Walkers Attorneys

by Amien Hoosain, Belinda van der Vyver, and Jerome Veldsman
Walkers Commercial Department

An owner of immovable property, to which members of the public are invited or permitted to have access, ought to reconsider its exposure to liability for physical harm (injury or death) suffered by individuals on the property, in the context of a judgment delivered by Nicholls J, on 3 April 2012, in the South Gauteng High Court, Johannesburg, in the case of Naidoo v Birchwood Hotel.. The matter may also be of interest to short-term insurers.

Prior to discussing the Naidoo case, we provide some background.

An owner of, for instance, a block of flats (Swinburne v Newbee Investments (Pty) Ltd 2010 (5) SA 296 (KZD), or a shopping complex (Holm v Sonland Ontwikkeling (Mpumalanga) (Edms) Bpk 2010 (6) SA 342 (GNP)), owes a duty of care to people present on the property. Accordingly, if someone suffers physical harm on the property, due to negligence of the owner, the latter will be liable for damages.

Owners protect themselves from liability for their negligence by (1) displaying disclaimer notices stating that "all who enter here do so at own risk", "the owner will not be liable for any damages", or similar wording; and/or (2) requiring a member of the public to sign some document including an exclusionary (or exemption) clause along the same lines.

Courts have in the past in many, but not all, instances held that a disclaimer notice (for instance, Durban's Water Wonderland (Pty) Ltd v Botha and Another 1999 (1) SA 982 (SCA)), and an exclusionary clause (for instance, Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA)), provides such protection to the owner.

The plaintiff in the Naidoo case was a paying guest in a hotel, and he was injured by a gate falling on him, as a result of negligence of the owner. Nicholls J found that an exclusionary clause (on the reverse side of the hotel registration card) was part of the contract between the owner and the plaintiff. The exclusionary clause was accordingly subjected to constitutional scrutiny.

Nicholls J found guidance in Barkhuizen v Napier 2007 (5) SA 323 (CC). The following two quotations are from the Barkhuizen case:

• "… the proper approach to the constitutional challenges to contractual terms is to determine whether the term challenged is contrary to public policy as evidenced by the constitutional values, in particular, those found in the Bill of Rights. This approach leaves space for the doctrine of pacta sunt servanda [agreements must be honoured] to operate, but at the same time allows courts to decline to enforce contractual terms that are in conflict with the constitutional values even though the parties may have consented to them."
• "Notions of fairness, justice and equity, and reasonableness cannot be separated from public policy. Public policy takes into account the necessity to do simple justice between individuals. Public policy is informed by the concept of Ubuntu."

Nicholls J determined fairness in the Naidoo case by considering the following two questions:

• Is the exclusionary clause objectively reasonable? If the answer is in the negative, the clause is unenforceable. If the answer is in the positive, the second question is to be considered.
• Notwithstanding the exclusionary clause being objectively reasonable, should it be enforced in the particular circumstances (of the litigating parties)?

Due to a technicality, Nicholls J assumed in favour of the owner that the answer to the first question (objective reasonableness) was in the affirmative; despite stating that: "… I am of the view that the exemption clause in which liability for negligently causing bodily injuries or death is excluded will not pass constitutional muster, …"

However, as to the second question (the particular circumstances), Nicholls J stated: "Naidoo was a guest in a hotel. To enter and egress is an integral component of his stay. A guest in a hotel does not take his life in his hands when he exits through the hotel gates. To deny him judicial redress for injuries he suffered in doing so, which came about as a result of the negligent conduct of the hotel, offends against notions of justice and fairness."

Accordingly, Nicholls J refused to enforce the exclusionary clause, and held that the owner liable for the damages suffered by the plaintiff.

Unless the Naidoo case is overruled (which is unlikely), exclusionary clauses relating to injury or death may henceforth be of no real consequence. The same fate may befall disclaimer notices.

Disclaimer notices and exclusion clauses usually also extend to exclusion of liability for damage to property. The prohibition of arbitrary deprivation of property is also enshrined in the Bill of Rights. An exclusionary clause relating to damage to property has not yet been subjected to constitutional scrutiny.

The incident in the Naidoo case preceded the coming into effect of the Consumer Protection Act 68 of 2008. The Act applies in the main (but not exclusively) to the supply of goods or services to natural persons in exchange for consideration. If an exclusionary clause is linked to a supply for consideration (such as a paying guest in a hotel), in terms of the CPA, the circumstances under which an exclusionary clause (relating to death, injury, or damage to property) will be valid are even more stringent than as determined in the Naidoo case.