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Furniture Bedding & Upholstery Industry Bargaining Council Greater Northern Region v Acraft Investments (Pty) Ltd (A1420/2005) [2007] ZAGPHC 230; (2008) 29 ILJ 939 (T) (10 October 2007)

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VISSER, AJ:

Application for condonation:

1. At the hearing of the appeal the appellant (to which I shall refer as “the Council”) applied in limine for condonation of its failure, in contravention of Uniform Rule 49(7)(a), to file with the Registrar of this Court and serve on the Respondent (herein referred to as “Acraft”), copies of the record of the appeal at the time when application was made for a date for the hearing of the appeal. The application was not opposed. An explanation had been given on behalf of the Council. It appears that the non-compliance had not been gross, that there had not been an undue delay to rectify the non-compliance, that there was no prejudice to Acraft and that the Council has a reasonable prospect of success in the appeal. (Melane v Santam Ins co. 1962 (4) SA 531 (A), at 532). In the exercise of our discretion, we consequently allowed the application for condonation. (United Plant Hire (Pty) Ltd. v. Hills and Others, 1976 (1) SA 717 (A) at 720E_G)

The application:

2. Acraft launched application proceedings against the Council on 4 October 2004, claiming a declaratory order to the effect that the second to ninth respondents (herein referred to as “the employees”) were at all material times employees of the Council and not of Acraft. In addition, Acraft claimed the repayment of certain amounts it had paid to the Council in respect of the remuneration of the salaries of the employees. It is to be noted that the tenth respondent is deceased, but that he was previously in the same position as the second to the ninth respondents. There is no need to deal with his situation separately.

3. The Council opposed the application. In its opposing papers it alleged that the employees had previously been in the employ of two companies, to which I shall more fully refer hereafter, and that they had become employees of Acraft as a result of a contract of sale of the business by the said companies to Acraft.

4. The matter came before Bosielo J who, on 20 July 2006, granted the declaratory order as requested by Acraft, but declined to order any repayment of moneys. The declaratory order which was granted in favour of Acraft provided:

a) That at all relevant times, there was a valid contract of employment in existence between the Council and second to tenth the respondents;

b) That there is at present and valid contract of employment in existence between the Council and second to ninth respondents;

c) That no valid contract of employment exists between Acraft and second to ninth respondents; and

d) That there had never been a valid contract of employment in existence between Acraft and the tenth respondents;

e) The first respondent was ordered to pay the costs of the application as between attorney and client.

5. The Council now appeals to the Full Court of this Division, leave having been granted, against the judgment and orders of the Court a quo.

Factual background:

6. The circumstances which gave rise to the application were that two companies, Meubelsentrum Properties (One) (Pty) Ltd and Meubelsentrum Properties (Two) (Pty) Ltd were property owning companies which owned a building known as “Meubelsentrum”, a 12-story building, erected on a property known as erf 1024 and 1025, situated at 111, Kerk Street, Johannesburg. These two companies were referred to in the affidavits as the “JV Companies”. I shall adopt that reference in this judgment.

7. According to an answering affidavit, attested to by one WAJ van Rensburg (“Van Rensburg”), the sole business of the JV Companies was the letting and hiring of the Meubelsentrum building, primarily for the purpose of accommodating the Council. He explained that the primary purpose of the JV Companies was consequently not to make profit, but that certain shops and parking bays were, however, rented out to third parties.

8. Van Rensburg stated in his affidavit that due to the drastic change in the quality of life in the area of Johannesburg where Meubelsentrum is situated, the Council resolved to sell the building. Acraft had expressed interest in purchasing the building, and extended negotiations were conducted between the JV Companies and Acraft.

9. At the time the Council had been paying the difference between the running expenses of the building and whatever rental income was received from other tenants, as “rental” for its occupation. The Council realised that if the building was to be sold, the aforesaid rental agreement would have to be formalised. The expressed intention during the negotiations between the JV Companies and Acraft was that the Council would remain a tenant in Meubelsentrum, and, in fact, the anchor tenant, after the sale of the building. This suited Acraft who wanted to enjoy security of tenancy of lessees.

10. Negotiations between Acraft and the JV Companies commenced around May 2002. Inter alia, a draft copy of the audited financial statements of the JV Companies was disclosed to Acraft on 18 October 2002. On about 24 October 2002 Acraft purchased the business of the JV Companies from the JV Companies as a going concern, by a written contract of that date.

11. The written contract provided, inter alia, for the following matters:

1. It stated that the JV Companies conducted a business of letting commercial properties, the whole of which “enterprise” consisted of the letting of the Meubelsentrum (clause1).

2. The purchase was in respect of the said “enterprise” as a “going concern” (clause 2).

3. The purchase price was R1,500,000.00 (One Comma Five Million Rand) which was payable by Acraft on 1 November 2002 by way of a bank guarantee, to be delivered to the Council’s attorneys on or before 31 October 2002 (clause 3).

4. Clause 11 of the contract provided:

“The purchaser acknowledges that, to the extent the purchaser deems necessary, the purchaser

11.3.1 has satisfied itself as to the enterprise and the manner in which it is conducted;

11.3.2 ...................

11.3.3 has examined all financial records pertaining to the enterprise and is fully acquainted with all the information contained therein;............”

[Words omitted and emphasis supplied, by me].

5. An explanation for the reason why the “enterprise” as opposed to the property, was sold and purchased, is to be found in clause 13.2 where provision was made that the agreement was subject to the suspensive condition that the transaction be zero rated in terms of section 11(1)(c) of the Value Added Tax Act, 89 of 1991.

6. Clause 17 provided for non-variation, and it reads:

“No agreement varying, adding to, deleting from or cancelling this Agreement, shall be effective unless reduced to writing and signed on behalf of the parties.”

Salaries of employees:

12. Approximately 4 months after the sale was concluded, a dispute arose in respect of certain costs of administration of the building, the most important of which appeared to be the salaries of the employees. Mr MA Ibrahim (“Ibrahim”), who attested to the founding affidavit for Acraft, averred that prior to the contract for the purchase and sale of the business, the monthly salary expenses of the business were represented to Acraft as being ± R5,208.00 per month. This representation was stated to be contained in Annexure “C1" attached to the founding affidavit. Ibrahim stated that, on the figures received from the Council, the total monthly running expenditure was ±R52,000.00, and the total monthly income was ±R70,000.00. This would render a monthly profit margin of “±R20,000.00", according to Ibrahim. It must be stated immediately that the contention of Ibrahim that he thought that Acraft stood to make a profit of R240,000.00 per annum from the rent of the building, is hard to understand. If the JV Companies had been making that kind of profit, they would most certainly not have sold the building for R1,5 million, one would think.

13. Ibrahim went on to say that an oral agreement was concluded between Acraft and Van Rensburg (his representative capacity, if any, not being stated) in which it was agreed that the latter would manage the property on behalf of Acraft. This would be done “until such time as Acraft appointed the necessary personnel to manage the buildings”. Ibrahim stated that there was no fixed agreement in respect of the remuneration payable for this service, but that the “approximate figure discussed was ±R5,000.00 per month”.

14. It transpired that on 21 February 2003, the Council demanded payment by Acraft of an amount of R89,516.75 in respect of salaries and expenses incurred in the maintenance of the building. This, stated Ibrahim, came as a shock, as he had expected that the salaries would be about R15,624.00 at that time, calculated at the rate of R5,208.00 as per Annexure “C1" for three months.

15. It serves to be noted in passing, that in spite of this “shock”, Acraft took no legal steps until before 4 October 2004, when the present application was issued.

16. Ibrahim queried the matter with Van Rensburg, and was told that the debits were in respect of maintenance and the salaries of the employees. Ibrahim stated that Van Rensburg’s view was that the employees automatically became the employees of Acraft after the sale of the business by the JV Companies to Acraft. Ibrahim protested that he knew nothing about Acraft having to pay the salaries of the employees. He stated that he was always present during the negotiations which preceded the sale, and no mention of them was ever made, nor did the contract make provision for these employees to be taken over by Acraft.

17. In due course the dispute would crystallise into the following: Acraft contended that the employees were, at the time of the sale of the business, employed by the Council. Various documents were attached to the founding affidavit in support of this contention. On the other hand, the Council contended that the employees were, at the time, in the employ of the JV Companies. Various documents were attached to the answering affidavit in support of that contention. The crisp issue for decision by the Court a quo was therefore in whose employ the employees were at the time of the sale of the business by the JV Companies to Acraft. The Court a quo found that they were in the employ of the Council.

18. The relevance of the question in whose employ the employees were, is to be found in the provisions of section 197(2) of the Labour Relations Act, 66 of 1995 which provides:

“If a transfer of a business takes place, unless otherwise agreed in terms of subsection (6)-

(a) the new employer is automatically substituted in the place of the old employer in respect of al contracts of employment in existence immediately before the date of transfer........”

19. It must be born in mind that there was no contract between the Council and Acraft for the sale of the business. That agreement was between the JV Companies and Acraft. It was common cause between counsel at the hearing of the appeal that if it be found that the employees were in fact in the employ of the Council at the time of the sale, section 197(2) would find no application, and if they were found to have been in the employ of the JV Companies, the section would apply with full force.

Documents attached to the papers:

20. Van Rensburg dealt fully in his affidavit with Annexure “C1". He pointed out that the annexure is an extract from the accounting records of the JV Companies, and that it reflects not only the running expenses for the current month up to the day of production of the document, being 31 May 2002, but also the budgeted expenses and variance for the year up to that date. He stated that the R5,208.00, reflected in the annexure, and relied upon by Ibrahim, does not reflect salaries “payable”, but clearly reflects salaries which had actually been paid during the specific month of May up to the date of the production of the annexure. The amount budgeted for salaries appears in the next column which is the amount of R47,195.00 for that particular month.

21. Van Rensburg stated that although the annexure reflects the date of 31 May 2002, his recollection was that when it was handed to Ibrahim, all the salaries for that month had not yet been paid, and therefore were not reflected. Van Rensburg stated that the financial year ran from 1 January to 31 December annually. He draws attention to the column headed “actual YTD” (year to date) which reflects an amount of R177,928.36. He stated that it required but a simple calculation to realise that monthly salary expenses averaged ±R35,585.67 per month, if that amount is divided by the five months from January to May 2002.

22. In my view, the evidence presented by van Rensburg in respect of Annexure “C1", constitutes a material dispute of the evidence of Ibrahim and that Annexure “C1" itself, on the face thereof, appears to contradict the claims by Ibrahim in respect of his understanding of what the monthly running expenses of the building were. A reading of the annexure in the way explained by Van Rensburg renders it difficult to understand the apparent dichotomy between the statement that Ibrahim believed that the monthly expenditure in respect of the building would be ±R52,000.00 and that he believed that the salaries would be R5,208.00 per month.

23. As has been pointed out, clause 11 of the contract of sale of the business specified that Acraft acknowledged that it had satisfied itself as to the enterprise and the manner in which it is conducted, and had examined all financial records pertaining to the enterprise and was fully acquainted with all the information contained therein. The question whether Acraft should now be permitted to tender evidence in conflict with the written contract was apparently not raised on behalf of the Council before the Court a quo, and certainly not on appeal.

24. Further documentation which have a bearing on the status of the employees, attached to the papers, include the contracts of employment of the seventh to the ninth respondents. (The Court a quo mistakenly apparently entertained the view that only the contract of employment of the seventh respondent was attached.) The contracts of employment clearly indicate that the said employees were in the employ of the JV Companies. It was argued on behalf of the Council that in view of this fact, it can be assumed that the other employees were in the same position. It is a matter for comment that in spite of these documents, all the employees, including the seventh to the ninth respondents, made affidavits on 11 July 2004 to the effect that they were in the employ of the Council.

25. There is also a letter from the brokers of the Council and the JV Companies to the effect that the personnel members of the JV Companies were enrolled in the pension scheme of the Council, by reason of the fact that they were too few in number to be organised into an independent scheme, but that they were recognised as being separate from the members of the Council.

26. There are various references in the attached documents to “Meubelsentrum”:

1. The IRP 5's in respect of the employees indicate that they were at all relevant times employed by “Meubelsentrum”, and that their salaries and “pay-as-you-earn” taxes were provided for by “Meubelsentrum”.

2. There is a clear distinction between the Council and “Meubelsentrum” by the Compensation Commissioner in the assessment of the contributions of the employees based on their income.

3. Schedules of “gross remuneration” of the employees show that for the months of November and December 2002, “Meubelsentrum” paid their salaries.

27. In all of the above references, it was argued by counsel for Acraft that “Meubelsentrum” may refer to the building, but it seems to me eminently more probable that it was meant to, and did in fact, refer to the JV Companies.

28. On the other hand a copy of an Unemployment Insurance Fund statement was also attached, in which, inter alia, all the employees, mentioned in the application, were specified as being employees of the Council prior to the date of the sale of the business to Acraft.

29. In addition, Acraft attached affidavits and other documents to the founding affidavit of Mr Ibrahim which indicate that the employees were in fact employed by the Council, and not the JV Companies.

30. It was submitted on behalf of the Council that the Court a quo failed to attach any, alternatively sufficient, weight to the above-mentioned documentation which was filed in the application, which, it was submitted, negate Acraft’s allegations. The same argument can be made on behalf of Acraft in respect of the documents attached by it to the papers.

31. In respect of the documentation, it is relevant to point out that from January 2003 to May 2004, the schedules of gross salary remunerations of the employees show that Acraft paid their salaries. It appears to me that if Acraft had been convinced of its case that it had not taken over the employees, one might ask why it did not simply refuse from the start to pay the salaries and invited the Council to institute action in respect thereof. It seems to me that these documents tend prima facie to show that Acraft accepted that they were liable to pay the said salaries during this time. This fact appears to contribute to the conclusion that Acraft had understood and accepted that the employees had been “taken over” with the sale of the business by it from the JV Companies.

32. In this respect, it bears reference to mention that, in spite of Acraft’s contentions stated above, that the employees were not taken over by it together with the business, Ibrahim nevertheless in paragraph 9.6.1 of his founding affidavit stated:

“He [van Rensburg] supplied us with personnel files for the 2^nd to the 10^th respondents and stated that these people were the employees of the Seller [the JV Companies]. Since this was a sale of a going concern these employees automatically became the Applicant’s employees.”

In spite of Van Rensburg having drawn specific attention to this statement of fact by Ibrahim on behalf of Acraft, the statement remained unexplained and unqualified in Mr Ibrahim’s replying affidavit.

Dispute of fact:

33. What all of the above illustrates, in my view, is that there exists between the parties a material dispute of fact in respect of the question whether it can be said that the employees were in the employ of the Council or the JV Companies at the time of the sale of the business to Acraft. The dispute must be considered to be material, as it pertains to the very issue between the parties, and will put an end to the litigation one way or the other, depending upon its outcome.

34. It is therefore clear that the disputes of fact to which I have referred, such as they exist on the papers, are real and bona fide disputes. They appear to me to be disputes such as must preclude the Court from properly deciding the application on the affidavits in favour of Acraft.

35. Rule 6(5)(g) of the Uniform Rules of Court provides:

"Where an application cannot properly be decided on affidavit the Court may dismiss the application or make such order as to it seems meet with a view to ensuring a just and expeditious decision. In particular, but without affecting the generality of the aforegoing, it may direct that oral evidence be heard on specified issues with a view to resolving any dispute of fact and to that end may order any deponent to appear personally or grant leave for him or any other person to be subpoenaed to appear and be examined and cross_examined as a witness or it may refer the matter to trial with appropriate directions as to pleadings or definition of issues, or otherwise."

The predecessor of Rule 6(5)(g) was the previous Transvaal and Orange Free State Rule 9. Authorities on Rule 9 are equally applicable to the present Rule 6(5)(g). Vide: Joubert & Ano v Stemmet & Others, 1965 (3) SA 215 (O) per Hofmeyr J at p. 220A:

"Ek meen dat die nuwe Hofreël, wat in die geval van die Vrystaat en Transvaal gewese Hofreël 9 vervang, nie bedoel is om enige nuwe regsmiddel te skep nie. Die drie weë wat vir 'n Hof oopstaan soos in Room Hire Co. _ en in die Abro Investment Co_sake genoem, bly essensiëel dieselfde, hoewel die nuwe Hofreël blykbaar allerhande variasies op die drie hooftemas in vooruitsig stel."

In the oft-quoted appeal case of Plascon_evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A) per Corbett JA (as he then was)(with whom Miller JA, Nicholas JA, Galgut AJA and Howard AJA concurred) stated at 634E-635

“Secondly, the affidavits reveal certain disputes of fact. The appellant nevertheless sought a final interdict, together with ancillary relief, on the papers and without resort to oral evidence. In such a case the general rule was stated by Van Wyk J (with whom De Villiers JP and Rosenow J concurred) in Stellenbosch Farmers' Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234 (C) at 235E_G, to be:

"... where there is a dispute as to the facts a final interdict should only be granted in notice of motion proceedings if the facts as stated by the respondents together with the admitted facts in the applicant's affidavits justify such an order... Where it is clear that facts, though not formally admitted, cannot be denied, they must be regarded as admitted."

This rule has been referred to several times by this Court (see Burnkloof Caterers (Pty) Ltd v Horseshoe Caterers (Green Point) (Pty) Ltd 1976 (2) SA 930 (A) at 938A _ B; Tamarillo (Pty) Ltd v B N Aitkin (Pty) Ltd 1982 (1) SA 398 (A) at 430 _ 1; Associated South African Bakeries (Pty) Ltd v Oryx & Vereinigte Bäckereien (Pty) Ltd en Andere 1982 (3) SA 893 (A) at 923G _ 924D). It seems to me, however, that this formulation of the general rule, and particularly the second sentence thereof, requires some clarification and, perhaps, qualification. It is correct that, where in proceedings on notice of motion disputes of fact have arisen on the affidavits, a final order, whether it be an interdict or some other form of relief, may be granted if those facts averred in the applicant's affidavits which have been admitted by the respondent, together with the facts alleged by the respondent, justify such an order. The power of the Court to give such final relief on the papers before it is, however, not confined to such a situation. In certain instances the denial by respondent of a fact alleged by the applicant may not be such as to raise a real, genuine or bona fide dispute of fact (see in this regard Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163 _ 5; Da Mata v Otto NO 1972 (3) SA 858 (A) at 882D _ H). If in such a case the respondent has not availed himself of his right to apply for the deponents concerned to be called for cross_examination under Rule 6(5)(g) of the Uniform Rules of Court (cf Petersen v Cuthbert & Co Ltd 1945 AD 420 at 428; Room Hire case supra at 1164) and the Court is satisfied as to the inherent credibility of the applicant's factual averment, it may proceed on the basis of the correctness thereof and include this fact among those upon which it determines whether the applicant is entitled to the final relief which he seeks (see eg Rikhoto v East Rand Administration Board and Another 1983 (4) SA 278 (W) at 283E _ H). Moreover, there may be exceptions to this general rule, as, for example, where the allegations or denials of the respondent are so far_fetched or clearly untenable that the Court is justified in rejecting them merely on the papers (see the remarks of BOTHA AJA in the Associated South African Bakeries case, supra at 924A).”

36. It is trite that a final order may only have been granted in the present application if the facts averred in the applicant's affidavits which have been admitted by Acraft, together with the facts alleged by the Council, justified such an order. As pointed out, there is no question in the present case that the denials by the Council of facts alleged by Acraft raise a real, genuine or bona fide dispute of fact. If in a case such as the present there has been no request for the deponents concerned to be called for cross_examination under Rule 6(5)(g) of the Uniform Rules of Court, the Court may only proceed where the allegations or denials of the Council are so far_fetched or clearly untenable that the Court is justified in rejecting them merely on the papers. Counsel for Acraft argued that the learned trial judge was quite entitled to find the defence put up by the Council

" so far-fetched that it cannot be the truth. In fact, on the admittedevidence, the inference is inescapable that the appellant is being untruthful."

On the merits of the application, I have to disagree with this argument. In fact, as has been pointed out, there are elements in the case which strongly support the case of the Council. I have found no cause on a reading of the papers to come to the conclusion that the evidence of Van Rensburg was " so far-fetched that it cannot be the truth”.

The Court a quo was of the view that the Council attempted to suppress and pervert the truth. The learned judge decided for that reason to display its displeasure by ordering the Council to pay attorney and client costs. In the Full Bench decision of Mahomed V Malk, 1930 TPD 615, consisting of Tindall, Greenberg et Barry JJ, per Tindall J, at 618 (bottom) - 619 it was held:

"A grave injustice might be done to the debtor if he were denied the ordinary procedure adopted in investigating the truth of conflicting allegations. Where the question at issue is, as in this case, whether a certain statement was made by a debtor to a creditor, in my opinion it is not sufficient that on the affidavits the balance of probabilities is in favour of the creditor's version. The Court must be satisfied that a viva voce examination and cross-examination will not disturb this balance of probabilities, before making an order for sequestration on the affidavits.”

And at 620:

".............it seems to me that the Court should apply the well known rule of procedure that questions of credibility should not be decided on affidavit except in the circumstances which I have mentioned." [Omissions from the original text, and emphasis, by me.][The circumstances to which the learned judge referred, have been alluded to above.]

37. It is my respectful view that the Court a quo clearly erred and misdirected itself in making probability and credibility findings on the papers.

38. On behalf of Acraft, several other arguments were offered. In view of what has been stated in respect of the existing disputes of fact, it is unnecessary to consider any further arguments in respect of the probabilities of the case.

Order to be made:

39. It was argued on behalf of Acraft that, should this Court find that the Court a quo ought not to have made the factual and/or credibility findings which it did, and that it should not have adjudicated the issues on paper, this Court should refer the issue of the employment of the employees to be determined by viva voce evidence, and should be referred for that purpose in terms of Rule 6(5)(g) of the Uniform Rules of Court. On behalf of the Council, it was urged that in the event of the appeal being upheld, the order of the Court a quo is to be substituted wih an order dismissing the application. Only if this Court decides that the application should not be ordered to be dismissed, the matter should be referred to trial with appropriate orders as to pleadings and other procedural issues.

40. It seems clear that Acraft was acutely aware of what defences would be put up by the Council in any application brought against it by Acraft in respect of the present disputes. I refer to what Ibrahim stated in his affidavit as to what Van Rensburg had intimated to him in respect of Van Rensburg’s view that the employees were taken over by Acraft from the JV Companies. In such circumstances a litigant such as Acraft, who notwithstanding that knowledge, nevertheless goes ahead to issue his application, does so at his peril. In Room Hire Co [Pty] Ltd v Jeppe Street Mansions [Pty] Ltd, 1949(3) SA 1155 (T), Murray AJP said at p1162:

"It is obvious that a claimant who elects to proceed by motion runs the risk that a dispute of fact may be shown to exist. In that event ..... the Court has a discretion as to the future course of the proceedings. If it does not consider the case such that the dispute of fact can properly be determined by calling viva voce evidence under Rule 9, the parties may be sent to trial in the ordinary way ..... Or the application may even be dismissed with costs, particularly when the applicant should have realised when launching his application that a serious dispute of fact was bound to develop. It is certainly not proper that an applicant should commence proceedings by motion with knowledge of the probability of a protracted enquiry into disputed facts not capable of easy ascertainment, but in the hope of inducing the Court to apply Rule 9 to what is essentially the subject of an ordinary trial action."

[Omissions from original text, by me.]

41. Having found that Acraft knew full well what disputes the Council would raise in the event of Acraft issuing the present application, and having nevertheless proceeded with its application, I am of the view that the correct order would be that the application ought to have been dismissed, as opposed to being sent for oral evidence or to trial.

42. There is also a further consideration which supports the view that the application should have been dismissed. As would have been noticed from this judgment, the dispute of fact in respect of the question of the employment of the employees is not a dispute which is confined to the Council and Acraft. The JV Companies are intimately involved in the issue, and may have an interest in the outcome of the case. They were not joined as parties to the application by Acraft. On behalf of the Council the point of non-joinder was taken in the Court a quo, but the issue was not dealt with in the judgment of the Court. It appears to me that the JV Companies have a direct and substantial interest in the matter. The judgment of Van Niekerk J in Smith v Conolect 1987 (3) SA 689 (W) appears to be of direct application to the present case. At 690 I - 691 F the learned judge stated:

"More recently the question of joinder and the related concept of a 'direct and substantial interest' was considered by Corbett J, as he then was, in United Watch & Diamond Co and Others v Disa Hotels Ltd and Another 1972 (4) SA 409 (C). More particularly at 415E the learned Judge summarises the legal principles as follows:

'It is settled law that the right of a defendant to demand the joinder of another party and the duty of the Court to order such joinder or to ensure that there is waiver of the right to be joined (and this right and this duty appear to be co_extensive) are limited to cases of joint owners, joint contractors and partners and where the other party has a direct and substantial interest in the issues involved and the order which the Court might make (see Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) ; Kock & Schmidt v Alma Modehuis (Edms) Bpk 1959 (3) SA 308 (A) . In Henri Viljoen (Pty) Ltd v Awerbuch Brothers 1953 (2) SA 151 (O) Horwitz AJP (with whom Van Blerk J concurred) analysed the concept of such a "direct and substantial interest" and after an exhaustive review of the authorities came to the conclusion that it connoted (see at 169) _

"... an interest in the right which is the subject_matter of the litigation and... not merely a financial interest which is only an indirect interest in such litigation".'

The Judge goes on to state that:

'... it is generally accepted that what is required is a legal interest in the subject_matter of the action which could be prejudicially affected by the judgment of the Court (see Henri Viljoen's case supra at 167).'

See also Morgan and Another v Salisbury Municipality 1935 AD 167............Rahim v Mahomed 1955 (3) SA 144 (D) at 147B _ E where Henochsberg AJ, in considering the necessity of joining co_owners, joint contractors and joint partners litigating, held that:

'The rule is that in such cases the other co_owner, joint contractor, partner or interested party is a necessary party and should be joined in the proceedings, unless the Court is satisfied that he has waived his right to be joined.'"

In Khumalo v Wilkens and Another 1972 (4) SA 470 (N), the Court, on appeal, summarised the position at 475:

“In my view, once it is shown that a party 'is a necessary party in the sense that he is directly and substantially interested in the issues raised in the proceedings before the Court and that his rights may be affected by the judgment of the Court 'the Court will not deal with those issues without such a joinder being effected, and no question of discretion nor of convenience arises. In my view, this is what was decided in Amalgamated Engineering Union v Minister of Labour, 1949 (3) SA 637 (A.D.) at p. 659. See also Sheshe v. Vereeniging Municipality, 1951 (3) SA 661 (A.D.) at p. 666 in fine.”

43. As stated, it appears to me that the point of non-joinder was well taken by the Council. While it is true that where non-joinder is pleaded, the Court may postpone the matter in order for the joinder to be effected as an alternative to dismissing the action or application with appropriate orders as to costs. But the choice of which avenue to follow must necessarily depend on the circumstances of the case. It is my view that at the stage of the appeal in this case, the choice of allowing Acraft the opportunity to join the JV Companies, is no longer an option. In the circumstances I conclude that for this reason as well, the order of the Court a quo should be amended to provide for the application to have been dismissed.

Costs of the appeal:

1. On behalf of the Council it was argued that the Council should be awarded the costs of the appeal including the costs consequent upon the employment of two counsel.

2. This can be motivated, first of all, by the fact that the Council already has a negative Court order to contend with. Appeals are not readily upheld, but only in circumstances where there has been a material misdirection or irregularity. This cannot always readily be shown. Acraft also claimed a refund of R583,933.87, for moneys paid by Acraft to the employees. That claim includes a claim for moneys paid by Acraft as salaries to the employees from date of issue of the application on 4 October 2004 to date of judgment. The present appeal is important in so far as that claim has been deferred for later adjudication. It is clear that the claim is dependent upon the outcome of this appeal. The amount of that claim is substantial.

3. More importantly, credibility findings have been made by the Court a quo of, and concerning Mr Van Rensburg. He is the General Secretary of the Council, and as such, an important person to whom such findings must be of substantial consequence.

4. It might be argued that the facts and the law pertaining to the present appeal are not sufficiently involved to justify the employment of two counsel. With reference to what I have stated above, however, I am of the view that it was a wise and reasonable precaution for the Council to have done so.

In these premises, the following orders are made:

1. The appeal is upheld with costs, such costs to include the costs attendant upon the employment of two counsel by the appellant.

2. The Orders of the Court a quo are set aside and are replaced with the following order:

“The application is dismissed with costs”.

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LJL VISSER

ACTING JUDGE OF THE HIGH COURT

I agree:

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W J HARTZENBERG

JUDGE OF THE HIGH COURT

I agree:

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A LEDWABA

JUDGE OF THE HIGH COURT