Bata in a knot after disobeying court orders
30 Jul 2018
Almost 300 women shoemakers have been left without work after Bata SA summarily stopped taking shoes from Ihlobo, the factory where they work. As Carmel Rickard explains in her A Matter of Justice column on the Legalbrief site, the case has now become far more than an industrial or contractual dispute between the two companies. Bata’s MD John Harman has ignored two High Court orders that he reinstate the weekly orders to Ihlobo pending a full hearing of the matter and as a result, when the case is heard in a few days, Harman will face a strong call that he be jailed for contempt of court.
Deep in my private dungeon hangs a rogues’ gallery. Some you will know by name or face. Others, perhaps, only by their story. They are figures from SA’s political life – protest activists, individual government officials, heads of department, sometimes even more senior. What they have in common is this: they have treated the law with disdain and ignored court orders.
Now, though, the politicos must make room for newcomers, this time from business. The first from that category are ready for adding to the wall: the bosses of Bata SA who ‘elected’ to ignore not one, but two, court directives and as a result face the very real possibility of jail for contempt of court.
Bata, part of an international shoemaking business headquartered in Switzerland, has been working with smaller local manufacturers. One of these is Ihlobo Footwear, which employs hundreds of women to ensure that Bata’s orders are met. Ihlobo means ‘summer’, but for the workers at the factory it must feel more like deep mid-winter at the moment as Bata has summarily stopped placing orders with the company.
To prevent the inevitably catastrophic impact the cancellation of Bata’s orders would have on its workers, Ihlobo asked the courts for help. It launched an application claiming that Bata’s decision to implement the termination clause in the agreement between itself and Bata (this allowed for 30 days’ notice of termination) was, in the circumstances of this case, contrary to the constitution and unenforceable. All the more so, since Bata had directed Ihlobo to ‘tool up’ for increased production in 2017. Ihlobo successfully applied for an order that Bata must continue to place orders as before, pending full argument of the constitutional challenge in court. During April 2018, Judge Trevor Gorven granted an interim order, directed that Bata must order shoes from Ihlobo as it had done previously and set a date for the constitutional issue to be fully argued.
Bata’s response to the order by Gorven was simply to ignore it. Ihlobo was thus soon back asking for help, this time requesting Judge Johan Ploos van Amstel to find the company in contempt of court. On 28 May the judge found that Bata was indeed unlawfully breaching the court order, but he hesitated about making a formal finding that the company had committed contempt. He said it was just possible that Bata had been wrongly advised by its lawyers, whom he warned about making an ‘over-zealous attempt’ to find ways for Bata to avoid placing further orders with Ihlobo.
Ploos van Amstel said he was now instructing Bata ‘to comply fully with the order’ of Gorven and he also ordered Bata to pay the legal costs of the hearing on a punitive scale. Hard to believe, but despite this close shave Bata has continued to ignore the court order. Having lost an application for leave to appeal the Gorven order, again with a punitive costs order, and lost a further application for leave to appeal against the Ploos van Amstel order, Bata has simply flouted the law.
Now a full hearing on all aspects of the case raised so far has been set for 2 August when, among others, the court will examine Bata’s behaviour, and the reasons given for ignoring the court. The full heads of argument filed in anticipation of that hearing are instructive.
Ihlobo will again argue that Bata’s MD John Harman should be sent to prison for three months, in that he has continued to act in contempt of two court orders. Reviewing the history of the dispute between the two companies, Ihlobo will point out that Bata has always given weekly production orders for shoes. Since the interdict by Gorven, directing that Bata must place orders with Ihlobo as usual, two orders were received in June, but one was ‘the smallest ever received’ in the course of its long relationship with Bata, and since then no orders at all have been placed with Ihlobo.
On the other hand, Bata’s argument purporting to explain why it blatantly ignored two court orders runs to all of nine pages, most of it taken up with peripheral issues. Explaining the contempt question, the best Bata has been able to come up with is to say that if Harman were to give orders to Ihlobo, he would be acting in breach of the standards of directors’ conduct because it would amount to acting in a way that ‘knowingly causes harm to the company’.
For this reason, Bata’s MD cannot comply with the Gorven order, according to his legal team. Harman, say his lawyers, is faced with an impossible choice: either he is in contempt of court or ‘in breach of his fiduciary duties’. This is an ‘untenable position’ and one in which he should not find himself in terms of the constitution.
A letter by Bata’s lawyers to Ihlobo will also be before the court. That letter refers directly to the Gorven order and blames Ihlobo for Bata’s decision not to place any more orders for shoes. It alleges that many shoes in a previous delivery were defective, as a result of which Bata had ‘elected, at this stage, not to issue further orders as clearly to do so, where there are serious problems with the present order, would be illogical and not commercially viable’.
In a few days, Bata and Harman will see just how far this defence to contempt gets them in court. All I can say is that it would be extremely surprising if a judge were to buy this ‘caught in a vice not of his own making’ argument.
Bata has a number of catchy slogans to ensure sales of its finished products. One of them goes like this: Bata shoes – improving working lives. Tell that to the women sitting idly in the Ihlobo factory.(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)