Khumalo and 50 Others v Emfuleni Municipality (J 1242/2020) [2022] ZALCJHB 260 (19 September 2022)

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case No: J 1242/2020

In the matter between:

SIZWE KHUMALO & 50 OTHERS

FIRST APPLICANT

FJ SAKOANE & 106 OTHERS

SECOND APPLICANT

and

EMFULENI LOCAL MUNICIPALITY

RESPONDENT

Heard: 3 August 2022

Delivered: 19 September 2022

(In view of the measures implemented as a result of the Covid 19 pandemic, this judgement was handed down electronically by circulation to the parties’ representatives, by email. The date on which the judgment is delivered is deemed to be 19 September 2022.)

JUDGMENT

VAN NIEKERK, J

[1] The applicants have filed what they described as a ‘dual application’ in which they seek to have a settlement agreement made an order of court in terms of section 158 (1) (c) of the LRA, and an order in terms of section 77 (3) of the Basic Conditions of Employment Act (BCEA) to the effect that the respondent be ordered to pay the applicant outstanding payments in relation to overtime, as agreed in the settlement agreement.

[2] During the course of 2014, the respondent and its employees (including the applicant) was in dispute regarding hours of work and in particular, the calculation of payment for overtime work. A facilitator was appointed who during March 2015, issued an advisory award in favour of the respondent. The award was not implemented. Later, PwC was appointed to assist in the determination of the appropriate manner in which working hours and overtime payment should be calculated. PwC is suited to their findings during September 2015, a finding rejected by the employees. The employees declared a dispute which was referred to the bargaining council. On 14 June 2017, the parties reached a settlement agreement. In terms of the agreement,

the respondent would pay the applicant amounts totaling some R52 million, as well as six months’ salary, being compensation for an unfair labour practice. The applicants aver that during August 2017, the respondent commenced making partial payments which

continued until later November 2017, when the respondent ceased paying. The applicants contend that the respondent has reneged on the settlement agreement and seek its enforcement.

[3] The application was filed on 1 December 2020, and enrolled for hearing on the unopposed motion roll for hearing on 9 March 2021. On 8 March 2021, the respondent filed a notice of intention to oppose. The application was removed from the unopposed roll, with costs reserved. On 26 May 2021, the respondent filed an answering affidavit. In the answering affidavit, the respondent disputes that it is indebted to the applicant. In particular, the respondent raises the defence of prescription. On the basis of the applicants’ averment that the last payment was made by the respondent on 7 November 2017, the respondent contends that any claim prescribed 6 November 2020. Further, the respondent contends that the parties to the settlement agreement are not the same parties to the present application and submits that the application ought to be dismissed for lack of locus standi.

[4] On 1 June 2021, the applicants’ attorneys filed a notice of objection to the late filing of the answering affidavit. On the same date, the applicants filed a replying affidavit.

[5] The respondent thereafter filed a substantive application seeking condonation for the late delivery of the answering affidavit. In this application, the acting municipal manager records that a number of employees who were part of the negotiation of settlement which led to the settlement agreement in question, are no longer employed by the

respondent, and that it had been difficult to conduct the consultations necessary for the preparation of the answering affidavit. The deponent further mentions that during the course of June 2021, a similar application was filed by those persons described as the second applicant in the present proceedings, under a different case number, seeking the same relief but represented by a different

set of attorneys.

[6] I turn first to the order sought in terms of section 158 (1) (c). That section reads as follows:

(1) The Labour Court may-

(c) make any arbitration award or any settlement agreement an order of the court.

Section 158 (1) (c) is qualified by section 158 (1A) which states:

For the purposes of subsection (1) (c), a settlement agreement is a written agreement in settlement of a dispute that a party has the right to refer to arbitration or to the Labour Court, excluding a dispute that a party is only entitled to refer to arbitration in terms of section 22 (4), 74 (4) or 75 (7).

[7] In Maryka Greef v Consol Glass (Pty) Ltd (2013) 34 ILJ 2835 (LAC), the Labour Appeal Court held that the correct approach to be followed when considering applications such as the present is this:

…A settlement agreement that may be made an order of court by the Labour Court in terms of s 158 (1) (c) must (i) be in writing, (ii) be in settlement of a dispute (i.e. it must have as its genesis a dispute); (iii) the dispute must be one that the party has the right to refer to arbitration, or to the Labour Court for adjudication, in terms of the LRA; and (iv) the dispute must not be of the kind that a party is only entitled to refer to arbitration in terms of s 22 (4) or s 74 (4) or s 75 (7). Those kinds of disputes are excluded…

[8] What is significant about the wording of section 158 (1) (c) is that it does not oblige this court to make any settlement agreement an order of court. In other words, even if the agreement satisfies the criteria set out in the subsection, the court retains a discretion to determine whether to make the agreement an order of court. In other words, there may well be facts or circumstances that militate against making a settlement agreement an order of court.

[9] In SA Post Office Ltd v Communication Workers Union on behalf of Permanent Part-time Employees (2014) 35 ILJ 455 (LAC), the Labour Appeal Court held that the purpose of making a settlement agreement an order of court is to enforce compliance with the agreement. The agreement must therefore be unambiguous and unequivocal and not open to any dispute. The overriding principle is that each case must be decided on its own facts, so as to satisfy the demands of the law and fairness. I do not understand this to mean that the court must grant orders for the sake of enforcement. This is particularly so when the terms of the settlement agreement are unclear or contested. To grant an order of enforcement in these circumstances would simply generate further litigation, since the inevitable response of the successful applicant will be to file an application to hold the respondent in contempt. Given the threshold to be met to hold a party in contempt of court, it is unlikely that a mala fide intention to refuse to comply with the order will be discerned where the dispute between the parties concerning the settlement agreement is a genuine dispute about its terms or application.

[10] In the present instance, even if I were to disregard the answering affidavit on account of what is by any standard a poor application for condonation for its late filing, there are a number of unsettling features that attach to the application. I refer first to the terms of the settlement agreement itself. The agreement is concluded between ‘Fusi J Sakoane and 106 others’ and the respondent. Annexure A to the agreement lists 106 employees, one less than the total number of employees described. The agreement records that the applicants have referred an unfair labour practice dispute to the bargaining council, and that the settlement is made in respect of that dispute. The definition of unfair labour practice contained in section 186 (2) of the LRA does not include in its scope a dispute about the calculation of working hours and overtime. These are quintessentially disputes that stand to be resolved in terms of the BCEA, either by way of a claim in contract or result to the enforcement mechanisms that are established by that Act. I fail to understand in these circumstances on what basis the bargaining council entertained the referral, and on what basis the settlement agreement appears to have been concluded under its auspices. Further, the agreement itself provides that it should be made an order of the bargaining council. I assume by this that the parties intended to have the agreement made an arbitration award in terms of section 142A. There is no reference in the papers to any attempt by either party to have the settlement agreement made an arbitration award, nor is there any explanation for the failure to invoke the terms of the agreement itself to enforce compliance with its terms. Further, the agreement makes provision for payment of a contingency fee to the applicants’ attorneys. Clauses 4.4 and 4.5 of the agreement provides that a total of 25% of the gross amount due and payable to each applicant will be paid to Sihunu Attorneys, an amount totaling more than R13 million. This amount is agreed to be payable to the attorneys over and above agreed legal costs in the sum of R 236 000. Finally, clause 6 of the agreement provides that in the event that either party commits a breach of the agreement, the aggrieved party shall institute action against the defaulting party to claim specific performance, alternatively damages. There is no explanation as to why the applicants have not sought the contractual remedies for which the agreement provides.

[11] Turning to the merits of the application itself, there is a great deal of confusion concerning the identity of the applicant. The first applicant is cited as “Sizwe Kumalo and 50 others’. The deponent to the founding affidavit, Kumalo, records that he and the ‘other subsequent applicants’ who are listed in an annexure to the affidavit, were part of a settlement agreement reached between the respondent and ‘FJ Sakoane and 106 others’. Kumalo then states that for the purposes of the application ‘FJ Sakoane and 106 others shall be referred to as the second applicant’. The second applicant is indeed cited as ‘FJ Sakoane and 106 others’, it would appear as an entity that is party to the

settlement agreement and with no reference as to who exactly the ‘106 others’ might be, and how many of them are included in the ‘Kumalo and 50 others’ described as the ‘first applicant’. The explanation proffered by the applicants in the replying affidavit is puzzling. Sizwe Khumalo is the deponent to the founding affidavit. In the replying affidavit, he refers to himself as the ‘first applicant’ and states that ‘subsequent applicants and myself are part of the settlement agreement between Fusi J Sakoane and Emfuleni Local Municipality’. As I have indicated, ‘Fusi J Sakoane and 106 others’ appear not to be individuals who seek relief under the umbrella of the ‘Second Applicant’. This appears to be no more than a reference to the settlement agreement, and its description of the parties to it. In the absence of any party representing the individual applicants and acting on their behalf, the individual applicants ought properly to have been cited in their individual capacities, each seeking to have the settlement agreement enforced. The confirmatory affidavits attached to the founding affidavit do not make matters any more clear.

[12] Further, the relief sought by the applicants is curious. On the one hand, they seek to have the settlement agreement made an order of court in terms of section 158 (1) (c) of the LRA; on the other hand, they seek an order for outstanding overtime payments in terms of section 77 (3) of the BCEA. In regard to the latter, the claim is not framed in contractual terms – it is simply a claim for enforcement of a settlement agreement brought under the guise of a claim concerning a contract of employment. There is no reference to any contractual term that is sought to be enforced by way of specific performance, nor is there any particularity as to the basis of the claim by reference to time worked and remuneration claimed. To the extent that the applicants appear to suggest that the terms of the settlement agreement were expressly incorporated into their individual contracts of employment, no proper case to this effect is made out in the founding affidavit. In any event, the claim under section 77 (3) is brought by way of motion proceedings. Section 77 (3) does no more than confer concurrent jurisdiction on this court, with the civil courts, to entertain disputes that concern contracts of employment. Ordinarily, a contractual claim for remuneration ought

to be referred to the court by way of a statement of claim. That is not to say that this court is not empowered in appropriate

circumstances to entertain a claim by way of notice of motion but in the present instance, motion proceedings are wholly inappropriate.

[13] A further difficulty faced by the applicants are the averments contained in paragraph 5.1.3 of the founding affidavit. The deponent avers that after the settlement agreement was concluded, in January 2018, the South African Municipal Workers union submitted a petition recording the applicants’ dissatisfaction with the implementation of the settlement agreement. A meeting was held, and it would appear that the respondent ‘agreed that it will implement the calculated amount to the value of R15 million with effect from 7 April 2018’. Without further explanation, this would appear to constitute a novation of the settlement agreement, thus extinguishing the terms of that agreement.

[14] In summary, having regard to all of the relevant facts and circumstances, I am not persuaded that the court ought to exercise a discretion in favour of the applicants by making the settlement agreement an order of court. There are simply too many unanswered questions and anomalies in relation to the settlement agreement itself, and the basis of the applicant’s claim as far as that can be ascertained from the founding affidavit is not clearly articulated. The application thus stands to be dismissed on the basis that the applicants have failed in the founding affidavit to make out a case for the relief they seek. It is not necessary for me in these circumstances to make any ruling in relation to the application for condonation for the late filing of the answering affidavit, or to consider any of the defences raised by the respondent in its opposition to the application.

[15] Finally, in relation to costs, the court has a broad discretion to make orders for costs according to the requirements of the law and fairness. This is not a matter where an order for costs is appropriate; on the requirements of the law and fairness are best met by each party paying its own costs, including the costs of 9 March 2021 when the application was removed from the roll.

I make the following order:

1. The application is dismissed.

André van Niekerk

Judge of the Labour Court of South Africa

APPEARANCES

For the Applicants:

D Tsotetsi

Instructed by:

Holomo Rapapali Attorneys

For the respondent:

E Sithole

Instructed by:

Madhlopa & Thenga Inc