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[2007] ZALAC 42
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Solidarity and Others v Eskom Holdings Ltd (CA9/05) [2007] ZALAC 42 (21 December 2007)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA HELD 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 institute a court proceeding.
Having said this, it is necessary to also point out that
there was a
period of over two years during the period January 1999 and 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 appellant’s
response was that the second and further
appellants would be entitled
to early retirements 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 the 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 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 the period within which they
should be brought to Court
and not to those which were 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 anyone 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 its decision on the point
concerning the “
unreasonable
delay
” rule and the respondent
noted a cross-appeal against the Labour Court’s decision on the
prescribed 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 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 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. 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
theMD102. 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, A 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 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 kicks in, 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 await 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 run. The appellants would not have
been able to
claim those early retirements 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 the 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 would 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 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 it instituted for the purpose of obtaining 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 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 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 the early
retirement benefits claimed because
the agreement had been validly
cancelled. The appellants would say it was not validly cancelled and
the court would 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 the 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 the 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 as to 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:
1.
The appellant’s appeal against the
decision of the Labour Court in respect of the second “
special
plea
” is upheld.
2.
The respondent’s cross-appeal in
respect of the first “
special
plea”
is dismissed.
3.
There is to be no order of costs on appeal.
4.
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.
(b)
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 –
(1)
Subject to the provision of
subsections (2) and (3), prescription shall commence to run as soon
as the debt is due.
(2)
…
(3)
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.