WBHO Civil Construction (Pty) Ltd v Hlatshwayo N.O. and Others (JR2578/14) [2018] ZALCJHB 176 (10 May 2018)

Principle:

In arbitrators' awards, errors or misdirections, in themselves, do not give rise to a review for want of reasonableness; they only do so if the "distorting effect" is the production of a substantively unreasonable outcome.

Facts:

Following their participation in a 3 week protected strike in the construction industry, the employees returned to work on Friday, 13 September 2013, but were not allowed to work their Saturday overtime shift the next day, despite sub-contractors being entitled to work. Aggrieved by this, the individual respondents came to work on the Saturday - the events of which resulted in them being charged and subsequently dismissed for the "intimidation of sub-contractors and management and / or engaging in undesirable activities leading to the shut-down of the site on 14 September 2013".

At the CCMA the commissioner found the dismissal of the employees to be substantively unfair (because of an absence of guilt) and awarded them retrospective reinstatement. This decision was based on three findings: (1) it was wrong to issue the instruction that the Saturday overtime shift would not be worked; (2) the alleged rationale for the instruction - ie that management did not have time to plan - was without merit; and (3) "confusion reigned supreme" on the Saturday. The commissioner held that there was no evidence of intimidation.

The company sought to set aside the award. The LC found that the commissioner's finding that the employees were not guilty of intimidating sub-contractors was unreasonable. Based on video evidence it was clear that they were guilty of intimidating sub-contractors while outside the entrance gate after the employees had left the site.

Despite this, the LC decided not to interfere with the commissioner's decision that the dismissal of the individual respondents was substantively unfair and that they should be reinstated, because it could reasonably have been found at arbitration that the sanction of dismissal was unfair in the peculiar circumstances of this matter. This would then have justified the decision and the reinstatement award. But, the Court said, the commissioner's award of back-pay stood to be reviewed and set aside because, in circumstances where the individual respondents were guilty of intimidating sub-contractors, a reasonable decision-maker would have deprived them of back-pay as a mark of disapproval of their misconduct.

The judgment begins with a reminder that the LRA restricts the scope of review, saying that "mere errors of fact or law may not be enough to vitiate the award. Something more is required." Where on all the material before the commissioner, the result is reasonable, errors and misdirections on the part of the commissioner in arriving at his or her conclusion are of no consequence.

This judgment is an important warning to parties seeking to take an award on review. In arbitrators' awards, errors or misdirections in themselves do not give rise to a ground for review; they only do so if the "distorting effect" of those errors is to produce a substantively unreasonable outcome. The intention of the legislature was to restrict the scope of review when it enacted s 145 of the LRA, confining review to 'defects' as defined in s 145(2) - being misconduct, gross irregularity, exceeding powers and improperly obtaining the award. This judgment sets a high bar for review. Would-be litigators should take heed!

Extract from the judgment:

Myburgh AJ:

[41]   In an often-quoted passage, Murphy AJA said this in Mofokeng:

"However, sight may not be lost of the intention of the legislature to restrict the scope of review when it enacted s 145 of the LRA, confining review to 'defects' as defined in s 145(2) being misconduct, gross irregularity, exceeding powers and improperly obtaining the award. Review is not permissible on the same grounds that apply under PAJA. Mere errors of fact or law may not be enough to vitiate the award. Something more is required. To repeat: flaws in the reasoning of the arbitrator, evidenced in the failure to apply the mind, reliance on irrelevant considerations or the ignoring of material factors etc must be assessed with the purpose of establishing whether the arbitrator has undertaken the wrong enquiry, undertaken the enquiry in the wrong manner or arrived at an unreasonable result. Lapses in lawfulness, latent or patent irregularities and instances of dialectical unreasonableness should be of such an order (singularly or cumulatively) as to result in a misconceived enquiry or a decision which no reasonable decision maker could reach on all the material that was before him or her." (Own emphasis.)

[42]   In short, errors or misdirections, in themselves, do not give rise to a review for want of reasonableness; they only do so if the "distorting effect" is the production of a substantively unreasonable outcome. So where on all the material before the commissioner, the result is reasonable, errors and misdirections on the part of the commissioner in arriving at his or her conclusion are really of no consequence.

[43]   As to when a decision will be unreasonable, it will only be so if it is one that a reasonable decision-maker could not arrive at. It must thus fall outside of a notional range of reasonable decisions that could be reached on a given set of facts. It will fall outside this range if the decision is not "capable of justification" (i.e. justifiable) or, put differently, cannot "plausibly be reached on the material evidence". This will be the case if the award is "entirely disconnected with the evidence" or is "unsupported by any evidence" and involves "speculation by the commissioner". "It follows from this that [a commissioner's] award will be reasonable when there is a material connection between the evidence and the result, or, put differently, when the result is supported by some [material] evidence." In short, a wrong award is not, in itself, reviewable; to be so, it must be so wrong ("obviously wrong") as to be unreasonable. The result of this is that there will be many awards where this court differs with the decision of the commissioner - awards that might rightly be described as unsatisfactory or poor - but where the result is, nevertheless, not unreasonable, and the award thus not reviewable.

[44]   There is another point that needs to be made for present purposes, which arises from the fact that reasonableness is a result-based review test. If the company in this matter establishes that the commissioner's decision to acquit the employees of misconduct (and thus find the dismissal substantively unfair) was unreasonable, that does not mean it will necessarily succeed in assailing the award of reinstatement on review. In order to do so, it must go further and establish that, assuming the employees were guilty of misconduct (as contended), the commissioner could not reasonably have found the dismissal substantively unfair on account of the sanction of dismissal having been unfair, and reinstated the employees on that basis. This is in line with the principle applicable to reasonableness review that the reasonableness of an award can be defended for reasons (or grounds) not considered by the commissioner.