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[2010] ZALCJHB 371
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Business Zone CC v National Bargaining Council for the Clothing Industry and Another (J1686/10) [2010] ZALCJHB 371 (31 August 2010)
IN THE LABOUR COURT OF
SOUTH AFRICA
(HELD AT JOHANNESBURG)
CASE NO: J 1686/10
In the matter between:
THE BUSINESS ZONE CC
Applicant
and
NATIONAL
BARGAINING COUNCIL FOR
THE
CLOTHING INDUSTRY
1
ST
Respondent
THE
SHERIFF, HARRISMITH
2
ND
Respondent
REASONS
FOR JUDGMENT
LAGRANGE,
J
Introduction
1.
This matter was heard on an urgent basis on 26 August 2010 and the
following order was handed down on 31 August 2010:
“…
the
application to stay the enforcement of the arbitration award dated 3
May 2010, issued under the auspices of the first respondent
(case
number 7879/ 44/05/10) and to stay the writ of execution consequent
thereto, pending the outcome of the review application
filed under
case number JR 1279/10, is dismissed with costs.”
2.
The writ was stayed pending the handing down of the order. My
reasons for the order follow.
Factual
Background
3.
The applicant, a clothing company operating in Qwa-Qwa, Free State
province, was seeking an interim interdict staying the enforcement
of
an arbitration award issued on 3 May 2010, under the auspices of the
first respondent. It wished to stay the enforcement of
the award
pending the outcome of a review of the award. The award issued is to
enforce the wage and benefit provisions of a collective
agreement
which applied to the applicant.
4.
The amount due by the applicant to the council in terms of the award
is R 2,774,061-75 some of which is comprised of underpayments
in
respect of: prescribed wages (R 1,910,330-00), provident fund
contributions (R 54,018-72); council levies (R 44,754-14)
and
interest (R 261,183-37). The balance consists of an unpaid fine
of R 502, 275-72 and costs of R 1500. The period during
which the
short payments arose relates to the period 1 September 2008 to 31
August 2009. During that time, the applicant fell within
the scope of
the collective agreement published in government Gazette 28280 dates
15 December 2005 which was extended to non-parties
to the agreement
on 9 November 2007.
5.
The applicant effectively concedes that it was not complying with the
collective agreement, but disputes the correctness of the
amount
awarded. The basis for the discrepancy it advances in its founding
affidavit is that the number of employees used to calculate
the
amount due is incorrect. The short payments which were the subject
matter of the award concerned 262 employees of the company,
whereas
the list of names of the applicant’s employees attached to its
purported review application consists of 435 employees.
If the
additional 173 employees were employed during the period under
consideration in the award and were paid correctly then that
would
not affect the validity of the award. If they employed then and
were underpaid then it simply means that there may
be further claims
yet to come. I do not see how that undermines the status of the award
in respect of the other 262 employees.
6.
On behalf of the applicant, it was also advanced from the bar that
the award was based on estimated and not actual underpayments
and
therefore the amount awarded would be inaccurate for this reason too.
However, as no basis for this contention was laid for
this contention
in the founding affidavits before the court. It appears for the first
time in the belated review application filed
the day this matter was
heard. This issue will be addressed below.
7.
In February 2010, the applicant was served with a compliance order by
the Council in terms of which it was called upon to rectify
the
underpayments. It appears to be uncontested that the applicant
made no effort at that stage to comply with the agreement.
8.
Prior to the arbitration award being made against it, the applicant
took no steps to apply for exemption from the provisions
of the
agreement, a fact noted by the arbitrator. It was only after the
award was issued that the applicant sought an exemption
from the
Council. It is telling that the application was rejected by the
Council, amongst other things, on the basis that wage
details were
not completed and audited financial statements were not attached to
the application. The rejection letter from the
Council also notes
that the exemption application was dated 1 March 2010, but was only
received on 9 July 2010. It was argued on
behalf of the applicant
that the March date was indicative of its earlier intention to apply
for exemption prior to the arbitration
award. However, no explanation
was tendered why it was never submitted until July.
9.
The Council’s rejection letter also makes the point that
applications for exemption cannot be made retrospectively.
By
implication, the applicant ought to have applied for exemption
sometime around September 2008, once the wage schedule was applicable
to it.
10.
The original review application which the applicant purports to have
launched under case number, JR1279 /2010 on or about
25 may 2010, was
in fact an incomplete statement of claim. A proper application was
served and filed only on 25 August 2010. The
applicant has applied
for condonation for the late filing of this application.
The
Arbitration Award
11.
The arbitrator had to determine two issues. The first was
whether the applicant had complied with the agreement
or not.
The second was the order to be made in the event that it had not.
12.
The arbitrator found the applicant conceded that it had not complied
with the agreement and that it had received the compliance
order.
Even though the applicant now complains that the figure for
underpayments might be inaccurate, because part of the workforce
had
not been included in the assessment by the Council, the applicant
does not currently deny that it had not been complying with
the
agreement, even though it disputes it made this concession at the
arbitration hearing, contrary to what the arbitrator recorded.
It does not appear from the arbitration award that the accuracy of
the amount claimed in the compliance order, which is the same
as the
amount due in consequence of the award, was disputed at the hearing
and the applicant does not make such a claim. The applicant's
non-compliance is also borne out by its application for exemption
from the agreement on a retrospective basis.
13.
In its answering affidavit the first respondent acknowledges that the
applicant presented arguments to the arbitrator,
but claims it
presented no evidence to counter the allegation that it had been
underpaying wages on a systematic basis. According
to the
evidence of Lubbe, the Labour Affairs manager of the first respondent
for the Free State, the representations of the applicant
in the
arbitration to approximately 10 minutes to conclude and were
insubstantial. According to his evidence the essence
of the
applicant’s complaint to the arbitrator concerned the high
levels of some of its costs, and that other employers were
also not
complying with the agreement. This latter refrain is repeated by the
applicant now.
14.
The arbitrator found that the applicant had not complied with the
agreement in respect of the underpayments which are
the subject of
the writ, and in respect of the regular submission of records and
wage returns on a monthly basis.
Merits
of the Application
15.
The
applicant seeks to avoid the consequences of the writ in order to
pursue a review application. The court has a wide discretion
when
granting such relief, which must be exercised judicially.
[1]
In
general, a court will grant a stay of execution if the underlying
causa of the judgment debt is being disputed or no longer exists,
or
when an attempt is made to use for ulterior purposes the machinery
relating to the levying of execution.
[2]
Urgency
16.
What is immediately apparent from the summary of facts above, is that
the award which the applicant now seeks to avoid
could hardly have
come as a surprise. The debts arose between September 2008 and
August 2009. The applicant does not
claim it did not know what
its obligations were under the agreement. It was served with a
compliance order in February this year.
It made no effort of any kind
to comply, such as discussing less onerous repayment terms with the
Council. When it came to the
arbitration hearing the applicant put no
evidence before the arbitrator disputing its liability for the
amounts due, but only presented
arguments why it should be excused
from complying with the agreement. It did not attempt to make use of
the exemption application
process timeously, but only did so after
the award was issued. Even then, the applicant did not provide
crucial information such
as its financial statements which would have
shed some light on its ability to pay.
17.
Accordingly, it is fair to say that the urgency in this matter comes
about in circumstances in which the applicant did
not make timeous
use of the mechanisms available to it to avoid the order it now
faces. When it did have an opportunity to engage
on the issues, it
did so in a half-hearted way. It made no attempt to seek alternative
and less onerous terms of repayment from
the Council, or engage with
it about any discrepancies it had found in the Council’s
calculations. It also failed to dispute
the amounts due, which were
previously set out in the compliance order and presented at the
arbitration, until after the award
was issued. If it had a
bona
fide
dispute with the Council over the amount claimed and had
timeously pursued the other avenues available to it to try and
resolve
the dispute, but to no avail, and if it could demonstrate
that there was a reasonable apprehension that it would suffer
irreparable
harm in direct consequence of the execution of the order,
its claim for relief might rest on a firmer footing.
The
harm the applicant seeks to avoid
18.
Frequently, applications to stay of writ in this Court concern
arbitration awards in favour of employees whose ability
to repay the
amount, if the award is ultimately set aside on review, is doubtful.
Even then, the court does not necessarily grant
the relief sought.
Other factors such as whether the employer was dilatory in
challenging the award or prosecuting the review application,
or
whether the review application appears to be a
bona fide
one,
with some prospects of success, are typical considerations which the
court will take into account in exercising its discretion.
19.
In this
case, no reliance is placed on a claim that the Council’s might
be unable to repay the amount, nor is there any suggestion
that the
harm the applicant will suffer is financial. It claims the harm it
faces is that the factory has closed and it is about
to forfeit
orders “worth thousands of rands”. The applicant does not
provide any detail about any of the orders which
are supposedly
jeopardized. The respondent points out that the attachment of
goods by the sheriff did not require the applicant
to close the
factory or cease production. Obviously though if a sale in execution
proceeds then this might well occur. However,
it must be said that
the applicant still makes no effort to explain why a closure is
unavoidable at this juncture nor does it provide
anything but the
vaguest detail about the nature and extent of the jeopardized orders.
The learned author, Prest, has noted that
where the evidence in
support of an application is ‘extremely meagre’ a court
may decline to grant an interdict.
[3]
20.
The applicant does not say it is unable to tender payment of the
amount, nor does it say it is unable to provide security
for the debt
as an alternative to a sale in execution as a means of satisfying the
debt. No financial information was put before
the court demonstrating
that it really has no other way of satisfying the award, but to let a
sale in execution proceed. On the
evidence before me, I am not
satisfied that the applicant has demonstrated that the threat of
closure it claims to be facing is
harm that necessarily follows from
the existence of the writ of execution. Thus, the applicant has
failed to establish it
is facing harm that can only be prevented if
the stay of the writ is not granted.
21.
In passing, it is noted that the applicant also claims that neither
its employees, nor the representative union support
the Council’s
attempt to recover underpayments from it, but not a single supporting
affidavit was filed in confirmation of
these claims.
The
existence of alternative relief
22.
Clearly, in respect of the disputed portion of what is owed to the
Council the applicant in principle has a remedy insofar
as the
arbitration award might be set aside and a fresh arbitration hearing
convened. Whether it is likely to succeed in
that application
is a matter for consideration in weighing up the balance of
convenience. As far as the possible closure of the
factory is
concerned, the applicant failed to demonstrate that the only means of
avoiding this eventuality at this time was to
obtain a stay of
execution (see discussion above).
The
balance of convenience
23.
The balance of convenience seeks to evaluate the relative prejudice
to the applicant if it is refused an interdict now
but is ultimately
successful on review, against the prejudice to the respondent if the
interdict is granted and it is ultimately
successful. In this
instance, because the applicant has not satisfactorily demonstrated
that the harm it fears is one that it cannot
avoid, the matter might
end here.
24.
However, if
I am wrong in this respect and assume instead that the applicant has
demonstrated that the harm it seeks to prevent
will probably arise as
it has no other means of avoiding it, then the balance of convenience
falls to be considered. Where interim
relief is sought pending the
outcome of a review application, then the merits of the review should
be taken into account in determining
where the balance of convenience
lies.
[4]
25.
In this instance, the applicant is seeking to set aside the award on
a number of grounds. Some of the reasons relied on
in its belated
review application are merely iterations of general grounds on which
an award may be set aside. In the absence of
any factual specificity
in the founding affidavit which would connect the stated review
principles to the facts of the arbitration,
these cannot be
considered. However, the applicant does set out some specific claims,
which will be considered.
26.
The applicant complains firstly that the arbitrator appears not to
have considered important issues such as CMT (‘cut,
make and
trim’) pricing, the high cost of transport and low
productivity. It does not explain how this renders his decision
reviewable. While these considerations may well play a part in
determining an exemption application, the applicant does not indicate
why they are material considerations in an arbitration to determine
whether or not it complied with the agreement. Further, in
paragraph
12 of the arbitrator’s award, he records that “(t)he
Respondent conceded that they were in breach of the
agreement but
requested me to consider their reason for failure to adhere.”
(sic) Even if the contested concession mentioned
in this statement is
ignored, it appears that the reasons mentioned by the arbitrator must
refer to the very factors which the
applicant says the arbitrator
failed to consider. It seems he did in fact consider them, but did
not view them as affecting his
finding that the applicant had not
complied with the agreement.
27.
Secondly, the applicant disputes that it ever agreed it was not
adhering to the collective agreement as recorded by the
arbitrator.
Lastly, it complains that the amounts set out in the award were based
on estimates and no exact figures of wages nor
employees were used in
determining the award. These two grounds are considered together.
28.
As
mentioned above, the arbitrator had to determine firstly whether the
applicant had complied with the agreement. The arbitrator
records in
his award, among other things, that: “(the) Respondent
submitted no actual argument but stated that they are prepared
to
comply but needed time to gradually phase in the wages etc.”
[5]
Although the applicant
denies it conceded that it was non-compliant, it does not take issue
with this recordal by the arbitrator,
nor does it place any reliance
on this statement in its review application. Its own argument is not
that it paid the correct wages,
but that the calculation of the
underpayments was incorrect because it was based on estimates. The
figures relied on by the arbitrator
were those contained in the
earlier compliance order on which Mr Lubbe testified. There is no
evidence on the face of the award
that the correctness of those
figures was raised as an issue in the arbitration. Moreover, the
applicant does not claim to have
even attempted to do so. In any
event, if the arbitrator’s calculations were simply incorrect,
that is not sufficient, without
more, to set aside his award on
review.
29.
On the content of the award there is also nothing which suggests that
the applicant defended itself on the basis that
it was compliant.
Quite the opposite appears to be the case: the applicant was
advancing reasons why it could not pay the wages
in the agreement. If
it had complied with the agreement why would it have been making such
representations? It does not allege
it provided evidence proving its
compliance which the arbitrator then ignored.
30.
On the basis of the aforegoing it does not seem the applicant has a
reasonable prospect of success in persuading a court
on review that
the arbitrator was wrong in concluding it had not complied with the
agreement and the amounts it owed. When this
is taken account the
balance of convenience appears to favour the respondent, as the
review application will simply delay the date
of payment further.
Possible
third party claim on the attached assets
31.
Before concluding it must be mentioned that in its founding affidavit
the applicant mentions that “….the
large majority of
machines and equipment belong to Mr Mohamed Zubair Hassim Rhaman (who
is not a member or employee of the applicant)”.
The applicant
further observes that Mr Rhaman would be entitled to file an
application in the High Court concerning this equipment
and has done
so in another matter. Mr Rhaman’s confirmatory affidavit was
attached to the founding affidavit.
32.
Clearly as the writ in question was issued by the Registrar of the
Labour Court and the application to stay its operation
is under
consideration by this Court, anyone who has a legal interest in
whether or not it should be stayed or not would be able
to join these
proceedings on that issue. Mr Rhaman, who is obviously aware of these
proceedings, has chosen not to. Accordingly,
I do not see how I can
consider his possible claim which he has not pursued as a factor
bearing on the evaluation of the balance
of convenience as the
applicant suggests.
Conclusion
33.
In the circumstances, I am satisfied the applicant has failed to
demonstrate that the urgency was not self-created, or
that the
prejudice it claimed to be facing would follow unavoidably because it
could not satisfy the claim. Futhermore, it would
seem the balance of
convenience favours the respondent. Accordingly, the abovementioned
order was issued.
ROBERT
LAGRANGE
JUDGE
OF THE LABOUR COURT
Date
of hearing: 26 August 2010
Date
of order: 31 August 2010
Date
of filing reasons: 1 September 2010
Appearances:
For
the applicant:
Attorney:
C M Dell
For
the first respondent
Advocate:
G Fourie
Attorney:
Crawford & Associates
[1]
See
Bartmann
& Another t/a Khaya Ibhubesi v De Lange & Another
30
ILJ
2701 (LC)
at
2703, [6] –[7], viz:
“
[6]
The court's discretion should be exercised judicially, but generally
speaking a court will grant a stay of execution where
real and
substantial justice requires a stay; or, put differently, where
injustice would otherwise be done.
[7]
The discretion is a wide one. It is founded on the court's power to
control its own process. Grounds on which a court may
choose to stay
execution include that the underlying cause of action on which the
judgment is based is under attack, or that
execution is being sought
for improper reasons. But these are not the only circumstances in
which the court will exercise the
power.”
(footnotes
omitted)
[2]
R
ham
Equipment (Pty) Ltd
v
L
loyd
& Others
(2008)
29
ILJ
3033 (LC)
at
3036, [10]
[3]
Prest C B, The Law and Practice of Interdicts, 2
nd
Impression, 2007, at 215.
[4]
Ladychin
Investments (Pty) Ltd v South African National Roads Agency &
Others
2001
(3) SA 344
(N)
at
355A/B
and 357C/D – D, and
Independent
Municipal & Allied Workers Union v City of Tshwane Metropolitan
Municipality
(2008)
28
ILJ
171 (LC)
at
182, [31]
[5]
At paragraph 11 of the award