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[2007] ZASCA 55
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ER24 Holdings v Smith NO and Another (392/06) [2007] ZASCA 55; [2007] 4 All SA 679 (SCA) ; 2007 (6) SA 147 (SCA); (2007) 28 ILJ 2497 (SCA) (18 May 2007)
Links to summary
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case number : 392/06
Reportable
In the matter between :
ER24 HOLDINGS ............................... APPELLANT
and
SMITH NO ............................... 1
ST
RESPONDENT
COMPENSATION COMMISSIONER
............................... 2
ND
RESPONDENT
CORAM : SCOTT, CAMERON, CLOETE, MAYA JJA
et
THERON AJA
HEARD : 4 MAY 2007
DELIVERED : 18 MAY 2007
Summary: Compensation for Occupational Injuries and
Diseases Act, 130 of 1993: remuneration ‘in kind’ as
contemplated
in the definition of ‘employee’ means the
provision of something that has an objectively ascertainable value
which can
serve as the basis for the assessment of an employer in
terms of s 83 and for the calculation of compensation payable in
terms of
Chapter VI read with Schedule 4 of the Act.
Neutral citation: This judgment may be referred to as
ER24 Holdings v Smith NO
[2007] SCA 55 (RSA).
_________________________________________________________
JUDGMENT
CLOETE JA
/
CLOETE JA
[1] On 10 August 2003 Ms Romy Staracek (‘Romy’)
was a passenger in a vehicle driven by Ms Natasha Swanepoel
(‘Natasha’).
The vehicle was involved in an accident
caused by the negligence of Natasha and Romy was seriously injured.
At the time of the accident
Natasha was acting in the course and
scope of her employment as a shift leader with Emergency Room Company
(Pty) Ltd, trading as
ER24, which operates an emergency service. Romy
was a volunteer worker undergoing vocational experience that was
essential to enable
her to qualify ultimately as a paramedic, and she
and Natasha were on their way to an accident scene.
[2] Adv Irvin Smith was appointed as curator
ad
litem
to Romy. In that capacity he sued ER24
for damages in excess of R7 million allegedly suffered by Romy in
consequence of the accident.
ER24 delivered two special pleas in
answer to the claim. In the first, ER24 alleged that Romy was an
‘employee’ as defined
in the Compensation for
Occupational Injuries and Diseases Act, 130 of 1993 (‘the
Act’); that the damages claimed by
her were in respect of an
‘occupational injury’; and that in terms of s 35 of the
Act, no action lay against it for the
recovery of the damages
claimed. Section 35(1) of the Act provides:
‘
(1)
No action shall lie by an employee . . . for the recovery of damages
in respect of any occupational injury . . . resulting in
the
disablement . . . of such employee against such employee’s
employer, and no liability for compensation on the part of such
employer shall arise save under the provisions of this Act in respect
of such disablement . . .’.
In s 1 of the Act, ‘occupational injury’ is
defined as ‘a personal injury sustained as a result of an
accident’
and ‘accident’ is defined as ‘an
accident arising out of and in the course of an employee’s
employment and
resulting in a personal injury . . . of the employee’.
In the second special plea, ER24 pleaded that it had concluded a
contract
with Romy in terms of which its liability for the injuries
suffered by Romy was excluded; and in the alternative, that the
contract
fell to be rectified so as to exclude such liability. ER24
also joined the Compensation Commissioner as a third party. In those
proceedings
it sought an order declaring that Romy was an ‘employee’
as defined in the Act and that the claim brought on her behalf
accordingly lay against the Compensation Commissioner in terms of s
35 of the Act. The court
a quo
(Bashall AJ) dismissed both special pleas and the relief
sought by ER24 against the Compensation Commissioner, but granted
leave to
appeal to this court.
[3] The essential question raised by the first special
plea and the third party notice is whether Romy was an ‘employee’
as defined in s 1 of the Act, the relevant part of which reads as
follows:
‘”
employee”
means a person who has entered into or works under a contract of
service or of apprenticeship or learnership, with
an employer,
whether the contract is express or implied, oral or in writing, and
whether the remuneration is calculated by time or
by work done, or is
in cash or in kind …’.
[4] The court
a quo
found that Romy had executed a contract with ER24, the
first paragraph of which provided that she
‘
will
not be regarded as an employee and is not entitled to any statutory
protection, remuneration or fringe benefits.’
If Romy is entitled to benefits under the Act, the
exclusion of ‘statutory protection’ cannot apply to such
benefits inasmuch
as s 33 of the Act provides:
‘
Any
provision of an agreement existing at the commencement of this Act or
concluded thereafter in terms of which an employee . . .
relinquishes
or purports to relinquish any right to benefits in terms of this Act,
shall be void.’
[5] Some of the witnesses called to give evidence
expressed the opinion that Romy was not an employee and reference was
made to correspondence
from the office of the Compensation
Commissioner which was to the same effect. These opinions are
irrelevant. The question whether
Romy was an employee as defined in
the Act, is a question for the court.
[6] The definition of ‘employee’ covers
remuneration ‘in cash or in kind’. It was not submitted ─
in
my view, correctly ─ that a person who has entered into or
works under any of the three categories contract mentioned in the
definition, would qualify as an employee if that person received no
remuneration. The evidence established that Romy was not paid.
It was
however submitted on behalf of ER24 that it remunerated Romy in kind
by allowing her to travel in its vehicles, to be exposed
to actual
accident scenes and to obtain vocational guidance and experience from
its more experienced personnel, all with the view
to enabling her to
gain the necessary experience to qualify as a paramedic. I cannot
agree with this argument.
[7] Remuneration ‘in kind’ to my mind means
the provision of something that has an objectively ascertainable
value which
can serve as the basis for the assessment of an employer
in terms of s 83 and for the calculation of compensation payable in
terms
of Chapter VI read with Schedule 4, of the Act. Section 83(1)
provides:
‘
Subject
to the provisions of this section, an employer shall be assessed or
provisionally assessed by the Director-General according
to a tariff
of assessment calculated on the basis of such percentage of the
annual earnings of his, her or its employees as the Director-General
with due regard to the requirements of the compensation fund for the
year of assessment may deem necessary.’
Schedule 4 deals with the manner of calculating
compensation and in each case (save in regard to funeral costs) the
benefit is calculated
having regard to the ‘monthly earnings’
of the employee. Thus, for example, the compensation for temporary
total disablement
payable in terms of s 47(1)(a) of the Act is
periodical payments representing 75 percent of an employee’s
monthly earnings
at the time of the accident (subject to a maximum);
and the compensation payable in terms of s 49(1) for permanent
disablement of
30 percent, is a lump sum being 15 times the monthly
earnings of the employee at the time of the accident (subject to a
minimum and
a maximum).
[8] If the argument on behalf of ER24 were correct, some
monetary value would have to be placed on the experience gained by
employees
for the purpose of determining the employees’ annual
earnings; and such experience would have to be taken into account in
determining
the ‘monthly earnings’ of an employee for the
purposes of calculating the compensation payable ─ because
there
can be no distinction in principle between a person such as
Romy and an employee of ER24 properly so called who is paid a monthly
salary. Both tasks are for practical purposes impossible and neither
is in my view required by the Act.
[9] Nor does s 51, referred to in argument, assist ER24.
That section provides:
‘
(1)
If as a result of an accident an employee sustains permanent
disablement and at the time of the accident ─
(a) was an apprentice or in the process
of being trained in any trade, occupation or profession; or
(b) was under 26 years of age,
the Director-General shall determine the
earnings of such employee in accordance with subsection (2) for the
purpose of the calculation
of compensation in terms of section 49.
(2)(a) In the case of an employee
referred to in subsection (1)(a), his earnings shall be calculated on
the basis of the earnings
to which a recently qualified person or a
person in the same occupation, trade or profession with five years
more experience than
the employee would have been entitled at the
time of the accident, whichever calculation is more favourable to the
employee.
(b) In the case of an employee referred
to in subsection (1)(b), his earnings shall be calculated on the
basis of the earnings to
which a person of 26 years of age would
normally have been entitled if at the time of the accident he had
been performing the same
work as the employee or a person in the same
occupation, trade or profession with five years more experience than
the employee, whichever
calculation is more favourable to the
employee.’
The purpose of this section is to benefit a person who
is
ex hypothesi
an
employee (one in training or under 26 years of age) by providing for
an increased benefit. This section does not assist in determining
whether a person being trained or under 26 years of age, is an
employee.
[10] I therefore conclude that as Romy was not
remunerated, whether in cash or in kind, she was not an employee for
the purposes of
the Act. It follows that the first special plea and
the relief sought by ER24 against the Compensation Commissioner were
correctly
dismissed by the court
a quo
.
[11] The principal contention by ER24 in its second
special plea was that it had contracted out of liability to Romy. The
contention
was based on the following clause in the contract which
the court
a quo
found
that Romy had signed:
‘
[Romy]
indemnifies ER24 of any claim in respect of any loss, damage or
injury howsoever caused which may be sustained during the course
of
assisting with the operational requirements of the Company.’
Scott JA in
Durban’s Water
Wonderland (Pty) Ltd v Botha and Another
1
stated the approach to be followed in construing such an
exemption clause as follows:
‘
If
the language of a disclaimer or exemption clause is such that it
exempts the
proferens
from liability in express and
unambiguous terms, effect must be given to that meaning. If there is
ambiguity, the language must be
construed against the
proferens
.
(See
Government of
the Republic of South Africa v Fibre Spinners & Weavers (Pty) Ltd
1978 (2) SA 794
(A) at 804C.)
But the alternative meaning upon which reliance is placed to
demonstrate the ambiguity must be one to which the language
is fairly
susceptible; it must not be “fanciful” or “remote”
(cf
Canada Steamship
Lions Ltd v Regem
[1952]
1 All ER 305
(PC) at 301C-D).’
[12] It was conceded on behalf of ER24 that the clause
is ambiguous inasmuch as it is not clear whether Romy indemnified
ER24 for
injuries caused to a third party or to herself. It is only
in the latter case that the clause could provide a defence to ER24.
The
clause is, however, fairly susceptible to the former
interpretation; apart from anything else, if ER24 wished to exclude
liability
on its part to Romy, why, it may be asked, would it limit
such exclusion to loss, damage or injury sustained during the course
of
her assisting with the operational requirements of the company?
Such a qualification makes far more sense if what is intended to
be
excluded is loss, damage or injury caused by Romy to a third party
while she was assisting in the operational requirements of
the
company. The concession on behalf of ER24 was accordingly well made.
The ambiguity is fatal and the
contra
proferentem
rule must be applied against
ER24.
[13] ER24 pleaded in the alternative in its second
special plea that the exclusion clause should be rectified so as to
exclude any
liability on its part to Romy. Counsel representing ER24
did not abandon the point, although he did not press it in argument
either
─ and rightly so. It is trite that a party relying on
rectification has to show that the contract as rectified reflects the
common continuing intention of the parties thereto. Although the
author of the contract who was employed by ER24 gave evidence as
to
what he intended the clause to mean, there was no evidence
from which Romy’s intention could legitimately be
inferred. It follows that ER24’s second special plea cannot
succeed
either.
[14] The appeal is dismissed. ER24 is ordered to pay the
costs of the curator
ad litem
and
the Compensation Commissioner including, in each case, the costs of
two counsel.
______________
T D CLOETE
JUDGE OF APPEAL
Concur: Scott JA
Cameron JA
Maya JA
Theron AJA
1
1999
(1) SA 982
(SCA) at 989G-I; see also
Johannesburg
Country Club v Stott
2004 (5) SA 511
(SCA).