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[2015] ZACC 3
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F & J Electrical CC v MEWUSA obo E Mashatola and Other (CCT 131/14) [2015] ZACC 3; 2015 (4) BCLR 377 (CC); (2015) 36 ILJ 1189 (CC); [2015] 5 BLLR 453 (CC) (17 February 2015)
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Heads of arguments
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case
CCT 131/14
In
the matter between:
F
& J ELECTRICAL
CC
.......................................................................................................
Applicant
and
MEWUSA
obo E MASHATOLA and
OTHERS
..............................................................
Respondent
Neutral
citation:
F & J Electrical CC v
MEWUSA obo E Mashatola and Others
[2015]
ZACC 3
Coram:
Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J,
Khampepe J, Leeuw AJ, Madlanga J,
Nkabinde J,
Tshiqi AJ, Van der Westhuizen J and Zondo J.
Judgment:
Zondo J (unanimous)
Decided
on:
17 February 2015
ORDER
On
application for leave to appeal from the Labour Court (Coetzee AJ):
1.
Leave to appeal is granted.
2.
The appeal is upheld.
3.
There is no order as to costs in this Court and in the Labour Appeal
Court.
4.
The order of the Labour Court is set aside and replaced with the
following:
“
(a)
The order of this Court granted by default against the respondent is
rescinded.
(b)
The respondent is granted leave to deliver its response to the
applicant’s statement of claim within ten court days from
the
date of this order.
(c)
There is no order as to costs.”
JUDGMENT
ZONDO
J (Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J, Khampepe J, Leeuw
AJ, Madlanga J, Nkabinde J, Tshiqi AJ and Van der Westhuizen
J
concurring):
Introduction
[1]
The applicant is a registered close
corporation. It applies for leave to appeal against an order of
the Labour Court. That
Court granted an order against the
applicant by default in favour of certain members of the Metal and
Electrical Workers Union
of South Africa (MEWUSA or union) whom the
applicant had previously dismissed from its employment (employees).
That order
required the applicant to pay each one of the employees an
amount equal to the employee’s 24 months’ remuneration.
There were about 30 employees who had been dismissed. The
applicant brought an application in the Labour Court for the
rescission
of that order but the Labour Court dismissed the
application. The Labour Court also dismissed the application
for leave to
appeal to the Labour Appeal Court. The applicant
then petitioned the Labour Appeal Court but that Court, too, refused
leave
to appeal. Hence, this application.
[2]
This
Court invited the parties to submit written argument, which they
did. It then decided to dispose of the matter without
an oral
hearing.
[1]
Background
[3]
The applicant was awarded certain contracts
by both the City of Tshwane and the City of Johannesburg. In
terms of those contracts
the applicant was required to provide
reticulation services to ensure the supply and connection of large
voltage electricity.
It seems that the employees involved in
this case were employed in positions connected with the execution of
the applicant’s
obligations under some of those contracts.
[4]
In June 2008 the applicant’s
contracts with the two cities expired. However, it would appear
that only the contract
with the City of Tshwane was permanently lost
and certain contracts with the City of Johannesburg were retained.
According
to the applicant, it experienced financial difficulties as
a result of the loss of the contract that it had with the City of
Tshwane.
[5]
The applicant says that, as a result of the
financial difficulties, it had no alternative but to resort to
retrenchment. This
led it to terminate the contracts of
employment of the employees. It says that on 23 January 2009 it
gave the employees letters
informing them of their dismissal for
operational requirements with effect from 31 January 2009. The
union and the employees
say that at the time of the dismissal the
employees were not informed of the reason for their dismissal.
Referral
to conciliation
[6]
A
dispute arose about the fairness of the dismissal of the employees.
On behalf of the employees the union referred an unfair
dismissal
dispute to the National Bargaining Council for Electrical Industries
(bargaining council) in terms of section 191(1)
of the Labour
Relations Act
[2]
(LRA) for
conciliation. This was in February 2009.
[7]
The bargaining council convened a meeting
between the parties on 3 March 2009 to try and resolve the
dispute through conciliation.
These attempts failed. On
the same day, the bargaining council issued a certificate in terms of
section 191(5) of the
LRA that the dispute remained unresolved.
Referral
to the CCMA for arbitration
[8]
After the failure of the conciliation
process, the union requested the Commission for Conciliation,
Mediation and Arbitration (CCMA)
to arbitrate the dispute. In
the arbitration the employees’ case was that the reason for
their dismissal was unknown
to them. The applicant was
represented by a Mr Coxwell Mavhandu who, it says, was a labour
consultant. Mr Mavhandu
said that he was employed as a human
resources manager by the applicant. Nothing turns on this
conflict between the two versions.
[9]
It is not clear why the union referred the
dispute to the CCMA for arbitration instead of asking the bargaining
council to arbitrate
the dispute. In terms of
section 191(1)(a)(i) read with subsection (5) of the LRA, a
dismissal dispute is required to
be arbitrated by the bargaining
council within whose scope of registration the parties fall if there
is one. In such a case,
as a general rule, the CCMA has no
jurisdiction to arbitrate that dispute. One would have expected
that the union would have
asked the bargaining council to arbitrate
the dispute because it, obviously, had jurisdiction. Otherwise,
it would not have
handled the conciliation process.
[10]
In the arbitration proceedings the
applicant’s representative informed the commissioner that the
reason for the dismissal
was the applicant’s operational
requirements. In support of this he produced correspondence
(which he said had been
given to the employees). The
correspondence was to the effect that the employees were dismissed
for operational requirements.
[11]
The commissioner issued a ruling that, as
the reason for dismissal was the applicant’s operational
requirements, the CCMA
had no jurisdiction. He said that the
dispute should be referred to the Labour Court for adjudication.
It would appear
that the ruling of the CCMA was issued on or about 29
July 2009.
Referral
to the Labour Court
[12]
On or about 7 October 2009 the union
referred the dispute to the Labour Court for adjudication by
delivering a statement of claim.
The union says that it
transmitted a copy of its statement of claim to the applicant by
using the applicant’s fax number.
It is not certain
whether Mr Mavhandu received the statement of claim. However,
the applicant says that, if he did, he did
not bring it to its
attention.
[13]
In the statement of claim the employees
alleged that they did not know the reason for their dismissal.
This was despite the
fact that at the arbitration proceedings the
applicant had said that the reason for the dismissal was its
operational requirements
and the CCMA commissioner had accepted this.
[14]
In
terms of section 191(5)
[3]
read
with section 191(11)(a) of the LRA an employee must, within 90 days
from the date of the expiry of 30 days from the date of
receipt by
the bargaining council or CCMA, as the case may be, of the referral
of a dismissal dispute for conciliation, refer the
dispute to the
Labour Court for adjudication or request the bargaining council or
CCMA to arbitrate the dispute. Whether
a dispute qualifies to
go to arbitration or adjudication is governed by the provisions of
section 191(5).
[4]
[15]
It is not necessary to go into details
about the provisions of section 191(5). It is sufficient to say
that, as a general
proposition, whether a dispute qualifies for
adjudication or arbitration depends upon what the employee alleges is
the reason for
dismissal. If the employee alleges, for example,
that he or she was dismissed for (alleged) misconduct or for
incapacity
or that he or she does not know the reason for his or her
dismissal, the dismissal dispute must go to arbitration. If he
or she alleges, for example, that the reason for his or her dismissal
is the employer’s operational requirements or his or
her
membership of a trade union or that the reason was his or her race,
nationality, pregnancy, colour, religion or participation
in an
unprotected strike, the dispute must be referred for adjudication by
the Labour Court.
Default
judgment
[16]
The
applicant did not deliver a response to the statement of claim within
the period prescribed by the Rules of the Labour Court.
The
Registrar of the Labour Court then set the dispute down for default
judgment. In terms of Rule 16
[5]
of the Rules of the Labour Court the Registrar need not give a
respondent who does not deliver a response to a statement of claim
notice of set down of an application for default judgment. The
applicant, as seen earlier, had not reacted to the receipt
of the
statement of claim. For that reason the Registrar did not give
the applicant a notice of set down.
[17]
It would appear that some time before the
date of hearing by default, the union and employees delivered certain
affidavits to the
Labour Court. In those affidavits they
averred for the first time that the reason for the employees’
dismissal was
their union membership. Those affidavits were not
served on the applicant. No explanation has been advanced by
the
union and the employees as to what prompted the preparation and
delivery of those affidavits. Nor have the union and employees
offered any explanation why those affidavits were not served on the
applicant.
[18]
The
Labour Court granted a default judgment against the applicant.
It ordered the applicant to pay each of the employees an
amount equal
to that employee’s 24 months’ remuneration.
The applicant says that the monetary value of that
order is more than
R1 million. The Labour Court did not give reasons for its
order. However, it is obvious that
it must have found that the
reason for the employees’ dismissal was their membership of the
union. This is so because
it is only if the Labour Court had
made that finding that it could award the employees the huge amounts
of compensation that it
awarded.
[6]
[19]
The
finding that the employees were dismissed for union membership would
mean that that dismissal was a breach by the applicant
of each
employee’s right to join a trade union entrenched in the
Constitution
[7]
and provided for
in the LRA.
[8]
This would
also mean that the dismissal was contrary to section 187(1)
[9]
read with sections 4(1)(b) and 5(1) of the LRA and constituted
an automatically unfair dismissal. That finding attracts
a
higher amount of compensation than would be the case with a dismissal
based on the employer’s operational requirements
or where the
employee does not know what the reason for the dismissal is.
[10]
The
rescission application
[20]
The applicant subsequently launched an
application in the Labour Court for the rescission of the order.
The union opposed
the application and delivered an answering
affidavit. In the view I take of this matter, I do not consider
it necessary to
go into details about when the applicant became aware
of the order and about its explanation for its default. It
suffices
to say that the applicant says it was Mr Mavhaudu who would
have received the documents. However, the applicant says that
it subsequently terminated its relationship with Mr Mavhandu when it
realised that he had failed to handle this matter properly.
It
then instructed a firm of attorneys to handle the matter on its
behalf.
[21]
The matter came before Coetzee AJ. He
dismissed the application. In his judgment the Acting Judge focussed
only on the applicant’s
explanation for its failure to deliver
its response to the statement of claim. He found the
explanation to be unsatisfactory.
He then dismissed the
application without considering the applicant’s prospects of
success or any of the other factors usually
considered in an
application for rescission. In adopting this approach, the
Court did not say it was doing so because the
delay was excessive and
the explanation for it poor.
[22]
The applicant subsequently launched an
application in the Labour Court for leave to appeal. It took
about a year before that
application was adjudicated. This was
in 2014. The Labour Court dismissed that application. The
applicant thereafter
made an application to the Labour Appeal Court
for leave to appeal but that Court, too, dismissed that application.
In
this Court
Jurisdiction
[23]
This Court has jurisdiction in respect of
this matter. The order the applicant seeks to have rescinded
was based on a finding
by the Labour Court that it had infringed the
employees’ right to join a trade union which is entrenched in
section 23(2)(a)
of the Constitution. That makes this a
constitutional matter.
Leave
to appeal
[24]
This
Court grants leave to appeal if it is in the interests of justice.
A very serious finding was made by the Labour Court
against the
applicant. That is that the applicant dismissed its employees
for being members of a trade union. This
finding means that the
applicant is anti-trade union and has violated one of the most
fundamental rights guaranteed to workers
by our Constitution, namely,
every worker’s right to join a trade union.
[11]
The applicant seeks an opportunity to have that negative finding
reversed. The order of the Labour Court flowing from
that
finding requires the applicant to pay compensation to its former
employees in an amount of more than R1 million.
[25]
The
applicant has been denied leave to appeal by both the Labour Court
and the Labour Appeal Court. It has no other court
to turn
to.
[12]
It contends that
the Labour Court had no jurisdiction to adjudicate this
dispute. In addition, the Court allowed
affidavits to be filed
which had not been served on it and were in conflict with the
employees’ case as set out in their
statement of claim.
It also contends that the Labour Court ordered it to pay double the
compensation it otherwise would have
had power to order it to pay had
it dealt with the matter on the basis of the employees’ case as
set out in the statement
of claim. Furthermore, there are
reasonable prospects of success. In my view, it is in the
interests of justice that
leave to appeal be granted.
The
appeal
[26]
On appeal the question is whether the
Labour Court was right in dismissing the applicant’s rescission
application. The
provision of the LRA that confers upon the
Labour Court the power to vary or rescind a decision it has
previously made is section 165.
Section 165 reads:
“
The
Labour Court, acting of its own accord or on the application of any
affected party may vary or rescind a decision, judgment
or order
—
(a) erroneously
sought or erroneously granted in the absence of any party affected by
that judgment or order;
(b) in which there
is an ambiguity, or an obvious error or omission, but only to the
extent of that ambiguity, error or omission;
or
(c)
granted as a result of a mistake common to the parties to the
proceedings.”
This
provision mirrors the provisions of Rule 42(1) of the Uniform Rules
of Court. This case concerns section 165(a).
[27]
A
party may have an order of the Labour Court rescinded under section
165(a) if it is shown that the order was erroneously sought
or
granted in the absence of that party. Whether the court grants
a rescission application under this provision does not
depend upon
the applicant showing good or sufficient cause. It is simply
enough if the order was erroneously sought or granted
in the absence
of that party. That is also the position under Rule 42 (1)(a)
of the Uniform Rules of Court.
[13]
In
respect of Rule 42(1)(a) this was held to be the position by
a Full Bench in
Tshabalala
and Another v Peer
.
[14]
Both
the Supreme Court of Appeal and this Court have also made this
point.
[15]
The
Court may even rescind or vary its order on its own accord under this
provision.
Was
the order erroneously sought or granted?
[28]
The next question is whether the order was
erroneously sought or granted. Counsel for the applicant
advanced a number of grounds
upon which he contended that the order
was erroneously granted. I agree. The Labour Court
committed a number of errors
in granting the order.
[29]
Before the Labour Court may adjudicate a
dispute, it, like any other court, should first satisfy itself that
it has jurisdiction.
In this case the Labour Court failed to do
so. The certificate of non-resolution was issued on 3 March
2009. In terms
of section 191(5) of the LRA the employees were
obliged to refer the dispute to the Labour Court or to the bargaining
council or
CCMA, as the case may be, within 90 days from 3 March
2009. The Labour Court would not have jurisdiction to
adjudicate
the dispute if the dispute was referred to the Labour
Court after the expiry of 90 days from that date unless the employees
applied
for condonation and showed good cause. In this case the
90-day period expired on or about 2 June 2009. The union
referred
the dispute to the Labour Court only on or about 7 October
2009. That was a delay of about four months.
[30]
When the Labour Court granted default
judgment, the union had not lodged an application for condonation.
The union contended
that the referral of the dispute to the Labour
Court was within the prescribed period. It seems that this
contention was
based on a misconception that the 90-day period was to
be reckoned from the date of the ruling of the CCMA. That is
not so.
In this case the period had to be reckoned from the
date when the certificate was issued. In the absence of a
finding that
there was good cause for the failure to refer the
dispute within the prescribed period, the Court had no jurisdiction
to adjudicate
the dispute. Accordingly, the Labour Court erred
in adjudicating the dispute and granting the order without an
application
for condonation.
[31]
Furthermore, if it was at all permissible
for the union and employees to use affidavits in trial proceedings,
at the very least
the Labour Court should have satisfied itself that
the affidavits had been served on the applicant so that the applicant
would
know their contents and take steps to protect its interests.
The Labour Court should have realised that the averment in the
affidavits that the employees had been dismissed for their membership
of the union was in conflict with their case in their statement
of
claim that they did not know the reason for their dismissal. In
granting the order on the basis of affidavits that had
not been
served on the applicant, the Labour Court also erred.
[32]
It is also significant to note how the
union and employees secured from the Labour Court double the
compensation they may otherwise
have been awarded. In the CCMA
the employees’ case was that they were dismissed for a reason
that they did not know.
The applicant informed them that they
were dismissed for its operational requirements. The
commissioner accepted the applicant’s
version. Very
remarkably, in their statement of claim in the Labour Court the
employees repeated their claim that they were
dismissed for a reason
they did not know. Yet, they suddenly acquired knowledge of the
reason for their dismissal.
Very conveniently, the employees
averred that the reason for their dismissal was their union
membership. They would have
us believe that this
suddenly-acquired knowledge had nothing to do with their knowledge
that the applicant would not be at the
default judgment hearing to
dispute this story and that it had nothing to do with a desire to get
double the maximum compensation
that they could have been awarded if
they stuck to the version set out in their statement of claim.
That is difficult to
believe.
[33]
The Labour Court should have required oral
evidence to satisfy itself whether the employees did not know the
reason for their dismissal
or whether they knew the reason and it was
their membership of a trade union or of MEWUSA. The employees
would then have
had to explain the inconsistency between that version
and the contents of the letters suggesting that the dismissal was for
operational
requirements. The Labour Court erred in not
requiring oral evidence to clarify this.
[34]
I hold that the order was erroneously
granted and should be rescinded. The appeal should be upheld.
As this is a labour
matter, no order as to costs should be made.
Order
The
following order is made:
1.
Leave to appeal is granted.
2.
The appeal is upheld.
3.
There is no order as to costs in this Court and in the Labour Appeal
Court.
4.
The order of the Labour Court is set aside and replaced with the
following:
“
(a)
The order of this court granted by default against the respondent is
rescinded.
(b)
The respondent is granted leave to deliver its response to the
applicant’s statement of claim within ten (10) court days
from
the date of this order.
(c)
There is no order as to costs.”
For
the Applicant:
A
Redding SC and S Collet instructed by Clifford Levin Attorneys.
For
the Respondent:
N
Phala, representative of Metal and Electrical Workers Union of South
Africa.
[1]
Rule
13(2) of the Rules of this Court reads as follows:
“
Oral
argument shall not be allowed if directions to that effect are given
by the Chief Justice.”
[2]
66
of 1995. Section 191(1) provides that, if there is a dispute
about the fairness of the dismissal of an employee, the
employee may
refer that dispute to a bargaining council if the parties fall
within the registered scope of a council or to the
Commission for
Conciliation, Mediation and Arbitration for conciliation.
[3]
Section
191(5) reads:
“
If
a council or a commissioner has certified that the dispute remains
unresolved, or if 30 days have expired since the council
or the
Commission received the referral and the dispute remains unresolved—
(a)
the council or the Commission must arbitrate the dispute at the
request of the employee if—
(i)
the employee has alleged that the reason for dismissal is related to
the employee’s conduct or capacity, unless paragraph
(b)(iii)
applies;
(ii)
the employee has alleged that the reason for dismissal is that the
employer made continued employment intolerable; or
(iii)
the employee does not know the reason for dismissal; or
(b)
the employee may refer the dispute to the Labour Court for
adjudication if the employee has alleged that the reason for
dismissal is—
(i)
automatically unfair;
(ii)
based on the employer’s operational requirements;
(iii)
the employees participation in a strike that does not
comply with the provisions of Chapter IV; or
(iv)
because the employee refused to join, was refused membership of or
was expelled from a trade union party to a closed shop
agreement.”
[4]
Id.
[5]
Rule
16 of the Rules of the Labour Court reads:
“
If
no response has been delivered within the prescribed time period or
any extended period granted by the court within which to
deliver a
response, the registrar must, on notice to the applicant(s), enrol a
matter for judgment by default.”
[6]
See
below n 10.
[7]
Section
23 of the Constitution reads:
“
(2)
Every worker has the right—
(a)
to form and join a trade union”.
[8]
Section
4(1) of the LRA reads:
“
Every
employee has the right—
.
. .
(b)
to join a trade union, subject to its constitution.”
[9]
Section
187(1) reads:
“
A
dismissal is automatically unfair if the employer, in dismissing the
employee, acts contrary to section 5 or, if the reason
for the
dismissal is . . . .”
[10]
Section
194(1) and (3) of the LRA reads:
“
(1)
The compensation awarded to an employee whose dismissal is found to
be unfair either because the employer did not prove that
the reason
for dismissal was a fair reason relating to the employee’s
conduct or capacity or the employer’s operational
requirements
or the employer did not follow a fair procedure, or both, must be
just and equitable in all the circumstances, but
may not be more
than the equivalent of 12 months’ remuneration calculated
at the employee’s rate of remuneration
on the date of
dismissal.
(2).
. .
(3)
The compensation awarded to an employee whose dismissal is
automatically unfair must be just and equitable in all the
circumstances,
but not more than the equivalent of 24 months’
remuneration calculated at the employee’s rate of remuneration
on
the date of dismissal.”
[11]
See
section 23(2)(a) of the Constitution.
[12]
See
section 168(3)(a) of the Constitution.
[13]
Rule
42 of the Uniform Rules of Court reads:
“
The
court may, in addition to any other powers it may have,
mero
motu
or upon the application of any
party affected, rescind or vary:
(a)
An order or judgment erroneously sought or erroneously granted in
the absence of any party affected thereby”.
[14]
Tshabalala
and Another v Peer
1979
(4) SA 27
(T) at 30D.
[15]
Ferris
and Another
v
First Rand Bank Limited and Another
[2013]
ZACC 46
;
2014 (3) SA 39
(CC);
2014 (3) BCLR 321
(CC) at para 13 and
Colyn
v
Tiger Food Industries Limited t/a Meadow Feed Mills Cape
[2003] ZASCA 36
;
2003 (6) SA 1
(SCA) at paras 8-9.