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[2017] ZALAC 79
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World Luxury Hotel Awards (Pty) Ltd v De Wet (CA17/2016, 2015/C763) [2017] ZALAC 79; (2018) 39 ILJ 808 (LAC) (15 December 2017)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, CAPE TOWN
Reportable
Labour
Appeal Court Case no CA17/2016
Labour
Court Case no 2015/C763
WORLD
LUXURY HOTEL AWARDS (PTY) LTD
Appellant
and
DE
WET,
MARINIQUE
Respondent
Heard:
31 October 2017
Delivered:
15 December 2017
Summary:
Pleadings – interpretation of – scope of cause of action
and scope of defence – to be examined in context
of the whole –
claim for outstanding leave pay - Labour Court ruling that the
defence pleaded was limited – effect
of ruling was to deny the
true scope of defence to be ventilated - ruling set aside and matter
remitted for trial on this issue
to be resumed
‘
severance
package’ – interpretation of this phrase in this matter –
not appropriate to attribute a universal or
familiar meaning to a
stock phrase – the usage of the phrase to be examined in
context of whole agreement – laypersons
drafting the agreement
– purposive approach to use of chosen terminology appropriate
Held
- that in this agreement the phrase was to be given a meaning
peculiar to the agreement – parties agreeing on certain
termination benefits if the business not sold to the employee when
she terminated the employment for any reason other than dishonesty
–
these included a so-called ‘severance package’ – in
context simply a termination benefit – the
phrase did not in
this particular agreement imply a sum of compensation paid by the
employer for a termination for operational
reasons – employee
entitled to the severance package as defined - appeal upheld
Coram: Coppin,
Sutherland JJA and Savage AJA
JUDGMENT
SUTHERLAND
JA
Introduction
[1]
The
respondent, De Wet, had been employed by the appellant. She resigned.
Later she sued the appellant on her employment contract,
making a
claim for a payment in respect of outstanding leave allegedly not
taken, and making a claim for a payment of a sum allegedly
owing upon
the termination of the contract. She succeeded before the Labour
Court on both claims, whereupon, her employer, the
appellant,
prosecuted an appeal against judgment in both claims.
[2]
The
first issue on appeal concerns the claim about outstanding leave pay,
and turns on whether a ruling given during the proceedings,
by the
Labour Court, resulted in an unfair trial. The effect of the ruling
was to deny the appellant the opportunity to ventilate
a case it
wished to advance; the Labour Court took the view that the pleadings
did not include that case. The gravamen of that
controversy is the
proper interpretation of the pleadings, read with the minutes of the
pre-trial conference.
[3]
The
second issue on appeal concerns the payment of what is called a
“severance package” and turns on the proper
interpretation
of the employment contract. More specifically, the
issue is whether De Wet was entitled to a “severance package”
if
she resigned or if such “severance package” became
owing only if the appellant dismissed her.
[4]
The
two issues are addressed discreetly. Neither claim is one regulated
by the Labour Relations Act 61 of 1995 (LRA). The case came
before
the Labour court pursuant to section 77(3) of the Basic Conditions of
Employment Act. (BCEA) conferring concurrent civil
jurisdiction on
the Labour Court.
The
Leave Pay Claim
[5]
The
employment contract entitled De Wet to 24 days’ annual leave.
(clause 6.1) She was forbidden to take such leave during
her notice
period, unless she got written permission. (clause 6.3) Upon
termination of the contract, she was entitled to “receive
payment for the leave due to her” (clause 6.4). She was obliged
to give two calendar months’ notice (clause 5, 5.1.).
The
notice period could not run concurrently with any leave taken (clause
5.2).
[6]
She
resigned on 1 January 2015, and gave two calendar months’
notice.
[7]
She
and Lourens, on behalf of the appellant, reached an agreement on 7
January about her using her leave during the notice period.
She
confirmed her understanding of the agreement in an e-mail on 8
January. The terms of the agreement are disputed. More important
than
that dispute, however, is
what
issues were formulated on the pleadings
in respect of the leave pay claim, which led, ultimately, to a
controversy, resolved by the controversial ruling.
[8]
In
De Wet’s statement of claim, she averred that 102.5 days of
leave were outstanding as at 28 February 2015, being the date
upon
which her notice period expired. She set out in paragraph 14, a table
of how it was computed, reflecting how many leave days
per year since
1 September 2009, she alleged she had not taken and would pursuant
thereto, be entitled to payment in lieu of such
leave as contemplated
by clause 6.4 of the employment contract. She claimed payment for all
102.5 days.
[9]
The
statement of defence averred thus:
‘
[De Wet] resigned…she
did not wish to work out her notice period and instead tendered to
take leave during her notice period,
which tender was accepted …’
(Paragraph 11 of the statement of defence).
[10]
The
statement of defence went on to belabour that point. The appellant
averred that at De Wet’s request, she was permitted
to “use
the leave which was due to her (according to her)” instead of
“working out” her notice period (Paragraph
19 of the
statement of defence). The appellant further averred, in paragraph
22, and again in paragraph 26, that, in these circumstances,
De Wet
was not “entitled to any payment for leave
not
used by her
during her employment.”. In paragraphs 24 and 25, it was
averred that:
‘…
[appellant] was
required to grant [De Wet], at her written request, the leave she
wanted to take, during the period of notice which
she gave….
[De Wet’s] leave was accordingly taken in accordance with the
agreement …. and there was no contravention
of the BCEA’.
[11]
The
averments, as cited, were entwined with other averments which are
surplusage to this controversy. The minute of the pre-trial
conference reiterated that the “fact in dispute” which
the Labour Court was asked to decide, was whether she was entitled
to
pay for 102.5 days of leave:
‘…
notwithstanding the
fact that she requested not to work out the notice period and
elected/requested to go on leave instead’.
[12]
What
do these several averments mean to say? A reading of the text of
these pleadings indicates, in my view, that the appellant
disputed
any
liability
to
pay for
any
leave
due because of the agreement to allow her to take leave in lieu of
serving out two months’ notice. However, notably, the
table in
the statement of claim setting out the number of days of leave
allegedly not taken was not expressly addressed in the
statement of
defence. The impression left on the reader is that the appellant’s
case was that the claim
per
se,
for
leave pay, was extinguished by the agreement, and the number of days
alleged “due” was immaterial
per
se
to
that defence.
[13]
When
the trial began De Wet made a concession. Her statement of claim had
been silent about taking leave in lieu of serving out
her notice
period; that fact was first mentioned in the statement of defence.
She acknowledged that she had done so, and abandoned
41 days of her
102.5 days claimed, being the leave taken over the two-month notice
period. What effect did this concession and
abandonment have on the
pleaded case?
[14]
Counsel
for De Wet then said to the Court, that his grasp of the pleadings
was that the defence of the appellant was as follows
(Record 37):
‘…
at no stage was [de
Wet’s) allegations denied other than the two-month period. [De
wet] has always pleaded it was more than
– she had more than
two months leave due and the only dispute was – and the
response was to that it’s a two-month
period. It doesn’t
deal – and we set out specifically how leave was calculated.
And I do understand …that
my learned friend intends to bring a
new defence to this claim which was not pleaded…. I would have
a serious objection
to that being raised at this late stage.’
[15]
In
response, counsel for appellant says that (Record 37):
‘
I don’t have an
instruction on the exact numbers for leave paid as I stand…obviously
we’ve prepared on the basis
as pleaded in the statement of case
that [De Wet] was simply not entitled to take leave during her notice
period… obviously
that’s no longer in dispute…as
for the rest is concerned, we were discussing that outside, ….
I hav’nt
got a final instruction…’
[16]
What
does all of this mean? Is it contemplated to amend to introduce a new
defence? If so what is the new defence? Is counsel for
appellant in
the dark about the 102.5 days computation? The Labour Court is not
told what the allusions relate to. Why, if at all,
did the
appellant’s pleaded defence become inadequate because the
quantum of the claim was reduced? What effect, if any,
would the
elimination of a legal argument about the lawfulness of taking leave
during the notice period, alluded to initially by
the appellant not
De Wet, have on the appellant’s pleaded case? The position was,
and remained, obscure and the trial trundled
on to hear De wet
testify.
[17]
Then,
after De Wet had testified, and was being cross-examined, it was put
to her that (Record 123):
‘
The company is going to give
evidence that you took leave at your discretion with a relaxation of
leave forms. So, your claim that
you had no leave isn’t true…
you had leave, but didn’t submit leave forms…’
To
this challenge, the record reflects that the answer was inaudible.
Regrettably, no reconstruction was ostensibly attempted.
[18]
Then
Counsel for De Wet interrupted the cross-examination to submit that
the computation of her leave claim had never been put in
dispute
(Record 124):
“
I pointed out…right from
the outset that the whole issue of what she was entitled to was
clearly set out in the statement
of case and it was never disputed.
No other version was given…why she was not entitled to this
leave, but I accept for the
two-month issue, which we have now
conceded, once that is conceded there is no denial that the employee
was entitled to that leave….
(Record 125)… but…now
in cross-examination…for the first time to start finding
reasons why the leave, she’s
not entitled to….[it] is
not proper at this stage. It should have been pleaded”.
[19]
Counsel
for appellant then remarks that (Record 125):
‘…
the way its pleaded,
yes, to some degree. .I would argue that my learned friend is
correct, but its couched in a claim for
leave pay that is due because
it was taken in notice period’.
[20]
The
concession that she cannot be paid for the leave taken during the
notice period is then noted. Further on counsel for appellant
says
(Record 125):
‘
now she’s led evidence
…that she’s entitled to so much other, leave to run –
now rode on the back of that
claim. It’s kind of an additional
sort of, oh, by the way, leaves other leave which wasn’t
pleaded, but the’ve
persisted with that claim alone….’
[21]
The
exchanges carry on but with no illumination. What seems fair to
extract from all the information?
[22]
The
concession that the leave granted and paid for that overlapped with
the notice period was not unlawful did not eliminate the
whole claim
of De Wet. Nor could that abandonment curtail the appellant’s
case that an agreement had extinguished any claim
to the leave pay.
The confusions evidenced are most regrettable.
[23]
When
the ruling was given by the Labour Court that a claim for 102 days
had been made and the concession merely eliminated 41 days,
leaving
the balance of an
uncontested
number of days, that perspective was wholly justified, but really
unimportant. If the appellant had wanted to have the Labour Court
decide if 102.5 days was truly what was outstanding as leave due, an
amendment would have been necessary. That was not the point
of the
pleaded case; nor is it apparent that the appellant’s
representative had fully grasped what the real point ought to
have
been to legitimise the cross-examination upon which he had embarked.
Indeed, the appellant’s pleaded defence, if it
to be understood
fairly, was premised on the notion that some sort of waiver of leave
not taken was subsumed into the agreement
to “use” leave
to avoid sitting out the two months of notice, not a challenge to her
computation of days allegedly
not taken as leave.
[24]
Cross-examination
on her allegations about the days, supposedly not taken, was relevant
to that issue, not only to an unpleaded
issue about computation of
the days. The controversy over the disputed terms of the agreement
allegedly extinguishing any claim
for untaken leave implicated her
credibility. Q
uite
properly, the discrepancy between her pleaded claim and an earlier
claim for 42 days was fertile ground for proper interrogation.
Her
claim of having built up such a huge outstanding leave entitlement
was a proper topic for the appellant to challenge in relation
this
issue, and if a case could have been advanced that she was untruthful
about an allegedly inflated claim, and her true leave
entitlement was
an approximation of the two months that would have been relevant to
the probabilities about the alleged extinction
of any further claims
to leave pay.
[25]
In
summary, therefore, the ruling was incorrect because the perspective
adopted by the Labour Court, in part engendered by the incoherence
of
the submissions advanced, was inappropriately focussed on what was
not pleaded but overlooked what was indeed pleaded and the
propriety
of cross-examination in relation to that pleaded issue. The ruling
resulted in an unfair trial.
[26]
Accordingly,
the appeal on this issue must succeed, and the ruling is set aside.
The appropriate relief is to remit this claim to
resume the trial.
The
severance pay dispute
[27]
The
locus of the controversy is clause 12 of the employment contract.
‘
SEVERANCE
12.1 In the event that the employee’s
employment is terminated for any reason other than dishonesty, the
employee shall be
entitled to the payment of the severance package on
the terms as set out below.
12.2 Where the firm is sold to a party
other than the employee, the employee shall be entitled to a payment
of a lump sum (axb)
calculated at 15% of her last month’s
salary within the firm’s employ (a) multiplied by the period 1
September 2006
to the date of severance(b).
12.3 Where the employees employ within
the firm is terminated, the employee shall be entitled to a payment
of a lump sum (axb) calculated
at 7.55 of her last month’s
salary within the firm’s employ (a) multiplied by the period 1
September 2006 to the date
of severance(b).’
[28]
The
contending submissions all tend to rely heavily on a textual
analysis. But prior to trying to divine meaning from the text,
it is
appropriate to register the relevant facts that give this contract
its context. This exercise embraces the recognition that
it is an
employment
contract,
drawn up for the “executive manager”. It is a bespoke
contract. It is the second contract drawn up between
the parties, and
one devised for and by the two
de
facto
principals, not their agents, and both were well acquainted with one
another. When this contract was signed, De wet had already
been
instrumental in building up the business since 2006, seven years in
all, and was a key actor is its activities, being
de
facto
in charge of the operations. She was, however, not a director. Clause
11 conferred on De Wet a right of first refusal should the
business
be up for sale; a significant indication of her role, status and
commercial interest in the business, which when read
with other
provisions must be taken together to grasp the substance of the
relationship between De Wet and the appellant.
[29]
The
meaning of the use of the words “severance package” is
hotly contested. The two poles are that, at the one end of
the
spectrum, it is a familiar labour relations term that can and ought
to be always understood to embrace termination of an employment
contract at the instance of an employer and in respect of which
compensation for the loss of the job is paid to the employee, and
at
the other end of the spectrum, it is a mere label, devoid of any
objective, independent or historical content or meaning, other
than
that conferred
ad
hoc
by
the terms of the written instrument in which it is used.
[30]
In
my view, it will be seldom that a single word (or pair of words)
however critical to the expression of an idea or of an obligation
or
of a right, is capable of being understood appropriately on its own.
More usually, it is the
phrases
,
if not the
sentences
,
in text, that require close examination to divine meaning. As Humpty
Dumpty has argued and Alice has cautioned, a word might mean
whatever
we want it to mean, depending on what we want to achieve with it.
[1]
In this case, as always, the words are defined by the work that they
are marshalled to perform.
[31]
An
analysis that begins by plumbing the depths of the traditional usage
of the phrase “severance package” instead of
beginning
with the whole text, in context, in order to divine what work the
phrase is required to do, is an approach from the wrong
way around.
[32]
A
close examination of clause 12.1 yields that a payment fell due on
the “termination” of the employment “
within
the
firm”
.
“Firm” is defined, on page 1 of the contract to identify
the appellant.
[2]
That payment
was called a “severance package”. What does clause 12 say
about the causa for the payment, other than
the termination of the
employment?
32.1.
Payment
upon termination for dishonesty was excluded. Thus, crookedness, so
excluded, implies that the payment remained due for
other kinds of
typical employee misconduct; eg late-coming, insubordination,
dereliction of duties and so forth.
32.2.
Accordingly,
if dishonesty alone was a
causa
that excluded De Wet from an entitlement to a “severance
package” can it be said that the “severance package”
so labelled
in
this clause
is the same species of “severance package” which is
associated with a typical retrenchment? In my view, the answer
is no.
32.3.
The
parties, in articulating their agreement, must have used the label in
another sense, peculiar to their aims; aims which are
expressed in
clause 12.2 and 12.3.
32.4.
Clause 12.2
is about a sale of the firm to “another party”, implying
that De Wet either would not or could not exercise
her right of first
refusal to buy it, as provided for in clause 11. This is a sort of
compensation for not being able to enjoy
a commercial interest in the
firm. What is this sort of benefit doing in this clause? Moreover,
clause 12.2 addresses termination
of employment “within the
firm” upon such a sale, and does not exclude continued
employment with “another party”.
When that benefit is
called a “severance package” could the meaning of the
phrase have been intended to mean “severance
package” as
known within a traditional retrenchment scenario? I think not.
32.5.
The
computation of the quantum in clause 2.3 does not adopt the
traditional retrenchment scenario of a multiple number of weeks
per
year of service. A much more generous benefit is envisaged.
The
implication of a guaranteed exit benefit rather than a traditional
retrenchment benefit is plain.
32.6.
Reading
these provisions holistically, it must, in my view, follow that
clause 12 addresses benefits that will accrue to De Wet
upon
termination in two circumstances, first the sale of the business to a
stranger and second, the termination
simplicter
of her employment.
Clause
12.1 governs the further two clauses and must be read in a way that
is compatible with both eventualities. Both payments
are described as
a “severance package”. In that context, what basis might
exist to intrude into the use of the phrase
as used in clause 12.1 a
meaning tied exclusively to a traditional retrenchment benefit
payable on a loss of a job at the instance
of the employer? In my
view, none at all.
[33]
It
is argued that the meaning of the phrase “…is terminated
for any reason other than gross dishonesty” contemplates
an
exclusively employer initiated “termination”. There is no
doubt that an employer-initiated dismissal would be covered
by the
phrase. But that conclusion is unimportant. The true question is
whether it can also bear the meaning that it can be a termination
at
the instance of either party. The utilisation of the neutral term
“termination” leaves that open. The word “termination”
describes a result not a rationale. If it is to be married to a
particular and exclusive rationale, that would need an express
articulation of that rationale to be read in a restricted way. In
this text there is nothing that promotes that conclusion. Moreover,
in the absence of a clear indication that the “termination”
was exclusively a “dismissal” the notion of
exclusivity
cannot be sustained.
[34]
Accordingly,
clause 12 does not require a termination at the instance only of the
employer, and upon her resignation, De Wet became
entitled to the
“severance package” in clause 12.3.
[35]
The
appeal on this claim therefore falls to be dismissed.
Costs
[36]
Both
parties seek costs.
[37]
Because
the appellant succeeded on one claim and not on the other, and
because the effort expended on each issue was comparable,
it seems
appropriate that neither party be awarded costs on appeal.
[38]
The
Labour court granted costs to De Wet. That costs order should be set
aside and similarly, the fate of costs on appeal should
apply to
those costs too.
The
Order
(1)
The appeal
on the leave pay claim is upheld.
(2)
The ruling
of the Court
a
quo
at
pages 128-130 of the record is set aside.
(3)
The costs
order made by the court
a
quo
is
set aside.
(4)
The leave
pay issue articulated in the statement of claim paragraphs 14 -17,
and in the statement of defence in response thereto,
is remitted to
the Court
a
quo,
for the resumption of the trial.
(5)
The appeal
on the severance pay claim is dismissed.
(6)
The order
of the Labour Court in respect of the Severance Pay Claim is
confirmed.
_________________
Sutherland
JA
Sutherland
JA (whom Coppin JA and Savage AJA concur)
APPEARANCES:
FOR
THE APPELLANT:
Adv Stelzner SC
Instru
cted
by B Schiff – Bagraims Attorneys
FOR
THE RESPONDENT:
Adv De Kock
Instructed
by R Carelse – Carelse Khan Attorneys
[1]
“
When
I
use
a word,” Humpty Dumpty said, in rather a scornful tone, “it
means just what I choose it to mean—neither
more nor less.”
“The question is,” said Alice, “whether
you
can
make
words mean so many different things.” “The question is,”
said Humpty Dumpty, “which is to be
master—that’s
all.” Lewis
Carroll
,
Through
the Looking-Glass,
chapter
6, p. 205 (1934 edition).
[2]
The business had
recently been incorporated when this employment contract was drawn
up and, ostensibly, some nostalgia must have
lingered for the ‘firm’
in this choice of term.