Osho Steel (Pty) Ltd v Ngobeni N.O. and Others

The First Respondent (Commissioner) issued an arbitration award on 26 October 2017 finding that the Third Respondent (Quereshi) had been constructively dismissed by the Applicant (Osho Steel) in terms of section 186(1)(e) of the Labour Relations Act. The Applicant was ordered to pay compensation of R150,000 (equivalent to five months' salary) to Quereshi. The Applicant sought to review and set aside this award. On 12 December 2017, the Applicant served its Notice of Motion together with founding affidavit on Quereshi, and on the same date filed its Rule 7A(6) Notice as well as a transcribed record of the arbitration proceedings. The Applicant had transcribed the record from its own recording of the proceedings, rather than obtaining the official record from the CCMA through the prescribed process. Quereshi opposed the review application and raised preliminary points regarding non-compliance with Rule 7A(5), 7A(6), and 7A(8) of the Labour Court Rules, and non-compliance with section 145(8) of the LRA regarding the furnishing of security. Despite being repeatedly advised of these defects, the Applicant persisted with the application as brought. The CCMA delivered its notice of compliance only on 2 February 2018.

• Whether the review application complied with Rule 7A of the Labour Court Rules, particularly regarding the proper procurement, transcription and service of the record of proceedings
• Whether the Applicant was required to furnish security in terms of section 145(7) and (8) of the Labour Relations Act or obtain an exemption from the Court
• Whether non-compliance with these procedural requirements rendered the review application defective and liable to be dismissed
• What constitutes good cause for exemption from furnishing security under section 145(8) of the LRA

1. The preliminary points raised by the Third Respondent are upheld. 2. The Applicant's application to review and set aside the arbitration award issued on 26 October 2017 under case number GATW12973-17 by the First Respondent is dismissed with costs.

The binding legal principles established are: (1) In review proceedings under Rule 7A of the Labour Court Rules, the record must be obtained through the prescribed process: the CCMA provides the record to the Registrar under Rule 7A(3), the Registrar makes it available to the applicant under Rule 7A(5), and the applicant then transcribes and serves copies under Rule 7A(6). Any record obtained outside this process, including from private recordings, cannot be regarded as an official and legitimate record for purposes of Rule 7A(6) compliance. (2) Under section 145(7) of the LRA, the mere institution of review proceedings does not suspend the operation of an arbitration award. Security must be furnished unless the Labour Court directs otherwise under section 145(8). (3) A reviewing party seeking exemption from furnishing security must bring a proper application demonstrating good cause, which requires a proper explanation of why the request should be entertained with particular emphasis on any material prejudice the applicant may suffer. The onus is on the employer to establish it has assets of sufficient value to meet its obligations should the award be upheld. (4) Including prayers for stay of execution and exemption from security in a Notice of Motion for review, without bringing a proper application, constitutes a circumvention of section 145(7) and improperly obtains these reliefs by default. (5) Non-compliance with these mandatory procedural requirements renders a review application defective and liable to be dismissed.

The Court made several important non-binding observations: (1) Private recordings of arbitration proceedings may be useful where the CCMA cannot provide a record, but acceptance of such recordings for review purposes would be subject to reconstruction under the auspices of the CCMA (citing Clause 11.2.4 of the Practice Manual). (2) The purpose of section 145(7) is to dissuade employers from bringing frivolous review applications with no prospects of success and to ensure they are timeously and expeditiously prosecuted. (3) The practice of filing a Notice of Motion encompassing prayers to review, stay execution, and obtain exemption from security is at odds with the purpose of section 145(7), as review applications are placed on the ordinary roll and heard long after awards are obtained, resulting in de facto stays and exemptions by default. (4) The Court suggested that a reviewing party seeking exemption from security should bring a proper application for the Court to determine before the review application can be considered properly before the Court and ripe for hearing, as these are ordinarily issues of jurisdiction under section 145. (5) Security is not ordinarily paid to the employee pending determination of the review; it can be deposited in trust accounts of legal representatives, with the Sheriff, or held in trust and guaranteed by banks. (6) The prejudice to successful employees when employers pursue reviews without furnishing security is evident, particularly when applications drag on for extended periods (in this case, preventing enforcement from October 2017 to August 2019).

This judgment is significant in South African labour law for several reasons: (1) It provides authoritative guidance on compliance with Rule 7A of the Labour Court Rules, emphasizing the mandatory nature of the prescribed process for obtaining and transcribing records in review proceedings. It clarifies that applicants cannot use their own private recordings as the official record without following the proper procedure through the CCMA and Registrar. (2) It clarifies the operation of section 145(7) and (8) of the LRA regarding security for stay of arbitration awards, holding that security must be furnished or an exemption obtained through a proper application - these reliefs cannot be obtained by default through inclusion in a Notice of Motion. (3) It sets out the test for what constitutes 'good cause' for exemption from furnishing security, requiring demonstration of material prejudice and adequate financial disclosure. (4) It reinforces that the Rules of Court serve important purposes including preserving the integrity of proceedings, promoting access to justice, ensuring expeditious resolution, and preventing abuse of process. (5) The judgment addresses the prejudice suffered by successful employees when employers pursue review applications without furnishing security, emphasizing the protective purpose of section 145(7). This case serves as an important reminder to practitioners of the need for strict compliance with procedural requirements in labour law reviews.