Sneller Verbatim/ASS
IN THE LABOUR COURT OF SOUTH AFRICA
BRAAMFONTEIN CASE NO: J322/03
2003-02-23
In the matter between
DAVE SAUNDERS VAN DER KNAAP Applicant
and
NAIL OUTDOOR (PROPRIETARY) LIMITED 1st Respondent
NEW AFRICA INVESTMENT LIMITED 2nd Respondent
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J U D G M E N T
___________________________________________________________
LANDMAN J: The applicant, Dave Saunders van der Knaap was
one of two shareholders and the chief executive officer of a
business belonging to a company called Natanya Signs (Pty)
Limited. He sold his shares in the company to the 1st
respondent, Nail Outdoor (Pty) Limited to which I shall refer as
Nail Outdoor. The sale of the shares included the sale of
Natanya’s business relating to the marketing of outdoor signs
in Africa excluding South Africa which was to be incorporated
in a company to be formed off-shore. 70% of the shares in this
company would held by Nail Outdoor and 30% by the
applicant.
The purchase price was payable in two ways:
1. Payment of R20-million; and
2. Payment of R660 667,00 per annum provided the company
reached prescribed target figures (earnings before interest tax
depreciation and amortisation).
These amounts were payable provided the end targets were
met by the end of December 2002, December 2003 and
December 2004. This amount is referred to as the "agterskot".
At the same time, and part of the same transaction, two
further agreements were concluded by the parties. First, the
shareholders’ agreement in relation to the off-shore African
Business later styled Outdoor Africa. The second agreement
was an employment contract also concluded on 4 February
2002. This contract has the following features:
1. It is a fixed term contract for three years terminating at the
end of December 2004 (when the last earnings target is to be
met).
2. The applicant will receive R600 000,00 per annum.
3. The applicant will receive a bonus based upon performance.
The employment contract is an integral part of the agreements
concluded between the parties and there is also a link between
the "agterskot" and the applicant's appointment as chief
executive officer. His appointment as chief executive officer
arises by virtue of the sale of the business and his knowledge
of the business.
It is common cause between the parties that the
applicant at all material times operated as the chief executive
officer of the Outdoor Africa business and has performed the
duties which are required to run that business.
In early December 2002 representatives of the
respondents discussed the applicant's position with him.
Meetings were held on 2, 4 and 6 December. The letter of 11
December 2002 sets out the respondents’ position.
The writer, Mr Kenny Setzin, referred to the discussions
regarding possible restructuring of Nail Outdoor. The
restructuring suggested is that the applicant relinquish his
position as chief executive officer of Nail Outdoor and take up
the position as chief executive officer of Outdoor Africa on
substantially the same remuneration package as his current
package.
After discussions, the applicant delivered a letter to the
respondent setting out his response. He denies that there is
any need for material restructuring of the companies and that
he considers that his appointment as chief executive officer of
Outdoor Africa would put him in a materially worse position
than that which he currently occupies. He also says that
provided an acceptable exit strategy can be agreed upon he
will reluctantly "resign" as executive director and chief
executive officer of Nail Outdoor.
On 31 January two meetings were held between Mr
Setzin and the applicant. At the meeting, held at the Hilton
Hotel, a signed employment contract was presented to the
applicant. He declined this offer and consequently was
handed a letter which is to the effect that:
1. The applicant is reassigned to be the chief executive officer of
Outdoor Africa.
2. The re-assignment occurs in accordance with the provisions of
clause 2.2 of his employment agreement which provides that
the applicant's designation may change if the company
undergoes a change of structure or nature for example
through a merger, acquisition or amalgamation.
3. The reasons for this are threefold which are regarded as in
accordance with corporate governance and best business
practice:
(a) The enormous growth of Outdoor Africa.
(b) The corporate governance issues to avoid conflicts of interest.
(c) The fact that it is in the applicant's interest to focus on the
African market.
Mr Redding, who appeared on behalf of the applicant,
submitted that there is no doubt that the move constituted a
demotion. I will assume that this is so and that Nail Outdoor
and the 2nd respondent have breached the contract of
employment.
The applicant deals, in his founding affidavit, with the
urgency of this application. He says:
"I respectfully submit that this matter should be dealt with as
one of urgency for the reasons stated above and as a
consequence of the following:
9.1.1 I am suffering an irrevocable loss in earnings in terms of the
sale agreement due to the 1st and 2nd respondents failure to
comply with the terms of my employment agreement attached
to my affidavit marked DK3;
9.1.2 The 1st and 2nd respondents had been given an opportunity to
rectify the unfair conduct on numerous occasions and they
have refused to do so;
9.1.3 The current remedies available to me in terms of the
provisions of the Labour Relations Act are such that I will only
be in a position to obtain relief many months from now. The
current backlog at the CCMA will mean that I will unlikely be
afforded an opportunity to state my case at arbitration
proceedings within the next few months. As a consequence of
the delay which will be occasioned through no fault of my own
the damage will have been done and I will be unable to
remedy the damage and harm caused to me financially as well
as to my reputation by the unfair conduct committed by the
1st and 2nd respondents. It is impossible to quantify in
financial terms the harm to my reputation and any future
employment opportunities."
Mr Franklin SC, with him Mr Myburgh, appeared on behalf of
the respondents. Mr Franklin submitted that this court has
repeatedly found that financial prejudice does not create
urgency. See for example Hultzer v Standard Bank of South
Africa Limited 1999 20 ILJ 1806 (LC) at paragraph 3. This has
also been the approach adopted by the High Court see IL and
B Marcow Caterers (Pty) Limited v Greatermans SA Limited
and another 1981 (4) SA 108 (C) at 113H. This court has also
not been prepared to accept that damage to reputation
entitles an applicant to obtain relief in this court by way of
urgency. In the Hultzer v Standard Bank-case, supra Revelas J
said:
"I have considered the grounds for urgency raised by the
applicant in so far as the applicant alleges that there would be
an injury to his reputation and a possibility that the respondent
could employ another person in his position, these are not
factors which distinguish the applicant's case from any other
dismissal case."
It is also correct that urgency plays even more a critical role
and represents more of a hurdle for an applicant who seeks
final relief by way of urgency. The reason for this has been
expressed by Loxton AJ in Tshwaedi v Greater Louis Trichardt
Transitional Council [2000] 4 BLLR 469 (LC) at paragraph 11
where he said:
"An applicant who comes to court on an urgent basis for final
relief bears even a greater burden to establish his right to
relief than an applicant who comes to court for interim relief.
Where interim relief is sought respondent can always address
the issues at his leisure at a later stage. Where final relief is
sought that is not possible."
In the present case the applicant came to court seeking final
relief, but after requesting a postponement, the applicant
amended his papers to claim interim relief. However, a claim
for interim relief on the grounds of urgency on which the
applicant relies does also not assist him.
In the result I find that the applicant has not shown
urgency and the application is, therefore, dismissed with costs.
Costs are to include the costs of two counsel.
SIGNED AND DATED AT BRAAMFONTEIN ON ....... APRIL
2003
_________________
A A LANDMAN
JUDGE OF THE LABOUR COURT OF SOUTH AFRICA