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[2017] ZALAC 16
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SAFPU and Others v Free State Stars Football Club (Pty) Ltd (JA22/2016) [2017] ZALAC 16; (2017) 38 ILJ 1111 (LAC) (21 February 2017)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: JA 22/2016
In the matter between:
SAFPU
First Appellant
HU
TOROMBA
Second Appellant
LM
MALEK
Third Appellant
BS
SENOKOANE
Fourth Appellant
and
FREE STATE STARS
FOOTBALL CLUB (PTY) LTD
Respondent
Heard:
30 November 2016
Delivered:
21 February 2017
Summary: Employees
entering into fixed terms contracts which provide for a dispute
resolution mechanism – employees
dismissed for operational
requirements referred their dispute to the Labour Court instead to
the dispute resolution forum –
Labour Court holding
considerations which arose from the contractual obligation were not
relevant - staying employees’ matter
and directing that they
refer their dispute to arbitration in the dispute resolution forum in
terms of their contract of employment.
Exceptional circumstances must
exist to exempt the employees from complying with agreement to refer
their matter to the dispute
resolution forum - Labour Court
exercising such discretion and appeal court may only interfere if the
exercise of the discretion
is irrational, capricious or unreasonable
– dispute resolution forum onerous for employee who must pay
fees unlike in the
Labour and Labour Appeal Court – moreover
employees would have the benefit of speedy resolution mechanisms of
the LRA –
matter requiring little evidence as impermissible to
retrench fixed term employees - Labour Court more suitable than forum
to hear
the dispute - such circumstances exceptional so as to warrant
interference in the exercise of the discretion by the Labour Court
–
Appeal upheld and employees directed to proceed with their dispute in
the Labour Court.
Coram: Landman JA,
Savage AJA and Phatsoane AJA
Neutral citation:
SAFPU
v FREE STATE STARS FOOTBALL CLUB (PTY) LTD
(LAC: J22/2016)
JUDGMENT
LANDMAN JA
Introduction
[1]
The South African Football Players Union (SAFPU), and Messrs H U
Toromba, LM Malek, and BS Senokoane, the first, second, third
and
fourth appellants, appeal against a judgment of the Labour Court
(Matyolo AJ), delivered on 24 November 2015, in terms of which,
their
application instituted in the Labour Court under case number
JS1101/2009, was stayed and they were ordered to refer the dispute
to
the ‘Dispute Resolution Chamber’ in terms of their
contractual agreements. The appeal is with leave of the court
of
quo
.
[2]
After hearing the parties, judgment was reserved, and it was
indicated that judgment would not be delivered until after 15 January
2017 unless the parties intimated that they could not settle the
matter. In the event of the parties not settling the appeal, the
parties were directed to file a joint note regarding the status of
the collective agreements in volume 9 of the papers and to indicate
the status of the Dispute Resolution Chamber/Centre (the DRC).
[3]
The parties have advised that they have been unable to file a joint
statement, but they agree that the DRC is not a bargaining
council
and was not established in terms of a collective agreement. A
collective agreement between SAFPU and the Employers’
Association for the Sport of Professional Football in South Africa
exists, but it has no bearing on this appeal. The respondent’s
statement traverses some of the facts on the papers, but as no
application has been made to lead further evidence on appeal, this
appeal is decided upon the facts set out in the record.
The
facts
[4]
The second, third and fourth appellants were professional football
players who entered into fixed term contracts of employment
with the
respondent, a professional football club. Each contract incorporated
and included the respondent’s ‘Employee
Handbook’
and the ‘Football Rules’. They were employees as defined
in terms of the
Labour Relations Act, 66 of 1995
, and professional
footballers as contemplated in the Football Rules.
[5]
The second appellant commenced employment with the respondent on 1
July 2008 and his employment contract was to terminate on
30 June
2011. The third appellant commenced employment with the respondent on
1 July 2008, and his employment contract was to expire
on 30 June
2011. The fourth appellant commenced employment with the respondent
on 1 August 2008 and his employment contract was
to expire on 30 June
2010.
[6]
The sport of professional football is conducted internationally under
the auspices of the International Federation of Association
Football
(FIFA) and the South African Football Association (SAFA). SAFA is an
affiliate of FIFA. The National Soccer League
of South Africa (the
NLS) is the Association of Professional Clubs and a special member of
SAFA. The respondent is a member of
the NSL and was at all material
times bound by the constitution of the NSL as developed and
implemented from time to time, read
together with that of SAFA and
FIFA (the Football Rules) to the extent required.
[7]
On 30 June 2009, the second, third and fourth appellants received
letters of retrenchment, stating that their services would
terminate
for operational reasons on 31 July 2009. On 29 July 2009, the
appellants referred a dispute that they had been unfairly
dismissed
to the Commission for Conciliation, Mediation and Arbitration. On 9
November 2009, the appellants delivered their statement
of claim to
the respondent and the Labour Court. The second, third and fourth
appellants claimed, in effect, the following relief
in the statement
of claim:
·
Payment
of the remainder of the regular remuneration due in terms of their
fixed term contract in terms of section 77(3) of the
Basic Conditions
of Employment Act (the BCEA);
·
Payment
of severance pay in accordance with the provisions of the
Labour
Relations Act (LRA
) and BCEA;
·
Payment
of leave pay due to the appellants;
·
Compensation
equivalent to 12 month’s salary in the event that the court
finds the appellants’ dismissal to have been
substantively and
all procedurally unfair;
·
Costs
of the suit on the scale as between attorney and client.
[8]
On 20 November 2009, the respondent delivered its statement of
defence. The parties held a pre-trial meeting on 9 December 2009
and
a further meeting on 8 April 2015. Paragraph 13.1 of the
supplementary pre-trial minute reads:
‘
The
Respondent contends that the Dispute should have been referred to the
Dispute Resolution Chamber of the NSL (‘Chamber’)
and
that the Applicants [Appellants] are not entitled, alternatively
premature in referring the disputes to the Labour Court. As
a result,
the Respondent seeks an order for the stay of the proceedings in the
Labour Court pending the Outcome of any proceedings
relevant hereto
at the Chamber. In this regard and for purposes of determining the
appropriate forum for a dispute, such as that
alleged in these
proceedings the Respondent intends to rely on Article 18 of the NSL
Constitution, Rule 36.17, of the National
Soccer League Football
Rules, the Employment Contracts of the Second, Third and Fourth
Applicants [… the Appellants], and
section 10.2 of the
Constitution of the South African National Bargaining Chamber for the
Sport of Professional Football.’
[9]
Paragraph 13.10 of the supplementary pre-trial minutes reads as
follows:
‘
The
Applicants contend that the Court retains jurisdiction to adjudicate
the Applicants’ claims at all relevant times. In
addition, the
Applicants shall seek an order that the Honourable Court exercise its
jurisdiction in favour of proceeding with the
Applicants’ claim
in the Labour Court. The Applicants shall argue that exceptional
and/or special circumstances exist herein
in order for the Honourable
Court to proceed with the case, the Labour Court. In this regard the
applicants intend to rely on the
following…’ (Paragraph
13.10.1 to 13.10.22 are omitted.)
[10]
As the individual appellants’ services were terminated on 31
July 2009, their claims relating to the unlawful breach
of their
employment contracts had to be referred to the DRC towards the end of
August 2009.
[11]
The hearing of the matter took place on 15 May 2015. Only the
jurisdictional point was argued. No oral evidence was led at
the
hearing. The matter was argued by both parties with reference to the
supplementary pre-trial minutes and heads of argument
presented to
the court.
The terms of the NSL
constitution and rules
[12]
Articles 18.1 and 18.3 of the constitution of the NSL form part of
the individual appellant’s contract of employment.
Article 18.2
reads as follows:
‘
The
following parties are subject to the jurisdiction of the Dispute
Resolution Chamber and each undertakes to refer their disputes
and
differences to the Dispute Resolution Chamber rather than to Courts
or administrative tribunal’s and to do so timeously
and in full
compliance of this Constitution and the rules: The league; Clubs;
Players; Coaches; Agents.’
It
is common cause that the individual appellants are players as
referred to in the aforementioned Article 18.2.
[13]
Article 18.3 reads as follows:
‘
The Dispute
Resolution Chamber will in particular have jurisdiction over and deal
with the following issues and/or disputes in accordance
with this
Constitution and the Rules:
…
..
The determination of disputes
concerning unfair dismissal and breach of contract and the provision
of the appropriate remedies in
respect of these, including urgent
relief where this is necessary and appropriate.’
[14]
Article 18.4 of the NSL constitution reads as follows:
‘
Disputes
that arise from allegations of unfair dismissal or breach of contract
must be referred to the Dispute Resolution Chamber
in the period of
30 days from the date of the dismissal. The Dispute Resolution
Chamber is entitled to condone the failure of a
party to timelessly
refer such dispute, on application, and may do so in the event that
the delay is not excessive, there is an
adequate explanation for the
delay, and the good prospects of success.’
[15]
Rule 36.17 of the NSL Rules reads as follows:
‘
All disputes
of a non-disciplinary nature relating to a contract of employment
between a player and his club will be settled by
arbitration within
the Dispute Resolution Chamber provided for in these Rules.’
Costs of referral
[16]
The NSL’s Private Dispute Resolution Process consists of three
stages, namely:
·
Referral
to the DRC.
·
Referral
of appeal to SAFA Appeals Board; and
·
Referral
to arbitration before the arbitrator appointed by SAFA.
A
referral to the DRC must be accompanied by a “dispute fee”
of ZAR 1000 excluding Value Added Tax (VAT). This amount
is payable
to the NSL. In the event of dissatisfaction with an award rendered by
the DRC, any party has the right to appeal to
the SAFA Appeal Board.
The appellant is obliged to lodge a notice of appeal, comprehensively
disclosing the grounds of appeal,
within 7 days of the date of the
award and in addition pay an “Appeal Fee”, as determined
in SAFA Constitution. At
present, the cost of referring the matter to
the SAFA Appeals Board amounts to ZAR23 000. A party has the option
to refer an award
of the SAFA Appeals Board to arbitration. The
prescribed in compulsory costs to refer the matter to arbitration
amounts to ZAR30
000. The aforementioned fee is payable before the
appointment of any arbitrator by SAFA. The total referral costs in
order to utilise
the aforementioned three stages process amounts to
approximately ZAR54 000.
The terms of the
employment contracts
[17]
Clause 19 of the individual appellants’ contracts reads as
follows:
‘
19.1 All
disputes arising out or relating to this contract, including disputes
as to the carrying into effect of any such provision
or as to
termination or consequences of termination shall be referred to the
Dispute Resolution Chamber in accordance with the
NSL Rule from time
to time.
19.2. The parties warrant that, in
accordance with the Football Rules, any dispute of whatsoever nature
shall be determined in accordance
with the NSL Rules and in the
Dispute Resolution Tribunals of the NSL rather than before any Court
other Tribunal insofar as it
is a requirement of FIFA and other
Football Rules that internal Dispute Resolution mechanisms available
in football should be utilised
by participants in the game, save
where the Football Rules do not provide an appropriate Tribunal to
determine the dispute.’
Grounds
of appeal
[18]
The grounds of appeal are lengthy but can be summarised as follows.
The complaint is that the court
a quo
failed to exercise its
discretion judicially by finding that the appellants had not shown
that they would personally face difficulties
at arbitration
proceedings and that the factors and circumstances submitted on
behalf of the appellants constituted special circumstances
for
refusing to refer the matter to arbitration. The process prescribed
for dispute resolution before the DRC are more onerous
and
prejudicial as compared to a referral to the Labour Court. The
prescribed process at DRC is less favourable to the individual
appellants than those prescribed by the court. Consequently, it was
contended that the Labour Court should have exercised its discretion
against referring the matter to arbitration.
The
law
[19]
The starting point in this appeal is that identified in
Trencon
Construction (Pty) Limited v Industrial Development Corporation of
South Africa Limited and Another
[1]
where the court said at para 83:
‘
Therefore,
the proper approach on appeal is for an appellate court to ascertain
whether the discretion exercised by the lower court
was a discretion
in the true sense or whether it was a discretion in the loose sense.
The importance of the distinction is
that either type of discretion
will dictate the standard of interference that an appellate court
must apply.’
[20]
The discretion exercised by the court
a
quo
,
in this case, was whether to stay or refuse to stay the litigation
which the appellants had launched in the Labour Court. The
limited
options available to the court demonstrate that it was required to
exercise a strict or narrow discretion in its true sense.
This being
so this Court may only interfere with the exercise of that discretion
if the court
a
quo
“exercised its discretion capriciously or upon a wrong
principle, or has not brought its unbiased judgment to bear on the
question, or has not acted for substantial reasons, or materially
misdirected itself.” See
Clipsal
Australia (Pty) Ltd and others v Gap Distributors and Others
.
[2]
[21]
In considering this question, it must be borne in mind that:
(a)
The
onus
of satisfying the court that it should not exercise its discretion in
favour of referring the matter to arbitration is on the party
who
instituted the legal proceedings (the appellants). See
Kathmer
Investments (Pty) Ltd v Woolworths (Pty) Ltd
[3]
and
Universiteit
van Stellenbosch v J A Louw (Edms) Bpk.
[4]
(b)
The
discretion of the court to refuse arbitration may only be exercised
when a "very strong case" is made out. See
The
Rhodesian Railways Ltd v Mackintosh
[5]
and
National
Bargaining Council for the Road freight Industry and Another v Carl
Bank mining Contracts (Pty) Ltd and Another
[6]
.
It has also been said that "there should be 'compelling reasons'
for refusing to hold a party to his contract to have a dispute
resolved by arbitration". See
Metallurgical
and Commercial Consultants (Pty) Ltd v Metal Sales Co (Pty) Ltd
[7]
.
Lastly,
it has been held that a court must be satisfied that “there is
no sufficient reason why the matter should not be referred
to
arbitration in accordance with the agreement.” See
Metallurgical
and Commercial Consultants (Pty) Ltd v Metal Sales Co (Pty) Ltd
relying
on
Bristol
Corporation v John Aird & Co.
[8]
Evaluation
[22]
The court
a
quo
examined the statement of case and noted that the appellants claimed
that the individual appellants’ dismissal for operational
reasons was unfair and that it was unlawful to dismiss them for this
reason as they were employed in terms of fixed-term contracts.
Buthelezi
v Municipal Demarcation Board (Buthelezi
)
[9]
is authority for the proposition that unless a fixed term contract of
employment provided for termination for operational requirements
that
this measure is not available to terminate such contracts. This
judgment was brought to the attention of the court
a
quo
by Mr Goosen, who appeared there and in this Court, for the
appellants. This decision meant that
prima
facie
the appellants had a good claim for payment of the balance of their
agreed remuneration. The minimum of evidence would be required.
Even
if the respondent persisted with its defence, that the appellants had
been dismissed for operational reasons and challenged
the authority
of the
Buthelezi
judgment, this is a matter of which the Labour Court was eminently
more suitable than the DRC. The failure to appreciate this is
one
factor that permits us to interfere with the strict discretion which
the court
a
quo
exercised.
[23]
The court
a quo
correctly inquired whether there were special
or exceptional circumstances which showed that the matter should not
proceed to arbitration
as agreed in the respective contracts of
employment. The court
a quo
concluded that considerations
which arose from the contractual obligation were not relevant. The
appellants had to show that they
would be individually affected by
being compelled to resort to arbitration. This, with respect, unduly
limits the facts and factors
which may be considered.
[24]
The fact that the appellants would be obliged to lodge a claim within
30 days is not insignificant. The expeditious resolution
of disputes
is a foundational value of the LRA and even disputes that are to be
resolved outside the courts must be resolved with
expedition. Of
course, the period of delay has grown longer and, as pointed out by
Mr Jackson who appeared for the respondent,
the statement of
opposition alerted the appellants to this course of action in 2009.
The delay may give rise in the DRC to defences
that could not be
raised successfully in the Labour Court eg prescription.
[25]
The contracts that the appellants entered into with the respondent
were entered into voluntarily but they are contracts of
adhesion.
There can be little doubt that a request to delete the dispute
resolution clause would have been rejected out of hand.
While there
is little merit as regards the payment of a referral fee of R1 000 to
the DRC, the fact that, in the event of the DRC
finding against the
appellants, they would be obliged to pay R23 000 to appeal the
finding to the SAFA appeals board, is a consideration
which should be
taken into account and weighed in the context of exceptional
circumstances. The same applies as regards the payment
of R30 000, in
the event of the appellants being dissatisfied with the outcome of
the SAFA appeals board, and deciding to refer
the dispute to the
arbitration tribunal. The payment of these fees should be weighed in
the light of the fact that access to the
Labour Court and the Labour
Appeal Court does not involve any charges.
[26]
The result of these misdirections entitles this court to interfere
with the strict discretion of the court
a
quo
and to consider the matter afresh. Taking all the factors discussed
above into account, I would exercise the discretion in favour
of
hearing the dispute and so to dismiss the application to stay the
proceedings.
Costs
[27]
Both counsel submitted that costs should follow the result.
Order
1.
The
appeal is upheld.
2.
Paragraph
1 of the order of the court
a
quo
,
dated 24 November 2015, is set aside and replaced by the following:
‘
The point
in
limine
is dismissed. The parties are to enrol the matter for trial after
holding a pre-trial conference.’
3.
The
respondent is to pay the costs of appeal including the costs of the
application for leave to appeal.
__________________
AA Landman
Judge
of the Labour Appeal Court
Savage
AJA and Phatshoane AJA concurred in the judgment.
APPEARANCES:
FOR
THE APPELLANT:
Adv Goosen
Instructed by Van Gaalen
Attorneys.
FOR
THE RESPONDENT:
Adv Jackson
Instructed by Tim Sukazi
Inc.
[1]
2015 (5) SA 245
(CC);
2015 (10) BCLR
1199
(CC) (26 June 2015).
[2]
2010 (2) SA 289 (SCA).
[3]
1970 (2) SA 498
(A) at 504H.
[4]
1983 (4) SA 321 (A).
[5]
1932 AD 359
at 375.
[6]
(2012) 33 ILJ 1808 (LAC) at para 34.
[7]
1971 (2) SA 388 (W).
[8]
1913 AC (HL (E)) 241 at 252-257 and
260.
[9]
[2005] 2 BLLR 115
(LAC).