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[2016] ZALAC 23
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Public Servants Association and Others v Minister of Correctional Service and Others (JR2363/2011, JA52/2014) [2016] ZALAC 23; [2017] 4 BLLR 371 (LAC) (26 May 2016)
INTHE
LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Not
reportable
Court Case no: JR2363/2011
Appeal Case no: JA52/2014
In
the matter between:
PUBLIC
SERVANTS ASSOCIATION AND 522 OTHERS
Appellants
and
MINISTER OF CORRECTIONAL
SERVICE
First Respondent
MINISTER OF PUBLIC SERVICE &
ADMINISTRATION
Second Respondent
THE GENERAL PUBLIC SERVICE SECTORAL
BARGAINING COUNCIL (“GPSSBC”)
Third Respondent
Heard:
04 March 2016
Delivered:
26 May 2016
Summary:
Parties in dispute concerning the interpretation of a meaning in a
clause agreeing to proceed by
way of stated case without setting
factual background – arbitrator favouring one party’s
view – arbitrator failed
to interpret the words he was called
upon to
interpret – principle that adjudication of a stated case and
the interpretation of contracts cannot properly be interpreted
without a factual matrix restated. Arbitrator’s finding in the
absence of factual basis upon whi
ch
to build the interpretation vitiating the award - decision of the
arbitrator falling outside the band of reasonable decisions
–
court
a quo
’s
judgment upheld – award set aside and remitted to the
bargaining council.
Coram:
Musi JA, Sutherland JA and Murphy AJA
JUDGMENT
C
J MUSI JA
[1] The issue that falls to be decided
in this appeal, namely how to formulate, present and adjudicate a
stated case, has already
received the attention of this Court. The
appeal is with the leave of the court
a quo.
[2] The facts as gleaned from the
affidavits filed in the review application are as follows. During
2009, the Public Servants Association
(PSA) a registered trade union
and various other trade unions that are members of the third
respondent (The General Public Service
Sectorial Bargaining Council
(GPSSBC)) agreed with the first and second respondents – the
Minister of Correctional Services
and the Minister of Public Service
and Administration respectively – to create an Occupation
Specific Dispensation (OSD)
for the Department of Correctional
Services employees (employees). The agreement became known as
Resolution 2 of 2009.
[3] The OSD was to be implemented in
two phases. Phase 1 which took effect on 1 July 2009 entailed that
all employees not previously
accommodated by the OSD created by
Resolution 1 of 2007 would be translated from their old (existing)
salary scales and notches
to new scales and notches determined in
Resolution 2 of 2009 provided that they should not be financially
worse off than before
the translation.
[4] Phase two which was supposed to
take effect on 1 April 2010 would entail financial recognition for
past experience in the Department
of Correctional Services.
[5] Clause 11 of Resolution 2 of 2009
which made provision for phase 2 reads as follows:
‘
Recognition
of experience – Phase 2
11.1
With effect from 1 April 2010 the recalculation of salary notch
position shall be based on DCS experience
as at 30 June 2009 based on
years of experience obtained in addition to the experience required
for appointment on the level. The
recalculation of salary notch will
be limited to officials in the production levels (current salary
level 3 to 8).
11.2
Translation of experience shall be recognized as one notch for every
five years worked, calculated
from the date of employment in DCS
based on new notch of the OSD.
11.3.
The employer shall introduce a basis for salary recognition for
relevant experience on appointment for employees
who are appointed
from outside the public service in production posts.’
[6]
The words “based on the new notch of the OSD” in clause
11.2 gave rise to two competing views of interpreting clause
11.2 and
therefore the implementation of phase 2 of the OSD. The parties could
not agree on the proper interpretation of clause
11.2. The employees
who were all members of the PSA referred a dispute to the GPSSBC.
Conciliation failed and the matter was referred
to arbitration.
[7]
The parties agreed not to adduce any
viva voce
evidence during
the arbitration hearing. They further agreed to hand in a bundle of
documents and to submit heads of argument,
which they duly did. It is
unclear what the purpose and status of the bundle was.
[8]
The appellants, the PSA and its 522 members, argued that clause 11.2
should be interpreted to mean that a calculation should
be made
according to the length of service of each employee, calculated from
the first day of his/her employment in the Department
of Correctional
Services. The employee would then be entitled to advance one notch
for every five years worked, from the next notch
on the OSD to which
the employee had been translated in Phase1. The effect of this
interpretation would be that an employee who
was translated on 1 July
2009 would on 1 April 2010 be given financial recognition for his/her
experience calculated on the notch
attained during phase 1.
[9]
The Ministers were of the view that what was intended was that clause
11.2 would afford further redress to a limited number
of employees
who were left behind, despite long years of service, as a result of
the way the previous salary scales were structured.
They contended
that an assessment would be made, in phase 2, of the service years of
all employees from the date of employment.
Those years would then be
translated to the new OSD salary scales based on the recognition of
every five years in addition to the
experience required upon
appointed. The recognition basis would commence from the first notch
attached to the relevant OSD post
to which the employee translated
during phase 1. Should the exercise show that the employee would have
reached a higher notch on
the new OSD than that which he/she had
attained in phase 1, she/he would then be awarded the higher notch as
stipulated in terms
of the phase 2 translation.
[10]
The arbitrator, after regurgitating the different arguments, decided
that the interpretation advanced by the appellants properly
sets out
the intention of the drafters of clause 11.2. He found that the “new
notch of the OSD” means the new OSD notch
to which the employee
was translated to during the first phase. He therefore issued the
following award:
‘
It
is hereby determined that clause 11.2 of the GPSSBC Resolution 2 of
2009 should be interpreted to read that the notches that
employees of
the first respondent are entitled to in terms of their years of
experience must be added to the individual notch position
of
employees after the interpretation of the phase 1 of OSD. (sic)’
[11]
The Ministers were dissatisfied with the award and they approached
the court
a quo
with a review application to set it aside.
[12]
The court
a quo
correctly restated the review test and the
principle relating to the interpretation of documents.
[13]
The court
a quo
pointed out that the arbitrator was supposed
to interpret the words “new notch of the OSD” but he did
not give any
meaning to the words. He only recanted the arguments and
reached a conclusion without giving proper reasons for such
conclusion.
The court
a quo
found that the arbitrator failed
to carry out his duties when he failed to interpret the words he was
asked to interpret. The court
a
quo
found it astonishing that
the arbitrator could make a finding on what the intention of the
drafters was without hearing evidence
on that issue. It found that
the arbitrator should have asked the parties to present oral
evidence, despite their agreement not
to do so. The court
a quo
found that the arbitrator misconceived the nature of the enquiry when
he failed to engage in the process of attributing meaning
to the
words used in clause 11.2 and by not having regard to the context.
The court
a quo
concluded that he arbitrator resultantly
arrived at an unreasonable conclusion.
[14]
Mr Pauw, on behalf of the appellant, argued before us that the court
a
quo
erred in setting the award aside because the award is
one which a reasonable decision-maker could reach. He pointed out
that the
arbitrator did bring an independent mind to bear on the
issue and settled on a reasonable conclusion because he made a choice
between
two competing interpretations.
[15]
Mr Ramawela, for the Ministers, argued that the court
a quo
was
correct because there were no facts before the arbitrator to assist
him to come to the conclusion that he reached. He submitted
that the
award is not one which a reasonable decision-maker could reach.
[16]
In
Arends
and Others v South African Local Government Bargaining Council
and
Others,
[1]
Murphy AJA set out the approach to follow when parties want an
arbitrator or court to decide a matter on a stated case extensively.
I repeat it herein for the sake of emphasis and to focus arbitrators’
attention to the best practice. Murphy AJA stated the
approach thus:
‘
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. 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. 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.
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.
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.’
[2]
[17] The factual
matrix is important because each agreement must be placed in its
proper context. Agreements are not made in a vacuum;
they are a
product of a particular background, context and knowledge of the
parties thereto. It has been said that words without
context mean
nothing
[3]
and that context is everything.
[4]
That however does not mean that the words used by the parties become
insignificant. Consideration must always be given to the language
used in the particular context without allowing the context to drown
the words chosen by the parties. The words used by the parties
are
the foundation on which the court and or arbitrator must build its
interpretation. The process is succinctly set out in
Natal
Joint Municipal Pension Fund v Endumeni Municipality.
[5]
[18]
I have sympathy for the arbitrator because he was called upon to
interpret a collective agreement devoid of a factual matrix.
He
therefore chose what he perceived to be the rational and logical
contention but failed to interpret the words that he was called
upon
to interpret in their proper context. It is clear from the approach
in relation to the adjudication of a stated case and the
interpretation of contracts that an agreement including a collective
agreement cannot properly be interpreted without a factual
matrix
.
[19]
The absence of a factual plinth on which to build his interpretation
renders his conclusion unreasonable. He could not apply
his mind
properly to the issue before him without a factual substratum. He
should have refused to deal with the matter without
an agreed set of
facts.
[6]
This irregularity distorted the result. The decision of the
arbitrator falls outside the band of reasonable decisions and is
consequently
one which a reasonable arbitrator could not reach.
[20]
I therefore agree with the court
a quo
that the award falls to
be set aside. I also agree with the court
a quo’
s order
that the matter should be remitted to the GPSSBC for the proper
ventilation of the dispute before another arbitrator.
[21]
I therefore make the following order.
1. The appeal is
dismissed with no order as to costs.
______________
C
J Musi JA
Sutherland JA and Murphy AJA agreed
with C J Musi JA.
APPEARANCES
FOR THE APPELLANT:
Adv. Pauw SC with
Adv Hitchings
Instructed by
Martins Weir-Smith Inc
FOR THE RESPONDENT:
Adv. Ramawele
Instructed by State
Attorney
[1]
(2015) 36
ILJ 1200 (LAC).
[2]
At paras 15
to17. Footnotes omitted.
[3]
Novartis
SA (Pty) Ltd v Maphill Trading (Pty) Ltd
2016 (1) SA
518
(SCA) at para 29.
[4]
See
KPMG
Chartered Accountants SA v Securefin Ltd and
Another
2009 (4) SA 399
(SCA) at para 39.
[5]
2012 (4) SA
593
(SCA) at para 18.
[6]
See
Bane v D’Ambrosi
2010 (2) SA 539
(SCA) at para 7.