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[2011] ZALCJHB 155
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Lechet v Red Alert (Pty) Ltd and Other (JR589/2010) [2011] ZALCJHB 155 (23 June 2011)
REIZEL LECHELL v RED
ALERT(PTY)LTD CCMA, E.TLHOTLHALEMAJE CASE NO JR 589/2010- Review
Application-Constructive dismissal, Lack
of Jurisdiction to
arbitrate. Service Agreement
IN THE LABOUR COURT OF SOUTH AFRICA
HELD IN JOHANNESBURG
Case No: JR589/2010
In the matter between:
REIZELL LECHET
...................................................................................
Applicant
AND
RED ALERT (PTY) LTD
...................................................................
1
st
Respondent
COMMISSION FOR CONCILIATION
MEDIATION AND ARBITRATION
..............................................
2
nd
Respondent
E TLHOTLHALEMAJE
.................................................................
3
RD
Respondent
JUDGMENT
CAWE AJ
[1] This is a review application wherein the Applicant
seeks to review and set aside the arbitration award handed down by
the Third
Respondent (hereinafter referred to as the Commissioner),
under case number GAJB16677/09. The Commissioner held that the CCMA
lacked
the requisite jurisdiction to arbitrate the constructive
dismissal between the parties because clause 11.2.1 of the Service
Agreement
of the parties required the dispute to be referred to
private arbitration.
[2] The Applicant bases its review application on the
contention that the Commissioner was not entitled to declare that the
CCMA
did not have jurisdiction to hear the matter on the basis of the
arbitration clause because the issue was not raised by the First
Respondent nor was it raised in the pre-arbitration minute between
the parties.
[3] Another contention held by the Applicant is that the
Commissioner committed an irregularity in finding that;
(i) The arbitration clause did not cover constructive
dismissal dispute as such disputes are contractual and not covered by
the
Labour Relations Act.
The arbitration clause bars the CCMA from exercising
jurisdiction over constructive dismissal cases.
[3] The most important subclause of clause 11 is
11.2.7 which reads
“
shall be decided by
arbitration and settled as set out in this clause”
The Facts
[4]
The Applicant alleges that he was employed by
the First Respondent in terms of a Service Agreement. Clause 11 of
the Service Agreement
provides as that the arbitrator, in disputes
arising from the agreement, shall be appointed by the Arbitration
Foundation of South
Africa and sets out the terms of reference of the
arbitration.
[5] The Applicant alleges that he was constructively
dismissed by the First Respondent on the 29
th
May 2009. He
duly referred a constructive dismissal dispute to the CCMA.
[6] At the CCMA the First Respondent raised a point in
limine contending that the Applicant was not its employee. This then
meant,
according to the First Respondent, that the CCMA did not have
jurisdiction to arbitrate the matter. This is also noted in the
arbitration
minute of the parties as the only
point in limine
raised. The issue of the arbitration clause was never raised by the
First Respondent at any stage of the proceedings before the
Commissioner.
Grounds for review
[7] Advocate Salooje, for the Applicant, submitted that
an arbitrator is entitled to
mero motu
raise the issue as to
whether or not he has jurisdiction to decide the matter. In this
regard he cited
CWU v Tau Ying Metal Industries & Others
[2008] 29 (ILJ) 2461 (CC)
and
Eskom v Marshal & others
[2003] 1 (BLLR) 12 (LC).
He however, goes on to submit that the existence of an
arbitration clause in a contract that does not raise any
jurisdictional point.
He cites Harms Amlers Precedents of Pleadings
6
th
ed at 32:
“
An Agreement to arbitrate
does not deprive the Court of its jurisdiction over the dispute
encompassed by the agreement. An Arbitration
Agreement is, therefore,
not an automatic bar to legal proceedings in ordinary Courts.
”
[8] Citing
Yorigmi Maritime Construction Co Ltd v/s
Nissho – Iway Co Ltd
1977 (4) SA 682
(c)
and
Stocks
Contruction (OFS) (Pty) Ltd v/s Metter – Pingan (Pty) Ltd
1978
(4) SA 34(T)
,
advocate Salooje submits that a defendant wishing
to rely upon an arbitration clause, must either apply for the
proceedings to
be stayed or raise a special plea. Consequently, in
the absence of the employer raising the existence of the arbitration
clause,
the arbitrator exceeded his powers in raising such a clause
mero motu
.
[9] I find the above argument persuasive. The parties
elected to refer the dispute to the CCMA. Both were well aware of the
existence
of the arbitration clause in the Service Agreement. Neither
raised it at any stage in their interactions nor at the arbitration.
By deviating from the pre-arb minute, that is whether or not the
applicant is an employee of the First Respondent or not, the
Commissioner deviated from the parties’ mandate regarding the
dispute he was called upon to settle.
[10] Applicant’s Counsel submitted that the
Carlbank Mining Contracts (Pty) Ltd v/s NBCRFI
[2010] 11 BLLR 4412
(LC) 1148 – 1149
settled the matter regarding the referral
of disputes to the CCMA as opposed to private arbitration. In that
case Van Niekerk J
states:
“
Both counsel referred to
section 147 of the LRA. Section 147(6) contemplates the referral of a
dispute to the CCMA in circumstances
where it becomes apparent that
the dispute ought to be resolved through private dispute resolution
in terms of a private agreement
between the parties to the dispute.
The section provides that the CCMA may either refer the dispute to
the appropriate person or
body for resolution through private-dispute
resolution procedures or appoint a commissioner to resolve the
dispute in terms of
the Act”.
[11] I find Applicant’s counsel’s
submissions compelling as the relevant section of the LRA confers
jurisdiction on
the CCMA to hear disputes that are ordinarily
referred to a private dispute resolution body. It is clear that the
Commissioner
failed to consider clause (b) of section 147 of the LRA
which reads:
“
the CCMA may appoint a
Commissioner to hear the matter.”
[12] The Applicant raised a further ground of review in
that the dispute referred to the CCMA was that of constructive
dismissal
in terms of the Labour Relations Act and not the
contractual relationship between the parties. The Commissioner, it
was submitted
by the Applicant’s counsel, placed reliance on
the contractual relationship of the parties in terms of the Service
Agreement.
[13] He went further to submit that an employee alleging
constructive dismissal does not have to allege or prove a breach of
contract
or a repudiation of the contract in order to succeed. In
view of this fact, he continued, even if the Commissioner was correct
in
mero motu
raising the jurisdictional issue, in light of the
Service Agreement, the matter is still reviewable. Relying on
Murray
v/s Minister of Defence [2008] 6 (BLLR) 513 (SCA)
Counsel cited
paragraphs 10 and 11 of the aforementioned judgement which stipulate
that;
“
And it is no longer
necessary under either the constitutionally developed common law or
under the LRA to continue to invoke concepts
such as repudiation (as
was previously necessary) to unmask the true substance of the
parties’ dealings.
That substance, as was pointed out before the 1995
LRA, is that the law and the Constitution impose ‘a continuing
obligation
of fairness towards the employee..... The obligation has
both a formal procedural and substantive dimension: it is now
capitulated
in the constitutional right to fair treatment in the
workplace.”
[14] The arbitration clause sets out which dispute shall
be arbitrated according to the Service Agreement. Any dispute arising
out
of or in connection with this agreement or the subject matter of
this agreement including, without limiting, any dispute concerning:
“
14.1 the existence of the
agreement apart from this clause;
14.2 the interpretation and effect of this agreement;
14.3 the parties’ respective rights or obligations
under the agreement;
14.4 the rectification of the agreement;
14.5 the breach, termination or cancellation of the
agreement of any matter arising out of the breach, termination or
cancellation;
14.6 damages in delict, compensation for unjust
enrichment or any other claim, whether or not the rest of the
agreement, apart from
this clause, is valid and enforceable;
14.7 shall be decided by arbitration and settled as set
out in this clause.”
[15] I tend to agree with the Applicant’s
Counsel’s submission that in the instant case the arbitration
clause simply
does not cover the dispute in point. This means,
therefore, the Commissioner erred in relying on the Service Agreement
to oust
the jurisdiction of the CCMA to hear the matter.
[16] Further, in the agreement of the Applicant’s
Counsel, he submitted that there were cost implications for the
Applicant
if he were to go the private arbitration route. Counsel
raises the point that;
“
An Arbitrator cannot
without more, non-suit an employee because there exists an
arbitration clause, without considering the consequences
of that
party having to be saddled with legal costs in order to ventilate the
dispute”
[17] I agree with this submission as the CCMA is freely
accessible to the public. On the other hand private arbitration is
costly
and extremely ardous. By going the CCMA route, the Applicant
was trying to guarantee the resolution of his dispute and ensuring
that he does so at minimal cost.
[18] In response to the Applicant’s submission,
advocate Hinrichson, for the Respondent, argued that before
determining whether
a disputant is an employee or not the
Commissioner has to determine whether the CCMA has jurisdiction or
not to hear the matter.
He argued further that in terms of section
147 (6) of the LRA, once a dispute is referred to the CCMA and there
is a private arbitration
clause then the Commissioner has a
discretion to refer it to private arbitration and the Courts are
loathe to interfere with this
discretion.
[19] Advocate Hinrichson submitted that the
Carlbank
case
(supra)
deals with Bargaining Councel and collective
agreements and is, therefore, not applicable to the present case.
[20] Counsel for Respondent ignores or fails to consider
that the Judge in the
Carlbank
case
(supra)
in
paragraph 18 says “
.... Counsel has a discretion to prevent
or call a halt to any private arbitration and tackle the dispute
itself.”
In the present case the parties were at the CCMA,
an institution fully covered by the provisions of Section 147(b) of
the LRA.
[21] The Respondent’s counsel loses sight of the
fact that paragraph 21 of its answering affidavit. Respondent admits
that
the issue to be decided was whether the Applicant was an
employee or not. Significantly it is the Respondent that raised the
point
in limine
at arbitration. That was the ideal forum to
raise the jurisdictional point
in limine
regarding the Service
Agreement of the parties. It elected to confine itself to the issue
of whether the Applicant was an employee
of the Respondent or not.
The point
in limine
application raised by the Respondent only
deals with proving that the Applicant was not an employee and
therefore the CCMA lacks
jurisdiction to entertain the dispute. The
same stance is taken at the arbitration. No mention of private
arbitration is made.
[22] What complicates matters further is the fact that
the Commissioner does not give reasons for using his discretion in
out suiting
the referral as in his award [paragraph 18] he states
that “
It is not my intention to enquire or pronounce on the
validity of the Service Agreement, more specifically oral evidence
was not
led in that regard, and further in view of the dispute
surrounding its origins.”
[23] In dealing with Section 146 (b) the Commissioner
states that;
“
In my view, this is not an
ordinary case where the Commission can willy-nilly assume
jurisdiction over this matter as there is more
to it than merely an
issue of whether the Applicant was an employee or not. The
relationship between the parties emanated from
the Shareholders’
Agreement which also curiously contains a dispute (arbitration)
clause which is an exact replica of the
arbitration clause found in
the Service Agreement.”
[24] In conclusion, I am persuaded that the Commissioner
did not apply his mind to the issues raised in the Respondent’s
point
in limine. He went off at a tangent and dealt with an issue
that was not raised in the Respondent’s papers and/or in oral
argument at the arbitration.
Order
[25] I accordingly make the following order:
The Third Respondent’s (the Commissioner) ruling
that the CCMA lacks jurisdiction to arbitrate the dispute and that
the
dispute should be referred to the private arbitration is
reviewed and set aside.
There is no order as to costs.
_________________
CAWE AJ
Acting Judge of the Labour Court
Date of hearing: 05 May 2011
Date of Judgment: 23 June 2011
Appearances:
Applicant: Adv. YF Saloojee
Instructed by: Cliffe Dekker Hofmeyer Inc
Respondent: Adv. Hinrichson
Instructed by: Lee Attorneys
7