|Marais and 56 Others (“Applicants”) were the employees of Shiva Uranium (Pty) Ltd (“First Respondent”) and brought an urgent application in the Labour Court seeking leave to institute legal proceedings against the First Respondent, the employer, which was placed in business rescue on 19 February 2018, in terms of section 113 (1)(b) of the Companies Act No. 71 of 2008 (“Act”).
The Applicants sought an order directing that the First Respondent make payment of all unpaid remuneration and employment benefit contributions (“Application”), which were due and payable to the Applicants for the months of July and August 2018 (“Remuneration”). The second and third respondents, being the business rescue practitioners appointed by the First Respondent (“Practitioners”), opposed the Application and raised two points in limine. Firstly, that the Labour Court lacked the requisite jurisdiction to uplift the moratorium placed on the First Respondent (in terms of section 131 of the Act) and secondly, that the matter lacked urgency and, as a result, should have been struck from the roll.
The Practitioners conceded in respect of the Remuneration and averred that they had been involved in various attempts to secure financial assistance to pay the Remuneration, given that the First Respondent was in financial distress.
Further, the Applicants argued that the Labour Court did in fact have jurisdiction to uplift the moratorium, based on the premise that the Applicants’ claims were founded on an infringement of a fundamental employment right and that, as such, the Labour Court had exclusive jurisdiction over the matter in terms of section 157(1) and (2) of the Labour Relations Act No. 66 of 1995 (“Labour Relations Act”).
|The Labour Court held that, for the purposes of instituting legal proceedings against a company in business rescue, section 128 (1)(e) of the Act should be interpreted to mean that, only a High Court has the requisite jurisdiction to make an order for the upliftment of the moratorium.
The Labour Court further held that there are only two exceptions for the upliftment of a moratorium, which are as follows: –
- with the written consent of the designated business rescue practitioner(s); and
- with special leave from the High Court with jurisdiction and in accordance with any terms the court deems fit.
|The Labour Court dismissed the Applicants’ submission that the Labour Court had the jurisdiction to uplift the moratorium. The Labour Court further held that the moratorium, as contemplated in section 133(1) of the Act, should be interpreted and understood as a tool with the purpose of providing for the efficient recovery of financially distressed companies, while all legal proceedings against the companies are put on hold.
In addition to the above, the Labour Court dismissed the urgency of the Application, as all unpaid employee benefits and remuneration owed by a company in business rescue are regarded as post-commencement finance and are be paid in priority to other claims, as per section 135 of the Act, and, as such, the Applicants’ interests were not under any threat.
Considering the above, the Application was struck from the roll and could only be re-enrolled with the leave granted by the High Court with jurisdiction over the matter, in terms of section 133(1)(a) or (b) of the Companies Act.
The correct interpretation of section 133(1) of the Act is that only the High Court has the jurisdiction to uplift the moratorium on legal proceedings against a company in business rescue, save for the two exceptions.
Written by Lindokuhle Mashilo and Simone Jansen van Rensburg