Furniture Bargaining Council v Kekakna N.O and Others (JR2396/2019) [2022] ZALCJHB 344 (5 December 2022)

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case no: JR 2396/2019

In the matter between:

FURNITURE BARGAINING COUNCIL Applicant

and

PRINCE KEKAKNA N.O First Respondent

COMMISSION FOR CONCILIATION,

MEDIATION AND ARBITRATION Second

Respondent

PLAZA BOARD CENTRES Third

Respondent

Enrolled: 23 November 2022

Delivered: 5 December 2022

This judgment was handed down electronically by consent of the parties’ representatives by circulation to them by email. The date for hand-down is deemed to be 5 December 2022.

JUDGMENT

PRINSLOO, J

Introduction

[1] The Applicant is a bargaining council, registered in accordance with the provisions of section 29 of the Labour Relations Act[1] (LRA) and its registered scope is the furniture manufacturing industry.

[2] The Third Respondent is six businesses carrying on business under the name and style of Plaza Board Centre Randfontein, Vereeniging, Lenasia, Bloemfontein, Krugersdorp and Rustenburg. The Respondent

advertises themselves as “The Carpentry Board Specialists” and they offer boards, cabinet fittings and accessories to their clients, as well as the service of cutting, edging and wrapping.

[3] The Respondent sells boards to their customers, also boards which are cut, edged and drilled according to the customer’s specifications. The Respondent has a production department at which the boards they retain in their warehouses are cut, edged and drilled according to the requirements of their customers.

[4] The Respondent was registered with the Applicant for many years, but recently the Respondent contended that their primary business is the wholesale and retail of boards and that the cutting and edging thereof is a subsidiary service to the main business. The Respondent’s case is that they do not manufacture furniture components but are mainly involved in the retail and wholesale of boards and accessories. As a result, the Respondent sought to deregister from the Applicant, contending that they do not fall under its registered scope and demarcation disputes were referred to the Second Respondent (CCMA), which disputes were subsequently consolidated.

[5] The Respondent’s case was that the employer and the employees are associated for the common purpose of wholesale and retail, with the cutting and edging service done by the employees, being ancillary

to that common purpose. The Applicant’s case on the other hand was that the purpose for which the Respondent and their employees

were associated, is the provision of furniture components to their clients, the majority of which required cutting and edging services

and consequently that the Respondent’s sale of products leverages off those services.

[6] The matter was set down for arbitration and five witnesses testified.

[7] The First Respondent (arbitrator) issued an award wherein he found that the Applicant has no jurisdiction over the Respondent and that the Applicant must deregister the Respondent.

[8] The Applicant seeks to review and set aside the aforesaid arbitration award.

The evidence adduced

[9] In order to assess the arbitrator’s findings and the grounds for review raised by the Applicant, it is necessary to consider the evidence adduced at the arbitration proceedings.

[10] The Respondent’s case was that the cutting, edging and potholing division, better known as the manufacturing division, is ancillary to the main business and that the main focus of the business was wholesale and retail. The Applicant’s case was that the manufacturing division is not ancillary to the main business, but that it is a service the majority of the Respondent’s customers wanted and it is the majority of the turnover, therefore the Respondent is an entity that manufactures furniture components. The Applicant submitted that the Respondent’s entire business falls under the Applicant, because of the predominance of its furniture manufacturing to its business. In the alternative, the Applicant sought demarcation of the division of the Respondent which relates to manufacturing, as that division is not insignificant and is a component on its own.

[11] The arbitrator had to decide whether the Respondent’s businesses fall within the registered scope of the Applicant.

The Applicant’s case

[12] The Applicant subpoenaed three witnesses. The first was Mr Khumalo, an employee of the Respondent. He testified that he has been employed by the Respondent at its Vereeniging branch for six years and his job title is ‘operator’. He does the cutting and edging of boards, which are components for kitchens. He explained that a board

has a length of between 2,4 and 2,7 metres and is between 1,2 and 1,8 metres wide. He uses a beam saw to cut the board in the sizes

required by the customers. After cutting, the boards go to edging and potholes (which is drilling), if so required by the customer. In the Vereeniging branch where Mr Khumalo works, there are two panel saws, three beam saws and three pothole machines.

[13] Mr Khumalo testified that the production department makes components for furniture. They work four shifts a day (06:00 – 15:00, 08:00 – 17:00, 09:00 – 18:00, 18:00 – 06:00) in the production department, doing cutting, edging, potholes and masonite. Mr Khumalo testified that the Respondent’s main business was cutting and edging, that is what they were doing most of the time and that is why there are four shifts to keep the machines running and not fall behind with the cutting and edging. He testified that most of the Respondent’s employees were working in the production department. The production department was the only department that operated 24 hours a day.

[14] Mr Khumalo testified that most of the Respondent’s customers are businesses that make kitchens and furniture. He knows this because when they are done, the customers would show them pictures of what they have made with the products they purchased.

[15] Mr Khumalo testified that they do the cutting, edging and potholing of boards that were bought at the Respondent as well as those that were bought elsewhere and the customer would pay for the service of cutting, edging or potholing.

[16] Mr Mahalepha testified that he is employed by the Respondent as a panel saw operator for five years at the Lenasia branch. At the Lenasia branch, there is a beam saw, a panel saw and an edging machine. He does the cutting of the boards on a daily basis, using the panel saw. The boards that he cut are from the Respondent and bought by customers, who specify the sizes and measurements they want. After cutting, the board is sent for edging and potholing, if that is what the customer required. If all of that is done, the customer will collect the order. Mr Mahalepha testified that the product is mostly used for kitchen units, wardrobes and for shelving in retail stores. Carpenters are customers of the Respondent and he knows them because he had worked with them for a long time. He had been doing work with kitchen units for the past 20 years and he knows what the product will be used for when he receives an order for cutting.

[17] Mr Mahalepha testified that the majority or bulk of the work done by the Respondent is cutting and edging.

[18] Mr Mokgoro testified that he is employed by the Respondent as an assistant operator, machine edging, for two years at the Rustenburg branch. He testified that his job was to edge the board after it was cut. At the Rustenburg branch, there is a beam saw, a panel saw and two edging machines. At the production department, they do cutting and edging most of the time and they do potholing as well.

[19] Mr Mokgoro testified that once the board has been cut and edged, it is used for wardrobe doors, TV stands and kitchen units. He knew what the product was used for because prior to joining the Respondent, Mr Mokgoro worked with a carpenter and he knows the sizes and what they are used for. He testified that the Respondent has carpenters as customers. He knows what the products are used for as the customers show them pictures afterwards and he knows that edged wood is used for the kitchen, wardrobes and TV stands.

The Respondent’s case

[20] Mr Gaffoor, the Respondent’s general manager of operations testified that the Respondent’s core business was the retail of boards and cabinet fittings. Each branch of the Respondent has a sales, accessories, warehousing, despatch, production and administration division.

[21] Mr Gaffoor referred to the scope of the Applicant which included “the industry in which employers and their employees are associated for the manufacture, either in whole or as a complete unit or in part as a component or components, of all types of furniture and bedding as well as upholstery and/or re-upholstery…” and testified that the Respondent never manufactured any furniture of a component of furniture.

[22] He explained that in the production division, the employees would take a board and cut it into the size determined by the customer and add edge bending, based on the customer’s requirement. The Respondent also sells edge bending to customers. Mr Gaffoor was unable to explain why the Respondent’s branches were differently registered with the Applicant, with the main manufacturing activity being ‘kitchen built-in cupboards/bars’ and ‘furniture components’.

[23] Mr Gaffoor referred to pictures of inter alia cabinets and a bed, which were pictures of the Respondent’s showrooms. He explained that the showrooms were promoting the products the Respondent keeps and to showcase the products that are available for customers to buy. He explained that the Respondent does not manufacture the products in the showrooms for customers, it is merely to show the customers what they can build and to give them ideas.

[24] Customers are charged an additional fee for cutting, edging and potholing of the boards as these are additional services that the Respondent provides. The Respondent does not manufacture kitchen units.

[25] In cross-examination, Mr Gaffoor explained that the boards the Respondent sells to customers are not manufactured by them, but it is bought from local suppliers. The Respondent sells full board sheets to customers and Mr Gaffoor explained that there are two types of customers – one would buy the complete board, take it and do what he wants with it, and the other would buy the full board and request the Respondent to cut it according to specific dimensions and for that, the customer pays an additional cutting charge. When the customer requires edging, it is done at an additional charge.

[26] Mr Gaffoor explained that the Respondent also does ‘potting’, which entails the drilling of a hole in the board, which is used to insert a couch leg or a small leg and for hinges.

[27] It was put to Mr Gaffoor that the majority of the Respondent’s customer base was customers who would not just buy a board and leave, but who would buy a board and want some cutting, edging or potting to be done to it. Mr Gaffoor responded that he did not know the statistics, but it was a percentage. He was not prepared to concede that it was the majority of the customers but conceded that it was a fair share of the business.

[28] Mr Gaffoor conceded that the Respondent offers a complete carpentry service as part of their advertising. It was put to him that when a customer who wants a kitchen cabinet walks into the store and gives the measurements of what he or she wants to the Respondent and specifies how it is to be cut and edged, the moment the Respondent does the cutting and edging for the customer, it is to that extent manufacturing a component of the customer’s kitchen cupboard, thus manufacturing a furniture component. Mr Gaffoor testified that the Respondent did not view it that way because they do not get involved in identifying where the component is to be used. He however accepted that when it is part of a kitchen, it is a component.

[29] Mr Gaffoor conceded that a fair share of the Respondent’s business was manufacturing components of furniture and he accepted that the Respondent manufactured furniture components to some extent.

[30] In cross-examination, Mr Gaffoor accepted that each branch of the Respondent has an edge bander, which is the machine that puts the edge on the side, a beam saw to cut large boards into smaller pieces, a compressor to run the said machines, forklifts to move stock around and a pothole machine, which drills the holes, a panel saw and dust extractor. It was put to him that all these assets, except the forklift which may be used for other purposes, are involved in the manufacturing of components and Mr Gaffoor agreed with that.

[31] It was further put to Mr Gaffoor that some employees spend their entire day cutting and edging boards from cutting lists supplied to them. Mr Gaffoor did not dispute this but disputed that that was the position for the majority of the Respondent’s staff. He explained that two people are employed per machine, being an operator and an assistant and thus there are eight employees per production department. He undertook to provide a staff list for each division.

[32] Mr Dawood, the Respondent’s accountant testified about a breakdown of invoices and credit notes in respect of certain months for some of the branches. He explained that the transactions that were processed for a certain month were broken down and the invoices were divided between what was a normal sale and what was cutting and edging on the invoice. The total of the invoice indicated the value of the sales and the value of the cutting and edging.

[33] Mr Dawood explained that the sales comprised 96,4% and cutting and edging a total of 3,5% of the Respondent’s total sales. It is evident from Mr Dawood’s cross-examination that the Applicant’s calculation of the percentages was radically different from the Respondent’s and that according to the Applicant, cutting and edging constitutes 60% of the Respondent’s business and the sales constitute 40%. The method to calculate the percentages differed. The Respondent split the sales and the sum charged for the labour to do the cutting, edging and potholing to calculate the percentage. The Applicant on the other hand considered whether a customer bought a board and left with it, or whether the customer bought a board which he or she required to be cut and edged, which is no longer just a board, but a customised product, in which case the

entire invoice should be allocated to the production department.

[34] Based on the Applicant’s method of calculation, cutting and edging constitute more than 50% of the Respondent’s business and not the mere 4%, as calculated by the Respondent. Mr Dawood was unable to say what percentage of customers buy boards and left and what percentage required cutting and edging. The Applicant’s case was that more than 50% of customers required cutting and edging and that the production department was a significant part of the Respondent’s business.

The arbitration award

[35] The arbitrator recorded that the issue he was required to decide was whether the Respondent’s business activities or a portion thereof fall within the jurisdiction of the Applicant. The dispute concerned the Respondent’s claim that its operations fell outside the registered scope of the Applicant and that it should be deregistered from the Applicant.

[36] The Applicant wanted the production department to be demarcated separately and to remain registered.

[37] In his analysis, the arbitrator accepted that the Respondent’s sales, accessories, warehousing and administration departments were not involved in the furniture-making industry. The issue was whether the production department was engaged in the furniture-making industry. The question was whether the production department was separate and should as such remain registered with the Applicant or whether it was merely ancillary to the Respondent’s business.

[38] The arbitrator found that he had to determine the Applicant’s industry and he considered the Applicant’s registered scope. He referred to Coin Security (Pty) Ltd v CCMA and others[2] (Coin Security) and held that he should determine the business of the enterprise and that he should not be distracted by the actual work done by the employees, as the work done by the employees is irrelevant.

[39] The arbitrator found that it was common cause that the Respondent’s main activity was the sale of board and accessories. He held that the character of the Respondent’s industry was retail and that it offers cutting, edging and potholing to the customers to improve sales. According to the arbitrator, 70% of the Respondent’s turnover is from sales.

[40] The arbitrator identified the question to be determined as whether the production department was a distinct and separate activity or whether it was ancillary to the Respondent’s sales activity. He found that the cutting, edging and potholing were mainly for existing customers of the Respondent, the production department was about 8% of the Respondent’s turnover, the production department was subsidized, was maintained to improve sales ad was not a viable separate activity.

[41] The arbitrator concluded that the cutting edging and potholing was for customers who purchased boards, it was an ancillary activity which accounted for less than 10% of the Respondent’s turnover, it was insignificant and not a separate activity from the sale of boards and accessories.

[42] The arbitrator found that the Applicant has no jurisdiction over the Respondent and that it must be deregistered.

The applicable principles

[43] Section 62(1) of the LRA confers jurisdiction on the Commission for Conciliation, Mediation and Arbitration (CCMA) to determine, amongst other things, whether any employer is engaged in any sector or area, and whether the terms of any collective agreement is binding on any employer. The determination is to be made by way of arbitration proceedings conducted in terms of section 138.

[44] The starting point remains, as established by Greatex Knitwear (Pty) Ltd v Viljoen and others[3] where it was held that:

‘When the tribunal is called upon to determine whether a class of employers is engaged in a particular industry it is faced with a problem similar to that with which the Courts have often been faced, viz. to decide whether a particular employer is one of those other employers, not being parties to an agreement, engaged in a particular industry, upon which the Minister has declared an agreement to be binding (cf. sec. 48 (2) of the 1937 Act; sec. 48 (1) (b) of the 1956 Act). The cases seem to show that the matter is approached along the following lines:

(a) The meaning of 'industry', as used in the agreement, is determined. This usually requires the interpretation of some definition appearing in the agreement. It seems that a restrictive interpretation is often applied, cutting down the scope of the general words used in the definition. Although not specifically invoked, the mode of interpretation appears to be that applied in Venter v R., 1907 T.S. 915 (cf. Rex v Scapszak and Others, 1929 T.P.D. 980; Rex v Ngcobo, 1936 NPD 408; R v Goss, 1957 (2) SA 107 (T) at p. 110).

(b) The activities of the employer (personal and by means of his employees) are determined.

(c) The activities and the definition (as interpreted) are now compared. If none of the activities fall under the definition, caedit quaestio; if some of the activities fall under the definition, a further question arises: are they separate from or ancillary to his other activities? If they are separate he is engaged in the industry (unless these activities are merely casual or insignificant – Rex v C.T.C. Bazaars (S.A.) Ltd., 1943 CPD 334); if they are ancillary to his other activities, he is not engaged in the industry (unless these ancillary activities are of such magnitude that it can fairly be said that he is engaged in the industry within the meaning of the definition A.G. Tvl v Moores (S.A.) (Pty.) Ltd., 1957 (1) SA 190(AD)).

Inherent in this approach is the possibility that an employer may be such in more than one industry (Rex v Giesker and Giesker, 1947 (4) SA 561 (AD) at p. 566), despite the difficulties that may arise from such a situation (cf. Rex v Auto-Parts (Pty.), Ltd. and Another, 1948 (3) SA 641 (T) at p. 648).

If the aforegoing is a correct reflection of the manner in which the Courts have approached the problem whether an employer is engaged in a particular industry, it is plain that the problem is only resolved by reference inter alia to the activities of the employer. Whether one uses the word ‘activities’ or ‘work’ seems merely a question of preference of language. As in the case of an individual it cannot be determined whether he is engaged in a particular industry without reference to his work, so also it cannot be determined in the case of a class of persons whether it is engaged in a particular industry without reference to the work it does. Whether that work is to be called merely 'work' or a class of work seems, again, to depend on linguistic preference or the degree of circumscription.’

[45] A demarcation extends beyond a comparative exercise in the form of a determination of the extent to which a particular business’s

activities match up against a definition of a sector or industry. In National Union of Metalworkers of SA v Commission for Conciliation, Mediation and Arbitration and others[4] (NUMSA) the Labour Appeal Court (LAC) held that:

‘The notion that, for the practical purposes of regulating employment conditions in economic activities, by assigning some enterprises to one or other bargaining council, proceeds from the foundational idea that 'grouping' like with more or less alike is a sensible pragmatic approach. Central thereto is the attempt, by the use of words, to describe the supposedly distinguishable economic activities in definitions which are almost always complex, wordy and often hair-splitting. The task aims at describing the characteristics or attributes of industrial activities. Then the characteristics or attributes of a business enterprise are described and the two are compared. Just as it is not objectively possible to determine when night ends and day begins, and a practical answer depends on what you want to pinpoint that moment for, so it is with demarcation of so-called distinct 'industries'.’

[46] Demarcations often involve considerations of fact, law and social policy[5]. As the LAC has made clear, the exercise of demarcation goes beyond the meaning of words in the defined scope of a bargaining council. In NUMSA,[6] the LAC stated:

‘Another dimension of the exercise that warrants acknowledgment is that the exercise is as much one of creation is of adjudication. The meaning of words of the defined scope of a bargaining council can indeed be adjudicated, but that is not always enough. The management of the reality that economic activities within the invented sectors, sometimes differently described, often overlap and, cannot therefore, in logic, be truly separated, means that a pragmatic policy decision to locate a given enterprise on one or other side of an imaginary fence is an inescapable aspect of the task of demarcation. It resembles, in some respects, an interest arbitration. What is sought is what may usefully be called the ‘best fit’ - an idea that defies precision and is axiomatically fact-specific.’

[47] In Intasol Tailings (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and others[7] (Intasol), the Court held that:

‘A s 62 demarcation exercise is thus not an adversarial contest in the ordinary sense. The process has a sui generis character, and presupposes a broader investigative role by the arbitrator (see SA Municipal Workers Union v Syntell (Pty) Ltd & others (2014) 35 ILJ 3059 (LAC)). It requires the arbitrator to make factual findings as to the nature of the business or activities concerned and then to group 'like with more or less like' to determine the 'best fit’.’

[48] In Bargaining Council for the Civil Engineering Industry v Commission for Conciliation, Mediation and Arbitration and others,[8] the LAC upheld the Intasol judgment and held that:

‘The award of the commissioner was held by Van Niekerk J to be vitiated by irregularities. In our view, this was a correct finding. In the appeal, counsel for the BC was rightly constrained to defend the award, arguing that the critical question ought not to be the fumbling of the commissioner, but whether he produced a reasonable answer to the question. Reasonableness in a demarcation enquiry is of a particular kind because of the ‘creative potential’ in such disputes involving the policy choices and balancing aspects of the evaluation. The thoroughness of the enquiry including a proper analysis of the relevant material, can colour the choices made. Where the exercise is ineptly carried out, the outcome is tarnished too.’

[49] I have to deal with the grounds for review within the context of the test that this Court must apply in deciding whether the arbitrator's decision is reviewable. The test has been set out in Sidumo and another v Rustenburg Platinum Mines Ltd and others[9] (Sidumo) as whether the decision reached by the commissioner is one that a reasonable decision maker could not reach. The Constitutional Court held that the arbitrator's conclusion must fall within a range of decisions that a reasonable decision maker could make.

[50] The LAC in Gold Fields Mining SA (Pty) Ltd (Kloof Gold Mine) v Commission for Conciliation, Mediation and Arbitration and others[10] (Gold Fields) affirmed the test to be applied in review proceedings and held that:

‘In short: A reviewing court must ascertain whether the arbitrator considered the principal issue before him/her; evaluated the facts

presented at the hearing and came to a conclusion that is reasonable.’

[51] The review Court must consider the totality of the evidence and decide whether the decision made by the arbitrator is one that a reasonable decision maker could make, based on the evidence adduced[11].

The grounds for review and analysis

[52] The Applicant raised four main grounds for review, which will be considered in turn. The gist of the Applicant’s complaint is the manner in which the arbitrator dealt with the evidence presented. The Applicant’s case is that the conclusion reached by the arbitrator was unreasonable as he failed to consider the totality of all the evidence presented.

[53] The first ground for review relates to the arbitrator’s material misdirection in that his point of departure was that it was undisputed that the Respondent’s main activity was the sale of boards and accessories. This was the starting point for the arbitrator to determine the Applicant’s scope and the Respondent’s main activities.

[54] In my view, there is merit in this ground for review.

[55] It is evident that the arbitrator accepted that it was common cause that the Respondent’s main activity was the sale of boards and accessories and as such, he found that the Respondent’s business is the retail industry. This is indeed a serious misdirection, as it was wrong and ignored the fact that the Applicant specifically disputed that the Respondent’s main business was the sale of boards and accessories. The Applicant’s case was that the Respondent’s core business was the manufacturing of furniture components.

[56] It is evident from the transcribed record that the Applicant presented a case to the extent that a significant part of the Respondent’s business was the manufacturing of furniture components. The three witnesses who were called by the Applicant, all testified that the production department manufactured furniture components and even Mr Gaffoor conceded that it was a ‘fair share’ of the Respondent’s business.

[57] The arbitrator misdirected himself when he found that it was undisputed that the Respondent’s main activity was the sale of boards and accessories and as a result of this misdirection, he did not consider relevant and material evidence.

[58] This goes to another ground for review, namely that the arbitrator failed to take material evidence into account when he came to the conclusion that the production department was an ancillary part of the Respondent’s business because it serviced existing customers, was subsidized, was responsible for only 8% of the Respondent’s turnover, was not a viable service entity and was meant to improve sales.

[59] It is evident from the analysis and the findings in the arbitration award that the arbitrator ignored and disregarded relevant evidence which demonstrated the materiality of the production department. Evidence such as the fact that the production department operated 24 hour shifts and was the only department to do so, that the majority of the Respondent’s assets were located in the production department, that the Respondent admitted having a separate production department, that the majority of the Respondent’s employees were engaged in the production department, that cutting and edging services were marketed as a key component of the Respondent’s business and the fact that the Respondent has two types of customers, the one type requiring the product purchased to be processed through the production department, where the product is changed to a furniture component was not at all considered by the arbitrator.

[60] The aforesaid evidence was critical, relevant and material in considering the question whether the Respondent’s production department was a distinct and separate activity or whether it was ancillary to the Respondent’s sales activity.

[61] In ignoring the aforesaid relevant and material evidence, the arbitrator committed a gross irregularity, which ultimately distorted his findings.

[62] The Applicant also raised as a ground for review the arbitrator’s failure to resolve the dispute arising from the analysis of the invoices. In my view, there is merit in this ground for review.

[63] It is evident from the testimony as well as documentary evidence presented that a material part of the arbitration dealt with the presentation and comparison of the parties’ analysis of the Respondent’s invoices. The methods used in each of the party’s analysis and what the information demonstrated about the materiality or ancillary nature of the Respondent’s production department, were in dispute.

[64] The Respondent’s calculation was that sales were 96% and production 4%, and the Applicant’s calculation was that sales were 40% and production 60% of the Respondent’s business. The arbitrator did not resolve the dispute arising from the different approaches taken in respect of the analysis of the invoices, nor did he deal with it. Instead, the arbitrator recorded that 70% of the Respondent’s turnover was from sales and that the production department was about 8% of the Respondent’s turnover.

[65] It is evident from the evidence placed before the arbitrator, that there was no basis, on either party’s version, for the percentages he accepted and recorded in the arbitration award.

[66] This was a material issue the arbitrator never resolved and instead he made a finding not supported by the evidence.

[67] The Applicant submitted that the arbitrator’s failure to deal with this dispute meant that he had failed to take into account material evidence, he failed to resolve a material dispute, which deprived the Applicant of a fair hearing.

[68] Lastly, during the arbitration proceedings, the arbitrator questioned Mr Gaffoor about the benefit that the Respondent’s employees were going to derive from deregistration and he stated that one of the issues he had to consider was whether the employees are better off in the bargaining council or outside of the bargaining council.

[69] In his analysis, the arbitrator held that registration with the Applicant adds no value to the employees and that deregistration will benefit the employees because of reduced deductions.

[70] It is evident from the aforesaid that the arbitrator believed that it was relevant to consider whether registration with the Applicant was beneficial to the Respondent’s employees. The arbitrator’s understanding of the issues he had to decide on was wrong as the benefit to the employees is irrelevant to the determination of a demarcation dispute.

[71] The arbitrator’s incorrect understanding of the issues he had to decide, ultimately influenced the conclusion he reached and as such, the arbitrator’s findings were unreasonable, being influenced by irrelevant considerations.

Conclusion

[72] I have to consider the grounds for review within the context of the test this Court must apply in deciding whether the arbitrator's decision is reviewable. The ultimate question is whether holistically viewed, the decision taken by the arbitrator was reasonable based on the evidence placed before him.

[73] In Bestel v Astral Operations Ltd and others,[12] the LAC considered the limited scope possessed by this Court to review an arbitration award and accepted that an arbitrator’s finding will be unreasonable if the finding is unsupported by any evidence, if it is based on speculation by the arbitrator, if it is disconnected from the evidence, if it is supported by evidence that is insufficiently reasonable to justify the decision or if it was made in ignorance of evidence that was not contradicted.

[74] I must ascertain whether the arbitrator considered the principal issue before him, evaluated the facts presented and came to a conclusion that is reasonable. I have considered this question after perusal of the transcribed record, the arbitration award and the grounds for review raised by the Applicant.

[75] The arbitrator’s primary task was to identify the Respondent’s activities, by applying the principles I alluded to supra. A perusal of the arbitration award shows that there was no meaningful attempt to consider the Respondent’s activities and to evaluate the evidence and assess whether those activities fall within the Applicant’s registered scope. The arbitrator did not assess properly whether the employer and the employees are associated for the common purpose of wholesale and retail, or whether it was for the purpose of the provision of furniture components to customers.

[76] The arbitrator made certain (incorrect) assumptions, which led him to ignore the real issue he was required to determine, and this failure constitutes a reviewable irregularity.

[77] In summary: the arbitrator failed to consider the central dispute that served before him, he ignored relevant evidence, he failed to take into account the totality of the evidence, he failed to conduct a proper appraisal of the evidence, and he had regard to evidence that was irrelevant. All of these constitute material misdirections.

[78] The relevant authorities indicate that misdirections of this sort invariably have the consequence that an award will be unreasonable in its result. Whether the award stands to be set aside is a second-stage enquiry which requires an assessment of the reasonableness of the outcome. A review court may intervene if and only if the outcome or result of the proceedings under review represents a decision to which no reasonable decision maker could come on the available evidence. What this requires is for the review court to determine whether on the evidence, and regardless of any reviewable irregularity committed by the arbitrator, the result should nevertheless be sustained because it represents a reasonable outcome.

[79] I am not persuaded that the outcome of the proceedings under review can be sustained as the outcome is unreasonable.

[80] It follows that the arbitration award is to be reviewed and set aside.

Relief

[81] In the event that an arbitration award is set aside on review, this Court has a discretion whether or not to finally determine the matter.

[82] In casu, the arbitrator failed to determine the real issue and on the Applicant’s own version, it was effectively deprived of a fair hearing, in which case it is not appropriate to substitute the award, but rather to remit the matter for a hearing de novo. I am not inclined to substitute the award where the principal and material issues were not properly determined, where relevant and material evidence was not considered at all and where a dispute about the analysis of the invoices was not resolved.

[83] I am of the view that it would be in the interest of the parties to have the matter properly ventilated and decided. The interest of justice will be best served by remitting the matter for an arbitration de novo.

Costs

[84] This Court has a wide discretion in respect of costs.

[85] This is a matter where ultimately the arbitrator’s award gave rise to the review application and the interest of justice will be best served by making no order as to cost.

[86] In the premises, I make the following order:

Order

1. The arbitration award dated 16 September 2019 and issued under case number HO13-18 is reviewed and set aside;

2. The dispute is remitted to the Second Respondent for a hearing de novo before a commissioner other than the First Respondent;

3. There is no order as to costs.

Connie Prinsloo

Judge of the Labour Court of South Africa

Appearances:

For the Applicant: Mr

C Beckenstrater from Moodie & Robertson Attorneys

For the Third Respondent: Mr N J Du Toit from Chantell Tim Inc Attorneys

] Act 66 of 1995, as amended.

[2] [2005] 7 BLLR 672 (LC).

[3] 1960 (3) SA 338 (T) at 344G - 345F.

[4] (2020) 41 ILJ 1629 (LAC) at para 12.

[5] See Coin Security. See also National Bargaining Council for the Road Freight Industry v Marcus NO and others (2011) 32 ILJ 678 (LC).

[6] NUMSA at para 13.

[7] (2021) 42 ILJ 2204 (LC).

[8] Unreported judgment under case no: JA 119/2021, delivered on 8 September 2022.

[9] (2007) 28 ILJ 2405 (CC) at para 110.

[10] (2014) 35 ILJ 943 (LAC) at para 16.

[11] Gold Fields supra at paras 18 - 19.

[12] [2011] 2 BLLR 129 (LAC) at para 18.