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[2016] ZASCA 150
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Eskom Holdings Limited v Halstead-Cleak (599/2015) [2016] ZASCA 150; 2017 (1) SA 333 (SCA) (30 September 2016)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 599/2015
In
the matter between:
ESKOM
HOLDINGS
LIMITED
APPELLANT
and
DEREK
ANTHONY
HALSTEAD-CLEAK
RESPONDENT
Neutral
citation:
Eskom
Holdings Limited v Halstead-Cleak
ZASCA
150 (30 September 2016)
Coram:
Lewis
and Willis JJA and Schoeman, Fourie and Makgoka AJJA
Heard:
13
September 2016
Delivered:
30
September 2016
Summary:
Section
61
of the
Consumer Protection Act 68 of 2008
does not create strict
liability on the part of a supplier of electricity if the plaintiff
is not a consumer vis-à-vis it.
ORDER
On
appeal from:
Gauteng
Division of the High Court of South Africa (Pretoria) (Baqwa J
sitting as court of first instance): judgment reported
sub
nom Halstead-Cleak v Eskom Holdings Ltd
2016
(2) SA 141
(GP)
1
The appeal is upheld with costs.
2
The order of the court below is replaced with the following:
‘
1
(a) The defendant is not liable to the
plaintiff in terms of the provisions
of s 61 of the Consumer
Protection Act 68 of 2008.
(b)
The plaintiff’s claim, based on those provisions, is dismissed,
with costs, those costs to include
the costs of the pre-trial
conference of 19 February 2015 and the costs of the trial that
commenced on 23 February 2015.
(c)
The plaintiff’s action is remitted to the trial court for the
determination of the remaining issues
in the action.’
JUDGMENT
Schoeman
AJA (Lewis and Willis JJA and Fourie and Makgoka AJJA
concurring)
[1]
The
central question in this appeal is whether the appellant, Eskom
Holdings Ltd (Eskom), can be held strictly liable in terms of
s 61 of
the Consumer Protection Act 68 of 2008 (the Act) for harm caused to
the respondent, Mr Derek Anthony Halstead-Cleak, by
a low hanging
power line which was not supplying or required to supply electricity
to anyone.
The
background
[2]
On 11 August 2013 the respondent, one of a group of four cyclists,
came into contact with a low hanging live power line spanning
a
footpath they were cycling on. He sustained severe electrical burns
and issued a summons against Eskom for the damages he had
suffered.
[3]
The respondent’s claim is based on (a) Eskom’s role as
the sole supplier or producer of electricity on the national
grid and
its control of all power lines not falling under the control of any
local authority or municipality; (b) the strict liability
of Eskom as
the producer or supplier of electricity provided for in terms of s 61
of the Act; and in the alternative (c) delict,
in that Eskom
negligently and wrongfully caused the respondent’s damages.
[4]
The parties agreed that the limited issue pertaining to whether Eskom
was liable in terms of s 61 of the Act would be separately
adjudicated with the remaining issues to stand over for later
determination, if necessary. It was so ordered in terms of Uniform
rule 33(4).
[5]
The Gauteng Division of the High Court of South Africa (Pretoria) (to
which I shall refer for the sake of convenience as the
high court)
found that Eskom was 100 per cent liable for the respondent’s
injuries in terms of the provisions of s 61 of
the Act. The appeal is
with the leave of the high court.
The
pleadings
[6]
The claim, based on s 61 of the Act, avers that Eskom was a producer
or supplier of electricity or a ‘service’ in
terms of the
Act while the production or generation of electricity constituted
‘supply’ and ‘market’ as
defined in the Act.
The respondent was a person mentioned in s 61(5) of the Act, that is
a natural person who had been injured,
or a ‘consumer’,
and had suffered injuries which constituted harm as envisaged in ss
61(1) and 61(5) of the Act due
to the alleged supply of unsafe goods
and/or defective goods, or a hazard in the goods resulting in the
injuries sustained. The
goods were the electricity generated,
supplied and permitted to be present in the lines spanning the
footpath.
[7]
Eskom’s plea was broadly that it was a licensee in terms of the
provisions of the Electricity Regulation Act 4 of 2006
and
responsible for the relevant power line through which it conducted
electricity. Eskom was made aware that the respondent had
come into
contact with the power line on 11 August 2013 whilst riding a
bicycle. Subsequently the employees of Eskom inspected
the power
lines and discovered that all three conductors of the power line had
been vandalised by the theft of stay rods, which
resulted in the
power lines hanging in a low position. Eskom denied that, in the
context of this particular accident, it was a
producer or supplier as
defined in the Act or that the respondent was a consumer as defined.
Eskom denied that the incident arose
as a result of the supply of
unsafe goods or a product failure, defect or hazard in any goods or
inadequate instruction or warnings.
Furthermore, Eskom could not have
been expected to discover the state of the power line.
[8]
In terms of the common law a manufacturer could not be held strictly
liable in delict for any harm caused. In
Wagener
v Pharmacare Ltd; Cuttings v Pharmacare Ltd
[1]
it was found that if the common law is to be extended to make
provision for strict liability, it is the Legislature’s duty
to
do so. That came to fruition with the promulgation of the Act.
The
interpretation of the Act and s 61 in particular
The
applicable definitions and tools of interpretation
[9]
In interpreting the Act it is instructive to refer to the principles
enunciated in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2]
and
Novartis
SA (Pty) Ltd v Maphil Trading (Pty) Ltd
[3]
that the interpetative process involves ascertaing the intention of
the legislature
but
considers the words used in the light of all relevant and admissible
context, including the circumstances in which the legislation
came
into being.
Furthemore,
as was said in
Endumeni
‘.
. a sensible meaning is to be preferred to one that leads to
insensible or unbusinesslike results. . .’
[10]
The
long title of the Act provides that it is to promote a
‘
.
. . fair, accessible and sustainable marketplace for consumer
products and services and for that purpose to establish national
norms and standards relating to consumer protection, to provide for
improved standards of consumer information, to prohibit certain
unfair marketing and business practices, to promote responsible
consumer behaviour, to promote a consistent legislative and
enforcement
framework relating to consumer transactions and
agreements. . .’
[11]
The Green Paper discussion of the Act makes it clear that a broad
spectrum of consumers needed protection:
‘
Perhaps
one of the greatest pitfalls in most consumer protection laws in
South Africa, is the absence of a uniform definition of
"a
consumer". This has resulted in a difficulty for enforcers to
accurately identify individuals that the State seeks
to protect.
Consumers must be defined
broadly
as individuals who purchase goods and services, and must include
third parties who act on behalf of the consumer. . . .’
[4]
[12]
In terms of the provisions of s 2(1), the Act must be interpreted in
a manner that gives effect to the purpose of the Act as
set out in s
3. That purpose is to promote and advance the social and economic
welfare of consumers, in particular vulnerable consumers,
in South
Africa.
[5]
If there is an inconsistency between the Act and any other
legislation both Acts apply concurrently, to the extent that it is
possible. If it is not possible, the provisions that extend the
greater protection to a consumer prevail over the alternative
provision.
[13]
Section 5 concerns the application of the Act. The relevant
provisions apply to every transaction occurring within South Africa
for the supply of goods or services or the promotion of goods or
services. Section 5(5) provides that if any goods are supplied
within
the Republic to any person in terms of an exempt transaction, those
goods and the producer are nevertheless subject to s
61.
[14]
A ‘transaction’ is defined in s 1 as an agreement between
two or more persons for the supply of goods or services
for
consideration in the ordinary course of business. The instances where
consideration is not a requirement for a transaction
and deemed to be
transactions are set out in s 5(6) and include the supply of goods or
services in the ordinary course of business
to members of a club,
trade union, association, society or a voluntary association of
people for a common purpose.
[15]
The definition of ‘consumer’ in s 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. This has the effect that the
recipient of a gift from a consumer would also be considered
a
consumer in terms of the Act. The important features to
note
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.
[16]
From the definitions, the Preamble and purpose of the Act, it is
clear that the whole tenor of the Act is to protect consumers.
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. There are categories of persons who fall outside this
definition, but they are deemed to be consumers in terms of
the
provisions of s 5(6) as set out above. These purchases are made by
way of transactions. The Act must therefore be interpreted
keeping in
mind that its focus is the protection of consumers.
Section
61 of the Act
[17]
Section 61 falls within Chapter 2 of the Act that deals with
‘Fundamental Consumer Rights’ and specifically Part
H
thereof, which concerns the ‘Right to fair value, good quality
and safety’. Section 61(4) deals with defences to
a claim
brought against a producer, or importer, distributor or retailer in
terms of s 61, but it is common cause that the defences
do not apply
in this case. The salient provisions of s 61 are:
‘
Liability
for damage caused by goods
(1) Except to the
extent contemplated in subsection (4), the producer or importer,
distributor or retailer of any goods is liable
for any harm, as
described in subsection (5), caused wholly or partly as a consequence
of –
(a)
supplying
any unsafe goods;
(b)
a
product failure, defect or hazard in any goods; or
(c)
inadequate
instructions or warnings provided to the consumer pertaining to any
hazard arising from or associated with the use of
any goods,
irrespective
of whether the harm resulted from any negligence on the part of the
producer, importer, distributor or retailer, as
the case may be.
(2) A supplier of
services who, in conjunction with the performance of those services,
applies, supplies, installs or provides access
to any goods, must be
regarded as a supplier of those goods to the consumer, for the
purposes of this section.
(3) If, in a
particular case, more than one person is liable in terms of this
section, their liability is joint and several.
(4) . . .
(5) Harm for which a
person may be held liable in terms of this section includes –
(a)
the
death of, or injury to, any natural person;
.
. .
and
(d)
any
economic loss that results from harm contemplated in paragraph
(a)
,
(b)
or
(c)
.
(6) Nothing in this
section limits the authority of a court to –
(a)
assess
whether any harm has been proven and adequately mitigated;
(b)
determine
the extent and monetary value of any damages, including economic
loss; or
(c)
apportion
liability among persons who are found to be jointly and severally
liable.’
[18]
The words creating liability used in s 61(1) are defined in s 53(1):
‘
(1)
In this Part, when used with respect to any goods, component of
goods, or services –
(a)
‘defect’ means –
‘
(i)
any
material imperfection in the manufacture of the goods or components,
. . . that renders the goods or results of the service
less
acceptable than persons generally would be reasonably entitled to
expect in the circumstances; or
(ii)
any characteristic of the goods or components that renders the goods
or components
less useful,
practicable
or safe than persons generally would be reasonably entitled to expect
in the circumstances
;
(b)
‘
failure’
means the inability of the goods to perform in the intended manner or
to the intended effect;
(c)
‘hazard’ means a
characteristic that –
(i)
has been identified as, or declared to be, a hazard in terms of any
other law;
or
(ii)
presents a significant risk of personal injury to any person, or
damage to property,
when the goods are utilised; and
(d)
‘unsafe’ means that,
due
to a characteristic, failure, defect or hazard, particular goods
present an extreme risk of personal injury or property damage
to the
consumer or to other persons’
[19]
Electricity
is ‘goods’ as defined in s 1 of the Act.
Further
definitions that are relevant are:
(a)
‘Supply’
when
used as a verb in relation to goods, includes sell, rent, exchange
and hire in the ordinary course of business for consideration.
(b)
A ‘producer’ with regard to particular goods is defined
as a person who generates or otherwise
produces the goods within
South Africa with the intention of making them available for supply
in the ordinary course of business.
(c)
‘Market’ when used as a verb means to promote or supply
any goods or services.
[20]
‘Ordinary course of business’ is not defined in the Act
but it has been the subject of interpretation in respect
of, inter
alia, insolvency matters. In
Van
Zyl & others NNO v Turner & another NNO
[6]
Brand J, when discussing whether a disposition was made in the
‘ordinary course of business’, found that the test is
an
objective one and that regard must be had to all the circumstances,
including the actions of both parties to the transaction.
[21]
Taking into
account all the definitions and the wording of s 61, the respondent
had to establish
that,
first, in respect of that incident, the respondent came to harm and
secondly that Eskom was a producer of electricity. Furthermore,
that
the harm was caused wholly or partly as a consequence of Eskom
selling unsafe electricity in the ordinary course of business,
for
consideration, or there was a product failure, defect or hazard in
the electricity. Taking into consideration that s 61 is
a section in
Chapter 2 of the Act dealing with ‘Fundamental Consumer Rights’
it is clear that the harm envisaged in
s 61 must be caused to a
natural person mentioned in s 61(5)(
a
),
in his or her capacity as a consumer. This is the only businesslike
interpretation possible. The reason why reference is made
to a
‘natural person’ is clearly to distinguish it from
‘person’ which may include a ‘juristic person’
or ‘consumer’ which may also include a ‘juristic
person’.
The
facts
[22]
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 [the Act] or consumers
in the general sense, but to “any natural person”
. . . .
The plaintiff need not, therefore be a “consumer” in the
contractual sense as defined in order for the Defendant
to be liable
to him.’ However, this loses sight of the fact that there
should be a supplier and consumer relationship for
Eskom to be
strictly liable for harm, as the Act’s purpose is to protect
consumers. In this instance the respondent is not
a consumer
vis-à-vis Eskom as: (a) the respondent did not enter into any
transaction with Eskom as a supplier or producer
of electricity in
the ordinary course of Eskom’s business; and (b) the respondent
was not utilising the electricity, nor
was he a recipient or
beneficiary thereof.
[7]
[23]
The supply of unsafe electricity also presupposes that Eskom sold the
electricity in the ordinary course of business for consideration.
Similarly, where s 61(1)(
c
)
provides that inadequate instructions pertaining to any hazard
attracts liability, it is restricted to inadequate instructions
to a
consumer who has entered into a transaction with Eskom. The
respondent and Eskom were not in a consumer, producer or supplier
relationship in respect of the electricity that caused the harm to
the respondent.
[24]
Section 61(1)(
b
)
makes provision for liability due to a product failure, defect or
hazard in any goods. As stated, it is clear in the context of
the Act
that it is restricted to a supplier and consumer relationship. In any
event it cannot be found that the harm the respondent
suffered 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. This was not the case.
The electricity, in the context of
the case did not suffer from a
material imperfection in the manufacture of the goods. Likewise, the
electricity did not have a
characteristic that rendered it less
useful or safe than a person would generally expect in the
circumstances. The same applies
to the electricity not possessing a
characteristic that presented a significant risk of injury to any
person when the goods are
utilised. It is clear that the respondent
was not utilising the electricity when he was harmed.
[25]
Accordingly
the respondent was not a consumer that was entitled to the protection
of Part H of Chapter 2 of the Act. Furthermore,
the circumstances of
this case clearly fall outside the ambit of a consumer –
supplier relationship to which the Act applies.
Therefore, the appeal
should succeed.
The
separation of issues
[26]
There
is another matter that needs to be addressed. An order was made by
agreement that there be a separation of issues and the
applicability
of s 61 of the Act be dealt with separately. The procedure in rule
33(4) is aimed at curtailing litigation if a question
of fact or law
may be conveniently decided separately. In
Denel
(Edms) Bpk v Vorster
[8]
Nugent
JA said:
‘
Rule
33(4) of the Uniform Rules – which entitles a Court to try
issues separately in appropriate circumstances –
is aimed at
facilitating the convenient and expeditious disposal of litigation.
It should not be assumed that that result is always
achieved by
separating the issues. In many cases, once properly considered, the
issues will be found to be inextricably linked,
even though, at first
sight, they might appear to be discrete. And even where the issues
are discrete, the
expeditious
disposal of the litigation is often best served by ventilating all
the issues at one hearing, particularly where there
is more than one
issue that might be readily dispositive of the matter. It is only
after careful thought has been given to the
anticipated course of the
litigation as a whole that it will be possible properly to determine
whether it is convenient to try
an issue separately.’
[27]
E
ven
though the parties to the litigation may agree to a separation of
issues, before a court orders separation in terms of rule
33(4), it
must be satisfied that it is convenient and proper to adjudicate that
issue separately. In this matter, the obvious issue
for determination
was whether there was liability in delict. Once the trial had
commenced, and evidence was presented, the court
should, in the
ordinary course, have determined all the bases of liability,
especially the claim in delict. Determination of one
issue only –
on the unlikely interpretation of a statute – can only serve to
prejudice the parties.
[28]
In the result the following order is made.
1
The appeal is upheld with costs.
2
The order of the court below is replaced with the following:
‘
1
(a) The defendant is not liable to the
plaintiff in terms of the provisions
of s 61 of the Consumer
Protection Act 68 of 2008.
(b)
The plaintiff’s claim, based on those provisions, is dismissed,
with costs, those costs to include
the costs of the pre-trial
conference of 19 February 2015 and the costs of the trial that
commenced on 23 February 2015.
(c)
The plaintiff’s action is remitted to the trial court for the
determination of the remaining
issues in the action.’
______________________
I
Schoeman
Acting
Judge of Appeal
APPEARANCES
For
Appellants:
J F Mullins SC (and L East)
Instructed by:
Mothle Jooma Sabdia Inc.,
Pretoria
Matsepes Inc., Bloemfontein
For
Respondent:
W P de Waal SC
Instructed by:
Joseph’s Inc., Pretoria
McIntyre & Van der Post,
Bloemfontein
[1]
Wagener
v Pharmacare Ltd; Cuttings v Pharmacare Ltd
2003 (4) SA 285
(SCA) para 38.
[2]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012]
ZASCA 13
;
2012 (4) SA 593
(SCA) para 18.
[3]
Novartis
SA (Pty) Ltd v Maphil Trading (Pty) Ltd
[2015]
ZASCA 111
; 2016 (1) 518 para 27.
[4]
Draft
Green Paper on the Consumer Policy Framework, GN 1957,
GG
26774 of 9 September 2004.
[5]
The
same purpose has been set out in the Preamble of the Act.
[6]
Van
Zyl & others NNO v Turner & another NNO
1998 (2) SA 236
(C) para 34.
[7]
The
Concise
Oxford Dictionary
12 ed (2011) defines ‘utilise’ as ‘make practical
and effective use of
’
.
[8]
Denel (Edms) Bpk
v Vorster
2004
(4) SA 481
(SCA) para 3.