Road Traffic Management Corporation v Tasima (Pty) Ltd

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Mogoeng CJ, Cameron J, Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J, Mathopo AJ, Theron J and Victor AJ
• Judgment Date: 04 August 2020
• Court: Constitutional Court
• Hearing Date: 04 August 2020
• Citation: 2021 (1) SA 589 (CC)
• Counsel: A Franklin SC (with A Redding SC and K Hopkins) for the applicant in case No CCT 86/19 and the respondent in CCT 27/19. P McNally SC (with A Rowan) for the applicant in case No CCT 27/19 and the respondent in CCT 86/19.
• Docket Number: CCT 27/19 and CCT 86/19 [2020] ZACC 21

Theron J (Cameron J, Froneman J, Madlanga J, Mathopo AJ and Victor AJ concurring):

Introduction

[1] In the main application under CCT 27/19, the applicant, the Road Traffic Management Corporation (RTMC), seeks leave to appeal against the findings of two courts, both of which found that s 197 of the Labour Relations Act (LRA) [1] applies to the transfer of the electronic National Traffic Information System (eNaTIS) and related services from the respondent, Tasima (Pty) Ltd (Tasima), to the RTMC (s 197 appeal). Both the Labour Court and the Labour Appeal Court held that s 197 was applicable, based on the jurisprudence of the Labour Court, the Labour Appeal Court and this court. [2]

Theron J (Cameron J, Froneman J, Madlanga J, Mathopo AJ and Victor AJ concurring)

[2] The Labour Court held that this matter was on all fours with the legal principles enunciated by this court in City Power[3] and concluded that the transfer of the eNaTIS and related services was a transfer as contemplated by s 197. [4] The Labour Appeal Court held that a holistic examination of the facts established that what was conducted by Tasima was a business, falling within the scope of s 197, and that it was this business that was transferred to the RTMC. [5]

[3] After the RTMC approached this court in respect of the s 197 appeal, Tasima filed a cross-appeal in relation to the Labour Appeal Court's findings about the effective date of the s 197 transfer. Additionally, there is an application for leave to appeal under CCT 86/19, which concerns an order issued by the Labour Appeal Court under s 18(3) of the Superior Courts Act, [6] setting aside the Labour Court's interim enforcement of the order in the Labour Appeal Court's s 197 judgment (s 18(3) appeal).

Factual background

[4] The factual background has been widely canvassed by this court in Tasima I[7] and Tasima II, [8] and I traverse that background only to the extent necessary.

[5] The RTMC is an organ of state, established in terms of s 3 of the Road Traffic Management Corporation Act (RTMC Act), [9] and an entity listed in sch 3A to the Public Finance Management Act (PFMA). [10] It is established as a partnership between national, provincial and local spheres of government with the statutory mandate 'to enhance the overall quality of road traffic management and service provision'. [11] Tasima is a private company.

[6] In July 2001 the Department of Transport (Department) awarded a tender to Tasima for the provision of services in relation to the eNaTIS. The eNaTIS links the Department with various parties throughout South Africa, including all vehicle licensing institutions, manufacturers of vehicles, banks and the South African Police Service. It also enables the Department to regulate and administer the licensing of all vehicles, driving licences, vehicle roadworthiness tests as well as the general implementation of road traffic legislation in South Africa.

Theron J (Cameron J, Froneman J, Madlanga J, Mathopo AJ and Victor AJ concurring)

[7] Pursuant to the award of the tender, the Department and Tasima concluded a Turnkey Agreement, in terms of which Tasima would redevelop the existing eNaTIS. In particular, Tasima undertook to develop, implement, support and operate the eNaTIS on behalf of the Department for a period of five years commencing on 1 June 2002. The Turnkey Agreement stipulated that, upon termination of the agreement, Tasima would hand over the system to the Department. However, upon termination of the Turnkey Agreement by effluxion of time in May 2007, it was ostensibly extended on a month-to-month basis until April 2010, during which time Tasima continued to operate the eNaTIS and provide related services.

[8] In May 2010 the Turnkey Agreement was purportedly extended for a further period of five years to 30 April 2015 (Extension Agreement), without the proper procurement processes having been followed. The Department initiated negotiations with Tasima in an attempt to terminate the Extension Agreement and arrange for the transfer of the eNaTIS to the Department. All payments to Tasima were stopped. Tasima launched urgent proceedings in the High Court to enforce the Extension Agreement. This led to further litigation between the parties, which is not relevant to the current proceedings. Suffice it to say that this litigation eventually culminated in the Tasima I judgment of this court.

Litigation history

[9] In Tasima I this court reinstated the order of the High Court declaring the Extension Agreement invalid with effect from 23 June 2015. [12] Paragraph 4 of this court's order in Tasima I is of particular importance in these proceedings. [13] This court ordered that the eNaTIS and related services be transferred from Tasima to the RTMC within a period of 30 days from 9 November 2016, the date of this court's judgment and order in Tasima I. It further ordered that Tasima and the RTMC were to agree on how the transfer would be facilitated, failing which the transfer would take place in accordance with a default migration regime set out in the Turnkey Agreement (the Migration Plan).

[10] Tasima failed to hand over the eNaTIS and related services before the expiry of the 30-day period as stipulated by this court's order in Tasima I. The RTMC instituted proceedings against Tasima in which it

Theron J (Cameron J, Froneman J, Madlanga J, Mathopo AJ and Victor AJ concurring)

sought an order evicting Tasima from the premises from which the eNaTIS was operated and the handover of the eNaTIS and related services to the RTMC. On 3 April 2017 the High Court held that, in terms of this court's order in Tasima I, Tasima was required to hand over the eNaTIS and related services by 22 December 2016. [14] The High Court also granted the RTMC's eviction application. [15] On 5 April 2017 Tasima was evicted from the premises. The RTMC took over the eNaTIS and related services that same day.

[11] Tasima launched urgent proceedings in the Labour Court to compel the RTMC to comply with its obligations under s 197 of the LRA. [16] The RTMC disputed that it was under any obligation to take transfer of Tasima's employees. Section 197 regulates the automatic consequences regarding the employees of a business that is transferred as a going concern. Tasima sought declaratory relief to the effect that the contracts of employment of certain of its employees were automatically transferred to the RTMC under s 197.

[12] The Labour Court, per Steenkamp J, declared that the contracts of employment of all of Tasima's employees had automatically transferred to the RTMC in terms of s 197 upon the transfer of the eNaTIS from Tasima to the RTMC. [17] The Labour Court concluded that the handover

Theron J (Cameron J, Froneman J, Madlanga J, Mathopo AJ and Victor AJ concurring)

ordered by this court in Tasima I was a transfer contemplated by s 197. [18] The factual bases for this finding included that —

(a)

the RTMC had taken control of the premises previously occupied by Tasima;

(b)

the RTMC employed the assets, information and property which had previously been used by Tasima to render the same services;

(c)

the RTMC had liaised with the same service providers and made the same payments as Tasima; and

(d)

the sole purpose of Tasima's business was the provision of eNaTIS services. [19]

[13] The Labour Court stated that it was —

'satisfied that the handover of the services and the eNaTIS to the RTMC in terms of the order of the Constitutional Court of 9 November 2016 is a transfer of a business as contemplated by section 197 of the LRA. The consequence is that the new employer (the RTMC) is automatically substituted in the place of the old employer (Tasima) in respect of all contracts of employment in existence immediately before the transfer.' [20] The Labour Court further held that the effective date of transfer was 5 April 2017, because the actual transfer took place on that date, pursuant to the order of this court. [21]

[14] On appeal, the Labour Appeal Court unanimously upheld the reasoning and findings of the Labour Court regarding the automatic transfer of the contracts of employment from Tasima to the RTMC in terms of s 197. [22] It agreed with the factual analysis of the Labour Court. It said:

'In the present case it does not appear to be contested that [Tasima] was the entity responsible for rendering eNaTIS services to end users. It used its premises solely to operate the system. When any faults were logged, it was required to respond thereto. It was required to develop, test and implement any new functionalities required of the system, and to manage third party service providers, securing necessary services and equipment from such parties and paying them.

All of respondent's employees were employed for the sole purpose of providing these services. They worked from eNaTIS premises with assets which were those of eNaTIS, accessing the eNaTIS, code and infrastructure. The premises were suitably furnished and equipped to provide for the necessary infrastructure to conduct the system. It is said that at least 80 persons were employed exclusively to perform these necessary functions. All assets were purchased and used solely to perform these functions. [Tasima] negotiated and entered into contracts solely to perform these functions.

Theron J (Cameron J, Froneman J, Madlanga J, Mathopo AJ and Victor AJ concurring)

Examining these facts holistically, it is clear that what was conducted by Tasima was a business, falling within the scope of s 197 of the LRA.' [23]

[15] The Labour Appeal Court, however, altered the effective date of the transfer to 23 June 2015 — the date on which the High Court declared the Extension Agreement invalid. [24] The Labour Appeal Court reasoned that this court in Tasima II made it clear that, although it only confirmed the High Court's...