Arbitral awards prescription: Considered in detail

Posted by GilesFiles | Nov 6, 2015 | 2015, Causes and defences, CCMA awards, Courts, Labour Appeal Court, Legal Practice, P Coppin, Statutes (LRL 2)-work, Words & phrases | 8

Myathaza v Johannesburg Metropolitan Bus Service (Soc) Limited t/a Metrobus; Mazibuko v Concor Plant; Cellucity (Pty) Ltd v CWU obo Peters (JA122/14) [2015] ZALAC 45; [2016] 1 BLLR 24 (LAC) (6 November 2015) per Coppin JA [CJ Musi JA and Makgoka AJA concurring]

The Labour Appeal Court heard three appeals concerning a similar legal point and allowed the appeal in the Cellucity matter but disallowed the other two appeals.

LAC summary:

Prescription of arbitration awards – applicability of the Prescription Act to arbitration awards prior to the 2015 amendment of the LRA – different schools of thought –

Held-Prescription Act applicable to arbitration awards made in terms of the LRA regardless of whether it is a compensatory or reinstatement award with or without back-pay. Court finding that an arbitration award under the LRA is not a judgment debt under the Prescription Act but a debt subject to a three-year prescriptive period. –

Held that the debt encompassed in the award is due, unless otherwise indicated in the award upon delivery of the award and regardless of whether it is certified. –

Held that the running of the prescription is interrupted by the process whereby the creditor claims payment for the debt and that final granting of the order necessary for the interruption to be successful.

Held that a review application and a warrant of execution do not interrupt prescription whereas an application to make an award an order of court does.

8 Comments

GilesFiles on November 10, 2015 at 10:54 am

The LAC overturned the judgment of Rabkin-Naicker J in Cellucity (Pty) Ltd v Cwu obo Peters
[2014] 2 BLLR 172; (2014) 35 ILJ 1237 (LC).
GilesFiles on November 13, 2015 at 3:14 pm

Section 145(9) of the LRA – too little, too late?.
Weekly Comment by Prof Darcy du Toit in IR Network published by LexisNexis [subscription required].

Just over a year ago, in CEPPWAWU obo Cyril Le Fleur v Rotolabel (Case No C 214/14, 17 October 2014) [note: also reported in [2015] 2 BLLR 147 (LC)], the Labour Court decided that an arbitration award of reinstatement is a “debt” which, if it is not enforced, prescribes (becomes unenforceable) after three years (see Weekly Comment ‘Can reinstatement orders prescribe?’ October 2014).]

Similar orders were made in Johannesburg Metropolitan Bus Service v Myathaza (unreported) and Concor Holdings (Pty) Ltd v Mazibuko (2014) 35 ILJ 477 (LC). These decisions were in line with the weight of authority. However, in Cellucity (Pty) Ltd v CWU obo Peters (2014) 23 LC 10.13.1 also reported at [2014] 2 BLLR 172; (2014) 35 ILJ 1237 (LC) the Labour Court reached an opposite conclusion, following a similar decision in Coetzee & 48 others v Member of the Executive Council of the Provincial Government (Case No C751/2008, 20 March 2013 also reported in [(2013) 34 ILJ 2865 (LC)].

Obviously, all these disputes arose before 1 January 2015 when the new section 145(9) of the LRA, stating that the launching of a review application will interrupt the running of prescription in respect of an arbitration award, took effect.

. . . .

The new section 145(9) of the LRA, supplemented by the new section 145(7) and (8), was enacted to discourage such abuse. Section 145(7) and (8) provide that a review application will not suspend the enforceability of an award unless security is furnished for its implementation. Section 145(9), as noted already, states that a review application interrupts the running of prescription in terms of the Prescription Act.

For Mr Mazibuko, Mr Myathaza and Ms Peters it comes too late. And there are numerous review applications in the pipeline, based on awards issued before 1 January 2015, where employees face the same pitfalls and employers can rely on the same devices. Hopefully the warning sounded by the LAC judgment in this matter will resonate with employees and trade unions who are at risk of being non-suited.

But also in the case of awards issued after 1 January 2015 the problem is almost the same. “Interruption of prescription”, in terms of section 14 of the Prescription Act, means no more than just that. If the running of prescription is interrupted by an acknowledgement of liability by the debtor, it provides, “prescription shall commence to run afresh from the day on which the interruption takes place”. In the case of review proceedings it means that prescription will start running from the date when the review application is launched, which must be within six weeks of service of the award.

This would have made no difference to either Mr Mazibuko or Mr Myathaza, whose applications for enforcement would still have been out of time (though by a slightly smaller margin), nor to Ms Peters, whose claim was upheld on review. The ultimate problem, perhaps, is the tension between a dispute resolution system designed to be accessible to unrepresented litigants or lay representatives and the relatively complex legal challenges which they may be faced with.
GilesFiles on January 11, 2016 at 10:48 am

AA Landman: Prescription of debt between employers and employees: Current law and the legal effect of new s145(9) of the Labour Relations Act (2016) 25:6 Contemporary Labour Law (January 2016) [subscription required]

Two recent decisions of the Labour Appeal Court (LAC) have dealt with the issue of prescription in the context of the enforcement of arbitration awards. In Hendor Mining Supplies (a Division of Marschalk Beleggings (Pty) Ltd) v National Union of Metalworkers of South Africa and Others (Unreported JA 55/2014 26/11/ 2015) The Labour Appeal Court clarified, for the purposes of prescription, the nature of debts (wages) owed to employees after an order of reinstatement.

The decision in Sizwe Myathaza v Johannesburg Metropolitan Bus Service (Soc) Limited t/a Metrobus (JA 122/14); Daniel Mazibuko v Concor Plant (JA 39/14) and Cellucity (Pty) Ltd v CWU obo Peters (CA 3/14) [2015] ZALAC 45 (6 November 2015) the LAC dealt with important aspects of the prescription of debts created by arbitration awards made in terms of the Labour Relations Act 66 of 1995 (LRA) before the 2015 amendments to the Act.

In the Namibian decision in Lisse v Minister of Health and Social Services (SA 75/2011) [2014] NASC 24 (12 December 2014) the Court made it clear that the service of an application for review by a creditor, who is obliged to review some act or omission as a step to enforcing a debt, interrupts the running of prescription. As from 1 January 2015 an application to review and set aside an award made in terms of the LRA will have the effect of interrupting the running of prescription. The abovementioned decisions as well as the legal effect of the newly introduced section 145(9) of the LRA will be discussed in this contribution.
GilesFiles on January 11, 2016 at 11:01 am

Now reported: [2016] 1 BLLR 24 (LAC)
Headnote:
Prescription – Enforcement of statutory arbitration awards – Debts embodied in arbitration awards issued prior to 1 January 2015 prescribe after three years, and prescription not interrupted by launching of review action.
GilesFiles on February 8, 2016 at 11:11 am

Reported:
(2016) 37 ILJ 413 (LAC)
GilesFiles on May 14, 2016 at 10:28 am

Prof Darcy du Toit’s Weekly Comment in IR Network published by LexisNexis [subscription required]

“Debt” redefined: What does it mean for labour law?

Excerpts

The Labour Appeal Court recently decided that an arbitration award ordering an employee’s reinstatement is a “debt” in terms of section 10 of the Prescription Act, which prescribes after three years even where the employer prevents enforcement by taking the award on review, IR Network Weekly Comment 13 November 2015. 1 The court did so in light of its interpretation of the public policy considerations applicable to prescription. What it did not do, however, was to consider the constitutional context. But in Makate v Vodacom (Pty) Ltd [2016] ZACC 13 (26 April 2016) the Constitutional Court did this and came to a different conclusion – which, it is suggested, calls for a reassessment of the prescription of reinstatement orders.
. . . . .
Its reasoning was brief. The view that “every obligation irrespective of whether it is positive or negative, constitutes a debt”, it found, was questionable even in the context of pre-Constitutional case law and unsustainable in light of section 39(2) of the Constitution (above).
The Prescription Act limits the right of access to court and, as such, must be narrowly interpreted – or, as the Constitutional Court has put it, “when legislative provisions limit or intrude upon those rights they should be interpreted in a manner least restrictive of the right if the text is reasonably capable of bearing that meaning” (para 91).
This alone puts paid to the High Court’s assumption that “debt” must be given a wide meaning, and also disposed of the Labour Appeal Court’s reliance in Myathaza [2016] 25 LAC 1.26.2 also reported at [2016] 1 BLLR 24 (LAC)on the common law principle of “legal certainty” in understanding the scope of prescription. What is essentially an issue of convenience cannot prevail over the protection of a basic right.

. . . . .
The judgment concludes:
“There is nothing … that remotely suggests that “debt” includes every obligation to do something or refrain from doing something apart from payment or delivery. It follows that the trial Court attached an incorrect meaning to the word “debt”. A debt contemplated in section 10 of the Prescription Act does not cover the present claim. Therefore, the section does not apply to the present claim, which did not prescribe” (para 93).
Applying the same reasoning to an arbitration award ordering the reinstatement of an employee, it can also be said that this does not involve “an obligation to pay money, deliver goods, or render services”. If so, the last word in the Myathaza dispute, or others like it, may yet remain to be spoken.
GilesFiles on December 14, 2016 at 6:02 pm

CONSTITUTIONAL COURT OF SOUTH AFRICA

Sizwe Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus and another and Another CCT 232/15

Date of hearing: 1 September 2016: Date of judgment: 15 December 2016
___________________________________________________________________

MEDIA SUMMARY
___________________________________________________________________

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On 1 September 2016 at 10h00 the Constitutional Court will hear an application for leave to appeal, concerning the applicability of the Prescription Act 68 of 1969 (Prescription Act) to arbitration awards.

The applicant, Sizwe Myathaza, worked for the Johannesburg Metropolitan Bus Services (SOC) Limited which trades as Metrobus (the employer) as a bus driver from 2001 and was suspended in September 2007 for alleged ticket irregularities. Following a refusal to plead guilty in terms of an agreement that the employer concluded with the South African Municipal Workers Union and the Independent Municipal Allied Trade Union (IMATU) in terms of which all employees who had been suspended for alleged ticket irregularities before 20 August 2008 could return to work, the applicant insisted on a disciplinary hearing. The employer refused the request for a disciplinary hearing and instead, charged the applicant for absenteeism without leave or permission and dismissed him on 09 July 2008.

The applicant referred an unfair dismissal dispute to the South African Local Government Bargaining Council. On 17 September 2009 the dismissal of the applicant was found to be procedurally and substantively unfair. The Commissioner ordered the applicant’s reinstatement with retrospective effect to the date of his dismissal on 9 July 2008, as well as back-pay of R90 747.86 comprising 14 months’ salary. The employer refused to reinstate him and the arbitration award was taken on review by the employer on 21 October 2009 but has to date still not been set down for hearing.

On 27 August 2013 the applicant applied to the Labour Court to have the arbitration award made an order of court in terms of section 158(1)(c) of the Labour Relations Act (LRA). The employer opposed the on the ground that it had launched an application to review and set aside the arbitration award. In addition, the employer raised in its defence that the arbitration award had prescribed as it had lapsed on 16 September 2012. The Labour Court held that an arbitration award under the LRA was a “debt” for purposes of the Prescription Act, irrespective of whether it was an award for reinstatement or compensation. Thus the Labour Court found that the arbitration award issued in favour of the applicant had indeed prescribed, and consequently dismissed his application to make the award an order of the Court.

On appeal, the Labour Appeal Court held that a review does not bar a party from applying to make an award an order of court. The Labour Appeal Court further made a distinction between awards which it held prescribed after three years and a judgment debt which only prescribes after 30 years under the Prescription Act. It further asserted that the certification of an award in terms of section 143 of the LRA and the issuing of warrant of execution does not interrupt prescription, nor turn the award into a judgment debt. Therefore, the Labour Appeal Court dismissed the application.

In this Court, the applicant submits that the Labour Appeal Court ought to have found that the Prescription Act does not apply to the arbitration awards under the LRA. The employer opposes the application for leave to appeal and the contention made by the applicant that an arbitration award is not a debt until it is certified or made an order of court. The employer further submits that a review application does not interrupt prescription.
GilesFiles on December 15, 2016 at 2:14 pm

Tension between prescription and labour relations
Although three judgments were prepared all of them support the same order but for different reasons. On appeal from the Labour Appeal Court (hearing an appeal from the Labour Court): Leave to appeal is granted and the appeal is upheld and the orders of the Labour Court and the Labour Appeal Court are set aside.

The Labour Court’s order is replaced with the following:
• The arbitration award issued on 17 September 2009 in favour of Mr Sizwe Myathaza is made an order of the Labour Court.
• Johannesburg Metropolitan Bus Services (SOC) Ltd t/a Metrobus is ordered to pay costs in the Labour Court, Labour Appeal Court and this Court, including costs of two counsel where applicable.

Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus (CCT232/15) [2016] ZACC 49 (15 December 2016)

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Arbitral awards prescription: Considered in detail

LAC summary:

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