Scholtz v CCMA and Others (C675/2014) [2015] ZALCCT 45 (25 June 2015)

Principle:

When a commissioner enters into the merits of a dispute before the end of the arbitration, thus inducing a party to settle, it may be a reviewable irregularity.

Facts:

The applicant, Ms Elze Scholtz, was dismissed by Utilitas Bellville, a non-profit company that operates two old age homes. She referred an unfair dismissal dispute to the CCMA. The parties settled the dismissal dispute as well as a pending dispute before the High Court between the employee and the fourth respondent, Utilitas Ontwikkelings trust.

The applicant received the money and both parties acted in terms of the settlement agreement. However, one day short of six weeks later, she brought an application to the LC to have the agreement reviewed and set aside, mainly on the ground of undue influence.

The commissioner had not told Ms Scholtz that she would not succeed; what he did do, was to sketch two possible scenarios: either she withstood cross-examination, of which she had a 50/50 chance, thus showing that she was not negligent; or she didn't, in which case her dismissal would be fair. But even if she won the case "hands down", it would be unlikely that she would get more than six months' compensation.

The employee's case that the commissioner acted improperly and that she entered into the settlement agreement because of undue influence rests mainly on the commissioner's comments that he made off the record whilst facilitating settlement discussions between the parties. Although those discussions were expressly and literally off the record - the recording equipment was switched off - the employee tape recorded it and had it transcribed. Both parties agreed that, despite the provisions of rule 16 of the CCMA rules, the commissioner's comments are central to this application and could and should be disclosed.

The LC held each case has to be assessed on its own merits.The court did think that the commissioner overstepped the mark in expressing a prima facie view that, if the employee were successful, she was unlikely to receive more than six months' compensation. But his remarks must be seen in context. They were made off the record in circumstances akin to conciliation. And the commissioner was sketching different scenarios. He was not giving legal advice. He did point out the costs of litigation; but that is no more than a "reality check" without expressing a view on her prospects of success. The applicant was represented throughout by an attorney; and it was her attorney who mooted the possibility of settlement. The court therefore found that the settlement agreement should not be set aside on the grounds of undue influence.

Extract from the judgment:

Steenkamp J

[17]   The applicant argues that the commissioner conducted himself in a manner that left her no alternative but to settle.

[18]   This submission rests on the commissioner's remarks as set out above. The applicant argues that the commissioner expressed his views on the merits of the case, having heard only the evidence on chief of the employer's first witness, and induced her to settle. He entered into the merits of the matter and made it clear to her that it was not worth her while to continue.

[19]   It is so that, when a commissioner enters into the merits of a dispute before the end of the arbitration, thus inducing a party to settle, it may be a reviewable irregularity. Thus, in Kasipersad v CCMA the court noted that the commissioner had told the employee that he had a 50/50 chance of success (as did the commissioner in this case); that it would take between two to three months before the matter would be heard in the Labour Court; and that he might have to pay for legal representation and, if he lost, the employer's costs. Pillay J further noted:

"Except for her assessment of the prospects of success being a 50/50 chance, the other three outcomes sketched by the commissioner present a negative scenario for the applicant. She did not advise the applicant of the possible outcome if he succeeded.

.....................

By sketching only the four possible outcomes, the commissioner manifested bias against the applicant. As the commissioner elected to use the technique of scenario sketching, she ought to have presented fully and dispassionately all the consequences of proceeding with and withdrawing the dispute. If she did not intend to advise the applicant to withdraw the application, then her conduct had precisely that effect. It was not unreasonable for the applicant, a layperson, to infer from what she said that he was being advised to withdraw the dispute.

...........................

Giving advice is ... counterproductive to the objectives of conciliation. A party who is advised that she has a good case is unlikely to settle. One who is advised that he has a bad case is likely to capitulate, as happened in this case."

[20]   Mr Ackermann also referred to Anglo Platinum Ltd v CCMA where the court found that, when the commissioner gave direct legal advice when facilitating conciliation, he had induced the company to settle:

"The applicant contends that the decision to settle the matter on its part was influenced quite significantly by the advice its representative received from the commissioner. Whatever the reason for giving the advice, there seems to be no doubt that the commissioner acted outside his mandate and in so doing induced the applicant to enter into the settlement

agreement. It is on this ground alone that I believe that the settlement agreement stands to be set aside..."

[21]   I agree with these sentiments. But each case has to be assessed on its own merits. It is clear from the excerpts quoted above that the court in Kasipersad did not consider the remark of a "50/50 chance" to be improper; the learned judge says that, "except for her assessment of the prospects of a 50/50 chance", the other three scenarios presented a negative scenario for the applicant in that case. The same goes for the applicant in this case. And the commissioner did not tell Ms Scholtz that she would not succeed; what he did do, was to sketch two possible scenarios: either she withstood cross-examination, of which she had a 50/50 chance, thus showing that she was not negligent; or she didn't, in which case her dismissal would be fair. But even if she won the case "hands down", it would be unlikely that she would get more than six months' compensation.

[22]   I do think that the commissioner overstepped the mark in expressing a prima facie view that, if the employee were successful, she was unlikely to receive more than six months' compensation. But his remarks must be seen in context. They were made off the record in circumstances akin to conciliation. And the commissioner was sketching different scenarios. He was not giving legal advice. He did point out the costs of litigation; but that is no more than a "reality check" without expressing a view on her prospects of success. It must also be borne in mind that, contrary to the position in Kasipersad, the applicant was represented throughout by an attorney; and it was her attorney who mooted the possibility of settlement. And in Anglo Platinum the commissioner gave legal advice based on a decision of the Labour Court that had been overturned by the Labour Appeal Court. I do not think that the commissioner's remarks in this case constitute legal advice as opposed to a form of reality checking.

[23]   The commissioner reverted to conciliation at the end of the first witness's evidence in chief in circumstances where the applicant's attorney indicated that he did not wish to commence cross-examination as he still wanted to explore settlement overnight. It is only after he had made that remark that the commissioner made the "off the record" remarks with regard to settlement that he did.

[24]   In that context, I agree with the following remarks of Van Niekerk J in WESUSA v Slabbert Burger Transport (Pty) Ltd:

"[8]   The LRA acknowledges mediation (the nature of the process undertaken by the arbitrator in the pre-arbitration phase) as a preferred form of dispute resolution. Mediation is often a robust process in which the mediator will seek to persuade and cajole parties, using techniques that rely on gentle and less gentle pressure to reach agreement. Obviously, a mediator cannot overstep the mark and act dishonestly, or misrepresent a position to the parties, or engage in conduct that amounts to intimidation. In National Union of Metalworkers of SA & others v Cementation Africa Contracts (Pty) Ltd (1998) 19 ILJ 1208 (LC) Waglay J said:

'While a commissioner may not advise the parties on the merits or compel parties to adopt any particular view, he or she may indicate to the parties making the claims or demands the possible weaknesses in their claims or demands.'

[9]   There may often be a fine line involved here, but there are a number of self-evident guidelines that might apply in a situation where a panellist attempts, with the parties' agreement, to explore the prospect of a settlement before arbitrating a dispute. First, the hallmark of the process is its voluntary nature. The panellist must therefore protect the voluntary participation in the process of each party, and respect the right of the parties to reach their own agreement. Secondly, the panellist should conduct the process impartially. By this, I mean not only that the panellist should avoid a conflict of interest, but also that the panellist should avoid communicating any pre-existing opinion that might bring her integrity and impartiality into question. Any conduct that might compromise the position of the panellist as a neutral intermediary should be avoided. This does not imply, as the quote from the Cementation Africa judgment suggests, that the panellist is not entitled to provide an evaluation of a party's position nor sketch likely outcomes should a dispute proceed to arbitration. But the panellist should avoid any expression of her own views to the parties on the merits of their positions.

[10]   I am not persuaded that in the present instance, the arbitrator acted unethically. This is evident from Beer's own evidence in which the arbitrator's language is expressed in tentative terms. He avers that the arbitrator stated that if the matter proceeded to arbitration he would be asked and would have the power to award the employees a year's remuneration. These are the arbitrator's powers under the LRA, and the union would have been quite within its rights to seek that relief. It does not appear from Beer's evidence that the arbitrator expressed his own opinion on the outcome of any arbitration, or that he ever stated that he would make an award less favourable to the Respondent than the terms of the union's proposal. In other words, there is no evidence that the arbitrator pointed out anything other than a range of possibilities should the matter proceed to arbitration. It was for Beer to assess the Respondent's risk in the light of those possibilities, and to decide whether to settle the dispute on the terms proposed. In short, I am unable to find on the evidence before me that the arbitrator made any misrepresentations to Beer, that he subjected Beer to any form of duress, or that he acted otherwise in a manner that was unbecoming."

[25]   It seems to me that the commissioner's remarks in this case, albeit expressed strongly, are more akin to the situation in Slabbert Burger. The commissioner sketched different scenarios: It could be that the applicant withstood cross-examination and the employer could not show that she was negligent; or, on the other hand, the employer could show that she had not fulfilled her duties and had, as bookkeeper, been ignorant (like " 'n donkie met oogklappeaan"). On the other hand, if the dismissal was unfair, the likely outcome was that she would receive in the region of six months' compensation; but to both of these scenarios the commissioner added the caveat, "Ek loop nie die saakvooruitnie".

[26]   This is a case where the commissioner sailed close to the wind and came near to crossing the line, at the risk of mixing my sailing metaphors, from a robust conciliation process to one where he pressed too hard for a settlement. But in my view, given the context and the nature of the proceedings, I do not think that he did. Neither party objected to the mid-arbitration attempts, off the record, to settle; it was at the instance of the applicant's attorney; and, once the commissioner had sketched the risks and possible scenarios, everyone went home and the actual settlement was brokered between the parties' legal representatives, with no further input from the commissioner (other than his remarks post settlement, to which I shall return under the fourth review ground).

[27]   In all these circumstances, I am of the view that the first review ground cannot succeed.

[28]   The CCMA has already conducted an investigation into the commissioner's conduct; suffice it to say that he will be well advised to be particularly careful in future processes not to push too hard when discussing possible settlement with the parties.