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[2012] ZASCA 87
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Chamber of Mines of South Africa v Compensation Commissioner for Occupational Diseases and Others (488/11) [2012] ZASCA 87 (31 May 2012)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 448/11
In the matter between:
CHAMBER OF MINES OF SOUTH
AFRICA
…..........................
Appellant
and
THE COMPENSATION COMMISSIONER
FOR OCCUPATIONAL DISEASES
…..............................
First
Respondent
THE MINISTER OF HEALTH
…..................................
Second
Respondent
THE DIRECTOR-GENERAL:
DEPARTMENT OF HEALTH
…......................................
Third
Respondent
NATIONAL UNION OF MINEWORKERS
…..............
Fourth Respondent
UNITED ASSOCIATION OF SOUTH
AFRICA
….............................................................................
Fifth
Respondent
SOLIDARITY
…...................................................................
Sixth
Respondent
Neutral citation:
Chamber
of Mines of SA v The Compensation Commissioner for Occupational
Diseases
(448/11)
[2012] ZASCA 87
(31 MAY 2012)
Coram:
NUGENT, PONNAN,
SNYDERS and TSHIQI JJA and KROON AJA
Heard:
22 MAY 2012
Delivered: 31 MAY 2012
Summary: Mines and Works
Compensation Fund – deficit in fund – whether owners of
mines and works may be levied for recovery
of deficit.
___________________________________________________________
ORDER
___________________________________________________________
On appeal from: North Gauteng
High Court (Zondo J sitting as court of first instance):
The appeal is dismissed. The
appellant is to pay the costs of the first and fourth respondents,
including the costs of two counsel.
___________________________________________________________
JUDGMENT
___________________________________________________________
NUGENT JA (PONNAN, SNYDERS and
TSHIQI JJA and KROON AJA CONCURRING)
[1] The Occupational Diseases in
Mines and Works Act 78 of 1973 came into effect on 1 October 1973.
Amongst other things it established
the Mines and Works Compensation
Fund. The purpose of the fund is to enable the Compensation
Commissioner for Occupational Diseases
(the first respondent) to
compensate workers in certain sectors of the mines and works industry
if they contract various specified
diseases in consequence of their
work. It is financed principally from levies that are imposed by the
commissioner upon owners
of the relevant mines and works.
[2] The fund is required to be
actuarially valued periodically.
1
The objective of the valuation is
to establish whether the fund has sufficient assets at the time of
valuation to pay all liabilities
that have accrued. Those liabilities
would comprise claims that have been reported and accepted but have
not yet been paid, as
well as claims that have accrued but have not
yet been reported or assessed and accepted. Needless to say, the
amount of those
latter liabilities can never be established with
certainty, and will always be no more than a predictive estimate.
[3] An actuarial valuation of the
state of the fund at 31 December 2003 revealed a deficit of
approximately R610 million –
that is, that the estimate of its
accrued liabilities at that date exceeded its assets by that amount.
Adopting a recommendation
to that effect by the actuary the
commissioner notified the contributing owners that he intended
increasing the levies annually
in amounts that would eliminate the
deficit at the end of 15 years.
[4] In discussions with the
commissioner through the Advisory Committee established under s 59
of the Act members of the Chamber
of Mines (the appellant) who were
subject to the payment of levies accepted liability for portion of
the deficit,
2
but disputed the commissioner’s
right to recover the full deficit from them. Impasse was reached and
the Chamber applied on
behalf of its members to the North Gauteng
High Court for declaratory orders, the terms of which I deal with
later in this judgment.
The application was dismissed (Zondo J) and
the Chamber now appeals with the leave of that court.
[5] The Minister of Health and
the Director-General of that department were cited in the application
but they have taken no active
part in the proceedings. After the
application had been launched three trade unions – the National
Union of Mineworkers,
the United Association of South Africa, and
Solidarity (the fourth, fifth and sixth respondents respectively) –
were joined
in the proceedings and affidavits were filed on behalf of
each of them. Their affidavits do not add materially to the evidence
but amount largely to argument advanced by each of the unions. The
National Union of Mineworkers and the United Association of South
Africa supported the approach of the commissioner – on the
basis that without a full contribution being made by the owners
to
finance the deficit they feared that workers might be deprived of
their claims. Solidarity supported the approach of the Chamber
–
submitting that the financial strain that would be placed upon owners
if they are required to fund the full deficit was
likely to lead to
job losses. Only the National Union of Mineworkers appeared before us
at the hearing of the appeal.
[6] It is convenient at this
point to outline certain features of the fund before turning to the
issues that arise in this appeal.
[7] The fund is not constituted
as a legal person. Claims for compensation lie against the
commissioner, who must compensate workers
or their dependants where
the worker has contracted a ‘compensatable disease’ in
consequence of performing ‘risk
work’ at a ‘controlled
mine’ or a ‘controlled works’. The fund exists as
the source from which the
commissioner must pay those claims.
[8] ‘Controlled mines’
and ‘controlled works’ are mines and works that were
controlled under the repealed
Pneumoconiosis Compensation Act 64 of
1962,
3
and mines and works that are
declared to be such by the Minister. The Minister must make such a
declaration whenever it comes to
his notice that ‘risk work’
is performed at a mine or works. What constitutes ‘risk work’
is dealt with
by the Act in considerable detail but for present
purposes I need only say that it is essentially work that exposes
workers to
dust or to gases, vapours or chemical substances that are
harmful or potentially harmful.
[9] The Act establishes a
certification committee to which various functions are assigned, in
particular to determine whether a
worker has contracted a
‘compensatable disease’. Those diseases are
pneumoconiosis and various pulmonary or other diseases
that, in the
opinion of the certification committee, are attributable to the
performance of risk work. If the certification committee
finds that a
person is suffering from a compensatable disease that was contracted
as a result of risk work at or in connection
with a controlled mine
or a controlled works, the commissioner must compensate the worker
from the fund according to a specified
formula. Compensation is also
payable to dependants of a worker who was suffering such a disease at
the time of his or her death.
[10] Upon the establishment of
the fund the assets and liabilities of the former General Council for
Pneumoconiosis Compensation,
and of the former Pneumoconiosis
Compensation Fund, both of which had been established under the
repealed Act, were transferred
to the fund. Its further funding is by
way of levies imposed by the Commissioner upon owners of controlled
mines and controlled
works. The levy that is payable by the owners is
expressed in the papers as an amount that is payable per worker for
each ‘risk-shift’
worked by that worker and for
convenience I will continue to express it in those terms.
[11] The commissioner is required
to keep four separate accounts for the fund, namely, the State
Account, the Mines Account, the
Works Account and the Research
Account. The Research Account is the recipient of a separate levy and
need not concern us.
[12] The State Account must be
debited with payments that are made by the commissioner to persons
who were suffering from pneumoconiosis
or tuberculosis before the Act
commenced, and to persons found to be suffering from a compensatable
disease contracted as a result
of work performed in the service of
the state, and to payments made under the Act in respect of service
performed at a mine or
works that ceased to be a controlled mine or
controlled works before the Act commenced. The assets that were
transferred from the
bodies that had existed under the repealed
Pneumoconiosis Act were required to be credited at inception to the
State Account. The
account was thereafter to be financed by moneys to
be appropriated by parliament for that purpose from time to time.
[13] The Mines Account and the
Works Account must each be credited with the levies that are paid by
the owners of controlled mines
and controlled works respectively. The
commissioner is required to debit to the Mines Account payments that
are made
‘
to
or in respect of any person who, after the commencement of this Act,
was found for the first time to be suffering or to have
suffered from
a compensatable disease which, in the opinion of the certification
committee, he or she contracted as a result of
work at or in
connection with a controlled mine’
.
4
Similarly, he must debit the
Works Account with payments that are made
‘
to
or in respect of any person who, after the commencement of this Act,
was found for the first time to be suffering or to have
suffered from
a compensatable disease which, in the opinion of the certification
committee, he or she contracted as a result of
work at or in
connection with a controlled works’
.
5
[14] The effect of those
provisions is to ring-fence each account so that each operates as a
separate fund dedicated to its particular
purpose. That being so
there might be a deficit in an account notwithstanding that the fund
overall is not in deficit – implying
that there is a surplus in
one or both of the other accounts. That is illustrated by earlier
actuarial valuations that evaluated
each account separately. A
valuation as at 1 April 1999 revealed a deficit in the State Account
of approximately R66 million,
a surplus in the Mines Account of
R223 million, and a surplus in the Works Account of R42 million
– thus an overall
surplus of R199 million. A valuation at
1 December 1999 revealed a State Account deficit of R74 million,
while the Mines
Account and the Works Accounts had surpluses of
R645 million and R97 million respectively – an
overall surplus
of R668 million.
[15] State Account deficits exist
because there is no reason for a reserve to be held in that account.
The state can be expected
always to be in a position to pay claims as
and when they arise and in practice the account is operated in that
way, with annual
appropriations being made by parliament to meet
current claims. Indeed, in view of the manner in which that account
is financed
it can be expected that there will almost always be an
actuarial deficit.
[16] We do not have the full
actuarial report before us but those portions that we have reflect a
valuation of the fund overall
and not of the individual accounts. It
seems that the Chamber feared, at one time at least, that mine-owners
and works-owners were
being expected to fund such deficit as might
exist in the State Account, because in its amended notice of motion
it claimed, as
an alternative to its principal claims, an order
declaring that
‘
in
determining a levy payable by the owner of each controlled mine or
controlled works … the [commissioner] may not include
in such
levy any amount that will be used to fund amounts that were/are
payable by the State’
[ie
amounts that fall to be paid from the State Account].
[17] It emerged in the hearing
before us that it is not disputed by the commissioner and, according
to his counsel, it has never
been disputed, that mine-owners and
works-owners may not be levied to make good a deficit in the State
Account. There being no
dispute on that issue a declaratory order to
that effect is not called for and I need say no more of the
alternative claim.
[18] There is also no dispute
that mine-owners may not be levied to make good a deficit in the
Works Account, and vice versa, and
that must indeed be so. The
dispute between the parties is thus whether mine-owners may be
required to make good a deficit in the
Mines Account, and
works-owners required to make good a deficit in the Works Account.
For convenience I deal with the matter hereafter
with reference only
to mine-owners and deficits in the Mines Account, though the same
principles apply to works-owners and deficits
in the Works Account.
[19] The first claim in the
amended notice of motion, summarized, was for an order declaring that
any determination of levies by
the commissioner in accordance with
the recommendations of the actuary – that is, a determination
of levies that aims at
eliminating the full deficit – was
inconsistent with the provisions of the Act. The second claim was for
two declarations
that are more specific, which I set out later in
this judgment. If the claim to those latter orders fails then equally
the first
claim must fail, and it is thus convenient to deal with
those orders first.
[20] The first of those orders is
directed at the responsibility for financing the fund as between the
contributing owners, which
has an impact on responsibility for the
deficit.
[21] The commissioner has
determined levies with reference to the mineral that is mined by each
mine. Thus the amount of the levy
imposed on platinum mines is the
same for each mine, and is lower than the levy imposed on asbestos
mines, and so on. It was submitted
on behalf of the Chamber that when
determining the levy payable by a mine-owner the commissioner must do
so with reference only
to the risk of disease that attaches to that
mine specifically. In that way an owner who has taken steps to reduce
the risk of
disease at its mine will not find itself unfairly
subsidising an owner who has not taken equivalent steps.
[22] It was on that submission
that an order was sought declaring that in determining a levy payable
by the owner of each controlled
mine the commissioner may not
‘
include
in such levy any amount that is not intended to be used solely for
funding benefits payable to persons who performed risk
work at that
controlled mine …’
.
[23] The form in which the order
is expressed might lead to confusion and I need to make it clear that
it was not suggested by the
Chamber that levies paid in respect of
workers at a mine must be used only to pay claims made by those who
worked at that mine.
Its submission was only that the levy payable by
the owner of a mine must be determined by the risk of contracting a
disease that
attaches to that mine specifically. Once levies have
been paid to the fund the moneys may be used to pay all claims
irrespective
of the mine from which the claim emanates.
[24] The submission on behalf of
the Chamber was founded on the language of s 62 and in
particular subsection (1). That subsection
– with emphasis
added to the words to which particular significance was given –
reads as follows:
‘
The
commissioner shall determine in respect of
each
controlled
mine or controlled works, in such manner and on such basis as may be
prescribed, an amount payable by the owner of
that
mine
or works to the commissioner, for the benefit of the compensation
fund,
in
respect of each shift worked by any person at or in connection with
that mine or works
during
which such person performed risk work, in order to enable the
commissioner to pay to or in respect of
every
person who performs
risk
work at or in connection with
that
mine
or works and who is after the commencement of this Act found to be
suffering from a compensatable disease,
such
amounts as may or are likely to become payable
under
this Act.’
[25] Other subsections that were
said to support the Chamber’s construction – again with
emphasis on the words that
were said to be particularly significant –
were the following:
Subsection (3), which requires
the commissioner, when he has made a determination under subsection
(1) to
‘
notify
the owner of
the
mine … in question
…’.
Subsection (4), which requires
the mine-owner to pay to the commissioner within a stipulated time
‘
the
amounts which, by virtue of a determination under subsection (1),
such
owner owes
in
respect of persons
who
performed risk work at or in connection with his mine … in the
preceding month … ’
.
Subsection (5), which provides
that when the commissioner has
‘
determined
the amount which
the
owner of a controlled mine … is to pay
…
may,
of his own motion or on application by
that
owner
,
and the commissioner shall when
the
risk of the mine or works in question
has
been altered by the risk committee under section 21, review and, if
he or she deems it necessary, alter the amount so determined,
and if
the commissioner has altered such amount he or she shall forthwith in
writing notify
the
owner concerned
’
.
[26] Support for the submission
was also sought to be found in the functions of the Risk Committee
for Mines and Works established
under s 18 (which is the risk
committee referred to in s 62(5)). The function of that
committee is to ‘determine
the risk’ at ‘
every
controlled mine or controlled works’
6
–
that risk being a
reference to the ‘risk of contracting a compensatable disease,
to which persons who perform risk work in
or at or in connection with
that mine or works are exposed’.
7
[27] Those provisions read
together, it was submitted, make it clear that the levy determined by
the commissioner must be determined
with reference to the risk of
disease that attaches to each particular mine.
[28] The submission overlooks the
provisions of s 62(2) and s 20(3)
(a)
.
When determining a levy the commissioner is permitted by s 62(2)
to
‘
determine
different amounts’ in respect of, [amongst others], different
categories, groups or classes of controlled mines
or controlled
works’
.
And while the risk committee must
determine the risk of each mine s 20(3)
(a)
allows it to
‘
determine,
different risks in respect of … kinds or groups of mines’
.
[29] While the commissioner must
indeed determine a levy ‘in respect of each … mine’,
and he may determine the
levy with reference to the risk attaching to
the particular mine, so too may he categorise the mine and determine
the levy with
reference to the risk attaching to that category of
mines. So, too, the risk committee may determine the risk of a
particular mine
with reference to a category of mines. Thus the
commissioner is entitled to categorise mines by the mineral that they
mine, as
he has done, and determine the amount of the levy that the
owner of each mine must pay with reference to the risk of disease
that
attaches to a mine that mines that mineral. In my view there is
no merit in the argument advanced by the Chamber on this part of
the
case and the order that it sought was rightly dismissed.
[30] The second of the two
declarations sought by the Chamber goes directly to the deficit in
the fund. Section s 62(1) requires
the levy determined by the
commissioner to be one that is payable in respect of each worker at a
mine. That means, so it was submitted,
that the levy payable in
respect of a particular worker is payable only for so long as that
worker is working at the mine, and
that must indeed be correct, but
the submission goes further.
[31] The subsection goes on to
provide that the purpose of the levy must be to enable compensation
to be paid, where appropriate,
to ‘every person who performs
[the present tense] risk work at or in connection with that mine …’.
What that
requires, the submission continued, is that the levy must
be determined ‘with reference to’ amounts intended to be
used to pay compensation to workers performing risk work at the time
the levy is determined.
8
On that basis the second of the
two orders sought was a declaration that in determining a levy the
commissioner may not
‘
include
in such levy any amount intended to be used to pay compensation to
persons who previously performed risk work at that controlled
mine …
but who no longer perform such work at that controlled mine …’
.
[32] What is meant by that order,
it was explained in argument before us, is that the levy must be
determined in an amount that
is required to cover the risk of disease
to workers then in employment, and not the risk of disease to workers
who had already
left employment, the implication being that a deficit
brought about by claims of former employees may not be recovered by
levies
imposed in respect of current workers.
[33] It is true that the levy
determined by the commissioner must be one that is payable only in
respect of each current worker,
but I do not think the section means
that it must be designed to cover the risk only of current employees
contracting a disease.
I do not think the words ‘every person
who performs risk work’ as used in s 62(1) is confined to
persons who are
performing such work at the time the levy is
determined (nor even at the time the levy is paid) – in my view
it refers to
every person who performs risk work at any time.
[34] Indeed, the construction
advanced on behalf of the Chamber would be inconsistent with other
provisions of Chapter V. In a fund
of this nature there is always the
prospect that there might be a deficit. The question, then, is how is
that deficit to be financed
if not by the contributing owners? The
response of counsel for the Chamber was that the shortfall must be
financed by the state.
It was argued that claims lie against, and
must be met by, the commissioner, who is a state official. If there
are insufficient
moneys in the fund, so the argument went, then his
employer, the state, must necessarily make up the shortfall.
[35] It seems to me that the
reverse is the true meaning of the statute. The responsibility of the
state towards the fund is expressly
circumscribed by s 74. It
requires the Minister to pay to the commissioner, from moneys
appropriated by parliament for that
purpose, for the credit of the
relevant account of the compensation fund –
‘
(a)
any
amount which is due to the commissioner by an owner of a controlled
mine or a controlled works … which the commissioner
is unable
to recover from that owner …;
(b)
any amount paid from the compensation fund to any person
who was not entitled to receive such amount, and which the
commissioner
is unable to recover from such person;
(c)
any loss suffered by the compensation fund through the
negligence, dishonesty or other act or omission of any person in the
service
of the State, or any person, institution, organization or
authority who or which has acted on behalf of the commissioner in
terms
of any provision of this Act, and which the commissioner is
unable to recover from the person, institution, organization or
authority
concerned;
(d)
any amount paid from the compensation fund under a
provision of this Act to or in respect of a person who contracted a
compensatable
disease wholly or partly as a result of his duties at
or in connection with mines or works while he or she was in the
service of
the State or while he or she performed a service on behalf
of the State;
(e)
any amount paid from the compensation fund under a
provision of this Act to or in respect of a person in connection with
work performed
at a mine or works which has ceased operations and at
the time of such cessation was not a controlled mine or a controlled
works’
.
[36] If the Chamber’s
construction of the Act were to be correct that detailed
circumscription of the responsibility of the
state is entirely
superfluous. The state is obliged to finance a shortfall no matter
what brought it about – so the argument
went. If that is so it
would be unnecessary to express the circumstances in which the state
must contribute to the fund.
[37] That construction is also
inconsistent with the requirement of the Act that the fund must be
actuarially valued. Actuarial
valuation is required only where
reserves are required to be held for future claims. If the state were
to be the guarantor of all
claims that are payable from the Mines
Account then the account might just as well be run on a current-cost
basis – as with
the State Account – which requires no
reserves to be held and thus no actuarial valuation.
[38] I find nothing in the Act
that requires – or even allows – the state to fund a
deficit in the Mines Account no
matter what brings it about. That
being so the only inference is that it was intended that a deficit
should be made good by additional
levies. In my view there is no
basis for the second of the two orders that were sought and it, too,
was rightly dismissed.
[39] I pointed out earlier that
those parts of the actuarial report that are before us – which
form the basis of the recommendations
made to the commissioner –
do not deal with the various constituents of the deficit, but that
there is no dispute that it
may not be recovered across the various
accounts. That having been said, and the Chamber not being entitled
to the orders I have
already dealt with, I can see no other grounds
justifying the grant of the first order claimed in the notice of
motion.
[40] There remains the question
of costs. There is no reason why the costs of the commissioner should
not follow the result. The
question remains whether the Chamber
should be held liable for the costs on appeal of the National Union
of Mineworkers. The Union
was not brought into the proceedings by the
Chamber but chose independently to intervene. Nonetheless, in my view
the union indeed
had an interest in the proceedings that it was
entitled to advance and I find it just and equitable that it should
recover its
costs.
[41] For those reasons the appeal
is dismissed. The appellant is to pay the costs of the first and
fourth respondents, including
the costs of two counsel.
__________________
R W NUGENT
JUDGE OF APPEAL
APPEARANCES:
For appellant: A E Franklin SC
A W T Rowan
Instructed by:
Brink Cohen le Roux Inc, Houghton
Claude Reid Inc, Bloemfontein
For
1
st
respondents: E A Limberis SC
P
G Seleka
Instructed by:
The State Attorney, Pretoria
The State Attorney, Bloemfontein
For
4
th
respondent: K S Tip SC
J
P Partington
Instructed by:
Cheadle Thompson & Haysom
Inc, Braamfontein
Webbers, Bloemfontein
1
Section
77A.
2
The
deficit so far as it related to workers who were then working in the
industry, which was estimated to be about R196 million.
3
Repealed
by the Act that is now under consideration.
4
Section
70(2).
5
Section
71(2).
6
Section
20(1).
7
Relevant
definition of ‘risk’ in s 1.
8
The
submission in those rather vague terms is taken from the heads of
argument filed by counsel for the Chamber.