Mogaila v Coca Cola Fortune (Pty) Limited (CCT76/16) [2017] ZACC 6 (2 March 2017)

Principle:

An arbitration award does not prescribe in terms of the Prescription Act 68 of 1969 if the CCMA referral interrupts prescription, persisting until the finalisation of review proceedings.

Facts:

On 26 November 2007, after a disciplinary enquiry had found her guilty of assault, an employee was dismissed. Aggrieved, she approached the CCMA and the Commissioner found the employee's dismissal procedurally fair but substantively unfair. The award ordered Coca Cola to reinstate her with effect from 2 June 2008. Coca Cola was also ordered to pay the employee six months' back pay of R27 899.40.

On 2 June 2008, the employee applied to have the arbitration award formally certified in terms of section 143(3) of the LRA. This was a precursor to enforcing it. When she reported for work, she was informed by the human resources department that Coca Cola intended taking the arbitration award on review.On 9 June 2008, the employee was served with a copy of the review application. The Labour Court dismissed the review application. A petition to the Labour Appeal Court was dismissed on 2 October 2013.

After leave to appeal was refused, the employee's attorney informed her that she should report for duty on 4 November 2013. But on arriving at work, she was told that since the arbitration award constituted a "debt" for the purposes of the Prescription Act and she had failed to enforce it within three years after 29 April 2008, the award could no longer be implemented. It had prescribed.

In an application for direct access to the Constitutional Court, the employee sought an order that (a) the Prescription Act was not consistent with LRA; and (b) an order of reinstatement granted in her favour does not constitute a "debt" for the purposes of the Prescription Act. In addition, the employee sought an order directing Coca Cola to reinstate her to her previous employment position.

When she made this application the Court had already set down for hearing on 1 September 2016 the application of a similar case, Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus [2016] ZACC 49. By the time the employee's application was heard, the Myathaza judgment had been handed down, but it consisted of three different judgments (none of which was a majority judgment). The Constitutional Court tried to find a way of reconciling (a) one judgment which said that the Prescription Act did not apply to the LRA (and therefore Mr Myathaza's arbitration award had not prescribed) and (b) one judgment which held that the Prescription Act was not inconsistent with the LRA, but complementary to it.But the second judgment also held that commencing proceedings before the CCMA interrupted prescription in accordance with section 15(1) of the Prescription Act. This judgment also held thatonly a claim for the enforcement of legal obligations should qualify as a 'debt' under the Prescription Act.

The Constitutional Court held that, on either approach, the employee was entitled to an order declaring that the arbitration award ordering her reinstatement had not prescribed.

Extract from the judgment:

(Mogoeng CJ, Nkabinde ADCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J, Mojapelo AJ, Pretorius AJ and Zondo J concurring)

[17]   Mr Myathaza sought leave to appeal from this Court. His appeal succeeded. Three judgments were delivered. The first, penned by Jafta J, with Nkabinde ADCJ, Khampepe J and Zondo J concurring, held that the Prescription Act was incompatible with the provisions of the LRA. In interpreting section 16 of the Prescription Act, the first judgment found that in the context of the Constitution, "inconsistency" was to be afforded a meaning wider than contradiction or conflict. Relying on this Court's decision in Mdeyide, the first judgment held that "[i]t is enough if there are material differences between [the two pieces of legislation]".

[18]   Based on the fundamental differences between the LRA and the Prescription Act, the first judgment concluded that the latter did not apply to the LRA. The result was that Mr Myathaza's arbitration award had not prescribed. In a statement that was additional to the judgment's basis of decision (obiter), the first judgment further held that, even if the Prescription Act were to apply, Mr Myathaza's reinstatement award could not prescribe because it did not constitute a "debt" for the purposes of the Prescription Act. This was because the order of reinstatement was "not an obligation to pay money or deliver goods or render services by Metrobus to the applicant".

[19]   In a judgment concurring with the approach of Jafta J, Zondo J wrote separately to underscore why the Labour Court and the Labour Appeal Court were mistaken in their approach (third judgment). The third judgment buttressed the first judgment's finding that the Prescription Act was not applicable to LRA matters. It disagreed that a referral of a dismissal dispute to the CCMA interrupted prescription since that could occur only by the service on the debtor of the process contemplated in section 15(1) read with subsection (6) of the Prescription Act.

[20]   The third judgment in addition concluded that an arbitration award did not constitute a "debt" for the purposes of the Prescription Act.

[21]   The second judgment in Myathaza was penned by Froneman J, with Madlanga J, Mbha AJ and Mhlantla J concurring. The second judgment held that the Prescription Act was not inconsistent with the LRA, but complementary to it. It found that the provisions of the two statutes are capable of complementing each other in a way that best protects the fundamental right of access to justice, whilst at the same time preserving the speedy resolution of disputes under the LRA.

[22]   After finding the two statutes consistent, the second judgment examined the meaning of "process" and "debt" in section 15 of the Prescription Act. It held that commencing proceedings before the CCMA interrupted prescription in accordance with section 15(1) of the Prescription Act.

[23]   In determining whether a claim for unfair dismissal under the LRA constitutes a "debt", the second judgment held that "only a claim for the enforcement of legal obligations should qualify as a 'debt' under the Prescription Act". An unfair dismissal claim sought to enforce three possible kinds of legal obligations, namely reinstatement, re-employment and compensation. This meant it was a "debt", because each of those obligations "enjoins the employer to do something positive":

"In the case of reinstatement, as was claimed and ordered here, it means the resuscitation of the employment agreement with all the attendant reciprocal rights and obligations. The employer must provide employment and pay remuneration. Both fall within the meaning of a 'debt' under the Prescription Act, however narrowly interpreted."

[24]   Since the service of process initiating the CCMA dispute resolution process interrupted prescription, prescription remained interrupted until any review proceedings seeking to nullify the CCMA outcome were finalised:

"The restriction to review only provides a cogent and compelling reason for re-interpreting the Prescription Act to include statutory reviews under section 145 of the LRA as included in the judicial process that interrupts prescription until finality is reached under section 15 of that Act. The restriction infringes the right of access to courts more severely than where a right of appeal is allowed. An interpretation that best protects the right of access should be preferred. That can be achieved by allowing the right of review to play the same role of finality as the right of appeal does in ordinary matters."

[25]   The referral of the dispute to the CCMA interrupted prescription, which remained interrupted until the finalisation of the review proceedings. Hence the second judgment found that Mr Myathaza's arbitration award had not prescribed and, like the first and third judgments, that the appeal should succeed.

[26]   The order the Court in Myathaza unanimously granted read thus:

  1. "Leave to appeal is granted.
  2. The appeal is upheld.
  3. The orders of the Labour Court and the Labour Appeal Court are set aside and that of the Labour Court is replaced with the following:
  4. 'The arbitration award issued on 17 September 2009 in favour of Mr Sizwe Myathaza is made an order of the Labour Court.'
  5. Johannesburg Metropolitan Bus Services (SOC) Ltd t/a Metrobusis ordered to pay costs in the Labour Court, Labour Appeal Court and this Court, including costs of two counsel where applicable."

Analysis

[27]   Because of the parity of votes in Myathaza, in which none of the judgments secured a majority, no binding basis of decision (ratio) emerges from the Court's decision. But, on either approach, that of Jafta J and Zondo J, or that of Froneman J, Ms Mogaila is entitled to an order declaring that the arbitration award ordering her reinstatement has not prescribed. She is entitled to secure its certification under section 143(3) of the LRA, and its enforcement under section 143(1).

[28]   Whether the arbitration award in her favour could not have prescribed because the Prescription Act does not apply at all to LRA matters, as the first and third judgments held (or because, even if that statute were applicable, the reinstatement order was "not an obligation to pay money, deliver goods or render services"), or because, as the second judgment held, the CCMA referral interrupted prescription, persisting until the finalisation of the review proceedings in October 2013, Ms Mogaila must succeed.

[29]   On the second judgment's approach, the arbitration award would have prescribed only in October 2016. Ms Mogaila filed her application in this Court timeously, in April 2016. Prescription was therefore interrupted, again, pending the finalisation of these proceedings. On either approach, Ms Mogaila is entitled now to proceed with the certification of the award under section 143 of the LRA.

[30]   Ms Mogaila has been successful before this Court and there is no reason why costs should not follow.

Order

[31]   The following order is made:

  1. The application for direct access is granted.
  2. It is declared that the order of reinstatement in favour of the applicant, Ms Maria Jane Mogaila, under arbitration award LP7202-07, has not prescribed in terms of the Prescription Act 68 of 1969.
  3. Coca Cola Fortune (Pty) Limited is ordered to pay costs in this Court.