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[2014] ZALCJHB 185
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Ellerines Furnishers (Pty) Ltd v Commissioner for Conciliation, Mediation and Arbitration and Others (JR818/2011) [2014] ZALCJHB 185; (2015) 36 ILJ 215 (LC) (23 May 2014)
REPUBLIC
OF SOUTH AFRICA
THE LABOUR COURT
OF SOUTH AFRICA; JOHANNESBURG
JUDGMENT
Reportable
Case no: JR 818/2011
In
the matter between:
ELLERINES
FURNISHERS (PTY) LTD
…......................................................................
Applicant
and
COMMISSIONER FOR
CONCILIATION,
MEDIATION AND
ARBITRATION
…................................................................
First Respondent
S NTOMBELA
NO
..............................................................................................
Second Respondent
R M
WHITEHEAD
...............................................................................................
Third Respondent
Heard: 19
December 2013
Delivered:
23 May 2014
Summary:
Review - arbitration award – peremption –
whether payment by employer of compensation ordered in award prior to
variation
thereof by arbitrator perempts employer’s right to
review entire award on the merits subsequent to variation. Once
right of review exists in respect of arbitration award such right
cannot be circumscribed by peremption of a portion of such right.
Waiver
- payment by employer of full amount of arbitration award does not in
and of itself constitute waiver or abandonment of right
to review
variation ruling that is clearly not within employer’s
contemplation and adversely affecting it.
Variation
ruling - once issued, reopens entire arbitration award to review by
affected party on any recognised grounds of review
despite possible
earlier peremption of such right to review by such party.
JUDGMENT
Bank; AJ
[1]
For the purposes of clarity I will refer to
the parties in this matter as follows:
1.1
the applicant - "Ellerines";
1.2
first respondent - "CCMA";
1.3
second respondent - "the
Commissioner";
1.4
third respondent - "Whitehead".
Factual
background
[2]
Ellerines decided to restructure its
logistics and supply chain department in 2008 as a result of various
acquisitions and restructuring.
Whitehead was involved in the initial
investigation into the proposed new structure which was eventually
approved by Ellerines'
board. On 15 October 2008, Whitehead raised a
number of concerns in an email to his line manager, Graham Adie
(“Adie”),
being aware of the advertised position of Group
Logistics Executive (“GLE”) and that he was entitled to
apply for this
position. Numerous consultation meetings were held
with Whitehead and various issues and queries arising from these
meetings were
raised in certain emails exchanged between the parties.
In short, Ellerines made it clear to Whitehead that it did not want
to
lose him as an employee and that it valued his services. It
furthermore made it clear that there would be no material change to
his terms and conditions of employment other than his job title of
GLE.
[3]
In
an email dated 6 November 2008
[1]
Whitehead recorded that it would have been futile for him to apply
for the GLE position because if he was suitable for it in the
first
place the process itself would not have been initiated. It appears
that he later had a change of heart and ultimately applied
for the
position but was unsuccessful. After the company restructuring, the
job requirements of the GLE position were however redefined,
with the
effect that Whitehead's responsibility would have become limited to
those stores in the Ellerines Group occupying what
is known as
“Market Position 1” such as Ellerines itself, Town Talk
and Furniture City. The redefined GLE position
post-restructuring
gave the incumbent responsibility for all trading brands, including
the abovementioned ones as well as Beares,
Lubners, Savills, among
others.
[2]
This effectively
caused Whitehead’s earlier position to become redundant. It is
common cause however, that he was offered
two alternative positions
with Ellerines. On 17 November 2008, Whitehead turned down the two
alternative positions offered to him
during the third consultation
meeting held with him. A fourth consultation meeting took place on 27
November. On 29 November, Whitehead
was informed of the proposed
restructuring of the logistics department for reasons of
cost-effectiveness and efficiency. He was
given a section 189(3)
letter setting out the reasons for the termination of his employment
for operational requirements. After
his dismissal he referred an
unfair dismissal dispute to the CCMA.
The
arbitration
[4]
After a lengthy eight-day arbitration the
Commissioner found that Whitehead’s dismissal for operational
requirements, whilst
substantively fair, was procedurally unfair
because the consultation period ought to have been extended to give
Whitehead sufficient
time to reflect on a document entitled “SCIP
Streams and Requirements”, or “the SCIP document”,
to formulate
a response and to ask questions arising from that
document. He furthermore found that Ellerines had failed to consult
with Whitehead
on the issue of severance pay and that Whitehead's
written question regarding this issue had never been answered. The
Commissioner
awarded Whitehead five months' salary as compensation in
the amount of R25,000.00 (being the net salary per month after all
deductions)
x 5, i.e. R125,000.00.
The variation
ruling
[5]
A variation ruling was issued on 4 April
2011, when the Commissioner realised that the compensation awarded
Whitehead had been based
on net pay when it should have been
calculated on his gross pay of R42,805.73 per month and consequently
varied the award to the
increased amount of R214,028.65. In the
meantime however, and before Ellerines became aware of the looming
variation ruling, it
had taken a practical view of the matter and
decided to pay Whitehead the full amount of the initial arbitration
award of R125,000.
After making payment of this amount to Whitehead
Ellerines was made aware of the variation ruling increasing the
amount payable
to Whitehead. Ellerines then decided to take the
entire arbitration award on review which encompassed not only a
review of the
Commissioner’s decision to vary the award by
increasing the amount of Whitehead’s salary from a net to a
gross basis
but which also, for the first time, included a review of
the Commissioner’s original finding of procedural unfairness.
Proceedings in
this court
[6]
Ellerines has applied for the partial
review and either the substitution or setting aside of the
Commissioner’s arbitration
award under case number GAJB
38441-08, and has also has applied for the review and either the
substitution or setting aside of
the Commissioner's variation ruling
dated 4 April 2011. It also seeks condonation for the late filing of
its review application.
[7]
Whitehead has subsequently launched what he
terms a “counter-review” application which is opposed by
Ellerines, which
is also out of time and for which he seeks
condonation. In his counter-review, Whitehead has raised a point
in
limine
to the effect that, by making
payment of the amount of compensation set out in the initial
arbitration award prior to variation,
Ellerines’ right of
review has effectively been perempted and it cannot now, after the
fact, attack the Commissioner’s
finding of procedural
unfairness.
[8]
What I therefore have before me are two
review applications, each coupled with a condonation application, one
from either party.
Each party seeks a review of a different aspect of
the arbitration award and for that reason I deem it expedient to deal
briefly
with the arbitration award and the grounds set forth by each
party to have it reviewed, prior to considering the questions of
whether
there has been a peremption of Ellerines' right of review and
whether condonation ought to be granted to each party for the late
filing of their respective review applications.
[9]
Neither party has challenged the
Commissioner's finding on substantive fairness and both rely on
fairly narrow grounds of review
in their papers.
[10]
The basis of Ellerines' review is an attack
on the Commissioner’s finding of procedural unfairness. It is
argued that that
if there is no prejudice to the employee as a result
of alleged procedural unfairness, one should not exercise the
discretion to
make an award of compensation. I was not provided with
any authority for this proposition but I need not rule on it as I
agree
with the Commissioner’s finding that the retrenchment
procedure was tainted by Ellerines' failure to provide Whitehead with
a document he had requested as well as by its failure to properly
consult with him on the question of severance pay. I agree further
that these failures may reasonably be seen to have prejudiced
Whitehead to the extent that, had they not occurred, he might well
have received a greater award of severance pay (or been able to
negotiate such greater award with his employer) prior to the
conclusion
of the consultation process.
[11]
Apart from the point
in
limine
on peremption to which I will
return momentarily, the basis of Whitehead's counter-review is
limited to a review of the Commissioner’s
finding that
Whitehead was not entitled to severance pay because he had
unreasonably refused to accept Ellerines’ offer of
alternative
employment. Whitehead seeks a review of that finding together with an
order that he was indeed entitled to severance
pay in accordance with
the severance pay policy of Ellerines prevailing at the time of his
dismissal, alternatively, in accordance
with section 41(2) of the
Basic Conditions of Employment Act. In the further alternative he
seeks that the matter be remitted back
to the CCMA for a
de
novo
hearing.
Peremption
[12]
It is argued on behalf of Whitehead that
Ellerines is perempted from applying for review of the varied award
because it waived its
right to do so by effecting payment of the
amount of compensation of R125,000.00 ordered in the original
unvaried award.
[13]
Although
most of the established authorities deal with the peremption of a
right of appeal I note that more recently, in the matter
of
NEHAWU
obo Tumana v CCMA
,
[3]
Lallie AJ briefly analysed the common law doctrine of peremption.
Simply stated this doctrine is based on the application of the
principle that no person can be allowed to take up two positions
inconsistent with one another or, as it is commonly expressed,
to
blow hot and cold or to approbate and reprobate.
[4]
This principle has also been approved by the Labour Appeal Court in
NUMSA
v Fast Freeze
.
[5]
With regard to the application of this principle to the review of
CCMA arbitration awards this Court has confirmed the relevance
and
applicability of the doctrine of peremption by finding that a party
who offers to comply with an award
unconditionally
and unreservedly
is precluded from seeking to review the award (my emphasis).
[6]
Also relevant is a decision of this Court in
Balasana
v Motor Bargaining Council
[7]
where Molahlehi J confirmed the common law requirement that the onus
of satisfying all the requirements of peremption rests on
the party
alleging it.
[14]
What makes the present situation somewhat
unique is that none of the authorities to which the parties referred
me contemplate an
issue such as the present: whether the handing down
of a ruling varying an initial arbitration award which has already
been complied
with by an employer party by unconditional payment of
this amount to the employee in question, automatically perempts the
right
of that employer to launch a review application against the
entirety of such award on any of the recognised grounds of review,
once such award has been varied.
[15]
It is common cause that the burden of
proving such peremption is on the one raising it and I must agree
with the argument submitted
on behalf of Ellerines that this is
indeed a difficult onus for Whitehead to discharge. It was
argued further that
Whitehead could only discharge his onus if
he was able to demonstrate that Ellerines, by making payment of the
compensation set
forth in the original arbitration award prior to
variation, had unequivocally abandoned or waived its right to
institute review
proceedings. This is however not the correct
formulation of the test: Whitehead would have had to demonstrate
that, by making
payment of the amount stipulated in the original
arbitration award, Ellerines had effectively offered to comply with
this award
unconditionally and
unreservedly
and was thus precluded
from taking it on review. There can be no doubt that this is so
insofar as the original unvaried award is
concerned. But what of the
variation ruling? Can it be said that payment by Ellerines of the
full amount of the arbitration award
constitutes a waiver or
abandonment of the right to review a ruling that was clearly not
within its contemplation at the time it
made payment and in respect
of which it was not given any opportunity of opposing?
[16]
It was cogently argued on behalf of
Whitehead that the subsequent issue of a variation ruling by the
Commissioner in no way affected
the substance of his original award
and that the partial compliance by Ellerines with the varied
arbitration award, through payment
of the initial amount of
compensation, constituted sufficient evidence of an unequivocal
abandoning or waiver of its right to institute
review proceedings.
Although this is a persuasive argument I very much doubt that when
making payment of the original award prior
to variation, Ellerines
unconditionally waived the right to seek a review of a variation of
such award, particularly where the
effect of such variation adversely
affected it.
[17]
In reply it was further submitted on behalf
of Ellerines that there is no authority for the view that the basis
of the review of
a variation ruling ought to be limited to the extent
of that variation and the reasons for such variation, as this could
conceivably
lead to the invidious position of having two simultaneous
review applications running simultaneously, against both the initial
arbitration award and the variation ruling respectively. Whilst I
agree with this submission it does not in my view go far enough.
This
is because I very much doubt that the correct legal position is that
peremption of the right of review may occur for only
certain aspects
of the award but may not occur with respect to the extent of the
variation, which in this case was the method of
calculation of the
compensation awarded and the resulting increase in quantum.
[18]
In my view, once it can be said that a
right of review exists such right cannot be circumscribed by the
peremption of a portion
of that right or that only certain grounds of
review may be raised but not others. Not only would this give rise to
the possibility
raised by Mr Makapane on behalf of Ellerines but I
find this to be an outcome that pushes the bounds of what may be
termed the
overriding objective of the LRA: the fair, just and
expeditious resolution of labour disputes. It would also constitute a
fettering
of the discretion of the Court to review and set aside any
award or ruling that falls within the grounds of review set out in
the
LRA as amplified, refined and evolved over almost twenty years of
jurisprudence in this and other Courts under the LRA.
[19]
What this effectively means, is that once
the variation ruling was issued it became open to Ellerines to
challenge the entire arbitration
award, for example, by reopening the
issue of the Commissioner’s ruling on procedural fairness as it
did. Simply put,
once a variation ruling is handed down by a
Commissioner the entire arbitration award then becomes open to review
by any party
affected by such variation on any of the recognised
grounds of review, despite an earlier possible peremption of such
right of
review on the part of an affected party.
[20]
Ellerines’ right to review the entire
arbitration award cannot therefore be said to have been perempted by
its payment of
the full amount of the arbitration award prior to the
issue of the variation ruling. Whitehead has not discharged the onus
of proving
such peremption and the point
in
limine
must therefore fail.
Ellerines’
application for condonation
[21]
Before dealing with the merits of both
reviews I have to apply my mind to the question of condonation being
sought by both sides.
I note that the original arbitration award was
received in January 2011 and that the variation ruling received on 4
April 2011.
Ellerines' review application was filed on 13 May 2011,
within the statutory six-week period after receipt of the final award
but
longer than six weeks after receipt of the original award.
[22]
The
question then arises whether the six week period for instituting
review proceedings commences from the date of the original
arbitration award or whether it commences afresh once variation award
has been issued by the Commissioner. It was submitted on
behalf of
Ellerines that, for purposes of calculation of the relevant time
period for purposes of review applications, the date
of the award is
deemed to be that of the varied award and that there is,
consequently, no need to apply for condonation where a
review
application has been filed within six weeks of receipt of the varied
award, in other words, within six weeks of receipt
of the variation
ruling.
[8]
I am in agreement
with the submission and find that Ellerines' review application was
launched timeously. Even if I am wrong in
this regard, I find that
there has been a sufficient explanation for any delay that was
occasioned and that the delay is, in any
event, insubstantial.
Condonation is therefore granted to the extent that this is
necessary.
Whitehead’s
application for condonation
[23]
Whitehead, on the other hand, filed his
answering affidavit in the review application only on 17 April 2012,
some five and a half
months late, but Ellerines does not oppose his
application for condonation in that respect. Whitehead’s
counter-review application
was however filed over 11 months late and
this was readily conceded by Mr Grundlingh who appeared on behalf of
Whitehead.
[24]
I
pause here to point out that there is no specific provision in either
the LRA or the Rules of this Court for a "
counter-review
application
"
and I agree with the applicant's submissions based on the authority
of
SABC
Ltd v Grogan NO and Another
[9]
to the effect that a counter-review application is simply a
substantive application for review by a different name. For this
reason,
the proper time to do so is within six weeks after the
publication of the arbitration award (or, in this matter, within six
weeks
after publication of the variation ruling). This period
cannot be said to commence as late as the time when the applicant
files the requisite notice in terms of Rule 7A (8).
[25]
In support of his application for the
extremely late filing of his counter-review application, Whitehead’s
affidavit explains
his lateness by stating that the grounds of this
counter-review were only confirmed upon perusal of the transcribed
record and
also that his attorneys were attempting to reach an
amicable settlement with Ellerines’ attorneys. It is clear to
me however
that at no stage was there any agreement between the
parties that the counter-review application be put on hold pending
the finalisation
of any possible settlement between the parties. It
is submitted on behalf of Ellerines that its attorneys were only
formally notified
of Whitehead’s intention to institute the
counter-review in his attorney's email of 5 March 2012 almost one
year after publication
of the variation ruling. From this time
Ellerines contended that condonation had to be sought by and granted
to Whitehead.
[26]
In considering these reasons I find no
reason why Whitehead could not have at least instituted his
counter-review application timeously
as it is plain that the basis of
his application is the Commissioner's failure to award him severance
pay in addition to the compensation
awarded. This much is patently
clear from the initial arbitration award which was handed down in
January 2011. It appears to me
that the institution of the
counter-review was an afterthought on the part of Whitehead and his
attorneys, albeit an extremely
late one. It bears mentioning that
Whitehead has been legally represented from the outset of the
arbitration proceedings.
[27]
I find furthermore that Whitehead has
failed to make out a sufficient case for condonation for the late
filing of his counter-review
application by reason of the fact that
he has failed to fully explain the reasons for the inordinate delay
of some 11 months. The
extreme lateness of the delay is also a factor
to be taken into account. For these reasons I am inclined to refuse
Whitehead’s
application for condonation and this must
inevitably have fatal consequences for his counter-review application
as well. I have,
in any event, considered the merits of the
counter-review application but find that they are noticeably lacking
for similar reasons
to those I have expressed above in relation to
Ellerines’ review: the Commissioner's evaluation of the
evidence and his assessment
of the law as contained in paragraphs 137
to 149 of the arbitration award, when considered together with his
analysis of the provisions
of section 41(4) of the Basic Conditions
of Employment Act are all rational, reasonable and, in my view,
entirely correct, based
on the evidence before the Commissioner.
There is, thus, no basis to interfere with his finding that Whitehead
was not entitled
to severance pay.
[28]
I therefore dismiss Whitehead’s
application for condonation for the late filing of his
counter-review.
Ellerines’
review
[29]
Although it
is
not clear from the papers before me whether Whitehead launched a
formal variation application or whether the perceived error
in the
award was brought to the attention of the Commissioner in some other
way this is not determinative of the issue as I cannot
agree with the
submission on behalf of Ellerines that the
audi
alteram partem
test was in any way
materially compromised by the want of compliance with the
requirements of Rule 31 of the CCMA Rules requiring
applications to
be brought on notice to all parties.
[30]
Although it is somewhat perturbing that
Ellerines did not receive any notice of the application to vary the
initial arbitration
award, from one based on net pay to one based on
the total cost to company, it cannot be denied that this decision was
made on
evidence available to the Commissioner which had been placed
before him during the initial arbitration. The Commissioner's initial
award in this regard states that Ellerines was to compensate
Whitehead, by reason of the procedurally unfair dismissal,
compensation
“…
which is
equivalent to five months' salary calculated at the applicant's rate
of salary at the time of dismissal i.e. R25,000.00
x 5 =
R125,000.00
.” This was clearly
incorrect on the evidence before the Commissioner and the fact that
he later saw fit to correct the monthly
"
rate
of salary
" from R25,000.00 to
R42,805.00 does not in my mind constitute a valid reason to interfere
with his award, notwithstanding
Ellerines vociferous complaints that
it was not afforded any opportunity to oppose this variation of the
arbitration award.
[31]
In
the present matter, it is argued on behalf of Ellerines that the
variation ruling increases the compensation per month from R25,000.00
(which is, in fact, R24,956.04, as evidenced by a payslip which
formed part of the record)
[10]
to some R42,805.00 (which is in fact R42,805.73 according to the same
payslip). The amount of R42,805.73 is clearly the total cost
to
company whereas Whitehead's gross monthly pay was, in fact,
R39,962.29, an amount equivalent to his net pay adding back the
total
deductions of R15,006.25 per month.
[32]
It is well within the powers of a
commissioner appointed by the CCMA to
mero
motu
vary an arbitration award to the
extent that there is some form of patent error or ambiguity therein
and I find that the limited
extent of the variation of the award was
most certainly covered by the evidence before him, particularly by a
payslip of Whitehead’s
to which reference was made.
[33]
I am not persuaded that Ellerines has made
out a proper case to review the decision of the Commissioner to vary
the award and effectively
increase the compensation payable to
Whitehead. The varied arbitration award is a decision that most
certainly falls within
the band of reasonable outcomes at which a
reasonable decision-maker could have arrived.
[34]
As to the further grounds of review, I find
no merit in Ellerines’ submissions that the Commissioner acted
unreasonably or
committed a gross irregularity in his finding of
procedural unfairness by reason of Ellerines' failure to properly
consult with
Whitehead on the question of severance pay. The
Commissioner was well aware of the aversion of these Courts to
following a ‘mechanical
checklist approach’ but felt
fairly strongly, on the evidence before him, that the aspect of
severance pay was one on which
Francois Nel of Ellerines ought to
have consulted Whitehead, but failed to do so. The Commissioner also
noted the fact that Nel
had failed to respond to Whitehead's written
query regarding severance pay.
[35]
The challenge by Ellerines to the
Commissioner’s finding of procedural fairness is therefore
without merit as such finding
cannot be assailed on the grounds of
unreasonableness.
[36]
In
my view then, the arbitration award, read together with the variation
ruling, constitutes a reasonable decision that is based
on evidence
placed before the Commissioner that is entirely rational and
connected to the evidence before him. The arbitration
award as varied
is thus one which contains a reasonable result and the outcome
thereof can in no way be said to be unreasonable.
The Commissioner
reached a fair and equitable decision and he determined the dispute
in accordance with a fair procedure.
[11]
Order
[37]
By reason of the fact that both parties
have been equally successful (or, rather, unsuccessful) in their
respective applications,
I deem it appropriate that no order as to
costs be made in this matter.
[38]
In the result and for all the above reasons
I make the following order:
38.1
The point
in
limine
raised by Whitehead regarding
peremption of the right to review is dismissed;
38.2
Ellerines' application for condonation for
the late filing of its review application, to the extent that this is
necessary, is granted;
38.3
Ellerines' application for review of the
arbitration award as modified by the variation ruling dated 4 April
2011 is dismissed;
38.4
Whitehead's application for condonation for
the late filing of his counter-review is dismissed;
38.5
Whitehead's counter-review application is
dismissed;
38.6
There is no order as to costs.
________________
Bank; AJ
Acting Judge of the
Labour Court of South Africa
APPEARANCES
For
the Applicant: Mr K Makapane, Bowman Gilfillan Inc
For
the Third Respondent: Advocate R Grundlingh
Instructed
by: Bester & Rhoodie, Pretoria
[1]
Document
bundle pp 205 - 206
[2]
Record,
pp 15-18
[3]
(2012)
33
ILJ
666 (LC) at paras 7 -9
[4]
Hlatshwayo
v Mare and Deas
1912
AD 242
as quoted in the
NEHAWU
case
supra
at para 7
[5]
(1992) 13
ILJ
963 (LAC)
[6]
Jusayo
v Mudau NO
and
Others
(2008) 29
ILJ
2953 (LC)
[7]
(2011)
32
ILJ
297 (LC)
[8]
Solidarity
obo Bouwer v Arivia (Pty) Ltd t/a Arivia.Kom
[2010]
9 BLLR 981
(LC) at para 5;
JDG
Trading (Pty) Ltd t/a Bradlows Furnishers v Laka NO and Others
[2001]
3 BLLR 294 (LAC)
[9]
(2006)
27
ILJ
1519 (LC) at para 13-24
[10]
Record
p 478
[11]
Herholdt
v Nedbank Ltd
(2013)
34
ILJ
2795 (SCA),
Kievits
Kroon Country Estate (Pty) Ltd v Mmoledi and Others
2014 (1) SA 585
(SCA) and
Gold
Fields Mining South Africa (Pty) Ltd (Kloof Gold Mine) v CCMA and
Others
[2007] ZALC 66
;
[2014]
1 BLLR 20
(LAC)