Premier Foods (Pty) Ltd (Nelspruit) v CCMA

(JR2103/12) [2016] ZALCJHB 426 ; (2017) ILJ 658 (LC) (8 November 2016) per S Snyman AJ.

In a conciliation/arbitration matter the LC reviewed and set aside an award in terms of s145(2)(a)(i) of the LRA simply on the grounds of the arbiter’s misconduct.  During the conciliation stage the arbiter expressed ‘views’ on the merits but then refused to recuse himself during the arbitration.  He refused to hear an application for recusal and then falsely claimed the parties had agreed to him arbitrating the dispute.  So the arbiter deprived the employer of a lawful, reasonable and procedurally fair arbitration hearing.  This had the effect of vitiating the entire award and the matter had to be sent back to the CCMA.

Comment:

There are some interesting statements in the judgment about the dangers of allowing the same person to conciliate a dispute and then preside as arbiter.  ‘Reality testing’ is explained, although some refer to ‘supposals’.  But neutrals must suppress the urge to express any views at any stage.  This also means that the parties must exercise extreme caution in what they say to the ‘arbiter’ during the conciliation phase.  All discussions are meant to be completely confidential.  But they cannot be erased from the mind of the ‘arbiter’ if the arbitration proceeds before the same person.

LC summary:

  • CCMA arbitration proceedings – misconduct by arbitrator – test for review – s145 of LRA 1995 considered
  • Recusal – principles considered – refusal of recusal by arbitrator unreasonable and irregular – arbitrator should have recused himself
  • CCMA arbitration proceedings – conduct by commissioner in the course of con/arb proceedings – duties of commissioner stated
  • CCMA arbitration proceedings – con/arb – conduct of commissioner in the course of conciliation – cannot advise party on merits of matter and prospects of success – constitutes misconduct
  • CCMA arbitration proceedings – guidelines on how commissioner must conduct conciliation component of proceedings discussed – commissioner did not act fairly and reasonably in proceeding with arbitration
  • Review of arbitration award – conduct of commissioner vitiating the arbitration – award reviewed and set aside – matter remitted back to CCMA for arbitration de novo

Excerpts without footnotes

[1]   This matter concerns an application by the applicant to review and set aside an arbitration award by the second respondent, Commissioner G Cormack, in terms of which the third respondent’s dismissal by the applicant was held to be substantively unfair, and the third respondent was afforded the relief of reinstatement retrospective to date of dismissal.  This application has been brought in terms of Section 145 of the Labour Relations Act[1] (‘the LRA’).

. . . . .

The relevant evidence

[4]   The third respondent had been dismissed by the applicant on 2 May 2012 for misconduct pursuant to disciplinary proceedings at the applicant, on charges of gross negligence, and failure to adhere to company policy. On another charge against the third respondent, being that of gross insubordination, he had been acquitted of.  The third respondent then referred an unfair dismissal dispute to the CCMA.

[5]   The matter was set down for con/arb on 12 June 2012 and came before the second respondent. The second respondent, after hearing each of the parties’ respective opening submissions, then first proceeded with conciliation to try and settle the matter.  Unfortunately the matter could not be settled.

[6]   When the proceedings resumed, on record, the applicant moved an application for the recusal of the second respondent.  This recusal application was founded on statements the second respondent had made to the applicant’s representative in the course of the settlement discussions in conciliation about the evidence in the case and the applicant’s prospects of success.   The applicant contended that these statements made by the second respondent indicated that the second respondent had already made up his mind in the matter, against the applicant.

[7]   In the founding affidavit, the applicant has contended that the second respondent had been inextricably involved in a discussion of the evidence in the conciliation, and following that he told the applicant that continuing with the arbitration would result in them losing.

[8]   The transcript does not reflect this statement, and for good reason.  It is clear for the transcript that the applicant had barely started motivating its recusal application when the second respondent intervened, saying:

‘I’m going to interrupt you, I’m not going to recuse myself, I don’t believe you have any grounds to ask me to recuse myself …’.

The second respondent then in essence compelled the applicant to commence leading evidence by calling its first witness.  The applicant was thus not allowed by the second respondent to bring a recusal application, and the third respondent was never required to answer such.

[9]   There is no answer from the second respondent to these allegations of the applicant as contained in the founding affidavit. I must say that I am concerned that the second respondent did not address all these issues, which was called for, and especially those concerns relating to the second respondent saying to the applicant that it would lose if the matter continues to arbitration.

. . . . .

[16]   The following dictum [of MJD Wallis AJ, as he then was] in Naraindath v Commission for Conciliation, Mediation and Arbitration and Others [2000] 6 BLLR 716 (LC) is also relevant, where the [Labour] Court said:

‘… A failure to conduct arbitration proceedings in a fair manner, where that has the effect that one of the parties does not receive a fair hearing of their case, will almost inevitably mean either that the commissioner has committed misconduct in relation to his or her duties as an arbitrator or that the commissioner has committed a gross irregularity in the conduct of the arbitration proceedings.’

[17]   Against the above principles and test, the conduct of the second respondent, as complained of by the applicant, must be considered.

. . . . .

[24]   Considering the above test for recusal, it is clear that the second respondent never came close to deciding the issue of his recusal based on these principles.  In fact, the second respondent did not even allow the issue to be properly ventilated, which in itself can be seen to add to the existence of the requisite apprehension to justify recusal.   For a judicial officer deciding a matter in the course of CCMA dispute resolution proceedings, to say from the very outset of the matter to a litigating party that they would lose, and then in effect prevent the issue from being ventilated when the arbitration starts, would surely satisfy the double requirement of reasonableness to justify recusal.

. . . . .

[28]   I appreciate that in con/arb proceedings there is a conciliation component and that in conciliation proceedings parties may very well discuss, in the presence of or together with the commissioner, the merits of the matter.   This is done in the context of what has been called ‘reality testing’ which has been held to be a proper component of conciliation.   Reality testing entails the commissioner testing through questioning, what informs the underlying positions adopted by the respective parties, so that the parties understand what their respective disputes in fact are, and then, what the legal consequences would be if these disputes are not amicably resolved.  The objective of this approach is thus to educate and inform the parties.   . . . . .

. . . . .

[33]   All the above authorities relate to conciliation proceedings as a standalone process.  However, and in the case of con/arb proceedings, there is an added dimension.   This dimension is that the very same commissioner conducting the conciliation then immediately proceeds to conduct the arbitration if conciliation fails.   This added dimension calls for even more caution to be exercised by the commissioner when engaging the parties with the view to procure a settlement.   In the case of conciliation only, and when settlement fails, the matter will proceed to arbitration only on a later date, and inevitably before another commissioner.   This would in effect, in general terms, mostly negate and neutralize undue involvement by commissioner in conciliation proceedings and possible negative consequences of the same.  But in the case of con/arb, there is no such process based intervention.   Matters all happen on the case day before the same commissioner.

. . . . .

[36]   In simple terms, a commissioner in the case of con/arb proceedings is faced with one of two possible choices where it comes to the conciliation component of con/arb.  The first choice is that of minimal involvement in the conciliation process, and if the parties more or less conciliating on their own do not want to settle, then the commissioner conducts the arbitration.   The second choice is for the commissioner to actively engage with the parties in the settlement discussions, to the extent permitted by law, and which process would include applying reality testing as set out above.   However, and if settlement discussions do not succeed, then the commissioner should rather postpone the matter to be heard by another arbitrator.   In my view, any skilled and experienced commissioner, after simply asking each party for a short summary of its case first, should be in a position to decide which of the two choices would be the most appropriate one.

. . . . .

[41]   In terms of this supervisory duty of the Labour Court over the arbitration functions of the CCMA, it is important that irregular practices of CCMA commissioner be highlighted, with the view that the CCMA can adopt policy measures to remedy or discourage the same.  In my view, and as the facts of this case illustrates, what could happen in con/arb proceedings would be one these kind of unacceptable practices.   It must be ensured that arbitration proceedings conducted under the auspices of the CCMA are not only actually lawful, reasonable and procedurally fair, but must be seen to be so.   . . . .

[42]   Overall, it is my conclusion that the events that occurred during the conciliation part of the con/arb proceedings in this matter, and in particular the manner in which the second respondent became involved in the conciliation and the views he expressed, deprived the applicant of a lawful, reasonable and procedurally fair hearing in the arbitration that followed.

The situation was exacerbated by the manner in which the second respondent virtually arbitrarily disposed of the concerns raised by the applicant in the form of a recusal application, and then recording in his award that the arbitration proceeded by agreement, which was never the case.   This all constitutes misconduct by the second respondent as arbitrator as contemplated by Section 145(2)(a)(i) of the LRA.   The effect of this is that the arbitration award itself is vitiated and falls to be set aside.