Essence
Tension between prescription and labour relations: meaning of ‘debt’ in the context of the Labour Relations Act with its own dispute resolution systems.
Decision
Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus (CCT232/15) [2016] ZACC 49 (15 December 2016)
Judges
Significance
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.
CC summary:
Prescription Act, 1969 — Labour Relations Act, 1995 — dismissal dispute — arbitration award — section 158(1)(c) application — prescription of arbitration award
Prescription of debt — meaning of “debt” — is an arbitration award a “debt” in terms of the Prescription Act — applicability of the Prescription Act to the LRA dispute resolution system
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 15 December 2016 the Constitutional Court handed down judgment in a matter concerning the question whether an arbitration award issued in terms of the Labour Relations Act (LRA) had prescribed in terms of the Prescription Act on expiry of three years from the date on which the award was issued. The matter came before the Constitutional Court as an application for leave to appeal against a judgment of the Labour Appeal Court.
Mr Sizwe Myathaza (applicant) was employed as a bus driver by the Johannesburg Metropolitan Bus Service (SOC) Limited t/a Metrobus (Metrobus) for a period of seven years. In September 2007, Metrobus suspended him together with other bus drivers for ticket irregularities. In April 2008, Metrobus reached an agreement with two unions that represented the suspended employees. It agreed that it would not take any action against the affected employees if they pleaded guilty to the charge of irregular ticketing and accepted a final warning as a sanction. The applicant refused to plead guilty and insisted on facing a disciplinary inquiry.
The applicant did not return to work and was charged with unauthorised absenteeism and, as a result, he was dismissed. The applicant referred the dispute to the relevant bargaining council for conciliation and arbitration. At the conclusion of the arbitration, the arbitrator held that his dismissal was both substantively and procedurally unfair. Metrobus was ordered to reinstate him and pay him back pay. Metrobus failed to pay the amount fixed by the arbitrator and when the applicant reported for duty, he was sent home because Metrobus instituted a review application on 21 October 2009. But Metrobus failed to obtain a date for the hearing of that application.
In August 2013 the applicant approached the Labour Court requesting that the award be made an order of court. The application was opposed by Metrobus and they argued that the award had prescribed. The Labour Court held that the award constituted a debt for purposes of the Prescription Act and that it had prescribed on the expiry of three years from the date it was made. The applicant appealed to the Labour Appeal Court which upheld the Labour Court’s conclusion. The applicant appealed to this Court.
#1 In the first judgment (Nkabinde ADCJ, Khampepe J and Zondo J concurring), Jafta J examined both the LRA and the Prescription Act and came to the conclusion that there were fundamental differences between the Acts.
First, the judgment held that the Prescription Act envisaged civil courts as the only forums at which claims or debts may be enforced. In contrast, in terms of the LRA, the Commission for Conciliation, Mediation and Arbitration (CCMA) and bargaining councils are forums that must resolve labour disputes and do so far more expeditiously than the time taken in courts.
Second, the Prescription Act bars creditors who fail to enforce their debts by instituting legal actions within specified periods which are far longer than the periods prescribed by the LRA at pre-arbitration stage.
Third, an arbitration award constitutes an outcome in terms of which a claim or dispute is finally settled between the parties. On the other hand, apart from a judgment debt that prescribes after 30 years, the Prescription Act is designed to extinguish the right to enforce a claim that is still to be determined by a court.
Jafta J concluded that all these differences illustrate that the LRA was inconsistent with the Prescription Act. The judgment held that the inconsistency did not flow from the fact that the LRA and the Prescription Act prescribed different time periods only, but also arose from the fact that section 158 of the LRA empowers the Labour Court to make an award an order of court for purposes of enforcement. The application of the Prescription Act to such awards effectively achieves the opposite outcome. Once prescribed, an award becomes unenforceable and the Labour Court may not exercise its power to make the award an order of court. In these circumstances the Prescription Act defeats the LRA process that was specifically designed to enforce the right to fair labour practices. The judgment upheld the appeal and set aside the orders of the Labour Court and the Labour Appeal Court.
#2 A second judgment penned by Froneman J (Madlanga J, Mbha AJ and Mhlantla J concurring), agreed with the first judgment in the need for re-interpreting the Prescription Act, but differed by holding that the provisions of the Prescription Act and the LRA can complement each other and co-exist. The second judgment found that the building blocks of that re-interpretation were:
(a) The general principle underlying the Prescription Act is that the running of prescription is interrupted from the commencement of adjudicative proceedings until their final conclusion;
(b) The CCMA established under the LRA, is an “independent and impartial forum” that can resolve disputes before it by “the application of law” in terms of section 34 of the Constitution;
(c) The initiation of proceedings before the CCMA under the LRA amounts to the commencement of adjudicative proceedings that interrupts prescription under the Prescription Act; and
(d) The review of an arbitration award under the LRA fulfils the same role in the finalisation of court proceedings as an appeal does in cases heard by the Labour Court.
It also found that the meaning of “debt” must be in closest harmony to the demands of section 34 of the Constitution. Further, the present case falls under a debt however narrowly interpreted. This approach does not contradict the majority in Makate, which found other types of obligations may constitute debts, only rejecting the broad construction of “debt” as defined in Desai.
With respect to the third judgment, the second judgment disagreed that the interpretation of legislation in conformity with the Constitution under section 39(2) of the Constitution infringes separation of powers.
In summation, the second judgment agreed with the order proposed in the first judgment.
#3 In a separate judgment (third judgment) in which Jafta J concurred, Zondo J concurred in the first judgment and provided additional reasons why the Prescription Act does not apply to the LRA dispute resolution system concerning dismissal disputes. He analysed various provisions of the Prescription Act, in particular, sections 11, 14 and 15. The third judgment highlighted, among others, the following difficulties that arise if one attempts to apply the Prescription Act to the LRA dispute resolution system concerning dismissal disputes.
For Chapter III of the Prescription Act to apply to the LRA dispute resolution system concerning dismissal disputes, one would have to say that the form used to refer a dismissal dispute to the conciliation process is a “process whereby legal proceedings are commenced” and is required to be served on the debtor in order to interrupt the running of prescription because that is what the Prescription Act recognises as the process for interrupting prescription. It cannot be said that the referral form is a process whereby legal or court proceedings are commenced because it is a first step towards the conciliation process and the conciliation process does not constitute legal or court proceedings.
Furthermore, it is clear from a reading of section 15 that the proceedings recognised by the Prescription Act as capable of interrupting the running of prescription are proceedings that end with a court judgment. The conciliation process does not end with a judgment.
Accordingly, the third judgment concluded that an arbitration award is not a judgment as contemplated in section 15. Zondo J held that the LRA dispute resolution system concerning dismissal disputes is a special dispute resolution system with its own prescribed periods within which various steps must be taken by those utilising it and the Prescription Act does not apply to it.
Reinstatement award still valid after 9 years
The employee was dismissed for an invalid reason on 26 November 2007. The employer ‘convicted’ her of a purported ‘assault’. But the employer failed to prove the ‘charge’ and she was reinstated with effect from 2 June 2008 with some back pay. The labour court (Basson J) reviewed the award and upheld it on 22 June 2012. In effect it was found that the employer had failed to prove the validity, let alone the fairness, of the reason for dismissal. The reason was unrelated to any conduct on the part of the employee. Without any hearing the Constitutional Court unanimously allowed her direct access and declared that the reinstatement award had not prescribed and ordered the employer to pay all the legal costs.
Mogaila v Coca Cola Fortune (Pty) Ltd (CCT76/16) [2017] ZACC 6 (2 March 2017) per the Court (Mogoeng CJ, Nkabinde ADCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J, Mojapelo AJ, Pretorius AJ and Zondo J concurring):
Excerpts without footnotes
Myathaza
[14] Metrobus employed Mr Myathaza as a bus driver. Aggrieved by a dismissal, he referred a dispute to the relevant bargaining council, which appointed an arbitrator to adjudicate. The arbitrator found that the dismissal was unfair and ordered reinstatement with retrospective effect. Metrobus was also ordered to pay Mr Myathaza back pay. But Metrobus failed to do so.
[15] When Mr Myathaza reported for work, Metrobus told him it intended to have the arbitration award reviewed. Mr Myathaza opposed the review proceedings. Those proceedings, at the time this Court heard oral argument, were still pending before the Labour Court. Mr Myathaza then applied to have the arbitration award made an order of court. Metrobus opposed the application on two grounds. First, it contended that the arbitration award could not be made an order of court whilst the review application was pending. Second, the arbitration award had, it said, in any event prescribed.
[16] The Labour Court held that the arbitration award constituted a “debt” for the purposes of the Prescription Act. On this basis, the award had prescribed and the application was dismissed. On appeal, the Labour Appeal Court upheld the Labour Court’s findings. That Court held that—
Since an arbitration award constituted a “debt” in terms of the Prescription Act, the Labour Appeal Court found that the award prescribed three years from the date it was issued. Mr Myathaza’s award had thus prescribed, and his appeal was dismissed.
[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”:
[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:
[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:
‘The arbitration award issued on 17 September 2009 in favour of Mr Sizwe Myathaza is made an order of the Labour Court.’
4. 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.”
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.
Reported
2017 3 BLLR ?; (2017) ILJ 527 (CC)
BLLR headnote
Prescription – Application to LRA disputes – Three-year prescription period set by Prescription Act, 1969 not applying because Act conflicting with LRA – Plea of prescription to block employee’s claim to enforce award after three years not permissible.