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[2014] ZALAC 69
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Arends and Others v South African Local Government Bargaining Council and Others (PA6/13) [2014] ZALAC 69; [2015] 1 BLLR 23 (LAC); (2015) 36 ILJ 1200 (LAC) (6 November 2014)
REPUBLIC OF SOUTH
AFRICA
IN THE LABOUR APPEAL
COURT OF SOUTH AFRICA, PORT ELIZABETH
JUDGMENT
Case
no: PA6/13
Reportable
In the matter between:
C ARENDS &
OTHERS
Appellants
and
THE SOUTH AFRICAN
LOCAL GOVERNMENT
BARGAINING
COUNCIL
First Respondent
MARTIN LE ROUX KOORTS
N.O.
Second Respondent
NELSON MANDELA BAY
METROPOLITAN
MUNICIPALITY
Third Respondent
Heard:
28 August 2014
Delivered:
06 November 2014
Summary: Review of
jurisdictional ruling- parties agreeing to proceed without leading of
any evidence or agreed statement of case
Such failure unacceptable. -
jurisdictional issue raised in one party’s heads of argument-
arbitrator ruling on jurisdiction
without affording the other party
opportunity to reply- such conduct irregular- arbitrator committing a
reviewable irregularity
– Labour Court order and award set
aside.
JUDGMENT
MURPHY AJA
[1]
This is an appeal against a decision of the Labour Court (Moshoana
AJ) in which, it dismissed an application by the appellants
to review
and set aside a decision of the second respondent (“the
arbitrator”) in which he declined on jurisdictional
grounds to
arbitrate a dispute referred to the first respondent, the South
African Local Government Bargaining Council (“the
SALGBC”).
[2]
As will appear more fully in the discussion which follows, no
evidence was presented at the arbitration hearing. It is nonetheless
possible to state the basic facts by having regard to those stated to
be common cause in the heads of argument and the findings
of the
Labour Court.
[3]
The third respondent is the Nelson Mandela Bay Metropolitan
Municipality (“the NMBMM”) which was formed as a
consequence
of the amalgamation of the erstwhile municipalities of
Port Elizabeth, Uitenhage and Despatch. The formation of the NMBMM
resulted
in salary disparities between employees performing the same
or similar duties. In April 2005, the council of the NMBMM adopted a
resolution that transitional allowances would be paid to qualifying
employees as an interim measure pending a permanent resolution
of the
problem. The remuneration of employees who benefited from the
transitional allowances consisted of their old salary rates
with
their municipalities of origin, plus their transitional allowances.
[4]
The transitional allowance scheme was intended to be a short-term
solution pending the outcome of a national process, “the
Task
process”, intended to provide a new uniform post evaluation and
grading scheme for local government. The Task process
took longer
than anticipated and the relevant parties then sought to substitute
the transitional allowance arrangement through
the conclusion of a
collective agreement, signed by NMBMM and the two trade unions, IMATU
and SAMWU on 11 December 2009. The collective
agreement comprises two
substantive clauses, which provide as follows:
‘
3.
GUIDING PRINCIPLES
3.1
Where employees are currently outside of a confirmed Grade (interim
Grading being the primary
source), they will continue to remain so
until TASK is implemented, as such cases are considered to be
anomalies. Employees within
the same post will not be migrated
outside of a formal Grade (interim grade) even if those employees who
are above the Grade are
in the majority.
3.2
All employees receiving Transitional Allowance will cease to receive
such with implementation
of this agreement.
4.
THE TERMS
4.1
That a process of achieving parity outside of the Task process as an
interim arrangement
be adopted;
4.2
That one pay curve for all employees of the NMBM, aligned to the
former PEM Grading System
be implemented. This would be done by
benchmarking all posts against the current PEM grading scheme or by
means of interim grading
in the case of newly advertised posts.
4.3
Former PEM employees who by virtue of their placement designations
are earning less than
their counterparts, will be migrated.
4.4
The measure that will be used to place this category of employees
will be the signed job
description.
4.5
Existing employees, who as of the date of the signing of the
agreement are currently earning
a salary that falls below the salary
for the benchmark grade for their counterparts performing the same
work, will be migrated
to the notch where the highest earner is
situated within that position on the structure.
4.6
Allowances, including long service bonus will be negotiated
separately.
4.7
The implementation of this agreement shall be 1 July 2009 subject to
further discussions.’
[5]
The notable provisions of the agreement for present purposes are
clause 3.2 which provides that the transitional allowance arrangement
will cease with the implementation of the collective agreement, and
clause 4.2 which provides that one pay curve will be implemented
for
all employees and that such would be achieved by benchmarking all
posts against the grading scheme applicable at the Port Elizabeth
municipality (“PEM”) or by means of interim grading in
the case of newly advertised posts.
[6]
Following the conclusion of the collective agreement, affected
employees (including the appellants) were placed on specific
grades
with associated remuneration packages, and were advised accordingly
in February 2010.
[7]
In July 2010, it was established that the appellants may have been
placed on incorrect grades and that their remuneration was
higher
than it should have been because their grades had been calculated
according to the method used in calculating transitional
allowances
and pursuant to an unlawful instruction of the Municipal Manager. The
NMBMM then sought to remedy the situation. Its
position is
encapsulated in a letter addressed to one of the appellants, Mr. J
van Vuuren, dated 29 September 2010, the relevant
part of which
reads:
‘
Since
the implementation of the TASK Job Evaluation System was delayed for
reasons beyond Council’s control, the Council decided
to
negotiate with SAMWU and IMATU on your behalf regarding a more
beneficial remuneration system to replace the Transitional Allowance
System. As a result of the above negotiations, the Pay Parity
Collective Agreement was signed on 11 December 2009 and implemented
with effect from 1 July 2009.
In terms of this
Agreement you should be remunerated in terms of the PEM Grading
Scheme on Grade 14 with effect from 1 July 2009.
This will further
mean that your Transitional Allowance will also effectively cease as
from 1 July 2009.
As you are aware, the
above was not implemented in your instance, and instead you were
remunerated on grade 16 with effect from
1 July 2009.
You are therefore hereby
officially informed that you have been overpaid since 1 July 2009 and
that the Municipality will have to
correct this error by recovering
monies as soon as possible.
You are however hereby
offered an opportunity to submit written representation on:
1.
Reasons should you not be in agreement with the above proposed grade.
2.
Means on how the overpaid money can be repaid to the Municipality.’
[8]
The appellants construed the conduct of NMBMM as an illegitimate
attempt to rely on the provisions of the collective agreement
to
effect a reduction of their earnings. They contended that the
collective agreement did not empower NMBMM to reduce their
remuneration
below their pre-agreement level of earnings. NMBMM took
the view that the transitional allowance was based on the condition
that
should the salary grade to which an employee was benchmarked for
transitional allowance purposes be lower than the grade determined
by
the Task process, the employee would be liable to pay back the
difference. In other words, it maintained that no employee could
hold
NMBMM to the pay level brought about by the transitional allowance
and that pay levels would be set ultimately by the grading
process.
The transitional allowance had been substituted by the grading
process identified in the collective agreement, and, as
far as NMBMM
was concerned, the appellants had been incorrectly graded in the
implementation of that process. The correction was
aimed at the
incorrect grading after the conclusion of the collective agreement,
which specifically recorded that the interim transitional
allowances
would cease from the date of implementation of the collective
agreement.
[9]
The appellants did not take up the invitation to make written
representations as proposed by NMBMM in its letter of 29 September
2010. They instead referred a dispute to the CCMA concerning an
alleged unilateral change to terms and conditions of employment
“purportedly in terms of a collective agreement”. That
referral was not pursued and a fresh dispute was referred to
the
SALGBC on 30 October 2011. The referral form indicated that the
appellants regarded the nature of the dispute to be one regarding
“the interpretation/application of a collective agreement”
and the outcome sought was: “NMBM to desist from unilaterally
reducing remuneration benefits”.
[10]
The arbitration proceedings convened before the arbitrator on 19
January 2012. Each of the parties presented the arbitrator
with a
bundle of documents and informed him that they were in agreement that
the dispute essentially related to the proper interpretation
of the
collective agreement and that there was no need for any evidence.
Both parties then made opening statements. The appellants’
attorney summarised the factual background to which the
representative of NMBMM added certain submissions. They then agreed
that
the parties would file written submissions within agreed
timeframes and the arbitrator thereafter would issue his award. The
appellants
defined the dispute in their submissions narrowly to be
whether the collective agreement allowed a reduction in salary. The
parties
did not prepare a pre-arbitration minute dealing with the
common cause facts, evidentiary material or issues to be determined.
Nor did they settle and agree upon a written stated case to be placed
before the arbitrator. The appellants were unhappy with the
written
submissions filed on behalf of NMBMM subsequent to the arbitration
hearing. They complained that the submissions included
a wide range
of documents that did not form part of the bundles that were handed
up at the arbitration and that the submissions
canvassed a range of
justifications for the approach taken by the NMBMM that were never
contemplated by the dispute referral and/or
the parties’
delineation of the issues to be determined in the course of their
opening statements.
[11]
The decision of the representatives of the parties to limit
themselves to providing the arbitrator with a verbal account of
the
background relevant to the conclusion of the collective agreement, as
a basis for the parties arguing the matter without leading
oral
testimony, was ill-advised. It appears from the transcript of the
arbitration proceedings that the parties agreed to narrow
the issue
for determination to be whether the collective agreement permitted
the employer to reduce the salaries of the appellants
and that they
would argue the point “on the face of the agreement” in
written submissions to be filed after the hearing.
As mentioned, the
appellants argue that NMBMM‘s written submissions went beyond
the appellants’ view of the issues
agreed for determination by
raising contentious facts and issues going to jurisdiction. NMBMM
also supplemented the bundle of documents
discovered at the
arbitration with documents pertaining to the conclusion of the
agreement, its implementation and an alleged unlawful
instruction by
the Acting Municipal Manager, which introduced a new defence that had
not been raised before the arbitrator. It
also appears that NMBMM’s
attorneys then addressed a letter on 14 February 2012 to the
appellants’ attorneys expressing
the view that as there was not
an agreed statement of facts, and now a dispute about what was common
cause, the parties should
agree to return to arbitration to fully
present their cases.
[12]
Before the parties could resolve their differences of opinion
regarding what was properly before the arbitrator for consideration
and determination, the arbitrator handed down his award on 15
February 2012. In it, he considered a point
in limine
in
relation to jurisdiction, which had been raised for the first time in
the written submissions of NMBMM, and concluded:
‘
I
have carefully considered the arguments before me and it is my view
that the Respondent (NMBMM) is correct in their assertion
that the
SALGBC do not have (sic) the required jurisdiction to determine the
enforceability or implementation
of
a collective agreement.’ (emphasis supplied)
He added:
‘
It
is clear that nowhere in the Pay Parity Collective Agreement a right
exists for a salary not to go down or to remain at a pegged
constant
as stated by the Respondent.
It is my view that after
inter alia
an assessment of the facts of this matter, the true
nature of the dispute, relevant case law presented that the dispute
is not
a dispute that can be arbitrated.’
[13]
Earlier in his award, the arbitrator indicated that he considered
that the dispute was one which required adjudication not
arbitration.
By that I assume he believed the dispute ought to be determined by
the Labour Court. At another point of the award,
the arbitrator
indicated that the dispute might also have been a dispute of interest
rather than a dispute of right.
[14]
The appellants were aggrieved by the approach taken by the
arbitrator, contending that the raising of the jurisdictional issue
in this fashion was contrary to the process that had been agreed at
the arbitration and fell out of the ambit of the dispute to
be
arbitrated. NMBMM predictably argued that the jurisdictional
challenge could be raised at any stage during the proceedings and
the
arbitrator was in any event entitled
mero motu
to determine
the true nature of a dispute.
[15]
The appellants are to some extent the authors of their own
misfortune. They placed the matter before the arbitrator as if there
was a simple, single issue capable of resolution with the barest
minimum of factual matter. Their approach was neither prudent
nor
correct. When parties desire to proceed without oral evidence in the
form of a special case, it is imperative that there should
be a
written statement of the facts agreed by the parties, akin to a
pleading. Otherwise, the presiding officer may not be in a
position
to answer the legal question put to him. Alternatively, without such
a statement, the question put is in danger of being
abstract or
academic. Courts of law and arbitration tribunals dealing with
disputes of right exist for the settlement of concrete
controversies
and not to pronounce upon abstract questions or to give advice upon
differing contentions about the meaning of an
agreement. Where a
question of legal interpretation is submitted to an arbitrator, the
parties must set out in the stated case
a factual substratum which
shows what has arisen and how it has arisen.
[1]
The stated case must set out agreed facts, not assumptions. The
purpose of the rule is to enable a case to be determined without
the
necessity of hearing the evidence.
[2]
An oral stated case predicated upon poorly ventilated and potentially
unshared assumptions as to the facts defeats the purpose
of the
requirements of a stated case and, as this case shows, will lead to
problematic results.
[16]
Rule 20(1) of the Rules for the Conduct of Proceedings before the
CCMA (which might be followed in proceedings before bargaining
councils) allows for a pre-arbitration conference at which the
parties must attempt to reach consensus
inter alia
on the
agreed facts, the issues to be decided, the precise relief claimed
and the discovery and status of documentary evidence.
The parties in
this case did not engage in a proper pre-arbitration process with the
aim of agreeing a stated case. Although the
CCMA rules do not include
provisions equivalent to the provisions of rules 33(1) and (2) of the
rules of the High Court, parties
who prefer to proceed by way of a
stated case at the CCMA or before a bargaining council, in my view,
should follow their prescriptions.
These rules provide that the
parties to any dispute may, after the institution of proceedings,
agree upon a written statement of
facts in the form of a special case
for the adjudication of the court. Such statement shall set forth the
facts agreed upon, the
questions of law in dispute between the
parties, their contentions thereon and shall be divided into
consecutively numbered paragraphs.
The parties must annex to the
statement copies of documents necessary to enable the court to decide
upon such questions.
[17]
Practitioners must follow these rudimentary elements of good practice
when intending to proceed on the basis of a stated case.
An
arbitrator faced with a request to determine a special case where the
facts are inadequately stated should decline to accede
to the
request.
[3]
In this instance,
the arbitrator did not do that. He dismissed the claim for want of
jurisdiction. The plea of jurisdiction was
not raised in any pleading
or supported by any evidence led before the arbitrator. Nor was it
raised in oral argument before him.
It came to light for the first
time in heads of argument filed after the hearing. The appellants
contend that the issue before
the arbitrator by agreement was solely
whether the collective agreement permitted the reduction of the
remuneration of the employees
and that at no point during or before
the hearing was any indication given that NMBMM would seek to widen
the factual or legal
issues to include a plea of jurisdiction.
[18]
The appellants also maintained that there was in any event a shared
understanding between the parties at the hearing that the
dispute
related to the interpretation and application of the collective
agreement and that the arbitrator therefore did indeed
have
jurisdiction in terms of section 24(5) of the Labour Relations Act
[4]
(“the LRA”).
[19]
The manner in which the jurisdictional point was raised and the speed
with which the arbitrator handed down his award meant
that the
appellants were not afforded an opportunity to address him on the
point. To that extent the arbitration proceedings were
not conducted
fairly. The enquiry was undertaken in the wrong manner with the
result that the appellants were denied their right
to have their case
fully and fairly determined. The principal cause of that denial or
failure was the inept manner in which the
case was put before the
arbitrator. Be that as it may, the undertaking of the enquiry in the
wrong or in an unfair manner by an
arbitrator is an irregularity in
the conduct of the proceedings reviewable in terms of section 145 of
the LRA as suffused by the
constitutional right to administrative
action that is lawful and procedurally fair.
[5]
[20]
At the very least when the plea of jurisdiction was raised by NMBMM
in its written submissions, the arbitrator ought to have
invited the
appellants to submit additional argument on the point before handing
down his award. The attorneys for NMBMM understood
that and thus
suggested in their letter of 14 February 2012 that the arbitration be
re-convened. Their proposal was overtaken by
events. The wiser course
for NMBMM at that point might have been to abandon the award and for
the matter to have been argued on
a proper statement of facts clearly
delineating the issues.
[21]
Counsel for NMBMM has put before us a cogent argument in support of
the contention that the arbitrator lacks jurisdiction in
terms of
section 24 of the LRA because the dispute does not relate to the
interpretation and application of a collective agreement.
The
dispute, he argued, has nothing to do with the interpretation or
application of the collective agreement which merely provides
in
clause 4.2 that “one pay curve for all employees of the NMBM
aligned to the former PEM Grading System be implemented”.
This
was done by “benchmarking all posts against the current PEM
grading scheme or by means of interim grading in the case
of newly
advertised posts”. Thus, according to counsel, the dispute is
about how the appellants should have been graded before
they were
migrated to the pay parity scheme. The collective agreement merely
provides a framework within which to slot employees
in grades
predetermined by the relevant task team. The collective agreement
does not include any prohibition on the reduction of
employee
remuneration, nor does it govern the situation where the
implementation of the agreement results in the employees being
incorrectly graded. The answers to the questions of whether the
appellants were unlawfully placed on the incorrect grades and whether
the municipality had the right to correct the grade and reduce the
appellants’ salaries, counsel argued, cannot be determined
with
reference to the collective agreement. The dispute, it was submitted,
therefore has nothing to do with the interpretation
and application
of the collective agreement but is concerned with the manner in which
the agreement was implemented and thus fell
outside the scope of
section 24 of the LRA. Hence, counsel concluded, the arbitrator got
it right on jurisdiction and the appeal
should be dismissed for that
reason.
[22]
Counsel’s submissions are predicated upon the premise that the
sole provision which could possibly have conferred jurisdiction
on
the arbitrator was section 24 of the LRA. I doubt that is correct. If
it were true then there may be merit in the contention
that it would
be pointless to refer the dispute back to arbitration. Given the
manner in which the case was presented, it is not
clear whether the
appellants have alleged that the dispute about the reduction of
salary was unfair conduct involving the provision
of benefits and
thus constituted an unfair labour practice. It appears from the
papers that the parties are
ad idem
that the dispute is
about the implementation of the collective agreement.
[23]
It is unnecessary for this Court to decide the jurisdictional issue.
It has not been properly ventilated because of the inept
manner in
which the parties presented their cases to the arbitrator. As already
discussed, where parties wish to proceed by way
of a stated case,
they are obliged to set out the facts upon which the proposed legal
argument is to rest, to define the questions
of law that the
arbitrator is being asked to determine and to set out the parties’
contentions in relation to those questions.
Had that been done, the
question of jurisdiction in this case would probably have been
addressed more fully with due consideration
to the relevant statutory
provisions and the applicable collective agreements
and
in particular clause 5 of the collective agreement which provides
that disputes regarding the implementation of the agreement
should be
referred to arbitration
.
[24]
The absence of any evidence; the absence of a stated case; and, the
manner of its presentation make it impossible for this
Court on
appeal to determine whether the dispute is indeed one about the
implementation of the collective agreement, and, if so,
how it should
be resolved. This Court cannot resolve the question of jurisdiction
or the merits of whether the new grading system
had been correctly
implemented in terms of the applicable contracts and neither could
the arbitrator.
[25]
The arbitration proceedings should accordingly be set aside on the
ground that the arbitrator committed an irregularity in
undertaking
the inquiry in the misconceived manner in which he did. As fault lies
with both parties, it is just that they should
bear their own costs
in the appeal and the court below.
[26] The following orders
are made:
i)
The appeal is upheld with no order as to costs.
ii)
The order of the Labour Court is set aside and substituted with the
following
order:
“
The
award of the second respondent dated 15 February 2012 is hereby
reviewed and set aside with no order as to costs.”
_______________
Murphy
AJA
I
agree
________________
Waglay
JP
I
agree
________________
Dlodlo
AJA
APPEARANCES:
FOR
THE APPELLANT:
Adv J G
Grogan
Instructed
by
Gray Moodliar attorneys
FOR
THE THIRD RESPONDENT:
Mr Minnaar Niehaus of Minnaar Niehaus
Attorneys
[1]
National
Union of Mineworkers and Others v Hartebeesfontein Gold Mining Co
Ltd
1986 (3) SA 53
(A) at 56G-57E.
[2]
Bane
v D’Ambrosi
2010
(2) SA 539
(SCA) para 7; and
Minister
of Police v Mboweni
(657/2013)
[2014] ZASCA 107
(5 September 2014).
[3]
Minister
of Police v Mboweni
(657/2013)
[2014] ZASCA 107
(5 September 2014) para 8.
[4]
Act
66 of 1995.
[5]
Section
33 of the Constitution. See
Goldfield
Investments and Another v City Council of Johannesburg and another
1938
TPD 551
;
Sidumo
and Another v Rustenburg Platinum Mines Ltd and Others
2008
(2) SA 24
(CC) at para 267; and
Herholdt
v Nedbank
2013
(6) SA 224
(SCA) at para 21.