When to apply for rescission in the CCMA?

Vrydag, Julie 27th, 2012

When to apply for rescission in the CCMA?

Johanette Rheeder

 

Parties often do not fully understand the purpose of section 144 of the Labour Relations Act. It is sometimes used as a mechanism to try and correct the mistakes either of the parties made prior to or during the proceedings, or even as an attempt to rescind the finding they do not agree with. The requirements for a rescission application was the topic of an interesting set of facts in the case of Builders Trade Depot v CCMA & others [2012] 4 BLLR 343 (LC). It is common cause that the employee had been drinking whilst on duty and that, at the time of his dismissal, there was an existing written warning pertaining to the same offence applicable to him. After two rounds of arbitration in the CCMA, the employer sought to review the reinstatement award and a rescission award by another commissioner prior to the arbitration. A first arbitration took place and the employer failed to appear. The matter was set down for con/arb and the employer objected to it. The employee’s attorney confirmed that the matter will proceed on conciliation only and the employer consequently did not attend the proceedings. The matter proceeded in the absence of the employer, despite the agreement between the parties and the notification to the CCMA. Somewhat peculiarly, Commissioner A found that the dismissal was fair, even on the version of the employee. The employee applied for rescission of the award and commissioner A granted it. The matter was then again referred to arbitration and commissioner B, having heard the evidence of both parties, came to the conclusion that the dismissal was unfair. He ordered the employer to reinstate the employee with no back pay and to couple the reinstatement with a final written warning.

The rescission ruling

The employer opposed the rescission application on various grounds, inter alia that the employee did not have locus standi to apply for rescission as the arbitration was not heard in his absence; that the employee dishonestly carried on with the arbitration despite an agreement to the contrary and that the dismissal was fair and there was in any event no basis for the application. Commissioner A ignored the preliminary point relating to locus standi. He accepted that the employee had behaved in a “reprehensible” manner by proceeding with the arbitration, contrary to the agreement between the parties, but nevertheless found that the balance of convenience based on the established legal principles dictate that the application should be granted.

Is the ruling on rescission reviewable?

The Labour court considered the following question: “It is certainly unusual for a party who was present at the arbitration proceedings, rather than the absent party, to apply for the rescission of a subsequent award. But is it prohibited? Put another way, did commissioner A exceed his powers by considering the application”?

Rescission of CCMA awards are governed by section 144 of the LRA as follows:

 Any commissioner who has issued an arbitration award or ruling, or any other commissioner appointed by the director for that purpose, may on that commissioner’s own accord or, on the application of any affected party, vary or rescind an arbitration award or ruling–

(a) erroneously sought or erroneously made in the absence of any party affected by that award;

(b) in which there is an ambiguity, or an obvious error or omission, but only to the extent of that ambiguity, error or omission; or

(c) granted as a result of a mistake common to the parties to the proceedings.”

The employee argued in his application for rescission before the CCMA that the award had been “erroneously granted”, relying on section 144(a). However, he failed to take into account the second clause in that subsection – i.e. that the award must have been erroneously made “in the absence of any party affected by that award”.

According to the court, the first aspect that becomes clear from a reading of the section is that “any affected party” may apply for an award to be rescinded – i.e. not only the absent party. However, in terms of subsection (a), only an award erroneously made “in the absence of any party affected by that award” may be rescinded. In this case, the employer was affected by the award made in its absence but did not bring the application. Although the employee was also affected because he lost the case, it was not made in his absence. He was therefore clearly an “affected party” as required in the main clause of section 144, but the employee could not have been the affected party in whose absence the award was made, as contemplated in subsection (a). The court found that from a reading of section 144(a) that an employee who was present during arbitration proceedings, even though he was affected by the award, cannot apply for the rescission of the award in terms of subsection (a).

The court then considered the provisions of subsections (b) and (c) and found that sub section (b) is not applicable. Neither party has alleged that there was an ambiguity or an obvious error or omission in the award. That leaves subsection (c). Was the award made “as a result of a mistake common to the parties to the proceedings”? From the facts before the court, it seemed that the parties were ad idem that the dispute should be conciliated only on the first day, there were correspondence confirming it between the attorneys and the CCMA was notified. The commissioner mistakenly proceeded with arbitration. If there was a mistake, it was made by the commissioner, not the parties. The court found that the mistake was not common to the parties.  That is akin to the situation in Department of Health v Naidoo & another [2004] 9 BLLR 890 (LC), where the court held that variation in terms of section 144 was impermissible where a mistake was that of the arbitrator, and not one common to the parties.

To the court it was tempting to accept that the arbitration award was erroneously granted in the mistaken belief that the matter was to be dealt with as a con/arb. In the current case, not only did the applicant object, the parties reached agreement that arbitration would not proceed on the day of conciliation.

In this case, the award was not erroneously made in the absence of the party affected by the award, i.e. the employee, as contemplated by section 144(a), nor was the mistake common to the parties, as contemplated by subsection (c).

The court then took guidance from the interpretation of rule 42 of the Uniform Rules of the High Court and mentioned that apart from a slight effort to make the language plainer, section 144 is the same as that rule. The clause “mistake common to the parties” in rule 42(1)(c) (which is similar to section 144(a)) was interpreted in Tshivashe Royal Council v Tshivashe  1992 (4) SA 852 (A) at 863A–B [also reported at [1992] 2 All SA 511 (A) – Ed] to occur “where both parties are of one mind and share the same mistake”.

That is not what happened in this case; the employee, according the court, snatched at a bargain by carrying on with arbitration in the absence of the employer party, when both parties had been ad idem that the matter would only be conciliated. It is only when the award was issued some time later and it was not in his favour that he sought to have it rescinded.

The question who an “affected party” is who has locus standi to apply for rescission in terms of that rule and the common law was considered in United Watch & Diamond Co (Pty) Ltd v Disa Hotels Ltd 1972 (4) SA 409 (C) [also reported at [1972] 4 All SA 493 (C) – Ed]. In this case the court found that an affected party must show that he has a direct and substantial interest in the case giving him the right to intervene in the original application upon which the judgment was given or order granted.” In this case, the difficulty the court had was that the employee was present, although he had an interest, he was not the party at default who displayed the interest to intervene in the case or its outcome and therefore falls outside the scope of section 144(a).

It is also so that not only judgments (or awards) granted by default can be rescinded. The common law position was summarised by Trengove AJA in De Wet & others v Western Bank Ltd 1979 (2) SA 1031 (A) at 1041C–E. The courts seem to have a relatively wide discretion in regard to the rescission of default judgments, and a distinction seems to have been drawn between the rescission of default judgments, which had been granted without going into the merits of the dispute between the parties, and the rescission of final and definitive judgments, whether by default or not, after evidence had been adduced on the merits of the dispute.” The employee however, with his application did not fall properly within any of the three circumscribed circumstances envisaged by that section.

The court therefore found that commissioner A exceeded his powers when he granted the employee’s application for rescission. His decision to rescind his own award was reviewed and set aside and his original award applied.

Johanette Rheeder

johanette@jrattorneys.co.za

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