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[2012] ZALCCT 16
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Rank Sharp South Africa (Pty) Ltd v Kleinman (C 143/2012) [2012] ZALCCT 16; (2012) 33 ILJ 2932 (LC) (24 May 2012)
REPUBLIC OF SOUTH AFRICA
Reportable
Of
interest to other judges
THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN
JUDGMENT
case
no: C 143/2012
In the matter between:
RANK SHARP SOUTH AFRICA (PTY) LTD
Applicant
and
ROBIN KLEINMAN
Respondent
Heard
:
17 May 2012
Delivered
:
24 May 2012
Summary:
Set-off – settlement agreement at CCMA made
order of court – employer setting amount off against alleged
debt on loan
account – stay of execution refused.
JUDGMENT
STEENKAMP J
Introduction
The applicant seeks an order setting aside, alternatively
suspending, a writ of execution on the basis that the underlying
debt has been discharged through set-off.
Background
The respondent was an employee, director and shareholder of the
applicant. He was dismissed for operational requirements. He
referred an unfair dismissal dispute to the CCMA. He also claimed
severance pay.
At conciliation on 12 October 2011, the parties signed an agreement
of settlement under case number WECT 10071-11. The applicant
was
represented by its current attorney of record, Neville R Cohen; and
the respondent by his attorney of record, Michael Bagraim.
Sadly, these two attorneys – both of whom were present at and
active in the negotiations leading to the settlement agreement
–
now proffer conflicting versions as to whether a further, oral, side
agreement had been reached at the same time. It
is indeed
unfortunate that two attorneys should allege that their counterpart
is not telling the truth; but such are the disputes
before this
court. Distasteful as it is, those are the allegations before me.
The relevance of the existence – or not – of the side
agreement arises in the context of an application to stay a
writ of
execution. The writ was issued pursuant to the settlement agreement.
In terms of that agreement, the applicant had to
pay an amount of
R180 000 to the respondent. It did not do so. Instead, it
argues that it had set off that amount against
an amount of
R505 946, 88 owing to it by the respondent arising from a loan
account the respondent had with the applicant.
The settlement agreement reads in part as follows:
“
1. The
respondent [Rank Sharp] agrees to pay the applicant [Kleinman] the
amount of R180 000 (One Hundred and Eighty Thousand
and Rand) by
no later than 31 October 2011;
2. The amount in paragraph 1
hereof is subject to tax deductions as directed by the receiver of
revenue;
3. The amount in paragraph 1 has
been calculated on the basis that applicant was employed by
respondent for a period of 13 years
and has been paid 13 weeks'
severance pay;
4. The payment is in full and
final settlement of all labour claims applicant may have against the
respondent arising from his employment;
5. The settlement does not
compromise any claim applicant has qua shareholder of respondent nor
any commercial claims respondent
may have against the applicant;
6. The remaining terms of this
agreement are as provided for in the pro forma settlement agreement /
award to which this document
is an Annexure."
The "pro forma" agreement referred to is the standard form
used by the CCMA. In that part of the agreement, under the
heading
"method of payment", it is stated that "payment will
be deposited by the respondent [i.e. Rank Sharp]
into the
applicant's [i.e. Kleinman’s] bank account".
Despite this agreement, the applicant (Rank Sharp) did not pay the
respondent (Kleinman). As a result, the respondent obtained
a writ
of execution on 6 February 2012. The applicant now seeks to have
that writ of execution stayed or set aside. It argues
that the debt
it owes to the respondent was discharged by way of set-off against
his loan account.
The claim
The applicant alleges that the respondent had a loan account with it
and that he owes it an amount of R505 941, 68 in terms
of that
account.
The applicant has attached bank statements showing that numerous
private expenses for the respondent were paid from the applicant’s
business account. These included payments to the respondents
daughter, Ms Koetser; his domestic worker, Ms Oor; his Diner’s
Club card; personal expenses incurred on another credit card;
payments made out of petty cash on his instructions; and payments
made in respect of his private business interests, namely Green
Bubble and Home Direct.
Although the status of the so-called loan account and the amounts
owing are in dispute, the respondent does not deny that the
applicant paid for certain of his private expenses. He alleges that
they were repaid to the applicant by way of fixed monthly
payments
allocated from his salary. I shall nevertheless direct the registrar
to make a copy of this judgement available to the
South African
Revenue Services.
On 3 November 2011 the applicant’s financial director, Stewart
Welsh, sent the respondent an e-mail message in the following
terms:
‘
Dear
Mr Kleinman
I refer to the meeting held on
31 October 2011, which meeting you failed to attend despite due
notice. The remaining directors have
resolved to claim the amount due
by you to the company (in respect of your loan account) by setting
off the amount due to you in
terms of the agreed CCMA award against
the said loan account and recovering the balance from you. Should the
aforesaid balance
of R325 941, 68 (Three hundred and twenty five
thousand nine hundred and forty one Rand and sixty eight cents) not
be paid
by close of business on Friday, 4 November 2011 summons will
be issued against you without further notice."
The next day, on Friday 4 November 2011 – and clearly before
close of business –the applicant did indeed issue summons
for
that amount against the respondent. The respondent did not respond
to the e-mail. The applicant subsequently, on 7 March
2012, amended
its declaration and attached further particulars about the alleged
debts owed by the respondent. Those proceedings
are pending before
the Western Cape division of the High Court.
On 1 February 2012, the applicant's attorney of record, Neville R
Cohen, wrote to the respondent's attorney, Michael Bagraim.
He noted
that Kleinman had procured a writ of execution in this court arising
from the settlement agreement of 12 October 2011.
He also referred
to the e-mail from Welsh to Kleinman of 3 November 2011 and asked
for an undertaking that Kleinman would not
execute upon the writ of
execution.
Bagraim wrote back in the following terms:
"You will recall that we
specifically debated the offset of the monies from the settlement
proposals at the CCMA.
We took a lower among settlement
on the basis that you weren't going to offset any alleged monies
owing to Rank Sharp South Africa
(Pty) Ltd.
We find the attempt to offset
the monies now as being completely disingenuous. Please let us have
your remarks on this as soon as
possible."
Cohen responded in these terms on 5 February 2012:
“
If
there had been an agreement as alleged by you in your letter it would
have been incorporated in the settlement agreement. There
was no such
agreement."
Bagraim retorted on 6 February 2012:
“
We
once again point out to you that we spent in excess of thirty minutes
discussing your request to be able to offset the settle
[
sic
]
amount from the loan account and our final position of lowering the
settlement amount was not to offset against the loan account.
This
discussion took place with you and your counsel with Robin Kleinman
overhearing most of these discussions."
The skirmish ended on this unhappy note, with two officers of the
court casting doubt on the other’s version of events.
On 23
February 2012, the applicant launched the current proceedings to
stay the writ of execution.
The defences
The respondent does not accept that set-off had taken place, and
hence opposes the application for a stay of the writ of execution.
He contends that there was a collateral oral agreement not to set
off the settlement amount of R180 000 against the applicant's
commercial claim against him based on the alleged loan account; and
in any event, he claims that the debt is not liquidated.
I am loath to decide which of the two attorneys, Cohen or Bagraim,
is telling the truth with respect to the existence or not
of a
collateral oral agreement. Fortunately, this case can be decided
without the court having to do so. The basis for that decision
is
whether or not the respondent’s debt to the applicant is
indeed liquidated.
The respondent raised a further defence, and that is that the amount
due constitutes “remuneration” and that no deductions
are permissible in terms of s 34 of the Basic Conditions of
Employment Act (BCEA).
1
Evaluation / Analysis
I shall first consider the defence under the BCEA. If that defence
is a good one,
caedit questio.
If not, I need to consider
whether there was a claim capable of set-off.
Basic Conditions of Employment Act s 34
Section 34(1) of the BCEA provides as follows:
“
34. Deductions
and other acts concerning remuneration.—(1) An
employer may not make any deduction
from an employee’s
remuneration unless—
(a) subject to subsection (2),
the employee in writing agrees to the deduction in respect of a debt
specified in the agreement;
or
(b) the deduction is required or
permitted in terms of a law, collective agreement, court order or
arbitration award.”
“
Remuneration” is defined as:
“
any
payment in money or in kind, or both in money and in kind, made or
owing to any person in return for that person working for
any other
person, including the State, and “remunerate” has a
corresponding meaning”.
2
In the settlement agreement, there is no agreement that any amount
may be deducted. Mr
Crowe
argued that the amount due to
Kleinman in terms of the settlement agreement constituted
“remuneration” as defined.
He based this argument on the
fact that the agreement specifies that the amount payable is
calculated on the basis of severance
pay.
In terms of s 41 of the BCEA, an employer must pay to an employee
who is dismissed because of operational requirements, “severance
pay equal to at least one week’s remuneration for each
completed year of continuous service with that employer.”
It will be immediately apparent that this formulation merely sets
out the basis for the calculation of the statutory minimum
severance
pay, i.e. it must be “equal to” at least one week’s
remuneration for each year of service –
in this case, 13
years’ service.
In my mind, this formulation in s 41 of the BCEA does not equate the
amount payable in terms of the settlement agreement to
“remuneration”. Even if it is calculated on the basis of
severance pay, it is an amount over and above the remuneration
owing
to the employee “in return for that person working for”
the applicant. He was paid his monthly salary during
his tenure in
return for his work; the settlement amount, even if it is calculated
on the basis of severance pay, is an amount
owing to the respondent
over and above his “remuneration” as defined. Set-off
cannot be equated to a prohibited deduction
in terms of s 34 of the
BCEA under these circumstances.
This defence cannot be upheld. The next question is then whether the
amount allegedly due under the loan account was capable
of set-off
against the settlement agreement.
A liquidated claim?
Set-off operates automatically and not only after or as a result of
a plea of set-off.
3
If there was indeed a liquidated debt owing by the respondent to the
applicant, once set-off had taken place, the reciprocal
debt of
R180 000 owing to the respondent by the applicant was
discharged as effectively as if payment had been made.
4
The requirements for set-off to operate can be summarised as
follows:
5
The debts must be owing between the same parties in the same
capacity.
The debts must be of the same kind.
The reciprocal debts must be due and enforceable.
Both debts must be liquidated in that they are capable of speedy
and easy proof.
In this case, it is common cause that the applicant owes R180 000
to the respondent in terms of the settlement agreement.
The alleged
reciprocal debt is disputed. But even though the debts are owing
between the same parties, it is not in entirely
the same capacity.
The settlement agreement specifies that the R180 000 is owing
to the respondent in full and final settlement “of all
labour
claims” that the employee may have against the company
“arising from his employment”. It further specifically
records that it does not compromise any claim Kleinman has qua
shareholder, nor any “commercial claims” the company
may
have against him. It appears from the parties’ own wording
that they drew a distinction between “labour claims”
arising from Kleinman’s employment and dismissal – the
subject of the CCMA dispute and settlement agreement –
on the
one hand, and “commercial claims” or “shareholder’s
claims” on the other hand. The alleged
debt due under the loan
account does not appear to be owing by Kleinman “in the same
capacity” as the amount due
to him in terms of the settlement
agreement.
But even if it were, it is by no means clear the amount allegedly
owing under the loan account is “due and enforceable”;
much less that it is liquidated in the sense that it is capable of
speedy and easy proof.
The applicant has not been able to show convincingly what the terms
of the alleged loan account agreement were and when it became
due
and payable. Welsh says that, “at a time, date and place the
[company] can no longer recall”, Kleinman caused
it to make
certain payments to third parties on his behalf. He relies on a
tacit agreement between the parties, and he does not
know when and
where it was concluded.
From the accounts and the affidavits before this court, the exact
amount allegedly owing is by no means clear. Between the time
of
filing answering and replying affidavits, it differed by more than
R147 000. The account attached to the applicant’s
papers
starts off with a debit entry of R120 798, 91 that is not
explained. In the financial statements for the financial
year ending
29 February 2008, an amount of R28 929 is reflected as owing by
the respondent; yet, in terms of the loan account,
the amount of
R120 078, 91 appears to be owing the very next day. The
applicant offers an unsatisfactory explanation in
reply that this is
due to a dividend of R150 000 having been reflected on 31 March
2008, whereas it was actually declared
in the previous financial
year. But even then the amounts do not balance.
The respondent submits that it is entitled to a proper debatement of
the account. I agree that, as it stands, the amount allegedly
owing
under the loan account is not clear and does not constitute a
liquidated amount.
Conclusion
I am not satisified that the underlying
causa
for the debt
owing to the respondent by the applicant has been extinguished.
6
As Ackermann J noted in
Le Roux v Yskor Landgoed (Edms) Bpk en
andere
7
:
“
Die
algemene reël is dat ‘n eksekusielasbrief tersyde gestel
sal word as die lasbrief nie ondersteun of nie verder ondersteun
word
deur sy
causa
nie. Die
causa
is die skuld en die vonnis wat daarop verleen is.”
A court will generally grant a stay of execution where real and
substantial justice requires it or where injustice would otherwise
be done. The court has a discretion that must be exercised
judicially.
8
In this case, I am not persuaded that the court should exercise its
discretion in favour of the applicant. In terms of the settlement
agreement, the applicant had to pay the amount of R180 000 into
the respondent’s bank account by 31 October 2011.
The
injustice occasioned to the respondent by the applicant’s
refusal to do so outweighs any potential prejudice to the
applicant.
The relief sought is in the nature of final relief. As Walsh states
in his founding affidavit:
“
The
purpose of this application is to set the writ against the applicant
aside...[and] interim urgent relief to immediately suspend
the writ
pending the outcome of this application.”
The applicant has not established a clear right. It suffers no
irreparable harm. And in any event, it has an alternative remedy
in
the form of a pending High Court action.
In conclusion, the applicant is not entitled to a stay of execution.
Both parties have asked for costs to follow the result. I see no
reason in law or fairness not to heed their request.
Order
The application is dismissed with costs, including the costs of the
hearing on 29 February 2012.
_______________________
Steenkamp J
APPEARANCES
APPLICANT:
Adv P Tredoux
Instructed by
Neville R Cohen.
RESPONDENT:
Adv MA Crowe SC
Instructed by
Bagraims attorneys.
1
Act
75 0f 1997.
2
BCEA
s 1.
3
Great
North Farms (Edms) Bpk v Ras
1972 (4) SA 7
(T);
Western Cape
Housing Development Board v Parker
2005 (1) SA 462
(C).
4
Joint
Municipal Pension Fund Transvaal) v Pretoria Municipal Pension Fund
1969 (2) SA 78
(T).
5
See
LAWSA
vol 19 (“Obligations”) para 244 and
authorities there cited;
AAA Brick Co (Pty) Ltd v Coetzee
1996
All SA 23
(B);
1996 (3) SA 578
(B);
Penny v 600 SA Holdings (Pty)
Ltd
[2003] JOL 1422
(LC).
6
See,
in this regard,
Wichmann v Standard Bank van Suid-Afrika Bpk en
andere
[2002] 1 All SA 558
(T).
7
1984
(4) SA 252 (T) 257.
8
Santam
Ltd v Norman & Another
1996 (3) SA 502
(C) 505 E-F;
Strime
v Strime
1983 (4) SA 850
(C) 852 B-G.