IN THE
LABOUR COURT OF LESOTHO

LAC/REV/43/02

HELD AT
MASERU

IN THE
MATTER BETWEEN

STEFAN
CARL BUYS APPLICANT

AND

ARBITRATOR T.R. KAO 1^ST
RESPONDENT

RATHEKISO MOLETSANE 2^ND
RESPONDENT

PETSO MAKHAKHE 3^RD
RESPONDENT

JUDGMENT

Date of
hearing : 31/10/06

Review
of DDPR award – DDPR has jurisdiction to resolve employer/employee
disputes – A trustee of insolvent estate is not an
employer of
former employees of the insolvent estate – Trustee’s obligations
towards former employees governed by Insolvency
Proclamation 1951.

1. 
   This is an application for review of the award of the
   Directorate of Dispute Prevention and Resolution (DDPR) in referral
   case
   No. 929/02. The review was initially made to the Labour Appeal
   Court pursuant to section 38A(1)(b)(ii) of the Labour Code
   (Amendment)
   Act 2000 (the Act) read with section 228F(1) of the Act.

   
   

2. 
   The application was however, only able to be heard
   after Parliament had enacted amendments in the aforesaid sections of
   the Act.
   The effect of the amendment viz. sections 3 and 5 of the
   Labour Code (Amendment) Act 2006 (the 2006 Act) was to place powers
   of review of arbitral awards of the DDPR in the Labour Court.

   
   

3. 
   In the light of this change the application was heard
   by the Labour Court acting in accordance with the rule in Curtis .v.
   Johannesburg
   Municipality 1906 TS308 which states:

   
   

“Every
law regulating procedure must, in the absence of express provisions
to the contrary necessarily govern, so far as is applicable
the
procedure in every suit which comes to trial after its promulgation.”

4. 
   The applicant is an attorney of this court who has been
   appointed as trustee in the insolvent estate of one Morero Sehlabane
   who
   traded under the name DRAFT TRANSPORT.

   
   

5. 
   2^nd
   and 3^rd
   respondents are former employees of the said Morero Sehlabane. They
   both referred a dispute to the DDPR against the applicant
   as the
   trustee claiming payment of outstanding wages and severance pay.

   
   

6. 
   The applicant avers in his supporting affidavit that
   when the service of the referral was effected on him, he refused to
   accept
   the referral because he in only “acting as the trustee of
   the insolvent estate…”.

   
   

7. 
   About a week later, he was served with a notice of set
   down from the DDPR, and he immediately contacted the then Case
   Management
   Officer Ms Malena Lebone-Mofoka and informed her that “…I
   had no dispute with the employees and that the matter was
   misunderstood
   that I was responsible for payment of the money.”
   He went further to explain that he is the trustee appointed in terms
   of
   the Insolvency Proclamation No.51 of 1957 and that “the claim
   for payment of salaries does not lie against me personally (as)
   my
   responsibilities and obligations towards ex-employees is clearly
   defined in the Insolvency Proclamation.”

   
   

8. 
   Notwithstanding these and other protestations the
   hearing at the DDPR proceeded as scheduled in the absence of the
   applicant.
   As it would be expected in a one man contest, the
   Arbitrator found in favour of the 2^nd
   and 3^rd
   respondent and ordered the applicant to effect payment of M13,026.46
   and M17,911.38 to the 2^nd
   and 3^rd
   respondents respectively.

   
   

9. 
   The applicant applied for the said award to be reviewed
   corrected and set aside on the ground that there is no dispute
   between
   him and the two employees and that he cannot be sued
   personally for payment of the salaries of the two respondents.

   
   

10. 
    He contended further that it was ultra
    vires the powers of the arbitrator to
    hear claims for the enforcement of wages in an insolvent estate. He
    contended further that in
    any event the two employees are normal
    concurrent creditors in the estate and that they cannot receive
    preference or benefit
    above all other creditors.

    
    

11. 
    The DDPR is a creature of statute viz. the Act. It is
    established under section 46B of the Act and its function is
    essentially
    to attempt to prevent and resolve trade disputes through
    conciliation and arbitration.

    
    

12. 
    Trade dispute is defined in the Code as:

    
    

“any
dispute or difference between employers or their organisations and
employees or their organisations or between employees and
employers,
connected with the employment or non
employment, or the terms of the
employment, or the conditions of labour of any person.” (emphasis
added).

13. Employer
on the other hand is defined as

“any
person or undertaking, corporation, company, public authority or body
of persons who or which employs
any person to work under a contract and includes:

“(b)
in the case of:

“(iv)
a company in liquidation, the liquidator of the company.”
(emphasis added).

14. In both definitions, the catchword is “employment”.
A liquidator who qualifies as an employer as defined in the Code is

that one who continues to employ people in advancement of the
business of the company under liquidation.

15. The applicant herein has protested consistently that
he is not an employer of the 2^nd
and 3^rd
respondents. Not only has this not been disputed before us, even at
the DDPR, the two respondents never alleged that he was their

employer. Clearly therefore there was no way that the 1^st
respondent could purport to intervene between applicant and the 2^nd
and 3^rd
respondents in the absence of an employment relationship.

16. That the 2^nd
and 3^rd
respondents have a claim against the insolvent estate of Mr.
Sehlabane, begs no question. In his Article Transfer, Closure, and

Insolvency of Undertakings (1991)12 ILJ 935 at pp. 938-939 B. Jordaan
states that:

“At
common law, the employer’s insolvency constitutes a breach of
contract. The trustee or liquidator, as the case may be, may
elect
not to retain the services of the employee in which event the
employee has a concurrent claim for damages against the insolvent

estate.”

17. 
    Section 20(1)(b) of the Insolvency Proclamation No.51
    of 1957 provided that the effect of the sequestration of an estate
    of the
    insolvent is, inter alia,
    
    

    
    

“(b)
to stay, until the appointment of a trustee, any civil proceedings
instituted by or against the insolvent…”

17. 
    In his Article The Employee and the Insolvent Company
    (1993) 14 ILJ 543, Michael Blackman also confirms that following an
    application
    for winding up any action against the company will be
    stayed by the court on application by the company, a creditor or,
    member
    and when the court has made an order all actions by or
    against the company are stayed until a liquidator is appointed.

    
    

17. 
    If an employee obtained judgment before an order of
    winding up was given, any attachment or execution to satisfy the
    claim after
    the commencement of the winding up is void. The learned
    author opines further at p.545;

    
    

“if
the winding-up order is granted any attempt that the employee may
have made to obtain satisfaction of a claim will prove to have
been
futile. The claim will become a claim against the company’s
insolvent estate and he or she will have to wait in the hope
that
there are sufficient assets in that estate to satisfy it.”

17. 
    These contentions lend credibility to the applicant’s
    contentions that his liability and obligation towards the two
    respondents
    is governed by the Insolvency Proclamation and that he
    cannot make payment to them (2^nd
    and 3^rd
    respondents) to the exclusion of other preferred creditors as they
    are normal concurrent creditors in the insolvent estate.

    
    

17. 
    Equally established is the proposition that; since all
    actions against the insolvent estate are suspended, and that claims
    arising
    there from are to be treated like all other concurrent
    claims against the insolvent estate, the 1^st
    respondent is not empowered to deal with such claims. The lack of
    jurisdiction of the DDPR in such matters is reinforced by
    the fact
    that the employer and employee relationship which gives it
    jurisdiction to intervene in employer/employee relations
    has not
    been established.

    
    

17. 
    For the above reasons we have come to the conclusion
    that the award of the DDPR in Referral No. A929/02 must be reviewed
    corrected
    and set aside for the reasons that appear in the body of
    the judgment.

    
    

17. 
    The applicant had sought the order that the 1^st
    respondent pays the costs of this application. The 1^st
    respondent is an officer of the DDPR who has been cited nomine
    officio. He did his function in good faith
    and there is therefore no reason why he should be mulcted with
    costs. For this reason we
    have made no order as to costs.

    
    

THUS
DONE AT MASERU THIS 23RD DAY OF NOVEMBER 2006

L.
A. LETHOBANE

PRESIDENT

L.
MATELA I CONCUR

MEMBER

R.
MOTHEPU I CONCUR

MEMBER

FOR
APPLICANT: MR. BUYS

FOR
RESPONDENT: NO APPEARANCE