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Msimango and Others v Mintroad Sawmills (Pty) Ltd (J1231/98) [1999] ZALC 22 (22 February 1999)

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the entire proceeds of the sale, R550000, were to be injected into the respondent.

6. The sale of the property obviously necessitated the closure of the Robertsham branch,

Mr. Smith testified. Its entire staff would be assimilated into the employee complement

at Alrode, but although the cash injection would initially relieve some pressure, the

respondent’s financial position was still precarious and it became apparent that the

production of certain products would have to cease, with the result that approximately

eight of its employees would become redundant.

7. A letter was accordingly addressed to the Union on 10 November 1997 in the following

terms:

re: OPERATIONAL STREAMLINING AND CLOSURE OF BRANCH

In accordance with the LRA 1995, section 189 (3) we hereby inform you that our

branch in Robertsham will cease to operate as of 19 December 1997, to coincide

with our annual shut-down, and furthermore it is our intention to stop production

on a number of our products, necessitating an overall dismiss of approximately 8

persons. It is indeed unfortunate but a number of contributing factors have led to

this decision, namely non-profit, drastic reduction in turnover, and an exhorbitant increase in raw materials and overheads.

The employees affected are labourers, we would look to the length of service of the

employees and to retainment of skills before deciding on who to dismiss, but would, more or less work on the lines of, last in first out. We propose a severance

package of 1 weeks pay in lieu of each completed year worked, and off course all

leave due to them. The chances of the branch being re-opened are nil, we have

already made arrangements for the sale of the stand, but if there is an improvement

in sales and it becomes necessary to employ more staff within 3 months of us

re-opening here in Alrode, then the people who were retrenched will be approached

and given the first opportunity for employment, should they wish.

Your assistance and input in making this move as smooth as possible would

be appreciated. Kindly bear in mind that this decision, in light of the fact that our

business was started over 50 years ago and was built up over the years with hard

work, was certainly not an easy one to make, in fact, the contributing factors have

more or less forced this on us.

We await your reply as to when we may meet, which has to be sooner rather than

later, as time is now running out.

ROY SMITH

MANAGING DIRECTOR

November 10, 1997

8. An exchange of at times confrontational correspondence then followed, with the detailed substance of which I do not consider it necessary, for reasons which will become apparent,

to burden this judgment. In essence, the Union’s stance was that closure of the Robertsham

branch had already been decided upon “before disclosure of information and before

consultation”. It was not prepared to enter into substantive discussions with the respondent unless and until the comprehensive financial information for which it repeatedly called,

was furnished. It is common cause that information that the respondent considered to be

relevant to and adequate for the consultation process was tendered by it on a basis of

inspection and examination which, having regard to the substance and volume of the material

in question, it considered reasonable, but that those tenders were rejected by the Union as

being unacceptable and inadequate for the purpose for which it was required.

9. The issues for determination by this court are defined in the minute of a pre-trial conference

between the parties as:

“Whether the respondent complied with the provisions of section 189 of the Act and

whether it disclosed a reason for the retrenchment of the applicants”.

10. The minute also records that the basis for the allegation by the applicants of substantive

fairness is that “no commercial rationale was shown by the respondent” to justify their

retrenchment. It emerged pertinently from the submissions made that that allegation was

sourced directly in the applicants’ contention that the respondent had failed or refused to

make financial disclosure to the Union on a basis which would substantiate such rationale.

11. A considerable portion of the two court days of this hearing was devoted to that issue.

Evidence from an expert witness called by the respondent, -a qualified member of its

Auditing firm, who testified and was cross-examined at length regarding the nature and

adequacy of the financial information tendered by the respondent, and further testimony

presented by Mr. Smith on that subject, was the subject of exhaustive examination by

Mr. D. Maluleke, representing the applicants. The challenge by the applicants regarding

alleged non-compliance by the respondent with the requirements of section 189 of the Act,

was the basis moreover of his comprehensive closing submissions to me.

12. It was only at that stage of the proceedings however, that a new factor was introduced by

Mr. G. Higgins, for the respondent, ostensibly as a point in limine. That, however, is a

misconception of the legal characterisation of his intervention. A point in limine is one

taken by a party at the onset of the matter and which might bear upon the subsequent

conduct of the proceedings. It is not one raised at the conclusion stage when issues in and

aspects of the dispute which might otherwise have been obviated, have already been

canvassed.

13. That said however, if the point, at whatever stage it is raised, has legal validity in the

in the context that it might possibly have material relevance to the determination of the

matter, then, subject to issues of costs which might arise from its irregular presentation,

it is incumbent upon the court to hear and consider it.

14. The whole question of the adequacy of the tender and substance of financial disclosure by

the respondent, and of its general compliance with section 189, Mr. Higgins submitted, was

res judicata. It had been exhaustively dealt with and disposed of in the context of an

urgent application brought by the Union and other applicants, including those in the

present matter, against the respondent in December 1997 for an order interdicting the

respondent from proceeding with its proposed retrenchment of those applicants.

15. In papers filed in that application, precisely the same allegations regarding purported

financial non-disclosure were made as those now before this court. In the result, the

application was dismissed and in the written reasons for that order, Grogan A.J., at

page 10 of the judgment, having comprehensively examined the same documentation now tabled in this matter, came to the following conclusion:

“I am satisfied that by 24 November 1997 the respondent had disclosed all relevant

information regarding the matters expressly specified in section 189 (3) -namely, the reasons for the proposed dismissals; alternatives considered before proposing

the dismissals and the reasons for their rejection; the number and job categories of

employees likely to be affected; the proposed methods of selection of employees

affected; the timing of the dismissals; severance pay and assistance proposed; and

the possibility of re-employment. By then, the only information outstanding was

that related to the respondent’s financial circumstances and other matters first

demanded by the first applicant on 25 November 1997. It is by allegedly denying

this information (and particularly, as I understand the case from the bar, the financial

details) that the applicants claim the respondent has breached its duty to consult.

The respondent, for its part, contends that it did not deny the first applicant access

to the information, but on the contrary took reasonable steps to ensure that its

officials could have sight of it if they so wished.

The first applicant cannot and does not deny that it could have availed itself of the

three express offers by the respondent to peruse its financial documents. What it

did, instead, was to insist, first, that the respondent deliver over the documents and,

second, that it abandon its decision to proceed with the retrenchments when finally,

on 4 December 1997, it agreed to inspect the documents at the respondent’s

premises. By that stage, it had already had more than a week to avail itself of the

respondent’s offer to inspect the documents with the assistance of the respondent’s

auditor. By that stage, it also knew that the persons selected for retrenchment on

18 December 1997 had been advised thereof.

At page 15, the judge continued:

“Given the first applicant’s repeated failure to attend meetings and to accept

invitations to inspect books, the respondent can be forgiven for concluding by

9 December that the first applicant was engaging in delaying tactics.

On the papers, therefore, I cannot conclude, as the applicants contend that I should,

that the respondent breached section 189 by refusing to disclose information or by

frustrating the duty to consult. This is not the case, like NUMSA v Comark Holdings

(Pty) Ltd [1997] 5 BLLR, upon which the applicants sought to rely, where the

employer had, after inviting the union to consult on possible staff reductions,

unilaterally taken the decision to reduce its workforce while the union was still

consulting with its members under the impression that a further meeting was to take

place. It is also distinguishable from FAWU v Simba (Pty) Ltd [1997] 4 BLLR 408

(IC), in which the employer was restrained from closing a factory and terminating the services of the employees concerned for a period laid down by a collective

agreement which bound the employer not to retrench for a period of six weeks after notice thereof was given, and in which such notice was not given. In this case,

it was the first applicant that chose not to consult, first, because in its view the

respondent had already made up its mind, then because the respondent declined to

deliver documents it had requested and, finally, because the respondent refused

expressly to undertake to halt the retrenchments indefinitely while the first applicant

made good the delays that had been caused by its own deliberate decision not to

engage in consultation.”

16. In the present matter, no evidence other than the documentation submitted by agreement

between the parties, was presented by or on behalf of the applicants, Mr. Maluleke’s

expressed position being that they relied solely on those documents and the evidence in

chief and under cross-examination of the respondent’s witnesses, to substantiate their

claims.

17. That documentation in its entirety was precisely that upon which Grogan, AJ based his

findings in the application proceedings referred to, and there is nothing, in my view, in

the testimony which I have heard in this matter, which would justify any different

conclusion on my part with regard to what are in essence the same contentions and

allegations now made by inter alia, the same applicants, in these proceedings.

18. The concept of the exceptio res judicata in the context of interdict and trial proceedings

was analysed, also by Grogan,AJ in the as yet unreported Labour Court matter of

National Union of Mineworkers v Elandsfontein Colliery (Pty) Ltd

Case No. J801/98

19. Following a comprehensive review of relevant case authority, the judge said this:

“ It follows in my view, that in the civil law the plea of res judicata can

in principle be raised as an exception in trial proceedings when the original

judgment upon which the excipient relies was given for purposes of an

interdict application. If this principle is applied in the context of the Labour

Relations Act, it follows that again in principle, a judgment handed down in

an application brought in terms of section 158(1), (i) or (iv) can be relied upon

for purposes of a plea of res judicata in respect of a referral in terms of section

191.

I have emphasised the words “in principle” advisedly. Whether the

requirements of plea of res judicata will be satisfied in any particular case

must depend on various considerations including, in particular, the likelihood

that issues or evidence not dealt with in the prior judgment might emerge

were the matter to go to trial: Ward v Cape Peninsula Ice Skating Club 1998

(2) SA 487 © at 501-2; Kommissaris van Binnelandse Inkomste v ABSA Bank

Bpk 1995 (1) SA 653 (A) at 669F-1.

20. I am in full agreement with that analysis. I have already stated that, in my view, no issues or evidence have emerged in this matter which were not fully canvassed in the earlier

application proceedings between the parties. In these circumstances, the respondent’s plea

of res judicata is valid and the applicants’ claims must fail.

21. In view of the fact however, that, as I have stated, that plea was raised virtually at the

conclusion, rather than properly at the inception of the matter, it does not seem to me that

the applicants should be burdened with costs that might possibly have been avoided or significantly curtailed had normal procedures been followed in that regard.

22. I accordingly make the following order:

(a) The application is dismissed.

(b) There is no order as to costs.

------------------------------------

B.M. JAMMY

ACTING JUDGE OF THE LABOUR COURT

Dates of hearing: 10 and 11 February 1999

Date of judgment: 22 February 1999

For the applicants: MR. D. MALULEKE

For the respondent: MR. G. HIGGINS

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