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IN THE LABOUR APPEAL COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO: PA5/05
In the matter between
SHOPRITE CHECKERS (PTY) LIMITED APPELLANT
And
COMMISSION FOR CONCILIATION
MEDIATION AND ARBITRATION FIRST RESPONDENT
COMMISSIONER JOHN ROBERTSON SECOND RESPONDENT
NYAMEKO WYCLIFFE YENGENI THIRD RESPONDENT
JUDGMENT
Jappie AJA
[1] This is an appeal against a judgment of the Labour Court in which the Court upheld a ruling by a commissioner declining to rescind an arbitration award handed down in the absence of the appellant.
[2] The appellant, Shoprite Checkers (Pty) Ltd trades inter alia at Grahamstown, in the Eastern Cape Province. The first respondent is the Commission for Conciliation, Mediation and Arbitration (“the CCMA”) and its offices situated, inter alia, at East London. The second respondent, a commissioner, is in the employment of the CCMA and it is his ruling that formed the subject matter of the decision of the Labour Court now appealed against. The third respondent, Nyameko Wycliffe Nengeni, was employed by the appellant as a sales manager at its store in Grahamstown. He was appointed to that position on the 1st December 2002.
[3] The facts and circumstances which gave rise to the application for the rescission of the arbitration award may be summarized as follows: During October 2003, whilst the third respondent was on duty, two persons were apprehended by the security guards at the appellant’s store in Grahamstown for having allegedly stolen electrical appliances. The police were called in and the two persons were arrested. The following day the third respondent was approached by a Miss Pumla Gamana who informed him that a syndicate was involved in stealing goods from the appellant’s store. She gave him the name of two security guards both of whom were in the employ of a company known as Magnum Security. This security company provided security services at the appellant’s store. The third respondent informed his supervisor, a Mr. Classen, as to what Gamana told him. Classen in turn informed Magnum Security who then installed a camera to monitor the area in the appellant’s store from where stock was being stolen.
[4] Towards the end of October 2003, stock was again stolen from the basement of the appellant’s store. At the time of the theft one of the security guards who had been implicated by Pumla Gamana was on duty. The appellant caused the matter to be investigated and in the course of the investigation Pumla Gamana was approached for further information. On information supplied by her some of the appellant’s goods were recovered. A week after this incident, the third respondent was asked to take a polygraph test. Did she take it and if so, what were the results? Thereafter, the third respondent was requested to undergo further questioning at the offices of the appellant in East London. Further investigation by the appellant led to the third respondent being charged with misconduct.
[5] At a subsequent disciplinary inquiry the charges faced by the third respondent were set out in the “charge sheet” read as follows:-
Charge:
“1) Gross misconduct and dishonesty for withholding or not disclosing
to management of the store or regional team about the syndicate and/or shoplifters of which you acknowledge of which also included the whereabouts of stolen property.
2) Gross misconduct and dishonesty for breaking the trust relationship
between the company and yourself.
3) Gross misconduct and dishonesty for breaking and breeching company rules.”
[6] The third respondent pleaded not guilty to all the charges. Nevertheless, the chairman of the disciplinary inquiry found him guilty and the sanction that was imposed was that the third respondent be dismissed from the appellant’s employment with effect from the 5th December 2003. The third respondent felt aggrieved by this dismissal, which he regarded as unfair. A dispute then arose between the appellant and the third respondent on the fairness or otherwise of the dismissal.
[7] The third respondent referred the dispute (of his dismissal) to the CCMA. At conciliation the matter remained unresolved and it was then referred to arbitration.
[8] The arbitration was set down for the 5th May 2004 and was to be held at the offices of the Department of Labour in Grahamstown. The second respondent was assigned to conduct. Notices of set down of the arbitration were served on both the third respondent and the appellant. The appellant had been notified of the arbitration proceedings by registered mail and had collected the notice of set down on the 16th April 2004. The second respondent was assigned to conduct the arbitration.
[9] Jacobus Federik Booysen, a human resources manager in the employ of the appellant, was appointed to represent the appellant at the arbitration proceedings. At the hearing on the 5th May 2004 the third respondent was in attendance. No-one appeared for or on behalf of the appellant. The second respondent, having satisfied himself that the appellant had been properly notified of the date, time and venue of the proceedings and in the absence of any explanation from the appellant for its failure to attend, proceeded with the arbitration. It later transpired that Booysen had mis-diarised the date of the hearing
[10] The following day, the 6th May 2004, Booysen went to the offices of the Department of Labour and it was then that he was informed that the arbitration proceedings had been concluded on the previous day and in the absence of any representative of the appellant. Booysen contacted the appellant’s attorney and informed them of the situation. He was advised to wait for the commissioner to hand down his award.
[11] On the 8th May 2004 the second respondent handed down his award. The effect of the award was that he found the dismissal of the third respondent to have been substantively unfair. The appellant was ordered to re-instate the third respondent into his position as sales manager at the Grahamstown store retrospectively from 6 December 2003. This means that the reinstatement order was to operate for the entire period from the day after the dismissal.
[12] On the 11th May 2004 the appellant’s attorneys were notified of the award. The appellant then instructed its attorneys make an application to have the award rescinded. On the 17th June 2004 the appellant filed an application with the CCMA to have the second respondent’s award rescinded. The same was served on the third respondent. The rescission application was brought in terms of section 144 of the Labour Relations Act, 1995 (Act 66 of 1995)(“the Act”).
Section 144 reads as follows-:
“Variation and rescission of arbitration awards and ruling.
Any commissioner who has issued an arbitration award or ruling, or any other commissioner appointed by the director for purpose, may on that commissioner’s own accord or, on the application of any affected, vary or rescind an arbitration award or ruling-
erroneously sought or made in the absence of any party affected by that award;
in which there is an ambiguity, or an obvious error or omission, but only to the extent of that ambuity, error or omission; or
granted as a result of a mistake common to the parties to the proceedings.”
[13] The application for the rescission of the arbitration award came before the second respondent. On the 4th August 2004 he handed down his ruling. The second respondent dismissed the application for rescission. In doing so the second respondent concluded that the material facts and circumstances of the application for rescission did not fall within the provisions of s 144 of the Act.
The second respondent stated his reasons as follows:-
“In the circumstances it cannot be said that the award was erroneously sought or erroneously made in the absence of any party affected by the award in that the notice given to the applicant complied in all respects with the rules in question. The fact that the applicant’s employee made an incorrect diary reference does not affect the question of proper notice and therefore does not make the ward erroneously sought or erroneously made.
The fact that the entry was incorrectly diarized did not amount to good cause for rescission. If this was so then any person could claim that the matter be rescinded under s 144 by virtue of the fact that he either forgot or made an incorrect diary reference regarding an arbitration hearing. This obviously defeats the purpose of s 144, which was enacted to address the three categories listed there under only.”
[14] The appellant, thereafter, brought a review application in the Labour Court and sought to have the second respondent’s ruling reviewed and set aside. The application was heard by Pillay J in the Labour Court who dismissed the application. In its judgment, the Labour Court stated its conclusions as follows:-
“[4] The application for rescission was brought in terms of all the sub sections of s 144 of the Labour Relations Act No. 66 of 1995 (the “LRA”). As it turned out, submissions in this review were made only in terms of ss (a). Nevertheless the commissioner’s ruling comprehensively covered ss (b) and (c). …
[6] Neither s 144, nor Rule 32 of the CCMA requires an applicant for rescission to show good cause. I am in respectful disagreement with judgments and awards that require it in applications for rescissions of a CCMA decision. (Goodyear South Africa (Pty) Ltd v CCMA and Others - P117/01 unreported at paragraph 15, per Gering A J.) …
[11] In the circumstances I hold that good cause is not a requirement in an application for the rescission of the decision of the CCMA, and the commissioner was not required to take it into account. However, I also find that to the extent that he did take it into account, he justifiably rejected the explanation as not amounting to good cause.”
[15] The appellant subsequently sought and obtained the leave of the court a quo to appeal to the Court, which leave was granted.
The appeal
[16] Before this Court, counsel for the appellant, submitted that the main question raised in the appeal is whether s 144 of the Act permits the rescission of a CCMA arbitration award on the ground of good cause. He submitted that a finding in favour of the appellant on this issue would result in the appeal being upheld as it would follow that the court a quo had erred in law in concluding that good cause was an insufficient basis for the rescission of an arbitration award. Moreover, he submitted that there can be no dispute that the appellant had in fact demonstrated good cause for its non- attendance at the CCMA on the date when the arbitration proceedings were held.
[17] It was argued that the approach adopted by the second respondent and the Labour Court in regard to whether or not an arbitration award is to be rescinded on the basis that an applicant (for rescission) has shown good cause is predicated on the approach that s 144 of the Act does not contemplate good cause to be shown. Counsel for the appellant submitted that, as the text of s 144 mirrors the wording of Rule 42 of the Uniform Rules of Court, this approach stems from placing reliance on the interpretation of Rule 42 in various decisions of the High Court. (See Colyn v Tiger Foods Industries Ltd t/a Meadow Feed Mills (Cape) 2003 (6) SA 1 (SCA)).
[18] It is apparent from the judgment of the court a quo that it applied s 144 as if it was applying the provisions of Rule 42 of the Uniform Rules of Court. This approach, it was argued, effectively amounted to a reliance on the principle of statutory interpretation referred to as “in pari materia”. The effect of this principle is that, where the meaning of a statute is unclear, then that statute should be afforded the same meaning given to an earlier statute if couched in the same language. It was submitted that this principle is inapplicable because it only applies to corresponding statutory provisions and not to provisions in statutes and corresponding rules of Court. It was argued that, that interpretation of Rule 42 arises in circumstances which are entirely different to the circumstances under consideration in relation to section 144 of the Act. In the High Court, a party bringing an application for rescission has available to him, in addition to the provisions of Rule 42, other remedies. He may obtain rescission under the common law or under the provisions of Rule 31(2) of the Uniform Rules which permits rescission on good cause shown. There is no similar rule which is applicable to arbitration proceedings before the CCMA.
[19] Counsel for the appellant submitted that this Court could interpret section 144 in such a way as to include “good cause”. He said that this Court has previously interpreted provisions of the Act to include words that were not expressly part of such provisions. In this regard he referred to the decision of this Court in Carephone. In Carephone this Court held that the ground of review of exceeding powers in section 145 of the Act had to be read to also include unjustifiability of an arbitration award as a ground of review. He also relied on the judgment of this Court in Queenstown Fuel Distributors CC v Labuschagne NO and Others (2000) 21 ILJ 166 (LAC). In that case this Court decided that, although there was no express provision in section 145 of the Act giving the Labour Court the power to condone non-compliance with the six weeks time-limit set out therein, section 145 had to be read to be directory and, therefore, not to exclude this Court’s power to condone non-compliance with time-limits relating to access to Court.
[20] An additional reason why the “in pari materia” principle is inapplicable is that in interpreting Rule 42 the civil courts do not have to contend with the provisions of section 3 of the Act. This section provides:-
“Any person applying this Act must interpret its provisions –
To give effect to its primary objects;
In compliance with the constitution, and
In compliance with the public international obligations of the Republic.”
[21] As one of the primary objects of the Act is the effective resolution of labour disputes, applying the “in pari materia” principle would defeat this object of the Act as it would in effect deprive the appellant in these circumstances of the opportunity of being heard and thus the dispute between the parties would not effectively be resolved.
[22] In response to the appellant’s argument, the third respondent contended that, as the appellant had sought to raise on appeal a single issue which was whether or not s 144(a) of the Act permitted the rescission of a CCMA arbitration award on good cause shown, the appeal must fail as the sub-section makes no mention of good cause as a ground for rescission. It was submitted that, as section 144 of the Act mirrors verbatim the provisions of Rule 42 of the Uniform Rules of the High Court and the civil courts have ruled that the correct interpretation of Rule 42 is that it does not contemplate rescission of a default judgment on good cause, section 144 of the Act can also not be said to contemplate rescission of a CCMA award on good cause shown. Moreover, the civil courts have consistently refused to rescind default judgments under Rule 42(1)(a) where there was no irregularity in the proceedings and the party in default relied on the negligence or physical incapacity of his attorney. (See: Bristo v Hill 1975(2) SA 505 N; Tshabala v Peer 1979 (4) SA 27T). It was submitted that section 144(a) of the Act is of limited application and can only be invoked in circumstances where an award was erroneously sought or erroneously made.
[23] In any event, counsel for the third respondent urged that this Court should be slow to “read in” or to construe s 144 (a) of the Act to include good cause as a ground for the rescission of an arbitration award since a court does not have power to create substantive law and rules which seek to make substantive law are ultra vires .
[24] In the affidavit in support of the application for rescission of the arbitration award Jacobus Federick Booysen stated:-
“I now wish to make the following submissions, which is material to the legal aspects pertaining to this rescission application:
6.1 It is respectfully submitted that it is trite that in order to succeed in an application for rescission of an award, the affected party (hereinafter referred to as the “applicant”) must show good cause justifying the rescission of the award under attack. In establishing good cause, the applicant bears the onus of not only proving that it has a reasonable explanation for its default but also that it has a bona fide case to pursue before this Honourable Commission.”
[25] Even though the appellant relied on the provisions of s 144, counsel argued that on the facts as set out in Booysen’s affidavit good cause was demonstrated and that the second respondent ought to have rescinded the award solely on that ground.
Section 144 of the Act reads as follows:-
“144. Variation and rescission of arbitration awards and rulings. - Any commissioner who has issued an arbitration award or ruling, or any other commissioner appointed by the director for that purpose, may on that commissioner’s own accord or, on the application of any affected party, vary or rescind an arbitration award or ruling –
erroneously sought or erroneously made in the absence of any party affected by that award;
in which there is an ambiguity, error or omission, but only to the extent of that ambiguity, error or omission; or
granted as a result of a mistake common to the parties to the proceedings.”
[26] It is so that s 144 of the Act makes no mention of good cause shown. Moreover s 144 of the Act mirrors the text of Rule 42 of the Uniform Rules of Court. Rule 42 (1) reads as follows:-
“42 (1) 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:
an order or judgment erroneously sought or erroneously granted in the absence of any party affected thereby;
An order or judgment in which there is an ambiguity , or a patent error or omission, but only to the extent of such ambiguity, error or omission;
An order or judgment granted as the result of a mistake common to the parties.”
[27] In Colyn v Tiger Food Industries Limited t/a Meadow Feed Mills (Cape) 2003 (6) SA 1(SCA), Jones AJA with regard to Rule 42 stated the position as follows:-
“[5] It is against this common law background which imparts finality to judgment in the interest of certainty, that Rule 42 was introduced. The Rule caters for mistakes. Rescission or variation does not follow automatically upon proof of a mistake. The Rule gives the Court a discretion to order it, which must be exercised judicially (Theron NO v United Democratic Front (Western Cape Region) and others and Tshivhase Royal Counsel and another v Tshivhase and Another; Tshivhase and Another v Tshovahase and Another.).
[6] Not every mistake or irregularity may be corrected in terms of the Rule. It is, for the most part at any rate, a restatement of the common law. It does not purport to amend or extend the common law. That is why the common law is the proper context for its interpretation. Because it is a Rule of court it ambit is entirely procedural.
[7] Rule 42 is confined by its wording and context to the rescission or variation of an ambiguous order or an order containing a patent error or omission (Rule 42(1)(b)); or an order resulting from a mistake common to the parties (Rule 42 (1)(c)); or ‘an order erroneously sought or erroneously granted in the absence of a party affected thereby’ Rule 42(1)(a)). In the present case the application was, a far as the Rule is concerned only based on Rule 42 (1)(a) and the crisp question is whether the judgment was erroneously granted.”
[28] In the civil courts, Rule 42 is confined by its wording and context to limited application. However it is clear that the rule do not deprive the court of its discretion which must be exercised judicially.
The civil courts had always retained discretion to grant rescission of a judgment on good cause shown. In De Wet and Other v Western Bank Limited 1979 (2) SA 1031 [AD] at 1024 F Trengrove AJA explained the position as follows:-
“Thus, under the common law, the Courts of Holland were, generally speaking, empowered to rescind judgments obtained on default of appearance, on sufficient cause shown. This power was entrusted to the discretion of the Courts. Although no rigid limits were set as to the circumstances which constituted sufficient cause (cf examples quoted by Kersteman (op cit sv defaillant) the Courts nevertheless laid down certain general principles, for themselves, to guide them in the exercise of their discretion. Broadly speaking, the exercise of the Courts discretionary power appears to have been influenced by considerations of justice and fairness, having regard to all the facts and circumstances of the particular case. The onus of showing the existence of sufficient cause for relief was on the applicant in each case, and he had to satisfy the court, inter alia, that there was some reasonably satisfactory explanation why the judgment was allowed to go by default. It follows from what I have said that the Court’s discretion under the common law extended beyond , and was not limited to, the grounds provided for in Rules 31 and 42 (1), and those specifically mentioned in the Childerley case. Those grounds do not, for example, cover the case for a litigant, or his legal representative, whose default is due to unforeseen circumstances beyond his control, such as sudden
illness, or some other misadventure, one can envisage many situations in which both logic and common sense would dictate that a defaulting party should, as a matter of justice and fairness, be afforded relief.”
[29] It seems to me that in applying s 144 of the Act a commissioner is in the same position as a judicial officer in the civil courts when considering an application for rescission.
[30] Moreover, s 3 of the Act directs any person applying the Act to interpret its provisions in such a way that it gives effect to the primary objects of the Act and for the interpretation to comply with the Constitution.
[31] This is what occurred in Carephone (Pty) Ltd v Marcus NO and Others (1998) 11 BLLR 1093 (LAC). In this case this Court had to interpret and give effect to section 145(2)(a)(iii) of the Act. The court held that section 145(2)(a)(iii) had to be interpreted in the manner consistent with the Constitution. Even though section 145(2)(a)(iii) was the exact equivalent of section 33(1)(b) of the Arbitration Act 42 of 1965, which had traditionally been interpreted narrowly, this Court decided or chose a wider interpretation of section 145(2)(b)(iii) by effectively reading into it the provisions of item 23(b) of Schedule to the Constitution. This then gave rise to wider grounds of review then the ordinary language reflects.
[32] In Queenstown Fuel Distributors CC v Labuschange NO and Other (2000) 21 ILJ 166 this Court found that the Act did not expressly confer authority on the Labour Court to condone non-compliance with the time-limit set out in section145 of the Act. This Court inquired into the question whether there was anything in the Constitution which suggested that the legislature did not, despite what it may have said or omitted to say, intend the time-bar to be immune from adjustment by the court. It considered the injunction in section 3 of the Act and the provisions of s23(1) and of the Constitution and concluded at 174G, “that considerations of justice and convenience dictate that acceptance of the proposition that the legislature intended the time-limit for bringing review proceedings in section 145(1)(a) to be directory. In principle, therefore, it is possible to condone non-compliance with the time-limit”.
[33] As there are circumstances which can be envisaged, such as in the present case, and which fall outside the circumstances referred to section 144 of the Act in such cases both logic and common sense would dictate that a defaulting party should, as a matter of justice and fairness be afforded relief. It follows, that if one was to hold that section144 of the Act does not allow for the rescission of an arbitration award in circumstances where good cause is shown and that an applicant who seeks rescission of an arbitration award was compelled to bring the application within the limited circumstances allowed by the wording of the section it could lead to unfairness and injustice. In my view this would be inconsistent with the spirit and the primary object of the Act referred to above. Furthermore, I am of the view that to interpret section 144 of the Act so as to include “good cause” as a ground for rescission is to give the Act an interpretation that is in line with the right provided for in section 34 of the Constitution because, if section 144 is not interpreted in that way, a party who can show good cause for his default would be denied an opportunity to exercise his right provided for in section 34 of the Constitution despite the fact that he may not have been at fault for his default. That could be a grave injustice.
[34] It would appear that the second respondent was of the view that good cause could be considered as a ground for rescinding the award. In his reasons for refusing the application for rescission he made the following remarks:-
“The fact that the entry was incorrectly diarized did not amount to good cause for rescission.”
[35] The test for good cause in an application for rescission normally involves the consideration of at least two factors. Firstly, the explanation for the default and secondly whether the applicant has a prima facie defence. In Northern Province Local Government Association v CCMA and Other [2001] 5 BLLR 539 (LC) at 545 at para 16 it was stated:
“An application for the rescission of a default judgment must show good cause and prove that he at no time denounced his defence, and that he has a serious intention of proceeding with the case. In order to show good cause an applicant must give a reasonable explanation for his default, his explanation must be made bona fide and he must show that he has a bone fide defence to the plaintiff’s claims.”
[36] In MM Steel Construction CC v Steel Engineering and Allied Workers Union of SA and Others (1994) 1 5 ILJ 1310 (LAC) at 1311 I – 132a Nugent J had this to say:-
“These two essential elements ought nevertheless not to be assessed mechanistically and in isolation. While the absence of one of them would usually be fatal, where they are present they are to be weighed together with relevant factors in determining whether it should be fair and just to grant the indulgence.”
[37] In considering good cause, the second respondent took into account only one aspect of the test. That is to say he only considered the fact that Booysen had mis-diarized the date of the arbitration hearing. He clearly did not consider the appellant’s defence to the third respondent’s claim as he made no mention of it in his decision. In my view, the second respondent, failed to weigh together all the relevant factors in determining whether it was just and fair and therefore, whether good cause had been shown for the rescission of the arbitration award. It follows that the second respondent did not apply his mind to all the issues before him and if he did, he ought to, in the circumstances of this case, to have rescinded his earlier default award.
[38] When the matter came before the Labour Court, Pillay J adopted the approach that good cause is not a requirement in an application for the rescission of a decision of the CCMA and a commissioner was obliged not to take it into account. As already shown above, I take a different view. Section 144 must be interpreted so as to also include good cause as a ground for the rescission of a default arbitration award. Accordingly, a commissioner may rescind an arbitration award under section 144 where a party shows good cause for its default. In my view this approach of interpreting the Act is in line with the approach adopted by this Court in the Queenstown case referred to above, particularly at paragraph 17-24 thereof. It, therefore, follows that the decision of the Labour Court is to be set aside.
[39] In light of all of the above the Court a quo should have set aside the ruling of the CCMA. The next question that arises is whether the Court a quo would then have had to remit the matter to the CCMA to be dealt with afresh or whether it could itself have effectively made the decision that the CCMA ought to have made in the rescission application. One of the primary objects of the Act is the effective resolution of disputes. This includes an expeditious resolution of disputes. In this case the dismissal occurred in December 2003. Accordingly, there has already been a delay of over three years. Furthermore, the employer had missed the arbitration hearing date by one day. The non-attendance by the employer’s representative was due to an understandable mistake. On the merits the employer’s case is one which deserves an opportunity to be heard at the arbitration. I am of the view that, if I were to remit the matter back to the CCMA for it to decide the rescission application afresh, the granting of the rescission in this matter would be a foregone conclusion in the light of all the circumstances of the case. I am of the view that the Labour Court, and, therefore, this Court as well, has power in cases such as this to make the decision which the tribunal whose decision is on review should have made (See Traub v Administrator of the Transvaal and another 1989 10 ILJ 9 at 21D-H)
[40] I do not propose to deal with the facts relating to the rescission in any detail. The facts relating to the background to the dismissal dispute have been set out above. Those show, in my view, that the employer has a case on the merits that is triable. Indeed, it cannot be said that the employer has no reasonable prospects of success. The explanation of the failure by the employer’s representative to appear at the CCMA is understandable. He misdiarised the matter. He thought it was to be on the day after the day when it was actually set down for arbitration. In all of those circumstances the arbitration award given earlier should be rescinded and the employer be given an opportunity to defend its decision to dismiss the employee. With regard to costs I am of the view that each party should pay its own costs.
[41] In the premises I make the following order-:
1. The appeal is upheld.
2. Each party is to pay its own costs.
3. The order of the Labour Court is set aside and replaced with the
following order-:
“(a). the application for review succeeds.
(b). No order is made as to costs.
(c). The ruling issued by the CCMA dismissing the rescission
application is hereby set aside and is replaced with the
following decision-:
(i) the arbitration award previously issued in this matter
Is hereby rescinded and the dispute can be set down
for arbitration with notice to all parties.”
_____________________
Jappie AJA
I Agree.
______________________
Zondo JP
I
Agree.
______________________
Khampepe
AJA
On behalf of the appellants: Adv. AT Myburgh
Instructed by
Van Zyl incorporated
Port Elizabeth
On behalf of the respondent: Adv Quinn Sc
Instructed by
Mili attorneys
Grahamstown
Judgment
handed down on the 29th
June 2007
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