National Union of Metal Workers of South Africa and Others v SGB Cape (JS779/18) [2021] ZALCJHB 438 (8 November 2021)

IN THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not reportable

Case no: JS 779/18

In the matter between:

NATIONAL UNION OF METAL WORKERS

OF SOUTH AFRICA Applicant

PETER TONGA AND 2 OTHERS Second

to Further Applicants

and

SGB CAPE Respondent

Heard: 14 October 2021

Heads of argument submitted: 22 October 2021

Delivered: 8 November 2021

In view of the measures implemented as a result of the Covid-19 outbreak, this judgment was handed down electronically by circulation

to the parties' representatives by email. The date for hand-down is deemed to be on 08 November 2021.

JUDGMENT

PRINSLOO J

Introduction

[1] The Respondent conducts the business of supply, installation and erection of scaffolding and forming material from various centres and regions throughout the Republic of South Africa. This particular dispute arose in the context of the Secunda premises of the Respondent where the Second to further Applicants (‘employees’) were employed.

[2] This matter relates to the dismissal of the employees on 18 May 2018, for reasons based on the operational requirements of the Respondent. The Applicants contend that their dismissal was both procedurally and substantively unfair and they seek retrospective reinstatement into the employ of the Respondent.

The pleadings and pre-trial minute

[3] It is trite law that this Court and the parties are bound by the pleadings and the pre-trial agreement[1] and this Court cannot and should not go beyond the issues it is required to determine.

[4] Jacob and Goldrein[2] aptly capture the position as follows:

“As the parties are adversaries, it is left to each of them to formulate his case in his own way, subject to the basic rules of pleadings…..

For the sake of certainty and finality, each party is bound by his own pleading and cannot be allowed to raise a different or fresh case without due amendment properly made. Each party thus knows the case he has to meet and cannot be taken by surprise at the trial.

The Court itself is as much bound by the pleadings of the parties as they are themselves. It is not part of the duty or function of the Court to enter upon any enquiry into the case before it other than to adjudicate upon the specific matters in dispute which the parties themselves have raised by their pleadings. Indeed, the Court would be acting contrary to its own character and nature if it were to pronounce upon any claim of defence not made by the parties……

The Court does not provide its own terms of reference or conduct its own enquiry into the merits of the case but accepts and acts upon the terms of reference which the parties have chosen and specified in their pleadings. In the adversary system of litigation, therefore, it is the parties themselves who set the agenda for the trial by their pleadings and neither party can complain if the agenda is strictly adhered to.”

[5] In Candy and others v Coca Cola[3] the Court considered the purpose of a statement of claim and held that:

“In its simplest terms, the statement of case must at least inform the respondent party what the pertinent facts are on which the applicant will rely in the case, and further, what the cause of action is that the applicant will pursue as founded on these facts. That must be done in sufficient particularity so as to enable the respondent to provide a proper answer to these facts and the related cause of action. The statement of claim and the answering statement thereto are not just for the benefit of the parties. They also serve the court, in that the issues in dispute are properly determined and other possible alternative causes of action are eliminated from having to be considered by the court. A proper statement of claim and answering statement are imperative to the fundamental requirement of expeditious resolution of employment disputes in terms of the LRA. As the court said in Harmse v City of Cape Town:

'The statement of claim serves a dual purpose. The one purpose is to bring a respondent before the court to respond to the claims made of and against it and the second purpose of a statement of claim is to inform the respondent of the material facts and the legal issues arising from those facts upon which applicant will rely to succeed in its claims.

The material facts and the legal issues must be sufficiently detailed to enable the respondent to respond, that is, that the respondent must be informed of the nature or essence of the dispute with sufficient factual and legal particularity so that it knows what it is that the applicant is relying upon to succeed in its claim.'

[6] In South African Breweries (Pty) Ltd v Louw[4] the Labour Appeal Court (LAC) was required to, inter alia, determine a complaint by the appellant that the court a quo decided the case on factual issues not properly put before it on the pleadings, nor as refined in the pre-trial conference minute. The LAC held that:

To state the obvious, litigation is complex. Among the duties of legal practitioners is to conduct cases in a manner that is coherent, free from ambiguity and free from prolixity. True enough, the holy grail of translating what is complex into simplicity is not always attainable, but the ground rules are irrefrangible: say what you mean, mean what say and never hide a part of the case by a resort to linguistic obscurities. The norm of a fair trial means each side being given unambiguous warning of the case they are to meet. Moreover, these requirements are not mere civilities as between adversaries; the court too, is dependent upon the fruits of clarity and certainty to know what question is to be decided and to be presented only with admissible evidence that is relevant to that question. Making up one’s case as you go along is an anathema to orderly litigation and cannot be tolerated by a court. Counsel’s duty of diligence demands an approach to litigation which best assists a court to decide questions and no

compromise is appropriate.

[7] The LAC further held that[5]:

‘The relationship between the pleadings and the pre-trial conference minute has been the subject of several judicial pronouncements[6]. In short, a minute of this sort is an agreement from which one cannot unilaterally resile. Also, a pleading binds the pleader, subject only to the allowing of an amendment, either by agreement with the adversary, or with the leave of the court. The case pleaded cannot be changed or expanded by the terms of a minute; if it does, it is necessary that that change go hand in hand with a necessary amendment. The chief objective of the pre-trial conference is to agree on limiting the issues that go to trial. Properly applied, a typical minute – cum – agreement will shrink the scope of the issues to be advanced by the litigants. This means, axiomatically, that a litigant cannot fall back on the broader terms of the pleadings to evade the narrowing effect of the terms of a minute. A minute, quite properly, may contradict the pleadings, by, for example, the giving an admission which replaces an earlier denial. When, such as in the typical retrenchment case, there are a potential plethora of facts, issues and sub-issues, by the time the pre-trial conference is convened, counsel for the respective litigants have to make choices about the ground upon which they want to contest the case. There is no room for any sleight of hand, or clever nuanced or contorted interpretations of the terms of the minute or of the pleadings to sneak back in what has been excluded by the terms of a minute. The trimmed down issues alone may be legitimately advanced. Necessarily, therefore, the strategic choices made in a pre-trial conference need to be carefully thought through, seriously made, and scrupulously adhered to. It is not open to a court to undo the laces of the strait-jacket into which the litigants have confined themselves.’

[8] In Louw the LAC held that the mantra expressed in a statement of claim where an applicant averred that his dismissal was both ‘procedurally and substantively unfair’, is a stock phrase that is hardly ever useful in communicating what exactly is the causa of the unfairness, which is what both court and counsel need to know in order to address it. The terms of the pre-trial minute narrow the permissible grounds upon which the cause of action is to be presented.

[9] A statement of claim must inform the respondent of the material facts and the legal issues arising from those facts upon which applicant will rely to succeed in its claims. Those must be sufficiently detailed to enable the respondent to respond and to be informed of the nature or essence of the dispute. Each side must be given unambiguous warning of the case they are to meet.

[10] An applicant’s pleaded case must be supported by evidence during the trial. As was held in Harmse:

‘The rules of this court do not require an elaborate exposition of all facts in their full and complex detail - that ordinarily is the role of evidence, whether oral or documentary. There is a clear distinction between the role played by evidence and that played by pleadings - the pleadings simply give the architecture, the detail and the texture of the factual dispute are provided at the trial. The pretrial conference provides an occasion for the detail or texture of the factual dispute to begin to take shape. In terms of rule 6(4)(b) the parties in the pretrial conference must attempt to reach consensus on facts that are common cause, facts that are in dispute, the issues that the court is required to decide and the precise relief claimed.

Accordingly, the rules of this court anticipate that the relief claimed might not have been precisely pleaded in the statement of claim filed. The rules of this court further anticipate that the factual matters at issue will be dealt with more fully and precisely in the pretrial conference. The rules therefore anticipate that the parties at the pretrial conference will have dealt in much more detail not only with the factual matters but also the legal issues. The statement of claim and response thereto foreshadow this activity but are not a substitute for it. It is for this reason that the rule on pretrial conferences provides for reaching consensus on the issues that the court is required to decide’.

[11] In summary: parties are bound by their pleaded case and the case pleaded cannot be changed or expanded by the terms of a pre-trial minute. if it does, it is necessary that that change go hand in hand with a necessary amendment. The chief objective of the pre-trial conference is to agree on limiting the issues that go to trial. Pleadings give the architecture and the evidence at the trial provides the detail and texture.

[12] What is the Applicant’s pleaded case?

[13] It is evident from the Applicants statement of case, considering the material facts and the legal issues raised, that their case is that: there was no meaningful consultation in that the Respondent had refused to provide the Applicants with relevant information, such as audited financial statements, that the selection criteria used was not the only one proposed by the Applicants and that there was no meaningful engagement on the severance pay.

[14] In the pre-trial minute the Applicants challenged the need to retrench and submitted that there was no need in general to retrench the employees. In the Applicants’ statement of case, there is not a single factual averment made to the effect that the need to retrench was challenged, nor was it raised as a legal issue. The need to retrench was challenged for the first time in the pre-trial minute. I already alluded to the fact that pre-trial minutes do not constitute pleadings and cannot expand a case that was not pleaded.

[15] In National Union Of Metal Workers Of South Africa and Others v Crabtree Eletrical Accessories SA: A Division Of Powertech Industries (Pty) Ltd[7], the Court confirmed that it is not sufficient for employees to merely allege that in general, the employer had no need to retrench - employees must lay factual basis for conclusion that there was no need to retrench.

[16] The need to retrench was not part of the Applicants’ pleaded case and no amendment had been filed to broaden the scope of the pleadings to include such a challenge. This issue was not raised at all in the Applicant’s statement of case, let alone sufficiently detailed to enable the Respondent to respond thereto and to be informed of the essence of the dispute. The Respondent was not given warning of the case it had to meet insofar as the need to retrench the employees was challenged. In view of the authorities referred to supra, it is as a result, not an issue for this Court to decide, as the Court cannot decided a case that was not pleaded.

[17] In any event, it is evident from the cross-examination of the Respondent’s witnesses, that the need to retrench was not disputed.

[18] The Applicants’ pleaded case with regard to the issue of selection criteria, is also problematic.

[19] Section 189(7) of the LRA provides for selection of employees to be dismissed according to selection criteria that have been agreed to by the consulting parties, or if no criteria have been agreed to, criteria that are fair and objective.

[20] The Applicants’ pleaded case is that the criteria that was used, ‘was not the only one proposed by the applicants.’ It is common cause that the Respondent adopted the criteria of ‘last in first out’ (LIFO). The pleaded case is merely that LIFO was not the only criteria proposed by the Applicants. There is no challenge as to the fairness of the criteria or any dispute that the criteria used was not objective.

[21] In the pre-trial minute the Applicants were required to state the basis for contending that the selection criteria was unfair. The only response provided as to the unfairness of the criteria is: “no consultation was held with regards to the selection criteria used by the Respondent.”

[22] In my view, there is no pleaded challenge to the fairness of the selection criteria per se. In his opening statement, Mr Masutha for the Applicants, also abandoned the challenge in respect of LIFO as selection criteria. Mr Masutha stated that there was no longer a challenge to LIFO as the employees were indeed the ones with the least service and the case that someone should have been retrenched instead of the employees, was not persisted with. What is challenged, is that LIFO was not the only criteria to be applied.

[23] During the trial, absolutely no evidence had been provided by the Applicants to establish the fact that the implementation and execution of LIFO was, in any way, unfair – in fact, no other criterion was even put to any of the Respondent’s witnesses.

[24] The Applicants’ challenge in fact goes to core of their pleaded case, namely that there was no meaningful consultation process

between the parties and that is the essence of the dispute this Court has to decide.

[25] In the pre-trial minute the parties agreed that the following facts and timeline were common cause:

i. On 7 March 2018 the Respondent issued a notification in terms of 189(3) of the Labour Relations Act[8] (the LRA) wherein the First Respondent (NUMSA or the union) was invited on behalf of its members to make representations by way of consultation.

ii. On 19 March 2018 the union addressed a letter to the Respondent, stating that due to the size of the business, the retrenchment will fall within a large scale retrenchment and the Respondent was advised that the process should be conducted in terms of section 189A of the LRA and that the Respondent should approach the Commission for Conciliation, Mediation and Arbitration (CCMA) for facilitation.

iii. The union also proposed that the retrenchment process should be conducted on a national level, across the company operations, applying LIFO.

iv. On 20 March 2018 the Respondent’s HR Generalist, Mr Andile Sindane (Mr Sindane) responded to NUMSA’s letter of 19 March 2018. He stated that the process could not be conducted nationally as the Respondent, SGB CAPE Secunda was the only branch affected in terms of the retrenchment process. It was further stated that the Respondent employed less that 100 employees and it was contemplated to retrench less than 10 employees. Mr Sindane made it clear that the process would be conducted in terms of the provisions of section 189 of the LRA.

v. The union requested audited financial statements for the entire group of the Respondent for the period 2015 to 2017.

vi. The Respondent adopted the approach that the provision of the entire group’s financial statements was not relevant to the retrenchment process and during the second consultation meeting, the financial management accounts of the Secunda Branch were provided and explained to NUMSA, acting on behalf of its members.

vii. Further consultations were arranged for 8 and 17 May 2018, but the union indicated that they would not be attending any further consultations due to the fact that they had not received the Respondent’s audited financial statements for the entire group of companies.

viii. The Respondent adopted the criteria of ‘last in first out’ (LIFO).

ix. The positions that were affected by the process were that of eight supervisors and one quality controller.

x. The employees’ services were terminated on 18 May 2018.

[26] The issue this Court has to decide is whether employees’ dismissal was fair, premised on the Respondent’s operational

requirements, with regard to the question whether there was a meaningful consultation process.

[27] The gist of the Applicants’ pleaded case, and which is to be decided by this Court, is whether there was a lack of consultation

and a lack of disclosure of adequate and relevant information.

The evidence adduced

The Respondent’s case

[28] The Respondent called Mr Naudè, its divisional director for the inland division, as its first witness. He explained that the Respondent has different divisions, to wit the coastal division, power division and the Africa division. The Secunda branch operates separately and solely for Sasol 1 and 2, where it provides scaffolding and project related and maintenance work.

[29] Mr Naudè referred to the management accounts for the Secunda branch and he testified in respect of the period May to June 2015. By the end of June 2015 the Respondent had suffered a loss of R3,5 million against a budgeted R 8,7 million. In June 2016 the Respondent made a profit of R 3,3 million, against a projected budgeted R 9,6 million. Mr Naudè explained that the ‘profit’ made in 2016, included a R2,1 million bad debt recovery from a client, with whom there was a dispute which was eventually resolved. The remainder of the profit was made on the maintenance contract the Respondent had at the time.

[30] In June 2017 the Respondent suffered a loss of almost R 3,7 million. Mr Naudè explained that during this period the Respondent had lost the maintenance contract for Sasol and its income and revenue dropped significantly. The Respondent had to find project related work, but it was a challenge as project work fluctuates, it is up and down, with a resulting fluctuation in revenue. It was difficult to control expenses with an unstable income. The Respondent faced a lack of revenue and had to reduce its cost base. Mr Naudè explained that the Respondent had to control its costs in order to save the operation and the Secunda operation was to close down due to the lack of work.

[31] In the section 189(3) notice the Respondent indicated that the number of employees to be affected, was nine. Mr Naudè explained that the nine employees included eight supervisors and one quality controller and the job categories were identified based on the lack of work. He explained that there were too many supervisors for the projects the Respondent had at the time and that there was no work for them to perform. At the time, the Respondent did not have a maintenance contract with Sasol and also lost CCI, another big client, which went into liquidation.

[32] Mr Naudè explained that only the Secunda branch was affected and that the branches operate independently from each other. In Secunda the Respondent had to scale down its operations and had to manage its costs before the business could recover and be rebuilt.

[33] In cross-examination Mr Naudè was asked what the difficulty was to provide the union’s Mr Makhathini with audited financial

statements. Mr Makhathini insisted on audited financial statements for three years, but instead he was provided with management accounts for three years. Mr Naudè explained that the Respondent is a division of a bigger entity, WACO and that the audited financial statements for WACO would not reflect any specific financial information on SGB Cape. The audited financial statements provided information on a much bigger entity and that information is irrelevant for the Respondent.

[34] Mr Naudè explained that the audited financial statements for WACO is a consolidation of all the financial results for all the divisions, such as Skyjacks, Form -Scaff and Sanitech. Each of the divisions operate a network of branches and the information contained in the audited financial statements and the results contained therein would mean nothing in a branch specific process. He further explained that the branches are different, for instance some branches are involved in cleaning services or modular buildings and it is not possible to move specialised employees between the branches, as their services and required skills and expertise, are different.

[35] It was put to Mr Naudè that if the union was provided with audited financial statements, it would have alleviated the situation.

He disputed the proposition and reiterated that the audited financial statements are irrelevant and that the management accounts or operational trading statements for the Secunda branch were relevant, as they contained specific information regarding the revenue and expenses of the branch.

[36] Mr Naudè was asked as to why the Respondent applied LIFO as the only selection criteria. He responded that the Respondent had identified the redundant positions and when there was no engagement from the union, LIFO was applied as a fair and objective criteria.

[37] Mr Sindane, the Respondent’s IR Coordinator, testified that the section 189(3) notice was addressed to NUMSA’s Mr Makhathini on 7 March 2018. Mr Makhathini responded on 19 March 2018, suggesting that it was a large scale retrenchment and that the process be conducted on a national level. Mr Sindane responded on 20 March 2018, with reference to the first consultation meeting of 14 March 2018, and reiterated that it was not a section 189A process, as the Respondent employed less than 100 employees and contemplated the retrenchment of less than 10 employees. Mr Sindane further indicated that the process could not be conducted nationally as the Secunda branch was the only one affected. Mr Sindane confirmed the Respondent’s availability to consult with the union on 28 March 2018 at 08:00.

[38] Mr Makhathini responded on 21 March 2018 and requested audited financial statements for 2015, 2016 and 2017.

[39] Mr Sindane testified that on 28 March 2018 the second consultation meeting was held. The first consultation was held on 14 March 2018, when he had explained all the items contained in the section 189(3) notice. The purpose of the meeting on 28 March 2018 was for the union to engage and make proposals, but instead the union requested audited financial statements. At that point the Respondent had provided financial trading statements for three years and it was explained that the Respondent could not provide the audited financial statements as SGB Secunda was not detailed as a separate entity in the said statements.

[40] On 6 April 2018 Mr Sindane addressed a letter to Mr Makhathini wherein he stated that the union was provided with the Respondent’s

financial trading statements, which reflected the position due to the lack of projects. It was also stated that the audited financial

statements for WACO could not be provided as they are confidential. In the same letter Mr Sindane accepted the union’s proposal to apply LIFO as selection criteria. The union was invited to make representations with regard to severance pay on 11 April 2018.

[41] On 9 April 2018 Mr Makhathini responded and persisted with his insistence that the audited financial statements should be made available, as he viewed the information that was provided to be inadequate. Mr Makhatini never indicated why the information provided

was inadequate.

[42] Mr Makhathini indicated that should the Respondent fail to furnish the statements as requested, on or before 13 April 2918, NUMSA will have no option but to declare a dispute in terms of section 16 of the LRA.

[43] Mr Sindane testified that NUMSA was not willing to engage with the Respondent unless it was provided with the requested audited

financial statements. The Respondent provided reasons to the union as to why the financial statements could not be disclosed. It was given four days to provide it, but did not do so. The section 16 of the LRA dispute was never referred and the Respondent’s view at that point was that NUMSA was no longer interested to engage regarding the retrenchment process.

[44] On 24 April 2018 a meeting was held and the Respondent’s trading statements for three years were made available again. Mr Sindane testified that he had explained once again why the audited financial statements could not be made available.

[45] Another meeting was scheduled for 8 May 2018. On 5 May 2018 the union indicated that it would not attend the meeting. Mr Sindane testified that he had a telephonic discussion with Mr Makhathini, during which he made it clear that absent the audited financial statements, he would not further engage with the Respondent. Mr Sindane indicated on 7 May 2018 that the Respondent would proceed to meet with the affected employees and shop stewards on 8 May 2018.

[46] On 8 May 2018 NUMSA did not attend the meeting and the affected employees and shop stewards also refused to participate, on instruction from NUMSA.

[47] On 9 May 2018 Mr Sindane invited the union, per email, to a consultation meeting scheduled for 17 May 2018. He requested the union to avail itself for the consultation as the Respondent’s purpose was to consult in good faith.

[48] On 11 May 2018, Mr Zakumba, the Respondent’s IR manager, intervened and he sent an email to NUMSA. Mr Zakumba attempted to

explain the Respondent’s position and stated that the Respondent did not have work to sustain the business going forward.

Mr Sindane testified that Mr Zakumba intervened as the section 189(3) notice was sent out in March 2018 and by May 2018, the parties have not moved a single step forward in the process. Mr Makhathini responded and persisted with his stance to insist on audited

financial statements.

[49] On 17 May 2018 NUMSA did not attend and the shop stewards refused to engage with the Respondent, on instruction from the union.

[50] Subsequent to this and on 17 May 2018, the Respondent issued letters to the employees, wherein they were informed that their positions were affected. Even at this point the employees refused to engage and said that they had received an instruction from NUMSA not to engage with their employer. There were no proposals forthcoming.

[51] On 18 May 2018 the Respondent issued notices of termination of employment to the affected employees. Mr Makhathini’s reaction

to the notices of retrenchment was an email to Mr Sindane on 20 May 2018, requesting proposals in relation to alternative positions in order to obtain a mandate from the members. At that point the employees had already received notices of termination and they were serving their notice period.

[52] Mr Sindane explained that nothing had changed between the issuing of the section 189(3) notice in March 2018 and 17 May 2018. The only change was that the employees were issued with notices of termination on 18 May 2018, and only at that moment was the union prepared to engage on alternatives.

[53] On 22 May 2018 Mr Makhathini addressed a letter to the Respondent wherein he once again insisted to be provided with the audited

financial statements. Mr Sindane testified that on 18 May 2018 Mr Makhathini wanted to engage on alternatives, yet on 22 May 2018 he insisted on audited financial statements again, which was indicative of the fact that he was never serious to engage the Respondent.

[54] Mr Sindane testified that on 19 March 2018 the union tabled LIFO as a proposed criteria and after that, NUMSA never made any other proposal regarding selection criteria to be applied. As the union did not provide any other criteria, the only fair and objective criteria to be applied was LIFO. He explained that due to the dynamics of the business, LIFO was always used as the only fair criteria and it was never questioned or challenged by NUMSA before. For the Respondent to consider another criteria, it had to come from the union.

[55] Mr Sindane testified that the Respondent had done everything in its power to get the union to consult, but at no point was the union

prepared to engage and to consult. The Respondent therefore implemented LIFO and applied it fairly as a selection criteria.

[56] In cross-examination Mr Sindane testified that there were two consultations, being on 14 and 28 March 2018. He conceded that two

consultations were not sufficient to explore all the issues and responded that it was why the union was repeatedly invited to consult

more, but the union was not interested and never came to any further consultation arranged for by the Respondent. In fact, the union made it clear that if the audited financial statements were not provided, it would not participate in any further consultation. Mr Sindane explained that the union effectively refused to participate and to consult.

[57] Mr Sindane was asked whether he regarded the request for financial statements as a genuine request and he responded that it was not. He testified that it was explained to the union why the audited financial statements could not be made available. It was explained

that it was confidential and would not assist to show the financial position at the Secunda branch. The union was not to refuse to participate after the reasons were explained to them. He further stated that the union had the right to refer a section 16 dispute to the CCMA to obtain the information it insisted to be provided with, but such a dispute was never referred.

[58] It was put to Mr Sindane that the union was prepared to engage on criteria, other than LIFO, in May 2018. He was asked why the union’s

proposal was rejected. Mr Sindane responded that the union was only prepared to engage after the employees’ services were already terminated and even at that stage, it still insisted on having audited financial statements. The Respondent’s trading

statements were provided to NUMSA twice, but it was not accepted as sufficient.

[59] Mr Sindane explained that even the Respondent’s efforts to engage directly with the affected employees and shop stewards were

unsuccessful as they were instructed by NUMSA not to engage with the employer. The consultation meeting scheduled for 8 May 2018 was of no assistance as the employees and shop stewards refused to participate, on instruction of NUMSA.

The Applicants’ case

[60] Mr Mcapukelo testified that he was employed by the Respondent as a senior supervisor: scaffolding at Secunda. He testified that the union communicated with the employees regarding their retrenchment and they received feedback from the union. There were two

consultation meetings before the employees were retrenched, which he testified was not enough. He testified that the employees did not sign letters from the Respondent because the union told them not to have meetings with the employer. Regarding the meeting the Respondent wanted to have with the employees on 17 May 2018, he testified that the employees were instructed by Mr Makhathini to leave the meeting.

[61] He testified that in the first consultation meeting, the employees raised the issue of being unemployed and they asked for other

position, even at a lower level. The union raised the issue of financial statements.

[62] Mr Mcapukelo was asked whether, had the Respondent disclosed its financial status, the process or outcome would be different. He

responded that it would as the union would have been satisfied if they could see that there was no money.

[63] In cross-examination Mr Mcapukelo conceded that he was aware of the fact that the Respondent had sent letters to the union to consult about the retrenchment process. It was put to him that the union said no to any engagement until audited financial statements were made available. The Respondent’s financial information was provided on 28 March 2018, but the union wanted more information. Mr Mcapukelo was unaware of the process provided for in section 16 of the LRA and he did not know why NUMSA had not followed the available process to obtain the information it required.

[64] Mr Mcapukelo explained that his proposal to the Respondent to avoid retrenchment was not put forward to the employer, as Mr Makhathini

said all he wanted to see was the audited financial statements.

[65] It was put to Mr Mcapukelo that the audited financial statements are a consolidation of the financial information of all the companies in the group of companies and it was not the Respondent’s case that there was a problem within the group. The problem was only with the Secunda branch, due to the loss of work. He was asked how the audited financial statements for the group of companies would have assisted the Applicants to know the financial status of the Secunda branch specifically and how the performance of WACO as a group would have been of assistance to the union to assess the decline at the Secunda branch. Mr Mcapukelo’s response was that Mr Makhathini wanted to see if there was enough money.

[66] It was further put to Mr Mcapukelo that Mr Makhathini did not want the process to get off the ground, the union was extremely uncooperative

and obstructed the process by insisting on and demanding irrelevant information. Mr Mcapukelo had no comment on this proposition.

[67] When asked how the process or the outcome could have been different, had the Respondent disclosed the audited financial statements, Mr Mcapukelo also reverted to a ‘no comment’ answer, instead of providing an explanation. It was after all his testimony that it would have been different, but when asked to explain how, he had no comment – or rather no explanation to tender.

[68] Closing arguments

[69] The parties were afforded until 22 October 2021 to submit written closing arguments.

[70] Mr Soldatos on behalf of the Respondent submitted his closing arguments in time. Mr Mashuta has not submitted closing arguments and despite numerous attempts from my secretary to follow up with Mr Masutha, no response and no submissions were received.

Analysis of the issues this Court has to decide:

[71] The Applicants’ case is that there was no meaningful consultation because the Respondent refused to furnish the union with audited financial statements.

The disclosure of information

[72] It is evident that NUMSA refused to participate in any process until and unless the Respondent provided audited financial statements. The issue of the audited financial statements is to be considered first.

[73] The undisputed evidence before this Court was that the union, per Mr Makhathini, insisted on audited financial statements. It is further undisputed that the union was informed that the Respondent was not going to provide the requested audited financial statements. The reasons for such refusal were twofold: firstly, the audited financial statements pertained only to the group (WACO Africa) and incorporated six or seven other divisions. Any consideration of the audited financial statements would not have demonstrated the actual trading position of the Secunda branch or the difficulties which were being sustained thereat. It would be of no assistance to NUMSA in the retrenchment process as it contained no specific financial information regarding the Secunda branch. The audited financial statements would show the cashflow, revenue etcetera for the group of companies and it did not contain or reflect any site specific information. Secondly, the audited financial statements of WACO were confidential. In short, it was refused because it was irrelevant and confidential.

[74] The Respondent however did not refuse to provide relevant financial information to NUMSA. It was undisputed that the management accounts or trading statements of the Respondent, at the Secunda branch, were indeed made available to the union during the consultation process.

[75] Mr Naudè testified that the management accounts was the only source documentation which could effectively be relied upon for the purposes of appreciating and understanding the true trading position of the Respondent at the Secunda branch. He emphasized that it was largely inconsequential for the retrenchment process at the Secunda branch as to how the group of companies had performed.

[76] That notwithstanding, NUMSA persisted in its approach that the Respondent would be required to produce audited financial statements and, in fact, indicated that it would not engage in any further consultations unless and until audited financial statements had been produced. At a particular point Mr Makhathini had indicated that unless the Respondent were to provide audited financial statements for the 2015 to 2017 period, NUMSA would have no alternative but to declare a dispute in terms of section 16 of the LRA and have the dispute appropriately determined by the CCMA.

[77] It is evident that NUMSA was aware of the fact that it had a remedy, provided for in section 16 of the LRA, to obtain information. Mr Makhathini even issued an ultimatum to the Respondent to provide the audited financial statements, failing which, a section 16 dispute would be declared.

[78] It is undisputed that and unexplained why NUMSA never referred a section 16 dispute to the CCMA, if it was of the firm belief that it is entitled to the audited financial statements and that those were absolutely necessary for purposes of meaningful consultation in the section 189 process.

[79] It was not disputed during the trial that the audited financial statements were irrelevant and confidential, nor was it disputed that the management accounts that were provided to the union, contained the relevant financial information regarding the Secunda branch and its financial position.

[80] In fact, the Applicants were unable to say why or how the outcome of the retrenchment process would have been different, had the audited financial statements been made available. It was no more than an unsubstantiated statement, that has no merit.

[81] The continued insistence by NUMSA, in the circumstances, on the production of audited financial statements was not only unreasonable

and unjustifiable but, ultimately, would have made no sense in the ultimate determination of the Respondent’s financial position

at the Secunda branch.

[82] This Court cannot, based on the evidence adduced, find that the Respondent failed or refused to furnish relevant information regarding its financial position to NUMSA. The information provided would have shown to NUMSA what the financial position was, with specific

reference to the revenue, cost and profit for the Secunda branch. The information provided was sufficient and relevant and Mr Makhathini’s

insistence on audited financial statements of a group of companies, which would be of no assistance to him, was arrogant and ill

considered. It is aggravating that Mr Makhathini did not refer the issue to the CCMA under the provisions of section 16 of the LRA, if he honestly believed that the information he requested, was necessary for purposes of consultation.

The consultation process

[83] The main issue is whether there was meaningful consultation.

[84] In my view the Applicants lost sight of the purpose of a section 189 process and the objective of consultation.

[85] It is evident from the provisions of section 189(2)(a) of the LRA that the employer and other consulting parties must consult and engage in a meaningful joint consensus seeking process to attempt to reach consensus on appropriate measures to avoid dismissals, to minimise the number of dismissals, to change the timing and to mitigate the adverse effect of the dismissals. NUMSA was invited to consult on these issues.

[86] The main objective of consultation before a final decision on retrenchment is taken, must be to avoid retrenchments altogether,

alternatively to reduce the number of retrenchments and to mitigate the consequences[9]. The objective is not to demand to have access to information that is not only confidential but also irrelevant.

[87] NUMSA, represented by Mr Makhathini had indicated in the infancy stages of the consultation process, that NUMSA required audited financial statements for the preceding three year period for the purposes of satisfying itself that there was, in fact, sound commercial rationale and import behind the retrenchment exercise. At the second consultation (held on the 28 March 2018) Mr Makhathini had indicated that in order for the consultation process to progress, NUMSA would need to be provided with audited financial statements.

[88] The Respondent did not provide the audited financial statements, but instead, management accounts for the Secunda operation were made available.

[89] It is common cause that further consultations were arranged for 8 and 17 May 2018, but the union indicated that they would not be attending any further consultations due to the fact that they had not received the Respondent’s audited financial statements for the entire group of companies.

[90] The Respondent was pressing NUMSA for further engagement but Mr Makhathini advised the Respondent that until such time as the audited

financial statements were provided, there will be no consultation. NUMSA did not, as had been recorded, engage upon any dispute as envisaged in terms of section 16 of the LRA, neither did it engage any further with the Respondent on this issue notwithstanding further invitations to NUMSA to attend a consultation on 17 May 2018.

[91] The Respondent’s attempt to consult directly with the affected employees and the shop stewards, was also undermined as they were instructed by NUMSA not to engage with the employer.

[92] Had NUMSA been acting in good faith and had it engaged upon its obligations to consult in terms of the LRA, in circumstances where it believed it could not effectively and meaningfully consult without audited financial statements being provided, it could (and should) have declared a dispute in terms of Section 16 of the LRA and, in the circumstances, continue with the further aspects of consultations, albeit under full reservation of its rights to continue to challenge the rationale.

[93] It is evident from the evidence adduced that two consultation meetings took place between the parties in March 2018 and there can be no doubt that the Respondent was willing and prepared to meet with NUMSA and to consult further on the relevant and pertinent issues. NUMSA, however, was of the view that the process could not progress without the audited financial statements being made available. In my view this ill-advised approach motivated NUMSA not to participate in the consultation process.

[94] NUMSA failed to engage with the Respondent in a meaningful joint consensus seeking process. This was due to Mr Makhathini’s obstinate view that without audited financial statements, there will be no consultation.

[95] Mr Soldatos submitted that it was quite ironic that Mr Makhathini did not venture anywhere near the Court for the purposes of providing testimony as to his methodologies and the reasons as to why he had so steadfastly and unreasonably refused to consult. He further submitted that it was a shame that NUMSA resorted to calling one of the employees to provide testimony on technical matters pertaining to operational requirements terminations in circumstances where Mr Makhathini ought to have been the individual explaining his conduct. I agree with these submissions. Mr Mcapukelo was thrown in as a witness, when he was not the person who decided not to consult and who insisted on audited financial statements. The failure to call Mr Makhathini or to advance any reasons as to his non-availability as a witness, is indeed an aspect of concern.

[96] NUMSA was invited to engage in a section 189 process and to make representations. NUMSA had had a duty to engage and participate in the section 189 process and the Respondent made all reasonable attempts to engage the Applicants in consultation, but NUMSA failed to do so.

[97] NUMSA did not engage in a meaningful joint consensus seeking process, despite the fact that it was invited to do so over the period March – May 2018. Instead, NUMSA and more particularly Mr Makhathini acted in an unreasonable and ill-advised manner and did so to the utmost detriment of the affected employees.

[98] NUMSA and Mr Makhathini have a lot to answer to their members. They have not acted reasonably and responsibly with the interest of the workers in mind. This cost the individuals dearly. More concerning is that when the decisions taken are to be explained and defended in a Court of law, Mr Makhathini is not taking the stand as a witness.

[99] The Respondent made reasonable efforts to engage and consult the union, but the union was obstructive and uncooperative, which forced the employer to finalise the retrenchment process, notwithstanding the lack of consultation, as it is never an open-ended process.

[100] The Applicants failed to make out a case that the employees’ dismissal, based on the Respondent’s operational requirements,

was unfair in any respect.

[101] Costs

[102] Costs should be considered against the provisions of section 162 of the LRA and according to the requirements of the law and fairness. This Court has a very wide discretion in awarding costs.

[103] Mr Soldatos submitted that the matter should be dismissed with costs.

[104] In Zungu v Premier of Kwa Zulu-Natal and Others[10] the Constitutional Court confirmed that the rule that costs follow the result does not apply in labour matters. The Court should seek to strike a fair balance between unduly discouraging parties from approaching the Labour Court to have their disputes dealt with and, on the other hand allowing those parties to bring to this Court (or oppose) cases that should not have been brought to Court (or opposed) in the first place.

[105] The general accepted purpose of awarding costs is to indemnify the successful litigant for the expense he or she has been put through by having been unjustly compelled to initiate or defend litigation.

[106] In Public Servants Association of SA on behalf of Khan v Tsabadi NO and Others[11] it was emphasized that:‘…unless there are sound reasons which dictate a different approach, it is fair that the successful

party be awarded its costs. The successful party has been compelled to engage in litigation and incur legal costs. An appropriate award of costs is one method of ensuring that much earnest thought and consideration goes into decisions to litigate in the Labour Court, whether as applicant in launching proceedings or as respondent opposing proceedings.’

[107] This is a case where the Court has to strike a balance and in my view it is appropriate to make a cost order.

[108] One of the factors to be considered, is the conduct of the parties. In casu NUMSA failed to consult in a retrenchment process and when its members were dismissed, the union came to Court to seek relief against the Respondent, who had made numerous reasonable efforts to ensure a meaningful consultation process. The Applicants approached this Court with a case which had no merit and of which there was no consideration of the prospects of success. This is a case that should not have been brought or prosecuted. The Respondent was compelled to oppose it and is entitled to the cost incurred in doing so.

[109] In the premises, I make the following order:

Order

1. The Applicants’ case is dismissed;

2. The First Applicant (NUMSA) is ordered to pay the Respondent’s costs.

Connie Prinsloo

Judge of the Labour Court of South Africa

Appearances:

For the Applicants: Mr Masutha of NUMSA

For the Respondent: Mr A Soldatos of SCI Attorneys

[1] Chemical, Energy,Paper, Printing, Wood and Allied Workers Union v CTP Ltd and another (2013) 4 BLLR 378 (LC).

[2] Pleading: Principles and Practice at 8-9.

[3] (2015) 36 ILJ 677 (LC)

[4] (2018) 39 ILJ 189 (LAC)

[5] At par 8.

[6] See: Price N.O. v Allied - JBS Building Society 1980 (3) SA (AD) 874 at 882 D-E; Zondo v St Marks Church (2015) 36 ILJ 1386 (LC) at [10] – [11].

[7] (JS1327/09) [2014] ZALCJHB 139 (29 April 2014)

[8] Act 66 of 1995.

[9] Atlantis Diesel Engines (Pty) Ltd v NUMSA (1994) 15 ILJ 1247 (A).

[10] (2018) 39 ILJ 523 (CC) at para 24.

[11] (2012) 33 ILJ 2117 (LC) at para p 2119 I-J.