Case CCT192/20
[2021] ZACC 26
Judgement Date: 07 September 2021
Post Judgment Media Summary
The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.
On Tuesday, 7 September 2021 at 10h00, the Constitutional Court handed down judgment in an application for leave to appeal against the judgment and order of the Labour Appeal Court, hearing an appeal from the Labour Court. The matter involved the applicant's request for the Labour Court to enforce a collective agreement between it and the respondents. Although the appeal raised certain issues on the merits of the Labour Court’s order, the pertinent question that the Constitutional Court answered was in relation to the matter of the costs order handed down by the Labour Court in the application for leave to appeal.
The applicant is the Union for Police Security and Corrections Organisation, a trade union whose members are employed by the second to fifth respondents, that is, Kensani Corrections Management, Royal Mnandi (Pty) Limited, Tec-Tron Maintenance (Pty) Limited and JFE Security. The first respondent, South African Custodial Management, provides services to the Department of Correctional Services, and subcontracts the second to fifth respondents. The sixth respondent is the National Commissioner of the Department of Correctional Services. Only the first and second respondents participated in these proceedings.
The applicant brought the appeal against the Labour Court’s order, in relation to the merits and costs, on behalf of its members. The litigation arose from an audit that was performed by a Task Team whose purpose was to address various employment issues at Kutuma Sinthumule Correctional Facility, a correctional facility serviced by the respondents. The report dealt with the remuneration structures and employment terms and conditions of the applicant’s members. The applicant argued that the findings of the report were meant to be binding on, and implemented by, the respondents.
The applicant launched proceedings in the Labour Court to impose and enforce the obligations arising from the findings and recommendations of the report. The respondents, however, argued that the Labour Court lacked jurisdiction to adjudicate the matter as the relevant documents were an agreement between the applicant, a trade union, and employers, which dealt with terms and conditions of employment. Thus, the relief sought by the applicant was the enforcement of a collective agreement, which section 24 of the Labour Relations Act (LRA) has placed outside the Labour Court’s jurisdiction, and within the jurisdiction of the Commission for Conciliation, Mediation and Arbitration (CCMA). The Labour Court found in favour of the respondents, and dismissed the application with no order as to costs.
Aggrieved, the applicant sought leave to appeal in the Labour Court. The Labour Court, refusing to grant leave, dismissed the application with costs, without any reason for doing so beyond merely stating that it “could find no reason for costs not to follow the result”. The applicant then petitioned the Labour Appeal Court for leave to appeal, which similarly dismissed the application on the basis that it lacked prospects of success. It did not make any finding on costs.
The applicant approached the Constitutional Court seeking leave to appeal against the Labour Court’s order on the merits and that Court’s costs order.
The respondents submitted that the application lacks prospects of success because the applicant sought to enforce a collective agreement, thus the Labour Court’s finding in this regard was unassailable. Regarding costs, they submitted that the Labour Court was entitled to award costs having dismissed the main application.
The matter was determined by the Constitutional Court on the papers without an oral hearing.
The Constitutional Court, in a unanimous judgment penned by Khampepe J (Mogoeng CJ, Jafta J, Madlanga J, Majiedt J, Mhlantla J, Pillay AJ, Theron J, Tlaletsi AJ and Tshiqi J concurring) dismissed the application for leave to appeal on the merits; however, granted leave to appeal against the costs order of the Labour Court.
The Constitutional Court held that its constitutional jurisdiction was engaged and that it was in the interests of justice to consider the question of costs given that there were prospects of success. It granted leave to appeal against the Labour Court’s costs order. However, the Constitutional Court found that the applicant’s arguments on the merits had absolutely no prospects of success, and that there was no reason to interfere with the Labour Court’s decision on the merits: the Labour Court’s finding that section 24 of the LRA places interpretations of collective agreements within the jurisdiction of the CCMA was correct. Accordingly, leave to appeal was confined to the question of costs.
On this issue, the Constitutional Court found that the Labour Court had erred. The Court recalled that, whilst it is an established rule in litigation that costs follow the result, this rule does not apply in labour-related matters. The Constitutional Court lamented that, despite having confirmed this time and again, worryingly, it is still being called upon to overturn orders of the Labour Court and Labour Appeal Court that have applied the general rule, rather than departing, as they should, from the premise that labour-related disputes constitute an exception to the general rule. The Constitutional Court emphasised that this principle is important for it honours imperatives flowing directly from the LRA and the Constitution in respect of how labour matters should be dealt with by courts.
Regarding the Constitution, the Constitutional Court referred to section 23, which entrenches various labour rights, and noted that the primary purpose of the LRA, intended to give effect to section 23 of the Constitution, is “to promote the effective realisation of labour disputes”. The LRA establishes mechanisms for section 23 rights holders to vindicate their rights speedily and cost-effectively. This laudable goal of section 23 and the LRA is eroded where rights bearers are faced with the threat of adverse costs orders in circumstances where their claims fail. Secondly, the Court held that section 34 of the Constitution establishes the right to have disputes resolved in a public hearing by an independent and impartial forum or tribunal, and in labour-related matters, the LRA demarcates specific institutions for their swift resolution. Ergo, when the Labour Court and Labour Appeal Court shut their doors by too keenly mulcting parties in costs, they discourage the proper resolution of those disputes, and instead encourage other proscribed means of dispute resolution.
The Constitutional Court went further to say that section 162 of the LRA, which sets out how costs should be dealt with, is an important provision that rejects the ordinary rule that costs follow the result. It favours an approach based on “law and fairness”. Thus, as a matter of constitutional and statutory obligation, courts are enjoined to apply the fairness standard when making costs orders. The Constitutional Court accepted that, in labour matters, costs remain a matter of discretion. However, courts must exercise this discretion judicially. Accordingly, where courts deviate from the rule that costs do not automatically follow the result in labour matters, reasons must be provided, which reasons must be based on considerations of law and fairness.
The Constitutional Court held that the Labour Court did not exercise its discretion judicially in this case. Instead, it ignored constitutional jurisprudence and followed the general rule, without justification or reasons. It accordingly applied the incorrect principle, and failed to provide reasons for why costs should have been awarded. As a result, the Constitutional Court held that the application for leave to appeal against the Labour Court’s costs order ought to be upheld. In the absence of reasons to depart from the principle that costs do not follow the result in labour matters, the Constitutional Court set aside the Labour Court’s costs order.
The Full judgment here
