Product Liability: Who Is A “Consumer”?

In the case of Halstead-Cleak, Derek Anthony vs Eskom Holdings Limited (26360/2014) [2015] VAT ZAGPPHC Mr Halstead- Cleak sustained severe electrical burns on his forehead, chest, arms and thighs when he inadvertently came into contact with a low hanging live power line while riding his bicycle on a footpath.

Section 61 of the Consumer Protection Act (CPA) holds the producer, distributor or retailer liable of any harm caused wholly or partly as a consequence of:

  • the supplying of unsafe goods;
  • a product failure, defect or hazards in any goods or
  • the inadequate instructions or warnings provided to the consumer pertaining to any hazards arising from or associated with the use of any goods.

The producer, importer, distributor, or retailer will be held liable in irrespective of whether the harm resulted from any negligence on their part.

Section 61(5) further states that harm for which a person may be held liable in terms of this section includes the death of, or injury to, any natural person; or an illness of any natural person.

The High Court determined that the wording of Section 61(5) makes it clear that liability arises not only in respect of “consumers” as defined in the CPA or consumers in the general sense, but to “any natural person”. Mr Halstead-Cleak need not, therefore be a “consumer” in the contractual sense as defined in order for Eskom to be liable to him.

The judgement as it then stood, had far reaching implications: a producer, importer, distributor or retailer, as case may be, may have been held liable, not only for harm suffered by consumers of goods or services supplied by them, but also to bystanders.

The case was further considered by the Supreme Court of Appeal (SCA), who came to a different conclusion than that of the High Court above.

The SCA stated that from the definitions, the Preamble and purpose of the Act, it is clear that the whole tenor of the CPA is to protect consumers. The CPA must therefore be interpreted keeping in mind that its focus is the protection of consumers.

Who is the “consumer” then?

In interpreting section 61 of the CPA, the SCA looked at the definition of “transaction” and “consumer” as defined in section 1 of the CPA. In particular the SCA noted that a “consumer” in section 1 is a person to whom goods or services are marketed in the ordinary course of a supplier’s business, or who has entered into a transaction with a supplier in the ordinary course of a supplier’s business. The definition includes a person who is a user of the goods or a recipient or beneficiary of the particular service irrespective of whether that person was a party to a transaction concerning the supply of the goods or services. However the court further noted that the important features here are that there must be a transaction to which a consumer is party, or the goods are used by another person consequent on that transaction.

In addition and taking into consideration that section 61 is a section in Chapter 2 of the CPA dealing with “Fundamental Consumer Rights”, the SCA stated that it is clear that the harm envisaged in section 61 must be caused to a natural person mentioned in s 61(5)(a), in his or her capacity as a consumer.

The court came to the conclusion that “a consumer is a person who buys goods and services, as well as persons who act on their behalf or use products that have been bought by consumers.”

In the premises the SCA held that Mr Halstead-Cleak was not a consumer vis-à-vis Eskom as he did not enter into any transaction with Eskom as a supplier or producer of electricity in the ordinary course of Eskom’s business. Mr Halstead-Cleak was not utilising the electricity, nor was he a recipient or beneficiary thereof. The situation may have been different if Mr Halstead-Cleak suffered the electrical burns in the course of utilizing the supply of the electricity to his home or otherwise in the course of his use of electricity.

Although section 61(1)(b) makes provision for liability due to a product failure, defect or hazard in any goods. It was not found that the harm suffered by Mr Halstead-Cleak was as a result of the electricity itself failing, or that the electricity had a defect. Failing in this context would be if the electricity were unable to perform in the intended manner.

The situation may have been different if Mr Halstead-Cleak suffered the electrical burns in the course of utilizing the supply of the electricity to his home or otherwise in the course of his use of electricity.

By Kgolofelo Makhuthudisa
kgolofelo@dyason.co.za

Tubular Holdings (Pty) Ltd and DBT Technologies (Pty) Ltd

The essence of the disputes in these matter was about the interpretation of clause 20 of the Standard FIDIC conditions of contract which deals with a dispute resolution procedure.

Background

DBT Technologies is the main subcontractor to one of the main contractors to Eskom on the Kusile Project. Part of this subcontracted project was in turn subcontracted by the Respondent to the applicant – Tubular Holdings.

1.1.     The relationship between the Applicant and the Respondent is for present purposes, that between a Contractor and Employer in a construction contract. Their contract is under the Standard FIDIC Conditions of Contract. Clauses that are of particular relevance to this High Court application are sub – clauses 20.4 and 20.6.

1.2.     The clauses provide that disputes between the parties are in first instance, to be referred to a Dispute Adjudication Board (DAB) for a decision on that dispute. A party that is dissatisfied with that decision may give notice of its dissatisfaction after which it is to be referred to Arbitration (if not settled by adjudication) but the decision of the DAB in the interim remain binding on both parties who shall promptly give effect to it.

The dispute

2.1.     A dispute arose between the parties and it was referred to DAB and DAB made a decision on the matter. The Respondent was dissatisfied with the merits of the decision. There was no suggestion to nullify the decision on jurisdictional or other grounds.

2.2.     The Respondent gave notice of its dissatisfaction with the decision.

2.3.     In this application, the Applicant demands, in the interim, compliance with the decision as the Respondent refuses to so comply.

2.4.     The Applicant submitted that the parties are required to give prompt effect to the decision by the DAB which is binding unless it is set aside by agreement or arbitration following a notice of dissatisfaction, whereas the Respondent says that the mere giving of a notice of dissatisfaction undo the effect of the decision.

Determination by the court

The Court was called upon to decide on the correct interpretation and make a determination which to it seemed appropriate.

Analysis of evidence by the court

As the real dispute was about the interpretation of clauses 20.4 and 20.6, the Court began by quoting the relevant provisions of these clauses and then turned to a discussion of them.

4.1.     Clause 20.4 (4)

‘The decision shall be binding on both Parties who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or an arbitral award as described below. Unless the contract has already been abandoned, repudiated or terminated, the contractor shall continue to proceed with the Works in accordance with the Contract.’

4.2.     Clause 20.4 (5)

‘ If either party is dissatisfied with the DAB’s decision, then either Party may, within 28 days after receiving the decision, give notice to the other Party of its dissatisfaction. If the DAB fails to give its decision…….

4.3.     Clause 20.4 (7)

‘If the DAB has given its decision as to the matter in dispute to both parties and no notice of dissatisfaction has been given by either Party within 28 days after it received the DAB decision, then the decision shall become final and binding upon both parties.’

4.4.     Clause 20.6 (10

‘Unless settled amicably or otherwise agreed by the parties in writing, any dispute in respect of which the DAB decision (if any) has not become final and binding shall be finally settled by arbitration in accordance with this sub – clause 20.6.

The effect of these provisions is that the decision shall be binding unless and until it has been revised as provided. The moment the decision is made, the parties are required to promptly give effect to it. Given that the a dissatisfied party has 28 days within which to give its notice of dissatisfaction, it follows that the requirement to give prompt effect will precede any notice of dissatisfaction.

The last sentence of clause 20.4 (4) requiring the contractor to continue to proceed with the Works, presupposes that work is not interrupted by a notice of dissatisfaction with a decision.

The Court cited an unreported decision of Esor Africa ( Pty) Ltd / Franki Africa (Pty) Ltd JV and Bombela Civils JV (Pty) Ltd SGHC case no. 12/7442, where the parties referred a dispute to DAB in terms of clause 20.4 of the FIDIC Conditions of Contract. The DAB gave its decision which was in favour of the Contractor. The employer refused to make payment in terms of the decision relying, inter alia, on the fact that it had given a notice of dissatisfaction. The Contractor approached the Court for an order compelling compliance with the decision.

The Court in Bombela found that the intention and purpose of the DAB process was the fact that neither payment nor performance could be withheld when the parties are in dispute pending the outcome of Arbitration. Upon determination of the dispute by the Arbitrator a reconciliation or adjustment in payment will then be put into effect.

Decision of the court

The Court in casu concurred with the decision in Bombela as it is supported by a number of judgements, both here and abroad, dealing with similar provisions in different standard forms of construction contracts. The Court cited among others, Stocks and Stocks ( Cape) ( Pty) Ltd V Gordon and others NNO 1993 (1) SA 156 (T), Freedman NO and another V Eskom Holdings Limited, SGHC case no. 4336/09, 23 April 2010 unreported, Basil Read (Pty0 Ltd v Regent Devco (Pty) Ltd, SGHC case no. 41108/09 in paragraphs (51) and (56) unreported. The Court also referred to the United Kingdom where the matter is dealt with by statute but has the same effect as the clauses referred to in the present case.

The Court found therefore that the terms of the relevant contractual provisions were perfectly clear; the parties were obliged to promptly give effect to a decision by the DAB. The issue of a notice of dissatisfaction does not in any way detract from this obligation. Until revised, the decision binds the parties and they must give prompt effect thereto.

The finding of this court has far reaching consequences for both contractors and employers in standard form of contracts, where a determination has been made by the adjudicator, same must be adhered to by the unsuccessful party despite a pending referral of the dispute for arbitration.

By John Letsoalo
johnl@dyason.co.za

The astonishing Labour Appeal Court decision: “Trying your luck” is sexual harassment

It is mostly advised that you must be careful of what comes out of your mouth. Words said could change your life in a split second. That’s what happened in the case of Campbell Scientific Africa (PTY) LTD v Adrian Simmers and others 2014, a Labour Appeal Court (LAC) decision in Cape Town.

Mr Simmers, a 48 year old installation manager employed by Campbell Scientific Africa, was dismissed following a disciplinary hearing for saying:

do you need a lover tonight?”

and

come to my room if you change your mind

to a 23 year old Ms Catherine Markside who was employed by Loci Environmental (Pty) Ltd, through which company Campbel was contracted as part of a consortium to work on a joint project in Botswana.

CCMA: Commission for Conciliation, Mediation and Arbitration

Mr Simmers felt aggrieved with his dismissal and referred the dispute to the CCMA. The commissioner found that Mr Simmers’s conduct constituting sexual harassment with verbal sexual advances made to Ms Markside, was unwelcome and related to the workplace. He also found that Mr Simmers had acted in an unprofessional manner in making those remarks. The sanction of dismissal was accordingly found to be procedurally and substantively fair.

Labour Court

Dissatisfied with the commissioner’s award, Mr Simmers sought its review by the Labour Court. Steenkamp J considered the words said to determine whether they constitute sexual harassment or mere sexual attention, and if the words constitute sexual harassment, whether they were sufficient enough to justify a dismissal. The court also took into consideration that the parties were not co-employees and found it relevant that they were not co-employees. The court expressed to say that when Markside made it plain clear to Simmers that his advances were not welcomed, he backed off.

Furthermore, the advance was an inappropriate sexual one, but did not cross the line to constitute sexual harassment, and the parties do not even work for the same employer.

The court held that, a fair sanction would be have been some form of corrective discipline including a written or final written warning for inappropriate conduct. Mr Simmers did behave unprofessionally, creating a bad impression and leading her to consider his conduct inappropriate and surprising, dismissal was not a fair sanction for a first offence when a form of progressive discipline was appropriate. The decision of the commissioner was found to fall outside of the realm of reasonableness required with the sanction imposed unfair. Consequently, Mr Simmers’ dismissal was held to be substantively unfair and he was retrospectively reinstated into his employment with final written warning valid for 12 months.

Labour Appeal Court

Campbel appealed the labour court’s decision.

This court agreed with the decision by the commissioner at the CCMA and found that the Labour Court erred in finding that the advances made constituted inappropriate sexual attention and not harassment, were not serious and did not impair the dignity of Ms Markside, who was not a co-employee, with whom there existed no disparity of power and when the two were unlikely to work together in the future.

To the contrary, the unwelcome and inappropriate advances were directed by Mr Simmers at a young woman close to 25 years his junior whose employment had placed her alone in his company and that of Mr Le Roux in rural Botswana. Underlying such advances, lay a power differential that favoured Mr Simmers due to both his age and gender. Ms Markside dignity was impaired by the insecurity caused to her by the unwelcome advances and by her clearly expressed feelings of insult. As much was apparent from her evidence that she was insulted, felt “incredibly nervous” given the proximity of the sleeping arrangements at the lodge and that she programmed Mr Le Roux’s number onto her phone “just in case anything happened”.

In SA Broadcasting Corporation Ltd v Grogan NO and Another, Steenkamp AJ (as she was at the time) observed that sexual harassment by older men in positions of power has become scourge in the workplace.

The labour court erred in treating the conduct as simply an unreciprocated sexual advance in which Mr Simmers was only “trying his luck”. The advances made affected Markside’s dignity and integrity, which is the protection our Constitution affords. The labour court overlooked that.

The court concluded to say the arbitration award was justifiable and the appeal must be upheld.

Conclusion

Even though I am sceptical about the decision of the Labour Appeal Court’s approach in the matter, this court does, however protect the interests of young female employees in an employment environment. Sexual advances can be made by both male and female, but it can only be sexual harassment if those advances impair your dignity and integrity, according to this court.

By Avela Makunga
avela@dyason.co.za