IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO. J1231/98
In the matter between
MSIMANGO DUMISANI AND OTHERS Applicant
and
MINTROAD SAWMILLS (PTY)LTD Respondent
JUDGMENT
JAMMY,AJ
1. The respondent in this matter, a company of more than 40 years standing, operates in
the timber industry as a processor of raw wood principally for the wholesale timber
trade.
2. In 1996 and 1997 it conducted its business activities from two sites, a stand in Alrode
where all production was carried out and where all its machinery, vehicles and most of its
staff were located, and a second stand in Robertsham, from which it conducted a minimal
retail business, comprising the sale of limited products to nurseries. At all times material
to this dispute, its staff complement, as testified to by its managing director, Mr. Roy Smith,
was approximately 120 employees at Alrode and a maximum of six at Robertsham.
3. It is common cause that, at that time, the National Entitled Workers Union (“the Union”)
enjoyed majority representation of the respondent’s workforce, that as such, it was their
collective bargaining agent recognised by the respondent and that the two applicants in
these proceedings were members of the Union.
4. It is also common cause that, in early September 1997, the Union orchestrated a protected
strike in the company, as a result of an unresolved wage dispute and that, after a prolonged
period of some five weeks, the issue was resolved through the intervention of the
Commission for Conciliation, Mediation and Arbitration. That strike, Mr. Smith
Commission for Conciliation, Mediation and Arbitration. That strike, Mr. Smith
testified, “brought us to our knees”. The respondent, already under severe financial
pressure, was now in “dire straits” and the Directors accordingly consulted the company’s
accountant, Mr. Joseph Pollack, in order to “weigh up its options”. Its reserves, principally
as a consequence of the strike, were depleted, its overdraft was unacceptably high and it was
desperately in need of working capital if it was to survive.
5. Various options were considered, said Mr. Smith, and it was ultimately decided that the
only practical of action was to sell the Robertsham stand, which was “not productive
anyway”. That was negotiated, at a price considerably in excess of its market value, and
the entire proceeds of the sale, R550000, were to be injected into the respondent.
6. The sale of the property obviously necessitated the closure of the Robertsham branch,
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Mr. Smith testified. Its entire staff would be assimilated into the employee complement
at Alrode, but although the cash injection would initially relieve some pressure, the
respondent’s financial position was still precarious and it became apparent that the
production of certain products would have to cease, with the result that approximately
eight of its employees would become redundant.
7. A letter was accordingly addressed to the Union on 10 November 1997 in the following
terms:
re: OPERATIONAL STREAMLINING AND CLOSURE OF BRANCH
In accordance with the LRA 1995, section 189 (3) we hereby inform you that our
branch in Robertsham will cease to operate as of 19 December 1997, to coincide
with our annual shutdown, and furthermore it is our intention to stop production
on a number of our products, necessitating an overall dismiss of approximately 8
persons. It is indeed unfortunate but a number of contributing factors have led to
this decision, namely nonprofit , drastic reduction in turnover, and an exhorbitant
increase in raw materials and overheads.
The employees affected are labourers, we would look to the length of service of the
employees and to retainment of skills before deciding on who to dismiss, but
would, more or less work on the lines of, last in first out. We propose a severance
package of 1 weeks pay in lieu of each completed year worked, and off course all
leave due to them. The chances of the branch being reopened are nil, we have
already made arrangements for the sale of the stand, but if there is an improvement
in sales and it becomes necessary to employ more staff within 3 months of us
in sales and it becomes necessary to employ more staff within 3 months of us
reopening here in Alrode, then the people who were retrenched will be approached
and given the first opportunity for employment, should they wish.
Your assistance and input in making this move as smooth as possible would
be appreciated. Kindly bear in mind that this decision, in light of the fact that our
business was started over 50 years ago and was built up over the years with hard
work, was certainly not an easy one to make, in fact, the contributing factors have
more or less forced this on us.
We await your reply as to when we may meet, which has to be sooner rather than
later, as time is now running out.
ROY SMITH
MANAGING DIRECTOR
November 10, 1997
8. An exchange of at times confrontational correspondence then followed, with the detailed substance
of which I do not consider it necessary, for reasons which will become apparent,
to burden this judgment. In essence, the Union’s stance was that closure of the Robertsham
branch had already been decided upon “before disclosure of information and before
consultation”. It was not prepared to enter into substantive discussions with the respondent unless
and until the comprehensive financial information for which it repeatedly called,
was furnished. It is common cause that information that the respondent considered to be
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relevant to and adequate for the consultation process was tendered by it on a basis of
inspection and examination which, having regard to the substance and volume of the material
in question, it considered reasonable, but that those tenders were rejected by the Union as
being unacceptable and inadequate for the purpose for which it was required.
9. The issues for determination by this court are defined in the minute of a pretrial conference
between the parties as:
“Whether the respondent complied with the provisions of section 189 of the Act and
whether it disclosed a reason for the retrenchment of the applicants”.
10. The minute also records that the basis for the allegation by the applicants of substantive
fairness is that “no commercial rationale was shown by the respondent” to justify their
retrenchment. It emerged pertinently from the submissions made that that allegation was
sourced directly in the applicants’ contention that the respondent had failed or refused to
make financial disclosure to the Union on a basis which would substantiate such rationale.
11. A considerable portion of the two court days of this hearing was devoted to that issue.
Evidence from an expert witness called by the respondent, a qualified member of its
Auditing firm, who testified and was crossexamined at length regarding the nature and
adequacy of the financial information tendered by the respondent, and further testimony
presented by Mr. Smith on that subject, was the subject of exhaustive examination by
Mr. D. Maluleke, representing the applicants. The challenge by the applicants regarding
alleged noncompliance by the respondent with the requirements of section 189 of the Act,
was the basis moreover of his comprehensive closing submissions to me.
12. It was only at that stage of the proceedings however, that a new factor was introduced by
12. It was only at that stage of the proceedings however, that a new factor was introduced by
Mr. G. Higgins, for the respondent, ostensibly as a point in limine. That, however, is a
misconception of the legal characterisation of his intervention. A point in limine is one
taken by a party at the onset of the matter and which might bear upon the subsequent
conduct of the proceedings. It is not one raised at the conclusion stage when issues in and
aspects of the dispute which might otherwise have been obviated, have already been
canvassed.
13. That said however, if the point, at whatever stage it is raised, has legal validity in the
in the context that it might possibly have material relevance to the determination of the
matter, then, subject to issues of costs which might arise from its irregular presentation,
it is incumbent upon the court to hear and consider it.
14. The whole question of the adequacy of the tender and substance of financial disclosure by
the respondent, and of its general compliance with section 189, Mr. Higgins submitted, was
res judicata . It had been exhaustively dealt with and disposed of in the context of an
urgent application brought by the Union and other applicants, including those in the
present matter, against the respondent in December 1997 for an order interdicting the
respondent from proceeding with its proposed retrenchment of those applicants.
15. In papers filed in that application, precisely the same allegations regarding purported
financial nondisclosure were made as those now before this court. In the result, the
application was dismissed and in the written reasons for that order, Grogan A.J., at
page 10 of the judgment, having comprehensively examined the same documentation now tabled
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in this matter, came to the following conclusion:
“I am satisfied that by 24 November 1997 the respondent had disclosed all relevant
information regarding the matters expressly specified in section 189 (3) namely,
the reasons for the proposed dismissals; alternatives considered before proposing
the dismissals and the reasons for their rejection; the number and job categories of
employees likely to be affected; the proposed methods of selection of employees
affected; the timing of the dismissals; severance pay and assistance proposed; and
the possibility of reemployment. By then, the only information outstanding was
that related to the respondent’s financial circumstances and other matters first
demanded by the first applicant on 25 November 1997. It is by allegedly denying
this information (and particularly, as I understand the case from the bar, the financial
details) that the applicants claim the respondent has breached its duty to consult.
The respondent, for its part, contends that it did not deny the first applicant access
to the information, but on the contrary took reasonable steps to ensure that its
officials could have sight of it if they so wished.
The first applicant cannot and does not deny that it could have availed itself of the
three express offers by the respondent to peruse its financial documents. What it
did, instead, was to insist, first, that the respondent deliver over the documents and,
second, that it abandon its decision to proceed with the retrenchments when finally,
on 4 December 1997, it agreed to inspect the documents at the respondent’s
on 4 December 1997, it agreed to inspect the documents at the respondent’s
premises. By that stage, it had already had more than a week to avail itself of the
respondent’s offer to inspect the documents with the assistance of the respondent’s
auditor. By that stage, it also knew that the persons selected for retrenchment on
18 December 1997 had been advised thereof.
At page 15, the judge continued:
“Given the first applicant’s repeated failure to attend meetings and to accept
invitations to inspect books, the respondent can be forgiven for concluding by
9 December that the first applicant was engaging in delaying tactics.
On the papers, therefore, I cannot conclude, as the applicants contend that I should,
that the respondent breached section 189 by refusing to disclose information or by
frustrating the duty to consult. This is not the case, like NUMSA v Comark Holdings
(Pty) Ltd [1997] 5 BLLR, upon which the applicants sought to rely, where the
employer had, after inviting the union to consult on possible staff reductions,
unilaterally taken the decision to reduce its workforce while the union was still
consulting with its members under the impression that a further meeting was to take
place. It is also distinguishable from FAWU v Simba (Pty) Ltd [1997] 4 BLLR 408
(IC), in which the employer was restrained from closing a factory and terminating the
services of the employees concerned for a period laid down by a collective
agreement which bound the employer not to retrench for a period of six weeks after
notice thereof was given, and in which such notice was not given. In this case,
notice thereof was given, and in which such notice was not given. In this case,
it was the first applicant that chose not to consult, first, because in its view the
respondent had already made up its mind, then because the respondent declined to
deliver documents it had requested and, finally, because the respondent refused
expressly to undertake to halt the retrenchments indefinitely while the first applicant
made good the delays that had been caused by its own deliberate decision not to
engage in consultation.”
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16. In the present matter, no evidence other than the documentation submitted by agreement
between the parties, was presented by or on behalf of the applicants, Mr. Maluleke’s
expressed position being that they relied solely on those documents and the evidence in
chief and under crossexamination of the respondent’s witnesses, to substantiate their
claims.
17. That documentation in its entirety was precisely that upon which Grogan, AJ based his
findings in the application proceedings referred to, and there is nothing, in my view, in
the testimony which I have heard in this matter, which would justify any different
conclusion on my part with regard to what are in essence the same contentions and
allegations now made by inter alia, the same applicants, in these proceedings.
18. The concept of the exceptio res judicata in the context of interdict and trial proceedings
was analysed, also by Grogan,AJ in the as yet unreported Labour Court matter of
National Union of Mineworkers v Elandsfontein Colliery (Pty) Ltd
Case No. J801/98
19. Following a comprehensive review of relevant case authority, the judge said this:
“ It follows in my view, that in the civil law the plea of res judicata can
in principle be raised as an exception in trial proceedings when the original
judgment upon which the excipient relies was given for purposes of an
interdict application. If this principle is applied in the context of the Labour
Relations Act, it follows that again in principle, a judgment handed down in
an application brought in terms of section 158(1), (i) or (iv) can be relied upon
for purposes of a plea of res judicata in respect of a referral in terms of section
191.
191.
I have emphasised the words “in principle” advisedly. Whether the
requirements of plea of res judicata will be satisfied in any particular case
must depend on various considerations including, in particular, the likelihood
that issues or evidence not dealt with in the prior judgment might emerge
were the matter to go to trial: Ward v Cape Peninsula Ice Skating Club 1998
(2) SA 487 © at 5012; Kommissaris van Binnelandse Inkomste v ABSA Bank
Bpk 1995 (1) SA 653 (A) at 669F1.
20. I am in full agreement with that analysis. I have already stated that, in my view, no issues or
evidence have emerged in this matter which were not fully canvassed in the earlier
application proceedings between the parties. In these circumstances, the respondent’s plea
of res judicata is valid and the applicants’ claims must fail.
21. In view of the fact however, that, as I have stated, that plea was raised virtually at the
conclusion, rather than properly at the inception of the matter, it does not seem to me that
the applicants should be burdened with costs that might possibly have been avoided or
significantly curtailed had normal procedures been followed in that regard.
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22. I accordingly make the following order:
(a) The application is dismissed.
(b) There is no order as to costs.
B.M. JAMMY
ACTING JUDGE OF THE LABOUR COURT
Dates of hearing: 10 and 11 February 1999
Date of judgment: 22 February 1999
For the applicants: MR. D. MALULEKE
For the respondent: MR. G. HIGGINS
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