Cash or cheque? Cost orders in labour litigation
Cash or cheque? Cost orders in labour litigation
The general rule in litigation is that costs follow the result. In layman’s terms, this means that the losing side will be paying the bill when it eventually arrives. However, like most things in law, there is a general rule and then there are exceptions to this general rule. The exception to the general rule that costs follow the result is found in labour disputes where it is often a David versus Goliath encounter as vulnerable employees seek to enforce their rights against seemingly omnipotent employers who have access to vast resources.
At a glance
- The general rule in litigation is that costs follow the result, but there are exceptions in labor disputes due to the power imbalance between employees and employers.
- In the case of Union For Police Security and Corrections Organisations v South African Custodial Management, the Constitutional Court upheld the dismissal of the applicant's appeal on the merits but set aside the adverse cost order made by the lower court.
- The Constitutional Court emphasized that in labor matters, courts have discretion to consider fairness and the principles of law when making cost orders, taking into account the unequal power relationship between employees and employers.
This was the issue before the Constitutional Court in the recent case of Union For Police Security and Corrections Organisations v South African Custodial Management (Pty) Ltd and Others  ZACC 26. For the purposes of this alert, it is not necessary to discuss the merits of the application at length, save to say that the applicant brought an application before the Labour Court (LC), when it was clear that the application fell within the jurisdiction of the Commission for Conciliation, Mediation and Arbitration (CCMA). The LC dismissed this application and the applicant sought leave to appeal, and the LC this time ordered costs against the applicant. The applicant then approached the Labour Appeal Court (LAC) which also dismissed the applicant’s appeal on the basis that the appeal lacked merit. Interestingly, the LAC did not interfere with the LC’s decision to award costs against the applicant. The applicant then launched an appeal to the Constitutional Court. The Constitutional Court differentiated between the applicant’s appeal on the merits and on the adverse cost order handed down by the LC.
Appeal on the merits
The Constitutional Court found that the LC’s reasoning on the merits was “unassailable” and therefore found no reason to interfere with this aspect of the judgment. Accordingly, the applicant’s appeal on the merits was dismissed.
Appeal on the costs order
The Constitutional Court then turned its focus to the adverse cost order handed down by the LC against the applicant. The Constitutional Court gave its support to the trite principle that in litigation costs follow the result, but found, however, that this general rule does not apply to labour matters and cited its own jurisprudence in Zungu v Premier of the Province of KwaZulu-Natal  ZACC 1. The Constitutional Court reasoned that the decision to deviate from the general principle pertaining to costs in litigation was not borne out of “overzealous generosity” but rather cited sections 23 and 34 of the Constitution which deal with labour rights and access to courts. The Constitutional Court found that section 162 of the Labour Relations Act 66 of 1995, as amended (LRA) confers courts with the discretion to make appropriate cost orders, taking into account the principles of law and fairness. The Constitutional Court was at pains to point out that when making cost orders in labour matters, a court is required to apply the fairness standard enriched in the LRA. Ultimately, the Constitutional Court upheld the applicant’s appeal on the costs and set aside the adverse cost order made by the LC.
The reason the general rule pertaining to costs does not apply in labour litigation is because the courts are alive to the unequal power relationship between often desperate employees and their employers who have vast resources at their disposal. Litigation is already a costly exercise and it would not be in the interests of justice to award costs orders against employees and or trade unions who have bona fide approached the courts seeking refuge. That being said, a court will still be required to exercise its discretion judicially by applying the “law and fairness” standard when making a determination on costs in labour litigation, or risk being on the wrong end of a scolding from a higher court.
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