Kingsbury v Fluxmans Inc and Others (J1634/16) [2016] ZALCJHB 298 (4 July 2016)

THE LABOUR COURT OF SOUTH AFRICA,

JOHANNESBURG

Not Reportable

Case no: J1634/16

In the matter between:

KINGSBURY, JEREMY OWEN Applicant And FLUXMANS INC First Respondent THE STANDARD BANK OF SOUTH AFRICA Second Respondent COMMISSION FOR CONCILIATION, MEDIATION & ARBITRATION Third Respondent

Heard: 02 July 2016

Delivered: 04 July 2016

JUDGMENT

TLHOTLHALEMAJE, J

Introduction:

[1] There is an alleged unfair dismissal dispute pending before the Third Respondent (CCMA) under case number GAJB5014-16 as referred by the Applicant. On or about 29 June 2016, the CCMA as per the First Respondent’s (Fluxmans) request, issued a subpoena calling upon the Second

Respondent (Standard Bank) to inter alia, produce certain documents, including the Applicant’s bank statements. Such documents were produced at the arbitration proceedings on 25 July 2016.

[2] The Applicant approached the court on an urgent basis on 29 July 2016 to seek an order in the following terms:

“1. That the non-compliance with the Rules of the Honourable Court pertaining to service and timeframes be condoned and that the matter be heard as urgent.

2. That the 1st Respondent is directed to deliver to the Applicant all the bank statements, documents, correspondence as well as any other communications (electronic or otherwise) that were exchanged between the 2nd Respondent and the 1st Respondent and any of its directors and or employees pertaining to any of the Applicant’s bank statements held with the 2nd Respondent.

3. That the 1st Respondent is directed to deliver to the Applicant any copies made of the above-mentioned documents, correspondence or other communications that were exchanged between this 2nd Respondent and the 1st Respondent and any of its directors and or employees pertaining to any of the Applicant’s bank accounts held with the 2nd Respondent;

4. That the 1st Respondent is interdicted and restrained from dealing in any manner or form with the information obtained from the bank statements, documents or communications any of its directors (executive or non-executive) and /or staff members or any other employee who had access to the bank statements of the Applicant;

5. That the 1st Respondent is interdicted and restrained from contacting anybody (juristic or otherwise) whose name (juristic or otherwise) appeared on the bank statements, documents or communications which flowed between the 2nd Respondent and the 1st Respondent’s directors and or employees of the 1st Respondent pertaining to the Applicant and from inquiring into the Applicant’s dealings (private or otherwise) with them;

6. That the 1st Respondent is directed to remove any digitally stored copies of the Applicant’s bank statements, documents and or communications from any and all of its computer equipment;

7. That 2nd Respondent is interdicted and restrained from providing the 1st Respondent with any information in any format pertaining to the Applicant’s bank accounts;

8. That the subpoena issued by the 3rd Respondent on 29 July 2016 be set aside;

9. That the 1st Respondent be ordered to pay the cost of this application;

10. Further and or alternative relief.”

Background to the application:

[3] The relevant background to the determination of the issues before the Court is as follows;

3.1 The Applicant is an attorney practising as such under the name Kingsbury Graca Inc. He was initially employed by Fluxmans with

effect from 1 March 2011 as an attorney, and in 2013 he became an equity director. He alleges that he was summarily dismissed by

Fluxmans on 8 February 2016. He subsequently referred dispute to the CCMA.

3.2 Conciliation having failed, the dispute proceeded to arbitration. On 6 April 2016, Fluxmans attorneys advised the Applicant’s attorneys of record that it intended to raise a preliminary point at arbitration to the effect that he was not an employee as defined. At the commencement of arbitration proceedings on 8 June 2016, Fluxmans then formally raised the preliminary point, contending that he was an equity partner and not an employee. Evidence of Mr. A Soldatos on behalf of Fluxmans was led at the proceedings, and the matter was then postponed to 25 and 26 July 2016.

3.3 On 25 July 2016 there was an issue pertaining to the discovery of a further bundle of documents and a transcribed record of a conversation held between Mr. Soldatos and the Applicant. This necessitated a postponement of proceedings whilst the Commissioner seized with the matter considered those issues.

3.4 The Applicant contends that before the parties left the proceedings, he had noticed that his personal banker from Standard Bank, Ms. Covele was present at the proceedings having a discussion with Mr. Soldatos and his colleague, Mr. Pretorius. The Applicant had confronted Ms. Covele who had informed him that she had been subpoenaed to attend the proceedings.

3.5 It was common cause that on 20 June 2016, Fluxmans had formally made a request to the Applicant through his attorneys of record that he should make his bank statements (for the preceding three years prior to the termination of his services) available. In its correspondence, Fluxmans sought these documents as they were deemed to be relevant to the preliminary point it had raised. The Applicant was advised that should such statements not be made available by 5 July 2016, Fluxmans would attend to subpoena the custodian of the bank account duces tecum for that purpose. The Applicant’s view however was that these statements were not relevant to the arbitration proceedings and had declined the request. He further intended to oppose any attempts by Fluxmans to subpoena such documents. This however was not to be.

The Applicant’s case:

[4] The Applicant approached the court on the basis that Fluxmans illegally and through an abuse of process, obtained copies of his bank statements for a number of years from Standard Bank, and that Fluxmans was now going through those statements and telephonically contacting people, including his new partners to make enquiries as to the reason certain monies were paid into his account. With the current application, he seeks to reclaim the copies of his bank statements from Fluxmans and to interdict and restrain it from dealing with what he views to be illegally obtained information.

[5] The Applicant’s further contention is that not only had Fluxmans gained access to his bank statements, it had also made same available to its other employees and had enlisted their services in interrogating his acquaintances. He contended that a determination as to whether he was a partner or not had no bearing on what happened to his bank accounts and the subpoena made no sense to him.

[6] The Applicant’s view was that he was dismissed for poor work performance in that he did not collect his book debt. Fluxmans in order to bolster the case was now conducting a witch-hunt at his expense. He believed that Fluxmans was out to alienate his business partners and acquaintances, and was out to cause him as much embarrassment as it could muster in order to force him to abandon the case against it.

Fluxmans’ case:

[7] In answering the affidavit deposed to by one of its directors, Mr Soldatos, it was contended that the Applicant was expelled from its legal practice on 8 February 2016 for malpractice and dereliction of his fiduciary duties. Having referred a dispute to the CCMA, on 6 April 2016, the Applicant was given notice that Fluxmans intended to raise a preliminary point effectively disputing his contentions that he was an employee as defined.

[8] In regards to the subpoena issued, Fluxmans’ contention was that the Applicant lacked locus standi to set it aside as it was duly issued and served on Standard Bank and not him. It was further contended that the matter was not urgent, that the Applicant has attempted to invent a new genre of urgency, namely ‘emotional urgency’, and had failed to take the basic precautionary step of despatching a letter of demand prior to approaching the Court. It was further contended that on his own version, the Applicant had an alternative remedy which would enable him to obtain redress in due course.

[9] According to Fluxmans, the copies of the Applicant’s bank statements were highly relevant to the arbitration proceedings as it intends to utilise them in preparation for those proceedings. It viewed the application before the court as a transparently self-serving attempt to cover up the Applicant’s malpractice and breach of his fiduciary duties as well as to interfere with the administration of justice.

[10] The bank statements accordingly demonstrated that that there was justification to expel the Applicant as he had manipulated Fluxmans’ debtors book under his control, and his delinquency constituted malpractice and breach of his fiduciary duties. In this regard, it was contended that the bank statements corroborated the Applicant’s malpractice, and revealed that he had in bad faith and dishonestly, procured that Fluxmans’ clients have paid him and not it, substantial amounts over the years, and had failed to make disclosures in regard to those payments. The statements also revealed that other payments were made to the Applicant in breach of his fiduciary duties, that he had earned secret profits whilst practicing as Fluxmans’ director, and also that they reflect that the Applicant received payment of regular amounts styled as a salary, which may well have been from Fluxmans’ clients.

[11] Fluxmans also contended that the bank statements were also relevant to justify the Applicant’s expulsion, and also demonstrated that he was not economically dependent on the drawings he received from it. It contended that it was its rights to pursue the administration of justice to contact its clients as reflected on the bank statements, and other persons who had paid money to the Applicant rather than to it, whilst the applicant was an equity director bound by fiduciary duties.

Evaluation:

[12] The determination of this application requires a consideration of the following factors. (a) whether the applications urgent; (b) whether the applicant has the necessary locus standi to set aside the subpoena; (c) whether if so, the applicant has satisfied the requirements of the relief sought. In regard to the

last considerations, the issue remains whether inter alia, the Applicant has demonstrated that the issuance of the subpoena constituted an abuse of proceedings.

Urgency:

[13] In this case, the Applicant contended that the application was urgent on the basis that Fluxmans is not entitled to his bank statements as Standard Bank was instructed to bring same to the arbitration proceedings, and that the CCMA was not instructed or authorised to hand them over to Fluxmans or its employees. He contended that Fluxmans was abusing a legal process in order to gain access to his bank statements, which they otherwise would not be able to get hold of, to conduct a witch-hunt.

[14] He contended that the matter was urgent as his right to privacy was being invaded without just cause; was being embarrassed by Fluxmans contacting his acquaintances and asking them why monies were paid into his account. He further raised concerns about payments he had made due to his children’s health issues and that same would become known to her friends and acquaintances as there are directors of Fluxmans, whose children attend the same school as his children. He was further concerned with Fluxmans going through his personal expenses, prying into his private life and discussing same amongst themselves. He had not sought an undertaking from Fluxmans prior to approaching this court as he did not trust its directors to act appropriately.

[15] Fluxmans’ contentions were that the Applicant sought to create a novel basis for urgency, and that ‘feeling violated’, ‘surprise’, ‘embarrassed’ and ‘invaded’ are emotions which did not constitute urgency.

[16] The principles regarding urgency in this court are now well-known. Rule 8 (2) of the Labour Court Rules (Rules) requires an applicant in an urgent application to give reasons for urgency, the necessity for urgent relief, and explanation for the non-compliance with the requirements of the Rules[1]. Central to urgency is whether the applicant acted with the necessary haste when confronted with an issue necessitating that the court be approached.

[17] In this case, it is common cause that a request was made through the Applicants’ attorneys to make the bank statements available to Fluxmans. In its letter of 20 June 2016, the Applicant was forewarned that should he fail to make these banks statements available, his bank would be subpoenaed. Even if the Applicant had not been aware of the subpoena issued, at the very latest on 25 July 2016 he was aware that his bank had been subpoenaed. He nevertheless took no action and had then decided at that stage that he would take the matter up with the Commissioner at the next sitting. Thereafter he changed his mind and approached this court.

[18] The Applicant’s approach between 20 June 2016 when he was informed of Fluxmans’ intention to subpoena those documents, and when he became aware of the fact that Fluxmans had indeed carried out its threat, and on 29 July 2016 when he ultimately decided to approach this court is that of apparent nonchalance. When he received Fluxmans’ correspondence of 20 June 2016, he appeared to have not taken the matter seriously, and in a way dared them. There is nothing in his papers that indicates that he was concerned that the threat may be carried through. Upon discovering that indeed the bank statements had been made available as at 25 July 2016, he took no immediate steps to raise his concerns either with the Commissioner at the time or with a prompt application to this court. He also did not approach Fluxmans to put them on terms. His contention that he did not trust that its directors would

act honourably does not assist him in that at the very least, in the light of the consequences of the subpoenaed documents, he ought to have done so. In fact, on his version, he was prepared to wait for the next arbitration sitting to raise the matter with the Commissioner.

[19] Emanating from the above events, and as correctly pointed out on behalf of Fluxmans, the proverbial horse had long bolted. The fact of the matter is that since 25 July 2016, Fluxmans has interrogated the documents in question, contacted individuals and entities that it was of the view that had dealings with the Applicant whilst in its employ, including its own client, whose names appeared from those statements as having made deposits into the Applicant’s account.

[20] In the light of the Applicant’s bank statements having been utilised in the manner that Fluxmans had, the next issue for consideration is whether any purpose would be served with granting the order that the Applicant seeks. Mr. Van As on behalf of Fluxmans

had correctly referred to the approach the court should adopt in such cases as enunciated by Sutherland J in South African Airways Soc v BDFM Publishers (Pty) Ltd and Others[2]. At para [38] of the judgment, Sutherland J stated that;

“Moreover, an interdict is an appropriate form of relief to prevent future harm, not afford redress for past harm. Once confidentiality is shattered, like Humpty Dumpty, it cannot be put back together again. It is not apparent how frank SAA was when addressing the urgent judge and whether the difficulties arising from the extent of publication were properly drawn to her attention and moreover whether the case law on the approach of the courts to lost confidentiality were mentioned. It seems rather plain that had these matters, no less the real inadequacies of service, been fully dealt with, the order might not have been so readily granted”. (Authorities omitted)

[21] The essence of the above is that it would be futile for this court to grant the Applicant the relief he seeks since Fluxmans as evident from its papers, is already in possession of his bank statements; has already dissected those statements and contacted individuals and entities that have dealt with the Applicant in the past, whom Fluxmans deem to be its clients. The information contained in the bank statements has been utilised and no court order can undo the consequences emanating therefrom. Any court order, to the extent that the Applicant is of the view that his rights to confidentiality and privacy have been encroached upon, would in any event be a sterile gesture.

[22] It therefore follows that to the extent that the Applicant has belatedly approached this court for relief, no redress can come to his aid in the light of the harm, if any, that has already occurred. His very inactivity from 20 June 2016 is the sole cause of the harm on which he relies on to seek relief in this court, and it is trite that this court cannot accord a matter urgency where such urgency as in this case is self-created. Ordinarily, and in the light of the conclusions on urgency, this matter ought to be

struck off the roll. It is however my view that such an order would not in any manner serve any purpose as the Applicant will still be entitled to re-enrol the matter in due course. In my view, the merits of this case calls for it to be disposed of.

Locus standi to set aside the subpoena?

[23] The Applicant’s contention was that he had the necessary locus standi to set aside the subpoena as the subject of this application pertained to his bank statements and their abuse. He further contended that the fact that the subpoena was addressed to Standard Bank did not detract from the fact that it was his personal bank statements which were being subpoenaed and which have been handed illegally to Fluxmans.

[24] The CCMA when called upon by a party before it is compelled to issue a subpoena in terms of the provisions of Rule 37 read together with those of section 142 (1) (a), (b) and (c) of the LRA. Any individual who fails to respond appropriately after a subpoena has been issued commits contempt of the CCMA in accordance with the provisions of section 142 (8) of the LRA. In this case, Standard Bank as represented by Ms Covele had accordingly responded to the subpoena as issued, and there is no merit in the argument that the documents were illegally obtained. As the subpoenaed party, Standard Bank had not raised any objections and had duly complied. The Applicant as correctly pointed out on behalf of Fluxmans was not the recipient of the subpoena and had not challenged the fact that it was duly and properly issued by the CCMA[3].

[25] The Applicant, despite the documents having been subpoenaed pertaining to him, was not a party to that subpoena. Once those documents were produced at arbitration proceedings, and to the extent that he might have claimed privilege, the provisions of section 142 (6) of the LRA[4] would have come to his assistance. To the extent that the Applicant would have formed the view that the documents subpoenaed had no relevance to the proceedings before the Commissioner, that as I had raised it with Ms. Bezuidenhout on behalf of the Applicant, was a matter to be ventilated before the Commissioner. As to whether the documents are relevant or not, is not for this court to determine, because to do so would be to usurp the functions and powers of the CCMA Commissioner seized with the matter.

Is the issuing of the subpoena an abuse of arbitration process?

[26] The starting point is that in any dismissal dispute, the onus in terms of the provisions of section 192 (2) of the LRA is upon the employer to demonstrate that the dismissal was substantively and procedurally fair. This implies that the employer is obliged to present its case and place the relevant evidence before a tribunal that will support its case. Once a subpoena has been issued, the onus of proving that such a subpoena constitutes an abuse of a process rests on a party alleging such abuse.

[27] Proceedings before the CCMA are not akin to normal court proceedings in that to the extent that a party has been requested to discover certain documents and had refused, the CCMA does not as the normal courts would, have any other processes in place to compel that party to discover such documents[5]. The only available avenue to have documents discovered is by way of subpoena as contemplated in section 142 (1) of the LRA.

[28] It has been held that if it appears that the issuing of a subpoena may constitute an abuse of process, even if the subpoenaed documents are relevant to the merits of the case, whether this is in fact so, will depend on the facts of the particular case[6]. As to what might constitute abuse of the process, the Supreme Court of Appeal in Beinash v Wixley[7] held as follows;

“What does constitute an abuse of the process of the Court is a matter which needs to be determined by the circumstances of each case. There can be no all-encompassing definition of the concept of ''abuse of process''. It can be said in general terms, however, that an abuse of process takes place where the procedures permitted by the Rules of the Court to facilitate the pursuit of the truth are used for a purpose extraneous to that objective. . ..

Ordinarily, a litigant is of course entitled to obtain the production of any document relevant to his or her case in the pursuit of the truth, unless the disclosure of the document is protected by law. The process of a subpoena is designed precisely to protect that right. The ends of justice would be prejudiced if that right was impeded. For this reason, the Court must

be cautious in exercising its power to set aside a subpoena on the grounds that it constitutes an abuse of process. It is a power which will be exercised in rare cases, but once it is clear that the subpoena in issue in any particular matter constitutes an abuse of the process, the Court will not hesitate to say so”

[29] It has already been stated that it is not the duty of this court to determine the relevance of the documents as subpoenaed. What the Court however can determine however is whether the subpoenas as issued constitutes an abuse of arbitration proceedings. Thus the question to be posed is whether in exercising its rights in pursuit of the truth, have those documents been used for a purpose extraneous to that objective. The Applicant’s contention was the subpoenas were used to bolster Fluxmans case and to conduct a witch hunt. Furthermore, he contends that the subpoenas no longer have a legitimate purpose as they were being used to alienate his business partners and acquaintances, to cause him embarrassment, and force him to abandon his case against it.

[30] The cardinal rule with any litigation is that a party that elects that path must be prepared to deal with the consequences that flow from it. It is trite that litigation in itself involves inherent risks, including counter claims by the respondent party. In colloquial terms, if one picks up a fight, no matter how legitimate the reasons may be, the rule is that he/she cannot bring a knife to a gun fight, as the likelihood is that he/she may come out second best.

[31] In this case, to the extent that the Applicant has referred an unfair dismissal dispute to the CCMA, and the onus being upon Fluxmans to demonstrate that the dismissal was fair, the latter is entitled, and obviously within the confines of the law, to secure and present any form of relevant evidence before the CCMA, to justify its decision. Its case is that the Applicant was expelled from it on account of various misdemeanours, and in particular, malpractice and breach of his fiduciary duties. To this end, and as can be gleaned from the answering affidavit, Fluxmans has identified the details from the bank statements that it contends supports its case in that regard.

[32] Furthermore, to the extent that Fluxmans’ case is that the Applicant was not an employee as defined, it needs to present such a case before the CCMA. In the light of the onus placed upon it, Fluxmans was within its rights to subpoena the documents in question. The consequences that flowed from the issuance of the subpoena, inclusive of Fluxmans’ interrogation of the financial affairs of the Applicant, contacting its own clients and the Applicant’s acquaintances, and the involvement of Fluxmans’ employees in further investigation of the matter were foreseeable in the light of the path that the Applicant chose. For the reasons set out above I am satisfied that no basis exists, in fact or in law, for a finding that the subpoena constitutes an abuse of process. The subpoenas were issued in the bona fide exercise of Fluxmans’ right to obtain the production of documents which it deemed relevant to its case. The Applicant was forewarned that this was the path that Fluxmans would take if he did not voluntarily discover those documents. As to whether all or some of the documents are relevant is for the CCMA to determine.

[33] In the light of the conclusions reached, it follows that the Applicant has not made out a case for the relief that he seeks, and the only issue to be determined is that of costs. Fluxmans seeks a punitive cost order against the Applicant more particularly as it is its view that this application was an abuse of the court’s process. In terms of the provisions of section 162 (1) of the LRA, this court can award costs after a consideration of the requirements of law and fairness.

[34] The Applicant had simply refused to discover the documents as requested by Fluxmans. Despite being forewarned, and upon realising

that the subpoena had been issued, he had without any attempt to put Fluxmans on terms, simply approached this court on contrived grounds of urgency. In the light of subpoenas having already been issued, and further due to his inaction subsequent to being informed that this was the path that Fluxmans was to take, this application was clearly ill-considered, moreso since his other main objection was that the documents were not relevant to the CCMA proceedings. As emphasised throughout this judgment, that issue was to be determined by the CCMA. In the light of these factors, it is my view that the requirements of law and fairness dictate that Fluxmans should not be burdened with costs in circumstances where it was compelled to defend a matter which should not have come to court in the first place. Accordingly, the following order is made;

Order:

i. The Applicant’s application is dismissed with costs.

Tlhotlhalemaje, J

Judge of the Labour Court of South Africa

APPEARANCES:

On behalf of the Applicant: Adv. R Bezuidenhout

Instructed by: Clifford Levin Attorneys

On behalf of the Respondent: Adv. M Van As

Instructed by: Fluxmans Inc

[1] See National Police Service Union and others v National Negotiating Forum and others (1999) 20 ILJ 1081 (LC) at para [39] where the Court held that; “…the latitude extended to parties to dispense with the rules of this court in circumstances of urgency is an integral part of a balance that the rules attempt to strike between time-limits that afford parties a considered opportunity to place their respective cases before the court and a recognition that in some instances, the application of the prescribed time-limits, or any time-limits at all, might occasion injustice. For the reason that, rule 8 permits a departure from the provisions of rule 7, which would otherwise govern an application such as this. But this exception to the norm should not be available to parties who are dilatory to the point where their very inactivity is the cause of the harm on which they rely on to seek relief in this court”

[1] See National Police Service Union and others v National Negotiating Forum and others (1999) 20 ILJ 1081 (LC) at para [39] where the Court held that;

“…the latitude extended to parties to dispense with the rules of this court in circumstances of urgency is an integral part of a balance that the rules attempt to strike between time-limits that afford parties a considered opportunity to place their respective cases before the court and a recognition that in some instances, the application of the prescribed time-limits, or any time-limits at all, might occasion injustice. For the reason that, rule 8 permits a departure from the provisions of rule 7, which would otherwise govern an application such as this. But this exception to the norm should not be available to parties who are dilatory to the point where their very inactivity is the cause of the harm on which they rely on to seek relief in this court”

[2] [2016] 1 All SA 860 (GJ)

[3] See Nico Harris and Five others v CCMA & Others. Case Number: JR 2019-11/J 1748-11, where a subpoena was set aside for want of compliance with the provisions of section 142 (2) of the LRA

[4] Which provide that; ‘The law relating to privilege, as it applies to a witness subpoenaed to give evidence or to produce any book, document or object before a court of law, applies equally to the questioning of any person or the production or seizure of any book, document or object in terms of this section.’

[4] Which provide that;

‘The law relating to privilege, as it applies to a witness subpoenaed to give evidence or to produce any book, document or object before a court of law, applies equally to the questioning of any person or the production or seizure of any book, document or object in terms of this section.’

[5] See Rule 6 (9) of this Court’s Rules which provide that; ‘(b) If the parties cannot reach an agreement regarding the discovery of documents and tape recordings, either party may apply to the court for an appropriate order, including an order as to costs.’

[5] See Rule 6 (9) of this Court’s Rules which provide that;

‘(b) If the parties cannot reach an agreement regarding the discovery of documents and tape recordings, either party may apply to the court for an appropriate order, including an order as to costs.’

[6] See Meyers v Marcus and Another 2004 (5) SA 315 (C) at 324D – F and 326I – 327B

[7] [1997] ZASCA 32; 1997 (3) SA 721 (SCA) at 734F – 735A