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[2018] ZALCJHB 392
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Telkom SA SOC Ltd v Mashaba (J 3734/18) [2018] ZALCJHB 392; (2019) 40 ILJ 629 (LC) (29 November 2018)
IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: J 3734/18
In
the matter between:
TELKOM
SA SOC LTD
Applicant
and
EZEKIEL
MASHABA
Respondent
Heard:
23 October 2018
Delivered:
29 November 2018
Summary: Application to set aside a
warrant of execution in the amount of R 27 337 355,00. Interest
calculated as interest on interest,
accruing monthly. Interest is to
be calculated at the prescribed rate of interest
per annum.
Questions dealt with: from what date is interest payable and how
it is to be calculated.
JUDGMENT
PRINSLOO,
J
Background
facts:
[1]
The
Respondent (the employee) is an employee of the Applicant. He was
dismissed in September 2011, where after he referred an automatically
unfair dismissal dispute in terms of the provisions of section
187(1)(d) of the Labour Relations Act
[1]
(the LRA) to the Labour Court.
[2]
The
matter proceeded to trial and judgment was handed down on 11 January
2018. The Court found the employee’s dismissal automatically
unfair in terms of section 187(1)(d) of the LRA and ordered the
employee’s reinstatement with effect from 11 January 2016.
It
is evident from the body of the judgment that the Court considered
the delays in finalising the matter and deemed it just and
equitable
to order reinstatement with a backdated period of 24 months from the
date of the judgment.
[3]
Pursuant
to the aforesaid Court order, the Applicant filed an application for
leave to appeal, which application was dismissed on
18 May 2018. The
Applicant subsequently filed a petition for leave to appeal, which
was refused on 21 August 2018.
[4]
The
parties thereafter engaged in discussions over the employee’s
reinstatement and the back pay due to him. The employee
was
reinstated and placed in the position of ‘Technical Broadband
SOC Generic’ with effect from September 2018.
[5]
On 21
September 2018, the Applicant’s attorneys proposed that the
parties meet on 27 or 28 September 2018 in order for them
to discuss
and finalise the calculation of the monies due to the employee.
[6]
On 26
September 2018, Ramphele attorneys, acting on behalf of the employee,
addressed a letter to the Applicant’s attorneys,
responding to
e-mail correspondence and indicated that they were likely to continue
with a writ to enforce the Court order. Ramphele
attorneys indicated
that the calculations are completely the Applicant’s
responsibility and they insisted that the Applicant
should do the
calculations and forward it to them so that they could take
instructions from the employee. It is evident from this
correspondence that Ramphele attorneys rejected the invitation to a
meeting to discuss the calculations and instead threatened
to
finalise the matter by way of execution.
[7]
In
respect of the back pay, the Applicant’s attorneys subsequently
addressed correspondence to Ramphele attorneys on 27 September
2018,
stipulating the calculation of back pay and that the amount due to
the employee was R 722 285, which included his total package,
a
performance bonus and performance pay. The employee’s package
was calculated at his total monthly package of R
25
542,00 for the period 1 January 2016 – 1 March 2017 and R 27
075 per month for the period 1 April 2017 – 31 December
2017,
totalling R 628 811,00, and added to that was a performance bonus of
R 63 763 and performance pay of R 31 712,00.
[8]
On 28
September 2018, Ramphele attorneys responded to the Applicant’s
attorneys’ letter of 27 September 2018 and agreed
that payment
be made in accordance with the Applicant’s calculations.
[9]
On 11
October 2018 Ramphele attorneys addressed a letter to the Applicant’s
attorneys, raising a number of issues regarding
reinstatement of the
employee. Ramphele attorneys indicated that in terms of section 75 of
the BCEA the employee was entitled to
interest on the amounts due
monthly from January 2016 until date of payment. It was stated that
unless a proper calculation was
done and presented within 10 days, a
writ of execution would be prepared.
[10]
Maserumule
attorneys, on behalf of the Applicant, responded on 16 October 2018
that the employee’s annual salary package of
R 334 649 is the
same package the employee earned and he had been reinstated in a
similar position as his previous position no
longer existed. It was
recorded that Ramphele attorneys accepted the calculation, after they
rejected an invitation to discuss
the calculations of the employee’s
remuneration. The final calculation was accepted and the employee was
paid accordingly
and the employee was not entitled to further
payments. It was recorded that Ramphele attorneys could not issue a
writ on an order
that was complied with and for payments which they
agreed to.
[11]
Nonetheless,
on 16 October 2018, Ramphele attorneys filed a ‘warrant of
execution’, claiming the amount of R 27 337
355,00, being the
employee’s monthly salary with interest on interest, accrued
monthly in terms of section 75 of the Basic
Conditions of Employment
Act
[2]
(BCEA) plus a performance bonus.
[12]
The
Applicant approached this Court on an urgent basis to set aside the
warrant so filed.
Legal principles
[13]
The
Prescribed Rate of Interest Act
[3]
(PRIA) provides for the payment and calculation of interest on a debt
where the rate at which interest is to be calculated, is
not governed
by any other law or by an agreement or a trade custom or in any other
manner. Such interest shall be calculated at
the rate as determined
from time to time by the Reserve Bank,
per
annum
and
the Minister of Justice and Correctional Services publishes the
applicable rate of interest in the Government Gazette from time
to
time.
[14]
Section
2 of the PRIA provides for interest on a judgment debt and reads as
follows:
‘
(1)
Every judgment debt which, but for the provisions of this subsection,
would not bear any interest after the date of the judgment
or order
by virtue of which it is due, shall bear interest from the day on
which such judgment debt is payable, unless that judgment
or order
provides otherwise;
(2)
Any interest payable in terms of subsection (1) may be recovered as
if it formed part of the judgment debt on which it is due;
(3)
In this section “judgment debt” means a sum of money due
in terms of a judgment or order, including an order
as to
costs, of a court of law, and includes any part of such a sum of
money, but does not include any interest not forming part
of the
principal sum of a judgment debt.’
[15]
In
General
Accident Versekeringsmaatskappy Suid-Afrika Bpk v Bailey NO
[4]
the
headnote aptly summarises the Court’s conclusion as follows:
‘
Every
judgment debt bears interest, in terms of
s 2(1)
of the
Prescribed
Rate of Interest Act 55 of 1975
, from the day on which such judgment
debt is payable. A judgment debt is payable on the day upon which the
trial Court hands down
its judgment, irrespective of whether the
judgment is substituted or amended on appeal, so that the eventual
judgment debt is only
determined on appeal.’
[16]
In
Victoria
Falls and Transvaal Power Co. Ltd. v. Consolidated Langlaagte Mines
Ltd
[5]
the Court pronounced that:
‘
The
civil law did not attribute
mora
to
a debtor who did not know and could not ascertain the amount which he
had to pay. ‘
Non potest
improbus videri, qui ignorat, quantum solvere
debeat.’
(
Dig.
50.17.99).
And that rule was adopted by the Courts of Vriesland. (See
Sande,
Dec.
,
3.14.9). It has also been followed in our own practice. No South
African decision was quoted to us, nor have I been able to find
any,
in which interest before judgment has been awarded upon unliquidated
damages. I do not think, therefore, that they can be
given here. I do
not say that under no circumstances whatever could such damages carry
interest. Cases may possibly arise in which
though the claim is
unliquidated the amount payable might have been ascertainable upon an
enquiry which it was reasonable the debtor
should have made. Such
cases, should they occur, may be left open. But the present matter
stands in a different position. It was
not possible for the defendant
to know or ascertain what damage its breach of contract had caused,
and it cannot therefore, on
the principles of our law, be held liable
for interest prior to judgment upon the amount of the damage.’
[17]
In
Malatji
v Minister of Home Affairs and Another
[6]
the
Labour Appeal Court (LAC) recently considered the issue of interest.
Although the case concerned interest in respect of an arbitration
award, the principles referred to by the LAC remain relevant and are
applicable
in
casu.
The
LAC held that
mora
interest
can only be levied and would accrue only once the amount of
compensation is ascertained or easily ascertainable. Where
the award
is subject to review, it cannot be said that the quantum is readily
ascertainable and that the time for performance by
the debtor is
fixed. This is so because there is no obligation on the debtor, under
those circumstances, to pay the debt.
[18]
The
LAC rejected an argument that the employer was
in
mora
from the date of issue of the award and/or its subsequent variation
as opposed to the date of final determination of review by
the Labour
Court as untenable as there is no principle in law which provides
that the debtor may be mulcted with the payment of
interest for a
period, in circumstances where the extent of its liability had not
yet been established in that period.
[19]
The
LAC accepted that a judgment debtor would only be entitled to the
payment of interest
a
tempore morae
on
the unliquidated claim from date of the award, if the award is not
challenged through the review process, or from date of the
judgment
on review pursuant to the Court’s determination of the quantum
of the claim. It was held that:
‘
It
is clear from the authorities cited that interest is not payable
unless there is an agreement to pay it or there is default or
mora
on the part of the debtor. A judgment debtor is
in
mora
from the date of payment fixed by the judgment. From this date,
the judgment creditor is, at common law, entitled to interest
as of
right if it was duly claimed in the Court
a
quo.
Analysis
[20]
In
casu,
the
employee filed a warrant of execution for the amount of R 27 337
355,00, being the employee’s monthly salary with interest
on
interest, accrued monthly as from 1 January 2016.
[21]
In my
view the employee’s claim calls for two issues to be decided.
First, the date from which interest is payable and second,
how
interest is to be calculated.
Date from when interest is payable
[22]
In
the judgment of 11 January 2018, the employee was reinstated with
effect from 11 January 2016. In the warrant of execution, the
employee claims interest with effect from January 2016. The employee
relied on the provisions of
section 75
of the BCEA in support of his
claim.
[23]
This
claim is misguided and opportunistic for a number of reasons.
[24]
Firstly,
the provisions of the PRIA are clear that every judgment debt shall
bear interest from the day on which such judgment debt
is payable,
unless the judgment or order provides otherwise.
In
casu,
there
is no judgment or order that provides otherwise, thus the provisions
of the PRIA must apply and they apply from the date of
the judgment.
[25]
Secondly,
in the authorities referred to
supra
it is evident that
mora
interest
can only be levied and would accrue only once the amount of
compensation is ascertained or easily ascertainable and the
time for
performance by the debtor is fixed. Prior to the determination of the
amount to be paid, there is no obligation on the
debtor to pay the
debt.
The
LAC confirmed
there
is no principle in law that the debtor may be mulcted with the
payment of interest for a period, in circumstances where the
extent
of its liability had not yet been established in that period.
[26]
The
LAC accepted that a judgment debtor would only be entitled to the
payment of interest
a
tempore morae
from
date of judgment and pursuant to the Court’s determination of
the quantum of the claim.
[27]
In
casu,
the
quantum of the employee’s claim was only determined on 11
January 2018. Prior to this date, there was no obligation on
the
Applicant to pay the employee because the employee was dismissed and
there was no order in respect of his dismissal. The employee’s
dismissal was only found to be automatically unfair on 11 January
2018 and he was only reinstated on this date, with effect from
11
January 2016. Prior to the Court order the amount of compensation to
be paid was not fixed and there is no liability to pay
where the
extent of the liability had not been established.
[28]
It
follows that the employee is not entitled to claim interest from a
date preceding the date of the judgment.
[29]
Thirdly,
reliance on
the
provisions of
section 75
of the BCEA is misplaced.
Section 75
of the
BCEA provides for the payment of interest on any amount due and
payable in terms of the BCEA, at the rate of interest prescribed
in
section 1
of the PRIA. Any monies due to the employee were due and
payable in terms of an order of Court and no amount was due and
payable
in terms of the BCEA.
Calculation of interest
[30]
In
his ‘warrant of execution’ the employee claims R 27 337
355,00, being his monthly salary with interest on interest,
accrued
monthly in terms of
section 75
of the BCEA.
[31]
The
employee’s monthly remuneration for the relevant period
(January 2016 – December 2017) ranged between R 25 542 and
R 27
075 per month. The Applicant’s calculation of his total
remuneration for this period (excluding performance bonus and
performance pay) is R 628 811,00. On the employee’s calculation
this amount grew to R 27 337 355,00.
[32]
The
obvious question is how did an amount of R 628 811 grow to an
enormous, whopping R 27 337 355,00 between January 2016 and January
2018. On the employee’s version, the answer is twofold.
[33]
Firstly,
it is calculated on his monthly salary with interest on interest,
accrued monthly and secondly that this is provided for
in
section 75
of the BCEA.
[34]
I
have already alluded to the fact that reliance on
section 75
of the
BCEA is misplaced.
Section 75
of the BCEA does not provide for the
payment or calculation of interest on an ‘interest on interest,
accrued monthly’
basis. In fact, it provides for the payment of
interest in accordance with
section 1
of the PRIA.
[35]
Section
1
of the PRIA provides for the payment of interest
per
annum
at
the applicable rate of interest as published by the Minister
of
Justice and Correctional Services
in
the Government Gazette from time to time.
[36]
On
20 April 2018, the Minister of Justice and Correctional Services
published a notice in the Government Gazette on the revised
prescribed rate of interest and with effect from 1 May 2018, the
prescribed rate of interest dropped from 10.25% to 10%. For the
applicable period in this case, the interest rate was 10.25%, dropped
to 10%
per
annum.
[37]
On
the employee’s calculation, the monthly interest payable for
July 2018 was R 3 464 933 and with his salary, the total sum
due was
R 16 877 578. By September 2018, a mere two months later, the monthly
interest was R 5 896 405 and the total sum due was
R 27 337 881.
[38]
The
employee’s calculation is dumbfounding and shocking, to say the
least. It shows a material lack of understanding of and
a total
disregard for the provisions of the law.
[39]
Interest
on a judgment debt is
simple
interest, calculated on a
per
annum
basis on the capital amount, at the prescribed rate of interest.
[40]
The
employee is not entitled to claim interest, calculated on a monthly
interest on interest basis.
Costs
[41]
The
last issue to be decided is the issue of costs.
[42]
In so
far as costs are concerned, this Court has a broad discretion to make
orders for costs according to the requirements of the
law and
fairness.
[43]
Considering
the merits of this application, there is no reason in law or fairness
not to make a cost order in favour of the Applicant.
I can see no
reason why the Applicant should be burdened with the legal costs
incurred as a result of the employee’s conduct.
The Applicant
was forced to approach this Court in view of the threat of execution
to the value of more than R 27 million, which
amount is not due and
payable to the employee and which execution would have vast and
severe consequences for the Applicant.
[44]
The
Applicant is entitled to costs. The question is who should be ordered
to pay the costs.
[45]
Ms
Makamu on behalf of the Applicant submitted that a cost order
de
bonis propriis
should
be made. The employee, an individual and layperson, who relied on the
advice and assistance of his attorney, should not be
burdened with
costs in this instance.
[46]
I
invited Mr Ramphele in argument to make submissions as to why he
should not be held liable for the costs. Mr Ramphele submitted
that
if his interpretation of
section 75
of the BCEA is correct, his
calculation is correct and the employee is entitled to the amount he
claims. He further submitted that
if his interpretation of
section 75
is incorrect, the Court should provide clarity and the attorney
should not be punished for interpreting the said section. To punish
him with a costs order, would be to deny the employee access to
justice and would be an infringement on Mr Ramphele’s
constitutional
right of freedom of expression.
[47]
It
has to be made clear: attorneys are not expected to interpret
legislation, that is the function of the Courts. Attorneys are
expected to read legislation and case law and to advise their clients
accordingly.
[48]
Mr
Ramphele persisted with his argument that
section 75
of the BCEA
means that interest is to be paid on interest.
[49]
I
have already alluded to the fact that
Section 75
of the BCEA does not
provide for the payment or calculation of interest on an ‘interest
on interest, accrued monthly’
basis. In fact, it provides for
the payment of interest in accordance with
section 1
of the PRIA,
which provides for the payment of interest
per
annum
at
the applicable rate of interest. Had Mr Ramphele properly read and
understood
section 75
of the BCEA, he would have noticed that it made
specific reference to
section 1
of the PRIA, which section he should
have read and considered before issuing the warrant of execution on
the basis that he did.
He should have noticed that his interpretation
of
section 75
of the BCEA was not only quite unnecessary but also
clearly incorrect.
[50]
In
SA
Liquor Traders' Association and others v Chairperson, Gauteng Liquor
Board and others
[7]
the Constitutional
Court ordered costs
de
bonis propriis
on
a scale as between attorney and client and held that
:
'An
order of costs
de bonis propriis
is made against attorneys
where a court is satisfied that there has been negligence in a
serious degree which warrants an order
of costs being made as a
mark of the court's displeasure. An attorney is an officer of the
court and owes a court an appropriate
level of professionalism and
courtesy.’
[51]
In
Indwe
Risk Services (Pty) Ltd v Van Zyl
[8]
the Court considered circumstances where a
de
bonis propriis
cost
order was warranted and held that:
‘
I
am also mindful of the fact that an order for costs
de
bonis propriis
is only awarded in exceptional cases and usually where the court is
of the view that the representative of a litigant has acted
in a
manner which constitutes a material departure from the
responsibilities of his office. Such an order shall not be made where
the legal representative has acted
bona
fide
or where the representative merely made an error of judgment.
However, where the court is of the view that there is a want of
bona
fides
or where the representative had acted negligently or even
unreasonably, the court will consider awarding costs against the
representative.
Because the representative acted in a manner which
constitutes a departure from his office, the court will grant the
order against
the representative to indemnify the party against an
account for costs from his own representative. (See in general
Erasmus
Superior
Court Practice
at E12-27.) ‘
[52]
In
casu,
it
is evident that the warrant of execution filed by Mr Ramphele, the
opposing affidavit, deposed to on advice of Mr Ramphele, as
well as
the heads of argument completely ignored the provisions of the PRIA
and reliance was placed on the Constitution and section
75 of the
BCEA. This, notwithstanding the fact that section 75 of the BCEA
specifically provides for interest with specific reference
to the
PRIA.
[53]
Mr
Ramphele calculated interest and opposed this application without any
reflection as to the provisions of the PRIA and without
any
consideration of the applicable case law. Even his reliance on
section 75 of the BCEA is misplaced and ignored the fact that
the
said section refers to the PRIA. One could reasonably accept that a
practising attorney assisting a paying client, should at
least
consider the law and the applicable legislation before a warrant of
execution on an obviously impossible amount is issued,
forcing the
Applicant to approach this Court for urgent relief.
[54]
To
persist with his calculation and arguments, Mr Ramphele did not
merely make an error of judgment and his conduct does not indicate
bona
fides
.
Ramphele
Attorneys acted in a manner that constitutes a departure from their
office by persisting with a calculation which they
should have known
was wrong. Forcing the Applicant to come to Court and persisting with
the absurd calculation of interest in Court,
made matters worse. This
Court’s displeasure should be known to the attorneys.
[55]
This
is an exceptional case where the employee’s representative
acted in a manner that justifies an order for costs
de
bonis propriis.
I
am of the view that Ramphele Attorneys should be ordered to pay the
Applicant’s costs
de
bonis propriis.
I
am guided by the principles set out by the Courts in making such an
order, mindful that it is awarded only in exceptional cases.
[56]
In
the premises I make the following order:
Order:
1.
The
warrant of execution issued by Ramphele Attorneys is set aside;
2.
Ramphele
Attorneys are ordered to
pay
the Applicant’s costs
de
bonis propriis;
3.
The
Registrar of the Labour Court is directed to serve a copy of this
judgment on the Law Society.
Connie Prinsloo
Judge
of the Labour Court of South Africa
Appearances:
For the Applicant:
Ms
Makamu of Maserumule Attorneys
For
the Respondent: Mr
T Ramphele of Ramphele Attorneys
[1]
Act 66 of 1995, as
amended.
[2]
Act 75 of 1997.
[3]
Act 55 of 1975.
[4]
1988
(4) SA 353
(A).
[5]
1915
AD 1
at
32.
[6]
(JA52/2017)
[2018] ZALAC 23
(15 August 2018).
[7]
2009 (1) SA 565
(CC) at para 54.
[8]
(2010) 31 ILJ 956
(LC).