The standard rule relating to costs in civil litigation is that costs follow the result. In other words, the unsuccessful party must pay the costs incurred by the opposing party. The consequence of this principle is that many parties may be hesitant to pursue a case out of fear of an adverse outcome and cost order, which may be significant. As a result, specific provisions apply to cost orders in labour tribunals.
POWERS OF THE LABOUR COURT
The powers of the Labour Court to make cost orders and the considerations which may be taken into account when determining those cost orders are contained in Section 162 of the Labour Relations Act (LRA), which provides as follows:
(1) The Labour Court may make an order for the payment of costs, according to the requirements of the law and fairness.
(2) When deciding whether or not to order the payment of costs, the Labour Court may take into account-
a) whether the matter referred to the Court ought to have been referred to arbitration in terms of this Act and, if so, the extra costs incurred in referring the matter to the Court; and
(b) the conduct of the parties-
(i) in proceeding with or defending the matter before the Court; and
(ii) during the proceedings before the Court.
The provision that the Court may grant cost orders “according to the requirements of the law and fairness” was explained in NUM v East Rand Gold and Uranium-
- The provisions that “the requirement of law and fairness” are to be taken into account is consistent with the role of a Court in which both the law and fairness are to be applied.
- The general rule of law that in the absence of special circumstances, costs follow the event is a relevant consideration. However, it will yield when considerations of fairness require it.
- Proceedings in the industrial Court are frequently a part of a conciliation process. Parties, and particularly individual employees, should not be discouraged from approaching the industrial Court in such circumstances. Consideration should be given to avoiding cost orders where there is a genuine dispute, and the approach to the Court was not unreasonable. The industrial courts should be easily accessible to litigants who suffer the effects of unfair labour practices.
- Frequently the parties will have an ongoing relationship that will survive after the dispute has been resolved. A cost order, especially where the dispute has been a bona fide one, may damage the relationship and thereby detrimentally affect industrial peace and the conciliation process.
- The conduct of the parties is obviously relevant, especially where considerations of fairness are concerned.
- The preceding considerations are not numerous clauses. A very wide discretion is given to the Court in respect of orders for costs. Such a discretion must be exercised with proper regard to all the facts and circumstances of each case.
Neither the above factors nor the factors contained in S162 of the LRA purport to be an exhaustive list of considerations to be considered. The Court may have regard for all relevant factors which are contained in law and take the principle of fairness into account. The interests of both employees and employers must be considered in equal measure.
The LRA provisions make special mention of matters that arrive before the Labour Court, which could have been referred to Arbitration (S162(2)(a)). The insertion of this provision is to discourage parties from approaching the Labour Court where less expensive options are available. In this regard, the provisions of S158(2) of the LRA are relevant. This section provides that, if at any stage, after a dispute has been referred to the Labour Court, it becomes apparent that the dispute ought to have been referred to arbitration, the Court may, with the consent of the parties, continue with the proceedings at the Court sitting as an arbitrator. The Court will only be entitled to make an order that an arbitrator could have made, and the provisions of S162(2)(a) are still applicable.
Although the Labour Court has adopted the scale of fees applicable to the High Court, it must be remembered that the legislature intended the costs of approaching the Labour Court to be less expensive than proceedings in the High Court. Factors that a judge should consider when awarding costs include the complexity of the dispute and the legal representative’s ability to deal with the dispute. Therefore, should a party employ the services of Senior Counsel for a straightforward dispute, the costs of that legal representative may be unrecoverable.
POWERS OF THE CCMA
The CCMA lacks inherent jurisdiction to award costs other than those that are contained in the LRA. S138(10) of the LRA regulate the circumstances under which costs can be awarded at the CCMA. Previous versions of the LRA only permitted the awarding of costs against a party who acted frivolously (pursuing a futile matter) or vexatiously (pursuing a matter merely to cause annoyance). However, the current provisions of the LRA permit the awarding of costs according to the requirements of fairness and the law and the CCMA rules.
The requirements of fairness apply as discussed above.
Rule 39 of the CCMA rules regulated the order of costs in arbitration proceedings and created a broad set of circumstances and considerations that should be considered when awarding costs. These include –
- The measure of success that the parties achieved
- Considerations of fairness that weigh in favour of or against granting a cost order
- Any with-prejudice offers that were made with a view to settling the dispute
- Whether a party acted frivolously or vexatiously in the proceedings
It is thus clear that the arbitrator has a broad discretion to award costs to a party in terms of the CCMA rules. In practice, however, arbitrators remain reluctant to award costs against parties, regardless of the manner in which they conduct themselves during the proceedings. Therefore, it is our advice that parties moderate their expectations of achieving significant cost awards as it rarely happens.
Article by: Stephen Kirsten
Provincial Manager – Cape Town