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Taxation and the recovery of costs from trade unions

Case law and legislation review

BY: JOHN GROGAN, Published by Siber Ink CC, © Siber Ink CC, J G Grogan
For Subscriptions:

, or fax (+27) – 021 – 701 3947
Used with permission

 

# TAXATION AND RECOVERY OF COSTS FROM UNIONS*

The Food & General Workers Union referred a dispute with Irvin & Johnson Ltd to the Labour Court on behalf of five of its members. That application was dismissed with costs. The union appealed unsuccessfully to the Labour Appeal Court, but no costs were awarded on appeal. I&J taxed the bill and demanded payment of the full amount from the union.

The FGWU paid one-sixth of the amount, claiming that since liability for costs was joint, the balance should be recovered from each of the five former employees. I&J obtained a writ of execution for the full amount against the union, but a magistrate set aside the writ on the basis that liability was joint. I&J appealed successfully to the High Court. The FGWU then appealed to a full bench.

In Irvin & Johnson Limited v Food & General Workers Union & another (Eastern Cape Division of the High Court case no. CA542/02, dated 27 March 2003, unreported) the court expressed doubt that the magistrates’ court had jurisdiction to pronounce on the writ in the first place, because proceedings to stay the writ should therefore have been launched in the Labour Court.

On the merits, however, the full bench held that it was plain that the Labour Court had intended to award the appellant its costs and that the FGWU should pay those costs. The problem was that the Labour Court merely stated in its order that "costs should follow the result". Did this mean that, in law, the taxed costs should be paid jointly and severally, or merely that each party should bear its own share of the total bill?

The court held that although the Labour Court had clearly intended that costs should be paid jointly and severally, its intention was irrelevant; judgments and orders must be interpreted from their words alone. According to established practice an order for costs generates joint liability only, unless otherwise specified. The union was accordingly liable only for its share of the costs. That I&J might not be able to recover costs from its former employees was also irrelevant, because the meaning of the order was to be sought only in its actual wording.

The lesson for employers is clear: if they seek costs against unions acting on behalf of employees, they must ensure that the wording of the proposed costs order uses the words "joint and several, the one paying the other to be absolved".

# THE LABOUR COURT CLOSES THE NET ON EMPLOYER ASSOCIATIONS THAT FAIL TO MEET THE CRITERIA OF THE LABOUR RELATIONS ACT*

When labour consultants who were not admitted lawyers were excluded from appearing in labour tribunals by the current LRA, they were quick to find a way back: they formed themselves into "trade unions" or "employers’ organisations". Some have served their members well; others have been unscrupulous. But, whatever their record, the Minister of Labour determined that all should go. Late last year, he published a list of "bogus" unions and employers’ organisations on the department’s website.

One of these organisations was the National Employers’ Forum, which had failed to submit financial statements to the Registrar of Labour, as required by the Act. The NEF was registered as an employers’ organisation in 1996. It claimed that it had about 1 500 members, who employed about 300 000 workers. The NEF was also a member of a number of bargaining councils. However, a year after registering, the NEF "outsourced" its administrative and support functions to Labournet Holdings (Pty) Ltd.

Then Labournet applied for a restraint order against one of its former employees. To Labournet’s surprise (and chagrin) the court went further than expected; the judge held that the relationship between the former employee and Labournet Holdings had been a deception. After dismissing the application, the court referred its judgment to the Judge President, the director of the CCMA, and the Registrar of Labour Relations.

Some time later, the LRA was amended to enable the registrar to cancel the registration of employers’ organisations and trade unions which were in his opinion not "genuine", provided he gave 60 days’ notice of his intention to do so and invited the employers’ organisation or trade union to make written representations. Labournet went back to the court. This time, it obtained an interim order restraining the registrar from de-registering it. On the return date, Labournet argued that the registrar had acted unlawfully by not affording it a hearing prior to gazetting a notice inviting Labournet to make representations.

The court held in National Employers’ Forum v The Minister of Labour & others (Labour Court case no. J240/03 dated 24 March 2003, unreported) that, because the actions of the registrar were subject to the Promotion of Administrative Justice Act 3 of 2000, he was required to comply with the audi alteram partem principle when taking action under the LRA. However, how that principle is applied depends on the nature of the action.

Labournet had been notified that it was not complying with the provisions of the LRA by failing to submit financial statements to the registrar; it had been invited to make representations within 60 days as to why its registration should not be cancelled. This, said the court, constituted sufficient compliance with the audi rule.

When it came to costs, the court noted that a website notice describing Labournet as "bogus" had been published despite the temporary order prohibiting the publication of such a notice. As a mark of the court’s displeasure at the flouting of its order, the Minister and the other respondents were denied their costs. That, however, was Labournet’s sole comfort; the actual de-listing survived.

*Reprinted by permission of Sibergrammes

, or fax (+27) – 021 – 701 3947

 


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Gary Watkins

Gary Watkins

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