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[2014] ZALCJHB 191
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Segakweng v Ogilvy (Johannesburg) (Pty) Ltd and Others (J2438/12) [2014] ZALCJHB 191 (29 May 2014)
REPUBLIC
OF SOUTH AFRICA
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
REPORTABLE
CASE
NO: J2438/12
In
the matter between:
PAMELA SEGAKWENG
Applicant
And
OGILVY
(JOHANNESBURG) (PTY) LTD
First Respondent
COMMISSION FOR
CONCILIATION, MEDIATION
AND ARBITRATION
Second Respondent
HAROUN DOCRAT N.O
Third Respondent
SICELO MTHETHWA N.O
Fourth Respondent
Heard:
12 July 2013
Delivered:
29 May 2014
Summary:
Application of Prescription Act to LRA – C
ellucity (Pty) Ltd
v CWU obo Peters
[2014] 2 BLLR 172
(LC) not followed –
arbitration awards, including certified awards, prescribe after 3
years
JUDGMENT
PONELIS,
AJ
Factual
background
[1]
The
applicant, a former employee of the first respondent, seeks twofold
relief. In the first instant, that an arbitration award
be made and
order of Court in terms of section 158(1)(c) of the Labour Relations
Act
[1]
(‘LRA’). In
the second instant, that the first respondent’s application for
review of the award be dismissed.
[2]
The arbitration award was issued by the fourth respondent, in the
capacity of commissioner of the second respondent, pursuant
to
arbitration of a dismissal dispute under the LRA. The fourth
respondent held that the applicant had been constructively dismissed
and ordered the first respondent to compensate the applicant in the
sum of R499 992,00, within seven days of receipt of the
award.
[3]
The award was served on the parties on 9 August 2009. On 14 September
2009 the first respondent launched an application for
review of the
award. The present application was instituted on 12 September 2012.
[4]
In its opposition the first respondent contends, amongst others, that
its indebtedness arising from the award has been extinguished
by the
operation of prescription. I proceed to deal with this issue and, to
the extent that it becomes necessary, with the remainder.
Application
of the Prescription Act
[2]
[5]
Chapter III of the Prescription Act deals with the extinction of
debts by prescription. According to section 16(1), Chapter
III
applies to any debt, save insofar as the provisions of Chapter III
are inconsistent with any specific time periods that may
be
prescribed for the making of a claim or institution of an action
under any other statute. Section 16 of the Prescription Act
provides:
“
16
Application of this Chapter
(1)
Subject to the provisions of subsection (2) (b), the provisions of
this
chapter shall,
save in so far as they are inconsistent with
the provisions of any Act of Parliament which prescribes a specified
period within
which a claim is to be made
or an action is to be
instituted in respect of a debt or imposes conditions on the
institution of an action for the recovery of
a debt, apply to any
debt arising after the commencement of this Act.
(2)
The provisions of any law-
(a)
which immediately before the commencement of this Act applied to
the
prescription of a debt which arose before such commencement; or
(b)
which, if this Act had not come into operation, would have applied
to
the prescription of a debt which arose or arises out of an advance or
loan of money by an insurer to any person in respect of
an insurance
policy issued by such insurer before 1 January 1974,
shall continue to apply
to the prescription of the debt in question in all respects as if
this Act had not come into operation.’
(Emphasis added)
[6]
Pursuant to section 210 of the LRA, the provisions of the LRA will
prevail if it conflicts with the Prescription Act in relation
to any
matter dealt with in the LRA. This section provides:
‘
210
Application of Act when in conflict with other laws
(1)
If any
conflict, relating to matters dealt with in this Act,
arises between this Act
and the provisions of
any other law
save the Constitution or any Act expressly amending this Act,
the
provisions of this Act will prevail
.’ (Emphasis added)
[7]
In
Cellucity
v CWU obo Peters
[3]
and
Coetzee
v MEC of the Western Cape
[4]
the Court held that the LRA is not subject to the provisions of the
Prescription Act. In this regard the Court in
Coetzee
held, amongst others:
‘
[15]
First respondent’s case in respect of prescription relies on
the submission that ‘all claims
under the LRA fall under the
Prescription Act’. In my judgment the LRA, in its design, is
inconsistent with such submission.
Instead of any reference to
prescription or the inclusion of a prescription clause, the LRA
includes specific time periods for the
referral of claims and
underscores the use of the tool of condonation by this court when
such periods are exceeded
in the text of the statute, rather than
in the court’s rules.’ (Emphasis added)
[8]
The LRA contains several provisions concerning dispute referrals that
must be made within specific time periods. For instance,
in terms of
section 191(1) an employee may, within thirty days of dismissal,
refer a dispute about the fairness of the dismissal
for conciliation
by the CCMA or a bargaining council. Furthermore, where certain
disputes could not be conciliated, section 191(11)(a),
read with
section 191(5)(a), provides that it can be referred for arbitration
within ninety days.
[9]
However, from the time that a dispute referral has culminated in the
issue of an arbitration award, the LRA is silent about
time periods.
In particular, the LRA does not prescribe any time periods for which
arbitration awards remain enforceable, or for
the enforcement of
arbitration awards by means of proceedings in terms of section
158(1)(c) and certification under section 143(3).
[10]
By virtue
of section 16 of the Prescription Act, the provisions of the
Prescription Act apply in these respects
[5]
because, for purposes of section 210 of the LRA, they do not conflict
with any matters dealt with in the LRA. I am therefore not
enjoined
to follow the Court in
Cellucity
and
Coetzee
.
[11]
The
application of the Prescription Act to the enforcement of arbitration
awards under the LRA may in some cases result in unfairness
to
parties seeking to enforce awards. For example, where an employee in
whose favour an arbitration award has been made does not
attempt
execution while awaiting the finalisation of pending review
proceedings; only to be met by a stale claim when the review
application is dismissed.
[6]
As
was pointed out by Gush J in
Sampla
Belting,
[7]
it is expected that this will in due course be resolved through
impending amendments to the LRA by which the filing of review
applications will interrupt the running of prescription of
arbitration awards.
[12]
In the
present context, considerations of fairness are however subject to
the overriding objectives of certainty and finality in
the
relationship between employers and employees, in their capacities as
creditors and debtors under arbitration awards. This may
be gleaned
from the respective objectives of the Prescription Act
[8]
and the objectives of speedy and effective resolution of labour
disputes, as envisaged under section 1(d)(iv) of the LRA.
[9]
But for operation of the Prescription Act, arbitration awards would
remain enforceable indefinitely, or at least for such period
as a
Court may find reasonable in the circumstances of a particular case,
which would defeat the objectives mentioned.
[13]
As a
general proposition, equity considerations do therefore not enter the
deliberation when a Court applies the Prescription Act.
See for
instance
Gopaul
v Subbamah,
[10]
where it was held:
‘…
[O]nce the
debt has become ‘due’ in terms of
s12(1)
of the
Prescription Act, 1969
, the rest is an arithmetical calculation. As
was stated by Miller J (as he then was) in
Mahomed
v Yssel
1963
(1) SA 866
(D) at 817A ‘prescription laws are absolute and
permit of no benevolent exceptions to the clear terms of the
statute.’’
[11]
(Parenthesis added)
[14]
In the
premises, this Court is compelled to give effect to the
Prescription
Act, despite
unfair consequences that may result from the
prescription of arbitration awards.
[12]
Therefore, the exercise of this Court’s powers under
section
158(1)(c)
, by leaning in favour of lending enforceability to an
arbitration award,
[13]
does
not extend to lending enforceability to an award beyond the
prescription period. As has been held in
Police
& Prison Civil Rights Union on behalf of Sifuba
:
[14]
‘
[44]
…
The
Prescription Act does
not give the court a discretion
.
If the requirements for a plea of prescription have been established
by the party taking the point then that party is entitled
as a matter
of right to have that plea upheld.
Although this court is a court
of equity, in my view considerations of equity do not come into play
when all the requirements for
a successful plea of prescription are
established
. Extinctive prescription renders unenforceable a
right by the lapse of time. See
s 10(1)
of the
Prescription Act.’
(Emphasis
added)
Further
provisions of the
Prescription Act
[15
]
In the
further salient provisions of Chapter III of the
Prescription Act,
prescription
commence to run as soon as a debt is due
[15]
and becomes extinguished, in the case of a judgment debt, after
thirty years
[16]
and in the
case of another debt, not specifically listed in the
Prescription Act
or
dealt with by another statute, after three years.
[17]
The running of prescription is interrupted where a debtor is served
with any process, such as a notice of motion or a summons,
[18]
whereby a creditor commences proceedings for recovery of the
debt;
[19]
as well as where a
debtor either expressly or tacitly acknowledges liability.
[20]
Should the proceedings for recovery of the debt not be prosecuted to
final judgment, the interruption of prescription shall lapse.
[21]
[16]
Although
the term ‘debt’ is not defined in the
Prescription Act,
it
can be denoted a wide and general meaning, which includes an
obligation to do something or to refrain from doing something.
[22]
An arbitration award for payment of money under the LRA accordingly
constitutes a ‘debt’ for purposes of the
Prescription
Act.
[23
]
[17]
Prescription
starts to run when a debt becomes due;
[24]
i.e. as soon as the creditor is able to pursue its claim.
[25]
With reference to
section 138(7)
, read with
section 143(1)
of the
LRA, a party in whose favour an award has been issued can pursue its
claim when the award has been issued, signed and served
by the
commissioner.
[26]
[18]
If a debtor
out of own accord fulfills its obligations under the award, it will
be the end of the matter. If the debtor however
fails to do so, the
creditor will need to secure compliance by the debtor, within the
applicable period of prescription imposed
by the
Prescription Act. In
order to obtain a judicial sanction to this effect, the creditor can
bring an application to make the award and order of Court,
in terms
of
section 158(1)(c)
of the LRA. It can also have the award certified
in terms of
section 143(3).
A certified award does not constitute a
court order, even though for execution purposes, it may be enforced
‘as if it were
an order of the Labour Court’.
[27]
[19]
An
application in terms of
section 158(1)(c)
of the LRA constitutes
‘process whereby the creditor claims payment of the debt’,
for purposes of
section 15(1)
, read with
section 15(6)
, of the
Prescription Act.
[28
]
Accordingly, if such an application is launched before expiry of the
prescription period, the running of prescription will be
interrupted.
[29]
It will
thereafter be incompetent for a debtor to claim that there has been
an unreasonable delay in the institution of the application.
[30]
Should the creditor however fail to diligently prosecute the
application, the debtor may react by invoking the applicable rules
and procedures of this Court.
[31]
If the
section 158(1)(c)
application is dismissed on that basis, the
interruption of prescription will lapse, by virtue of
section 15(2)
of the
Prescription Act.
[20
]
Unlike
proceedings initiated in terms of
section 158(1)(c)
of the LRA, a
review application does not constitute a process for recovery of a
debt. It is settled law that review proceedings
under the LRA do not
automatically suspend the operation of prescription.
[32]
[21]
If a Court
order in terms of
section 158(1)(c)
is granted, prescription shall
run afresh
[33]
and, because an
order in terms of
section 158(1)(c)
constitutes a judgment debt for
purposes of
section 11(a)(ii)
of the
Prescription Act, the
debt will
thereafter prescribe after thirty years.
First
respondent’s plea of prescription
[22]
The first
respondent submits that the fourth respondent’s award
prescribed on 16 August 2012, being three years after it became
due.
[34]
Because the present
application was launched after this date, and there has been no
interruption of prescription, the first respondent
prays that the
application be dismissed.
[23]
The key question is what is the period of prescription applicable to
the fourth respondent’s award? Insofar as the fourth
respondent’s award constitutes a judgment debt, as contemplated
in
section 11(a)(ii)
of the
Prescription Act, it
prescribes after
thirty years, but if it constitutes a debt, as contemplated in
section 11(d)
, it prescribes after three years.
Applicable
prescription period
[24]
In
Blaas
v Athanassiou
[35]
the applicant sought to have a private arbitration award made an
order of Court, pursuant to the provisions of section 31 of the
Arbitration Act.
[36]
In terms
of the arbitration agreement, the parties had agreed that the award
would have the status of a Court order. In its opposition
to the
application the respondent contended, amongst others, that the award
had prescribed because more than three years have lapsed
since it was
issued. Hartzenberg J dismissed this argument on the basis that, as a
consequence of the agreement between the parties,
the prescription
period was thirty years. Because this decision is based on the
specific agreement between the parties, it cannot
be elevated to a
general principle that the prescription period applicable to private
arbitration awards is thirty years.
[25]
In
Primavera
Construction v Government, North-West Province
[37]
the
Court concluded, also in the context of a private arbitration award,
that a party’s right to enforce an arbitration award
prescribes
after three years from the date of its publication. When the award is
however made an order of Court, it becomes a judgment
debt that
prescribes after thirty years. In this instance Friedman JA held:
‘
The effect of a
valid award by an arbitrator will usually be to create new rights and
obligations between the parties, and it will
either dissolve existing
rights or bring an end to a dispute as to whether certain rights
existed or not. It is clear that in the
absence of voluntary
compliance, the award can be enforced only with the approval of the
Court. The party therefore wishing to
enforce the award will sue on
the award and not on the original contract from which the dispute
arose.
It is clear that a judgment debt lapses through
prescription after 30 years, an arbitrators’ award will acquire
the status
of a judgment debt only once it has been made an order of
Court
…
I reiterate that once
the award has been made an order of Court, it becomes a judgment debt
which prescribes after 30 years
.
See s 11(a)(ii) of the Act.
Until
it is made an order of Court, it appears that a party’s right
to enforce the award would ordinarily prescribe within
three years
from the date of publication of the award
.
See
Cape
Town Municipality (supra).
’
[38]
(Emphasis added)
[26]
Similar
considerations apply to an arbitration award issued under the LRA. It
does not by mere issue constitute an order of Court,
[39]
and it is only when this Court grants an order in terms of section
158(1)(c) that an arbitration award is transformed into a judgment
debt, for purposes of
section 11(a)(ii)
of the
Prescription Act.
Before
that happens the award constitutes a debt, as contemplated in
section 11(d)
of the
Prescription Act, which
means that it prescribes
after three years.
[40]
The
facts
[27]
In the present matter there has been no interruption of prescription
for purposes of
section 14(1)
of the
Prescription Act. In
order to be
eligible for relief in terms of
section 158(1)(c)
of the LRA, the
applicant was therefore required to institute the present application
within three years of the date when the fourth
respondent’s
award became due.
[28]
The fourth respondent’s award was signed on 19 May 2009. In
terms thereof the first respondent was ordered to pay the
applicant
R499 992,00, within seven days of service of the award on the
first respondent.
[29]
On 9 August 2009 the award was served on the parties. For present
purposes I accept that the award became due; i.e. that prescription
started to run; seven days after 9 August 2009. The fourth
respondent’s award accordingly prescribed on 16 August 2012.
[30]
The present application was delivered on 12 September 2012.
Conclusion
[31]
By the time that the applicant launched the present application, the
first respondent’s indebtedness arising from the
fourth
respondent’s award had prescribed. The award can therefore not
be made an order of this Court.
[32]
Save for
the issue of costs, this disposes of the present application in its
entirety and I will therefore not consider the applicant’s
remaining prayer for dismissal of the review application.
[41]
Costs
[33]
In order to decide whether it will be fair for a costs order to
follow the result in this matter, I proceed to analyse the
first
respondent’s conduct in relation to the prosecution of its
review application.
[34]
The first respondent instituted the review application on 14
September 2009. On 14 October 2009 the second respondent filed
eleven
audio cassette recordings of the arbitration proceedings, under cover
of a notice in terms of
Rule 7(A)(3)
of this Court’s
rules. In the course of subsequent transcribing of the recordings it
became apparent that six of the cassettes
were blank.
[35]
On 8 February 2010 the first respondent’s attorneys dispatched
a letter to the second respondent in which it pointed
out these
shortcomings in the audio recordings. They further enquired whether
the whole of the arbitration proceedings were recorded
and, if so,
requested the second respondent to produce the balance of the
recordings. Since no response was received, the first
respondent’s
attorney’s repeated these enquiries in a letter dated 24 March
2010. It is apparent from the relevant
facsimile report that this
letter was not sent to the second respondent. On 14 June 2011 the
first respondent’s attorneys
reiterated the said enquires to
the second respondent.
[36]
On 20 June 2011 the second respondent informed the first respondent’s
attorneys that the missing tapes could, despite
a diligent search,
not be located. The second respondent further pointed out that it
would be difficult to reconstruct the record
because the fourth
respondent was no longer appointed as a commissioner. It was
therefore suggested that the parties abandon the
award, upon which
arbitration could proceed afresh before another commissioner.
[37]
By letter dated 21 June 2011 the first respondent’s attorneys
invited the applicant to agree to the second respondent’s
proposal, failing which the first respondent would approach this
Court for an order in terms of the second respondent’
s 20
June
2011 letter. Since no response was forthcoming, the first
respondent’s attorneys repeated the request on 5 July 2011.
[38]
An
applicant for review in this Court is duty bound to prosecute the
application without undue delay.
[42]
I am not satisfied that the first respondent acted in accordance with
this obligation. In the first instant, it is unclear why
it took the
first respondent some four months, between 14 October 2009 and 8
February 2010, to realise that some of the tape recordings
were
missing. If the first respondent had acted diligently, this ought to
have come to its knowledge sooner.
[39]
Once the
first respondent became aware of the missing recordings, it was
required to make sufficient endeavours to locate the tapes.
[43]
The applicant however merely dispatched a letter to the second
respondent, on 8 February 2010, and thereafter effectively left
the
matter in abeyance, for approximately sixteen months, until 14 June
2011. Though the first respondent obliquely refers to attendance
at
the fourth respondent’s premises to search for the tapes, is it
is unclear when the attendance or attendances occurred
and what steps
were taken in the course thereof. Ultimately, the first respondent
fails to tender a plausible explanation why it
took some sixteen
months to get confirmation that the missing tapes could not be
located. Clearly, if the first respondent acted
conscientiously, it
would have realised this well in advance of 20 June 2011.
[40]
After it
became apparent to the first respondent that no response to its 21
June 2011 and 5 July 2011 letters would be forthcoming
from the
applicant’s attorneys, it was incumbent upon the first
respondent to initiate a process aimed at reconstructing
the
arbitration record, with the assistance of the applicant and the
fourth respondent.
[44]
The
applicant however failed to do so. Insofar as it was because of the
fourth respondent’s unavailability, this was not
an
insurmountable obstacle to the conduct of a reconstruction process.
The first respondent could have entered into such process
with the
applicant, either with or without the assistance of another
commissioner, by using extant notes and other relevant documents
as a
starting point.
[41]
The first respondent also did not launch the Court proceedings
mentioned in its last two letters to the applicant. In fact,
after 5
July 2011 it has failed to take any steps to advance its review
application.
[42]
In the premises, a costs order in the first respondent’s favour
would be unfair in view of its failure to meet the level
of diligence
and care that is expected in the prosecution of a review application.
I therefore make no order in relation to costs.
Order
[43] In the premises, I
make the following order:
(i) The
application is dismissed.
(ii) There is
no order as to costs.
________________
PONELIS
AJ
Acting
Judge of the Labour Court
APPEARANCES:
For the Applicant:
Adv K Iles
Instructed by: Dockrat
Inc.
For the First
Respondent:
Adv N Basson
Instructed by: Cheadle
Thompson & Haysom Inc.
[1]
66
of 1995
[2]
68 of 1969
[3]
Cellucity
(Pty) Ltd v CWU obo Peters
[2014]
2 BLLR 172
(LC
).
[4]
Coetzee
and others v MEC of the Provincial Government of the Western Cape
and others
(C751/2008) [2013] ZALCCT 12 (20 March 2013) (unreported).
[5]
Mpanzama
v Fidelity Guards Holdings (Pty) Ltd
[2000]
12 BLLR 1455
(LC) at paras 6-7. See also:
Police
& Prison Civil Rights Union on behalf of Sifuba v Commissioner
of the SA Police Service & others
(2009) 30 ILJ 1309 (LC) at para 34;
Fredericks
v Grobler NO & others
[2010] 6 BLLR 644
(LC) at paras 22-23;
Magengenene
v PPC Cement (Pty) Ltd & others
(2011) 32 ILJ 2518 (LC) at para 6;
SA
Transport & Allied Workers Union on behalf of Hani v Fidelity
Cash Management Services (Pty) Ltd
(2012)
33 ILJ 2452 (LC) at para 22;
Sampla
Belting SA (Pty) Ltd v Commission for Conciliation, Mediation &
Arbitration & others
(2012) 33 ILJ 2465 (LC) at para 14.
[6]
Robor
(Pty) Ltd (Tube Division) v Joubert & others
[2009]
8 BLLR
785
(LC) at 789G-790B.
[7]
at
para 24.
[8]
Police
& Prison Civil Rights Union
at
para 29;
Uitenhage
Municipality v Molloy
1998
(2) SA 735 (SCA).
[9]
National
Education Health & Allied Workers Union v University of Cape
Town & others
(2003) (3) SA 1
(CC) at para 31;
Mpanzama
at
paras 9-10.
[10]
2002 (6) SA 551 (D).
[11]
at 561E-F.
[12]
Sampla
Belting
at
para 23.
[13]
Deutsch
v Pinto & another
(1997) 18 ILJ 1008 (LC);
Ntshangane
v Speciality Metals
(CC)
[1998] 3 BLLR 305
(LC) at paras 8-9;
Professional
Security Enforcement v Namusi
[1999] 6 BLLR 610
(LC);
Olivier
v University of Venda
[2003]
5 BLLR 471 (LC).
[14]
n 3.
[15]
section 12(1).
[16]
section 10(1)
, read with
section 11(a)(iii).
[17]
section 10(1)
, read with
section 11(d).
[18]
section 15(6).
[19]
section 15(1).
[20]
section
14(1).
[21]
section
15(2).
[22]
Desai
NO v Desai and others
[1995] ZASCA 113
;
1996 (1) SA 141
(A) at 146I.
[23]
Mpanzama
at
para 18.
[24]
section 12(1).
[25]
Deloitte
Haskins & Shells Consultants (Pty) Ltd v Bowthorpe Hellerman
Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) at 532H-I.
[26]
SA
Transport & Allied Workers Union v Fidelity Cash
at
para 22.
[27]
LRA:
section 143(1).
[28]
Sampla
Belting
at
paras 20-22.
[29]
Prescription Act: section
15(1) and
section 15(6).
[30]
Solidarity
at
para 15;
CEPPWAWU
& another v Le-Sel Research (Pty) Ltd
[2009] 5 BLLR 421
(LC) at paras 22-24.
[31]
Basson
& another v Walters and others
1981
(4) SA 42
(C) at 49G-Y;
Fredericks
at
para 28;
Kuhn
v Kerbel and another
1957 (3) SA at 534A.
[32]
Olivier
;
Police
& Prison Civil Rights Union
at
paras 35-37;
National
Union of Metalworkers of SA & another v Espach Engineering
(2010)
31 ILJ 987 (LC) at paras 10-12;
SA
Transport & Allied Workers Union v Fidelity Cash
at
para 22;
Sampla
Belting
at
para 14.
[33]
Prescription Act: section
15(4).
[34]
Prescription Act: section
15(2).
[35]
1991 (1) SA 723 (W).
[36]
42 of 1965.
[37]
Primavera
Construction SA v Government, North West Province and another
(2003)
3 (SA) 579 (B).
[38]
at 604A-E.
[39]
Deutsch;
Gois v t/a Shakespeare’s Pub v Van Zyl & others
(2003)
24 ILJ 2302 (LC).
[40]
Mpanzama
at
para 17;
Police
& Prison Civil Rights Union
at
para 34;
Fredericks
at
paras 22-23;
Magengenene
at
para 6;
SA
Transport & Allied Workers Union v Fidelity Cash
at
para 22;
Sampla
Belting
at
para 14.
[41]
Sampla
Belting
at paras 4-5.
[42]
Khoza
v Sasol Ltd
[2002]
9 BLLR 868
(LC);
Bezuidenhout
v Johnston NO & others
(2006) 27 ILJ 2337 (LC);
Autopax
Passenger Services (Pty) Ltd v Transnet Bargaining Council &
others
(2006) 27 ILJ 2574 (LC).
[43]
Lifecare
Special Health Services (Pty) Ltd t/a Ekuhlengeni Care Centre v
Commission for Conciliation, Mediation and Arbitration
& others
(2003)
24 ILJ 931 (LAC).
[44]
Lifecare
at
para 17.