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[2017] ZALCJHB 13
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Malatji v Minister of Home Affairs and Another (JR2326/2006) [2017] ZALCJHB 13 (19 January 2017)
THE
LABOUR COURT OF SOUTH AFRICA
JOHANNESBURG
Case no: JR
2326/2006
Reportable
In
the matter between:
KHWAILE
RUFUS MALATJI
Applicant
and
MINISTER OF HOME
AFFAIRS
DEPARTMENT OF HOME
AFFAIRS
First Respondent
Second Respondent
Heard:
8 July 2016
Delivered:
19 January 2017
Summary:
Labour Court on review substituting award of arbitrator of General
Public Services Sector Bargaining
Council - Effect of Judgement on
interest payable on sum of money – Meaning of “substituting”
- Parties disagree
on meaning and hence whether interest payable from
date of Arbitration Award or date of Judgement of Labour Court –
Application
of section 143(2) of the Labour Relations Act on when
interest payable – Impact of ruling of Labour Court in review
proceedings
– Jurisdiction of Labour Court.
JUDGEMENT
HARPER,
AJ
Introduction:
[1]
The
Applicant seeks an order declaring that the First and Second
Respondents are liable to pay interest at 15,5 % per annum to the
Applicant as from 1 September 2006 in respect of an arbitration award
made under case number PSGA 126/05/06. The award was issued
by Z
Mdladla (the arbitrator) at the General Public Services Sector
Bargaining Council (the Bargaining Council). The Applicant
also seeks
an order in respect of the costs against the Respondents jointly and
severally, the one paying the other to be absolved.
[2]
The
dispute is accordingly about whether interest should be payable from
1 September 2006 or as from the date of the judgment of
the Labour
Court which dealt with the review application.
[3]
The
Bargaining Council is correctly not cited as a Respondent because the
remaining issue in dispute is not relevant to the Bargaining
Council.
[4]
Following
a review lodged at the Labour Court the award of the arbitrator was
“substituted
in
toto
”
by Snyman AJ in a judgment dated 2 April 2013.
Summary
of Facts:
[5]
On
28 April 2005, some eleven years ago, the Applicant was dismissed by
the Respondents.
[6]
He
referred a dispute to the Bargaining Council and was reinstated by
the arbitrator in terms of an award dated 14 August 2006 and
varied
by an award dated 30 August 2006. He was also granted back pay.
[7]
The
variation award provided that if the compensation was not paid by 30
September 2006 then it should accrue interest on the normal
basis.
The award did not refer to section 143(2) of the Labour Relations
Act
[1]
(the LRA) which deals
with the issue of interest payable pursuant to arbitration awards
sounding in money.
[8]
In
response to the arbitration award, the Respondents launched a Review
Application and for various reasons which are not relevant
to this
judgment, the matter was only heard by the Labour Court during
February 2013.
[9]
On
2 April 2013 Snyman AJ set aside and substituted the award of the
arbitrator “
in
toto
”
and granted the Applicant compensation equivalent to 9 (nine) months’
salary, being an amount of R399, 750.00. The
Respondents have paid
the compensation to the Applicant.
[10]
As
a consequence of a dispute arising in respect of the period during
which interest should be paid on the compensation, in a letter
dated
25 February 2014 the Respondent’s attorneys advised the
Applicant’s attorneys that interest was only payable
as from
the date of the judgment of the Labour Court, being 2 April 2013 and
hence not from 1 September 2006.
[11]
The
Respondents paid the interest for the period between 2 April 2013 and
24 February 2014 to the Applicant.
[12]
The
Applicant contends that the interest should be payable from 1
September 2006 to 1 April 2013.
[13]
Accordingly
the Labour Court is required to determine whether interest should be
payable in respect of that period in terms of section
143(2) of the
LRA.
Analysis
of Argument:
[14]
Advocate
Pio for the Respondents submitted that the amount of interest which
may be payable is determined by the interpretation
of the words
“substituting
in
toto
”
in the judgement of the Labour Court and certain other relevant
factors which are discussed below.
[15]
Advocate
Beaton SC for the Applicant referred to section 143(2) of the LRA
which provides as follows:-
“
If an
arbitration award orders a party to pay a sum of money, the amount
earns
interest from the date of the award …… unless the award
provides otherwise
”.
(My emphasis).
[16]
On
the face of it section 143(2) of the LRA is straightforward. In terms
of section 143(2) the date when the interest commences
to accrue on
the sum of money is from the date of the arbitration award unless the
award sets another date. Accordingly in respect
of this matter
interest should have commenced to earn on the sum of money as from 1
September 2006 in terms of section 143(2) of
the LRA unless the
arbitration award set another date. The Variation Award of the
arbitrator set the date of payment as being 1
September 2006.
[17]
Section
143 of the LRA does not deal with the circumstances where the award
of an arbitrator is later substituted by an order of
the Labour
Court. It should be noted that as a consequence of the existence of
section 143(2) of the LRA, it is not necessary for
an arbitrator to
specifically deal with the issue of interest in the arbitration
award. Provided that the arbitration award orders
a party to pay a
sum of money, in terms of section 143(2) of the LRA interest by
application of statute is automatically payable
from the date of the
issuing of the arbitration award unless the arbitrator set another
date for the payment of interest. It is
however preferable for the
arbitrator to refer to section 143(2) of the LRA in the award.
[18]
Should
an arbitrator for a lawful reason wish to determine that interest
should either not be payable on the sum of the money or
that it
should be payable from another date, he should specifically deal with
that issue in the award by giving reasons. As indicated
section
143(2) of the LRA specifically empowers the arbitrator to make a
different award on the payment of interest on the sum
of money.
[19]
Section
143(2) of the LRA does not refer to the Labour Court in the same
context for the reason that section 143 deals with the
effect of
arbitration awards and not judgments of the Labour Court. In review
proceedings there is a direct link between section
143(2) of the LRA
and the review process itself because the Labour Court is being asked
to review the arbitration award and essentially
acts as the
arbitrator to the extent determined by it in the Judgement. The
Labour Court is therefore entitled to review the issue
of interest
and decide whether to grant interest from the date of the arbitration
award or from a later date or not grant interest
at all. Where the
Labour Court changes the date on which the interest will be payable
and it is prejudicial to the employee, reasons
should be given by the
Labour Court. This would also apply where the Labour Court declines
to grant interest on the amount owed
to the employee.
[20]
My
view is fortified by the provisions of section 145(a) of the LRA
which empowers the Labour Court to determine the dispute “in
the manner it considers appropriate”. The powers of the Labour
Court in relation to that sub-section are dealt with succinctly
in
Rustenburg
Platinum Mines Ltd v the CCMA and others
[2]
where Njanu AJ, stated:-
“
Section
145(4)(a) gives the Court, the widest possible powers necessary to
determine disputes. Such powers given to the Court in
this section
are
those powers given to the Arbitrator
.
Put differently, when the Court exercises its discretion in terms of
Section 145(4)(a),
it
sits as an Arbitrator in the Arbitration hearing
”.
(My emphasis).
[21]
Accordingly
the Labour Court in a judgment dealing with a review application can
either elect to deal with the issue of interest
or decide not to deal
with that issue. If the Labour Court is silent on the issue of
interest in a Judgement it does not generally
follow that section
143(2) of the LRA which deals with the payment of interest on a sum
of money lapses in respect of the payment
of interest granted in
terms of section 143(2) of the LRA. Hence the Labour Court replaced
the award “
in
toto
”.
Where however the arbitration award has dealt with the issue of
interest and the Labour Court decides to substitute the
award “
in
toto
”
then the Labour Court either expressly or by necessary implication
has dealt with the issue of whether interest should be
payable on the
sum of money. In other words the issue of whether interest should be
payable does not become an issue still to be
dealt with in legal
proceedings.
[22]
Where
there is a complaint about the interest payable, it would be
preferable for the aggrieved party to lodge an appeal to the
Labour
Appeal Court in order to request it to make a different award on the
issue whether interest should be payable or not.
[23]
A
Judge of the Labour Court in a matter such as this one is constrained
when dealing with the judgment of a Judge sitting at the
same level
and does not have jurisdiction to overrule the judgment of the fellow
Judge.
[24]
Therefore
subject to applying the meaning of “substituting”
correctly it follows that the payment of interest on a sum
of money
in terms of section 143(2) of the LRA would fall away where an order
of the Labour Court sets out and replaces the arbitration
award on
the issue of interest.
[25]
In
this matter Snyman AJ through “substituting
in
toto
”
the award of the arbitrator elected to not grant interest on the sum
of money payable to the Applicant. In my view a Judge
of the Labour
Court is entitled to issue such an order provided that it is fair and
lawfully sound.
[26]
Unfortunately
Snyman AJ’s order in so far as it affects the payment of
interest does not provide the reasons for that ruling.
his
Court is seized with a legal issue which arises from a review and it
would be inappropriate for the Labour Court in these circumstances
to
speculate on why Snyman AJ did not grant interest on the sum of money
to the Applicant and in particular in the context of section
143(2)
of the LRA which, as indicated, provides for the payment of interest
and in a sense this constitutes statutory support on
the issue of the
payment of interest.
[27]
It
is also worth noting that section 145 of the LRA does not
specifically deal with the issue of when interest should commence
accruing on a sum of money. As indicated the Labour Court can
exercise its inherent jurisdiction
[3]
to vary that part of the award which deals with the payment of
interest on a sum of money. The exercise of that power would be
subject to a defect existing in relation to an award dealing with the
payment of interest. The nature of the defect is generally
known and
the categories are dealt with in section 145(2) of the LRA. That is
however not the question which is raised in these
proceedings.
[28]
The
word “substitute” in summary means:-
“
Put (a
personal thing) in the place of another”
[4]
.
[29]
In
my view, however, a review in these circumstances is quintessentially
a corrective process
[5]
and it
should not normally therefore be interpreted to prejudice the party
who has been granted a sum of money unless the Labour
Court for sound
reasons specifically determines that the interest payable on a sum of
money should either be paid from a specified
later date or not at
all. In respect of either of these options, the order could be
punitive in nature and hence contrary to the
tenets of fairness and
the objectives of the LRA. Hence it would be important for the Labour
Court to give reasons where an adverse
order on interest is issued by
the Labour Court.
[30]
Advocate
Pio in summary submitted that the Respondents had successfully
reviewed the arbitration award. This is correct in part
as the
reinstatement was set aside but there was a finding of substantive
unfairness by the Labour Court and compensation was granted
in an
amount of (9) nine months. Hence, again, for that reason it is
unusual that the issue of interest was not dealt with in the
order.
[31]
The
Award of the Arbitration in respect of the compensation payable and
the reinstatement was substituted “
in
toto
”
by an Award that the Third Respondent is entitled to compensation in
an amount of 9 months’ salary.
[32]
What
is critically important is that Snyman AJ did not deal with the issue
of interest in the judgment save to the extent that he
substituted
the Award of the Arbitrator “
in
toto
”
with an Award granting 9 months’ compensation to the Second
Respondent. He did not refer to section 143(2) of the
LRA. That was
his finding and it stands until it is dealt with by a higher Court.
[33]
Furthermore
in my view the substitution of the Award by Snyman AJ was intended to
correct or rectify the Award of the Arbitrator
and was not intended
to penalise the Second Respondent by permitting that interest should
only be paid as from the date of the
issuing of the judgment. Had
Snyman AJ intended there to be a prejudicial outcome, he would have
dealt with the issue of the payment
of interest specifically and
being fully cognisant with the provisions of section 143(2) of the
LRA.
[34]
I
am bound by the Judgment of the Labour Court. It is for this reason
that it would have been preferable to lodge an appeal against
the
Judgment.
[35]
I
therefore conclude that I do not have jurisdiction to overrule the
Judgment of Snyman AJ on the issue of paying interest on the
sum of
money.
[36]
In
these circumstances it is fair and appropriate that costs should not
follow the result.
Order
[37]
I
hereby order as follows:
1.
The
application is dismissed;
2.
Each
party shall be responsible for its own costs.
_________________________
R Harper
Acting
Judge of the Labour Court of South Africa
Appearances:
On
behalf of the Applicant:
Advocate R G Beaton SC
Instructed
by:
Rooth and Wessels Inc.
On
behalf of the Respondent:
Advocate P C Pio
Instructed
by:
The State Attorney Pretoria
[1]
66 of 1995, as
amended
[2]
(2007) 28 ILJJ 417
(LC) at para 14
[3]
Kindly complete footnote
[4]
The new Shorter Oxford English
Dictionary 1993, p2064
[5]
Reviews in the LC,
A Myburgh and C Bosch, first edition, p117
Fidelity
Cash Management Services v CCMA & others
[2008]
3 BLLR 197
(LAC)
at
para 101