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Coestee and Another v Transnet Ltd and Others (D76/09) [2009] ZALCD 3 (16 March 2009)

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Labour Law
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Brief Summary

Labour Law — Jurisdiction — Concurrent jurisdiction of Labour Court and Bargaining Council — Applicants, managers at Transnet, challenged disciplinary proceedings initiated against them over alleged misconduct, arguing the matter fell under the Basic Conditions of Employment Act (BCEA) and was purely contractual — Court held that the dispute was regulated under the Labour Relations Act (LRA) and must be resolved through the established dispute resolution mechanisms of the LRA, emphasizing that the Labour Court lacks jurisdiction to intervene in misconduct cases pending arbitration — Applicants required to exhaust internal remedies before seeking relief from the Labour Court.

Comprehensive Summary

Summary of Judgment


1. Introduction


The matter was an application in the Labour Court (Durban) in which two employees sought declaratory and interdictory relief aimed at preventing their employer from proceeding with disciplinary action against them. Although the application was framed as a contractual dispute, the underlying contest concerned jurisdiction: whether the dispute should be dealt with in the Labour Court under section 77(3) of the Basic Conditions of Employment Act 75 of 1997 (BCEA) (read with the common law), or whether it fell to be determined through the Labour Relations Act 66 of 1995 (LRA) dispute-resolution system (conciliation and arbitration) within the bargaining council structure.


The parties were William Adriaan Coetsee and Colleen Susan Evens (the applicants, both managers), Transnet Limited (first respondent and employer), the Transnet Bargaining Council (second respondent), and Leslie Owen N.O. (third respondent, the arbitrator designated in the pre-dismissal arbitration process).


Procedurally, Transnet had initiated a pre-dismissal arbitration process. Before that process proceeded, the applicants approached the Labour Court for relief. On 13 February 2009, the parties consented to an order recording that Transnet would not proceed with disciplinary action against the applicants pending finalisation of the Labour Court proceedings. The judgment determined whether the Labour Court should entertain the matter at all, given the statutory allocation of disputes to specialist labour forums.


The general subject-matter was the lawfulness of disciplinary action (including reliance on delay in instituting it), and whether employees can, by characterising the complaint as contractual “unlawfulness” rather than statutory “unfairness”, bypass the LRA dispute-resolution framework and obtain a status quo-type interdict from the Labour Court.


2. Material Facts


It was common cause that the applicants were managers employed by Transnet and that their alleged misconduct was said to have occurred on 13 November 2007. It was also common cause that Transnet only notified them more than a year later to attend a pre-dismissal arbitration scheduled for 29 January 2009.


The applicants’ Labour Court application was brought in the context of that pending pre-dismissal arbitration. They sought to prevent Transnet from pursuing disciplinary action, and they challenged the jurisdiction of the bargaining council and the arbitrator, relying in particular on the employer’s delay in instituting the process.


The judgment treated as central the fact that the dispute, however formulated, arose from the same factual matrix: the applicants’ alleged misconduct and Transnet’s decision to institute disciplinary proceedings. The court regarded the applicants’ attempt to label the claim as a “purely contractual complaint” (and expressly not as one founded on unfairness) as a strategic characterisation rather than a distinct factual foundation.


3. Legal Issues


The central legal question was whether the Labour Court had jurisdiction to grant declaratory and interdictory relief under section 77(3) of the BCEA (and the common law of contract) in circumstances where the substance of the dispute was the propriety of employer disciplinary action relating to alleged misconduct, a subject the court viewed as expressly regulated by the LRA.


Closely connected to this was whether an employee may avoid the LRA’s prescribed dispute-resolution route (conciliation and arbitration for misconduct disputes) by framing the complaint as one of contractual unlawfulness rather than statutory unfairness, thereby engaging the “concurrent” jurisdiction created by section 77(3) of the BCEA.


The dispute was primarily one of law (jurisdiction and statutory interpretation), applied to largely common-cause facts, with an attendant value-laden policy consideration concerning the integrity of the LRA’s specialist dispute-resolution architecture and the avoidance of forum shopping.


4. Court’s Reasoning


The court situated the matter within the broader jurisprudential difficulty created by “concurrent jurisdiction” in labour matters. It drew heavily on the Constitutional Court’s approach in Chirwa v Transnet Ltd and Others (2008) 29 ILJ 73 (CC), emphasising that jurisdictional provisions must be construed purposively to give effect to the primary objects of the LRA, including the creation of specialist institutions and streamlined procedures for resolving labour disputes.


Although Chirwa dealt directly with section 157 of the LRA and the relationship between the Labour Court and the High Court, the court held that the same reasoning was apposite to section 77(3) of the BCEA in the context of a contest between litigation in court and arbitration in the specialist labour forums. In the court’s view, the intention of the statutory framework would be frustrated if litigants could bypass LRA mechanisms merely by re-labelling what is essentially an LRA dispute as a contractual claim. The court treated this as a form of forum shopping that undermines the coherence and centralised administration of labour dispute adjudication.


A key step in the court’s application of these principles was its conclusion that the same facts underpinned both the purported contractual claim and the LRA dispute: the dispute concerned “the propriety of the applicants’ conduct and Transnet’s decision to take disciplinary action”. That type of dispute was characterised as one “expressly regulated under the LRA” and therefore one that must be ventilated through the LRA’s prescribed dispute-resolution mechanisms. The court further reasoned that the contractual dimension relied upon by the applicants was, in substance, comprehensively addressed within the statutory codification governing conduct-related dismissal disputes.


The court also placed weight on the policy consequences of allowing the application. It reasoned that granting the relief would “open the floodgates” to Labour Court applications in misconduct matters, including applications for status quo orders. It observed that the LRA represented a decisive policy shift away from the status quo interdict practice that existed under the previous labour relations regime, and that misconduct disputes are ordinarily resolved through conciliation and arbitration, not by interdicting disciplinary processes through court proceedings.


In addressing the institutional competence of the Labour Court, the judgment highlighted that the Labour Court has no general arbitral powers, save for the exceptional circumstance in section 158(2) of the LRA, where it may, in its discretion and in the interests of expediting dispute resolution, determine a dispute that ought to have gone to arbitration (in which event it acts as an arbitrator). Outside such exceptional circumstances, the dispute should proceed in the arbitral forum. The court also noted an additional contractual feature: the applicants had agreed, as an express term of their employment contracts, to submit to arbitration, reinforcing the appropriateness of the arbitral route.


Finally, the court held that the applicants’ reasons for choosing the Labour Court route—such as the inconvenience and expense associated with possible unemployment if dismissed and the burdens of defending misconduct charges—were not jurisdiction-conferring considerations. Similarly, even if the merits of the delay-based complaint were compelling, those merits did not determine jurisdiction. The proper course was for the applicants to raise their procedural and substantive objections (including jurisdictional objections) within the disciplinary or pre-dismissal arbitration process, and thereafter approach the Labour Court only by way of review if appropriate.


Given the court’s reliance on Chirwa as determinative, it stated that it was unnecessary to consider other issues and authorities raised in argument.


5. Outcome and Relief


The Labour Court dismissed the application. The court refused to grant the declaratory and interdictory relief sought, holding in substance that the dispute should be dealt with through the LRA dispute-resolution framework (including the bargaining council/arbitration route) rather than by litigation framed as a contractual claim under section 77(3) of the BCEA.


The application was dismissed with costs.


Cases Cited


Chirwa v Transnet Ltd and Others (2008) 29 ILJ 73 (CC)


Boxer Superstores Mthatha and Another v Mbenya (2007) 28 ILJ 2209 (SCA)


Langeveldt v Vryburg Transitional Local Council and Others (2001) 5 BLLR 501; (2001) 21 ILJ 1116 (LAC)


Legislation Cited


Labour Relations Act 66 of 1995, sections 157(1), 157(2), 158(2), and 191(1)


Basic Conditions of Employment Act 75 of 1997, section 77(3)


Rules of Court Cited


No rules of court were expressly cited in the judgment.


Held


The court held that where the factual foundation of a claim is, in substance, a dispute concerning employer disciplinary action for alleged misconduct, the dispute falls within the LRA’s specialised dispute-resolution regime and should be pursued through conciliation and arbitration rather than through an interdict and declarator sought in court under section 77(3) of the BCEA.


It further held that considerations such as the strength of the employees’ defence, the employer’s delay in instituting proceedings, or the practical inconvenience of participating in disciplinary processes are not factors that confer jurisdiction on the Labour Court where the statutory framework allocates the dispute to arbitration. The appropriate course is to raise procedural, substantive, and jurisdictional objections within the disciplinary or pre-dismissal arbitration process, and to approach the Labour Court only by way of review where permitted.


LEGAL PRINCIPLES


Jurisdictional provisions that appear to create “concurrent” jurisdiction in employment-related matters must be construed purposively so as to give effect to the primary objects of the LRA, including the use of specialist tribunals and prescribed dispute-resolution procedures.


An employee may not bypass the LRA’s dispute-resolution mechanisms by re-characterising what is essentially an LRA-regulated labour dispute as a contractual claim under section 77(3) of the BCEA; such re-characterisation risks forum shopping and undermines the coherence of labour jurisprudence.


Misconduct-related dismissal disputes are, as a general rule, intended to be resolved through conciliation and arbitration within the statutory labour dispute-resolution architecture, with judicial intervention generally confined to the review stage, subject to narrowly defined statutory exceptions.


The Labour Court’s power to determine disputes that would ordinarily be arbitrated is limited and exceptional, as contemplated in section 158(2) of the LRA, and does not create a general competence to interdict ongoing disciplinary proceedings on a contractual footing.

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[2009] ZALCD 3
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Coestee and Another v Transnet Ltd and Others (D76/09) [2009] ZALCD 3 (16 March 2009)

LOM
Business Solutions t/a Set LK Transcribers
IN
THE LABOUR COURT OF SOUTH AFRICA
DURBAN
REPORTABLE
CASE NO:  D76/09
DATE
:
2009-03-16
In
the matter between
WILLIAM
ADRIAAN
COETSEE                                                                         First

Applicant
COLLEEN
SUSAN EVENS

Second
Applicant
And
TRANSNET
LIMITED                                                                                    First

Respondent
THE
TRANSNET BARGAINING
COUNCIL                                             Second

Respondent
LESLIE
OWEN N.O.
Third

Respondent
J
U D G M E N T
PILLAY
D, J
:
The
Issue
1.
In
Chirwa v Transnet Ltd & Others
(2008) 29 ILJ 73 (CC)
(Chirwa
),
the jurisdictional contest was between the High Court and the Labour
Court, between administrative law and labour law.
In this case
the jurisdictional contest is between the second respondent
Bargaining Council and the Labour Court, between the common
law and
labour law, between litigation and arbitration.
Central
to the contest in both cases is the “concurrent”
jurisdiction of the Labour
Court
with the Civil Court.  In
Chirwa
it turned on the interpretation and application of section 157(2)
of the Labour Relations Act No. 66 of 1995 (LRA).
In this case,
it turns on the interpretation and application of section 77(3) of
the Basic Conditions of Employment Act No.
75 of 1997 (BCEA).
The
Facts
2.
The
facts of the case are that the applicants, both managers, allegedly
committed misconduct on 13 November 2007.  More than
a year
later, the first respondent employer, Transnet, notified the
applicants to attend a pre dismissal arbitration on 29
January
2009. On 13 February 2009, the parties consented to an order in terms
of which Transnet undertook not to proceed with the
disciplinary
action against the applicants until these proceedings are concluded.
3.
Miss Nel, appearing for the applicants, described the
applicants’ cause of action as a “purely contractual
complaint … still capable of being enforced by a declarator
and interdict in terms of Section 77(3) of the BCEA
”
,
[1]
This was so because the competing bases for jurisdiction under the
provisions of the LRA, BCEA and common law, had to be undone
through
legislation.
[2]
Boxer Superstores
Mthatha and Another v Mbenya 2007
(28) ILJ 2209 (SCA) 11 confirmed that the High Court has jurisdiction
over a purely contractual dispute that bears no reference
to
unfairness.
[3]
4. She
emphasised that this application was not founded on unfairness; it
was founded on unlawfulness.  Unlawfulness is not
necessarily
unfairness.
[4]
She
submitted that
Chirwa
considered both
Boxer
and
Langeveldt
v Vryburg Transitional Local Council and Others
(2001) 5 BLLR 501
;
2001 21 ILJ 1116 LAC
and did not overturn either of them.
Analysis
5.
Both
Langeveldt
and
Boxer
preceded
Chirwa
.
Ngcobo J, in his separate judgment in
Chirwa,
echoed the lament of the Labour Appeal Court in
Langeveldt
about problems that plague labour law jurisprudence as a result of
the concurrent jurisdiction of the Labour Court and the High
Court.
He also noted that the impugned provisions remained on our statutes
despite the LAC’s call in 2001 for them
to be eradicated so as
to deprive the High Court of jurisdiction in employment and
labour matters.
6.
Ideally, legislation should be clear so as to avoid multiple
interpretations, in this instance, about jurisdiction.  Until

that occurs, the courts have to do their best to interpret the
legislation to give effect to its primary objects.
[5]
That is precisely what Ngcobo J set out to do in
Chirwa
.
[6]
The following extracts from
Chirwa show how Ngcobo J accomplished this:
[7]
“
All
of this prevented the development of a coherent labour and employment
relations jurisprudence.”
“
[104]
To address this problem, the LRA creates a specialised set of forums
and tribunals to deal with labour and employment related
matters.
It establishes an interlinked structure consisting of, among others,
various bargaining councils, the CCMA, the
Labour Court and the
Labour Appeal Court.  It also creates procedures
designed to accomplish the objective of simple,
inexpensive and
accessible resolution of labour disputes, which is one of the
purposes of the LRA”
“
A
dispute about the procedural fairness of a dismissal must, like all
other disputes, be dealt with in terms of s 191.  The
bargaining
council having jurisdiction or the CCMA must attempt to resolve the
dispute through conciliation.
[8]
If the dispute remains unresolved for a period of 30 days and if, as
in this case, a dispute relates to the conduct of an
employee, the
dispute must be referred for arbitration.”
[9]
“
It
is in this context and in the light of these primary objects of the
LRA that the provisions of section 157 must be understood
and
construed.”
[10]
“
The
objects of the LRA are not just textual aids to be employed where the
language is ambiguous.  This is apparent from the
interpretive
injunction in s 3 of the LRA which requires anyone applying the LRA
to give effect to its primary objects and the
Constitution.  The
primary objects of the LRA must inform the interpretive process and
the provisions of the LRA must be read
in
the
light
of
its objects.  Thus where a provision of the LRA is capable of
more than one plausible interpretation, one which advances
the
objects of the LRA and the other which does not, a court must prefer
the one which will effectuate the primary objects of the
LRA.
The clear intention of the legislature was to create specialised
forums to deal with labour and employment matters and
for which the
LRA provides specific resolution procedures.”
[11]
“
When
enacting the LRA, parliament did not merely lay down a substantive
rule of law to be enforced by any tribunal competent to
apply the
law.  It went on to entrust the primary interpretation and
application of its rules to specific and specially constituted

tribunals and forums and prescribed a particular procedure for
resolving disputes arising under the LRA.  Parliament evidently

considered that centralized administration and adjudication by
specialised tribunals and forums was necessary to achieve uniform

application of its substantive rules and to avoid incompatible and
conflicting decisions that are likely to arise from a multiplicity
of
tribunals and diversity of rules of substantive law.”
[12]
“
When
a proposed interpretation of the jurisdiction of the Labour Court and
the High Court threatens to interfere with the clearly
indicated
policy of the LRA to set up specialised tribunals and forums to deal
with labour and employment relations disputes, such
a construction
ought not to be preferred.  Rather, the one that gives full
effect to the policy and the objectives of the
LRA must be
preferred.  The principle involved is that where parliament in
the exercise of its legislative powers and in fulfilment
of its
constitutional obligation to give effect to a constitutional right,
enacts the law, courts must give full effect to that
law and its
purpose.  The provisions of the law should not be construed in a
manner that undermines its primary objectives.
The provisions
of subsections (1) and (2) of s 157 must therefore be construed
purposively in a manner that gives full effect to
each without
undermining the purpose of each.”
[13]
“
The
purpose of s 157(1) was to give effect to the declared object of the
LRA to establish specialist tribunals ‘with exclusive

jurisdiction to decide matters arising from [it]’.
[14]
7.
In
the opinion of Ngcobo J, the only way to reconcile the regrettable
consequences of the use of the word “concurrent”
is to
reconcile the provisions of the statute with the primary objects of
the LRA.
[15]
Although the
learned judge was there referring to section 157 (1) and (2)
of the LRA, his opinion is also apposite
for
section 77 (3) of the BCEA.
8.
With
regard to cases in which an applicant has more than one cause of
action Ngcobo J said:
[16]
“
It
could not have been the intention of the legislature to allow an
employee to raise what is essentially a labour dispute under
the LRA
as a constitutional issue under the provisions of s 157(2).  To
hold otherwise would frustrate the primary objects
of the LRA and
permit an astute litigant to bypass the dispute-resolution provisions
of the LRA.  This would inevitably give
rise to forum shopping
simply because it is convenient to do so or as the applicant alleges,
convenient in this case ‘for
practical considerations’.
Here
too, the learned judge’s comments are apposite in the contest
between the LRA and the BCEA read with the common law,
even though he
was referring to the LRA and the Constitution.
9.
In this case, the facts that found the
cause of action under the LRA and the BCEA read with the common law
of contracts are exactly
the same.    They are about
the propriety of the applicants’ conduct and Transnet’s
decision to take
disciplinary action.  That is precisely a cause
of action that is expressly regulated under the LRA.  It is a
cause of
action that must be ventilated through the dispute
resolution mechanism under the LRA.  The alleged breach of
contract that
arises from the same facts is now comprehensively
codified for conduct related dismissal.
10.
This conduct related dismissal case is no different from any other
misconduct dismissal.  It challenges procedural
and substantive
infringements of the applicants’ labour rights.

If the court grants the application, it will open the floodgates to
applications to the Labour Court to adjudicate misconduct cases.
It will also open the floodgates to
status
quo
orders.  The LRA was a
decisive policy shift away from
status
quo
orders under the old LRA of 1956.
11.
Disputes about misconduct dismissals are resolved through
conciliation and arbitration.  Section 158(2) of the LRA
give
the Labour Court the discretion to arbitrate disputes that ought to
have been referred to arbitration in the interest of expediting

dispute resolution. When the court exercises this power, it sits as
an arbitrator. But for this exceptional circumstance, the Labour

Court has no arbitral powers.
12.
In addition to section 158, the applicants
agreed as an express term of their written contracts of employment to
submit to arbitration.
13.
The principle reason the applicants chose
this procedure and this forum seems to be the inconvenience and
expense of being unemployed
if they are dismissed, of defending
themselves against misconduct charges and challenging their dismissal
if that eventuates. They
also challenge the jurisdiction of the
Bargaining Council and the third respondent arbitrator on the ground
that Transnet delayed
instituting disciplinary proceedings for more
than a year. However compelling the merits of the applicants’
case is, they
are not jurisdiction-conferring considerations.
14.
A good defence is all the more reason why
the applicants should subject themselves to the disciplinary
proceedings initiated by
Transnet instead of avoiding it.  At
that forum, whether it takes the form of a disciplinary inquiry or
pre dismissal
arbitration, the applicants can raise all the
jurisdictional objections and complaints on procedural and
substantive grounds, including
grounds that give rise to unlawfulness
and unfairness, the very grounds on which they rely in this case to
persuade the Labour
Court to grant them relief.  They may
approach the Labour Court only on review.
15.
The paucity of decisions on applications to
interdict disciplinary proceedings is an indication that by far the
majority of litigants
acknowledges and accepts the labour relations
system and the demarcation of jurisdiction between various labour
dispute forums.
16.
Given the supremacy of the decision in
Chirwa,
the Court does not have to consider any of the other issues and
authorities raised by either of the parties in argument.
17.
In the circumstances, the application is
dismissed with cost.
_____________
Pillay
D, J
Date
of Editing: 30 March 2009
Appearances:
For
the Applicant: Adv C. Nel instructed by Jacobs & Partners
For
the Respondent: R Haslop – Woodhead, Bigby and Irving
[1]
Paragraph
2 of the Applicants’ Supplementary Heads
[2]
Paragraph
2 of the Applicants’ Further Submissions
[3]
Paragraph
2 of the Applicants’ Further Submissions
[4]
Langeveldt
v Vryburg Transitional Local Council and Others
(2001) 22 ILJ 1116 (LAC) 44, 46-48, 54, 56, 58-59, para 4 of the
Applicants’ Further Submissions
[5]
Chirwa
v Transnet Ltd & Others
(2008)
29 ILJ 73 (CC) para 123
[6]
Chirwa
v Transnet Ltd & Others
(2008)
29 ILJ 73 (CC)  para 115
[7]
Chirwa
v Transnet Ltd & Others
(2008)
29 ILJ 73 (CC)
para
103
[8]
Section
191(1).
[9]
Chirwa
v Transnet Ltd & Others
(2008)
29 ILJ 73 (CC)   para 108
[10]
Chirwa
v Transnet Ltd & Others
(2008)
29 ILJ 73 (CC)  para 109
[11]
Chirwa
v Transnet Ltd & Others
(2008)
29 ILJ 73 (CC)  para 110
[12]
Chirwa
v Transnet Ltd & Others
(2008)
29 ILJ 73 (CC)  para 111
[13]
Chirwa
v
Transnet
Ltd & Others
(2008)
29 ILJ 73 (CC) para 112
[14]
Chirwa
v
Transnet
Ltd & Others
(2008)
29 ILJ 73 (CC) para 113
[15]
Chirwa
v
Transnet
Ltd & Others
(2008)
29 ILJ 73 (CC) para 122 to 123
[16]
Chirwa
v
Transnet Ltd & Others
(2008)
29 ILJ 73 (CC) para 124

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