Department of Health Kwa Zulu-Natal v Public Health and Social Development Sectoral Bargaining Council and Others (D447/24) [2024] ZALCD 44 (29 October 2024)

THE LABOUR COURT OF SOUTH AFRICA, DURBAN

Not Reportable

Case No: D447/24

In the matter between:

DEPARTMENT OF HEALTH

KWA ZULU-NATAL

Applicant

And

PUBLIC HEALTH AND SOCIAL DEVELOPMENT

SECTORAL BARGAINING COUNCIL

First Respondent

BHEKINHLANHLA STANLEY CELE N.O.

Second Respondent

INNOCENTIA ZANELE MDLALOSE

Third Respondent

Heard: 23 October 2024

Delivered: 29 October 2024

Summary: Security – Applicant would suffer irreparable harm if not being allowed to provide proper security in terms of section 145 (7) and (8) of LRA to the satisfaction of the Court – Stay of Award: The interests of both parties are catered for in ordering a short stay of the enforcement of the award and allowing the Applicant to provide satisfactory and proper security. Should the Applicant fail to provide such security, the stay falls away.

JUDGMENT

PRIOR, AJ

Nature of the application

[1] This is an urgent opposed application for the stay of the enforcement of the arbitration award obtained in this matter.

[2] On 23 October 2024, after hearing argument, I made an order with reasons to follow.

[3] These are those reasons.

Background facts

[4] On 5 July 2024, an arbitration award was handed down by the Second Respondent in which it was determined that the Third Respondent had been dismissed as contemplated in section 186(1) (e) of the Labour Relations Act[1] (LRA) (constructive dismissal). After considering reinstatement inappropriate, the Second Respondent awarded the Third Respondent

compensation in the sum of R643 895.76 together with interest at the rate of 11.25% per annum calculated from 1 September 2024 to when the debt is paid in full.

[5] On 30 August 2024, the Applicant lodged an application for a review of the arbitration award together with an urgent application for the stay of the enforcement of the award. The Third Respondent opposed

the urgent application and filed an answering affidavit.

[6] Notwithstanding the application for a stay of the enforcement of the award, on 10 October 2024 the Applicant filed, what the Applicant considered to be, appropriate security.

[7] On 11 September 2024 when the application for stay was first heard, the matter did not proceed and Moodley AJ ordered that the matter be adjourned to 23 October 2024 and that the Applicant file a replying

affidavit. No pronouncement was made on whether the learned Judge accepted that the matter was urgent, nor was the matter removed from the roll.

[8] Advocate Giba, who appeared for the Applicant, argued that there existed sufficient grounds to stay the enforcement of the award in that, in his view, the mere lodging of an application for review was

sufficient cause to stay the enforcement of the award but that in any event, security had now been filed.

[9] Mr Buthelezi, who appeared for the Third Respondent, disagreed that there were grounds for the stay. He was of the view that the

Applicant’s founding affidavit suggested that the Applicant was seeking to be exonerated from filing security. However, he argued that the Applicant had not complied with the requirements as set out in City of Johannesburg v SA Municipal Workers Union on behalf of Monareng and Another[2] (City of Johannesburg), had failed to make a proper case for the stay and had failed to deal with whether security should be dispensed with or reduced. He nevertheless conceded that security had now been put up by the Applicant, however, he opined that this security did not constitute

proper security of the type contemplated in Rustenburg Local Municipality v SA Local Government Bargaining Council and Others[3] (Rustenburg Local Municipality) and Moqhaka Local Municipality v Motloung and Others[4] (Moqhaka).

Analysis

[10] The interrelation between the provisions of subsections 145(3), (7) and (8) of the LRA appears to have occupied much of our Courts’ time, who, to my mind, at a time had entered into an overly complex analysis of these sections despite, in my view, the clear purposive intention of these sections which was to retain the right of an aggrieved employer to legitimately challenge an unreasonable award or one which offended s 145 (2) of the LRA (s145(3)) whilst assuring, with the requirement of having to provide security in terms of s 145(7) and (8), that errant employers would be deterred from bringing

frivolous review applications. It is however trite that the Court has retained the discretion to waive the requirement for security or reduce the quantum thereof.

[11] If one has regard to the security put up by the Applicant, it is self-evident that the purported instrument does not constitute security at all. The undertaking in the document declares:

‘NOW THEREFORE I the undersigned Ndumiso Xhakaka, on behalf of the Applicant, confirm that the Applicant is held firmly bound to the First Respondent….. to discharge for and on behalf of the Applicant the sum of R643 895.76…….including any increase the First Respondent would have been entitled to….’

[12] The instrument then has annexures attached which surprisingly do not deal with whether the Applicant is financially sound or capable of meeting the quantum of the award but are in fact simple delegations of authority.

[13] At best for the Applicant the instrument may constitute an acknowledgement of debt. This certainly does not provide any comfort for the Third Respondent that she will be compensated should the review and any resultant appeal, fail. The security put up by the Applicant leaves the Third Respondent unprotected.

[14] Despite the fact that it may be accepted that some State institutions are struggling financially this does not excuse them from either making out a case for being absolved from putting up security or to put up satisfactory security.

[15] In City of Johannesburg[5], the Labour Appeal Court gave short shrift to the proposition that State enterprises, who are subject to the Public Finance Management

Act[6] (PFMA) and municipalities, who are subject to the Municipal Finance Management Act[7] (MFMA) are automatically excused from putting up security. The Labour Appeal Court agreed with the decision in Rustenburg Local Municipality[8] that –

‘... [T]he provisions of the PFMA, MFMA and related legislation cannot serve as a basis to exonerate any government departments or municipalities… as employers, from having to provide security under s 145(7) and (8) of the LRA, in order to secure a stay or suspension of the execution or enforcement of an arbitration award, pending a review application…’

[16] In Rustenburg Local Municipality and Moqhaka, the Courts dealt with what constitutes satisfactory security, namely –

1. A bond of security put up by a bank;

2. A deposit into an attorney’s trust account and a bond of security put up;

3. A deposit into a Sheriff’s Trust account;

4. A deposit into the Labour Court’s account;

5. A pledge or other hypothecation of movables or immovables provided that the value of the asset and any depreciation thereof would have to be considered and taken into account.

[17] The rejection of the Applicant’s security is not the end of the matter. This Court has a discretion to determine or prescribe the form of security to be provided. Given that the Applicant has applied to review and set aside the award, the Applicant would suffer irreparable harm should it not be afforded an opportunity to provide security to the satisfaction of this Court, and it later emerges that underlying causa for the review are removed.[9]

[18] I am of the view that despite the Third Respondent’s complaint regarding delays and the Applicant being aware of what was required of them, a compromise can be struck in this matter.

[19] The compromise would be to grant a short stay of the enforcement of the award and reasonable time be given to the Applicant to furnish proper security in the form of a security bond.

[20] In my view, the protection and balancing of the parties’ respective rights would be achieved by the order which I give.

[21] In the premises, the following order is made:

Order

1. The Applicant’s non-compliance with the rules governing time periods and service is condoned and the matter is heard as one of urgency.

2. The enforcement of the award issued by the Second Respondent under case no PSHS 297-23/24, dated 5 July 2024, is hereby stayed.

3. The stay in paragraph 2 above is conditional upon the Applicant providing a bond of security in compliance with section 145(8)(b) of the Labour Relations Act 66 of 1995, that is for the full amount of the compensation due to the Third Respondent, by no later than 31 January 2025.

4. Should the Applicant fail to provide the security as provided for in paragraph 3 above, the stay as ordered in paragraph 2 shall fall away.

6 The costs of these proceedings are reserved for determination by the Court hearing the review.

A Prior

Acting Judge of the Labour Court of South Africa

Appearances:

For the Applicant:

Adv Giba

Instructed by:

State Attorney, KwaZulu-Natal, Durban

For the Third Respondent: Mr Buthelezi Attorney of T S Buthelezi Incorporated Attorneys

[1] Act 66 of 1995, as amended.

[2] [2019] ZALAC 54; (2019) 40 ILJ 1753 (LAC) at para 8.

[3] [2017] ZALCJHB 261; (2017) 38 ILJ 2596 (LC).

[4] [2016] ZALCJHB 401; (2017) 38 ILJ 649 (LC).

[5] City of Johannesburg supra at para 21.

[6] Act 1 of 1999, as amended.

[7] Local Government: Municipal Finance Management Act 56 of 2003.

[8] Rustenburg Local Municipality supra at para 41.

[9] See: Bhekani Abantu Services (Pty) Ltd v Johan Redelinghuys and Others [2024] ZALCJHB 102; (2024) 45 ILJ 1242 (LC) at para 28.