Impossibility of Performance in the Workplace

Imagine that you own an optometry practice located in a busy shopping mall. A fellow tenant of the mall accuses your employee of theft, and the management of the mall bans your employee from ever setting foot in the mall again. She can no longer enter your office at the mall without being ejected by mall security.

Obviously, in these circumstances, you are relieved from the duty to employ the employee concerned, and you simply terminate her contract – right? Wrong.

Our case law indicates that cases such as these – known as “supervening impossibility of performance” cases – must be treated as cases of incapacity. Cases of incapacity include instances where an employee becomes sick or injured, and therefore unable to perform their work, in whole or in part, and on a temporary or permanent basis.

The law sets out duties with which the employer must comply in such cases. In essence, the law expects the employer to accommodate and assist an employee who is incapacitated. The extent to which this must be done depends on the facts of each case. Where the incapacity arose in the course of the employee’s employment – for example a shop assistant falls off a ladder while packing goods on shop shelves, and injures herself – more is expected from the employer. More is also expected from a large employer who has “deep pockets” and can better afford to be generous.

In some cases, the period for which the employee cannot work is short, and the employer can do without the employee or get by through hiring a temporary replacement.

If, in the circumstances, the employee will be prevented from working for a period which is unreasonably long, the employer cannot simply dismiss and replace the employee, but must first consider all options short of dismissal. This might include, in the case of the optometrist’s employee, transferring her to another branch located outside of the mall from which she was banned. It might include adapting the employee’s work circumstances – for example,  providing seating to an employee who would normally be required to work standing – or adapting the employee’s duties to accommodate her incapacity. It might also involve providing the employee with alternative work if this is available – and as a last resort before dismissal a demotion might be justified.

It may well be that, having investigated all of these options together with the employee, there is no alternative to dismissal. Then the employer can rest assured that he or she has treated the employee fairly and that the resultant dismissal will be both substantively and procedurally fair. In the absence of taking the trouble to investigate these options, however, any dismissal is likely to be both substantively and procedurally unfair, and ultimately prejudicial to both parties.

banned

 

Making sense of Contracts – Presumptions in the Interpretation of Contracts

Presumptions are aids for obtaining clarity when reading and applying the terms of written contracts. They originate from what is known to happen in the ordinary course, and generally promote outcomes that are fair and reasonable. As contracts often leave things unsaid, presumptions help to close gaps. Presumptions apply in the absence of compelling considerations indicating that they should  not apply in a specific case.

These are the six most important presumptions relied upon when contracts are interpreted. They underline the importance of clear, careful and thoughtful drafting whenever an agreement is reduced to writing.

1. Words used in contracts, are used in their normal, ordinary sense

This includes a presumption that, where the parties are involved in a specific business or trade, the words used in their contract are used in the sense usually understood in that business or trade.

The exceptions will be when the context makes it clear that the parties intended a different meaning, or where applying the ordinary meaning would have absurd results.

2. The parties have chosen the words used in their contract carefully, and those words express their intention precisely and exactly

3. Where a particular word or expression is used more than once in a contract, that word or expression has the identical meaning throughout the contract

The exception will be where the context clearly indicates otherwise, or where applying a consistent meaning would lead to absurd or unjust results.

For example, where “the house” refers to 1 Quality Street in clause 1 of a lease agreement, the term “the house” should not be used in clause 5 to refer to a different property, unless clause 5 clearly specifies that the term has a different meaning in that clause, and specifies that meaning.

4. Different words and expressions used in a contract indicate different meanings (this is the corollary of the presumption above)

For example, one should not use different terms such as “the house”, “the property” and “the premises” in different clauses all to indicate the same thing, such as 1 Quality Street. In interpreting the contract one must assume that “the house” means something different to “the property”, which in turn means something different to “the premises”, or otherwise the drafters would have used the same term.

5. The contract contains no superfluous words and no purposeless terms

It is assumed that everything to be found in a contract, is there for a reason and with a specific purpose. For that reason, every word and expression in a contract must be taken account of and given effect to, unless no sensible meaning can be extracted from the word or expression used.

6. There are no omissions

The parties are assumed to not have left out of the contract any words which should have been inserted, that is the contract is assumed to be complete and comprehensive.

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What is “extinctive prescription” and why is it so important?

In legal proceedings, if a debtor successfully raises the defence of “extinctive prescription”, then the claim against him or her is made permanently unenforceable. This will be the case regardless of whether the claim is legally valid in all respects, or the creditor enforcing the claim has ample or even irrefutable evidence proving his or her claim.

The defence becomes available as a result of a period of time, set out in the law, having passed since the claim came into being. These periods of time are, largely, set out in the Prescription Act.

If a debtor satisfies a claim – for example, repays a debt – despite the fact that the defence of extinctive prescription was available to him or her because of the length of time that had passed since the debt became due, she or he cannot insist on repayment of the money paid. The debtor must raise the defence before satisfying the claim, or will have lost the opportunity. Where the claim is in court, the court is not allowed to raise the matter of prescription of its own accord, thereby potentially depriving a creditor of satisfaction of its claim.

These are the prescription periods set out in the Act:

  • Three years: debts not covered specifically elsewhere in the Act of other legislation;
  • Six years: debts arising from bills of exchange or negotiable instruments (such as cheques or promissory notes), or notarial contracts (with exceptions);
  • Fifteen years: debts to the state arising from sales, leases, loans or advances (with exceptions);
  • Thirty years: debts secured by mortgage bond, debts in respect of which a judgment has been issued, taxation debts (eg income tax, VAT), and debts to the state in respect of profits and royalties.

The prescription period starts to run as soon as the debt becomes legally due. A debt does not become due in law until the creditor is – or ought to be through the exercise of reasonable care – aware of the identity of the debtor and the facts giving rise to the debt. For example, where a person has suffered harm but has not been able to ascertain who caused the harm despite exercising reasonable care, the claim for damages for that harm will not prescribe at once.

Certain events delay the running of prescription, for example the creditor lacking legal competence (due to factors such as youth or a period of mental incapacity).

Prescription can be interrupted by the debtor acknowledging his or her liability, or the creditor serving upon the debtor legal process claiming the debt. If the creditor manages to serve summons on the debtor claiming payment of the debt one day shy of the three year period ending, then the claim will remain valid pending finalisation of the court case.

 

Disputes with Pension Funds

What can a member or former member of a pension fund do to resolve a dispute with the fund, or with their employer about their participation in the fund?

Four main types of disputes arise:
• The fund may exercise its powers improperly, or do something which it is not entitled to do;
• The fund can be poorly administered, causing you prejudice;
• You and the Fund may disagree on an important fact or matter of law;
• Your employer may not be fulfilling its duties where your membership of the Fund is concerned.

The Pension Funds Act sets out the procedure you may follow in order to have your dispute addressed.

First, you are required to send a written complaint to the Fund (or employer, if applicable). You must keep a copy of your complaint as well as your proof that it was sent. They have 30 days in which to respond to your complaint. If they do not respond, or if their response does not resolve the dispute to your satisfaction, you may take the matter to the Pension Funds Adjudicator (PFA).

The PFA has a simple online form which enables you to submit your complaint to them quickly and easily. It is found on their website at http://www.pfa.org.za. You can only submit a complaint to the PFA once you have first complained to the Fund (or employer) and 30 days have elapsed.

The online form helps ensure that you submit all necessary information. In brief, this includes your personal details, the Fund’s details (or employer’s), your dates of joining and leaving the Fund (or employer), your complaint in detail, the outcome you desire, as well as proof that you first complained to the Fund (or employer). Copies of all relevant documents must be supplied.

The PFA may require a written response from the Fund (or employer) and may also investigate the matter further by phoning the parties or engaging in correspondence. A decision will be made in writing and communicated to the parties, and this decision has the force of a judgment of a court. If the PFA rules that the Fund must make a payment to you of money, then this is enforceable via the sheriff of the Court in the same way as a court order.

The Consumer Commission – off to a poor start

Since the passing into law of the Consumer Protection Act, many consumers, businesses and legal professionals have been waiting for the new Act to be tested in reported cases, to provide practical guidance for the future.

One such case came before the National Consumer Tribunal just a fortnight ago. The case was brought by Kia Motors, against the National Consumer Commission. The Commission had earlier issued a compliance notice against Kia, under the CPA. Kia challenged the lawfulness of the compliance notice on a number of grounds. The Commission failed to defend the challenge, neither filing papers nor appearing at the hearing of the matter.

By way of background, in 2010 a Mrs J brought her two-year old Tata car to Kia for servicing. While her car was at Kia’s premises, another car reversed into it, causing damage to the fender. Kia provided and installed a replacement fender to Mrs J’s vehicle, at its own cost. Several months later, Mrs J indicated that she was not satisfied with these repairs. She was invited to bring in her vehicle to discuss her unhappiness but she elected not to. Instead she approached Commission, and lodged a complaint against Tata, the original retailer of her vehicle. Tata clearly had nothing whatsoever to do with the dispute, and after filing papers indicating as much, the complaint was directed against Kia instead.

After Kia filed its response to the complaint, the Commission went ahead and issued a compliance notice against Kia. Remarkably, that notice required Kia to “replace the vehicle or refund the deposit, all instalments and repair costs”.

Not surprisingly, Kia was unwilling to accept this notice, and challenged it on a number of grounds before the Tribunal. These included that the incident took place before the CPA became law, that there were no grounds on such which a notice could be issued, and there had been no investigation as required by the Act before the notice was issued.

The Tribunal agreed that Kia had genuine cause for complaint. The incident had indeed occurred before the CPA came into effect. The damages were also delictual in nature – arising from a collision of vehicles – which was not the subject-matter of the CPA at all. The Commission had issued the notice without undertaking the necessary investigation. The Commission also lacked the power to order a party to repay amounts received – only the Tribunal enjoyed that power.

In the end, the compliance notice was set aside, however without any order holding Mrs J or the Commission liable for Kia’s costs. Effectively, Kia was compelled to go to great trouble and expense to undo the Commission’s bungling, and restore the original position with no benefit to itself (or Mrs J for that matter).

A review of other reported cases emerging from the Tribunal sitting in review of notices issued by the Commission, suggests that this is not an isolated instance. A number of notices have been issued concerning matters outside the scope of the Commission’s powers, without proper investigation. The Commission is not engaging with the Tribunal’s processes to defend its actions, but is simply allowing hearings to proceed in its absence, with the effect of reversing what it has done. This is a worrying early trend for such a new institution.

A recent Auditor-General’s report had much criticism for the management of the Commission, and an acting Commissioner currently holds the reins pending a new appointment by Trade and Industry.

Consumer website Hellopeter.com is replete with overwhelmingly negative feedback from the public concerning the Commission’s performance thus far.

While the CPA is generally looked upon as a positive and exciting development for consumers, without an effective and credible mechanism for enforcement, the Act will not live up to its promise. It is hoped that new leadership will soon be appointed who will breathe life into the Commission and enable it to fulfil its mandate to the public in an efficient and sensible manner.

Persons wanting to refer complaints under the CPA to the Commission may download the necessary form at their website http://www.nccsa.org.za.