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[2011] ZALCJHB 94
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National Employers Association of South Africa and Others v Minister of Labour and Others (J2141/11) [2011] ZALCJHB 94; [2012] 2 BLLR 198 (LC); (2012) 33 ILJ 929 (LC) (9 November 2011)
REPUBLIC OF SOUTH AFRICA
Reportable
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Case
no: J 2141/11
In the matter between:
NATIONAL
EMPLOYERS’ ASSOCIATION
OF
SOUTH AFRICA
…..............................................................
First
Applicant
PLASTICS
CONVERTORS ASSOCIATION
OF
SOUTH AFRICA
….........................................................
Second
Applicant
RIVERPARK
CRANE HIRE CC
…...........................................
Third
Applicant
and
MINISTER
OF LABOUR
…...................................................
First
Respondent
METAL
AND ENGINEERING INDUSTRIES’
BARGAINING
COUNCIL
….............................................
Second
Respondent
FURTHER RESPONDENTS
…......................
Third and
further Respondents
Heard
:
25 October 2011
Delivered
:
9
November 2011
VAN NIEKERK J
Introduction
[1] This is an urgent application in which the applicants seek an
order declaring that Government Notice R 748, published in Government
Gazette No. 34613 on 23 September 2011, is invalid and of no force
and effect. The notice comprises an extension by the first respondent
(the minister) of a collective agreement concluded on 18 July 2011
under the auspices of the second respondent (the bargaining
council),
to non-parties to the agreement. In the alternative, the applicants
seek a rule
nisi
interdicting the bargaining council from
enforcing the collective agreement as against those employers who are
not parties to it,
pending the finalisation of review proceedings to
be filed.
[2] The first applicant is an employers’ organisation and a
party to the bargaining council. The second applicant is also
an
employers’ organisation, but it is not a party to the council.
The third applicant is an employer that is not affiliated
to the
bargaining council but falls within its registered scope. None of the
applicants are parties to the collective agreement
that is the
subject of these proceedings; the first applicant because it refused
to sign it, and the second and third applicants
because they are not
parties to the council.
[3] The third to fortieth respondents are trade unions and employers’
organisations that are parties to the bargaining council.
The
forty-first respondent is the Steel Engineering Industries Federation
of South Africa (SEIFSA), a federation of employers’
organisations in the metal and engineering sector, and acknowledged
by the Registrar of Labour Relations as having complied with
s 107 of
the Labour Relations Act (LRA).
The issues
[4] This application has aroused a great deal of interest, and
generated enough paper to fill some 15 lever arch files, most of
it
irrelevant. It may be prudent therefore to commence this judgment by
stating that despite what is suggested in certain of the
affidavits
filed in these proceedings and in the press, the application does not
concern the legitimacy of sectoral bargaining
arrangements (either
generally or in the metal and engineering sector in particular) nor
does it directly concern the constitutionality
or legitimacy of the
provisions of s 32 of the LRA in the form of the minister’s
right to extend collective agreements concluded
by bargaining
councils to non-parties. The applicants do not seek to challenge the
validity of the collective agreement itself;
they accept that the
signatories to the agreement are bound by its terms. Simply put, the
applicants’ case is that the extension
by the minister of the
collective agreement concluded under the auspices of the bargaining
council is invalid; first, because some
of the preconditions to
extension established by s 32 of the LRA had not been met and
secondly, because the meeting of the bargaining
council in which it
was resolved to request the minister to extend the agreement was
invalidly constituted.
[5] Urgency aside, the key issues raised by the applicants in their
application for a declaratory order can be summarised as follows:
Whether the extension complies with the provisions of s 32 of the
LRA, and particularly –
Whether the vote by the bargaining council to request the minister
to extend the collective agreement was properly taken (this
involves
an enquiry into whether the bargaining council’s
decision-making structures were correctly constituted, subsequent
meetings convened to ratify the decision, and into the scope of s
206 of the LRA);
Whether the collective agreement is void for vagueness;
Whether the exemption provisions in the collective agreement comply
with s 32 (3) (f) of the LRA;
Whether it was necessary for the minister, prior to any decision to
extend the agreement, to allow non-parties who will be affected
by
the outcome the opportunity to make representations.
Urgency
[6] The bargaining council did not take issue with the question of
urgency, but a number of other respondents represented at the
hearing
of the application contended that the matter was not urgent, or that
any urgency that exists is self-generated. In essence,
they contend
that the first applicant had made its point about the invalidity of
the composition of the bargaining council’s
management
committee as far back as May 2011 and that it was aware that the
agreement was likely to be extended, since the majority
of the
parties represented in the bargaining council had supported such a
motion. The applicants on the other hand contend that
the matter is
complex, and that it required full and proper consideration prior to
a decision to launch these proceedings and that
it took some time to
finalise the papers. They also contend that the deadline for
applications for exemption from the terms of
the collective agreement
(the only manner in which a non-party may be excused from compliance
with those terms) expires on 5 November
2011, and that the interests
of certainty and clarity will be served by a determination of this
application.
[7] While the applicants may be criticised for not filing the
application at an earlier stage – they were aware from at least
23 September 2011 that the agreement had been extended - the period
of delay in filing the notice of motion and founding affidavit
(the
papers were filed on 10 October 2011) is not so significant so as to
justify a ruling that the matter is not urgent. As I
have noted, the
bargaining council has taken the view that the validity or otherwise
of the extension of the collective agreement
is a matter of some
importance to all concerned, and that it was in the interests of all
parties that the matter be heard. Given
that the application was
filed within a reasonable time after the applicants became aware of
the extension of the agreement, the
importance of the issue to the
parties and the bargaining council’s attitude to the issue of
urgency, I am satisfied that
the application should be heard on an
urgent basis.
Factual background
[8] Collective bargaining in the metal and engineering sector has,
for decades, taken place at industry or sectoral level, initially
under the auspices of an industrial council (established in 1945) and
since the promulgation of the LRA, the present bargaining
council.
The council is registered in terms of s 29 of the LRA, and is
governed by a constitution that regulates the relationship
between
the parties to the council, who in turn comprise registered trade
unions and employers’ organisations. The constitution
regulates
the composition of regional councils, the composition of the council,
and its annual general meeting of the council,
one of the functions
of which is the appointment of a management committee to run the
council’s day to day affairs. Regional
councils are defined and
allocated a specific number of seats. They are populated by nominees
of member trade unions and employer
organisations, on the basis of
equal representation, or what might be referred to as a parity
principle, this being fundamental
to the council’s governance
and structures.
[9] During 2011, the union parties to the council referred a dispute
about wages and other conditions of employment in the sector
to the
council. After an unsuccessful conciliation process, an industry-wide
strike and subsequent intervention by mediators, a
settlement was
reached.
[10] On 18 July 2011, in a meeting of the management committee,
SEIFSA and the trade union parties to the council signed a collective
agreement resolving the dispute. Amongst other things, the agreement
contains the wage increases to which employees will be entitled
for
the next three years, and various other amendments to the terms and
conditions of employment. The first applicant, although
it is party
to the council, did not sign the agreement, nor did the thirty-fourth
respondent, the Federated Employers Organisation
of South Africa. At
the same meeting at which the agreement was signed, a resolution was
adopted to request the minister to extend
the agreement to
non-parties to the agreement, as contemplated by s 32 (1) of the LRA.
[11] On 21 July 2011, in accordance with the resolution adopted by
its management committee, the bargaining council addressed a
letter
to the Department Labour in which it requested the minister to extend
the contents of the collective agreement to non-parties
in the
industry. On 23 September 2011, the minister published in the
Government Gazette the notice that is the subject of these
proceedings, which had the effect of extending the collective
agreement, concluded under the auspices of the bargaining council,
to
non-parties to the agreement.
[12] To the extent that the applicants in these proceedings rely on
various contraventions of the bargaining council’s
constitution,
a dispute about the interpretation and application of
the bargaining council’s constitution has been referred to
arbitration
before an independent arbitrator. These proceedings are
scheduled to commence on 10 November 2011. In the statement of case
before
the arbitrator, the applicant contends that the management
committee, the regional councils and the council are all constituted
in contravention of the applicable provisions of the bargaining
council’s constitution.
Inter alia
, the applicant
contends that the management committee was not appointed at the last
annual general meeting of the council as required,
that the persons
held out by the council to be members of the management committee
have never been validly appointed as such, that
the council itself
has never been validly constituted, that there is no parity as
required in relation to membership by employer
and trade union
representatives respectively on the management committee. The
applicants contend further that the regional councils
are improperly
constituted and that as a consequence, the council itself is not
validly constituted.
[13] Of course, the minister is not a party to the arbitration
proceedings, and the first applicant does not seek in those
proceedings
to have the extension of the collective agreement set
aside. However, there is an obvious overlap between the present
proceedings
and the arbitration process, at least to the extent that
the applicants rely in these proceedings on the averment that the
management
committee meeting that resolved to request the minister to
extend the collective agreement had no standing to make such a
decision
since it had not been appointed by the council as a
management committee, and what they contend to be the invalid
composition of
the bargaining council’s decision–making
structures.
Legal principles
[14] Section 32 (1) of the LRA provides that a bargaining council may
ask the minister, in writing, to extend a collective agreement
concluded in the council to any non-parties to the agreement that are
in the council’s registered scope and are identified
in the
request. The request must be preceded by a meeting of the bargaining
council at which one or more registered trade unions
whose members
constitute the majority of the members of the members of the trade
unions that are party to the council vote in favour
of the extension,
and one or more employers’ associations, whose members employ
the majority of the employees employed by
members of the employers’
organisations that are party to the council, vote in favour of the
extension.
[15] There are two categories established by s 32; the first in which
extension is mandatory, the second in which it is discretionary.
Only
the first is relevant to these proceedings. The minister must extend
the agreement if the preconditions established by s 32
(2) have been
met, within 60 days of receiving a request to do so, by publishing a
notice in the Government Gazette declaring that
from a specified date
and for a specified period, the collective agreement is binding on
those non-parties specified in the notice.
The conditions for
extension are set out in ss (3), and read as follows:
“
(a) the decision of the bargaining
council to request the extension of the collective agreement complies
with the provisions of
subsection (1);
(b) the majority of all the employees who, upon extension of the
collective agreement, will fall within the scope of the agreement
are
members of the trade unions that are arties to the bargaining council
(c) the members of the employers’ organisations that are
parties to the bargaining council will, upon the extension of the
collective agreement, be found to employ the majority of all
employees who fall within the scope of the collective agreement;
(d) the non-parties specified in the request fall within the
bargaining council’s registered scope;
(e) provision is made in the collective agreement for an
independent body to hear and decide, as soon as possible, any appeal
brought
against –
(i) the bargaining council’s refusal of a non-party’s
application for exemption from the provisions of a collective
agreement;
(ii) the withdrawal of such an exemption by the bargaining
council.
(f) the collective agreement contains criteria that must be
applied by the independent body when it considers the appeal, and
those
criteria are fair and promote the primary objects of this Act;
and
(g) the terms of the collective agreement do not discriminate
against non-parties.
”
[16] I need also to refer to s 206 of the LRA, which deals with the
effect of certain defects and irregularities. It reads as follows:
Despite any provision in this Act or in any other law, a defect
does not invalidate-
The constitution or the registration of any trade union,
registered employers’ organisation or council;
Any collective agreement or arbitration award that would
otherwise be binding in terms of this Act;
Any act of a council;
Any act of the director or a commissioner.
A defect referred to in subsection (1) means-
a defect in, or omission from, the constitution of any registered
trade union, registered employers’ organisation or council;
a vacancy in the membership of any council; or
any irregularity in the appointment or election of -
a representative to a council;
(ii) an alternate to any representative to a council;
(iii) a chairperson or any other person residing over any meeting
of a council or a committee of a council; or
(iv) the director or a commissioner.”
With that background, I turn next to consider the merits of the
applicants claim to the primary relief that they seek.
The application for a declaratory order
[17] Section 158(1) (a) (iv) empowers this court to make declaratory
orders. Neither the LRA nor the Rules of this court prescribe
the
circumstances in which such an order may be made. Section 19 (1) (a)
(iii) of the Supreme Court Act, 59 of 1959, entitles the
High Court,
in its discretion, and at the instance of an interested person, to
enquire into and determine any existing, future
or contingent right
or obligation, notwithstanding that such person cannot claim any
relief consequential on the termination. The
granting of a
declaratory order is dependent on the judicial exercise by the court
of its discretion, with due regard to the circumstances
of the matter
before it.
1
Section 19 (1) of the Supreme Court Act establishes a two stage
approach – the first leg of the enquiry is concerned with
whether the applicant has an interest in an existing, future or
contingent right or obligation; the second is whether or not the
order should be granted.
[18] Harms, in
Civil Procedure in the Superior Courts
,
referring to
Director of Public Prosecutions v Mohammed NO
2003
4 SA 1
(CC)), suggests that a declaratory order is not appropriate if
there are other specific statutory remedies available (at A-26).
In
the present instance, the powers conferred on this court by s 158 (1)
(g) afford the applicants a right of recourse. Whether
the existence
of an alternative statutory remedy is necessarily fatal to an
application for a declaratory order appears to be open
to some doubt.
Herbstein and Van Winsen observe that the fact that remedies other
than a declaration of rights are available is
a consideration that
the court must take into account in exercising a discretion as to
whether or not to make a declaration of
rights (see p 1437). On
either account, it is clear that the availability of alternative
remedies ought properly to be taken into
account in the exercise of
the discretion as to whether or not to grant a declaratory order.
2
[19] I deal first with the requirement that the applicants
demonstrate an interest in an existing, future or contingent right.
In
Oudekraal Estates (Pty) Ltd v City of Cape Town & others
2004 (6) SA 222
(SCA), the Supreme Court of Appeal was concerned
with a matter in which declaratory orders had been sought
inter
alia
to declare the administrator’s approval of certain
development rights to be of full force and effect. The court
concluded
that the administrator’s failure to take account of
material information either not before him or left out of his
reckoning
had the consequence that the approval was
ultra vires
and invalid. The question that then arose was whether the Cape
Metropolitan Council was entitled to disregard the administrator’s
approval and all its consequences merely because it believed that
they were invalid and provided that its belief was correct. The
court
held the following:
In our view, it was not. Until the Administrator’s approval
(and thus also the consequences of the approval) is set aside by
a
court in proceedings for judicial review it exists in fact and has
legal consequences that cannot simply be overlooked. The proper
functioning of a modern State would be considerably compromised if
all administrative acts could be given effect to or ignored
depending
upon the view the subject takes of the validity of the act in
question. No doubt it is for this reason that our law has
always
recognised that even an unlawful administrative act is capable of
producing legally valid consequences for so long as the
unlawful act
is not set aside
.
3
It seems to me therefore that unless and until the minister’s
decision is reviewed and set aside, as a matter of law, her
decision
stands, notwithstanding the issues raised and submissions made to her
by the applicants regarding the validity of composition
of the
bargaining council’s internal structures. Of course, this does
not mean that in any arbitration proceedings initiated
by the
bargaining council to enforce the collective agreement, the validity
of the extension of the agreement is immune from attack
by way of a
collateral challenge – on the contrary, a defence based on
arguments about the validity of the extension of the
agreement
remains open to any non-party who is subjected to enforcement
proceedings.
[20] In any event, in so far as the requirement of an existing right
is concerned, the provisions of s 206(1) (c) of the LRA preclude
the
applicants, as least in as the relief they seek is directed against
the minister, from relying on any irregularity in the appointment
or
election of a representative to a council effectively to invalidate
any collective agreement or act of the bargaining council
that would
otherwise be binding in terms of the Act. It seems to me that s 206
was enacted specifically to protect processes against
technical
shortcomings and deficiencies in the functioning of bargaining
councils. The ordinary grammatical meaning of s 206 (1)(b)
read with
ss (2)(c) immunises collective agreements and acts of bargaining
councils from attacks on their validity on account of
any
irregularity in the appointment or election of any representative to
a council, or any of its structures. The applicants’
attack on
the validity of an act of the bargaining council, at least that part
of it premised on the failure by the bargaining
council to comply
with its constitution in so far as appointments to the management
committee are concerned, is precisely the kind
of attack envisaged by
s 206. What s 206 means is that even if the council or its management
committee were not constituted in
accordance with its constitution
when it requested the minister to extend the agreement, that defect
does not invalidate the request,
nor does it affect the validity of
the agreement. It would do violence to the plain wording of the
section and its obvious purpose
to find, as the applicants submit,
that a distinction ought to be drawn between void and voidable acts,
and that only the latter
are contemplated by s 206.
[21] In short: For the purposes of the application for a declaratory
order, the minister’s decision is valid and enforceable
until
it is set aside by a court of law, and there is therefore no existing
right in which the applicants have an interest. In
any event, the
assertion of any right that the applicants may have, to the extent
that it is premised on the invalidity of any
act by the bargaining
council or any irregularity in any appointment or election of any
representative to the bargaining council
or any of its structures,
any defects do not invalidate the extension of the collective
agreement by virtue of the provisions of
s 206.
[22] Even if I am wrong in coming to the conclusion that there is no
‘right’ for the purposes of the present application
that
pre-exists any setting aside of the minister’s decision, the
application stands to be dismissed on the basis that the
applicants
have failed to clear the second hurdle before them, i.e. that all of
the facts and circumstances of the case require
the exercise of a
discretion in their favour. I come to this conclusion for two
reasons. First, as I have noted, there is an alternative
remedy open
to the applicants. In effect, the substantive right to which they lay
claim is a right to fair administrative action.
The right of review
under the LRA is available to the applicants on all of the grounds
raised by the applicants in these proceedings
relating to the
vagueness of the collective agreement, the absence of fair criteria
in relation the adjudication of appeals in
exemption proceedings and
the failure by the minister to afford non-parties a right to be hear
prior to extending the agreement.
Indeed, such an application is
foreshadowed by the alternative relief sought in these proceedings.
[23] Secondly, the primary basis of the applicants’ complaint,
in the form of their contentions regarding the constitution
particularly of the bargaining council’s management committee,
has been referred to arbitration in terms of the bargaining
council’s
constitution, and those proceedings remain pending. In these
proceedings, the applicants are in effect asking this
court to make a
final order as to validity of the composition of the council,
regional councils and the management committee in
circumstances where
this is the substance of their statement of case before the
arbitrator. The arbitrator’s decision obviously
does not bind
the minister, but to the extent that the resolution adopted by the
bargaining council’s management council
is found to be invalid
or that any subsequent attempts to ratify the resolution remains
contested, it remains open to the applicants
to attack the decision
to extend the agreement on that or any other basis.
The claim for interim relief
[24] I turn next to the applicants’ alternative claim for an
interim interdict prohibiting the bargaining council from enforcing
the collective agreement pending the outcome of a review to be
instituted. The requirements for interim relief in this court are
no
different to those that apply in the High Court - a clear right or a
right
prima facie
established though open to some doubt, a
well-grounded apprehension of irreparable if the interim relief is
not granted and the
ultimate relief sought is granted, a balance of
convenience in favour of granting interim relief, and the absence of
an any other
satisfactory remedy (see
Spur Steak Ranches Ltd v
Saddles Steak Ranch
1996 (3) SA 706
(C)). In proceedings such as
the present, where interim relief is sought pending the finalisation
of an application for review,
it is also incumbent on an applicant to
demonstrate some prospects of success in the pending application.
[25] I do not intend to canvass the applicants’ prospects of
success in any review application - for present purposes, this
is a
neutral factor. It seems to me that the application for interim
relief can be disposed of on the basis of the balance of convenience
and the absence of irreparable harm. It is not disputed that if the
interim relief sought by the applicants were to be granted,
a great
deal of uncertainty and confusion would be caused in the industry;
hundreds of thousands of employees would be affected
by the
differential in wage rates that would inevitably occur. Further, any
harm to which the applicants are exposed is not irreparable.
It
amounts to no more than the risk of paying wages in advance.
Moreover, if the applicants’ complaints are found either
in the
pending arbitration proceedings or in any review application to be
valid, there is the prospect that through a process of
ratification
or a subsequent extension of the agreement that the result that the
applicants now seek to upset would in any event
be achieved. On the
other hand, if interim relief were to be refused pending a review
that is ultimately successful, non-parties
to the agreement would be
entitled to recover the value of any increase paid by way of set off
against subsequent wage payments
adjusted to suit. In any event,
those of the first applicant’s members who are not able to meet
the terms of a collective
agreement have the remedy of a an expedited
application for exemption with a right of appeal ultimately to an
independent panel.
While the applicants have expressed their doubts
about the efficiency of this process, the facts deposed to by the
bargaining council
appear to indicate that the system is not
dysfunctional. In short: the balance of convenience favours the
respondents, and the
harm that would be caused by granting the
interim relief that the applicants seek substantially outweighs the
benefits that would
be derived by what are at the end of the day two
non-parties in an entire industry
[26] On this basis, in my view, the applicants have failed to make
out a case for an interim order.
Costs
[27] Section 162 empowers the court to make orders for costs on the
basis of the requirements of law and fairness. This requires
the
court, on a case-by-case basis, to have regard to all of the relevant
facts and circumstances and to exercise a discretion
as to whether a
costs order should be granted, and if so, on what basis.
[28] In
National Union of Mineworkers v East Rand Gold and Uranium
Ltd
, what was then the Appellate Division of the Supreme Court
held that where the parties to a dispute were parties to a collective
bargaining relationship, the court should consider any prejudice to
that relationship that an order for costs against one of the
parties
might pose. In the present instance, the applicants and those of the
respondents who have opposed the application are,
in one way or
another, parties to a collective bargaining relationship. The
sub-text in this case is a dispute between the first
applicant, other
employer association that are party to the council and the council
itself over issues that relate to the governance
of the council.
While these issues will shortly be the subject of arbitration
proceedings, I have no doubt that whatever the arbitrator’s
decision may be, present disagreements are necessarily going to have
to be resolved, one way or another. I am mindful that an adverse
order for costs might prejudice that process, and for that reason, in
my view, it is fair that each party pays its own costs.
I accordingly make the following order:
The application is dismissed.
There is no order as to costs
_______________________
André van Niekerk
Judge
APPEARANCES
APPLICANT: Adv AIS Redding SC, with Adv G Fourie, instructed by Anton
Bakker Inc
FIRST RESPONDENT: Adv T Motau SC, with Adv MJ Ramaepadi,
instructed by the state attorney
SECOND RESPONDENT: Adv RT Sutherland SC, with Adv A Mosam, instructed
Gattoo Attorneys Inc
THIRD RESPONDENT: Adv PJ Pretorius SC, with Adv T Bruinders SC and
Adv A Snider, instructed by DLA Cliffe Dekker Hofmeyr Inc
THIRTY-SIXTH RESPONDENT: Mr MM Baloyi, MM Baloyi Attorneys
THIRTY-SEVENTH RESPONDENT: Adv J Grogan
THIRTY-NINTH RESPONDENT: Adv G Rautenbach SC, instructed by Haffegee
Roskam Savage Attorneys
1
See
Farlam, Fichardt and Van Loggerenberg
Erasmus Superior Court
Practice
(Juta) at A1-34
2
Trinity
Asset Management (Pty) Ltd v Investec Bank Ltd
2009 (4) SA 89
at
paragraph [40]
3
At
paragraph [26] of the judgment.