Posted: September 6, 2013 in Uncategorized
Tags: , , , , , , , ,

The Labour Appeal Court has recently in Herhold v Nedbank Limited [2012] 9 BLLR 857 (LAC); (2012) 33 ILJ 1789 (LAC) adopted the view that a latent defect or irregularity (or process related unreasonableness) would include an instance “[w] here a commissioner fails to have regard to material facts,… [as] this will constitute a gross irregularity in the conduct of the arbitration proceedings because the commissioner would have unreasonably failed to perform his or her mandate and thereby have prevented the aggrieved party from having its case fully and fairly determined” (at § [36]).


This view as based on the minority judgment in Sidumo & another v Rustenburg Platinum Mines Ltd & others [2007] ZACC 22; 2008 (2) SA 24 (CC) at § [267] where Ngobo J held that “‘[f]airness in the conduct of the proceedings requires a commissioner to apply his or her mind to the issues that are material to the determination of the dispute. One of the duties of a commissioner in conducting an arbitration is to determine the material facts and then to apply the provisions of the LRA to those facts in answering the question whether the dismissal was for a fair reason. In my judgment, where a commissioner fails to apply his or her mind to a matter which is material to the determination of the fairness of the sanction, it can hardly be said that there was a fair trial of issues”.


The Supreme Court of Appeal now in Herhold v Nedbank Limited [2013] ZASCA 97, found that the views held by Ngobo J was contrary to that of the majority approach and rejected the such “additional” ground of review inter alia as it led a situation where the “[t]he threshold for interference with the award is lower than in terms of the judgment in Sidumo” and it would lead to a situation where it would be “immaterial whether the result reached by the arbitrator is one that could reasonably be reached on the material before the arbitrator. The mere possibility of prejudice will suffice to warrant interference” (at §§ [17] to [20]).  The Court however stressed that this “does not mean that a latent irregularity, as Schreiner J originally used that term in the Goldfield Investments case, is not a gross irregularity within the meaning of s 145(2)(a)(ii). It is, but only in the limited sense mentioned earlier, where the decision-maker has undertaken the wrong enquiry or undertaken the enquiry in the wrong manner” (at § [22]).


The SCA further rejected the so-called “dialectical unreasonablenesss” review ground, i.e. “unreasonableness flowing from the process of reasoning adopted by the arbitrator” and indeed as the said “approach is also based on a dictum by Ngcobo J, this time in New Clicks, that reads: ‘There is obviously an overlap between the ground of review based on failure to take into consideration a relevant factor and one based on the unreasonableness of the decision. A consideration of the factors that a decision-maker is bound to take into account is essential to a reasonable decision. If a decisionmaker fails to take into account a factor that he or she is bound to take into consideration, the resulting decision can hardly be said to be that of a reasonable decisionmaker.’ The first thing to note about this dictum is that it expressly relates to the provisions of PAJA and the manner in which they are to be applied. As PAJA does not apply to reviews under s 145(2) of the LRA it is of no application to CCMA awards. Second, if applied by considering the reasoning of a CCMA arbitrator and determining that the reasons given for making an award are not such as to justify that award, its effect is to resuscitate this court’s decision in Rustenburg Platinum Mines Ltd (Rustenburg Section) v Commission for Conciliation, Mediation and Arbitration, supra, even though that decision was expressly overruled in Sidumo. Once again that is not a permissible development of the law” (at §§ [23] and [24]).


The court concluded in surmising that “[a]review of a CCMA award is permissible if the defect in the proceedings falls within one of the grounds in s 145(2)(a) of the LRA. For a defect in the conduct of the proceedings to amount to a gross irregularity as contemplated by s 145(2)(a)(ii), the arbitrator must have misconceived the nature of the inquiry or arrived at an unreasonable result. A result will only be unreasonable if it is one that a reasonable arbitrator could not reach on all the material that was before the arbitrator. Material errors of fact, as well as the weight and relevance to be attached to particular facts, are not in and of themselves sufficient for an award to be set aside, but are only of any consequence if their effect is to render the outcome unreasonable” (at § [25]).

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s