THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT
Reportable

CASE  NO: 222/06

In the matter between :

TAO YING METAL INDUSTRY (PTY) LTD
Appellant

and

MAY POOE NO
First Respondent
THE COMMISSION FOR CONCILIATION, MEDIATION
AND ARBITRATION
Second Respondent
HOTELLICA
Third Respondent
CUSA
Fourth Respondent
THE METAL AND ENGINEERING INDUSTRIES
BARGAINING COUNCIL
Fifth Respondent
_____________________________________________________________________________
Before:
FARLAM, NUGENT, LEWIS, JAFTA JJA & MUSI AJA
Heard:
8 MARCH 2007
Delivered:
18 MAY 2007
Summary:
Arbitration under the Labour Relations Act 1995 – duties of
arbitrator – function of court on review – exemptions from industrial
council and bargaining council agreements.
The order appears at para 66 of the judgment of Nugent JA.

Neutral citation:
This judgment may be referred to as Tao Ying Metal Industries v Pooe
NO [2007] SCA 54 (RSA)
_____________________________________________________________________________

J U D G M E N T
____________________________________________________________________________

NUGENT  JA

NUGENT JA:

[1] This is an appeal against a decision of the Labour Appeal Court (LAC)
(Zondo JP, Nkabinde and Pillay AJJA concurring) that is before us with the
special leave of this court.1 It concerns an application to review an arbitration
award of a commissioner of the Commission for Conciliation, Mediation and
Arbitration (CCMA).  The application failed in both the Labour Court
(Francis J) and in the LAC.2

[2] The case raises important questions concerning the role of arbitrators
and that of the courts in overseeing the arbitration process. The Labour
Relations Act 1995 is a carefully crafted statute.  Applied in its terms it will
generally result in the just and speedy resolution of labour disputes.  In many
such disputes conciliation and arbitration play a pivotal role.  If care is taken
at that stage of the process there ought to be little call for the intervention of
the courts.

[3] In the case of disputes that are subject to compulsory arbitration the
courts have a limited role.  Their role is generally confined to overseeing the
process by way of review to ensure that it was in accordance with law. In
proceedings for review two separate questions arise.  The first is whether the
award was made in accordance with law. The focus in that enquiry, as
reiterated most recently by this court in Rustenburg Platinum Mines,3 is not
on whether the decision of the arbitrator is right or wrong but rather on ‘the
process and on the way in which the decision-maker came to the challenged
conclusion.’  Describing the enquiry that this calls for Cameron JA said the
following:4

1  The test for special leave is contained in Numsa v Fry’s Metals (Pty) Ltd 2005 (5) SA 433 (SCA).
2   The judgment of the LAC is reported at (2006) 27 ILJ 137 (LAC).
3 Rustenburg Platinum Mines Ltd (Rustenburg Section) v Commission for Conciliation, Mediation and
Arbitration 2007 (1) SA 576 (SCA).
4 Paras 30 and 31.

‘The question on review is not whether the record reveals relevant considerations that are
capable of justifying the outcome.  That test applies when a court hears an appeal:  then the
inquiry is whether the record contains material showing that the decision – notwithstanding
any errors of reasoning – was correct.  This is because in an appeal the only determination
is whether the decision is right or wrong … In a review the question is not whether the
decision is capable of being justified … but whether the decision-maker properly exercised
the powers entrusted to him or her.’

[4] It is only if the award is found not to be in accordance with law that the
second enquiry arises. The second enquiry concerns the fate of the dispute
that was the subject of the award once the award is set aside. Section 145(3)
authorises the court to ‘determine the dispute in the manner it considers
appropriate’ or to ‘make an order it considers appropriate about the
procedures to be followed to determine the dispute’.  The course that a court
will follow to achieve the resolution of the dispute will necessarily depend
upon the particular circumstances. It is then that a court might consider
whether the material before the arbitrator nonetheless justified the award.

[5] The task of an arbitrator is a demanding one. It is made more
demanding by the absence of formality that characterises the resolution of
labour disputes.5 It is important that an arbitrator, notwithstanding the
absence of formality, ensures at the outset that the ambit of the dispute has
been properly circumscribed, even if the dispute has many facets, for that
defines the authority that the arbitrator has to make an award.  The authority
of an arbitrator is confined to resolving the dispute that has been submitted
for resolution and an award that falls outside that authority will be invalid.
As pointed out by Mustill and Boyd6 in the context of commercial arbitration
(but the principle is equally applicable to labour arbitrations):

5 Section 138(1).
6 Sir Michael J Mustill and Stewart C Boyd The Law and Practice of Commercial Arbitration in England
2ed 317.  See, too, 554-5.

‘If [an arbitrator] awards on issues which have not been left to him for decision, he
commits misconduct and may also be acting in excess of jurisdiction.’
The same point was made in Produce Brokers7 (cited with approval in
McKenzie8):
'The binding force of an award must depend in every case on the submission. If the
question which the arbitrator takes upon himself to decide is not in fact within the
submission, the award is a nullity. The arbitrator cannot make his award binding by
holding contrary to the true facts that the question which he affects to determine is within
the submission.'

[6] An award may also not be founded on matters that occur to the
arbitrator but that the parties have had no opportunity to address.9 That is
simply an application of the principles of natural justice, and in particular the
right to be heard, that are now formalised in the Promotion of Administrative
Justice Act 2000.10  As Lord Justice Morris said in relation to the duties of an
umpire (equally applicable to the duty of an arbitrator) in Société Franco-
Tunisienne d’Armement-Tunis,11 which was applied in Kannenberg:12
‘It seems to me that the point that occurred to the umpire was a point that would bring
about a dramatic development of the case, and I am satisfied that the import of it was not
communicated to the shipowners’ arbitrator in such a way as enabled him to deal with it …
The new point which appealed to the umpire … involved a complete departure from the
course followed in the litigation up to that moment … Clearly there was a dramatic new
turn to the case if this possible point had clearly emerged … Whether he was right in law is
not for me to say in these proceedings.  But, in my judgment, the owners ought to have had
a real opportunity of dealing with the new point, and of putting forward reasons for
submitting that it was wrong.’

7 Produce Brokers Company, Limited v Olympia Oil and Cake Company, Limited [1916] 1 AC 314 (HL)
at 327.
8 McKenzie NO v Basha 1951 (3) SA 783 (N) at 787H-788A.
9 Steeledale Cladding (Pty) Ltd v Parsons NO 2001 (2) SA 663 (D) at 672F-673C.  See, too, Russell on
Arbitration 22 ed by David St John Sutton and Judith Gill paras 5-060 and 6-085.
10  Section 3(2).
11 Société Franco-Tunisienne d’Armement-Tunis v Government of Ceylon 1959 (3) All ER 25 (CA) at 34-
35.
12 Kannenberg v Gird 1966 (4) SA 173 (C) at 186G-187E.

[7] This matter has travelled a long journey to this court and it is as well to
commence at the start so that there is clarity on what has occurred along the
way.  Before doing so it is convenient to clarify the legal context within
which the dispute arose.

EXEMPTIONS FROM INDUSTRIAL COUNCIL AND BARGAINING
COUNCIL AGREMENTS

[8] The principal institution for resolving labour disputes under the Labour
Relations Act 1956 was a system of industrial councils.  The parties to an
industrial council (representatives of employers and employees in the
particular industry) were authorised to conclude collective agreements13  that
could then be imposed upon all employers and employees in the industry by
ministerial decree.14  Typically, the parties to an industrial council would
conclude an initial agreement, commonly referred to as ‘the main agreement’,
that would deal comprehensively with conditions of employment. That
agreement would be given legal effect in the industry by ministerial decree
for a limited period in anticipation of at least some of its terms (particularly
those relating to minimum wages) being re-negotiated (usually annually).
Once the period of validity expired the main agreement, subject to
amendments, would then be extended for another limited period, and so the
process would be repeated. Thus at any time employers and employees in the
industry would be bound by the terms of the main agreement, often
concluded many years earlier, that had been periodically amended and
extended.

[9] One such agreement was the industrial council agreement for the iron,
steel, engineering and metallurgical industry.  The main agreement that is

13 Section 23.
14 Section 48.

now relevant was concluded and given legal effect in the industry by
ministerial decree in 1980.15  It was imposed upon the industry initially for a
year and was thereafter extended annually, subject to numerous intervening
amending agreements.16  I will return to it later in this judgment.

[10] Section 51 of the 1956 Act authorised an industrial council to exempt
an employer from ‘all or any of the provisions of an agreement entered into
by parties to an industrial council which is binding in terms of this Act’.  The
terms and conditions of an exemption were to be incorporated in a ‘licence of
exemption’ issued under the hand of an official of the council.17 Its effect was
to ‘exempt [the employer] from the relevant provisions of the agreement …
to the extent specified in the licence of exemption’ and the terms and
conditions incorporated in the licence were binding upon the persons
concerned.18

[11] The Labour Relations Act 1995, which replaced the 1956 Act with
effect from 11 November 1996, creates a comparable regime to resolve
labour disputes.  The former industrial councils are replaced by bargaining
councils, also comprising representatives of employers and employees in the
particular industry, and they fulfil functions similar to those that were
formerly fulfilled by industrial councils.19 Collective agreements concluded
by bargaining councils may similarly be imposed upon the industry by
ministerial decree for specified periods and are subject to amendment and
extension from time to time.20

[12] Employers may once more be exempted from the provisions of a
bargaining council agreement but there is this distinction: while the authority

15 Government Notice R1329 of 27 June 1980 in Regulation Gazette 3026.
16 See, for example, Government Notice R295 dated 20 February 1981 in Regulation Gazette 3137.
17 Section 51(4).
18 Section 51(7).
19 Sections 27 and 28.
20 Section 32.

to grant exemptions from an industrial council agreement was formerly
conferred statutorily (by s 51 of the 1956 Act) the 1995 Act contemplates that
the authority to grant exemptions from a bargaining council agreement made
under that Act will emanate from the constitution of the bargaining council
concerned.21  A bargaining council agreement that is imposed upon the
industry must make provision for an appeal to an independent body from a
refusal by the bargaining council to grant an exemption to a person who is
not a party to the bargaining council.22

[13] The transition from one regime to the other was provided for in
Schedule 7 to the 1995 Act.  An industrial council registered under the 1956
Act was deemed to be a bargaining council for purposes of the 1995 Act.23
An industrial council agreement that was binding on the industry
immediately before the commencement of the 1995 Act was to remain
binding (subject to certain provisos that are not now relevant) ‘for a period of
18 months after the commencement of this Act or until the expiry of that
agreement … whichever is the shorter period, in all respects, as if the [1956
Act] had not been repealed.’24  Any person who was bound by an industrial
council agreement that continued to be binding after the 1995 Act
commenced could still ‘apply in accordance with the provisions of s 51 of the
[1956 Act] for an exemption from all or any of the provisions of [the
agreement]’ and any such application had to be dealt with ‘in terms of the
provisions of section 51 … in all respects as if the provisions in question had
not been repealed’.

[14] With that statutory background in mind I turn to the events that led to
the arbitration that is now in issue.

21 Section 30(1)(k).
22 Section 32(3)(e).
23 Section 7(1) of Schedule 7.
24 Section 12(1)(a) of the Schedule.

THE EVENTS THAT GAVE RISE TO THE ARBITRATION

[15] Botshabelo in the Free State at one time fell within one of the so-called
self-governing states that fell outside the authority of the Republic. Many
such areas, including Botshabelo, were not attractive to industry.  But one
attraction was that industries located in those areas were not subject to the
minimum conditions of employment that were applicable in the Republic
under industrial council agreements.

[16] The appellant (the company), which has a manufacturing business that
falls within the metal and engineering industry (formerly known as the iron,
steel, engineering and metallurgical industry), was one of those that located
itself in Botshabelo. In about 1993 the company concluded a recognition
agreement with a trade union known as the Hotel, Liquor, Commercial and
Allied Workers’ Union of South Africa (the union).  From time to time the
company negotiated wages and other conditions of employment with the
union but those wages and conditions were generally less favourable than the
minimum wages and conditions provided for in the industrial council
agreement.

[17] When Botshabelo was again brought under the authority of the
Republic its industries automatically became subject to the provisions of the
relevant industrial council agreements. Not surprisingly, some businesses
were not economically viable on those terms.  The bargaining council for the
leather industry was the first to enforce the terms of its industrial council
agreement with the result that the leather industry in Botshabelo immediately
collapsed. The Department of Labour was concerned that the same might
occur in the metal and engineering industry and it urged the bargaining
council concerned (which replaced the former industrial council and which I
will refer to simply as the bargaining council) to exercise caution and to

explore ways of accommodating employers and employees so as not to
precipitate the same result.

[18] In  1997 the company was told by the bargaining council that it was
required by law to affiliate to it.  After taking advice from a labour broker the
company affiliated to the bargaining council in about February or March
1997 on the understanding that it would apply for exemptions from the
provisions of the industrial council agreement. (The agreement that was then
in force was the main agreement of 1980 as amended and extended from time
to time.)  According to a representative of the company who gave evidence
during the course of the arbitration, the company told the union
representatives on several occasions when they came to collect the monthly
cheque for union dues, and told the shop stewards, that it had been required to
affiliate to the bargaining council and that it was applying for exemptions.
The union organizer who gave evidence denied that that the union was told of
the company’s intentions.

[19] The company applied for exemptions from the provisions of the
agreement relating to annual leave (clause 12(3)), the provisions relating to
the payment of holiday bonus (clause 14(1)(a)), and the minimum wage
provisions (part 2).  (It also applied for an exemption from the provisions of
the pension and provident funds but that is not relevant for present purposes.)

[20] The members of the bargaining council could not reach agreement on
what was to be done and it appointed a committee to investigate conditions in
the companies concerned and then to make recommendations to the council
concerning the applications for exemptions.25

25 The committee comprised two employer representatives, a representative of the SA Electrical Workers’
Union, and a representative of the National Union of Metalworkers of South Africa.

[21] Three members of the committee (the representative of one of the
unions failed to arrive),  together with the secretary of the bargaining council,
visited the premises of the company and made various enquiries. After
lengthy deliberation the committee recommended to the council that the
company should be excused from payment of the holiday bonus for the
annual holiday period that had just passed (the annual holiday closure occurs
annually from mid December to early January) but not in the future, and that
it should be excused from the three-week leave requirement of the agreement
during that closure (the company had allowed only two weeks) but the
company should be required to increase it to three weeks from the next
annual closure. With regard to wages it recommended that the company be
exempted from the minimum wage provisions (contained in part 2 of the
agreement) on two conditions: first, that it did not reduce its wages below the
level at which they then were (that they ‘retain the status quo’), and secondly,
that it increased its wages thereafter in accordance with the percentage
increase negotiated by the bargaining council from time to time for the
industry as a whole, commencing with the increase that was to be negotiated
during the forthcoming bargaining session (which would be reflected in the
bargaining council agreement that would supplant the industrial council
agreement when its term expired).

[22] The bargaining council accepted the recommendations and granted
exemptions on those terms. The exemptions, and the terms on which they
were granted, were recorded in four standard-form ‘licences of exemption’,
with appropriate additions, that were issued under the hand of the secretary of
the bargaining council on 7 April 1997.

[23] It is not necessary to deal with the exemptions relating to annual leave
and to the payment of holiday bonus (in both cases the exemptions were
restricted to past events). The minimum wage exemption was recorded in two

standard-form ‘licences of exemption’ (from the stock of the former
industrial council). Each document recorded one of the conditions upon
which the exemption was granted. The exemption reflecting the condition
relating to the payment of the annual increase was in the following terms (the
printed words in the standard form are in ordinary script and the typewritten
insertions are in bold):
‘This is to certify that under the powers conferred upon it the Council has been pleased to
grant exemption from the provisions of PART 2 of the MAIN agreement published under
Government Notice R1329 Dated 27 June 1980 as amended and/or extended and/or
replaced from time to time by any succeeding Agreement and/or any amendments and/or
extensions thereof to [TAO YING METAL INDUSTRIES (PTY) LTD] to That the
national percentage increase negotiated annually be enforced on the company with
the inception of the 1998/1999 Main Agreement.  Period from: 19 March 1997 to:
duration of Agreement.  NOTE: This exemption may be varied or withdrawn at any time
at the discretion of the Council.’
The reference to the ‘1998/1999 Main Agreement’ is a reference to the
bargaining council agreement that was to replace the industrial council
agreement when the latter expired (that occurred on 14 April 1998).  The
other ‘licence of exemption’ was in precisely the same terms except that the
condition subject to which it was granted was recorded as ‘status quo
currently prevailing be retained’.

[24] For reasons that I will come to the proper meaning of these exemptions
is of only secondary importance to this appeal but it is as well to deal with it
at this stage. The meaning of the exemption that the bargaining council
purported to grant as reflected in the two documents read together is clear.  It
purported to exempt the company from part 2 (the minimum wage
provisions) of the industrial agreement that was then in force, and from the
comparable provisions of the bargaining council agreement that was to
supplant it when the industrial council agreement expired (and any extensions
or replacements of that bargaining council agreement).  Counsel for the union

was not able to advance any other construction that would give effect to all
the language of the exemption and there is none.  No other interpretation
would be consistent with the condition upon which the exemption was
granted (that the ‘national percentage increase negotiated annually [would] be
enforced on the company with the inception of the 1998/1999 Main
Agreement’).  But if there were to be any ambiguity in that regard (and in my
view there is no ambiguity) recourse could be had to evidence to resolve the
ambiguity, bearing in mind that this is not a legislative instrument but merely
a recordal of the council’s decision. The evidence before the arbitrator
established unequivocally that the bargaining council intended the
exemptions to have the effect I have described and that evidence was not
even challenged.   It is not surprising that the evidence was not challenged
because the parties were agreed throughout the arbitration that that was the
meaning of the exemption.

[25] It is true, as pointed out by the LAC, that the period for which the
exemption was to endure was stated to be ‘duration of Agreement’, which,
read in isolation, might mean the duration of the agreement that was then in
force.  But that would ignore the words ‘as amended and/or extended and/or
replaced from time to time by any succeeding Agreement and/or any
amendments and/or extensions thereof’, and the condition upon which the
exemption was granted, and the unchallenged evidence.

[26] The LAC also found support for its construction in the presumption
that the bargaining council intended to act lawfully.  It held in that regard that
s 51 of the 1956 Act26 permitted a person to be exempted only from the
provisions of an industrial council agreement that was in force when the
exemption was granted.27  I do not think that is the correct meaning of the

26 Read together with the transitional provisions of Schedule 7 of the 1995 Act.
27 Paragraph 38 of the judgment.

section.  It could not have been intended that fresh exemptions would need to
be applied for and issued whenever the period of validity of an industrial
council expired, which in the present case was annually. (According to the
evidence there are some 15 000 exemptions in existence in the industry at any
time.)  In my view the phrase ‘an agreement … which is binding’ as it is used
in the section refers to an industrial council agreement that is binding on a
person then or in the future.  Any other construction would lead to an absurd
result.

[27] But in any event that approach to the construction of s 51 seems to me
to overlook something more fundamental.  In acting as it did in April 1997
the bargaining council purported to do two things:  First, it purported to
exempt the company from the provisions of the existing industrial council
agreement. Secondly, it purported to exempt the company from the
provisions of the bargaining council agreement that was to replace the
industrial council agreement.  The validity of its acts depended upon whether
the bargaining council indeed had authority to perform the particular act,
irrespective of what it might have thought to be the source of its authority (it
did not express itself on what it thought to be the source of its authority).
With regard to its decision to exempt the company from the provisions of the
industrial council agreement that was then in force clearly it was authorised
to do so by s 51 of the 1956 Act read together with the transitional provisions.
But whether it had authority to exempt the company from the provisions of
the bargaining council agreement that superseded it depends not upon the
construction of s 51 (which applied only to industrial council agreements
contemplated by the 1956 Act) but rather upon whether that was authorised
by the bargaining council’s constitution.28  The constitution of the bargaining
council is not before us (it seems also not to have been before the LAC) and it
is not possible in the circumstances to determine whether or not it had or

28 See paragraph 12 above.

lacked that authority.  But that is in any event not material for present
purposes.  Where the language that is used in the document is clear, as it is in
this case, there is no need to resort to presumptions.  Apart from its use by the
LAC as an aid to interpretation, the validity or otherwise of the bargaining
council’s decision in April 1997 is immaterial to the arbitrator’s award and to
the issues that arise in this appeal.

[28] The industrial council agreement was replaced with effect from 14
April 199829 by a bargaining council agreement.30 Not surprisingly the
bargaining council agreement largely replicated the provisions of the former
industrial council agreement (but with an additional significant provision that
I will return to).

[29] Soon after the bargaining council agreement took effect the union
(which was not a party to the bargaining council because it lacked the
minimum membership required for admission) demanded that the company
comply with its minimum wage provisions (again reflected in part 2).  The
company’s standpoint, supported by the bargaining council, was that it was
exempted from those provisions by the exemption that had been granted in
April 1997.  On 5 November 1998 the union lodged a dispute with the
CCMA against both the company and the bargaining council.

[30] It is not ordinarily the function of the CCMA to enforce or resolve
disputes concerning bargaining council agreements.  That is generally the
function of designated agents of the bargaining council31 (enforcement) or the
bargaining council itself.32 The bargaining council agreement contained a
procedure for the resolution of disputes ‘concerning the interpretation,

29 The effect of the transitional provision in Schedule 7 of the 1995 Act was that all industrial council
agreements would come to an end no later than 10 May 1998.
30 Published under Government Notice R 404 in Regulation Gazette No 6127 dated 31 March 1998.
31 Section 33.
32 Section 33A.

application or enforcement of the agreement’, which envisaged conciliation,
followed if necessary by arbitration by an arbitrator appointed by the
bargaining council.33 It seems that at the time the dispute in this matter arose
the bargaining council had not yet been accredited to resolve disputes,34 and
the parties considered the CCMA to be the appropriate body to do so in the
circumstances.35  (Whether that was correct is not necessary to decide.)

[31] In the standard-form document that is completed when a dispute is
referred to the CCMA the union recorded that the nature of the dispute was
the company’s ‘failure to comply with minimum wages and conditions [in
terms of] Metal and Engineering Industries Bargaining Council’, and that the
outcome it required was the company’s ‘compliance with minimum wages
and conditions [in terms of] bargaining council agreement’ and a ‘prohibition
of unilateral exemptions by bargaining council’.

[32] Those cryptic statements do not disclose precisely what was in
dispute,36 but that emerged later when the arbitration commenced, and I will
deal with that more fully below.  For the moment it is sufficient to say that
the effect of the exemptions (that they exempted the company from the
provisions of the bargaining council agreement that replaced the industrial
council agreement) was never in dispute.  On the contrary, it was agreed that
that was the effect of the exemptions.  What was in dispute was rather
whether the exemptions had been validly granted. The union contended in
that regard that the exemptions had been granted without prior consultation
with the union and for that reason they were invalid. (That is why the
bargaining council was cited as a party to the dispute, and why an order was

33 Clause 36 of the bargaining council agreement read with the Metal and Engineering Industries Dispute
Resolution Agreement published under Government notice R 406 dated 31 March 1998.
34 Section 127.
35 Section 24(2).
36 National Union of Metalworkers of SA v Driveline Technologies (Pty) Ltd (2000) 21 ILJ 142 (LAC)
para 36. See too Telecall (Pty) Ltd v Logan 2000 (2) SA 782 (SCA) paras 10-12.

sought prohibiting the bargaining council from issuing ‘unilateral
exemptions’.)

[33] When conciliation failed the dispute was referred to arbitration under
the auspices of a commissioner of the CCMA (who is cited as the first
respondent in this appeal).37 In the standard-form document requesting
arbitration the union recorded that the issue in dispute was ‘application of
collective agreement’, and the decision it sought from the arbitrator was
‘agreement of bargaining council to be applied’.

[34] At the outset the arbitrator considered an objection by the company
and the bargaining council to her jurisdiction.  She rejected the objection but
she also ruled that the bargaining council ‘may not be a party to the dispute’.
(Why that ruling was made is not now material.)

[35] The arbitration resumed on 18 January 2000. The union was
represented by an attorney and the company was represented by counsel.  I
have pointed out that the cryptic statements in the standard-form documents
did not reveal precisely what was in dispute.  But the nature of the dispute
emerged from the opening statements of the union’s attorney, in which he
formulated the dispute that the arbitrator was called upon to resolve as
follows:
‘In 1997 … an exemption was granted [from adherence to] all these minimum conditions
or minimum requirements set by the council.  It is our case [that] this exemption was
granted unilaterally by the council without negotiations with trade union or employees
thus making these exemptions granted improperly granted.  It will be shown to you that the
employees of Tao Ying are earning way under the minimum wages, they are not receiving
the appropriate yearly increments, and they are not receiving other benefits as per the
collective agreement of the Bargaining Council.  Our request today to you will be to find in

37 Relying upon ss 24(2)-(5) of the 1995 Act.

favour of the applicants and to order that the respondent comply with the collective
agreement’ (my emphasis).
What the union’s attorney meant by his assertion that the exemptions were
‘improperly’ granted, as appears from the heads of argument that he later
filed, was that they were invalid in law because they had been granted
without consultation with the union.  It was on those grounds that, at the
conclusion of the arbitration, he sought an order from the arbitrator that the
exemptions ‘be declared null and void’.

[36] As if to avoid any uncertainty as to what was in dispute the union’s
attorney went on to say the following (after counsel for the company had said
that he intended leading evidence to show that the union had ample
opportunity to be heard before the exemptions were granted):
‘[I]t seems from what my learned friend has indicated the only issue basically in dispute
might be today the granting of the exemption [as] such and the manner in which it was
granted, that I perceive to be the only issue in dispute mainly, I don’t know if my learned
friend wishes to add anything else, because we are in [agreement] that there is a
Bargaining Council agreement, that there are the minimum wages prescribed, and that
there was an exemption given to these minimum wages. So in an effort not to prolong the
arbitration proceedings with [unnecessaries] I do not wish to, you know, confine my
learned friend in any way, but I’m just enquiring is that not perhaps the only issue that is in
dispute and that is what needs be led evidence on from both the parties?’
That was confirmed by counsel for the company, subject to what he called
another ‘jurisdictional point’ that was to be argued at the end of the
arbitration but that is not now material.  (Needless to say, the attitude of the
company and its counsel throughout was that the exemptions applied to the
bargaining council agreement, for otherwise it would have had no grounds to
avoid submitting to its provisions.)

[37] Thus it is clear that it was accepted by both parties that the exemptions
were still operative at the time of the arbitration.  Indeed, as appears from the
extract above, the parties were in agreement that ‘there is a Bargaining

Council agreement, that there are the minimum wages prescribed, and that
there was an exemption given to these minimum wages’. The only dispute
between them, which the arbitrator was called upon to resolve, was whether
the exemptions were invalid for failure on the part of the bargaining council
to consult the union.  Presumably that was also the dispute that was subjected
to conciliation (there is no evidence to suggest that it was not) because
otherwise the arbitrator would have lacked jurisdiction to conduct the
arbitration at all.38

[38] That dispute was not capable of being resolved by arbitration and the
proceedings were fruitless from the start. The arbitrator had no jurisdiction to
declare the conduct of the bargaining council to be invalid, least of all in
proceedings from which the bargaining council had been expressly excluded.
The validity or otherwise of its conduct was capable of being determined
only by a competent court in review proceedings to which the bargaining
council was a party. The only proper outcome that was possible in the
circumstances was thus a declaration that the arbitrator had no jurisdiction to
resolve the dispute that had been submitted to arbitration.

[39] The arbitration proceeded nonetheless, and evidence was called on
both sides on the question whether the union and its members had had an
opportunity to express their views to the bargaining council before the
exemptions were granted.  With regard to the evidence that was led in the
course of the arbitration (which was immaterial in view of the absence of
jurisdiction to make the award that was sought) I need only observe that
evidence that the exemptions were intended to endure for the life of the
industrial council agreement and the bargaining council agreement that later
replaced it went unchallenged.  That is not surprising, bearing in mind that
the parties were agreed that that was the effect of the exemptions.

38 Per Zondo AJP in Driveline Technologies (Pty) Ltd, above, para 62.

[40] At the conclusion of the evidence the arbitration was adjourned and the
representatives of both parties submitted written heads of argument. Apart
from the ‘jurisdictional point’, the only matter addressed in the heads of
argument, by both parties, was whether the union had indeed had an
opportunity to be heard before the exemptions were granted, and if not, what
effect that had on the validity of the exemptions.

[41] The arbitrator delivered her award on 23 July 2000. Apart from
disposing of the so-called ‘additional jurisdictional point’ that had been raised
on behalf of the company (the nature of the point need not be considered) the
arbitrator made no finding on the issue that had been canvassed before her.
But she nevertheless made an award compelling the company to comply with
the terms of the bargaining council agreement.  Her award was in the
following terms:
‘[The company] is ordered to pay to its employees who are members of [the union] the
wages negotiated in the Metal and Engineering Industries Bargaining Council since 14
April 1998 unless exemptions were granted to the [company] under the New Collective
Agreement concluded in terms of the Labour Relations Act, 1995’.

[42] The reason that the arbitrator held that the company was obliged to
comply with the provisions of the bargaining council agreement was that she
believed, incorrectly, that it was common cause between the parties that the
exemptions had come to an end when the industrial council agreement
expired on 14 April 1998.   That is apparent from her reasons for making the
award.  Dealing first with the so-called ‘additional jurisdictional point’ that
had been raised on behalf of the company the arbitrator made the following
observations:
‘It is also common cause that by the time the dispute arose in August [1998] the
exemptions under discussion were no longer valid having ceased to be so when the main

Agreement in terms of which they were issued terminated and a period of eighteen months
referred to in item 12(1) [of Schedule 7 to the 1995 Act] had also expired’.
After dismissing the ‘jurisdictional point’ the arbitrator turned to the merits of
the matter and said the following:
‘From [the] survey of the evidence above, it is clear that no exemptions were applied for
by the [company] under the collective agreement in the Bargaining Council concluded
under section 28(a) of the [1995 Act].  [The company] continued to rely on the exemptions
that had terminated on the 14 April 1998 which is the date of commencement of a New
Agreement published in Government Notice R404 dated 31 March 1998 …  In the absence
of exemptions issued under the New Agreement, the [company] does not have a valid
reason at law not to pay the minimum wages negotiated in the Bargaining Council after the
Main Agreement was in operation’.

[43] It is clear from those passages that the arbitrator made her award in the
belief that it was common cause between the parties that the exemptions
expired on 14 April 1998, which was the date when the industrial council
agreement was supplanted by the bargaining council agreement.  Indeed, the
assertion in the company’s replying affidavit that the arbitrator ‘wrongly
assumed that the exemption endured only for so long as the original 1980
agreement remained in force’ was not contested nor was it placed in issue
before us by counsel.

[44] The arbitrator’s belief that it was common cause that the exemption
had expired was clearly incorrect:  what was common cause was precisely the
opposite. The first time that it was suggested that the exemptions had expired
was when the arbitrator made her award and it has bedevilled the proceedings
ever since.

[45] It is self-evident from the terms in which the award was made that the
arbitrator failed to take account of the existence of the exemption when she
made her award, which was the ground advanced in the founding affidavit for

setting aside the award.  In Carephone (Pty) Ltd v Marcus NO,39 which was
applied by this court in Rustenburg Platinum,40 the LAC held that the award
of an arbitrator constitutes administrative action as contemplated by s 33 of
the Constitution, which requires there to be ‘a rational objective basis
justifying the connection made by the administrative decision-maker between
the material properly available to him and the conclusion he or she eventually
arrived at.’ To leave out of account the exemption, when it was common
cause that its effect was to relieve the company of the relevant provisions of
the bargaining council agreement, clearly deprived the award of a rational
connection between the award and the material that was before the arbitrator,
and on that ground alone the award was liable to be set aside. Needless to
say, if the arbitrator had applied the correct criterion for her decision on the
material that was before her, which was that it was common cause that the
exemptions were applicable, her award would necessarily have been
different.  To found the award upon a supposition that it was common cause
that the exemption had ceased to operate when the opposite was true was also
a gross irregularity,41 which had the added effect that the arbitrator exceeded
her powers by travelling outside the dispute that was before her.42

THE PROCEEDINGS IN THE LABOUR COURT AND THE LAC

[46] Bearing in mind that it had never been disputed that the exemptions
from the provisions of the bargaining council agreement had indeed been
granted the caveat in the award (‘unless exemptions were granted to the
[company] under the New Collective Agreement’) initially caused some
confusion and the company took the matter up with the bargaining council to
confirm that the exemptions were indeed extant and had not been withdrawn.

39 1999 (3) SA 304 (LAC) para 37 read with para 15.
40 Above, esp paras 20 and 29.
41 Section 145(2)(a)(i) of the 1995 Act.
42 Section 145(2)(a)(iii).  See Amalgamated Clothing and Textile Workers Union v Veldspun Ltd 1994 (1)
SA 162 (A) at 169C; Carephone, above, para 25.

Ultimately, after the union applied to the Labour Court to have the award
made an order of court, the company applied to review both awards of the
arbitrator (the award on jurisdiction made on 23 July 1999 and the award
made on 23 July 2000).  The attack upon the former award (the award
relating to jurisdiction) has since been abandoned.

[47] By the time the application was brought the affected workers had
resigned from the union and had joined the Commercial Workers’ Union of
South Africa (CUSA), which is a member of the bargaining council.  The
parties who were cited in the application were the arbitrator, the CCMA, the
union, CUSA, and the bargaining council.  Only CUSA opposed the
application and it is the only party that opposes this appeal.

[48] The application was brought out of time and condonation was
required.  The labour court dismissed the application for condonation. In the
course of doing so it made certain observations concerning the merits of the
review but I need not deal with them.

[49] On appeal the LAC found, in my respectful view correctly, that there
was good cause for the delay, and it set aside the decision of the Labour
Court refusing condonation.  But it went on to dismiss the application to
review the award.  The order that it made was as follows:
‘1.
The appeal is upheld in part and dismissed in part.
2.
No order is made as to the costs of the appeal.
3.
The appellant’s appeal on the merits of the review application is dismissed.
4.
The appellant’s appeal against the order of the Labour Court relating to
condonation is upheld and such order is set aside and replaced with the following
one:
“(a)
The applicant’s application for condonation in regard to the launching of
the review application is granted.
(b)
the applicant’s application for review is hereby dismissed.

(c)
There is to be no order as to costs.”’

[50] The order granting leave to appeal to this court provided that ‘leave to
appeal is limited to the dismissal of the appeal by the Labour Appeal Court
on the merits of the review application’.  That was a reference to the order in
paragraph 3 of the orders made by the LAC (in contrast to its order in
paragraph 4 relating to condonation).  The ‘merits of the review application’
are whether the review ought to have succeeded.

[51] Before the appeal was heard counsel were furnished by this court with
a comprehensive set of questions concerning what was properly before the
arbitrator, and the basis upon which she made her award, as I have outlined
those matters above, which was not dealt with in the judgment of the LAC,
and counsel were invited to address us on those issues as they then did.

[52] The LAC misconstrued the facts so far as they relate to the dispute that
was before the arbitrator and the manner in which she arrived at her award,
though I hasten to add that it seems to me to be quite probable that the appeal
was presented to the LAC in a form that was conducive to the error.

[53] The LAC was under the impression that the dispute that the arbitrator
had been called upon to resolve was whether the exemptions that had been
granted to the company ‘still applied to, and were operational under’ the
bargaining council agreement that supplanted it, and it was under the
impression that the arbitrator had ‘found that the exemptions … fell away
when the new agreement came into operation on the 14th April 1998.’ 43  In
both respects that impression was incorrect.  The dispute before the arbitrator
did not concern the duration of the exemptions at all.  And the arbitrator
made no finding as to the duration of the exemptions but relied instead upon

43 Paras 3 and 30 of the judgment.

what she incorrectly believed was common cause.  That explains why, as
observed by the LAC, the arbitrator ‘did not in her award refer to the
[company’s] argument that such exemptions continued to apply during the
life of the new agreement’.44 She did not refer to the argument simply
because it was never addressed to her, and that was because the duration of
the exemptions was not in dispute.

[54] The LAC went on to consider whether that ‘finding’ of the arbitrator
was correct by construing the terms of the ‘licences of exemption’.  It held
that the exemptions did not extend beyond the life of the industrial council
agreement, for the reasons that I expressed in paragraphs 25 and 26 of this
judgment, and accordingly it found that the award was correct.

[55] I have said that in my view the construction that the LAC placed upon
the exemption was not correct, but the difficulty with its judgment is more
fundamental. What was before the LAC was not an appeal against the
arbitrator’s award but rather a review of the proceedings that culminated in
the award.  In those circumstances the LAC was not called upon to decide
whether the conclusion that was reached by the arbitrator was correct but
rather whether the arbitrator properly exercised her powers in reaching that
conclusion.  By misconstruing the question that was before it the LAC
inadvertently failed to address that question at all (perhaps for the reason that
I alluded to earlier).

[56] I have already pointed out that the award that was made by the
arbitrator is liable to be set aside.  Accordingly the review ought to have
succeeded and the order made by the LAC on the merits of the review
application (paragraph 3 of its order) cannot stand.

44 Judgment para 30.

[57] That gives rise to the second enquiry, which concerns the fate of the
dispute once the award is set aside.  It is in relation to that enquiry that the
other defect in the proceedings, and the proper construction of the exemption,
become relevant.

[58] Once an award is set aside on review a court is authorised to
‘determine the dispute in the manner it considers appropriate’ or to ‘make an
order it considers appropriate about the procedures to be followed to
determine the dispute.’  No purpose would be served by remitting the dispute
to the arbitrator.  I have already pointed out that the dispute that was before
the arbitrator was whether the exemptions were invalid for want of prior
consultation with the union.  There is only one appropriate award that she
could have made in relation to that dispute, which was to declare that she had
no jurisdiction to declare upon the validity of the exemptions. If we substitute
a declaration to that effect that will bring to an end the dispute that was before
the arbitrator.

[59]   But it has become apparent in the course of these proceedings that
CUSA has now resiled from the position that was taken by the union during
the course of the arbitration, and it now contends that on a proper
construction the exemption was intended to come to an end when the
industrial council agreement lapsed on 14 April 1998.  No purpose would be
served by remitting the matter to the arbitrator for the dispute to be broadened
so that an award may properly be made on that issue or to undertake that task
ourselves. I have already held that that is not the correct meaning of the
exemption and nothing would be served by doing so. To do so might in any
event serve no purpose, for reasons that emerge below.

[60] For both counsel invited us to go even further and to substitute an
award declaring the effect of the exemption upon the company’s obligations

(or absence of obligations) under the bargaining council agreement in the
light of the construction that I have placed upon the exemption.  I do not
think we should do so.

[61] I am by no means certain that a court on review has the power to
broaden the dispute that was before an arbitrator and then make an award in
relation to the broadened dispute.  That would seem to me to be a recipe for
undermining arbitration and encouraging parties to look to the courts instead
to resolve their disputes, contrary to the intention of the 1995 Act.  Counsel
for CUSA submitted that because this was what he called a ‘labour matter’
the court was at large to do what it considered to be fair in any case that
comes before it.  That submission seems to me to bear the seed of a doctrine
that would undermine the Act and the rule of law and I have no hesitation in
rejecting it. A court does not have a general jurisdiction to do what it
considers to be best, even in respect of labour disputes, but must confine
itself to what it is authorised to do by law.

[62] But even if we had a general discretion to make an award that we
considered would be best to bring the present saga to an end I would in any
event not do so in the present case, at least without careful reflection and
further enquiry, lest we inadvertently pronounce on matters that are not
properly before us.  I have already pointed out that we do not know whether
the bargaining council had the authority to exempt the company from the
bargaining council agreement that took effect on 14 April 1998 because we
do not have its constitution before us.  And even if the bargaining council
was authorised to act as it did it is also not clear that the exemption had any
effect in law in relation to the bargaining council agreement. The bargaining
council agreement that took effect on 14 April 1998 provided for exemptions
to be granted by ‘an independent body [established by the agreement and]
referred to as the Exemption and Arbitration Board’ and not by the

bargaining council itself.  In those circumstances it might be that the
exemption that was given by the bargaining council was always ineffective
and that these proceedings have been misconceived from the start.

[63] I stress that these are not matters upon which I make any finding.
Whether the bargaining council was authorised to grant exemptions, and
what effect, if any, such exemptions might have had, was not addressed in
argument before us, or at any stage of the proceedings that have culminated
in this appeal, but have only come to the fore in the course of preparing this
judgment.  I mention them only to illustrate why it would be undesirable to
make orders falling outside the scope of the dispute that was before the
arbitrator without fully appreciating the implications that those orders might
have.  Needless to say, there are also serious implications in introducing new
matters into proceedings that have endured for nearly ten years. For this court
to interpose its own notions of how matters might best be brought to finality
without adequate insight into the implications carries a real risk of causing
irreparable harm.

[64] In my view it is preferable that we confine ourselves to what is
properly before us, which is a review of the arbitration proceedings in
relation to the dispute that was before the arbitrator.  In the course of this
judgment it has been necessary to construe the exemption that was in issue
and that might serve to guide the parties in their future relations.  But I think
that the parties are best placed to resolve any further disputes that might exist
between them through the medium of the bargaining council, upon which the
employees are now represented, which is the proper forum for the resolution
of such disputes.

[65] As to the costs that have been incurred thus far I think it is appropriate
that they be allowed to lie where they fall in all courts and I intend making no
order in that regard.

[66] The appeal is upheld.  The orders of the LAC are set aside and the
following orders are substituted:
‘1. The appeal is upheld.  The order of the Labour Appeal Court is set
aside and substituted with the following:
“(a)
The application for condonation is granted.
(b) The award of the arbitrator made on 23 April 2000
(incorrectly dated 23 July 1999) is set aside and substituted
with an award in the following terms:
“It is declared that the arbitrator has no jurisdiction to make an
award in respect of the dispute that is the subject of this
arbitration.”
(a) No order is made in relation to the costs of the application.’
2.
No order is made in relation to the costs of this appeal.’

_________________________
R.W. NUGENT
JUDGE OF APPEAL
CONCUR:

FARLAM JA)
LEWIS JA)

JAFTA JA

[67] I have had the benefit of reading the judgment prepared by my
Brother Nugent. Regrettably I am constrained to disagree with the findings
and the conclusion reached therein. In particular I find myself in respectful

disagreement with him on the issue of the real dispute that served before
the arbitrator; the validity of the process she followed in arbitrating it, the
issue that arose before the Labour Appeal Court and the cogency of reasons
given by it in support of its decision.

[68] The appellant operates a manufacturing business in the metal
industry at a factory in Botshabelo in the Free State Province. Among its
employees, were members of a trade union called The Hotel Liquor
Commercial and Allied Workers’ Union of South Africa (the union) who
later resigned and joined Commercial Workers Union of South Africa
(CUSA).

[69] In 1993 the union and the appellant concluded a recognition
agreement. Clause 4 of this agreement established a committee consisting
of an equal number of members representing each party. The committee
was charged with the task of conducting collective bargaining. Collective
bargaining on wage increases took place in May of each year. The
committee was bound to convene within 21 days of receipt of a written
request from either party. The union represented 250 employees out of a
workforce of approximately 300 workers.

[70] Towards the end of 1996 the appellant became a member of the
Bargaining Council in the Metal and Engineering Industries. When it was
first approached to join by the council, it raised concerns about the effect
the collective agreement would have on it, as at that stage it was paying its
employees wages lower than the minimum wages prescribed in the
council’s collective agreement. The council proposed that it apply for an
exemption from paying minimum wages and other benefits which it
claimed it could not afford to pay. Following this advice the employer
indeed applied for an exemption. At the outset members of the council

could not agree on whether to grant the exemption or not. As a result a
committee was appointed to investigate the matter. Messrs Viljoen,
Stander, Van Vuuren (all members of the committee) visited the
employer’s factory together with Mr Coetzee, the council’s regional
manager. Pursuant to its visit, the committee made a recommendation to
the council which issued four licences of exemption, each licence dealing
with a separate and different issue.

[71] Meanwhile the union, which was not a member of the council and
was not represented in the council’s committee, wrote a letter to the
employer requesting that the bargaining committee be convened for the
purpose of negotiating wage increases for 1997. The employer responded
by saying that having joined the council, it was subject to its collective
agreement which superseded the parties’ recognition agreement. When the
union demanded that the employer pay the minimum wages prescribed by
the council’s collective agreement, it refused, claiming that it had been
exempted from doing so. It must be mentioned that, although the union was
a representative union at the employer’s factory and this was known to the
council, it was nonetheless not consulted during the council’s visit to the
factory. A few workers, none of whom were members of the union, were
randomly consulted. The union’s capacity to advance and promote the
interests of its members was severely emasculated. It was not only denied
the rights it enjoyed in terms of the recognition agreement but also its
constitutional right to engage in collective bargaining on behalf of its
members. Its members’ right to join a trade union of their choice and their
right to fair labour practices were, as a result, impaired.

[72] The union applied for membership of the bargaining council with a
view to advancing the interests of its members there. But its application
was turned down on the basis that it did not meet the threshold set by the

council for membership. In terms of that threshold requirement any union
seeking membership had to have a minimum of 5000 members in the
industry falling within the jurisdiction of the council, regardless of whether
it was a majority union at the workplace of any of the employer members.

[73] In 1998, the union once again demanded that the employer pay the
minimum wages in compliance with the new collective agreement which
was promulgated in terms of the current Labour Relations Act 66 of 1995
(the current Act). Once again the employer refused to pay, contending that
the exemption issued to it the previous year continued to apply to the new
agreement. Reliance was placed on the clause quoted in para 23 of Nugent
JA’s judgment.

[74] Finding itself in an untenable situation once more, the union declared
a dispute. At that stage its members were earning R125 per week instead of
the R388 minimum wage prescribed in the new collective agreement. As
appears from the background, the dispute was about the employer’s failure
to pay the minimum wages in compliance with the new collective
agreement. It was then referred to the Commission for Conciliation,
Mediation and Arbitration (the CCMA) for conciliation. The CCMA
requires that referrals of this nature be contained in a standard pro forma
form supplied by it. The form is meant to guide parties making referrals. In
column 3 of the form, the applicant for conciliation is required to state the
nature of the dispute. In this case the union described it in the following
terms:
‘The dispute is about Tao Ying Metal Industries’s failure to comply with minimum
wages and conditions i.t.o. Metal and Engineering Industries’s Bargaining Council.’

[75] Resolution of the dispute eluded the parties at conciliation and the
matter was referred to arbitration. After hearing evidence, the arbitrator

issued an award in the following terms:
‘Respondent TAO YING INDUSTRIES, is ordered to pay to its employees who are
members of the Applicant, HOTEL, LIQUOR, COMMERCIAL and CATERING
ALLIED WORKERS UNION OF SOUTH AFRICA (HOTELLICA) the wages
negotiated in the Metal and Engineering Industries Bargaining Council since
14 April 1998 unless exemptions were granted to the Respondent under the New
Collective Agreement concluded in terms of the Labour Relations Act, 1995.’

[76] The appellant instituted an application in the Labour Court for the
review of the award on, inter alia, the ground that the arbitrator had failed
to apply her mind to the provisions of the exemptions granted to it in
March 1997. It contended that those exemptions ‘still enured to its benefit
since they were granted in respect of the wage provisions of the Main
Agreement published on 27 June 1980 as amended and/or extended and/or
replaced from time to time by any succeeding agreement’. The Labour
Court found it unnecessary to consider the merits and dismissed the
application on the basis that the appellant had failed to make a proper case
for condonation for instituting the application late.

[77] Dissatisfied with the outcome the appellant appealed to the Labour
Appeal Court. The latter court reversed the Labour Court’s finding on
condonation but dismissed the appeal on the merits. The present appeal
comes before us with special leave of this court. In the order granting leave
this court said:
‘The leave to appeal is limited to the dismissal of the appeal by the Labour Appeal
Court on the merits of the review application.’

The merits considered by the Labour Appeal Court relates only to the
question whether the clause on which the appellant relied had the effect of
extending the currency of the exemption to the new collective agreement.

[78] The issue before the Labour Appeal Court was essentially one of
interpretation of the exemption as reflected on the licences. The Labour
Appeal Court held that on the issue of currency the exemption contained
two conflicting terms. One in the middle (the first clause) and the other at
the bottom of the licence document (the second clause). The second clause
limited, so it found, the currency of the exemption to the duration of the old
collective agreement whereas the first clause suggests that the exemption
was intended to survive the termination of the main agreement and
continue to be in force.

[79] The Labour Appeal Court reasoned that since the exemption was
applied for and granted in terms of s 51 of the old Act, the bargaining
council’s power was limited to granting an exemption from an agreement
already in existence and which was binding in terms of this Act. To the
extent that the first clause purports to extend the currency of the exemption
beyond the duration of the collective agreement then in existence, Zondo
JP held, it was ultra vires because the bargaining council had no power to
grant an exemption beyond the lifespan of such agreement. The learned
Judge President concluded that the correct interpretation is that the
currency of the exemption terminated simultaneously with the main
agreement in May 1998.

[80] Although the arbitrator did not, understandably so I may add, engage
in the detailed interpretative process which Zondo JP undertook, she also
found that the exemption expired when the new agreement came into
operation on 14 April 1998. In her award the arbitrator expressed herself as
follows:
‘It is common cause that the period during which the exemptions were valid is well
within the eighteen months referred to in item 12(1) of the Act. It is also common cause
that the exemptions were granted in terms of an agreement that was concluded in the
industrial council. The said agreement (Main Agreement) was promulgated in terms of

section 48 of the 1956 Act and published in the Government Notice R1329 dated 27
June 1980. These exemptions were not, with due respect to Adv Beaton, valid for a
period of eighteen months. They remained valid for the duration of the Main
Agreement. The agreement terminated with the coming into operation of the collective
agreement concluded in the Metal and Engineering Industries Bargaining Council. The
said collective agreement was published in the Government Notice R404 dated 31
March 1998 and came into effect on 14 April 1998’ (my emphasis).

[81] Before us it was argued on behalf of the employer that the arbitrator
had failed to apply her mind to the issue before her, namely, the invalidity
of the exemption on the basis that it was improperly granted. The fact that
she failed to apply her mind was, it was argued, demonstrated by her
making the finding that it was common cause between the parties that the
exemptions were valid for eighteen months. I do not agree for three
reasons. First, the finding falls short of supporting the inference of failure
to apply her mind. In my view such finding suggests, if anything, that she
did apply her mind. The use of the word “valid” may, in this regard, have
been erroneous. However, it must be read in the context of the entire
award. The arbitrator’s statement refers to the period during which the
exemption was in force as envisaged in item 12(1). This item extends the
currency of agreements beyond the repeal of the old Act, albeit for a period
of 18 months. Secondly, it is a well-known rule of interpretation that the
whole document must be considered and that words in it must be read in
their context. It is therefore impermissible to take a word, in isolation, and
give it a particular meaning. Thirdly, it appears from the quotation in para
14 above that the appellant’s counsel had argued before the arbitrator that
the exemption was valid for a period of 18 months from the
commencement of the current Act.

[82] In argument before us a considerable amount of time was devoted to
the enquiry as to what were the real issues before the arbitrator. While it is

true that during the opening addresses before the arbitrator the issues may
have been expanded upon, sight must not be lost of the fact that she had to
arbitrate the same dispute that had earlier been unsuccessfully conciliated. I
have serious reservations about whether parties appearing before an
arbitrator, in matters such as the present, can raise issues not covered in the
dispute which was submitted for conciliation. In terms of s 135 of the
current Labour Relations Act, certain jurisdictional facts must be in
existence before such a dispute can be arbitrated. These are: (a) the same
dispute must have been unsuccessfully conciliated; and (b) a period of 30
days from the date of referral must have elapsed or a certificate to the effect
that conciliation has failed must be issued by the mediator.

[83] In National Union of Metalworkers of SA & Others v Driveline
Technologies (Pty) Ltd (2000) 21 ILJ 142 (LAC) Zondo AJP (Mogoeng
AJA concurring) rejected the proposition that a party could pursue a
dispute, in arbitration or in the Labour Court, which has not been referred
to conciliation. The learned Judge President said at para 62:
‘At 1214J-1215A in[Numsa & Others v Cementation Africa Contracts (Pty) Ltd (1998)
19 ILJ 1208 (LC)] the Labour Court made statements to the effect that, after
conciliation, a party which wants to take a dismissal further is bound by the conciliating
commissioner’s description of the dispute in the certificate of outcome. I do not agree
with this. The position is, as the Labour Court correctly pointed out in that case, that a
party cannot change the nature of the dispute. I would add that the conciliating
commissioner is also bound not to change the nature of the real dispute between the
parties. If he did, the party that seeks to take the matter further would not be bound by a
wrong description of the dispute but would have a right to take further the true dispute
that was referred to conciliation and give a correct description of the dispute. What the
parties are bound by is the correct description of the real dispute that was referred to
conciliation.’

[84] In the light of the provisions of s 135 the dispute that was before the
arbitrator was the employer’s failure to pay minimum wages in compliance

with the new collective agreement. Its nature could not be altered by the
parties. While the legal representatives on both sides alluded to the real
dispute during their opening statements, they also referred to issues
pertaining to the defence raised by the employer. These remarks were
aimed at defining the issues relating to the exemption and its application to
the new collective agreement. In his opening statement counsel for the
employer said:
‘Madam Commissioner the complaint against my client, Tao Ying, is its failure to apply
a collective agreement, it was formulated in the referral to the CCMA, and the relief
sought is compliance with a collective agreement, that is what my learned friend has
articulated to you, that what he wants from you is an order that we shall comply with
the Bargaining Council agreements.’

[85] Consistently with the dispute referred to above, counsel for the
appellant put the following question to its employee at the arbitration:
‘Right, now you are aware that the union in this case is asking for an order that you
comply with the minimum wages prescribed by the Bargaining Council?... Ja.’

The employer’s defence was that the exemption granted to it in April 1997,
when properly construed, continued to relieve it of its obligation. As stated
above, the employer relied on the clause that said it was exempted from
‘Part 2 of the Main Agreement as replaced from time to time by any
succeeding agreement’. The answer to the question raised lies in the
interpretation of this clause.

[86] In construing the exemption it must be read as a whole. If it is read in
this way, I agree with Zondo JP that there appears to be a conflict between
the first and second clauses, particularly that portion of the first clause
which refers to the main agreement as replaced by succeeding agreements.
However, to the extent that this clause refers to the main agreement as
amended or extended, it is consistent with the second clause. What it means

is that the exemption would continue to apply to the agreement in its
amended or extended form. The important issue here being that it is still the
same agreement against which the exemption was originally granted. To
this extent the currency of the exemption corresponds with that of the main
agreement. This much was conceded by the appellant’s counsel in their
written argument before us. They stated in para 37:
‘37.1 The proper construction of a legal instrument requires a consideration of the
document taken as a whole. Effect must be given to every clause in the instrument and,
if two clauses appear to be contradictory, an effort must be made to reconcile them in
order to do justice to the intention of the framer of the document.

37.2
In the present case the textual reconciliation of the two clauses is no complex
matter. The two provisions are fully compatible and, read together, signify that the
exemption, subject to it not been withdrawn at an earlier date, is to continue throughout
the life of the agreement. If the agreement is not extended the exemption lapses; if it is,
the exemption continues for the extended period.’

[87] The difficulty arises though when effect is given to that part of the
exemption which says it would apply to the main agreement as replaced
from time to time by succeeding agreements. What becomes immediately
clear, in this instance, is that the focus of the exemption is no longer the
main agreement but the agreement that replaces it. The phrase ‘exempted
from Part 2 of the Main Agreement as replaced from time to time by
succeeding agreements’ is, in my view, meaningless. This is so because the
entire agreement has, by now, fallen away. To maintain that an employer
is, in these circumstances, exempted from an agreement which is no longer
binding ineluctably leads to an absurdity. This part of the clause is so vague
that no effect can be given to it (Commissioner for Inland Revenue v
Golden Dumps (Pty) Ltd 1993 (4) SA 110 (A) at 116E and the authorities
there cited).

[88] Furthermore the phrase ‘any succeeding agreement’ would have to
be interpreted in the context of the exemption. It certainly cannot bear its
wide literal meaning simply because the bargaining council’s authority to
grant an exemption in terms of s 51 of the old Act was limited to
agreements binding in terms of that Act only. Therefore, reference to any
succeeding agreement in the clause must have been intended to mean
agreements which were binding in terms of the old Act. That much is clear
from Item 12(8) which provides:
‘After the commencement of this Act and despite the repeal of the Labour Relations Act
any person or class of persons bound by an agreement or award remaining in force in
terms of sub-item (1), may apply in accordance with the provisions of section 51 of the
Labour Relations Act for an exemption from all or any of the provisions of that
agreement or award (as the case may be). Any application so made, must be dealt with
in terms of the provisions of section 51 and, wherever applicable, any other relevant
provisions of the labour Relations Act, in all respects as if the provisions in question
had not been repealed.’

[89] Item 12(8) taken together with s 51 reveals that there are
jurisdictional facts which had to be in existence prior to the granting of
exemptions by the bargaining council. These were: an application made in
the prescribed form and manner; an agreement entered into by the parties to
a bargaining council; and that such agreement be a binding agreement in
terms of the old Act. In truncated form s 51 reads:
‘(1)
Whenever application is made in the prescribed form and manner for the
exemption of any person or class of persons from all or any of the provisions of an
agreement entered into by the parties to a conciliation board, which is binding in terms
of this Act, or from all or any of the provisions of an award and the Minister is of the
opinion that –

(a)
the terms and conditions of employment of such person or class of persons are
substantially not less favourable to him or them than the terms and conditions of

employment prescribed by that agreement or award….

he may, if he deems it expedient to do so, grant exemption from all or any of the
provisions of the agreement or award concerned to or in respect of that person or class
of persons, for such period and subject to such terms and conditions as he may
determine. The period for which exemption is granted may commence on a date prior to
that on which the exemption is granted but not earlier than the date on which the
application was made in terms of this sub-section….

(3)
Application for exemption from all or any of the provisions of an agreement
entered into by parties to an industrial council which is binding in terms of this Act may
be made to the industrial council concerned, or to any committee to which the powers of
the council under this section have been delegated in terms of section twenty-five, and
the powers conferred on the Minister by sub-section (1) may mutatis mutandis be
exercised by such council or committee.

(4)
The terms and conditions of an exemption granted under sub-section (1) or (3)
shall be incorporated in a licence of exemption, signed by an officer or secretary of the
council or committee concerned, as the case may be, and a copy thereof shall be
transmitted to such person or persons as the officer or the secretary, as the case may be,
considers necessary….’

[90] In my view, it was permissible for the arbitrator to consider the ambit
and scope of the exemption and form an opinion on whether it indeed
exempted the employer from paying the minimum wages as contemplated
in the new agreement. Following her assessment of the exemption, she was
entitled to say its application did not extend to the new agreement and
therefore the employer was not excused from paying the minimum wages.
That was the effect of her finding, namely that the currency of the
exemption lapsed when the old agreement terminated.

[91] But even if one were to accept as correct the interpretation contended
for by the appellant, it would still bear the duty of proving that the new

agreement has indeed replaced the old one because without that factual
basis the exemption cannot be construed to apply to the new agreement. In
this regard the appellant led the evidence of only Mr Willem Coetzee, the
bargaining council’s regional manager. At the arbitration he testified that
he did not know whether or not the old agreement had been terminated at
the time the new one came into operation. He said, however, that such an
agreement could co-exist with non-cancellation. His evidence continued as
follows:
‘Now on 10 November 1996 was there an industrial council agreement, as it was then
known, in force in the metal industry? ---This, I have a list of the instructions if you will
bear with me a second. Can I give it to you?
Yes ---That was for ease of reference because there were many, many agreements
published from 1980 to current and I have given you the Government Gazette numbers
and the pages.
Here we are ---Yes sir. I’ve given you an account of what transpired from 27 June 1980,
how many times the agreement was amended, extended, re-enacted, and the last one
was done on 6 August 1999 in Government Gazette 20330 on page 17….
So the agreement that, so there was an agreement in place on 10 November 1999, sorry
1996, am I right Mr Coetzee? ---Yes sir, it was in force for two days.
Commissioner: Agreement in place on?
Mr Beaton [for the appellant]: 10 November 1996.
Commissioner: And it was in place for two days?
Mr Beaton: Yes, on 10 November it had been in place for two days. Now Mr Coetzee
are you aware of any cancellation of that main agreement prior to 31 March 1998? ---
The agreements are normally cancelled by the minister before he re-enacts a new one
otherwise there would be two in operation.
Yes, so I assume that would take place pari passu? --- That’s right.
Other than that are you aware of any cancellation? --- Not off the top of my head sir.’

[92] The appellant relied solely on Coetzee’s advice for the contention
that the exemption still enured as at the time the present dispute arose. This
is quite clear from the correspondence between it and him. In a letter dated
14 December  1999 Coetzee responded as follows to an enquiry about the

duration of the exemptions:
‘Your correspondence dated 20th September 1999 which was received by this office
[on] 1st December 1999 in the above regard has reference.
Scrutiny of the confirmed minutes of the Regional Council Meeting where these
exemptions were granted, revealed no specific expiry date. I would therefore assume
that the exemptions would be in force until such time as the council, in writing
withdraws the exemption, or the expiry date, whichever is the soonest.’

This letter reveals Coetzee’s thinking which was the basis of his opinion
that the exemption in question still applied. He held the view that since the
exemption itself had not been withdrawn and it had no specific expiry date,
it continued to apply for the duration of the old agreement which in his
view, had not been cancelled even at the time he testified before the
arbitrator in January 2000. The same views were repeated by him in the
letters addressed to the appellant dated 11 April 2000 and 5 July 2000.

[93] When asked about the duration of the exemptions by the union’s
attorney (at the arbitration) Coetzee said:
‘Again I refer to page 10 and to page 14, sorry, 13, these agreements are also exempted
from 19 March 1997 for the duration of the agreement? --- Yes sir.
How long is that? --- Can I just refer you to the previous one to make myself clear
please? We were referring in the previous one to paragraph 2, Engineering Industries
Pension Fund agreement which was published under government notice R627 of 19
April 1996, which is a completely different agreement to the one that we referring to in
the exemption … (intervenes)
I’m quite aware of that. --- If you look at the list that we distributed a little while ago
you will find that the council’s main agreement started off in 1980 and it was not
rescinded in the sense that there is no such agreement in force any more therefore the
agreement which was in force in 1980 is currently today still in force so, to answer your
question, if the exemption was issued on 19 March 1997 then while the agreement is in
force that exemption will be in force’ (my emphasis).

[94] It is quite clear that Coetzee linked the currency of the exemption in

question to the duration of the main agreement. In my view, his reading of
the exemption was, in this regard, correct and is consistent with the
interpretation preferred above. However, his view that the old agreement
was still in force in January 2000 was clearly wrong because in terms of the
transitional provisions it terminated in May 1998, a month after the new
agreement came into operation. As indicated above, the question of the
latter agreement replacing the former did not arise in this matter. It follows
that there is no basis for extending the exemption in question to the new
agreement. That exemption lapsed when the old agreement was terminated.

[95] Before us the Labour Appeal Court was criticised for holding that by
purporting to extend the exemption beyond the duration of the main
agreement, the bargaining council acted ultra vires. Counsel for the
appellant argued that the Labour Appeal Court failed to appreciate that the
exemption granted by the bargaining council had two components which
must not be conflated. The first, so he argued, concerns the main agreement
which continued to be of force for 18 months; and, the second, concerns the
new agreement which constitutes a replacing agreement as contemplated in
the survival clause dealt with above. He contended that the constitution of
the bargaining council empowers it to grant exemptions. While it may be
true that the bargaining council’s constitution gives such power to it, the
argument loses sight of a fundamental issue which is that the appellant’s
application for exemption was made in terms of Item 12(8) and
consequently it had to be determined in terms of the relevant provisions of
the old Act only. The bargaining council had no authority whatsoever to
deal with that application in terms of its constitution. Moreover, the
bargaining council could not, acting in terms of s 51 of the old Act, validly
grant an exemption from an agreement which was binding in terms of the
current Act in circumstances where there was no application before it for
exemption from such agreement.

[96] There is simply no factual basis for the contention, made by the
appellant, that the bargaining council acted in terms of its constitution in
granting the exemption. Coetzee’s testimony on this issue was that the
bargaining council acted in terms of the old Act. His evidence was as
follows:
‘But at the time that this exemption was granted, the date on the documents to which
you have referred is 7 April 1997, at that time which exemption procedure applied?---
The same one that applied in 1980 sir.
And that is the one on page 4? ---That is the one referred to on page 4, top left-hand
corner.’

[97] Nowhere in his testimony did Coetzee say that the exemption was
granted in terms of the bargaining council’s constitution, following the
procedure provided for in the current Act. Nor did the other witness called
by the appellant, at the arbitration hearing, testify on this issue. The facts
established at that hearing do not support the inference that the council
acted on authority derived from its constitution. Indeed counsel for the
appellant submitted to the arbitrator that the exemption was valid for a
period of 18 months from the coming into operation of the current Act. In
these circumstances the criticism levelled at the Labour Appeal Court was
unwarranted.

[98] My Brother Musi assumes, without deciding, that the irregularities
brought up for the first time at the hearing of this appeal were permissibly
raised. I am not willing to do so. I agree with the submission made by
counsel for the union that the appellant’s case, as set out in its founding
affidavit, does not cover the issue of the arbitrator having exceeded her
powers by reason of considering the duration of the exemption. Nor does it
cover the other irregularities dealt with in Musi AJA’s judgment. Our
courts do not allow applicants in review proceedings to raise new grounds

of review in replying affidavits or from the bar during argument (Director
of Hospital Services v Mistry 1979 (1) SA 626 (A) at 635H-636B).

[99] But apart from the timing and manner in which those irregularities
were raised, in the present case they do not justify interference with the
award because the arbitrator has taken into consideration other factors,
properly placed before her, which support her conclusion. If we accept that
the award we are concerned with here constitutes an administrative action,
then the existence of irregularities by itself alone does not warrant
interference unless there was no other material before the arbitrator which
justified the conclusion she reached. At the time the award was issued our
Constitution guaranteed, inter alia, the right to administrative action which
was justifiable in relation to the reasons given for it and the right to a
procedurally fair administrative action as two separate and distinct rights.
The Constitution did not, however, guarantee an entitlement to a perfect or
much less administrative action that was free of procedural errors. Instead
what was guaranteed was procedural fairness (Bel Porto School Governing
Body v Premier, Western Cape 2002 (3) SA 265 (CC) para 104 and the
authorities there cited). A complaint that is based on irregularities is
ordinarily aimed at showing that the right to procedural fairness has been
infringed. Over the years our courts have developed a test for determining
whether an irregularity complained of has resulted into procedural
unfairness. The test is whether the irregularity vitiates the entire
administrative action. If the answer to this question is in the affirmative,
then the administrative action in question must be set aside. However, if
there was material before the administrative functionary, justifying the
action taken, the court would not be entitled to interfere even if an
irregularity had been committed.

[100] Recently this court has, in the South African Veterinary Council and

another v Veterinary Defence Association 2003 (4) SA 546 (SCA),
considered the issue of irregularities in the context of the right to a
procedurally fair administrative action as was contemplated in the interim
Constitution. Writing for the court Farlam JA said (para 35):
‘I turn to consider whether a reviewable irregularity took place. It is clear from the
authorities that if a disciplinary tribunal has applied the wrong criterion in making a
finding of guilt the application of such criterion constitutes a reviewable irregularity,
which can only be ignored if it is clear that if the correct criterion had been applied the
finding would have been the same: see, for example, Hira and Another v Booysen and
Another 1992 (4) SA 69 (A) at 95C-F.’

The learned Judge continued (para 40):
‘In view of the fact that it is clear that the tribunal adopted an erroneous approach to the
matter the proceedings can be saved only if it is clear that despite the irregularity Dr
Krawitz was not prejudiced because the finding would have been the same if the correct
approach had been applied: cf Le Roux and Another v Grigg-Spall 1946 AD 244 at
254.’

[101] The doctrine of judicial precedent obliges us to follow this decision
unless we are convinced that it is wrong (Contract Forwarding (Pty) Ltd v
Chesterfin (Pty) Ltd 2003 (2) SA 253 (SCA) para 9). I am not so convinced
despite what was stated in Rustenburg Platinum Mines (Rustenburg
Section) v Commission for Conciliations, Mediation and Arbitration 2007
(1) SA 576 (SCA) paras 30 and 31. The decision in the South African
Veterinary Council was not considered in Rustenburg Platinum Mines.

[102] A similar test was adopted by the Constitutional Court in Prinsloo v
Van der Linde 1997 (3) SA 1012 (CC) para 36 and Pharmaceutical
Manufacturers Association of SA: In re Ex parte President of the Republic
of South Africa 2000 (2) SA 674 (CC). In the latter case the Constitutional
Court said (para 90):
‘Rationality in this sense is a minimum threshold requirement applicable to the exercise

of all public power by members of the Executive and other functionaries. Action that
fails to pass this threshold is inconsistent with the requirements of our Constitution and
therefore unlawful. The setting of this standard does not mean that the Courts can or
should substitute their opinions as to what is appropriate for the opinions of those in
whom the power has been vested. As long as the purpose sought to be achieved by the
exercise of public power is within the authority of the functionary, and as long as the
functionary’s decision, viewed objectively, is rational, a Court cannot interfere with the
decision simply because it disagrees with it or considers that the power was exercised
inappropriately’ (my emphasis).

[103] In this case the parties raised before the arbitrator the question of the
duration of the exemption as one of the issues to be considered in
arbitrating the dispute. In fact, as stated above, the only basis on which the
award was challenged was that the arbitrator failed to apply her mind to the
duration of the exemption. She considered the material before her and came
to the conclusion referred to in para 80 above. The evidential material
presented at the arbitration supported the finding that the exemption lapsed
when the old agreement terminated and that when the present dispute arose
in August 1998, the exemption was no longer in force. Consequently her
award cannot, in my view, be set aside.

[104] For these reasons I would dismiss the appeal.

____________________
C N JAFTA
JUDGE OF APPEAL

MUSI AJA:

[105] I have had the benefit of reading the judgments prepared by my
Brothers Nugent and Jafta. I agree with Jafta JA that the appeal must be
dismissed for reasons he so lucidly articulates. However I have adopted a

different approach which leads to the same conclusion. I propose to deal with
three issues, namely, the grounds of review on which the arbitrator’s award
was challenged; the nature of the dispute before her; and the irregularities
allegedly committed by her during the arbitration proceedings.

[106] Initially the award was challenged on three bases. The appellant
contended in its founding papers that the bargaining council ought to have
been joined because the exemptions granted by it were being challenged. It
also claimed that the arbitrator had exceeded her powers in entertaining the
dispute because she had no jurisdiction to do so in terms of the Labour
Relations Act 66 of 1995 (the LRA). However these two grounds of attack
were not pursued in the court below and in this court. Nothing more need be
said about them.

[107] The sole ground of review in which the appellant persisted is that the
arbitrator failed to apply her mind to the terms of the exemptions granted to it
in 1997. In its founding affidavit the complaint is set out in the following
terms:
‘9.23 It is also submitted that the First Respondent failed to apply her mind to the
provisions of the exemptions previously granted to the Applicant during March 1997. It is
the Applicant’s position that the exemptions previously granted still enure to its benefit
since they were granted in respect of the wage provisions of the Main Agreement
published on 27 June 1980:
“as amended and/or extended and/or replaced from time to time by any succeeding
agreement. . . .” (The deponent’s underlining)
9.24
Should she have considered them properly she would not have given the award she
did.
9.25
It is submitted that the conduct of the First Respondent as outlined above amounts
to:
i)
a defect as contemplated in subsection 145(1) of the Labour Relations Act, No 66
of 1995; alternatively

ii)
a permissible ground in law as provided for in section 158(1)(g) of the Act, to
review and set aside the function and/or act performed by the Respondent, wherefore it is
prayed that the Honourable Court will grant an order in terms of which the First
Respondent’s award is reviewed and set aside as prayed for in the Notice of Motion.’

[108] For its cause of action the appellant relied solely on the provisions of
the LRA and in order to succeed it had to prove that its challenge was based
on one or more of the grounds of review contained the sections of the LRA it
had relied upon, Section 145 provides:
‘(1)
Any party to a dispute who alleges a defect in arbitration proceedings under the
auspices of the Commission may apply to the Labour Court for an order setting aside the
arbitration award –
(a)
. . .
(2)
a defect referred to in subsection (1), means –
(a)
that the commissioner –
(i)
committed misconduct in relation to the duties of the commissioner as an
arbitrator;
(ii)
committed a gross irregularity in the conduct of the arbitration proceedings;
or
(b)
that an award has been improperly obtained.’

[109] The word ‘defect’ in s 145 bears four meanings. It means a misconduct
committed by an arbitrator or a gross irregularity which she or he has
committed during the arbitration proceedings or an act performed by an
arbitrator falling beyond his or her powers or that the award was improperly
obtained. Any complaint which does not fall within the ambit of any of the
four defined meanings of the word does not constitute a defect as
contemplated in s 145.

[110] Clearly the only ground possibly covered by the appellant’s complaint
is that relating to commission of a gross irregularity in the conduct of
arbitration proceedings.

[111] In argument in this Court the grounds of review were somewhat
expanded to include a contention that the arbitrator exceeded her powers by
inquiring into and basing her award on an issue that was not properly before
her, namely, the currency of the exemptions. Related to this is a contention
that no notice had been given that such issue would be considered and that
the parties had not been given the opportunity to address it. It was also
contended that the sole issue that was properly before the arbitrator was the
validity of the exemptions on the basis averred by the union and that she had
no authority to enquire into such issue. Finally it was contended that the
award was not rationally justifiable in that it had been based on an erroneous
finding that it had been common cause that the exemptions had expired. The
latter contention introduces the requirement enunciated in Carephone (Pty)
Ltd v Marcus NO 1999 (3) SA 304 (LAC) to the effect that an arbitration
award must be rationally justifiable. See also Shoprite Checkers (Pty) Ltd v
Ramdaw NO (2001) 22 ILJ 1603 (LAC). I proceed to deal with these grounds
and issues incidental thereto. In doing so I leave aside the question of whether
it was permissible to raise and canvas new grounds that were not included in
the appellant’s review application and not even canvased in the court a quo.

[112] I deal first with the question of whether the validity of the exemptions
on the basis alleged by the third respondent (the union) was the sole issue
before the arbitrator. It is so that the opening statement made by the union
representative at the start of the arbitration does give the impression that the
dispute was about the validity of the exemptions, it being alleged that they
were irregularly granted, in that the union or its members, had not been
consulted before they were granted. However, such statement must be read in
the context of the documentation filed of record as a whole and other
material, including statements made by the appellant’s then legal
representative.

[113] It is noteworthy that the union’s representative concludes that
statement with a prayer that ‘the respondent company comply with the
collective agreement’. The complaint that the union had taken to the CCMA
was that the appellant was not paying its employees (the union’s members)
the minimum wages that had been determined by the collective agreement
concluded in the bargaining council and which came into operation on 14
April 1998. This much is clear from paragraph 3 of the referral form 7.11
which reads:
‘3 The nature of the dispute:
(a)
The dispute is about: Tao Ying Metal Industry’s failure to comply with the
minimum wages and conditions in terms of Metal and Engineering Industries
Bargaining Council’
What the union wanted was for the CCMA to conciliate this dispute about the
applicant’s failure to pay, with a view to enforcing payment of the minimum
wages. The certificate of non-resolution issued by the CCMA reflects the
dispute as: “collective bargaining provisions – interpretation or application”
(read enforcement for application). Likewise the Request for Arbitration form
reflects the dispute as: ‘application of collective agreement.’

[114] That the dispute before the arbitrator was about the interpretation or
application of the collective agreement was confirmed by the appellant’s
representative when he stated the following:
‘Madam Commissioner the complaint against my client, Tao Ying, is its failure to pay a
collective agreement, it was so formulated in the referral to the CCMA, and the relief
sought is compliance with a collective agreement, that is what my learned friend has
articulated to you, that what he wants from you is an order that we shall comply with the
Bargaining Council agreement.’
The appellant’s representative then went on to submit, by way of a point in
limine, that the agreement in terms of which the exemptions had been granted
was not a collective agreement within the meaning of item 12 of schedule 7

to the LRA. The point he was making, if I understand it correctly, was that
the CCMA had no jurisdiction to interpret or apply an agreement
promulgated under s 48 of the 1956 Labour Relations Act and, by
implication, the exemptions granted thereunder, because such an agreement is
not a collective agreement as contemplated in the LRA.

[115] The issue of the exemptions was raised by the appellant in the form of
a defence to the union’s claim for payment of the minimum wages. Such
defence was that the appellant was not obliged to pay such wages because it
had been exempted from doing so and referred to the relevant licences of
exemption, in particular, the exemption from part 2 of the 1980 agreement
(the main agreement). It is in response to that defence that the union raised
the issue of validity when it alleged that the exemptions were irregularly
granted and therefore invalid. But this does not detract from the fact that the
real dispute before the arbitrator was enforcement of the terms of the
collective agreement relating to minimum wages. In fact the appellant clearly
accepted this to be the position when it stated the following in its founding
affidavit in the review application:
‘9.2
In terms of the dispute referral the dispute is about the applicant’s failure to comply
with minimum wages and conditions in terms of Metal and Engineering Industries
Bargaining Council.’

[116] Now it is so that the arbitrator had no authority to enquire into the
validity of the exemptions on the basis that they had been improperly granted,
and bearing in mind that the bargaining council had been excluded from the
proceedings. However, as mentioned above, that was not the sole issue before
her. At any rate, this issue became water under the bridge as it appears that
the union had, during the course of the proceedings, accepted the validity of
the exemptions.

[117] I now turn to consider the allegation that the expiry of the exemptions
was not properly before the arbitrator and was not canvassed. During
argument in this court, reference was made to a passage in the questioning of
Mr Coetzee, the appellant’s chief witness, by the arbitrator and from this
counsel who appeared for the appellant in this court suggested that the issue
of the duration of the exemption was generated by the arbitrator herself. He
further contended that not only had the parties been given no notice that the
issue would be raised, but also that they were not given an opportunity to
address it.

[118] A closer perusal of the record of the arbitration proceedings reveals
that the issue was first raised by the appellant’s legal representative in his
address at the start of the arbitration proceedings. In outlining the further
point in limine that he had raised, the appellant’s counsel quoted item
12(1)(a) of schedule 7 to the Labour Relations Act to the effect that an
agreement promulgated under s 48 of the 1956 Labour Relations Act that was
in force immediately before the coming into operation of the new Labour
Relations Act (on 11 November 1996) would remain in force and enforceable
for a period of 18 months from the date of coming into operation of the latter
Act. He then stated the following:
‘Now the 18 month period takes you to March 1998 the exemptions which are challenged
in this arbitration were granted in April 1997, in fact if I am not mistaken on 7 April 1997
so that they were granted in terms of the Industrial Council Agreement promulgated in
terms of s 48 of the old act and were in force until March 1998’ (my emphasis).
Clearly this statement means that he was of the view that the exemptions
expired in about March 1998 (he probably confused March with May). This
statement is significant in another respect to which I shall turn in due course.

[119] In his heads of argument the appellant’s legal representative argued the
point in limine that he had earlier outlined. In doing so he did not retract the

statement to the effect that the exemptions had expired. In response to the
point in limine aforesaid, the union representative complained vaguely that
not enough information had been provided but nonetheless proceeded to
make a statement the effect of which was that the exemptions had expired
with the expiry of the 18 months from the inception of the LRA as provided
for in item 12(1) of schedule 7.

[120] The duration of the exemptions was also canvassed with Coetzee in his
evidence. He was asked how long the exemptions lasted and his response was
as follows:
‘If you look at the list that we distributed a little while ago you will find that the council’s
main agreement started off in 1980 and it was not rescinded in the sense that there is no
such agreement in force any more therefore that agreement which was in force in 1980 is
currently today still in force so, to answer your question, if the exemption was issued on 19
March 1997 then while the agreement is in force the exemption will be in force.’
Further on he says:
‘So it is not only my opinion and my council’s opinion, it was also the opinion of the
Exemptions and Arbitrations Board that while this agreement is running the exemption is
issued to the company for the duration of that agreement until such time as the exemption
is drawn . . .’
Coetzee’s view was that the exemptions were linked to the duration of the
main agreement and that for so long as it remained in force so would they,
unless withdrawn by the bargaining council or the Minister. Of course the
tenor of his evidence was also that the exemptions were still in force at the
time of arbitration but he seemed to have assumed that the main agreement
was still in force. The question of the effect of the 1998 collective agreement
on the exemptions was not canvassed with him.

[121] In my view, the above evidence shows that the issue of the expiry of
exemptions was indeed canvassed by the parties and it is not as if the
arbitrator went on a frolic of her own in dealing with it. The contention that

the issue was not part of the issues before the arbitrator, runs counter to what
the appellant stated in its founding affidavit:
‘8.16 Eventually the first respondent saw it fit to declare a dispute against the applicant
for underpayment of wages alleging that the exemptions held by the applicant in fact
expired or were invalid exemptions’ (my emphasis).
Moreover the expiry of the exemptions was not only relevant for a
determination of the issues in dispute but was also an integral element of the
defence based on the exemptions, which, once it arose, could not be ignored.
I would say that the arbitrator would have misconducted herself had she
ignored it.

[122] In my view, the finding that it had been common cause that the
exemptions had expired emanates directly from, and is supported by, the
statements made by the representatives of the parties, as indicated above. The
difficulty that confronts this court is that nowhere in the founding affidavit
filed on behalf of the appellant in the review application was such finding
challenged nor was it even mentioned. The application was served on the
arbitrator and she surely would have responded and cleared the matter had
the allegation been made that she would have so grossly misdirected herself.
Besides, the award shows that the arbitrator’s own conclusion was that the
exemptions expired with the expiry of the main agreement when the new
collective agreement came into operation on 14 April 1998.

[123] The arbitrator differed with the legal representatives of the parties only
in respect of the exact date of the expiry of the main agreement and the
exemptions. She expressed the difference as follows:
‘These exemptions were not, with due respect to Advocate Beaton, valid for a period of 18
months. They remained valid for the duration of the main agreement. The agreement
terminated with the coming into operation of a collective agreement concluded in the
Metal and Engineering Industry Bargaining Council.’

Whether the arbitrator was correct in this regard is an issue I discuss
hereunder.

[124] It was also argued on behalf of the appellant that the phrase in the
founding affidavit ‘that the arbitrator had failed to apply her mind to the
provisions on the exemptions’ encompasses a gross irregularity that rendered
the award susceptible to review under s 6 of the Promotion of Administrative
Justice Act 3 of 2000 (PAJA). PAJA does not have retrospective effect and
therefore it does not apply to the present case. When the challenged award
was issued in July 2000, PAJA was not in existence, it having come into
operation on 13 November 2000.

[125] In my view, the only notable error committed by the arbitrator was her
finding referred to above that the exemptions lapsed when the new collective
agreement came into operation on 14 April 1998. The difficulty with this
finding is that it assumed that the coming into operation of the new
agreement had the effect of terminating the main agreement. However there
was no evidence to this effect. The only evidence that has a bearing on this
aspect is that of Coetzee. The tenor of his testimony was that the agreement
would be terminated by the occurrence of two events: a ministerial notice or
withdrawal by the bargaining council. None of these had occurred and
Coetzee suggested that the two agreements would have existed side by side.
In my view, the correct position is that adopted by the legal representatives
during the arbitration to the effect that the exemptions expired when the main
agreement lapsed at the end of the 18 months transitional period in May
1998. In any event, this error by the arbitrator does not detract from her core
finding that when the dispute arose in August 1998 the exemptions had
expired. If anything, this shows that the arbitrator did indeed apply her mind
to the terms of the exemptions.

[126] It has to be borne in mind that an irregularity has to be gross to render
an award susceptible to review. As to what constitutes a gross irregularity the
following dictum of Schreiner J in Goldfields Investment Ltd v City Council
of Johannesburg 1938 TPD 551 at 560 is instructive:
‘It seems to me that gross irregularities fall broadly into two classes, those that take place
openly, as part of the conduct of the trial – they might be called patent irregularities – and
those that take place inside the mind of the judicial officer, which are only ascertainable
from the reasons given by him and which might be called latent. . . . Neither in the case of
latent nor in the case of patent irregularities need there be any intentional arbitrariness of
conduct or any conscious denial of justice. . . . The crucial question is whether it prevented
a fair trial of the issue. If it did prevent a fair trial of the issues then it will amount to a
gross irregularity. (my emphasis) In matters relating to the merits the magistrate may err
by taking a wrong one of several possible views or he may err by mistaking or
misunderstanding the point in issue. In the latter case it may be said that he is in a sense
failing to address his mind to the true point to be decided and therefore failing to afford the
parties a fair trial. But that is not necessarily the case. Where the point relates only to the
merits of the case, it would be straining the language to describe it as a gross irregularity or
a denial of a fair trial. One would say that the magistrate has decided the case fairly but has
gone wrong on the law. But if the mistake leads to the court not merely missing or
misunderstanding a point of law on the merits, but to its misconceiving the whole nature of
the enquiry, or of its duties in connection therewith then it is in accordance with the
ordinary use of the language to say that the losing party has not had a fair trial.’

[127] The above dictum has been followed and applied in a long line of
cases including cases involving administrative decisions decided in this court
and the LAC. See Local Road Transportation Board v Durban City Council
1965 (1) SA 586 (A) at 598; Paper, Printing, Wood & Allied Worker’s Union
v Pienaar NO 1993 (4) SA 621 (A) at 638; Toyota SA Motors (Pty) Ltd v
Radebe (2000) 21 ILJ 340 (LAC) at 351; Stocks Civil Engineering (Pty) Ltd v
Rip NO (2002) 23 ILJ 358 (LAC) and Bramford v Metrorail Services
(Durban) (2003) 24 ILJ 2269 (LAC) at 2282. The same approach applies in
the review of irregularities in constitutional matters. See S v Shikunga 1997

(2) SACR 470 (NmSc) at 484 and S v Jaipal 2005 (1) SACR 215 (CC) at
234a-235i.

[128] I should conclude by pointing out that when viewed in its proper
perspective the complaint that the arbitrator failed to apply her mind to the
provisions of the exemptions in fact relates to interpretation. It was contended
in particular that she misconstrued the survival clause, the import of which
was that the exemptions applied to the new agreement and therefore
continued to enure to the appellant’s benefit. That was in fact the sole issue
that was pursued in the Labour Appeal Court and that was the issue
addressed in the original heads of argument filed on behalf of the appellant in
this court. In the premises I cannot, with respect, share the view of Nugent JA
that the Labour Appeal Court misconstrued the issues before it. I need also
emphasize that the contention that the validity of the exemptions was the sole
issue before the arbitrator and that she had no authority to arbitrate it was
certainly not raised in the appellant’s review papers, it emerging for the first
time in this court.

[129] I conclude that the challenged award is not vitiated by any irregularity
and is rationally connected to the material that was before the arbitrator. I
would dismiss the appeal.

___________________________
HM MUSI
ACTING JUDGE OF APPEAL