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IN THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG

 

Reportable

Case No: JA 7/24

 

In the matter between:

 

ALEXKOR SOC LIMITED                                                  First Appellant

 

ALEXKOR RMC JV                                                            Second Applicant

 

and

 

MERVYN CARSTENS                                                        Respondent

 

Heard:         30 November 2024

Delivered:   15 May 2025

Coram:        Molahlehi JP, Savage ADJP and Van Niekerk JA

Summary: Appeal against the decision of the Labour Court refusing to declare a pre-arbitration minute concluded in terms of the CCMA Rules to be invalid.

Before the Labour Appeal Court, the issue was whether the Court had jurisdiction to issue a declaratory order regarding the validity of pre-arbitration minutes concluded by the parties under Rule 20 of the CCMA Rules, read with section 115 of the LRA.

The principles governing the issue of cost restated. Costs do not automatically follow the results in labour matters, but are to be considered based on the law and fairness.

 

JUDGMENT

 

MOLAHLEHI, JP

 

Introduction

 

[1]  The key issue in this appeal is whether the Labour Court has jurisdiction to declare invalid and set aside the pre-arbitration minutes concluded by the parties in terms of the CCMA Rules. The appeal stems from the judgment and order made by the Labour Court on 27 October 2023, in which the appellant's application to set aside the pre-arbitration minutes on the grounds of invalidity was dismissed.[1]

 

[2]  The appellants further requested the Labour Court to direct that a further arbitration conference be convened or specific paragraphs of the impugned pre-arbitration minutes be struck out.

 

[3]  The first respondent, Mr Carstens, a former employee of the appellant, opposed the appeal and lodged a cross-appeal in terms of which he contended that the Labour Court erred in not awarding him costs and in not recognising that his case was distinguishable from those cases where the Courts have held that costs do not usually follow the results. He also applied for condonation because his heads of argument and his powers of attorney were filed outside the time frames provided for in the rules. The appellants opposed both applications.

 

[4]  Following the appeal hearing on 5 November 2024, this Court adjourned the matter to 30 November 2024, allowing the parties to engage in settlement discussions.

 

The background

 

[5]  Mr Carstens was initially placed on precautionary suspension following a forensic investigation that found negligence in how he ran the affairs of the second appellant.

 

[6]  Before the suspension, the appellants proposed a pre-arbitration process to address the findings of negligence on the part of Mr Carstens.[2] He rejected the proposal and insisted that the charges be determined through an internal disciplinary hearing.

 

[7]  Instead of instituting a formal disciplinary hearing, the appellant invited Mr Carstens to respond in writing to the misconduct allegations. He submitted the written response but insisted on having a formal disciplinary hearing.

 

[8]  On 5 August 2020, the appellant terminated Mr Carstens' employment without convening a disciplinary hearing. He challenged the decision before the Commission for Conciliation, Mediation and Arbitration (CCMA) on the ground that it was unfair.

 

[9]  Following the failure of conciliation, the unfair dismissal dispute was referred to arbitration in the CCMA. In preparation for the arbitration hearing, the parties arranged for a pre-arbitration process conducted by correspondence. In this process, Mr Richard Brown of Herold Gie Attorneys (Mr Brown) represented Mr Carstens, and the appellants were represented by their erstwhile attorney, Mr Feke-Myeko (Myeko).

 

[10]  After written exchanges between the parties, Myeko signed a pre-arbitration minute on 15 November 2020 and Brown on 16 November 2020.

 

[11]  The matter was initially set down for two days, 25 and 26 November 2020, before Commissioner Segotsane and was conducted virtually. The matter was postponed on 26 November 2020 and rescheduled for a three-day hearing starting 8 June 2021. At this stage, the arbitration proceedings were part-heard, and the appellant led one of its witnesses, Mr Shokie Bopape.

 

[12]  In the meantime, the appellants terminated Mr Myeko's mandate, and a new firm of attorneys, Messina Incorporated (Messina Attorneys), was appointed as the appellants' attorneys of record.

 

[13]  The evidence of Ms Bopape, who was cross-examined on this matter, was primarily based on concessions made by the appellants in the pre-arbitration minutes.

 

[14]  The appellants and their new attorneys did not dispute the knowledge of the set-down notice for 25 November 2020. They, however, asserted that they were under the impression that the matter would have been postponed without any evidence being led and thus believed that the matter was not part-heard.

 

[15]  The matter was set down for a hearing on 8 June 2021 but was, however, postponed on that day to 26 and 27 July 2021. The appellants further asserted that they were not aware of the existence of the pre-arbitration minutes. Upon learning of the pre-arbitration minutes, they instructed their new attorneys of record to request that Mr Carstens abandon the pre-arbitration minutes and allow for a further pre-arbitration conference.

 

[16]  Mr Carstens rejected the appellant's request to cancel the pre-arbitration minutes and convene a fresh pre-arbitration conference.

 

[17]  Having failed to persuade Mr Carstens to abandon the pre-arbitration minutes, the appellant sought the intervention of the CCMA. The CCMA rejected the request and stated the following:

‘Our office has noted that you requested to hold a pre-arb conference, as the previous one was not completely done. In light of that, you need to be reminded that the tardiness of your client’s previous attorneys cannot be used as an excuse with regard to this matter and as the matter raised, procedural aspects to be determined in an arbitration hearing such preliminary issue may be raised before presiding commissioner for determination as the other party has the right to respond or oppose your request.’[3]

 

[18]  The appellants pursued the point of setting the pre-arbitration minutes aside on 27 July 2021, when the matter was served before Commissioner Segotsane. They argued that the pre-arbitration minutes were inaccurate and that the erstwhile attorneys were not mandated to conclude them. The application, which was orally made, was dismissed.

 

[19]  After the dismissal of the application to set aside the pre-arbitration minutes, the appellants applied to recall their first witness, Ms Bopape, who, as indicated earlier, had already testified. This application was also dismissed.

 

[20]  The following day, 28 July 2021, the appellants requested a postponement of the hearing, the main reason being to allow them to consider filing a review application in terms of section 158(1)(g) of the Labour Relations Act (LRA),[4] to challenge the commissioner's above ruling. The postponement application was dismissed.

 

[21]  Following the above ruling, the appellants applied for the recusal of Commissioner Segotsane, who upheld the application and recused herself from the proceedings on 10 August 2020.

 

[22]  On 17 August 2020, the CCMA’s Regional Senior Commissioner advised the parties via email that, following Commissioner Segotsane’s decision, the matter would be set down to commence anew before a different commissioner. The email reads:

‘Dear Marcel

We acknowledge receipt of your email and bears reference.

I had been advised that rulings were made on the spot during the hearing and such been intended to be recorded on the award once the matter is finalised. However, I have been informed that a recusal application was made and subsequent to that the presiding Commissioner recused herself from the proceedings. Therefore, our understanding is that the matter will be heard de novo and the recusal ruling override (sic) the process in its entirety.

We would set down the matter before a new commissioner and your request for senior commissioner would be taken into consideration. In light of the above no ruling would be issued and if you intend to exercise your rights to approach the Labour Court feel free to do so and our offices would provide the records of the previous hearing as contemplated in terms of rule 7A of the Labour Court.’[5]

 

The Labour Court decision

 

[23]  The first issue before the Labour Court was whether Commissioner Segotsane’s ruling regarding the status of the pre-arbitration minute was invalid consequent to her recusal.

 

[24]  It is important to note that Commissioner Segotsane's recusal was not due to bias, but rather because, according to her, she had “ruled against the appellants on more than one occasion”.

 

[25]  The Labour Court, in dealing with the first issue, referred to the decision of this Court in Sasol Infrachem v Sefafe & others,[6] where it was held:

‘On the question whether the entire proceedings are vitiated by bias, the principle to be deduced from the cases, including SARFU, Ndimeni, and others, is as follows. If it is held that the arbitrator, or the judicial officer, ought to have recused himself, or herself, at the outset then the entire proceedings before him or her are vitiated by the failure to recuse himself or herself. It has been held that continuing to sit in proceedings in which the presiding officer ought to have recused himself or herself at the outset, constitutes an irregularity for every minute of the proceedings in which the presiding officer or arbitrator continues to sit. In Ndimeni the judge did not disclose his interest in one of the litigants. On appeal, the Supreme Court of Appeal held that he ought to have disclosed his interest and that his failure to do so was an irregularity.’

 

[26]  The Labour Court correctly rejected the appellant’s contention that the Commissioner's ruling was a nullity due to her recusal. In other words, the ruling regarding the pre-arbitration minutes was not vitiated by the fact that the commissioner recused herself. There is no evidence that the commissioner should have recused herself at the outset of the arbitration hearing. As stated earlier, she recused herself not because of bias, but because she sought to avoid a complaint that she was not objective, given the number of rulings she had made against the appellants.

 

[27]  Regarding the evidence of Ms Bopape, presented before the commissioner's recusal, the Labour Court correctly held that the evidence was rendered inapplicable due to the de novo principle.[7] In this regard, the Labour Court reasoned:

‘With the above in mind, and based on what is set out below, I am at odds with Sondolo. A ruling issued by a Commissioner under the auspices of the CCMA can only be set aside on review by this Court in terms of section 145 of the LRA, or as in the present cases in terms of section 158(1)(g) of the LRA. Conjunctively, and outside of the de novo principles, the operation of the doctrine of functus officio is instructive. In this regard, it is trite that a decision once made which is final, cannot be revisited in the absence of statutory authority. The invalidity of an administrative act does not detract from the legal consequences thereof, which are binding until varied or set aside by a court of law. Hence, an administrator will be functus officio once a final decision has been made and will not be entitled to revoke the decision in the absence of statutory authority. An exception to this would be where the administrator has the competence to perform the act in the first place, or where the action was fraudulently performed on the basis that fraud unravels everything.’

 

[28]  The Labour Court held that the pre-trial minutes concluded between the parties should stand, and their validity is a matter to be determined by the Labour Court, not the CCMA. This means that the Labour Court assumed jurisdiction over the issue of the validity of the pre-arbitration minutes.

 

[29]  Turning to the relief sought by the appellants, the Court held that disregarding the Commissioner's ruling would severely undermine and defeat the integrity of the CCMA and its rulings. The Labour Court further found that the approach proposed by the appellants would undermine the provision of section 158(1B) of the LRA.

 

Condonation applications

 

[30]  As indicated earlier Mr Carstens’ heads of argument were filed late. According to Mr Carsten’s attorney of record, the late filing of the heads of argument was due to his busy practice, which resulted in difficulties setting aside time to draft the relevant papers. The power of attorney was also filed late. The reason for the delay in filing the power of attorney, according to Mr Carstens, was his relocation to Angola after accepting employment in that country.

 

[31]  The heads of argument in this matter were filed 31 Court days late and 44 calendar days late, and the power of attorney was also filed outside the period prescribed in the Rules of the Labour Court[8].

 

[32]  In opposing the condonation applications, the appellants contended that the delays in both instances (the heads of argument and power of attorney) were not insignificant, and the explanation for the delay was not reasonable to justify the indulgence sought. They also strongly criticised the condonation application for not being made soon after Mr Carstens became aware of the delay.

 

[33]  The test for determining whether to grant condonation is well established in our law, and I accordingly do not deem it necessary to repeat it in this judgment.[9]

 

[34]  The degree of the delay in both instances is not so excessive as to exclude the consideration of the prospects of success. In this regard, the appellants' Counsel conceded during the debate that the prospects of success carried significant weight in determining whether condonation should be granted. The prospects of success in the present matter compensated for the weakness in the explanation provided in both instances.

 

[35]  Considering the totality of the facts, the importance of the matter, and the circumstances of this case, the pragmatic approach to adopt, despite the criticism in addition to the poor explanation, is to grant Mr Carstens the indulgence in the interest of justice. The appellant will not suffer prejudice because there is no entitlement to the relief sought.

 

Jurisdiction

 

[36]  In dealing with the jurisdiction of the CCMA and the Labour Court, the starting point is to recognise that the LRA created structures and procedures to achieve its objective of expeditious labour dispute resolution. This means that both institutions are creatures of statutes, and thus the scope of their jurisdiction is defined by the legislation that created them. They also have jurisdiction to deal with other labour-related matters as provided for in other relevant legislation.

 

[37]  Before dealing with the issue of the jurisdiction of the Labour Court, which is central in the present matter, it is apposite to briefly discuss the CCMA’s jurisdiction concerning declaratory orders.

 

[38]  The CCMA, being a creature of statute, derives its powers from the LRA's provisions to resolve employment relationship disputes. In this regard, the power to grant declaratory orders is provided in section 138 (9)(c) of the LRA, which provides as follows:

‘The commissioner may make any appropriate arbitration award in terms of this Act, including, but not limited to, an award-

(a)             …

(b)             …

(c)             that includes, or is in the form of, a declaratory order.’

 

[39]  Section 138(9) of the LRA stipulates that a commissioner has the authority to issue declaratory orders on preliminary points, such as jurisdictional issues (e.g., whether an employment relationship exists between the parties), before proceeding to address the substantive merits of the dispute. In this respect, the Labour Court in Food and Allied Workers Union v Buthelezi and Others,[10] held that:

‘[16]    Presented with such a situation, the Commissioner will be guided by what is appropriate under the circumstances and whether the decision he is called upon to make at that point in time gives effect to the primary objects of the Act, such as the effective resolution of disputes. In such a situation, I cannot rule out the possibility of a Commissioner making a declaratory order before he considers the substantive merits of the dispute. I do not therefore agree that the third respondent exceeded his powers when he made a declaratory order before considering the substantive merits of the dispute. It was appropriate under the circumstances to do so.’

 

[40]  In Tsengwa v Knysna Municipality and another,[11] per Rabkin-Naicker J, the Labour Court correctly rejected as a misconception the notion that a commissioner has powers under section 138(9) of the LRA to declare disciplinary proceedings null and void.

 

[41]  As pointed out earlier, the essential issue in this appeal is whether the Labour Court or this Court has jurisdiction to declare pre-arbitration minutes concluded by agreement between the parties in terms of rule 20 of the CCMA Rules invalid. Rule 20 of the CCMA Rules allows parties in trial proceedings to conclude pre-arbitration minutes, similar to pre-trial minutes in civil proceedings.

 

[42]  The parties in the present matter concluded the impugned pre-arbitration minutes as required by the CCMA Rules,[12] promulgated in section 115(2A) of the LRA. Rule 20 of the CCMA Rules outlines the circumstances under which parties to arbitration proceedings should hold a pre-arbitration conference and the matters that should be addressed in their pre-arbitration minutes.[13] The validity of this rule has never been challenged.

 

[43]  There is no dispute in the present matter that the CCMA did not have jurisdiction to issue a declaratory order regarding the validity of the pre-arbitration minutes.

 

Labour Court jurisdiction

 

[44]  The status of the Labour Court is similar to that of the High Court, except that its mandate is limited to dealing with labour disputes arising from the relationship between employers, employees and trade unions. As a creature of statute, its authority is limited to what is provided in the LRA and other labour statutes conferring jurisdiction.[14] The extent of its jurisdiction is limited by the provisions of section 157(1) of the LRA in the following terms:

‘Subject to the Constitution and section 173, and except where this Act provides otherwise, the Labour Court has exclusive jurisdiction in respect of all matters that elsewhere in terms of this Act or in terms of any other law are to be determined by the Labour Court.’

 

[45]  Section 158 of the LRA gives the Labour Court the power to make any appropriate order, including, amongst others, the power to make a declaratory order.

 

[46]  The Labour Court also has supervisory powers over the CCMA and bargaining councils, to ensure fairness and lawfulness in resolving labour disputes, specifically concerning arbitration awards issued by the CCMA or bargaining councils as provided in section 145 of the LRA.

 

[47]  In terms of section 158 (1)(g) of the LRA the Labour Court has the power to “review the performance or purported performance of any function provided for in this Act on any grounds that are permissible in law” and sub-section (h) provides; “review any decision taken or any act performed by the State in its capacity as employer, on such grounds as are permissible in law”.

 

[48]  The Labour Court also has concurrent jurisdiction with the High Court in all employment and labour relations matters, including employment contracts as envisaged in the Basic Conditions of Employment Act (BCEA).[15] Section 158 of the LRA lists its powers, which include the power to make appropriate, declaratory orders.

 

[49]  In support of the argument that the two Courts have jurisdiction to declare pre-arbitration minutes invalid, the appellants’ representatives referred to Inspektex Mmamaile Construction & Fire Proofing (Pty) Ltd v Coetzee and Others (Mmamaile).[16] The facts of that case and the present are distinguishable in law and fact. The issue of jurisdiction in that case concerned the validity of the settlement agreement.[17] The Labour Court, in finding that it had jurisdiction, relied on the decision in University of the North v Franks and Others[18], where this Court found that it had jurisdiction under the provisions of section 77(3) of the Basic Conditions of Employment Act[19] to determine the validity of a settlement agreement. In this respect, this Court held that:

‘The termination of an employment contract and the terms and conditions upon which this is to occur are clearly matters concerning such a contract. The Labour Court correctly held that it had jurisdiction.’[20]

 

[50]  The second basis upon which the Court in Mmamaile found jurisdiction to entertain the dispute concerning the validity of the settlement agreement was under section 158 (1)(j) of the LRA which provides the Court may “deal with all matters necessary or incidental to performing its function in terms of this Act or any or other law”.

 

[51]  The facts of the present matter are similar, if not the same, to those in MTamila v Samacor Western Chrome Mines and Others (Samancor).[21] Like the present case, the Labour Court in that case addressed the issue of the validity of the pre-arbitration agreement, which was also concluded under the auspices of the CCMA.

 

[52]  Similar to the present case, the Court in Samancor raised the issue of jurisdiction and invited the applicant to point out any provision in the LRA and other laws that gave the Labour Court jurisdiction to entertain the relief sought. In paragraph 6 of its judgment, the Labour Court held that the applicant had failed to point out any provision in the LRA that gave it jurisdiction to entertain the relief sought. The Labour Court (per Van Niekerk J, as he then was) in dismissing the application, reasoned as follows:

‘This court has no inherent power of supervision over the CCMA and its processes; the scope of intervention is limited to the remedy of review, and in a few instances, appeal. To the extent that the applicant has sought to invoke the remedy of review, this is a matter that has been dealt with and determined above. To the extent that the applicant relies on the submission that the terms of the Commissioner’s ruling contemplate a referral to this court of the dispute about the validity of the pre-arbitration agreement, that is not a basis on which this court might acquire jurisdiction. It seems to me that the dispute concerning the validity of the pre-arbitration agreement is a matter internal to the CCMA and that it ought properly to be dealt with on that basis. In any event, as the first respondent’s counsel points out, there are a host of factual disputes regarding the conclusion of the pre-arbitration agreement, none of which are suitable for determination by way of motion proceedings.’

 

[53]  The representative of the appellants contended that what the Labour Court stated in Samancor does not constitute a principle governing the issue at hand, as that was not the Court's intention. The suggestion is that the Labour Court made an obiter statement and did not seek to set a principle to govern the issue. The appellants’ interpretation of what the Labour Court intended above is wrong. The proper interpretation of the decision of the Labour Court in the above matter, which I align myself with, was that it did not have jurisdiction to declare the pre-arbitration minutes concluded by the parties invalid. The Labour Court rejected the contention that it had the power to interfere with a pre-arbitration procedure, whose outcome is set out in rule 20 of the CCMA Rules. As indicated above, the CCMA is empowered by section 115 of the LRA to regulate the pre-arbitration procedure. This procedure is an internal mechanism to regulate arbitration proceedings and assist commissioners in determining disputes fairly and quickly with minimum legal formalities.[22]

 

[54]  For the above reasons, the appeal stands to fail. The appeal further stands to fail because of the well-established principle of our law that says an administrative decision stands until set aside by a competent court. This principle was set out by the Labour Court in Taung Local Municipality v Mofokeng,[23] as follows:

‘It is generally accepted that an unlawful administrative decision remains valid until it is set aside by a competent court. The authorities say that an unlawful act is invalid in law but is, however, valid as a matter of fact. As a general rule an unlawful administrative decision is in fact valid and has legal consequences until such time that it is set aside by a court.’

 

[55]  In the present matter, the commissioner’s ruling exists in fact and thus could not be ignored by the Labour Court or this Court. It stands and is of full force until set aside on review.[24] The appellants elected not to review the Labour Court's decision. Following the commissioner's recusal, only the evidentiary materials presented before the Commissioner can be relied upon.

 

Costs

 

[56]  It is now well established that the principle of costs follows the result does not automatically apply in labour matters. This approach was emphasised by the Constitutional Court in Union for Police Security and Corrections Organisation v South African Custodial Management (Pty) Ltd and Others [25] (South African Custodial Management). In that case, the Court, in dealing with the issue of costs issued by the Labour Court under section 162 of the LRA, said the following:

‘[33]    The principles set out above form the bedrock of how the question of costs should be understood in labour matters in the context of our democracy. These principles find expression in section 162 of the LRA, which rejects the ordinary rule of litigation that costs should follow the result in favour of an approach based on “law and fairness”. When we pay heed to this fairness standard, we do so because we are obliged by the LRA and the above constitutional imperatives. Hence, I repeat: when making costs orders in labour matters, courts are enjoined to apply the fairness standard in the LRA as a matter of constitutional and statutory obligation.’

 

[57]  In determining whether to award costs, this Court has discretion to exercise based on the requirements of the law and fairness.[26] In exercising its discretion whether to award costs, this Court may, in terms of section 179 of the LRA take into account amongst others the following:

‘(a)     …

(b)      the conduct of the parties-

(i)       in proceeding with or defending the matter before the Court; and

(ii)      during the proceedings before the Court.’

 

[58]  In Member of the Executive Council for Finance, KwaZulu-Natal & another v Dorkin NO & another[27] (Dorkin), this Court held that the approach to adopt when dealing with the issue of costs is that costs ought not to be made unless the requirements of law and fairness are met.[28] The Court further explained:

‘In making decisions on cost orders this court should seek to strike a fair balance between, on the one hand, not unduly discouraging workers, employers, unions and employers’ organizations from approaching the Labour Court and this court to have their disputes dealt with, and, on the other, allowing those parties to bring to the Labour Court and this court frivolous cases that should not be brought to court. That is a balance that is not always easy to strike, but if the court is to err, it should err on the side of not discouraging parties to approach these courts with their disputes.’

 

[59]  In Zungu v Premier of the Province of KwaZulu-Natal and Others,[29] the Constitutional Court (CC) held that it was entitled to interfere with the exercise of discretion by the Labour Court and the Labour Appeal Court in mulcting the applicant with costs, as they did not exercise their discretion judicially. The CC found that the two Courts erred in not following the abovementioned principle of law and fairness set out in Dorkin. The same approach was followed by the CC in South African Custodial Management, where, after quoting with approval what was said in Dorkin, said:

‘[W]hen making an adverse costs order in a labour matter, a presiding officer is required to consider the principle of fairness and have due regard to the conduct of the parties.’

The appellants in this matter contended in the notice of appeal that it was entitled to costs because Mr Carstens had unreasonably refused to convene a further pre-arbitration conference on multiple occasions. This would mean that Mr Carstens would not be entitled to costs if the appeal were unsuccessful. I do not agree with this proposition because nothing compelled him to agree to the appellant's proposal. As stated above the law is well established that the commissioner's decision regarding the pre-arbitration minutes was valid and enforceable until set aside on review. The appellants decided to proceed to seek the declaratory order despite this well-established legal principle. It is also unclear why this appeal is before this Court when the matter is to start de novo. The appellants can raise the issue before the new commissioner. In my view, there is no legal basis for the appeal. Thus, the fairness requirements would favour that Mr Carstens be granted the costs of these proceedings, except for the two applications, the late filing of the heads of argument and the powers of attorney.

 

Order

 

[60]  In the circumstances, the following order is made:

1.  The late filing of the heads of arguments by the respondent is condoned with no order as to costs.

2.  The late filing of the powers of attorney by the respondent is condoned with no order as to costs.

3.  The appellants’ appeal is dismissed with costs.

 

Molahlehi JP

Savage ADJP and Van Niekerk JA concur.

 

APPEARANCES:

FOR THE APPELLANTS:          Adv B Jackson

Instructed by:                             Messina Inc

FOR THE RESPONDENT:        L Brown Attorneys

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