THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case no: 344/10

In the matter between

JOHANNESBURG CITY PARKS
Appellant

and

ADV JAFTA MPHAHLANI NO
First Respondent
THE SOUTH AFRICAN LOCAL
Second Respondent
GOVERNMENT BARGAINING COUNCIL
SAMWU obo F MAGUVHE
Third Respondent
COMMISSIONER, CHAIRMAN WEBB NO
Fourth Respondent

Neutral citation: Johannesburg City Parks v Mphahlani NO & others (344/10)
[2011] ZASCA 56 (31 March 2011)

Coram:

Streicher, Nugent, Snyders, Bosielo and Majiedt JJA

Heard:

24 February 2011
Delivered:
31 March 2011
Summary:
Labour Law – Dismissal – Interpretation – s 62(3A)(a) and (b) –
whether the arbitrator had jurisdiction to hear the arbitration whilst
there was a demarcation dispute pending before the CCMA

ORDER

On appeal from: Labour Appeal Court, Johannesburg (Zondo JP, Patel JA and
Sangoni AJA sitting as a court of appeal).

The appeal is upheld with costs.
The order by the Labour Appeal Court is set aside and substituted with the
following order:

The appeal is upheld with costs.

The order made by the Labour Court is set aside and substituted with

the following order:

‘1
The arbitration award dated 17 November 2005 issued under
the auspices of the South African Local Government Bargaining
Council (case no GMD 080511) is set aside.

The third respondent is ordered to pay the costs of the
application.’

__________________________________________________________________

JUDGMENT
__________________________________________________________________

BOSIELO JA (Nugent, Snyders and Majiedt JJA concurring)
[1] This is an appeal with the leave of this Court against a judgment of the
Labour Appeal Court (LAC) dismissing an appeal by the appellant against the

judgment of the Labour Court (LC) in terms whereof the appellant’s application
for the review and setting aside of an arbitration award made by one Ms Webb
during 31 October 2005 was dismissed.

[2] The facts of this case are fairly straight-forward and to a large extent
common cause. Mr Maguvhe was employed by the appellant. He was a member of
a trade union called South African Municipal Workers Union (SAMWU), the third
respondent in this appeal. Following upon a formal disciplinary enquiry he was
dismissed on 21 April 2005. A dispute regarding the fairness of the dismissal arose
between the appellant and the third respondent, representing Maguvhe, which was
referred to second respondent (SALGBC). Second respondent is a duly registered
bargaining council. The appellant did not attend the conciliation meeting alleging
that it did not fall within the jurisdiction of SALGBC. The dispute was referred to
arbitration and the fourth respondent (Webb) was appointed the arbitrator.

[3] On 16 September 2005 the appellant sent a letter to the second respondent
stating that it would not attend the arbitration proceedings as it did not fall within
its jurisdiction. In addition, the appellant advised second respondent in the same
letter that this was due to the fact that there was a demarcation dispute still pending
before the Commission for Conciliation, Mediation and Arbitration (CCMA) and
that until that dispute is resolved, it would not be bound by any decision taken by
the second respondent. It stated further that by virtue of this fact its employees
were free to refer their disciplinary matters to the CCMA which the appellant
would duly attend.

[4] It is not in dispute that the letter aforesaid was received and read by the
fourth respondent. As foreshadowed in the letter the appellant did not attend the
arbitration proceedings. Notwithstanding the clear contents of the letter aforesaid
and in the absence of the applicant, the fourth respondent found that she had
jurisdiction and proceeded with the arbitration proceedings. She made a default
award in favour of third respondent.

[5] Aggrieved by the arbitrator’s decision, the appellant tried unsuccessfully to
have the award reviewed and set aside by the LC. This was followed by an
unsuccessful appeal to the LAC.

[6] This appeal revolves around the correct interpretation of s 62(3A) of the
Labour Relations Act 66 of 1995 (LRA). I therefore find it expedient to set out the
relevant part of s 62(3A) which reads:
‘In any proceedings before an arbitrator about the interpretation or application of a collective
agreement, if a question contemplated in subsection (1)(a) or (b) is raised, the arbitrator must
adjourn those proceedings and refer the question to the Commission if the arbitrator is satisfied
that –
(a)
the question raised –
(i) has not previously been determined by arbitration in terms of this section; and
(ii) is not the subject of an agreement in terms of subsection (2); and
(b)
the determination of the question raised is necessary for the purposes of the proceedings.’

[7] Before us counsel for the appellant submitted that s 62(3A) is clear and has
no inherent ambiguities. He contended that the section provides clearly and
unambiguously that when faced with a demarcation dispute, the arbitrator has no

choice but to adjourn the proceedings until the very issue of jurisdiction is
resolved, more so that the Bargaining Council itself does not possess the
jurisdiction to resolve a demarcation dispute. This issue falls within the exclusive
domain of the CCMA, so it was submitted.

[8] On the other hand, counsel for the third respondent, contended that even
where the issue of jurisdiction is raised, the arbitrator must first satisfy himself or
herself if he or she has jurisdiction on the facts before him or her and if the dispute
is unrelated to the pending demarcation dispute, to proceed to hear the matter on
the merits. He submitted that if the party raising lack of jurisdiction as a defence is
aggrieved by the decision of the arbitrator to proceed, he or she is free to take such
a decision on review to the LC where the matter can be referred to the appropriate
forum with authority being the CCMA.

[9] It is common cause that SAMWU and the Independent Municipal and Allied
Trade Union (IMATU) are both members of second respondent (SALGBC).
SAMWU and IMATU contend that the appellant falls within the scope of second
respondent. The appellant disputes this vigorously. It is this dispute that was
referred to the CCMA for determination in terms of section 62 of the LRA by both
SAMWU and IMATU. It follows logically in my view that, if the appellant is not a
party to second respondent, then the second respondent would not have jurisdiction
over it. This is the issue that was raised pertinently as a point in limine by the
appellant. The question therefore is whether the arbitrator acted correctly by
proceeding with the arbitration proceedings whilst there was this unresolved
demarcation dispute.

[10] The LAC found that the appellant relied on a wrong section as s 62(3A) is
restricted to an instance where the ‘proceedings before an arbitrator are about the
interpretation or application of a collective agreement’. The LAC found that the
dispute herein was not about the interpretation or application of a collective
agreement but about unfair dismissal. The LAC drew a distinction between s
62(3A) and s 62(3) and (5). The LAC found that the distinguishing feature is that s
62(3) speaks of ‘any proceedings’ whilst s 62(3A) restricts itself to ‘proceedings
before an arbitrator about the interpretation or application of a collective
agreement.’ The LAC concluded therefore that s 62(3A) was narrower than s 62(3)
and not applicable to this case. The LAC found that s 62(3A) did not apply to the
proceedings before the arbitrator as these were concerned with an unfair dismissal
dispute. Furthermore the LAC found that in the absence of any evidence being put
before the arbitrator, the arbitrator could not have been and was not satisfied about
the questions raised in s 62(3A)(a) and (b).

[11] I do not agree with the construction of s 62(3A) and s 62(3) and (5) as
adumbrated by the LAC. I found the distinction drawn by the LAC to be more
illusory than real. The nub of the enquiry is simply whether the arbitrator had the
jurisdiction to arbitrate this matter or not, given the admitted fact that there was a
demarcation dispute which addresses jurisdiction pending before the CCMA.

[12] It would appear to me to be illogical that the arbitrator, fully alerted to the
objection raised by the appellant in their letter of 16 September 2005, and whilst
the demarcation dispute is still pending before the CCMA, could ignore such an
objection and arrogate to herself the jurisdiction to arbitrate this matter. The

arbitrator could only have had jurisdiction if the collective agreement was binding
on the appellant. That was in issue and pending before the only body empowered
to decide it, the CCMA. In order to decide jurisdiction it had to be decided whether
the collective agreement applied to the appellant. That decision falls squarely
within the wording of s 62(3A). Logic dictates that in strict compliance with s
62(3A) which is couched in peremptory language that the arbitrator was obliged to
adjourn the proceedings as the demarcation dispute was still pending before the
CCMA.

[13] It is not in dispute that the demarcation dispute herein had been referred by
SAMWU and IMATU during 2004 to the CCMA for determination of the question
whether the appellant falls within the scope of the second respondent. It is
furthermore common cause that as at 16 September 2005 when the arbitration
proceedings were held this dispute was still pending before the CCMA. It makes
little sense to me that the arbitrator could proceed to arbitrate the matter against an
objection to the jurisdiction of second respondent (SALGBC) based on s 62(3A) of
the LRA. It appears to me plain that such conduct circumvents the mischief which
s 62(3A) seeks to address, ie that the arbitrator shall not adjudicate in a matter
where his or her jurisdiction is being challenged on the basis of whether one of the
parties is bound by the collective agreement. To say that, an arbitrator can act even
in the face of a pending demarcation dispute and that such a decision can later be
taken on review to the LC as submitted by counsel for the third respondent would
cause multiple streams of litigation in the same issue and is simply untenable. This
is so because even the LC itself will not be able to handle the matter until the
CCMA has finally determined the demarcation dispute. Manifestly, the

consequences of such an approach are so absurd that the legislature could never
have contemplated or intended them. An interpretation which leads to such patent
absurdities should in my view, not be countenanced. It follows in my view that this
appeal must succeed.

[14] In the result the following order is made:
The appeal is upheld with costs.
The order by the Labour Appeal Court is set aside and substituted with the
following order:

The appeal is upheld with costs.

The order made by the Labour Court is set aside and substituted with

the following order:

‘1
The arbitration award dated 17 November 2005 issued under
the auspices of the South African Local Government Bargaining
Council (case no GMD 080511) is set aside.

The third respondent is ordered to pay the costs of the
application.’

_______________
L O Bosielo
Judge of Appeal

STREICHER JA: (NUGENT, SNYDERS and MAJIEDT JJA concurring)
[15] This is an appeal against a judgment of the Labour Appeal Court (the LAC)
in respect of an unfair dismissal dispute between the third respondent and the
appellant.

[16] The third respondent was dismissed from the employ of the appellant on the
ground that he had been in breach of the appellant’s conditions of service in that he
had done private work during working hours. He contended that his dismissal was
unfair and referred the dispute to the second respondent, the South African Local
Government Bargaining Council (the SALGBC). The SALGBC is registered in
terms of s 29 of the Labour Relations Act 66 of 1995 (the LRA) as a bargaining
council with the ‘Local Government Undertaking in the Republic of South Africa’
as its registered scope. The collective agreements concluded in the SALGBC have
been extended in terms of s 32 of the LRA to non-parties falling within its
registered scope.

[17] Upon the dispute having been referred to the SALGBC it called on the
appellant and the third respondent to attend a conciliation meeting. The appellant
responded that it would not attend the meeting as it did not fall within the
jurisdiction of the SALGBC. It added:
‘There is a demarcation dispute pending at the CCMA case no SA 18299/04. Until this matter is
finalized by the CCMA Johannesburg City Parks will not be bound by any decision of the
Bargaining Council and our employees are free to refer disciplinary matters to the CCMA which
the company duly attend.’
The SALGBC thereafter called upon the parties to attend an arbitration of the
dispute to which the appellant responded in a similar manner.

[18] The appellant is an association established by the City of Johannesburg
Metropolitan Municipality and incorporated in terms of s 21 of the Companies Act
61 of 1973. The majority of the appellant’s workforce is represented by the South
African Municipal Workers Union (SAMWU) and the Independent Municipal and

Allied Trade Union (IMATU). SAMWU and IMATU contend that the appellant
and various other utilities, agencies and corporatized entities (UAC’s) established
by the Greater Johannesburg Transitional Metropolitan Council and/or the City of
Johannesburg Metropolitan Municipality, which succeeded it, fall within the
registered scope of the SALGBC. At all material times the appellant and the other
UAC’s have contended that they do not fall within the scope of the SALGBC.
During 2004 SAMWU and IMATU referred this dispute to the Commission for
Conciliation, Mediation and Arbitration (the Commission) in terms of s 62 of the
LRA. This is the demarcation dispute referred to in the appellant’s letters to the
SALGBC in response to its invitation to attend conciliation and arbitration
proceedings.

[19] The SALGBC proceeded with the arbitration by appointing Ms Webb, the
fourth respondent, to conduct the arbitration. The appellant did not attend the
arbitration hearing and after having heard the evidence of the third respondent the
arbitrator held that he had been unfairly dismissed and ordered that he be reinstated
retrospectively from the date of his dismissal. The appellant thereupon applied to
the Labour Court for an order reviewing and setting aside the arbitration award on
the ground that the SALGBC lacked jurisdiction to adjudicate the dispute. The
labour court held that the SALGBC did have jurisdiction in respect of the dispute
and dismissed the application for review with costs.

[20] An appeal by the appellant to the LAC was unsuccessful. Counsel for the
appellant submitted in that court, as he did before us, that, in terms of s 62(3A) of
the LRA the fourth respondent was obliged to adjourn the proceedings once she

became aware that a demarcation dispute was pending before the Commission. The
section reads:
‘In any proceedings before an arbitrator about the interpretation or application of a collective
agreement, if a question contemplated in subsection (1)(a) or (b) is raised, the arbitrator must
adjourn those proceedings and refer the question to the Commission if the arbitrator is satisfied
that –
(a)
the question raised -
(i) has not previously been determined by arbitration in terms of this section; and
(ii) is not the subject of an agreement in terms of subsection (2); and
(b)
the determination of the question raised is necessary for the purposes of the proceedings.’

[21] Section 62(1) deals with demarcation disputes and provides that any
registered trade union, employer, employee, registered employers’ organisation or
council that has a direct or indirect interest in the application may apply to the
Commission for a determination as to (a) whether any employee, employer, class
of employees or class of employers, is or was employed or engaged in a sector or
area; (b) whether any provision in any collective agreement is or was binding on
any employee, employer, class of employee or class of employers.

[22] The LAC held that one should distinguish between a dispute and an issue in
a dispute and that ‘proceedings before an arbitrator about the interpretation or
application of a collective agreement’ referred to in s 62(3A) were intended to refer
to proceedings where the main dispute between the parties was about the
interpretation or application of a collective agreement. In the case under
consideration, so it held, the main dispute concerned the fairness of the dismissal
of the third respondent whereas the application of the collective agreement was

only an issue in that dispute. For that reason the LAC held that the section was not
applicable to the arbitration proceedings conducted by the fourth respondent and
that the appeal should be dismissed with costs.

[23] In terms of s 191 of the LRA a dismissed employee may refer a dispute
about the fairness of his dismissal to a bargaining council if the parties to the
dispute fall within the registered scope of the council or to the Commission if no
council has jurisdiction (s 191(1)(a)). The council or the Commission must
thereupon attempt to resolve the dispute through conciliation (s 191(4)). If the
council or a commissioner certifies that the dispute remains unresolved, or if 30
days have expired since the council or the Commission received the referral, and
the dispute remains unresolved the council or the Commission must arbitrate the
dispute at the request of the employee if the employer alleged that the reason for
dismissal is related to the employee’s conduct (s 191(5)(a)(i)). Section 51(4)
provides that if one or more of the parties to a dispute that has been referred to a
bargaining council do not fall within the registered scope of that council, it must
refer the dispute to the Commission. It is therefore clear that a bargaining council
has no jurisdiction to arbitrate an unfair dismissal dispute if one of the parties to
the dispute does not fall within the registered scope of the council.

[24] If the employer disputes that he falls within the registered scope of the
bargaining council to which a dispute has been referred, as happened in the present
case and that issue has not been determined by a body having authority to do so, it
obviously needs to be determined in order to establish whether the bargaining
council has jurisdiction in respect of the dispute. But, quite understandably, the

LRA does not confer jurisdiction on a bargaining council to arbitrate a dispute
about its own registered scope. In terms of s 62 it is the Commission that has
jurisdiction to decide demarcation disputes.

[25] Counsel for the third respondent did not submit that a bargaining council has
jurisdiction to resolve a demarcation dispute. He submitted that the unfair
dismissal proceedings between the appellant and the third respondent were not
proceedings about the interpretation or application of a collective agreement and
that s 62(3A) by implication authorised an arbitrator in such proceedings, in the
event of a demarcation issue being raised, to proceed with the matter without
determining the demarcation issue. Thus, leaving it to the party contending that he
fell outside the registered scope of the bargaining council, to review the arbitrator’s
award once the demarcation issue had been decided by the Commission.

[26] I can understand an argument to the effect that because the legislature said
that in proceedings about the interpretation or application of a collective agreement
a demarcation dispute which has not been decided must be referred to the
Commission, the legislature intended that in other proceedings such a dispute need
not be referred to the Commission. But, that argument does not deal with the
question as to what the arbitrator in such other proceedings is to do about the
demarcation dispute if the proceedings are not adjourned and the demarcation
dispute is not referred to the Commission. According to counsel for the third
respondent’s argument the arbitrator simply has to ignore the dispute about its
jurisdiction, proceed with the matter, make an award which may subsequently,
maybe months later, be reviewed and set aside. Meanwhile the award would

presumably be treated as a valid award which may be enforced. I am satisfied that
the legislature could not have intended such an extraordinary result and that had it
intended such a result it would have made its intention clear.

[27] Section 62(3A) provides that ‘no arbitrator’ may in the circumstances
mentioned in the section proceed with an arbitration in the event of a demarcation
dispute being raised. The reference to an arbitrator is therefore not a reference only
to the SALGBC as arbitrator but is a reference to any arbitrator ie also an arbitrator
appointed by agreement between the parties which, in terms of the agreement may
have had jurisdiction to decide the demarcation dispute between the parties, had it
not been for the section. This section must therefore have been intended to deprive
arbitrators of jurisdiction to decide demarcation disputes between the parties in the
circumstances mentioned in the section. That being so, there is no way it can be
interpreted to have been intended to confer jurisdiction on an arbitrator, such as a
bargaining council, which in any event does not have jurisdiction to arbitrate a
demarcation dispute to proceed with the arbitration.

[28] For these reasons I agree that the appeal should succeed and that the order
proposed by my colleague Bosielo JA should be made.

__________________
P E STREICHER
JUDGE OF APPEAL

APPEARANCES:

For Appellant:

Adv Timothy Bruinders SC

Instructed by:

Sim & Botsi, Johannesburg,

Symington & De Kok, Bloemfontein;

For Respondent:

Adv JG van der Riet SC

Instructed by:

Cheadle Thompson & Haysom, Johannesburg;

Matsepes Inc, Bloemfontein;

McIntyre & Van der Post, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

31 March 2011

STATUS

Immediate

Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.

Johannesburg City Parks v Adv. Jafta Mphahlani NO & others (344/10) [2010] ZASCA
56 (31 March 2011)

The Supreme Court of Appeal upheld an appeal against a judgment of the Labour Appeal
Court (LAC) with costs. It furthermore set aside the order of the Labour Court (LC) and
substituted it with an order setting aside the arbitration award issued under the auspices of
the South African Local Government Bargaining Council (SALGBC).

The third respondent (Mr Maguvhe) was dismissed from his employment with the appellant on
the ground that he had been in breach of the appellant’s conditions of service when he did
some private work during office hours. He challenged the fairness of his dismissal and
referred the dispute to second respondent SALGBC which is registered as a bargaining
council in terms of s 29 of the Labour Relations Act 66 of 1995 (LRA). Its registered scope is
the ‘Local Government Undertaking in the Republic of South Africa.’ SALGBC called the
appellant and the third respondent to attend a conciliation meeting. The appellant declined on
the basis that it did not fall within the jurisdiction of the SALGBC. The SALGBC then called on
the parties to attend arbitration. The appellant wrote a letter to the arbitrator stating that it will
not attend the arbitrator’s proceedings as there was a pending demarcation dispute before the
CCMA. The appellant reiterated that the arbitrator does not have jurisdiction to hear the
arbitrator.

In the absence of the appellant, and notwithstanding the objection raised, the arbitrator
proceeded with the arbitration, found that the third respondent had been unfairly dismissed

and ordered that he be reinstated from the date of his dismissal. An application for the review
of the order to the LC failed, as well as an appeal to the LAC.

The SCA found that the arbitrator was bound by the peremptory terms of s 62(3A) of the LRA,
which provides in explicit and peremptory terms that in any proceedings before an arbitrator
about the interpretation or application of a collective agreement, if a question contemplated in
subsection (1) (a) or (b) is raised, the arbitrator must adjourn the proceedings and refer the
question to the Commission.

The SCA found that as the demarcation dispute was still pending before the CCMA, that the
SALGBC did not have the authority or jurisdiction to adjudicate a dispute about its own
registered scope. In terms of s 62 it is the CCMA which has the jurisdiction to determine the
dispute.

Finally the SCA found that the arbitrator acted wrongfully in the circumstances. The appeal is
therefore upheld.