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[2017] ZALCJHB 143
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Emfuleni Local Municipality v SAMWU obo Mokoena and Others; In re: Emfuleni Local Municipality v South African Local Government Bargaining Council (SALGBC) and Others (J2961/16) [2017] ZALCJHB 143 (3 May 2017)
Of
Interest to other Judges
THE
LABOUR COURT OF SOUTH AFRICA,
HELD
AT JOHANNESBURG
C
ase no: J
2961/16
In the
matter between:
EMFULENI LOCAL MUNICIPALITY
Applicant
and
SAMWU obo MOKOENA & 72
OTHERS
First Respondent
COMMISSION FOR CONCILIATION,
MEDIATION AND ARBITRATION
Second Respondent
KATHLHOLO WABILE
N.O
Third Respondent
In re:
Case
JR 741/16
EMFULENI LOCAL MUNICIPALITY
First Applicant
and
SOUTH AFRICAN LOCAL
GOVERNMENT BARGAINING
COUNCIL (‘SALGBC’)
First Respondent
M N S DAWSON
N.O
Second Respondent
SAMWU obo MOKOENA & 72
OTHERS
Third Respondent
Heard
:
16 February 2017
Delivered
:
3 May 2017
Summary:
(Reinstatement of review application– unfair labour practice
claim – local authority –
security provided under s
48(2)(h) of the Local Government: Municipal Finance Management Act )
JUDGMENT
LAGRANGE
J
Background
[1] On 16
March 2016, the second respondent in case no JR 741/16 (‘the
arbitrator’) issued an arbitration award in an
unfair labour
practice dispute ordering the applicant to promote the seventy-three
individual respondents, who are traffic officers
represented by
SAMWU, to the same level as certain Land Use Management employees.
Previously, the traffic officers were on salary
level 9. The
applicant applied timeously on 25 April 2016 to review the award and
did not give effect to it. The arbitrator had
ordered that if the
traffic officers were not placed on the same level, the matter could
be brought back to him “for a proper
assessment” whatever
that might have been intended to mean.
[2] In
view of the applicant not giving effect to the award by 15 April 2
016 as required by the arbitrator, SAMWU referred the
matter back to
the arbitrator, who, in the exercise of his self-designated role of
making ‘a proper assessment’, issued
a second award
ordering the applicant to pay back-pay to the traffic officers
amounting to more than R 36 million and to pay the
respondents’
legal costs of approximately R 50,000. To date the applicant has not
applied to review and set aside this supplementary
award which was
premised on the 16 March award.
[3] On 17
October 2016, the respondent applied to dismiss the applicant’s
review application. On 26 October 2016, the applicant
filed the
record, although it was incomplete because the transcript did not
include the cross examination of the applicant’s
main witness
and the evidence of the respondents’ witnesses.
[4]
Having certified the award, the respondents proceeded to have
property of the applicant attached on 12 December 2016. Three
days
later, the applicant applied urgently to stay the enforcement of the
award pending the outcome of the review proceedings.
[5] The
matter came before the honourable Justice H Cele on 28 December 2016
and the matter was postponed to 16 February 2017. In
the order of
Cele J, the enforcement of the award was stayed pending certain
conditions being fulfilled, failing which the order
would lapse
automatically on 16 February 2017. In summary, those conditions were:
5.1
The applicant had to obtain “a Council resolution in order to
furnish security as required
in terms of section 145 (7) and (8) of
the Labour Relations Act, 66 of 1995 (‘the LRA’).
5.2
The applicant had to apply for an extension of time to file the
record of the arbitration
proceedings by 18 January 2017.
5.3
The applicant had to obtain the missing parts of the record from the
SALGBC, failing which it
had to approach the Council to set up a
meeting for the reconstruction of the record by 27 January 2017.
[6]
Further, the property attached by the sheriff would remain attached
but the sheriff was ordered not to remove the same.
[7]
Before the hearing on 16 February 2017, the applicant filed two
additional applications. Firstly, on 18 January 2017, it filed
an
application to reinstate the review and for an extension of time to
file the record of the arbitration proceedings. Secondly,
on 31
January 2017, it filed a rule 11 application to compel the bargaining
Council to dispatch the missing portion of the records.
[8] On 31
January 2017, the applicant had adopted a resolution approving “the
necessary security to the amount of R36 776
150” to satisfy the
court order of 28 December 2016. It further resolved that the
Accounting Officer and Acting Chief Financial
Officer as
co-signatories should implement the decision of the Council and
confirmed that the “necessary security as required
by the
Labour Court be extended under section 48(2)(h) as provided for in
the Local Government: Municipal Finance Management Act
(56 of 2003)”.
These resolutions were then encapsulated in a declaration signed by
the Accounting Officer and Acting Chief
Financial Officer in the
following terms:
“
Furthermore
that this declaration therefore serves to satisfy the provision of
security as provided by the Emfuleni Local Municipality
in favour of
the Registrar of the Labour Court to the amount of R36 776 150 (...)
by means of undertaking to make provision in
ELM’s Amendment
Budget of 2016/2017 financial year and subsequent budgets for payment
of its financial obligations; including
interest and capital; thus
forth serving as security as envisaged in terms of section 48(2)(h)
of the Local Government: Municipal
Finance Management Act (56 of
2003).”
[9] The
pertinent portions of section 48(1) and (2) of the Local Government:
Municipal Finance Management Act provide that:
“
48
Security
(1)
A municipality may,
by resolution of its council, provide security
for-
(a)
any
of its debt obligations;
(b)
any
debt obligations of a municipal entity under its sole control; or
(c)
contractual
obligations of the municipality undertaken in connection with capital
expenditure by other persons
on property, plant or equipment to be
used by the municipality or such other person for the purpose of
achieving the objects of
local government in terms of section 152 of
the Constitution.
(2)
A
municipality may in terms of subsection (1) provide any
appropriate security, including by
-
(a)
giving
a lien on, or pledging, mortgaging, ceding or otherwise
hypothecating, an asset or right, or giving any
other form of
collateral;
(b)
undertaking
to effect payment directly from money or sources that may become
available and to authorise the lender
or investor direct access to
such sources to ensure payment of the secured debt or the performance
of the secured obligations,
but this form of security may not affect
compliance with section 8 (2);
(c)
undertaking
to deposit funds with the lender, investor or third party as
security;
(d)
agreeing
to specific payment mechanisms or procedures to ensure exclusive or
dedicated payment to lenders or investors,
including revenue
intercepts, payments into dedicated accounts or other payment
mechanisms or procedures;
(e)
ceding
as security any category of revenue or rights to future revenue;
(f)
undertaking
to have disputes resolved through mediation, arbitration or other
dispute resolution mechanisms;
(g)
undertaking
to retain revenues or specific municipal tariffs or other charges,
fees or funds at a particular level
or at a level sufficient to meet
its financial obligations;
(h)
undertaking
to make provision in its budgets for the payment of its financial
obligations, including capital and interest
;
(i)
agreeing
to restrictions on debt that the municipality may incur in future
until the secured debt is settled or
the secured obligations are met;
and
(j)
agreeing
to such other arrangements as the municipality may consider necessary
and prudent.”
(emphasis
added)
[10] In
addition to the resolution mentioned above, on 08 February 2017, the
applicant’s attorney issued a ‘security
bond’
confirming that the applicant was firmly bound to pay the sum
mentioned in the award within 30 days of the review application
or an
appeal arising therefrom being dismissed, if the Council failed to
comply with the award.
Issues
arising on 16 February 2017
[11] In
view of the developments which had taken place since the matter came
before Cele J, before an order was made, the parties
were given an
opportunity to make representations by 23 February 2017 on the
applicant’s request for extension of time to
file the record of
the proceedings so that the court could also address that application
as well as the security for costs question.
Both parties made written
represetations.
[12]
Having considered the order made on 28 December 2016, I am satisfied
that the only requirement which the applicant did not
comply with was
the requirement to request the Council to convene a meeting to
reconstruct the record. Instead the application
was made to compel
the Council to produce the record. In substance, I am satisfied that
the applicant conducted himself in a
bona fide
manner to
comply with the order of Cele J.
[13] The
second question is whether the security provided in the form of a
resolution of the Council under section 48(2)(h) of the
Local
Government: Municipal Finance Management Act satisfies the
requirements of section 145 (7) and (8) of the Labour Relations
Act,
66 of 1995 (‘the LRA’), which state:
“
(7)
The
institution of review proceedings does not suspend the operation
of
an arbitration award, unless the applicant furnishes security to the
satisfaction of the Court in accordance with subsection
(8).
(8)
Unless the Labour Court directs otherwise
, the security
furnished as contemplated in subsection (7) must—
(a)
in the case of an order of reinstatement or re-employment, be
equivalent to 24 months’ remuneration; or
(b)
in the case of an order of
compensation, be equivalent to the amount of compensation awarded.”
(emphasis
added)
[14]
Since the Municipal Finance Act permits a local authority to provide
security for a debt and since the arbitration award clearly
constitutes one, subject to whether the award is upheld, the only
issue to consider is whether it is the kind of security that
might be
accepted under the section 145 (8). It is true that the typical form
of security provided by private employers is usually
in the form of a
security bond issued by their attorney of record. In this case, the
security bond issued by the applicant’s
attorney is not in the
form of a typical security bond. All that document supposedly does is
to confirm the resolution taken by
the Council and add that, the
payment will be made within 30 days of falling due. The real question
is whether the resolution of
the Council and the declaration by the
financial officers is sufficient. In my view, as long as the amount
is contained as a line
item in the applicant’s current annual
budget and until such time as the review application is determined,
together with
the resolution (provided it is not revoked), ought to
be sufficient guarantee of payment. I am also mindful of the fact
that sections
145(7) and (8) were partly introduced to discourage
review applications which brought solely for the purpose of delay.
The value
of the quantified award in this case is fairly high and the
ultimate financial implications potentially go beyond the backpay
award.
The grounds of review relied on the initial award which
decided the substance of the unfair labour practice claim also do not
appear
to be frivolous.
[15]
SAMWU correctly points out that the applicant has failed to bring a
separate application to review the second award which determined
substantive relief based following the applicant’s
non-compliance with the original award. That might give rise to
further
complications for the applicant’s claim, if it fails to
review the second part of the award also. However, I do not need to
consider that because it is sufficient for present purposes that it
is reviewing the first award on which the second is premised.
[16] In
the circumstances, I am happy to agree to the execution of the award
been stayed pending the outcome of the review application,
subject to
the conditions set out in the order below.
[17] I
have also considered the application for further time to file the
complete review record. In this regard, it is evident that
the
applicant had taken steps to obtain the record and had been partially
successful by October 2016. It has been hampered in finalising
the
review by the missing portion of the transcript which appears to be
substantial. I do not believe the applicant has been unduly
remiss or
tardy in prosecuting the review to date. Consequently, in so far as
the review application is deemed withdrawn in terms
of paragraphs
11.2.2 and 11.2.3 of the Labour Court Practice Manual, I am satisfied
that the applicant has made out a case for
reviving the review
application and for obtaining an extension of time to file the review
record, including attempts to reconstruct
it if necessary.
[18] To
expedite matters, there is no reason why an order should not be made
compelling the first and second respondents to make
the remainder of
the record available, as prayed for in the application launched on 17
January 2017. I am mindful of the possibility
that the council will
not be able to provide the missing portion of the record, but that
does not mean the reconstruction of the
record is unattainable
through other efforts. Accordingly, the order requires all those
involved to assist in the reconstruction
of the record if necessary.
Order
Accordingly,
it is ordered that -
[1]
Provided the applicant does not rescind or amend the resolution
adopted and recording in
the declaration attached hereto as Annexure
“A” (dated 1 February 2017) and provided the applicant
makes provision
for payment of the amount stipulated in the
resolution as a distinct item in its final expenditure budget each
financial year until
such time as the review application under case
number JR 741/16 is finalised, the execution of the arbitration
awards issued by
the second respondent under case number GPD 061501
on 10 March and 16 August as authorised by the CCMA under case
HO 3118-16
are stayed and any attachment of the applicant’s
assets pursuant thereto must be uplifted.
[2]
The applicant’s review application under case no JR 741/16 is
reinstated.
[3]
The first and second respondents in case no JR 741/16 are ordered to
dispatch the missing
portion of the record to the Registrar of the
Labour Court, being the recording and, or handwritten notes of the
evidence of the
applicant’s main witness and the evidence of
the respondents’ witnesses, within 15 days of receipt of this
order.
[4]
The applicant must file the missing portion of the record within one
calendar month of the
missing portion of the record being received by
the registrar and simultaneously comply with rule 7A(8) of the Labour
Court rules.
[5]
If the applicant is unable to file the remaining record or a
reconstruction of the missing
portion of the record by 15 July 2017,
it must approach the court in writing for further directions on the
conduct of the review
giving a full account of the steps taken to
finalise the record and why they were unsuccessful.
[6]
No order is made as to costs.
_______________________
Lagrange
J
Judge
of the Labour Court of South Africa
APPEARANCES
APPLICANT:
J
Makamu of KNT Incorporated
FIRST
RESPONDENTS:
R
Venter instructed by Maenetja Attorneys