Potgieter v Samancor Chrome Limited t/a Tubatse Ferrochrome (J 155/2021) [2022] ZALCJHB 146; (2022) 43 ILJ 2091 (LC) (13 June 2022)

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Reportable

Case No: J 155/2021

In the matter between:

DIRK WILLEM POTGIETER

Applicant

and

SAMANCOR CHROME LIMITED t/a

TUBATSE FERROCHROME

Respondent

Heard: 3 June 2022

Delivered: 13 June 2022

(In view of the measures implemented as a result of the Covid-19 outbreak, this judgment was handed down electronically by circulation

to the parties' representatives by email. The date for hand-down is deemed to be on 13 June 2022.)

JUDGMENT

PRINSLOO, J

Introduction

[1] The dispute between the parties has a long history, which provides context to the current application.

[2] The Respondent employed the Applicant as a project superintendent. He was dismissed on 24 October 2006, following allegations of misconduct. The Applicant referred an unfair dismissal dispute to the

Metal and Engineering Industries Bargaining Council, where he successfully challenged the fairness of his dismissal. An arbitration

award was issued on 25 June 2008 wherein the Applicant’s dismissal was found to be procedurally and substantively unfair and the Applicant was awarded maximum compensation. The Respondent reviewed the arbitration award, which application was dismissed and the arbitration award was not interfered with.

[3] The Applicant, not satisfied with the limited relief of compensation only, appealed the Labour Court’s decision. On 12 June 2014, the Labour Appeal Court (LAC) upheld his appeal and reversed the Labour Court’s decision dismissing the review application. The LAC replaced it with the following order:

‘2.1. The award of the commissioner is reviewed and set aside and replaced with the following order:

(i) The dismissal of the employee was substantively and procedurally

unfair;

(ii) The employee is reinstated retrospectively into his position and must be paid the salary he would have received had he not been unfairly dismissed;

(iii) No order is made as to costs.’

[4] The Respondent applied to the Constitutional Court for leave to appeal against the judgment of the LAC, which application was dismissed on 3 September 2014.

[5] The Applicant reported back to work on 23 July 2015, but his employment was terminated on 30 November 2015 by mutual agreement between the parties.

[6] On 20 July 2018, the Applicant initiated a claim in this Court under case number JS532/18, in which he claimed backpay for the period 24 October 2006, being the date of his dismissal, until 12 June 2014,

being the date of the LAC order. The Applicant’s claim was quantified in the sum of R 5 152 359,41, together with

interest.

[7] The Respondent raised, as a special plea or a point in limine, the argument that the Applicant’s claim ought to have been brought by means of a writ of execution or contempt of Court proceedings. The issue was set down for determination and was to be heard by Van Niekerk J on 29 May 2020. Before the matter was heard, the parties reached an agreement which was made an order of Court. The terms of the order were as follows:

‘1. The applicant withdraws the action proceedings filed under the above case number;

2. The parties will engage with each other during the period 3 to 17 June 2020 with a view to formulating an agreed stated case pertaining to the effect of paragraph 2.1(ii) of the Labour Appeal Court’s order under case number JA71/12, insofar as it pertains to the respondent’s payment liability for the period between the date of the applicant’s dismissal and the date of delivery of the Labour Appeal Court’s order;

3. If the parties are unable to agree to a stated case by 17 June 2020, the respondent will deliver an application within 14 Court days from 17 June 2020 seeking a declaratory order pertaining to the effect of paragraph 2.1(ii) of the Labour Appeal Court’s order under case number JA71/12 insofar as it pertains to the respondent’s payment liability for the period between the date of the applicant’s dismissal and the date of delivery of the Labour Appeal Court’s order, and seeking any consequential or associated relief;

4. The parties shall approach the Court to request that it hear the matter in an expedited manner;

5. There is no order as to costs.’

[8] The parties were unable to agree to a stated case and on 10 July 2020, the Respondent brought an application for a declaration aimed at determining a dispute arising from the Applicant’s contention that the effect of the LAC’s judgment, properly interpreted, entitled him to full salary for the entire period, notwithstanding that he may have engaged in alternative employment over that period. The application was opposed and was heard on 7 December 2020.

[9] Judgment was delivered on 16 February 2021 and the order made was as follows:

‘1. It is declared that for the period between the date of dismissal of the respondent on 26 October 2006 and the date of the arbitration award of 25 June 2008 under case number MEGA14544, the respondent is entitled to be paid his full salary by the applicant, as if he was not dismissed, without any moderation or adjustment;

2. It is declared that for the period from 26 June 2008, as being the date following the reinstatement of the respondent in terms of the arbitration award of 25 June 2008 under case number MEGA14544, and the date of the order of the Labour Appeal Court on 12 June 2014 under case number JA71/12, the respondent is not entitled to be paid his full salary by the applicant, as if he was not dismissed, as such claim must still be determined and is subject to moderation and adjustment depending on damages the respondent is able to prove and any contractual defences raised by the applicant;

3. The respondent is given leave to institute a claim as contemplated by paragraph 2 of this order within 90 days of date of this order;

4. The respondent is ordered to make/disclose to the applicant any information and/or documents in the possession of or known to the applicant, of any alternative income the respondent may have earned in the period from 26 June 2008 to 12 June 2014, from any third party other than the applicant, within 90 (ninety) days of date of this order;

5. There is no order as to costs.’

[10] The Applicant sought leave to appeal against the aforesaid decision, but leave to appeal was refused on 21 April 2021 and a subsequent petition to the LAC was not successful and was refused on 3 June 2021.

The statement of case

[11] On 2 August 2021, the Applicant filed a statement of case claiming payment of salary and interest in the sum of R 8 997 198,82. The claim is for salary and interest for the period from 26 June 2008 until 12 June 2014.

[12] The Applicant’s claim is based on paragraphs 2 and 3 of the order that was handed down on 18 February 2021 under case number JS 532/18. It is evident from the statement of case that the Applicant’s understanding is that the aforesaid order made provision for him to bring a claim for payment of his salary for the period 26 June 2008 until 12 June 2014.

[13] The Applicant’s case is that his contract of employment was in existence for the period 26 June 2008 and 12 June 2014 and as such he brought a contractual claim in terms of the provisions of section 77 of the Basic Conditions of Employment Act[1] (BCEA).

The Respondent’s special plea

[14] The Respondent filed a statement of response, in answer to the Applicant’s statement of claim, wherein a special plea of prescription was raised.

[15] The substance of the special plea of prescription is the following:

15.1 The Applicant’s claim is for arrear salary which is claimed to have accrued each month between 26 June 2008 and the date of reinstatement, being the date of the LAC order (12 June 2014);

15.2. The debt in respect of salary became due at the end of each month

during this period, alternatively on the date that the Applicant was retrospectively reinstated (12 June 2014);

15.3. In terms of section 12(1) of the Prescription Act[2] prescription commences to run as soon as the debt is due (14 June 2014) and prescribes three years after that date (13 June 2017).

15.4. The Applicant’s initial claim for payment of the debt was

brought by way of a statement of claim under case number JS 538/18 on 20 July 2018, which was 13 months after the debt had prescribed. This claim was withdrawn in May 2020.

Prescription

[16] In Coca Cola Sabco (Pty) Ltd v Van Wyk,[3] the LAC confirmed that a reinstatement award does not cover the period between the award and its implementation. Should an employer refuse to pay an employee for the said period, then the employee has a contractual claim which is a totally different cause of action against the employer. The LAC held that as the reinstatement order only serves to revive the contract of employment, the rights and obligations of the parties would be governed by the contract of employment, Therefore, if the employee, after the reinstatement order and during the time the employer exercises its review and appeal remedies to exhaustion, tenders his services, he does so in terms of the employment contract and is accordingly entitled to payment in terms of the contract. Accordingly, the arrear salaries between the time the order is made, up to the date of implementation of the order would constitute a contractual claim. The employee would have to prove that the contract of employment is extant, that he tendered his labour in terms thereof and that the employer refuses or is unwilling to pay him in terms of the contract. In turn, the employer would have all contractual defences at his disposal.

[17] In National Union of Metalworkers of South Africa obo Fohlisa and others v Hendor Mining Supplies (a division of Marschalk Beleggings (Pty) Ltd)[4] (Hendor) Zondo J (as he then was) dealt with the question of, when an order is granted to reinstate employees and the employer does not allow such employees to work pending its appeal or application for leave to appeal, but later reinstates the employees when its application is dismissed, whether the employees’ claim for payment of wages for the period that they did not work (while the employer was pursuing its appeal) constitute a judgment debt or a contractual claim. The Constitutional Court confirmed that an employee’s claim for the payment of wages relating to the period after the grant of a reinstatement order is a contractual

claim.

[18] The position is this: a claim for reinstatement or re-employment, backpay or compensation constitutes a debt as envisaged in the Prescription Act. The applicable period of prescription is provided for in section 11(d) of the Prescription Act, which provides that a debt prescribes after three years.

[19] The Applicant’s claim in casu is a contractual claim. The claim for the period between June 2008 and June 2014, is a claim in respect of contractual debt for arrear salary and one to which the principles of prescription apply to.

[20] The question is when did prescription commence to run?

[21] On the question of when prescription of the contractual claim began to run, the Constitutional Court in Hendor held that as the contractual debts owing to the employees could not have been due before the contracts of employment had been restored,

prescription could not have started to run before the date of the restoration of the contracts. Accordingly, the employees could not have instituted legal proceedings to enforce contracts that were not in place yet as the order of reinstatement was suspended during the period that the employer was pursuing appeals. It was only upon the restoration of the employees’ contracts that they were able to institute legal proceedings.

[22] In Uitenhage Municipality v Molloy[5](Molloy) the Supreme Court of Appeal (SCA) considered when a debt was due and held that:

‘When does a debt become ‘due’ for the purpose of determining the date when prescription commences to run? The answer to that question is: “When the time arrives for the performance by the debtor of the obligation”.’

[23] In casu, the LAC judgment of 12 June 2014 restored the Applicant’s contract of employment and the contractual debt owed to him, became due and he was entitled to institute legal proceedings in respect thereof. Even if this Court were to accept that the order for reinstatement was suspended during the period that the Respondent applied to the Constitutional Court for leave to appeal against the judgment of the LAC, the application to the Constitutional Court was dismissed on 3 September 2014, when the obligation to re-instate the Applicant became a final reality.

[24] The Applicant’s claim for salary for the period between June 2008 and June 2014 is subject to a prescription period of three years, which started to run either in June or September 2014. The Applicant had to institute proceedings within a period of three years from the date on which the debt became due.

[25] It is common cause that the Applicant did not institute a claim during 2017. The first claim he instituted was filed in July 2018 and which claim was then withdrawn. A second claim for the arrear salary debt was instituted on 2 August 2021.

[26] As the provisions of the Prescription Act apply in casu and as the claim was instituted more than three years after the debt became due, the only remaining question is whether the running of prescription has been interrupted or not.

[27] Section 15 of the Prescription Act provides that the running of prescription shall be interrupted by the service on the debtor of

any process whereby the creditor claims payment of the debt. ‘Process’ refers to the specific ‘process’

described in section 15(6) of the Prescription Act and includes a petition, a notice of motion, a rule nisi, a pleading in reconvention, a third party notice referred to in any rule of court, and any document whereby legal proceedings are commenced.

[28] The SCA in Molloy held that[6]:

‘A creditor against whose claim prescription commences to run, may protect himself or herself from its consequences, by causing the interruption of prescription in terms of s 15 of the Prescription Act through the service of any “process whereby the creditor claims payment of the debt”.’

[29] The Applicant submitted that his claim is not subject to prescription as it was based on the judgment of 16 February 2021, which gave him leave to institute a claim to determine his claim for salary for the period between 26 June 2008, as being the date following the reinstatement of the respondent in terms of the arbitration award of 25 June 2008, and the date of the order of the LAC on 12 June 2014, within 90 days of the date of the said order.

[30] The judgment of 16 February 2021 did not interrupt prescription. In fact, the judgment did not deal with the issue of prescription at all, as it interpreted a judgment by the LAC and the order that was granted, was granted subject to any contractual defences to be raised by the Respondent. Such defence of course includes a special plea of prescription. An order by the Court giving leave to a party to initiate a claim, cannot and does not eliminate an accrued right of a party to rely upon prescription.

[31] In casu, the Applicant did not serve any ‘process’, as defined in the Prescription Act, claiming payment or performance from the Respondent and he did not serve any other document whereby legal proceedings were commenced within the period of three years

after the debt became due. Even the first claim instituted by the Applicant in July 2018 did not interrupt prescription as it was filed more than three years after the debt became due and payable. The Respondent has not agreed to the Applicant’s claim or conceded at any point that the debt he claims is due.

[32] The running of prescription was not interrupted and the prescriptive period elapsed in June or September 2017.

[33] In Police and Prisons Civil Rights Union on behalf of Sifuba v Commissioner of the SA Police Service and others,[7] it was held that the Court does not have a discretion if prescription is indeed established. The Court held that:

‘…It is not only an issue of punishment but also an issue of substantive law, finality, certainty, protection of the debtor and the expeditious prosecution and resolution of disputes. The Prescription Act does not give the Court a discretion. If the requirements for a plea of prescription have been established by the party taking the point then that party is entitled as a matter of right to have that plea upheld. Although this court is a court of equity, in my view considerations of equity do not come into play when all the requirements for a successful plea of prescription are established. Extinctive prescription renders unenforceable a right by lapse of time.’

[34] The SCA in Molloy[8] held that an employee cannot profit by his or her own inaction in that:

‘One of the main purposes of the Prescription Act is to protect a debtor from old claims…If creditors are allowed by their deliberate or negligent acts to delay the pursuit of their claims without incurring the consequences of prescription, that purpose would be subverted.’

[35] This Court does not have any discretion if prescription is established and I cannot but find that the Applicant’s claim became prescribed and that it is no longer enforceable.

[36] Insofar as costs are concerned, this Court has a broad discretion. In my view, this is a case where the interest of justice and fairness will be best served by making no order as to costs.

[37] In the premises, I make the following order:

Order

1. The Respondent’s special plea of prescription is upheld;

2. There is no order as to costs.

Connie Prinsloo

Judge of the Labour Court of South Africa

Appearances:

For the Applicant: Mr D W Potgieter in person

For the Respondent: Advocate A Redding SC

Instructed by:

Solomon Holmes Attorneys

[1] Act 75 of 1997, as amended.

[2] Act 68 of 1969.

[3] (2015) 36 ILJ 2013.

[4] (2017) 38 ILJ 1560 (CC).

[5] [1997] ZASCA 112; 1998 (2) SA 735 (SCA) at 739I-J.

[6] Ibid at 740C-E.

[7] 2009 30 ILJ 1309 (LC) at para 44.

[8] Molloy supra at 742H –743A