National Union of Metalworkers of South Africa obo Fohlisa and others v Hendor Mining Supplies (a division of MarschalkBeleggings (Pty) Ltd)[2017] 6 BLLR 539 (CC)

Principle:

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. An obligation to pay mandating from a court order is a judgment debt and should prescribe only after 30years.

Facts:

The employer dismissed the 42 appellant employees for participating in an unlawful strike. The employees referred a dispute to the Labour Court in 2007, and that court reinstated them with effect from the date of their dismissal, 1 January 2007. When the employees reported for duty, they were told that the employer had decided to seek leave to appeal against the judgment. The appeal was unsuccessful, and an attempt to appeal to the SCA suffered the same fate in September 2009.

Those employees who were still able to work reported for duty at the end of that month. The employer took them back, but refused to pay the employees the salaries they would have earned between the date on which they should have been reinstated in terms of the Labour Court's order and the date of reinstatement - a period of nearly two years.

The registrar issued a writ for recovery of the arrear wages, but the writ was set aside by the Labour Court in June 2011. Three years after the date of the Labour Court's reinstatement order, the employees sought an order from the Labour Court declaring that they were entitled to their arrear wages. The employer contended that the claim had prescribed. The court (in NUMSA and Others v Hendor Mining Supplies a Division of MarschalkBeleggings (Pty) Ltd (JS 794/03) [2013] ZALCJHB 293 (5 November 2013)) granted the order sought for the entire period for those employees who were still alive, and to the date of the deaths of those deceased, finding that the amount owing was a judgment debt, which prescribed after 30 years.

The Labour Appeal Court found, however, that the claim did not arise from the Labour Court's judgment, but rather from the reinstatement of the employment contract, and accordingly prescribed after three years (see Hendor Mining Supplies (a Division of MarschalkBeleggings (Pty) Ltd v National Union of Metalworkers of SA and others [2016] 2 BLLR 107 (LAC)). That appeal was upheld.

On further appeal to the Constitutional Court, the employees contended that the claim arose from a judgment debt, which prescribed after 30 years. The judges of the Constitutional Court were split 4 judges supporting the judgment of Madlanga J and four judges supporting the judgment of ZondoJ.

Madlanga J noted that the Labour Court's reinstatement order did not mention back pay. But, properly interpreted, the judgment implied that reinstatement was retrospective. The appellant employees were entitled to be paid from the date of the order, provided that they tendered service. However, the issue was whether the obligation to pay arrear salary emanated from the judgment. This in turn meant determining the meaning of the word "debt" in the Prescription Act 68 of 1969. A reinstatement order places obligations on both employee and employer: on the employer to accept the employee to enter into service; on the employee to present himself or herself for duty. Both obligations emanate from a judgment debt.

It follows that if reinstated employees tender services and theemployee refuses to pay back pay, the remedy is to cite the employer for contempt of court. This is not a contractual remedy. Furthermore, in his case the reinstatement order had been suspended by the employer's vain attempts to appeal. The Labour Court's order simply revived when those efforts finally proved fruitless. The employer remained bound to comply with the order from inception. The employer knowingly took the risk of delaying implementation of the order while it appealed. The obligation that arose at that stage could only have flowed from the judgment. When reinstatement eventually took place, the obligation to pay the accumulated unpaid remuneration was also reinstated.

Writing for four other justices, Zondo J agreed that the claim had not prescribed, but disagreed that the entire claim arose from a judgment debt. These justices found that wages due between 1 January (the date of dismissals) and 15 April 2007, the date of the order ("the first period") were claimable as a judgment debt, while the claim for wages between 15 April 2007 and the actual date of reinstatement ("the second period") was a contractual claim.

Turning to the second period, Zondo J noted it was clear that the Labour Court ordered the employer to pay the employees their remuneration for the first period. However, since the judgment was silent in respect of the second period, there could be no basis for the claim that the claim for remuneration for that period was a judgment debt. The Labour Court judgment ordered the employer to reinstate the employees.

The effect of the judgment hinged onthe meaning of the word "reinstate". It is now established that to reinstate means to put the employee back in the same position he or she would have been at the time of the dismissal, on the same terms and conditions. This was what the employer was required to do. Had the employer complied with the order then, it would have discharged its obligation. Had the employer not complied and the employees had launched an application for contempt, they could not have been able to point anything in the judgment that obliged the employer to pay them anything beyond the date on which the court ordered them to report for duty. Had the employer paid the remuneration for the first period, it would not have owed them anything more in terms of the judgment.

To constitute a judgment debt, the obligation that constitutes the debt must be based on a judgment or order, for which execution may be levied by the judgment creditor. A writ could have been issued for the first period, based on the Labour Court judgment. It could not have been issued for the second period.

Any dispute over payment for the second period would be a contractual dispute. The employer's lodging of an appeal did not alter this; it did not change the terms or scope of the original order. Appeals under the LRA are appeals in the strict sense: the appellate court is confined to the evidence before the court a quo and to deciding whether the judgment on appeal is right or wrong. That was all that had happened here: the dismissal of the appeal by the SCA did not alter the terms of the Labour Court's order, which required the employer to remunerate the employees only for the first period.

As far as prescription of the claim for remuneration during the second period was concerned, the date commenced running only when the employer had complied with the Labour Court order and reinstated the employees, because their claim under the restored contracts arose only at that point. This meant that when the appellant launched their application for the declaratory order in September 2012, the threeyear period of prescription had not expired. Those employees still living were able to work during that period, but could not do so because the employer declined to accept their tender. They were accordingly entitled to their remuneration, even if they had not worked.

Zondo J held that the employees alive at the time of reinstatement were entitled to payment of remuneration due during both the first and second periods, but that interest should not accrue in respect of the entire second period. The parties were advised to appoint an expert to work out the interest due, and to approach the Labour Court if they could not agree.

The appeal was upheld, the order of both the Labour Court and the LAC were set aside and the employer was ordered to pay those workers still alive their weekly wages plus benefits from 1 April 2007 to 28 September 2009, plus interest, and the estates of the deceased employees from 1 April to the dates of their deaths. The employer was also ordered to pay the appellant's costs, as well as their costs in the Labour and Labour Appeal Courts.

Extract from the judgment:

Madlanga J:

[1]   This matter arises from an employer's failure to reinstate its employees and pay the remuneration in the intervening period before eventually reinstating them. There instatement took place interim so fan order made by the Labour Court on 16 April 2007(Cele AJ's order). The employees were to be reinstated with effect from 1 January 2007. The Labour Courtal so ordered the employee store port for duty on 23 April 2007. On that day, the employees reported for duty but the employer did not take them back. What it did instead was to engage in attempts to have the order over turned through appeal processes. It was only after these attempts had failed that the employees were able to return to work. That was on 29 September 2009. Payment of remuneration for the period 1January 2007 to 28 September 2009 was not forth coming. Litigation ensued. In the main, a tissue before use whether the prescription period in respect to the unpaid remuneration is three or 30 years. The answer turns on whether the employees' claim is a judgment debt.

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[15]   It seems there should be no question that an obligation to pay mandating from a court order is a judgment debt and should prescribe only after 30years.Not according to Hendor. It argues that the obligation we are about here is not a judgment debt. That is because one cannot issue a writ for its enforcement."It is not executable without more, "says the contention. And it is not immediately executable because the amount to be paid is not quantified. This misses the point. The antecedent question is whether the obligation to make are to respective payment of remuneration is a judgment debt. That must be answered by having recourse to what "debt" means in terms of the Prescription Act.

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[21]   Do the facts that Cele AJ' s order specified that reinstatement was to be with effect from 1 January 2007 and that there sumption of duty was to be on 23 April 2007 mean that only back pay for the period 1 January to 22 April 2007 can properly be regarded as constituting a judgment debt? I think not. Viewed from 29 September 2009, back pay both before 23 April 2007 and from 23 April 2007 is a direct consequence of Cele AJ's order. It is artificial to draw a line and say the one is a judgment debt and the other not. Let me make a short analysis of the order.

[22]   Cele AJ's order did not itself reinstate the employees. Rather it ordered Hendor to do so. Although a reinstatement order places a primary obligation on the employer to reinstate, it creates an obligation interms of which an employee must first pres enter-or himself for resumption of duties. The employer must then accept her or him back in employment. These are reciprocal obligations. The employee's obligation to present her-or himself for work and the corresponding obligation to accept her or him back to work flow from the court order. On the authority of Escom, which was accepted by this Court in Makate, these obligations are each a judgment debt. As in all cases where a dispute is settled by adjudication, the judgment becomes the source of the debt, whether the judgment is viewed as strengthening the original underlying debtor novating it. It is, in the plainest of terms, a judgment debt.

[23]   If the employee presents her-or himself for work, but the employer refuses to accept her or him back, her or his remedy is not contractual. It is to bring the employer before court for contempt of court. What contempt? For not complying with the judgment debt embodied in the order to accept her or him back in to employment. The order of reinstatement cannot be a contractual debt. It is true that once the employee has presented her-or himself for work and has been accepted back, prospectively from that date there ciprocal rights and obligations of the employer and employee will be purely contractual. And the employee cannot claim remuneration or other employment benefits if she or he stops working. But the fact that there ciprocal rights and obligations are then governed by contractual principles does not mean that the original obligation to comply with their instatement order has also somehow morphed into a contractual debt. For as long as that obligation is not complied with it continues to maintain its essential nature of being a judgment debt.

ZondoJ:

[62]   I have read the judgment by my Colleague, Madlanga J ("first judgment"). It concludes that the claim is a judgment debt and has, therefore, not prescribed. I am unable to agree with the conclusion that the whole claim is a judgment debt. One part of the claim, namely, the one for wages for the period 1 January 2007 to 15 April 2007 is a judgment debt but the other part, namely, the one for wages for the period 16 April 2007 to 28 September 2009 is a contractual debt and not a judgment debt. However, I agree that the claim has not prescribed. In regard to the first part of the claim, it has not prescribed because, being a judgment debt, the prescription period applicable to it is 30years.These on part of the claim has also not prescribed but my reasons for this conclusion differ from those in the first judgment. My reasons for the conclusion that the second part of the claim is a contractual claim and that it has not prescribed are set out below.

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[99]   The next issue that arises is: what is a judgment debt and what areits features? In my view, for a debt to constitute a judgment debt,the obligation that constitutes the debt must be based on the terms of a judgment or order of court. If there is no judgment or order of court whose terms either expressly or by necessary implication say that a particular person must pay a certain amount or that obliges the debt or to pay or to do something, there can be no judgment debt.

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[204]   I agree with the order in the first judgment. That order accords with the approach taken in this judgment that there is a distinction between he claim for the period 1 January 2007 to 15 April 2007 and the claim for the period 16 April 2007 to 28 September 2009. The order contemplates that, in respect of the remuneration for the period1 January 2007 to 15 April 2007,interest is to be calculated from one date, namely, 16 April 2007 (ie the date of Cele AJ's order),whereas, in respect of the remuneration for the period 16 April 2007 to 28 September 2009, interest is to be calculated from different dates.