SACCAWU and Others v Pick 'n Pay Retailers (Pty) Ltd and Others (J922/2011) [2011] ZALCJHB 67; [2012] 1 BLLR 71 (LC); (2012) 33 ILJ 279 (LC) (16 August 2011)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2011
>>
[2011] ZALCJHB 67
|

|

SACCAWU and Others v Pick 'n Pay Retailers (Pty) Ltd and Others (J922/2011) [2011] ZALCJHB 67; [2012] 1 BLLR 71 (LC); (2012) 33 ILJ 279 (LC) (16 August 2011)

IN THE LABOUR COURT OF
SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO: J922/2011
In the matter between:
SACCAWU
….............................................................................................
First
Applicant
MEMBERS OF FIRST
APPLICANT EMPLOYED
BY FIRST & SECOND
RESPONDENTS
….........................
Second
& further Applicants
and
PICK ‘N PAY
RETAILERS (PTY) LTD
…..............................................
First
Respondent
PICK ‘N PAY
BUTCHERIES (PTY) LTD
…......................................
Second
Respondent
REDDING, A.I.S,
N.O
….......................................................................
Third
Respondent
Date of hearing: 11
August 2011
Date of judgment: 16
August 2011
JUDGMENT
VAN NIEKERK J
Introduction
1
[1] This is an
application to review a
n
arbitration award issued by the third respondent (the
arbitrator) brought in terms of
section 33
of the
Arbitration Act, 42
of 1965
, read with section 157(3) of the Labour Relations Act, 66 of
1995 (the LRA). At the request of the parties and in terms of the
Consolidated Directive of 2010, the Deputy Judge President approved
the fast-tracking of the application. The primary reason for
the
joint request was the arbitration award impacted directly on a
retrenchment process that the respondents have triggered. The

application was heard on that basis.
[2] The award was issued
consequent on an arbitration agreement concluded between the parties
on 17 January 2011. In the agreement,
the parties recorded that they
had concluded a collective agreement on 21 October 1994
,
termed the Supplementary Agreement covering Job Security, Flexibility
and Mobility of Labour. This agreement is referred to in
the
arbitration award and is known by the parties as the “F&M
agreement”. Clause 3 of the agreement provides: “This

Agreement shall remain in force indefinitely or until such time as
the parties negotiate amendments to this Agreement provided
that such
amendments are put in writing and are signed by the parties in a
similar manner to that used in this Agreement.”
On 6 August
2011, the respondents gave notice of their intention to cancel the
F&M agreement and all other agreements included
in the notice of
cancellation. Clause 6.2 of the F&M agreement required the
parties to conclude an agreement for the formula
to establish
staffing levels and shift patterns at the first and second
respondent’s stores and operating units. This agreement,

entitled “Review of Formulae/Criteria to Establish and Review
Staffing Levels”, was initially concluded in 1994 but
replaced
in 2001, and was referred to in these proceedings as the “2001
formulae agreement”. The formulae agreement
is an attachment to
the F&M agreement, and as its title suggests, the purpose of the
agreement is to list the formulae and
criteria to be utilises to
review staffing levels. contained a provision to the following
effect:
“
3. This
collective agreement shall come into with effect from 15 March 2001
and shall continue to operate until such time that it
is replaced or
amended by another agreement provided that the such replacement or
amendment are put in writing and is signed by
the parties in a
similar manner to that used in this agreement.”
(
sic).
[3] The arbitrator was
appointed to determine whether the F&M agreement was lawfully
terminated by the first and second respondents.
He was empowered to
make “any appropriate order” and to award costs in
accordance with the law and fairness. An additional
element of the
dispute between the parties concerned the reasonableness of the
notice period given, but this is not germane to
this application.
[4] In his award, issued
on 18 April 2011, the arbitrator made the following findings:
“
55.
In the circumstances, I find that the notice period was not an
unreasonable one in the circumstances.
56. On the main question which I was
requested to decide, I determine that the agreement was lawfully
terminated by the Company.
57. On the remaining issue of costs,
in the light of the continuing relationship between the parties and
the material importance
of the issue referred to arbitration, I
determine that there shall be no award as to costs
.
”
The grounds for review
[5] The applicant submits
that the arbitrator was called upon to apply his mind to the validity
of the cancellation of both the
F&M agreement and the 2001
formulae agreement and that he failed to consider the applicant’s
self-standing submissions
regarding the latter. In particular, there
is no analysis of the wording of the duration clause in the 2001
formulae agreement,
in stark contrast to the detailed analysis of the
wording of the duration clause in the F&M agreement. The
reference to the
2001 formulae agreement is made in for the purposes
of the interpretation of the F&M agreement, and not for the
purposes of
any determination whether the 2001 formulae agreement
could be cancelled unilaterally.
[6] It is apparent from
this formulation of thee grounds for review that the applicants do
not attack the arbitrator’s determination,
at least insofar as
it relates to the body of the F&M agreement and all supplementary
agreements save for the 2001 formula
agreement. The review is based
solely on the contention that the arbitrator committed a latent gross
irregularity by failing to
determine independently the validity of
the cancellation of the 2001 formula agreement (‘the 2001
formula agreement issue’).
In that sense, the application is
for what may be termed a review for non-determination.
The relevant legal
principles
[7] The specific grounds
upon which a private arbitration award can be reviewed on account of
the conduct of the arbitrator are
those grounds (strictly
interpreted) set out in
section 33(1)(a)
and (b) of the
Arbitration
Act, i.e
. misconduct; gross irregularity; or excess of powers.
2
Neither
section 33
(just administrative action) nor
section 34
(access to courts) of the Constitution apply directly to
private arbitrations, and thus cannot serve as a basis for extending
the
grounds upon which a private arbitration award can be reviewed.
3
In
Lufuno Mphaphuli and
Associates (Pty) Ltd (supra
),
O’Regan J, writing for the majority, set out the policy basis
for the limited scope of intervention in private arbitartions
:
”
Courts
should be respectful of the intention of the parties in relation to
procedure. In so doing, they should bear in mind the
purposes of
private arbitration which include the fast and cost-effective
resolution of disputes. If courts are too quick to find
fault with
the manner in which arbitration has been conducted, and too willing
to conclude that the faulty procedure is unfair
or constitutes a
gross irregularity within the meaning of section 33(1), the goals of
private arbitration may well be defeated
”
4
This cautionary sentiment
is reflected in the conclusion reached by Van Dijkhorst AJA in
Stocks
Civil Engineering (supra):
‘
A court is
entitled on review to determine whether arbitrator in fact functioned
as arbitrator in the way that he upon his appointment
implied
undertook to do, namely by acting honestly, duly considering all the
evidence before him and having due regard to the applicable
legal
principles. If he does this, but reaches the wrong conclusion, so be
it. But if he does not and shirks his task, he does
not function as
an arbitrator and reneges on the agreement under which he is
appointed. His award will then be tainted reviewable…An
error
of law or fact may be evidence of the above in given circumstances,
but may in others merely be part of the incorrect reason
leading to
an incorrect result, In short, material malfunctioning is reviewable,
a wrong result per se ( unless it evidences malfunctioning).
If the
malfunctioning is in relation to his duties, that would be misconduct
by the arbitrator as it would be breach of implied
terms of his
appointment.’
In short: in the case of
a review of a private arbitration award, there exists little scope
for a review going to the merits, as
a private arbitrator has the
right to be wrong.
5
[8] The
applicants rely solely on the ground of review of a (latent) gross
irregularity. In order for there to be a gross irregularity

warranting interference on review, two conditions must be met:
firstly, the omission on the part of the arbitrator must involve
him
or her having misconceived the nature of the enquiry or his or her
duties in connection with the enquiry,
and
thus result in him preventing a fair trial of the matter.
6
Secondly, there must not
exist material that would serve to justify the arbitrator’s
decision, because ‘
if
there was material before the [arbitrator], justifying the action
taken, the court would not be entitled to interfere even if
an
irregularity had been committed
’
.
7
Put differently, if an
arbitrator was caused by inappropriate means to reach one conclusion
whereas if he had adopted appropriate
means he might have reached
another conclusion favourable to the applicant, then the award is
reviewable.
[9] Mr. Myburgh SC, who
appeared for the respondents, referred to a number of English
authorities in relation to the test to be
applied in a review for
non-determination. Section 68(2) of the UK Arbitration Act, 1996
lists a number of grounds upon which an
award can be challenged on
review if the court considers that it “caused or will cause
substantial injustice to the applicant”.
Amongst the listed
grounds (ground (d)) is the “failure by the tribunal to deal
with all the issues that were put to it”.
Sutton
et al,
Russell on Arbitration
(23
rd
ed, Sweet & Maxwell
(2007)) comment as follows on section 68(2) (d):
“
An
irregularity will only result where the tribunal has not dealt at all
with a critical aspect of the case of a party. In other
words, it “is
concerned with a failure … where the tribunal has not dealt at
all with the case of a party so that
substantial injustice has
resulted … In the former instance the tribunal has not done
what it was asked to do, namely to
give the parties a decision on all
issues necessary to resolve the dispute or disputes (which does not
of course mean a decision
on all the issues that were ventilated but
only those required for the award)”. The tribunal certainly
does not have to deal
with every point which was raised in the
proceedings. If an award expresses no conclusion at all as to a
specific claim or defence
then that is a clear failure to deal with
the issue. The ground will also be triggered where the decision
cannot be justified as
a key issue has not been decided which is
crucial to the result. It is certainly the case however that an award
does not have to
set out each step by which a conclusion is reached.
The courts shy away from conducting a narrow textual analysis in an
attempt
to pick holes in the reasoning. Once a party is reduced to
alleging that particular sub-issues have not been properly explained

in the award then the challenge is very likely to fail”
(at
8-094).
And further:
“
Ground
(d) is also not triggered just because the tribunal’s reasoning
is compressed, confusing or unsatisfactory. If a court
can deduce
from the award and the other available material before it, which may
include extracts from evidence and the transcript
of hearings, the
thrust of the tribunal’s reasoning then no irregularity will be
found”
(at
8-095).
[10] In his commentary on
section 68(2) (d), Merkin
Arbitration Law
(LLP (2004)) states
as follows:
‘
The
point has arisen under the 1996 Act, in
Hussmann
(Europe) Ltd v Al Ameen Development and Trade Co
8
,
where it was alleged that the arbitrators failed to deal with a
series of matters, including: (a) whether the buyer was entitled
to
discount for prompt payment; and (b) whether commission was payable
under a distributorship agreement. Thomas J was satisfied,
as to (a),
that the award (by reason of its analysis of the negotiations between
the parties) implicitly decided that there was
no entitlement to a
discount, and as to (b), that although the reasoning was not as clear
as it might have been the outcome made
it clear that the issues as to
commission had been comprehensively dealt with in the award. Thomas J
stated in the course of his
judgment that an award cannot be
challenged simply because the arbitrator has failed to set out each
step and each point by which
the conclusion was reached. A deficiency
of reason in a reasoned award is not capable of amounting to a
serious irregularity. It
follows that if a fair reading of the award
shows that the arbitrator had in fact considered and rejected the
arguments put to
him then the absence of specific references to
individual issues will not taint the award. … In
Al
Hadha Trading Co v Tradigrain SA
9
… [the court] held that the decision to extend time [for a
claim to be brought] was an implicit rejection of the argument
put
forward [that a default award should be issued, which defence was not
referred to in the award] and it followed that the arbitrators
had
dealt with all the matters put to them. In
Checkpoint
Ltd v Strathclyde Pension Fund
10
… [it was held that] it was not open to a party to challenge
an award by pointing to subsidiary matters which had been raised
but
which did not require to be resolved in the course of the
arbitrator's ultimate decision. In much the same vein it was made

clear … in
Weldon
Plant Ltd v Commissioner for the New Towns
11
that s 68(2) (d) is concerned with ensuring that the arbitrator did
not reach his award by disregarding important issues, and that
it was
“not to be used as a means of launching a detailed inquiry into
the manner in which the tribunal considered the various
issues”’
(at
871-872).
[11] The decision in
Middlemiss and Gould (a firm) v Hartlepool Corporation
[1973]
1 All ER 172
(CA) is of particular relevance for present purposes. In
this matter, in opposition to an application for the enforcement of
an
arbitration award in favour of a number of building contractors,
the corporation contended that the award was unenforceable because

the arbitrator had not decided a key issue, namely its defence that
no further payments were due under the contract by virtue of
clause
25(4) (d) thereof. The court
a quo
found for the corporation.
In dismissing the ensuing appeal, Lord Denning MR held as
follows:
“
But
counsel for the corporation then suggested that the arbitrator had
not decided the point under cl 25(4) (d) at all. He contended
that
the arbitrator had only decided the way in which the certificates
should be calculated. It is true that the arbitrator did
not
expressly say anything about cl 25(4) (d) in his award. But the point
was distinctly raised by the corporation in para II of
their defence.
By implication the arbitrator rejected their contention. … If
a point is raised for decision and by implication
has been decided,
that is final. The parties cannot be allowed thereafter to re open
it. This has been applied to arbitrations.
It is stated in Russell on
the Law on Arbitration
:
‘
The
award will be sustained even though the arbitrator has omitted to
notice some claim put forward by a party, if, according to
the fair
interpretation of the award, it is to be presumed that the claim has
been taken into consideration”’
.
(at
176).
This
dictum
by
Lord Denning is described by Merkin
(supra)
at 712 as giving
rise to a rebuttable presumption, in favour of the validity of the
award, that arbitrators have taken account
of all the issues properly
before them.
[12] In his concurring
judgment in
Middlemiss (supra)
, Lord Edmund Davies cited
Harrison v Creswick
(1853) 13 CB 399 at 416, in which it
was held that:
”
where
an award is made de praemissis, the presumption is, that the
arbitrator intended to dispose finally of all the matters in

difference; and his award will be held final, if by any intendment it
can be made so”
(at
).
The learned judge then
continued:
“
In
the present case it is unchallenged that the operation and impact of
cl 25(4)(d) of the building contract was one of the
issues
referred to the arbitrator, being expressly raised by the corporation
in their points of defence as a ground for their assertion
that no
further payments were due to the claimants. It is to be observed that
the arbitrator virtually adopted the language used
by the corporation
themselves in his summary of their contentions under two heads
saying: “The [corporation] claim (1) that
they have paid all
moneys due to the claimants.” But, contrary to such contention,
he made an award that in point of fact
£7,957 was due from
them. In my judgment, it would be bordering on the mischievous if in
circumstances such as are here present
this award could now be
impeached on the ground that the arbitrator of high qualifications
and I have no doubt great experience
failed to bear in mind the
matter which had thus been expressly raised and referred to him. In
line with the authorities, I prefer
to make the assumption that he
fully considered cl 25(4)(d) of the building contract in coming
to his conclusion”
(at
177).
[13] These authorities
are instructive in relation to the meaning of “gross
irregularity” for the purposes of s 33(1)
(b) of the
Arbitration Act. They affirm that potentially at least, a failure to
determine an issue constitutes a latent gross irregularity
and thus a
basis on which an arbitration award might be set aside, and also the
limits of gross irregularity as a ground of review.
The approach is
consistent with the analysis of the concept by the Supreme Court of
Appeal in
Telcordia (supra)
, and the court’s caution
against confusing an arbitrator’s reasoning with the conduct of
the proceedings (see paragraph
[75]). Two passages from the judgment
warrant mention:
“
The
failure to have dealt with a particular factual subissue does not
mean that the arbitrator misunderstood the nature of the inquiry.
It
also does not mean that the arbitrator ignored them. It is equally
conceivable that he thought that the issue was not worth
pursuing in
the light of some of his other findings … (at paragraph
[125]); and
‘
If
one considers the length of the proceedings, the arbitrator's active
involvement in defining and refining the issues, and the
detailed and
reasoned award, it was as presumptuous as it was fallacious for the
Court to have held that the arbitrator did not
apply his mind
properly to the issues at hand”. (at paragraph [99]).
The approach to be
adopted by the court
[14] Mr. Myburgh
submitted that as a point of departure, on the basis of the above
authorities, the court should presume (on a rebuttable
basis) that
the arbitrator took account of all issues before him and, insofar as
possible, uphold the award as being final. Secondly,
Mr. Myburgh
submitted that the court should be alive to the fact that this is a
very narrow review – one that is based exclusively
on the
alleged non-determination of an issue by the arbitrator (as opposed
to a review going to the merits). The court should therefore
not
conduct “a narrow textual analysis”, but rather undertake
a holistic enquiry with a view to determining whether
the issue was
dealt with. In this context, the fact that an arbitrator’s
‘reasoning is compressed, confusing or unsatisfactory
or even
patently wrong, that an arbitrator failed to set out “each step
and each point by which the conclusion is reached”,
and that
the arbitrator did not approach or analyse the matter in the manner
contemplated by one of the parties (for he may have
‘thought
that the issue was not worth pursuing in the light of some of his
other findings’) does not serve to establish
that the issue was
not determined. Thirdly, Mr. Myburgh submitted that regarding the
mode of the scrutiny of the award, the court
should identify what is
recorded in the award about the 2001 formula agreement, whether there
is any reference to the applicants’
contentions in relation to
the issue in question, what findings may be implied from the findings
made by the arbitrator, and whether
the award made by the arbitrator
is capable of encompassing a determination of the issue. In order to
place the relevant contents
of the award in context, the court is
entitled to have regard to the events of the arbitration itself.
Finally, Mr. Myburgh submitted
that even if the court comes to the
conclusion that the award does not expressly deal at all with the
2001 formula agreement issue,
this, in itself, not a sufficient basis
to sustain a review for non-determination. The question that would
then arise is whether
it can be reasonably implied or presumed from a
reading of the award overall that the arbitrator rejected the
applicants’
case in point. The key considerations here would be
whether the issue in question was distinctly raised by the
applicants, whether
the point is recorded in the award, and whether a
rejection of the claim can be implied from the arbitrator’s
award.
The 2001 formula
agreement issue
[15] In order to place
the findings made by the arbitrator (dealt with below) in context, it
is necessary to track how the 2001
formula agreement issue came to
light and was dealt with during the arbitration. [Right up until oral
argument, the case pursued
by the applicants at the arbitration
(leaving aside their pleaded alternative causes of action which are
not relevant for present
purposes) was that, on their interpretation
of clause 3 of the F&M agreement, the company was not entitled to
terminate the
F&M agreement unilaterally by giving notice. This
was their pleaded case; this is what was stated in opening address;
and this
is what was pursued during the cross-examination of the
company’s witnesses.
[16] In the process of
the cross-examination of the respondents’ witnesses, Mrs.
Delight and Mr. Van der Walt, counsel for
the applicants put to them
that clause 3 of the 2001 formula agreement served to clarify the
parties’ intention in relation
to the termination of the F&M
agreement, and demonstrated (so it was contended) that the F&M
agreement could not be terminated
unilaterally. In effect, the
applicants sought to use the terms of clause 3 of the 2001 formula
agreement as an aid to the interpretation
of clause 3 of the F&M
agreement (both of the aforesaid clauses being duration clauses).
[17] In their main heads
of argument, which were filed before the company filed its heads of
argument and before the presentation
of oral argument, the applicants
persisted with this approach. In this regard, it was
inter alia
submitted on behalf of the applicants that: (a) the subsequent
conduct of the parties in including clause 3 in the 2001 formula

agreement supported the applicants’ interpretation of clause 3
of the F&M agreement, i.e. it informed the meaning thereof;
and
(b) the effect of clause 3 of the 2001 formula agreement was that
neither party could resile unilaterally from the F&M
agreement.
In the result, the relief prayed for by the applicants in their heads
of argument was an award that the termination
of the F&M
agreement was unlawful.
[18] At the presentation
of oral argument, and having received the company’s heads of
argument in advance thereof, counsel
for the applicants handed up his
“submissions in reply” to the company’s heads. In
these submissions, the applicants
advanced two points: firstly, that
the termination of the 2001 formula agreement was
in itself
unlawful because clause 3 of that agreement did not permit unilateral
termination; and, secondly, that the
subsequent conduct
of the
parties in concluding clause 3 of the 2001 formula agreement shed
light on the interpretation of clause 3 of the F&M
agreement and
supported the applicants interpretation thereof. The first point,
which is referred to above as the “2001 formula
agreement
issue”, had hitherto not been advanced by the applicants. The
second point was the point relating to the 2001 formula
agreement
that had been advanced in evidence and in the applicants’ main
heads of argument (see above).
[19] In oral argument
before the arbitrator, counsel for the applicants submitted, in
relation to the 2001 formula agreement issue,
that the termination of
the agreement was unlawful because it continued indefinitely, that
this was being dealt with separately,
and that, whatever was decided
in relation to the F&M agreement, the company could not get out
of the 2001 formula agreement.
[20] Turning then to the
F&M agreement, counsel for the applicants submitted that it did
not make practical sense to deal with
it differently from the 2001
formula agreement – ‘they either all stay or they all
go’; it thus made practical
sense to give ‘indefinitely’
in clause 3 of the F&M agreement the meaning “in
perpetuity”; and the
subsequent conduct of the parties in
concluding clause 3 of the 2001 formula agreement should be used as
an interpretative tool
in determining the intention of the parties
when concluding clause 3 of the F&M agreement.
[21] During the course of
the respondents’ submissions in reply, counsel for the company
submitted that if the F&M agreement
fell, then all supplementary
agreements (including the 2001 formula agreement) would fall with it
because they were supplementary
to the main agreement. The company’s
counsel went on to submit that the situation was analogous to a fixed
agreement on rental
price falling with the termination of the
underlying lease agreement though it had initially been pointed out
that the issue in
question fell outside of the applicants’
pleaded case, the company’s counsel placed on record that the
company did
not require the applicants to amend their statement of
claim. (This in circumstances where the 2001 formula agreement issue
fell
within the arbitrator’s terms of reference and where, as
far as the company was concerned, the issue was essentially a matter

of law.)
[22] In his replying
submissions, the applicants’ counsel submitted that one of two
things happened in relation to the 2001
formula agreement –
either: (a) it is a self-standing agreement and survived cancellation
of the F&M agreement; or (b)
it is subordinate to the F&M
agreement (as the company had submitted) and introduced a competing
duration clause, which, so
it was submitted, must apply to the
termination of the F&M agreement because the specific trumps the
general. The relevant
passage from the record reads as follows:
“
ADV
BODA: There’s one of two things that happened with the 2001
agreement. Whether it’s a self standing agreement, in
which
case it has a self standing duration clause which on no-one’s
interpretation, I can’t see how one could read,
in the light of
the principles in the SAA case, one could read the duration clause as
allowing or giving room for termination of
reasonable notice, in
which case it still survives. Or, it’s, my learned friend says
it’s subordinate to the main agreement
but if it’s
subordinate to the F&M agreement, then there are potentially two
duration clauses but then you apply the
principle, the special
overrides the general”
.
(at
p 168 of the record, lines 12 -21).
The arbitrator’s
award: key findings
[23] The arbitrator dealt
with the 2001 formula agreement in paragraphs 35-42 of his award.
These bear quoting in full:
“
35.
I have had regard to the contextual arguments raised by Mr. Boda on
behalf of the Union. However, I cannot find anything in
the wording
of clause 3 of the F&M Agreement helpful. The words “or
until such time as the parties negotiate amendments
to this
agreement” present an equally sensible alternative to either
the Company’s construction or the Union’s.
They do not,
in my view, shed light on the interpretation of the word
“indefinitely”.
36. He places particular reliance eon
the subsequent supplementary agreement reached in 2001. This
supplementary agreement was the
product of a review of the formal
dealing with staffing levels. It, in effect, replaces the provisions
of annexure “A”
to the F&M Agreement by a new
Annexure “A” which reflected a different formula which
could be used to establish
staffing levels at stores and operational
units. This 2001 amendment stated the following at paragraph 3
concerning duration:
‘
This
collective agreement shall come into effect from 15 March 2001 and
shall continue to operate until such time that is replaced
or amended
by another agreement provide that the such replacement (sic) or
amendment are put in writing (sic) and is signed by
the parties in a
similar manner to that used in this Agreement.’
37. The thrust of the Union’s
argument was that this provision concerning duration made no
reference to the duration being
indefinite and stated expressly that
the agreement “shall continue” until such time as it was
replaced by another agreement.
38. It was submitted that the 2001
agreement was not capable of being terminated unilaterally. Further,
insofar as it was a subsequent
agreement, the provision on duration
constituted a later manifestation of the parties’ common
intention when the main F&M
Agreement was entered into. The
subsequent conduct of the parties can be used as an interpretative
guide to the parties’
intention in concluding the main
agreement …
39. The subsequent agreement varied
the formula. It provided that the formula would not be varied again
except by agreement.
40. However, the formula is merely a
factor to be used in determining the main issues in the F&M
agreement- the staffing levels
and shift patterns. It is the
equivalent to the exchange rate in a transaction involving foreign
currency. The formula is variable
upon which the main operative
factors in et agreement can be determined. An agreement not o change
the formula or variable is not
the same as an agreement not to change
the main operative factors which are the substance of the agreement.
41. Therefore a subsequent
supplementary agreement that a formula will not change does not lead
to a conclusion that the main agreement
has now been rendered
immutable. It is simply agreed that the variable (the formula) will
not again be changed without agreement.
42. The subsequent decision of the
parties to make the subordinate issue of the formula immutable except
for agreement is neither
a strong or decisive indication of the
parties’ intention at the conclusion if the agreement. I am not
sure whether I should
have regard to the subsequent agreement at
all…but even if I do, it is not inconsistent for the parties
to have a main agreement
terminable by notice, but say that a
variable or factor within that agreement will not be terminable
except on notice. It is not
inconsistent with t general intention of
a party that a subordinate aspect of the agreement will remain
unchanged, while the main
portion of the contract may be terminable
on notice. Certainly, if the main body of the agreement falls, the
agreement concerning
the formula falls with it.
[24] In my view,
paragraph 42 of the award amounts to a rejection of the applicant’s
contention that the formulae agreement
was not capable of being
terminated unilaterally, in that the arbitrator found that
“[c]certainly, if the main body of the
agreement [i.e. the F&M
agreement] falls, the agreement concerning formula falls with it. The
overall conclusion arrived at
by the arbitrator, consistent with the
terms of reference located in the arbitration agreement, was this:
“On the main question
which I was required to decide, I
determine that the agreement was lawfully terminated by the company”
(at para 56 of the
award). This determination is plainly wide enough
to encompass a determination that the 2001 formula agreement (being
part and
parcel of the F&M agreement) was lawfully terminated.
[25] The fact that the
arbitrator did not pose the question of the 2001 formulae agreement
issue and that he made no specific reference
to the authority relied
on by Mr Boda to advance his submissions regarding the self-standing
nature of the formulae agreement is
not in itself an indication that
he failed to address the issue and thereby committed a gross
irregularity. It clearly follows
from his award that the arbitrator
did not consider the 2001 formula agreement to be a self-standing
agreement and instead preferred
the alternative construction, i.e.
that it was subordinate and supplementary to the F&M agreement.
That being the case, the
question that consequently arose, which had
also been identified by applicant’s counsel, was how to
reconcile the competing
duration clauses in the F&M agreement and
the 2001 formula agreement. Mr Boda submitted in this regard that
clause 3 of the
2001 formula agreement should override clause 3 of
the F&M agreement. The arbitrator arrived at a different
conclusion, namely
that clause 3 of the 2001 formula agreement did
not operate so as to render the F&M agreement immutable (this
being in line
with what had been argued by the company). The
arbitrator then went on to find that the F&M agreement was
lawfully terminated,
and that – arising from this – the
2001 formula agreement (being a supplementary agreement akin to an
agreement setting
an exchange rate) fell with it. It would only have
been if the arbitrator had found that the 2001 formula agreement was
a self-standing
agreement that an analysis separate and independent
from the F&M agreement would have been called for. But, as stated
above,
the arbitrator construed the 2001 formula agreement as being
subordinate and supplementary to the F&M agreement, and thus
analysed
the two agreements together – in coming to the
conclusion that the F&M agreement was not immutable, and that the
2001
formula agreement fell with it. Thus the key question –
whether the 2001 formulae agreement was supplementary and subordinate

or self-standing and overriding- was asked, addressed and answered.
As I have indicated, whether the answer was right or wrong
is
immaterial for the purposes of these proceedings. What matters is
whether the question was asked and addressed. In my view,
for the
reasons stated above, it was.
[26] In relation to
costs, the parties were agreed that costs should follow the result.
Despite this agreement, and in the exercise
of the discretion
conferred on the court by s 162 of the LRA, in my view, it is
appropriate to make no order as to costs. The parties
are engaged in
a collective bargaining relationship. They will soon embark on
discussions, foreshadowed by this application, which
will have a
profound effect on both of them and on the lives of the company’s
employees. An adverse order as to costs in
these circumstances would
not be a happy start to this process, and may potentially turn what
ought to be a meaningful search for
consensus conducted on a
constructive basis into an adversarial confrontation. I intend
therefore to make no order as to costs.
In the result, I make the
following order:
The application is
dismissed.
There is no order as to
costs
__________________________
ANDRE VAN NIEKERK
JUDGE OF THE LABOUR COURT
Appearances:
For the applicant: Adv F
Boda, instructed by Dockrat Attorneys
For the respondents:
Adv A Myburgh SC,
instructed by Bowman Gilfillan Inc.
1
I
am indebted to both counsel for their comprehensive heads of
argument. I have made liberal use of their heads in preparing this

judgment.
2
See
Telcordia Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA) at para 51;
Stocks Civil Engineering (Pty) Ltd v Rip NO and
Another
[2002] 3 BLLR 189
(LAC) at paras 73-74;
NUM obo 35
employees v Grogan NO and
Another
[2010] 8 BLLR 799
(LAC)
at para 33;
Volkswagen (SA) (Pty) Ltd v Koorts and
Others
[2011] 6 BLLR 561
(LAC) at paras 8-10.
3
See
Total Support Management (Pty) Ltd and
Another v
Diversified Health Systems (SA) (Pty) Ltd and
Another
[2002] ZASCA 14
;
2002
(4) SA 661
(SCA) at para 24;
Telcordia (supra)
at para 45;
Lufuno Mphaphuli Associates (Pty) Ltd v Andrews and
Another
2009 (4) SA 529
(CC) at para 215.
4
Lufuno
Mphaphuli Associates (Pty) Ltd v Andrews
and
A
nother
at para [236] .
5
Telcordia
above n2 at para [85]
6
(see
Goldfields Investment Ltd v City of Johannesburg
1938 TPD 551
at 560-561 – referred to and discussed in
Telcordia (supra)
at para [73], and in
Tao Ying Metal Industry (Pty) Ltd v Pooe NO
and
Others
(2007) 28 ILJ 1949 (SCA) at para [126]).
7
See
Tao Ying Metal Industry
above n6 at 1980D.
8
[2000]
2 Lloyd’s Rep 83.
9
[2002]
2 Lloyd’s Rep 512.
10
[2003]
EWCA Civ 84.
11
[2000]
BLR 496.