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2011
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[2011] ZALCJHB 119
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Public Servants Association of South Africa obo Members v Gwanta NO and Another (J439/2010) [2011] ZALCJHB 119; [2012] 5 BLLR 517 (LC); (2012) 33 ILJ 1255 (LC) (20 December 2011)
REPORTABLE
IN THE
LABOUR COURT OF SOUTH AFRICA
HELD AT
JOHANNESBURG
Case Number
: J439-2010
In the
matter between
The Public Servants Association
OF
SOUTH AFRICA
o.b.o its members
…........................................................
Applicant
and
T T GWANTA N.O
…..............................................................................
1
st
Respondent
G NKWINTI N.O
…................................................................................
2
nd
Respondent
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Conradie AJ
In this matter the Applicant seeks an order declaring that the First
and Second Respondents are in contempt of a court order
granted by
this court on 13 November 2006. In the alternative it seeks an order
declaring the First and Second Respondents to
be in breach of the
court order and a further order compelling them to comply with the
court order.
The First Respondent was cited in his official capacity as the
Director General of the Department of Rural Development and Land
Reform (the Department). The Second Respondent was cited in his
official capacity as the Minister of the Department.
Background
The Applicant’s members in this case are employed in the
office of the Registrar of Deeds. Their responsibilities include,
amongst other things, the verification and examination of documents
lodged with the Registrar of Deeds.
During 2006 the Applicant’s members and the Department were in
dispute regarding the implementation of an incentive bonus
scheme
known as the “Piece Work Production Incentive Scheme.”
The dispute led to the situation where the Applicant’s
members
were set to embark on strike action on 7 November 2006.
In response to the threatened strike the Department brought an
urgent application in this court for an order interdicting the
strike. The Applicant opposed the urgent application.
The urgent application was, however, not heard because the parties
concluded a settlement agreement which sought to regulate
the
payment of an incentive bonus going forward. This settlement
agreement was made an order of court.
It appears that the parties complied with the terms of the
settlement agreement until 15 January 2009, when the Department
informed the Applicant that it was terminating the agreement.
The Department argues that the economic downturn experienced in the
country during recent years caused the workload in the Deeds
Office
to be reduced to such levels that the scheme no longer found
application.
According to the Department the settlement agreement of 13 November
2006 was concluded at a time when the economy was booming.
A high
volume of property purchases lead to a high volume of registrations.
In order to maintain the normal turnaround time for
the registration
and transfer of property, the high volume necessitated that extra
work be done by employees. In return employees
would benefit from
the incentive scheme. This was done by placing a cap on the number
of deeds which would ordinarily be examined
in a day. Any deeds
examined over and above this number would result in employees being
paid at a specified rate per extra deed
examined.
The Respondent also argues that when the parties concluded the
settlement agreement they were committed to resolving the issue
and
averting the strike. At this stage the question of what would happen
in the case of an economic downturn was not necessarily
discussed by
the parties. In particular, whether or not the incentive scheme
would remain in place indefinitely was not discussed,
nor was it
addressed in the settlement agreement.
The Applicant on the other hand argues that as the settlement
agreement is an order of court, it stands until it is set aside
or
varied by a subsequent order of court. This is the case even though
the party to whom it applies may believe itself entitled
to an
amendment or rescission of the terms of that order.
The Applicant also contends that the settlement agreement, as an
agreement which regulates the terms and conditions of employment
of
its members, varied the contracts of employment concluded between
its members and the Department. As a result, even if the
Department
is entitled to terminate the settlement agreement, this does not
have the effect of undoing the variation of the individual
contracts
of employment as they exist between the Department and each of the
Applicant’s members.
The Settlement Agreement
The settlement agreement consists of six clauses. Clause 1 deals
with introductory issues such as definitions and a recordal
of the
events leading up to the settlement agreement. The remainder of the
clauses, which I quote in full, provide as follows
–
“
The parties are now desirous of
settling this matter and wish to record the terms and conditions
pertaining thereto as follows:
2.1. The parties agree that the Collective Agreement signed on the
11
th
of February 2004 no longer regulates relations
between the parties.
2.2. The parties agree that the norms that applied on the 30 June
2002 will continue to be utilised until the 31
st
of
December 2006.
2.3 The tariffs that applied since 30 June 2002 will be adjusted
upwards on an annual basis at the same rate as the annual salary
Increments that applied to the affected staff, with effect from 1
July 2002.
2.4 That the Department will recalculate the amounts payable to
employees in terms of clauses 2.2 and 2.3 above and then any
outstanding
amounts payable to such employees will be paid to them in
monthly batches with final payments to be made by no later than 31
March
2007.
2.5. That the attached norms approved by the Director General on
the 11 August 2006 will apply with effect from 1 January 2007.
2.6 The aforesaid tariffs will continue to be adjusted on an
annual basis in the same way indicated in Clause 3 above.
Withdrawal
Upon signature of this agreement by both parties the parties
will attend upon the Labour Court , Braamfontein, by no later than
the 13
th
of November 2008, being the date to which this
matter has been stood down for hearing, to inform his Lordship that
this matter
is withdrawn on the basis that it has become settled
between the parties.
The parties agree that this agreement may be made an order of
court in terms of
section 158(1)
of the
Labour Relations Act 66 of
1995
.
The parties agree that the terms of this agreement are in full
and final settlement of all claims that either party may have
against
the other.
General
No agreement varying, adding to, deleting from or cancelling
this agreement shall be effective unless recorded in writing and
signed by or on behalf of the parties.
Costs
Each party shall bear its own legal costs occasioned by the Labour
Court Application under Case Number J2064/06.”
The Nature of the Settlement Agreement
Before the question of contempt of court can be considered, the
status of the court order, read with the settlement agreement,
must
be analysed.
In my view the fact that a settlement agreement is made an order of
court does not mean that all the terms of the settlement
agreement
automatically become terms of the court order. Too often it is
simply assumed that this is the case, with little if
any
consideration given to the nature of the settlement agreement.
There are inherent difficulties in clothing a settlement agreement
in the terms of a court order. In the case of
Thutha v Thutha
1
,
Alkema J, in dealing with a similar situation relating to a deed of
settlement which was made an order of court as part of divorce
proceedings, postulated the problem as follows:
“
The following difficulties flowing from
the terms of a contract being embodied in a court order come to mind
in the case of a dispute
between two contracting parties regarding
the terms of their contract. Is the result that one or both of them
is/are in breach
of the court order and may such party/parties in
these circumstances be compelled to comply with the court order even
if non-compliance
may be contractually excused? If not, what is the
object and purpose of the court order if it cannot be enforced? Is it
expected
of contracting parties to approach the court every time they
amend or change their contract to apply for an order of variation of
the court order? If the object and purpose of the court order is to
allow either or both contracting parties to proceed immediately
to
execution without resorting to a resolution of their contractual
disputes, may any of the parties be deprived of their contractual
rights or remedies, including the right to have their disputes
settled in a court of law? If not, again the rhetorical question:
What then is the purpose and effect of incorporating a contract into
an order of court?”
It is arguable in this case that when the court made the settlement
agreement an order of court, all that it was doing was acknowledging
that the matter before it was withdrawn, and that the parties had
reached an agreement as to how they would address the underlying
dispute going forward. In other words the specific terms of the
settlement agreement does not necessarily form part of the court
order.
It is noteworthy that clause 4 of the settlement agreement records
that the parties would inform the court on the day when the
interdict application was to be heard that the matter is withdrawn
on the basis that it has become settled between the parties.
The
fact that the settlement agreement contains an option to make the
agreement an order of court does not mean that the details
relating
to the incentive scheme also form part of the court order. All that
is included in the ambit of the order is that the
parties have
reached agreement on how to resolve the matter going forward.
In
Thutha v Thutha
it was also stated that:
“
I believe with respect that a court should
distinguish clearly between orders of court and their enforcement on
the one hand, and
deeds of settlement on the other hand. The former
is concerned with procedural principles and the protection of the
court’s
dignity and honour: and the latter with the law of
contract.
2
”
The learned judge goes on to say that if it is found that a court
order is merely a recording of a settlement agreement between
the
parties without an element of the court requiring obedience with its
terms as a court order, it cannot and should not be
treated as a
court order.
3
In such a case the remedy of the applicant is to sue on the contract
and for the court to decide the matter on contractual principles.
I agree with the above sentiments which show that the mere fact that
a settlement agreement is made an order of court does not
mean that
it is enforceable as such. The purpose of a court order should not,
except in appropriate circumstances, be to record
contractual terms
between the parties, as the court is not a registry of obligations.
Rather the purpose of the court order should
be to bring a dispute
to closure. This cannot be achieved where the settlement agreement
is not capable of ready enforcement
by execution. The settlement
agreement in question is in my view one that is not capable of ready
execution. A host of disputes
could arise relating to the
interpretation and application of the settlement agreement, which
would make enforcement of it on
the strength of a court order
undesirable.
The Settlement Agreement as a Collective Agreement
The settlement agreement in this matter is also, in fact and in law,
a collective agreement as contemplated in the Labour Relations
Act
66 of 1995 (the LRA).
The normal principle applicable to a collective agreement which is
concluded for an indefinite period, such as the one in question,
is
that it may be terminated on reasonable notice. In this regard
section 23(4) of the LRA provides that “
Unless the
collective agreement provides otherwise, any party to a collective
agreement that is concluded for an indefinite period
may terminate
the agreement by giving reasonable notice in writing to the other
parties.”
In this case, to the extent that there is a conflict between the
duty to observe a court order and the right to terminate the
collective agreement, I am of the view that the collective agreement
must prevail.
The conclusion of collective agreements through the process of
collective bargaining is what underpins our labour relations system.
If the Applicant’s argument is accepted, then the Department
would never be in a position to alter or terminate the incentive
scheme without approaching this court for an order that the
underlying agreement is varied or terminated. This court would be
called upon to resolve through litigation that which must be
resolved through collective bargaining. Such an approach would be
inconsistent with the LRA. This would also mean that if the parties
agree to vary, add to, delete or cancel the agreement as
provided
for in Clause 5, this would be of no force and effect unless
sanctioned by the court. This clearly cannot be correct.
The Variation of the Contracts of Employment
I do not agree that the Applicant’s members’ contracts
of employment were varied to include the incentive bonus and
as such
they should continue to be entitled to the bonus even though the
agreement is cancelled. Given the nature of the right,
they only
enjoyed it for as long as the collective agreement was in force.
Based on the reasons above I do not believe that there was a breach
of the court order. The Respondents cannot therefore be held
to be
in contempt of court.
As far as costs are concerned I can see no reason why the Applicant,
as the unsuccessful party, should not pay the costs of this
application.
In the circumstances I make the following order-
The application is dismissed with costs.
__________________
Conradie AJ
For the Applicant
Adv H A Van Der Merwe, instructed by Martins Weir-Smith
For the Respondents
Adv WR Mokhare, instructed by the State Attorney
Date of Judgment: 20 December 2011
1
2008
(3) SA 494
TkH at 499 16 – 17.
2
At
506 C-E.
3
At
508 C-E.
11