Employment law update – Labour Court makes costs order against CEO in his personal capacity

July 1st, 2014

By Talita Laubscher and Monique Jefferson

In Passenger Rail Authority of South Africa v Molepo [2014] 5 BLLR 468 (LC), the respondent employee, who had been employed as the Chief Executive Officer (CEO) of the applicant’s property division, was placed on special leave pending an investigation into his performance. During his period of special leave a meeting was held with him in which three options were discussed –

  • converting his special leave into suspension pending the investigation;
  • reaching a separation agreement; or
  • appointing him as special adviser to the newly appointed CEO of the applicant’s property division.

The respondent requested certain information about the special adviser position and was advised that he would be provided with a draft employment contract for consideration. The respondent continued to follow up on the status of the contract but was not provided with it. Eventually the respondent was instructed by the applicant’s CEO to report for work in the position of adviser on real estate strategy. The respondent advised that he had never agreed to his redeployment into this role but had only agreed to consider the draft contract, which had not been provided to him.

The applicant’s CEO responded and stated that this constituted a direct repudiation of their agreement. He communicated to the respondent that he had decided to terminate his employment on the basis that he had no interest in working for the applicant. The respondent alleged that he had been unfairly dismissed and referred a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). During the CCMA proceedings, the applicant alleged that there had been no dismissal but that the respondent had repudiated his contract, and that such repudiation had simply been accepted by the applicant. The respondent denied the repudiation of his contract. The commissioner found that the respondent had been dismissed and that such dismissal was substantively and procedurally unfair. The respondent was reinstated to the position of CEO.

The applicant took the commissioner’s finding on review to the Labour Court. The Labour Court found that the applicant had conceded that the respondent had been dismissed and yet it had led no evidence to justify the dismissal at the arbitration. Furthermore, the respondent’s denial that he had repudiated the contract had not been challenged by the applicant during the arbitration proceedings. The Labour Court found that there was no basis to challenge the commissioner’s finding that the dismissal was substantively and procedurally unfair and the review application was accordingly dismissed.

Mooki AJ furthermore expressed concern that the applicant had wasted public funds when litigating this matter. In this regard, the applicant had been ordered to pay wasted costs of the arbitration proceedings on a punitive scale, as well as the costs of a postponement of the review application because it had not adequately prepared for the matter. Furthermore, the applicant had changed its case on review and attempted to add another ground to the application. It had also given notice of its intention to appeal against an earlier order enforcing the award, but had done nothing further. This was found to amount to a delaying tactic which had the effect of halting the expeditious resolution of disputes which the Labour Court seeks to achieve. Mooki AJ found that the abovementioned conduct should not be tolerated by the courts. He concluded that the applicant was a public entity and should not litigate ‘willy-nilly’ at the public’s expense. He found that, in the circumstances, it was appropriate to order the applicant’s CEO to pay the costs of the review application in his personal capacity. This was despite the fact that the applicant was a juristic person and the CEO was not cited as a party to the dispute. This said, the entire dispute had arisen from the CEO’s actions, and Mooki AJ remarked that he may have held a different view if the CEO had not played any role in the dispute and the inappropriate manner in which it had been handled.

Time limits as per the practice manual of the Labour Court

In Tadyn Trading CC t/a Tadyn Consulting Services v Steiner and Others [2014] 5 BLLR 516 (LC), the applicant sought an order staying the writ of execution that had been obtained by the respondent employee. The respondent argued that the applicant had no basis to stay the writ pending the outcome of the review as the applicant had been deemed to have abandoned the review by failing to file the record of proceedings within the prescribed time limit. This was on the basis that the practice manual of the Labour Court of South Africa provides that an applicant is deemed to have abandoned the review if it has not filed the record of the arbitration proceedings within the prescribed period, unless the applicant has obtained the respondent’s consent to the delay. In this case, the record was filed ten days outside the time limit set out in the manual and the applicant had not obtained the respondent’s consent to the delay.

The Labour Court considered the fact that practice directives have been held to constitute guidelines only. Molahlehi J, however, did not agree with this approach and found that, since the Judge President has been empowered to issue practice directives, these should be followed.

The time lines in the manual, therefore, should not simply be ignored. In this case, however, the applicant applied for condonation for the late filing of the record. Molahlehi J found that the power of a court to grant condonation where there has been non-compliance with the time limits set out in a practice directive should be inferred, even if the practice directive does not expressly provide for this. It was found that the applicant had excellent prospects of being granted condonation for the late filing of the record and thus the application to have the writ of execution stayed pending the outcome of the review was granted.

Talita Laubscher BIur LLB (UFS) LLM (Emory University USA) is an attorney at Bowman Gilfillan in Johannesburg.

Monique Jefferson BA (Wits) LLB (Rhodes) is an attorney at Bowman Gilfillan in Johannesburg.

This article was first published in De Rebus in 2014 (July) DR 49.