Nexnovo Africa (Pty) Ltd v Vorster and Another (2024/109583) [2024] ZALCJHB 509 (7 October 2024)

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case no: 2024/109583

In the matter between:

NEXNOVO AFRICA (PTY) LTD Applicant and JAN PAUL VORSTER First Respondent SHERIFF, RANDBURG WEST Second Respondent

Summary: Reasons for order issued on 7 October 2024. Application for stay of execution dismissed with costs.

REASONS FOR ORDER

DANIELS J

Introduction

[1] This application was brought on an urgent basis to set aside a writ of execution[1] alternatively to stay execution of an arbitration award (the “award”). The award on the basis of a settlement agreement[2] entered into between the applicant and the first respondent at the CCMA on 2 August 2024 (the “settlement”).

[2] Having heard the application on an urgent basis, I issued an order dismissing the application, with costs. These are the reasons for my order.

Background to the application

[3] The applicant employed the first respondent as its chief executive officer (the “CEO”). The first respondent was sourced

through a recruitment agency. The employment relationship met an unhappy end. Thereafter the applicant, the recruitment agency, and the first respondent (though he is yet to be joined) became involved in litigation in the High Court.[3]

[4] The application for an urgent stay of execution was sought on two bases:

4.1 The applicant states that its counter claim in the High Court exceeds the main claim (brought by the recruitment agency against the applicant). The applicant seeks to withhold payment of the settlement because it anticipates that its counter claim will succeed in the High Court. However, given that the first respondent is not a party to the High Court litigation, and no damages is sought from him, it is hard to fathom the relevance of the High Court litigation.

4.2 The applicant alleges that first respondent’s attorneys behaved in an improper manner. The first respondent’s attorneys delivered an application to make the settlement an arbitration award, in accordance with section 142A(1) of the Labour Relations Act 66 of 1995 (the “LRA”). The applicant’s attorneys emailed a notice of opposition[4] to first respondent’s attorneys and requested an indulgence to file its answering affidavit late. No response was received. Instead, the first respondent, or his attorneys, approached the CCMA to make the settlement an award. The settlement was made an award. From the facts set out in the founding affidavit, it is hard to see how the first respondent, or its attorney, behaved improperly. In any event, I fail to see how any of this establishes a right to stay execution.

Legal principles and analysis

[5] The applicant states that a review application is pending before this court under case number JR1629/24. The applicant does not attach a copy of the review papers. It does not state what relief is sought in that application. And it does not state why it has prospects of success in the review. Nor does it state that the review was brought within the prescribed period. The applicant does not state whether it has provided security in terms of section 145(7) of the LRA, or applied for an exemption from the provision of security.

[6] The applicant and the first respondent, though not formally joined as yet, are engaged in litigation before the High Court. It is only from the High Court pleadings that the dispute takes any shape at all. However, though the pleadings are attached, they are not incorporated. It is trite that pleadings, including affidavits, cannot be considered incorporated merely by attachment.[5] Nevertheless, even if the High Court papers had been incorporated, it is not inappropriate for this court to pronounce on whether the applicant has prospects in litigation pending before that Court. In any event, as previously mentioned, no damages have been sought from the first respondent. In any event, a stay of execution in terms of section 145(3) contemplates a stay of execution pending a decision by this court on review.

[7] In Rustenburg Local Municipality v SALGBC and others[6] (hereafter “Rustenburg”) this court captured the requirements for a stay of execution, contemplated in section 145(3) of the LRA:

[28] The Labour Court, in an application as contemplated by s 145(3), exercises a discretion as to whether to grant a stay or suspension of execution or enforcement of the award, which discretion must be exercised judicially on the basis that real or substantial justice requires such stay or suspension. In Robor (Pty) Ltd (Tube Division) v Joubert & others the court held:

‘[10] The discretion to stay execution must be exercised judicially, but generally speaking a court will grant a stay of execution where real and substantial justice requires it or, put differently, where injustice would otherwise be done.

[11] The discretion is a wide one. It is founded on the court’s power to control its own process. Grounds on which a court may choose to stay execution include that the underlying cause of action on which the judgment is based is under attack, and that execution is being sought for improper reasons. But these are not the only circumstances in which the court will exercise the power.’

Other factors identified by the court in Robor for consideration are whether the underlying challenge to the arbitration award was brought in time, the parties’ interest in finality, the cost to all parties of a delay in finality or of instituting or opposing further proceedings, and the risk of injustice being done to the less powerful party to the dispute.

[30] Another consideration in the Labour Court exercising its discretion whether or not to stay or suspend the execution or enforcement of the award is that of having regard, on a prima facie basis, to the prospects of success of the review application on the notice of motion and founding affidavit in the review application, as it stands. It is not necessary to decide whether the case advanced in the review application has merit or not. All that is necessary to consider is whether this case, should it be substantiated when the matter ultimately comes up for hearing, could sustain a successful review.

(own emphasis)

[8] In summary, in relation to applications to stay execution, this court exercises a wide discretion. The court must consider whether real and substantial prejudice is likely to result if the stay is refused. It must consider if execution is sought for improper motives. It must consider the parties’ interest in finality, the cost associated with a delay in the proceedings, and the risk of injustice to the weaker party. Finally, the court must consider prospects of success. In this respect the court need only consider, on a prima facie basis, the prospects of success of the review. It is unnecessary to decide if the review will succeed, only whether the allegations made by the applicant in the review application are sufficient for success if they are accepted in due course.

[9] The applicant fell woefully short of meeting any of the requirements for a stay of execution. I address some of these issues below:

9.1 The applicant did not attach nor incorporate any of the allegations it made in its review application. The applicant has not shared with the court why it has prospects of success in the review, or in the High Court (even if this can be taken into consideration).

9.2 The applicant does not address the first respondent’s interest in finality of the dispute, which led to the settlement.

9.3 The applicant fails to address the risks of injustice to the first respondent. Instead, it addresses only the prejudice to itself. In any event, I am not satisfied that any prejudice will result to the applicant if the stay is refused.

9.4 The applicant does not explain whether it has furnished security, intends to furnish security, or whether it has applied for exemption from the payment of security.

9.5 The applicant does not explain, as one would have expected it to, why the terms of the settlement were not suspended pending the High Court proceedings. The applicant does not explain why it consented to the settlement being made an arbitration award.

[10] From the facts in the founding and answering affidavits, the conclusion is inescapable that applicant entered into the settlement without intending to give effect to it. In addition, as the first respondent alleges, I believe that the application has been brought with improper motives - to apply financial pressure on the first respondent in relation to other litigation.

Conclusion

[11] In the exercise of my discretion, the application was heard and determined on an urgent basis. I took account of the fact that the first respondent had filed papers and it was ready to argue the matter.

[12] However, for the reasons set out above, I dismissed the application with costs. The fact that the application was so hopelessly without merit, and so lacking in transparency, impelled me to conclude that the application had been brought for improper motives. Accordingly, I dismissed the application with costs.

Reynaud Daniels

Judge of the Labour Court of South Africa

Appearances:

For the Applicant

Adv MJS Langa

Nicqui Galaktiou Inc

For the First Respondent

Adv CR Dames

Instructed by Payne Steynberg Inc

[1] The applicant made out no case whatsoever to set aside the writ, and this need not be considered further.

[2] Clause 8 of the settlement states that the parties consent to the settlement agreement being made an arbitration award.

[3] It appears from the High Court papers that the applicant secured the first respondent’s services through a recruitment agency, Rethink Talent, for which it undertook to pay the agency 20% of the CEO’s annual cost to company. Believing the applicant had failed to pay it in full, the agency instituted a claim for damages in the High Court. The applicant brought a counter claim, for damages, against the agency. The applicant alleges that the first respondent was unsuitable for the position, and it informed the agency of this.

[4] The notice of opposition was itself several days late. See answering affidavit, para 11.21.6

[5] See Rand Refinery (Pty) Ltd v Sehunane NO & others (2023) 44 ILJ 2434 (CC) at para 22

[6] [2017] 11 BLLR 1161 (LC) at para 28