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[2010] ZALCCT 16
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National Union Of Mineworkers and Others v Coin Security (Pty) Ltd t/a Protea Coin Group (C592/2007) [2010] ZALCCT 16 (19 July 2010)
IN THE LABOUR COURT OF
SOUTH AFRICA
HELD AT CAPE TOWN
NOT REPORTABLE
CASE NO: C592/2007
In
the matter between:
NATIONAL UNION OF
MINEWORKERS
First
Applicant
THUNDEZA
ELIZABETH MDEBUKA
Second
Applicant
TSAKANI METILENI
Third
Applicant
And
COIN SECURITY GROUP
(PTY) LTD
t/a
PROTEA COIN GROUP
Respondent
RULING
ON COSTS
STEENKAMP
J:
1.
This matter was set down for trial on 14
July 2010. Before the matter was called, the parties informed me that
they had agreed to
settle the merits and requested me to make the
settlement an order of court. The parties had further agreed to argue
the question
of costs and to ask the court to determine that issue in
light of the settlement.
2.
As agreed by the parties, I made the
following order:
2.1
The respondent shall pay to the second and third applicants one
year’s salary at the
rate they were paid when dismissed during
May 2007. Such payments shall be subject to tax and net amount shall
be paid into the
account of the applicants’ attorneys, Cheadle
Thompson & Haysom, by no later than 31 July 2010. The applicants’
attorneys shall furnish the respondent’s attorneys with the
details of their account in writing.
2.2
The respondent shall re-employ the third applicant from 1 August 2010
as a security officer,
Grade A, at the rate applicable to such
officers at one of the following venues: Pretoria, Bedfordview or
Midrand. It is recorded
that, if at all possible, she shall be
re-employed in the magisterial district of Pretoria.
2.3
Such re-employment shall-
2.3.1
not encompass any obligation on the part of the third applicant to be
subjected to a pre or post-employment polygraph test;
2.3.2 carry the seniority
of her employment from 1 August 2005 to 25 May 2007.
2.4
The question of costs shall be decided
after consideration of argument on that issue.
3.
The parties proceeded to argue the issue of
costs. This ruling, therefore, only addresses the issue of costs,
without the benefit
of any evidence.
4.
The applicants submit that, having achieved
substantial success in the litigation, they are entitled to their
costs. The respondent
submits that each party should pay its own
costs.
5.
The background to the dispute is that the
two individual applicants were dismissed for operational requirements
after undergoing
polygraph tests. The two employees had allegedly
failed the polygraph test. It was a term and condition of their
employment that
they would undergo polygraph tests at the request of
either the respondent or Alexkor Limited, the entity at whose
premises the
respondent placed them to do security duties.
APPLICABLE
LEGAL PRINCIPLES CONCERNING COSTS
Costs
in Labour Court cases of unfair dismissal
6.
The Labour Court has a discretion in terms
of s 162 of the LRA to make an order for costs according to the
requirements of the law
and fairness.
7.
Mr
Kahanovitz
,
who appeared for the applicants together with Mr
Paschke
,
submits that the recent general approach in unfair dismissal disputes
in this court is to award costs to the substantially successful
party
unless considerations of fairness dictate otherwise. This is
illustrated, for example, in the following matters:
7.1.
In
Manhattan
Motors
Trust v Abdulla,
[1]
the LAC said the following in relation to the costs award in Labour
Court:
‘
Maleka
AJ furnished no reasons for not awarding them. From the recorded
argument it appears that Mr Boda's predecessor submitted
that costs
should not be awarded either way. In response to a contrary
submission by Mr Koekomoer, the learned judge observed:
“No,
this court does [not] want to discourage litigants to advance their
case or their defence simply because of the aspect
of costs. I
mean it is quite clear that I can only order costs when there is some
element of vexatious or [bad faith?] on
the part of the litigant.”
If
that reflected the learned judge's eventual reasoning, he was in
error. The discretion regarding costs is far wider than
that,
and includes fairness among other considerations. See Landman &
Van Niekerk Practice in the Labour Courts at A-61. In
my view the
outcome of the trial and the dictates of fairness indicate that the
respondent should have been awarded his trial costs.
[2]
7.2.
In
Hospersa & Another v MEC for Health, Gauteng Provincial
Government
[3]
the
court rejected an argument that costs should not be awarded to
an applicant who had succeeded in her application: ‘I
can see
no reason why the respondent should not be ordered to pay the costs
in circumstances where an employee had to resort to
bringing an
application to put a stop to the highhanded and unilateral conduct of
her employer.’
[4]
7.3.
In
Wallis
v Thorpe & another
[5]
Van Niekerk J ordered an individual who unsuccessfully instituted
proceedings for unfair dismissal to pay the party and party costs
of
the respondent.
7.4.
Similarly,
in
National
Union of Mineworkers & Others v Black Mountain Mining (Pty)
Ltd
[6]
,
in
an unfair dismissal dispute involving a number of employees, despite
the fact that the applicants had been partly successful,
the court
still awarding costs in favour of the respondent as it had been
substantially successful.
[7]
7.5.
The
recent Labour Court matter of
FAWU
obo Kapesi and 31 others v Premier Foods Limited t/a Blue Ribbon Salt
River,
[8]
like this matter, was an unfair dismissal dispute for operational
requirements involving the use of polygraph testing. Mr Kahanovitz
pointed out that the order in respect of costs in that case was:
‘
3.
The Respondent to pay the costs, including the costs of two counsel
as well as the qualifying expenses of the expert witness
Professor
Tredoux.’
8.
Mr
Beaton
,
for the respondent, unsurprisingly asked me to take into account the
ongoing relationship between the parties, especially in the
light of
the fact that the third applicant, Ms Metileni, is to resume
employment with the respondent. In this regard, I am mindful
of the
principles established in
NUM
v East rand Gold and Uranium Co Ltd
[9]
.
Determination
of costs when a matter has settled
9.
In
a case such as this, where the merits have been settled, a court will
adjudicate the question of costs on broad general lines
and not on
lines that would necessitate a full hearing on the merits of a case.
Thus in
Jenkins
v South African Boilermakers', Iron and Steel Workers' and
Shipbuilders' Society,
[10]
Price, J held:
'The
concession in respect of the first claim admittedly disposes of the
dispute on the merits.
It seems to me to
be against all principle for the Court's time to be taken up for
several days in the hearing of the case in respect
of which the
merits have been disposed of by the acceptance of an offer in order
to decide questions of costs only
... I
cannot imagine a more futile form of procedure than one which would
require Courts of law to sit for hours, days or perhaps
even weeks,
trying dead issues to discover who would have won in order to
determine the question of costs, where cases have been
settled by the
main claims being conceded ...
When a
case has been disposed of by an offer which concedes the main claim
and the costs of the whole case have still to be decided,
I think the
Court must do its best with the material at its disposal to make a
fair allocation of costs, employing such legal principles
as are
applicable to the situation
...
In my
view the costs must be decided on broad general lines and not on
lines that would necessitate a full hearing on the merits
of a case
that has already been settled.'
[11]
(my emphasis)
10.
The
issue in
Roupell
v Metal Art (Pty) Ltd and Another
[12]
also concerned the costs that should be awarded in respect of a
matter that had been settled on the merits the day before the trial
was meant to commence. Margo J, following the principle in
Jenkins,
decided that ‘I therefore do not propose to engage in a close
scrutiny of the various issues of fact raised in the conflicting
affidavits that have been filed, nor do I propose to conduct a full
investigation into the legal arguments advanced by the parties.
I
intend to resolve this issue of costs on the basis of a broad general
approach to the matter.’
[13]
The court then being of the opinion that the application would have
succeeded and applying “the broad general approach”
awarded costs against the defendant.
11.
I intend to follow the same ‘broad
general approach’ in this matter.
THE
PLEADINGS
12.
The applicants submitted that, on the
pleadings in this case, it should have been apparent from the outset
that the respondent ought
to have settled the matter. It should not
have been necessary, they say, for the applicants to litigate to
obtain relief as there
was no merit to the opposition from the
outset.
13.
After
having heard argument from both sides, the recent judgment of the
Labour Appeal Court in
SATAWU
v Khulani Fidelity Security Services (Pty) Ltd
[14]
came
to my attention. I then asked the parties to make further submissions
in the light of that judgment, with which I will deal
hereunder.
The
employment contract
14.
The
respondent relied upon clause 31 in the contract of employment to
justify the dismissals. That clause provides that ‘should
the
Employee fail the polygraph test or the test should indicate
deception on the Employee’s part, dismissal for operational
requirements shall be the immediate result if the Client should
request the Employee’s removal...’
[15]
.
The “Client” (
sic
)
in this case was Alexkor Limited.
15.
Mr
Kahanovitz referred me to a very insightful article by Craig Bosch
entitled 'Contract as a Barrier to ''Dismissal”: The
Plight of
the Labour Broker's Employee'
[16]
.
Bosch argues that it is not permissible to have a contractual term
which takes away from the right to fair labour practices. In
short,
Mr Kahanovitz argued, the contractual term relied upon by the
employer in this case for the dismissal is indefensible. I
deal with
this argument in the following paragraphs. It must e noted, though,
that this is not a case where a Temporary Employment
Service has
simply terminated a contract of employment without more, based on a
suspensive condition – the type of case that
Bosch mainly
refers to in his article. In the present case, the employer accepts
that there was a dismissal, but argues that it
was based on
operational requirements and that it was for a fair reason and in
accordance with a fair consultation procedure in
terms of s 189 of
the LRA.
Was
this a dismissal for ‘operational requirements’?
16.
The
LRA permits only three reasons for dismissal, namely misconduct,
incapacity or operational requirements. A dismissal is substantively
unfair if the employer fails to prove that the dismissal is for one
of those reasons (s 188(1)(a)). ‘Operational requirements’
is defined to mean requirements based on the economic, technological,
structural or similar needs of an employer’ (s 213).
The
courts have interpreted the words ‘or similar needs of an
employer’ as being restricted to ‘the economic
viability
of the enterprise’ and that hence the reasons for a dismissal
‘must relate or have some resemblance to the
economic,
technological or structural needs of the business’
[17]
and that ‘the company's economic viability or economic
stability is under threat to such an extent that dismissal on the
basis of operational requirements is the measure of last resort.’
[18]
17.
In
its notice in terms of s 189(3) dated 20 March 2007,
[19]
the respondent gave the following reason for the proposed dismissal
of the second and third applicants in accordance with s 189(3)(a):
‘
As
per your agreement of service
you are
required to successfully complete a polygraph examination from
time-to-time in order to, render services at the specific
contract
site
.
It is
with utmost regret to inform that you did not successfully complete
the polygraph examination and in terms of your agreement
of service
your services will be terminated based on operational requirements.
We
wish to reiterate that your contract of employment makes specific
provision for polygraph testing and as such constitutes a material
term and condition of your contract of employment.
In
this instant where you have displayed indications of deception in
your polygraph test, the employer has no alternative but to
revert to
Section 189 of the Act.’
18.
The
respondent’s reason for dismissal is also apparent from the
following explanation given by Mike Nelson, its operational
Manager
at a meeting on 20 March 2007: ‘You must remember, the
people who failed the test broke their contract with
Protea is stated
in the contract, if you do not follow your contract clearly that you
can be dismissed due to operational requirements.’
[20]
19.
In the following exchange on 22 March 2007
between Nelson (MN) and the Union’s L Nongqo (LN), it is clear
that the second
and third applicants’ posts have not become
redundant:
‘
LN:
Can you explain what you mean with redundancy?
MN:
It means that the employees broke their contract with the employer by
failing the polygraph
tests. By failing the test it means that the
person became redundant and can not work on the Alexkor site anymore.
LN:
But by redundancy their posts are still available, so what do you
mean?
MN:
It is not the post that became redundant but the person who became
redundant by failing
the polygraph test.’
20.
The applicants submit that it is clear from
the respondent’s own version that its true reason for
dismissing the second and
third applicants is that they ‘failed
to successfully complete a polygraph examination’. The
respondent has not
pleaded that the dismissal was for an economic,
technological, structural or any similar need. Why, the
applicants ask, should
failing a polygraph test make an employee
redundant?
21.
A
court may investigate the real reason for a dismissal. In
SA
Mutual Life Assurance v IBSA
[21]
the Court held that where the evidence showed that the employer was
actually dissatisfied with the performance of certain members
of the
department and chose not to initiate proper disciplinary inquiries
but rather to restructure as a means of dismissing those
employees
with whom it was dissatisfied,
[22]
that does not constitute an operational requirement as defined in
s 213. The employer also did not show that their jobs were
redundant.
[23]
22.
However,
in
Khulani
[24]
the
Labour Appeal Court accepted that the security company in that case
could fairly dismiss employees for operational requirements
in
circumstances where it had a security agreement with its “client”,
ACSA, in terms of which its employees had to
undergo polygraph tests.
In that case, the applicable employees had failed polygraph tests and
were dismissed for operational requirements.
The dismissals were held
to be fair. However, the trade union in that case (SATAWU) had
concluded a collective agreement agreeing
to its members undergoing
polygraph tests; and the relevant employees had been offered
alternative positions in a consultation
process in terms of s 189 of
the Labour Relations Act, which they had rejected.
23.
Despite these distinguishing factors, in
the light of the LAC’s authority apparently accepting that
employees could be dismissed
for operational requirements in similar
circumstances, provided a fair procedure was followed, I cannot find
that the dismissals
were not for operational requirements and were
therefore substantively unfair for that reason alone. I bear in mind
that
Khulani
may be distinguished on the basis that in that case the trade union,
and not only the individual employees, consented to the clause
in
question. Nevertheless, I make no pronouncement on the validity of
the clause in the employment contract itself.
Was
s 189 permitted in this case?
24.
The
relevant questions in the polygraph tests conducted upon the second
and third applicants were:
[25]
24.1.
Did you help anyone to steal diamonds from
Alexkor in the past three months?
24.2.
Did you steal any diamonds from Alexkor in
the past three months?
24.3.
Did you receive any benefit from any theft
of diamonds from Alexkor in the past three months?
24.4.
Are you currently a member of a syndicate
that steals diamonds at Alexkor?
25.
The
subject matter covered by these questions, namely the theft of
diamonds, is clearly a matter of misconduct. It is only in rare
cases
that an employer would be entitled to follow the s189 route where
misconduct triggered the operational rationale, namely
where it is
not possible to hold a disciplinary enquiry and where ‘continued
economic survival of the business’ is
under threat.
[26]
The s189 route is not open in cases where an employer simply cannot
prove the charges against the employee.
[27]
The respondent has not pleaded that it was unable to hold a
misconduct hearing or that its continued economic survival was
threatened.
26.
Nevertheless, I cannot accept the
applicants’ argument that it follows that the respondent is
never entitled to follow the
process in s 189 for an operational
requirements dismissal in circumstances where it is a condition of
employment to undergo
polygraph tests. I am bound by the LAC
authority in
Khulani
.
It appears to me that, in that case, the LAC accepted that it may in
certain circumstances be permissible for a security company
to follow
a s189 process in circumstances where its customer insists on its
employees undergoing polygraph tests and an employee
fails that test,
albeit that the trade union in that case explicitly agreed to the
testing.
Did
the respondent comply with s 189?
27.
In the light of the LAC’s decision in
Khulani
,
which binds me, and in spite of my own misgivings in that regard, I
have to accept that, in certain circumstances, dismissal for
failure
of a polygraph test may fall within the potential ambit of an
operational requirements dismissal.
28.
The
next question for consideration is then whether the dismissal in this
case – having regard to the pleadings only –
meets the
requirements for a fair dismissal in terms of s 189. In this case,
where the criteria for selecting which employees are
to be dismissed
for operational requirements were not agreed, s 189(7)(b)
required the respondent to adopt ‘criteria
that are fair
and objective’. Dismissal for operational requirements is a
remedy of last resort.
[28]
29.
Professor
Tredoux, the head of UCT’s department of psychology has
provided a detailed report on the reliability of polygraph
testing.
[29]
He
gave similar evidence in the
FAWU
matter where that court found him to be clearly an expert in the
field of polygraph testing and a ‘highly competent and
respected expert’ with ‘extensive and impressive
qualifications’.
[30]
(I
pause to note that the court in
Khulani
did
not have the benefit of any expert evidence on polygraph tests).
Tredoux’s report shows that polygraph testing has not
been
scientifically shown to be a reliable, accurate and valid means of
detecting deception.
[31]
It
follows that polygraph test results cannot be a ‘fair and
objective’ basis for selecting who should be dismissed.
In
fact, this court held in
FAWU
that:
‘
In
light of the aforegoing and in light of the controversy that
surrounds the accuracy and reliability of polygraph tests, I am
not
persuaded that the polygraph is a reasonable or fair alternative to
minimise retrenchment... In the context of a disciplinary
process the
polygraph can be a useful tool in the investigation process but can
never substitute the need for a disciplinary hearing.
A polygraph
test on its own cannot be used to determine the guilt of an employee
... I am, as already pointed out, not persuaded
that it constitutes a
fair and objective selection criteria or a fair an objective method
alternative to minimise retrenchment
in the context of section 189
and section 189A of the LRA.’
[32]
30.
The respondent has not explained in its
pleadings what benefit its “client” derives from its use
of polygraph testing.
It has not, on the pleadings, shown that it was
either a fair and objective selection criterion or, as was the case
in
Khulani
,
an agreed one.
Did
the applicants fail the polygraph tests ?
31.
Even if the respondent could fairly use the
polygraph test as a selection criterion, though, it appears from the
pleadings that
the two individual applicants have not been shown to
have failed the tests.
32.
James
Murphy, the former Chief of the FBI’s Polygraph Unit who was
responsible for the FBI’s polygraph program and a
highly
experienced polygrapher, did an assessment of the polygraph charts
produced in this case. His conclusion, based on those
charts, is that
in respect of some of the questions there is ‘no deception
indicated’ and in respect of other questions
‘no opinion’
could be rendered. His findings contradict the respondent’s
case that the second and third applicants
failed their tests.
[33]
33.
There are also a number of inconsistencies
and procedurals irregularities in how the tests were conducted and
the results are contradictory.
For instance:
33.1.
The
finding that the second and third applicant were truthful in denying
that they received any benefit from any theft of diamonds
from
Alexkor in the past three months (question 3), is inconsistent with
the finding that they were deceptive in denying that they
stole
diamonds in the past three months (question 2) and that they are
currently members of a diamond-stealing syndicate (question
4).
[34]
33.2.
The
control questions were poorly formulated for their function and some
are incomprehensible.
[35]
33.3.
The
examiner of the third applicant reached inconsistent conclusions on
the same scoring sheet and changed her method of evaluation
to
achieve a result which indicated deception.
[36]
34.
I bear in mind, tough, that the applicants
only filed the expert witness statements by Murphy and Prof Tredoux
on 21 June 2010.
The applicants’ notice of intention to
amend their statement of claim, attacking the validity of the
polygraph tests and
based on this expert evidence, was only filed on
18 June 2010. I will come back to this aspect.
Repeated
unfair dismissals by the respondent
35.
The applicants submit that another factor
that I should take into account is that the respondent is a ‘repeat
offender’
when it comes to unfair dismissals.
36.
The
respondent re-employed the second and third applicants on 5 November
2007, at first not realising that it had previously dismissed
them
for failing polygraph tests. When the respondent discovered the first
dismissals and the fact that the second and third applicants
were
exercising their rights under the LRA in this case to challenge those
dismissals, the respondent dismissed them a second time.
In a
separate case, the late Nel J held those second dismissals to be
automatically unfair.
[37]
37.
I also take into account that the
respondent was only willing to consider transfer to another site as
an alternative to dismissal
if the individual applicants underwent
another polygraph test at their own expense. In the light of my
previous findings with regard
to the conduct of the polygraph tests,
this was neither reasonable nor fair. Contrast this with the position
in
Khulani
,
where the employees were offered alternatives – which were not
said to be unreasonable – and rejected those alternatives.
CONCLUSION
38.
On the facts of this case, and in spite of
the judgment in
Khulani
,
I am persuaded that the applicants would have been substantially
successful had the matter proceeded to trial.
39.
As Mr Beaton pointed out, though, in the
light of the judgment in
Khulani,
it cannot be said that it was clear from the outset that the
respondent enjoyed no prospects of success in defending the claim.
It
was only after the applicants served their expert witnesses and their
notice of intention to amend their pleadings on the respondent
on or
about 17 June 2010 that the respondent could have no doubt that it
was prudent to throw in the towel.
40.
I agree with the applicants that it would
be fair for respondent to bear the costs of the referral, at least to
some extent. Taking
into account both principles of law and fairness,
though, it cannot be said that the law is sufficiently clear on the
principle
of dismissal for operational requirements in similar
circumstances. The respondent cannot be criticised for defending the
matter
at the outset. In the circumstances, I am in agreement with Mr
Beaton’s alternative argument that costs should be awarded
only
from 17 June 2010 to date of settlement. However, as the amendment of
17 June was premised on the reports of the expert witnesses,
I deem
it fair to include the costs of those witnesses.
41.
I make the following order as to costs:
The
respondent must pay the applicants’ costs, including the costs
of two counsel where two counsel were used, from 17 June
2010 up to
and including the date of this ruling; as well as the qualifying
expenses of the expert witnesses, Professor Colin Tredoux
and Mr
James Murphy.
__________________________
STEENKAMP
J
Date
of hearing:
14 July 2010
Date
of order:
19
July 2010
For
the applicants:
Colin Kahanovitz SC
Ron
Paschke
Instructed
by Cheadle Thompson & Haysom
For
the respondent:
RG Beaton
Instructed
by Malan Vogel
[1]
(2002)
23
ILJ
1544 (LAC)
[2]
At para 15.
[3]
(2008)
29
ILJ
2769 (LC).
[4]
At para 27.
[5]
(2010)
31 ILJ 1254 (LC) at para 16.
[6]
(2010)
31 ILJ 387 (LC).
[7]
At para 91.
[8]
Unreported judgment of Basson J under case number C640/07 dated 4
May 2010.
[9]
[1991] ZASCA 168
;
1992
(1) SA 700
(A) at 739 A-H
[10]
1946
W.L.D. 15
[11]
at
pp. 17 – 18.
[12]
1972 (4) SA 300 (W)
[13]
At 302H – 303A.
This
approach has been approved in subsequent matters
.
See for instance,
Erasmus
v Grundow en ‘n Ander
1980 (2) SA 793
(O) at 798H.” Wanneer 'n beslissing omtrent
koste afgesonderd staan van 'n beslissing omtrent die "meriete"
omdat
'n bevel op die meriete nie meer gevra word nie of nie langer
toelaatbaar is nie, beteken dit nog nie dat die beslissing omtrent
koste bereik moet word in totale isolasie van oorwegings omtrent die
meriete nie. By 'n appèl teen 'n kostebevel, is dit
duidelik
dat die beslissing in die afwesigheid van kompliserende faktore
bereik moet word na gelang van die vraag of die
appellant met
betrekking tot die meriete suksesvol moes gewees het.”
[14]
Unreported,
JA 25/09, handed down on 6 May 2010 (per Davis JA, Hendricks and
Musi JJA concurring)
[15]
Clause 31.2 pleadings p 34.
[16]
(2008)
29 ILJ 813. See also
Molusi
and Ngisiza Bonke Manpower Services CC
(2009) 30 ILJ 1657 (CCMA).
[17]
Tiger
Foods
para 14, 28 and 38-40;
FAWU
para 65.
[18]
FAWU para 66.
[19]
Bundle p 64.
[20]
Bundle p 61, penultimate paragraph.
[21]
(2001)
9
BLLR 1045
(LAC)
.
[22]
At para 16.
[23]
Para 17.
[24]
SATAWU
v Khulani Fidelity Security Services (supra)
[25]
Bundle pp 43 and 46-47.
[26]
FAWU
at para 66.
[27]
FAWU
at para 66.
[28]
South
African Breweries
,
per Gamble AJ.
[29]
Pleadings pp 123-166.
[30]
Para 91.
[31]
Tredoux’s report pleadings p 157-158 para 14.4.
[32]
Para 112
[33]
[33]
Pleadings
pp 118120
[34]
Bundle pp 43 and 46-47.
[35]
Bundle p 90.
[36]
Bundle p 112A.
[37]
Case
number C72/2008
.