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IN THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN

Not Reportable

Case no: C 482/17

In the matter between:

SEAN PRINSLOO                                                               Applicant

And

EXPIDOR 163 CC t/a THE LEAGUE

OF GENTLEMEN                                                                First Respondent

J.S WILSON                                                                       Second Respondent

Heard:           1 August 2018

Delivered:     9 May 2019

JUDGMENT

TLHOTLHALEMAJE, J:

Introduction and background:

[1]          Following his dismissal by the first respondent (Expidor 163 CC t/a the League of Gentlemen) (Incorrectly referred to as ‘Explorer 163 CC t/a The League of Gentlemen’ in the arbitration award (and herein referred to as Expidor)), the applicant, Sean Prinsloo referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (The CCMA). Prinsloo subsequently obtained a default award in his favour in the absence Expidor. The second respondent, (JS Wilson) is registered as Expidor’s sole member, which is a close corporation.

[2]          In a default award issued on 22 February 2016, Commissioner Verhoog of the CCMA found that the dismissal of Prinsloo on the grounds of Expidor’s operational requirements was procedurally and substantively unfair. Prinsloo was awarded an amount of R165 669.52, inclusive of compensation equivalent to three months’ remuneration, and other outstanding statutory payments.

[3]          On 20 January 2017, the default arbitration award was made an order of this Court under case number J935/16 in accordance with the provisions of section 158(1)(c) of the Labour Relations Act (LRA).[1] On 21 February 2017, Prinsloo with the assistance of the Sheriff of the Court attempted to execute the Court order. Wilson had initiated interpleader proceedings, claiming sole ownership of all the movables contained in the inventory of goods which the Sheriff sought to attach. The Sheriff returned with a certificate nulla bona.

[4]          It is against the above background that Prinsloo approached this Court to seek an order in the following terms:

a)            That Wilson be joined as a party to these proceedings;

b)            That it be the ordered that the Wilson was his true employer;

c)            That Wilson is jointly and severally liable with the Expidor for obligations arising from the employment relationship between him and the Expidor;

d)            That the Wilson is jointly and severally liable with the Expidor to comply with arbitration award issued in his favour on 22 February 2016 case number WECT 15946/16

[5]          Wilson opposed the joinder application on various grounds, including that Prinsloo had failed to demonstrate that a joinder was permissible and regular in the circumstances. He submitted that he would suffer substantial prejudice if the joinder was allowed. He further contended that Prinsloo had failed to comply with the requirements of section 64 read with section 65 of the Close Corporations Act in demonstrating there was an abuse of the juristic persona of Expidor, which necessitated the apportioning of liability to him as a member of the corporation.

[6]          In his founding affidavit, Prinsloo in support of the application averred the following;

6.1.       He was employed on 4 March 2014 as Marketing Manager for Expidor until 16 October 2016, which was then known as ‘The League of Gentlemen’ (‘LOG’). LOG was an upmarket shuttle service provider, catering for businesses and other entities.

6.2.       His employment followed upon an interview with the then Operations Manager of LOG, the late Derrick Stewart, and its owner Wilson. His letter of appointment confirmed his appointment by LOG, which he had signed. Steward signed on behalf of LOG. Whilst employed by LOG, he resided at Wilson’s property like all other employees employed by him.

6.3.       On 6 July 2015, Stewart passed away, and he (Prinsloo) subsequently held a meeting with Wilson, who had informed him that he intended to close down LOG with immediate effect as he had been supporting Stewart to run it for over a long period without any returns.

6.4.       Wilson however proceeded to offer LOG as a business to him for a sum of R297.000.00. The offer came with LOG’s clients’ data base, all bookings already made, cellular phone and e-mail address. Despite numerous attempts, Prinsloo failed to secure the necessary funding to acquire the business, and after the deadline set by Wilson came and went, the deal collapsed. He did not hear from Wilson thereafter despite staying on his property.

6.5.       On 15 September 2015 and subsequent the intervention of his union (Solidarity), Wilson’s attorneys of record in correspondence to Solidarity advised that LOG was the trading name of Expidor 163 CC, and that Prinsloo was employed by the latter entity.

6.6.       On 23 September 2015, Prinsloo with the assistance of Solidarity then referred an unfair labour practice dispute to the CCMA. Wilson had attended the conciliation proceedings, and advised the CCMA conciliating Commissioner that LOG was insolvent, and confirmed that Prinsloo was dismissed.

6.7.       Upon the advice of the CCMA Conciliating Commissioner, Solidarity referred another dispute (unfair dismissal) on or about 19 October 2015, citing Wilson and Expidor 163 t/a The League of Gentlemen as the respondents. Wilson had attended the second conciliation hearing convened on 9 November 2015, and when the dispute could not be resolved, it was referred for arbitration.

6.8.       Wilson however failed to attend the arbitration proceedings, resulting in the default arbitration award, which was subsequently made an order of Court.

6.9.       Prinsloo averred that he only became aware that Expidor existed when LOG contemplated his dismissal during August 2015. Prior to that period, he had held the view that the LOG was his employer and that Wilson was its Sole Proprietor.

The issues for determination:

[7]          Two principal intertwined issues are up for consideration in this case. The first pertains to whether Wilson should be joined as a party in circumstances where Prinsloo is in possession of a favourable arbitration award, and aligned to that is whether this Court should pierce the corporate veil for the purposes of finding Wilson liable in terms of that arbitration award.

Application for a joinder:

[8]          Prinsloo is of the firm belief that Wilson ought to be joined for the purposes of liability on the following grounds;

8.1         The address at which the luxury vehicles of LOG were stored is essentially the same premises the personal vehicles of Wilson were also stored and/or repaired.

8.2         The restoration of all the vehicles at this address were done by Wilson and four other employees, and his premises also served as business and/or operating offices.

8.3         Wilson had indicated that Expidor was conceptualised for the benefit of his friend, Stewart, and Wilson had consistently directed finances to Expidor, which was running at a loss during that period.

8.4         Wilson had offered to sell LOG, together with its website and personal vehicles to him. He was also the provider of tools and infrastructure for the operation of the business, his personal vehicles were utilised to operate the business, and he had paid his remuneration during his employment.

8.5         Wilson assumed responsibility for the statutory amounts owing to him, and that concession accordingly was inconsistent with Wilson’s defence that Expidor was the true employer. The acknowledgment of debt was further indicative of an admission that Wilson was the true employer, or that both legal personalities were indistinguishable for the purpose of the operation of the business.

[9]          In opposing the application for a joinder, Wilson relied on Riding for Disabled v Regional Land Claims Commissioner & Others[2] for the proposition that it was desirable for the affected party to be afforded an opportunity to be heard in proceedings that culminated in the judgment debt. Wilson argues that should he be joined to the proceedings at this point, he may be substantially prejudiced on the basis that he would have played no role in the proceedings that resulted in an outcome that shall affect him personally in view of the fact that the unfair dismissal proceedings have been concluded in the CCMA. In the result, he contends that his right to a fair trial (i.e. the right to be heard) would be unjustifiably infringed and a joinder in circumstances where it might cause prejudice is impermissible.

[10]       The test to apply in considering whether a party should be joined in proceedings is whether the party sought to be joined has “substantial interest in the subject matter of the proceedings[3]. Central to this dispute however is whether a joinder is permissible where it is only sought for the purposes of executing a court order.

[11]       The approach of our courts has been that a party may not be joined to proceedings if that party had not been a party to the conciliation process, and further that a joinder may not take place after judgment has been handed down[4]. The reasoning behind this approach is that any party should be afforded an opportunity to be heard in a matter where it has a direct and substantial interest[5]. A further important factor is that a party sought to be joined is entitled to be heard on the specific question of the relief[6].

[12]       The question of whether Wilson should be joined in these proceedings is in my view moot. Inasmuch as the legal principles relied upon in regard to the question of joinder are irrefutable, the facts and circumstances of this case however indicate that it is not even necessary to get to that point. My reasons in this regard are as follows;

12.1      From the annexures to the founding affidavit, a second referral[7] was launched at the CCMA on 19 October 2015, with Wilson being cited as a party.

12.2      In the referral form, Prinsloo or Solidarity had on his behalf under paragraph 2 (‘Details of the other party (Party with whom you are in dispute’)), cited both Expidor and Wilson. Wilson’s denials that he was not cited are thus patently untrue, as the referral form indicates otherwise.

12.3      Having been cited, Wilson had attended the conciliation meeting. His contention that he had elected not to participate in the proceedings before the CCMA as at the time he did not run any risk of liability does not avail him. The risks were always there that such liability may arise, and he was aware of them as he had sought to mitigate them when he attended the first and second conciliation proceedings. To that end, any prejudice he may have suffered as a consequence of that election is clearly self-inflicted.

12.4      It is true from a reading of the arbitration award that the Commissioner may not have specifically made an order against Wilson. That however is not the point in that an award was made against Expidor, giving rise to questions surrounding his liability. However, to the extent that he was cited and had failed to attend the arbitration proceedings even though he had attended the conciliation proceedings, it cannot be argued that he was not afforded an opportunity to be heard prior to the default award. He had effectively waived his right to be heard.

[13]       In the light of the above, it is apparent that the application for a joinder was not necessary in the first place, as Wilson was properly cited in the CCMA referral.

[14]       Inasmuch as Wilson seeks to deny liability, he nonetheless sought to attack the award on a variety of grounds, which attacks are in any event belated. If he was aggrieved by the outcome of the award as he appears to suggest in his answering affidavit[8], it was up to him to pursue rescission proceedings. It can further not be correct as he had suggested, that he would not have had locus standi to seek a rescission. As already indicated, he was cited, and thus a party to the proceedings before the CCMA,. To this end, any averments made and objections raised by Wilson in regards to the arbitration award are immaterial to this application as correctly pointed out on behalf of Prinsloo.

Piercing the Corporate veil:

[15]       The only issue for consideration to the extent that the arbitration award does not specify Wilson’s liability is whether facts have been placed before the Court for the piercing of the corporate veil, in order for a conclusion to be reached that Wilson was Prinsloo’s employer and therefore liable for the payments arising from the arbitration award.

[16]       When the veil of incorporation is pierced or lifted, the consequences thereof are that the protective covering of the limited liability presented by the company structure is stripped away[9]. It is trite that courts do not enjoy a general discretion to disregard the separate juristic personality of a legal entity, and that the piercing of the corporate veil is ‘an exceptional procedure’.

[17]       Exceptional circumstances permitting the piercing of the corporate veil will ordinarily include instances where there is fraud, dishonesty or other improper conduct in the establishment or use of the corporation or the conduct of its affairs[10]. These principles were considered in detail in Airport Cold Storage (Pty) Ltd V Ebrahim and Others[11], where the Court held as follows;

9.    “Whatever form it takes, veil piercing is an 'exceptional procedure', and, as pointed out by Scott JA in Hülse-Reutter and Others v Gödde, a court has no general discretion simply to disregard the existence of a separate corporate identity whenever it considers it just or convenient to do so. However, the circumstances in which a court will disregard the distinction between a corporate entity and those who control it are 'far from settled':

“Much will depend on a close analysis of the facts of each case, considerations of policy and judicial judgment. Nonetheless what is, I think, clear is that as a matter of principle in a case such as the present there must at least be some misuse or abuse of the distinction between the corporate entity and those who control it which results in an unfair advantage being afforded to the latter.”

10.  In The Shipping Corporation of India Ltd v Evdomon Corporation and Another Corbett CJ required proof of 'an element of fraud or other improper conduct in the establishment or use of the company or the conduct of its affairs' before a court can pierce the corporate veil.

11.  This requirement of fraud or other improper conduct finds resonance in the provisions of s 65 of the Act, where the legislature, with regard to close corporations, has created a statutory remedy 'which is equivalent to (the court's) jurisdiction at common law to ''pierce the corporate veil'' in relation to a company'. Liability under this section depends on a finding of 'gross abuse of the juristic personality of the corporation as a separate entity'. However, no attempt has been made in the section to indicate the facts or circumstances that would qualify as a gross abuse of the juristic personality of the corporation as a separate entity. The courts are required, in other words, to give content to the open-ended concept of 'gross abuse', based on the facts of each particular case. This exercise does not take place in a vacuum, however, and it is axiomatic that the principles and categories developed with regard to piercing the corporate veil in the context of company law will serve as useful guidelines in this context.

12.  The starting point is that veil piercing will be employed 'only where special circumstances exist indicating that it [i.e. the company or close corporation] is a mere façade concealing the true facts'. Fraud will obviously be such a special circumstance, but it is not essential. In certain circumstances the corporate veil will also be pierced 'where the controlling shareholders do not treat the company as a separate entity, but instead treat it as their ''alter ego'' or ''instrumentality'' to promote their private, extracorporate interests': Although the form is that of a separate entity carrying on business to promote its stated objects, in truth the company is a mere instrumentality or business conduit for promoting, not its own business or affairs, but those of its controlling shareholders. For all practical purposes the two concerns are in truth one. In these cases there is usually no intention to defraud although there is always abuse of the company's separate existence (an attempt to obtain the advantages of the separate personality of the company without in fact treating it as a separate entity).

13.  Against this background, I turn to consider whether the plaintiff has established that the defendants have in fact abused the separate juristic personality of the close corporation in question.”[12] (Citations omitted)

[18]       Prinsloo seeks to have the corporate veil pierced and for an order to be made that would allow him to recover the amounts due to him by virtue of the arbitration award from Wilson. In this regard, he submitted that;

18.1      Once a corporation is nothing but an alter ego of its members, then there was nothing in law that would preclude a party from seeking relief from its members who are shown to have acted improperly[13].

18.2      In matters where the piercing of the corporate veil must occur, the courts will consider the corporate’s scope of operation, the members’ role and their function and powers, the amount of debt, the extent of the financial hardship, the prospect of recovery and the extent of the harm caused by the members’ conduct[14].

18.3      In this case, Wilson misused and abused the principal corporate personality of Expidor, to improperly avoid liability for obligations incurred as a result of his unfair dismissal from his employ, and therefore, the need to preserve the separate corporate identity would have to be disregarded in the light of considerations which arise in favour of piercing the corporate veil.

18.4      He was never aware of the existence of Expidor, and was never advised that he was employed by Expidor and not Wilson until the timing of his dismissal. He had however reported directly to Wilson or Stewart, and Wilson had acted as his employer at all times. To this end, Wilson and Expidor were inseparable as far as his employment with LOG was concerned.

[19]       Wilson in opposing the application made the following submissions;

19.1.    He and Stewart conceived an idea of a business of an up-market shuttle service. At the time, he was a sole member of a Close Corporation (Expidor) and owned luxury vehicles which he earmarked for the business venture (operating the shuttle service). The shuttle business would utilise his luxury vehicles in a form of a loan to operate and earn an income for Stewart and his family.

19.2.    Wilson further bought (on behalf of the Expidor), the same business idea for a third party for an amount of R100 000, which included a motor vehicle, a client book and secured bookings. The idea resulted in the birth of LOG.

19.3.    Expidor operated the business of LOG which had its own banking account, an accountant, and was operated on day-to-day basis by Stewart and his wife. In the end, Expidor owed him loans in an amount equivalent to R347 962.00.

19.4.    He further averred that he had no personal involvement in the day-to-day operations of LOG, and that his role was limited to bankrolling the business when the need arose.

19.5.    He further denied that he had interviewed Prinsloo for the position of Marketing Manager and contended that that his role in the appointment was limited to approving Prinsloo as a candidate, as he was the financial sponsor of the business.

19.6.    The relief sought by Prinsloo when holistically viewed was tantamount to that as contemplated in the provisions of section 65 of the Close Corporations Act and in the circumstances, Prinsloo ought to have sought an order declaring that Expidor was not a separate juristic persona and his claim lay with Wilson.

19.7.    Prinsloo according to Wilson had failed to meet stringent requirements for a successful claim for piercing of the corporate veil, and the Court did not have a general discretion to pierce the corporate veil for the purposes of attributing liability to the individual member.

19.8.    For a successful claim for piercing the corporate veil, Prinsloo had to prove fraud and/or improper conduct in the running of the corporation’s affairs. Thus the burden of proving that Expidor was ran in a fraudulent or improper manner with the intent of avoiding its obligations was on Prinsloo.

19.9.    Considering these factors, Wilson contends that the inability of the corporation to satisfy the judgment debt does not constitute improper conduct that may justify the piercing of the corporate veil, nor did it justify the holding of its members liable for the corporation’s obligations and liabilities.

19.10. Prinsloo had not revealed any improper conduct except to erroneously allege that he only became aware during August 2015 of the existence of Expidor. In view of the fact that Prinsloo was provided with documents in respect of the proposed sale of the business, it is inconceivable that the he only became aware of Expidor in August 2015.

[20]       Wilson contends that what Prinsloo seeks as can be gleaned from the prayers in the Notice of Motion is an order in terms of section 65 of the Close Corporation Act[15], and under those circumstances, he ought to have sought an order declaring Expidor not to be a juristic person in respect of the right he seeks to enforce against him. It was further contended that absent such relief being sought and granted, the separate corporate personality of Expidor must be recognised, and any of its obligations remains its own only.

[21]       The difficulty however with the above argument is that nowhere in his pleadings does Prinsloo make any reference to the provisions of section 65 of the Close Corporation Act. His main contention was that what needs to be determined is whether upon the piercing of the corporate veil, Wilson should be found to be the true employer. There can therefore be no merit on the reliance of the provisions of section 65 of the Close Corporation Act, when Prinsloo’s case is not grounded on those provisions.

[22]       What Prinsloo seeks is an order declaring that Wilson was his true employer for the purposes of joint and several liability in respect of obligations arising from his employment relationship with Expidor. In any event, it was held in L & P Plant Hire BK v Bosch[16] that the provisions of section 64[17] should not be applied where the corporation was in a position to meet the debt in question, and that it should be of no concern to the creditor if the person who acted on behalf of the close corporation has been reckless or even fraudulent, as the creditor’s only interest is to recover the debt owed to him[18].

[23]       In this case, it was Prinsloo’s contentions that his claim against Expidor qualified him as a creditor in any liquidation proceedings that may have been initiated by or against Expidor. He had submitted that he had not however been approached or advised of any liquidation proceedings. To that end, and to the extent that Wilson in the pleadings had not responded to his contentions that Expidor had not been liquidated, it should be concluded that it was not.

[24]       To the extent that it was Prinsloo’s contentions that Wilson was the only member of the Close Corporation and in effect the same person as the corporation wearing different hats, it is accepted that in certain cases the Court has disregarded the company’s separate legal personality and focused on the natural person or persons ‘behind’ the company as if there were no dichotomy between such person or persons and the company[19]. In this regard, it is further accepted that in certain instances, the corporate veil ought to be pierced where the business of a close corporation was so enmeshed with that of the respondent company that the respondent could be regarded as the real employer of the applicant. In some instances, it has also been held that it was not even necessary for the purposes of establishing an employment relationship formally, to pierce the corporate veil[20].

[25]       Prinsloo in substantiation of his claim that the corporation was the mere alter ego or business conduit of Wilson, averred that the LOG was effectively Wilson’s operation based on the following:

25.1      Wilson did not disclose the existence of Expidor or true identity of the corporation until his contemplated dismissal;

25.2      Wilson was effectively involved in the day-to-day operations of the business, and the appointment of employees. Furthermore, all the financials of the corporation were vested in him;

25.3      Wilson had at all material times acted as his employer and the sole proprietor of Expidor and in the result, the juristic persona of Expidor and Wilson were inseparable and indistinguishable.

25.4      Almost all the assets including the means of operations (the vehicles) were owned by Wilson in his personal capacity, and the business address and the storage facility was under the control of Wilson.

25.5      Wilson had accepted liability for the retrenchment package (severance pay), he was entitled to in terms of legislation;

25.6      The employees were at all material times were under the impression that Wilson was the owner of the LOG.

25.7      The identity of Expidor was withheld and misused in order to avoid the obligations arising from the employment relationship and in particular the unfair dismissal claim.

[26]       Wilson disputed the above contentions and submitted that in view of the dispute of facts, the application ought to be dismissed. The disputed facts raised by Wilson are as follows;

26.1      He was effectively not involved in the employment of Prinsloo, had not interviewed him or provided him with a letter of appointment, or entered into any agreement with him in regards to the terms of his employment. He denied having provided him with accommodation as part of his employment agreement.

26.2      Wilson disputed that he exercised any form of authority over Prinsloo, and further disputes that he paid him his salary, including an amount of R12 225.00 per month as he had alleged at the CCMA.

26.3      Despite Prinsloo being informed in July 2015 after the death of Stewart that Expidor would cease trading with immediate effect, he informed the CCMA that he only got to know of his retrenchment in October 2015.

[27]       It is trite that in motion proceedings, disputes of fact arising from the pleadings where a final order is sought are resolved by the application of the principles enunciated in Plascon-Evans Plaints (TVL) Ltd v van Riebeck Plaints (Pty) Ltd[21]. These principles were further explained in National Director of Public Prosecutions v Zuma[22] as follows;

“Motion proceedings, unless concerned with interim relief, are all about the resolution of legal issues based on common cause facts. Unless the circumstances are special they cannot be used to resolve factual issues because they are not designed to determine probabilities. It is well established under the Plascon-Evans rule that where in motion proceedings disputes of fact arise on the affidavits, a final order can be granted only if the facts averred in the applicant's (Mr Zuma’s) affidavits, which have been admitted by the respondent (the NDPP), together with the facts alleged by the latter, justify such order. It may be different if the respondent’s version consists of bald or uncreditworthy denials, raises fictitious disputes of fact, is palpably implausible, far-fetched or so clearly untenable that the court is justified in rejecting them merely on the papers...”

[28]       In applying the above principles to the facts of this case, it ought to be concluded that based on the observations as shall be illustrated below, Prinsloo’s claim should succeed on the basis that Wilson’s denials are not genuine dispute of facts that could necessitate the dismissal of the claim or a referral of this dispute for oral evidence[23]. Further emanating from the pleadings, the Court is of the view that Wilson’s allegations and denials are clearly fictitious, palpably implausible, far-fetched and/or so clearly untenable that they ought to be rejected merely on the papers. My conclusions in this regard are based on the following;

28.1      Wilson did not dispute that on Stewart’s advice, a pre-employment meeting with Prinsloo was convened to assess his suitability for the position of marketing manager. Wilson attended that meeting and in his answering affidavit, he merely disputed the purpose of that meeting, contending that he attended it as a ‘favour’ to Stewart, who may have wanted his approval as the financial muscle of the operations.

28.2      Wilson had admitted discussing the operations of the LOG in that meeting, with a view of adopting a turnaround strategy, and had from that meeting, formed a view that Prinsloo was competent and suitable for the position of marketing manager. His contentions that he merely discussed the business in broad terms without interviewing him seems to be far-fetched.

28.3      Wilson met Prinsloo at the commencement of his employment, and however denied that he had instructed Steward to present him (Prinsloo) with a letter of appointment.

28.4      According to Prinsloo, his salary was paid by Wilson in cash and he stayed on his property during the period of his employment. Wilson’s contentions are that Prinsloo stayed on his property as he did him a favour as he was struggling to sort out his accommodation.

28.5      Although Wilson denied being responsible for the day-to-day running of the operations, he nonetheless admitted that he was the sole member of the corporation, which was revived with the sole purposes of operating the LOG. He had further admitted that he provided periodic financial injection to the operations, regularly attended at the premises of the business and that the assets of the corporation were stored and maintained under the same roof. He conceded that ‘notionally, he owned’ the business, even though he never traded through it other than to assist Stewart to operate the LOG.

28.6      Wilson admitted that he conceived the business, provided it with infrastructure and finances. He held ownership of the vehicles which were the core of the operations of the Expidor’s business, and the vehicles were retained in his name, albeit he contended that this was done in order to mitigate against any loss that the business may suffer and in order to protect his investments, and for the luxury vehicles to serve as security for the loans granted in favour of Expidor.^[24]

28.7      Wilson contended that the LOG was conceived for the purpose of assisting Steward in generating an income after his previous business venture collapsed. Even if those factors were relevant for the consideration of personal liability, in line with what was stated in Cape Pacific Ltd v Lubner Controlling Investments, it was immaterial whether the corporation was established for a legitimate purpose in circumstances were fraud, dishonestly or improper purposes has been shown.

28.8      Wilson admitted that he had advised Prinsloo of his dismissal and offered to pay him a retrenchment package in respect of his contemplated dismissal on account of Expidor’s operational requirements. He however denies that he had offered the severance package in his personal capacity. At the time that the offer of a severance package was mentioned, it was disclosed that LOG was a close corporation, something that was never brought to Prinsloo’s attention at the time of his employment

28.9      Wilson had offered to sell LOG, its website, bookings, and vehicles to Prinsloo. On his version, when Stewart’s health started to deteriorate, he had the vehicles and administration of the business moved to his own smallholding, as he was ‘concerned with the welfare of Stewart’. The question that needs to be asked in these circumstances is why Wilson would want to sell assets that did not belong to him, even if he had financially supported the business. If the business was insolvent upon the death of Stewart, the issue is how he could have on his own wished to dispose of those assets without any legal proceedings having been instituted insofar as other creditors, if any, were concerned. It is apparent from the attempted sale of the assets, that Wilson made not distinction between himself and Expidor, a corporation of which he was the sole member.^[25]

[29]       In the light of the above observations, and further having examined the substance rather than the form of the business of Expidor, it is my view that Prinsloo has discharged the evidential basis to disregard a company's separate personality, and a case has been made out as to why the corporate veil in respect of Wilson should be lifted. Furthermore, the facts and circumstances of this case are such that the business of Expidor was so enmeshed with that of Wilson that Prinsloo’s impression that he (Wilson) was indeed his true employer was reasonable under the circumstances.

[30]       It is apparent that the affairs of Expidor were conducted in the manner that they were indistinguishable from those of Wilson in his personal capacity, and clearly the corporate personality of Expidor was misused and abused as a facade by Wilson, resulting in an unfair advantage to him as an individual controlling Expidor. In this regard, it is worth repeating that Wilson was the sole member of Expidor, owned all the vehicles used by Expidor, provided Expidor with all financing, premises, and vehicles to conduct its business. He provided operational capital and had assumed all responsibility of Expidor’s debts after the death of Stewart, and further sought to sell Expidor’s assets. Other considerations are that Wilson’s personal luxury vehicles were stored and maintained in the same premises in which those of LOG were stored and maintained by the same employees. In the absence of any formalised arrangements in respect of the maintenance and storage of the vehicles, the invariable conclusion to be reached is that indeed the assets were considered as one for all purposes.

[31]       A further worrisome consideration is that the true identity of the business was only revealed after the death of Stewart and when a dismissal was to take place. In my view, it is irrelevant whether Prinsloo got to know the true identity of the business in July or October 2015, in that this ought to have been made clear and disclosed to him when he joined the business in March 2014. To this end, the only inference to be drawn is that Wilson made the disclosure at the point that he did, with the improper intention of avoiding his obligations and liabilities in relation to any steps that may have been taken against Expidor, with the intention to place Prinsloo or any other creditor in a disadvantaged position.

[26]       In the light of the above conclusions, it follows that Prinsloo’s claim ought to succeed. I have further had regards to the requirements of law and fairness, and I am of the view that a costs order is not warranted in this case.

[27]       In the premises, the following order is made;

Order:

1.    The Second Respondent (J.S Wilson) is liable for the obligations arising from the employment relationship between the Applicant and the First Respondent (Expidor 163 CC t/a the League of Gentlemen).

2.    The Second Respondent is liable to comply with the arbitration award issued in favour of the Applicant dated 22 February 2016 under case number WECT 15946/15, which award was made an order of this Court on 20 January 2017 under case number J935/16.

3.  There is no order as to costs.

____________________

Edwin Tlhotlhalemaje

Judge of the Labour Court of South Africa

Appearances:

For the Applicant:                Mr W. Jacobs of Willem Jacobs & Associates

For the Respondents:                    Adv. T. Möller, instructed by Johan Venter & Associates

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