Chamber of Mines of SA v Amcu, In Re; Amcu v Chamber of Mines of SA (J 99/14) [2014] ZALCJHB 233 ; [2014] 3 BLLR 258; (2014) 35 ILJ 1243; [2014] JOL 31274 (LC) (23 June 2014) per Cele J.

The debate is hotting up over the wisdom and constitutionality of the compulsory extension of certain collective agreements to non-parties.   It has even been suggested that a sectional title body corporate has extensive powers to

“place legal obligations on sectional title holders in the building without usurping public power’ because Parliament gave it that power and that “section 23(1)(d) of the Labour Relations Act 66 of 1995 (LRA) is essentially no different”.

It is respectfully suggested that nothing could be further from the truth.

On the other hand the suggestion that it may be time to re-examine the existing model of collective bargaining in a systematic way and ‘identify its underlying weaknesses’ and ‘understanding how these can be addressed holistically’ must be supported.   It is claimed that picking away at specific building blocks ‘which are considered objectionable from a partisan perspective does not seem helpful except for those who hope to benefit’.   For some strange reason it seems that championing entrepreneurship, free enterprise and the creation of more job opportunities by the Free Market Foundation (FMF) is regarded as unacceptable and objectionable.

It is suggested that trade unions offer no protection or support for job-seekers and on the contrary must protect the interests of their own members who finance the trade union through monthly subscriptions deducted by their employers and paid to the trade union.   Little thought seems to be have been given to the fact that trade union members do not gain at the expense of employers.   The private sector is constrained by competition and rather than increase the cost of the wage bill management will simply cut the size of the workforce.    This can be done legally by basing decisions to dismiss on ‘operational requirements’.

In the Chamber of Mines of South Africa v Amcu (J 99/14) [2014] ZALCJHB 233 (23 June 2014) it was held that the only exercise of public power involved was by Parliament  in enacting s 23(1)(d) of the LRA authorising employers and majority trade unions to take certain action whereby legal obligations could be placed on others.   As was noted, “legislation does so frequently [i.e.allowing private parties to place obligations on others], in a range of contexts, and without requiring the consent of all affected parties” (para 47).

It is necessary to examine in some detail the assertion that

“the body corporate of an apartment building has extensive powers to place legal obligations on sectional title holders in the building without usurping public power.   On the contrary, Parliament gave it that power.   Section 23(1)(d) is essentially no different”.

In any sectional title development there are the

  • owners of the sections, who automatically become members of the body corporate;
  • body corporate itself, which simply manages and maintains the common property; and
  • trustees who are elected by the members to act of behalf of the body corporate.

The members make the rules, not the body corporate, and the management rules can only be changed by a unanimous decision of the members.   There is no question of the Legislature having empowered the body corporate to place any legal obligations on the members without their unanimous consent.   Consequently it is suggested that the analogy is incorrect, and if anything actually supports the argument being made by the Free Market Foundation in its legal proceedings in the High Court.

Sectional titles schemes

In the context of compulsory arbitration the Supreme Court of Appeal (SCA) in Body Corporate of the Pinewood Park scheme no 202 v Dellis (Pty) Ltd [2012] 4 All SA 377 (SCA) compared aspects of the LRA with those of the Sectional Titles Act 95 of 1986 (STA) and referred specifically to Imatu v Northern Pretoria Metropolitan Substructure (1999) 20 ILJ 1018; 1999 (2) SA 234; [1998] JOL 3642 (T) per Van Dijkhorst J [HC].

A registered owner of a unit is obliged to pay levies to the body corporate which managed the scheme, and legal proceedings were instituted by the body corporate in the High Court.   The owner claimed that the STA provided for compulsory arbitration of such disputes.   It was held by the SCA that neither the STA nor the regulations prescribes a procedure for dispute resolution.

Section 35(1) of the STA simply provides that the sectional title scheme shall be controlled and managed by means of rules (which may or may not provide for the resolution of disputes).

Section 35(2) directs that the rules shall provide for the control, management and enjoyment of common property and that they may be substituted, added to, amended or repealed by the developer.   Although s 35(2)(a) directs that the rules shall comprise management rules prescribed by regulation, regulation 30(1) only states where to find the rules and which parts thereof may not be substituted, added to, amended or withdrawn by the developer when submitting an application for the opening of a sectional title registrar.

Sub-regulation (4) provides that the management rules may be added to, amended or repeated by unanimous resolution of the body corporate, but that may occur only when there are owners, other than the developer, of at least 32 percent of the units in the scheme.   Thus the entire set of rules may be substituted by unanimous resolution of the body corporate.

The fact that the rules may be jettisoned in part by a developer and in toto, and others substituted for them, by unanimous resolution of a body corporate indicates clearly, in my view, that the Legislature intended the rules to be of a contractual nature.

The SCA agreed with the following statement that was equally valid in respect of the management rules made in terms of the regulations, read with the provisions of s 35 of the STA.

In Wiljay Investments (Pty) Ltd v Body Corporate, Bryanston Crescent & another 1984 (2) SA 722 (T), Spoelstra J considered the status and nature of rules governing body corporates under the Act’s predecessor and said the following at 727D-E:

“These rules are clearly not intended to define or limit the ownership of individual owners of sections, units or common property.   The rules, read with the provisions of the Act, contain a constitution or the domestic statutes of the body corporate.   In this sense it could properly be construed as containing the terms of an agreement between owners inter se and between owners on the one hand and the body corporate on the other hand”.

The SCA held that it was logical that when purchasers bought a unit in a sectional title scheme they would be deemed to have consented, or agreed, to be bound by the existing rules relating to that scheme and to future changes to them introduced by unanimous resolution of that scheme’s body corporate.

The SCA held that the arbitration procedure provided for in management rule 71 is consensual and the provisions of the STA and the regulations do not prescribe an arbitration procedure for inclusion in the rules.   This was contrasted with section 24 of the LRA which provides that every collective agreement must provide for a specific procedure to resolve disputes and that such procedure was compulsory.

Compulsory arbitration

Section 6 of the Arbitration Act 42 of 1965 provides that:

‘(1)       If any party to an arbitration agreement commences any legal proceedings in any court (including any inferior court) against any other party to the agreement in respect of any matter agreed to be referred to arbitration, any party to such legal proceedings may at any time after entering appearance but before delivering any pleadings or taking any other steps in the proceedings, apply to that court for a stay of such proceedings.

(2)        If on any such application the court is satisfied that there is no sufficient reason why the dispute should not be referred to arbitration in accordance with the agreement, the court may make an order staying such proceedings subject to such terms and conditions as it may consider just.’

In other words section 6 of the Arbitration Act does not apply to compulsory arbitrations.

Bargaining councils

In Imatu supra an order was sought by the applicant (Imatu) declaring the employer to be bound to comply with the terms and conditions of a collective agreement between it and three unions of which IMATU was one.

It was held that the High Court did not have jurisdiction to adjudicate a dispute about the interpretation or application of a collective agreement as referred to in the Labour Relations Act.   Among several points in limine raised by the employer, one was that the court had no jurisdiction to decide the matter because the LRA contained clear provisions about dispute resolution regarding collective agreements.

Section 24(1) of the LRA provides that

‘[e]very collective agreement .   .   .   must provide for a procedure to resolve any dispute about the interpretation or application of the collective agreement’.

The provision stipulated that the procedure ‘must first require the parties to attempt to resolve the dispute through conciliation and, if the dispute remains unresolved, to resolve it through arbitration’.

Van Dijkhorst J held that wherever the LRA provided for dispute resolution by arbitration,

‘that concept in the context of the Act excludes resort to the ordinary courts of law for dispute resolution’.

The SCA could not fault that statement of the law,

“at least in so far as it does not purport to suggest that resort to the ordinary courts is excluded even when the statute concerned does not prescribe that the decision of the arbitrator shall be final, where one of the parties wishes to challenge the decision of the arbitrator”.

The reasons given in the Imatu judgment were that the clear intention of the Legislature was that a specialised set of fora should deal with labour-related matters.   It established an interlinked structure of inter alia trade unions, employers’ organisations, a variety of councils, the CCMA and the Labour and Labour Appeal courts.   The Act also creates procedures designed to accomplish the object of simple inexpensive and accessible resolution of labour disputes.   The role of the CCMA and the exclusive jurisdiction of the Labour Courts are important features.   Generally the scheme of the Act is that the Labour Court does not itself hear disputes as a court of first instance but neither does the Act confer exclusive jurisdiction on the CCMA vis a vis the Labour Court in all matters pertaining to labour disputes.