IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT CAPE TOWN
DATE: 1 December 1999
CASE NUMBER: C 452/99
In the matter between:
LIONEL SMITH Applicant
and
POLYOAK (PTY) LTD Respondent
JUDGMENT
BASSON, J :
[1] This is an application for making an arbitration award an order of court in terms of section
158(1)(c) of the Labour Relations Act, 66 of 1995 ("the Act").
[2] The respondent has reinstated the applicant in its employ, but has refused to pay the
backpay ordered by the arbitration. It now opposes the making of this award an order of court on the
basis of the principle of setoff.
[3] The principle of setoff is a principle which has been widely applied in our law and
described in Schiedhout v Union Government 1926 AD 286 at 289, as follows:
"The doctrine of setoff with us is not derived from statute and regulated by rule of court as in England.
It is a recognised principle of our common law when two parties are mutually indebted to each other,
both debts being liquidated and fully due, then the doctrine of compensation comes into operation the
one debt extinguishes the other pro tanto as effectually as if payment had been made. Should one of the
creditors seek thereafter to enforce his claim, the defendant would have to set up the defence of
compensation by bringing the facts to the notice of the court as indeed the defence of payment would
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also have to be pleaded and proved. But compensation, once established, the claim would be regarded
as distinguished from the moment the mutual debts were in existence together".
[4] See also in this regard, inter alia, the judgment in Joint Municipal Pension Funds v
Pretoria Municipal Pension Funds 1969 (2) 87 TPD.
[5] The facts which presented themselves in the present matter were the following. The
respondent instituted separate proceedings in the Magistrate's Court and was awarded a judgment by
default. However, this judgment was rescinded later. This is the position which applies at the moment,
that is, this matter is at present lis pendens in the Magistrate's Court.
[6] I believe that one could cogently apply Rule 22(4) of the Rules of the High Court to
proceedings in the Labour Court in terms of Rule 11 which allows the Labour Court some leeway in
determining its procedures.
[7] Rule 22(4) of the Uniform Rules of the High Court makes it possible for the postponement of
judgment of one claim under this Rule, pending a decision of another counterclaim. I do not see any
necessity of quoting Rule 22(4) as the contents thereof is wellknown to all before Court.
[8] However, the question is whether Rule 22(4) of the Uniform Rules of the High Court can be
utilised in circumstances where the counterclaim has to be decided in a different forum, namely, for
instance, by the Magistrate's Court and not by the High Court or, as is the case in casu , by the Labour
Court.
[9] In the informative judgment by Didcott J (as he then was) in Pareg v Shah Johan Cinemas
(Pty) Ltd & Others 1981 SA 301 (Durban and Coast Division) the following dictum is to be found at
308BE:
"Counsel told me that they had found no reported instance of the court's postponement of judgment on
a claim ripe for adjudication, merely an order that proceedings in some other forum might be
completed. This, Mr Law submitted, was unthinkable whether the forum in question was the
Magistrate's Court, a different division of the Supreme Court or a foreign tribunal. To the list he added
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arbitration. He conceded that once a reciprocal claim was involved, the case for delay was no weaker
in equity on account of its prosecution elsewhere, but a deferment had drawbacks then, he maintained,
which outweighed its equitable advantages . Without control over the parallel proceedings, lacking
even firsthand knowledge of their progress, the Court would tend to lose touch with the situation. More
important, indeed fatal altogether to the stratagem, was the impossibility in such circumstances of a
simultaneous judgment on both claims which, when all was said and done, was the essence of the
equitable solution . Far from synchronising the verdicts, the one claim's obstruction would usually
result in the prior determination of the other. Potential prejudice instead of being eliminated would thus
be shifted from the defendant to the plaintiff. The argument had marked force, I am inclined to think,
when applied to proceedings truly separate in their forum " (emphasis supplied).
[10] Clearly, these counterarguments have strong persuasive value and I am in respectful
agreement with these views.
[11] In the event, the fact that the counterclaim is to take place in a separate forum, that is, the
Magistrate's Court, over which this Court has no control, and which would result in prejudice to the
applicant in that the Labour Court’s judgment would be deferred or postponed, I find that the principle
of setoff should not be applied in casu .
[12] In the event, the defence put up by the respondent should fail and in this application to
make the arbitration award an order of court (and in view of the fact that only a part of this arbitration
award has been adhered to) I make the following order:
1. The award issued by the commissioner in this matter, in so far as it applies to payment of
backpay to applicant, is made an order of court in terms of section 158(1)(c) of the Labour Relations
Act, 66 of 1995.
Act, 66 of 1995.
2. The respondent is ordered to pay the applicant an amount equal to the remuneration he would
have earned from 13 September 1998 to 6 August 1999, plus interest at the legal rate.
3. The respondent is to pay the applicant's costs.
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______________________
Basson, J
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