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[2010] ZALCJHB 348
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Edgars Consolidated Stores Ltd v South African Commercial And Catering And Allied Workers Union and Others (J1089/07) [2010] ZALCJHB 348 (18 May 2010)
IN THE LABOUR COURT OF
SOUTH AFRICA
(HELD AT JOHANNESBURG)
CASE
NO: J 1089/07
In the matter between:
EDGARS CONSOLIDATED
STORES
LTD
Applicant
and
SOUTH
AFRICAN COMMERCIAL AND CATERING
AND
ALLIED WORKERS
UNION
1
st
Respondent
JACKY
MFUSI
2
nd
Respondent
JOHANNES
FREDERICK KLOPPER N.O.
3
rd
Respondent
WILLY
LEGOABE SERITI N.O.
4
rd
Respondent
JOHN
LOUIS CARTER
FOURIE
5
th
Respondent
KAREN
KEEVY
N.O.
6
th
Respondent
JUDGMENT
LAGRANGE,
AJ
Introduction
1.
The applicant (‘Edcon’) seeks an order declaring an
arbitration award in favour of the second respondent unenforceable
against it, and setting aside a writ of execution issued by the
registrar on 4 March 2008.
2.
The application was opposed by the first respondent (‘SACCAWU’)
but for reasons which are not apparent it did not
attend court on the
day the application was heard and accordingly the matter proceeded on
a default basis.
Background
3.
The second respondent was employed by CNA Limited (“CNA”),
which dismissed her on 25 April 2001.
4.
Subsequently, the second respondent referred an unfair dismissal
dispute to the CCMA. The presiding commissioner handed down
an
arbitration award on 20 December 2001, in which he found the
dismissal was substantively unfair and ordered CNA to reinstate
the
second respondent and pay compensation in the amount of R 35 588-00.
5.
In February 2002, CNA launched a review application to set aside the
award.
6.
On 27 July 2002, CNA was placed in provisional liquidation.
7.
On 21 October 2002, in the course of CNA’s liquidation, the
applicant acquired the business of CNA as a going concern following
the conclusion of a sale of business agreement between itself and the
joint liquidators of CNA.
8.
Edcon sought leave to intervene in the review application which CNA
had launched, but withdrew this application before the matter
was
heard on 30 November 2005. The review application was dismissed.
9.
In June 2006, SACCAWU launched a joinder application in the CCMA,
with the real object of substituting Edcon for CNA as the employer
party in the arbitration award.
10.
Edcon claims it opposed the joinder application, but a CCMA
commissioner issued a ruling effectively substituting Edcon
as the
respondent party on 12 February 2007, on an unopposed basis. Edcon
has not sought to rescind or review this ruling.
11.
On 3 March 2008, SACCAWU subsequently obtained a writ of execution
from the registrar of the Labour Court. Edcon obtained
a stay of the
writ of execution pending the outcome of this application.
The
enforceability of the award
12.
Edcon contends that, on a proper interpretation of section 197A(4) of
the Labour Relations Act, 66 of 1995 (‘the
LRA’), the
provisions of section 197(5)(b)(i) of the same Act do not apply and
accordingly, it is not bound by the arbitration
award made in favour
of the second respondent.
13.
Sections 197(5)(a) and 197(5)(b)(i) read as follows:
“
(5) (a) For the
purposes of this subsection, the collective agreements and
arbitration awards referred to in paragraph (b) are agreements
and
awards that bound the old employer in respect of the employees to be
transferred,
immediately before
the date of transfer.
(b) Unless otherwise
agreed in terms of subsection (6), the new employer is bound by-
(i)
any arbitration award made in terms of this Act
, the common
law or any other law;
(ii)
any collective agreement binding in terms of section 23; …”
(emphasis added)
14.
Section 197A applies to transfers of businesses or undertakings under
conditions of insolvency. Sub-section 197A(4) of
the LRA reads:
“
(4) Section 197
(5) applies to a collective agreement or
arbitration binding on
the employer immediately before
the employer's provisional
winding-up or sequestration.”
(emphasis added)
15.
Edcon does not contend that an arbitration award in favour of a
former employee of the old employer cannot be binding
on the new
employer to whom the business is transferred in conditions of
insolvency. The only argument advanced by Edcon in support
of its
claim that the award is unenforceable, is that an arbitration award
of more than seven months’ vintage issued against
CNA (the old
employer) occurred too long ago to be brought within the ambit of
section 197(4) and hence section 197(5) cannot operate
to preserve
the enforceability of the award against it, as the new employer.
16.
The crux of Edcon’s argument is that the word “immediately”,
as considered in a number of other legislative
contexts has been
interpreted to mean ‘as soon as reasonably possible’ or
‘within a reasonable time’ in
the circumstances of each
case. The court was referred to the definition of ‘immediately’
in
Claasen’s Dictionary of Legal Words and Phrases (2ed)
as an authoritative summary of these cases. Relying on the this
authority, Edcon submits that the word ‘immediately’,
as
contemplated in section 197A(4), cannot be construed as meaning a
period of more than seven months and instead contemplates,
at best, a
contemporaneous sequence of events.
17.
The New
Shorter Oxford English Dictionary
[1]
defines the adverb ‘immediately’ as:
“
A.
adverb.
1
Without intermediary agency; in direct connection or relation; so as
to affect directly.
LME
.
2
With no person, thing, or
distance intervening, next (before or after); closely.
LME
.
3
Without delay, at once, instantly.” (p)resent or nearest in
time, most urgent, occurring or taking effect without delay”.
18.
Similarly,
Black’s Law Dictionary
[2]
provides the following definition of ‘immediate’.
“
immediate.
1.
Occuring without delay; instant <an immediate acceptance>. 2
Not separated by other persons or things. <her immediate
neighbour> 3. Having a direct impact; without an intervening
agency < the immediate cause of the accident>”
19.
Useful though the interpretation of the word ‘immediately’
as summarised in Claasen’s Dictionary is,
the cases cited there
largely concern time limits within which certain things had to be
done. In this instance, the word
‘immediately’ is
part of the prepositional phrase ‘immediately before’.
The phrase is used in sections
197 and 197A refers to a point in time
at which a certain state of affairs exists, rather than to a deadline
by which certain action
must be taken. The prepositional phrase
‘immediately before’ occurs in four separate provisions
of sections 197 and
197A. Two instances of the phrase are to be found
in the sections 197(5) and 197A(4), as set out above. Two more appear
in sections
197(2) and 197A(2), namely:
“
197(2) If a
transfer of a business takes place, unless otherwise agreed in terms
of subsection (6)-
(a) the
new employer is automatically substituted in the place of the old
employer in respect of all contracts
of employment
in existence
immediately before
the date of transfer; …
197A(2) Despite the
Insolvency Act, 1936 (Act 24 of 1936), if a transfer of a business
takes place in the circumstances contemplated
in subsection (1),
unless otherwise agreed in terms of section 197 (6)-
(a)
the new employer is automatically substituted in the place of the old
employer in
all contracts of employment
in existence
immediate
l
y before
the old employer's provisional
winding-up or sequestration; …”
(emphasis added)
20.
In analysing the phrase ‘immediately before’ it is useful
to consider the way an equivalent phrase ‘immediately
preceding’ was interpreted in the case of
Ackerman v Cape
Law Society
1933 CPD 171
. In that case, the court was
contemplating the meaning of that phrase in section 2(c) of Act 30 of
1892, which governed the admission
of attorneys. The provision
required an applicant for admission as an attorney to produce proof
that for a period of three
years ‘immediately preceding’
the date of his admission or enrolment as an attorney of the Orange
Free State, Provincial
Division he had been articled to serve or had
served as a clerk to an enrolled attorney in the Division. In the
case before it
the applicant had only been admitted three years after
completing his articles. The court decided to condone the delay
between
the conclusion of the applicant’s articles and his
admission because he had continued to work for the attorney had
served
articles with up to the time of his admission and the delay
was attributable to him only passing his exams three years after
completing
his articles. The court decided that a ‘liberal
interpretation’ ought to be given to the phrase ‘immediately
preceding’ as had been done in the case of
Ex parte
Middleton
. In that case a full bench of the CPD looked at the
purpose of the provision and decided that the phrase was inserted in
the section
to ensure that clerks should not take up some other work
after serving their articles and then, having forgotten what they had
learnt, revert back to the law and then be admitted as attorneys.
21.
For present purposes, what is relevant about these cases is that the
ordinary meaning of the phrase ‘immediately
preceding’
was understood to refer to a three year period of articles which
ended very shortly before the candidate’s
admission, even
though the courts ultimately adopted a far more relaxed
interpretation of the phrase taking into account the purpose
of the
provision. Although the phrase ‘immediately preceding’
is used to describe the point in time at which
a person completed
articles relative to their application for admission, I believe the
interpretation of the ordinary meaning of
that phrase provides a
better guide to what is meant by ‘immediately before’ as
it is used in the provisions of sections
197 and 197A of the LRA.
22.
In this sense, I would agree with the applicant that the phrase
‘immediately before’ contemplates two virtually
contemporaneous occurrences. The two ‘occurrences’ that
are under consideration in section 197A(4) concern firstly
the
existence of a binding arbitration award and secondly, the act of
placing the employer in provisional sequestration. It is
important to
note that the section does not refer to an arbitration award being
issued
immediately before the employer’s provisional
sequestration, but rather refers to an arbitration award which is
binding
on the old employer immediately before the
sequestration. In other words, it describes a state of affairs
in which an employer
that is currently bound by an arbitration award,
is placed in provisional liquidation. For this reason, I think the
applicant is
incorrect when it argues that the event which must be
compared with the occurrence of the transfer, is the issuing of the
award.
Rather, the question is whether or not an arbitration award is
still binding on the old employer on the eve of the transfer.
23.
In order for an award to bind an employer it need not have been
issued recently: it is sufficient that it simply has not
yet
prescribed. Because of the various actions of the parties since
the award was handed down, prescription would have been
interrupted
in this matter and, understandably, was not raised as an issue by the
applicant. The award in question here,
had been issued less
than eight months prior to CNA’s provisional liquidation, and
therefore section 197A(4) applied to the
award because it was still
binding on that date. Consequently, by virtue of the operation of
197(5) the award became binding on
Edcon when the business of CNA was
transferred to it. For this reason the award is enforceable against
the applicant.
Order
24.
In the circumstances,
24.1.
the application to declare the award issued by second respondent on
20
th
December 2001 unenforceable against the applicant is
dismissed;
24.2.
the application to set aside the writ of execution issued by the
Registrar
of the Labour Court on 4 March 2008 is dismissed, and
24.3.
no order is made as to costs.
_____________________
ROBERT
LAGRANGE
ACTING
JUDGE OF THE LABOUR COURT
Date
of hearing : 25 February 2010
Date
of judgment: 18 May 2010
Appearances:
For
the applicant: Mr M Van As
Instructed
by Deneys Reitz Inc.
[1]
Vol 1, 6th edition, 2007
[2]
BA Garner (ed), 8
th
ed, 2004