Costs in the labour court: frivolous and vexatious conduct

Hangayika v Amazing Kids Private School Academy NALCMD (09 December 2022) – what constitutes frivolous and vexatious in terms of section 118 of the Labour Act 11 of 2007?

Section 118 of the Labour Act reads “despite any other law in any proceeding before it, the Labour Court must not make an order for costs against a party unless that party has acted in a frivolous or vexatious manner by instituting proceeding with or defending those proceedings.” In National Housing Enterprise v Beukes and Others 2009 (1) NR 82 (LC) at 87E-88F Van Niekerk J, the following was said about the terms frivolous or vexatious:

“[20] … In its legal sense, ‘vexatious’ means frivolous, improper: instituted without sufficient ground, to serve solely as an annoyance to the defendant.

[21] It seems to me that the intention [of enacting section 118] was to allow a measure of freedom to parties litigating in labour disputes without them being unduly hampered by the often-inhibiting factor of legal costs. The exception created by the section uses the word acted, indicating that it is the conduct or actions of the party sought to be mulcted in costs that should be scrutinized. In other words, the provision is not aimed at the party whose conduct is such that the proceedings are vexatious in effect even though not in intent.”

[28] In other words, it occurs to me that these words mean that the party allegedly acting vexatiously or frivolously must act in a manner that is in all the circumstances of the case without pure and honourable motive; one that is entirely groundless; without proper foundation and singularly designed to trouble, irritate, irk, incense, anger, provoke, pique and serve to disturb and vex the spirit of the other party.”

If one then returns to the facts of this case it becomes clear – and even if it is accepted to some degree that the applicant believed in the justice of his cause and also that his plight motivated his belated referral to an extent– that this is a case where the proceedings are without doubt to be considered an abuse, which put the first and second respondents to unnecessary additional trouble and expense, four years after a change of the conditions of service.

What aggravates the situation, in addition, is that the applicant could have withdrawn his application after a sober reconsideration of his position once he had been appraised of the first and second respondents’ grounds of opposition. In spite of this opportunity, he nevertheless persisted doggedly with the urgent application. In all the circumstances, this is a fit and proper instance where the applicant should lose the protective shield afforded by section 118 against a costs order.

Having considered section 118, the court was of the view that the applicant acted in a ‘frivolous or vexatious manner’ and found no reason why the costs should not follow the result. Therefore, the applicant was ordered to pay the costs of the first and second respondents.

Sefelana Cash & Carry (Namibia) (Pty) Ltd t/a Cash & Carry v Mwandingi NALCMD (18 June 2020) – under what circumstances may the court issue an order of costs in labour matters?

Notwithstanding the provisions of section 118, the court is at large, in deserving matters, and in which some exceptional circumstances are shown to exist, to issue an order as to costs. It is in situations where the behaviour of a party before the court leaves a lot to be desired and may include misleading the court or a chronic failure to comply with court orders and prosecute a case, with the requisite degree of promptitude.

Section 118 of the Labour Act was enacted to primarily protect employees who, in many cases, are not possessed the financial resources to litigate toe to toe with their employers, who are endowed with large financial resources. It was held that:

1. If the court did not have powers to sanction parties who misbehave before with an order as to costs, the court may well lose control of the proceedings and be at the mercy of errant litigants.

2. Held further that it would not have been the intention of the legislature that the court could only grant an order for costs where section 118 is met, as that would leave the court open to unacceptable behaviour that it cannot otherwise correct. Such a result would be absurd and not intended by the legislature in enacting section 118.

Namibia Estate Agent Board v Steen &

Another NALCMD (14 December 2018)– what does not constitute frivolous and vexatious?

The applicant sought to review and set aside a ruling made by the second respondent (the arbitrator), refusing to compel the first respondent to provide the applicant with certain records of the first respondent. The first respondent opposed the review application; however, he withdrew his opposition on 16 June 2018, just before the hearing on 14 August 2018. The first respondent through his legal representative or in person failed to appear in court for the hearing.

The applicant sought an order of costs against the first respondent on the basis that the first respondent acted frivolously in view of the respondent’s withdrawal of the application, having initially opposed the application for review. It was held that:

1. Costs in labour matters are limited to the provision of section 118 of the Labour Act 11 of 2007.

2. The conduct of the party, against whom a costs order is sought, must have acted vexatiously and frivolously in instituting, proceeding with, and defending the matter without sufficient ground.

3. The first respondent did not act frivolously in defending the review application, instituted by the applicant.

The court referred to Commercial Investment Corporation (Pty) Ltd v Namibian Food and Allied Workers Union and Others 2007 (2) NR 467 (HC) 468-469, where it was held that:

“[10] [section 118] specifically proscribes an order as to costs in circumstances where the respondent (as in this case) did not oppose the application and in fact ceased with its unlawful conduct by the time the matter was called in open court. That is indeed the end of the matter. I cannot use the peripheral jurisdictional provisions of section 18(1)(f ) or (g) to override (impliedly so) the specific provisions of section [118] of the Act. The upshot of the matter is that a Labour Court cannot give a costs order against a respondent in an unopposed matter, particularly in circumstances where the unlawful conduct had ceased by the time the matter was called in open court.”

The court adopted the reasoning above but went further to state that in the instant case, ‘it must not be forgotten that the respondent, in opposing the review application, did so in support of a decision made by the arbitrator, meaning that the arbiter, after considering the submissions made by both parties, took the position that the respondent was on the right side of the law. It would accordingly be absurd, in my view, for a party who supports a decision by the court and oppose an application to have same set aside, to be regarded as having acted frivolously or vexatiously. The fact that a person in the respondent’s position opposed the application does not, on its own bring the opposition within the realms of vexatious or frivolous as explained above. He was within his rights to support the decision that had been reached by the arbitrator.

It would equally be queer for a party, who had initially filed opposition in a labour matter, to be mulcted in costs for reconsidering his or her position by subsequently withdrawing the opposition. If Mr Dicks’ argument were to be upheld, it would mean that the respondent would be punished for withdrawing his opposition, but if he had not so withdrawn, thus prolonging the matter, but subsequently lost the application, he would be not considered as one who acted frivolously or vexatiously. That would be fly in the face of reason and would be the high watermark of unreasonableness in my view. Furthermore, it would serve to defeat the object of the provision in question.

Parties should, in that regard, be allowed to pursue matters genuinely and where, as in this case, they receive counsel to the effect that they should not pursue the opposition on preliminary legal skirmishes but rather reserve their time and energy for the matter on the merits, that could hardly be regarded as being frivolous or vexatious. It just means a new course, which saves the applicant time and money has been adopted and this cannot be punished by an adverse costs order in the light of the policy reason behind the provision in question in labour matters.

As a result, no order as to costs was made.

Johannes v Nedbank Namibia Ltd NAHCMD (13 April 2022) – what does not constitute frivolous and vexatious?

The court was called upon to determine whether the prosecution of the claims against the applicants qualified to be called vexatious as defined in Namibia Estate Agent Board.

In justifying the reason for the security for costs, it was argued on the applicants’ behalf that although the parties had initially entered into a written agreement regarding the payment of instalments by the applicants to the respondent, there was a novation of the initial agreement, resulting in the applicants paying a higher amount than initially agreed upon by the parties.

That notwithstanding, the respondent came to court and claimed the amount in question based on the old agreement. It was submitted that the respondent was well aware of the novation but persisted with its claim in terms of the initial agreement and that this amounted to vexatious proceedings.

The court was of the view that the applicants’ application for security for costs filed for the reasons advanced above, was clearly ill advised. There was no element of vexatiousness in the respondent’s claim. There was no denying that there was an agreement between the parties, which the respondent claimed was breached by the applicants. Suing because of that cannot, on any stretch of the imagination, be construed as acting vexatiously to warrant the court to order the respondent to pay security for costs.

The fact that the respondent’s claim may not have been properly pleaded, in the sense that it does not disclose a cause of action or other complaint, for that matter, does not justify the court granting an application for security for costs. This is because framing the particulars of claim wrongly does not in any way, shape or form amount to vexatious conduct. It must be recalled that parties are allowed by the rules to amend their pleadings if they are rendered excipiable or suffer some deficiency that may need to be cured.

The applicants sought security for costs on the basis that the respondent’s claim was vexatious and does not disclose a cause of action. In African Farms and Township Limited v Cape Town Municipality 1963 (2) SA 355 (A) at 56D it was stated:

“An action is vexatious and abuse of the process of court inter alia if it is obviously unsustainable. This must appear as a certainty, and not on a preponderance of probability.”

One cannot say, as a matter of certainty that the respondent’s claim was obviously unsustainable. To the contrary, it appeared that the respondent made out a claim that could, with evidence to support it, subject of course to what the defendants raise in their plea, succeed. The applicants were, in this enterprise, clearly barking the wrong tree. Their application for security for costs was wholly without merits and it was accordingly dismissed.