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[2018] ZALCCT 46
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Unicorn Pharmaceuticals (Pty) Ltd v Edwards NO and Others (C118/17) [2018] ZALCCT 46 (20 February 2018)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT CAPE TOWN
CASE
NUMBER: C118/17
Reportable
In
the matter between:
UNICORN
PHARMACEUTICALS (PTY)
LTD
Applicant
and
ARBITRATOR
K EDWARDS
N.O.
First
respondent
PAUL
VAN DER HORST and 12 others
Second
and further respondents
Heard:
31
January 2018
Delivered:
20
February 2018
SUMMARY:
Review –
Arbitration Act 42 of 1965
.
JUDGMENT
STEENKAMP
J:
Introduction
[1]
The
applicant seeks to have an arbitration award reviewed and set aside.
But this is not, as is usually the case in this Court,
an application
in terms of
s 145
of the LRA
[1]
;
instead, it is an application in terms of
s 33
of the
Arbitration
Act
[2
]
to review and set aside a
private arbitration award.
Background
[2] The
applicant was involved in the business of pharmaceutical
distribution, primarily for the Clicks group,
before it was renamed
and repurposed. In 1990 it set up an “owner-driver”
scheme whereby drivers would deliver pharmaceuticals
on its behalf.
The second to twelfth respondents, Messrs van der Horst and others,
were owner drivers under this scheme. The applicant
says they were
engaged as independent contractors.
[3]
The
relationship was initially governed by “cartage agreements”
that were replaced by individual “transportation
agreements”
in March 2006. All of the individual respondents signed
transportation agreements on 20 March 2006, subject to
the condition
that they had to undergo polygraph tests within a specified period.
The agreements also included an arbitration clause
that required any
dispute to be referred to private arbitration. It includes the
following sub clause:
[3]
“
The arbitrator
shall be any suitably qualified independent person agreed upon
between the parties to the dispute, and failing agreement
within 7
days, appointed on the application of either party by the chairman
for the time being of the Association of Arbitrators.”
[4] The
individual respondents continued driving in terms of the agreement
but refused to undergo polygraph tests.
The applicant terminated the
transportation agreements with them on 23 October 2006.
[5]
The
individual respondents referred an unfair dismissal dispute to the
CCMA.
[4]
The CCMA dismissed the
referral because it lacked jurisdiction. Commissioner W F Maritz
ruled:
“
The CCMA does not
have jurisdiction to consider either the validity of the agreement or
whether the applicants, despite the apparent
terms of the agreement,
are nonetheless employees and not independent contractors.
The
in limine
objection is upheld and the application is dismissed.”
[6] On
20 April 2008 the individual respondents launched an application in
the Western Cape High Court to compel
the applicant to participate in
private arbitration. Blignault J dismissed the application with costs
on 1 July 2009. He held that
the court does not have the power to
compel a reluctant party to participate in arbitration.
[7]
Over
seven years later, on 13 December 2016, a private arbitrator, Ms Kim
Edwards
[5]
handed down an
arbitration award, following an arbitration that was held in the
absence of the applicant. She found that the individual
respondents
were employees; that they were unfairly dismissed; and she ordered
the applicant to pay each of them compensation equivalent
to 12
months’ remuneration.
[8] The
applicant says that the award was improperly obtained; that the
arbitrator’s appointment was irregular;
that it did not receive
proper notice of the arbitration; and that the arbitrator did not
apply her mind to the issues before her.
It is for those reasons that
it seeks to have the award reviewed and set aside. I shall consider
each of those grounds of review
separately.
Evaluation
[9] As
I mentioned at the outset, this is an application in terms of
s 33(1)
of the
Arbitration Act. That
section reads:
“
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.”
Irregular appointment?
[10] The
parties did not agree to the appointment of an arbitrator. The
respondents made much of the applicant’s
recalcitrance to do
so, and blamed it for the fact that, ten years after the dispute
arose, it has not been finalised. But as a
matter of fact, there is
no evidence before me that the respondents tried to get the
applicant’s agreement. Mr
Chamisa
, who represented the
respondents in these proceedings, has done so from at least 2016. On
16 November 2016 he sent a fax to the
applicant at its general fax
number in Montague Gardens. It was addressed to no-one in particular,
despite the fact that the respondents’
previous representative,
one Bertram Albrecht (styled as a labour and HR practitioner with
Nwekwezi Labour & HR Consultancy
cc) had been in email
correspondence with the applicant’s Head: Group Legal Counsel,
Mr David Janks, about this very dispute.
Janks had a different and
dedicated fax number and email address. And as long ago as 14
February 2012 Janks wrote to Albrecht and
said:
“
You indicated in
your letter to UPD dated 21 July 2011 that there is still a private
arbitration pending with regards to the allegation
of unfair
dismissal. Please let me know what issues are being determined in
such arbitration, who the parties are, and the arbitrator’s
details and contact information.”
[11]
Chamisa’s
letter of 16 November 2016 reads:
[6]
“
In re: Private
arbitration re Paul van der Horst and 13 Others v New United
Pharmaceutical Distributors Pty Ltd
1.
Above has reference.
2.
Please note that Paul van der Horst and 13 others will be proceeding
with private arbitration after the
lack of co-operation from
Respondent in giving finality to the dispute that required private
arbitration.
3.
It is the position of the applicants that if the respondent had
genuine concerns was to raise such in
limine to be considered at
private arbitration, however the lack of co-operation at all material
times has left the applicants
vis-à-vis the unreasonable
period taken with no option but to proceed with private arbitration
set for the 5
th
and 6
th
of December 2016.
4.
It is imperative for the company to be informed that the process will
be carried out without any further
delay by the respondent.
Regards
Adv Dennis Jnr Chamisa.”
[12] The
applicant says it was not aware of this fax. It had been sent to a
general fax machine at a distribution
centre at another company in
the same group of companies. But be that as it may, it is apparent
that it does not comply with the
provisions of clause 50.4 of the
arbitration agreement. Chamisa, on behalf of the respondents, did not
ask the applicant to agree
to the appointment of an arbitrator. He
merely purported to inform it of an arbitration that had already been
set down. And, failing
any agreement to the appointment of an
arbitrator, neither did the chairperson of the Association of
Arbitrators appoint one.
[13] When
asked about this in argument, Mr
Chamisa
conceded that the
arbitrator was not appointed in terms of clause 50.4. The best he
could do was to refer to email correspondence
between him and the
Association. But the arbitrator that the respondents unilaterally
appointed, Ms Edwards, was appointed neither
by agreement nor by the
Association of Arbitrators.
[14] It
follows that the appointment of the arbitrator was irregular and the
award was improperly obtained. Her
award must be reviewed and set
aside for this reason alone.
Defective notice
[15] Also,
and in any event, the arbitration notice did not comply with
s 15(1)
of the
Arbitration Act:
“
>An arbitration
tribunal shall give to every party to the reference, written notice
of the time when and place where the arbitration
proceedings will be
held, and every such party shall be entitled to be present personally
or by representative and to be heard
at such proceedings.”
[16] In
this case, the arbitrator gave no such notice.
[17]
Although
it may appear to elevate substance over form, Mr
Conradie
referred
in this regard to the binding authority of the SCA in
Favish
Vidavsky v Body Corporate of Sunhill Villas
[7]
:
“
It will be
convenient first to consider the nature of the irregularity in the
present case. The arbitrator was vested with general
jurisdiction to
try the dispute between the parties by reason of his appointment. But
his powers to conduct the proceedings in
the absence of a party were
expressly limited by
s 15(2)
, which lays down as a jurisdictional
fact that the arbitrator may only proceed if that party has received
reasonable notice of
the time and place of the hearing. The
requirement is peremptory. There was no notice and the arbitrator’s
jurisdiction to
proceed was lacking. An alternative, but, I think
equally valid, approach to the section is to recognise that
proceeding with a
hearing without proper notice to a party of the
date and place of that hearing fundamentally taints both the
proceedings and any
decision which depends upon them.”
[18] For
this reason also, the arbitration was an irregularity and must be
reviewed and set aside.
Failure to apply her mind
[19] The
arbitrator recorded in the opening paragraph of her award:
“
The defendant
[
sic
] did not attend the arbitration. The defendant has thus
far not co-operated with the need to pursue the private arbitration
as
directed by an order of the High Court. I am satisfied that all
communication in respect of this arbitration was delivered to the
defendant within the prescribed time periods.”
[20] Firstly,
the High Court gave no such order. On the contrary, Blignault J
dismissed the individual respondents’
claim with costs. He held
that the Court did not have the power to compel a reluctant party to
participate in arbitration proceedings.
And he pointed out that the
applicants in that case (i.e. the individual respondents in this one)
could have proceeded in terms
of clause 50.4. Yet they did not do so.
The arbitrator nevertheless proceeded with the arbitration, despite
the fact that clause
50.4 had not been followed, and she did so based
on an incorrect premise. The very foundation of the arbitration was
irregular.
[21] Secondly,
the arbitrator accepted that the company had received “all
communication” – presumably
including the notice of the
arbitration. But she took no further steps to ensure that that was
the case, nor did she ask the individuals
to provide such proof,
other than the fax transmission sheet of the fax that Mr Chamisa had
sent to the general fax number at the
distribution centre. Yet she
proceeded in the absence of the company. That deprived it of a fair
trial in circumstances where it
was not clear that it had waived its
right to a hearing.
[22]
The
Constitutional Court held in
Lufano
Mlhaphuli & Associates (Pty) Ltd v Andrews
[8]
:
“
[74] In
my view, there is no reason why the fairness requirement of section
34 of the Constitution cannot co-exist with
the requirements imported
by the provisions of
section 33(1)
of the
Arbitration Act. On
the
contrary, there is every reason why co-existence should be accepted:
the fairness requirement in
section 34
is part of a fundamental
constitutional right incorporated into the Bill of Rights and it is
properly to be engrafted onto the
principles applicable to
arbitrations.
[75] This
conclusion is in accordance with the principle that in interpreting
any legislation the courts are enjoined
to promote the spirit,
purport and objects of the Bill of Rights, including the right to a
fair and impartial hearing guaranteed
by
section 34.
[76] …
[77] In
Sidumo and Another v Rustenburg Platinum Mines Ltd and Others
,
a case dealing with statutory arbitrations under the Labour Relations
Act (the LRA), Ngcobo J made comments to the following effect.
In
order to give effect to the intention that, as far as possible,
arbitration awards would be final and only interfered with in
very
limited circumstances, the drafters of the LRA, in section 145(2)(a)
thereof, chose to provide for narrow grounds of review
similar to
those provided for in
section 33(1)
of the
Arbitration Act, and
did
so aware of the jurisprudence under the latter Act. But they were
equally aware that in construing the provisions of
section 145(2)(a)
,
in particular the ambit of the grounds of review in the section, the
Labour Courts would have regard inter alia to the right to
fair
labour practices guaranteed to everyone in terms of section 23 of the
Constitution and the interpretative injunction contained
in section
39(2) of the Constitution. The crucial inquiry (in assessing
irregularities) is whether the conduct of the decision-maker
complained of prevented a fair trial of issues. The requirements of
fairness in the conduct of arbitration proceedings are consistent
with the LRA and the Constitution: section 138(1) of the LRA enjoins
the commissioner to determine the dispute fairly; section
34 of the
Constitution enshrines the right of everyone to, inter alia, a fair
hearing. The right to a fair hearing before a tribunal
lies at the
heart of the rule of law, and a fair hearing before a tribunal is a
pre-requisite for an order against an individual,
and this is
fundamental to a just and credible legal order.
[78] Similarly,
O’Regan J stated that it was beyond doubt that the functions
performed by a commissioner
in an arbitration under the LRA clearly
fall within the terms of section 34 of the Constitution. In my
judgement, private arbitrations
are, as a starting point, not to be
subjected to a lower standard of procedural fairness – once an
arbitration award is made
an order of court the legal effect thereof
is identical to that of an arbitration award under the LRA.
[79] I
conclude therefore that the mere fact of a submission to arbitration
does not import a waiver of the fairness
requirement. This conclusion
finds support in
Suovaniemi
.
[80] In
the above discussion I have assumed that the constitutional right to
a fair hearing may validly be waived.
[81] The
conclusion reached in paragraph 79 above is in accordance with common
law principles regarding waiver
of rights. Waiver is first and
foremost a matter of intention; the test to determine intention to
waive is objective, the alleged
intention being judged by its outward
manifestations adjudicated from the perspective of the other party,
as a reasonable person.
Our courts take cognisance of the fact that
persons do not as a rule lightly abandon their rights. Waiver is not
presumed; it must
be alleged and proved; not only must the acts
allegedly constituting the wavier be shown to have occurred, but it
must also appear
clearly and unequivocally from those facts or
otherwise that there was an intention to waive. The onus is strictly
on the party
asserting waiver; it must be shown that the other party
with full knowledge of the right decided to abandon it, whether
expressly
or by conduct plainly inconsistent with the intention to
enforce it. Waiver is a question of fact and is difficult to
establish.
[82] What
should be emphasised is that, as will appear from the authorities
referred to below, the fairness rights
invoked by Mphaphuli lie at
the core of a legitimate arbitration and it would require extremely
strong evidence for a conclusion
to be sustained that Mphaphuli
waived such rights. Yet, neither the arbitrator nor Bopanang alleged,
let alone proved, that there
had been a waiver of rights sufficient
to allow the arbitrator to engage with Bopanang in the absence of
Mphaphuli.”
[23] Similarly,
in this case, neither the individuals nor the arbitrator showed that
there was a waiver of rights
sufficient to allow her to engage with
the individuals in the absence of the company.
[24]
With
regard to the fax transmission, this Court held in
Halcyon
Hotels
[9]
that a telefax transmission slip is only
prima
facie
proof
that a document has come to the knowledge of the party on whom it was
served. The court held that the arbitrator should have
satisfied
himself that the parties had been properly notified and that the
arbitrator misdirected himself in finding that a notice
sent to a
general fax number constituted sufficient notification. The same
holds true for the case before me. In this regard also,
the
arbitrator misdirected herself.
Conclusion
[25] For
all these reasons, the arbitration award must be reviewed and set
aside.
[26] With
regard to costs, I take into account that this dispute should and
could have been resolved ten years
ago, had the parties been more
co-operative. Both parties are to blame for the subsequent delays. It
may be that the dispute is
still not resolved. In law and fairness, I
do not consider a costs award to be appropriate.
Order
The
arbitration award of the first respondent dated 13 December 2016 is
reviewed and set aside.
Anton
J Steenkamp
Judge
of the Labour Court of South Africa
APPEARANCES
APPLICANT: Bradley
Conradie of BCHC attorneys.
SECOND AND FURTHER
RESPONDENTS: Dennis Chamisa of Dech Legal.
[1]
The
Labour Relations Act 66 of 1995
.
[2]
Act
42 of 1965.
[3]
Clause
50.4.
[4]
The
Commission for Conciliation, Mediation and Arbitration.
[5]
The
first respondent.
[6]
Verbatim.
[7]
2005
(5) SA 200
(SCA) par 12.
[8]
2009
(6) BCLR 527
(CC);
2009 (4) SA 429
(CC) (footnotes omitted).
[9]
Halcyon
Hotels (Pty) Ltd t/a Baraza v CCMA
[2001]
8 BLLR 911
(LC) par 14.