About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Labour Appeal Court
SAFLII
>>
Databases
>>
South Africa: Labour Appeal Court
>>
2018
>>
[2018] ZALAC 23
|
|
Malatji v Minister of Home Affairs and Another (JA52/2017) [2018] ZALAC 23; (2018) 39 ILJ 2684 (LAC); [2019] 1 BLLR 8 (LAC) (15 August 2018)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA52/2017
In
the matter between:
KHWAILE
RUFUS
MALATJI
Appellant
and
MINISTER
OF HOME
AFFAIRS
First
Respondent
DEPARTMENT
OF HOME
AFFAIRS
Second
Respondent
Heard:
22 March 2018
Delivered:
15 August 2018
Summary:
Mora
interest – determination of the date from which the
mora
interest should starts to run in respect of the retrospective payment
– Labour Court substituting the award of reinstatement
with a
compensatory order – employer paying compensation and interests
from the date of the Labour Court’s judgment
– employee
contending that
interest
ought to run from the date of the award and not from date of the
judgment of the Labour Court – Labour Court dismissing
employee’s claim –
Held
that:
Mora
interest can only be levied and would accrue once the amount of
compensation is ascertained or easily ascertainable. Where the
award
is subject to review, it cannot be said that the quantum is readily
ascertainable and that the time for performance by the
debtor is
fixed. This is so because there is no obligation on the debtor, under
those circumstances, to pay the debt.
Further
that interest could not have accrued from the date of the issue of
the award, which was challenged by means of a review
before the
Labour Court. The judgment debtor would only be entitled to the
payment of interest
a
tempore morae
on
the unliquidated claim from date of the award, if the award is not
challenged through the review process, or from date of the
judgment
on review pursuant to the Court’s determination of the quantum
of the claim. Appeal partially upheld and Labour
Court’s
judgment substituted with an order to the effect that the
compensatory order made by it should bear interest at the
prescribed
rate from the date of the judgment.
Coram:
Phatshoane ADJP, Jappie and Coppin JJA
JUDGMENT
PHATSHOANE
ADJP
[1]
At
stake in this appeal, which is with leave of the Court
a
quo
(
per
Harper
AJ), is the date upon which
mora
interest should begin to run in respect of the retrospective pay,
equivalent to nine months’ salary, which the Labour Court
(
per
Snyman AJ) ordered the Minister of Home affairs (“the
Minister”) and the Department of Home Affairs (“the
department”),
the first and second respondents, on 02 April
2013, to pay to Mr Khwaile Rufus Malatji, the appellant. The
controversy is whether
interest on the capital amount should be
calculated from the date of the arbitration award, which was issued
on 14 August 2006
by the General Public Services Sector Bargaining
(“GPSSBC”) in favour of the appellant, or from the date
of the review
judgment by Snyman AJ.
[2]
The
background to this litigation is as follows. On 28 April 2005 the
department dismissed the appellant from its service as its
Chief
Director: Legal Services following a disciplinary hearing where he
was found guilty on various charges. He referred his dismissal
dispute to GPSSBC for resolution through conciliation and
arbitration. On 14 August 2006 the GPSSBC issued an arbitration award
in terms of which the appellant was reinstated retrospectively to his
former position. The Minister and the department were also
ordered to
pay him 12 months’ remuneration. The award which was varied on
30 August 2006 and the terms of the variation do
not form part of the
record of this appeal.
[3]
During
October 2006 the Minister and the department launched an application
to review and set aside the award issued by the GPSSBC.
On 02 April
2013 the Labour Court (
per
Snyman AJ) reviewed and set aside the GPSSBC’s award on the
grounds of procedural unfairness of the dismissal. It substituted
the
relief with an amount of R399 750.00, equivalent to the
appellant’s nine months’ salary. The award was made
an
order of the Labour Court in terms of s 158(1)(c) of the Labour
Relations Act, 66 of 1995 (“the LRA). The Labour Court
made
no order in respect of the payment of interest
.
[4]
On 24 April 2014 the department paid the principal amount and
interest from 02 April 2013, the date of the judgment of the Labour
Court. However, the appellant demanded that he be paid interest from
01 September 2006, the date pursuant to the issuing of the
variation
award by the GPSSBC. He contended that the effect of the Labour
Court’s order of 02 April 2013, insofar as it substituted
the
award, was that he was entitled to the payment of interest on the
capital amount from the date of the arbitration award and
not from
the date of the judgment. The gist of his argument is founded on s
143(2) of the LRA which provides:
‘
If
an arbitration award orders a party to pay a sum of money, the amount
earns interest from the date of the award at the same rate
as the
rate prescribed from time to time in respect of a judgment debt in
terms of section 2 of the Prescribed Rate of Interest
Act, 1975 (Act
55 of 1975),
unless
the award provides otherwise
.’
[5]
On 21 January 2015 the appellant launched an application in the
Labour Court for a declaratory order that the Minister and the
department were liable to pay him interest from date of the variation
of the award until 24 April 2013, i.e the date on which the
department paid interest on the capital amount, at the rate of 15.5%
per annum in respect of the monetary award made in his favour
by the
GPSSBC for the substantive unfairness of his dismissal, as
substituted by the order of the Labour Court on 02 April 2013.
[6]
On 19 January 2017 the Labour Court (Harper AJ) dismissed the
application for the declarator. It
reasoned
that s143 (2) of the LRA
does
not address the circumstances where the award of an arbitrator is
substituted with an order of the Labour Court. It held that
there was
a direct link between s143 and the review process because the Labour
Court, when tasked to review the arbitration proceedings,
essentially
acts as the arbitrator to the extent determined by it in the
judgment. It further held that the Labour Court is entitled
to review
the question of interest and decide whether to grant same from date
of its judgment, or from date of the arbitration
award. Where the
Labour Court alters the date upon which the interest is payable,
which is prejudicial to an employee or declines
to order that the
interest be paid, it would provide the employee with reasons for its
decision. It went on to hold that where
the Labour Court’s
order is silent on the payment of interest it does not follow that
s143(2) does not apply.
[7]
The Labour Court further held that where the Labour Court “
decides
to substitute the award “in toto” [as it did in casu]
then [it] either expressly or by necessary implication
has dealt with
the issue of whether interest should be payable on the sum of money.
In other words, the issue of whether interest
should be payable does
not become an issue still to be dealt with in legal proceedings.”
It concluded that it had no jurisdiction to overrule the judgment of
a fellow judge and was bound by it. It further held that it
could not
speculate why the Labour Court had not ordered that interest be paid.
It was preferable, the Court continued, for the
judgment and/or order
of Snyman AJ to have been appealed against.
[8]
Before us the appellant contended that Haper AJ erred in holding
that:
8.1 section 143(2) of the
LRA does not apply where the Labour Court substitutes the decision of
an arbitrator with its own. It was
contended that the Labour Court’s
conclusion is in conflict with the authority to the effect that when
the Court substitutes
the arbitrator’s decision it sits as an
arbitrator;
8.2 the Labour Court, in
substituting the arbitrator’s decision ‘
in toto
’,
elected to disallow the payment of interest on the capital sum;
8.3 the order
substituting the award was not intended to penalise the department by
permitting that interest run from the date of
the judgment. It was
contended that by substituting the award with an award of
compensation, as opposed to reinstatement, Snyman
AJ considerably
ameliorated the financial burden imposed on the respondents by the
arbitrators’ award, even if that award
attracted interest as
contemplated in s143(2) of the LRA.
[9]
As already alluded to, the crux of this appeal
is
whether
mora
interest should be calculated from 01 September 2006, the date of the
variation award by the GPSSBC or from 02 April 2013, the
date of the
review judgment of the Labour Court. Mr Beaton, for the appellant,
contended that had Snyman AJ intended to deprive
the appellant of
interest in respect of the seven years from 2006 to 2013 he would
have expressly said so in his judgment because
his order does “
not
provide otherwise”
as envisaged in s143(2). He relied on
General
Accident Versekeringsmaatskappy Suid-Afrika Bpk v Bailey No
[1]
in
support of the argument that interest ought to have begun to run from
the date of the award and not from the date of the judgment
of the
Labour Court. The headnote of that case aptly summarises the Court’s
conclusion as follows:
‘
Every
judgment debt bears interest, in terms of
s 2(1)
of the
Prescribed
Rate of Interest Act 55 of 1975
, from the day on which such judgment
debt is payable. A judgment debt is payable on the day upon which the
trial Court hands down
its judgment, irrespective of whether the
judgment is substituted or amended on appeal, so that the eventual
judgment debt is only
determined on appeal. Where an appeal against a
judgment succeeds and the amount of the judgment debt is altered,
there is
no question of a new judgment, but of an amended
judgment which the trial Court should have given and such judgment is
of force
and effect retrospectively to the date of the trial Court's
judgment.’
[10]
The decision in
General
Accident Versekeringsmaatskappy
is distinguishable, as it concerned interest on a judgment debt in
respect of a claim for damages. As observed by the Constitutional
Court in
Myathaza
v Johannesburg Metropolitan Bus Services (SOC) Ltd t/a Metrobus and
Others (Myathaza),
[2]
an arbitration award is not a judgment debt because it is not a
judgment of a court of law. A different approach applies to
arbitration
awards issued under the LRA. Its dispute resolution
dispensation is a special, self-standing system, with its own
prescribed periods
within which various steps are required to be
taken. It is a system for specific disputes, which is based on
special processes
and principles underlying the LRA, and fora
specially created for their appropriateness to that system.
[3]
[11]
The import of
s143(2)
is that the capital sum awarded would naturally
bear interest at the prescribed rate unless the award provides
otherwise. In
Top
v Top Reizen CC,
[4]
the Labour Court correctly noted that
section 143(2)
“does not
depart from the common law position in that interest commences to run
from the date on which the debtor’s
claim was ascertained.”
This brings me to the question whether the debtor's liability for the
payment of interest or
mora
can be said to have arisen in an instance where the validity of the
award is subject to challenge through the review process.
[12]
In
Intramed
(Pty) Ltd (In Liquidation) and Another v Standard Bank of South
Africa Ltd and Others
[5]
the
Court held:
‘
[14]
More than 80 years ago in
West
Rand Estates Ltd v New Zealand Insurance Co Ltd
1926 AD 173
at 182 this court said the following:
“
Here,
however, the amount of the loss incurred in respect of each item of
the claim was ascertained by agreement between the parties
before
issue of summons, so that the defendant knew exactly what was the
value of the property destroyed, for which he was held
liable, and
his failure to pay that amount constituted
mora
on his part. It follows therefore, that by our law interest began to
run on the amount of defendant's liability from the date of
mora
.
And that brings me to consider the question of what that date is.
”
[15] In
Thoroughbred
Breeders' Association v Price Waterhouse
2001 (4) SA 551
(SCA)
at
594G - 595B this approach was reaffirmed. The following appears at
594G - E [in para 86 - Eds]:
“
The
only remaining issue regarding TBA's claim for
mora
interest relates to the date from which such interest should be
calculated. TBA's contention is that the commencement date should
be
a date earlier than the date of summons because the
quantum
of its damages was readily ascertainable by PW at such earlier date.
I disagree. In the first place the
quantum
was by no means capable of easy and ready proof and the fact that
Reid reported on it cannot be held as an admission by PW against
itself. In the second place it fails to recognise the fundamental
principle that, however liquidated a plaintiff’s claim
for
damages may be,
mora
interest can only be calculated from the date when
mora
commenced.”
[16] In VG Hiemstra and
HL Gonin's
Trilingual Legal Dictionary
3 ed (1992) at 147 the
phrase
a tempore morae
is defined as follows:
“
vanaf
die tydstip wanneer die skuldenaar in gebreke is; vanaf die
tydstip van wanbetaling / / from the moment the debtor is
in
default.”
[17] The authorities
referred to in the preceding paragraphs give expression to this
meaning. The phrase always has to be viewed
in the context in which
it is used and in particular, in relation to the attendant claim and
the debtor's knowledge or ascertainment
of the amount due.’
(See
also:
Commissioner
for Inland Revenue v First National Industrial Bank Ltd
[1990] ZASCA 49
;
1990
(3) SA 641
(A) at 652I-653B.)
[13]
It is clear from the authorities cited that interest is not payable
unless there is an agreement to pay it or there is default
or
mora
on the part of the debtor. A judgment debtor is
in
mora
from the date of payment fixed by the judgment. From this date,
the judgment creditor is, at common law, entitled to interest
as of
right if it was duly claimed in the Court
a
quo
.
[6]
The purpose of
mora
interest is to place the creditor in the position that he or she
would have been had the debtor performed in terms of the
undertaking.
[7]
[14]
In
Victoria
Falls and Transvaal Power Co. Ltd. v. Consolidated Langlaagte Mines
Ltd
,
[8]
the Court pronounced that:
‘
The
civil law did not attribute
mora
to
a debtor who did not know and could not ascertain the amount which he
had to pay. ‘Non
potest
improbus videri, qui ignorat, quantum solvere
debeat.’
(
Dig.
50.17.99).
And that rule was adopted by the Courts of Vriesland. (See
Sande,
Dec.
,
3.14.9). It has also been followed in our own practice. No South
African decision was quoted to us, nor have I been able to find
any,
in which interest before judgment has been awarded upon unliquidated
damages. I do not think, therefore, that they can be
given here. I do
not say that under no circumstances whatever could such damages carry
interest. Cases may possibly arise in which
though the claim is
unliquidated the amount payable might have been ascertainable upon an
enquiry which it was reasonable the debtor
should have made. Such
cases, should they occur, may be left open. But the present matter
stands in a different position. It was
not possible for the defendant
to know or ascertain what damage its breach of contract had caused,
and it cannot therefore, on
the principles of our law, be held liable
for interest prior to judgment upon the amount of the damage.’
[15]
Mora
interest can only be levied and would accrue once the amount of
compensation is ascertained or easily ascertainable. To my mind
where
the award is subject to review, it cannot be said that the quantum is
readily ascertainable and that the time for performance
by the debtor
is fixed. This is so because there is no obligation on the debtor,
under those circumstances, to pay the debt.
Section 145(1)
of the LRA
affords any party to a dispute, who alleges a defect in any
arbitration proceedings under the auspices of the commission,
to
apply to the Labour Court within six weeks of the date that the award
was served for an order,
inter
alia
,
setting aside the arbitration award. If the award is set aside, the
Labour Court may determine the dispute in the manner it considers
appropriate or make any order it considers appropriate about the
procedure to determine the dispute.
[9]
[16]
In
Myathaza
(
supra
),
[10]
the Court noted that although
s145(3)
of the LRA empowered the Labour
Court to stay enforcement of an award pending a review
application, it did not follow automatically
that the award was
enforceable. If this were to be so, the Court remarked, applicants
for review would be prejudiced, in the event
that the award is set
aside. In some instances, the harm would be irreparable. The
arbitration awards constitute administrative
action not claims
capable of being enforced.
[11]
The last step in the adjudication of the unfair dismissal disputes is
either a judgment of the Labour Court in regard to a dismissal
dispute in respect of which the Labour Court has jurisdiction, or an
order of the Labour Court making an arbitration award an order
of
that court if the dispute is one that had to be referred to
arbitration after an unsuccessful conciliation process.
[12]
[17]
It is important to remember that the GPSSBC made an award of
retrospective reinstatement in favour of the appellant. With regard
to what would constitute a “debt” authorities are clear
that the order of reinstatement is not an obligation to pay
money or
deliver goods or to render service by a judgment debtor.
[13]
Interest could not have accrued from the date of the issue of the
award, which was challenged by means of a review before the Labour
Court. In any event, the order made by Snyman AJ, insofar as it
stipulates that the respondents were liable to pay the appellant
nine
months’ salary, substantially altered the original award of
reinstatement made by the GPSSBC.
[18] From the aforegoing
analysis, it cannot be said that the Minister and the department were
in
mora
from the date of issue of the award and/or its
subsequent variation. Mr Beaton’s argument, that by ordering
that interest
should run from the date of the issue of the
arbitration award, as opposed to the date of final determination of
review by the
Labour Court, would encourage speedy disposition of the
review applications in conformity with the general principle that
labour
dispute ought to be resolved expeditiously, is misplaced. Such
an order will be untenable. I am not aware of any principle of the
law that the debtor may be mulcted with the payment of interest for a
period, in circumstances where the extent of its liability
had not
yet been established in that period.
[19] In conclusion, the
judgment debtor would only be entitled to the payment of interest
a
tempore morae
on the unliquidated claim from date of the award,
if the award is not challenged through the review process, or from
date of the
judgment on review pursuant to the Court’s
determination of the quantum of the claim. To the extent that the
Labour Court,
correctly in my view, was disinclined to make a
determination on the declarator sought, the appeal should succeed. It
follows that
the judgment by Snyman AJ, only to the extent that he
did make an order in respect of interest, ought to be substituted by
fixing
the date from which the interest is to be calculated.
[20] I am of the view
that in accordance with the requirements of law and fairness this is
not a case where any of the parties should
be ordered to pay the
costs of this appeal. I make the following order.
Order
1.
The
appeal is partially upheld.
2.
Paragraph
99.4 of the order, issued on 02 April 2013 under Case No: JR2326/2006
by Snyman AJ, is set aside and substituted with
the following:
“
99.4
The award of the second respondent regarding the issue of relief, as
contained in the arbitration award dated 16 August 2006
and the
variation award dated 30 August 2006, are substituted by an award
that the third respondent is entitled to compensation
in an amount
equivalent to 9 (nine) months’ salary, being an amount of
R699 750. This amount is to bear interest at
the rate of 15.5%
from the date of the judgment, being 02 April 2013, to date of final
payment.”
3.
No
order is made in respect of the costs of the appeal.
_________________________
MV Phatshoane
Acting Deputy Judge
President - The Labour Appeal Court
Jappie and Coppin JJA
concur in the judgment of Phatshoane ADJP
APPEARANCES:
FOR THE APPELLANT: Adv RG
Beaton SC
Instructed by Rooth &
Wessels Attorney
FOR THE FIRST AND
SECOND RESPONDENT: Adv PC
PIO
Instructed
by The State Attorney, Pretoria.
[1]
1988 (4) SA 353
(A) (
General
Accident Versekeringsmaatskappy
).
[2]
2018 (1) SA 38
(CC) at 80C para142.
[3]
Myathaza v
Johannesburg Metropolitan Bus Services (SOC) Ltd t/a Metrobus and
Others
2018 (1) SA 38
(CC) at 76F-G para 131.
[4]
(2006) 27 ILJ
1948 (LC).
[5]
2008 (2) SA 466
(SCA) at 470 paras 14-17.
[6]
Russell NO and
Loveday NO v Collins Submarine Pipelines Africa (Pty) Ltd
1975
(1) SA 110
(A) at 156G.
[7]
Crookes
Brothers Ltd v Regional Land Claims Commission, Mpumalanga, and
Others
2013 (2) SA 259
(SCA) 269 at para 17
[8]
1915
AD 1
at 32
[9]
Section 145(4)
of
the LRA.
[10]
At para 47.
[11]
Myathaza
at
para 53.
[12]
Myathaza
at
para 56.
[13]
Myathaza
at para 59;
Mogaila
v Coca Cola Fortune (Pty) Ltd
2018 (1) SA 82
(CC) at para 18;
Brompton
Court Body Corporate
SS119/2006
v Khumalo
2018 (3) SA 347
(SCA) 350-351 at paras 9 and 11 and authorities
cited therein.