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[2007] ZALAC 19
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Solidarity and Others v Eskom Holdings Limited (CA9/05) [2007] ZALAC 19; (2008) 29 ILJ 1450 (LAC) (21 December 2007)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA Held in Johannesburg
Case no: CA 9/05
IN THE MATTER BETWEEN
SOLIDARITY 1
st
Appellant
R N HUTCHINGS 2
nd
Appellant
APPELLANTS
AS PER SCHEDULE HERETO 3
rd
to further appellants
AND
ESKOM HOLDINGS LIMITED
Respondent
JUDGMENT
ZONDO JP
[1] I have had the benefit of reading
the judgment prepared by Khampepe JA in this matter. I agree with her
conclusion that the
appellant’s “
claim
”
had not prescribed. Accordingly, I agree that the respondent’s
so-called first “
special
plea
” fell to
be dismissed and that the Labour Court was right in dismissing it.
However, I am unable to agree with Khampepe JA
and the Labour Court
that what I refer to hereunder for convenience as the “
unreasonable
delay
” rule
applies in this case and that, because of that rule, the appellants’
application cannot be considered on the
merits and should be
dismissed. I set out my view and my reasons for it hereinafter.
Khampepe JA has in her judgment adequately
set out the factual
background to this matter. For that reason I do not propose to deal
with the factual background save to the
limited extent that may be
necessary for the proper understanding of this judgment.
[2] As this matter concerns what the
parties have regarded as “
special
pleas
” or
points in limine raised by the respondent to the appellant’
claim as contained in the appellants’ statement
of claim, the
matter must be decided on the basis of the allegations of fact
contained in the appellants’ statement of claim.
The appellants
filed and served their statement of claim against the respondent in
the Labour Court on the 17
th
April 2003. According to the appellants’ statement of claim the
following is what gave rise to the claim:
- On 10 July 1998 an oral
agreement was concluded between the first appellant in its own name
and on behalf of all of those of its
members who were employed by the
respondent as licenced operators on certain matters including that
the respondent would pay licenced
operators a “yearly once-off
non-pensionable payment equal to double his/her monthly basic salary
with effect from 1998 and
continue to do so to date hereof.”
- In November 1998 consensus was
reached between the parties on a scheme for early retirement of
licenced operators and the respondent
subsequently reduced the
agreement to writing in a document referred to as “Management
Directive 102 Revision 2” which
was signed on the 2
nd
November 1998.
- With effect from the 15
th
January 1999, in breach of their obligations, “Eskom and the
Respondent have unlawfully refused to implement the provisions
of
[the Management Directive 102 Revision]” (“MD102”).
The respondent’s refusal to
implement MD102 was evident from a letter dated the 15
th
January 1999 from the respondent’s Mr Peter Prozensky in which
he advised that MD102 would be “temporarily suspended”
in
so far as it related to early retirement for licenced operators
.
In their statement of claim the appellants sought an
order declaring the respondent to be bound by the agreement relating
to early
retirement for licenced operators and MD 102 and that the
respondent be ordered to take the necessary steps to implement such
agreement
and MD102 plus costs of suit.
[3] It is common cause between the
parties that on the 15
th
January 1999 – the same day that the respondent purported to
withdraw or suspend MD102 – the first appellant or its
predecessor declared a dispute on the respondent’s conduct
purporting to withdraw or suspend MD102. There can be no doubt
that
by its declaration of a dispute the first appellant conveyed to the
respondent that it did not accept the respondent’s
conduct in
so far as it purported to withdraw MD102 or in so far as it thereby
sought to say it would no longer comply with its
obligations under
MD102 concerning early retirement for licenced operators. The message
conveyed by the first appellant or its
predecessor was clearly that
it would hold the respondent to the agreement between the parties as
reflected in MD102 in relation
to early retirement for licenced
operators.
[4] From the above it is beyond doubt
that the dispute between the parties was on whether or not the
respondent was still bound
by the agreement between the parties on
early retirement and would be obliged to honour those obligations at
the appropriate times.
Although some steps were taken between the
parties to try and resolve the dispute, it had not been resolved by
the 17
th
April 2003 which is when the appellants instituted court proceedings
in the Labour Court. Having said this, it is necessary to
also point
out that there was a period of over two years during the period from
January 1999 to 17 April 2003 when the appellants
did not do anything
about the dispute.
[5] In its response to the
appellants’ statement of claim, the respondent delivered and
served a document which it said contained
its “
special
pleas
” to the
appellants’ statement of claim. For convenience I shall refer
to the points taken by the respondent as “
special
pleas
” or
“
points in
limine
”. The
first “
special
plea
”
concerned was prescription. The respondent’s point in this
regard was in effect that, if the agreement alleged by
the appellants
existed, then their claim was, for purposes of the Prescription Act,
for the payment of a debt. In this case that
debt, contended the
respondent, became due on the 15
th
January 1999 when the respondent purported to withdraw MD102 and the
appellants had three years from that date to institute court
proceedings which they instituted on the 17
th
April 12003. The period of three years from the 15
th
January 1999 lapsed on or about 14 January 2002 – more than a
year before the appellants instituted court proceedings in
the Labour
Court. Because of this, said the respondent, the appellants’
claim had prescribed.
[6] The respondent’s second
“
special plea
”
or point in limine was in the alternative. It was that, if the
appellants’ claim had not prescribed under the Prescription
Act, it, nevertheless, fell to be dismissed without being considered
on the merits on the basis that the appellants had delayed
unreasonably in instituting court proceedings about the matter. In
this regard the first respondent pointed out that the period
from the
15
th
January 1999 to the 17
th
April 2003 was more than four years.
[7] With regard to the point of
prescription, the appellants’ response was that the second and
further appellants would be
entitled to early retirement provided for
in MD102 if and when each one of them reached early retirement age in
terms of that agreement
and none of them had reached early retirement
age in terms of MD102 at the time of the institution of court
proceedings in the
Labour Court. Accordingly, so went the argument,
they would each reach their early retirement age at different stages
in the future.
It would only be at that stage, contended the
appellants, that it could be said that the “
debt
”
had become “
due
”
in terms of the Prescription Act and prescription would begin to run
at that stage – and not before. Accordingly,
contended the
appellants, their claims had not prescribed under the Prescription
Act.
[8] With regard to the “
unreasonable
delay
” point,
the appellants’ counter was that the “
unreasonable
delay
” rule
does not apply in this case because this was not a review application
and this case was subject to a prescription period
prescribed by the
Prescription Act. The appellants pointed out that the so-called
“
unreasonable
delay
” rule
only applies to reviews in respect of which there is no statutory
provision prescribing a period within which they
should be brought to
Court and not to those which are subject to such a statutory
requirement. The appellants argued that, at any
rate, even if such
rule applied in this case, it could not be said that they had delayed
unreasonably in instituting court proceedings.
[9] The parties subsequently agreed
that the points in limine or “
special
pleas
” taken
by the respondent should be decided by the court prior to the Court
dealing with the merits. Obviously, if the Court
upheld any one of
the points in limine or “
special
pleas
” raised
by the respondent, the matter would not proceed to the merits. It
would only reach the merits if both points in limine
or “
special
pleas
” were
dismissed. The Labour Court subsequently made an order giving effect
to this agreement of the parties.
[10] The matter was duly set down for
the purpose of the hearing of the points in limine or “
special
pleas
”. On
the date of hearing, some oral evidence was led which covered only
the points in limine or “
special
pleas
”. In
due course the Labour Court, through Waglay J, handed down its
judgment. In terms of that judgment the Labour Court
dismissed the
respondent’s point in limine on prescription but upheld the
point that the appellants had delayed unreasonably
in instituting
court proceedings. It ordered the appellants to pay the costs.
Subsequently, the Labour Court granted leave to appeal.
The
appellants appealed to this Court against the decision of the Labour
Court on the point concerning the “
unreasonable
delay
” rule.
The respondent noted a cross-appeal against the Labour Court’s
decision on the prescription point. The appellants
also appealed
against the order of costs. It does not appear that the respondent
obtained leave to note a cross-appeal but, to
the extent that it may
have been required to obtain leave, I have no doubt that it would
have been granted leave if it had sought
leave. At any rate, nobody
made this an issue before us.
[11] In a very thorough but succinct
analysis of the authorities in her judgment, my Colleague, Khampepe
JA, has come to the conclusion
in effect that in terms of the
Prescription Act the “
debt
”
owed to the appellants by the respondent would be “
due
”
when each one of the second and further appellants reach their early
retirement age and that it did not become due in January
1999. She
has accordingly rejected the respondent’s contention on the
prescription point and upheld the decision of the Labour
Court in
this regard. For the reasons that Khampepe JA gives in her judgment,
I agree with her conclusion on this point. I do not
propose to add
anything to her reasons. However, with regard to the second point in
limine or “
special
plea
”, as I
have already said, I find myself unable to agree with Khampepe JA. In
my view the “
unreasonable
delay
” rule
does not apply to this case. I give my reasons for this view
hereunder.
[12] Part of my difficulty with the
conclusion that the appellants delayed unreasonably in instituting
court proceedings is the
scope of application of the rule on which
the first “
special
plea
” is
based. Counsel for the appellants submitted that that rule is only
applicable to review applications which are not subject
to any
statutory requirement that they be brought within a specific period.
He indicated that, except for the judgment of Conradie
J in
NAPTOSA
& others v Minister of Education, Western Cape & others
(2001) 22 ILJ 889 (C)
(in
which Jali J concurred)
,
he was not aware of any case in which the rule had been invoked and
the case was not a review application that is not subject to
a
statutory time limit that it should be instituted within a specific
time period. Counsel for the respondent was also not able
to refer us
to any cases in which the rule had been invoked where there was a
statutory time limit applicable for the institution
of a review
application except the NAPTOSA case which was not a review case. I
shall deal with the NAPTOSA case shortly.
[13] With regard to the first special
plea, both the Labour Court and Khampepe JA conclude that the
Prescription Act applied and
that the appellants’ claim had not
prescribed at the time that the appellants instituted proceedings in
the Labour Court.
As I have already said earlier, I agree with this.
It seems to me that the conclusion reached by Khampepe JA in regard
to the prescription
point means that prescription would effectively
commence running after each affected employee had reached early
retirement age
in terms of MD102. It follows from this that, as the
second and further appellants had not yet reached their respective
early retirement
ages at the time of their instituting the
application for a declaratory order in the Labour Court, they could
have instituted the
application later than they did after they had
reached early retirement age in terms of MD102 which would have been
at different
times in the future. It would also follow from the
conclusion that the appellants had delayed unreasonably in
instituting the application
for a declarator that the appellants were
obliged to have instituted the application much earlier than they
did. These two conclusions
– the first relating to the first
“
special
plea
”, the
second to the second “
special
plea
” –
are, to my mind, contradictory to each other and cannot both be
correct.
[14] The first one is right, the
second one not. In my view the answer to the respondent’s
second “
special
plea
” is that
the “
unreasonable
delay”
rule
does not apply in this case. Firstly, this is not a review
application, and the rule applies to reviews only. Secondly, such
rule does not apply to a case that is subject to a statutory limit in
terms of the period within which it should be instituted.
In this
case the Prescription Act applies and the prescription period had not
even begun to run when the appellants instituted
court proceedings.
That being the case, it would be a contradiction in terms to hold
that the appellants had delayed unreasonably
in instituting the
application that they instituted in the Labour Court and, yet to also
say, as it has been said in respect of
the first special plea, that
the appellants’ claim had not prescribed in terms of the
Prescription Act. To apply the “
unreasonable
delay
” rule
where the Prescription Act applies would, it seems to me, amount to
the Court legislating another prescription period
in addition to the
one prescribed by the Prescription Act. In my view there is no reason
or justification in law for that additional
prescription period and
it can only serve to sow confusion as to when the one period applies
and when the other does not apply.
[15] Furthermore, the view that the
“
unreasonable
delay
” rule
applies to a case where the Prescription Act applies will render the
relevant provisions of the Prescription Act redundant.
In terms of
the Prescription Act, if A assaults B, B has three years within which
to institute court proceedings for the payment
of damages arising
from the assault. The
effect is that A can
sit at home and not do anything about his claim until the last minute
before the expiry of the prescription
period of three years. There
is, in my view, no rule of law to the effect that, despite the
availability to him of a period of
three years within which to
institute court proceedings, B must, nevertheless, institute court
proceedings within a reasonable
time prior to the expiry of that
period of three years because, if he fails to do so, he will be
barred from doing so even though
the prescription period of three
years prescribed by the Prescription Act has not expired. The reason
why there is no such rule
is because, when the Legislature prescribed
three years, it regarded three years as a reasonable period within
which A should be
required to institute his claim for damages. There
can, therefore, not be a rule that effectively nullifies the
prescription period
provided for in the Prescription Act. That is a
rule that says A must institute court proceedings within a reasonable
time before
the expiry of the three years prescribed by the
Prescription Act and says, if he fails to do so, he will suffer the
same consequence
that the Prescription Act says he will suffer if he
fails to institute court proceedings within a much longer period,
namely, three
years. Such a rule would create a prescription period
within a prescription period.
[16] In my view the same applies to this case. In terms
of the conclusion relating to the first “
special
plea
”, the appellants’ claim had
not prescribed at the time of the institution of the proceedings in
the Labour Court. That
means that the appellants could still have
waited for more time before they could institute the proceedings.
However, in terms
of the Labour Court’s decision on the second
“
special plea
”
the appellants were obliged to have instituted court proceedings
despite the fact that their claim had not prescribed. The
effect of
that approach is that the appellants’ claim was subject to two
prescription periods, one in terms of the Prescription
Act and the
other in terms the so called “
unreasonable
delay
” rule. The obvious question that
arises is: when will the prescription period as prescribed by the
Prescription Act apply
and when will the prescription period founded
upon the “
unreasonable delay
”
rule apply? In other words: what is the relationship between the two?
[17] Obviously, the “
unreasonable
delay
” rule can only apply prior to the
expiry of the prescription period prescribed by the Prescription Act
because, once the
prescription period prescribed by the Prescription
Act has expired, there will be no claim to which the “
unreasonable
delay”
rule can apply. Once the
“
unreasonable delay
”
has occurred in a case prior to the expiry of the prescription
period, and there is no good cause shown, the litigant is
deprived of
his claim in the same way as he would have been if he had delayed
beyond the statutory prescription period in instituting
court
proceedings. In my view this would be untenable. The correct position
is simply that, if a claim is subject to a prescription
period
prescribed by the Prescription Act or is subject to any specific
statutory time frame within which it is required to be
brought to
Court, that is the time frame that governs it and the unreasonable
delay rule has no application to it. In my view the
“
unreasonable
delay
” rule applies to reviews that are
not subject to a statutory requirement that they be instituted within
a fixed period.
[18] The conclusion reached in
Khampepe JA’s judgment in respect of the prescription point
that the appellants’ claim
has not prescribed is based on the
finding that, when the respondent purported to withdraw or cancel the
agreement reflected in
MD102, that conduct on the part of the
respondent constituted a repudiation which vested the appellants with
an election to accept
the repudiation and treat the agreement as at
an end or to reject the repudiation and treat the agreement as alive
and hold the
respondent to it. It is also based on an acceptance that
the appellants elected to reject the repudiation and to hold the
respondent
to the agreement. In my view the effect of that election
was that the appellants were free to wait for the time in the future
when
in terms of that agreement between the parties they would be
entitled to go on early retirement and when the respondent would be
obliged to afford them certain benefits. They would then at that time
be able to say to the respondent: the conditions which in
terms of
the agreement must be met before you must give us benefits A, B &
C have been met and you must now give us those benefits.
If the
respondent gave them those benefits at that time, it would have
complied with its obligations. However, if it refused to
do so, they
would then be able at that time to institute court proceedings. At
that point the “
debt
”
under the Prescription Act would become due and the prescription
period would start to running. The appellants would not
have been
able to claim early retirement benefits prior to the time when the
conditions precedent applicable had been met. In my
view if and when
in the future the second and further appellants reach their early
retirement age in terms of MD102, they will
be entitled to require
the respondent to comply with its obligations and, if the respondent
fails to comply, they will be entitled
to institute appropriate court
proceedings. I am, obviously, not necessarily saying that they will
succeed. I am saying that, if
their allegations are taken as correct,
they will have a claim at that time.
[19] If the appellants were entitled
as a result of the election that they made to reject the repudiation
and hold the respondent
to the agreement as reflected in MD102 and
would be entitled to wait until many years in the future to sue the
respondent if it
did not comply with its obligations then, the
question that arises is; why must the respondent be compelled to live
with the resultant
uncertainty over many years on whether it is right
or the appellants are right on whether or not the agreement is still
binding
after it purported to cancel or withdraw it?
[20] The answer to this question is,
in my view, this one: the respondent is not obliged to live with such
uncertainty for a long
time because it is entitled to itself
institute court proceedings immediately after the appellants have
made the election to hold
it to the agreement and in such proceedings
it can ask for an order that it is no longer bound by the agreement
or an order to
the effect that that agreement has been validly
cancelled or that it is void and of no legal effect. The appellants
can also institute
proceedings such as the proceedings that they
instituted for an order that the respondent is still bound by the
agreement or that
the purported cancellation or “
withdrawal
”
of the agreement by the respondent was invalid and of no legal
effect. In my view the position is that, when a dispute such
as the
one that arose between the parties in this case arises, each party is
free to institute proceedings for an order that will
ensure certainty
about whether the agreement is still binding or not or to only
institute proceedings later when in terms of the
agreement it would
have been entitled to certain benefits or performance or when it
would have been obliged to make certain performance.
If one says that
the appellants’ claim in this case had not prescribed at the
time of the institution of court proceedings
but also say that the
appellants were obliged to have instituted court proceedings prior to
the time of the institution of the
proceedings that they did
institute, one is forcing a duplication of proceedings on the
appellants - with the attendant duplication
of costs for litigation –
in circumstances where all the issues that would be the subject of a
court decision in the first
proceedings would also have been some of
the issues that would have been dealt with in the future if and when
the second and further
appellants would have reached their early
retirement age and they would have had to institute court proceedings
upon the respondent’s
refusal to honour its obligations in
terms of the agreement. At that stage the appellants would sue the
respondent under the agreement
and in its defence the respondent
would say that the appellants are not entitled to early retirement
benefits claimed because the
agreement had been validly cancelled.
The appellants would say that the agreement was not validly
cancelled. The court would then
decide the point and, if it found for
the appellants, also consider their claim to such benefits on the
merits. Is there any reason
why the second and further appellants
should be forced to bring court proceedings earlier than when they
reach early retirement
age and the respondent refuses to honour its
obligations? I cannot think of any.
[21] The irony about finding that the
appellants must be barred from proceeding with their claim on the
merits because they delayed
unreasonably in instituting Court
proceedings is this: if, in the future, any one of the second and
further appellants reaches
the early retirement age in terms of MD102
and all the conditions precedent prescribed by MD102 for him to be
entitled to certain
benefits have been met and he sues the respondent
for performance thereunder when the respondent refuses to perform or
to make
certain payments, the court will not be barred from
pronouncing on whether or not the agreement will still be binding on
the respondent
if the respondent raises that point as its defence.
Accordingly, it will have been a futile exercise to say that the
appellants
delayed unreasonably in instituting court proceedings and
to refuse to deal with the merits of the appellants’ claim.
Ultimately
at that stage the merits of the claim will be dealt with.
I now turn to Conradie J’s judgment
in NAPTOSA.
[22] In Naptosa’s case the applicants brought an
application to the High Court for a declaratory order that clause 3
of certain
fixed-term contracts of employment of certain educators
was void, that the second to seventh applicants were entitled for the
years
1998 and 1999 to all benefits afforded to educators in terms of
certain regulations, including pension benefits of the Government
Employees Pension Fund constituted in terms of the Government Service
Pension Law 1973 and that the unilateral change of certain
service
benefits of temporary educators in 1998 and 1999 constituted an
unfair labour practice in terms of sec 23(1) of the Constitution
and
costs.
[23] It is not apparent from Conradie J’s judgment
when the applicants in the Noptosa case brought their application to
Court.
It seems to have been heard in August 2000. It seems that the
events which had given rise to the application had occurred at the
end of 1997 and in 1998. In NAPTOSA’s case Conradie J dealt
with a number of issues. One of them was that the applicants
in that
case had failed to establish their entitlement to specific benefits.
Another one was that there had been a “
substantial
delay
” on the part of the applicants in
bringing their application for a declaratory order. Conradie J said
at 900 F:
“
I consider that the substantial delay in
bringing these proceedings is another reason for exercising our
discretion against the
grant of a declaratory order. It is
well-established law that undue delay may be taken into account in
exercising a discretion
as to whether to grant an interdict or a
mandamus or to grant relief in review proceedings. The declaratory
order, being as flexible
as it is, can be used to obtain much the
same relief as would be vouchsafed by an interdict or a mandamus.
Where it is not necessary
that a record of proceedings be put before
the Court, a declaratory order could serve as a review. A court, in
exercising its discretion
whether to grant a declaratory order should
accordingly, in an appropriate case, weigh the same considerations of
‘justice
or convenience’ as it might do in the case of an
interdict or a review.
”
[24] It is clear from the above passage that in NAPTOSA
the Court did not rely only on the “
unreasonable
delay
” rule for its decision to dismiss
the applicants’ application for a declarator. Conradie J said
so in so many words
when at 901B he said: “
I
do not say that any one of the above considerations by itself would
have been decisive. Taken together, they constitute in my
opinion a
formidable hurdle in the way of the exercise of a discretion
favourable to the applicants
.”
Actually, a careful consideration of Conradie J’s judgment
reveals that he was taking into account the delay in instituting
proceedings as one of a number of factors – not to non-suite
the applicants but in the exercise of his discretion whether
or not
to grant the declaratory order on the merits of the case before him.
That is different from the case before us. In this
case the Labour
Court was not asked to take into account the delay in the exercise of
its discretion to grant or refuse the declaratory
order on the merits
but it was asked to uphold the point as a “
special
plea
” so that the appellants’
claim could not be considered on the merits. In fact the parties had
agreed effectively to
separate the “
special
pleas
” from the merits of the case and
an order of the Labour Court effecting such separation was granted.
[25] In the light of all of the above I am of the
opinion that the appellants’ appeal must succeed and the
respondent’s
cross-appeal stands to be dismissed. The appeal
was in respect of the Labour Court’s decision on the second
“
special plea
”
whereas the respondent’s cross-appeal was in respect of the
decision of the Labour Court on the first “
special
plea
”.
[26] With regard to costs I am of the opinion that the
requirements of the law and fairness dictate that there should be no
order
as to costs. There is a continuing employment relationship
between the parties in this matter and the matter which is the
subject
of the present proceedings is of great importance to all
parties concerned. Even in the Labour Court no order as to costs
ought
to have been made. It was made against the appellants. The
appellants have appealed against that cost order. In the premises I
make the following order:
The appellant’s appeal against the decision of
the Labour Court in respect of the second “
special
plea
” is upheld.
The respondent’s cross-appeal in respect of the
first “
special plea”
is dismissed.
There is to be no order of costs on appeal.
The order of the Labour Court in respect of the second
“
special plea
”
and the order of costs are hereby set aside and, for them are
substituted the following orders:
“
(a) The second special plea is hereby
dismissed.
There is to be no order as to costs.”
ZONDO JP
I
agree.
JAPPIE JA.
Appearance
For the appellant : Adv MSM Brassey SC
Instructed by : De Lange Attorneys
For
the respondent : Adv Schippers SC
Instructed
by : J Ramages Attorneys
Date
of judgment : 20 February 2008
IN THE
LABOUR APPEAL COURT OF SOUTH AFRICA
APPEAL CASE NO: CA9/05
LC
CASE NO: C207/2003
In the matter between:
SOLIDARITY
First
Appellant
R N HUTCHINGS
Second
Appellant
APPELLANTS AS PER SCHEDULE HERETO
Third to Further Appellants
and
ESKOM HOLDINGS LIMITED
Respondent/Cross Appellant
J U D G M E N T
KHAMPEPE, AJA
:
INTRODUCTION
[1] This is an appeal, with the leave of the
court
a quo
,
against an order granted by Wagley J on 19 January 2005, in the
Labour Court in which he dismissed the appellants’ application
for a declaratory order seeking to bind the respondent to an
agreement (Management Directive 102) allegedly entered into on 10
July 1998 with the appellants. The application was dismissed on the
basis that the appellants had delayed unreasonably –
some four
and a half years – before launching the proceedings. The court
a quo
also
dismissed the respondent’s special plea of prescription, in
respect of which it has noted a cross-appeal.
[2] The first appellant is a trade union
registered in terms of the Labour Relations Act (‘
the
LRA
”). The second to further
appellants are licensed reactor operators, employed at the
respondent’s Koeberg Power Station.
They are members of the
first appellant union.
[3] In the court
a
quo
the appellants sought an order
declaring that the respondent was bound by an agreement entered into
between the first appellant
and the respondent. In terms of that
agreement, the appellants claimed that the parties had agreed to
implement an early retirement
scheme for licensed operators.
Accordingly, they claimed an order directing the respondent to take
the necessary steps to implement
the early retirement scheme.
[4] The
respondent raised two special pleas, namely prescription and
unreasonably delays.
[5] On 9 February 2004, pursuant to an agreement
between the parties, it was ordered that the points
in
limine
be heard on 23 September 2004.
On that day the respondent adduced evidence in the court
a
quo
regarding prescription and
unreasonable delay.
FACTUAL
BACKGROUND
[6]
On 2 November 1998 Eskom, Koeberg, issued Koeberg Management
Directive 102 Revision 2 (“
MD
102
”), which contained
inter
alia
an early retirement scheme for
licensed operators. In essence, the scheme provided that such
operators would qualify for additional
condoned service according to
a formula in terms of which the operator would be credited with 1, 5
years’ service for each
one year of active licensed duty.
According to the scheme, licensed operators would have been able to
retire earlier, without
forfeiting the benefits that they would have
received, had they worked to the normal retirement age of 65.
[7] On 14 January 1999 the respondent withdrew MD
102. On the same day Mr Douglass and Mr Wilczewski, officials of the
first appellant’s
predecessor, the Mine Workers’ Union
(“
MWU
”),
declared a dispute on behalf of the licensed operators at Koeberg.
They described the dispute as follows:
“
An agreement has been reached, between
Koeberg management, all affected staff & all trade unions willing
to participate, for
the early retirement of operating personnel.
This has now been withdrawn.
”
[8] On 15 January 1999 Mr Peter Prozesky
(“
Prozesky
”),
the manager of Koeberg Power Station, advised the operating training
staff that there had been a misunderstanding by Koeberg
management
regarding corporate approval (by the respondent) to proceed with the
implementation of MD 102, and that it had been
withdrawn completely.
[9] On 15
January 1999 Koeberg management and all the then recognised trade
unions signed a staff briefing notice confirming that
MD 102 had been
withdrawn and that MWU had declared a dispute.
[10] On
22 January 1999 an Internal Conciliation Committee was convened but
did not resolve the dispute.
[11] On
13 October 1999 MWU addressed a letter to Prozesky advising him that
on 14 January 1999, it had raised a dispute regarding
the decision to
withdraw MD 102, and requested the respondent to state its position.
[12]
Between 22 January 1999 (the date of the meeting of the Internal
Conciliation Committee) and 5 August 2002, the appellants
did not
take any steps to resolve the dispute.
[13] On 5
August 2002 the second appellant, on behalf of licensed operators at
Koeberg, the bulk of who are members of the first
appellant, lodged a
grievance that the respondent had breached MD 102. The first
appellant’s members described their grievance
as follows:
“
WE THE UNDERSIGNED HAVE A GRIEVANCE
WITH KOEBERG MANAGEMENT DUE TO A BREACH IN CONTRACT WITH REGARD TO
PAYMENTS AGREED TO UNDER
MD 102
.”
[14] On 7
August 2002 the second appellant’s grievance on behalf of the
members of MWU was dealt with at the next level,
but was not
resolved.
[15] On 4
September 2002 Eskom, Koeberg, completed Grievance Investigation Form
III but the grievance remained unresolved.
[16] On
25 November 2002 a meeting was held between members of the first
appellant (assisted by their attorney and counsel) and
Prozesky. The
parties agreed to meet again on 15 January 2003 to attempt to resolve
the dispute. It was also recorded that it
was open to the first
appellant to launch proceedings in the Labour Court or in the High
Court in the meantime.
[17]
Subsequent meetings were held with a view to resolving the dispute
but without success.
[18] On
17 April 2003 the appellants served and filed their statement of
claim.
I now turn
to consider the issue of prescription.
[19] In the court
a
quo
the respondent argued that the
declarator sought by the appellants was an equivalent of a claim for
the payment of debt (in this
case the claim for the pension benefits
in terms of the agreement) which had become prescribed at the very
least on 15 January
1999 when the withdrawal of the benefits was
communicated to the applicants. In dismissing this argument the court
held that the
appellants’ right to claim early retirement
benefits had not become prescribed. The court
a
quo
, quite rightly, held that the
respondent’s contention that the appellants’ claim for
early retirement benefits, fell
due at the very least on 15 January
1999 when the withdrawal of the early retirement scheme was
communicated to the appellants
was incorrect. It found that on 15
January 1999 only the right to the retirement scheme had been
withdrawn.
[20] Mr Van der Riet who appeared on behalf of
the respondent, argued before us, that the court
a
quo
erred in failing to find that the
appellants’ claim for early retirement benefits under MD 102,
was based on an acknowledgement
by the appellants that the respondent
had allegedly breached MD 102 on 14 January 1999. It contended that
prescription began to
run on 14 January 1999 when the breach of MD
102 was communicated to the applicants. It was therefore contended
that when the respondent
withdrew MD 102 on 14 January 1999, the
right to claim early retirement benefits fell away and with it any
future claim to those
benefits.
[21] Mr
Brassey, who appeared on behalf of the appellants, however argued
that according to MD 102, the appellants only became
entitled to
claim early retirement benefits when in each of their respective
cases, the debt fell due. It was therefore argued
that, since at the
date of application for a declarator, none of the appellants had
retired, the debt owing to each of the beneficiaries
had not arisen
and their claim for the retirement benefits had not become
prescribed.
[22] Section 12 of the Prescription Act
1
provides that:
“
12
When
prescription begins to run –
Subject to the provision of subsections (2) and (3), prescription
shall commence to run as soon as the debt is due.
…
A
debt shall not be deemed to be due until the creditor has knowledge
of the identity of the debtor and of the facts from which
the debt
arises: Provided that a creditor shall be deemed to have such
knowledge if he could have acquired it by exercising
reasonable
care.
”
[23] The issue whether the appellants’
claim for the retirement benefits has become prescribed depends on
whether the debt
had become “
due
”
when the application for a declarator was launched.
[24] In
submitting that the debt had become due, the respondent placed much
reliance on the appellants’ written declaration
of dispute on
14 January 1999 in which the respondent’s withdrawal of the
retirement benefits was recorded. It was therefore
argued that
prescription began to run on the day of repudiation.
[25] The meaning of what the term “
debt
due
” denotes in terms of section
12(1) of the Act, has received the attention of the courts in many
judicial pronouncements.
It has authoritatively been determined to
mean that “
there has to be a debt
immediately claimable by the debtor
[sc
creditor]
or stated in another way, that
there has to be a debt in respect of which the debtor is under an
obligation to perform immediately
”
2
.
[26] A debt is due in this sense, when the
creditor acquires a complete cause of action for the recovery of the
debt, that is when
the entire set of facts which the creditor must
prove in order to succeed with his or her claim against the debtor is
in place
or in other words when everything has happened which would
entitle the creditor to institute action and to pursue his or her
claim
3
.
[27] The due date of the debt arising from breach
of contract is usually determined by the particular wording of the
contract
4
.
In terms of MD102 this was when each of the appellants reached
retirement.
[28] The respondent’s argument in paragraph
[20] above has lost sight of the fact that in the event of a breach
of contract
including an anticipatory breach, the party in breach may
become liable for different kinds of debts, in respect of which
prescription
will not necessarily begin to run at the same time. Upon
breach of contract the debtor may become liable for specific
performance
(or declaratory order) in terms of the contract or for
damages arising from the breach of contract
5
.
DUE
DATE OF DEBT ARISING FROM BREACH OF CONTRACT
[29] In my view the respondents have failed to
appreciate the significant distinction between a breach of contract
and an anticipatory
breach in regard to the determination of when
prescription commences to run. The significance of this distinction
was eloquently
articulated in
HMBMP
Properties (Pty) Ltd v King
:
“
Where a party to a contract repudiates
in advance his obligation under the contract to render performance at
some future date such
repudiation by itself has no effect in law,
save that it
‘
places the other party
in a position to elect whether to treat such conduct as a breach of
contract, or to persist in the contract
and hold his opponent to all
its terms when the due date should arrive’.
De Wet v Kuhn
1910 CPD 263
at 267. If the
innocent party elects not to treat the repudiation as a breach of
contract but to await the arrival of the date
fixed for performance,
then the repudiation is a nullity and both parties remain bound by
their obligations under the contract.
Geldenhuys and Neethling v
Beuthin
1918 AD 426
at 444; De Wet and Yeats Kontraktereg 4th ed at
155. If however the innocent party elects to treat the repudiation as
a breach
and cancels the contract, he treats the contract as at an
end from the date of his election; so much so that he can, after
cancellation,
still enforce rights under the contract which have
accrued and have become due and enforceable before cancellation.
Crest Enterprises
(Pty) Ltd v Rycklof Beleggings (Edms) Bpk
1972 (2)
SA 863
(A) at 870. The innocent party is given a reasonable time
after repudiation within which to make his election, failing which he
loses his right to cancel on account of the repudiation. De Wet and
Yeats (supra at 196). The party who has repudiated is entitled
to
withdraw his repudiation before the other party has made his
election. Cole v Stuart
1940 AD 399
at 414.
In our law, therefore, an anticipatory repudiation only becomes a
breach of contract if and when, as a result of such repudiation,
the
innocent party, in the exercise of the election which the repudiation
gives him, cancels the contract. Novick v Benjamin
1972 (2) SA 842
(A) at 861; De Wet and Yeats (supra at 155).
In
the case of a breach of a contractual obligation which has fallen due
for performance, a right of action generally accrues immediately
on
such breach; differing in this respect from an anticipatory breach.
In the case of an anticipatory breach - which is described
by JANSEN
JA in Novick's case as a novel form of breach - the innocent party
becomes entitled to sue the defaulting party immediately
for damages
resulting from his repudiation of an obligation the time for
performance of which has not yet arrived - but only immediately
after
the innocent party has cancelled the contract in the exercise of his
right to elect whether to treat the contract as at an
end.
”
6
[30] Wessels
7
also state that:
“
The aggrieved party however is not
compelled to regard the repudiation as a breach and forthwith sue for
damages; he is entitled
to refuse to accept the repudiation and to
await the arrival of the date of performance of them to bring his
action.
”
[31] There are other authoritative academic
authors who state the law in broadly the same terms.
8
[32] Repudiation therefore only becomes a breach
of contract if and when the innocent party in the exercise of the
election which
repudiation affords him\her cancels the contract. As
stated by Mthiyani JA in Ndlovu v Santam an unaccepted repudiation is
a “
thing writ in water
”.
9
[33] The
debt of the repudiating party arising from the election of the
innocent party to treat the contract as at an end becomes
due when
the election is made. In that event prescription begins to run from
that time.
[34] Whether an election has been exercised is a
question of fact to be deduced from the circumstances of each case.
10
[35] To the extent that the respondent’s
reliance on the written declaration by the appellant on 14 January
1999 can be construed
to constitute an election on the part of the
appellant, it appears to me to be out of step with the general trend
of authority
that the election must be unequivocal and/or the kind to
be inferred from the conduct of the creditor.
11
[36]
Quite to the contrary, the appellants’ written declaration on
14 January 1999 is in my view, clearly indicative of their
non-acceptance of the breach.
For these
reasons I would therefore dismiss the respondent’s appeal with
costs including the costs of two counsel.
UNREASONABLE
DELAY
[37] The remaining issues arise from the
appellants’ challenge of the court
a
quo’s
finding that the appellants
had delayed unreasonably by approximately 4½ years in
launching an application for a declaratory
order.
[38]
The appellants sought a declaratory order in terms of section 158(1)
(a) (IV) of the LRA. The provisions of the relevant
section do not
prescribe the period within which to launch such an application. The
court
a quo
took the view, quite correctly so in my view, that it had an inherent
power to dismiss the application on account of unreasonable
delay.
[39] The approach to be adopted by our courts
when faced with the issue of unreasonable day and the legal
principles applicable
thereto, were well articulated by Brand JA in
Associated Institutions Pensions Fund
and Others v Van Zyl and Others
12
as follows:
“
It is a longstanding rule that courts
have the power, as part of their inherent jurisdiction to regulate
their own proceedings,
to refuse a review application if the
aggrieved party had been guilty of unreasonable delay in initiating
the proceedings. The
effect is that, in a sense, delay would
'validate' the invalid administrative action (see eg Oudekraal
Estates (Pty) Ltd v City
of Cape Town and Others
2004 (6) SA 222
(SCA) ([2004]
3 All SA 1)
at para [27]). The raison d'être of
the rule is said to be twofold. First, the failure to bring a review
within a reasonable
time may cause prejudice to the respondent.
Secondly, there is a public interest element in the finality of
administrative decisions
and the exercise of administrative functions
(see eg Wolgroeiers Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad
1978 (1) SA 13
(A) at 41).
[47] The scope and content of the rule has been the subject of
investigation in two decisions of this Court. They are the
Wolgroeiers
case and Setsokosane Busdiens (Edms) Bpk v Voorsitter,
Nasionale Vervoerkommissie, en 'n Ander
1986 (2) SA 57
(A). As
appears from these two cases and the numerous decisions in which they
have been followed, application of the rule requires
consideration of
two questions:
(a) Was there an unreasonable delay?
(b) If so, should the delay in all the circumstances be condoned?
(See Wolgroeiers at 39C - D.)
[48] The reasonableness or unreasonableness of
a delay is entirely dependent on the facts and circumstances of any
particular case
(see eg Setsokosane at 86G). The investigation into
the reasonableness of the delay has nothing to do with the Court's
discretion.
It is an investigation into the facts of the matter in
order to determine whether, in all the circumstances of that case,
the delay
was reasonable. Though this question does imply a value
judgment it is not to be equated with the judicial discretion
involved
in the next question, if it arises, namely, whether a delay
which has been found to be unreasonable, should be condoned (see
Setsokosane
at 86E - F).
”
[40] The finding of the court
a
quo
was that the appellants had delayed
unreasonably in the launching of its declaratory application.
[41] It has however been argued on behalf of the
appellant that the court
a quo
did not properly exercise its discretion in that having found that
there was unreasonable delay, the court
a
quo
“
considered
that to be the end of the matter and looked no further
”.
[42] In its reasoning the court noted that in the present matter the
respondent withdrew the early retirement scheme on 15 January
1999 –
just over two months after it was reduced to writing: That the
appellants raised a grievance in respect thereof and
the grievance
was unsuccessfully dealt with on 22 January 1999: That
notwithstanding, no formal steps at all to pursue the matter
further
were taken for an inordinately long period, from 22 January until 5
August 2002. On 5 August they again filed a grievance
and then
declared a dispute on 27 August 2002 this dispute remained unresolved
following a conciliation meeting held on 25 November
2002.
Appellants then waited a further six months before they launched the
present proceedings.
[43] It was contended on behalf of the appellants that the delay in
the institution of proceedings was adequately explained by
the events
which occurred at the meeting held between Prozesky and the
appellants in which it was explained that notwithstanding
the
withdrawal of the directive, the respondent remained committed to the
spirit and intent of the directive. To this extent Prozesky
stated
that persons, who would have otherwise qualified under MD 102 for
early retirement, could approach him and their circumstances
would be
considered on a case by case basis. In my view the undertaking by
Prozesky to consider each case on its merits could not
have been
misconstrued by the appellants as the respondent’s revival of
MD 102.
[44] The court
a quo
found that not only was the delay in prosecuting the action by the
appellants substantial but that they had failed to provide
any
explanation for their delay. It noted that the first appellant was a
trade union and by its nature an expert on the actions
it ought to
take in order to protect its member’s interest. In this regard
it found that:
“
In any event it does not claim that it
was uncertain of the actions it was required to take. The second to
further applicants like
the first applicant were aware of the
respondent’s withdrawal of the early retirement scheme from 15
January 1999 they also
took no steps to prosecute this action nor do
they explain the reason for their failure to do so. The fact that the
applicants
may have repeatedly raised the issue with senior officials
of the respondent does not assist them as they were well aware of the
processes with which they were obliged to comply
.”
[45] I can find no cogent reason to interfere
with the court
a quo’s
finding in this regard.
[46] Mr
Van der Riet who appeared on behalf of the respondent submitted that
the appellants cannot succeed when the prejudice to
the respondent is
considered. I agree. Of pivotal consideration is the severe
prejudice that the declaratory order would have
caused not only to
the respondent but to a large number of its workforce.
[47]
Prozesky’s evidence in this regard is instructive. He
testified that if MD 102 had to be implemented, it would run counter
to the principle of collective bargaining, in that all of the parties
that would be implicated would not have had an opportunity
to
negotiate on the issue of early retirement.
[48]
There would be severe financial prejudice. If MD 102 had to be
implemented, about 80 senior reactor operators and 155 reactor
operators would be eligible for the benefits under MD 102, which
would cost the respondent approximately R162 million.
[49] The
implementation of MD 102 would also have national implications since
other employees in high-risk jobs such as national
control operators
and pilots would have to be considered for early retirement. There
are about 73 employees affected which would
cost the respondent an
additional amount of some R160 million. In total the respondent would
stand to lose about R322 million.
[50] For
four years, the respondent and trade unions had been in negotiations
to move from a defined benefit type of pension scheme
to a defined
contribution scheme. The scheme in terms of MD 102 is in conflict
with the principles of those negotiations and the
new pension system
is incompatible with MD 102.
[51] The
implementation of MD 102 would also have an adverse effect on labour
relations at the respondent’s coal-fired power
stations. MD 102
was not negotiated at central level in a national forum and if it had
to be implemented at Koeberg, there was
the potential that the lack
of negotiation at central level would have been used as a precedent
by employees at other coal-fired
power stations.
[52] It was also submitted that the court erred
when it considered the question of unreasonable delay as a point
in
limine
. I have grave difficulty in
comprehending the appellants’ complaint in this regard when in
terms of the pre-trial minute
dated 9 February 2004 the parties
agreed to shorten the proceedings by seeking the court’s
indulgence to consider the issue
of prescription and unreasonable
delay raised by the respondent in its special pleas. The appellants’
submission is therefore
devoid of any substance.
ORDER
[53] For these reasons, the following order is granted:
[53.1] The
appellants’ appeal is dismissed with costs, including the costs
of two counsel.
[53.2] The
Respondent’s cross-appeal is dismissed with costs, including
the costs of two counsel.
_________________________
KHAMPEPE, AJA
I concur.
__________________________
ZONDO, JP
I concur.
__________________________
JAPPIE, AJA
COUNSEL
FOR APPELLANTS : Adv. M S M Brassey SC
INSTRUCTED
BY : De Lange Attorneys
COUNSEL
FOR RESPONDENT : Adv. A Van der Riet SC
INSTRUCTED BY : J Ramages Attorneys
DATE OF
JUDGMENT : 2007-12-21
1
68
of 1969.
2
See
Deloite
Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman
Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) 532;
Santam
Ltd v Ethwar
[1998] ZASCA 102
;
1999 (2) SA 244
(SCA) at 253;
Cape
Town Municipality and Another v Allianz Insurance Co Ltd
1990 (1) SA 311
(C) at 321;
3
See
Evans
v Shield Insurance Co Ltd
1980 (2) SA 814
(A) 838D-H;
HMBMP
Properties (Pty) Ltd v King
1981 (1) SA 906
(N);
Uitenhage
Municipality v Molloy
[1997] ZASCA 112
;
1998 (2) SA 735
(SCA) at 741A;
List
v Jingers
1979 (3) SA 106
(A) 121;
Benson
and Another v Walters and Another
1981 (4) SA 42
(C) at 48F-G;
Santam
v Athwar supra
.
4
Christie
on
The
Law of Contract in South Africa
5
th
edition page 486 and cases cited in footnote 434. See also
Santam
v Athwar supra
at 253A.
5
Loubser
on
Extinctive
Prescription
page 68 paragraph 4.5.
6
@
910
7
The
Law
of Contract in South Africa
2
nd
edition Volume II page 795 paragraph 2938.
8
Kerr
on
The
Principles of the Law of Contract
6
th
edition at paragraph 561, dealing with extinctive prescription.
Loubser on
Extinctive
Prescription
page 71; Christie on
The
Law of Contract
page
87. He emphasises the need for the innocent party to exercise his
election within a reasonable time.
9
2006
(2) SA 239
(SCA) at page 248 paragraph C;
Culverwell
and Another v Brown
1990 (1) SA 7
(A) at 28B-F.
10
Kerr
on
Principles
of the Law of Contract
6
th
edition at 563-4;
Consol
Ltd t/a Consol Glass v Twee Jonge Gezellen
2005 (6) SA 23
at page 40.
11
Segal
v Mazzur
1920 CPD 634
at 644-5 approved in
Du
Plessis and Another NNO v Rolfes Ltd
[1996] ZASCA 45
;
1997 (2) SA 354
(A) at 364H.
12
2005
(2) SA 302
(SCA) 321 paragraphs 46-48.