Leo Boonzaier | Suitable candidates? City Power v Grinpal and Coughlan NO v Road Accident Fund

24 April 2014  South Africa’s Constitutional Court handed down two unanimous judgments on Monday. Both have special significance, because they were written by Acting Judge Zukisa Tshiqi. As we noted previously, the Judicial Service Commission (‘JSC’) has decided to appoint several female judges to act on the Court with a view to their permanent appointment. Judge Tshiqi, currently of the Supreme Court of Appeal, is one of them. Nominations for permanent appointment to the Constitutional Court close today, so the JSC’s shortlist should be released very soon. Will Judge Tshiqi be on it? In the coming weeks, the African Legal Centre will examine all of the candidates ultimately shortlisted. For now, we subject Monday’s two judgments to scrutiny.

The first judgment, City Power v Grinpal, has received media coverage because of its supposed implications for municipal government. In truth, the judgment is unremarkable. City Power, Johannesburg’s electricity provider, had outsourced the provision of electricity in Alexandra Township to Grinpal. When that arrangement ended, and City Power took the reigns, what was to happen to the project’s employees? The Labour Relations Act (‘LRA’) provides in section 197 that, where a business is transferred as a going concern from company A to company B, the employees of company A become the employees of company B automatically — in other words, regardless of whether company B wants to take over their employment. This is a way of protecting the employees, who should not lose their jobs because of corporate horsetrading. The Labour Court and Labour Appeal Court found that this section applied to City Power when it took over the provision of Alexandra’s electricity.

Before the Constitutional Court, however, City Power argued that, as an organ of state, it was exempt from this section of the LRA. This seems strange: why should an organ of state owe lesser obligations than a private employer to protect the employees of businesses it acquires? Section 197 certainly implies nothing of the sort. And City Power’s arguments were almost comically weak. It relied on the Municipal Systems Act, which requires municipalities to comply with certain procedures when recruiting employees. These procedures could not be complied with, it said, if it acquired employees automatically. Therefore, it argued, the Municipal Systems Act impliedly overrides section 197 in the case of municipal entities.

This argument has many problems. Most tellingly, section 210 of the LRA expressly says that, in the event of any conflict with other legislation (and barring irrelevant exceptions), the LRA prevails. So, in dismissing the appeal, and agreeing with the two lower courts, the Court’s judgment only tells us what was already obvious: section 197 of the LRA applies to all employers — just as it says. The judgment doesn’t disclose Tshiqi AJ’s abilities or convictions. Nor does the fact that she secured a unanimous judgment hold much significance: even in a Court that is regularly divided, it is hard to imagine how any of its judges could dissent from a conclusion so banal.

The second judgment is more interesting. Coughlan NO v Road Accident Fund was handed down nine weeks after the hearing. The Court’s judgments usually take about six months to appear — as in the case of even the straightforward City Power. Coughlan’s almost unprecedentedly quick turnaround time may prove fortuitous, since it means Tshiqi AJ’s judgment appears mere days before the nominees for permanent appointment to the Court are finalised. Or could the judgment, on a difficult issue, have benefited from further refinement?

Mr Coughlan, the applicant, represents two children whose mother was killed by a negligent driver. The Road Accident Fund (‘RAF’), the state scheme that provides compensation for death and injury on our roads, was liable to pay damages to the children for what our law calls “loss of support”. In other words, the children had to be paid damages in lieu of the money their mother would have used to care for them had she been alive.

The wrinkle was this: after their mother’s death, the children were cared for by their grandparents, who were paid foster care grants by the state. And the evidence seemed to show that, but for the mother’s death, the grandparents would never have applied for the grants. Accordingly, the RAF decided that the grants’ value fell to be deducted from the damages it owed the children. Otherwise, it said, the children would be doubly compensated for their mother’s death: once through their claim against the RAF, and once through the payment of the foster care grants.

The Supreme Court of Appeal (‘SCA’) agreed with the RAF. The nub of its reasoning was that “[t]he foster child grants served the very purpose which an award of damages would do: providing the children with the financial support lost as a result of the death of their mother.” It followed, according to the SCA, that if the children were to receive both full compensation from the RAF and the benefit of the foster care grants they would indeed be doubly compensated.

Writing for the Constitutional Court, Tshiqi AJ disagreed. Was she right to do so? Frankly, it is hard to say. The issue in Coughlan is genuinely very difficult, and the rules against double compensation have always been slippery. Tshiqi AJ’s conclusion may ultimately be correct. The applicant’s heads of argument, written by Geoff Budlender SC (and his junior, A D Maher), certainly make a compelling case. But the judgment’s own reasoning can be hard to follow, and is not always persuasive.

One key plank in Tshiqi AJ’s reasoning is that the foster care grant is paid to the foster parent, whereas the damages from the RAF are paid to the children. This is true, but not obviously helpful. As a matter of legal form, the recipients of the two payments are different. But, as a matter of substance, the children seem to be the envisaged beneficiaries of both. According to the Social Assistance Act and its regulations, the foster parent receives the grant only as long as the child is in his or her care and is adequately caring for the child. So it seems unduly technical, or at least undermotivated, to say, as the judgment does, that the child has “no claim” to the foster grant. True, the judgment does say at one point that foster grants are “designed to encourage fostering”. It thus suggests that the grants are meant to incentivise foster parenting, rather than (merely) to provide for the child’s needs. That may be right, but it is not obvious. Nor is it peripheral. The point requires full substantiation, not only oblique allusion.

As a second example, Tshiqi AJ says that “an award of damages for loss of support is no substitute for foster parenting”. Damages, she says, in a passage that tracks the applicant’s heads very closely, relate purely to the child’s material needs, whereas foster care aims to serve also the child’s psychological, emotional and developmental needs. She thus contrasts the damages award with the institution of foster parenting as a whole. But why is this the relevant comparison? Tshiqi AJ admits that “the RAF’s argument is limited to the monetary component of the foster care grant” — not to the entire institution of foster care. But doesn’t that scupper the comparison? Of course being a foster parent involves more than just spending money on one’s child. The RAF never claimed otherwise. It only sought to compare the two sources of money: the damages award and the grants.

Finally, Tshiqi AJ attaches much weight, in seeking to expose the SCA’s reasoning, to the fact that foster care grants are “not predicated on the death of a parent”. Well, as a general statement, this is plainly true. Many foster care grants are awarded because the biological parent is absent, or unwilling or unable to provide the children with adequate care. But how does that bald statement help here? After all, the SCA held that, in this particular case, “but for the death of the mother … the foster parent would not have claimed foster child grants”. Indeed, the SCA said this was the only conclusion available on the evidence. It also said that, in other cases, where this is not so, the foster care grants need not be deducted from the damages award.

Tshiqi AJ does not explain how her observation that not all foster care grants are consequent upon the death of a parent refutes the SCA’s reasoning. Far from denying this fact, the SCA made allowance for it. And Tshiqi AJ never takes issue with the SCA’s finding that, in this case, the foster care grant was predicated on the death of a parent. (Nor could she, if this was indeed the only evidentially permissible finding.) So what does she mean?

One is able to infer an answer by reading Mr Budlender SC’s heads. The general point is meant to show, as a matter of principle, that foster care grants are not compensatory in nature. But Zysset v Santam — which, according to the SCA, lays down the applicable test — attaches no relevance to the grants’ purpose in determining whether they will doubly compensate. As long as the damages award is compensatory, it follows that any other money acquired as a result of the wrong (in this case, the mother’s death) will lead to double compensation unless its value is deducted from the award. This is because the damages award cannot “compensate” for a loss that was never, in fact, incurred — or for one that was initially incurred but has already been offset by another source of income. It does not matter whether that other source is itself compensatory; the only question, according to Zysset, is whether that other source was caused by the wrong. That is why the SCA’s finding that “but for the death of the mother … the foster parent would not have claimed foster child grants” is so significant.

To be sure, Zysset recognised that a finding that double compensation will result does not end the enquiry. Even if the grants would doubly compensate the children, there is no need to deduct them from the damages award if they are res inter alios acta — in other words, if they are a matter between the state’s social security agency and the foster parents, and have nothing to do with the children’s damages award. And that would be an eminently justifiable conclusion on the arguments; many of the points Tshiqi AJ makes would fit snugly in the res inter alios acta enquiry. But she is adamant she does not even need to get there.

In short, the Court’s judgment seems irreconcilable with Zysset. There is nothing wrong with this in itself. The Constitutional Court is our country’s highest court. It can and must develop the law. The problem is that Tshiqi AJ barely mentions Zysset. She never states, still less analyses, the test that it authoritatively laid down. Nor, therefore, can she tell us whether, to what extent, and why she disagrees with its logic. This is a large part of why her judgment is so tricky to interpret. What has Zysset been replaced with? And what is the new framework or principle that lower courts must apply in future cases on double compensation? Coughlan provides none.

So where does all this leave us? There may well be reason to celebrate the upshot of Tshiqi AJ’s judgment, which is that more money will go to the plaintiffs and to other vulnerable children in need of foster care. Tshiqi AJ has thus added to the Constitutional Court’s admirable jurisprudence on children’s rights.

These points are important. But questions remain. A judge’s duty is not only to reach just outcomes. The quality of her reasons, when doing so, is equally important. Those reasons form the legal precedents, which, in the case of the Constitutional Court, bind the whole country. And it is only the force of a judge’s reasons that justify the public power that she holds.

These reasons will have special significance in the coming weeks, as the JSC draws up its shortlist. After all, a judge’s reasons are the only way to assess whether she has applied the care, moral clarity and analytical skill that South Africa’s apex court demands.

Leo Boonzaier

About Leo Boonzaier

Leo is an Editor for the African Legal Centre, and he reports on the Constitutional Court of South Africa. He has BSocSci and LLB degrees from the University of Cape Town and a BCL from the University of Oxford. He has worked as a visiting researcher at the Max Planck Institute for Private Law in Hamburg, Germany, and more recently as a law clerk at the Constitutional Court of South Africa. He is currently a doctoral student at the University of Oxford.