Sneller Verbatim/MLS
IN THE LABOUR COURT OF SOUTH AFRICA
BRAAMFONTEIN CASE NO: J 3039/02
2002-07-26
In the matter between
NATIONAL UNION OF MINEWORKERS Applicant
and
1ST Respondent
THE SHERIFF FOR CENTRAL JOHANNESBURG 2ND Respondent
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J U D G M E N T
DELIVERED ON 31 JULY 2002
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REVELAS J:
1. This was an urgent application, its main objective
being to prevent the operation of a written execution
issued on 8 July 2002 and in terms of which the first
respondent, to whom I shall refer to as Maseko, through
his attorneys of record had instructed the deputy
sheriff to execute against the applicant for the
latter's nonpayment of the amount or R85 000.
2. The deputysheriff is the second respondent in this
matter and no relief is sought against him.
1. 1. 3. The amount of R85 000, according to Maseko, is
payable by the applicant, the National Union of Mine
Workers or the Union to him in terms of an agreement of
settlement which was made an order of this court on
14 June 2002.
4. The first respondent raised two points in limine in
respect of the urgent application, namely that the
deponent to the founding affidavit did not have the
necessary locus standi to depose to the founding
affidavit.
5. However, this point abandoned during argument by the
attorney appearing on behalf of Maseko.
6. The second objection raised was that the matter was not
urgent inter alia, because there were no prayers
specifically requesting the court to regard the matter
as urgent as per the usual practice in a Notice of
Motion of this kind. The applicant has, however, made
sufficient allegations and submissions in its founding
affidavit to foreshadow such a prayer. To argue that
the application should be dismissed on that ground
would suggest an overly technical approach which is
untenable.
7. The urgency of the matter had to be determined on all
the facts of the matter, which brings me to the merits.
It is necessary to set out briefly the background
of the facts which gave rise to this matter.
8. Maseko was dismissed by the union and reinstated by an
arbitrator acting under the auspices of the Commission
for Conciliation, Mediation and Arbitration (“the
CCMA”), to whom he referred a dispute about an unfair
dismissal which could not be resolved between the
parties and the dispute was arbitrated.
1. 9. The arbitrator determined that the applicant should
pay Maseko the sum of R52 680, being an amount equal to
the remuneration he would have received had it not bee
for the dismissal, up to the date of the award.
10. On 13 February 2002 the applicant received a directive
from the South African Revenue Services, indicating to
the applicant as the respondent was obliged to deduct
employee's tax from the sum awarded by the CCMA and
gave the sum of R52 680.
11. This sum was deducted from the amount awarded and on 18
February 2002 the applicant paid the respondent the sum
of R34 944,12 in satisfaction of the award, having
deducted the sum prescribed in the directive from the
SARS. The applicant banked this cheque.
12. Subsequently a dispute arose between the parties as to
a sum payable for the period between the date of the
award and the finalisation of the unsuccessful review
application.
13. When this dispute was not resolved the first
respondent, Mr Maseko, launched an application in the
Labour Court under case number J 1027/02 on 19 March
2002. The applicant applied to make the arbitrator's
award an order of court and an order for the payment of
R127 755,87 in respect of remuneration which Maseko
stated he ought to have received between the date of
the arbitration award and the date on which the
application for review was refused by the Labour Court.
1. 14. The parties then entered into a settlement
agreement with regard to the application which was set
down for hearing before the Labour Court on 14 June
2002. It was agreed that the agreement be made an
order of court. The memorandum of the agreement was
part of the papers. According to the memorandum,
the dispute between the parties was settled on a final
basis and the applicant undertook to pay the respondent
the sum of R85 000,00 and the settlement agreement was
made an order of court.
15. Maseko's attorneys of record then contacted the union
and he was advised that in accordance with union policy
and following the procedure which was adopted
previously (to the award of R52 680), it again applied
to the South African Revenue Services for a directive
in relation to whether income tax was payable on the
agreed sum of R85 000 or not.
16. Maseko's attorneys adopted the approach that a tax
directive or requesting a tax directive would amount to
a repudiation of the settlement agreement.
17. A tax directive was then received on 8 July 2002
wherein the union was required to deduct a sum of
R25 224 from the lump sum payment of R85 000 as
employee tax.
18. The union then requisitioned a cheque in the sum of R59
776 reflecting such a deduction as required by the
South African Revenue Services and the cheque was
forwarded to the applicant's attorneys.
1. 19. On 19 July 2002 Maseko's attorney delivered a
letter to the union's attorney returning the cheque and
requiring a cheque in the full amount of R85 000 drawn
in their favour.
20. At this stage I must mention that the agreement of
settlement reflected that the amount in question, that
is the R85 000, should be paid to Maseko's attorneys of
record. The cheque was for R59 776,00, however, made
out to Maseko personally.
21. The letter written to the union's attorney referred to
the fact that a warrant of execution had been issued
and that it intended to instruct the Sheriff to
execute the warrant should there be any further delay
in the payment of the amount of R85 000.
22. The City Press of 21 July 2002 also reported that the
Sheriff had reported to attach the applicant's bank
account in satisfaction of the writ issued in respect
of this matter. It emerged that the union did not
have enough funds in its bank account to be attached.
23. The written execution which was issued on 8 July 2002
appears to be in terms of Section 163 of the Labour
Relations Act 66 of 1995, the Act.
24. The union contended that the writ is unlawful since it
had complied with its obligations in terms of the court
order (i.e. the agreement of settlement which was made
an order of court) in that the correct amount was paid
to Maseko and that the amount need not have been paid
to the attorney as a requirement of satisfaction of
that court order.
1. 25. According to the provisions of the Income Tax Act
58 of 1962 the applicant has an obligation to deduct or
withhold the payment of remuneration to an employee
unless the commission of the South African Revenue
Services has indicated to employ the contrary.
26. “Remuneration” in the Income Tax Act includes gross
income and gross income and is defined by Section 1(d)
of the Income Tax Act as including any amount including
any voluntary award received or accrued in respect of
determination, loss, cancellation or deviation of any
employment.
27. It is clear that under the Act remuneration is used to
calculate compensation and compensation is essentially
what was awarded to Maseko by the arbitrator and what
was owed and due to him following the period between
the unsuccessful review and payment in terms of the
award where no payment was made to him. It is
calculated on exactly the same basis.
28. In my view, such an amount does not constitute damages
or any other amount and is therefore subject to the
provisions of Section 1(d) of the Income Tax Act.
29. In my view this matter is on all fours with the Labour
Court decision in Barnard v Shelard Media (Pty) Limited
2000 21 ILG 2248 wherein Mohlalegi AJ relied on the
judgment of Landman J in Eckhard v Fulpro Industrial
Filters (Pty) Limited and Others (1999) 20 ILJ 2043
(LC). It was held:
1. "Generally a payment accrued in respect of termination
of employment constitutes income in terms of a definition of
gross income in terms of Section 1 of the Income Tax Act 58 of
1962. The Act places a duty on the employer to obtain a
direction regarding the employee's liability and to deduct this
from the payment due to the employee."
30. The judge held that an unexpressed term relating to
reduction of tax imported into a settlement agreement
of the nature as the one in the application before me
by schedule 4 of the Income Tax Act.
31. Generally, in cases of this nature the provisions of
the Income Tax Act would nullify any attempt by the
parties to exclude in their agreements tax obligations.
32. Accordingly the judge found that the settlement amount
of R65 000 in that matter constituted gross income in
the hands of the respondent's employee and the
applicant was obliged in law to effect the tax
deduction.
33. I respect of the amount payable to Maseko,the union was
not obliged to pay him R85 000,00 the amount of the
cheque which was forwarded to Maseko on the basis that
he was liable for tax.
34. The second question is whether or not the union is
obliged in terms of the agreement to pay the attorneys
instead of Maseko. Maseko's attorneys of record were
not third parties to the agreement. They were acting as
agents to a principal.
1. 35. The object of the agreement was to pay Maseko.
He was to be compensated and not the attorneys of
record. Therefore it is not for the attorneys of
record to insist that the agreement was breached
because the cheque was not made out to them.
36. The underlying indebtedness reflected in the settlement
agreement which is the subject of the order of court,
has been satisfied by the tender of the cheque in
payment of the indebtedness.
37. It is significant to point out that in the founding
affidavit a tender is made to make out the cheque to
Maseko's attorneys of record instead of to him if, that
would be so desired. However, it appears that there
is a conflict between Maseko and his attorneys of
record in this ground. That dispute remains between
Maseko and his attorneys of record and is not for this
Court to make arrangements in this application as to
how payment should be effected by Maseko to his own
attorneys.
38. In the light of the clear dispute between the two
parties on the one hand and the instruction to the
Sheriff to execute the warrant at any time, it was
necessary to bring the application on an urgent basis.
The written execution was issued on 8 July 2002 and
there was an attempt to attach the applicant's bank
account.
39. It is reasonable to infer that it has been Maseko's
strategy or belief to obtain the money through
execution. Therefore the applicant or the union had
no other alternative but to approach the court on an
interim basis.
40. The relief sought by the union was declaratory in
nature.
1. 41. I therefore make the following order:
1. It is declared that the written execution issued under
case number J 1027/02 on 8 July 2002 is of no force and
effect.
2. The applicant has satisfied its indebtedness to the
respondent as reflected in paragraph 1.2 of the
memorandum of agreement dated 14 June 2002. First
respondent has no claim in law to that sum.
3. The respondents are interdicted and restrained from
taking any steps to enforce the memorandum of agreement
in order of court dated 14 June 2002 under case number
J1027/02 or by either instructing the sheriff to act
under the written issued on 8 July 2002 or by issuing a
fresh writ or otherwise.
4. The first respondent is ordered to pay the costs of the
application.
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E. Revelas