National Union of Metalworkers of South Africa and Others v Thyden Steel CC and Another (J1813/14) [2014] ZALCJHB 442 (11 November 2014)

REPUBLIC OF SOUTH AFRICA

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

JUDGMENT

Not Reportable

Case no: J1813/14

In the matter between:

NATIONAL UNION OF METALWORKERS OF SOUTH AFRICA WYCLIFF AARON & 18 OTHERS First Applicant Second to Further Applicants and THYDEN STEEL CC BLACK IRON INDUSTRIES (PTY) LTD First Respondent Second Respondent

Heard:

6 November 2014

Delivered on: 11 November 2014

ORDER

TLHOTLHALEMAJE AJ

Introduction:

[1] On 29 July 2014, the Honourable Lagrange J issued an order in the following terms:

“Having read the documents and having considered the matter:

IT IS ORDERED THAT:

1. The provisions of the Rules relating to times and manner of service referred to therein are dispensed with and the matter is dealt with as one of urgency in terms of Rule 8 of the Rules for the conduct of proceedings in the Labour Court.

2. A rule nisi is issued calling upon the First & Second Respondents to appear and show cause on 06 November 2014 why an order should not be granted in the following terms:

2.1 Declaring that the transfer of the machinery and equipment of the First Respondents and the First Respondents customers by the First Respondent to the Second Respondent constitutes a transfer of a going concern as contemplated by section 197 of the Labour Relations Act 66 of 1995 as amended (the LRA);

2.2 Directing the Second Respondent to employ the Second to Further Applicants on the same terms and conditions they enjoyed under the employ of the First Respondent;

2.3 Directing the Second Respondent to employ the Second to Further Applicants immediately and retrospective to their date of dismissal by the First Respondent if their employment contracts have already been terminated by the First Respondent;

2.4 In the event that they are still employed by the First Respondent, directing the Second Respondent to employ the Second to Further Applicants immediately when the First Respondent terminates their employment contracts;

3. The provisions of paragraphs 2.1 and 2.4 will operate with immediate effect as an interim order pending a final order being made on the return day of the rule nisi.”

[2] On the return date, notwithstanding the fact that the Applicants had indicated their intention to discharge the rule nisi as issued above, the Second Respondent persisted in seeking an order of costs, which is the only only issue for determination in this matter.

Background:

[3] The urgent application was brought before the court on the basis that the first respondent had in January 2014 introduced short time. In May 2014, the second to further applicants were informed not to return to work due to difficulties surrounding operational requirements experienced by the first respondent. Around May 2014, machinery and other equipment belonging to the first respondent was observed being removed to the premises of the second respondent, prompting the Applicants to infer that the first respondent had transferred its business to the second respondent as contemplated in section 197 of the Labour Relations Act.

[5] The applicants again approached the Court on 28 July 2014 in view of their contention that the respondents failed to comply with the court order of 29 May 2014. This resulted in the order granted by Lagrange J as indicated above. On the return date however, Mr. Cartwright had submitted that the rule nisi should be discharged with no order as to costs. The second respondent however holds the view that it is entitled to costs.

[6] The basis of seeking a cost order was that the second respondent is a start up company with limited resources and was forced to defend the matter in circumstances which were unnecessary. It was argued on its behalf that notwithstanding the fact that the return date was well known to the applicants, it was only indicated on 31 October 2014 that the matter was no longer being pursued. This information only came to its attention after the second respondent had briefed attorneys and counsel; attended to the indexing and pagination of documents, filed its written heads of argument and further having filed its practice note in accordance with the Practice Manual of this Court. The second respondent further sought costs on the basis

that the application leading to a rule nisi being issued was ill-conceived and frivolous; that the allegations made in the founding affidavit in regards to machinery and other equipment were unsubstantiated and based on hearsay evidence.

The legal principles surrounding costs:

[7] The court has discretion when considering an order of costs. In awarding costs, the court finds guidance from the provisions of section 162 of the Labour Relations Act, which provides that:

“(1) The Labour Court may make an order for the payment of costs, according to the requirements of the law and fairness.”

[8] The aspect of requirement of the law has been interpreted by the courts to imply that costs would ordinarily follow the results. In other words a successful party would be entitled to costs[1]. The aspect of consideration of fairness on the other hand implies that in the Labour Court, it being a court of equity, costs would not automatically follow an adverse decision[2].

[9] The issue of the exercise of a discretion taking into account considerations of law and fairness was decisively dealt with within the context of the now repealed Labour Relations Act of 1956 in Chevron Engineering (Pty) Ltd v Nkambule & Others[3] in the following terms:

“Although the appellant succeeds on appeal, when deciding the question of costs discretion must be exercised after taking into account the requirements of law and fairness. Section 17C (2) specifically enjoins this Court to decide the question of costs “according

to the requirements of law and fairness”. The guidelines as to fairness are set out in National Union of Mineworkers East Rand Gold & Uranium Ltd [1991] ZASCA 168; 1992 (1) SA 700 (A) at 738F–739G (see also Performing Arts Council of the Transvaal v Paper Printing Wood & Allied Workers Union [1993] ZASCA 201; 1994 (2) SA 204 (A) at 221A–C). The proper approach is to take account of the conduct of the parties during the dispute and in the conduct of the litigation. The general approach developed by courts acting in terms of this Act is that costs do not automatically follow the result, unless there are special or exceptional circumstances justifying a costs order. Mala fides, unreasonableness and frivolousness have been found to be factors justifying the imposition of a costs order.”

Evaluation:

[10] It was common cause that the first respondent has since been liquidated, and as a consequence, its landlord attached its stock and equipment. The second respondent, which had traded on the premises of the first respondent, had admitted having purchased certain equipment from the first respondent, which turned out to be personal belongings of the second respondent’s employees. It appears that the applicants had accepted the respondents’ explanation as to their state of affairs. The basis of seeking a cost order appear to be more related to the events after the rule nisi was issued on 29 July 2014. The second respondent had filed its answering affidavit and opposition to the application in anticipation

of the rule nisi on 14 August 2014.

[11] In the light of the above, I am of the view that a cost order would be inappropriate in circumstances where the applicants held a bona fide belief that a transfer of a business was taking place given the events as they had observed them and as they unfolded. In approaching the court on an urgent basis, the applicants were prompted by their view that the respondents refused to enter into consultations with them in order to explain the events as they unfolded. There is no basis upon which it can be concluded that the applicants acted in bad faith, or unreasonably, or frivolously when approaching the court for relief.

[12] As Mr. Cartwright had correctly pointed in his submissions, nothing prevented the second respondent from inviting the applicants in order to clarify its position in the matter as sufficiently as it had done in its answering affidavit. It is accepted that by only informing the second respondent on 31 October 2014 that the applicants sought the rule to be discharged may have been belated. However, given the overall circumstances of this case, there is no basis in law or fairness that calls for a cost order.

Order:

i. The rule nisi issued by Lagrange J on 29 July 2014 is discharged.

ii. There is no order as to costs.

________________

Tlhotlhalemaje AJ

Acting Judge of the Labour Court of South Africa.

Appearances:

For the Applicants:

Mr. D Cartwright of David Cartwright Attorneys

For the Second Respondent: Adv. SD Maritz

Instructed by:

Mark-Anthony Beyl Attorneys

[1] See City of Cape Town v SAMWU (2008) 7 BLLR 618 (LC).

[2] See Apollo Tyres (Pty) Ltd (formally Dunlop Tyres Internal Ladysmith (Pty) Ltd) v NUMSA & Others 2009 JOL 24326 (LC)

[3] 2004 (3) SA 495 (SCA) para 42