South African Transport And Allied Workers Union and Another v Scopeful 21 t/a Maluti Bus Service (JR1487/12) [2014] ZALCJHB 290 (30 July 2014)

REPUBLIC OF SOUTH AFRICA

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

JUDGMENT

Not Reportable

Case no: JR 1487/12

SOUTH AFRICAN TRANSPORT AND ALLIED

WORKERS UNION First

Applicant

M MASITENG Second

Applicant

and

SCOPEFUL 21 t/a MALUTI BUS SERVICE Respondent

Heard: 5 September 2013

Delivered: 30 July 2014

TLHOTLHALEMAJE, AJ

Introduction:

[1] The Applicants approached the Court to seek an order that an arbitration award issued on 29 July 2008 be made an order of Court in terms of the provisions of section 158 (1) (c) of the Labour Relations Act (The LRA). The Respondent opposed the application on the grounds that the arbitration award had prescribed in terms of the provisions of the Prescription Act 68 of 1969.

Background:

[2] The background facts to this application are fairly common cause. The Second Applicant (Masiteng) was dismissed on 3 April 2008. A dispute was referred to the South African Road Passenger Bargaining Council and was arbitrated on 19 May 2008 and 1 July 2008. An award was issued on 29 July 2008 in terms of which the arbitrator found that the dismissal of Masiteng was substantively unfair. It was ordered that he should be reinstated with effect from 11 August 2008 and that he should be paid from the date of dismissal. On or about 12 August 2008, Masiteng tendered his services and was told that the Respondent was considering an application to review the arbitration award.

[3] The Respondent had then filed an application for review on 17 September 2008, which application was opposed by the Applicant. There were problems in securing the record of proceedings and the parties had engaged in a process of reconstructing that record. Ultimately, a Rule 7A (8) notice was filed on 18 October 2010, and the Respondent had recorded that it stood by its notice of motion without any amendments. On 7 December 2010 the Respondent delivered its replying affidavit and the parties then delivered their respective heads of argument.

[4] On 16 February 2011 the Respondent delivered a notice requesting that the review application be set down for a hearing on an opposed motion roll. This was done and the matter was accordingly enrolled for hearing on 15 December 2011. Notwithstanding the set-down date, on 2 December 2011 the Respondent withdrew its review application. The Applicants’ attorneys of record had thereafter repeated Masiteng’s tender of services pursuant to the arbitration award and the Respondent refused to comply with the award.

[5] Six months after the Respondent had withdrawn the review application, the Applicants had launched the present application to make the award an order of Court. On 19 June 2012, the Respondent delivered its answering affidavit in which it raised the defence of prescription.

The submissions:

[6] The Respondent’s case was that any claim that Masiteng had arising from the arbitration award issued on 29 July 2008 became

prescribed and he was no longer entitled to enforce it. It was argued that the Applicants should have pursued the award that had been granted in Masiteng’s favour and he should have either certified and executed, or made the award an order of Court prior to the prescription thereof on 28 July 2011.

[7] It was further submitted on behalf of the Respondent that the review application did not stay the execution or certification of the award, nor did it bar the Applicants from applying for an order in terms of section 158 (1) ( c) of the LRA. It was further contended that the Applicants had waited for three years and eleven months after the date of the arbitration award to take steps and to bring this application. To this end, it was submitted that the award became prescribed and the Applicants’ case should be dismissed.

[8] The Applicants’ submissions were as follows:

8.1 The Prescription Act does not apply to the application to make the arbitration award an order of court. In this regard, reliance was placed on the provisions of section 210 of the LRA[1] and the savings clause contained in section 16 (1) of the Prescription Act[2].

8.2 The mechanisms prescribed by the LRA for the referral of disputes about unfair dismissals are inconsistent with the provisions of Chapter III of the Prescription Act.

8.4 The running of prescription was interrupted by the Respondent’s express or tacit acknowledgement of liability. If it were found that Chapter III of the Prescription Act did not apply and that the ‘debt’ was the arbitration award, the running of prescription was interrupted in terms of section 14 (1) of the Prescription Act.

The legal principles:

[9] One of the primary objectives of the Labour Relations Act is the expeditious resolution of labour disputes, hence the time frames

contained and specified throughout Chapter VIII of that Act. It would however appear that in making provision for these time frames, it did not occur to the drafters of the LRA that disputes do not end at the point of the issuing of an award, despite the provisions of section 143 (1) of the LRA[3].

[10] The LRA does not prescribe any time periods for which arbitration awards remain enforceable. Furthermore, it is silent in regard to the time frames relating to the enforcement of arbitration awards by means of proceedings in terms of section 158(1)(c) and certification under section 143(3) of the LRA. Thus it was left to dismissed employees in possession of favourable awards to ensure that they either approached this Court or the CCMA in terms of these provisions, and hopefully timeously so. Where employees failed to act on those favourable awards, the risk has always been there that their claims may be deemed to have prescribed in the light of the LRA being equally silent on the applicability of the provisions of the Prescription Act.

[12] In terms of the Prescription Act, 68 of 1969 (the Act), a debt is extinguished (prescribes) after the relevant period provided for by law for that debt. In Mpanzama v Fidelity Guards Holdings (Pty) Ltd[5] the Court held that the provisions of the Prescription Act apply to the provisions of the LRA, and arbitration awards had the status of a ‘debt’. Thus the principles applicable to a debt also apply to an arbitration award. This approach was followed by the Honourable Molahlehi J in PSA & another v CCMA & others[6], who having referred to Mpanzama with approval also held that arbitration awards are considered "debts" in terms of the Act, and prescribe after three

years. There are other judgments of this Court that have followed a similar approach[7].

[13] On the other side of the divide are decisions which hold the view that the Prescription Act finds no application in awards issued by the CCMA or Bargaining Councils. In Cellucity (Pty) v CWU OBO Peters[8] and also in Coetzee & 48 others v The Member of the Executive Council of the Provincial Government & Others[9], the Honourable Rabkin-Naicker J had held in both matters that the Prescription Act was incompatible with the architecture of the LRA. The rationale behind this view was inter alia that there was a strong case on public policy grounds to find that prescription does not apply to unfair dismissal claims under the LRA, and that the application of the Prescription Act to LRA claims would create inequalities between litigants using different routes for their disputes and furthermore will be unworkable where disputes move between tribunal and the Court and vice versa[10].

[14] The Honourable Chetty AJ (as he then was) in Circuit Breakers Industries v NUMSA & others[11] was constrained to agree that an award of compensation constituted a ‘debt’ for the purposes of the Prescription Act. He however held a different view when it came to an award of reinstatement, on the basis that reinstatement is the primary remedy

in the case of an unfair dismissal, and it could have never been the intention of the legislature to make the remedy of reinstatement open to being up-ended by a plea of prescription[12].

[15] The adverse consequences of the application of the Prescription Act to arbitration awards have been eloquently addressed by the Honourable Rabkin-Naicker J in Cellucity (Pty) (Ltd) and also in Coetzee & 48 others. It cannot be doubted that the Prescription Act is incompatible with public policy, and creates unintended and iniquitous consequences for vulnerable employees in possession of favourable awards. Given the fact that the finalisation of matters in this Court may be delayed for a variety of reasons, the application of the Prescription Act affords opportunities to employers who seek to frustrate employees in possession of favourable awards by launching review applications even in circumstances where they are clearly unwarranted and have no prospects of success. The matter before this Court is a case in point.

[16] In this case, the Respondent upon receipt of an adverse award had timeously filed an application to review that award. Due to no fault on the part of either party, the construction of the record of arbitration proceedings took longer than necessary, but that record was ultimately filed some two years after the review application was filed. The employer even went to the extent of obtaining a set-down date. Having obtained a date, the employer had 13 days before the set-down date, withdrawn the application. In my view, there is a fine line between the right of a party to approach the Court with a review application, and a clear abuse of that right with the sole purpose of frustrating an employee in possession of a favourable award. This case represents an abuse of that right, and words cannot describe such conduct other than to say that it completely goes against the grain of fair labour practices and fair litigation.

[17] Inasmuch as the conduct of the employer in this case (i.e. of instituting and withdrawing review proceedings three years later)

causes revulsion and should be viewed as repugnant to fair labour practices and be frowned upon, the employee, duly assisted by his attorneys of record cannot be said to be less blameworthy. Legal practitioners who appear regularly in this Court are or should be aware that matters before this Court may take longer than anticipated. Be that as it may, and with that knowledge, employees

still fail to make a counter application in terms of section 158 (1) (c) of the LRA when opposing review applications. Other than seeking this order, nothing prevents employees from approaching the CCMA in terms of the provisions of section 143 of the LRA application to seek certification of that award. In National Union of Metal Workers of South Africa (NUMSA) v Espach Engineering[13], it was held that these processes fall within the ambit of section 15(6) of the Prescription Act and are available to the successful employee even though the employer may have filed a review application. The same views were expressed in Police & Prisons Civil Rights Union obo Sifuba v Commissioner of the SA Police Service & others[14] , where the Court held that:

“Until the arbitrator’s award is made an order of Court, the applicant’s right to enforce the award therefore prescribes within three years of the publication of the award.”

[18] In a nutshell, nothing prevents an employee from utilising the provisions of sections 143 and 158 (1) (c) of the LRA as a cautionary measure, pending a review application. This is even more apposite in circumstances where a review application may be unsuccessful or withdrawn. Notwithstanding the iniquitous consequences of the application of the Prescription Act to arbitration awards, in the light of the lacuna in the LRA, this Court is obliged to find that the Prescription Act is applicable to such awards as a matter of law, and our views on policy considerations, fair labour practices and equity on the matter becomes secondary. It therefore follows that as a consequence of the lacuna in the LRA in regards to time frames relating to enforcement or certification, the provisions of section 210 find no application in such matters. By virtue of section 16 of the Prescription Act, those provisions are applicable in such cases as they cannot be construed to be in conflict with any matters dealt with in the LRA for the purposes of section 210. I am also in agreement with the views expressed by Musi AJ (as he then was) in Sifuba where he also held that;

‘It was also argued that it would be inequitable to punish the applicant by upholding a plea of prescription. 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 the lapse of time. See s10(1) of the Prescription Act’[15].

Was the running of prescription interrupted?

[19] An application in terms of section 158(1)(c) of the LRA constitutes ‘process’ whereby the creditor claims payment of the ‘debt’, for purposes of section 15(1), read with section 15(6), of the Prescription Act[16]. Thus if such an application is launched before expiry of the prescription period, the running of prescription will be interrupted.

The Applicants’ contention however was that prescription in this case was interrupted in a number of ways.

[20] Advocate Euijen on behalf of the Applicants had submitted that where it is found that Chapter III of the Prescription Act does apply and that the ‘debt’ is an arbitration award, the running of prescription was interrupted in terms of section 14 of the Prescription Act[17]. Reliance in this regard was placed on the decision of this Court in Aon SA (Pty) Ltd v CCMA & others[18] where the Honourable Cook AJ had held the following:

‘The debt in this matter is created by the arbitration award. The Applicant, by launching the review application, acknowledged the debt created by the award, but seeks to have the debt reviewed, corrected or set aside by the Court. I am of the view that the filing of the review application by the applicant, the debtor, amounts to express acknowledgement of liability by the applicant to the employee, the creditor. Accordingly, the running of prescription was interrupted by an express acknowledgement of liability by the debtor on 11th of November 2004’.

[21] Advocate Prinsloo on behalf of the Respondent had relied on Sifuba for the proposition that the filing of a review does not interrupt prescription as envisaged by section 15(6) of the Act[19]. The Court in that case had further held that:

“There is no legal provision that provides for the automatic suspension of the enforceability of an arbitration award by an application for review. Both s 145(3) of the Act and s 33(3) of the Arbitration Act provide that a court may, if it considers that the circumstances so require, stay the enforcement of the award pending its decision on the review of an award’.

….The mere fact that a review application is pending is not a bar to making an award an order of court.”

[22] It is my view that when a review application is launched, it can only imply that the reviewing party disputes liability, and considers itself not bound by the award. The launching of a review application in effect cannot therefore be considered an ‘acknowledgement of debt’ or ‘liability’ for the purposes of section 14 (1) of the Prescription Act. In this regard I respectfully differ with the views expressed by the Honourable Cook AJ in Aon. Furthermore, a review application does not constitute a ‘process’ for recovery of a debt, and there is consensus that review proceedings under the LRA do not automatically suspend the operation of prescription, nor does it automatically stay an award in the absence of a court order.[20] It further follows that the provisions of section 14 of the Prescription Act as relied upon by the Applicants find no application in this case.

[23] It was further submitted on behalf of the Applicants that the Respondent had expressly acknowledged liability when Masiteng

tendered his services shortly after receiving the award, and when he was advised that he should not report for duty until the finalisation

of the review application. In my view, this argument cannot be sustainable in that by the mere fact of preventing Masiteng from reporting for duty, the Respondent expressly indicated that it was disputing the award. In my view, it was more an acknowledgement of an arbitration outcome, which the Respondent stated its intention to challenge.

[24] The conclusions above are also reached in regard to the argument that the Respondent had acknowledged liability after the review

application was withdrawn and Masiteng had again tendered his services. As already pointed out, an arbitration award without a

section 158 (1) (c) of the LRA order or certification under section 143 of the LRA remains meaningless, and a tender to return to service or a demand for the employer to comply with that award in the absence of a court order or certification remains futile.

[25] The Applicants had further relied on the provisions of section 13 (1) of the Prescription Act for the proposition that in the case of an application to make an arbitration award an order of court, an extra year must be added to the normal three year prescription period. In this case, the present application was launched less than four years after the award was issued. Reference in this regard was made to Sifuba[21] and Primavera Construction SA v Government, North West Province & another [22] .

[26] The arbitration award was issued on 29 July 2008. The three year period expired on 30 July 2011. Section 13 (1) (f) of the Prescription Act deals with certain circumstances in which completion of prescription may be delayed where the creditor was not able to lodge his or her claim within the three years period because of any of the factor listed in subsection 1 (a) to (h). Section 13(1) (f) makes provision for the delay of prescription if the debt

is the “object of a dispute subjected to arbitration.”

[27] The issue whether an arbitration award prescribed after three years in terms of section 11 (d) or whether the prescription period could be extended by virtue of the provisions of section 13 (1) (f) received detailed attention in PSA obo Khaya v CCMA & others[23]. The Court, per Molahlehi J declined to follow Primavera Construction SA wherein it was held that an arbitrator’s award prescribes after four years in terms of the provisions of section 13 (1) (f) of the Prescription Act. At paragraph 22, the Court had held that the correct approach to follow was that enunciated in Murray & Roberts Construction (Cape) (Pty) Ltd v Upington Municipality[24], and concluded that prescription in terms of section 13 (1) (f) was delayed for an additional year where the debt is an object of a dispute subject to the arbitration process. The section did not envisage a situation where a debt which is the object of the dispute had already been determined through arbitration proceedings and an award issued as a result thereof[25]. I align myself with the conclusions reached by Molahlehi J in PSA obo Khaya, and moreso since the award constitutes a debt, as contemplated in section 11(d) of the Prescription Act, which means that it prescribes after three years. The arguments raied by the Applicants would have been sustainable where section 13 (1) (f) had specifically made reference to ‘the debt is the object of a dispute subjected to litigation’. In their current form, these provisions are clearly restrictive.

Conclusions:

[28] The arbitration award prescribed on or around 30 July 2011. This application to make the award an order of court was filed on 7 June 2012. By the time the application was launched the Respondent’s indebtedness arising from the award had prescribed. It follows that the award cannot be made an order of this Court. Given the circumstances of this case and inequities already referred to elsewhere in this judgment, this is one of those cases where costs should not even be considered.

Order:

i. The preliminary points raised by the Respondents are upheld.

ii. The Applicants’ application in terms of section 158 (1) (c) of the LRA is dismissed.

iii. There is no order as to costs.

Tlhotlhalemaje, AJ

Acting Judge of the Labour Court of South Africa

Appearances:

For the Applicants:

Adv N Euijen

Instructed by:

Cheadle Thompson & Haysom INC

For the First Respondent: Adv C Prinsloo

Instructed by:

Vogel Malan Attorneys

[1] This section provides: ‘210 Application of Act when in conflict with other laws (1) If any conflict, relating to matters dealt with in this Act, arises between this Act and the provisions of any other law save the Constitution or any Act expressly amending this Act, the provisions of this Act will prevail.’

[1] This section provides: ‘210 Application of Act when in conflict with other laws

(1) If any conflict, relating to matters dealt with in this Act, arises between this Act and the provisions of any other law save the Constitution or any Act expressly amending this Act, the provisions of this Act will prevail.’

[2] ‘16 (1) Subject to the provisions of subsection (2) (b), the provisions of this chapter shall, save in so far as they are inconsistent with the provisions of any Act of Parliament which prescribes a specified period within which a claim is to be made or an action is to be instituted in respect of a debt or imposes conditions on the institution of an action for the recovery of a debt, apply to any debt arising after the commencement of this Act’.

[3] An arbitration award issued by a commissioner is final and binding and may be made an order of the Labour Court in terms of section

158(1)(c), unless it is an advisory arbitration award.

[4] The proposed amendment to s 145 of the Labour Relations Act reads as follows: ‘(9) [A]n application to set aside an arbitration award in terms of this section interrupts the running of prescription in terms of the Prescription Act (Act No. 68 of 1969) in respect of the award.’

[4] The proposed amendment to s 145 of the Labour Relations Act reads as follows:

‘(9) [A]n application to set aside an arbitration award in terms of this section interrupts the running of prescription in terms of the Prescription Act (Act No. 68 of 1969) in respect of the award.’

[5] 2000 12 BLLR 1459 (LC).

[6] (2008) 29 ILJ 1546 (LC)

[7] See Sampla Belting SA (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2012) 33 ILJ 2465 (LC) and other decisions referred to in para 14 of that judgment; Chemical Energy Paper Printing Wood and Allied Workers Union and Another v Le-Sel Research (Pty) Ltd (2009) 30 ILJ 1818 (LC).

[7] See Sampla Belting SA (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others

(2012) 33 ILJ 2465 (LC) and other decisions referred to in para 14 of that judgment; Chemical Energy Paper Printing Wood and Allied Workers Union and Another v Le-Sel Research (Pty) Ltd (2009) 30 ILJ 1818 (LC).

[8] 2014] 2 BLLR 172 (LC)

[9] (2013) 34 ILJ 2865 (LC)

[10] See also Mpumalanga Gambling Board v CCMA & others (JR 46/2010), a judgment of Rabkin-Naicker J

[11] Case no: JR1958/08

[12] At para 23

[13] (2010) 31 ILJ 987 (LC). See also CEPPAWU & another v Le-Sel Research (Pty) Ltd [2009] 5 BLLR 421 (LC), where it was held that if action to enforce an arbitration award is not instituted within three years of the debt arising, the Court lacks the necessary jurisdiction to entertain the claim.

[14] 2009 30 ILJ 1309 (LC).

[15] At paragraph 44.

[16] Sampla Belting SA (Pty) Ltd v Commission for Conciliation, Mediation & Arbitration & others (2012) 33 ILJ 2465 (LC) at paras 20-22.

[17] Which provides that; ‘(1) The running of prescription shall be interrupted by an express or tacit acknowledgement of liability by the debtor. (2) If the running of prescription is interrupted as contemplated in subsection (1), prescription shall commence to run afresh from the day on which the interruption takes place or, if at the time of the interruption or at any time thereafter the parties postpone the due date of the debt from the date upon which the debt again becomes due.’

[17] Which provides that; ‘(1) The running of prescription shall be interrupted by an express or tacit acknowledgement of liability by the debtor.

(2) If the running of prescription is interrupted as contemplated in subsection (1), prescription shall commence to run afresh from the day on which the interruption takes place or, if at the time of the interruption or at any time thereafter the parties postpone the due date of the debt from the date upon which the debt again becomes due.’

[18] (2012) 33 ILJ 1124 (LC) at paragraphs 9 to 11

[19] ‘16 (6) For the purposes of this section, process 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’.

[20] SATAWU obo Phakathi v Ghekko Services SA (Pty) Ltd 2011 32 ILJ 1728 (LC)

[21] At para 33

[22] 2003 (3) SA 579 (B) at 601D-E,

[23] Case Number: P 170/05 ((2008) 29 ILJ 1546 (LC))

[24] 1984 (1) SA 571 (AD)

[25] At para 28