NUMSA and Others v Hendor Mining Supplies a Division of Marschalk Beleggings (Pty) Ltd (JS 794/03) [2013] ZALCJHB 293 (5 November 2013)

Principle:

  1. A Labour Court order is suspended pending an appeal to a higher court, and prescription of the judgment debt is interrupted until the appeal is decided. This applies to both the 'retrospective' award (wages from dismissal until the Labour Court's judgment) and the 'prospective' claim for wages (from the Labour Court's judgment until all appeals are decided).
  2. The beneficiaries of deceased employees should not be deprived of the benefits of a judgment handed down by the Labour Court simply because the employees pre-deceased that judgment.
Facts:

The employees were dismissed by the company on 18 August 2003 but reinstated on 16 April 2007 in terms of a LC judgment, retrospective to 1 January 2007. On 23 April 2007, the employees tendered their services to the company. That tender was rejected because the company elected to take the matter on appeal, first to the LAC and thereafter to the SCA. The order of the LC was suspended pending the appeals to the higher courts.

On 19 June 2009, the LAC dismissed the company's appeal against the LC judgment, and the same fate met its application for leave to appeal to the SCA on 15 September 2009. It was on that date, according to the company, that the order of the LC became immediately enforceable and so too any claim for wages which had fallen due since 1 January 2007. The company proceeded to re-employ the dismissed employees on 29 September 2009, although there were some employees who were deceased by that date. The company however refused to reinstate their wages or pay them any back pay.

The company's refusal to pay the back pay was based on a contractual defence to the claims coupled with its reliance on section 11 of the Prescription Act 68 of 1969. The company argued that the employees had to plead and prove their contracts of employment, the wages and benefits to which they were entitled and the basis on which they calculated arrear remuneration. This contractual defence was rejected by the LC. The LC also rejected the attempt to impose a prescription period on any claims arising from the court order. Unlike what happens when an arbitrator's reinstatement or compensation order is taken on review, an order of the Labour Court is suspended pending an appeal to a higher court, and prescription of the judgment debt is interrupted until the appeal is decided.

The court said it was illogical on the part of the company to accept that the order of the Labour Court (reinforced by the order of the SCA) is effective and binding on the parties, but to contend that the financial part of that order could not be executed upon unless a properly constituted contractual claim was instituted within three years of the SCA order.

The Court said that when an employer processes an appeal to higher courts, it does so with full knowledge that such an approach carries with it the risk of additional financial obligations which become payable when the highest court finalises the matter, as a judgment debt rather than a contractual claim.

Extract from the judgment:
Gaibie AJ:


[12]   As indicated earlier in this judgment, the company accepts that the order of the Labour Court was suspended by operation of law pending the appeals to the higher courts. It however seeks to impose a contractual prescription period to any claims arising from that order. That approach is incongruous, if not illogical, for the reasons that follow.As indicated earlier in this judgment, the company accepts that the order of the Labour Court was suspended by operation of law pending the appeals to the higher courts. It however seeks to impose a contractual prescription period to any claims arising from that order. That approach is incongruous, if not illogical, for the reasons that follow.

[13]   The suspension of court orders is dealt with in Rule 49(11) of the Uniform Rules of the High Court [rule 49(11)] and it provides that:

'Where an appeal has been noted or an application for leave to appeal against or to rescind, correct, review or vary an order of court has been made, the operation and execution of the order in question shall be suspended, pending the decision of such appeal or application, unless the court which gave such order, on the application of a party, otherwise directs.'

[14]   The effect of rule 49(11) is that the LC judgment was suspended pending the outcome of the decision of the LAC, and thereafter the SCA. According to Harms, this rule restates the accepted common law rule that the execution of a judgment is ipso facto suspended upon the noting of an appeal, and the judgment or order is also suspended whilst an application for leave to appeal is pending before the SCA or the Constitutional Court.

[15]   In the ordinary course, an appeal from a final judgment of the Labour Court lies to the LAC, but only with leave of the Labour Court, or where such leave is refused, with the leave of the LAC. The judgment of the LAC in this matter therefore constituted the final judgment of that court. Thereafter the company applied for leave to appeal to the SCA. On 15 September 2009, that court dismissed the application for leave to appeal, and its order constituted the final order in this matter. It was in that context that the company happily contended that the judgment of the LC became fully enforceable on 15 September 2009 but sought to extricate its financial obligations emanating from that judgment with its obligations to physically re-employ the employees. It seems illogical to me to accept implicitly that the order of the Labour Court (reinforced by the order of the SCA) is effective and binding on the parties, but to contend that the financial part of that order cannot be executed upon unless a properly constituted contractual claim is instituted within three years of the SCA order.

[16]   That approach doesn't absorb the principle that when an employer notes an appeal or lodges an application for leave to higher courts, it does so with full knowledge that such an approach carries with it the risk of additional financial obligations which become fully executable at the date of the order of the highest court that pronounces on it, as a judgment debt rather than a contractual claim.

[17]   It was precisely because of that risk, that the employer in Billiton Aluminium SA Ltd t/a Hillside Aluminium v Khanyile, sought to raise a constitutional argument about the onerous and cumulative effect of a reinstatement order in matters that may sometimes take up to eight years before the matter is finally determined by the Constitutional Court. The employer in that matter raised the issue of 'systemic delays' in the determination of labour disputes that commence with the arbitration process, is thereafter dealt with in review proceedings by the Labour Court, and thereafter in appeal proceedings in the LAC, the SCA and finally in the Constitutional Court. By the time the matter was heard by the Constitutional Court, eight years had passed, and it was contended by the employer before that court that the LAC is obliged to make orders that are just and equitable, and that confirmation of an award that had the effect of backdating an employee's reinstatement for eight years was neither just nor equitable, and breached the employer's constitutional rights.

[18]   Apart from the fact that the employer had raised this issue for the first time in the Constitutional Court, and that Court was disinclined to give it leave to appeal to that court on that basis, Froneman J made pertinent findings about an order of reinstatement, its effect and the risk of an appeal process on such an order.

The nature of the reinstatement order

[19]   In articulating the nature of a reinstatement order, Froneman J cited the decision of the Constitutional Court in Equity Aviation Services (Pty) Limited v Commission for Conciliation, Mediation and Arbitration and Others, and confirmed that the judgment in that matter achieved clarity about the nature and inter-relationship between the remedies of re-instatement, re-employment and compensation provided in section 193 of the LRA. He indicated that after the Equity Aviation judgment, there can be no doubt not only that reinstatement is the primary remedy in unfair dismissal disputes but quoted the following dicta from that judgment in support of the proposition that the remedy of reinstatement is granted by virtue of an arbitration award or an order of court:

'The ordinary meaning of the word re-instate is to put the employee back into the same job or position he or she occupied before the dismissal, on the same terms and conditions. Reinstatement is the primary statutory remedy in unfair dismissal disputes. It is aimed at placing an employee in the position he or she would have been but for the unfair dismissal. It safeguards workers employment by restoring the employment contract. Differently put, if employees are reinstated they resume employment on the same terms and conditions that prevailed at the time of their dismissal. As the language of section 193(1)(a) indicates, the extent of retrospectivity is dependent upon the exercise of a discretion by the Court or arbitrator....The fact that the dismissed employee has been without income during the period since his or her dismissal must, among other things, be taken into account in the exercise of the discretion, given that the employees having been without income for that period was a direct result of the employer's conduct in dismissing him or her unfairly.'

[20]   It is apparent, in citing the dicta in the Equity Aviation matter, that the Constitutional Court in the Billiton matter reinforced the notion that the reinstatement order arises from the confines of the Labour Relations Act and is reinforced in terms of an order of Court. To the extent that the employer or the company appeals that decision, it does so with the risk that the order of reinstatement continues pending a reversal, if any, of that order by a higher court.

Accumulated financial risk in appeal processes

[21]   In dealing with the possibility of the reinstatement order carrying with it the accumulated financial burden in the event that such an order is upheld by the Supreme Court of Appeal or for that matter by the Constitutional Court, Froneman J expressly indicated that any appeal process, particularly in relation to reinstatement orders carries its own risk. In support of that view, Froneman J cited the decision of Goldstone JA in Performing Arts Council of the Transvaal v Paper, Printing, Wood and Allied Workers Union, where the learned Judge had the following to say in relation to the same issue but which emanated from the previous Labour Relations Act:

'Whether or not reinstatement is the appropriate relief, in my opinion, must be judged as at the time the matter came before the Industrial Court. If at that time it was appropriate, it would be unjust and illogical to allow delays caused by unsuccessful appeals to the Labour Appeal Court and to this Court to render reinstatement inappropriate. Where an order for reinstatement has been granted by the Industrial Court, an employer who appeals from such an order knowingly runs the risk of any prejudice which may be the consequence of delaying the implementation of the order'.

[22]   But, Froneman J also indicated, that the implementation of reinstatement orders is:

'Often also caused by rich and powerful litigants who use their superior financial capabilities to take the review and appeal opportunities available to them to the very end in the hope of wearing out an opposing litigant who may be in a less advantageous financial position. Where that does not eventuate the 'appeal risk' is one way of dealing with this use (or abuse) of the legal system'.

[23]   In other words, the possibility of paying additional back pay, pursuant to an appeal process to one or more of the higher courts, is a risk inherent in that process. The company's argument in this Court - that the 'prospective part' of the Labour Court order commencing from the period after 16 April 2007 and terminating on 28 September 2009 is subject to a properly pleaded contractual claim - is in light of the authorities quoted above not only odd but perverse. As at 15 September 2009, the effect of the SCA order, was to confirm the reinstatement order. In other words the effect of the Labour Court judgment as at 15 September 2009 is the following:

The employees are entitled to back pay from the period 1 January 2007 to 28 September 2009 as a consequence of the SCA order and constitutes a judgment debt.

Deceased employees

[24]   It is common cause that a number of the employees who were party to the proceedings in the Labour Court have since deceased. Some of them were deceased prior to the declaratory application and some prior to the judgment of the Labour Court.

[25]   In its answering papers, the company contends that the only parties that have locus standi to claim any amounts for arrear remuneration and benefits would be the executors who would have to be cited nomine officio from the outset, and that substitution would only be competent in respect of any employee who passed away subsequent to the institution of the declaratory application.

[26]   Given the view taken in this matter about the nature of the reinstatement order, there is no basis upon which the deceased employees should be deprived of the benefits of the judgment handed down by the Labour Court simply because they pre-deceased the LC judgment or the institution of the declaratory application. The declaratory application emanates from and is directly linked to the original matter and the employees are therefore entitled to bring this application and to provide for substitution of the deceased applicants, and their executors and executrixes are rightfully entitled to substitute the deceased individual employees in these proceedings. They are clearly entitled to their remuneration from the date of reinstatement until the date of their deaths, provided of course that they were party to the original dispute that was heard by the Labour Court.

[27]   Finally, in so far as the issue of costs is concerned, there is no reason why costs should not follow the result of the application.

[28]   In the circumstances, I make the following order:

  1. The respondent is ordered to pay the employees, excluding the deceased employees -
    • back pay for the period 1 January 2007 to 28 September 2009, as indicated in the first part of the schedule attached hereto;
    • interest thereon at the prescribed rate from 16 April 2007.

  2. The respondent is ordered to pay the estates of the deceased employees - upon production of letters from the administrator or the Master of the High Court and provided that they were party to the Labour Court proceedings -
    • back pay for the period 1 January 2007 to 28 September 2009, in the case of employees who were deceased after this date, as indicated in the first part of the schedule attached hereto;
    • back pay for the period 1 January 2007 to the date of their deaths, in the case of employees who were deceased prior to 28 September 2009, calculated on the basis of the information provided by the applicants (in annexure A to the founding papers), in relation to those employees who are indicated in the second part of the schedule attached hereto;
    • interest thereon at the prescribed rate from 16 April 2007.

  3. The respondent to pay the costs of this application, including the cost of counsel.