Member Article

Recently, there have been a number of interesting judgments of the South African Labour Court regarding cost orders and new approaches have been adopted which signal a change as to how cost orders are approached in the Labour Court. 

Section 162 of the Labour Relations Act, 1995 (“LRA”) states that the Labour Court has discretion regarding the granting of cost orders, which is not dependent of the nature of the claim brought before the court. Regardless of whether the claim relates to a contractual dispute or if the matter is a “cut-and-dry” unfair dismissal dispute, the Labour Court has discretion regarding the cost order that it may make, taking into account the relevant facts and circumstances of the matter, and is thus not bound by the rules regulating cost orders in the magistrate, regional and/or superior courts.

In any form of litigation, cost orders can take various forms, namely:

• party and party costs – the reasonable and necessary costs to defend the interests of the litigant;
• attorney-client costs – costs that an attorney is entitled to recover based on the prescribed tariff; and
• attorney-own client costs – costs that an attorney is entitled to recover from their client based on their engagement agreement.
• costs de bonis propriis, which are costs that are awarded against a person acting in a representative capacity, usually the legal representative. Such costs are a penalty for improper conduct and the representing person must pay out of his or her own pocket.

In litigation outside the confines of the Labour Court, the general principle is that costs follow the result. In the Labour Court, this is not necessarily the case as section 162 of the LRA provides that fairness must be considered when making such an order. As a result, the Labour Court has, in the past, seldom made any drastic cost orders, especially punitive costs orders.

In the 2014 Labour Court decision of Passenger Rail Authority of South Africa v Molepo, where the court made a cost order against the CEO of the applicant in his personal capacity, we began to see a change in the approach of the Labour Court judges in relation to costs orders – from old school to new school. 

Mr Molepo, who was employed as the CEO of the applicant employer’s property division, had been placed on special leave pending the outcome of an investigation into his performance. The applicant later approached Mr Molepo to discuss three options going forward, namely: having the special leave converted into a suspension pending the conclusion of the investigation; concluding a separation agreement; or, appointing Molepo as a special advisor to a new CEO of the property division that would be appointed. Mr Molepo requested further information regarding the latter option, which the applicant failed to provide. The applicant’s CEO then requested that Mr Molepo report for duty in this new position as advisor to the new CEO of the property division. Mr Molepo refused to do so on the basis that he had not accepted this new position and had merely requested further particulars in relation to the job specifications. The applicant stated that Molepo’s decision constituted a repudiation of the agreement between the parties and terminated his employment with the company. Mr Molepo approached the Commission for Conciliation, Mediation and Arbitration (“CCMA”) and lodged an unfair dismissal dispute, which eventually resulted in his reinstatement. The CCMA arbitration award was taken on review by the applicant, where the Labour Court found that there was no basis on which the commissioner’s finding could be challenged and the review application was dismissed. Mooki AJ was concerned by the fact that the applicant had wasted public funds in litigating, that the applicant had at the last minute changed its case on review and attempted to add another ground of review to the application, and had attempted to halt the expeditious resolution of the matter by giving notice of intention to appeal against an order enforcing the award and thereafter, failing to follow through with this matter. The Labour Court ordered that the applicant’s CEO, in his personal capacity, pay the wasted costs of the arbitration on a punitive scale as well as the costs of postponement of the review application due to the fact that the applicant had stated that it was not adequately prepared to proceed. 

In the case of Mphalele v Mogale Municipality (13 November 2017), Judge Van Niekerk ordered costs de bonis propriis against the respondent legal representatives. The judge noted that a specialist court such as the Labour Court was created to adjudicate employment-related matters. Where matters outside of the realm of the court’s jurisdiction are instituted and the statutory process is not complied with, especially in circumstances where a party does have legal representation, this adds to the substantial backlog already faced by the Labour Courts. Judge Van Niekerk stated that, where claims devoid of merit are instituted, and require the attention of an already limited judicial resource, “the court ought to mark its disapproval of those practitioners who persist with claims and undermine the statutory purpose of expeditious and efficient dispute resolution”.

A more recent decision is that of Judge Lagrange in Ashley Seopa v Imperial Cold Logistics (Pty) Ltd, relating to a contempt application. The judge held that there was no purpose in proceeding with the application as the applicant had only attempted to make out his case in its replying affidavit. Notwithstanding this, the case made out by the applicant was “wholly implausible”. Judge Lagrange stated that “it should have been apparent to his attorneys that there was no meaningful case to pursue after receipt of the respondent’s answering affidavit and that he could not rescue his case by setting it out for the first time in reply”. It was ordered that the applicant’s attorneys pay the wasted costs of the respondents for having to attend the hearing and the costs of preparing argument.

Mdluli v International Union for Conservation of Nature, also heard before Judge Lagrange, related to a condonation application that was granted for the applicant’s late referral of a statement of claim. Notwithstanding the fact that the applicant’s application for condonation was granted, the court made an order requiring the applicant’s attorneys of record to show good cause as to why they should not be ordered to pay costs de bonis propriis to the respondent for its costs incurred in opposing the condonation application. The applicant’s attorneys failed to make submissions in this regard and failed to satisfy Judge Lagrange that the late referral of the applicant’s statement of claim was not attributable to their gross negligence. The applicant’s attorneys were thus faced with a rather painful costs de bonis propriis order, again depicting the new “no nonsense” approach taken by the Labour Courts.

Despite the fact that these orders may seem particularly harsh, especially in light of the fact that the Labour Court has the discretion to make orders relating to costs, it is imperative that the Labour Court make such orders in light of the considerations of fairness. The above judgments indicate the court’s willingness to order costs, not only against a party, but also against its legal representatives, where there has clearly and indubitably been vexatious and reprehensible conduct on part of a litigant and where it is found that a litigant has acted in an unconscionable, appalling or disgraceful manner – allowing and almost forcing the court to move from the default position of no costs to the other end of the extreme, being punitive costs orders.

However, there are limits to this new approach, as illustrated by the decision in AFMSA Group (Pty) Ltd v Sean Mark Francis. The respondent in this matter, Mr Francis, was unsuccessful in an application for the condonation for the late referral of a dispute to the Labour Court. His application for leave to appeal was also dismissed. A few months later, he addressed an email to the applicant in which he stated that the condonation application had been actually been granted and attached what purported to be a court order stating the same. The applicant then brought an ex parte application to have Mr Francis held to be in contempt of court for fraudulently amending an order of court. At the hearing of the contempt application, Mr Francis gave evidence to the effect that a draft court order, which had been prepared on the assumption that he would be granted condonation, had been included in the court file. He had mistakenly regarded this draft court order as the actual court order. Out of confusion, and without the assistance of his legal representative, he had sent out the email with the attached draft order. Applying the criminal law standard of proof (ie, beyond a reasonable doubt), that the Constitutional Court held must be used in matters of this nature, the court held that, based on the evidence before it, it must reluctantly find that the applicant failed to prove that the respondent was guilty of contempt of court for fraudulently amending a court order. Further to this, the court stated that it could not find error in the actions of Mr Francis’ legal representatives, thus eliminating the possibility of costs de bonis propiis. 

This judgment clearly depicts that fairness is the ultimate deciding factor when considering whether or not to grant or issue a cost order. However, Steenkamp J did sound a cautionary note to Mr Francis and all litigants that come before the Labour Courts to tread carefully in future with their dealings with the Labour Court.