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[2020] ZALCJHB 96
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Vosloo NO and Another v South African Medical Association NPC and Another (J1973/19) [2020] ZALCJHB 96; (2020) 41 ILJ 2482 (LC) (18 May 2020)
The LABOUR COURT OF
SOUTH AFRICA
(Held at johannesburg)
JUDGMENT
Reportable
CASE NO: J 1973/19
In the matter between:
GERHARD VOSLOO
N.O
(Administrator of the
South African Medical
Association
Trade Union)
First Applicant
THE SOUTH AFRICAN
MEDICAL ASSOCIATION
TRADE
UNION (under
administration)
Second Applicant
and
THE SOUTH AFRICAN
MEDICAL
ASSOCIATION
NPC
First Respondent
REGISTRAR
OF LABOUR RELATIONS
Second Respondent
Heard:
13 May 2020 (via Zoom)
Judgment delivered:
The judgment was handed down electronically by circulation to the
parties’ legal representatives and the
registrar by email on 18
May 2020 at 12h00.
(by
email)
JUDGMENT
VAN NIEKERK J
Introduction
[1]
On 10 October 2019, this court granted an order placing the second
applicant (the
union) under administration in terms of s 103A (1)(a)
of the Labour Relations Act (LRA). On 27 February 2020, the court
granted
an order appointing the first applicant as the administrator.
That order incorporates the administrator’s terms of reference,
which include the authority to take immediate control of the affairs
of the union with a view to exercising his powers to conserve
the
affairs and business of the union.
[2]
In these proceedings, the administrator seeks an order directing the
first respondent
(SAMA) to provide him with all necessary information
and assistance to enable him to perform his duties as administrator
and other
ancillary relief. In essence, he seeks an order to enforce
his statutory rights and obligation to take charge of the union’s
affairs.
Urgency
[3]
The present proceedings were brought on an urgent basis. The
applicant submits that
the application is urgent because SAMA is
actively engaging with its members to persuade them to cancel their
membership of the
union, that the bargaining council of which the
union is a member has put it on terms to submit audited membership
figures or face
termination of its membership of the PSCBC, and
because union members require their interest to be represented and
advanced during
the Covid-19 pandemic. It is not clear to me from the
papers that the union has the necessary organisational infrastructure
to
achieve the latter. However, the prospect of forfeiting its
membership of the bargaining council (membership figures were to have
been submitted by no later than 30 April 2020) and the consequences
of that loss, is a relevant consideration. What weighs particularly
heavily with me is the fact that should the union be required to
obtain a hearing in the normal course, the purpose of the order
placing it in administration would be frustrated, if not undermined.
For these reasons, I am satisfied that the applicants have
made out a
case for urgency.
The Registrar of
Labour Relations
[4]
The Registrar of Labour Relations does not oppose the application,
and has delivered
an explanatory affidavit both to explain the
circumstances surrounding the registration of the union as an
independent trade union,
and the purpose of the deductions of the
union’s membership fees through the PERSAL stop order facility.
The court is indebted
to the registrar for the explanatory affidavit.
Material facts
[5]
SAMA is a non-profit company registered in terms of the Companies
Act. It was established
in the late 1920s, to represent the interest
of medical doctors and the medical profession generally. The first
respondent is not
a trade union. SAMA established the union in 1996,
initially known as the Medical Association of South Africa Trade
Union. The
union was registered in terms of what was then the
newly-enacted Labour Relations Act (LRA) so as ‘to create a
trade union
to complement the existing services and benefits provided
by SAMA NPC to its members’. SAMA’s memorandum of
incorporation
includes as a main objective of the organisation
seeking and obtaining organisational rights in terms of the LRA,
planning recognition
from employers as a collective bargaining
representative, representing and assisting members in both the
private and public sectors
in disputes before the statutory bodies
such as the CCMA, bargaining councils and this court and providing
legal assistance to
members in connection with these matters. SAMA
provides these services through the vehicle of the union.
[6]
Subsequent to its establishment, the union was granted various
organisational rights.
It is a member of the bargaining councils the
Public Sector Coordinating Bargaining Council and the Public Health
and Social Development
Sectoral Bargaining Council.
In this capacity, it enjoys organisational rights that
extend to
access, check-off, the election of trade union representatives, leave
for trade union activities and the disclosure of
information (see
ss12 to 16 of the LRA). In respect of doctors employed in the public
sector, the union has been afforded stop
order facilities on the
PERSAL payroll system. The National Treasury confirmed on 22 August
2002 in a letter addressed to SAMA
that the stop order facilities had
been allocated for the deduction of trade union subscriptions.
[7]
In 2013, the union adopted a new constitution and changed its name to
the present.
That constitution provides, amongst other things, that
all registered medical practitioners are eligible for membership, on
application,
and that the national congress or the national executive
committee of the union has the power to determine the rate of the
subscriptions
payable by members of the union. In regard to financial
administration, the constitution provides that the union’s
funds
shall be generated by subscriptions, levies donations, interest
or any other legitimate source. The constitution further provides
for
broad accountability in respect of finances at both national and a
provincial level.
[8]
As I have indicated, the second respondent, the Registrar of Labour
Relations, submitted
an explanatory affidavit in which he records
that the union’s constitution, adopted in March 2013, was
registered on 18 April
2013. Further, he explains that the union was
thus registered as an independent trade union in terms of s 97 (1) of
the LRA, with
a certificate of registration being sufficient proof
that the union is a body corporate. The union was registered on the
basis
that it was a genuine trade union for the purposes of s 97 (7)
of the LRA and that it was independent in the sense of being free
from any direct or indirect control from an employers’
organisation (or any entity for that matter), and any interference
or
influence from such entities. According to the registrar, the union
has submitted an audited list of members in compliance with
s 100 of
the LRA except for the years 2017 and 2019.
[9]
Despite the existence of the union as a registered trade union and a
body corporate,
SAMA records that it has historically treated the
union as one of its divisions, a vehicle through which SAMA could
represent its
salaried members in the forums established by the LRA,
and part of what it describes as its ‘bouquet of services to
members’.
SAMA’s relationship with the union is described
in the answering affidavit deposed to by Dr. Nhlapho, SAMA’s
acting
general manager. He records that the first meeting of the
union’s national executive committee was held in October 2013,
when a Dr. Phalane was elected general secretary. He was not an
independent trade unionist; rather, he was employed by SAMA on a
fixed term contract which expired in October 2016, after which she
relinquished the office of general secretary. Phalane was not
replaced and the union had no other office bearers. SAMA avers that
at this point, the union was dysfunctional. None of the national
office bearers elected in 2013 remained in office after 2016 and in
September 2016, SAMA’s Board of Directors resolved to
disestablish the union’s structure and replace it with what is
referred to as the interim employed doctors’ committee.
Thereafter, SAMA established a trade union task team to investigate
the position and re-establish the union, and to ensure compliance
with the requirements established by the LRA. For various reasons,
the work of the task team was impeded and as recently as August
2019,
the convener of the task team reported that no province had concluded
an elective process and that no provincial executive
committees had
been established. In short, it would appear that the inability to
re-establish national and provincial union structures
led ultimately
to the application during September 2019 when the union was placed
under administration.
[10]
Central to the present dispute is the relationship between SAMA and
the union. SAMA avers that
at no time did it intend to establish a
trade union that is a separate juristic entity. The reason for
registering the union was
simply to enable SAMA to provide services
to its members. Even after the registration of the union, members of
SAMA did not discretely
pay subscription fees to belong to the union.
The entire monthly membership subscription payment received from
employed and non-salaried
members of SAMA was budgeted and allocated
to the provision of services to SAMA’s members. In particular,
SAMA avers that
services were made available to every employed doctor
who was a member of SAMA but denies that this had the effect that any
member
became a member of the trade union, or that a monthly trade
union subscription fee was recovered from any member. Further, SAMA
states that no separate list of union members was kept - membership
of SAMA entitled an employed doctor to be represented by SAMA,
and no
separate trade union operated or indeed, existed.
[11]
After the union was placed in administration, SAMA has continued to
deduct what it refers to
as monthly membership subscription payments.
There were a number of meetings during March 2020 between SAMA and
the administrator
where SAMA avers that it was explained to him that
there was no membership of the union and that the union had no
structures. In
SAMA’s view, it remains the administrator’s
function to determine which of SAMA’s members wish to be union
members
and it was for him to create the formal structures of the
trade union and to see to the election of office bearers. After the
meetings,
the administrator insisted that the monthly membership
subscription payments of all employed doctors be paid over to him, in
his
representative capacity. SAMA avers that the administrator ‘could
not or would not understand that the monthly membership
subscription
payments were the subscription fee paid to SAMA by its members,
whether they are in private practice or whether they
are employed’.
[12]
The differences between the administrator and SAMA led ultimately to
a communiqué issued
by SAMA to its members in which it advised
them of the problems experienced with the intended separation of SAMA
and the union.
It also informed employed doctors of the intention to
migrate their debit orders from PERSAL to personal debit orders. It
would
appear that this communiqué had the consequence of the
letter of demand, addressed by the administrator to SAMA. In that
demand, certain information in respect of the membership of the union
was required. In the interim, the administrator approached
the chief
director: health sector bargaining, with a demand that the banking
account for the payment of monthly membership subscriptions
deducted
from PERSAL be changed from SAMA to the union. On 20 April 2020, the
chief director addressed a letter to the director:
PERSAL with a
request that the administrator’s demand be executed. SAMA’s
attorneys addressed a letter to the director:
PERSAL to demand
that the instruction from the Department of Health be ignored. This
demand was refused, and proceedings were instituted
in the High Court
to interdict and restrain the National Treasury from heeding to the
Department of Health’s instruction.
That application has been
set down for hearing in the High Court on 19 May 2020.
[13]
In short, SAMA takes the view that the union was always an integral
part of its own organisation,
and established solely for the purpose
of providing services to those of its members who are employed, as
opposed to those members
in practice for their own account. The union
never existed as a discreet legal entity, certainly since 2016 it has
had no separate
structures, and no separate list of union members was
ever maintained, and in reality, there are no union members. The
deductions
effected through the PERSAL system are in respect of SAMA
membership fees; they are not trade union membership subscriptions.
On
this basis, the information sought by the administrator is simply
not in the position of SAMA, and there is no basis for the
interdictory
and other relief sought by administrator.
[14]
Counsel for SAMA submitted that the union had failed to make out a
case for the relief sought in its
founding affidavit and that in any
event, on the basis of the principles that regulate the determination
of factual disputes in
motion proceedings, the court was obliged to
find in favour of SAMA. (See
Plascon-
Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
[1984] 2 All SA 366
(A), as restated in
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA).)
Analysis
[15]
Whatever factual disputes may exist between the parties (primary
among these is whether as a
matter of fact there is a discrete union,
whether the union has members and whether the subscriptions deducted
from employed doctors
are in respect of union subscriptions), SAMA
cannot dispute the existence of the union as a legal entity, that the
union is and
remains a registered trade union in terms of s 96 of the
LRA, that the union is a member of two bargaining councils and party
to
collective agreements concluded in those councils, and that as a
registered trade union, it enjoys (and continues to enjoy)
organisational
rights, including the right to deduction of trade
union subscriptions or levies in terms of s 13 of the LRA. It is also
not in
dispute that SAMA is not a trade union, let alone a trade
union registered under the LRA, and that it enjoys none of the rights
that accrue to registered trade unions under the Act.
[16]
What is also not in dispute are the administrator’s terms of
reference, an integral part
of the order issued by Lagrange J on 27
February 2020. The terms of reference are cast widely and extend to
such powers as are
necessary to give effect to the order including
the authority to take immediate control of, in place of any union
office bearers,
the management of the affairs of the union together
with all assets and interests relating to its business, the power to
control
the funds and finances of the union, to take control of cash,
cash investment shares and other securities, to commission the
preparation
of the union’s audited financial statements, to
submit the audited financial statements to the registrar of labour
relations
and to investigate any financial irregularities relating to
the assets or the affairs of the union and when necessary, to
recommend
that action be taken against any person guilty of
misconduct or a crime. It should be recalled that in essence, the
non-interdictory
relief sought by the administrator seeks to enforce
the rights and obligations accorded the administrator by virtue of
the order,
and to enable him to take charge of the affairs of the
union and administer it in terms of his appointment.
[17]
Section 103A of the LRA, which regulates the appointment of an
administrator of a trade union
that is placed under administration,
has as its primary objective the regaining of a trade union’s
viability and the fulfilment
of the purpose for which the union was
established (see
Solidarity v Metal & Engineering Industries
Bargaining Council & others
(2017) 38
ILJ
2109 (LC)).
As Myburgh AJ noted in
Public Servants Association of South Africa
and another v Minister of Labour and another
[2016] 1 BLLR 68
(LC):
[7]
in essence, the appointment of an administrator may be compared to
the appointment
of a business rescue practitioner in the case of an
ailing company. It is a mechanism that can be resorted to before a
trade union
or employer’s organisation is deregistered and
wound up, and attempts to avoid this in the interests of all
concerned.
[18]
Certain legal consequences flow from the undisputed factual matrix,
the terms of Lagrange J’s
order and the statutory provisions
referred to above. Firstly, in terms of s 97 of the LRA, registration
has the effect that the
trade union concerned is a body corporate.
Further, in terms of s 98, the union is required to comply with the
standards of generally
accepted accounting practice, principles and
procedures, keep books and records of income expenditure, assets and
liabilities and
prepare financial statements. Further, the union is
obliged in law to arrange for an annual audit of its books and
records of account
and its financial statements. A certified copy of
the financial statements and the auditor’s report are required
to be made
available to union members for inspection, and provided to
the registrar within 30 days of receipt of the auditor’s
report.
Section 99 requires a union to keep records of the list of
its members, the attendance register, minutes and any other
prescribed
record of its meetings, and ballot papers or any
documentary or electronic record of any ballot. The statutory
reporting obligations
established by s 100 are extensive. In addition
to the submission of the auditor’s report and a certified copy
of the financial
statements, a registered trade union is required to
submit the list of members as at 31 December of the previous year,
and the
names and work addresses of office bearers.
[19]
Secondly, s 13 regulates the exercise of the statutory right to
check-off or the deduction of
trade union subscriptions and levies
from remuneration. This right may be enjoyed by any employee who is a
member of a representative
trade union and who authorises the
employer in writing to deduct subscriptions or levies payable to the
union from the employee’s
remuneration. An employee may revoke
an authorisation given in terms of the section by giving the employer
and the representative
trade union one month’s written notice
or, if the employee works in the public service, three months’
written notice.
With each monthly remittance, the employer is obliged
to give the representative trade union a list of the names of every
member
from whose wages the employer has made the deductions that are
included in the remittance, with details of the amounts deducted
and
remitted.
[20]
It follows from these provisions, which served to guarantee the
rights of freedom of association
and confer statutory benefits on
employees who are members of representative and registered trade
unions, that it is not open to
a professional body, such as SAMA, to
ignore or circumvent all of these statutory requirements simply for
reasons of internal administrative
and managerial convenience. Some
of the services offered by SAMA are reserved for trade unions as they
are defined in s 213 of
the LRA. A ‘trade union’ is
defined to mean ‘
an association of employees whose principal
purpose is to regulate relations between employees and employers,
including any employers’
organisations
’. The LRA
clearly did not intend trade unions to be used as vehicles for other
ends, or to be a single bloom in what SAMA
terms ‘a bouquet of
services’ offered to its members. The trade union is a body
that is statutorily recognised, which
exists independently and with
freedom from interference and with all of the statutory protections
that flow from the fundamental
rights established by s 23 (4) of the
Constitution. Significantly, this right includes the rights of a
trade union to determine
its own administration, programs and
activities, and to organise. These fundamental rights find
legislative expression in the LRA.
[21]
In law therefore, regardless of the fact that SAMA has historically
regarded and managed the
union as one of its business divisions and
despite its denial that any trade union exists or that any single one
of its members
is a member of the union, the union exists, in law, as
an entity independent of SAMA the fact that it may not have been
managed
in that fashion is neither here nor there. While there is
clearly a significant overlap between SAMA’s membership and
that
of the union, for statutory purposes, at least some of SAMA’s
members are members of the union.
[22]
Of some significance for present purposes is the fact that the union
obtained organisational
rights by agreement with the state, with the
result that several thousand doctors employed by the state currently
pay trade union
subscriptions via the PERSAL payroll system. It is
not open to SAMA to contend, as it does in these proceedings, that
subscriptions
deducted from their remuneration of those of its
members employed in the public sector are membership fees due to SAMA
paid through
the convenient vehicle of the statutory right to
check-off. Section 13 makes clear that deductions in these
circumstances made
solely for the benefit of a trade union, after
authorisation by employees who are trade union members. SAMA thus
cannot deny the
existence of information in its possession in which
is recorded the names of those doctors employed in the public sector
from whom
trade union subscriptions have been deducted, and from whom
they continue to be deducted.
[23]
In summary: the fact that SAMA has managed the union as one of its
business divisions does not
detract from the fact that in law, the
union is a discrete, independent statutory body, subject to
regulation by the LRA and accountable
to its members and the
registrar. To the extent that SAMA denies that the subscriptions
deducted from the remuneration of those
of its members who are
employed by the state accrue to the union, the statutory basis on
which the deductions are made and remitted
is such that only the
union is the proper beneficiary of those funds. Those of SAMA’s
members who have been and remain party
to authorisations to effect
deductions from the PERSAL payroll system are union members, since
only union members may grant such
authorisations to a registered
trade union. They remain bound by those authorisations until the
authorisations are validly terminated.
[24]
The administrator has been mandated by this court to unscramble an
egg of significant proportions.
The order does not require this court
to undertake that task – this is for the administrator to
accomplish. But this court
is empowered to give effect to its orders,
and to provide the administrator with the necessary means to give
effect to his mandate.
On its own version, SAMA has been the
de
facto
manager of the union since the union’s inception. It
is not open to SAMA to hide behind the organizational structures that
it has created to refuse to assist the administrator, who is obliged
in law to take control of the union’s management and
affairs.
The scope of the administrator’s terms of reference as defined
by the order granted on 27 February 2020, entitle
him to all
necessary information and assistance from SAMA in the execution of
his mandate. This would include all information in
SAMA’s
possession regarding those of its members employed in the public
sector who are members of the union, and from whom
statutory
deductions in respect of trade union subscriptions or levies have
been made in terms of s 13 of the LRA. Further, the
administrator is
entitled to all documents relating to the registration of the union
that may be in SAMA’s possession, including
the original
certificate of registration and a certified copy of the union’s
constitution, and all financial records and
returns referred to in ss
99 and 100 of the LRA. Given that the stop order deductions in place
in respect of doctors employed in
the public sector deductions made
in terms of s 13 of the LRA and solely for the benefit of the union,
the union is entitled to
a declaratory order to that effect, as well
as a declaratory order to the effect that all employees in respect of
whom such stop
orders were and are being made, are union members, at
least for as long as they have not terminated their membership of the
union.
[25]
To the extent that the administrator seeks further orders declaring
that all cancellations of
membership of the union for the period 27
February 2020 to date which did not comply with the provisions of s
13 (3) of the LRA
are invalid and of no consequence, I am unable to
ascertain on the papers before me whether such cancellations have
indeed been
effected, and whether any cancellations so effected
comply with s 13 (3) of the LRA. It will be recalled that in terms of
that
subsection, three months’ written notice must be given by
the employee to the employer and the trade union concerned. Whether
terms of any cancellation failed to comply with this provision, it is
of course open to the employer and the union concerned to
reject the
notice of cancellation. To the extent that the administrator sought
interdictory relief, including an order that SAMA
is precluded from
holding itself out to be a registered trade union in terms of the
LRA, seeking or obtaining organisational rights,
seeking or obtaining
recognition from employers as a collective bargaining representative,
soliciting members of the union or taking
steps to encourage them to
cancel existing union membership stop order facilities, Mr. Fourie
SC, who appeared for the applicants,
abandoned this prayer and I need
not consider whether the administrator is entitled to an order
in these terms. However,
as I have noted above, it is not in dispute
that SAMA is not a trade union as defined, nor is it registered in
terms of the LRA.
This fact alone places restraints on the activities
of SAMA, at least to the extent that it seeks now to hold itself out
as a trade
union and offer its members the benefits that accrue to a
registered trade union.
Costs
[26]
Finally, in terms of s 160 of the LRA, this court has a broad
discretion to make orders for costs
in accordance with the
requirements of the law and fairness. The applicants contend that
SAMA has acted fraudulently and that a
punitive costs order is
warranted. On the papers before me, I am unable to make a finding of
fraud. That does not excuse the conduct
of SAMA, which was obliged to
assist the administrator and offer him its fullest cooperation.
Despite a promising start, the administrator
has met with obstruction
and obfuscation. None of the usual conventions that apply to disputes
between individual employees and
their employers, or between trade
unions and employers are applicable in the present instance. The
applicants have substantially
succeeded in obtaining the relief that
they seek in the interests of the law and fairness are best served by
an order that costs
follow the result.
I make the following
order:
1.
The first respondent is
directed, within five days of the date of this order, to provide the
applicant with the following:
1.1
all information in its
possession regarding the members of the second applicant, including
but not limited to those employed in
the public sector and whose
union subscriptions are deducted via the PERSAL payroll system;
1.2
all necessary
assistance in providing the above information, and ensuring that same
is accessible and complete;
1.3
all records in its
possession relating to disputes and grievances instituted, pending or
received by the second applicant;
1.4
the second applicant’s
original certificate of registration;
1.5
a certified copy of the
second applicant’s constitution;
1.6
all of the second
applicant’s financial records in its possession submitted to
the Registrar of Labour Relations in terms
of s 100 of the Labour
Relations Act, including:
1.6.1
audited financial
statements;
1.6.2
management accounts;
1.6.3
bank statements;
1.6.4
records of investment;
1.6.5
assets;
1.6.6
income statements;
1.6.7
details of all monies
appropriated by the first respondent in respect of the costs of
shared services provided by the first respondent
to the second
applicant.
2.
It is declared
that all amounts deducted in favour of the second applicant on the
PERSAL payroll system pursuant to the right to
the deduction of trade
union subscriptions and levies in terms of 13 of the Labour Relations
Act, were remitted in terms of s 13
(3) to and for the account of the
second applicant.
3.
It is declared that in
the absence of any proof to the contrary, all SAMA members in respect
of whom such stop order deductions
were and continue to be made
through the PERSAL payroll system, are and remain members of the
second applicant.
4.
The first respondent is
to pay the applicants’ costs of the proceedings, such costs to
include the costs of two counsel where
so employed.
André van Niekerk
Judge
of the Labour Court
APPEARANCES
For the applicants: Adv.
G Fourie SC, with him Adv. D Groenewald, instructed by Serfontein
Viljoen & Swart
For the First Respondent:
Adv. TP Krüger SC, instructed by Wellman Bloem
For the Second
Respondent: Adv. S Shaba SC, with him Adv. S Tshauke, instructed by
the state attorney