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[2021] ZALAC 51
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Gerber v Stanlib Asset Management (Pty) Ltd (JA92/20) [2021] ZALAC 51; [2022] 3 BLLR 251 (LAC); (2022) 43 ILJ 1080 (LAC) (13 December 2021)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
JA92/20
In
the matter between:
RIAAN
GERBER Appellant
and
STANLIB
ASSET MANAGEMENT (PTY)
LTD Respondent
Heard:
21
September 2021
Delivered:
13
December 2021
Coram:
Waglay JP, Davis JA and Kubushi
AJA
JUDGMENT
KUBUSHI
AJA
[1] The
appeal with leave of the court
a quo
is against part of the
judgment and order of that court, which provides that:
‘
The respondent’s
jurisdictional point in respect of claims B and D is upheld and the
proceedings are stayed in respect of
those claims, which are referred
to arbitration in terms of section 158(2)(a) of the LRA,
[1]
the arbitration to be conducted in terms of the respondent’s
compulsory private arbitration policy.’
[2] Before
the commencement of argument, the appellant applied for and was
granted condonation for the late delivery
of his heads of argument
and power of attorney.
[3] The
appellant had referred three disputes to the court
a quo
comprising of claims A, B, C and D. Only claims B and D are relevant
for purposes of this appeal. Claim B pertains to a dispute
in terms
of section 187 (1) of the Labour Relations Act 66 of 1995 (LRA),
referred by the appellant to the court
a quo
on the basis that
his dismissal was automatically unfair. Claim D, on the other hand,
was pleaded in the alternative to the other
claims, and pertains to
the dispute that the dismissal was both substantively and/or
procedurally unfair.
[4] The
issue that came for adjudication, amongst others, before the court
a
quo,
was whether that court has the requisite jurisdiction to
entertain claims B and D, when the appellant is contractually obliged
to refer the disputes to compulsory private arbitration.
[5] The
genesis of the issue before the court
a quo
, was as a result
of one of the
in limine
points raised by the respondent in his
statement of response in answer to the claims raised by the appellant
in his statement of
claim. The respondent supported the points
in
limine
by a separate interlocutory application with a founding
affidavit. The appellant delivered an answering affidavit in answer
to
the interlocutory application raising various defences to which
the respondent replied. The matter was, thus, adjudicated by the
court
a quo
based on a substantive application.
[6] The
in limine
point concerned the question of jurisdiction in that
it was contended that the court
a quo
was non-suited to
entertain the disputes which ought to have been referred to
compulsory private arbitration as required by the
terms and
conditions of employment contained in the employment contract of the
appellant. The said terms and conditions of employment
are averred to
have been incorporated by reference in the letter of employment which
the respondent issued to and was accepted
by the appellant by
attaching his signature thereto.
[7] When
opposing the respondent’s point
in limine
before the
court
a quo,
the appellant, in the main, disputed that he was
bound by the handbook which required dismissal disputes to be
referred to compulsory
private arbitration. He, further, proffered
various other defences, for instance: that compulsory private
arbitration was not discussed
with him at the time of his employment,
he was not advised subsequently about any changes to the terms and
conditions of employment,
the relations handbook was not incorporated
into his contract of employment, the respondent misrepresented
certain facts to him,
the doctrine of election, and the disputes
concerning dismissal for reasons that are automatically unfair are
not contemplated
by the contractual provision on which the respondent
relied.
[8] In
upholding the respondent’s point
in limine
on
jurisdiction, the court
a quo
reasoned as follows:
‘
[13] First,
in general terms, it should be recalled that the LRA encourages
private dispute resolution. If the parties
to a contract of
employment agree that any disputes that arise between them will be
privately arbitrated, the principle
pacta sunt servanda
applies. . . Indeed, the provisions of clause 12.1.1 of the
respondent’s Handbook have been subject of at least two
judgments
by this court, both of which uphold the principle of
compulsory arbitration introduced by this provision. . . There can be
no objection
in principle therefore to the requirement that the
applicant refers any dispute concerning the fairness of his dismissal
to arbitration
in terms of the compulsory arbitration process
established by the applicant’s contract of employment. Insofar
as the applicant
claims ignorance of the relevant provisions, the
fact remains that by signing his letter of appointment, he accepted
that his appointment
was in terms of the respondent’s terms and
conditions of employment, and specifically the disciplinary code and
procedure,
as published in the internet, which he was urged to read.
The applicant’s letter of appointment specifically required him
to familiarise himself with the contents of and functions of both the
employee relations handbook and the employee handbook and
to abide by
the provisions. Insofar as the applicant contends that the employee
relations handbook was created in 2010 and thus
post-dated his
appointment, it is clear that the handbook is regularly amended and
updated and the document to which the applicant
refers (which refers
to a date in 2010) is simply an updated version of the handbook. It
is not in dispute that the compulsory
private arbitration procedure
has been in effect since 2002 and that it has been the subject of the
employee relations handbook
since the applicant’s letter of
employment describes the employee relations handbook in specific and
particular terms for
it to be validly incorporated by reference. The
employee relations handbook, which contains the disciplinary code and
procedure,
is not presented in any terms that entitle the applicant
to rely on the
caveat subscriptor
rule, or to claim that there
was a misrepresentation as to the contents of the respondent’s
policies and procedures by the
respondent when the applicant was
offered employment on the terms reflected in his letter of
appointment. Insofar as the applicant
contends that the respondent
waived its rights to enforce compliance with the compulsory private
arbitration provision, but it
is correct that the applicant’s
unfair dismissal disputes were referred for conciliation and that the
respondent attended
the conciliation meeting, this is not in itself
evidence of a waiver of any right that the respondent may have
enjoyed. Clause
19.2 of the applicant’s letter of appointment
contains a standard non-variation clause which requires any variation
to the
contract to be in writing and signed, and provides that any
failure by the respondent to enforce any of its rights under the
agreement
at any time shall not be deemed to be a waiver. That
notwithstanding, the respondent was entitled to raise the obligation
to refer
disputed dismissals to compulsory arbitration at any time.
The point is a jurisdictional point, not subject to waiver and which
a party (and even the court acting
mero motu
) is entitled to
raise at any time. Finally, the applicant contends that the
compulsory private arbitration procedure does not apply
because at
least claim A, his claim is one of automatically unfair dismissal, a
matter that ought to be dealt by the court. This
submission cannot be
sustained by the plain wording of the employee relations Handbook.
Clause 8.5.2 records that a disciplinary
enquiry will be held if
‘termination of services is possible due to misconduct’.
If the employee is dismissed and the
employee is not satisfied with
the outcome, the employee can refer the matter to private arbitration
with 30 days of the date of
termination. Considered as a whole and
given its proper context, the provision requires any dispute
regarding a dismissal for misconduct
to be referred to private
arbitration. If an employee chooses to characterise the dispute as a
dismissal for a reason that is automatically
unfair, that is a matter
that must be determined at the arbitration process. The present
instance, there is no dispute that the
applicant was dismissed by the
respondent for misconduct, after an informal disciplinary enquiry.
The dispute is one that accordingly
falls within the ambit of the
private arbitration agreement.’
[9] The
appellant’s point of departure, as far as the appeal is
concerned, is that the court
a quo
erred in that firstly, it
did not correctly consider the factual question of whether there was
a contract between the parties that
bound them to compulsory private
arbitration in the circumstances of their relationship. Secondly, if
the court
a quo
had found that there was such an agreement
between the parties, as it did, the court
a quo
did not
exercise a discretion on whether to refer the dispute before it to
arbitration, judicially; hence the core issue for adjudication
by
this court is whether the court
a quo
erred in making a
finding that there is a valid enforceable private arbitration
agreement between the parties; and if so, whether
the court
a quo
judicially exercised its discretion to stay the proceedings in
respect of claims B and D and to refer same to compulsory private
arbitration.
[10] In
essence, the appeal turns on the narrow issue of whether the court
a
quo
had the requisite jurisdiction to entertain the aforesaid
claims when the appellant is contractually bound to compulsory
private
arbitration. If it is found to be so, then the second part of
the enquiry, that of the court
a quo
’s decision to stay
the proceedings and refer the dispute to compulsory private
arbitration, kicks in, and if it is not so,
then that is the end of
the enquiry.
[11] I
deal, hereunder, with the two issues in turn.
Whether
there is a validly enforceable compulsory private arbitration between
the parties
[12] In
trying to overturn the court
a
quo
’s
judgment and order on this point, the appellant raised the same
argument and defences that were raised before the court
a
quo
.
[2]
What he puts at issue is whether the compulsory private arbitration
clause, on which the respondent relies for its
in
limine
point, formed part of the terms and conditions of his employment with
the respondent.
[13] And,
in deciding this question, the court
a quo
had found that the
letter of appointment which incorporated the terms of the
Disciplinary Code and Grievance Procedures by reference,
eventually
integrated the compulsory private arbitration clause into the
appellant’s terms and conditions of employment.
As such, the
court
a
quo
concluded that the appellant was required
to refer any dispute concerning the fairness of his dismissal to
arbitration in terms
of the compulsory private arbitration process
established by his contract.
[14] It
became patently clear that the crux of the dispute is the
construction of the letter of employment signed
by the appellant on 1
August 2005, and whether such letter, by reference, incorporated the
compulsory private arbitration agreement
between the parties in the
appellant’s employment contract.
[15] It
was argued on behalf of the appellant that the court
a quo
did
not correctly consider the factual question of whether the compulsory
private arbitration clause formed part of the terms and
conditions of
the employment contract of the appellant as set out in the letter of
appointment. According to the appellant, at
the time of signing the
letter of employment, the compulsory private arbitration clause was
not contained in the Disciplinary Code
and Grievance Procedures that
were incorporated by reference into the terms and conditions of
employment of the appellant. It was
contained secretly in a separate
document that was not referred to in the letter of appointment which
document was created in 2010
when the appellant had already signed
the employment contract. The appellant, was, further, not informed
about the compulsory private
arbitration clause, nor was he informed
when the terms and conditions of his employment contract were
changed, as such, he did
not know about it.
[16] The
appellant’s submissions that: when the appellant signed the
letter of employment dated 29 July 2005,
the compulsory private
arbitration clause did not form part of the Disciplinary Code and
Grievance Procedures that were incorporated
by reference in the
letter of employment; and that the appellant did not know about the
compulsory private arbitration agreement,
is of no merit.
[17] The
salient terms and conditions in the letter of employment are
contained in clauses 11 and 17, the wording
thereof which, in my
view, is clear and unambiguous and requires no interpretation, state
as follows:
‘
11.
Discipline and Grievances
The Company’s
Disciplinary Code and Grievance Procedure are incorporated herein by
reference and form an integral part of
this contract of employment.
Copies of the aforesaid Disciplinary Code and Grievance Procedure are
available from the Human Resource
Department. The Company requires of
you to forthwith acquaint yourself of the contents and functions of
the said Disciplinary Code
and Grievance Procedure and to abide by
the provisions thereof.’
and
‘
17.
Compulsory Policies and Procedures
You are required to
comply with the Company’s policies and procedures, disciplinary
and grievance procedures, security regulations
or any other rules and
regulations of the Company as contained in the policies and other
documents, including health and safety
rules.
Copies of such rules,
regulations and procedures are available for perusal at the offices
of the Human Resources Department. It
is expected of you to acquaint
yourself with the contents of this documents and you may request the
Human Resources Department
to assist you in this regard and to
explain any provisions which are not clear to you. A short summary of
some of the policies,
procedures, rules and regulations is attached
for your perusal.
Detailed copies of all
the policies and procedures will be available on the STANLIB intranet
or in paper format from your reporting
line executive.
In order for STANLIB to
attain the status of a world class company, flexibility will be
regarded as a core requirement. The Company
hereby wishes to record
that it may thus be required to change such rules, regulations and
policies from time to time. You will,
however, be advised of such
changes should this be the case.’
[18] From
the reading of these clauses, it is clear that the respondent’s
Disciplinary Code and Grievance
Procedures were incorporated by
reference into the terms and conditions of the appellant’s
employment contract. There can
be no dispute about that.
[19] The
appellant’s case is based on the argument that the compulsory
private arbitration clause was not
encompassed in the Disciplinary
Code and Grievance Procedures, and as a result, it could not have
been integrated into the terms
and conditions of the appellant’s
employment contract. This, however, cannot be correct. When
considering the terms of the
employment contract, the appellant,
fails to take into account the various relevant prescripts of the
respondent, relating to the
respondent’s employees. For
example, firstly, the appellant failed to take into account that
together with the letter of
employment he was handed a summary of the
respondent’s conditions of employment. He further fails to take
note that it was
stated in the conditions of employment, amongst
others, that –
‘
This summary of
conditions of employment must be read in conjunction with the
detailed STANLIB handbook which is available on the
STANLIB
intranet.’
and
‘
20.
OTHER BASIC CONDITIONS OF EMPLOYMENT
General terms and
conditions of employment, other than those specified in this contract
and including, but not limited to disciplinary,
grievance, health and
safety, non-smoking, non-discrimination and employment equity, are
governed by certain standard policies,
procedures and practices of
the company (except where such policies/procedures are stated to be
guidelines). These form part of
your conditions of employment and
should be interpreted in the light of actual practice and
interpretation of these Procedures.
Copies of these documents are
available either of STANLIB intranet or Human Resources.’
Secondly,
the STANLIB Employee Handbook referred to in the summary of
conditions of employment, stipulates, amongst others, the
following:
‘
FOREWORD
The purpose of this
handbook is to provide a brief summary of the various conditions and
regulations governing employment within
STANLIB and its subsidiary
companies. It should be read in conjunction with your letter of
appointment, which sets out the terms
and conditions on which you
were employed.
Such conditions, terms,
regulations and guidelines may change from time to time and the
management of STANLIB reserves the right
to amend the Employee
Handbook at its discretion and to advise you accordingly.’
And
‘
INDUSTRIAL
RELATIONS
The Industrial Relations
Policies and Procedures Guide deals at length with the procedures to
be followed when dealing with industrial
relations issues. The guide
consists of three sections:
Ø
Section One Disciplinary Procedure
Ø
Section Two Grievance Procedure
Ø
Section Three Poor Performance
To obtain copies of the
guide, or discuss any aspect of the contents or related matters,
please contact the STANLIB Human Resources
Department.
A copy of the Industrial
Relations Policies and Procedures Guide will be available on the
STANLIB intranet site.’
Thirdly,
the ER Handbook that contains the Disciplinary Procedure Code and
Grievance Procedures stipulates in Clause 2 thereof,
under the
heading “
Scope of Application
”, that:
‘
The Disciplinary
Code and Procedure shall apply to all Employees (including
management, permanent and temporary Employees) of the
Liberty Group,
in respect of disciplinary misconduct in the workplace.’
Furthermore,
and under the same heading the ER Handbook states:
‘
However, this
Disciplinary Code and Procedure will also apply to all companies
within the Liberty Group and all its/their subsidiaries
and
affiliates as per the contract of employment. Currently these
subsidiaries and affiliates include STANLIB Limited, STANLIB
Asset
Management Limited, STANLIB Wealth Management, STANLIB Collective
Investments, STANLIB Multi Manager, STANLIB Africa, Liberty
Africa,
Liberty Group Properties (Pty) Ltd, Liberty Group Properties
Development (Pty) Ltd, Liberty Group Properties Management
(Pty)
Ltd.’
And
again, it is stated in another clause under the same heading that:
‘
Insofar as
Compulsory Private Arbitration is concerned, it must be noted that
this procedure will remain compulsory and binding
on the Company and
all the Employees employed by the Company.’
And
at clause 8.5.2 the ER Handbook provides that:
‘
Possible dismissal
due to misconduct Employees will in terms of their conditions of
employment be subjected to a disciplinary or
formal/informal inquiry
if termination of services is possible due to misconduct. If the
inquiry outcome leads to a dismissal,
and the Employee is not
satisfied with this outcome, the employee can refer the matter to
Compulsory Private Arbitration within
30 days from the date of
termination.
The Compulsory Private
Arbitration is compulsory if the dismissed Employee wishes to
challenge his/her dismissal. This means that
if the dismissed
Employee wishes to challenge his/her dismissal he/she can do so by
referring the dismissal dispute only to Compulsory
Private
Arbitration. The Compulsory Private Arbitration is a term and
condition of employment and thus substitutes the dismissed
employee’s
right in terms of his/her conditions of employment to refer an unfair
dismissal dispute to the CCMA (Commission
of Conciliation, Meditation
and Arbitration).’
Clause
12 thereof, on the other hand, stipulates that:
‘
12.
COMPULSORY PRIVATE ARBITRATION
12.1
Referral of a dispute to Compulsory Private Arbitration
12.1.1 If the
disciplinary enquiry outcome leads to a dismissal, and the dismissed
Employee is not satisfied with the outcome,
the dismissed Employee
may refer the matter to Compulsory Private with 30 days from the date
of termination. A referral to Compulsory
Arbitration must be in
accordance with the prescribed form and must be submitted to the
Employee’s Relations Department.’
[20] From
a reading of these clauses, which are clear and unambiguous, it is
evident that the Disciplinary Code
and Grievance Procedures referred
to in the letter of employment forms part of the ER Handbook which
the appellant’s counsel
referred to as a separate document that
was not referred to in the letter of employment. The salient
provisions of the relevant
prescripts set out above, when read
together, reinforce the notion that there is a connection between the
provisions of the compulsory
private arbitration clause that is found
in the ER Handbook and the Disciplinary Code and Grievance Procedures
referred to in the
letter of employment. Consequently, the court
a
quo
was correct to have concluded in its judgment that the
appellant’s letter of employment describes the employee
relationship
handbook in specific and particular terms for it to be
validly incorporated by reference into the employment contract.
[21] Counsel
for the appellant, eventually ended up conceding in oral argument
that the Disciplinary Code and Grievance
Procedures referred to in
the letter of employment were the same as those contained in the ER
Handbook. She, however, submitted
that as the Disciplinary Code and
Grievance Procedures regulate the employment relationship between the
parties, they do not intend
nor could they be understood to include
anything that relates to a process post the employment relationship;
and no reasonable
person would read into them an agreement that
regulates the relationship between the parties, post-employment, like
the arbitration
process, which is something completely unrelated to
the disciplinary process. According to counsel, what was sought to be
incorporated
in the appellant’s terms of employment was
something that regulates discipline and grievances in the workplace
and should
not be extended to include something else that regulates
the parties’ relationship post the employment and limited their
rights to the statutory dispute resolution forum they might have
chosen.
[22] Counsel,
further, conceded that the Disciplinary Code and Grievance Procedures
included the compulsory private
arbitration clause, but that, the
compulsory private arbitration clause was not binding on the
appellant as it does not deal with
internal discipline. The clause
should not have been there and, thus, it is invalid, so she argued.
[23] It
is my view that the appellant’s argument that the disciplinary
code and grievance procedures should
include only what regulates
discipline in the workplace and cannot include private arbitration
because private arbitration regulates
the relationship
post-employment, is fundamentally flawed. The disciplinary process
and the arbitration process are all part of
the same process.
Although the arbitration process happens after dismissal, both
processes are included in the disciplinary code
and grievance
procedures, because the arbitration clause serves to inform the
employees what process to follow after dismissal.
[24] Counsel
sought support for her submission that, on a proper construction, the
letter of appointment cannot
be construed to incorporate the
provisions of the compulsory private arbitration clause, in the
judgment in
Stocks
Civil Engineering
case.
[3]
However, the judgment
provides no authority for the argument raised by the appellant, in
that this case did not deal with the question
of whether a letter of
appointment can incorporate a compulsory arbitration clause In
addition, reference was made to the judgment
in the
Cape
Group Construction
(Pty)
Ltd t/a Forbes Waterproofing v The Government of the United
Kingdom,
[4]
where the court dealt with a telefaxed quotation that referred to
further terms and conditions that were on the overleaf of the
said
telefax but the overleaf was not transmitted. The issue to be decided
was whether the terms and conditions on the overleaf
formed part of
the quotation. The court held that by omitting to send the reverse
side of the quotation to the respondents, the
appellant must be held
not to have intended to conclude a contract on the basis of the terms
and conditions therein. The court
further concluded that the words
that referred to the conditions embodied on the reverse side of the
quotation, without the said
terms having been made available, to be
meaningless and to be considered as
non
pro scripto
.
The
Cape
Group Construction
case is manifestly different from the matter before this court where,
unlike the present dispute, documents were sent by fax, reference
is
made to terms stated on the back, which were not stated or otherwise
communicated. Since what was described as being on the
back was not
sent, it was held that these terms were not intended to apply. In the
present case the letter of appointment was provided
to the appellant
in full and as indicated, the terms thereof were clear and ambiguous.
[25] In
the matter before this court, the Disciplinary Code and Grievance
Procedures were expressly incorporated
by reference in the contract
of employment. The appellant was, as well, expressly informed that
the said documents were available
for inspection at the Human
Resource Department as well as on the respondent’s intranet. He
was, further, enjoined to acquaint
himself with the contents and
functions of the said documents.
[26] In
light of the above findings, the appellant’s submission that
there are several documents which do
not necessarily follow
conveniently from the incorporation clause and that even if he had
familiarised himself with those clauses
he would not have necessarily
anticipated it and it would not have been factually linked to the
Disciplinary Code and Grievance
Procedures in the workplace, is
similarly without merit.
[27] The
argument that the handbook in which the compulsory private
arbitration clause is contained was not in
place at the time of
signing of the employment letter and thus post-dated his employment,
cannot be justified on this record. There
is undisputed evidence that
the compulsory private arbitration clause has always been a term and
condition of employment for the
employees in all the companies within
the Liberty Group and all its/their subsidiaries and affiliates as
per
the contract of employment, since 2002. And has been the
subject of the employee relations handbook since then. It is not
disputed
that the respondent is a subsidiary of the Liberty Group.
[29] In
addition, the Labour Court has upheld the principle of compulsory
private arbitration introduced by the
provisions of clause 12.1.1 of
the respondent’s employee handbook. This is confirmed by the
respondent in its papers before
the court
a quo
when it
fortified its contention that the compulsory private arbitration
clause had been in effect since 2002 by presenting unchallenged
evidence based on the pleadings from the Commission for Conciliation
Mediation and Arbitration (“CCMA”), in the matter
between
Scott and STANLIB
dated December 2003 and the 2003 CCMA
Ruling, thereof.
[30] I
find the appellant’s further contention that the contract was
secretly amended later to unilaterally
incorporate the compulsory
private arbitration clause, untenable. Although the ER Handbook
relied on by the respondent is dated
2010, it is evident from the
extracts referred to in paragraph 19 of this judgment that the
respondent’s employee handbook
has always been susceptible to
amendments. As the court
a quo
also found, the ER Handbook
referred to is simply an updated version of the handbook.
[31] Having
accepted that the respondent’s Disciplinary Code and Grievance
Procedures form part of the ER
Handbook, it goes without saying that
the compulsory private arbitration clause was ultimately incorporated
by reference in the
letter of appointment and forms an integral part
of the appellant’s employment contract.
[32] Should
the appellant have taken time to read the documents that he was
provided with when he signed the letter
of employment, which
documents further referred him to documents in the respondent’s
intranet and Human Resources Department,
he would have noted that the
compulsory private arbitration clause formed part of his terms and
conditions of employment.
[33] Like
at the hearing before the court
a quo
, the appellant has, in
this court raised various other defences similar to those stated in
paragraph 7 of this judgment. It is
my view that, the appellant
having failed to succeed on the main point in this appeal, all the
other defences he has raised are
of no relevance. Besides, the court
a quo
has in a well-reasoned judgment, rightly dismissed these
defences as having no merit.
[34] The
court
a quo
correctly so, in my view, found that the letter of
appointment incorporated the terms of the disciplinary code and the
employee
handbook which the appellant was encouraged to read and
acquaint himself with. The handbook was, at all times material
hereto,
published on the respondent’s intranet and copies
thereof readily available from the Human Resources Department. All
that
the appellant needed to do was to obtain same on the intranet,
better still, to simply approach the Human Resources Department and
ask for a hard copy thereof and to read and acquaint himself with the
contents thereof. If he had done so, he would have realised
that his
terms of employment incorporate a compulsory private arbitration
agreement between him and the respondent.
Whether
the court
a quo
exercised its discretion in terms of section
158(2) of the LRA, judicially
[35] Having
made a finding that the court
a quo
correctly decided the
issue of jurisdiction, I now have to deal with the second issue
relating to the court
a quo’s
decision to stay the
proceedings and to refer the disputes to compulsory private
arbitration.
[36] As
alluded earlier in this judgment, the respondent supported his points
in
limine
by filing an interlocutory application. The jurisdiction
in
limine
point, which is the subject of this appeal, was applied for in terms
of section 158(2)(a) of the LRA,
[5]
wherein the respondent sought a stay of the proceedings in respect of
the disputes in claims B and D and for the court
a
quo
to
refer the disputes to private arbitration. It is common cause that in
this matter the court
a
quo
having found that it had no jurisdiction to hear the disputes in
claims B and D, decided to stay the proceedings in respect of
those
disputes and referred them to arbitration.
[37] The
reasoning of the court
a quo
when it made the above decision,
is stated as follows in its judgment:
‘
[14] .
. . The recent amendments to s 158 (2) of the LRA provides that if it
becomes apparent during the course of proceedings
that a dispute
referred to the court ought to have been referred to arbitration, the
court may, if it is expedient to do so, continue
with the
proceedings. This is not an invitation to refer matters to this court
which ought ordinarily to be the subject of arbitration
under the
auspices of the CCMA or a bargaining council with jurisdiction. The
applicant has not made out a case in the pleadings
as to why it is
expedient for this court to hear the matter that in the normal course
ought to be referred to the CCMA for arbitration,
nor is any basis
laid for any submission to the effect. For the above reasons, claims
B and D stand to be stayed and referred to
arbitration in terms of
the employee relations handbook.’
[38] The
appellant’s main ground of appeal on this aspect, is for this
court to interfere with this decision
of the court
a quo
on
the basis that the court
a quo
failed to judicially exercise
its discretion in terms of section 158(2) of the LRA and, further,
calls upon this court to exercise
such discretion afresh.
[39] The
gravamen of the appellant’s case is that the court
a quo
erred when it stayed the proceedings and referred the disputes to
arbitration. The submission is that, when the court
a quo
found that the disputes in question ought to have been referred to
arbitration, it should have exercised its discretion in favour
of the
appellant and instead of staying the proceedings and referring the
disputes to arbitration, it ought to have continued with
the
proceedings after considering whether it was expedient to do so,
which it failed to do.
[40] In
terms of section 158(2) of the LRA, the Labour Court is enjoined,
where it becomes apparent that the dispute
ought to have been
referred to arbitration, to stay the proceedings and refer the
dispute to arbitration. If it is expedient to
do so, continue with
the proceedings in which case the court may make any order that a
commissioner or arbitrator would have been
entitled to make. This is
a discretion in the strict sense.
[6]
[41] It
is trite that a court of appeal is not entitled to set aside the
decision of a lower court merely because
the court of appeal would
itself, on the facts of the matter before the lower court, have come
to a different conclusion. The court
of appeal may only interfere
when it appears that the lower court had not exercised its discretion
judicially, or that it has been
influenced by wrong principles or a
misdirection on the facts, or that it had reached a decision which
could not reasonably have
been made by a court properly directing
itself to all the relevant facts and principles.
[7]
[42] It
is trite that a party resisting a stay of court proceedings based on
a private arbitration clause bears
the
onus
of convincing the court that, owing to exceptional circumstances, the
stay should be refused. A court will enforce an agreement
to
arbitrate unless there are compelling reasons to order otherwise.
[8]
[43] Whilst
dealing with the enforceability of the arbitration clause in relation
to the old section 158 of the
LRA, the court
in
Steiler Properties CC v Shaik Prop Holdings (Pty) Ltd,
[9]
at
paras 49 – 54 thereof, emphasised the following:
‘
[49] The
contract provides for arbitration in clause 16. The current
dispute falls within the scope of the arbitration
clause. Arbitration
clauses are governed by the
Arbitration Act
42 of
1965 (The Act).
[50] When
parties, exercising their contractual autonomy, make provision as, in
the present dispute, for the private
resolution of their disputes,
the Courts are enjoined to respect the parties’ choice of
method for resolving their disputes. The
Courts’
deference, to the parties’ choice to arbitrate their disputes,
does not amount to an abdication of jurisdiction.
Arbitration clauses
do not oust the Courts’ jurisdiction. Under the Act, the
Courts retain the powers to assist, supervise
and intervene in the
dispute and the arbitration before, during and after the arbitration.
[51] Due
to the binding nature of the arbitration clause, neither party to
this dispute, may, unilaterally initiate
Court proceedings. The Act,
stipulates that, if either party, unilaterally, initiates Court
proceedings, as the applicant (purchaser)
has done, the other party,
in the position of first respondent (seller), may apply to Court for
an order, staying proceedings.
[52] Unless
it is specifically provided in the contract, neither party to an
arbitration contract may terminate
the contract without the consent
of the other parties to the contract. However, the Court on
application and on good cause
shown, as to why the matter should not
be referred to arbitration in accordance with the contract, may hear
it.
[53] No
argument has been made before me or on papers, to show ‘good
cause’, why the current dispute,
should not be referred to
arbitration, in accordance with the parties’ choice, to resolve
their disputes privately. It is
the practice of our law that
pacta
sunt servanda
. As Cameron J observed, in
Brisley v
Drotsky
[2002 (4) SA 1
SCA p 34 – 35]
Courts, are
required to respect the parties’ contractual autonomy, as it
informs,
inter alia
, the constitutional values of dignity
and equality.
[54] Absent
any special circumstance why the parties’ choice of
arbitration, as a dispute resolution mechanism,
should not be
respected, it is my view, that this application was brought
prematurely. This dispute, should first, have been referred
to
arbitration. Consequently, first respondent’s (seller’s)
application, for stay of proceedings, is granted. However,
I do not
consider it fair, to order costs against the applicant (purchaser).’
[44] Although
the case was decided before the amendment of section 158(2) of the
LRA, the principles enunciated
in the above passages still finds
application. Therefore, in light of the said principles, for the
appellant to succeed on this
aspect, he must show that there is a
basis for this court to interfere with the discretion exercised by
the court
a quo
to stay the proceedings and that there were
exceptional circumstances present for the court a quo not to have
enforced the arbitration
clause.
[45] The
enquiry in this matter is, in essence, whether the court
a quo
’s
discretion to stay the proceedings, in respect of the two claims, was
exercised judicially. If it is found that the discretion
was not
exercised judicially the question that follows would be whether this
court should exercise the discretion afresh not to
stay the
proceedings due to special circumstances or to continue with the
proceedings because it is expedient to do so.
[46] Consequently,
for the appellant to succeed in his appeal, he must first show that
there is a basis for this
court to interfere with the discretion
exercised by the court
a quo
to stay the proceedings, that is,
that the discretion was not exercised judicially. If he crosses this
hurdle, he must then establish
that there are exceptional
circumstances present for the court not to enforce the arbitration
clause.
[47] Furthermore,
when dealing with the application of section 158(2) of the LRA, this
court in
Parliament
of the Republic of SA v Charlton
,
[10]
at paras 34 – 35 thereof, held that:
‘
[34] .
. . Therefore, once it is apparent to the court that the dispute is
one that ought to have been referred to arbitration,
the court may
stay the proceedings and refer the dispute to arbitration or it may,
[with the consent of the parties,] and if it
is expedient to do so,
continue with the proceedings [sitting as an arbitrator]. It cannot
deal with the dispute outside the ambit
of these provisions.
Accordingly, it [the court] has no power to proceed to adjudicate the
dispute on the merits simply because
it is already seized with the
matter. To do so would be in conflict with the provisions of s 157(5)
and s 158(2) of the LRA.
[35] In
resolving labour disputes a clear line must be drawn between the
different fora that have been set up by
the LRA.’
[48] This
case, as well, was decided before subsection 158(2) of the LRA was
amended, but the principle as to how
to exercise the discretion still
finds application to the amended subsection.
[49] It
has, also, been held that by virtue of the use of the word ‘may’
in the provisions of section
158(2) of the LRA, the Labour Court does
not have to automatically assume jurisdiction over the dispute. The
subsection gives the
court the discretion to act under subsection (a)
or (b), that is, it may stay the proceedings and refer the dispute to
arbitration
or if it is expedient, continue with the proceedings.
This is a two stage enquiry. The court must first determine whether
the proceedings
should be stayed, and to refer the dispute to
arbitration if it is so, or it must determine whether it is expedient
to continue
with the proceedings.
[50] In
support of the appellant’s ground of appeal, it was submitted
on behalf of the appellant that this
court should interfere with the
court
a quo
’s decision on the basis that in the first
place, there are sufficient reasons not to stay the unfair dismissal
dispute and
refer it to arbitration. Secondly, the court
a quo
failed to consider whether it was expedient for the court
a quo
to continue with the proceedings.
[51] In
support of his submission that there are sufficient reasons not to
stay the unfair dismissal dispute and
refer it to arbitration, the
appellant contends that the court
a quo
exercised the
discretion to stay the proceedings on a material misdirection that a
private arbitration agreement ousts the ordinary
jurisdiction of the
court, and that the court
a quo
failed to enquire whether
there was sufficient reason not to refer the dispute to arbitration.
[52] The
appellant’s proposition that the court
a quo
exercised
the discretion to stay the proceedings on a material misdirection
that a private arbitration agreement ousts the court’s
ordinary
jurisdiction can no longer be maintained due to my finding that the
court
a quo
’s decision on the jurisdiction point ought
to be upheld. It is not for a court to disregard, replace or override
contractual
terms agreed to by the parties.
[53] More
importantly, as was held in
Parliament
of the Republic of SA v Charlton,
[11]
that section 157(5) of the LRA specifically oust the jurisdiction of
the Labour Court to deal with a dispute that must be resolved
through
arbitration.
[54] It
is my view that when the court
a quo
upheld the
in limine
point of the respondent it at the same time exercised the discretion
whether or not to stay the proceedings. The reason why it
stayed the
proceedings, as already indicated earlier in this judgment, was due
to the fact that it did not have the requisite jurisdiction
to hear a
matter that should ordinarily be referred to arbitration.
[55] A
further reason is that the court
a
quo
,
referred the disputes to arbitration as a way of emphasising the
provisions of the LRA which encourages private dispute resolution.
In
this regard, it reinforced its reasoning by relying on the principle
of
pacta
sunt servanda
.
It is trite that if parties agree in a contract of employment that
any disputes arising between them will be privately arbitrated
then,
absent evidence to the contrary the principles of
pacta
sunt servanda
must apply.
[12]
[56] Furthermore,
in support of his contention that the court
a quo
failed to
consider whether it was expedient for it to continue with the
proceedings, it is the appellant’s argument that
firstly, the
court
a quo
materially misdirected itself on the jurisdiction
of the court in respect of the unfair dismissal dispute for an
automatically
unfair reason; and secondly, because the appellant did
not address the issue of expediency in his papers.
[57] According
to the appellant’s counsel, even if the appellant did not
address the question of expediency
in his papers, the court
a quo
was enjoined by section 158(2)(b) of the LRA to have
mero motu
considered it, but it failed to do so. Counsel further argued that it
would have been expedient for the court
a quo
and the parties
that the disputes be heard together as the disputes in question
formed part of the four claims that were before
the court
a quo
,
and, although the claims are different in terms of what is claimed,
they, however, rely on the same questions of law and fact.
This,
according to counsel, would have helped to avoid potential
conflicting judgments if the claims were to be adjudicated by
different forums.
[58] The
submission by the appellant’s counsel that the court
a
quo
did not consider whether it was expedient for it to hear
the matter, is again without merit. It is evident from reading
paragraphs
13 and 14 of the court
a quo
’s judgment cited
above that the court
a quo
considered whether it was expedient
to continue with the proceedings and, also, supplied various reasons
as to why the dispute
is to be referred to arbitration and made the
determination that it was not expedient for it to deal with the
matter.
[59] That
the appellant did not make out a case in the pleadings as to why it
was expedient for the court
a quo
to hear the matter, is not
the only basis upon which appellant’s submissions was rejected.
The court
a quo
stayed the proceedings because it found that
it did not have the jurisdiction to entertain the disputes in claims
B and D; secondly,
it referred the disputes to private arbitration on
the ground that section 158(2)(b) of the LRA is not an invitation to
refer matters
to the Labour Court which ought ordinarily to be
subject to arbitration.
[60] Furthermore,
the court
a quo
was correct in not continuing with the
proceedings for it would not have been expedient to hear all the
claims together as the
appellant sought to suggest. The appellant’s
argument that the disputes in claims A and C are intricately linked
with the
disputes in claims B and D, is not correct. The disputes in
claims A and C are separate claims and do not fall within the
dismissal
claims (claims B and D) which are misconduct cases, and the
court
a quo
had no jurisdiction to entertain them because of
the arbitration clause.
[61] The,
further, submission that there would be a multiplicity of claims,
stands to be rejected. The unfair dismissal
disputes (claims B and
D), are in substance similar claims; whereas the others are
Employment Equity Act disputes (claims A and
C). They fall under a
different statute that gives rise to a separate cause of action.
These claims should be separated since the
relief sought in claims A
and C and the cause of action are different to claims B and D.
[62] The
oral submission by counsel for the appellant in this court, that it
was wrong for the court
a
quo
, to have not given
reasons why the automatically unfair dismissal dispute must go to
arbitration, but instead gave reasons only
in respect of the
substantively and procedurally unfair dismissal which is an
alternative to the automatically unfair dismissal
dispute, does not
take the appellant’s case any further. This argument was
correctly dealt with by the court
a quo
in its judgment when
it stated the following:
‘
Finally, the
applicant contends that the compulsory private arbitration procedure
does not apply because at least claim A, his claim
is one of
automatically unfair dismissal, a matter that ought to be dealt by
the court. This submission cannot be sustained by
the plain wording
of the employee relations Handbook. Clause 8.5.2 records that a
disciplinary enquiry will be held if ‘termination
of services
is possible due to misconduct’. If the employee is dismissed
and the employee is not satisfied with the outcome,
the employee can
refer the matter to private arbitration with 30 days of the date of
termination. Considered as a whole and given
its proper context, the
provision requires any dispute regarding a dismissal for misconduct
to be referred to private arbitration.
If an employee chooses to
characterise the dispute as a dismissal for a reason that is
automatically unfair, that is a matter that
must be determined at the
arbitration process. The present instance, there is no dispute that
the applicant was dismissed by the
respondent for misconduct, after
an informal disciplinary enquiry. The dispute is one that accordingly
falls within the ambit of
the private arbitration agreement.’
[63] As
is clear from the passage, the arbitration clause requires any
dispute regarding a dismissal for misconduct
to be referred to
arbitration, irrespective of the format in which such a dismissal is
couched. In short, the appellant was dismissed
for a misconduct which
the appellant opted to refer to as an automatically unfair dismissal
in terms of the employment contract
that binds them.
[64] There
was, however, no need for the court
a quo
to decide whether
there was an automatically unfair dismissal or not, before the court
a quo
can refer the disputes to arbitration, as the court
a
quo
, correctly found. The court a quo explains itself as follows
in its judgment:
‘
If an employee
chooses to characterise the dispute as a dismissal for reason that it
is automatically unfair, that is a matter that
must be determined at
the arbitration process. The present instance, there is no dispute
that the applicant was dismissed by the
respondent for misconduct,
after an informal disciplinary enquiry. The dispute is one that
accordingly falls within the ambit of
the private arbitration
agreement.’
[13]
[65] In
the circumstances, it is my view that when the court
a quo
took a decision to stay the proceedings and refer the disputes in
respect thereof to arbitration, it exercised a discretion. And,
for
the reasons provided above, that discretion was exercised
judicially.
[66] As
regards costs, both parties argued for costs in the event of being
successful. As is trite, costs in labour
proceedings do not
ordinarily follow the successful party. Neither of the parties has
made out a case for this court to grant costs
against this trite
principle. I make no order as to costs.
[67] Consequently,
the appeal is dismissed and no order of costs is made.
Kubushi
AJA
Waglay
JP and Davis JA concur.
APPEARANCES:
FOR
THE APPELLANT: S
LANCASTER
Instructed
by Daan Beukes Attorneys
FOR
THE RESPONDENT: F A BODA
Instructed
by Salijee Govendor Van der Merwe Attorneys
[1]
Labour Relations Act 66 of 1995
.
[2]
See paragraph [7] of this judgment.
[3]
Stocks
Civil Engineering (Pty) Ltd v Rip NO
(JA52/00)
[2002] ZALAC 1
(01 February 2002).
[4]
2003 (5) SA 180
(SCA); (99/2002)
[2003] ZASCA 51
at
[4]
–
[16].
[5]
Section 158
(2) “If at any stage after a dispute has been
referred to the Labour Court, it becomes apparent that the dispute
ought
to have been referred to arbitration, the Court may –
(a) Stay
the proceedings and refer the dispute to arbitration.
(b) If
it is expedient to do so, continue with the proceedings in which
case the Court may make any order
that a commissioner or arbitrator
would have been entitled to make. . .”
[6]
Kemp
t/a Centralmed v Rawlins
(2009)
30 ILJ 2677 (LAC) (JA11/06) [2009] ZALAC 8.
[7]
National
Coalition for Gay and Lesbian Equality v Minister of Home Affairs
[1999] ZACC 17
;
2000 (2) SA 1
CC para 11.
[8]
See
Stieler
Properties CC v Shaik Prop Holdings (Pty) Ltd
[2015] 1 All SA 513
(GJ) paras 49 - 54.
[9]
[2015] 1 All SA 513 (GJ).
[10]
(2010) 31 ILJ 2353 (LAC).
[11]
Para 34, thereof.
[12]
NBCRFI
v Carlbank Mining Contracts
[2012] 11 BLLR 1110
(LAC) at para 4.
[13]
See Paragraph 13 of the judgment of the court
a
quo
.