- July 28, 2023
- |Concise Law Reports (CLR), Labour Law
In this appeal from the Labour Court – the first respondent (Mr. Smith) was employed by the appellant (Desert Fruit) in 2005 as its chief executive officer until he was dismissed on 11 December 2019 (his gross monthly salary was N$112 000). In April 2017, Mr. Smith went on leave with the view to negotiate a separation package with Desert Fruit. He was however subsequently suspended without pay with effect from 1 October 2017 pending disciplinary proceedings which proceeded thereafter. Before the conclusion of the disciplinary enquiry, Mr. Smith lodged a dispute of unfair labour practice (concerning his suspension without pay) against Desert Fruit with the Office of the Labour Commissioner, and the dispute was referred to arbitration. Desert Fruit in opposition applied for a stay in the arbitration proceedings, pending the finalisation of the incomplete disciplinary proceedings on the basis that the relief sought could be claimed once the disciplinary proceedings were finalised. The arbitrator granted the stay application in his award on 8 August 2019. Mr. Smith applied to set aside the award on review to the Labour Court under s 89(4) read with s 89(5) of the Labour Court Act 11 of 2007 (the Act). It emerged during an argument that Mr Smith had also filed a notice of appeal against the arbitrator’s award – during case management, the presiding judge impermissibly required him to elect between the review and the appeal and he withdrew the appeal. At issue, as per the rule 20 statement of issues (of the rules relating to the conduct of conciliation and arbitration before the Labour Commissioner), the parties referred to Mr. Smith’s claimed remuneration during suspension as being N$112 000 per month. There was no mention of deductions in respect of income tax under the Income Tax Act 24 of 1981 or for loan repayments in respect of a N$4 million loan advanced by Desert Fruit to Mr. Smith. The parties had agreed in the loan agreement that deductions of N$40 000 be made from Mr. Smith’s monthly salary to repay that loan.
The Labour Court found that the arbitrator’s decision to ‘decline to interfere with the ongoing disciplinary hearing’ and failing to order payment during suspension or uplifting it amounted to an ‘abdication of his jurisdiction’ by declining ‘to exercise the functions entrusted to him’. Further, the court declined to refer the matter back to the arbitrator and proceeded to order payment on the basis of the rule 20 statement and made no provision for deductions from its orders to pay the sum of N$112 000 for each month of suspension. As for the costs order against Desert Fruit, the Labour Court found that there was no basis for the refusal to pay Mr. Smith’s salary during suspension. Despite efforts with reference to authority to persuade Desert Fruit otherwise, it persisted with that stance until a written argument was filed on its behalf prior to the hearing before that court. The Labour Court found the persistence in that stance to be untenable and amounted to conduct which was frivolous and vexatious. The court proceeded to grant costs in favour of Mr. Smith up to 16 July 2020 and did so on the most punitive basis. The appellant is appealing against the Labour Court’s judgment and order except for para 1 of the order setting aside the arbitrator’s order staying the dispute concerning the suspension without pay.
On appeal to this Court, three issues arise for determination. The first issue concerns whether the Labour Court’s judgment was appealable without leave to appeal (to be determined is thus whether the Labour Court sat as a court of appeal or as a court of first instance for the purpose of s 18(2) of the High Court Act 16 of 1990). The second issue is the correctness of the court’s order to direct payment of a gross salary amount without deductions. The third issue raised is the costs order granted by the Labour Court.
SMUTS JA (HOFF JA and FRANK AJA concurring) considered the matter and held that:
a) In determining whether the Labour Court sat as a court of appeal in this instance, two criteria would need to be met. The first concerns the actual nature and characterisation of the proceedings before the court below and whether they are appellate in nature. The second concerns whether the phrase ‘as a court of appeal’ necessarily contemplates from a court forming part of the judicial system or can also include appeals from other tribunals contemplated by Art 12 of the Constitution but not forming part of the judicial system.
b) The court below did not sit as a court of appeal in the sense contemplated by s 18(2) of the High Court. The fact that the court below did not entirely confine itself to the enquiry to establish one of the defects contemplated by s 89(5) does not assist Mr. Smith. The proceedings are to be viewed within their statutory confines.
c) Appeals and reviews from arbitration tribunals established under the Act would likewise not amount to the Labour Court sitting as a court of appeal for the purpose of s 18(2)(b) of the High Court Act. A decision reached by the Labour Court in those circumstances would be as a court of first instance and not one on appeal for the purpose of s 18(2), even though this Court had previously accepted the position to be to the contrary but without the point ever being argued and determined.
d) Section 18(2) is not applicable to proceedings where the Labour Court determines an application for review from an arbitration tribunal established under the Act. The Labour Court sat as a court of first instance and leave to appeal is thus not required under s 18(2) of the High Court Act.
e) Desert Fruit’s submission that the orders for payment are not authorised by s 89(10) and that this Court would be entitled to rectify an order which a court is not empowered to make is sound. This Court is not only entitled to correct an order which is not competent or authorised by statute but is duty-bound to do so.
f) It is only in the case of appeals that the Labour Court may determine the dispute in the manner it considers appropriate. In the case of setting aside an award on review, s 89(10)(b) and (c) The court can either refer the matter back to the arbitrator or direct that a new arbitrator be designated or make an order considered appropriate about the procedures to be followed to determine a dispute. The very confined remedies on review are in keeping with the confined nature of the review itself – only concerning narrowly defined defects relating largely to the conduct of the arbitrator and not the merits.
g) The appropriateness of these confined remedies is demonstrated by what transpired in this matter. The award reviewed was for a stay in a dispute. In response to that review, the court not only set aside the order to stay the dispute but proceeded itself to determine the dispute thus stayed. Not only was that entirely inappropriate, but this plainly exceeded the powers of the court under s 89(10).
h) The court was not empowered – nor should it have in any event – to have made the orders directing payment. Those orders fall to be set aside for this reason alone. Plainly the court should have referred the dispute back to the arbitrator for determination after setting aside the award to stay the dispute. The arbitrator is also furthermore and, in any event, better placed to determine the dispute of fact concerning the repayment of the loan in the event Desert Fruit can persuade the arbitrator to revisit the rule 20 stated case. The arbitrator would then determine which deductions need to be made inclusive of tax deductions in order to make an order for payment which would then be enforceable in its own terms.
i) It was held that, for a Labour Court to make an order for costs on the most punitive scale, there would need to be further factors of an aggravating nature present in such conduct in order to justify a costs order on that particularly punitive scale. No further factors were raised in the justification of the order on a most punitive scale. On the contrary, in the absence of a finding in respect of aggravating facts, it would appear that the court operated under the misapprehension that frivolous or vexatious conduct would automatically result in a cost order on the most punitive scale. That is not what s 118 of the Act contemplates and amounts to a misdirection.
It thus follows that the cost order made by the court on the most punitive scale is to be set aside and replaced with merely one of the costs as is reflected in the order of this Court.
As a result, the appeal partially succeeded in that the order of the Labour Court in paragraph 1 was confirmed; the order in paragraph 2 was set aside and replaced with an order that:
‘2. The dispute in respect of the applicant’s claim is referred back to the arbitrator or another arbitrator designated by the Labour Commissioner to determine the monthly amounts payable to Mr. Smith during his suspension without pay.’
The order of the Labour Court in paragraph 3 was varied to read:
‘3. The first respondent shall pay the applicant’s legal costs up to and inclusive of 16 July 2020 which shall include the costs of two instructed legal practitioners and one instructing legal practitioner.’