Employment law update – Union’s liability to members for negligence

June 1st, 2013
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Food and Allied Workers Union v Ngcobo NO and Another (SCA) (unreported case no 353/12, 28-3-2013) (Ponnan JA and Plasket AJA)

By Moksha Naidoo

This was an appeal from a judgment of the KwaZulu-Natal High Court in which Swain J, in the matter of Ngcobo NO and Another v Food and Allied Workers Union [2012] 10 BLLR 1035 (KZD), ordered the appellant to pay damages in the amount of R 107 232 to each respondent, with interest at the prescribed rate running from 28 August 2004 to date of final payment. The respondents cross-appealed, arguing that the quantum awarded should have been doubled.

Background

At the time the respondents were retrenched by their employer, Nestlé, they were members of the appellant trade union, the Food and Allied Workers Union (FAWU).

Subsequent to their dismissals, FAWU, on behalf of the employees, referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration. An official from FAWU attended the conciliation process set for 18 June 2002, but the matter could not be settled and a certificate of non-resolution was issued. It is trite that, in terms of the Labour Relations Act 66 of 1995 (LRA), FAWU had 90 days from such time to refer the dispute to the Labour Court for adjudication.

After the conciliation process, the respondents visited the offices of FAWU on numerous occasions inquiring about the progress of their matter and on each occasion were informed that the matter was lodged and pending before the Labour Court. In May 2003 the respondents sought the assistance of a university law clinic, which, having inquired into the respondents’ matter, advised them that their dispute had not, to date, been referred to the Labour Court.

It was only in November 2003 that FAWU wrote a letter to the respondents informing them of this fact and further advising that a condonation application needed to be made. In April 2004, having consulted its attorney, FAWU advised the respondents that they had weak prospects of success in their case and two months later advised them that it would not proceed with their matter in the Labour Court.

In response to this, the respondents sought legal advice, and a letter on behalf of the respondents was sent to FAWU demanding that it, within two weeks, bring a condonation application on behalf of the respondents, failing which the respondents would institute a claim for damages against it.

FAWU failed to comply with the demand, resulting in the respondents filing a claim against the union.

The SCA

In the majority judgment, the Supreme Court of Appeal (SCA) noted that the respondents’ claim was one based in contract and not delict. It therefore became necessary for the court to establish what contractual obligation, if any, FAWU had failed to discharge.

The SCA held that the contract between the parties was one of mandate. Once FAWU accepted its mandate, which was to take the necessary steps to have the respondents’ labour dispute determined in accordance with the LRA, it was obliged to act faithfully, honestly and with care and diligence.

Once this was established, the SCA addressed the contention advanced by FAWU that, being a trade union, ‘a less exacting standard’ was expected of it as compared to that of an attorney. In dispelling this notion, the SCA approved and followed the dictum in Mead v Clarke 1922 EDL 49, which reads:

‘Voet (XVll.1.9.) points out that, where a man has expressly or tacitly professed to have business capability, he ought not to have undertaken an affair for which he was not qualified and in which he knew or ought to have known that his own lack of skill would be damaging to the interests of his principal.’

On the merits, the court held, at para 47:

‘In our view, the mandate given to FAWU was a relatively simple one – it was to take such steps as were necessary to have the respondents’ labour dispute with their employer determined in accordance with the provisions of the LRA. That it could easily have done. FAWU committed breaches of its mandate. It did so, in the first place, by failing to timeously refer the respondents’ dispute with Nestlé to the Labour Court and, in the second place, by failing to secure condonation for that failure. In both instances it failed to act honestly or diligently.’

This, according to the court, altered the respondents’ unconditional right to have their dispute adjudicated to a right that was subject to the Labour Court first having to grant condonation before their matter could be heard.

In confirming the legal principle that ‘a contracting party cannot liberate himself from a contract by reason of his own breach’, the SCA further rejected the argument that the respondents’ failure to themselves apply for condonation placed a bar on instituting civil action against FAWU.

In deciding the quantum of damages to award, the SCA had to further consider whether or not the respondents would have been successful in their claim at the Labour Court.

The court examined the evidence of a Nestlé employee who was at the time ‘intimately involved in’ the restructuring process. Among the concessions he made were:

  • He did not know whether the respondents were consulted as part of the retrenchment process.
  • The respondents were not offered vacant positions as alternatives to their dismissals.

On these and other grounds, the SCA upheld the court a quo’s findings that the respondents’ dismissals would have been both substantively and procedurally unfair.

In deciding how to quantify the damages, the SCA took various factors into account when determining what was just and equitable for both parties under these circumstances, and confirmed the quantum ordered by the court a quo.

Both the appeal and cross-appeal were dismissed, with the appellant ordered to the pay the respondents’ costs.

Note: Unreported cases at date of publication may have subsequently been reported.

Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

This article was first published in De Rebus in 2013 (June) DR 58.