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[2012] ZALCCT 45
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Cape Clothing Association v De Kock NO and Others (C 1015/12) [2012] ZALCCT 45; (2013) 34 ILJ 1957 (LC) (14 December 2012)
Reportable
Of interest to other judges
REPUBLIC OF
SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA,
CAPE TOWN
JUDGMENT
Case
no: C 1015/12
In the matter between:
CAPE CLOTHING ASSOCIATION
Applicant
and
C DE KOCK N.O.
First Respondent
THE NATIONAL BARGAINING COUNCIL FOR THE CLOTHING MANUFACTURING
INDUSTRY (CAPE)
Second Respondent
SACTWU
Third Respondent
Heard
:
13 December 2012
Delivered
:
14 December 2012
Summary:
Urgent application to stay arbitration award pending
review.
JUDGMENT
STEENKAMP J
Introduction
The applicant seeks an urgent interim order to stay the enforcement
of an arbitration award pending its review. What makes this
application unique is that it is not an application to stay the
execution of an award in circumstances where one or more employees
have been dismissed, have been successful at arbitration, and where
the employer seeks to have a writ of execution stayed pending
review. In this case, the arbitrator (the first respondent) has held
that the applicant’s members must pay their employees,
the
members of the Southern African Clothing and Textile Workers’
Union (SACTWU, the third respondent) two extra days’
wages
pursuant to the interpretation of a collective agreement. The
applicant seeks to have the enforcement of that award stayed
pending
a review of the award.
Background facts
This matter has had a long history, summarised in a previous
judgement of this court.
1
It pertains to the payment regime that should apply to SACTWU
members when public holidays during the annual leave period fall
on
a Saturday or a Sunday. The parties have attempted to achieve parity
between the Cape and KwaZulu-Natal regions. In the 2010/2011
substantive agreement, it was agreed that the Western Cape would pay
one additional day’s paid leave for 27 December 2010.
Clause 5
of the 2011/2012 substantive agreement reads as follows:
“
WESTERN
CAPE PUBLIC HOLIDAYS
5.1 The Western Cape collective
agreement to be amended to reflect the wording of the KwaZulu-Natal
Metro agreement wording on payment
of public holidays falling during
the shutdown of the industry. This parity dispensation shall become
binding with effect from
the 2011/2012 annual leave period.
5.2 Consequent to the
implementation of the provisions of sub-clause 5.1 above, Western
Cape employees shall be paid an additional
two (two) days’ paid
leave for the 2011/2012 annual leave period.”
The parties differ over the interpretation of clause 5.2. A year
ago, in December 2011, SACTWU declared a dispute in terms of
section
64 (4) of the LRA
2
and called its members out on strike. The applicant (the CCA)
successfully interdicted the strike on the basis that the dispute
between the parties was one concerning the interpretation and
application of clause 5 of the collective agreement and that, in
terms of section 24 of the LRA, the dispute had to be referred to
arbitration. A rule
nisi
granted by this court on 19 December
2011 was confirmed on 12 June 2012
3
and consequently the parties agreed to an expedited arbitration in
terms of section 24 of the LRA.
The terms of reference provided for the following:
The arbitrator had to interpret clause 5 of the agreement.
The arbitrator had to decide whether clause 5.2 of the agreement
correctly set out the common intention of the parties.
The arbitrator had to decide whether the parties suffered under the
mistaken belief that the main agreement did not require
employers
to pay employees for public holidays that fall on a Sunday during
annual leave.
The arbitrator had to determine whether he had the power to rectify
the substantive agreement, and if so, whether it should
be
rectified.
The parties agreed that oral evidence could be led.
“
Should the arbitrator’s ruling have
the effect that the members of the applicant have to pay additional
amount of holiday
pay to the members of the respondent, such
payment will be effected in the last pay run of December 2012.”
Both parties were legally represented. Only the CCA led oral
evidence, that of its Executive Director, Mr Johann Baard.
The arbitrator handed down his award on 10 December 2012. In
essence, he found that:
The parol evidence rule applied
4
and he must therefore attempt to interpret the agreement on its
plain wording.
Only if there was an ambiguity, he would hear sufficient relevant
evidence as to determine the true intention of the parties.
In his view, clause 5.2 of the agreement was not ambiguous.
Given his view in this regard, he was of the view that “the
evidence presented by Mr Baard as to the reason why he signed
the
agreement with clause 5.2 in fact should not have been led in the
first place based on the parol evidence rule and I are
such will
not place much reliance on his evidence so presented.”
Based on his conclusion that the CCA was obliged to pay SACTWU’s
members and additional two days’ paid leave for
the 2011/2012
annual leave period, it was not necessary for him to pronounce on
his powers as an arbitrator to rectify collective
agreements or to
rectify the agreement “in any way whatsoever”. He
added, though:
“
I can
however state that I am not convinced that an arbitrator has the
powers to rectify collective agreements to the extent that
the
respondent [CCA] is seeking for it to be done. Such power of
rectification lies with an appropriate forum such as the civil
and or
the Labour Courts and not with arbitrators during an arbitration
process regarding the interpretation and or application
of a
collective agreement.”
The arbitrator ordered the CCA’s members to pay SACTWU’s
members the additional two days’ paid leave by no
later than
15 December 2012.
The CCA launched this application on 12 December 2012 and it was
heard the following day. Given the arbitrator’s ruling,
the
Court had to hand down its judgement within one day.
Evaluation / Analysis
In considering this application, I shall apply the principles
generally applicable to applications to stay warrants of execution,
even though no such warrant has yet been issued. It would seem to me
that the principles that would apply to stay the enforcement
of an
award in terms of section 145(3) of the LRA should be the same.
Those principles were usefully summarised by Todd AJ in
Robor
(Pty) Ltd (Tube Division) v Joubert & ors
5
:
“
[10]
The discretion to stay execution must be exercised judicially, but
generally speaking a court will grant a stay of execution
where real
and substantial justice requires it or, put differently, where
injustice would otherwise be done.
[11] 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, and that
execution is being sought for
improper reasons. But these are not the only circumstances in which
the court will exercise the power
[12] In determining whether or
not to exercise the discretion, the High Court has “borrowed”
from the requirements for
the granting of interim interdicts. At the
heart of the enquiry is whether the applicant has shown a
well-grounded apprehension
of execution taking place and of injustice
being done to the applicant by way of irreparable harm being caused
if execution were
not suspended.
[13] One of
the grounds on which a stay of execution is regularly sought in this
Court is that there is a pending attack on the
underlying cause of
action giving rise to the judgment debt, whether arising from an
order of this Court or an arbitration award
made in the CCMA or a
bargaining council, and enforceable by reason of the provisions of
section
143(1)
of the LRA.
[14] As to
the factors that weigh in considering the interests of justice, the
applicant points out that an amount payable under
an arbitration
award bears interest at the rate determined in terms of the
Prescribed Rate of Interest Act
55
of 1975
. This protects the interests of the judgment creditor
(typically the employee in whose favour an award has been made) in
the event
that the challenge to the underlying cause of action is
unsuccessful.
[15] By contrast, if the
challenge to the underlying cause of action is ultimately successful,
and the amount of the debt has already
been paid prior to
finalisation of that challenge, the judgment debtor (typically the
employer) may find it difficult to secure
repayment. This may be
likely to be the case where the employee is relatively low paid and
has suffered financial hardship in consequence
of having been
dismissed. This Court is, then, regularly asked to assume that an
employee in these circumstances will have difficulty
repaying any
amount already paid if the challenge to the underlying cause of
action later succeeds.
[16] There is no closed list of
factors that may be relevant to the question whether the interests of
justice require a stay of
execution. But there are a number of other
considerations, in addition to those raised by the applicant, that
are frequently of
importance in applications of this nature. These
include:
16.1 Whether the attack on the
underlying cause of action was brought in time, and whether its
prospects of success are strong.
This Court’s roll is regularly
burdened with a large number of applications of this kind, brought on
an urgent basis in the
face of steps taken to execute an award, when
the attack on the underlying award was brought out of time, or when
the attack clearly
has little or no prospects of success. The
interests of justice will seldom warrant a stay in these
circumstances.
16.2 The interest of all parties
in securing finality. The dispute resolution system established by
the Labour Relations Act provides
parties with easily accessible
remedies. In return, they must exercise their rights quickly. The
time periods for doing so –
30 days for a referral to
conciliation in the case of most disputes, and 90 days thereafter for
a referral to adjudication –
are considerably shorter than
ordinary prescription periods. Speedy dispute resolution is a core to
one of the LRA’s primary
objects, the effective resolution of
labour disputes. This is one of the ways in which the LRA seeks to
advance economic development,
social justice and labour peace.
8
16.3 The cost to all parties of
a delay in finality, and the cost to all parties of instituting or
opposing further proceedings,
whether in this Court or elsewhere, to
attack the underlying cause of action or to stay execution pending
any such attack. Many
applicants come to this Court by way of urgent
application, with counsel and attorneys briefed, in circumstances
where the amount
of the judgment debt is likely to be less than or,
perhaps, little more than the cost of doing so. The position is far
worse if
one takes into account the overall cost of the attack on the
underlying cause of action which is usually the basis of the
application
to stay. It is difficult to conceive what the commercial
justification is for litigation of this kind, and one fears that all
too
often litigants are acting on inadequate or inappropriate legal
advice.
16.4 The risk of injustice being
done to the less powerful party to the dispute. The stronger
financial position of most employers
enables them to mount attacks on
the underlying cause of action which the employee party is frequently
powerless to oppose or to
expedite. This may lead to an outright
abuse of the dispute resolution system.”
Before considering those principles, I need to consider a number of
preliminary points raised by Mr
Whyte.
Application premature?
Mr
Whyte
has argued that the application is premature because
the arbitration award has not yet been certified by the director of
the
CCMA in terms of section 143(3) of the LRA, nor has SACTWU or
the Bargaining Council (the second respondent) sought to obtain a
writ of execution from the registrar of this court. The submission
is that, until such time as a warrant has been issued, the
applicant
(the CCA) is not entitled to the relief sought.
Given the view that I have taken on the merits of the application, I
need not consider this argument. That is best left for another
court
to consider at another time in circumstances of less urgency. I
doubt, though, that it has merit. Section 145(3) provides
simply:
“
The
Labour Court may stay the enforcement of the award pending its
decision” [on review].
It seems unlikely that the legislature would have intended to read
in the words “[the award] that has been certified and
in
respect of which a warrant of execution has been issued”.
However, I do not intend to premise this judgement on that
point.
Urgency
SACTWU also argues that the matter is not urgent, as the CCA has
advised its members not to comply with the award on the basis
that
it is (on its version) “fatally flawed”.
As Mr
Oosthuizen
pointed out, that argument is based on a
misinterpretation of an email that the CCA sent to its members on 11
December 2012,
the day after the award was handed down. That email –
signed by Baard -- states:
“
Having
consulted with our legal team, they are very confident that the award
is fatally flawed in law. The strong recommendation
is that the CCA
file for the award to be stayed pending a review application.…
This process is now underway and we are filing
an urgent application
in the Labour Court to that effect. Until further notice from myself,
there is no legal obligation on you
to pay your employees an extra
two days leave pay.”
It is quite clear, and Mr Oosthuizen confirmed from the bar, that
the legal advice to the CCA’s members was that they need
not
make payment pending this application. He assured the court that his
client had no intention to disregard the order of this
court, should
it not be in its favour.
In these circumstances, the application is clearly urgent. The date
of 15 December agreed upon by the parties and confirmed by
the
arbitrator is on a Saturday. That means that, should the application
for a stay not be granted, the CCA’s members have
to pay their
employees the extra two days’ pay tomorrow, Friday, 14
December 2012.
Waiver
The agreed terms of reference provide that:
“
Should
the arbitrator’s ruling have the effect that the members of the
[CCA] have to pay additional amount of holiday pay
to the members of
[SACTWU], such payment will be effected in the last pay run of
December 2012.”
It is common cause that the last pay run of December 2012 is on 14
or 15 December 2012. SACTWU argues that, having agreed to
these
terms of reference, the CCA had waived its right to challenge it.
This argument cannot be sustained. As Innes CJ explained as long ago
as 1924 in
Laws v Rutherford
6
,
in order to establish waiver, the party attempting to rely on it
must show that the other party, with full knowledge of her right,
decided to abandon it, whether expressly or by conduct plainly
inconsistent with an intention to enforce it.
In the present case, by agreeing to the terms of reference, the CCA
did not decide to abandon its right to review the arbitration
award,
whether expressly or by its conduct. The fact that parties agreed to
a final and binding arbitration award does not remove
the right to
review that award for legitimate and lawful reasons, unless the
parties expressly say so.
I now turn to the merits, applying the principles summarised in
Robor.
7
Irreparable harm
The most difficult hurdle that the CCA has to overcome, in my view,
is to show that it will suffer irreparable harm if the application
is not granted.
As the court pointed out in
Robor
8
:
“
[I]f
the challenge to the underlying cause of action is ultimately
successful, and the amount of the debt has already been paid
prior to
finalisation of that challenge, the judgement debtor (typically the
employer) may find it difficult to secure repayment.
This may be
likely to be the case where the employee is relatively low paid and
has suffered financial hardship in consequence
of having been
dismissed. This Court is, then, regularly asked to assume that an
employee in these circumstances will have difficulty
repaying any
amount already paid if the challenge to the underlying cause of
action later succeeds.”
The case before me, as I stated in the introductory remarks, is an
unusual one. The workers have not been dismissed. They are
still in
the employ of the CCA’s members. Should the CCA’s
members pay the workers the two days’ wages in accordance
with
the arbitration award, and should the CCA be successful on review,
its members will be able to deduct those amounts from
their
employees’ wages. They will be within their rights to do so in
terms of section 34(1)(b) of the Basic Conditions
of Employment
Act.
9
Any harm that the employers will suffer at this stage by giving
effect to the arbitration award is not irreparable. Even if the
CCA
were to be successful on review, its members are in the unusual
position that they can recover the money that they have paid
to the
employees without much further ado. It is obvious that the CCA and
its members therefore also have an alternative remedy
in due course,
should the application for review be successful.
It is also in this context that the balance of convenience needs to
be considered.
Balance of convenience
The CCA’s members will suffer some inconvenience by giving
effect to the arbitration award now, pending the application
for
review. That has to be weighed up against the prejudice occasioned
by the employees.
Subsequent to its intended strike action having been interdicted by
this Court, SACTWU agreed with the CCA to refer the dispute
to
expedited arbitration. The parties agreed that the arbitrator’s
award will be final and binding (subject to my comments
about waiver
above). A year later, and having given effect to the judgement of
this Court, the parties are back in court. The
workers have an
expectation that the arbitration award will be given effect to and
that they will pocket some extra wages, however
paltry, in these
days before Christmas. The amounts in question are not large –
it amounts to between R278,80 and R314,
40 per employee. The CCA
says that the financial implications for its members are in the
region of R 2 million – but that
amount has to be divided
amongst some 250 employers and approximately 20 000 employees.
The CCA also submitted that, should payment be made now and should
its members try to recover those payments after a successful
review
application, SACTWU’s members may embark on wildcat strike
action. It has laid no basis for this submission. When
its intended
strike action – pursuant to SACTWU having followed the
prescribed procedures set out in s 64 of the LRA –
was
interdicted by this court, SACTWU and its members complied with the
court order and referred the dispute to arbitration.
That is why the
CCA has come back to Court on an urgent basis after the arbitration
award was not in its favour. There is no
basis to assume that SACTWU
or its members will embark on unprotected strike action.
At best for the CCA’s argument in this regard, there were some
rumours at Pep Clothing that workers would embark on strike
action
before the shutdown if they were
not
paid the two days’
wages in terms of the arbitration award. Pep accordingly decided to
pay the amounts, while reserving
its rights to recover them if the
review application were to be successful. That is exactly the remedy
that is available to the
other members of the CCA.
The prejudice suffered by the CCA and its members, should the
application be granted, is outweighed by the prejudice suffered
by
the workers. The balance of convenience favours SACTWU and its
members.
I consider the applicant’s prospects of success in the review
application to be a neutral factor. I do not consider it
necessary
to express a view on its prospects of success, other than to say
that the underlying cause of action is obviously under
attack, and
the stay is not being sought for improper reasons; but that does not
sufficiently tilt the scales in the applicant’s
favour in
weighing up the balance of convenience.
Interests of justice
It remains to consider the interests of justice generally, including
the interest of all parties in securing finality.
This matter has dragged on for some time. The intention was that a
final and binding arbitration award should bring the dispute
to an
end. It would appear to me to be in the interest of justice, and in
conformity with the objects of the Labour Relations
Act, including
the expeditious resolution of labour disputes, to give effect to the
arbitration award at this stage.
I also debated with counsel whether an expedited review would assist
their clients’ members. They agreed that, regardless
of the
outcome of this application, it would be in everyone’s
interests to expedite the review process. I agree, given
the large
number of employers and employees affected and their interest in
securing finality. I have therefore requested the
parties’
legal representatives to prepare a proposed expedited timetable and,
with the assistance of the Judge President
and the Registrar, the
Court will attempt to have the review application set down for
hearing within two months.
Conclusion and costs
In these circumstances, it is not in the interests of justice to
grant the application. With regard to costs, I take into account
that there is an ongoing relationship and an ongoing dispute between
the CCA and SACTWU. I do not consider a costs order to be
appropriate in the circumstances.
Order
The application is dismissed, with no order as to costs.
_______________________
Steenkamp J
APPEARANCES
APPLICANT:
A C Oosthuizen SC
Instructed by Norton
Rose South Africa.
THIRD RESPONDENT:
J Whyte of Cheadle
Thompson & Haysom.
1
Cape
Clothing Association v SACTWU & others
[2012] 11 BLLR 1145
(LC).
2
Labour
Relations Act 66 of 1995
.
3
Cape
Clothing Association v SACTWU & others
[2012] 11 BLLR 1145
(LC).
4
With
reference to
FAWU v CCMA & others
(2007) 28
ILJ
382 (LC).
5
[2009]
8 BLLR 785
(LC) paras [10] – [16] (footnotes omitted). See
also
Gois t/a Shakespeare’s Pub v Van Zyl & ors
(2003) 24
ILJ
2302 (LC);
Rham Equipment (Pty) Ltd v Lloyd
& ors
(2008) 29
ILJ
3033 (LC) and
Bartmann &
ano t/a Khaya Ibubhesi v De Lange & ano
(2009) 30
ILJ
2701 (LC) paras [6] – [7].
6
1924
AD 261
at 263.
7
Supra.
8
Supra
para [15].
9
Act
75 of 1997.