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[2018] ZALCJHB 264
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Baloi and Another v Maddox Adams International South Africa (Pty) Ltd (J203/16) [2018] ZALCJHB 264 (15 August 2018)
THE
LABOUR COURT OF SOUTH AFRICA,
JOHANNESBURG
Not Reportable
Case no: J203/16
In the matter between:
DENNIS
BALOI
First
Applicant
CASWELL MOZOMANE
BALOYI
Second
Applicant
and
MADDOX
ADAMS INTERNATIONAL
SOUTH
AFRICA (PTY)
LTD
Respondent
Heard: 29 March 2018
Delivered: 15 August
2018
Summary:
Declaratory order that the respondent’s takeover of the
business in accordance with section 197A of the LRA –
the
arbitration award sought to be enforced has since prescribed.
JUDGMENT
NKUTHA-NKONTWANA. J
Introduction
[1]
In
this matter, the applicants seek a declaratory order to the effect
that the takeover of the business of Rofo Equipment CC (Rofo)
by the
respondent after it was liquidated was a transfer of a business as a
going concern in terms of section 197 and 197A of the
Labour
Relations Act
[1]
(LRA). The applicants also seek reinstatement and compensation in
respect of the arbitration award dated 4 August 2003 with interest.
Alternatively, 12 months’ compensation in
lieu
of reinstatement with interest.
[2]
The application is vigorously opposed by
the respondent and it raises two points
in
limine
; firstly, that the arbitration
award dated 4 August 2003 has prescribed and secondly, that the
application amounts to
res judicata.
Factual background
[3]
The applicants were employed by Rofo. They
were dismissed on or about 21 January 2000. They successfully
challenged their dismissal
and the arbitration award dated 4 August
2003 granted in their favour ordered that they be reinstated with
compensation equivalent
to 12 months’ salary.
[4]
On 1 March 2004, the applicants launched a
joinder application seeking to join the respondent as a party to the
writ issued on the
strength of the award and enforce the writ against
the respondent. The joinder application was dismissed on 14 August
2005.
[5]
The applicants were informed on 8 June 2006
that Rofo had been liquidated as of 19 June 2001.
[6]
On 14 December 2006, the applicants
referred an unfair dismissal dispute against the respondent and
sought condonation. The Metal
and Engineering Industries Bargaining
Council (MEIBC) dismissed the condonation application on 7 February
2007.
[7]
On 27 September 2010, the applicants
launched a review application challenging the ruling on condonation
which is still pending
before this Court. It would seem that there
were no further steps taken by the applicants in that matter and the
respondent has
since filed an application to have that matter
dismissed.
[8]
At the heart of this application is the
question whether Rofo had been transferred as going concern as
contended by the applicants.
The respondent concedes that it operates
the same business as Rofo, using the same premises and similar
equipment and had offered
employment to Rofo’s employees.
However, the respondent denies that the business was a going concern
as it did not purchase
Rofo. Alternatively, that there were no
existing contracts of employment at the date of Rofo’s
liquidation and as such, the
respondent cannot be held liable in
terms of section 197(2)(C).
Prescription
[9]
In
Food
and Allied Workers' Union obo Gaoshubelwe v Pieman's Pantry (Pty)
Ltd,
[2]
the Constitutional Court, as per the majority judgment, endorsed the
findings of the second judgment in
Myathaza
v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus
and Others
[3]
that
the
provisions
of
the
Prescription
Act
[4]
are applicable to claims
arising from allegations of unfair dismissal pursued under the Labour
Relations Act.
[5]
Patently, it
was found that a claim for unfair dismissal constitutes a debt as
contemplated in section 16(1) of the Prescription
Act
[6]
and that the running of prescription is interrupted by the referral
of an unfair dismissal dispute to conciliation, a process commencing
legal proceedings
in
terms of section 15(1) of the Prescription Act.
[7]
[10]
Also, in terms of section 145(9) of the
LRA, ‘an application to set aside an arbitration award in terms
of this section interrupts
the running of prescription in terms of
the Prescription Act in respect of that award’. However, since
the award sought to
be enforced was issued on 4 August 2003, section
145(9) is not applicable since it was promulgated in 2015.
[11]
In terms of section 11 of the Prescription Act,
the
periods of prescription of debt shall be the following:
‘
(a) thirty years
in respect of—
(i)
any debt secured by mortgage bond;
(ii)
any judgment debt;
(iii)
any debt in respect of any taxation imposed or levied by or under any
law;
(iv)
any debt owed to the State in respect of any share of the profits,
royalties or any similar consideration payable in respect
of the
right to mine minerals or other substances;
(b) fifteen years in
respect of any debt owed to the State and arising out of an advance
or loan of money or a sale or lease of
land by the State to the
debtor, unless a longer period applies in respect of the debt in
question in terms of paragraph (a);
(c) six years in respect
of a debt arising from a bill of exchange or other negotiable
instrument or from a notarial contract, unless
a longer period
applies in respect of the debt in question in terms of paragraph (a)
or (b);
(d)
save where an Act
of Parliament provides otherwise, three years in respect of any other
debt
.’ (Emphasis added)
[12]
In the present case, prescription was
interrupted by the conciliation proceedings that commenced on 7 March
2000 and continued to
be interrupted pending the review of the
outcome certificate and the CCMA ruling dated 20 October 2003,
dismissing Rofo’s
application to rescind the default award
dated 4 August 2003. The award was never made an order of court but
had been executed
consequent to the certification in terms of section
143(3) of the LRA. Therefore, the applicable prescription period is
three years.
[13]
The applicants clearly abandoned the award
consequent to the dismissal of their application to join the
respondent as a party for
purposes of execution on 14 August 2005.
The prescription henceforth was uninterrupted. Evidently, when this
application was launched
on 8 March 2016, 11 years later, the claim
had already prescribed. In fact, the applicants elected to institute
a new dispute against
the respondent which is subject to the review
proceedings that are pending before this Court.
[14]
As
stated in
Myathaza
,
[8]
‘
[28] …The
purpose of the Prescription Act is to prompt creditors to institute
legal proceedings without inordinate delays
which may adversely
affect the quality of adjudication if witnesses are no longer
available or their memories have faded.
Unquestionably the
focus here is on having a claim settled without undue delay.
[30] That the protection
of debtors and the preservation of quality and reliable evidence is
the objective of the Prescription Act
was reaffirmed in
Mdeyide
,
where Van der Westhuizen J stated:
“
This
Court has repeatedly emphasised the vital role time limits play in
bringing certainty and stability to social and legal affairs
and
maintaining the quality of adjudication. Without prescription
periods, legal disputes would have the potential to be
drawn out for
indefinite periods of time bringing about prolonged uncertainty to
the parties to the dispute.
The quality of adjudication by
courts is likely to suffer as time passes, because evidence may have
become lost, witnesses may no
longer be available to testify, or
their recollection of events may have faded. The quality of
adjudication is central to
the rule of law. For the law to be
respected, decisions of courts must be given as soon as possible
after the events giving
rise to disputes and must follow from sound
reasoning, based on the best available evidence
.’
(Emphasis added)
[15]
It is almost 13 years after the last
process on the matter and 18 years since the dismissal of the
applicants. It is without doubt
that the
quality of
adjudication of this matter would be hampered by the delay.
On
this point alone, the application stands to be dismissed.
[16]
For
completeness sake, I deem it necessary to comment on the applicant’s
substantive claim. It is common cause that Rofo was
voluntarily
liquidated on 19 June 2001 consequent by its creditors. The
liquidation order preceded the award that the applicants
seek to
enforce. As such, when the liquidation order was granted, the
applicants had already been dismissed and, as correctly submitted
by
the respondent’s counsel, there was no persisting employment
contract.
In
Hydro
Colour Inks (Pty) Ltd v CEPPWAWU,
[9]
the Labour Appeal Court, per Tlaletsi JA (As he then was),
articulated the difference in effect between sections 197 and 197A as
follows:
‘
I have already
mentioned that the fact that Keep Inks is insolvent is common cause.
Section 197A in so far as it states that the
new employer is
automatically substituted in the place of the old employer in all
contracts of employment in existence immediately
before the old
employer's winding-up or sequestration finds application. It must be
emphasised that the automatic substitution
only relates to all
"contracts of employment" in existence immediately before
the old employer's winding-up or sequestration.
This means that the
new employer takes no responsibility for the actions of the old
employer. By way of an example, any wrongful
dismissal by the old
employer remains a matter for the old employer.’
[17]
It follows that the applicants’
contracts of employment were never transferred to the respondent in
terms section 197A of
the LRA and, as such, their dismissal remained
the matter for Rofo and not the respondent.
Conclusion
[18]
In all the circumstances, I am persuaded
that
the award sought to be enforced by the
applicants has prescribed.
Costs
[19]
The
Constitutional Court made it clear
in
Zungu v
Premier of the Province of KwaZulu-Natal and Others,
[10]
that the rule of practice that costs follow the result does not apply
in matters before this Court as orders of costs in this Court
are to
be made in accordance with the requirements of the law and fairness.
In this instance, it would not be fair and just to
award costs
against individual litigants.
[20]
I, therefore, make the following order:
Order
1. The application is
dismissed with no order as to costs.
__________________
P. Nkutha-Nkontwana
Judge of the Labour Court
of South Africa
Appearances:
For
the applicants: Mr S Masina of Tshiqi Zabediela Attorneys
For the second
respondent: Advocate WJ van Wyk
Instructed by Coetzee &
Louw Attorneys
[1]
Act 66 of 1995 as amended.
[2]
2018
(5) BCLR 527
(CC) at paras at paras 195 to 204 (
Pieman's
Pantry).
[3]
[2016] ZACC 49
; (2017) 38 ILJ 527 (CC);
[2017] 3 BLLR 213
(CC);
2017
(4) BCLR 473
(CC);
2018 (1) SA 38
(CC) at paras 83 to 90 (
Myathaza
)
.
[4]
Act 68 of 1969.
[5]
Act 66 of 1995 (LRA)
[6]
Section 16(1) defines the scope of the provisions of the
Prescription Act. It stated that: ‘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.’
[7]
S 15 of the Prescription Act reads:
‘
(1) The running
of prescription shall, subject to the provisions of subsection (2),
be interrupted by the service on the debtor
of any process whereby
the creditor claims payment of the debt.
(2) Unless the debtor
acknowledges liability, the interruption of prescription in terms of
subsection (1) shall lapse, and
the running of prescription
shall not be deemed to have been interrupted, if the creditor does
not successfully prosecute his
claim under the process in question
to final judgment or if he does so prosecute his claim but abandons
the judgment or the judgment
is set aside.
(3) If the running of
prescription is interrupted as contemplated in subsection (1) and
the debtor acknowledges liability, and
the creditor does not
prosecute his claim to final judgment, prescription shall commence
to run afresh from the day on which
the debtor acknowledges
liability or, if at the time when the debtor acknowledges liability
or at any time thereafter the parties
postpone the due date of the
debt, from the day upon which the debt again becomes due.
(4) If the running of
prescription is interrupted as contemplated in subsection (1) and
the creditor successfully prosecutes his
claim under the process in
question to final judgment and the interruption does not lapse in
terms of subsection (2), prescription
shall commence to run afresh
on the day on which the judgment of the court becomes executable.
(5) If any person is
joined as a defendant on his own application, the process whereby
the creditor claims payment of the debt
shall be deemed to have been
served on such person on the date of such joinder.
(6) For the purposes of
this section, ‘process’ includes a petition, a notice of
motion, a rule
nisi
, a pleading in reconvention, a third
party notice referred to in any rule of court, and any document
whereby legal proceedings
are commenced.”
[8]
Myathaza
, above n 3 at paras 28 to 30.
[9]
Hydro
Colour Inks (Pty) Ltd v CEPPWAWU
[2011] 7 BLLR 637
(LAC) at para 17.
[10]
[2018] ZACC 1
at para 24 to 26.