Arbitration costs awards are rare

Arbitration costs awards are rare

It’s rare for a winning party to win costs in a CCMA or Bargaining Council arbitration case.  Section 138(10) of the Labour Relations Act makes limited provision for costs to be awarded in favour of a party to an arbitration hearing.

In short, costs may be awarded against a party and/or their representative, in the event that either or both act frivolously (“manifestly futile”) and/or vexatiously (manifestly groundless or utterly hopeless in foundation”), which is defined as (1) proceeding with or defending a case without merit and (2) in its conduct during the proceedings.

So in short, if you initiate an arbitration case with little or no merits and/or behave badly during the arbitration hearing, a claim for costs may validly be made.  In practice however, costs awards, especially against applicants who are typically employees, are rarely made.

That’s not to say on the other hand that parties costs awards are never made; they certainly are at times, even if it seldom occurs.

In the past, the CCMA has issued a Practice Note to Commissioners regarding the awarding of costs, recommending that “Parties should not be discouraged from invoking the dispute mechanisms of the LRA, which should be accessible to parties; costs should not be lightly ordered if a party acts in good faith, especially where the matter involves issues of importance to the wider IR community; a costs award should not damage an ongoing relationship, and the conduct of the parties is relevant.

In the CCMA case of Mark Jeffrey Fuhr  v  Momentum Agency services (GAJB20761-07) the applicant had claimed constructive dismissal.  After a lengthy arbitration hearing wherein the applicant introduced hundreds of pages documentary evidence purportedly supporting his claim, the Commissioner held that his claim was indeed frivolous and vexatious, and that he did “not come to the Commission with clean hands” and that “he chose to put the Respondent to the cost of defending what I regard as a flimsy case in the hope of convincing the Commission to award him a large sum of money.”  The Commissioner concluded that the applicant had “failed dismally in discharging the onus on him to prove he was constructively dismissed.”

It was held further that the applicant’s main reason for resigning was a perceived better offer from an alternative employer, and not intolerable conduct on the part of the respondent.

In Rose Ramchau  v  Ackermans (NP856-01) the Commissioner awarded costs to the employer on grounds that the applicant “dragged the company to the CCMA for an utterly hopeless case … the services of this statutory body should be utilised for genuine disputes and never as a playing field for petty vindictive disputes  by parties bent on settling old scores”.

Similarly in Ntombela  v  SMT Health Solutions (KNDB10811-08)costs were awarded in favour of the employer on grounds that the applicant was “argumentative, evasive, and less than honest … and knew that his case was predicated on a lie”.

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