About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2014
>>
[2014] ZALCJHB 153
|
|
Lawrence v Mutual And Federal (Pty) Ltd and Another (JR3308/2011) [2014] ZALCJHB 153 (9 May 2014)
REPUBLIC
OF SOUTH AFRICA
THE LABOUR COURT OF
SOUTH AFRICA, JOHANNESBURG
JUDGMENT
NOT REPORTABLE
CASE NO: JR3308/2011
In
the matter between:
K
M
LAWRENCE
Applicant
and
MUTUAL
AND FEDERAL (PTY)
LTD First
Respondent
L
SHEAR Second
Respondent
Heard:
21 November 2013
Judgment:
09 May 2014
Summary:
Review of a private arbitration award. Arbitration award not
reviewable.
JUDGMENT
PRINSLOO, AJ
Introduction
[1]
The Applicant is seeking to review and set
aside a private arbitration award issued in consequence of private
arbitration proceedings
agreed to between the Applicant and the First
Respondent (‘the employer’). The parties agreed to the
terms of reference
for the conduct of the arbitration proceedings and
the Applicant is seeking that his dismissal be declared substantively
unfair
and that the findings be substituted in respect of the issues
that were to be determined as set out in the terms of reference.
Background facts
[2]
The
brief history of this matter is as follows: the Applicant was
employed as a general manager of Mutual and Federal and after
he was
found guilty of misconduct, he was dismissed. The Applicant and the
employer subsequently entered into a private arbitration
agreement
and the Second Respondent (‘the arbitrator’) was
appointed as a private arbitrator. He was given the same
powers and
functions of a commissioner of the Commission for Conciliation,
Mediation and Arbitration (‘the CCMA’) and
as
contemplated in section 138 of the Labour Relations Act
[1]
(the Act).
[3]
On 5 October 2011 the Applicant and the employer
signed a ‘terms of reference’ for the conduct of the
arbitration and
paragraphs 3.1 – 3.4 are relevant to this
review application.
[4]
Paragraph 3 of the terms of reference deals with
the issues the arbitrator was required to determine and reads as
follows:
‘
3.1.
Whether the employee is guilty of: Gross negligence in that the
employee failed to exercise due care
and / or gross failure by the
employee to implement control and adequate monitoring mechanisms
regarding prescribed claims thereby
exposing the employer to a
financial loss of R5 million to R10 million and causing an
unwarranted premium reduction;
3.2.
If so, whether the dismissal of the applicant was substantively fair;
3.3.
If not, the appropriate legal relief to be awarded to the applicant;
3.4.
Whether the applicant is entitled to the deferred payment of his 2009
bonus which is R 165 567
plus interest at the prescribed rate from 16
February 2011 to date of payment, less income tax to be deducted.’
[5]
The arbitrator found that the Applicant was not
guilty of gross negligence but was guilty of negligence for failing
to take adequate
and additional measures, as general manager, to
ensure that claims did not prescribe. He ordered the employer to pay
the Applicant
the equivalent of six month’s salary as
compensation and 50% of his performance bonus for the financial year
2009 plus interest
at the prescribed rate from 1 October 2010.
[6]
The Applicant is seeking to review and set aside
the arbitration award and the variation of the arbitration award.
The test on review
[7]
The
test that this Court must apply in deciding whether the arbitrator's
decision is reviewable has been rehashed innumerable times
since
Sidumo
and Another v Rustenburg Platinum Mines Ltd and Others;
[2]
as ‘whether the conclusion reached by the arbitrator was so
unreasonable that no other arbitrator could have come to the
same
conclusion.’ The Constitutional Court very clearly held that
the arbitrator's conclusion must fall within a range of
decisions
that a reasonable decision maker could make.
[8]
However
the arbitration award sought to be reviewed was issued in consequence
of a private arbitration agreement between the parties
and the award
may only be reviewed in terms of the provisions of section 33 of the
Arbitration Act
[3]
.
[9]
In
Lufuno
Mphaphuli and Associates (Pty) Ltd v Andrews and Another
[4]
the Constitutional Court held that:
‘
The
twin hallmarks of private arbitration are thus that it is based on
consent and that it is private, i.e. a non-state process.
It must
accordingly be distinguished from arbitration proceedings before the
Commission for Conciliation, Mediation and Arbitration
(CCMA) in
terms of the
Labour Relations Act 66 of 1995
which are neither
consensual, in that respondents do not have a choice as to whether to
participate in the proceedings, nor private.
Given these
differences, the considerations which underlie the analysis of the
review of such proceedings are not directly applicable
to private
arbitrations.’
[10]
In
Telcordia
Technologies Inc v Telkom SA Ltd
[5]
the Supreme Court of Appeal stressed the need, when courts have to
consider the confirmation or setting aside of arbitral awards,
for
adherence to the principle of party autonomy, which requires a high
degree of deference to arbitral decisions and minimises
the scope for
intervention by the courts.
[11]
This Court has made in clear in numerous judgments that the norms
that apply in reviews of private arbitrations are those found
in the
provisions of section 33 of the Arbitration Act and the wider test of
review of section 145 of the Act is not applicable
to private
arbitrations under section 33 of the Arbitration Act.
[12]
In
Clear
Channel Independent (Pty) Ltd v Savage NO and another
[6]
this
Court held that the test as set out in
Telcordia
[7]
applies in reviews of private labour disputes. The test to apply is
set out in that case as follows:
'By agreeing to
arbitration parties to a dispute necessarily agree that the fairness
of the hearing will be determined by the provisions
of the Act and
nothing else. Typically, they agree to waive the right of appeal,
which in context means that they waive the right
to have the merits
of their dispute relitigated or reconsidered. They may, obviously,
agree otherwise by appointing an arbitral
appeal panel, something
that did not happen in this case.
Last, by agreeing to
arbitration the parties limit interference by courts to the ground of
procedural irregularities set out in
s 33(1) of the Act. By necessary
implication they waive the right to rely on any further ground of
review, ''common law' or otherwise.
If they wish to extend the
grounds, they may do so by agreement but then they I have to agree on
an appeal panel because they cannot
by agreement impose jurisdiction
on the court.'
[13]
In other words by agreeing to refer their dispute to private
arbitration the parties limit interference by court to the grounds
of
procedural irregularities as set out in section 33(1) of the
Arbitration Act. The consequence of agreeing to refer the matter
to
private arbitration is that the parties waive the right to rely on
any further ground of review be it 'common law' or otherwise.
The
grounds of review as set out in section 33(1) of the Arbitration Act
can only be extended by agreement between the parties.
[14]
Section 33(1) of the Arbitration Act provides for
the setting aside of an award as follows:
‘
(1)
Where
(a)
any member of an arbitration
tribunal has misconducted himself in relation to his duties as
arbitrator or umpire; or
(b)
an arbitration tribunal has
committed any gross irregularity in the conduct of the arbitration
proceedings or has exceeded its powers;
or
(c)
an award has been improperly
obtained,
the court may, on the application
of any party to the reference after due notice to the other party or
parties, make an order setting
the award aside.’
[15]
It is against this background that the Applicant's
grounds for review must be assessed.
Grounds for review
[16]
The Applicant raised four grounds of review and
the application for review is opposed.
[17]
The first ground of review is that the arbitrator
committed a gross irregularity in the conduct of the arbitration
proceedings by
failing to determine the substantive fairness of the
Applicant’s dismissal.
[18]
Substantive fairness is established by considering
a number of aspects, as set out in Item 7 of Schedule 8 of the Act.
If it is
established that the employee is guilty of misconduct, the
question for the arbitrator is whether the dismissal was an
appropriate
sanction. The consideration of the appropriateness of the
sanction is part of the enquiry into the substantive fairness of the
dismissal.
[19]
The arbitrator found that the Applicant was not
guilty of gross negligence, but that he was negligent. He held that
dismissal was
not the only and not the appropriate sanction.
[20]
The Applicant’s case is that the arbitrator
failed to determine substantive fairness. I cannot agree with this as
the arbitrator
found that the Applicant was not guilty of gross
negligence and the sanction of dismissal was too harsh.
[21]
In finding that dismissal was not an appropriate
sanction, the arbitrator made a finding on the substantive fairness
of the Applicant’s
dismissal. If the Applicant’s
expectation was that the arbitrator should have dealt with the issue
of substantive fairness
separately and specifically, that is
understandable but that expectation
per
se
cannot render the award reviewable.
[22]
The arbitrator made a finding on substantive
fairness and this ground for review has no merit.
[23]
The second ground for review is that the
arbitrator committed gross irregularity in the conduct of the
arbitration proceedings by
disregarding material evidence and
argument, alternatively failed to apply his mind to evidence and
argument in finding that the
Applicant was guilty of negligence. In
this respect the Applicant’s case is that the arbitrator’s
decision is irrational
and not one that a reasonable decision maker
could make. Alternatively that he acted
ultra
vires
the powers given to him by the
private arbitration agreement in that he was not required to
determine whether the Applicant was
guilty of negligence. The
arbitrator was to determine whether the Applicant was guilty of gross
negligence.
[24]
The ‘reasonable decision maker’ test
does not apply and I cannot accept the first part of this ground for
review as
a basis to interfere with the decision.
[25]
The alternative ground for review goes to the
question of the powers given to the arbitrator by the agreement and
as set out in
the terms of reference. The arbitrator was tasked to
determine whether the Applicant was guilty of ‘gross
negligence’.
The arbitrator found that he was not guilty of
gross negligence, but that he was negligent.
[26]
I am of the view that the arbitrator did not
exceed his powers and that he did not commit a reviewable
irregularity by considering
that the Applicant was guilty of lesser
misconduct. He determined that the Applicant was not guilty of ‘gross
negligence’
and in that respect he carried out the mandate the
parties had given him. He was further mandated to determine that in
the event
the Applicant was not guilty of ‘gross
negligence’ and his dismissal substantively unfair, what would
be the
appropriate legal relief.
[27]
The employer’s case is that since the
arbitrator found the Applicant’s dismissal substantively
unfair, the finding as
to the negligent conduct of the Applicant is
irrelevant to the issue of substantive fairness but relevant to the
issue of an appropriate
remedy and the arbitrator was entitled to
take that into account in determining the remedy.
[28]
It is trite law that not every irregularity in the conduct of an
arbitration would invite interference from the court. The
court will
interfere where the irregularity is so gross that the affected party
can be said to have been denied a fair hearing
as a result. I cannot
find that the Applicant was denied a fair hearing simply because a
finding of negligence was made.
[29]
The arbitrator had to determine appropriate relief and I agree with
the employer’s argument that he was entitled to consider
the
issue of negligence in determining an appropriate remedy.
[30]
Therefore the second ground for review is without merit.
[31]
The third ground for review is that the arbitrator failed to consider
the prescripts of section 193(2) of the Act regarding
re-instatement
or re-employment as an obligatory remedy.
[32]
The Applicant’s case is that once the arbitrator found that the
Applicant’s dismissal was substantively unfair,
he had no
option but to re-instate the Applicant. I cannot agree with this
submission.
[33]
It is evident from the award that the arbitrator considered the
appropriate remedy and in doing so he found that re-instatement
is
not the appropriate remedy and he awarded compensation. The reasons
for not re-instating the Applicant and for determining the
amount of
compensation had been set out in the arbitration award.
[34]
The terms of reference required the arbitrator to determine
if
the Applicant was guilty of ‘gross negligence’ and
whether his dismissal was substantively fair and if not, what
the
appropriate legal relief would be.
[35]
I cannot find that the arbitrator failed to take account of or
consider the prescripts of section 193 of the Act. He considered
the
facts and his finding that the Applicant was indeed negligent and
came to a finding that re-instatement would not be appropriate
but
compensation should be awarded. The arbitrator provided reasons why
he did not re-instate the Applicant and in awarding compensation,
he
carried out his mandate to determine the appropriate legal relief.
[36]
There remains one ground for review to be
considered and that is whether the arbitrator failed to provide any
cogent reasons for
awarding payment of only 50% of the Applicant’s
2009 bonus and failed to determine the date for interest on the
amount to
be paid.
[37]
It is evident from the variation ruling that the
arbitrator found that the Applicant was to be paid his performance
bonus plus interest
at the prescribed rate as from 1 October 2010.
There is no merit in the allegation that the arbitrator failed to
determine the
date for interest to be paid.
[38]
The arbitrator was specifically mandated to
determine whether the Applicant was entitled to payment of his 2009
bonus. He found
that the Applicant was not guilty of gross negligence
but negligence and he should receive only a portion of the bonus.
[39]
The employer conceded that the arbitrator did not
provide reasons for only awarding 50% of the bonus and submitted that
it is implicit
in the award that the Applicant was only awarded 50%
of his bonus because he found the Applicant negligent in discharging
his duties
and responsibilities.
[40]
In my view this amounts to speculation and calls
for inferences to be drawn.
[41]
The arbitrator should have provided reasons why
the Applicant was not entitled to his full bonus and making reference
to his negligence
almost in passing, does not constitute a reason for
awarding 50% of the bonus. The arbitrator was specifically mandated
to determine
this issue and his award should be clear on all the
issues requiring determination and should not require any inference
to be drawn.
[42]
In my view, the arbitrator’s failure to
provide reasons for awarding only 50% of the bonus is reviewable.
[43]
This ground for review is upheld.
[44]
Mr Campanella for the Applicant submitted that the
matter should not be remitted
de novo
but should be determined by this Court.
Conclusion
[45]
In reviewing the arbitration award, the ground for
review as raised by the Applicant must be assessed and this Court
must apply
the
norms found in the provisions of section 33 of
the Arbitration Act.
The test to be applied is a
strict one.
[46]
The Applicant raised four grounds for review.
Three of the grounds so raised are without merit and the last ground
for review is
upheld.
[47]
With regard to costs, I take into account the fact
that the Applicant is an individual who feels prejudiced and wanted
this Court
to consider his matter. I do not in law and fairness
consider a costs award to be appropriate.
Order
[48]
In the premises, I make the following order:
48.1 The application for
review on the ground that the arbitrator failed to determine the
substantive fairness of the Applicant’s
dismissal that he acted
ultra vires
the powers given to him by the private arbitration
agreements and that he failed to consider the prescripts of section
193(2) of
the Act is dismissed;
48.2 The Applicant is
entitled to his full performance bonus for the 2009 financial year
being R 165 567 plus interest at the prescribed
rate from date of
accrual to date of payment, less income tax deductions;
48.3
The is no order as to costs.
_____________
Prinsloo,
AJ
Acting
Judge of the Labour Court
Appearances:
Applicant:
Advocate Campanella
Instructed
by:
Stan Dewey
Second
Respondent:
Advocate van As
Instructed
by:
Moni Attorneys
[1]
Act
66 of 1995
[2]
(2007) 28 ILJ 2405 (CC) at para 110.
[3]
Act 42 of 1965.
[4]
2009
(4) SA 529 (CC); 2009 (6) BCLR 527 (CC).
[5]
2007 (3) SA 266 (SCA).
[6]
(2009) 30 ILJ 1593 (LC).
[7]
Telcordia Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112
;
2007 (3) SA 266
(SCA).