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[2019] ZALCJHB 157
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Jacobson v VITALAB (JS1042/19) [2019] ZALCJHB 157; (2019) 40 ILJ 2363 (LC) (28 May 2019)
the
labour court of South Africa, johannesburg
judgment
Reportable
CASE NO: JS 1042/19
In
the matter between:
JACOBSON, MERWYN
JACK
Applicant
and
VITALAB
Respondent (Excipient)
Application
heard: 17 May 2019
Judgment
delivered: 28 May 2019
JUDGMENT
VAN NIEKERK J
[1]
On 3 April 2019, the applicant filed a statement of claim in this
court which he seeks
an order declaring his dismissal to be
automatically unfair, alternatively substantively unfair; declaring
his dismissal to be
procedurally unfair; and seeking reinstatement
alternatively compensation.
[2]
The applicant is a specialist medical practitioner; the respondent is
a medical practice
that until 31 August 2018, employed the applicant.
The applicant was a founding director and shareholder of the
respondent. He
was also a director (and remains a shareholder) of a
property-owning company (Strawberry Bush 3 (Pty) Ltd), the owner of
premises
in which the medical practice is situated.
[3]
During 2016, the directors and shareholders of the respondent held
discussions on
an appropriate retirement age and agreed that 70 was a
reasonable age at which to retire. The applicant expressed the wish
to continue
working beyond that age, subject to his good health,
until the age of 75. To give effect to this wish, the parties agreed
that
the applicant would be employed on a series on annual fixed term
contracts of employment. On 13 May 2017, the applicant and the
respondent signed a written fixed term contract of employment. The
applicant agreed to be employed in the position of a reproductive
medicine specialist for the period 1 July 2017 to 30 June 2018, on
the terms reflected in the agreement.
[4]
During 2017, the applicant resigned as a director of the respondent
and Strawberry
Bush, but remains a shareholder. There is a dispute
among the shareholders as to the value of the shares in these
entities.
[5]
In May 2018, the respondent furnished the applicant with a service
agreement for the
period 1 July 2018 to 31 May 2019. The terms of the
draft agreement suggested a settlement of the dispute regarding the
applicant’s
various shareholdings. There was no agreement on
the terms of the offer, and the applicant continued working at the
practice, on
the same terms, beyond the expiry of the fixed term
contract on 30 June 2018. On 9 July 2018, a second proposed agreement
was sent
to the applicant, in terms of which he would agree to retire
from active practice and resign as an employee of the respondent,
that he would sell his shares in the respondent for a stipulated
price, and that he would be re-employed by the respondent until
31
May 2019 at a stipulated net salary. The applicant refused to accept
the offer, stating that until he received financial information
that
he had requested in relation to the respondent and Strawberry Bush,
he could not consider selling his shareholding in either
entity.
[6]
On 26 July 2018, the respondent’s attorneys wrote to the
applicant and advised
him that unless the service agreement was
signed by 30 July 2018, his services would be terminated. The
applicant refused to sign
the contract, and reiterated that he
remained a shareholder in the respondent and Strawberry Bush, and
that his shares had not
been sold.
[7]
On 1 August 2018 the respondent’s attorneys wrote to the
applicant recording
that he had been employed in terms of a fixed
term contract that expired on 30 June 2018, and that without
prejudice to its rights,
the applicant had been permitted to continue
in his employment for the month of July. The letter went on to record
that the applicant’s
employment was terminated with effect from
31 August 2018.
[8]
The applicant contested the fairness of his dismissal and referred
the dispute to
the CCMA. On 19 September 2018, a certificate of
non-resolution was issued and the dispute was later referred to this
court on
the terms reflected in paragraph [1] above.
[9]
The applicant’s first claim, that the termination of his
employment constituted
a dismissal and that the dismissal was
automatically unfair, is premised on the assertion that the main or
proximate cause of his
dismissal was his refusal to accept a demand
in respect of a matter of mutual interest between the applicant and
the respondent.
In particular, the applicant asserts that he was
dismissed because he refused to accept the respondents’ demand
that he sell
his shares in the respondent and/or Strawberry Bush on
the terms set out in the proposed service agreement dated 9 July
2018.
[10]
The respondent excepts to the applicant’s claim on the basis of
four discreet complaints.
The only compliant pursued at the hearing
is that the applicant’s claim fails to sustain a cause of
action in that the demand
on which the applicant relies for the
purposes of s 187 (1) (c) does not concern a matter of mutual
interest. In particular, the
excipient contends that two different
relationships emerge from the applicant’s pleadings. The first
is a corporate relationship,
in which the applicant is and remains a
shareholder of entities owning shares that have commercial value. The
second is the applicant’s
employment relationship with the
respondent. The respondent contends that the first of these
relationships, and any dispute as
to the value of the applicant’s
shares, is not subject to the LRA. To the extent that the applicant
contends that he was
dismissed for refusing to accept the
respondent’s demand that he sells his shares in the respondent
and Strawberry Bush on
the terms set out in the proposed agreement of
9 July 2018, this was a term that concerned the corporate and not the
employment
relationship between the parties, and thus did not concern
a matter of mutual interest for the purposes of s 187 (1) (c).
[11]
Although the Rules of this court do not specifically regulate
exceptions to a statement of claim,
in
Harmse v City of Cape Town
[2003] 6 BLLR 557
(LC), Waglay J (as he then was) said the following:
5
.
Rule 6 of the Rules of this Court deals with referrals of disputes by
way of a statement of claim. Rule 6(1) (b) provides
that “a
document initiating proceedings, known as a ‘statement of
claim’ … must have a substantive part
containing the
following information:
(i)
The names, description and addresses of the
parties;
(ii)
A clear and concise statement of the material
facts, in chronological order, on which the party relies, which
statement must be
sufficiently particular to enable any opposing
party to reply to the document;
(iii)
A clear and concise statement of the legal
issues that arise from the material facts, which statement must be
sufficiently particular
to enable any opposing party to reply to the
document; and
(iv)
The relief sought”.
6.
The
statement of claim serves a dual purpose. The one purpose is to bring
a Respondent before the Court to respond to the claims
made of and
against it and the second purpose of a statement of claim is to
inform the Respondent of the material facts and the
legal issues
arising from those facts upon which applicant will rely to succeed in
its claims.
7.
The
material facts and the legal issues must be sufficiently detailed to
enable the Respondent to respond, that is, that the Respondent
must
be informed of the nature or essence of the dispute with sufficient
factual and legal particularity so that it knows what
it is that the
Applicant is relying upon to succeed in its claim.
8.
The
Rules of this Court do not require an elaborate exposition of all
facts in their full and complex detail – that ordinarily
is the
role of evidence, whether oral or documentary. There is a clear
distinction between the role played by evidence and that
played by
pleadings – the pleadings simply give the architecture, the
detail and the texture of the factual dispute are provided
at the
trial. The pre-trial conference provides an occasion for the detail
or texture of the factual dispute to begin to take shape.
In terms of
rule 6(4)(b) the parties in the pre-trial conference must attempt to
reach consensus on facts that are common cause,
facts that are in
dispute, the issues that the Court is required to decide and the
precise relief claimed.
9.
Accordingly the rules of this Court anticipate
that the relief claimed might not have been precisely pleaded in the
Statement of
Claim filed. The Rules of this Court further anticipate
that the factual matters at issue will be dealt with more fully and
precisely
in the pre-trial conference. The rules therefore anticipate
that the parties at the pre-trial conference will have dealt in much
more detail not only with the factual matters but also the legal
issues. The statement of claim and response thereto foreshadows
this
activity but is not a substitute for it. It is for this reason that
the rule on pre-trial conferences provides for reaching
consensus on
the issues that the Court is required to decide.
10.
When
an exception is raised against a statement of claim, this Court must
consider, having regard to what I have said above, whether
the matter
presents a question to be decided which, at this stage, will dispose
of the case in whole or in part. If not, then this
Court must
consider whether there is any embarrassment that is real and that
cannot be met by making amendments or providing of
particulars at the
pre-trial conference stage.
[12]
In order to succeed, the excipient must necessarily persuade the
court that on every interpretation
that the pleading in question can
reasonably bear, no cause of action is disclosed (
First
National Bank of Southern Africa Ltd v Perry NO
2001 (3) SA 960
(SCA)). Care must be taken to distinguish the facts
which must be proved in order to disclose a cause of action from the
evidence
necessary to prove them. The determination of the latter, in
each particular case, is essentially a matter of substantive law
rather
than procedure (
Alphedie
Investments (Pty) Ltd v Greentops (Pty) Ltd
1975 (1) SA 161
(T)).
[13]
The respondent contends that s 187 (1) (c) has no application in the
present dispute, and that
the applicant accordingly has no cause of
action. During argument, the nature and scope of s 187 (1) (c) was
considered at some
length, as was its history, which is of some
significance to the present dispute.
[1]
[14]
What emerged during argument is that the essential enquiry in the
present instance is not whether
the dispute between the parties
concerns a matter of mutual interest between them. Rather, the issue
to be determined is whether
s 187 (1) (c) finds any application in a
dismissal dispute that concerns an individual employee.
[15]
Under the 1956 LRA, a lock-out could legitimately assume forms other
than an exclusion from the
workplace, including a termination of
employment. This gave rise to the phenomenon of the ‘lock-out
dismissal’ (sometimes
referred to as a ‘tactical
dismissal’) as opposed to a common law or ‘final’
termination of the employment
contract. The present LRA amended the
definition of a lockout so as to exclude any reference to a
termination of employment, and
inserted s 187 (1) (c) into the list
of reasons that would be automatically unfair. The original wording
of the section provided
that it was automatically unfair for an
employer to dismiss an employee if the reason for the dismissal was
to compel the employee to accept a demand in respect of any matter
of mutual interest
between employer and employee (own emphasis).
In other words, an employer could not legitimately resort to
dismissal as part of
the power play in a collective dispute.
[16]
In
Fry’s Metals (Pty) Ltd v NUMSA
[2003] 2 BLLR 140
(LAC), the Labour Appeal Court held that when a dismissal was final
and irrevocable, by definition, the reason for dismissal could
not be
to compel the acceptance of a demand. The same principle was applied
with a different outcome on the facts in
CWIU v Algorax (Pty) Ltd
[2003] 11 BLLR 1081
(LAC).
[17]
Section 187 (1) (c) was amended in 2014 to provide that a dismissal
is automatically unfair if
the reason is ‘
a refusal by
employees to accept a demand
in respect of any matter of
mutual interest between them and their employer’
(own
emphasis). The purpose of the amendment (and the difficulty with the
pre-2015 formulation of s 187 (1) (c)) is made clear by
the
Explanatory Memorandum that accompanied the Amendment Bill:
This section is amended
to remove an anomaly arising from the interpretation of section 187
(1) (c) in [Fry’s Metals] which
held that the clause had been
intended to remedy the so-called ‘lock-out’ dismissal
which was a feature of pre-1995
labour relations practice. The effect
of this decision when read with decisions such as [Algorax] is to
discourage employers from
offering re-employment to employees who
have been retrenched after refusing to accept changes in working
conditions. The amended
provision seeks to give effect to the
intention of the provision as enacted in 1995 which is to preclude
the dismissal of employees
where the reason for the dismissal is
their refusal to accept the demand by the employer over a matter of
mutual interest. This
is intended to protect the integrity of the
process of collective bargaining under the LRA and is consistent with
the purposes
of the Act.
[18]
Although the pre-amendment version of s 187 (1) (c) was invoked in a
number of dismissal disputes
concerning individual employees
[2]
,
the question that arises consequent on the amendment and the clear
statement of its purpose is whether an individual employee
may claim
the protection afforded by the section.
[3]
[19]
It would seem to me from the wording of the amended s 187 (1) (c) and
the explication of its
purpose in the Explanatory Memorandum that the
application of the section is limited to the collective sphere. The
Explanatory
Memorandum makes clear that the purpose of the amended s
187 (1) (c) is to protect the integrity of the collective bargaining
process.
It precludes the use of dismissal as a legitimate instrument
of coercion in the collective bargaining process.
[4]
That process, by definition, contemplates concerted action and the
participation of more than one employee.
[5]
For the section to find application therefore, there must have
been an employer demand made of two or more employees, they
must have
refused to accept that demand and they must have been dismissed in
consequence of that refusal.
[6]
The conclusion that s 187 (1) (c) is not intended to apply in
individual dismissal disputes is fortified by the wording of
the
provision itself – the reference is to a ‘refusal by
employees
to accept a demand in respect of any matter of mutual interest
between
them
and
their
employer’ (own emphasis). The use of the plural makes clear
that the extent of the prohibition against dismissal applies
only
where an employer seeks to extract a concession by employees to
demands made in a collective context.
[20]
In the present instance, the respondent does not dispute that there
was an employment relationship
between the parties, or that it
demanded that the applicant sell his shares in Strawberry Bush on the
terms set out in the proposed
service agreement of 9 July 2018. Even
if I accept the applicant’s contention that the demand is one
that concerns a matter
of mutual interest (because it is inextricably
bound to the employment relationship between the parties, and in
particular, an
agreement to regulate the applicant’s continued
employment by the respondent)
[7]
the reason for dismissal is not one contemplated by s 189 (1) (c)
since the present dispute does not concern the integrity of
collective bargaining, nor does it concern more than one employee.
[21]
It follows that the exception stands to be upheld. Given the basis of
the conclusion to which I have
come, it is not necessary for me to
decide whether the distinction that the respondent seeks to draw
between a ‘commercial’
dispute on the one hand and an
‘employment’ dispute on the other is a valid distinction
for the purposes of determining
whether there is a ‘matter of
mutual interest’ between the parties for the purposes of s 187
(1) (c).
[22]
The parties were agreed that the consequence of any order upholding
the exception is that the
applicant’s claim based on an
automatically unfair dismissal be struck out and the matter remitted
to the CCMA for an arbitration
hearing on the merits of the
applicant’s alternative claims based on a substantively and
procedurally unfair dismissal.
[23]
Finally, in relation to costs, s 162 of the LRA confers a broad
discretion on the court to make
orders for costs according to the
requirements of the law and fairness. Even though the respondent has
succeeded in these proceedings,
it seems to me that the interests of
the law and fairness are best served by each party bearing its own
costs. This is particularly
so given the respondent’s election
to abandon three of the four grounds of exception only at the stage
of argument, and the
unnecessary costs of preparation incurred by the
applicant as a consequence.
I make the following
order:
1.
The exception set out in paragraph 3 of the
Notice of Exception is upheld.
2.
The applicant’s claim that his
dismissal constituted an automatically unfair dismissal is struck
out.
3.
The applicant’s claim of unfair
dismissal is remitted to the CCMA for an arbitration hearing.
4.
There is no order as to costs.
André van Niekerk
Judge
REPRESENTATION
For
the applicant: Adv. S Collet, instructed by George Wolff Attorneys
For
the respondent (excipient): Adv. P Kennedy SC, instructed by Cranko
Karp Attorneys
[1]
See
generally Clive Thompson ‘Bargaining, Business Restructuring
and Operational Requirements Dismissal’ (1999) 20
ILJ
755; C Todd and G Damant ‘Unfair Dismissal – Operational
Requirements’ (2004) 25
ILJ
896; T Cohen ‘Dismissals to Enforce Changes to Terms and
Conditions of Employment – Automatically Unfair or
Operationally
Justifiable?’ (2004) 25
ILJ
1883; Clive Thompson ‘Bargaining over Business Imperatives:
The Music of the Spheres after
Fry’s
Metals
’
(2006) 27
ILJ
704; and Rochelle Le Roux
Retrenchment
Law in South Africa
(Lexis Nexis) 2016 at chapter 2.4.
[2]
See,
for example,
Solidarity
obo Wehncke v Surf4Cars (Pty) Ltd
(20140 35
ILJ
1982 (LAC).
[3]
This
case does not concern the effect of the amended s 187 (1) (c) on the
principle established in
Fry’s
Metals
– that was a matter dealt with by this court in
National
Union of Metalworkers of SA obo members v Aveng Trident Steel (A
Division of Aveng Africa) (Pty) Ltd
(2018) 39
ILJ
1625 (LC), currently on appeal to the LAC.
[4]
Clive
Thompson ‘Bargaining over Business Imperatives: The Music of
the Spheres after
Fry’s
Metals
’
(
supra
).
[5]
See
Schoeman
& another v Samsung Electronics (Pty) Ltd
[1997] 10 BLLR 1364 (LC).
[6]
(see
National
Union of Metalworkers of SA obo members v Aveng Trident Steel (A
Division of Aveng Africa) (Pty) Ltd
(2018) 39
ILJ
1625 (LC), where this court referred with approval to Rochelle le
Roux
Retrenchment
Law in SA
(Lexis Nexis 2016) pp 44 -50)
[7]
See
Vanachem
Vanadium Products (Pty) Ltd v National Union of Metalworkers of SA &
others
(2014) 35
ILJ
3241 (LC;
Department
of Home Affairs & another v Public Servants Association &
others
(2017) 38
ILJ
1555
(LC).