H & H Specialized Services (Pty) Ltd v Bezuidenhout and Others (J318/21) [2023] ZALCJHB 333 (22 November 2023)

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

case No: J318/21

In the matter between:

H & H SPECIALIZED SERVICES (PTY) LTD Applicant And HENDRIK BEZUIDENHOUT IDENTITY NUMBER: [...] First Respondent SHERIFF OF THE HIGH COURT, SPRINGS Second Respondent REGISTRAR OF THE LABOUR COURT, JOHANNESBURG Third Respondent In re: H & H SPECIALIZED SERVICES (PTY) LTD REGISTRATION NUMBER: […] First Applicant MATSAKANE LUCY HUMAN Second Applicant WERNER DU TOIT Third Applicant MARICHKA SCHOULTZ Fourth Applicant And HENDRIK BEZUIDENHOUT IDENTITY NUMBER: [...] Respondent

Heard: 4 July 2023

Delivered: 22 November 2023

JUDGMENT

MOTSHEGARE, AJ

Introduction

[1] This is an opposed application in terms of which the Applicant seeks the following order:

1.1 The setting aside of a writ of execution under case number J318/21, dated 19 August 2021;

1.2 Costs of the application on an attorney and client scale.

[2] When the matter was heard, the First Respondent was not in attendance. Having considered the papers before the hearing, I was satisfied that the Court was in a position to determine the matter on the facts as pleaded, notwithstanding the First Respondent’s non-attendance.

Background

Relationship between the parties

[3] The First Respondent is the erstwhile acting CEO of the Applicant. On 16 March 2021, the First Respondent was suspended pending the outcome of disciplinary proceedings into allegations of misconduct.

[4] There is a long history of litigation between the parties in this Court and the High Court, emanating from the First Respondent’s suspension. It is not necessary to set out the full details of these matters. Here, I will only set out what, in the Court’s view, are the facts relevant for purposes of this application.

[5] It is common cause that in lieu of payment for services rendered as the acting CEO, the Applicant was paying the First Respondent an amount of R120 000. This amount, amongst others, was invoiced to the Applicant by the First Respondent through various legal entities owned by/under the control of the First Respondent and value added tax (VAT) was levied on the said amount.[1] In effect, the amount paid over by the Applicant to these legal entities for services rendered by the First Applicant in his capacity

as acting CEO, was R138 000, inclusive of VAT.

The issuing of the writ of execution

[6] On 24 March 2021, the parties approached this Court on an urgent basis, under this case number. An order was issued by Moshoana J, by agreement between the parties (Consented Order). The Consented Order was final in part and interim in part. In terms of paragraph 7 of the final portion of the Consented Order, the Applicant is ordered “…to pay the Respondent the amount due to him for the suspension period of March 2021.”

[7] It is common cause that the Consented Order has not been rescinded or set aside and remains of full force and effect.

[8] The First Respondent, on 29 March 2021 and on several occasions, thereafter, demanded payment from the Applicant in terms of paragraph 7 of the Consented Order. In a letter dated 29 July 2021, the First Respondent once again demands payment in terms of the Consented Order by no later than 2 August 2021, failing which “we will proceed to issue a warrant of execution”.

[9] It was only on 3 August 2021, in a letter of even date, that the Applicant provided a direct response to the demand for payment. Below is an extract of the Applicant’s response:

‘8. Our Client has instructed us that it is willing to make payment to your client based on a Salary, however it will need the following documents in order to do so:

…

8.2 Your client’s Personal Income Tax Number;

8.3 A bank stamped confirmation of the account in which the payment should be made not older than 3 months. …

9. The payment will be made as a single lump sum as it is not possible to pay salaries in a retrospective and piecemeal fashion as the necessary financial returns have already been submitted.

10. Payment can be processed within 3 business days of receipt of the above information and proof of payment will be provided to you for your records.

11. We look forward to the above information in order to process the payment.’

[10] I pause to note that in neither the abovementioned correspondence nor subsequent correspondence does the Applicant suggest that it is not aware of the amount it is required to pay to the First Respondent, in relation to his suspension period for March 2021. The Applicant tenders payment, subject to receipt of the First Respondent’s tax information.

[11] The First Respondent did not accept the Applicant’s tender as same was viewed as a conditional tender. On account of the Applicant's failure to make payment as demanded, the First Respondent approached the Registrar of this Court, on 19 August 2021, to have a writ of execution issued in the amount of R138 000.

[12] In obtaining the writ, the First Respondent approached the Registrar with the Consented Order; an invoice in the amount of R138 000,

including VAT, issued to the Applicant by Superior Rubber (Pty) Ltd with the description “Specialist Consultants For Hendrik Bezuidenhout”, keeping with the method of payment set out at paragraph [5] above, and the judgment of Niewoudt AJ.[2]

[13] On or about 24 August 2021, the Second Respondent attended at the Applicant’s premises for the immediate attachment and removal of the Applicant’s assets, in the value of the writ, plus costs.

[14] The Applicant then approached this Court on an urgent basis. Under Part A of its notice of motion, the Applicant sought to, inter alia, have the writ stayed, pending the outcome of an application to have the writ set aside and, interestingly, the Applicant further sought an order directing the First Respondent to provide it with his tax particulars. Part B of the notice of motion was for an order for the writ to be set aside, being the proceedings before this Court.

[15] On 31 August 2021, Nkutha-Nkontwana J issued an order staying the enforcement of the writ pending the hearing of an application to have the writ set aside.

Applicable legal principles

[16] In terms of section 163 of the Labour Relations Act,[3] service and execution of this Court's decisions, judgments or orders must take place in accordance with the procedure for service and execution of decisions, judgments or orders of the High Court of South Africa.

[17] The procedure for service and execution of decisions, judgments or orders of the High Court of South Africa is set out under rule 45 to 46A of the Rules Regulating the Conduct of the Proceedings of the Several Provincial and Local Divisions of the High Court of South Africa (Uniform Rules Of Court)[4] (Uniform Rules). The Court in A.J.N v W.L.N[5] stated the following in relation to the above Uniform Rules:

‘10. Rule 45A reads as follows:

“The court may suspend the execution of any order for such period it may deem fit.”

11. Apart from the provisions of Rule 45A, a court also has an inherent discretion to order the stay of a sale in execution, which includes the stay of a Warrant of Execution.

12. This discretion of a court must however be exercised judicially. Such exercise of a courts’ discretion shall be fact specific and the guiding principle will be that execution will be suspended where real and substantial injustice would occur.

13. It is for this reason that a court will only do so where injustice will otherwise ensue and a writ in execution will only be set aside where it is just and equitable to set it aside on, inter alia, the following grounds:

13.1 Where the writ had not been issued on conformity with the judgment;

13.2 where the wrong person is named therein as a party;

13.3 where the amount payable under the judgment can be ascertained only after deciding a further legal problem; and

13.4 where the debt in respect of which the judgment has been obtained had been extinguished before obtaining the judgment or where satisfaction of the judgment has been made or tendered, whether by offer of the goods claimed, or by payment, or by setoff, or by way of novation.’ (footnotes omitted)

[18] The Court in Naidoo v The Careways Group (Pty) Ltd and Another[6] has stated the following, as regards tax deductions by employers:

‘[14] The law regarding legal deductions and in particular as concerning tax deductions by an employer is well established in our law. In this respect this court in Barnard v Shellard Media (Pty) Ltd, was faced with a situation where an employee objected to the employer deducting tax from a settlement amount of R65,000.00. The employer had deducted the sum of R22 843.32. In objecting to the tax deductions the employee argued that the employer was not entitled to deduct tax from the settlement amount as there was no common intention between the parties to make the incidence of income tax to be applicable to the settlement agreement. In considering whether the law import into the settlement agreement as a matter of course an implied term that the employer is obliged to deduct tax from the settlement amount, the court held that:

‘In terms of Schedule 4 Item 2 (1) of the ITA (Income Tax Act), an employer who pays ‘any amount by way of remuneration to an employee . . . shall deduct or withhold from the amount by way of employee’s tax an amount which shall be determined as provided for in paragraph 9, 10, 11 and 12 whichever is applicable, in respect of liability for normal tax of that employees . . .’

[15] The court further obsessed that:

‘It is clear that the obligation (to deduct tax) arises when the employer pays or becomes liable to pay ‘remuneration’ to an employee.’

[16] In dealing with an express term in an agreement that seeks to exclude or prohibit an employer from deducting tax from the income of an employee the Court held that:

‘In my view the unexpressed claim relating to deduction of tax is imported into this agreement by Schedule 4 of the ITA. In general in cases of this nature, the provisions of ITA nullify any attempt by parties to exclude in their agreements tax obligations. . . It suffices to mention that item 8 of schedule 4 of the ITA prohibits an employee from recovering any amount deducted as tax from the employer’.’ (footnotes omitted)

Evaluation

[19] In these and other proceedings before this Court, the issue of this Court’s jurisdiction has been raised either directly or indirectly by the parties. In this regard, it is important to note the following:

19.1 By virtue of being an order of this Court, the Consented Order was issued premised on the existence of an employment relationship;

19.2 In the matter between the parties that came before Niewoudt AJ on 21 July 2021 under case number J654/21 and subsequent to the Consented Order, the Court stated that “[t]he first respondent disputes that an employment relationship exists between him and the applicant. If this contention is correct, this court would not have jurisdiction to entertain the dispute between the parties. However, this is not an issue that the court will revisit in the face of an existing order in J318/21[.] That order is premised on an employment relationship”. Reference to “an existing order” is reference to the Consented Order;

19.3 On 5 August 2021, being the return date of the matters between the parties under case numbers J318/21 and J654/21, the matters came before Baloyi AJ. Having noted that jurisdiction was a central point to the First Respondent’s opposition in those proceedings, Baloyi AJ found that paragraph 6 of Niewoudt AJ’s judgment, as quoted immediately above, had settled the issue of this Court’s jurisdiction. Baloyi AJ went on to further say:

‘Assuming a controversy is created around the interpretation of the above finding to be not dispositive of the jurisdictional point raised, such point cannot in anyway be sustained. This is in view of the nature of the relationship which the respondent had with the first applicant. It is common cause that the parties agreed to have the respondent appointed as an Acting CEO pending the recruitment of the CEO. It does not appear in either party’s pleadings that a candidate to be recruited for the position of CEO was to have any other kind of relationship with the first applicant than employment relationship. As pointed above I do not find a reason for the discharge of the rule nisi based on the point raised.’[7]

[20] All the orders and judgments of this Court, as set out above, remain of full force and effect. Accordingly, it is in the context of the existence of an employment relationship that this matter stands to be determined.

[21] On the facts before this Court, it must be accepted that the causa for the writ of execution is the Consented Order directing the Applicant, an employer, to pay the First Respondent, its employee, for the period of his suspension. Having accepted that the Consented Order is, in effect, for the payment of remuneration to an employee, the Applicant has an obligation ex lege to deduct or withhold employee’s tax from the amount of remuneration due to the First Respondent, as per Naidoo.[8]

[22] It must also be accepted that the First Respondent presented an invoice in the amount of R138 000, inclusive of VAT, to the Registrar in support of the issuing of the writ. This was the payment method in terms of which the First Respondent would invoice the Applicant, for services rendered. This amount cannot be said to be correct, in the light of the Consented Order being for the payment of remuneration. Accordingly, on this point alone, the writ stands to be set aside. It cannot be said to have been issued in conformity with the Consented Order.

[23] In passing, as regards the Applicant’s contention that the writ stands to be set aside on account that the amount payable to the First Respondent can only be ascertained after deciding a further legal problem, I am of the view that the purported legal problem is superficial. On the facts before this Court, the Applicant cannot objectively dispute that:

23.1 To the extent that the Consented Order orders payment to the First Respondent for the suspension period of March 2021, in the context of an employment relationship, the First Respondent is entitled to his full remuneration for the month of March 2021;

23.2 On the payment method common cause between the parties, the First Respondent’s remuneration as the Applicant’s erstwhile acting CEO was a net amount of R120 000, per month, excluding VAT; and

23.3 It has at all material times been in a position to make payment to the First Respondent upon receipt of only his tax information.

[24] Nothing prevents the First Respondent from having the writ reissued for the payment of a net amount of R120 000, after the deduction of tax. However, the Applicant cannot make payment to the First Respondent without him providing it with his tax information. To the extent that the First Respondent continues to refuse to provide his tax information, this will prevent the Applicant from complying with paragraph 7 of the Consented Order.

[25] In the premise, the following order is made:

Order

1. The writ of execution dated 19 August 2021 is set aside.

2. There is no order as to costs.

N. Motshegare

Acting Judge of the Labour Court of South Africa

Appearances:

For the Applicant: Ms A Davies of Pretorius Davies Inc.

For the First Respondent: Not in attendance

[1] Answering Affidavit Bundle pg7 at para 11. Replying Affidavit Bundle pg 11 at para 10.

[2] Supplementary Answering Affidavit para 9-11. Niewoudt AJ’s judgment, at paragraph 10, where Niewoudt AJ states that “[t]he last issue that must be dealt with is that the applicant has not complied with its obligation to pay remuneration to the first respondent. This does not affect the right of the applicant to have its vehicles retuned. Nothing precluded the First Respondent from having a writ of execution issued against the applicant if he wished to enforce that is similarly founded on a court order.” See paragraph 19.2 of this judgment.

[3] 66 of 1995, as amended.

[4] Government Notice R48 in Government Gazette 999 dated 12 January 1965. Commencement date: 15 January 1965.

[5] [2023] ZAGPPHC 341.

[6] (2014) 35 ILJ 181 (LC) at para 14-16.

[7] To wit, reference here is being made to the judgment of Niewoud AJ, referred to at paragraph 19.2 of this judgment.

[8] Naidoo (Id fn 6).