ANOTHER CONSITUTIONAL COURT WIN FOR LDA INCORPORATED

This is an important judgement of the Constitutional Court. Two principle issues were dealt with. The first ruling related to the question whether the Labour Court had jurisdiction to adjudicate the automatically unfair dismissal cause of action where the dispute that was referred to conciliation was an unfair dismissal dispute.  This question impacts on the proper interpretation of section 191 of the Labour Relations Act (LRA).  The second ruling was on the plea of lis alibi pendens (same action pending in other proceedings).  
 
The employer in this matter was Ngululu Bulk Carriers. During January 2016, Ngululu employees, including members of AMCU, were engaged in an unprotected strike.  When those workers failed to return to work, Ngululu dismissed them.  476 employees were dismissed as a result of their participation in the strike.  An unfair dismissal dispute was immediately referred to the relevant bargaining council by AMCU.  The dispute was conciliated without success and a certificate of non-resolution was issued (the first dismissal). 
 
Ngululu was however re-employing some of the dismissed employees.  But not a single member of AMCU was among those who were re-employed.  AMCU and its members considered the selective re-employment to be a further dismissal to which AMCU members were subjected.  AMCU referred that dismissal to the same bargaining council. It contended that selective re-employment constitutes an unfair dismissal mentioned in section 186(1)(d) of the LRA (the second dismissal). Ngululu challenged the council’s jurisdiction to conciliate the second dismissal dispute.  The council rejected the objection. Ngululu instituted a review application in the Labour Court. In those proceedings Ngululu challenged the ruling on jurisdiction. AMCU opposed that review.
 
AMCU initiated claims for unfair dismissal in the Labour Court.  The first claim pertained to the first dismissal.  AMCU alleged that its members were dismissed for their affiliation to AMCU and in terms of section 187(1)(f) of the LRA, that dismissal was automatically unfair. Ngululu raised two preliminary points.  With regard to the first claim, Ngululu contended that since the claim was now based on the assertion that the dismissal was automatically unfair, the Labour Court lacked jurisdiction because an automatically unfair dispute had not been referred to conciliation.  The argument was that what was referred was an unfair dismissal dispute and not an automatically unfair dismissal dispute.
 
 
Regarding the second claim, Ngululu raised the lis alibi pendens defence. It contended that the issues raised by the second claim were the subject-matter of its review application which was then pending before the Labour Court. Both points found favour with the Labour Court which upheld them and dismissed the claims.  That Court refused to grant leave to appeal and subsequently the Labour Appeal Court dismissed AMCU’s petition for leave to appeal, hence the approach to the Constitutional Court.
 
Courts findings:
 
The Constitutional Court found that the interpretation assigned to section 191 by the Labour Court appears not only to be incorrect, but also to be at variance with the construction of the same provisions by courts above the Labour Court.  In addition, the principle of lis alibi pendens was manifestly misapplied. 
 
Although unfair dismissal disputes fall within the jurisdiction of the Labour Court, the exercise of that jurisdiction is deferred until a dispute has been conciliated.  The LRA is structured in a manner that obliges parties to disputes to first make use of non-litigation dispute resolution mechanisms, before approaching courts. Of importance in this regard is section 191, which requires dismissed employees to refer disputes about the “fairness of a dismissal to conciliation
 
Depending on the reason for the dismissal, once conciliation fails to resolve the dispute, the affected employee has two options if she wishes to pursue the matter further.  If the employee has alleged that the reason for the dismissal is one of those listed in section 191(5)(b), then she may ask the relevant bargaining council or the CCMA to arbitrate the dispute.  That is if the body asked to arbitrate is the one that conciliated the dispute.  The other option is that the employee may refer the dispute to the Labour Court for adjudication. It is important to keep in mind that what is referred to conciliation is the dispute and not causes of action or claims which may arise from that dispute.  Moreover, conciliation involves both sides to the dispute, that is the dismissed employee and the employer that dismissed him/her.  Both parties are usually familiar with the dispute sought to be resolved through conciliation.  However, while the reasons for a dismissal are always known to the employer, the employee may not know them at the time the referral is made.  Those reasons may be revealed to the employee during conciliation.
 
If the reasons so revealed include those mentioned in section 191(5)(b) and conciliation fails, the employee has a choice to pursue arbitration or adjudication in the Labour Court. But here the Labour Court read the relevant provisions differently.  The Labour Court held the view that a referral to conciliation of an unfair dismissal dispute does not include an automatically unfair dismissal.  Proceeding from this premise, the Labour Court concluded that the claim of an automatically unfair dismissal needed to be conciliated first before that Court could entertain it.  It took that stance despite the fact that an unfair dismissal dispute had been referred to conciliation and had been conciliated.
 
To bolster its reasoning, the Labour Court called in section 157(4) of the LRA which empowers that Court to refuse to adjudicate a dispute if not satisfied that the dispute was conciliated. This was incorrect and inconsistent with established authority. Section 157(4) did not apply here because there was sufficient proof that there was an attempt to resolve the dispute by conciliation.  A certificate of non-resolution was furnished to the Court.
 
The flaw in the Labour Court’s reasoning stems from its characterisation of an automatically unfair dismissal as a dispute separate from an unfair dismissal dispute that was referred to conciliation.  That Court overlooked the fundamental issue which is that what was referred to conciliation was the unfairness of the dismissal, regardless of whether the unfairness concerned was automatic or otherwise.  And that it is not the reason for a dismissal which must be referred to conciliation but the unfairness of the dismissal. Here the CC referred to Driveline case and that it was not open to the Labour Court to prefer a different meaning of the provision.  The correct meaning had already been authoritatively settled.
 
Judicial precedent is a principle of our law. It obliges lower courts to follow decisions of higher courts, for as long as those decisions remain in operation.  It follows that the Labour Court erred in holding that it had no jurisdiction to adjudicate the automatically unfair dismissal claim.
 
On the issue fo lis alibi pendens, the CC expounded that the purpose of lis alibi pendens is to prevent duplication of legal proceedings. As its requirements illustrate, once a claim is pending in a competent court, a litigant is not allowed to initiate the same claim in different proceedings.  For a lis alibi pendens defence to succeed, the defendant must show that there is a pending litigation between the same parties, based on the same cause of action and in respect of the same subject matter.
 
The review application by Ngululu was directed at impugning the council’s ruling and the certificate of non-resolution.  It had nothing to do with the unfairness of the second dismissal.  It follows that the causes of action in the two proceedings were different.  And so were the subject matters.  Therefore Ngululu had failed to establish the defence of lis alibi pendens. Here the review court could only determine whether the relevant bargaining council had jurisdiction to conciliate the dispute and whether the certificate issued by that council was valid.  The review court could not enquire into the fairness of the dismissal in question because that was not an issue before it.  Similarly the Labour Court here could not adjudicate the issues that were before the review court.  Consequently the Labour Court erred in upholding lis alibi pendens in present circumstances.
 
The CC held that the appeal must be upheld and since the merits of the claim were not determined, the matter must be remitted to the Labour Court.
 
Larry Dave, LDA Inc Attorneys
6 May 2020

READ THE FULL REPORTED JUDGEMENT HERE http://www.saflii.org/za/cases/ZACC/2020/8.html