IN THE LABOUR COURT OF SOUTH AFRICA HELD AT JOHANNESBURG
Case Number J 1643/98
In the matter between
JAN HENDRIK WHEELER FIRST APPLICANT
R S MAHASHA SECOND APPLICANT
And
J C J VAN RENSBURG
MANIE STEYN
BASIE DE BEER
T/a DRIVE SHAFT ENGINEERING CENTRE
previously known as PRETORIA PROPSHAFT CENTRE
also trading as PROPSHAFT PROFESSIONAL
STELZNER, AJ:
1. This is a ruling on an application for substitution of a party for an existing party in
terms of Rule 22(5) of the Rules of this Court and a ruling on the issue of costs,
preliminary to an application arising out of the alleged unfair dismissal of the
applicant, apparently by reason of the operational requirements of the business.
2. The first peripheral issue which required my attention was the question of
condonation for the late filing of respondent’s statement of case, an application to
that effect having been filed. There was no opposition to such condonation by the
applicant and condonation was, accordingly, granted as requested.
3. It was apparent from the pre trial minute filed by the parties, and was confirmed to
me at the outset of the proceedings, that the dispute in regard to second applicant
had been settled. Accordingly it is only the case of first applicant which is proceeding
and my ruling is made in respect of and only concerns first applicant.
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4. Respondent initially raised a point in limine namely that this Court does not have
jurisdiction in respect of the dispute arising out of applicant’s dismissal because the
parties who had been cited as respondents were not the applicant’s employer.
Applicant cited three individuals as co-respondents, namely J C J Van Rensburg, Manie
Steyn and Basie De Beer (hereinafter referred to as “Van Rensburg”, “Steyn” and “De
Beer”, respectively), trading as Drive Shaft Engineering Centre previously known as
Pretoria Propshaft Centre also trading as Propshaft Professionals (Reg no.
92/01337/07), and alleged in his statement of case that these respondents were
(collectively it would appear) his employer. Respondent contended that at all material
times applicant was employed by Pretoria Propshaft Centre CC, an incorporated
entity.
5. Both parties led evidence on the issue and the facts emerged as follows. Applicant
had indeed been employed by Pretoria Propshaft Centre CC (this much being
conceded as at least a possibility by applicant in evidence but being conceded as a
fact by applicant’s attorney in argument), the members of which were Van Rensburg,
Steyn and De Beer. It was also common cause that applicant’s services were
terminated in writing on 3 October 1997 on a letterhead headed Pretoria Propshaft
Centre. No reference was made on that letter to the fact that Pretoria Propshaft
Centre was a close corporation, the registration number of the corporation was absent
as were the names of the members of the close corporation. It was conceded on
behalf of respondents in argument that this constituted a contravention of the
provisions of s 23(1) of the Close Corporations Act, No 69 of 1984.
6. Applicant testified that he responded to an advertisement in Die Beeld newspaper,
was interviewed for the job by Van Rensburg and subsequently advised that his
was interviewed for the job by Van Rensburg and subsequently advised that his
application had been successful. He was then told by Van Rensburg that he would be
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sent for two weeks training with Van Rensburg’s partner (“vennoot” was the term
used by applicant giving evidence in Afrikaans). He was in fact sent for training at a
business known as Drive Shaft Engineering Centre in Pretoria which business
appeared to be run by Steyn. Thereafter he reported for duty at Pretoria Propshaft
Centre at a different location in Pretoria. He started working for Pretoria Propshaft
Centre in May 1997. Van Rensburg ran the business but he reported directly to one
Mr Stoltz, the foreman.
7. Frederik Stoltz, the foreman, (hereinafter referred to as “Stoltz”) also testified. He
stated that he had been employed by Pretoria Propshaft Centre CC, reporting to Van
Rensburg. Besides being advised at the time he was employed that he would be
working for the close corporation, which fact had in any event appeared from the
advertisement to which he had responded, the details of the close corporation had
appeared on invoices and the various books of the business. These facts were not
placed in dispute.
8. Van Rensburg testified that applicant had from time to time worked at the counter
where he would have dealt with documents such as invoices reflecting the corporate
identity of the business. Furthermore, by agreement a copy of a salary cheque of the
applicant for the month of August 1997 was handed in as evidence, which cheque was
drawn on the name of Pretoria Propshaft Centre, underneath which appeared the
letters ”BK” and the registration number of the close corporation, the cheque being
signed by Van Rensburg and one of the other two members, either Steyn or De Beer.
Applicant’s evidence confirmed that he had worked at the counter occasionally but
that he had not noticed anything on the documents with which he worked anything
which suggested to him that he was working for a close corporation. Similarly with his
salary cheque, he testified that he received his cheque each month from Van
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Rensburg’s secretary and simply handed it to his wife to deposit in his bank account.
Under cross examination it became clear that the letters “BK” and the registration
number following thereon simply had no meaning to the applicant. He did not know
what a close corporation or a partnership were, did not understand the difference
between a partner in or the owner of a business, not did he appreciate or understand
the concept of limited liability. As far as he was concerned he worked for the business
known as Pretoria Propshaft Centre, which business was owned by Van Rensburg and
his partners.
9. When applicant’s dispute was initially processed by his then attorneys (Leander Wiid
attorneys) the dispute was characterised as being between applicant and Pretoria
Propshaft Centre. All the conciliation referral and related documents were prepared
on this basis. Mr Boshoff (hereinafter referred to as “ Boshoff”), a candidate attorney
at the time, handled the matter and also testified in these proceedings. At a point in
the process the representatives were advised that the business of Pretoria Propshaft
Centre had closed down. Boshoff testified that he then telephoned the business and
spoke to a woman who appeared to be the telephonist of receptionist. He was
advised by her that Pretoria Propshaft Centre was now known as Drive Shaft
Engineering Centre but that the owners (“eienaars”) remained the same. On the
strength of that telephonic advice Boshoff proceeded to process applicant’s dispute
against Drive Shaft Engineering Centre, informing the CCMA that this was the name of
the business formerly known as Pretoria Propshaft Centre. He also wrote that Van
Rensburg was one of the owners. At this stage conciliation had passed and the
representatives were attempting to obtain a date for arbitration. Under cross
examination Boshoff testified that he had simply accepted his client’s description of
examination Boshoff testified that he had simply accepted his client’s description of
Pretoria Propshaft Centre as being name of the business for which he worked, the
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business having three “owners”. It never occurred to him at any stage to investigate
the matter further or to conduct a company search, even though it was clear that his
client was not familiar with legal terminology. He also maintained that at far as he
himself was concerned the terms owner and partner (“eienaar” and “vennoot”)
amounted to the same thing.
10. The statement of claim in these proceedings was filed by applicant’s current
attorneys of record, Anderson and Kloppers Attorneys. No evidence was presented to
me as to the reason therefor but the facts speak for themselves as to the manner in
which respondents were cited. I was advised that the business known as Propshaft
Professionals was included because that business appeared to be the employer of
second applicant who has since, as mentioned before, fallen out of these proceedings.
It is nevertheless still relevant to note that this business (cited as a corporate entity if
one has regard to the registration number) was included as one of the trading names
of the three individual respondents.
11. When respondent’s statement of defence was served and filed on or about 28
October 1998, the point in limine was pertinently raised and it was clearly alleged that
applicant had been employed by Pretoria Propshaft Centre CC. In subsequent pre-trial
proceedings further discovery was requested from respondent in regard to this aspect
of the matter and respondent subsequently delivered copies of the various
incorporation documents and financial statements of the close corporation.
12. There was no application by applicant’s representatives either to amend the
pleadings or, in terms of Rule 22, to join and / or substitute any other party to the
proceedings when the matter commenced or when argument commenced. On the
morning of the second day or the proceedings, when Ms Anderson, who appeared for
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applicant, resumed her argument in reply, she sought leave to bring an application in
terms of Rule 22(4) to amend the citation of the parties to include Pretoria Propshaft
Centre CC as first respondent. She sought leave also to serve the application on the
representatives of the individual respondents in court, as well as condonation for
failure to comply with the rules in regard to service. It was subsequently agreed that
the application ought more appropriately to have been brought under the provisions
of rule 22(5) which provides for the substitution of a party. Initially Mr Kruger, who
appeared on behalf of respondent, indicated that he had no instructions to accept
service of the application on behalf of Pretoria Propshaft Centre CC, however, he
subsequently, after an adjournment, accepted that as Van Rensburg, one of the
members, was in Court it ought to be accepted from a practical point of view that
Pretoria Propshaft Centre CC had notice of the application and that while he may not
have initially been instructed by Pretoria Propshaft Centre CC it was clear that he
would be representing it in any further proceedings in which it might be involved
regarding this matter. In any event, the three members of the CC were all before
Court in the matter, were fully aware of the proceedings and were represented. It
would appear artificial in the circumstances to hold that the CC had no notice or
knowledge of the application to substitute it as a party.
13. Ms Anderson accepted after some deliberation and adjournment to enable her to
canvass and consider the issues, that Pretoria Propshaft Centre CC was applicant’s
employer and therefore ought to be the party before Court. The case against the
individual respondents was thus withdrawn with the acknowledgment that some sort
of costs order would have to follow. It remained thus for me to consider the question
of the substitution of Pretoria Propshaft Centre CC as the respondent, and costs in
of the substitution of Pretoria Propshaft Centre CC as the respondent, and costs in
relation to this late application as well as the late withdrawal of the case against the
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individual respondents.
14. I am satisfied that in the circumstances it would be appropriate to substitute
Pretoria Propshaft Centre CC as the respondent in this matter. On the evidence led
thus far Pretoria Propshaft Centre CC was clearly the employer of the applicant. Such
an order would not cause any prejudice to the respondents that could not be cured by
an appropriate order as to costs. The evidence which will need to be canvassed
during the trial on the merits, the documents to be discovered and indeed the
pleadings would be essentially the same, save for the substitution as aforesaid. In
addition, if I were to simply refuse the application for substitution applicant would
have to start afresh against the correct respondent on essentially the same papers,
thus duplicating the costs. I do not think that such a situation would be in the
interests of either party. The question which remains thus is what order as to costs
would be appropriate in the circumstances.
15. It appears appropriate to consider the conduct of the various parties and legal
representatives in dealing with this issue. I am satisfied that on the evidence before
me the applicant himself was in no way to blame for the sorry state of affairs which
has resulted in the significant accumulation of costs before reaching the position
where this matter can now proceed to be dealt with on the merits. Had respondent/s
not contravened the provisions of s 23(1) of the Close Corporations Act, it is likely that
the correct respondent would have been before this Court from the outset. It is also
possible that respondents could have come forward at the conciliation stage to set the
record straight, but in the absence of evidence on that issue I cannot rule or base my
decision thereon. At the same time, however, the conduct of the applicant’s attorneys
(both erstwhile and current) would appear to have been lacking in due diligence and
(both erstwhile and current) would appear to have been lacking in due diligence and
attention to the factual and legal issues. I do not think that they acted in the manner
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one would expect of a reasonable attorney. As a result the applicant’s case was not
properly formulated and unnecessary costs have been incurred and it is the applicant
who is belatedly seeking the indulgence of this Court. At the very least one would
have expected the issue of substitution to have been considered and the application
in respect thereof to have been brought at a much earlier stage in the proceedings. It
would have been a simple matter to verify respondent’s version as to the existence of
otherwise of the CC known as Pretoria Propshaft Centre CC.
16. In the circumstances it seems to me to be appropriate and fair to order that the
wasted costs occasioned by the late substitution of Pretoria Propshaft Centre CC as
respondent in this matter and the withdrawal of the case against the individual
respondents be paid by the applicant’s attorneys de bonis propriis. I make this ruling
mero motu as costs de bonis propriis were not sought by respondents’ representative.
I have exercised my discretion to make such award in an attempt to achieve a fair and
just result. However, in view of the contravention of the provisions of s 23(1) of the
Close Corporations Act by the respondents and the fact that this undeniably misled
applicant’s representatives, I am ordering that only such costs as were incurred after
28 October 1998 (when respondents’ statement of defence was filed and the point in
limine raised for the first time) be paid by applicant’s attorneys. These will include
the costs of appearance in Court on 28 July 1999 and 29 July 1999 until the lunch
adjournment, as well as preparation for presenting evidence on and arguing the point
in limine. I do not believe that an order that costs be paid on an attorney client scale
would be appropriate, having regard to the conduct of all the parties as detailed
above.
17. In the circumstances I make the following order:
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17.1 The application to substitute Pretoria Propshaft Centre CC as the respondent in this
matter is hereby granted.
17.2 It is recorded that the case against the respondents as previously cited has been
withdrawn.
17.3 The applicant’s attorneys are to pay the wasted costs occasioned subsequent to 28
October 1998 by virtue of the application for substitution and withdrawal as aforesaid,
which costs are to include the costs of appearance in Court on 28 July 1999 and 29
July 1999 until the lunch adjournment, as well as preparation for presenting evidence
on and arguing the point in limine. These costs are to be paid on a party and party
scale and are to include the costs of counsel.
.
STELZNER AJ
Date of hearing :28 and 29 July 1999
Date of judgment :29 July 1999
For the applicant :Ms R Anderson
Of :Anderson and Kloppers Attorneys
For the Respondent :Mr Kruger
Instructed by :Rothmann, Rothmann and Nell Inc
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