IN
THE HIGH COURT OF SWAZILAND
HELD
AT MBABANE
CIVIL
CASE NO. 1620/2004
In
the matter between:-
SWAZI
TIMBER PRODUCTS Applicant
And
MADUDUZA
ZWANE N.O. 1st Respondent
THE
CONCILIATION FOR MEDIATION
ARBITRATION
COMMISSION 2nd Respondent
SWAZILAND
MANUFACTURING AND
PROCESSING
INDUSTRY STAFF
ASSOCIATION
3rd Respondent
Coram
Annandale, ACJ
For
Applicant Mr. S. Nsibande
For
3rd Respondent Mr. P.R. Dunseith
JUDGMENT
8
September 2004
2
By
way of an urgent motion the applicant obtained an interim order of
the High Court in the following terms:-
1.
That a Rule Nisi do hereby issue returnable on Friday the 9th July,
2004 calling upon the Respondents to show cause why:
1.1
the ruling of the 1st Respondent dated 24th May 2004 in the matter
between SMAPISA and Swazi Timber Products under CMAC file No. DSPT
026/04 should not be reviewed and corrected and/or set aside;
1.2
the ruling as aforementioned should not be stayed pending the outcome
of the present review application.
2.
That the rale as set out in paragraph 1.2 above do operate as an
interim interdict pending the return date.
This
order was granted by consent on the 18th June 2004, although not so
reflected in the copy of the order itself. The learned Judge who made
the order gave further directives as to the filing of papers in the
matter and on the return date, the 9th July 2004, the interim relief
was further extended until the 23rd July 2004, the date on which
argument was heard. On this date, the applicant sought a final order
to confirm the rale nisi as well as a prayer for costs against the
third respondent.
3
Initially
at the hearing, the third respondent wanted to raise certain points
in limine, based on the issue of urgency, but these points were
abandoned in court at the onset of argument and I need not deal with
it.
The
essence of the matter is that an issue was referred for arbitration
and that the outcome is not acceptable to the applicant who now seek
to have it set aside on review.
Briefly,
the position is that the Swaziland Manufacturing and Processing
Industry Staff Association ('SMAPISA') reported a labour dispute and
sought some eleven issues to be settled with Swazi timber Products
(Pty) Ltd (the present applicant). The first respondent (the
arbitrator) was appointed by the second respondent (the Conciliation,
Mediation and Arbitration Commission - 'CMAC') to deal with the
outstanding seven issues which could not be settled by agreement.
The
parties (SMAPISA and Swazi Timber) then agreed to have the
outstanding issues arbitrated. Although both parties are ad idem that
eleven issues arose of which six were settled, they are equally ad
idem that seven
4
issues
remained for arbitration. Six and seven does not amount to eleven and
according to the papers, the seven (sic) issues are listed but add up
to six. I will proceed from the premise that it is a mutual error and
that only six issues were arbitrated on, and list the six separate
issues hereunder, with the positions of the Union, the company and
the arbitration awards tabulated, for ease of reference.
Issues
for Arbitration Union Company Award
1
Overtime l1/2 times Mon. Nil 1 1/2 times Mon - Sat to Saturday
Double time Nil Double Time on Sunday Sunday and and Public Holiday
Public
Holiday
Transport
E6 per day Nil E2.50 per day
3
Canteen E13 perday E4.75 per E4.75per day
Day
4
Housing E600-0Q E3 36-00 E431-00
5
Bonus 13th Cheque Nil Nil
6
Salary Increase 20% Nil 5%
As
can be seen from the above table, the union had its six demands which
were not agreed to by the employer and the arbitrator determined his
awards, each as listed. It is the awards made by the arbitrator which
are now sought to be set aside on review on the grounds that:
5
'He
arrived at a decision which was so grossly unreasonable as to justify
an inference that he failed to apply his mind to the matter in
accordance with tenents (sic) of natural justice by reason of one or
more or all of the following:
In
not assigning proper weight to the fact that the applicant is in
dire financial difficulties which is borne out by the fact that over
300 employees have been retrenched between December 2003 and May
2004;
In
granting the affected employees an increase in their salaries at the
rate of 5% despite that retrenchments were ongoing;
In
granting the affected employees housing, canteen and transport
allowances in the face of a retrenchment exercise.'
(Paragraph
13 of the founding affidavit of the applicant's Managing Director)"
To
this criticism of the arbitrator, the union's president replies that
the arbitrator indeed applied his mind, considered all relevant
factors and ultimately made awards that lean more in favour of the
company than the workers.
To
support especially the latter contention he points out no bonus or
13th cheque was awarded, that the overtime rates are in accordance
with legislation on minimum wages, that the canteen allowance is in
line with the
6
offer
of the company and not the demand of the workers, that the demand of
the workers for a housing allowance of E600 vis-a-vis the company's
offer of E336 was awarded at E431, that the transport claim of E6 per
day (with no offer by the company) was awarded at only E2.50 per day
and that the (refused) salary increment demand of 20% was awarded at
5%, which accords with the current inflation rate.
This
he stated in order to show that the arbitration award was not
capricious or biased or that it was made without an application of
his mind, as averred, but also to indicate that the arbitrator indeed
applied his mind, inter alia to the financial position of the
company.
The
arbitrator gave scant reasons for his award. It records in the
relevant portion that:
'Having
heard submissions of both parties and made my analysis of the
submissions and taking into consideration the financial position of
the business, the financial state of the affected employees, the
voluntary agreement between the parties to have the award effected
from the 19th October, 2003 and to promote uniformity at the work
place, I make the following award..,'
7
From
the above, it cannot in any way be ascertained how calculations were
computed, how much weight was attached to which factor he mentioned,
what his knowledge of the financial position of the company was, what
is meant by the promotion of uniformity at the workplace and how he
reasoned to get to the different awards. But ex facie the award
document and the "reasons" stated therein, especially
having regard to the different outcome of each individual outcome, it
is obviously clear that there was no consistent pattern of
mathematical equality applied to the issues as a whole. Each and
every one of the different points in dispute has a unique formula,
with the exception of the instances where no award was made at all.
In whichever way he applied his mind, I find it hard to accept the
contention that he did not apply his mind at all.
The
clearly stated ground for asking this court to intervene on review is
that the company was facing dire financial difficulties, causing
retrenchments on a large scale, in view of which the awards that were
made cannot be seen as in accordance with natural justice.
Be
that as it may for the time being, the union's president brings it to
the attention of this court that the company voluntarily agreed to
refer the
8
matter
to arbitration and that it submitted to the award of the arbitrator
being final and binding, further that it also agreed that any award
would be effective retrospectively from the 1st October 2003. I will
revert to the aspect of finality of an arbitration further down.
The
applicant company tries to bolster its cause by stating that when
earlier ways negotiations deadlocked, it advised the employees of its
financial difficulties with the resultant retrenchment and
discontinuation of temporary employment. Further, that during the
arbitration, many more employees were on notice of retrenchment,
since then finally retrenched. The company is at odds with the
arbitrator's award of financial benefits to its employees despite the
financial dire straits faced by the company, so much so that it
resorted to payment of terminal benefits to retrenched employees over
a period of time instead of forthwith upon termination.
It
is therefore said that his decision should be reviewed and set aside
because his decision constitutes a gross irregularity of arbitration
proceedings, is grossly unreasonable and that he failed to apply his
mind.
9
The
respondent union does not have an issue with the declared financial
difficulties of the applicant but it does contest the allegations of
gross irregularity of the proceedings. It states that 'the present
application appears to be motivated solely by the applicant's pique
because the arbitrator did not fully accept the applicant's
submissions.'
From
the onset, I clearly state my sympathy with an employer who has the
proverbial cake to cut with only so many slices but who has an
overpowering demand for bigger slices of that limited cake. It is the
stark reality of modem economics that labour has a different
understanding of financial constraints in which a business entity
operates, than the view held by the employer's financial management.
The workers have their demands for increased wages to cope with their
own needs, just as the business needs to cope with the realities of
its own expenditures. To achieve an equilibrium between these two
opposing poles frequently is the determinating factor by which the
company falls or grows - the consequences of an unsustainable balance
is to the detriment of employer and employee alike. Demands that
cannot be met result in retrenchments and ultimately in the downfall
of both parties. The reality remains that it is not always possible
to achieve an
10
acceptable
compromise whereby the spoon that feeds the mouth does not fall to
the ground.
Before
considering the submissions of the applicant's attorney, already
enumerated above to the greater extent, as to why the arbitrator's
decision should be found grossly unreasonable and set aside on
review, it is first necessary to determine whether this court
actually do so, if need be.
Initially
at the hearing, the 3rd respondent argued that the existing
legislation does not empower the High Court to set aside an
arbitration decision. Mr. Dunseith contended that section 16 of the
arbitration act, 1904 (Act 24 of 1904), provides that this court may
only set aside an arbitration award if the arbitrator has misbehaved
himself or that the arbitration or the award has been improperly
procured.
When
Mr. Nsibandze pointed out that the Industrial Relations Act, 2000
(Act 1 of 2000), more specifically section 19(5) thereof, provides
for the review of the decision of an arbitrator's decision despite
the limited provisions of the arbitration Act, especially so when
considering the explicit right of a dissatisfied party to seek review
by the High Court. The 3rd
11
respondent's
attorney conceded the point and withdrew his argument in that regard.
It
is thus not necessary to delve on to the merits and demerits of the
jurisdictional powers of the High Court on review of a matter like
the present and decide this aspect. Suffice to say that it is trite
that with some limitations, the High Court of Swaziland does indeed
have the power of review in so far as awards made by an arbitrator
are concerned. Section 19(5) of the Industrial Relations Act, 2000
(Act 1 of 2000) reads that ' (a) decision or order of the court or
arbitrator (my emphasis) shall, at the request of any interested
party, be subject to review by the High Court on grounds permissible
at common law'.
Before
considering whether the decision of the arbitrator is '...so grossly
unreasonable as to justify an inference that he failed to apply his
mind to the matter in accordance with the tenets of nature's
justice...' that the award needs to be set aside on review, it is
useful to bear in mind the rationale behind arbitration. In
Amalgamated Clothing & Textile Workers Union v Veldspun Ltd
1994(1) SA 162 (AD) at 199 F - Hs Goldstone JA stated that:
12
'When
parties agree to refer a matter to arbitration, unless the submission
provides otherwise, they implicitly, if not explicitly (and, subject
to the limited power of the Supreme Court under Section 3(2) of the
Arbitration Act), abandon the right to litigate in courts of law and
accept that they will be finally bound by the decision of the
arbitrator. There are many reasons for commending such a course, and
especially so on the labour field where it is frequently advantageous
to all the parties and in the interests of good labour relations to
have a binding decision speedily and finally made. In my opinion the
courts should in no way discourage parties from resorting to
arbitration and should deprecate conduct by a party to an arbitration
who does not do all in his power to implement the decision of the
arbitrator and in good faith.'
The
applicant makes the bold allegation that the arbitrator did not apply
his mind to the matter. It did not ask for reasons from the
arbitrator as to how the individual amounts it complains of were
calculated and derived at. There are thus no further reasons from the
arbitrator before this court save what has been incorporated in the
award itself, referred to above. He does however state that he did
consider the financial position of the applicant when making the
award.
13
There
is no ground to infer gross misconduct on the part of the arbitrator.
Gross unreasonableness is the issue at stake. On review, the High
Court is not in a position to substitute its own award in the present
matter, nor is it asked to do so. The application is to set aside the
arbitration award in toto. There is no further relief that is sought,
save for an interim stay of the ruling pending the outcome of this
review. Should the applicant be successful, the effect would be to
have the parties placed in the position that they were before the
arbitration now complained of, but negating their joint acquiescence
to arbitration. This is not what they agreed to. They agreed that the
remaining unresolved disputes be referred for arbitration, but now
that the applicant company is dissatisfied with the outcome of the
matter it seeks to have it set aside on review, due to the arbitrator
allegedly not having applied his mind to the matter. None of the
factors that the applicant sets out in paragraphs 13.1 to 13.3 are
new issues, unknown to the arbitrator. The real gripe of the
applicant company is that he did not attach so much weight to it that
he came to the conclusion that the workers were not entitled to
anything better than what the company offered.
An
analysis of the arbitrator's award does not support the applicant's
contention that he did not properly apply his mind. Six issues were
at hand
14
and
they are tabulated above. The first issue was overtime payment. In
its papers, the respondents pointed out that in regard to both
overtime payments for public holidays and Sundays and for weekdays,
the award is merely in line with already existing statutory
requirements. The effect of the award is to have overtime paid in
accordance with the existing laws of Swaziland. This was not disputed
by the applicant. Had the arbitrator not applied his mind as alleged
and had he ruled as wanted by the applicant, it would have resulted
in a negation of statutory law.
The
workers wanted E6 per day in respect of transportation costs while
the company was unwilling to pay anything. The arbitrator awarded
E2.50 per day, less than half of what the workers wanted. If the
applicant company was unwilling to have this issue arbitrated it
could have refused to do so. Had the arbitrator not applied his mind,
as contended, the only way in which he could have satisfied the
company was to award nothing to the workers. Whether the applicant is
satisfied with this aspect of the award or not, it cannot, in my
view, be construed as a failure to apply his mind in accordance with
the tenets of natural justice.
15
The
third issue related to canteen costs. The workers wanted E13 per day
and the company offered E4.75 per day. The award was E4.75 per day.
Here, it is the workers who could have held the attitude now adopted
by the company. The award is far less than what they agitated for and
100% in line with the company offer. Yet, it is the amount awarded by
the arbitrator having considered the facts before him. It is part of
the award that the company now seek to have overturned. The applicant
did not ask that this item not be set aside on review, even though
the award was made in accordance with its offer.
The
housing allowance was awarded at E431 per month, in dissonance with
both the claimed E600 and the offered E336. It is E105 more than the
offer and El69 less than the claimed amount. If there is any
substance to the averment that the arbitrator did not apply his mind,
this item shows otherwise. The arbitrated amount is not an
mathematical halfway mark but leans towards the company. How exactly
the amount was derived, mathematically, is not known, but it does not
serve to warrant the assertion by the applicant.
16
The
item relating to a bonus 13th cheque for the workers resulted in a
zero award by the arbitrator. If he did not take the financial
position of the applicant company in consideration, as is now
contended, it is hard to find justification for that, when looking at
this item. Both the issue of a non bonus and an increase of 5%
instead of the claimed 20% auger in favour of his stated reasons,
namely that he did consider the financial position of the business,
the financial state of the affected employees and that he analysed
the submissions of both parties.
The
respondents state that the wage increase is in line with inflation.
Although they do not state the rate applicable to the date of the
award, 5% is rather on the lower end of financial information, not
higher.
From
an assessment of the award, it is not in my view an indication that
the arbitration was devoid of natural justice, that it was grossly
unreasonable or that the arbitrator failed to apply his mind. It is
therefore that the award complained of is not set aside on review.
Accordingly,
the application stands to be dismissed and the interim relief is set
aside.
17
Mr.
Dunseith convincingly argued that the court should deprecate conduct
by a party to an arbitration who does not do all in his power to
implement the decision of the arbitrator promptly and in good faith,
as held by Goldstone JA in the Veldspun matter referred to above. In
the present matter, apart from decrying its financial dire straits,
there is no indication that the conduct of the applicant was
otherwise. The costs order which follows the outcome of the event is
awarded at the scale of attorney and client to mark the disapproval
of the unwarranted delay in the implementation of the arbitration
award. This costs order, as well as compliance with the arbitration,
may well result in further retrenchments by the applicant in order to
make ends meet. Should that be the consequence, it will be due to
other reasons than a capricious arbitration.
JACOBUS
P. ANNANDALE
ACTING
CHIEF JUSTICE
