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[2007] ZASCA 54
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Tao Ying Metal Industry (Pty) Ltd v Pooe NO and Others (222/06) [2007] ZASCA 54; [2007] 3 All SA 329 (SCA); [2007] 7 BLLR 583 (SCA); 2007 (5) SA 146 (SCA); (2007) 28 ILJ 1949 (SCA) (18 May 2007)
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
CASE NO: 222/06
In the matter between :
TAO
YING METAL INDUSTRY (PTY) LTD
..........................
Appellant
and
MAY
POOE NO
..........................
First
Respondent
THE
COMMISSION FOR CONCILIATION, MEDIATION
AND
ARBITRATION
..........................
Second
Respondent
HOTELLICA
..........................
Third
Respondent
CUSA
..........................
Fourth
Respondent
THE
METAL AND ENGINEERING INDUSTRIES
BARGAINING
COUNCIL
..........................
Fifth
Respondent
_____________________________________________________________________________
Before: FARLAM, NUGENT, LEWIS,
JAFTA JJA & MUSI AJA
Heard: 8 MARCH 2007
Delivered:
18 MAY 2007
Summary: Arbitration under the
Labour Relations Act 1995
– duties of arbitrator –
function of court on review – exemptions from industrial
council and bargaining council
agreements.
The order appears at para 66
of the judgment of Nugent JA.
Neutral
citation: This judgment may be referred to as
Tao
Ying Metal Industries v Pooe NO
[2007] SCA 54 (RSA)
_____________________________________________________________________________
J U D G M E N T
____________________________________________________________________________
NUGENT JA
NUGENT JA:
[1]
This is an appeal against a decision of the Labour Appeal Court (LAC)
(Zondo JP, Nkabinde and Pillay AJJA concurring) that is
before us
with the special leave of this court.
1
It concerns
an application to review an arbitration award of a commissioner of
the Commission for Conciliation, Mediation and Arbitration
(CCMA).
The application failed in both the Labour Court (Francis J) and in
the LAC.
2
[2] The case raises
important questions concerning the role of arbitrators and that of
the courts in overseeing the arbitration process.
The
Labour
Relations Act 1995
is a carefully crafted statute. Applied in its
terms it will generally result in the just and speedy resolution of
labour disputes.
In many such disputes conciliation and arbitration
play a pivotal role. If care is taken at that stage of the process
there ought
to be little call for the intervention of the courts.
[3]
In the case of disputes that are subject to compulsory arbitration
the courts have a limited role. Their role is generally confined
to
overseeing the process by way of review to ensure that it was in
accordance with law. In proceedings for review two separate questions
arise. The first is whether the award was made in accordance with
law. The focus in that enquiry, as reiterated most recently by
this
court in
Rustenburg
Platinum Mines,
3
is not on
whether the decision of the arbitrator is right or wrong but rather
on ‘the process and on the way in which the decision-maker
came
to the challenged conclusion.’ Describing the enquiry that this
calls for Cameron JA said the following:
4
‘
The question on
review is not whether the record reveals relevant considerations that
are capable of justifying the outcome. That
test applies when a court
hears an appeal: then the inquiry is whether the record contains
material showing that the decision –
notwithstanding any errors
of reasoning – was correct. This is because in an appeal the
only determination is whether the decision
is right or wrong …
In a review the question is not whether the decision is capable of
being justified … but whether
the decision-maker properly
exercised the powers entrusted to him or her.’
[4] It is only if
the award is found not to be in accordance with law that the second
enquiry arises. The second enquiry concerns
the fate of the dispute
that was the subject of the award once the award is set aside.
Section 145(3)
authorises the court to ‘determine the dispute
in the manner it considers appropriate’ or to ‘make an
order it
considers appropriate about the procedures to be followed to
determine the dispute’. The course that a court will follow to
achieve the resolution of the dispute will necessarily depend upon
the particular circumstances. It is then that a court might consider
whether the material before the arbitrator nonetheless justified the
award.
[5]
The task of an arbitrator is a demanding one. It is made more
demanding by the absence of formality that characterises the
resolution
of labour disputes.
5
It is
important that an arbitrator, notwithstanding the absence of
formality, ensures at the outset that the ambit of the dispute
has
been properly circumscribed, even if the dispute has many facets, for
that defines the authority that the arbitrator has to make
an award.
The authority of an arbitrator is confined to resolving the dispute
that has been submitted for resolution and an award
that falls
outside that authority will be invalid. As pointed out by Mustill and
Boyd
6
in the
context of commercial arbitration (but the principle is equally
applicable to labour arbitrations):
‘
If [an
arbitrator] awards on issues which have not been left to him for
decision, he commits misconduct and may also be acting in
excess of
jurisdiction.’
The
same point was made in
Produce
Brokers
7
(cited with
approval in
McKenzie
8
):
'The binding force of an award must
depend in every case on the submission. If the question which the
arbitrator takes upon himself
to decide is not in fact within the
submission, the award is a nullity. The arbitrator cannot make his
award binding by holding contrary
to the true facts that the question
which he affects to determine is within the submission.'
[6]
An award may also not be founded on matters that occur to the
arbitrator but that the parties have had no opportunity to address.
9
That is
simply an application of the principles of natural justice, and in
particular the right to be heard, that are now formalised
in the
Promotion of Administrative Justice Act 2000
.
10
As Lord
Justice Morris said in relation to the duties of an umpire (equally
applicable to the duty of an arbitrator) in
Société
Franco-Tunisienne d’Armement-Tunis,
11
which was
applied in
Kannenberg
:
12
‘
It seems to me
that the point that occurred to the umpire was a point that would
bring about a dramatic development of the case, and
I am satisfied
that the import of it was not communicated to the shipowners’
arbitrator in such a way as enabled him to deal
with it … The
new point which appealed to the umpire … involved a complete
departure from the course followed in the
litigation up to that
moment … Clearly there was a dramatic new turn to the case if
this possible point had clearly emerged
… Whether he was right
in law is not for me to say in these proceedings. But, in my
judgment, the owners ought to have had
a real opportunity of dealing
with the new point, and of putting forward reasons for submitting
that it was wrong.’
[7] This matter has
travelled a long journey to this court and it is as well to commence
at the start so that there is clarity on
what has occurred along the
way. Before doing so it is convenient to clarify the legal context
within which the dispute arose.
EXEMPTIONS FROM
INDUSTRIAL COUNCIL AND BARGAINING COUNCIL AGREMENTS
[8]
The principal institution for resolving labour disputes under the
Labour Relations Act 1956 was a system of industrial councils.
The
parties to an industrial council (representatives of employers and
employees in the particular industry) were authorised to conclude
collective agreements
13
that could
then be imposed upon all employers and employees in the industry by
ministerial decree.
14
Typically,
the parties to an industrial council would conclude an initial
agreement, commonly referred to as ‘the main agreement’,
that would deal comprehensively with conditions of employment. That
agreement would be given legal effect in the industry by ministerial
decree for a limited period in anticipation of at least some of its
terms (particularly those relating to minimum wages) being
re-negotiated
(usually annually). Once the period of validity expired
the main agreement, subject to amendments, would then be extended for
another
limited period, and so the process would be repeated. Thus at
any time employers and employees in the industry would be bound by
the terms of the main agreement, often concluded many years earlier,
that had been periodically amended and extended.
[9]
One such agreement was the industrial council agreement for the iron,
steel, engineering and metallurgical industry. The main
agreement
that is now relevant was concluded and given legal effect in the
industry by ministerial decree in 1980.
15
It was
imposed upon the industry initially for a year and was thereafter
extended annually, subject to numerous intervening amending
agreements.
16
I will return
to it later in this judgment.
[10]
Section 51 of the 1956 Act authorised an industrial council to exempt
an employer from ‘all or any of the provisions of
an agreement
entered into by parties to an industrial council which is binding in
terms of this Act’. The terms and conditions
of an exemption
were to be incorporated in a ‘licence of exemption’
issued under the hand of an official of the council.
17
Its effect
was to ‘exempt [the employer] from the relevant provisions of
the agreement … to the extent specified in the
licence of
exemption’ and the terms and conditions incorporated in the
licence were binding upon the persons concerned.
18
[11]
The
Labour Relations Act 1995
, which replaced the 1956 Act with
effect from 11 November 1996, creates a comparable regime to resolve
labour disputes. The former
industrial councils are replaced by
bargaining councils, also comprising representatives of employers and
employees in the particular
industry, and they fulfil functions
similar to those that were formerly fulfilled by industrial
councils.
19
Collective
agreements concluded by bargaining councils may similarly be imposed
upon the industry by ministerial decree for specified
periods and are
subject to amendment and extension from time to time.
20
[12]
Employers may once more be exempted from the provisions of a
bargaining council agreement but there is this distinction: while
the
authority to grant exemptions from an industrial council agreement
was formerly conferred statutorily (by s 51 of the 1956
Act) the
1995 Act contemplates that the authority to grant exemptions from a
bargaining council agreement made under that Act will
emanate from
the constitution of the bargaining council concerned.
21
A bargaining
council agreement that is imposed upon the industry must make
provision for an appeal to an independent body from a refusal
by the
bargaining council to grant an exemption to a person who is not a
party to the bargaining council.
22
[13]
The transition from one regime to the other was provided for in
Schedule 7 to the 1995 Act. An industrial council registered
under
the 1956 Act was deemed to be a bargaining council for purposes of
the
1995 Act.
23
An industrial
council agreement that was binding on the industry immediately before
the commencement of the 1995 Act was to remain
binding (subject to
certain provisos that are not now relevant) ‘for a period of 18
months after the commencement of this Act
or until the expiry of that
agreement … whichever is the shorter period, in all respects,
as if the [1956 Act] had not been
repealed.’
24
Any person
who was bound by an industrial council agreement that continued to be
binding after the 1995 Act commenced could still
‘apply in
accordance with the provisions of s 51 of the [1956 Act] for an
exemption from all or any of the provisions of [the
agreement]’
and any such application had to be dealt with ‘in terms of the
provisions of section 51 … in all respects
as if the
provisions in question had not been repealed’.
[14] With that
statutory background in mind I turn to the events that led to the
arbitration that is now in issue.
THE EVENTS THAT GAVE
RISE TO THE ARBITRATION
[15] Botshabelo in
the Free State at one time fell within one of the so-called
self-governing states that fell outside the authority
of the
Republic. Many such areas, including Botshabelo, were not attractive
to industry. But one attraction was that industries located
in those
areas were not subject to the minimum conditions of employment that
were applicable in the Republic under industrial council
agreements.
[16] The appellant
(the company), which has a manufacturing business that falls within
the metal and engineering industry (formerly
known as the iron,
steel, engineering and metallurgical industry), was one of those that
located itself in Botshabelo. In about 1993
the company concluded a
recognition agreement with a trade union known as the Hotel, Liquor,
Commercial and Allied Workers’
Union of South Africa (the
union). From time to time the company negotiated wages and other
conditions of employment with the union
but those wages and
conditions were generally less favourable than the minimum wages and
conditions provided for in the industrial
council agreement.
[17] When Botshabelo
was again brought under the authority of the Republic its industries
automatically became subject to the provisions
of the relevant
industrial council agreements. Not surprisingly, some businesses were
not economically viable on those terms. The
bargaining council for
the leather industry was the first to enforce the terms of its
industrial council agreement with the result
that the leather
industry in Botshabelo immediately collapsed. The Department of
Labour was concerned that the same might occur in
the metal and
engineering industry and it urged the bargaining council concerned
(which replaced the former industrial council and
which I will refer
to simply as the bargaining council) to exercise caution and to
explore ways of accommodating employers and employees
so as not to
precipitate the same result.
[18]
In 1997 the
company was told by the bargaining council that it was required by
law to affiliate to it. After taking advice from a
labour broker the
company affiliated to the bargaining council in about February or
March 1997 on the understanding that it would
apply for exemptions
from the provisions of the industrial council agreement. (The
agreement that was then in force was the main
agreement of 1980 as
amended and extended from time to time.) According to a
representative of the company who gave evidence during
the course of
the arbitration, the company told the union representatives on
several occasions when they came to collect the monthly
cheque for
union dues, and told the shop stewards, that it had been required to
affiliate to the bargaining council and that it was
applying for
exemptions. The union organizer who gave evidence denied that that
the union was told of the company’s intentions.
[19] The company
applied for exemptions from the provisions of the agreement relating
to annual leave (clause 12(3)), the provisions
relating to the
payment of holiday bonus (clause 14(1)(a)), and the minimum wage
provisions (part 2). (It also applied for an exemption
from the
provisions of the pension and provident funds but that is not
relevant for present purposes.)
[20]
The members of the bargaining council could not reach agreement on
what was to be done and it appointed a committee to investigate
conditions in the companies concerned and then to make
recommendations to the council concerning the applications for
exemptions.
25
[21] Three members
of the committee (the representative of one of the unions failed to
arrive), together with the secretary of the
bargaining council,
visited the premises of the company and made various enquiries. After
lengthy deliberation the committee recommended
to the council that
the company should be excused from payment of the holiday bonus for
the annual holiday period that had just passed
(the annual holiday
closure occurs annually from mid December to early January) but not
in the future, and that it should be excused
from the three-week
leave requirement of the agreement during that closure (the company
had allowed only two weeks) but the company
should be required to
increase it to three weeks from the next annual closure. With regard
to wages it recommended that the company
be exempted from the minimum
wage provisions (contained in part 2 of the agreement) on two
conditions: first, that it did not reduce
its wages below the level
at which they then were (that they ‘retain the status quo’),
and secondly, that it increased
its wages thereafter in accordance
with the percentage increase negotiated by the bargaining council
from time to time for the industry
as a whole, commencing with the
increase that was to be negotiated during the forthcoming bargaining
session (which would be reflected
in the bargaining council agreement
that would supplant the industrial council agreement when its term
expired).
[22] The bargaining
council accepted the recommendations and granted exemptions on those
terms. The exemptions, and the terms on which
they were granted, were
recorded in four standard-form ‘licences of exemption’,
with appropriate additions, that were
issued under the hand of the
secretary of the bargaining council on 7 April 1997.
[23] It is not
necessary to deal with the exemptions relating to annual leave and to
the payment of holiday bonus (in both cases the
exemptions were
restricted to past events). The minimum wage exemption was recorded
in two standard-form ‘licences of exemption’
(from the
stock of the former industrial council). Each document recorded one
of the conditions upon which the exemption was granted.
The exemption
reflecting the condition relating to the payment of the annual
increase was in the following terms (the printed words
in the
standard form are in ordinary script and the typewritten insertions
are in bold):
‘
This
is to certify that under the powers conferred upon it the Council has
been pleased to grant exemption from the provisions of
PART
2
of
the
MAIN
agreement published under Government Notice
R1329
Dated
27
June 1980
as
amended and/or extended and/or replaced from time to time by any
succeeding Agreement and/or any amendments and/or extensions thereof
to [
TAO
YING METAL INDUSTRIES (PTY) LTD]
to
That
the national percentage increase negotiated annually be enforced on
the company with the inception of the 1998/1999 Main Agreement.
Period
from:
19
March 1997
to:
duration
of Agreement.
NOTE:
This exemption may be varied or withdrawn at any time at the
discretion of the Council.’
The reference to the
‘1998/1999 Main Agreement’ is a reference to the
bargaining council agreement that was to replace
the industrial
council agreement when the latter expired (that occurred on 14 April
1998). The other ‘licence of exemption’
was in precisely
the same terms except that the condition subject to which it was
granted was recorded as ‘status quo currently
prevailing be
retained’.
[24]
For reasons that I will come to the proper meaning of these
exemptions is of only secondary importance to this appeal but it
is
as well to deal with it at this stage. The meaning of the exemption
that the bargaining council purported to grant as reflected
in the
two documents read together is clear. It purported to exempt the
company from part 2 (the minimum wage provisions) of the
industrial
agreement that was then in force, and from the comparable provisions
of the bargaining council agreement that was to supplant
it when the
industrial council agreement expired (and any extensions or
replacements of that bargaining council agreement). Counsel
for the
union was not able to advance any other construction that would give
effect to all the language of the exemption and there
is none. No
other interpretation would be consistent with the condition upon
which the exemption was granted (that the
‘
national
percentage increase negotiated annually [would] be enforced on the
company with the inception of the 1998/1999 Main Agreement’).
But if there were to be any ambiguity in that regard (and in my view
there is no ambiguity) recourse could be had to evidence to
resolve
the ambiguity, bearing in mind that this is not a legislative
instrument but merely a recordal of the council’s decision.
The
evidence before the arbitrator established unequivocally that the
bargaining council intended the exemptions to have the effect
I have
described and that evidence was not even challenged. It is not
surprising that the evidence was not challenged because the
parties
were agreed throughout the arbitration that that was the meaning of
the exemption.
[25]
It is true, as pointed out by the LAC, that the period for which the
exemption was to endure was stated to be ‘duration
of
Agreement
’
,
which, read in isolation, might mean the duration of the agreement
that was then in force. But that would ignore the words ‘as
amended and/or extended and/or replaced from time to time by any
succeeding Agreement and/or any amendments and/or extensions
thereof’,
and the condition upon which the exemption was
granted, and the unchallenged evidence.
[26]
The LAC also found support for its construction in the presumption
that the bargaining council intended to act lawfully. It held
in that
regard that s 51 of the 1956 Act
26
permitted a
person to be exempted only from the provisions of an industrial
council agreement that was in force when the exemption
was granted.
27
I do not
think that is the correct meaning of the section. It could not have
been intended that fresh exemptions would need to be
applied for and
issued whenever the period of validity of an industrial council
expired, which in the present case was annually.
(According to the
evidence there are some 15 000 exemptions in existence in the
industry at any time.) In my view the phrase ‘an
agreement …
which is binding’ as it is used in the section refers to an
industrial council agreement that is binding
on a person then or in
the future. Any other construction would lead to an absurd result.
[27]
But in any event that approach to the construction of s 51 seems to
me to overlook something more fundamental. In acting as it
did in
April 1997 the bargaining council purported to do two things: First,
it purported to exempt the company from the provisions
of the
existing industrial council agreement. Secondly, it purported to
exempt the company from the provisions of the bargaining
council
agreement that was to replace the industrial council agreement. The
validity of its acts depended upon whether the bargaining
council
indeed had authority to perform the particular act, irrespective of
what it might have thought to be the source of its authority
(it did
not express itself on what it thought to be the source of its
authority). With regard to its decision to exempt the company
from
the provisions of the industrial council agreement that was then in
force clearly it was authorised to do so by s 51 of the
1956 Act read
together with the transitional provisions. But whether it had
authority to exempt the company from the provisions of
the bargaining
council agreement that superseded it depends not upon the
construction of s 51 (which applied only to industrial council
agreements contemplated by the 1956 Act) but rather upon whether that
was authorised by the bargaining council’s constitution.
28
The
constitution of the bargaining council is not before us (it seems
also not to have been before the LAC) and it is not possible
in the
circumstances to determine whether or not it had or lacked that
authority. But that is in any event not material for present
purposes. Where the language that is used in the document is clear,
as it is in this case, there is no need to resort to presumptions.
Apart from its use by the LAC as an aid to interpretation, the
validity or otherwise of the bargaining council’s decision in
April 1997 is immaterial to the arbitrator’s award and to the
issues that arise in this appeal.
[28]
The industrial council agreement was replaced with effect from 14
April 1998
29
by a
bargaining council agreement.
30
Not
surprisingly the bargaining council agreement largely replicated the
provisions of the former industrial council agreement (but
with an
additional significant provision that I will return to).
[29] Soon after the
bargaining council agreement took effect the union (which was not a
party to the bargaining council because it
lacked the minimum
membership required for admission) demanded that the company comply
with its minimum wage provisions (again reflected
in part 2). The
company’s standpoint, supported by the bargaining council, was
that it was exempted from those provisions by
the exemption that had
been granted in April 1997. On 5 November 1998 the union lodged a
dispute with the CCMA against both the company
and the bargaining
council.
[30]
It is not ordinarily the function of the CCMA to enforce or resolve
disputes concerning bargaining council agreements. That is
generally
the function of designated agents of the bargaining council
31
(enforcement)
or the bargaining council itself.
32
The
bargaining council agreement contained a procedure for the resolution
of disputes ‘concerning the interpretation, application
or
enforcement of the agreement’, which envisaged conciliation,
followed if necessary by arbitration by an arbitrator appointed
by
the bargaining council.
33
It seems that
at the time the dispute in this matter arose the bargaining council
had not yet been accredited to resolve disputes,
34
and the
parties considered the CCMA to be the appropriate body to do so in
the circumstances.
35
(Whether that
was correct is not necessary to decide.)
[31] In the
standard-form document that is completed when a dispute is referred
to the CCMA the union recorded that the nature of
the dispute was the
company’s ‘failure to comply with minimum wages and
conditions [in terms of] Metal and Engineering
Industries Bargaining
Council’, and that the outcome it required was the company’s
‘compliance with minimum wages
and conditions [in terms of]
bargaining council agreement’ and a ‘prohibition of
unilateral exemptions by bargaining
council’.
[32]
Those cryptic statements do not disclose precisely what was in
dispute,
36
but that
emerged later when the arbitration commenced, and I will deal with
that more fully below. For the moment it is sufficient
to say that
the effect of the exemptions (that they exempted the company from the
provisions of the bargaining council agreement
that replaced the
industrial council agreement) was never in dispute. On the contrary,
it was agreed that that was the effect of
the exemptions. What was in
dispute was rather whether the exemptions had been validly granted.
The union contended in that regard
that the exemptions had been
granted without prior consultation with the union and for that reason
they were invalid. (That is why
the bargaining council was cited as a
party to the dispute, and why an order was sought prohibiting the
bargaining council from issuing
‘unilateral exemptions’.)
[33]
When conciliation failed the dispute was referred to arbitration
under the auspices of a commissioner of the CCMA (who is cited
as the
first respondent in this appeal).
37
In the
standard-form document requesting arbitration the union recorded that
the issue in dispute was ‘application of collective
agreement’,
and the decision it sought from the arbitrator was ‘agreement
of bargaining council to be applied’.
[34] At the outset
the arbitrator considered an objection by the company and the
bargaining council to her jurisdiction. She rejected
the objection
but she also ruled that the bargaining council ‘may not be a
party to the dispute’. (Why that ruling was
made is not now
material.)
[35] The arbitration
resumed on 18 January 2000. The union was represented by an attorney
and the company was represented by counsel.
I have pointed out that
the cryptic statements in the standard-form documents did not reveal
precisely what was in dispute. But the
nature of the dispute emerged
from the opening statements of the union’s attorney, in which
he formulated the dispute that
the arbitrator was called upon to
resolve as follows:
‘
In
1997 … an exemption was granted [from adherence to] all these
minimum conditions or minimum requirements set by the council.
It
is our case [that] this exemption was granted unilaterally by the
council without negotiations with trade union or employees thus
making these exemptions granted improperly granted.
It will be shown to you that the employees of Tao Ying are earning
way under the minimum wages, they are not receiving the appropriate
yearly increments, and they are not receiving other benefits as per
the collective agreement of the Bargaining Council. Our request
today
to you will be to find in favour of the applicants and to order that
the respondent comply with the collective agreement’
(my
emphasis).
What the union’s
attorney meant by his assertion that the exemptions were ‘improperly’
granted, as appears from
the heads of argument that he later filed,
was that they were invalid in law because they had been granted
without consultation with
the union. It was on those grounds that, at
the conclusion of the arbitration, he sought an order from the
arbitrator that the exemptions
‘be declared null and void’.
[36] As if to avoid
any uncertainty as to what was in dispute the union’s attorney
went on to say the following (after counsel
for the company had said
that he intended leading evidence to show that the union had ample
opportunity to be heard before the exemptions
were granted):
‘
[I]t
seems from what my learned friend has indicated the only issue
basically in dispute might be today the granting of the exemption
[as] such and the manner in which it was granted, that I perceive to
be the only issue in dispute mainly, I don’t know if my
learned
friend wishes to add anything else, because
we
are in [agreement] that
there is a Bargaining Council agreement, that there are the minimum
wages prescribed, and that
there
was an exemption given to these minimum wages.
So in an effort not to prolong the arbitration proceedings with
[unnecessaries] I do not wish to, you know, confine my learned friend
in any way, but I’m just enquiring is that not perhaps the only
issue that is in dispute and that is what needs be led evidence
on
from both the parties?’
That was confirmed
by counsel for the company, subject to what he called another
‘jurisdictional point’ that was to be
argued at the end
of the arbitration but that is not now material. (Needless to say,
the attitude of the company and its counsel
throughout was that the
exemptions applied to the bargaining council agreement, for otherwise
it would have had no grounds to avoid
submitting to its provisions.)
[37]
Thus it is clear that it was accepted by both parties that the
exemptions were still operative at the time of the arbitration.
Indeed, as appears from the extract above, the parties were in
agreement that ‘there is a Bargaining Council agreement, that
there are the minimum wages prescribed, and that there was an
exemption given to these minimum wages’. The only dispute
between
them, which the arbitrator was called upon to resolve, was
whether the exemptions were invalid for failure on the part of the
bargaining
council to consult the union. Presumably that was also the
dispute that was subjected to conciliation (there is no evidence to
suggest
that it was not) because otherwise the arbitrator would have
lacked jurisdiction to conduct the arbitration at all.
38
[38] That dispute
was not capable of being resolved by arbitration and the proceedings
were fruitless from the start. The arbitrator
had no jurisdiction to
declare the conduct of the bargaining council to be invalid, least of
all in proceedings from which the bargaining
council had been
expressly excluded. The validity or otherwise of its conduct was
capable of being determined only by a competent
court in review
proceedings to which the bargaining council was a party. The only
proper outcome that was possible in the circumstances
was thus a
declaration that the arbitrator had no jurisdiction to resolve the
dispute that had been submitted to arbitration.
[39] The arbitration
proceeded nonetheless, and evidence was called on both sides on the
question whether the union and its members
had had an opportunity to
express their views to the bargaining council before the exemptions
were granted. With regard to the evidence
that was led in the course
of the arbitration (which was immaterial in view of the absence of
jurisdiction to make the award that
was sought) I need only observe
that evidence that the exemptions were intended to endure for the
life of the industrial council
agreement and the bargaining council
agreement that later replaced it went unchallenged. That is not
surprising, bearing in mind
that the parties were agreed that that
was the effect of the exemptions.
[40] At the
conclusion of the evidence the arbitration was adjourned and the
representatives of both parties submitted written heads
of argument.
Apart from the ‘jurisdictional point’, the only matter
addressed in the heads of argument, by both parties,
was whether the
union had indeed had an opportunity to be heard before the exemptions
were granted, and if not, what effect that
had on the validity of the
exemptions.
[41] The arbitrator
delivered her award on 23 July 2000. Apart from disposing of the
so-called ‘additional jurisdictional point’
that had been
raised on behalf of the company (the nature of the point need not be
considered) the arbitrator made no finding on
the issue that had been
canvassed before her. But she nevertheless made an award compelling
the company to comply with the terms
of the bargaining council
agreement. Her award was in the following terms:
‘
[The company]
is ordered to pay to its employees who are members of [the union] the
wages negotiated in the Metal and Engineering
Industries Bargaining
Council since 14 April 1998 unless exemptions were granted to the
[company] under the New Collective Agreement
concluded in terms of
the
Labour Relations Act, 1995
’.
[42] The reason that
the arbitrator held that the company was obliged to comply with the
provisions of the bargaining council agreement
was that she believed,
incorrectly, that it was common cause between the parties that the
exemptions had come to an end when the
industrial council agreement
expired on 14 April 1998. That is apparent from her reasons for
making the award. Dealing first with
the so-called ‘additional
jurisdictional point’ that had been raised on behalf of the
company the arbitrator made the
following observations:
‘
It is
also common cause that by the time the dispute arose in August [1998]
the exemptions under discussion were no longer valid having
ceased to
be so when the main Agreement in terms of which they were issued
terminated and a period of eighteen months referred to
in item 12(1)
[of Schedule 7 to the 1995 Act] had also expired’.
After dismissing the
‘jurisdictional point’ the arbitrator turned to the
merits of the matter and said the following:
‘
From [the]
survey of the evidence above, it is clear that no exemptions were
applied for by the [company] under the collective agreement
in the
Bargaining Council concluded under section 28(a) of the [1995 Act].
[The company] continued to rely on the exemptions that
had terminated
on the 14 April 1998 which is the date of commencement of a New
Agreement published in Government Notice R404 dated
31 March 1998 …
In the absence of exemptions issued under the New Agreement, the
[company] does not have a valid reason at
law not to pay the minimum
wages negotiated in the Bargaining Council after the Main Agreement
was in operation’.
[43] It is clear
from those passages that the arbitrator made her award in the belief
that it was common cause between the parties
that the exemptions
expired on 14 April 1998, which was the date when the industrial
council agreement was supplanted by the bargaining
council agreement.
Indeed, the assertion in the company’s replying affidavit that
the arbitrator ‘wrongly assumed that
the exemption endured only
for so long as the original 1980 agreement remained in force’
was not contested nor was it placed
in issue before us by counsel.
[44] The
arbitrator’s belief that it was common cause that the exemption
had expired was clearly incorrect: what was common
cause was
precisely the opposite. The first time that it was suggested that the
exemptions had expired was when the arbitrator made
her award and it
has bedevilled the proceedings ever since.
[45]
It is self-evident from the terms in which the award was made that
the arbitrator failed to take account of the existence of
the
exemption when she made her award, which was the ground advanced in
the founding affidavit for setting aside the award. In
Carephone
(Pty) Ltd v Marcus NO
,
39
which was
applied by this court in
Rustenburg
Platinum
,
40
the LAC held
that the award of an arbitrator constitutes administrative action as
contemplated by s 33 of the Constitution, which
requires there to be
‘a rational objective basis justifying the connection made by
the administrative decision-maker between
the material properly
available to him and the conclusion he or she eventually arrived at.’
To leave out of account the exemption,
when it was common cause that
its effect was to relieve the company of the relevant provisions of
the bargaining council agreement,
clearly deprived the award of a
rational connection between the award and the material that was
before the arbitrator, and on that
ground alone the award was liable
to be set aside. Needless to say, if the arbitrator had applied the
correct criterion for her decision
on the material that was before
her, which was that it was common cause that the exemptions were
applicable, her award would necessarily
have been different. To found
the award upon a supposition that it was common cause that the
exemption had ceased to operate when
the opposite was true was also a
gross irregularity,
41
which had the
added effect that the arbitrator exceeded her powers by travelling
outside the dispute that was before her.
42
THE PROCEEDINGS IN
THE LABOUR COURT AND THE LAC
[46] Bearing in mind
that it had never been disputed that the exemptions from the
provisions of the bargaining council agreement had
indeed been
granted the caveat in the award (‘unless exemptions were
granted to the [company] under the New Collective Agreement’)
initially caused some confusion and the company took the matter up
with the bargaining council to confirm that the exemptions were
indeed extant and had not been withdrawn. Ultimately, after the union
applied to the Labour Court to have the award made an order
of court,
the company applied to review both awards of the arbitrator (the
award on jurisdiction made on 23 July 1999 and the award
made on 23
July 2000). The attack upon the former award (the award relating to
jurisdiction) has since been abandoned.
[47] By the time the
application was brought the affected workers had resigned from the
union and had joined the Commercial Workers’
Union of South
Africa (CUSA), which is a member of the bargaining council. The
parties who were cited in the application were the
arbitrator, the
CCMA, the union, CUSA, and the bargaining council. Only CUSA opposed
the application and it is the only party that
opposes this appeal.
[48] The application
was brought out of time and condonation was required. The labour
court dismissed the application for condonation.
In the course of
doing so it made certain observations concerning the merits of the
review but I need not deal with them.
[49] On appeal the
LAC found, in my respectful view correctly, that there was good cause
for the delay, and it set aside the decision
of the Labour Court
refusing condonation. But it went on to dismiss the application to
review the award. The order that it made was
as follows:
‘
1. The
appeal is upheld in part and dismissed in part.
No order is made as to the costs
of the appeal.
The appellant’s appeal on
the merits of the review application is dismissed.
The appellant’s appeal
against the order of the Labour Court relating to condonation is
upheld and such order is set aside
and replaced with the following
one:
“
(a) The
applicant’s application for condonation in regard to the
launching of the review application is granted.
the applicant’s
application for review is hereby dismissed.
There is to be no order as to
costs.”’
[50] The order
granting leave to appeal to this court provided that ‘leave to
appeal is limited to the dismissal of the appeal
by the Labour Appeal
Court on the merits of the review application’. That was a
reference to the order in paragraph 3 of the
orders made by the LAC
(in contrast to its order in paragraph 4 relating to condonation).
The ‘merits of the review application’
are whether the
review ought to have succeeded.
[51] Before the
appeal was heard counsel were furnished by this court with a
comprehensive set of questions concerning what was properly
before
the arbitrator, and the basis upon which she made her award, as I
have outlined those matters above, which was not dealt with
in the
judgment of the LAC, and counsel were invited to address us on those
issues as they then did.
[52] The LAC
misconstrued the facts so far as they relate to the dispute that was
before the arbitrator and the manner in which she
arrived at her
award, though I hasten to add that it seems to me to be quite
probable that the appeal was presented to the LAC in
a form that was
conducive to the error.
[53]
The LAC was under the impression that the dispute that the arbitrator
had been called upon to resolve was whether the exemptions
that had
been granted to the company ‘still applied to, and were
operational under’ the bargaining council agreement
that
supplanted it, and it was under the impression that the arbitrator
had ‘found that the exemptions … fell away when
the new
agreement came into operation on the 14
th
April 1998.’
43
In both
respects that impression was incorrect. The dispute before the
arbitrator did not concern the duration of the exemptions at
all. And
the arbitrator made no finding as to the duration of the exemptions
but relied instead upon what she incorrectly believed
was common
cause. That explains why, as observed by the LAC, the arbitrator ‘did
not in her award refer to the [company’s]
argument that such
exemptions continued to apply during the life of the new agreement’.
44
She did not
refer to the argument simply because it was never addressed to her,
and that was because the duration of the exemptions
was not in
dispute.
[54] The LAC went on
to consider whether that ‘finding’ of the arbitrator was
correct by construing the terms of the ‘licences
of exemption’.
It held that the exemptions did not extend beyond the life of the
industrial council agreement, for the reasons
that I expressed in
paragraphs 25 and 26 of this judgment, and accordingly it found that
the award was correct.
[55] I have said
that in my view the construction that the LAC placed upon the
exemption was not correct, but the difficulty with
its judgment is
more fundamental. What was before the LAC was not an appeal against
the arbitrator’s award but rather a review
of the proceedings
that culminated in the award. In those circumstances the LAC was not
called upon to decide whether the conclusion
that was reached by the
arbitrator was correct but rather whether the arbitrator properly
exercised her powers in reaching that conclusion.
By misconstruing
the question that was before it the LAC inadvertently failed to
address that question at all (perhaps for the reason
that I alluded
to earlier).
[56] I have already
pointed out that the award that was made by the arbitrator is liable
to be set aside. Accordingly the review ought
to have succeeded and
the order made by the LAC on the merits of the review application
(paragraph 3 of its order) cannot stand.
[57] That gives rise
to the second enquiry, which concerns the fate of the dispute once
the award is set aside. It is in relation
to that enquiry that the
other defect in the proceedings, and the proper construction of the
exemption, become relevant.
[58] Once an award
is set aside on review a court is authorised to ‘determine the
dispute in the manner it considers appropriate’
or to ‘make
an order it considers appropriate about the procedures to be followed
to determine the dispute.’ No purpose
would be served by
remitting the dispute to the arbitrator. I have already pointed out
that the dispute that was before the arbitrator
was whether the
exemptions were invalid for want of prior consultation with the
union. There is only one appropriate award that she
could have made
in relation to that dispute, which was to declare that she had no
jurisdiction to declare upon the validity of the
exemptions. If we
substitute a declaration to that effect that will bring to an end the
dispute that was before the arbitrator.
[59] But it has
become apparent in the course of these proceedings that CUSA has now
resiled from the position that was taken by the
union during the
course of the arbitration, and it now contends that on a proper
construction the exemption was intended to come
to an end when the
industrial council agreement lapsed on 14 April 1998. No purpose
would be served by remitting the matter to the
arbitrator for the
dispute to be broadened so that an award may properly be made on that
issue or to undertake that task ourselves.
I have already held that
that is not the correct meaning of the exemption and nothing would be
served by doing so. To do so might
in any event serve no purpose, for
reasons that emerge below.
[60] For both
counsel invited us to go even further and to substitute an award
declaring the effect of the exemption upon the company’s
obligations (or absence of obligations) under the bargaining council
agreement in the light of the construction that I have placed
upon
the exemption. I do not think we should do so.
[61] I am by no
means certain that a court on review has the power to broaden the
dispute that was before an arbitrator and then make
an award in
relation to the broadened dispute. That would seem to me to be a
recipe for undermining arbitration and encouraging parties
to look to
the courts instead to resolve their disputes, contrary to the
intention of the 1995 Act. Counsel for CUSA submitted that
because
this was what he called a ‘labour matter’ the court was
at large to do what it considered to be fair in any case
that comes
before it. That submission seems to me to bear the seed of a doctrine
that would undermine the Act and the rule of law
and I have no
hesitation in rejecting it. A court does not have a general
jurisdiction to do what it considers to be best, even in
respect of
labour disputes, but must confine itself to what it is authorised to
do by law.
[62] But even if we
had a general discretion to make an award that we considered would be
best to bring the present saga to an end
I would in any event not do
so in the present case, at least without careful reflection and
further enquiry, lest we inadvertently
pronounce on matters that are
not properly before us. I have already pointed out that we do not
know whether the bargaining council
had the authority to exempt the
company from the bargaining council agreement that took effect on 14
April 1998 because we do not
have its constitution before us. And
even if the bargaining council was authorised to act as it did it is
also not clear that the
exemption had any effect in law in relation
to the bargaining council agreement. The bargaining council agreement
that took effect
on 14 April 1998 provided for exemptions to be
granted by ‘an independent body [established by the agreement
and] referred
to as the Exemption and Arbitration Board’ and
not by the bargaining council itself. In those circumstances it might
be that
the exemption that was given by the bargaining council was
always ineffective and that these proceedings have been misconceived
from
the start.
[63] I stress that
these are not matters upon which I make any finding. Whether the
bargaining council was authorised to grant exemptions,
and what
effect, if any, such exemptions might have had, was not addressed in
argument before us, or at any stage of the proceedings
that have
culminated in this appeal, but have only come to the fore in the
course of preparing this judgment. I mention them only
to illustrate
why it would be undesirable to make orders falling outside the scope
of the dispute that was before the arbitrator
without fully
appreciating the implications that those orders might have. Needless
to say, there are also serious implications in
introducing new
matters into proceedings that have endured for nearly ten years. For
this court to interpose its own notions of how
matters might best be
brought to finality without adequate insight into the implications
carries a real risk of causing irreparable
harm.
[64] In my view it
is preferable that we confine ourselves to what is properly before
us, which is a review of the arbitration proceedings
in relation to
the dispute that was before the arbitrator. In the course of this
judgment it has been necessary to construe the exemption
that was in
issue and that might serve to guide the parties in their future
relations. But I think that the parties are best placed
to resolve
any further disputes that might exist between them through the medium
of the bargaining council, upon which the employees
are now
represented, which is the proper forum for the resolution of such
disputes.
[65] As to the costs
that have been incurred thus far I think it is appropriate that they
be allowed to lie where they fall in all
courts and I intend making
no order in that regard.
[66] The appeal is
upheld. The orders of the LAC are set aside and the following orders
are substituted:
‘
1.
The appeal is upheld. The order of the Labour Appeal Court is set
aside and substituted with the following:
“
(a)
The application for condonation is granted.
(b) The award of the
arbitrator made on 23 April 2000 (incorrectly dated 23 July 1999) is
set aside and substituted with an award
in the following terms:
“
It
is declared that the arbitrator has no jurisdiction to make an award
in respect of the dispute that is the subject of this arbitration.”
No order is made in
relation to the costs of the application.’
No order is made
in relation to the costs of this appeal.’
_________________________
R.W. NUGENT
JUDGE OF APPEAL
CONCUR
:
FARLAM JA)
LEWIS JA)
JAFTA JA
[67] I have had the
benefit of reading the judgment prepared by my Brother Nugent.
Regrettably I am constrained to disagree with the
findings and the
conclusion reached therein. In particular I find myself in respectful
disagreement with him on the issue of the
real dispute that served
before the arbitrator; the validity of the process she followed in
arbitrating it, the issue that arose
before the Labour Appeal Court
and the cogency of reasons given by it in support of its decision.
[68] The appellant
operates a manufacturing business in the metal industry at a factory
in Botshabelo in the Free State Province.
Among its employees, were
members of a trade union called The Hotel Liquor Commercial and
Allied Workers’ Union of South Africa
(the union) who later
resigned and joined Commercial Workers Union of South Africa (CUSA).
[69] In 1993 the
union and the appellant concluded a recognition agreement. Clause 4
of this agreement established a committee consisting
of an equal
number of members representing each party. The committee was charged
with the task of conducting collective bargaining.
Collective
bargaining on wage increases took place in May of each year. The
committee was bound to convene within 21 days of receipt
of a written
request from either party. The union represented 250 employees out of
a workforce of approximately 300 workers.
[70] Towards the end
of 1996 the appellant became a member of the Bargaining Council in
the Metal and Engineering Industries. When
it was first approached to
join by the council, it raised concerns about the effect the
collective agreement would have on it, as
at that stage it was paying
its employees wages lower than the minimum wages prescribed in the
council’s collective agreement.
The council proposed that it
apply for an exemption from paying minimum wages and other benefits
which it claimed it could not afford
to pay. Following this advice
the employer indeed applied for an exemption. At the outset members
of the council could not agree
on whether to grant the exemption or
not. As a result a committee was appointed to investigate the matter.
Messrs Viljoen, Stander,
Van Vuuren (all members of the committee)
visited the employer’s factory together with Mr Coetzee, the
council’s regional
manager. Pursuant to its visit, the
committee made a recommendation to the council which issued four
licences of exemption, each
licence dealing with a separate and
different issue.
[71] Meanwhile the
union, which was not a member of the council and was not represented
in the council’s committee, wrote a
letter to the employer
requesting that the bargaining committee be convened for the purpose
of negotiating wage increases for 1997.
The employer responded by
saying that having joined the council, it was subject to its
collective agreement which superseded the
parties’ recognition
agreement. When the union demanded that the employer pay the minimum
wages prescribed by the council’s
collective agreement, it
refused, claiming that it had been exempted from doing so. It must be
mentioned that, although the union
was a representative union at the
employer’s factory and this was known to the council, it was
nonetheless not consulted during
the council’s visit to the
factory. A few workers, none of whom were members of the union, were
randomly consulted. The union’s
capacity to advance and promote
the interests of its members was severely emasculated. It was not
only denied the rights it enjoyed
in terms of the recognition
agreement but also its constitutional right to engage in collective
bargaining on behalf of its members.
Its members’ right to join
a trade union of their choice and their right to fair labour
practices were, as a result, impaired.
[72] The union
applied for membership of the bargaining council with a view to
advancing the interests of its members there. But its
application was
turned down on the basis that it did not meet the threshold set by
the council for membership. In terms of that threshold
requirement
any union seeking membership had to have a minimum of 5000 members in
the industry falling within the jurisdiction of
the council,
regardless of whether it was a majority union at the workplace of any
of the employer members.
[73] In 1998, the
union once again demanded that the employer pay the minimum wages in
compliance with the new collective agreement
which was promulgated in
terms of the current Labour Relations Act 66 of 1995 (the current
Act). Once again the employer refused
to pay, contending that the
exemption issued to it the previous year continued to apply to the
new agreement. Reliance was placed
on the clause quoted in para 23 of
Nugent JA’s judgment.
[74] Finding itself
in an untenable situation once more, the union declared a dispute. At
that stage its members were earning R125
per week instead of the R388
minimum wage prescribed in the new collective agreement. As appears
from the background, the dispute
was about the employer’s
failure to pay the minimum wages in compliance with the new
collective agreement. It was then referred
to the Commission for
Conciliation, Mediation and Arbitration (the CCMA) for conciliation.
The CCMA requires that referrals of this
nature be contained in a
standard pro forma form supplied by it. The form is meant to guide
parties making referrals. In column 3
of the form, the applicant for
conciliation is required to state the nature of the dispute. In this
case the union described it in
the following terms:
‘
The dispute is
about Tao Ying Metal Industries’s failure to comply with
minimum wages and conditions i.t.o. Metal and Engineering
Industries’s Bargaining Council.’
[75] Resolution of
the dispute eluded the parties at conciliation and the matter was
referred to arbitration. After hearing evidence,
the arbitrator
issued an award in the following terms:
‘
Respondent TAO
YING INDUSTRIES, is ordered to pay to its employees who are members
of the Applicant, HOTEL, LIQUOR, COMMERCIAL and
CATERING ALLIED
WORKERS UNION OF SOUTH AFRICA (HOTELLICA) the wages negotiated in the
Metal and Engineering Industries Bargaining
Council since
14 April 1998 unless exemptions were granted to the
Respondent under the New Collective Agreement concluded
in terms of
the
Labour Relations Act, 1995
.’
[76] The appellant
instituted an application in the Labour Court for the review of the
award on, inter alia, the ground that the arbitrator
had failed to
apply her mind to the provisions of the exemptions granted to it in
March 1997. It contended that those exemptions
‘still enured to
its benefit since they were granted in respect of the wage provisions
of the Main Agreement published on 27
June 1980 as amended and/or
extended and/or replaced from time to time by any succeeding
agreement’. The Labour Court found
it unnecessary to consider
the merits and dismissed the application on the basis that the
appellant had failed to make a proper case
for condonation for
instituting the application late.
[77] Dissatisfied
with the outcome the appellant appealed to the Labour Appeal Court.
The latter court reversed the Labour Court’s
finding on
condonation but dismissed the appeal on the merits. The present
appeal comes before us with special leave of this court.
In the order
granting leave this court said:
‘
The leave to
appeal is limited to the dismissal of the appeal by the Labour Appeal
Court on the merits of the review application.’
The merits
considered by the Labour Appeal Court relates only to the question
whether the clause on which the appellant relied had
the effect of
extending the currency of the exemption to the new collective
agreement.
[78] The issue
before the Labour Appeal Court was essentially one of interpretation
of the exemption as reflected on the licences.
The Labour Appeal
Court held that on the issue of currency the exemption contained two
conflicting terms. One in the middle (the
first clause) and the other
at the bottom of the licence document (the second clause). The second
clause limited, so it found, the
currency of the exemption to the
duration of the old collective agreement whereas the first clause
suggests that the exemption was
intended to survive the termination
of the main agreement and continue to be in force.
[79] The Labour
Appeal Court reasoned that since the exemption was applied for and
granted in terms of
s 51
of the old Act, the bargaining council’s
power was limited to granting an exemption from an agreement already
in existence
and which was binding in terms of this Act. To the
extent that the first clause purports to extend the currency of the
exemption
beyond the duration of the collective agreement then in
existence, Zondo JP held, it was
ultra vires
because the bargaining council had no power to grant an
exemption beyond the lifespan of such agreement. The learned Judge
President
concluded that the correct interpretation is that the
currency of the exemption terminated simultaneously with the main
agreement
in May 1998.
[80] Although the
arbitrator did not, understandably so I may add, engage in the
detailed interpretative process which Zondo JP undertook,
she also
found that the exemption expired when the new agreement came into
operation on 14 April 1998. In her award the
arbitrator
expressed herself as follows:
‘
It is common
cause that the period during which the exemptions were valid is well
within the eighteen months referred to in item 12(1)
of the Act. It
is also common cause that the exemptions were granted in terms of an
agreement that was concluded in the industrial
council. The said
agreement (Main Agreement) was promulgated in terms of section 48 of
the 1956 Act and published in the Government
Notice R1329 dated 27
June 1980. These exemptions were not, with due respect to Adv Beaton,
valid for a period of eighteen months.
They
remained valid for the duration of the Main Agreement
.
The agreement terminated with the coming into operation of the
collective agreement concluded in the Metal and Engineering
Industries
Bargaining Council. The said collective agreement was
published in the Government Notice R404 dated 31 March 1998 and came
into effect
on 14 April 1998’
(my
emphasis).
[81] Before us it
was argued on behalf of the employer that the arbitrator had failed
to apply her mind to the issue before her, namely,
the invalidity of
the exemption on the basis that it was improperly granted. The fact
that she failed to apply her mind was, it was
argued, demonstrated by
her making the finding that it was common cause between the parties
that the exemptions were valid for eighteen
months. I do not agree
for three reasons. First, the finding falls short of supporting the
inference of failure to apply her mind.
In my view such finding
suggests, if anything, that she did apply her mind. The use of the
word “valid” may, in this
regard, have been erroneous.
However, it must be read in the context of the entire award. The
arbitrator’s statement refers
to the period during which the
exemption was in force as envisaged in item 12(1). This item extends
the currency of agreements beyond
the repeal of the old Act, albeit
for a period of 18 months. Secondly, it is a well-known rule of
interpretation that the whole document
must be considered and that
words in it must be read in their context. It is therefore
impermissible to take a word, in isolation,
and give it a particular
meaning. Thirdly, it appears from the quotation in para 80 above that
the appellant’s counsel had
argued before the arbitrator that
the exemption was valid for a period of 18 months from the
commencement of the current Act.
[82] In argument
before us a considerable amount of time was devoted to the enquiry as
to what were the real issues before the arbitrator.
While it is true
that during the opening addresses before the arbitrator the issues
may have been expanded upon, sight must not be
lost of the fact that
she had to arbitrate the same dispute that had earlier been
unsuccessfully conciliated. I have serious reservations
about whether
parties appearing before an arbitrator, in matters such as the
present, can raise issues not covered in the dispute
which was
submitted for conciliation. In terms of s 135 of the current
Labour
Relations Act, certain
jurisdictional facts must be in existence
before such a dispute can be arbitrated. These are: (a) the same
dispute must have been
unsuccessfully conciliated; and (b) a period
of 30 days from the date of referral must have elapsed or a
certificate to the effect
that conciliation has failed must be issued
by the mediator.
[83] In
National
Union of Metalworkers of SA & Others v Driveline Technologies
(Pty) Ltd
(2000) 21 ILJ 142 (LAC) Zondo AJP
(Mogoeng AJA concurring) rejected the proposition that a party could
pursue a dispute, in arbitration
or in the Labour Court, which has
not been referred to conciliation. The learned Judge President said
at para 62:
‘
At 1214J-1215A
in[
Numsa & Others v Cementation
Africa Contracts (Pty) Ltd
(1998) 19
ILJ 1208 (LC)] the Labour Court made statements to the effect that,
after conciliation, a party which wants to take a dismissal
further
is bound by the conciliating commissioner’s description of the
dispute in the certificate of outcome. I do not agree
with this. The
position is, as the Labour Court correctly pointed out in that case,
that a party cannot change the nature of the
dispute. I would add
that the conciliating commissioner is also bound not to change the
nature of the real dispute between the parties.
If he did, the party
that seeks to take the matter further would not be bound by a wrong
description of the dispute but would have
a right to take further the
true dispute that was referred to conciliation and give a correct
description of the dispute. What the
parties are bound by is the
correct description of the real dispute that was referred to
conciliation.’
[84] In the light of
the provisions of
s 135
the dispute that was before the arbitrator
was the employer’s failure to pay minimum wages in compliance
with the new collective
agreement. Its nature could not be altered by
the parties. While the legal representatives on both sides alluded to
the real dispute
during their opening statements, they also referred
to issues pertaining to the defence raised by the employer. These
remarks were
aimed at defining the issues relating to the exemption
and its application to the new collective agreement. In his opening
statement
counsel for the employer said:
‘
Madam
Commissioner the complaint against my client, Tao Ying, is its
failure to apply a collective agreement, it was formulated in
the
referral to the CCMA, and the relief sought is compliance with a
collective agreement, that is what my learned friend has articulated
to you, that what he wants from you is an order that we shall comply
with the Bargaining Council agreements.’
[85] Consistently
with the dispute referred to above, counsel for the appellant put the
following question to its employee at the
arbitration:
‘
Right, now you
are aware that the union in this case is asking for an order that you
comply with the minimum wages prescribed by the
Bargaining
Council?... Ja.’
The employer’s
defence was that the exemption granted to it in April 1997, when
properly construed, continued to relieve
it of its obligation. As
stated above, the employer relied on the clause that said it was
exempted from ‘
Part 2
of the Main Agreement as replaced from
time to time by any succeeding agreement’. The answer to the
question raised lies in
the interpretation of this clause.
[86] In construing
the exemption it must be read as a whole. If it is read in this way,
I agree with Zondo JP that there appears to
be a conflict between the
first and second clauses, particularly that portion of the first
clause which refers to the main agreement
as replaced by succeeding
agreements. However, to the extent that this clause refers to the
main agreement as amended or extended,
it is consistent with the
second clause. What it means is that the exemption would continue to
apply to the agreement in its amended
or extended form. The important
issue here being that it is still the same agreement against which
the exemption was originally granted.
To this extent the currency of
the exemption corresponds with that of the main agreement. This much
was conceded by the appellant’s
counsel in their written
argument before us. They stated in para 37:
‘
37.1 The proper
construction of a legal instrument requires a consideration of the
document taken as a whole. Effect must be given
to every clause in
the instrument and, if two clauses appear to be contradictory, an
effort must be made to reconcile them in order
to do justice to the
intention of the framer of the document.
37.2 In the present case the
textual reconciliation of the two clauses is no complex matter. The
two provisions are fully compatible
and, read together, signify that
the exemption, subject to it not been withdrawn at an earlier date,
is to continue throughout the
life of the agreement. If the agreement
is not extended the exemption lapses; if it is, the exemption
continues for the extended
period.’
[87] The difficulty
arises though when effect is given to that part of the exemption
which says it would apply to the main agreement
as replaced from time
to time by succeeding agreements. What becomes immediately clear, in
this instance, is that the focus of the
exemption is no longer the
main agreement but the agreement that replaces it. The phrase
‘exempted from
Part 2
of the Main Agreement as replaced from
time to time by succeeding agreements’ is, in my view,
meaningless. This is so because
the entire agreement has, by now,
fallen away. To maintain that an employer is, in these circumstances,
exempted from an agreement
which is no longer binding ineluctably
leads to an absurdity. This part of the clause is so vague that no
effect can be given to
it (
Commissioner for
Inland Revenue v Golden Dumps (Pty) Ltd
[1993] ZASCA 89
;
1993
(4) SA 110
(A) at 116E and the authorities there cited).
[88] Furthermore the
phrase ‘any succeeding agreement’ would have to be
interpreted in the context of the exemption. It
certainly cannot bear
its wide literal meaning simply because the bargaining council’s
authority to grant an exemption in terms
of
s 51
of the old Act was
limited to agreements binding in terms of that Act only. Therefore,
reference to any succeeding agreement in the
clause must have been
intended to mean agreements which were binding in terms of the old
Act. That much is clear from Item 12(8)
which provides:
‘
After
the commencement of this Act and despite the repeal of the
Labour
Relations Act any
person or class of persons bound by an agreement or
award remaining in force in terms of sub-item (1), may apply in
accordance with
the provisions of
section 51
of the
Labour Relations
Act for
an exemption from all or any of the provisions of that
agreement or award (as the case may be). Any application so made,
must be
dealt with in terms of the provisions of
section 51
and,
wherever applicable, any other relevant provisions of the labour
Relations Act, in all respects as if the provisions in question
had
not been repealed.’
[89] Item 12(8)
taken together with s 51 reveals that there are jurisdictional facts
which had to be in existence prior to the granting
of exemptions by
the bargaining council. These were: an application made in the
prescribed form and manner; an agreement entered
into by the parties
to a bargaining council; and that such agreement be a binding
agreement in terms of the old Act. In truncated
form s 51 reads:
‘
(1)
Whenever application is made in the prescribed form and manner for
the exemption of any person or class of persons from all or
any of
the provisions of an agreement entered into by the parties to a
conciliation board, which is binding in terms of this Act,
or from
all or any of the provisions of an award and the Minister is of the
opinion that –
(a) the terms and conditions of
employment of such person or class of persons are substantially not
less favourable to him or them
than the terms and conditions of
employment prescribed by that agreement or award….
he may, if he deems it expedient
to do so, grant exemption from all or any of the provisions of the
agreement or award concerned to
or in respect of that person or class
of persons, for such period and subject to such terms and conditions
as he may determine. The
period for which exemption is granted may
commence on a date prior to that on which the exemption is granted
but not earlier than
the date on which the application was made in
terms of this sub-section….
(3) Application for exemption
from all or any of the provisions of an agreement entered into by
parties to an industrial council which
is binding in terms of this
Act may be made to the industrial council concerned, or to any
committee to which the powers of the council
under this section have
been delegated in terms of section twenty-five, and the powers
conferred on the Minister by sub-section (1)
may
mutatis mutandis
be exercised by such council or committee.
(4) The terms and conditions of
an exemption granted under sub-section (1) or (3) shall be
incorporated in a licence of exemption,
signed by an officer or
secretary of the council or committee concerned, as the case may be,
and a copy thereof shall be transmitted
to such person or persons as
the officer or the secretary, as the case may be, considers
necessary….’
[90] In my view, it
was permissible for the arbitrator to consider the ambit and scope of
the exemption and form an opinion on whether
it indeed exempted the
employer from paying the minimum wages as contemplated in the new
agreement. Following her assessment of the
exemption, she was
entitled to say its application did not extend to the new agreement
and therefore the employer was not excused
from paying the minimum
wages. That was the effect of her finding, namely that the currency
of the exemption lapsed when the old
agreement terminated.
[91] But even if one
were to accept as correct the interpretation contended for by the
appellant, it would still bear the duty of
proving that the new
agreement has indeed replaced the old one because without that
factual basis the exemption cannot be construed
to apply to the new
agreement. In this regard the appellant led the evidence of only Mr
Willem Coetzee, the bargaining council’s
regional manager. At
the arbitration he testified that he did not know whether or not the
old agreement had been terminated at the
time the new one came into
operation. He said, however, that such an agreement could co-exist
with non-cancellation. His evidence
continued as follows:
‘
Now on 10
November 1996 was there an industrial council agreement, as it was
then known, in force in the metal industry? ---This,
I have a list of
the instructions if you will bear with me a second. Can I give it to
you?
Yes ---That was for ease of reference
because there were many, many agreements published from 1980 to
current and I have given you
the Government Gazette numbers and the
pages.
Here we are ---Yes sir. I’ve given
you an account of what transpired from 27 June 1980, how many times
the agreement was amended,
extended, re-enacted, and the last one was
done on 6 August 1999 in Government Gazette 20330 on page 17….
So the agreement that, so there was an
agreement in place on 10 November 1999, sorry 1996, am I
right Mr Coetzee? ---Yes
sir, it was in force for two days.
Commissioner: Agreement in place on?
Mr Beaton [for the appellant]: 10
November 1996.
Commissioner: And it was in place for two
days?
Mr Beaton: Yes, on 10 November it had
been in place for two days. Now Mr Coetzee are you aware of any
cancellation of that main agreement
prior to 31 March 1998? --- The
agreements are normally cancelled by the minister before he re-enacts
a new one otherwise there would
be two in operation.
Yes, so I assume that would take place
pari passu
? --- That’s right.
Other than that are you aware of any
cancellation? --- Not off the top of my head sir.’
[92] The appellant
relied solely on Coetzee’s advice for the contention that the
exemption still enured as at the time the present
dispute arose. This
is quite clear from the correspondence between it and him. In a
letter dated 14 December 1999 Coetzee
responded as follows
to an enquiry about the duration of the exemptions:
‘
Your
correspondence dated 20
th
September 1999
which was received by this office [on] 1
st
December 1999 in the above regard has reference.
Scrutiny of the confirmed minutes of the
Regional Council Meeting where these exemptions were granted,
revealed no specific expiry
date. I would therefore assume that the
exemptions would be in force until such time as the council, in
writing withdraws the exemption,
or the expiry date, whichever is the
soonest.’
This letter reveals
Coetzee’s thinking which was the basis of his opinion that the
exemption in question still applied. He held
the view that since the
exemption itself had not been withdrawn and it had no specific expiry
date, it continued to apply for the
duration of the old agreement
which in his view, had not been cancelled even at the time he
testified before the arbitrator in January
2000. The same views were
repeated by him in the letters addressed to the appellant dated 11
April 2000 and 5 July 2000.
[93] When asked
about the duration of the exemptions by the union’s attorney
(at the arbitration) Coetzee said:
‘
Again I refer
to page 10 and to page 14, sorry, 13, these agreements are also
exempted from 19 March 1997 for the duration of the
agreement? ---
Yes sir.
How long is that? --- Can I just refer
you to the previous one to make myself clear please? We were
referring in the previous one
to paragraph 2, Engineering Industries
Pension Fund agreement which was published under government notice
R627 of 19 April 1996,
which is a completely different agreement to
the one that we referring to in the exemption … (intervenes)
I’m quite aware of that. --- If you
look at the list that we distributed a little while ago you will find
that the council’s
main agreement started off in 1980 and it
was not rescinded in the sense that there is no such agreement in
force any more therefore
the agreement which was in force in 1980
is currently today still in force so
, to answer your question,
if
the exemption was issued on 19 March 1997 then while the agreement is
in force that exemption will be in force
’
(my
emphasis).
[94] It is quite
clear that Coetzee linked the currency of the exemption in question
to the duration of the main agreement. In my
view, his reading of the
exemption was, in this regard, correct and is consistent with the
interpretation preferred above. However,
his view that the old
agreement was still in force in January 2000 was clearly wrong
because in terms of the transitional provisions
it terminated in May
1998, a month after the new agreement came into operation. As
indicated above, the question of the latter agreement
replacing the
former did not arise in this matter. It follows that there is no
basis for extending the exemption in question to the
new agreement.
That exemption lapsed when the old agreement was terminated.
[95] Before us the
Labour Appeal Court was criticised for holding that by purporting to
extend the exemption beyond the duration of
the main agreement, the
bargaining council acted
ultra vires
.
Counsel for the appellant argued that the Labour Appeal Court failed
to appreciate that the exemption granted by the bargaining
council
had two components which must not be conflated. The first, so he
argued, concerns the main agreement which continued to be
of force
for 18 months; and, the second, concerns the new agreement which
constitutes a replacing agreement as contemplated in the
survival
clause dealt with above. He contended that the constitution of the
bargaining council empowers it to grant exemptions. While
it may be
true that the bargaining council’s constitution gives such
power to it, the argument loses sight of a fundamental
issue which is
that the appellant’s application for exemption was made in
terms of Item 12(8) and consequently it had to be
determined in terms
of the relevant provisions of the old Act only. The bargaining
council had no authority whatsoever to deal with
that application in
terms of its constitution. Moreover, the bargaining council could
not, acting in terms of s 51 of the old Act,
validly grant an
exemption from an agreement which was binding in terms of the current
Act in circumstances where there was no application
before it for
exemption from such agreement.
[96] There is simply
no factual basis for the contention, made by the appellant, that the
bargaining council acted in terms of its
constitution in granting the
exemption. Coetzee’s testimony on this issue was that the
bargaining council acted in terms of
the old Act. His evidence was as
follows:
‘
But at the time
that this exemption was granted, the date on the documents to which
you have referred is 7 April 1997, at that time
which exemption
procedure applied?---The same one that applied in 1980 sir.
And that is the one on page 4? ---That is
the one referred to on page 4, top left-hand corner.’
[97] Nowhere in his
testimony did Coetzee say that the exemption was granted in terms of
the bargaining council’s constitution,
following the procedure
provided for in the current Act. Nor did the other witness called by
the appellant, at the arbitration hearing,
testify on this issue. The
facts established at that hearing do not support the inference that
the council acted on authority derived
from its constitution. Indeed
counsel for the appellant submitted to the arbitrator that the
exemption was valid for a period of
18 months from the coming into
operation of the current Act. In these circumstances the criticism
levelled at the Labour Appeal Court
was unwarranted.
[98] My Brother Musi
assumes, without deciding, that the irregularities brought up for the
first time at the hearing of this appeal
were permissibly raised. I
am not willing to do so. I agree with the submission made by counsel
for the union that the appellant’s
case, as set out in its
founding affidavit, does not cover the issue of the arbitrator having
exceeded her powers by reason of considering
the duration of the
exemption. Nor does it cover the other irregularities dealt with in
Musi AJA’s judgment. Our courts do
not allow applicants in
review proceedings to raise new grounds of review in replying
affidavits or from the bar during argument
(
Director
of Hospital Services v Mistry
1979 (1) SA 626
(A) at 635H-636B).
[99] But apart from
the timing and manner in which those irregularities were raised, in
the present case they do not justify interference
with the award
because the arbitrator has taken into consideration other factors,
properly placed before her, which support her conclusion.
If we
accept that the award we are concerned with here constitutes an
administrative action, then the existence of irregularities
by itself
alone does not warrant interference unless there was no other
material before the arbitrator which justified the conclusion
she
reached. At the time the award was issued our Constitution
guaranteed, inter alia, the right to administrative action which was
justifiable in relation to the reasons given for it and the right to
a procedurally fair administrative action as two separate and
distinct rights. The Constitution did not, however, guarantee an
entitlement to a perfect or much less administrative action that
was
free of procedural errors. Instead what was guaranteed was procedural
fairness (
Bel Porto School Governing Body v
Premier, Western Cape
[2002] ZACC 2
;
2002 (3) SA 265
(CC)
para 104 and the authorities there cited). A complaint that is based
on irregularities is ordinarily aimed at showing that the
right to
procedural fairness has been infringed. Over the years our courts
have developed a test for determining whether an irregularity
complained of has resulted into procedural unfairness. The test is
whether the irregularity vitiates the entire administrative action.
If the answer to this question is in the affirmative, then the
administrative action in question must be set aside. However, if
there
was material before the administrative functionary, justifying
the action taken, the court would not be entitled to interfere even
if an irregularity had been committed.
[100] Recently this
court has, in the
South African Veterinary
Council and another v Veterinary Defence Association
2003
(4) SA 546
(SCA), considered the issue of irregularities in the
context of the right to a procedurally fair administrative action as
was contemplated
in the interim Constitution. Writing for the court
Farlam JA said (para 35):
‘
I turn to
consider whether a reviewable irregularity took place. It is clear
from the authorities that if a disciplinary tribunal
has applied the
wrong criterion in making a finding of guilt the application of such
criterion constitutes a reviewable irregularity,
which can only be
ignored if it is clear that if the correct criterion had been applied
the finding would have been the same: see,
for example,
Hira
and Another v Booysen and Another
1992
(4) SA 69
(A) at 95C-F.’
The learned Judge
continued (para 40):
‘
In view of the
fact that it is clear that the tribunal adopted an erroneous approach
to the matter the proceedings can be saved only
if it is clear that
despite the irregularity Dr Krawitz was not prejudiced because the
finding would have been the same if the correct
approach had been
applied: cf
Le Roux and Another v
Grigg-Spall
1946 AD 244
at 254.’
[101] The doctrine
of judicial precedent obliges us to follow this decision unless we
are convinced that it is wrong (
Contract
Forwarding (Pty) Ltd v Chesterfin (Pty) Ltd
2003
(2) SA 253
(SCA) para 9). I am not so convinced despite what was
stated in
Rustenburg Platinum Mines
(Rustenburg Section) v Commission for Conciliations, Mediation and
Arbitration
2007 (1) SA 576
(SCA) paras 30
and 31. The decision in the
South African
Veterinary Council
was not considered in
Rustenburg Platinum Mines
.
[102] A similar test
was adopted by the Constitutional Court in
Prinsloo
v Van der Linde
1997 (3) SA 1012
(CC) para 36
and
Pharmaceutical Manufacturers Association
of SA
:
In re Ex parte
President of the Republic of South Africa
[2000] ZACC 1
;
2000
(2) SA 674
(CC). In the latter case the Constitutional Court said
(para 90):
‘
Rationality in
this sense is a minimum threshold requirement applicable to the
exercise of all public power by members of the Executive
and other
functionaries. Action that fails to pass this threshold is
inconsistent with the requirements of our Constitution and therefore
unlawful. The setting of this standard does not mean that the Courts
can or should substitute their opinions as to what is appropriate
for
the opinions of those in whom the power has been vested.
As
long as the purpose sought to be achieved by the exercise of public
power is within the authority of the functionary, and as long
as the
functionary’s decision,
viewed
objectively,
is rational, a Court cannot
interfere with the decision simply because it disagrees with it or
considers that the power was exercised
inappropriately
’
(my emphasis).
[103] In this case
the parties raised before the arbitrator the question of the duration
of the exemption as one of the issues to
be considered in arbitrating
the dispute. In fact, as stated above, the only basis on which the
award was challenged was that the
arbitrator failed to apply her mind
to the duration of the exemption. She considered the material before
her and came to the conclusion
referred to in para 80 above. The
evidential material presented at the arbitration supported the
finding that the exemption lapsed
when the old agreement terminated
and that when the present dispute arose in August 1998, the exemption
was no longer in force. Consequently
her award cannot, in my view, be
set aside.
[104] For these
reasons I would dismiss the appeal.
____________________
C N JAFTA
JUDGE OF APPEAL
MUSI
AJA
:
[105] I have had the
benefit of reading the judgments prepared by my Brothers Nugent and
Jafta. I agree with Jafta JA that the appeal
must be dismissed for
reasons he so lucidly articulates. However I have adopted a different
approach which leads to the same conclusion.
I propose to deal with
three issues, namely, the grounds of review on which the arbitrator’s
award was challenged; the nature
of the dispute before her; and the
irregularities allegedly committed by her during the arbitration
proceedings.
[106] Initially the
award was challenged on three bases. The appellant contended in its
founding papers that the bargaining council
ought to have been joined
because the exemptions granted by it were being challenged. It also
claimed that the arbitrator had exceeded
her powers in entertaining
the dispute because she had no jurisdiction to do so in terms of the
Labour Relations Act 66 of 1995 (the
LRA). However these two grounds
of attack were not pursued in the court below and in this court.
Nothing more need be said about
them.
[107] The sole
ground of review in which the appellant persisted is that the
arbitrator failed to apply her mind to the terms of the
exemptions
granted to it in 1997. In its founding affidavit the complaint is set
out in the following terms:
‘
9.23 It
is also submitted that the First Respondent failed to apply her mind
to the provisions of the exemptions previously granted
to the
Applicant during March 1997. It is the Applicant’s position
that the exemptions previously granted still enure to its
benefit
since they were granted in respect of the wage provisions of the Main
Agreement published on 27 June 1980:
“
as
amended and/or extended and/or replaced from time to time by any
succeeding agreement. . . .”
(The
deponent’s underlining)
9.24 Should she have considered
them properly she would not have given the award she did.
9.25 It is submitted that the
conduct of the First Respondent as outlined above amounts to:
i) a defect as contemplated in
subsection 145(1) of the
Labour Relations Act, No 66 of 1995
;
alternatively
ii) a permissible ground in law
as provided for in section 158(1)(g) of the Act, to review and set
aside the function and/or act performed
by the Respondent, wherefore
it is prayed that the Honourable Court will grant an order in terms
of which the First Respondent’s
award is reviewed and set aside
as prayed for in the Notice of Motion.’
[108] For its cause
of action the appellant relied solely on the provisions of the LRA
and in order to succeed it had to prove that
its challenge was based
on one or more of the grounds of review contained the sections of the
LRA it had relied upon, Section 145
provides:
‘
(1) Any
party to a dispute who alleges a defect in arbitration proceedings
under the auspices of the Commission may apply to the Labour
Court
for an order setting aside the arbitration award –
(a) . . .
(2) a defect referred to in
subsection (1), means –
(a) that the commissioner –
(i) committed misconduct in
relation to the duties of the commissioner as an arbitrator;
(ii) committed a gross
irregularity in the conduct of the arbitration proceedings; or
that an award has been
improperly obtained.’
[109] The word
‘defect’ in s 145 bears four meanings. It means a
misconduct committed by an arbitrator or a gross irregularity
which
she or he has committed during the arbitration proceedings or an act
performed by an arbitrator falling beyond his or her powers
or that
the award was improperly obtained. Any complaint which does not fall
within the ambit of any of the four defined meanings
of the word does
not constitute a defect as contemplated in s 145.
[110] Clearly the
only ground possibly covered by the appellant’s complaint is
that relating to commission of a gross irregularity
in the conduct of
arbitration proceedings.
[111]
In argument in this Court the grounds of review were somewhat
expanded to include a contention that the arbitrator exceeded
her
powers by inquiring into and basing her award on an issue that was
not properly before her, namely, the currency of the exemptions.
Related to this is a contention that no notice had been given that
such issue would be considered and that the parties had not been
given the opportunity to address it. It was also contended that the
sole issue that was properly before the arbitrator was the validity
of the exemptions on the basis averred by the union and that she had
no authority to enquire into such issue. Finally it was contended
that the award was not rationally justifiable in that it had been
based on an erroneous finding that it had been common cause that
the
exemptions had expired. The latter contention introduces the
requirement enunciated in
Carephone
(Pty) Ltd v Marcus NO
1999 (3) SA
304
(LAC) to the effect that an arbitration award must be rationally
justifiable. See also
Shoprite
Checkers (Pty) Ltd v Ramdaw NO
(2001) 22 ILJ
1603 (LAC). I proceed to deal with these grounds and issues
incidental thereto. In doing so I leave aside the question
of whether
it was permissible to raise and canvas new grounds that were not
included in the appellant’s review application
and not even
canvased in the court
a
quo
.
[112] I deal first
with the question of whether the validity of the exemptions on the
basis alleged by the third respondent (the union)
was the sole issue
before the arbitrator. It is so that the opening statement made by
the union representative at the start of the
arbitration does give
the impression that the dispute was about the validity of the
exemptions, it being alleged that they were irregularly
granted, in
that the union or its members, had not been consulted before they
were granted. However, such statement must be read
in the context of
the documentation filed of record as a whole and other material,
including statements made by the appellant’s
then legal
representative.
[113] It is
noteworthy that the union’s representative concludes that
statement with a prayer that ‘the respondent company
comply
with the collective agreement’. The complaint that the union
had taken to the CCMA was that the appellant was not paying
its
employees (the union’s members) the minimum wages that had been
determined by the collective agreement concluded in the
bargaining
council and which came into operation on 14 April 1998. This much is
clear from paragraph 3 of the referral form 7.11
which reads:
‘
3 The
nature of the dispute:
(a) The dispute is about: Tao Ying Metal
Industry’s failure to comply with the minimum wages and
conditions in terms of Metal
and Engineering Industries Bargaining
Council’
What the union wanted was for the CCMA to
conciliate this dispute about the applicant’s failure to pay,
with a view to enforcing
payment of the minimum wages. The
certificate of non-resolution issued by the CCMA reflects the dispute
as: “collective bargaining
provisions – interpretation or
application” (read enforcement for application). Likewise the
Request for Arbitration
form reflects the dispute as: ‘application
of collective agreement.’
[114] That the
dispute before the arbitrator was about the interpretation or
application of the collective agreement was confirmed
by the
appellant’s representative when he stated the following:
‘
Madam
Commissioner the complaint against my client, Tao Ying, is its
failure to pay a collective agreement, it was so formulated in
the
referral to the CCMA, and the relief sought is compliance with a
collective agreement, that is what my learned friend has articulated
to you, that what he wants from you is an order that we shall comply
with the Bargaining Council agreement.’
The
appellant’s representative then went on to submit, by way of a
point
in
limine
,
that the agreement in terms of which the exemptions had been granted
was not a collective agreement within the meaning of item 12
of
schedule 7 to the LRA. The point he was making, if I understand it
correctly, was that the CCMA had no jurisdiction to interpret
or
apply an agreement promulgated under s 48 of the 1956
Labour
Relations Act and
, by implication, the exemptions granted thereunder,
because such an agreement is not a collective agreement as
contemplated in the
LRA.
[115] The issue of
the exemptions was raised by the appellant in the form of a defence
to the union’s claim for payment of the
minimum wages. Such
defence was that the appellant was not obliged to pay such wages
because it had been exempted from doing so and
referred to the
relevant licences of exemption, in particular, the exemption from
part 2
of the 1980 agreement (the main agreement). It is in response
to that defence that the union raised the issue of validity when it
alleged that the exemptions were irregularly granted and therefore
invalid. But this does not detract from the fact that the real
dispute before the arbitrator was enforcement of the terms of the
collective agreement relating to minimum wages. In fact the appellant
clearly accepted this to be the position when it stated the following
in its founding affidavit in the review application:
‘
9.2 In
terms of the dispute referral the dispute is about the applicant’s
failure to comply with minimum wages and conditions
in terms of Metal
and Engineering Industries Bargaining Council.’
[116] Now it is so
that the arbitrator had no authority to enquire into the validity of
the exemptions on the basis that they had
been improperly granted,
and bearing in mind that the bargaining council had been excluded
from the proceedings. However, as mentioned
above, that was not the
sole issue before her. At any rate, this issue became water under the
bridge as it appears that the union
had, during the course of the
proceedings, accepted the validity of the exemptions.
[117] I now turn to
consider the allegation that the expiry of the exemptions was not
properly before the arbitrator and was not canvassed.
During argument
in this court, reference was made to a passage in the questioning of
Mr Coetzee, the appellant’s chief witness,
by the arbitrator
and from this counsel who appeared for the appellant in this court
suggested that the issue of the duration of
the exemption was
generated by the arbitrator herself. He further contended that not
only had the parties been given no notice that
the issue would be
raised, but also that they were not given an opportunity to address
it.
[118]
A closer perusal of the record of the arbitration proceedings reveals
that the issue was first raised by the appellant’s
legal
representative in his address at the start of the arbitration
proceedings. In outlining the further point
in
limine
that he had
raised, the appellant’s counsel quoted item 12(1)(a) of
schedule 7 to the Labour Relations Act to the effect that
an
agreement promulgated under s 48 of the 1956
Labour Relations Act
that
was in force immediately before the coming into operation of the
new
Labour Relations Act (on
11 November 1996) would remain in force
and enforceable for a period of 18 months from the date of coming
into operation of the latter
Act. He then stated the following:
‘
Now
the 18 month period takes you to March 1998 the exemptions which are
challenged in this arbitration were granted in April 1997,
in fact if
I am not mistaken on 7 April 1997 so that they were granted in terms
of the Industrial Council Agreement promulgated in
terms of s 48 of
the old act and
were
in force until March 1998
’
(my
emphasis).
Clearly this
statement means that he was of the view that the exemptions expired
in about March 1998 (he probably confused March with
May). This
statement is significant in another respect to which I shall turn in
due course.
[119]
In his heads of argument the appellant’s legal representative
argued the point
in
limine
that he had
earlier outlined. In doing so he did not retract the statement to the
effect that the exemptions had expired. In response
to the point
in
limine
aforesaid,
the union representative complained vaguely that not enough
information had been provided but nonetheless proceeded to
make a
statement the effect of which was that the exemptions had expired
with the expiry of the 18 months from the inception of the
LRA as
provided for in item 12(1) of schedule 7.
[120] The duration
of the exemptions was also canvassed with Coetzee in his evidence. He
was asked how long the exemptions lasted
and his response was as
follows:
‘
If you look at
the list that we distributed a little while ago you will find that
the council’s main agreement started off in
1980 and it was not
rescinded in the sense that there is no such agreement in force any
more therefore that agreement which was in
force in 1980 is currently
today still in force so, to answer your question, if the exemption
was issued on 19 March 1997 then while
the agreement is in force the
exemption will be in force.’
Further on he says:
‘
So it is not
only my opinion and my council’s opinion, it was also the
opinion of the Exemptions and Arbitrations Board that
while this
agreement is running the exemption is issued to the company for the
duration of that agreement until such time as the
exemption is drawn
. . .’
Coetzee’s view
was that the exemptions were linked to the duration of the main
agreement and that for so long as it remained
in force so would they,
unless withdrawn by the bargaining council or the Minister. Of course
the tenor of his evidence was also
that the exemptions were still in
force at the time of arbitration but he seemed to have assumed that
the main agreement was still
in force. The question of the effect of
the 1998 collective agreement on the exemptions was not canvassed
with him.
[121] In my view,
the above evidence shows that the issue of the expiry of exemptions
was indeed canvassed by the parties and it is
not as if the
arbitrator went on a frolic of her own in dealing with it. The
contention that the issue was not part of the issues
before the
arbitrator, runs counter to what the appellant stated in its founding
affidavit:
‘
8.16
Eventually the first respondent saw it fit to declare a dispute
against the applicant for underpayment of wages alleging that
the
exemptions held by the applicant in fact
expired
or were invalid exemptions’
(my
emphasis).
Moreover the expiry
of the exemptions was not only relevant for a determination of the
issues in dispute but was also an integral
element of the defence
based on the exemptions, which, once it arose, could not be ignored.
I would say that the arbitrator would
have misconducted herself had
she ignored it.
[122] In my view,
the finding that it had been common cause that the exemptions had
expired emanates directly from, and is supported
by, the statements
made by the representatives of the parties, as indicated above. The
difficulty that confronts this court is that
nowhere in the founding
affidavit filed on behalf of the appellant in the review application
was such finding challenged nor was
it even mentioned. The
application was served on the arbitrator and she surely would have
responded and cleared the matter had the
allegation been made that
she would have so grossly misdirected herself. Besides, the award
shows that the arbitrator’s own
conclusion was that the
exemptions expired with the expiry of the main agreement when the new
collective agreement came into operation
on 14 April 1998.
[123] The arbitrator
differed with the legal representatives of the parties only in
respect of the exact date of the expiry of the
main agreement and the
exemptions. She expressed the difference as follows:
‘
These
exemptions were not, with due respect to Advocate Beaton, valid for a
period of 18 months. They remained valid for the duration
of the main
agreement. The agreement terminated with the coming into operation of
a collective agreement concluded in the Metal and
Engineering
Industry Bargaining Council.’
Whether the
arbitrator was correct in this regard is an issue I discuss
hereunder.
[124] It was also
argued on behalf of the appellant that the phrase in the founding
affidavit ‘that the arbitrator had failed
to apply her mind to
the provisions on the exemptions’ encompasses a gross
irregularity that rendered the award susceptible
to review under s 6
of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). PAJA
does not have retrospective effect and
therefore it does not apply to
the present case. When the challenged award was issued in July 2000,
PAJA was not in existence, it
having come into operation on 13
November 2000.
[125]
In my view,
the only notable error committed by the arbitrator was her finding
referred to above that the exemptions lapsed when the
new collective
agreement came into operation on 14 April 1998. The difficulty with
this finding is that it assumed that the coming
into operation of the
new agreement had the effect of terminating the main agreement.
However there was no evidence to this effect.
The only evidence that
has a bearing on this aspect is that of Coetzee. The tenor of his
testimony was that the agreement would be
terminated by the
occurrence of two events: a ministerial notice or withdrawal by the
bargaining council. None of these had occurred
and Coetzee suggested
that the two agreements would have existed side by side. In my view,
the correct position is that adopted by
the legal representatives
during the arbitration to the effect that the exemptions expired when
the main agreement lapsed at the
end of the 18 months transitional
period in May 1998. In any event, this error by the arbitrator does
not detract from her core finding
that when the dispute arose in
August 1998 the exemptions had expired. If anything, this shows that
the arbitrator did indeed apply
her mind to the terms of the
exemptions.
[126]
It has to be borne in mind that an irregularity has to be gross to
render an award susceptible to review. As to what constitutes
a gross
irregularity the following dictum of Schreiner J in
Goldfields
Investment Ltd v City Council of Johannesburg
1938 TPD 551
at 560 is instructive:
‘
It
seems to me that gross irregularities fall broadly into two classes,
those that take place openly, as part of the conduct of the
trial –
they might be called patent irregularities – and those that
take place inside the mind of the judicial officer,
which are only
ascertainable from the reasons given by him and which might be called
latent. . . . Neither in the case of latent
nor in the case of patent
irregularities need there be any intentional arbitrariness of conduct
or any conscious denial of justice.
. . .
The
crucial question is whether it prevented a fair trial of the issue.
If it did prevent a fair trial of the issues then it will
amount to a
gross irregularity
.
(my emphasis) In matters relating to the merits the magistrate may
err by taking a wrong one of several possible views or he may
err by
mistaking or misunderstanding the point in issue. In the latter case
it may be said that he is in a sense failing to address
his mind to
the true point to be decided and therefore failing to afford the
parties a fair trial. But that is not necessarily the
case. Where the
point relates only to the merits of the case, it would be straining
the language to describe it as a gross irregularity
or a denial of a
fair trial. One would say that the magistrate has decided the case
fairly but has gone wrong on the law. But if
the mistake leads to the
court not merely missing or misunderstanding a point of law on the
merits, but to its misconceiving the
whole nature of the enquiry, or
of its duties in connection therewith then it is in accordance with
the ordinary use of the language
to say that the losing party has not
had a fair trial.’
[127]
The above dictum has been followed and applied in a long line of
cases including cases involving administrative decisions decided
in
this court and the LAC. See
Local
Road Transportation Board v Durban City Council
1965 (1) SA
586
(A) at 598;
Paper,
Printing, Wood & Allied Worker’s Union v Pienaar NO
[1993] ZASCA 98
;
1993 (4) SA
621
(A) at 638;
Toyota
SA Motors (Pty) Ltd v Radebe
(2000) 21 ILJ
340 (LAC) at 351;
Stocks
Civil Engineering (Pty) Ltd v Rip NO
(2002) 23 ILJ
358 (LAC) and
Bramford
v Metrorail Services (Durban)
(2003) 24 ILJ
2269 (LAC) at 2282. The same approach applies in the review of
irregularities in constitutional matters. See
S
v Shikunga
1997
(2) SACR 470
(NmSc) at 484 and
S
v Jaipal
[2005] ZACC 1
;
2005
(1) SACR 215
(CC) at 234a-235i.
[128]
I should conclude by pointing out that when viewed in its proper
perspective the complaint that the arbitrator failed to apply her
mind to the provisions of the exemptions in fact relates to
interpretation. It was contended in particular that she misconstrued
the survival clause, the import of which was that the exemptions
applied to the new agreement and therefore continued to
enure
to the
appellant’s benefit. That was in fact the sole issue that was
pursued in the Labour Appeal Court and that was the issue
addressed
in the original heads of argument filed on behalf of the appellant in
this court. In the premises I cannot, with respect,
share the view of
Nugent JA that the Labour Appeal Court misconstrued the issues before
it. I need also emphasize that the contention
that the validity of
the exemptions was the sole issue before the arbitrator and that she
had no authority to arbitrate it was certainly
not raised in the
appellant’s review papers, it emerging for the first time in
this court.
[129] I conclude
that the challenged award is not vitiated by any irregularity and is
rationally connected to the material that was
before the arbitrator.
I would dismiss the appeal.
___________________________
HM MUSI
ACTING JUDGE OF
APPEAL
1
The
test for special leave is contained in
Numsa v Fry’s Metals
(Pty) Ltd
2005 (5) SA 433
(SCA).
2
The
judgment of the LAC is reported at (2006) 27 ILJ 137 (LAC).
3
Rustenburg
Platinum Mines Ltd (Rustenburg Section) v Commission for
Conciliation, Mediation and Arbitration
2007 (1) SA 576
(SCA).
4
Paras
30 and 31.
5
Section
138(1).
6
Sir
Michael J Mustill and Stewart C Boyd
The Law and Practice of
Commercial Arbitration in England
2ed 317. See, too, 554-5.
7
Produce
Brokers Company, Limited v Olympia Oil and Cake Company, Limited
[1916] 1 AC 314
(HL) at 327.
8
McKenzie
NO v Basha
1951 (3) SA 783
(N) at 787H-788A.
9
Steeledale
Cladding (Pty) Ltd v Parsons NO
2001 (2) SA 663
(D) at
672F-673C. See, too,
Russell on Arbitration
22 ed by David St
John Sutton and Judith Gill paras 5-060 and 6-085.
10
Section
3(2).
11
Société
Franco-Tunisienne d’Armement-Tunis v Government of Ceylon
[1959] EWCA Civ 4
;
1959
(3) All ER 25
(CA) at 34-35
.
12
Kannenberg
v Gird
1966 (4) SA 173
(C) at 186G-187E.
13
Section
23.
14
Section
48.
15
Government
Notice R1329 of 27 June 1980 in Regulation Gazette 3026.
16
See,
for example, Government Notice R295 dated 20 February 1981 in
Regulation Gazette 3137.
17
Section
51(4).
18
Section
51(7).
19
Sections
27 and 28.
20
Section
32.
21
Section
30(1)(k).
22
Section
32(3)(e).
23
Section
7(1) of Schedule 7.
24
Section
12(1)(a) of the Schedule.
25
The
committee comprised two employer representatives, a representative
of the SA Electrical Workers’ Union, and a representative
of
the National Union of Metalworkers of South Africa.
26
Read
together with the transitional provisions of Schedule 7 of the
1995
Act.
27
Paragraph
38 of the judgment.
28
See
paragraph 12 above.
29
The
effect of the transitional provision in Schedule 7 of the 1995 Act
was that all industrial council agreements would come to
an end no
later than 10 May 1998.
30
Published
under Government Notice R 404 in Regulation Gazette No 6127 dated 31
March 1998.
31
Section
33.
32
Section
33A.
33
Clause
36 of the bargaining council agreement read with the Metal and
Engineering Industries Dispute Resolution Agreement published
under
Government notice R 406 dated 31 March 1998.
34
Section
127.
35
Section
24(2).
36
National
Union of Metalworkers of SA v Driveline Technologies (Pty) Ltd
(2000) 21 ILJ 142 (LAC) para 36. See too
Telecall
(Pty) Ltd v Logan
[2000] ZASCA 97
;
2000 (2) SA 782
(SCA) paras 10-12.
37
Relying
upon ss 24(2)-(5) of the 1995 Act.
38
Per
Zondo AJP in
Driveline Technologies (Pty) Ltd
, above, para
62.
39
1999
(3) SA 304
(LAC) para 37 read with para 15.
40
Above,
esp paras 20 and 29.
41
Section
145(2)(a)(i) of the
1995 Act.
42
Section
145(2)(a)(iii). See
Amalgamated Clothing and Textile Workers
Union v Veldspun Ltd
[1993] ZASCA 158
;
1994 (1) SA 162
(A) at 169C;
Carephone,
above, para 25.
43
Paras
3 and 30 of the judgment.
44
Judgment
para 30.