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[2012] ZALCJHB 114
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South African Post Office Ltd v Nowosenetz NO and Others (JR 663/2011) [2012] ZALCJHB 114; [2013] 2 BLLR 216 (LC); (2013) 34 ILJ 1604 (LC) (17 October 2012)
REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA,
JOHANNESBURG
JUDGMENT
Reportable
Case no: JR 663/2011
In the matter between:
SOUTH AFRICAN POST OFFICE LIMITED
Applicant
and
COMMISSIONER L NOWOSENETZ
N.O.
First Respondent
COMMISSION FOR CONCILIATION, MEDIATION AND
ARBITRATION
Second Respondent
SOUTH AFRICAN POSTAL WORKERS UNION
Third Respondent
COMMUNICATION WORKERS UNION
Fourth Respondent
Heard: 28 June 2012
Delivered: 17 October 2012
Summary: Review Application – material error of
law – dispute between minority trade union and employer about
applicable
representivity threshold for organisational rights - what
is the effect of novation on a representivity threshold agreed in a
collective
agreement
JUDGMENT
________________________________________________________________________
MASHER, AJ
Introduction
This
is an application in terms of section 145 of the Labour Relations
Act 66 of 1995 (“the Act”), to review and set
aside the
award of the first respondent (“the commissioner”)issued
under case number GATW 7037-10 (HO1570/10) and
dated 14 February
2011.The third respondent (“SAPWU”) opposes the
application.
Background facts
This matter has a long and unfortunate history. I set
out the facts relevant to this application below.
Between 14 June 1996 and 19 January 2011, the applicant
and the fourth respondent (“CWU”) concluded four
collective
agreements in which the parties agreed to
variousrepresentivity thresholdswhich were required in order for any
registered trade
union to be accorded the organisational rights
referred to in sections 12, 13 and 15 of the Act.From the record of
the arbitration
proceedings and the papers filed in this
application, SAPWUdoes not dispute that the applicant and CWU, as
the majority trade
union at the workplace, were entitled to agreeto
these representivity thresholds.
Two collective agreements are directly relevant for
purposes of the issues in dispute in this application. They are the
Procedural
and Recognition Agreement concluded on 31 January 2008
(“the 2008 agreement”) and the Procedural and
Recognition
Agreement concluded on 19 January 2011 (“the 2011
agreement”).
The 2008 agreement provides as follows in clause 3.2:
‘
The
Union shall be recognised if it upholds the threshold of 30% + 1 of
the employees in the bargaining unit who are members of
the union.’
In mid-2009, SAPWU approached the applicant and
requested certain organisational rights. At the time, the applicant
declined to
grantthese organisational rights to SAPWU.
SAPWU accordingly,referred an organisational rights
dispute to the second respondent (the “CCMA”) in late
2009.A settlement
agreement was concluded to settle this dispute on
the basis that 30% + 1 was the required threshold for the exercise
of the organisational
rights referred to in sections 12, 13 and 15
of the Act. At the time, it was agreed that SAPWU’s membership
exceeded this
threshold.
However, SAPWU was not granted the organisational
rights referred to in sections 12, 13 and 15 of the Act. It appears
that the
reason for this was that notwithstanding the signature of
the settlement agreement, the applicant formed the view that the
representivity
threshold for purposes of the organisational rights
referred to in sections 12, 13 and 15 of the Act was in fact 40% +
1. The
basis for this was an agency shop agreement that had
previously been concluded between the applicant and CWU and which
provided
for this threshold.
In May 2010, the applicant launched an application in
the Labour Court to set aside the settlement agreement.
InJune 2010,SAPWU referred a further dispute to the
CCMA relating to the “interpretation/application” of the
settlement
agreement. CWU subsequently also referred a dispute to
the CCMA.
The two referrals to the CCMAwere consolidated and the
parties to these disputes (the applicant; SAPWU and CWU) held a
pre-arbitration
conference in which it was agreed that the following
issues were to be decided by the commissioner:
‘
3.1
Whether the threshold for representativeness is 30% + 1 as per the
Procedural and Recognition Agreement dated 31 January 2008,
or 40% +
1 as per the Agency Shop and Threshold Agreement dated 1 November
2001.
3.2 Whether the same
organizational rights enjoyed by the Second Respondent
(
CWU
)
can
be enjoyed by the Applicant
(
SAPWU
)
as per the
Procedural and Recognition Agreement dated 31 January 2008.
3.3 Whether the Procedural and
Recognition Agreement (Amendment 1 of 2011) dated 19 January 2011
will supercede and amend all other
previous threshold agreements.
3.4 Whether the Applicant
(
SAPWU
)
is entitled to exercise any organizational
rights currently, in terms of the Procedural and Recognition
Agreement (Amendment 1 of
2011) dated 19 January 2011.
3.5 Whether the Applicant
(
SAPWU
)
can retrospectively enjoy organizational rights
from the date that the Applicant
(
SAPWU
)
attained the
30% + 1 threshold.
3.6 Whether the Second
Respondent
(
CWU
)
is a majority union.’
In terms of their pre-arbitration minute, the parties
also agreed that:
‘
1.4
The First Respondent
(
South
African Post Office Ltd
)
shall withdraw the entire Labour Court Application lodged under case
number J1941/10 aimed at setting aside the settlement agreement
concluded with the Applicant
(
SAPWU
)
on 6 May 2010.
1.5 The Applicant
(
SAPWU
)
and the First Respondent
(
South African Post Office Ltd
)
agreed to set aside the settlement agreement entered into on 6 May
2010.’
On 19 January 2011, the applicant and CWU entered into
the 2011 agreement, which dealt,
inter alia
, with the
threshold for the exercise of the organisational rights referred to
in sections 12, 13 and 15 of the Act, and set the
threshold at
40%+1.
The 2011 agreement provides as follows in clause 3.2.3:
‘
The
Company and the Union, who represent a majority of the employees (50%
+ 1) in the bargaining unit, where this agreement will
apply, hereby
establish a threshold of representativeness of 40% + 1 (“Threshold”)
for the purpose of any union seeking
to exercise one or more of the
organisational rights referred to in section 12, 13 and 15 of the
LRA.’
The 2011 agreement also provides as follows in clause
14.2:
‘
This
Agreement will also amend and supersede any threshold of
representativeness that is contained in any other previous
agreement.’
After having considered the matter at the arbitration,
the commissioner ordered as follows:
1 ‘The threshold of
representativeness during 2009/2010 at all times material to when the
Applicant
(
SAPWU
)
applied for organisational rights
from the First Respondent
(
South African Post Office Ltd
)
in terms of section 21 of the LRA, was 30% + 1 as provided for in the
recognition agreement between the First
(
South African Post
Office Ltd
)
and Second Respondent (CWU) dated 31 January 2008;
2 The organisational rights
which accrued to the Applicant
(
SAPWU
)
were in terms of
section 12, 13 and 15 of the LRA;
3 The threshold in the 2011
agreement between the First
(
South African Post Office Ltd
)
and Second Respondent
(
CWU
)
supersedes all other
previous threshold agreements but it does not operate retrospectively
nor does it affect the attainment by
the Applicant
(
SAPWU
)
of the threshold that was valid as at November 2009, which was 30
+ 1;
4 The Applicant
(
SAPWU
)
can retrospectively enjoy organisational rights from the date that it
attained a 30% + 1 threshold being 9 November 2010 or earlier
if it
is able to verify this with the First Respondent
(
South
African Post Office Ltd
)
.’
Grounds of review
The applicant contends that the commissioner’s
finding is unreasonable, unjustifiable and/or irrational, and that
the commissioner
failed to apply his mind to material issues,
focused upon irrelevant considerations, ignored relevant
considerations, committed
errors of law, and exceeded his power in
his final determination.
In support of the above grounds, the applicant relies
primarily on the following submissions:
At the time of the arbitration, the 2011 agreement had
superseded all previous agreements by novation, and thus SAPWU’s
claim was academic, or alternatively, was novated.
Alternatively, organisational rights cannot
practically be exercised retrospectively, rendering the award
reviewable.
The applicant also applied for condonation for the late
filing of the record of the arbitration proceedings.
During the hearing of this application, counsel for
SAPWU conceded that the 2011 agreement is valid and that clause 14.2
of that
agreement constitutes a novation of the representivity
threshold contained in previous collective agreements between the
applicant
and CWU. SAPWU’s primary submissions in opposing the
review application are that notwithstanding the concessions made,
the novation does not apply retrospectively, and the 30%+1 threshold
contained in the 2008 agreement applies when determining SAPWU’s
right to organisational rights at November 2009. Counsel for SAPWU
also argued that organisational rights, specifically in respect
of
the deduction of trade union subscriptions, can practically be
implemented retrospectively because it only requires the
quantification of an amount of money to be paid to SAPWU. Counsel
for SAPWU accordingly argued that no valid ground of review exists,
and that the review application should be dismissed.
SAPWU did not oppose the condonation application in
respect of the late filing of the arbitration record.
Analysis
Having considered the submissions and arguments made by
counsel for the applicant and SAPWU respectively, it is clear that
the
following questions are fundamental to determining this review
application:
Whether clause 14.2 of the 2011 agreement, read with
clause 3.2.3 of the 2011 agreement, constitutes a novation of the
representivity
threshold that existed immediately prior to the
conclusion of the 2011 agreement;
If such a novation has occurred, then:
Whether the novation applies
vis-à-vis
third parties who are not party to the 2008 agreement or the 2011
agreement; and
What the effect of the novation is on the
representivity threshold applicable at November 2009.
The principles of novation are firmly established in
our law.
In
Swadif (Pty) Ltd v Dyke
N.O,
1
Trengove
AJA
held as follows with regard to the
existence and consequences of a novation:
‘
When
parties novate they intend to replace a valid contract by another
valid contract (Wessels, Law of Contract in SA, 2nd ed vol
2, paras
2370 – 2379; Caney,
op
cit
.,
p 2,
Acacia
Mines Ltd v Boshoff
1958 (4) SA 330
(AD) at p 337;
Trust
Bank of Africa Ltd v Dhooma
1970 (3) SA 304
(N) at p 307).’
Furthermore, it is settled in our law that parties can,
through a novation, vary one obligation in an “old contract”
and replace it with another obligation, leaving the other terms
intact. In
Tauber v Von Abo
,
2
Van Rensburg J
described
novation as follows:
‘
Novation
can be described as the replacing of an existing obligation by a new
one, the existing obligation being discharged by the
new obligation.’
In applying these principles to the present matter to
determine whether a novation has occurred, it is necessary to
consider the
wording of the 2011 agreement. Clause 14.2 of the said
agreement provides that the 2011 agreement ‘will also amend
and
supersede any threshold of representativeness that is contained
in any other previous agreement’.In my view, the wording
of
the 2011 agreement clearly discloses an intention to replace any
existing representivity threshold with a new one. Accordingly,
any
representivity threshold in existence at the time the 2011 agreement
was concluded was novatedby the provisions of the 2011
agreement.
The next question that arises, pertains to whether the
novation of obligations between two contracting parties, can have an
impact
on the rights of a third party to whom a contractual
provision has had application. In particular, where a collective
agreement
between two contracting parties sets a representivity
threshold that applies in respect of third parties and a novation
occurs
which varies that threshold, it is necessary to determine
whether the obligations in relation to those third parties would be
impacted by the novation; or whether novation only has application
to pre-existing obligations between the contracting parties
themselves.
It is settled in our law that a novation abolishes not
only the obligations between the contracting parties, but all
obligations
arising from a novated contract, including obligations
that apply to parties other than the contracting parties. In this
regard,
in
Caney,
3
the
learned author stated the following:
‘
The
general effect of novation is to extinguish the debt asked by
payment. This is so even if the debt be founded on a judicial
decision. All privileges and accessories vanish with it.
Hence:
(i) if one of several debtors in
solidum contracts a novation, his co-debtors are released with him
from the old debt;
(ii) if one of several creditors
in solidum contracts a novation, he releases the debtor from
liability to the other creditor or
creditors in solidum;
(iii) obligations accessory to
the debt, for example, suretyships are extinguished with it (the
accessory cannot exist without the
principal);
(iv) securities, hypothecs and
pledges are released; but not so if they are renewed, and then
preference dates from the time it
was originally constituted in so
far as it relates to the original amount, but no more, of the
obligation. If an intervening security
has been cancelled, but the
cancellation is held null and void, it is restored to its former
ranking and if a bond ranking before
it has been in the meantime
novated, it loses its priority;
(v) interest ceases to run;
(vi) stipulations for penalties
fall away;
(vii) default is purged: eg if
the debtor be in default with delivery, so that the risk of injury is
now on him, and the debt be
then novated by a fresh stipulation for
delivery, the risk is transferred again as though he were not in
default.
Novation bars relief by way of
condictio indebiti in respect of the novated obligation.’
In
Du Bois
et
al
,
4
the learned authors state the following:
‘
The
effect of a novation is to discharge not only the original
obligation, but also all accessories to it, such as interest, penal
charges, suretyships and pledges, unless these are actually renewed.’
On the basis of these principles the effect of the
novation in the present matterwas to novate the
previousrepresentivity threshold
and replace it with a new
threshold.
It follows that:
The effect of the novation of the previous
representivity threshold is that, at the time when this matter was
before the commissioner,
the threshold applicable to the dispute
before the commissioner was the one contained in the 2011
agreement. The commissioner
was required to apply this threshold in
making his award; and
The representivity threshold at the date that the
commissioner made his awardwas 40% + 1.
In failing to find that the novation had the effect of
replacing therepresentivity threshold that was applicable
immediately prior
to the conclusion of the 2011 agreement with the
threshold contained in the 2011 agreement,and then applying the
threshold in
the 2008 agreement, the commissioner committed a
material error of law.
In the circumstances, the arbitration award falls to be
reviewed and set aside.
In light of my finding in relation to the applicant’s
first ground of review, it is unnecessary for me to deal with the
applicant’s second and alternative ground of review.
I have also considered the applicant’s
application for condonation of the late filing of the record of the
arbitration proceedings.
I am satisfied that the applicant has
proper reasons for the late filing of the record of the arbitration
proceedings, and in
the circumstances, that the condonation
application should be granted.
Order
I, therefore, make the following order:
The application for the condonation of the late filing
of the record of the arbitration proceedings is granted.
The arbitration award of the first respondent under
case number GATW 7037-10 (HO1570/10) dated 14 February 2011 is
reviewed
and set aside.
The order in the arbitration award is replaced with an
order in the following terms:
The provisions of the 2011 agreement novated
therepresentivity threshold contained in any collective agreements
concluded
between the South African Post Office Limited and the
Communication Workers Union prior to the conclusion of the 2011
agreement;and
The 40% + 1 representivity threshold contained in the
2011 agreement, applies to SAPWU’s request for the
organisational
rights referred to in
sections 12
,
13
and
15
of the
Labour Relations Act 1995
.
No order is made in respect of costs.
____________________
Masher AJ
Acting Judge of the Labour Court
Appearances:
For the Applicant: Advocate F Boda
Instructed by: Routledge Modise Inc. practising as
Eversheds
For the Third Respondent: Advocate D Brown
Instructed by: Medupi Lehong Incorporated
1
1978
(1) SA 928
(AD) at 940G-H.
2
1984
(4) SA 482
(E) at 485C.
3
The
Law of Novation at 33.
4
Wille’s
Principles of South African Law, 9
th
Ed at 839,