REPORTABLE
IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO. JR660/02
In the matter between –
KHULA ENTERPRISE FINANCE LIMITED Applicant
and
DR THAMI MADINANE First Respondent
K G MNGEZANA NO Second Respondent
THE COMMISSION FOR CONCILIATION,
MEDIATION AND ARBITRATION Third Respondent
JUDGMENT
KENNEDY A J:
[1] The applicant seeks the review of an arbitration award issued by the
second respondent (referred to in this judgment as “the arbitrator”),
who is a commissioner of th e CCMA. In terms of the award, the
arbitrator found that the dismissal of the first respondent (Dr
Madinane) by the applicant was both procedurally and substantively
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unfair. The award ordered the applicant to reinstate Dr Madinane with
twelve months back pay.
[2] When first appointed by the applicant, Dr Madinane had reported to the
managing director Mr Tati. The management structures were changed
and a general manager, Mr Fisher, was appointed. Dr Madinane was
now required to report to Mr Fisher rather tha n to Mr Tati. Dr
Madinane was unhappy about this. There were a number of incidents
for which he was disciplined. For the first series of such incidents he
was issued with warnings. Dr Madinane lodged grievances against the
chief executive officer and Mr Fisher which arose from his
dissatisfaction at having to report to Mr Fisher and his relationship with
him. Dr Madinane was thereafter charged with another series of
disciplinary charges which were dealt with at an enquiry held during
November 2000. T his enquiry was conducted by an advocate
independent of the organization, Advocate Mark Antrobus of the
Johannesburg Bar. Management decided on this appointment in view
of the seniority of the members of management involved in bringing or
defending the di sciplinary charges and because there was no other
member of management available.
[3] At the conclusion of the lengthy disciplinary enquiry, Mr Antrobus
found Dr Madinane guilty of two sets of charges as follows –
three charges of insubordination and failure t o obey lawful
instructions issued by Mr Fisher to furnish certain reports and
business plans; and
two charges of gross negligence in failing to follow company
procedures in binding the company to a lease agreement and
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without authority purporting to bind the managing director of the
company as surety in his personal capacity.
[4] Dr Madinane referred two disputes to the CCMA. The one related to
his grievance against Mr Fisher which Dr Madinane contended was an
unfair labour practice. The other dispute which he referred to the
CCMA concerned his dismissal, which he contended was unfair both
procedurally and substantively.
[5] At the outset of the arbitration proceedings, Dr Madinane sought the
joinder or consolidation of the two disputes in the same arbitration
proceedings. This was refused by the arbitrator. After hearing the
evidence adduced by both parties, and argument advanced on their
behalf, the arbitrator handed down a lengthy award. He concluded that
the dismissal was both procedurally and substantivel y unfair. In
argument, counsel for the applicant submitted that the arbitrator’s
findings were flawed in various respects and fell to be reviewed and set
aside.
PROCEDURAL FAIRNESS
[6] Dr Madinane relied on two grounds for his attack on the procedural
fairness of the disciplinary process. Both were upheld by the arbitrator.
The first related to the appointment of the chairperson, Advocate
Antrobus. It was contended that this was in breach of the
applicant’s disciplinary procedure and that Dr Madinane perce ived
him to be biased.
The second was to the effect that the applicant had denied Dr
Madinane his right of appeal.
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[7] In relation to the first aspect, much reliance was placed by the
arbitrator on the disciplinary procedure applicable to the applicant.
That provided, in clause 6.7.3, that “an appropriate level of manager
acceptable to both parties shall chair the enquiry.”
[8] It appears from the reasoning set out in the arbitrator’s award that he
found two defects in relation to the appointment of Advocate Antrobus:
first, that the applicant had “deliberately breached its own
procedure” by appointing an outside chairperson where it “did not
have a right to unilaterally determine who should chair the
proceedings of the disciplinary hearing.” and
second, that bec ause Advocate Antrobus had been briefed by the
applicant’s attorneys, Brink Cohen & Le Roux, “this created doubt
in the mind of Dr Madinane in respect of the independence and
impartiality over this matter ... it is my view that a perception of
bias was present.”
[9] From the reasoning of the arbitrator it appears that he conflated the two
issues and that the overriding consideration in his view was that there
had been a breach of the disciplinary procedure. Indeed, the latter
aspect appears to have been the decisive one as far as the arbitrator was
concerned. This is apparent inter alia from the following statements in
the award :
“It is my view that a perception of bias was present and that the hearing
would not have been the one contemplated in terms of the provisions of
the respondent’s internal procedure. In terms of the wording of the
clause, the respondent is bound by the provisions of the disciplinary
procedure. It therefore goes without saying that the respondent violated
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its own procedure and that it self renders the dismissal unfair insofar as
the procedure is concerned.”
“In terms of the aforementioned clause, the respondent did not have a
right to unilaterally determine who should chair the proceedings of the
disciplinary hearing which led to the dismissal of Dr Madinane.”
“The respondent party made reference to various case laws [sic] such as
De Villiers v Fisons Pharmaceuticals (Pty) Limited (1991) 12 ILJ 1033
(IC); SACTWU v Martin & Johnson (Pty) Ltd (1993) 14 ILJ 1033
(LAC); CWIU & Another v Ho echst (Pty) Ltd (1993) 14 ILJ 471 (IC)
and Changula v Bell Equipment (1992) 13 ILJ 101 (LAC) and NEHAWU,
Mwalo & Others v Director General of Agriculture and Minister of
Agriculture (1993) 4 (12) (SALLR) 33 (IC). And further references made
to the matter of Oliver v Foschini Group Ltd [1995] 8 BLLR 102 (IC). I
must further point out that the wording of the clause of Khula’s
disciplinary procedure is also significant in its interpretation. The
respondent deliberately breached its own procedure and ignored
reasonable objection by Dr Madinane.”
[10] The case law cited in the last passage quoted from the award was cited
in argument by the employer’s representative, Mr Johan Olivier, in
support of the proposition that the provisions of a disciplinary code
must not be applied mechanically but an arbitrator or court must decide
the matter ultimately on whether, having regard to all the
circumstances, the procedure as followed was fair. Although the
arbitrator recorded the cases cited, he does not in his award state
anything which addresses their effect or deals with the central issue,
namely whether the procedure as implemented was ultimately fair. 1
1 In addition to the cases cited above, see Highveld District Council v CCMA & Others (2003) 24 ILJ
517 (LAC) para 15 and Leonard Dingler (Pty) Ltd v Ngwenya (1999) 20 ILJ 1711 (LAC).
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Section 188(1)(b) makes it clear that the procedural fairness requires a
determination whether “the dismissal was effec ted in accordance with
a fair procedure.” While a relevant consideration is whether an
employer has complied with a disciplinary code, it is not exhaustive of
the enquiry. The code merely represents guidelines and is not to be
elevated to an immutable co de which is to be applied rigidly and must
apply regardless of the circumstances.
[11] The arbitrator does not appear to have considered at all the reason why
an independent advocate was appointed to chair the enquiry. There
were sound reasons for doing so, in particular that the most senior
levels of management were personally involved in the complaints and
allegations against Dr Madinane and it was simply unrealistic to
appoint anybody within management. None was available or able to
handle a disciplinary en quiry with any level of detachment and
objectivity in the circumstances. The code serving merely as a
guideline, the employer was entitled to look outside the organization
for somebody with appropriate expertise and objectively to chair the
enquiry. This served the interests of both sides receiving a fair hearing.
There is no basis for Dr Madinane’s objection in this regard. His
reliance on the provision of the code was misplaced. It did not provide
that an employee had to approve the appointment of an y person to
chair the disciplinary enquiry. It merely provided that enquiries would
ordinarily be chaired by a member of management, the level of which
“would be acceptable to both parties.” In this case no level of
manager was acceptable to management, for sound reasons as
discussed above. There could be no reasonable objection to appointing
an outsider in these circumstances.
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[12] The arbitrator appears not to have applied his mind to this at all. Nor
did he get to grips with the true issue namely where th e procedure as
adopted was in some real and substantial sense unfair to Dr Madinane.
[13] The failure by an arbitrator to appreciate and decide the true issue that
he or she is called upon to determine is a gross irregularity which
justifies the review and setting aside of an award. See in this regard the
remarks of Francis A J (as he then was) in the S A Revenue Service
matter2 -
“It is crucial that an arbitrator who is conducting arbitration
proceedings knows what the true issues are that he is called upon to
determine. Where he issues an award which is based on a failure by
him to appreciate the true nature of the issue before him, he commits a
gross irregularity which vitiates the entire proceedings ...”.
[14] Such a failure denies the parties their right to hav e the issues fairly
determined. See in this regard the judgments of Zondo JP and Van
Dijkhorst AJA in the Stocks Civil case;3 and of Nicholson J A in the
Milady’s case4 and in the Crown Chickens matter5 in which the
following was stated –
“ ... The arbit rator must have applied his mind seriously to the issues
at hand and reasoned his way to the conclusion. Such conclusion must
be justifiable as to the reasons given in the sense that it is defensible,
2 S A Revenue Service v CCMA & Others (2001) 22 ILJ 1680 (LC) paras 32 and 33.
3 Stocks Civil Engineering (Pty) Ltd v Rip NO & Other (2002 ) 23 ILJ 358 (LAC) paras 26 and 27, 51
and 52.
4 Milady’s a Division of Mr Price Group Ltd v Naidoo & Others (2002) 23 ILJ 1234 (LAC); (2002) 9
BLLR 808 (LAC) para 29.
5 Crown Chickens (Pty) Ltd t/a Rocklands Poultry v Kapp & Others (2002) 23 ILJ 863 (LAC); (2002)
6 BLLR 493 (LAC) para 58.
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not necessarily in every respect, but as regards the i mportant logical
steps on the road to his order.”
[15] In the present matter the arbitrator in my view manifestly stopped short
the enquiry. He appears to have concluded that non -compliance with
the disciplinary code ipso facto meant that the process was unfai r. He
should have also considered the vital question of whether,
notwithstanding such non -compliance, the procedure was nonetheless
fair, i.e. whether the hearing conducted by Mr Antrobus granted the
applicant a fair opportunity to present his case and to challenge the
employer’s case against him.
[16] Had the arbitrator properly considered this issue he should in my view
inevitably have come to the conclusion that the process followed was
indeed fair. It was a thorough enquiry at which Dr Madinane and his
representative were given a full opportunity to present their case, both
in evidence and in argument, and to challenge and answer the case
presented on behalf of the employer.
[17] There is furthermore no basis in my view for the arbitrator’s finding
that Mr Ant robus should not have presided over the disciplinary
enquiry because, in the words of the arbitrator “a perception of bias
was present.” Whether there is a perception of bias is not the test. The
true test as confirmed in the SARFU case6 is whether, seen objectively,
there exists a reasonable apprehension that the Judge (or in this case
the chairperson of a disciplinary enquiry) may be biased, as viewed by
a reasonable, objective and informed person having regard to the
correct facts.
6 President of the RSA and Others v S A Rugby Football Union & Others 1999 (4) SA 147 (CC).
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[18] In the present matte r there was no factual basis for any such
apprehension to be regarded as reasonable. The mere fact that Mr
Antrobus was briefed by a firm of attorneys at the instance of the
applicant is neither out of the ordinary nor sinister. On the contrary,
our law requires that practising advocates be briefed by attorneys as
recently confirmed by the Supreme Court of Appeal in the Competition
Commission matter.7
[19] Accordingly, the arbitrator in my view had no factual basis or
reasonable justification for his finding that it was procedurally unfair to
appoint Mr Antrobus to chair the disciplinary enquiry.
[20] The arbitrator also erred in relation to the final aspect of procedural
fairness in finding that Dr Madinane had been denied the right to
appeal. Evidence presented a t the arbitration was to the effect that Dr
Madinane was offered an opportunity to appeal or to refer the dismissal
directly to the CCMA and he elected to adopt the latter course. There
is accordingly no rational basis, having regard to the relevant evide nce,
to justify the arbitrator’s conclusion that the employer “denied the
applicant a right of appeal contained in the procedure deliberately
with an intention to ensure that Dr Madinane is no longer in its employ
because in the past he has been successful in his previous appeal
hearings.” This fundamentally misconstrues or ignores material
evidence.
[21] Accordingly, I find that the arbitrator’s findings on procedural fairness
cannot be sustained.
7 Commissioner, Competition Commission v General Council of the Bar of South Afri ca & Others2002
(6) SA 606 (SCA) para 11; Society of Advocates of Natal v De Freitas & Another (Natal Law Society
intervening) 1997 (4) SA 1134 (N); General Council of the Bar of South Africa v Van der Spuy 1999
(1) SA 577 (T).
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SUBSTANTIVE FAIRNESS
[22] Mr Boda, for the applicant, submitted that notwithstanding a lengthy
and detailed summary of various evidence which was led at the
arbitration, the arbitrator’s award manifests a failure on his part to
consider material evidence. There is little meaningful analysis of the
evidence and a failure t o get to grips with the real issues.
Notwithstanding lengthy and thorough argument presented to the
arbitrator (inter alia in the form of written submissions) the arbitrator
fails to address or show any consideration of the real issues, the
contradictory v ersions of certain witnesses and other considerations
relevant to deciding which version to accept.
[23] In my view this criticism of the arbitrator’s award has merit. There is
no real attempt by the arbitrator to deal meaningfully with the specific
charges, i n particular the individual charges of insubordination. He
appears to ignore the common cause fact that Dr Madinane ignored
certain instructions and fails to deal meaningfully with the issue of
whether the instruction was reasonable and whether Dr Madinan e had
justification for failing to comply with it. Of particular concern was
the third charge of insubordination. This related to non -compliance
with an instruction issued by the Board. There was detailed evidence
by both Mr Tati and Mr Fisher as well as from Dr Madinane himself, in
which the latter made various concessions. None of this was dealt with
in the award, which does not set out any factual findings by the
arbitrator in relation to this charge whatsoever.
[24] It appears that the arbitrator either ignored this evidence altogether or
failed meaningfully to apply his mind to it and to determine the real
issue at the heart of the dispute namely whether Dr Madinane was
insubordinate or whether he was justified in disobeying instructions.
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On either basis, the award cannot be justified rationally, having regard
to the evidence that was put before the arbitrator and the reasons for the
award.
[25] I am accordingly satisfied that the arbitrator’s conclusions in relation to
the issue of substantive fairness canno t be sustained and fall to be set
aside on review.
RELIEF
[26] It is accordingly appropriate to set aside the award. Both parties
submitted that it might be appropriate for this court to substitute its
own decision on the merits rather than remitting it to the CCMA for a
fresh arbitration to be conducted before a different commissioner.
[27] In my view it would be inappropriate for this court on the papers to
decide the matter on the merits. Although there is a full transcript of
the arbitration proceedings, I do not have the benefit of seeing and
hearing witnesses and observing their demeanour. Ultimately, the
matter may turn on an assessment of the credibility of witnesses. In
my view it would be appropriate to remit the matter to the CCMA for a
fresh arbitrat ion. It is also in my view appropriate that costs should
follow the result.
[28] In the result I make the following order –
(a) The arbitration award of the second respondent dated 27
March 2002 is hereby reviewed and set aside.
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(b) The dismissal dispute is referred back to the CCMA for
arbitration proceedings to be conducted afresh before a
commissioner other than the second respondent.
(c) The first respondent is to pay the applicant’s costs of this
application.
P M Kennedy
Acting Judge of the Labour Court
Date of hearing: 6 February 2004
Date of judgment: 13 February 2004
Applicant’s counsel: Advocate F A Boda
Instructed by: Sihlali Molefe Attorneys
First respondent’s counsel: Advocate G Shakoane
Instructed by: Tshiqi Attorneys