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[2010] ZAWCHC 383
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Wicks v SA Independant Liner Services (Pty) Ltd and Another (10155/2008) [2010] ZAWCHC 383 (30 April 2010)
IN
THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE HIGH COURT, CAPE TOWN)
REPORTABLE
CASE
NO: 10155/2008
In
the matter between
IAN
WICKS
….................................................................................................................
Applicant
and
SA
INDEPENDENT SERVICES (PTY) LTD
…..................................................
First
Respondent
LONRHO
AFRICA (HOLDINGS) LIMITED
…..........................................
Second
Respondent
CORAM:
D H ZONDI J
JUDGMENT
BY: D H ZONDI J
FOR
THE APPLICANT: ADV. N F RAUTENBACH
INSTRUCTED
BY
:
WEBBER
WENTZEL
FOR
THE RESPONDENTS: ADV. S KIRK-COHEN (SC)
ADV.
H RABKIN-NAICKER
INSTRUCTED
BY: CLIFFE DEKKER HOFMEYR INC
DATE
OF HEARINGS: 16 FEBRUARY 2010
DATE
OF JUDGMENT: 30 APRIL 2010
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
REPORTABLE
CASE
NO: 10155/2008
In
the matter between
IAN
WICKS
….................................................................................................................
Applicant
and
SA
INDEPENDENT LINE SERVICES (PTY) LTD
….........................................
First
Respondent
LONRHO
AFRICA (HOLDINGS) LIMITED
…..............................................
Second
Respondent
JUDGMENT
DELIVERED ON 30 APRIL 2010
ZONDI,
J
Introduction
[1]
On 03 July 2008 the applicant launched an urgent application in this
Court for an order declaring that his suspension from
the employment
of the first respondent was void, and of no force and effect;
setting aside his suspension and reinstating him
as managing
director.
[2]
The Court (per Desai J) granted an interim order which was
returnable on 06 August 2008. In terms of the interim order the
applicant's suspension was declared null and void, set aside and the
applicant was reinstated as managing director with full
benefits.
[3]
On 06 August 2008 the application was further postponed to 16
February 2010. In the meantime the first respondent has been
liquidated thereby rendering the dispute between the parties academic
as the applicant's reinstatement order cannot be given effect
to.
[4]
The only issue which is before the Court is that of costs, in other
words which of the parties should be liable for costs.
[5]
In dealing with this issue I shall adopt the approach as set out in
Gamlan
Investments (Pty) Ltd and Another v Trilion Cape (Pty) Ltd and
Another
1996
(3) SA 692
(C) at 700G which is to the effect that where a disputed
application is settled on a basis which disposes of the merits except
insofar as the costs are concerned, the Court should not have to hear
evidence to decide the disputed facts in order to decide who
is
liable for costs, but should with the material at its disposal, make
a proper allocation as to costs.
[6]
The applicant seeks costs on the basis that on the merits of the
application, he would have succeeded on the return day. On
the other
hand the respondents contend that the interim order should be
discharged with costs on the grounds that the urgent application
was
misconceived and bad in law and that this Court lacks jurisdiction to
determine it as it essentially involves a labour dispute.
The
respondents point out that the applicant should have followed the
mechanisms of the Labour Relations Act.
Factual
Background
[7]
The applicant was appointed as managing director of the first
respondent in terms of a contract of employment. The second
respondent
became a shareholder of the first respondent pursuant to
the subscription and shareholders agreement ("the subscription
agreement").
[8]
Initially, the second respondent subscribed for a minority
shareholding but, over a period of time and as it advanced more loan
finance, it became a majority shareholder. The subscription agreement
provided for the appointment of three directors to the board
of
directors of the first respondent by the second respondent; and the
other three directors to be appointed by the existing members
of the
first respondent.
[9]
Pursuant to these rights the second respondent appointed Mr David
Lenigas, Mr Lorenz Werndel and Mr Geoffrey White as directors
while
the existing members appointed the applicant, Mr Christian Kindersley
and Mr Randal Gregg as directors. The latter resigned
in April 2008
and has not yet been replaced.
[10]
It is common cause that a board meeting of the first respondent was
held on 24 April 2008, during which a decision was taken
to the
effect that:
"Management,
including the chief operating officer, the managing director and the
chief financial officer of the company report
to PA (Albeck) and PA
reports
back to the Lonrho board. GW (Geoffrey White, a director of Sails and
MD of Lonrho) seconded the resolution and put a caveat
on the
resolution that the resolution would be in force until such time as
the company demonstrates to the board that it is operating
on a
balanced commercial basis".
[11]
The applicant was in support of this resolution and expressed his
willingness to co-operate with Albeck.
[12]
On 02 June 2008 the applicant was requested to attend a meeting at
the Cape Grace Hotel for discussion relating to a management
meeting
to be held on 03 June 2008. He attended as well as Albeck, Scott and
Kindersley.
[13]
At the conclusion of the meeting the applicant was requested to
leave the room briefly, after which he was asked to return
and
requested to consider taking leave of absence of two months due to
exhaustion and stress, during which time the second respondent
would
manage the business. He was given time up until 09h00 on 03 June
2008 to respond.
[14]
On 03 June 2008 the applicant requested written reasons for his
required leave of absence and conditions relative to his
return.
[15]
On 04 June 2008 he was told by email that he was placed on
suspension pending the finalisation of an investigation.
[16]
The applicant referred to various clauses in the employment contract
and shareholders' agreement as bases for his contention
that his
suspension was unlawful. In particular he referred to clause 18.20
of the shareholders' agreement which provides that:
"A
written resolution which is signed by the directors will be valid"
[17]
The applicant contends that as a director he never signed any such
resolution relating to his suspension nor was he involved
in or
attended any board meeting at which a decision to suspend him was
taken.
[18]
Geoffrey White, who deposed to the answering affidavit on behalf of
the second respondent, alleges that although the meeting
of 03 June
2008 was not a formal board meeting with provision of the required
notice period, it was a meeting called following
a detailed
discussion between all the directors of the first respondent and was
fully sanctioned as an urgent meeting by all
directors.
[19]
He further alleges that the purpose of the meeting was to enable the
applicant to persuade the first respondent's major shareholder
(the
second respondent) and the board of directors that all was well, and
that the first respondent was operating on a balanced
commercial
basis. He says the applicant was unable to answer pertinent
questions and declined to give direct answers on a wide
range of
issues.
[20]
He points out that the applicant was asked to leave the room briefly
because of the respondents' directors' concern at the
attitude
evidenced by the applicant at the meeting and the ongoing losses
being made by the first respondent.
[21]
In describing the further conduct of the meeting during applicant's
absence Geoffrey White has this to say in paragraph 21
of the
answering affidavit:
"I
made contact with Lenigas, and we discussed the matter in his
absence. It stands to be emphasised that all directors (apart
from
Applicant, who had just been asked to leave the room) were present,
either in person, per telephone or authorised by those
present. We
agreed that there was an urgent necessity for the financial affairs
of SAILS to be investigated further, without
interference from
Applicant. We also agreed that he should not be present during this
process, and resolved to offer him temporary
leave (on full
benefits) to overcome this difficulty."
[22]
Geoffrey White further alleges that when the applicant contacted him
and Scott the following day he informed the applicant
that the board
of directors had decided to suspend him.
Statement
of the issues
[23]
For the purposes of determining liability for costs the question is
whether the applicant would have succeeded had the matter
proceeded
on a return day.
[24]
When the matter was argued on the return day the question of urgency
was no longer an issue and the main focus was on the
issue of
jurisdiction.
The
Applicant's Case
[25]
The applicant seeks an order declaring null and void and of no force
and effect his purported suspension by the respondents
as a managing
director and an order setting it aside and reinstating him as a
managing director.
[26]
The applicant advanced various causes of action in challenging his
suspension. Firstly, he contends that the effect of his
purported
suspension is to undermine his reputation as an employee in the
shipping industry, with devastating effect. He is afraid
that his
career will be permanently destroyed and he will not be able to find
work in the industry again or finance to start
a new business.
[27]
Secondly, he alleges that he was not afforded any opportunity to
state his case in respect of the reasons for his suspension
and
proposed replacement by the respondents. He states that on a number
of occasions the representatives of the second respondent
have
threatened to terminate his services or require his resignation
despite the fact that he was never informed of the respects
in which
his services or suitability as an employee fell short of the
standards required by the first respondent.
[28]
Thirdly, the applicant contends that the notice of his suspension
was invalid in that it was issued without any board decision.
The
applicant blames the board of the first respondent which he contends
should by rights have been the organ to take a decision
about his
suspension for not doing so by way of properly constituted board
decisions as required by the articles of association
and the
agreements between the parties.
[29]
Fourthly, he alleges that in terms of the shareholders' agreement,
the parties undertook to observe in its application the
principles
of good faith and that in suspending him the respondents acted in
breach of the obligation of good faith.
[30]
Fifthly, the applicant contends that his contract of employment
created a relationship of trust between him and the first
respondent
and by suspending him the first respondent breached that trust
relationship.
[31]
Finally, he alleges that his employment contract imposed a
contractual duty on the part of the first respondent to extend
to
him the benefit of fair labour practices inclusive of procedural
fairness.
The
Second Respondent's Case
[32]
The second respondent denies that the applicant's suspension was
unlawful. It alleges that the applicant was suspended as
managing
director in the wake of a duly constituted management meeting and
after consultation and approval of all other directors
of the first
respondent.
[33]
The second respondent further contends since the issues between the
parties involve the employment dispute, the applicant
should have
resorted to mechanisms of the Labour Relations Act.
Legal
Principles
[34]
The only question with regard to jurisdiction is whether this Court
had jurisdiction to determine the issue whether the applicant's
purported suspension was null and void by reason of the respondents'
failure to call a properly constituted board meeting to
effect such
suspension.
Section 157
of the
Labour Relations Act, 66 of 1995
governs the jurisdiction of the Labour Court.
[35]
Section 157(1)
provides as follows:
"(1)
Subject to the Constitution and section 173, and except where this
Act provides otherwise, the Labour Court has exclusive
jurisdiction
in respect of all matters that elsewhere in terms of this Act or in
terms of any other law are to be determined
by the Labour Court."
And
section 157(2) stipulates:
"2)
The Labour Court has concurrent jurisdiction with the High Court in
respect of any alleged or threatened violation of
any fundamental
right entrenched in Chapter 2 of the Constitution of the Republic of
South Africa, 1996, and arising from-
employment
and from labour relations;
any
dispute over the constitutionality of any executive or
administrative act or conduct, or any threatened executive or
administrative act or conduct, by the State in its capacity as an
employer; and
the
application of any law for the administration of which the Minister
is responsible."
[36]
Section 157(1) makes it clear that the Labour Court has exclusive
jurisdiction in respect of all matters that in terms of
the
Labour
Relations Act or
in terms of any other law are to be determined by
the Labour Court.
[37]
The question is whether for the purposes of
section 157
the
applicant's cause of action is the type of a matter which in terms
of the
Labour Relations Act or
in terms of any other law is to be
determined by the Labour Court.
[38]
In an attempt to remove the claim from the purview of the labour law
and the exclusive jurisdiction of the Labour Court and
place it
within the concurrent jurisdiction of the Labour Court and the High
Court,
Mr
Rautenbach,
who
appeared for the applicant, in his heads and in argument disavowed
any reliance on the employment contract provisions and
in particular
the
Labour Relations Act and
relied instead on the contention that
the purported suspension of the applicant was null and void and of
no force and effect
on the basis of the first respondent's failure
to take a board resolution to effect it
("ultra
vires
argument").
He submitted that the applicant's claim was based on company law and
being so the
Labour Relations Act does
not exclude the jurisdiction
of this Court to hear the matter. He pointed out that only the cause
of action based on
ultra
vires
was
pursued when the interim order was granted. He stated that the other
causes of action are irrelevant for purposes of the present
dispute.
[39]
Mr
Rautenbach
pointed
out that in the instant matter the applicant's cause of action is
based on the alleged violation by the respondents of
the provisions
of the shareholders' agreement relating to valid board decisions. He
submitted that the applicant's suspension
is null and void in that
the first respondent failed to convene a properly constituted board
meeting at which a decision to suspend
him should have been taken.
[40]
Mr
Rautenbach
further
submitted with reference to
sections 186
and
191
of the
Labour
Relations Act that
there is no provision in the Act which enables an
employee such as the applicant to complain about non-compliance with
the company
law in respect of any decision affecting him, whether a
suspension, dismissal or any other decision.
[41]
He argued that the
Labour Relations Act creates
no remedy for an
employee who complains that a purported suspension is null and void.
He pointed out that either the CCMA or
the Labour Court would not
have jurisdiction to entertain a dispute unless it is about the
fairness of the suspension. He submitted
that in the instant case it
is the lawfulness as opposed to unfairness of the purported
suspension which is an issue and for
which the Labour Relations Act
does not exclude the High Court jurisdiction, namely whether there
was in fact, as a matter of
law, any suspension at all, or whether
the purported suspension of the applicant was null and void.
[42]
He argued that the
Labour Relations Act does
not provide for
remedies for claims founded on company law such as in the instant
case. In support of his contention he referred
to
Gcaba
v Minister for Safety and Security and Others
2010
(1) SA 238
(CC). At paragraph 73 Van Der Westhuizen J held:
"[73]
Furthermore, the LRA does not intend to destroy causes of action or
remedies and
s 157
should not be interpreted to do so. Where a
remedy lies in the High Court,
s 157(2)
cannot be read to mean that
it no longer lies there and should not be read to mean as much.
Where the judgment of Ngcobo J in
Chirwa speaks of a court for
labour and employment disputes, it refers to labour- and
employment-related disputes for which the
LRA creates specific
remedies. It does not mean that all other remedies which might lie
in other courts, like the High Court
and Equality Court, can no
longer be adjudicated by those courts. If only the Labour Court
could deal with disputes arising out
of all employment relations,
remedies would be wiped out, because the Labour Court (being a
creature of statute with only selected
remedies and powers) does not
have the power to deal with the common-law or other statutory
remedies."
[43]
On the other hand
Mr
Kirk-Cohen
who
appeared with
Ms
Rabkin-Naiker
for
the respondents argued for the discharge of the Rule Nisi inter alia
on the basis that this Court had no jurisdiction to hear
the matter.
He pointed out that the applicant should have approached the CCMA
with an alleged
"unfair
labour practice"
in
terms of the
Labour Relations Act.
[44
]
I disagree with
Mr
Rautenbach's
contention.
The basis upon which the applicant alleges that his suspension was
unlawful, is that the board of the first respondent,
which should by
rights have been the organ to take a decision about his proposed
suspension and any investigation during such
suspension had not
acted to do so by way of properly constituted board decision as
required by the articles of association and
the service and
shareholders agreement.
[45]
The unlawfulness of the purported suspension does not deprive the
applicant of the remedies provided for by the
Labour Relations Act
and
in particular
section 193
which deals with remedies for unfair
dismissal and unfair labour practices. In my view the label or
characterisation of the conduct
complained of may not be used as a
basis to establish the High Court jurisdiction for matters which
essentially fall within the
exclusive jurisdiction of the Labour
Court or statutory agencies created under the
Labour Relations Act.
[46]
The effect of a suspension is that while on suspension the applicant
is prohibited temporarily from rendering his services
to the first
respondent pending an investigation. His suspension thus affects
employer-employee relationship.
[47]
The question is whether the
Labour Relations Act provides
for a
remedy to an employee such as the applicant who by reason of an
unlawful suspension is temporarily prohibited from rendering
his
services to his employer.
[48]
In my view suspension of an employee by an employer based upon an
unlawful conduct which is violative of either the company
law or
common law constitutes an unfair suspension for which the
Labour
Relations Act fully
provides for remedies under
section 193.
It is
therefore incorrect to contend that an employee whose suspension is
unlawful has no remedies under the
Labour Relations Act.
[49
]
By characterising the manner in which his suspension was obtained,
as unlawful the applicant could have his claim heard in the
High
Court but yet if he characterises the same conduct as unfair he
could have it heard in the Labour
Court.
This approach clearly defeats the object which the Legislature
intended to achieve through the enactment of the
Labour Relations
Act.
[50
]
In my view it also places emphasis on the form of conduct and not on
its substance. The real intention of the applicant is to
obtain
reinstatement as managing director by having his purported
suspension declared null and void.
[51]
The approach contended for by the applicant also encourages the
multiplicity of laws governing labour-related matters and
the
overlapping and competing jurisdictions of different Courts referred
to by Ngcobo J in
Chirwa
v Transnet Limited & Others
[2007] ZACC 23
;
2008
(3) BCLR 251
(CC) supra, at paragraph 98 which were the problems
which the legislature intended to address in enacting the
Labour
Relations Act. (See
also the remarks of Chaskalson CJ in
Pharmaceutical
Manufacturers Association of SA and Another: In re Ex Parte
President of the Republic of South Africa and Others
[2000] ZACC 1
;
2000
(2) SA 674
(CC) at paragraph 44.)
[52]
It is apposite in this regard to refer to the remarks made by Ngcobo
J (as he then was) in
Chirwa
supra,
at paragraph 92:
"[92]
In United National Public Servants Association of SA v Digomo NO and
Others the Supreme Court of Appeal held that provided
the employee's
claim, as formulated, does not purport to be one that falls within
the exclusive jurisdiction of the Labour Court,
the High Court has
jurisdiction even if the claim could have been formulated as an
unfair labour practice. The difficulty with
this view is that it
leaves it to the employee to decide in which court the dispute is to
be heard. By characterising the manner
in which the disciplinary
hearing was conducted as unfair dismissal, the employee could have
the dispute heard in the Labour
Court. Yet by characterising the
same dispute as constituting a violation of a constitutional right
to just administrative action,
the employee could have the same
dispute heard in the High Court. It could not have been the
intention of the Legislature to
bring about this consequence."
[53]
I am in agreement with the views expressed by Ngcobo J in
Chirwa.
The
dispute between the parties is a labour related one although the
rights which the applicant seeks to assert may be protected
by the
company law. The
Labour Relations Act, however
, provides for a
remedy for violation of the rights which the applicant seeks to
assert. He must therefore seek the remedy in
the
Labour Relations
Act.
[54
]
The reliance by
Mr
Rautenbach
on
Boxer
Superstores Mthatha and Another v Mbenya
2007
(5) 450 (SCA);
Tsika
v Buffalo City Municipality
2009
(2) SA 628
(E) and
Fredericks
and Others v MEC for Education and Training, Eastern Cape, and
Others
[2001] ZACC 6
;
2002
(2) SA 693
(CC) cannot help the applicant as the applicant has
disavowed any reliance on a cause of action based on contract.
[55]
In
Boxer
Superstores
the
issue was whether an employee may sue in the High Court for relief
on the basis that the disciplinary proceedings and the
dismissal
were
"unlawful'
without
alleging any loss apart from salary. The Supreme Court of Appeal
answered that question in the affirmative and at 453H
held:
"This
means that every employee now has a common law contractual claim -
not merely a statutory unfair labour practice right
- to a
pre-dismissal hearing. Contractual claims are cognisable in the High
Court. The fact that they may also be cognisable
in the Labour Court
through that Court's unfair labour practice jurisdiction does not
detract from the High Court's jurisdiction'.
[56]
Boxer
Superstores
is
distinguishable from the present case, in that the SCA in that case
had to deal with a claim founded on contract whereas in
the instant
matter Counsel for the applicant disavowed any reliance on a
contractual claim.
[57]
Tsika
is
also distinguishable from the instant matter. In Tsika the
plaintiff, a former manager of the defendant, who had been dismissed
for misconduct, claimed payment from the defendant of a sum of R2
017 359-23 part of which he claimed was unlawfully deducted
by the
defendant from two preservation-fund policies into which part of his
salary had been paid and the rest he claimed was
owing to him
pursuant to his contract of employment.
[58]
In
Tsika
the
Court rejected the contention that the plaintiff's claims were
essentially labour related matters which fall to be determined
under
the
Labour Relations Act and
at paragraph 33 the Court went on to
say:
"[33]
The difficulty I have with this submission is that, unlike in Ms
Chirwa's case, there is no express provision in the
LRA which would
give either the plaintiff or the defendant direct access to the
Labour Court to pursue their respective claims
and counterclaim, or
which expressly empowers the Labour Court to grant the relief
sought.
[59]
In explaining why the
Labour Relations Act was
not applicable to the
matter before it, the Court had this to say at paragraph 35:
"In
this matter the plaintiff does not dispute the fairness of his
dismissal. He merely claims a sum of money he alleges
is owing to
him as a consequence of the termination of his employment or to put
it in contractual terms, in consequence of the
breach by the
defendant of an obligation arising from his contract, and a further
sum he claims to have been unlawfully deducted
from his policies"
[60]
Fredericks
concerned
the refusal by the Eastern Cape Department of Education to approve
application for voluntary retrenchment determined
in terms of a
collective bargaining agreement. The applicants approached the High
Court to have the decision reviewed and set
aside and they based
their claim upon the alleged infringement of their rights under
sections 9 and 33 of the Constitution.
[61]
The High Court held that on the proper construction of the
Labour
Relations Act it
did not have jurisdiction to consider the matter.
[62]
In reversing the High Court's finding the Constitutional Court held
at paragraph 33:
"[33]
The applicants raise a constitutional matter.
Section 24
does not
oust the jurisdiction of the High Court to determine that dispute
because the institution responsible for the resolution
of disputes
in terms of
s 24
is not a Court of similar status to the High Court.
The effect of these conclusions is not however that a person who has
a constitutional
complaint arising out of the interpretation or
application of a collective agreement may not take that matter to
the CCMA. Nor
does it mean that the CCMA should not consider the
provisions of the Constitution in the exercise of its powers.
Indeed, like
all organs of State, it is obliged to seek to give
effect to constitutional commitments. What we do conclude, however,
is that
the Legislature may not oust the jurisdiction of the High
Court to consider constitutional matters unless it assigns that
jurisdiction
to a Court of similar status, even if at the same time,
it confers a similar, though not exclusive, jurisdiction upon
another
tribunal or forum. The High Court therefore erred in
concluding that the dispute in this matter concerned the
interpretation
or application of a collective agreement as
contemplated by s 24.
[63]
It further went on to hold at paragraph 40:
"[40]
As there is no general jurisdiction afforded to the Labour Court in
employment matters, the jurisdiction of the High
Court is not ousted
by s 157(1) simply because a dispute is one that falls within the
overall sphere of employment relations.
The High Court's
jurisdiction will only be ousted in respect of matters that 'are to
be determined' by the Labour Court in terms
of the Act. The Concise
Oxford English Dictionary (1990 edition) defines 'determine' so as
to include 'to settle', 'to decide',
and 'to fix'. Adopting this
definition, a matter to be determined by the Labour Court as
contemplated by s 157(1) means a matter
that in terms of the Act is
to be decided or settled by the Labour Court"
Conclusion
[64]
In conclusion I therefore find that this Court does not have a
concurrent jurisdiction with the Labour Court to entertain
the
applicant's claim. It follows therefore that the Rule Nisi must be
discharged. Two Counsel were employed by the respondents
in this
matter and it is not suggested by the applicant that the employment
of two Counsel was not justified. In the circumstances
costs of two
Counsel will be awarded.
The
Order
[65]
In result the Rule Nisi is discharged with costs including costs of
two Counsel.
ZONDI D H