now
faces financial claims from third parties, which supports
Tasima’s version that it used to pay service providers, is
undisputed.
[95]
In respect of the employee’s, the RTMC submitted that there is
no evidence to suggest
that they would suffer irreparable harm. The
argument is that the employees will not suffer any harm at all if
somebody pays their
salaries, they will not suffer any harm if the
RTMC does not pay them, as Tasima is by law required to do so.
[96]
It is evident from the papers filed that each of the relevant
employees has in their own
affidavits, explained the irreparable harm
that would befall them should they not receive payment of their
monthly salaries. The
RTMC has not challenged these facts and it is
thus incontestable that, should the employees not be paid, they will
suffer irreparable
harm.
[97]
I have repeatedly alluded to the fact that the RTMC has not disputed
that Tasima was a
special purpose vehicle, that it has no other
business at all, cannot employ the employees elsewhere and generates
and receives
no revenue with which to pay the employees. It is
undisputed that the RTMC previously accepted that section 197 of the
LRA applies
and that the employees would transfer accordingly. In
addition, the Labour Court and the LAC ordered that the employees
transfer
to the RTMC and it cannot be said that in those
circumstances Tasima is by law required to pay the employees’
salaries, the
opposite is quite true.
[98]
The RTMC’s specific response to what was set out in Tasima’s
founding affidavit
(paragraphs 74 – 84) in respect of
irreparable harm, was that it was dealt with and that the deponent
had nothing more to
add. The issue of irreparable harm was responded
to as alluded to
supra.
[99]
Apart from taking issue with Tasima’s failure to disclose its
financial or bank statements,
the RTMC has not put forward any facts
to dispute or displace Tasima’s averments on irreparable harm.
[100]
Mr Hopkins submitted that the requirements of section 18(3) of the
Superior Court Act are not satisfied
if Tasima cannot show that it
would suffer irreparable harm and the allegation that the employees
would suffer irreparable harm
is not sufficient to satisfy the
requirement of section 18(3) of the Superior Court Act. His argument
is that the employees would
only suffer irreparable harm if Tasima
cannot pay their salaries, yet Tasima says its own financial health
is irrelevant to the
employees’ irreparable harm. Tasima did
nothing to substantiate the allegations that it does not have the
means to pay the
employees’ salaries.
[101]
It is not uncommon in section 197 of the LRA cases for the old
employer to litigate or pursue the case on
behalf of its former
employees, as they are normally not in a financial position to do so.
This case is no different. In fact,
the employees in their individual
affidavits confirmed that they understand that Tasima is acting on
their behalf and in their
interests and that they are not in a
financial position to litigate in respect of their own rights against
the RTMC. The harm to
be suffered by the employees is a factor that
this Court should consider.
[102]
The disclosing of financial or bank statements is not the begin all
and end all. In its founding affidavit,
Tasima has dealt with its
constrained financial position, given the fact that it is owed
millions of Rands for the period it has
rendered the eNaTIS but was
not paid for it, it is facing a number of financial claims by third
party service providers and the
fact that it is not generating or
receiving any income. None of these issues were disputed by the RTMC.
The RTMC’s position
is that Tasima has received funds in the
past and as it has failed to disclose its bank statements, the only
inference is that
the money is still in its bank account. That can
never be the only inference based on the facts placed before me, more
specifically
because of the fact that the funds received were used to
run the operations and did not accrue solely for Tasima’s
benefit,
the fact that Tasima is owed money and faces financial
claims from service providers and has not generated any income.
[103]
In my view the irreparable harm is obvious. Given that the eNaTIS had
transferred to the RTMC, Tasima has
no business at all and receives
no revenue with which to pay the employees. The employees will no
doubt suffer irreparable harm
if they are not paid their salaries.
[104]
The value of the relief that Tasima, and effectively the employees,
had obtained, will become worthless
if leave to enforce the LAC’s
order is refused.
[105]
This is however not the end of the enquiry. Tasima must also prove on
a balance of probabilities that the
RTMC will not suffer irreparable
harm if leave to execute is granted pending an appeal process to the
Constitutional Court.
[106]
Tasima’s case is that the RTMC will suffer no harm, much less
irreparable, in the event that the LAC
judgment and order is enforced
pending the RTMC’s appeal. The employees have at all times
tendered their services to the
RTMC and the RTMC has the opportunity
to receive the services of the employees and to have the benefit of
their services. The RTMC
clearly has a need for the services, given
the fact that the RTMC advertised for positions with the skillsets of
the employees
as recently as 9 November 2018, even after the hearing
of the matter by the LAC.
[107]
The RTMC cannot argue that it is over-capacitated, as that is not a
defence to the operation of section
197 of the LRA.
[108]
There is no financial prejudice for the RTMC in circumstances where
the eNaTIS is self-financing and the
salaries of the employees could
be paid from the income that the system generates. Such income
exceeds the amount of the salaries
to be paid. Furthermore, the RTMC
was able to comply with the interim order and pay the employees’
salaries from April 2017
until December 2018, without there being any
irreparable harm.
[109]
The RTMC has indicated that it will have recourse to the
condictio
indebiti
in order to recover amounts paid.
[110]
For these reasons, Tasima submitted that the RTMC will not suffer
irreparable harm.
[111]
The RTMC submitted that its financial position is not as painted by
Tasima in that it operated at a deficit
of approximately R 239
million in the 2017/1018 financial year. The RTMC is cash strapped
and cannot afford any additional liabilities.
[112]
The RTMC submitted that irreparable harm is determined by considering
whether what was paid as salaries,
could later be recovered and if it
could, the harm is reparable and if not, the harm is irreparable. The
RTMC’s case is that
in its founding affidavit Tasima submitted
that it has no money and is unable to meet claims for money and if
this is to be accepted,
the RTMC’s harm will be irreparable as
it would be required to pay salaries with no prospect of recovering
anything at all.
[113]
In my view there is no merit in the RTMC’s submissions. This is
so because affordability is irrelevant
in circumstances where section
197 of the LRA applies. Even if I am wrong on that, the RTMC was
clearly able to afford the employees’
salaries from April 2017
until December 2018, notwithstanding the picture it now wants to
paint in respect of its poor financial
position.
[114]
Furthermore, the RTMC did not dispute Tasima’s allegations that
the eNaTIS is self-financing and that
it receives millions of Rands
in transaction fees, from which the employees’ salaries could
be paid.
[115]
The RTMC’s
arguments regarding Tasima’s contention that
it
has no money and that its harm will be irreparable as it would be
required to pay salaries with no prospect of recovering anything
at
all, is misplaced. Tasima is not the party to be receiving any
payments from the RTMC, instead it will be the employees. The
RTMC
did not deny that it could use the services of the employees and
enjoy the benefit thereof and thus it would receive value
for the
payments it makes in respect of salaries. The RTMC will be paying for
services rendered by the employees and I fail to
see any harm in
that.
[116]
Even if the RTMC succeeds with its appeal, it will in the meantime
have the benefit of the employees’
services and pay their
salaries in return for services rendered, that does not constitute
irreparable harm. This is a benefit Tasima
cannot enjoy, as it no
longer operates at all.
[117]
In conclusion: it is evident
from the circumstances
supra
,
that Tasima and the employees will indeed suffer irreparable harm if
the LAC’s judgments and order are not put into operation
and
that the RTMC will not suffer irreparable harm if the order is put
into operation. The section 18 test is met on both counts
of the
second leg.
[118]
It follows that all the
requirements under sections 18(1) and (3) of the Superior Courts Act
have been satisfied.
Costs
[119]
The last issue to be decided is the issue of
costs.
[120]
Insofar 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.
[121]
Tasima claims that it is entitled to punitive
costs because it should never have been necessary to launch this
application.
[122]
Mr Hopkins submitted that the costs should follow
the result.
[123]
The
Constitutional Court in
Zungu
v Premier of Kwazulu-Natal and Others
[23]
confirmed
that the rule of practice that costs follow the result does not apply
in labour matters, but that the Court should seek
to strike a fair
balance between unduly discouraging parties from approaching the
Labour Court and have their disputes dealt with
and, on the other
hand allowing those parties to bring to this Court cases that should
not have been brought to Court in the first
place.
[124]
In this matter I have to strike a fair balance and in doing so I have
considered the fact that there is
no existing or continuing
collective bargaining relationship that may be harmed by making an
order for costs. I have also considered
the conduct of the parties
and more specifically that of the RTMC in reneging on its acceptance
that section 197 of the LRA applies,
causing this application to be
filed and in opposing this application, the RTMC raised meritless
points
in limine
and instead failed to address material
allegations that had a significant bearing on the determination of
this application.
[125]
Accordingly, I make an order as follows:
Order
1.
Paragraph 57.1 of the Labour
Appeal Court order of 21 December 2018, read with paragraph 63.1 of
the Labour Court order, dated 25
May 2017, operates and is extant
until the final determination of all leave to appeal applications and
appeals against the Labour
Appeal Court order;
2.
The Road Traffic Management
Corporation (First Respondent) is ordered to comply with the Labour
Appeal Court’s order of 21
December 2018, read with paragraph
63.1 of the Labour Court order, dated 25 May 2017, by taking transfer
of the Fifth to Eighty
Fourth Respondents, excluding those listed in
annexure B to the Applicant’s notice of motion, within 24 hours
of this order
being granted.
3.
The First Respondent is
ordered to pay the Applicant’s costs on a party and party
scale, which cost is to include the cost
of one counsel.
___________________
Connie Prinsloo
Judge of the Labour Court
of South Africa
Appearances:
Applicant:
Advocate A E Franklin SC with Advocate J P McNally SC
Instructed by:
Webber Wentzel Attorneys
First
Respondent:
Advocate K Hopkins
Instructed
by:
Dexter Selepe Attorneys
[1]
JA
77/2017.
[2]
2017
(2) SA 622 (CC).
[3]
Ibid
n
2.
[4]
Act
66 of 1995 as amended.
[5]
Tasima
(Pty) Ltd v Road Traffic Management Corporation and Others
(
2017)
38 ILJ 2385 (LC).
[6]
Act 10 of
2013.
[7]
JA
77/2017, JA 78/2017, JA 28/ 2018 and JA 134/2017.
[8]
Henochsberg
on the
Companies Act 71 of 2008
, Volume 1, First Edition, Lexis
Nexis page 253 – 258.
[9]
Act
71 of 2008.
[10]
2004
(3) SA 615
(SCA) at 624,
(2004)
25 ILJ 995 (SCA).
[11]
Unreported
judgment of the High Court of South Africa, Eastern Cape Division,
Grahamstown, handed down on 11 December 2014 under
case number
4512/14.
[12]
2005
(4) SA 199 (SCA).
[13]
1992
(2) SA 703 (W)
at
705C-J.
[14]
Supra
n
10 at para 19.
[15]
Supra
n
10.
[16]
Supra
n
12 at para 14 and 17.
[17]
Id
n 8.
[18]
Supra
n
13.
[19]
See:
Luxor
Paints (Pty) Ltd v Lloyd and Another
(2017)
38 ILJ 1149 (LC).
[20]
2014
(3) SA 189 (GJ)
at para27.
[21]
Ibid
n
23.
[22]
See:
Ntlemeza
v Helen Suzman Foundation and Another
2017
(5) SA 402
(SCA),
University
of the Free State v Afriforum and Another
2018
(3) SA 428.
[23]
(2018) 39 ILJ 523 at para 24