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[2012] ZALCCT 24
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Capstick-Dale and Another v Sustainable Fibre Solutions (Pty) Ltd (C424/11) [2012] ZALCCT 24; (2013) 34 ILJ 129 (LC) (18 June 2012)
REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA,
CAPE TOWN
JUDGMENT
Reportable
Of interest to other judges
Case
no: C 424/11
In the matter between:
C K CAPSTICK-DALE
First applicant
L WOOLLEY
Second applicant
and
SUSTAINABLE FIBRE SOLUTIONS (PTY) lTD
Respondent
Heard
:
30 May 2012
Delivered
:
18 June 2012
Summary:
Jurisdiction – election and estoppel.
Applicants claim relief i.t.o. LRA section 197 – respondent
raised point
in limine.
Applicants had elected at CCMA
proceedings to rely on agreement and not on section 197. Estopped
from relying on different cause
of action in same dispute.
RULING ON POINT
IN LIMINE
STEENKAMP J:
Introduction
The applicants were retrenched by the respondent. They referred a
dispute over severance pay to the CCMA in terms of s 41 of
the Basic
Conditions of Employment Act
1
.
Prior to the arbitration on 1 June 2011 they specifically elected to
base their claim on an alleged oral undertaking made by
the
respondent at the Cape Town Club on 4 February 2009 that it would
honour the applicants’ prior service with the Seardel
Group,
should they be retrenched. Their attorney, on their behalf,
disavowed any reliance on s 197 of the Labour Relations Act.
2
The CCMA ruled that it did not have jurisdiction. It did so because
the applicants’ claim was not based on continuous service
with
the respondent and therefore the provisions of s 41(2) of the BCEA
did not apply. The applicants then referred a dispute
to this court.
In their statement of claim, they now rely on s 197 of the LRA as a
basis for their claims for severance pay.
In short, albeit through a
rather convoluted series of transfers, they claim that there was a
transfer of business from Seardel
to the respondent.
The respondent has raised a point
in limine
that the
applicants are bound by the election they made at the stage of the
CCMA arbitration that they do not rely on s 197;
and that,
therefore, they are estopped from doing so in the Labour Court
proceedings. In the alternative, it pleads that this
court has no
jurisdiction to adjudicate the applicants’ claim based on
their reliance on s 197 as that claim is governed
by s 41 of the
BCEA and must be arbitrated by the CCMA.
Background facts
The applicants joined Brits Textiles, a division of Seardel Group
Trading (Pty) Ltd, in 1977 and 1996 respectively. The first
applicant eventually served as managing director of Brits Textiles.
The applicants moved to a company called Brits Automotive Systems
(Pty) Ltd (“BAS”), formed by Seardel, in 1997.
In June
2005 the Industrial Development Corporation acquired 49% of the
shareholding of BAS. At the same time, a new company,
Sustainable
Fibre Solutions (Pty) Ltd (“SFS”) (the respondent) was
formed. The IDC had a 66,7% shareholding and Seardel
the remaining
33,3% in SFS. Both applicants were appointed to positions in SFS.
The respondent dismissed the applicants for operational requirements
in July 2010. They now claim that their contracts of employment
had
been transferred to SFS in terms of s 197 of the LRA; and that their
periods of service with Brits Textiles, BAS and Seardel
should be
taken into account to compute their entitlement to severance pay.
The respondent disputes this entitlement. It has raised a point
in
limine
that the applicants are estopped from relying on s 197 as
they had specifically elected to rely, not on s 197, but on an
alleged
agreement with the respondent that it would recognise their
years of service with the Seardel Group.
On 16 May 2011 the respondent’s attorney, Glen Cassells of
Maserumule Inc, sent an email to the applicants’ attorney,
Michael Bagraim, in the following terms:
“
The
email from the second applicant [Woolley] to the first applicant
[Capstick-Dale] dated 30 October 2009 refers to the provisions
of
section 197 of the LRA as the basis for the second applicant
contending that his services with Seardel ‘have been recognised
and transferred’ to respondent. Your clients’ claim as
recorded in the pleadings and amplified by your email dated
18 April
2011 does not refer to a reliance on section 197 as a basis for their
claims, but rather on a specific undertaking that
respondent would
recognise their previous service and they would not be prejudiced
should they be retrenched at a later stage from
my client.
In the light of the content of
the email from second applicant to first applicant referred to above,
we also request that you confirm
whether your clients are relying on
section 197 of the LRA.”
Bagraim responded on 16 May 2011:
“
There
was a specific undertaking in the discussions that the respondent
would recognise their previous services [
sic
]
and [the applicants] would not be prejudiced should they be
retrenched at a later stage.
We are not relying on section
197
although this was pointed out in the e-mail.”
3
On the basis of their attorney’s reassurance that the
applicants were not relying on s 197 of the LRA, the respondent
objected to the jurisdiction of the CCMA to arbitrate the dispute
that they had referred in terms of s 41 of the BCEA. That subsection
reads:
“
An
employer must pay an employee who is dismissed for reasons based on
the employer’s operational requirements or whose contract
of
employment terminates or is terminated in terms of section 38 of the
Insolvency Act, 1936 (Act No. 24 of 1936) severance pay
equal to at
least one week’s remuneration for each completed year of
continuous
service with that employer, calculated in accordance with section
35.”
4
Commissioner Bill Maritz ruled as follows on 7 June 2011:
“
[T]he
applicants’ claim is not based on continuous service rendered
to the respondent and the provisions of section 41(2)
of the BCEA can
therefore not apply.
In the result the respondent was
entitled to a ruling that section 41(2) of the BCEA does not apply
and the CCMA accordingly has
no jurisdiction to determine the dispute
referred to it...
The claim for severance pay
referred to the CCMA does not fall within the ambit of section 41 of
the BCEA and the application in
terms of that section is accordingly
dismissed.”
On 22 July 2011 the applicants referred a claim for severance pay to
this court in which they do rely on s 197 of the LRA. Their
attorney
of record remained the same throughout.
Relevant legal principles
The respondent argues that the applicants – through their
attorney – have exercised an election to base their claim
on a
specific undertaking and expressly not on s 197 of the LRA. By
virtue of this election, it argues, the applicants are estopped
from
claiming relief based on the section. Had applicants relied on s 197
at arbitration, the CCMA would have had jurisdiction
and would by
now have arbitrated the dispute in terms of s 41(2) of the BCEA.
The applicants cannot approbrate and reprobate. Mr
Elliot
referred in this regard to the old
dictum
of Lord
Blackburn in
Scarf v Jardine,
as cited in
Churchyard v
Redpath, Brown and Co Ltd:
5
“
Where
a party in his own mind has thought that he would choose one of two
remedies, even though he has written it down on a memorandum
or has
indicated it in some other way, that alone will not bind him; but so
soon as he had not only determined to follow one of
his remedies but
has communicated it to the other side in such a way so as to lead the
opposite party to believe that he has made
that choice, he has
completed his election and can go no further; and whether he intended
it or not, if he has done an unequivocal
act – I mean an act
that would be justifiable if he had elected one way and would not be
justifiable if had elected the other
way – the fact of his
having done that unequivocal act to the knowledge of the persons
concerned is an election.”
The principles applicable to election / waiver in respect of breach
of contract are analogous to the present matter:
6
“
The
innocent party’s choice is subject to what is usually known as
the doctrine of election. Enforcement and cancellation
being
inconsistent with each other or mutually exclusive the innocent party
must make his election between them; he cannot both
approbate and
reprobate the contract; he cannot blow both hot and cold. The
doctrine is stated by Watermeyer JA in
Segal
v Mazzur
1920 CPD 634
at 644-645:
‘
Now,
when an event occurs which entitles one party to a contract to refuse
to carry out his part of the contract, that party has
a choice of two
courses. He can either elect to take advantage of the event or he can
elect not to do so. He is entitled to a reasonable
time in which to
make up his mind, but once he has made his election he is bound by
that election and cannot afterwards change
his mind. Whether he has
made an election one way or the other is a question of fact to be
decided by the evidence. If with knowledge
of the breach, he does an
unequivocal act which necessarily implies that he has made his
election one way; this is, however, not
rule of law, but a necessary
inference of fact from his conduct;…
As already stated, a question
whether a party has elected not to take advantage of a breach is a
question of fact to be decided
on the evidence; but it may be that he
has done an act which, though not necessarily conclusive proof that
he has elected to overlook
the breach, is of such a character as to
lead the other party to believe that he has elected to condone the
breach, and the other
party may have acted on such belief. In such a
case an estoppel by conduct arises and the party entitled to elect is
not allowed
to say that he did not condone the breach.’
This passage makes clear the
true nature of the doctrine of election. It is not a mechanical rule
of law but a combination of waiver
and estoppel – the onus is
on the defendant to prove that, as a question of fact, the plaintiff
has waived the relief he
claims or, failing such proof, that he is
estopped from claiming it – reinforced by a logical bar to
claiming inconsistent
remedies, but only if the claims are truly
inconsistent.
In
Montesse Township and Investment Corporation (Pty) Limited and
another v Gouws NO and Another
7
the
court found that whilst it was not aware of any general proposition
that a plaintiff who has two or more remedies at his disposal
must
elect at a given point of time which of them he intends to pursue,
and that, having elected one, he is taken to have abandoned
all
others, such a situation might well arise where the choice lies
between two inconsistent remedies and the plaintiff commits
himself
unequivocally to the one or other of them.
And the Labour Appeal Court explained the relevant principles as
follows in
Maluti Transport Corporation Ltd v MRTAWU &
others
8
:
“
The
principle of ‘estoppel by election or waiver’ (as it was
called by Hoexter JA in
Chamber
of Mines of South Africa v National Union of Mineworkers
1987 (1) SA 668
(A) at 690J) has been applied to labour law, both against a union
(the
Chamber
of Mines
case
(
supra
))
and an employer (
Administrator,
Orange Free State & others v Mokopanele & another
(1990)
11
ILJ
963
(A)). The principle is based on ‘considerations of elementary
fairness’ (
Chamber
of Mines
case
(
supra
)
at 690J) and for this reason I do not agree with Mr Campbell’s
submission that once made, an election cannot be undone.
Where
fairness dictates it, and it causes no injustice to the other party,
I see no reason why a party cannot change his or her
mind (in a
labour context) on this kind of issue (cf
Mshumi
& others v Roben Packaging (Pty) Limited & another t/a
Ultrapak
(1988)
9
ILJ
619
(IC) at 625G–I).”
It seems abundantly clear that the applicants’ attorney’s
email dated 16 May 2011 (quoted above) constitutes an election
as
contemplated above in that it was made by the applicants’
legal advisor on their behalf. It cannot be argued that where
applicants are represented by attorneys specialising in labour law
they were unaware of the effect of their election or unequivocal
waiver at the time that it was made
Should the applicants now be allowed to rely on the provisions
section 197 of the LRA despite their prior unequivocal communication
to the contrary, the respondent’s prejudice is both obvious
and material as that dispute will have to be referred back
to the
CCMA for arbitration in circumstances where the dispute that the
applicants brought to the CCMA has already been resolved.
Fairness
does not dictate that the applicants and their attorney can now
change their mind.
In these circumstances the point
in limine
must be upheld.
The parties submitted that costs should follow the result. I agree.
Order
I grant an order in the following terms:
The applicants elected on 16 May 2011 not to place any reliance on
section 197 of the LRA in their claim against the respondent
for
severance pay in terms of section 41of the BCEA;
The applicants are estopped from placing any reliance on section
197 of the LRA in support of the claim against the respondent;
The applicants are ordered to pay the respondent’s costs of
this application jointly and severally, the one paying, the
other
to be absolved.
_______________________
Anton Steenkamp
Judge of the Labour Court of South Africa
APPEARANCES
APPLICANTS:
Michael Bagraim
attorney.
RESPONDENT:
Adv Guy Elliot,
instructed by Maserumule Inc (Glen Cassells).
1
Act
75 of 1997 (the BCEA).
2
Act
66 of 1995 (the LRA).
3
My
emphasis.
4
My
emphasis.
5
1911
WLD 131.
6
Christie,
The Law of Contract
,
Fourth Edition, LexisNexis Butterworths, pages 627 – 628.
7
1965
(4) SA 380
(A) at page 380 per Beyers JA.
8
[1999]
9 BLLR 887
(LAC) para [35] (per Froneman DJP, as he then was).