What is the ‘law of the land’ when dealing with hearsay evidence during arbitration proceedings

November 1st, 2019
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Exxaro Coal (Pty) Ltd v Chipana and Others (LAC) (unreported case no JA161/17, 27-6-2019) (Coppin JA (Murphy and Savage AJJA concurring))

In the recent judgment of Exxaro Coal (Pty) Ltd the Labour Appeal Court (LAC) dealt with a paramount issue around the interplay between the powers granted to commissioners at the Commission for Conciliation, Mediation and Arbitration (CCMA) in terms of s 138 of the Labour Relations Act 66 of 1995 (LRA) and s 3 of the Law of Evidence Amendment Act 45 of 1988. To be specific, the court addressed the issue concerning the admissibility of hearsay evidence during arbitration proceedings at the CCMA.

Factual background

Mr Chipana, a National Union of Mineworkers of South Africa (NUMSA) shop steward was employed by Exxarro in its human resources department. He was charged with dishonesty for selling jobs to members of the public and was in breach of the disciplinary code. At the disciplinary hearing, the employer called three witnesses, namely, two members of the forensic auditing team who conducted the investigation and one of the complainants. The evidence of the two members of the forensic auditing team relayed what they had been told and heard from others during the investigation process and also relied on affidavits allegedly made by the complaints to give their testimony. Their evidence was essentially hearsay in that they had no first-hand knowledge of the alleged wrongdoing.

Mr Chipana was dismissed, however, he challenged his dismissal at the CCMA. During the arbitration proceedings, Exxaro relied on a bundle of documents, including the affidavits allegedly made by the complainants and called the two members of the forensic auditing team to prove that the dismissal was fair. It was common cause that the evidence sought to be relied on by Exxaro was hearsay evidence. The commissioner found at para 9 that: ‘6.6 Hearsay evidence cannot be admitted against a person without his consent, especially where it is not corroborated by independent evidence. This is the law of the land, and disciplinary enquiries are not exempted from the application of the law of evidence. The standard of proof in disciplinary proceedings is the same as that in civil matters, and not something lower than that. The standard must also be observed in arbitration proceedings in the CCMA.

6.7 Once the hearsay evidence against the applicant is excluded, which I hereby do, there remains no shred of evidence in support of the respondent’s allegations against him,’ (my italics).

Exxaro was ordered to reinstate Mr Chipana retrospectively, with back pay. On review, the Labour Court held that Exxaro had ‘failed to genuinely establish a compelling case for the admission of such evidence’, and that the contents of the affidavits of the complainants was undisputed and that the evidence given by the forensic audit team members was ‘based on untested allegations received from the complainants’. The court dismissed Exxaro’s review application.

The decision of the LAC

On appeal, Exxaro argued that the arbitrator failed to have proper regard to s 3 of the Law of Evidence Amendment Act, he had ignored the totality of the evidence and had merely excluded the hearsay evidence on the ground that Mr Chipana had not consented to its admission. Mr Chipana argued that there was not a ‘shred of evidence’ on which Exarro could rely to prove the fairness of the dismissal, that the commissioner’s failure to take into account certain corroborating evidence for the content of the alleged affidavits of the complainants was not an error of law that amounted to a gross irregularity since it did not cause the commissioner to misconceive the nature of the inquiry, or his duties in relation thereto.

Section 3 of the Law of Evidence Amendment Act provides as follows:

‘3 Hearsay evidence –

(1) Subject to the provisions of any other law, hearsay evidence shall not be admitted as evidence at criminal or civil proceedings, unless –

(a) each party against whom the evidence is to be adduced agrees to the admission thereof as evidence at such proceedings;

(b) the person upon whose credibility the probative value of such evidence depends, himself testifies at such proceedings; or

(c) the court, having regard to –

(i) the nature of the proceedings;

(ii) the nature of the evidence;

(iii) the purpose for which the evidence is tendered;

(iv) the probative value of the evidence;

(v) the reason why the evidence is not given by the person upon whose credibility the probative value of such evidence depends;

(vi) any prejudice to a party which the admission of such evidence might entail; and(vii) any other factor which should in the opinion of the court be taken into account, is of the opinion that such evidence should be admitted in the interests of justice.

(2) The provisions of subsection (1) shall not render admissible any evidence which is inadmissible on any ground other than that such evidence is hearsay evidence.

(3) Hearsay evidence may be provisionally admitted in terms of subsection (1)(b) if the court is informed that the person upon whose credibility the probative value of such evidence depends, will himself testify in such proceedings: Provided that if such person does not later testify in such proceedings, the hearsay evidence shall be left out of account unless the hearsay evidence is admitted in terms of paragraph (a) of subsection (1) or is admitted by the court in terms of paragraph (c) of that subsection.

(4) For purposes of this section –

“hearsay evidence” means evidence, whether oral or in writing, the probative value of which depends upon the credibility of any person other than the person giving such evidence;

“party” means the accused or party against whom hearsay evidence is to be adduced, including the prosecution.’

Section 138 of the LRA gives commissioners a discretion to conduct an arbitration in a manner that they consider appropriate to determine a dispute fairly and quickly and requires that they deal with the substantial merits of disputes with minimum legal formalities.

The LAC recognised that s 3 of the Law of Evidence Amendment Act means that if there is no agreement to receive hearsay evidence it is to be excluded unless the interests of justice requires its admission, that hearsay evidence that is not admitted in accordance with the provisions of this section is not evidence at all. This section has changed the rules regarding when hearsay evidence is to be received and when it is not to be received. It was held that s 138 does not imply that the commissioner may arbitrarily receive or exclude hearsay evidence. Even though s 3 of the Law of Evidence Amendment Act assumes some legal formality, such formality is invaluable. Notionally, a commissioner is not obliged to apply it during arbitration proceedings because of s 138 of the LRA (which requires minimal formality), however, a prudent commissioner does not err by applying it when dealing with hearsay evidence but follows an alternative norm, which ensures fairness in both the process and outcome of the arbitration (para 21).

It was held that applying the common law rules for the reception or exclusion of hearsay evidence in arbitration proceedings is contrary to the principles of fairness and reasonableness as they often lead to ‘rigidity, inflexibility – and occasional absurdity’. The provisions of s 3 of the Law of Evidence Amendment Act are straightforward and the factors to be considered are not a closed list. With reference to the SCA judgment of S v Ndhlovu and Others 2002 (6) SA 305 (SCA) where criminal courts were cautioned to be scrupulous when applying s 3 of the Law of Evidence Amendment Act, the LAC held that those safeguards and precautions, duly adapted, also apply to the application of s 3 of the Law of Evidence Amendment Act in civil proceedings. Because of the similarities between civil proceedings and arbitration proceedings, those safeguards equally apply to arbitration proceedings to ensure fairness and serve as a guide for arbitrators when faced with hearsay evidence, particularly in applying s 3.

In adapting them to the labour law context, the LAC held that the principles are as follows –

  • s 3(1)(c) of the Law of Evidence Amendment Act is not a license for the wholesale admission of hearsay evidence in the arbitration proceedings;
  • the commissioner must be careful to ensure that fairness is not compromised in applying the section;
  • a commissioner is to be alert to the introduction of hearsay evidence and ought not to remain passive in that regard;
  • a party must as early as possible in the arbitration make known its intention to rely on hearsay evidence so that the other party is able to reasonably appreciate the evidentiary ambit or challenge that they are facing;
  • the commissioner must explain the significance of the provisions of s 3 of the Law of Evidence Amendment Act; and
  • the commissioner must timeously rule on the admission of the hearsay evidence and such ruling should not be made for the first time at the end of the arbitration, or in the closing argument, or in the award.

The court emphasised that the point at which a ruling on the admissibility of evidence is made is crucial to ensure fairness in arbitration proceedings. The fact that the commissioner only made his finding on admissibility of hearsay evidence in the arbitration award was heavily criticised as being undoubtedly unfair to both parties. Exxaro’s legal representative had conceded in both her opening and closing statements that Exxaro had relied on hearsay evidence at the disciplinary inquiry, proceeded to adduce such hearsay evidence at the arbitration and Mr Chipana’s legal representative led evidence, which essentially tried to answer to the evidence without raising an objection on the basis that it is hearsay evidence.

The commissioner appeared passive at all times during the arbitration and did not deal with the admissibility of the hearsay evidence at that point. The court held at para 29 that:

‘The timing of the ruling and the Commissioner’s relative passivity during the arbitration when the hearsay evidence was being adduced is not consonant with a commissioner’s duty to determine a dispute between the parties fairly, or quickly’.

If the issue of admissibility of the evidence had been addressed promptly when it was adduced, a ruling in that regard would have assisted both sides to know the ambit of the cases that they had to meet and could have possibly led to a quicker and cheaper resolution of the dispute. Both parties were prejudiced and essentially deprived of the opportunity to make out a case and by the time the ruling on admissibility was made, it was too late for them to do anything to save their cases. Ultimately, it was held that a reasonable commissioner in the position of the arbitrator would have known the law on the admissibility of hearsay evidence, would have been alert to its introduction and would have addressed its admissibility promptly so as to ensure fairness and expediency.

Finally, the LAC acknowledged that while this approach seeks to introduce some measure of formality in arbitration proceedings, s 138 of the LRA does not ban all formality but merely requires ‘minimal formality’. An equitable balance must be struck between the requirement of minimal formality and the principles of fairness and speed. The award was set aside, and the matter remitted back to the CCMA for a hearing de novo before a different commissioner.

Conclusion

This case is not only important because it sets the ‘law of the land’ regarding the admissibility of hearsay evidence in arbitration proceedings but also because it is a reminder to CCMA commissioners to know their law. In the words of the LAC at para 18: ‘[I]f a commissioner purports to apply the law then it is incumbent upon the commissioner to at least make an effort to ascertain what the law is. In this matter the commissioner avowed in his award that it was the law of the land that uncorroborated hearsay evidence could not be admitted without Mr Chipana’s consent. Perhaps the commissioner had in mind an oversimplified view of the law as it stood before the enactment of section 3 of the [Law of Evidence Amendment Act], because the position described by the commissioner is and was at the time of the award certainly not the law of the land’.

Tshegofatso Malope LLB (cum laude) (Wits) is a candidate legal practitioner at ENSafrica in Johannesburg.

This article was first published in De Rebus in 2019 (Nov) DR 28.