Browns The Diamond Store CC v Commissioner for Conciliation Mediation And Arbitration and Others (JR1230/12) [2014] ZALCJHB 460 (24 November 2014)

REPUBLIC OF SOUTH AFRICA

THE LABOUR COURT OF SOUTH AFRICA,

IN JOHANNESBURG

Of Interest to Other Judges

Case no: JR 1230/12

In the matter between:

BROWNS THE DIAMOND STORE CC First Applicant And THE COMMISSION FOR CONCILIATION, MEDIATION AND ARBITRATION First Respondent COMMISSIONER MANISHA SINGH (N.O.) Second Respondent SIVENA NAIDOO Third Respondent

Heard: 21 February 2014

Delivered: 24 November 2014

Summary: (Review- rescission ruling – date for hearing agreed on at request of applicant – set down notice for a different date before a different commissioner – rescission ruling set aside for not affording parties opportunity to make submissions before deciding matter on the affidavits - Rule 31 of the CCMA rules – on reconsideration of the merits after considering submissions rescission application nonetheless dismissed).

JUDGMENT

LAGRANGE, J

Introduction

[1] This matter concerns a review of a rescission ruling. The ruling was in respect of a default award issued in circumstances where the employer party, the applicant, failed to attend on the agreed date of the reconvened arbitration hearing in which the employee party, the third respondent, had already given evidence in support of her claim that she had been constructively dismissed, as part of her unfair dismissal claim.

[2] The arbitration hearing commenced on 17 January 2012, during which the third respondent led her evidence in support of her claim that she had been constructively dismissed. At the conclusion of proceedings that day, the parties agreed that the matter would resume on 10 February 2012. The evidence was that the matter had not continued because the applicant needed a chance to prepare its case in response and the earliest date it would be available was that date.

[3] The day after the adjournment, on 18 January 2012, the respondent received a notice of set down purporting to set the matter down before a different arbitrator on 28 February 2012. The applicant claims that it accepted that notwithstanding the agreement the CCMA had decided to set the matter down at the later date. It did not offer any explanation why it did not phone to verify the apparent change nor why it assumed everything was in order even though the set down notice indicated the name of a different commissioner in a matter that was part heard.

[4] On 10 February 2012, when all other parties except the employer were present, the arbitrating Commissioner contacted the employer and gave it an opportunity to attend, but it did not. This is discussed in a bit more detail below.

[5] The deponent to the founding affidavit in the review application, the human resources manager of the applicant, Ms B Brown, claims also to have been advised that it is common practice in the CCMA to issue notices of set down, notwithstanding agreements between the parties that matters would proceed on a specific date. Presumably that advice she obtained from her attorneys, though she does not claim that the applicant or its representative from the employer’s organisation, a Mr Lace, acted on that advice or had received such advice at the time the applicant failed to attend the hearing on 18 January 2012.

[6] The hearing then proceeded on 18 January 2012 in the absence of the employer party and a default award was issued in which the arbitrator found that the third respondent had been constructively dismissed and that her dismissal was substantively unfair. The arbitrator then awarded the third respondent compensation of four months’ salary. The applicant then applied to rescind the default award and the rescission application was dismissed by the same arbitrator. That application is now the subject matter of this review.

The rescission ruling

[7] The arbitrator considered the principles governing the rescission of default award. In considering the merits of the application the arbitrator in summary found that-

7.1 In relation to the justification for the employer’s non-attendance:

7.1.1 The employee’s version was a more accurate account of the events on 10 February 2012.

7.1.2 It was common cause that on 9 February 2012 there was an agreement confirmed in a ruling by the Commissioner that the matter would resume at 09H00 on 10 February 2012, regardless of whether parties received notification or not.

7.1.3 Any reasonable person let alone a representative of an employer’s organisation on receiving the erroneous notice of set down would have realised that there is a problem because it was set down before another commissioner, one Thulani Akim, even though the matter was part heard.

7.1.4 It followed that the employer ought to have made enquiries with the CCMA or the employee to obtain clarification, and had it done so in all probability the matter would not have proceeded in default.

7.1.5 There was no explanation why the employer ignored the ruling or considered to be less “official” than the notice of set down, especially as it was a reflection of what the parties had agreed to.

7.1.6 The employer had both a human resources Department and an employer’s organisation and deliberately chose to ignore the Commissioner despite being told by her they must be present irrespective of the receipt of a notification of set down.

7.1.7 In the circumstances she was not satisfied that the employer furnished a satisfactory explanation for its non-attendance.

7.2 In relation to whether the employer had some prospects of success, the arbitrator felt that merely because the employer said it had a witness to counter the third respondent’s evidence was not sufficient reason to believe it had any prospects of success.

[8] Accordingly, the rescission application was dismissed.

Grounds of review and evaluation

[9] In essence, the grounds of review relied on by the applicant are that-

9.1 The applicant contends the arbitrator should have set the rescission application down for hearing oral submissions.

9.2 The arbitrator committed a gross irregularity or gross misconduct by concluding that the employer was in wilful default in accepting the CCMA notice of set down of the postponed hearing rather than relying on the agreement and ruling that the matter would proceed on that day, despite the fact that the notice was received after the agreement had been reached.

9.3 The arbitrator committed a gross irregularity or misconduct by concluding that it had not presented facts why it had good prospects of success in defending itself against the third respondent’s claim, given that it had dealt with its prospects of success in its replying affidavit in the rescission application. In this regard it appears that the applicant adopted the view that because the third respondent bore the onus of proving that it had made her employment intolerable, it only had to deal with this by way of reply.

9.4 The arbitrator adopted “an approach unjustified on the facts and inconsistent with her statutory duties” and “reached conclusions not capable of reasonable justification when the regard is had to the factual premises on which they were based”.

[10] All of the grounds above were set out in the applicant’s founding papers, but it provided no factual support on affidavit for the assertions mentioned in paragraph 7.4 above.

Failure to have a hearing to consider submissions in the rescission application

[11] In its founding affidavit the applicant asserted it as a matter of right that it should have been afforded an opportunity to make submissions on its rescission application in a hearing in accordance with Rule 31(9)(a), but in its replying affidavit sought to argue that the arbitrator decided the rescission application without having had sight of its replying affidavit.

[12] In so far as this second alternative factual basis, which was only advanced in reply, can properly be entertained, which it ought not to be, there is no reason to believe that the arbitrator did not have sight of the replying affidavit, given that it was deposed to nearly a fortnight before the rescission ruling was issued. Accordingly, there is no good reason to believe this ground is well founded, even if the court were to entertain it.

[13] In relation to the assertion that it ought to have been afforded a hearing to make submissions, Rule 31(9) of the Rules for the Conduct Of Proceedings before the CCMA (‘the CCMA rules’) does make provision for the enrolment of applications for hearing on a motion roll, on notification to the parties, once a replying affidavit has been filed or ought to have been filed. Subrule 31(10) provides that despite Rule 31, the Commission or a Commissioner “may determine an application in any manner it deems fit”.

[14] The applicant argued on the basis of the LAC decision in Kungwini Residential Estate & Adventure Sport Centre Ltd v Mhlongo NO & others[1] and the decision of this court in Silver Unicorn Trading 33 (Pty) Ltd v Commission for Conciliation, Mediation & Arbitration & others [2] that the arbitrator should not have decided the rescission application on the affidavits filed but should have set the matter down for oral submissions.

[15] In Kungwini’s case, the condonation application for the late referral of an unfair dismissal claim had been made without citing the case number, which is a requirement of all applications in terms of the CCMA rule 31(3)(b). The employer party had immediately objected and reserved its rights until such time as there was proper compliance with the application procedure. By the time the employee’s attorney responded with the details of the case number and put the employer on terms to file any opposing papers within 14 days, a Commissioner had already issued a condonation ruling in the employee’s favour. The day after receipt of the ruling, the employer party filed an application to rescind the ruling and the following day filed its opposing papers in the condonation application. Before the rescission application could be heard the hearing for the employee’s unfair dismissal claim was set down. The Commissioner conciliating the dismissal dispute took it upon himself to deal with the rescission application even though it was not before him and dismissed it.

[16] The court noted that the condonation application appeared to have been fatally defective in the first place because it gave the employer only five days to respond and that the Commissioner who issued the condonation ruling ought to have noticed that. The court’s then reasoned as follows:

“[13] Another point is that in terms of rule 31(9)(a), the commission must allocate a date for the hearing of an application, including an application for condonation, and in terms of rule 31(9)(b) the commission must notify the parties of the date, time and place of the hearing of the application. Rule 31(10) provides that: 'Despite this rule, the Commission or a commissioner may determine an application in any manner it deems fit.'

However, I do not think that this provision can possibly be relied upon to dispense with the giving of notice to the parties, or at least to the applicant if the respondent is in default, of the commissioner's intention to hear a matter. For a commissioner to hear and determine an application for condonation without notice to the parties would be to ignore the audi alteram partem rule. There is no indication in the papers that any such notice was given to either the third respondent, who had applied for condonation, or the appellant. Although it may be argued that it was not necessary to give notice to the appellant, since, although it was a party as contemplated by rule 31, it had not given notice of intention to oppose the application (leaving aside annexure A), the same cannot be said about notice to the third respondent. Had notice of the intention to hear the condonation application been given to the third respondent's legal representative, Hawyes, he would surely have had an obligation to call annexure A [which contained the defective notice of the time to file an opposing affidavit][3] to the attention of the CCMA or at least to advise the appellant's attorneys of the set down of the application. Had that occurred it is unlikely that the condonation ruling would have been made in the absence of both parties and the huge wastage of time and effort which has occurred in this matter would have been avoided.

… [14] As it happens, the appellant did not, at the time, seek to have the condonation ruling set aside on review and did not appeal against it. Instead it sought to rescind the condonation ruling.

[15] …

[16] In my view a ruling on an application for condonation of the failure to refer a dispute within the 30 days … is a ruling

contemplated by s 144 of the Act which may be rescinded….

[17] The words 'erroneously sought or erroneously granted in the absence of a party affected thereby' have been considered in a number of cases …. In the case of Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape) 2003 (6) SA 1 (SCA) at 9I-10B the Supreme Court of Appeal referred to, but did not resolve the conflicting approaches of the courts to the question as to whether or not the 'error' must be patent from the record or whether reference may be had to external evidence of the 'error'.

[18] In my view, however, it does not matter, in the present case, which approach is adopted. It was apparent from the record that rule 31(3)(e) had not been complied with and it must have appeared from the record that notice of set down of the condonation application had not been given to either of the parties. In the circumstances Commissioner Dadabhai ought not to have considered and determined the condonation application, at least not without addressing the question of the short service and the absence of notice to the parties. Cf Nyingwa v Moolman NO 1993 (2) SA 508 (Tk) at 510D-G.

[19] I have already referred to rule 31(9) which requires the commission to allocate a date for the hearing of an application and to notify the parties of that date. It was common cause that that was not done in the case of the rescission application in this matter. Instead the commissioner, in the face of an objection by the applicant, and apparently at the instance of Hawyes, took it upon himself to use the occasion for which the conciliation proceedings had been set down (incorrectly, in the light of the rescission application), in order to hear and determine the rescission application. In my view, the fact that the commissioner proceeded to hear the rescission application, in the face of the objection by the appellant and without allowing his legal representative time to prepare, was an irregularity which, in itself, warranted the review and setting aside of the rescission ruling. Even if I am wrong, however, and rule 31(10) empowered the commissioner to hear and determine the application which had not been set down, I am of the view that the commissioner, in deciding the rescission application against the appellant, misdirected himself in certain material respects and that his reasons did not justify his decision.”[4]

(emphasis added)

[17] In Unicorn Trading the hearing was postponed pending the appointment of a senior Commissioner to hear the matter. Despite this, a default arbitration award was issued and the employer applied for rescission thereof. However the application was dismissed without affording the employer a hearing because the application had been out of time and was not accompanied by a condonation application. On review, the court held that the arbitrator, in accordance with the established practice of the CCMA, should have informed the applicant that its application was late and that therefore it should apply for condonation. The court also held that in not convening a hearing and giving the company an opportunity to show cause why its brief delay and failure to apply for condonation did not justify dismissing the application, the Commissioner had ignored the principles of natural justice. Shortly after that the Commissioner had dismissed the rescission application, an application for condonation for the late filing thereof was filed by the applicant. The court held that the Commissioner had been rigid and inflexible in applying CCMA rule 32 in terms of which a party must file an application for rescission within 14 days of the award or ruling in question being made.

[18] In the circumstances, when realising that no condonation application had been filed and taking into account that the delay was very short and the CCMA had still not made to decision on the appointment of a senior Commissioner, the Commissioner should have notified the applicant of his contemplated decision and given it the opportunity to show why the rescission application should not be dismissed.[5]

[19] It is certainly arguable in the light of both these cases that both courts in affirming the need for a hearing in terms of Rule 31(9) based on the facts of those cases. In both instances, the rulings that were made ought not to have been made. In Kungwini the parties were afforded a hearing on the rescission application but without warning and without the chance to prepare for it. Moreover this impromptu hearing took place in the course of conciliation proceedings which had been prematurely scheduled, and the employer party had objected to having to deal with the rescission application unprepared. In Unicorn Trading the court also felt that if a hearing had been convened in terms of the rule, the applicant would have had an opportunity to deal with the issue of condonation which it did not have because of the rigid application of Rule 32. Equally, though if the applicant had simply been given the opportunity to file a condonation application and both applications had been ripe for determination, any additional submissions by way of legal argument could have been dealt with by way of written submissions in a case where both parties are legally represented, and it could hardly be said that the mere fact a hearing was not convened, would have deprived them of a right to audi alterem partem. In short, I am not persuaded that the authorities referred to, necessarily mean that Rule 31(10) in appropriate circumstances cannot be invoked to determine applications on the papers, if there is no reason to believe that the parties have not had a fair opportunity to ventilate their respective positions and have done so in their papers.

[20] Be that as it may, I will assume for the purposes of this judgment that the decision in Kungwini does at least mean that the second respondent, who was dealing with parties who were both represented, at least ought to have advised them that unless there was good reason to convene a hearing she would decide the matter on the affidavits and any written submissions they might wish to make. For this reason only the rescission ruling is set aside.

[21] For the sake of completeness and because it is also of relevance to the re-consideration of the ruling, I should mention that I would dismiss the third ground of review since it is trite that a party cannot make out its case in reply. Moreover, in this instance, the applicant had already had the benefit of having heard the third respondent’s oral testimony on why she believed she had been constructively dismissed so it hardly needed to wait for her answering affidavit before it knew what she might say on that

issue.

Re-assessment of the rescission application

[22] Since the rescission ruling will be set aside it needs to be reconsidered. The parties have both made submissions on the merits of the ruling and the court has the record in the form of what was before the second respondent, there is no reason for referring it back to another commissioner to consider. In Shoprite Checkers (Pty) Ltd v Commission For Conciliation, Mediation & Arbitration & Others [6] the LAC restated the requirements 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 & other (2001) 22 ILJ 1173 (LC); [2001] 5 BLLR 539 (LC) at 545 para 16 it was stated:

'An applicant 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 bona fide defence to the plaintiff's claims.'

[36] In MM Steel Construction CC v Steel Engineering & Allied Workers Union of SA & others (1994) 15 ILJ 1310 (LAC) at 1311I-1312A 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.'”[7]

[23] The applicant agrees that the matter was postponed by agreement of both parties and the commissioner to allow it to prepare for cross examination of the third respondent and to prepare its case. The following day it received the notice of set down and believed, ‘as a reasonable man’ that despite the agreement, case management at the CCMA had decided to change the date “for whatever reason”. It apparently accepted this change without demur and ‘made preparations to appear’ on the new date.

[24] Then there is a question of what transpired on the day when proceedings did resume as per the agreement of the parties, but then supposedly much to the applicant’s surprise in view of the new date in the ‘official’ notice of set down. According to the Human Resouces Manager, Brown, he claimed claims that the applicant’s representative, Lace, phoned the arbitrator “sometime after 10h00” and she accused the applicant of being in default. This was after calls ‘during the course of the morning’ from the commissioner and the second respondent’s attorney querying the applicant’s whereabouts.

[25] When Mr A Lace (‘Lace’), the employer’s representative from the employer’s organisation, did speak to the arbitrator, he tried to reason with her that the dates for the part heard had been changed as per the official notice of set down, but she would not accept his explanation that the applicant was not in wilful default for this reason. The arbitrator then ‘threatened Lace that she was going to issue a default award’ against the applicant for its non-attendance. According to Brown, Lace pleaded with the arbitrator to postpone the matter, but despite his pleas she issued the default award.

[26] The second respondent pointed out in her replying affidavit that the arbitrator actually recorded in a directive that the matter was part heard and that they agreed to resume the process at 09h00 on 10 February 2012. Neither she nor her attorney received the ‘official’ notice of set down. When they attended on that day, the arbitrator asked her attorney Ms T Ngakane (‘Ngakane’) to phone Lace, but he did not answer and she left a message for him to call her urgently because none of the applicant’s representatives had arrived. At this juncture it must be mentioned that the regional manager, Ms L Capazario (‘Capazario’) and Ms A Mclellan (‘Mclellan’) the regional and store managers of the applicant respectively, attended the first day of the arbitration proceedings together with Lace.

[27] After another half hour passed, the arbitrator asked Ngakane to phone another of the applicant’s representatives. She phoned Capazario who said, as heard on Ngakane’s speakerphone, that she could not talk about the matter and Ngakane should talk to the HR department but said she would phone back. When she did someone named Barbara from the Human Resources department spoke and then passed the phone on to a colleague ‘Marika’ who spoke to Ngakane. Marika undertook to speak with the employer’s

organisation and at around 11h00 someone from the employer’s organisation phoned to find out what was going on. He undertook to try and trace Lace and asked the arbitrator for more time before she resumed the proceedings. About half an hour after that Lace called and advised the arbitrator of the notice of set down. The arbitrator reminded Lace of the agreement and her ruling. The second respondent contends the arbitrator also reminded him that she had warned that it would proceed whether parties received notice or not, but said she would give him more time to attend the hearing and finalise the matter, but Lace advised her the applicant was not ready and was preparing for the hearing on 28 February.

[28] The arbitrator then reminded him that the matter had been postponed to 10 February at his insistence and that if the applicant failed to appear she would hear the matter on a default basis having waited until 11h30 already. Lace insisted the employer could not proceed and relied on the notice of set down. The arbitrator then advised that she would proceed on a default basis. The applicant claims that the arbitrator merely said she had a good mind to proceed with the matter on a default basis and Lace had pleaded with her to postpone it. The applicant also claims that Lace said it was too late in the day to obtain his witnesses. It should be mentioned that though the applicant disputes the second respondent’s account of these telephone conversations as she was not doing the speaking, she did mention that Ngakane put her phone on speakerphone during the second call, so it is not unlikely

this practice continued. In any event, the deponent to both the applicant’s affidavits was Brown who was not present either on 17 January or during any of the discussions on 10 February 2012, and no confirmatory affidavit of the applicant’s version by Lace was filed, which ought to have been done in the circumstances, nor was his version even confirmed in these proceedings.

[29] There is no evidence the applicant showed any willingness to try and attend the proceedings, nor was there any request made to the arbitrator to stand the matter down for a while so that a representative could appear at the proceedings and argue for a postponement. Its response was premised on the assumption that it was free of any obligations to attend. The applicant adopted the attitude that the patently erroneous notice of set down indemnified it from attending, however absurd it was to take the notice at face value. Despite there being about three weeks before the agreed date and over a month before the date on the notice of set down, the

applicant sedulously avoiding taking any steps to clarify what was the correct position, which any reasonable employer in its position

would have done.

[30] The applicant cannot plausibly argue that it was reasonable for it to assume that all those arrangements had simply fallen away solely because of the notice it received. It is interesting to note that the applicant offers no explanation why it just accepted the notice as correct given that it contradicted what had been clearly agreed and ruled upon the previous day. Even more surprising is that it saw nothing odd about another arbitrator’s name appearing on the notice of set down despite the matter being part heard. It did not make so much as one phone call either to the CCMA, the arbitrator or to the third respondent’s attorneys

to try clarify and, if possible, rectify something so at odds with the agreement and ruling and the reality that the matter was part heard.

[31] Any reasonable person in their position would have made some enquiries about the apparent change of plan, particularly when the arbitrator had been quite clear about the agreed arrangement. In these circumstances, it cannot be said that it could have bona fide believed that the matter was now set down on a different day before a different arbitrator.

[32] On whether the respondent placed before the arbitrator anything in its affidavit that would persuade her it had a bona fide defence, all the applicant said in its founding affidavit was that it had good prospects of success because it would call witnesses to refute the allegations made by the second respondent at the first hearing on 17 January 2012. Despite expressly referring to the second respondent’s evidence, it was only in its replying affidavit that the applicant gave some indication what its response to some of the applicant’s claims would be. Consequently, the second respondent in her answering affidavit was not in a position to answer its contentions why it asserted it had ‘good prospects of success’.

[33] In the circumstances, I believe the applicant did not act in good faith in not attending the hearing on 10 February 2012 and it did not provide any indication of its prospects of success except in reply, which cannot be relied on for that reason. As such the applicant failed to give a satisfactory explanation for its default and did not demonstrate prospects of success. Consequently, the rescission application stands to be dismissed either on the first leg of the test alone or on both. Thus, even on a reconsideration of the rescission application in the light of the submissions made in the course of the review, which allowed the parties an opportunity to ventilate the merits of the rescission application fully, I am satisfied that the application should be dismissed.

Costs

[34] The third respondent has had to defend this application in order to preserve the default award in her favour, and her opposition was more than justified. In the circumstances, I believe fairness and equity demand that she should not have to meet the costs incurred in doing so, even though the rescission ruling is set aside.

Order

[35] The rescission ruling of the second respondent dated 10 April 2012 under case number GAJB 27918-11 is reviewed and set aside for not advising the parties that she intended to make a decision on their affidavits without affording them an opportunity to make submissions in argument.

[36] On a fresh consideration of the application to rescind the default arbitration award of the second respondent issued on 21 February 2012, under case number GAJB 27918-11 the application is dismissed for the reasons stated above.

[37] The applicant must pay the third respondent’s costs.

_______________________

R LAGRANGE, J

Judge of the Labour Court of South Africa

APPEARANCES

For the Applicant:

L De Wet

Instructed by: Fluxmans

Inc

For the Third Respondent: L Jean-Pierre of Fasken Martineau

[1] (2006) 27 ILJ 953 (LAC).

[2] (2011) 32 ILJ 1760 (LC)

[3] Contents of square brackets inserted for clarification.

[4] At 962-3.

[5] At 1765, para [16].

[6] (2007) 28 ILJ 2246 (LAC)

[7] At 2257