REPUBLIC OF NAMIBIA

IN THE LABOUR COURT OF NAMIBIA

JUDGMENT Case no: LCA 89/2013

LC 209/2013

In the matter between:

HANGANA SEAFOOD (PTY) LTD APPELANT

and

GERSON SWARTZ 1ST RESPONDENTGERTRUDE USIKU N.O. (ARBITRATOR) 2ND RESPONDENT

Neutral citation: Hangana Seafood v Swartz (LCA 89/2013 LC 209/2013)

[2014] NAHCMD 32 (30 July 2014)

Coram: SMUTS, J

Heard: 16 July 2014

Delivered: 30 July 2014

Flynote: Application for review and an appeal against an arbitrator’s award

heard together. The arbitrator had an interest in a close corporation which

assisted the first respondent during the internal disciplinary process and applied

to represent him in the arbitration proceedings. The applicant applied for the

NOT REPORTABLE

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recusal of the arbitrator as a consequence. The arbitrator failed to do so and

failed to appreciate the nature of the test for bias – being a reasonable

apprehension of bias. The facts established that. The failure to recuse

amounted to a gross irregularity in the proceedings and thus a defect in the

award set aside and dispute referred back for conciliation and arbitration de

novo before another arbitrator for the purpose of s89 of Act 11 of 2007.

ORDER

1. The arbitrator’s award dated 29 November 2013 is hereby set aside;

2. The dispute is referred back for conciliation and arbitration before a

different arbitrator to commence de novo;

3. There is no order as to costs;

4. The appeal is removed from the roll.

JUDGMENT

SMUTS, J

[1] The applicant in case number LC 209/2013 is also the appellant (in case

number LAC 89/2013) in these dual proceedings. The applicant had dismissed

the first respondent from his employment as an accounts supervisor for

insubordination on 11 March 2013.

[2] On 28 March 2013 the first respondent referred a labour dispute to the

office of the Labour Commissioner. An arbitrator made an award in favour of the

first respondent on 29 November 2013, reinstating him in his employment with

effect from 6 January 2014 and directing that he be paid an amount of N$155

071, 82 in respect of his remuneration from the date of dismissal to the date of

reinstatement. The arbitrator, cited as the second respondent in the review

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proceedings, also ordered payment of an amount equal to leave days which had

accrued during the period from March 2013 to December 2013 and that

remuneration should be calculated on the current rates to include an increase of

7%1 and ordered payment of a total amount of N$164 001, 32.

[3] The applicant seeks to review the arbitrator’s decision on 21 June 2013,

which preceded the hearing of evidence, not to recuse herself as arbitrator and

to set aside the proceedings, inclusive of the award, as a consequence of her

failure to do so. In the review application, the applicant also seeks a cost order

against the arbitrator to pay the costs of the review application in terms of s118

of the Labour Act (the Act).2

[4] The applicant also noted an appeal against the award under s89 of the

Act. In view of the outcome of the review application, it is not necessary for me

to further consider that appeal.

[5] Neither the review application nor the appeal were opposed in

accordance with the rules of this court by either the first respondent or the

arbitrator (in respect of the review application). Nor was any answering affidavit

was filed in the review application.

[6] The review and the appeal were set down together for hearing on 12

June 2014. The first respondent attended at court on that date and sought a

postponement to enable him to secure the services of a legal practitioner. The

appeal and review application were then postponed to 16 July 2014. Shortly

before the date of hearing and on 14 July 2014, a legal practitioner for the first

respondent filed heads of argument in respect of points in limine. These are

dealt with below, after setting out the factual background to these proceedings.

Factual background

1 This portion of the award is by no means clear to me or properly comprensibe for that matter.

Nothing however turns on this virtue of the outcome of these proceedings.2 No. 11 of 2007.

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[7] In terms of the first respondent’s employment contract, he was required

to report directly to his immediate supervisor. The contract also provided that the

applicant reserved the right to change his duties as may be required from time

to time and that he may be required to perform duties at places and in such

other capacities as may directed by his supervisor, provided that he is

competent to do so.

[8] The first respondent’s duties and responsibilities included general

accounting functions. During February 2013 he was requested to liase with the

Receiver of the Revenue’s office concerning a PAYE capital file. The first

respondent however refused to execute the instruction because he said it was

not within his job description. He was then given the instruction in writing and

persisted in declining it. His supervisor reported his refusal to the applicant’s

Finance Director who also instructed the first respondent to execute the

instruction. He however persisted with his refusal.

[9] After being afforded the opportunity to explain himself, the Finance

Director charged the first respondent with insubordination. He was found guilty

of insubordination in internal disciplinary proceedings and dismissed. He

exercised his right to an internal appeal. His appeal was however only directed

against the sanction of dismissal imposed upon him. His appeal was not

successful and the findings of the disciplinary hearing were confirmed. His

services were then terminated on 11 March 2013 and he referred his dispute in

that regard to the office of the Labour Commissioner on 28 March 2013.

[10] In the founding affidavit to the review proceedings, it was alleged by the

applicant’s Human Resource Manager, Mr G. Musili – and not disputed by either

of the respondents – that the first respondent had behind the scenes been

represented and advised by a labour consultancy, Ocean Wave CC trading as

Top Gear during the disciplinary process against him. Mr Musili also pointed out

that this entity had requested the applicant’s consent to represent the first

respondent at the conciliation and arbitration proceedings. The applicant did not

consent to that representation.

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[11] Mr Musili pointed out that the arbitrator was indicated on the letterhead of

this CC to be one of its members. He then approached the arbitrator prior to the

conciliation proceedings to raise his concern on this issue and most particularly

because of her interest in Ocean Wave CC. On that occasion, the arbitrator did

not dispute that she had an interest in the CC but stated that she would enquire

from the Labour Commissioner whether a different arbitrator should be

appointed.

[12] It subsequently appeared from the record that the arbitrator directed an

undated letter to the Labour Commissioner, stating:

‘I noted that I have been designated to deal with the above case. I kindly inform

your good office that I can unfortunately not deal with this specific case as I am

a stakeholder in the company that will represent the applicant. Your

consideration in re-allocating the matter to one of the conciliators/arbitrators will

be highly appreciated.’

[13] The Labour Commissioner responded to this on 22 April 2013 in the

following way:

‘1. Which company are you referring to?

2. How the representation was decided and by whom? We have dealt in

great details on representation and the procedures and requirements

involved both retreat and recent workshop but to no avail why?’ (sic)

[14] The applicant was unaware of this correspondence at the time.

[15] Instead of reverting to the Labour Commissioner, the arbitrator informed

Mr Musili that the applicant would need to formally apply for her recusal. The

applicant did so. That application was however refused and a ruling was given

by the arbitrator on 21 June 2013. Her reasons for refusing the recusal

application are salutary. They were as follows:

‘The applicant was not represented by anyone during the conciliation meeting

as well as the arbitration proceedings as claimed by the respondent’s

representative. No proof if any was presented to me as the arbitrator to that

effect but was only done by word of mouth.

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The issue of me being involved in the Company is not reason enough to

conclude that I am in conflict, conflict of what? My involvement in the said

Company is justifiable as I only deal with training on the Labour Act of

Companies, Trade Unions, and individuals that help stakeholders a great deal in

resolving matters that are solvable by knowing the Labour Act, thus not a

conflict.

The respondent’s representative will agree with me that it had benefitted the

respondent a great deal in making use of the said knowledge on the Labour Act

from me in resolving most of its cases in the past before it had reached the

Office of the Labour Commissioner by acquiring the knowledge on provisions,

interpretation, or the application of the Labour Act on issues affecting it at no

charge. That shows that I contribute in speedy dispute resolutions.

The respondent will further agree that many cases were brought before me

involving the respondent that had outcomes where I ruled either in its favour or

in favour of the other party that shows that I have proven that I dealt with the

substantial merits of the case without being bias or partial or favouring one

particular party.

I don’t have any interest whatsoever in the outcome of the matter and shall only

deal with the substantial merits of the dispute with the minimum of legal

formalities as required in terms of s86(7) (b) of the Labour Act. Any party who

would not be happy with the outcome of the matter has the right to appeal or

ask for review against my award in terms of s89 of the Labour Act (Act 11 of

2007).’ (sic)

[16] After the arbitrator’s ruling on 21 June 2013, the applicant addressed a

letter to the Labour Commissioner on 2 July 2013 before the commencement of

the evidence in the arbitration. In this letter, the applicant pointed out to the

Labour Commissioner that the first respondent had consulted the CC

concerning his dismissal and pointed out that the arbitrator was a member of

that CC. Concern was expressed that the first respondent would receive advice

throughout the arbitration proceedings from the CC and that the arbitrator would

thus have an interest in the outcome. The Labour Commissioner however

pointed out in response that he had no power to remove a duly designated

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arbitrator in a case. This despite the fact that the arbitrator had approached him

to re-allocate the case for the self same reason.

[17] The arbitration proceedings proceeded in September and October 2013

and the award was handed down on 29 November 2013 with the arbitrator

finding that the first respondent’s dismissal was substantially and procedurally

unfair and reinstated him and made the further orders summarised above.

[18] The applicant in the review application applies to set aside the

proceedings and award and the decision by the arbitrator refusing to recuse

herself. The applicant contends that there was a reasonable apprehension of

bias on the part of the arbitrator. The applicant’s concerns of an apprehension in

that regard were compounded by her approach adopted in reaching the

outcome of the arbitration proceedings. The applicant pointed to a number of

issues upon which, so it is contended, the arbitrator fundamentally erred in her

decision making and submitted that the flawed nature of the award confirms the

apprehension of bias and gives rise to an inference of actual bias. Several key

findings on the part of the arbitrator were highlighted as being without any legal

or factual basis. The applicant accordingly contends that not only was there a

reasonable apprehension of bias but that there was in fact actual bias by virtue

of the findings made by the arbitrator for which there was no basis and in the

context of the factual matter supporting her recusal.

[19] The applicant contends that the failure on the part of the arbitrator to

recuse herself and her bias exhibited in her approach in reaching its outcome

constituted a gross irregularity as well as being misconduct on her part. The

applicant accordingly seeks a costs order against the arbitrator by virtue of her

conduct which the applicant submits amounts to frivolous or vexatious conduct

and thus justifies a cost order under s118 of the Act.

[20] As I have already pointed out, neither the arbitrator nor the first

respondent filed any notice to oppose or any answering affidavit contesting any

of the allegations contained in the applicant’s founding affidavit. Indeed, the

allegations concerning the arbitrator’s interest in the CC made in the founding

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affidavit are confirmed in the correspondence which emerged when the record

of proceedings were provided.

First respondent’s preliminary point

[21] Very shortly before the hearing, certain preliminary points were raised in

heads of argument filed by legal practitioners representing the first respondent.

Some of these relate to the noting and prosecution of the appeal which I do not

propose to deal with in view of the outcome of the review application.

[22] As far as the review is concerned, points were taken that the review

application had not been properly noted and is, as a consequence, defective.

[23] The first point raised in the heads of argument and argued by Mr B.

Cupido who appeared on behalf of the first respondent, referred to rule 14(3)

which requires that a review application is to be brought on notice of motion on

form 10. Nothing however turns on this point as the notice of motion follows form

10 in every single respect. Indeed Mr Cupido was unable to point out anything at

all contained in form 10 which had not been contained in the notice of motion.

[24] He further submitted that the review application had not been properly

noted by virtue of non compliance with rule 14(4). He was however also not able

to point out in what respect this sub-rule had not been complied with. On the

contrary, notice had been given to all the parties affected, as is required by the

sub-rule. Mr Cupido would appear to overlook the words ‘as the case may be’ in

the sub-rule.

[25] Mr Cupido further took a point that rule 14(7) had not been complied

with. The relevant portion of this rule provides as follows:

‘On receipt of the record referred to in sub-rule (6), the applicant must within 14

days of such receipt –

(a) have copies made of such portion of the record as may be necessary for the

purposes of the review and . . .’

He submitted that the applicant did not supply the record within the required

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time period and did not apply for condonation for the failure to do so. It is

common cause that the record had been provided subsequently by virtue of the

appeal.

[26] The invocation of this sub-rule is likewise without any substance. The

applicant does not rely upon any portion of the record for the application for

review. The application is based upon the refusal on the part of the arbitrator to

recuse herself. All the allegations relied upon for that relief are contained in the

founding affidavit. Neither the first respondent nor the arbitrator has placed any

of that factual matter in issue. It was thus not necessary to make copies of the

record or any portion of it for the purpose of the review application, as is

reflected in the underlined portion of the sub-rule. As I have pointed out, crucial

elements of the factual matter were in any event subsequently confirmed. This

point, also without merit, likewise must fail.

[27] There would in any event have been no prejudice to the first respondent

as the record was in fact subsequently filed. The first respondent has

furthermore not contested any of the factual or any legal matter contained in the

application.

[28] On the contrary, rule 6(8) of the rules of this court precludes a party

failing to deliver a notice of intention to oppose timeously from taking part in the

proceedings. When I put this rule to Mr Cupido, he indicated that he was not

aware of its terms. Despite those terms and in the exercise of my discretion, I

afforded him the opportunity to be heard and to argue the preliminary points

before me, given the fact that I had previously postponed the proceedings to

enable the first respondent to secure the services of a legal practitioner.

The failure to recuse amount to defect in the proceedings?

[29] Section 89(4) entitles a party to a dispute, where these is an alleged

defect in any arbitration proceedings, to apply for an order reviewing and setting

aside the award. A defect contemplated by s89(4) includes an arbitrator

committing misconduct in relation to the duties of an arbitrator as well as

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committing a gross irregularity in the conduct of the proceedings.

[30] The question accordingly arises as to whether the failure on the part of

the arbitrator to recuse herself in this matter amounts to a defect for the purpose

of s89(4) which would result in the award and the proceedings being set aside.

[31] The starting point in my view is s85(1) of the Act. It establishes arbitration

tribunals for the purpose of resolving disputes under the Act. This section further

specifically states that these tribunals are as contemplated in art 12(1)(a) of the

Constitution. Art 12(1)(a) in turn confers upon persons the constitutional right to

a fair and public hearing by an independent, impartial, competent tribunal. It

follows that a party to arbitration proceedings enjoys a right to a fair trial as

envisaged under art 12.

[32] As the Supreme Court recently stressed, the duty to act independently

and impartially is also expressly imposed upon an arbitrator in terms of s85(6).3

Inherent in the requirement of in partiality (and a fair trial) is the recusal right. As

was made in this context by this court.4

‘[113] As was made clear by Corbett, CJ in Council of Review, SADF and

others v Mönnig and others:5

“he recusal right is derived from a number of rules of natural justice

designed to ensure that a person accused before a Court of law should

have a fair trial.”

[114] The right to a fair trial is entrenched in Namibia in Article 12 which the

legislature has expressly made applicable to arbitration tribunals established

under the Act.

Recusal in the context of judicial officers was recently summarised in this court

as follows:3 Atlantic Chicken Company (Pty) Ltd v Mwandingi and Another case SA 45/2012 unreported 15

July 2014.4 In Novanam Limited v Absalom and 316 Others, LC 101/2013 [2014] NALCMD 19 (30 April

2014).

51992(3) SA 482 (A) at 491 E-F.

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‘Principles governing recusal applications

[115] The applicant contends that he has a reasonable likelihood or

apprehension of bias if I were to preside in the review application. The principles

applicable to recusal were, with respect, recently succinctly summarised by the

South African Constitutional Court in Bernert v Absa Bank in the following way:

“The apprehension of bias may arise either from the association or interest that

the judicial officer has in one of the litigants before the court or from the interest

that the judicial officer has in the outcome of the case. Or it may arise from the

conduct or utterances by a judicial officer prior to or during proceedings. In all

these situations, the judicial officer must ordinarily recuse himself or herself. The

apprehension of bias principle reflects the fundamental principle of our

Constitution that courts must be independent and impartial. And fundamental to

our judicial system is that courts must not only be independent and impartial, but

they must be seen to be independent and impartial.

The test for recusal which this Court has adopted is whether there is a

reasonable apprehension of bias, in the mind of a reasonable litigant in

possession of all the relevant facts, that a judicial officer might not bring an

impartial and unprejudiced mind to bear on the resolution of the dispute before

the court.”

[116] The court in Bernert then referred to the proper approach to an

application for recusal articulated in one of its previous decisions in SARFU and

Others v President of South Africa & Others as:

“It follows from the foregoing that the correct approach to this application for the

recusal of members of this Court is objective and the onus of establishing it

rests upon the applicant. The question is whether a reasonable, objective and

informed person would on the correct facts reasonably apprehend that the

Judge has not or will not bring an impartial mind to bear on the adjudication of

the case, that is a mind open to persuasion by the evidence and the

submissions of counsel. The reasonableness of the apprehension must be

assessed in the light of the oath of office taken by the Judges to administer

justice without fear or favour; and their ability to carry out that oath by reason of

their training and experience. It must be assumed that they can disabuse their

minds of any irrelevant personal beliefs or predispositions. They must take into

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account the fact that they have a duty to sit in any case in which they are not

obliged to recuse themselves. At the same time, it must never be forgotten that

an impartial Judge is a fundamental prerequisite for a fair trial and a judicial

officer should not hesitate to recuse herself or himself if there are reasonable

grounds on the part of a litigant for apprehending that the judicial officer, for

whatever reasons, was not or will not be impartial.”

This approach in SARFU was followed and cited with approval in the Supreme

Court in Christian v Metropolitan Life Namibia Retirement Annuity Fund and

Others and in this court in Christian v Chairman of Namfisa.’

[116] The threshold of a reasonable apprehension of bias as the prerequisite

to establish disqualifying bias was authoritatively established in BTR Industries

South Africa (Pty) Ltd and others v Metal and Allied Workers Union and

another.6 That case concerned a recusal application directed at an Industrial

Court member in a labour dispute. The court, in a closely reasoned judgment,

concluded that the existence of a reasonable suspicion or apprehension of bias

satisfies the test for disqualifying bias in such a context. In the course of its

judgment, that court quoted with approval7 what was stated by the court below

in the Mönnig matter:8

“Since the appearance of impartiality has to do with the public perception of the

administration of justice, it is only to be expected that some tribunals will be

more vulnerable to suspicion of bias than others. The most vulnerable, I

venture to suggest are tribunals – other than courts of law – which have all the

attributes of a court of law and are expected by the public to behave exactly as a

court of law does. The court martial is, of course, such a tribunal. In fact it is the

only tribunal I know of, apart from a court of law, which is competent to impose

criminal sanctions. It is, to all intents and purposes, a court which may be

presided over by laymen.”

[117] Similar considerations apply to arbitration tribunals established by the

Act, given their wide ranging powers whose exercise can only be appealed

against on questions of law alone.61992(3) SA 673 (A) at 690A-695C.7Supra at p 692 H-I.8Mönnig and others v Council of Review and others 1989(4) SA 866 (C).

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[118] As was stressed by the court in BTR,9 as a matter of policy, it is

important that the public – both employees and employers – should have

confidence in the tribunals established to adjudicate their disputes, as

contemplated under Article 12 of the Constitution.’

[33] Turning to the facts of this matter, the applicant asserts that it had an

apprehension of bias well in advance of the proceedings. A close corporation, in

which the arbitrator is a member and an admitted stakeholder, had assisted the

first respondent in the disciplinary processes. That CC applied to represent him

in the arbitration proceedings. The fact that the applicant did not consent to that

representation and the CC did not then formally represent him in the arbitration

proceedings does not dispel the reasonableness of an apprehension of bias in

the circumstances, particularly given the concern – not refuted – that the CC

would provide ongoing advice (for reward) to him during the arbitration.

[34] The applicant then approached the arbitrator informally and requested

her to recuse herself. The arbitrator then approached the Labour Commissioner,

confirming that she is a stakeholder ‘in the company’ and sought his guidance.

The role and position of that company and its identity were unfortunately not

explained and the Labour Commissioner understandably enquired as to the

identity of the company but the arbitrator inexplicably did not revert to him.

Instead, she required that a formal recusal application be made, which occurred.

[35] It is clear from the reasons given for her refusal to recuse herself that the

arbitrator failed to appreciate the fundamental principles relating to recusal and

impartiality of proceedings. By being a member and stakeholder of a close

corporation which had assisted the first respondent and advised him in the

disciplinary proceedings and thereafter applied to represent him in arbitration

proceedings clearly gives rise to a reasonable apprehension of bias. It strains

belief that the arbitrator did not comprehend that she was in a conflicted position

and that this gave rise to a reasonable apprehension of bias. The arbitrator

9Supra at p 694 F.

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entirely failed to appreciate the test for disqualifying bias. She wrongly

considered it to equate to actual bias.

[36] On the facts of this matter, it is clear that the arbitrator’s membership of

the CC which represented the first respondent in his disciplinary proceedings

and which had applied to represent him in the arbitration proceedings gave rise

to a reasonable apprehension of bias on the part of the applicant. The arbitrator

should clearly have recused herself when an application was directed to that

end. Her failure to do so amounts to a gross irregularity in the conduct of the

arbitration proceedings and thus a defect for the purpose of s89(4).

[37] It follows that the arbitrator’s award is to be set aside.

[38] Given the very evident basis for the recusal and the reasonableness of

the apprehension of bias, it is not necessary for me to consider the further

arguments directed by Ms Schimming-Chase at establishing actual bias by way

of inference on the basis of her motivated submissions as to the fundamentally

flawed findings of both fact and law in the award.

[39] Given the result of setting the award on this basis, it would follow that the

proceedings would need to commence de novo before another arbitrator. The

order which I make reflects this. It is also not necessarily to deal with the appeal

because the award is set aside.

Costs

[40] Ms Schimming-Chase submitted that the arbitrator should pay the costs

of this application under s118 of the Act. This section provides:

‘Despite any other law in any proceeding before it, the Labour Court must not

make an order for costs against a party unless that party has acted in a frivolous

or vexatious manner by instituting, proceeding with or defending those

proceedings.’

[41] That provision precludes this court from making an order for costs

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unless a party has acted in a frivolous and vexatious manner by instituting,

proceeding with or defending the proceedings in question. This section thus

severely restricts the discretion of this court in making cost orders. Not only must

the conduct of the party be frivolous or vexatious, but it must be by ‘instituting,

proceeding with or defending those proceedings’.

[42] The arbitrator has not defended these proceedings. Nor did she institute

or proceed with them, even though she may be said to have caused them to be

instituted. Had she opposed these proceedings, then I would certainly be

minded to make a cost order against her. But she did not defend or oppose

these proceedings. In view of that fact, it would appear to me that this section

precludes me from making a cost order, even though I regard her conduct as

grossly irregular and certainly not befitting a person presiding over a tribunal as

contemplated by art 12 of the Constitution.

[43] It follows that in my interpretation of s118, I am precluded from granting

the costs order sought, notwithstanding the reproachable conduct of the

arbitrator.

[44] The following order is made:

1. The arbitrator’s award dated 29 November 2013 is hereby set aside;

2. The dispute is referred back for conciliation and arbitration before a

different arbitrator to commence de novo;

3. There is no order as to costs;

4. The appeal is removed from the roll.

____________

D F SMUTS

Judge

APPEARANCES

APPLICANT/APPELLANT: E. Schimming-Chase

Instructed by: MB de Klerk & Associates

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FIRST RESPONDENT: B. Cupido

Instructed by: Clement Daniels Attorneys