1. Introduction:
The issue of setting security by the Applicant when reviewing an Arbitration Award in the Labour Court has received close scrutiny in the recent past in both the Labour and Labour Appeal Courts. There however still exists a great deal of uncertainty with some practitioners regarding this issue.
2. What does the Statutory Provisions say?
Section 145 (7) of the LRA states that:
i. The institution of review proceedings does not automatically suspend the operation of an arbitration award,
ii. The institution of review proceedings does automatically suspend the operation of an arbitration award if, the Applicant furnishes security to the satisfaction of the Court in accordance with subsection (8).
3. When is security required?
Security must be set, or the Applicant must be absolved from setting security before the review proceedings can be heard by the Court.
4. Ways in which security can be set:
i. Payment of the amounts referred to in Section 145 (8)(a) and (b) at the Court.
ii. Setting of security in whatever way may satisfy the Court for example Payment of the amounts referred to in Section 145 (8)(a) and (b) into the trust account of an Attorney.
5. Is the setting of security an absolute in review applications?
The LAC interpreted section 145(3), (7) and (8) so as to give the Court a discretion regarding the need to set security, the manner in which it should be set and the extent thereof. (SEE City of Johannesburg v SAMWU obo Monareng and Another (JA120/2017) [2019] ZALAC 54; (2019) 40 ILJ 1753 (LAC) (20 March 2019)) The Court will however only deal with the facts presented in the papers when applying its discretion regarding the setting of security and the extent thereof. The Applicants application should therefore be specific in what is prayed for and the affidavit/s should deal with this aspect in detail.
In Emalahleni Local Municipality v Phooko N.O and Others (J396/21) [2021] ZALCJHB 61 (5 May 2021) as per Moshoana, J the stated the following: [14] “Proper reading of the judgment (City of Johannesburg v SAMWU obo Monareng and Another) suggests that there are two distinct applications that a party may bring. Those are, for a stay or for being absolved from furnishing security.” The Court then went further and states the following: “[17] For very obvious reasons, there is no requirement to furnish security or to be absolved before a stay may be granted. The judgment accepts and appreciates an existence of an underlying dispute, which in my view is a review application. However, of importance is its existence and not the merits or demerits of the underlying dispute before a stay may be granted. Having traversed the authorities, I take a view that once a party satisfies the requirements spelled out above a stay must happen irrespective of whether a party has symbiotically sought to be absolved from the furnishing of security.” [20] Where a party is unable to furnish security, in my view, the only way to prevent an imminent irreparable harm is to obtain a stay, which is an equivalent of an interim interdict. [21] In the event I am wrong in my conclusions that a section 145 (3) application is not separate and distinct from a requirement to furnish security, I am satisfied that the applicant has made a case for being absolved from furnishing security. City of Johannesburg[1] tells us that the onus lies with an applicant who must show that it has assets of a sufficient value to meet its obligations should the arbitration award be upheld by the Labour Court on review. The LAC did not consider prejudice to an employer as being decisive. It considers it to be one factor but it is not decisive. It does seem that the LAC considers the sufficiency of assets as a crucial consideration. It held – “[25] …In particular, because the facts more than adequately demonstrate that the appellant is in possession of sufficient assets to meet an order of the review court upholding the arbitration award in the dismissed employee’s favour.” [22] This sufficiency of assets was seen by the LAC as a crucial shield for an employee should the review application be decided in his or her favour.” (Own emphasis added)
6. Are there any other alternatives to setting security?
It must be remembered that the implications of a Court Order for the stay of a Writ of Execution has the effect that the execution process is suspended pending the outcome of the review of the case. Secondly, the purpose of the setting of security is to protect the employee should he/she be successful at the end of the review process by ensuring that there are funds available to give effect to the Courts Order. Despite having successfully applied for the stay of a Writ of Execution, the attachment of the items by the Sheriff is still valid and in place until such time as the review outcome is found to be in favour of the Respondent. The attached items are therefore already secured “as a crucial shield for an employee should the review application be decided in his or her favour.” There is no reason for these attached items not to serve as security in terms of Section 145 (7) and (8) pending the outcome of the review process.
The following procedure has been successful on numerous occasions in the Labour Court. i. Include a prayer in the Review Application itself whereby the Court is requested to make an order that Applicant is exempted from setting additional security in that the items secured under the Writ of Execution will serve as security in terms of Section 145 (7) or (8). ii. The affidavits needs to deal with the nature and value of the attached items needs to to be dealt with in detail in order to enable the Court to make an informed decision whether or not such attached items would serve as security and whether its value is enough cover the amount of the Award should the Review Application be unsuccessful.
Adv. Louis Froneman Legal Practice Number: M56310 B. Iuris, LLB, Post Graduate Diploma in Labour Law Advocate, Mediator, Facilitator, Arbitrator 079 516 0189