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[2018] ZALCCT 30
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Emetonjor v Kintetsu World Express SA (Pty) Ltd (C736/16) [2018] ZALCCT 30 (11 September 2018)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT CAPE TOWN
CASE
NUMBER: C 736/16
Not
reportable
Of
interest to other judges
In
the matter between:
KUMARIE
EMETONJOR
Applicant
and
KINTETSU
WORLD EXPRESS SA (PTY)
LTD
Respondent
Heard:
21-21 August 2018
Delivered:
11 September 2018
SUMMARY
:
Contractual claim for commission payments. BCEA s 77. Interpretation
of agreement.
JUDGMENT
STEENKAMP J:
Introduction
[1]
The applicant, Ms Kumarie Emetonjor, claims outstanding
commission payments from her erstwhile employer, Kintetsu World
Express
SA (Pty) Ltd.
The facts
[2]
The applicant was employed by the respondent from 1 October
2014 to 30 October 2016 as a business development manager. They
entered
into a contract of employment as well as a commission
agreement. She initially earned R780 000 per year (i.e. R65 000 per
month).
When she left the employ of the company, she was earning R67
700 per month.
[3]
The commission agreement included the following crucial
clause:
“
To qualify for the
commission scheme, you would have to have written total revenue
(excluding facility fees) of 2.6 x cost to company
over a rolling 24
month period”.
[4]
It is this rather badly drafted clause that has led to the
current dispute.
Evaluation
[5]
The applicant
seeks to enforce a contractual claim in terms of s 77 of the Basic
Conditions of Employment Act.
[1]
She claims that she was entitled to a commission payment worked out
on the basis of new business written up according to the following
formula:
2.6
X R780 000 = R2 028 000.
[6]
Based on that
formula, she calculates the commission due to her, not on the basis
of the “cost to company” that the
company actually
incurred over 24 months, but on her annual remuneration of R780 000.
She then calculates the commission as follows:
[2]
6.1 Applicant’s
cost to company over 12 months: 2,6 x R780 000 = R2 028 000.
6.2 Revenue generated by
applicant over 24 months (October 2014 to September 2016) = R 2 839
770.
6.3 R2 839 770 – R
2 028 000 = R811 770.
6.4 Commission: R811 770
x 8,5% =
R 69 000, 45.
[7]
The company
interprets the commission agreement differently. It stresses that the
revenue is calculated on the basis of cost to
company “over a
rolling 24 month period”. It then calculates the commission
payable (if any) as follows:
Period
Cost
to
Company
for
the period
Target
for
period
(CTC x 2.6)
Revenue Generated
for Period
Commission due
October 2014 to
December 2014
R65,000
x 3 =
R195,000
R507,000
R235,443.47
R0
January 2015 to
December 2015
R67,600
x12 =
R811,200
R2,109,120
R1,304,489.05
R0
January 2016 to
October 2016
R70,980
x 10 =
R709,800
R1,845,480
R1,110,295.14
R0
1.
Total target for 24 months
= R4,461,600
2.
Total revenue generated for same 24 month period =
R2,650,227.66
[8] Commission due:
R0 (as target for 24 months not achieved)
[9]
Whether or not the
applicant is entitled to any commission payment, therefore, rests on
the interpretation and application of the
commission agreement.
Evaluation
[10]
The
locus
classicus
with
regard to the interpretation of contracts has, until recently, been
the
dictum
of Wallis JA in
Natal
Joint Municipal Pension Fund
:
[3]
“
The present state
of the law can be expressed as follows. Interpretation is the process
of attributing meaning to the words used
in a document, be it
legislation, some other statutory instrument, or contract, having
regard to the context provided by reading
the particular provision or
provisions in the light of the document as a whole and the
circumstances attendant upon its coming
into existence. Whatever the
nature of the document, consideration must be given to the language
used in the light of the ordinary
rules of grammar and syntax; the
context in which the provision appears; the apparent purpose to which
it is directed and the material
known to those responsible for its
production. Where more than one meaning is possible each possibility
must be weighed in the
light of all these factors. The process is
objective not subjective. A sensible meaning is to be preferred to
one that leads to
insensible or unbusinesslike results or undermines
the apparent purpose of the document. Judges must be alert to, and
guard against,
the temptation to substitute what they regard as
reasonable, sensible or businesslike for the words actually used. To
do so in
regard to a statute or statutory instrument is to cross the
divide between interpretation and legislation. In a contractual
context
it is to make a contract for the parties other than the one
they in fact made. The ‘inevitable point of departure is the
language of the provision itself’, read in context and having
regard to the purpose of the provision and the background to
the
preparation and production of the document.”
…
“
Sometimes the
language of the provision, when read in its particular context, seems
clear and admits of little if any ambiguity.
Courts say in such cases
that they adhere to the ordinary grammatical meaning of the words
used. However that too is a misnomer.
It is a product of a time when
language was viewed differently and regarded as likely to have a
fixed and definite meaning, a view
that the experience of lawyers
down the years, as well as the study of linguistics, has shown to be
mistaken. Most words can bear
several different meanings or shades of
meaning and to try to ascertain their meaning in the abstract,
divorced from the broad
context of their use, is an unhelpful
exercise. The expression can mean no more than that, when the
provision is read in context,
that is the appropriate meaning to give
to the language used. At the other extreme, where the context makes
it plain that adhering
to the meaning suggested by apparently plain
language would lead to glaring absurdity, the court will ascribe a
meaning to the
language that avoids the absurdity. This is said to
involve a departure from the plain meaning of the words used. More
accurately
it is either a restriction or extension of the language
used by the adoption of a narrow or broad meaning of the words, the
selection
of a less immediately apparent meaning or sometimes the
correction of an apparent error in the language in order to avoid the
identified
absurdity.
In between these two
extremes, in most cases the court is faced with two or more possible
meanings that are to a greater or lesser
degree available on the
language used. Here it is usually said that the language is ambiguous
although the only ambiguity lies
in selecting the proper meaning (on
which views may legitimately differ). In resolving the problem the
apparent purpose of the
provision and the context in which it occurs
will be important guides to the correct interpretation. An
interpretation will not
be given that leads to impractical,
unbusinesslike or oppressive consequences or that will stultify the
broader operation of the
legislation or contract under
consideration.”
[11]
More recently, and
in the same court, Wallis JA held:
[4]
“
That summary is no
longer consistent with the approach to interpretation now adopted by
South African courts in relation to contracts
or other documents,
such as statutory instruments or patents. Whilst the starting
point remains the words of the document,
which are the only relevant
medium through which the parties have expressed their contractual
intentions, the process of interpretation
does not stop at a
perceived literal meaning of those words, but considers them in the
light of all relevant and admissible context,
including the
circumstances in which the document came into being. The former
distinction between permissible background and surrounding
circumstances, never very clear, has fallen away. Interpretation is
no longer a process that occurs in stages but is ‘essentially
one unitary exercise’ .
Accordingly it is no
longer helpful to refer to the earlier approach.”
[12]
This Court must therefore give a sensible meaning to the badly
drafted and somewhat ambiguous clause in the commission agreement,
“in the light of all relevant and admissible context, including
the circumstances in which the document came into being.”
But
the one person who could shed light on the circumstances in which the
document came into being was not called as a witness
by either party.
That is Mr Louis Coetzee, the national sales manager who drafted the
clause and left the company under a cloud
in 2016. It is therefore up
to the Court to give a sensible and businesslike meaning to the
clause in the light of the evidence
before it, the context and
purpose.
[13]
The applicant
contends for a meaning of the words “cost to company” in
the commission agreement to equate to her annual
remuneration (i.e.
over 12 months instead of 24 months) of R780 000 (in October 2016),
relying on this clause
[6]
in the
contract of employment:
“
Your remuneration
is determined on the basis of the total direct costs to the Company,
of employing you, excluding Unemployment
Insurance Contributions, and
any other statutory charges over which you have no control.”
[14]
On her version, she would be able to recover 2.6 times her
annual remuneration over 24 months, plus an additional 0,6% to
qualify
for the commission.
[15]
The company sees it otherwise. It would not be businesslike or
make commercial sense, it argues, for an employee barely to cover
her
own salary in order to qualify for the commission. It reads the
clause to mean that the employee would have to write total
revenue of
2.6 times cost to company “over a rolling 24 month period”,
i.e. a target of R 4 461 600 over 24 months.
[16]
This calculation – as set out in paragraph 7 above –
calculates the target over the rolling 24 month period based on
the
employee’s actual “cost to company” over the same
period. Her total cost to company over that period is R1
716 000,
translating to a target (x 2.6) of R 4 461 600. She generated revenue
of R 2 650 227, 66 over the same period.
Ergo
, she did not
achieve the target and does not qualify for commission over and above
her monthly remuneration. That is also how the
chief operating
officer, Mr Pierre Engelbrecht, understood it. Her remuneration
changed twice over the 24 month period; that is
the (rolling) basis
on which the target over 24 months was based.
[17]
The applicant’s interpretation does not make
businesslike sense. On her understanding, she should be given the
benefit of
two years’ income measured against one year’s
cost to the company. That is not plausible in the context of an
incentive
structure combined with a generous monthly salary.
[18]
In my view, the more plausible and businesslike interpretation
of the commission clause in the context of the incentive structure
is
that advanced by the company, i.e. to calculate both the target and
the “cost to company” over a “rolling
24 month
period”.
[19]
That interpretation has the consequence that the applicant
does not qualify for a bonus; but the contrary interpretation is not
the logical and businesslike one.
Conclusion
[20]
Given the interpretation of the clause set out above, the
applicant is not entitled to a commission payment. Her claim must
fail.
[21]
With regard to costs, I take into account that the applicant
is an individual; and that she may have had a
bona fide
understanding of the commission structure that differs from that of
the company. Taking into account the requirement of fairness,
I do
not consider a costs award to be warranted.
Order
The
applicant’s claim is dismissed.
_______________________
Anton
J Steenkamp
Judge
of the Labour Court of South Africa
APPEARANCES
APPLICANT:
Vernon
Kathemba of S Kondlo attorneys.
RESPONDENT:
Malcolm Lennox
Instructed
by Eversheds Sutherland.
[1]
Act
75 of 1997 (BCEA).
[2]
Although
she initially claimed commission of R 72000, Mr
Kathemba
argued
for the sum of R69 000 based on the above calculation.
[3]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012] 2 All SA 262
(SCA);
2012 (4) SA 593
(SCA) pars [18] and [25] - [26] (footnotes
omitted).
[4]
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
[2014] 1 All SA 517
(SCA);
2014 (2) SA 494
(SCA) par [12].
[6]
Capitalisation
as in the original.