Prescription can it be stopped

23 March 2016 - Case in point

 BACKGROUND / COMMON CAUSE FACTS

1. Here the Arbitration Award awarded the Employee twelve months salary in compensation BUT had it prescribed?
2. The Arbitration Award was dated 16 April 2012 and provides for an order of a purely monetary amount; and sets out that the Applicant herein was to comply therewith by paying that amount “within 21 days, less any statutory deductions.” The CCMA works with ordinary calendar days and as the Arbitration Award was meant to be complied with twenty one (21) days from the date of the Arbitration Award (16 April 2012) the Applicant was meant to comply with the Arbitration Award by or on 08 May 2012 at the latest.
3. The Applicant (Company) brought a Review Application on 22 May 2012 which was within the forty two (42) day period for launching a Review Application. The Review Application is in the Court file.
4. On 22 May 2012 the Third Respondent applied for the certification of the CCMA Award. On 15 June 2012 the Arbitration Award was varied by the changing of the name of the Third Respondent and the changing of the amount in words to correspond with the amount in figures as set out in the Arbitration Award.
5. On 05 July 2012 a writ of execution was issued by the above Honourable Court.
6. On 25 October 2013 the Applicant brought an urgent application under J 2427/13 was brought to stay the enforcement of the Arbitration Award pending the outcome of the Review Application.
7. On 29 October 2013 the above Honourable Court per the Honourable Acting Justice Prinsloo (as she then was) granted an Order inter alia staying all steps in the execution of the writ of execution pending the outcome of the Review Application.
8. The Order also sets out that the Order the Applicant was “to serve and file its Rule 7A (6) and (8) notices and record of the arbitration proceedings by no later than 5 November 2013, failing which this order will lapse.”
9. The Applicant then served and filed its Rule 7A (6) and (8) notices and record of the arbitration proceedings as per the Order.

PRESCRIPTION – APPLYING THE FACTS TO THE LAW

1. The Applicant was meant to comply with the Arbitration Award by or on 08 May 2012 at the latest and therefore the Arbitration Award prescribed on 08 May 2015. Even if one takes the date of the Variation Ruling being 15 June 2012 three (3) years have prescribed since such date and as such the Award has prescribed.
2. To reiterate the Arbitration Award, whose status has not changed, and for which the Third Respondent has failed to apply for the status of same to be changed has prescribed in that an arbitration award prescribes three (3) years after the date upon which it was meant to be complied with.
3. The Court Order of 29 October 2013 stayed the writ of execution, nothing more. The status of the Award was not affected thereby. Further as set out prescription is a fact and / or point of law and is not interrupted by an Order staying a writ of execution.

PRESCRIPTION AND HOW IT APPLIES TO AN ARBITRATION AWARD

1. In terms of Section 11(c) of the Prescription Act, [Also see] a debt prescribes after a three (3) year period.
2. Section 14 of the Prescription Act under the heading “Interruption of prescription by acknowledgement of liability” provides:

‘The running of prescription shall be interrupted by an express or tacit acknowledgement of liability by the debtor.’

1. Section 15 of the Prescription Act[Quick guide to the Prescription Act] under the heading "judicial interruption of prescription" provides:

‘(1)        The running of prescription shall, subject to the provisions of subsection (2), be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt.

(6)        For the purposes of this section, 'process' includes a petition, a notice of motion, a rule nisi, a pleading in reconvention, a third party notice referred to in any rule of court, and any document whereby legal proceedings are commenced.’

1. Accordingly in terms of Section 15 (1) of the Prescriptions Act, the running of prescription shall be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt.
2. “Process” as contemplated in Section 15(1) of the Prescriptions Act, is defined in Section 15 (6) of the Prescriptions Act to include “a petition, a notice of motion, a rule nisi, a pleading in reconvention, a third party notice referred to in any document whereby legal proceedings are commenced”. [Section 15(6) of the Prescriptions Act 66 of 1969.]
3. An application by the Third Respondent in terms of section 158(1) (c) would have stayed prescription. [See the case of Metrobus (quoted below) and the case of Lekhoeneha v Minister of Police (JR2422/14) [2016] ZALCJHB 3 (8 January 2016)] . The mere lodging of an application in terms of Section 158(1) (c) of the LRA is sufficient to stay prescription of the arbitration award.
4. In terms of Section 15(6) of the Prescriptions Act, an Application in terms of Section 158(1) (c) of the LRA is considered a “process” within the meaning of the Prescriptions Act and therefore acts to stay the running of prescription.
5. In the case of 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) 37 ILJ 413 (LAC); [2016] 1 BLLR 24 (LAC) (6 November 2015). (hereinafter referred to as “the Metrobus case”)Metrobus case the LAC considered three cases and set out that only a LRA Section 158 fitted the bill of a process and that the mere bringing of such an application stayed prescription. To quote from the case:

[41]       In my view any arbitration award that creates an obligation to pay or render to another, or to do something, or to refrain from doing something, does meet the definitional criteria of a ‘debt’ as contemplated in the Prescription Act. 

[42]       Generally, arbitration awards pertaining to unfair dismissals, in which compensation and/or reinstatement, with or without back pay are awarded, shall constitute ‘debts’ as contemplated in the Prescription Act.

 [56]      In terms of section 10(1) of the Prescription Act, subject to the provisions of Chapters III and IV of that Act, a debt shall be extinguished by prescription after the lapse of the period which, in terms of the relevant law, applies in respect of the prescription of such a debt.

[57]       Section 12 of the Prescription Act stipulates when prescription begins to run and provides, in essence, in section 12(1) that prescription commences to run as soon as the debt is “due”.

When is the debt “due” in respect of an arbitration award made under the LRA?

[58]       A debt is due “when the time arises for the performance by the debtor of the obligation…”

[59]       The inception of prescription in respect of such awards depends on the wording of the award. It will generally be clear in respect of the time for the performance by the debtor of the obligation(s) embodied in it. The debt embodied in, or represented by the award, is generally due, unless the award provides otherwise, upon the issue or handing down of the award. The general position will thus be that a person or entity in whose favour it is made may immediately, unless the award provides otherwise, claim satisfaction of the debt embodied in the award.

[60]       Section 143(3) of the LRA provides that an arbitration award may only be enforced in terms of section 143(1), i.e. as if it were an order of the Labour Court, if the director has certified that it is an arbitration award as contemplated in section 143(1).

[61]       The question that immediately arises, with particular reference to the appeals before us, is whether the certification, contemplated in section 143(3) of the LRA, affects the inception of prescription in respect of the award, or more particularly, whether the lack of certification of an award means that the award, or more specifically the “debt” embodied in the award, is not due.

[62]       The certificate is merely required to enforce arbitration awards as if they were orders of the Labour Court. But compliance with the award is not delayed pending certification. Performance by the debtor of the obligation(s) embodied in the reward is not dependent upon, or subject to, the certification contemplated in section 134 of the LRA.

[63]       Certification therefore has nothing to do with whether the award is due or not, but is part of the process of executing an award as if it is an order of the Labour Court.

[64]       We were not specifically addressed on whether the issue of a warrant of execution on the strength of a certified award interrupts the running of prescription in respect of the award. It is however a feature of the Cellucity appeal and requires to be dealt with, albeit, very briefly. In terms of section 143 of the LRA, properly construed, a warrant of execution may be issued on the strength of an award for the payment of money (i.e. ad pecuniam solvendam). Although this may be a necessary step to obtain satisfaction of the award, it does not interrupt the running of prescription in respect of the award, because it is not a “process” as envisaged in section 15 of the Prescription Act, which deals with the judicial interruption of prescription. In order for it to constitute the “process” envisaged in that section, it must result in a “final judgment”, because the section provides that in order for the “process” to effectively interrupt prescription, the creditor must “successfully prosecute his claim under the process in question to final judgment”. 

[65]       Section 13 of the Prescription Act deals with the delay in the completion of prescription in certain circumstances. In my view, it does not apply here. The reliance by some of the parties before us on section 13(f) of the Prescription Act, which provides that there would be a delay in the case where “the debt is the object of a dispute subjected to arbitration” is misplaced. This is because an arbitration award itself is the debt, but is not the object of the dispute subjected to arbitration. The arbitration award is the final outcome of the arbitration and it replaces the original debt which was the object of the dispute subjected to arbitration.

[66]       Section 14 of the Prescription Act provides that prescription of a debt shall be interrupted by an acknowledgment (be it tacit or express) of liability by the debtor. The application of the section does not require consideration here because of the facts of the appeals before us. However, the appeals require us to consider the application of section 15 of the Prescription Act which deals with the judicial interruption of prescription. 

The interruption of prescription

[67]    The questions that arise for determination in this regard are whether an application to make an arbitration award made in terms of the LRA, an order of court, interrupts prescription and, also more importantly, whether an application to review an arbitration award made and issued in terms of the LRA (i.e. before 1 January 2015) interrupts prescription of the arbitration award.

[68]    Section 15(1) of the Prescription Act provides that the running of prescription shall, subject to the provisions of section 15(2), “be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt”. It is important to note that for the prescription to actually be interrupted, the creditor must “successfully prosecute his claim under the process in question to final judgment”. If he does not and the debtor does not acknowledge liability, prescription shall not be deemed to have been interrupted.

[75]    In any event, it has long been recognised in our law that a creditor cannot “by his conduct postpone the commencement of prescription.” Thus a creditor cannot by his own conduct in bringing a review application, interrupt or postpone the running of prescription in respect of the award, unless the law provides otherwise, as is the case under the amendment.

[76]       An application to make an arbitration award an order of court could however be construed as a “process whereby the creditor claims payment of the debt”. It is the substance rather than the form of the application that matters. By bringing such an application, the creditor is in effect asking the court to order the debtor to pay the debt (represented by the award).

[77]       The application to make an award a court order will interrupt prescription by its mere service on the debtor. But for it to actually and effectively interrupt prescription, the creditor will have to prosecute his claim under that process to final judgment.

[78]       In argument, counsel pointed to the fact that where a review is pending, the Labour Court is not likely to make the award an order of court. That may be the case, as was discussed by the Labour Court in Rotolabel and POPCRU obo Sifuba, amongst others, but there is nothing preventing a debtor to, at any time after the issue of the arbitration award, and before its prescription, bring an application to make such an award an order of court. (My underlining) 

1. In the recent case of Compass Group SA (Pty) Ltd v Chris Van Tonder [Case No: JR 260/13 Delivered: 2 March 2016] Steenkamp J. approved of the above quoted paragraph 78 of the Metrobus case as quoted above. Steenkamp further found that he was bound by the Metrobus He sets out: 

“[19]      The upshot is that the employee has been deprived of an award of R228 000. I am not persuaded that justice has been served. The law is, in this case, an ass; but I am reluctantly forced to hand down an asinine judgment.”

1. It can be argued that a LRA Section 158 (1) (c) application is similar to an application for liquidation of a company in that in both applications you are applying for a change in status.
2. In an application for liquidation the status of the Company changes upon the institution of the application, this is seen to be the commencement of liquidation. [See Section 348 of the Companies Act (Act 61 of 1973) which sets out that the date of liquidation is the date when the application is presented (filed)]. Similarly where an LRA’s section 158 (1) (c) application is launched that too changes the status of the Award so that prescription is effectively stopped.
3.  The Third Respondent (obo the Employee) argued in its opposing papers and in its heads of argument that the notice of opposition to the Urgent Application stayed prescription.  

•  At Court I argued that: 

1. The Third Respondent sets out that the notice of opposition in the urgent application stayed prescription –
2. The Third Respondent fails to set out for how long it stayed prescription. Even if it stayed prescription it stayed prescription for a brief period which was until the Urgent Order was handed down.
3. Notice of opposition – not provided for in the Labour Court Rules as such there is no need for it. As such it cannot stay prescription.
4. The urgent application was finalised already with the order – no further step was done. Further prescription, if it was stayed, was only stayed for a number of days.
5. The Labour Court does not enforce Awards the CCMA does, Judge President Waglay pointed this out to me in the matter of Technikon Pretoria v Zak Gordon Fatagodien JA 15 / 2012[Mentioned in the Post Office caseSouth African Post office Ltd v CWU obo Permanent Part-Time Employees (CA 15/12) [2013] ZALAC 20; (2014) 35 ILJ 455 (LAC); [2013] 12 BLLR 1203 (LAC) (28 August 2013)] it makes awards into orders of court which can then be enforced JP Waglay set out to me that the Labour Court only acts to change the status of the Award (via a section 158 process whereby the Applicant seeks a change of status by making the Award an Order of Court) whereas in an urgent application it acts to stay the enforcement of the CCMA process of enforcement and same is only stayed pending the Review Application which itself does not stay prescription. The Third Respondent has admitted that the prescription point be decided first yet it also seeks to set out that the notice of opposition in the urgent application which caused the writ to be stayed pending the review application acted to stay prescription – this makes no sense.
6. To rephrase: if the Applicant’s prescription point is upheld the Review will not be decided and as such the stay of the writ will continue to exist forever.
7. Should the Review be denied then the Third Respondent can act in terms of the writ of execution but that too has prescribed. A writ of execution becomes stale after a year.
8. The notice of opposition even if it is a process is not a process whereby the Creditor acts to claim the debt owed to him or her.
9. The process must be a process of launching or commencement of proceedings. 

Judgment 

1. The Judge in an ex-temporare Judgment found that the Award had prescribed, the Review was moot (and as such he dismissed same). In respect of costs he found that despite the various delays that were mostly caused by the Applicant that this was not an appropriate matter to order costs.

 As such in terms of the Labour Relations Act prior to the new amendments (January 2015) only an application to make the Award an Order of Court stays prescription! Thus even a prayer for the award to be made an order of court in answering papers will not suffice, there must be a notice of motion!

Andrew Goldberg

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