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[2010] ZAGPPHC 558
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Pall South Africa (Pty) Limited v Group 4 Falck (Pty) Limited (A233/07) [2010] ZAGPPHC 558 (10 February 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG COURT, PRETORIA)
Date: 2010-02-10
Case Number: A233/07
Not reportable
Not of interest to
other judges
In the matter
between:
PALL SOUTH AFRICA
(PTY)
LIMITED
.......................................................................................
Appellant
(Plaintiff a quo)
and
GROUP 4 FALCK
(PTY)
LIMITED
.............................................................................................
Respondent
(Defendant a quo)
JUDGMENT
SOUTHWOOD J
[1]
The appellant appeals against the judgment and order of the court a
quo
(Ismail
AJ) dismissing, with costs, the appellant's claim for damages in the
sum of R254 046,58.
[2]
The parties prepared a stated case for the court a
quo.
The
issues involved the interpretation of a written agreement in terms of
which the respondent provided security services by means
of security
personnel to reduce the risk of loss or damage by
inter
alia
theft
and burglary. The court was required to interpret the exemption
clause and the procedural clause which governed claims in
terms of
the agreement. The court
a quo
upheld
the respondent’s contention that the appellant was bound to
comply with the procedural provisions and because of its
failure to
do so was not entitled to succeed with its claim.
[3] The relevant
agreed facts are as follows:
(1) On 29 January
2004 the appellant occupied industrial premises at 33 New Road,
Midrand, Gauteng (‘the premises’)
and also owned property
there. On 29 January 2004 a written agreement (‘the agreement’)
existed between the appellant
and the respondent in terms of which
the respondent provided security services at the premises, the sole
function of which was
to reduce the risk of loss or damage by theft,
burglary, vandalism or arson, subject to the terms of the agreement,
in return for
a monthly payment of R10 500.
(2) On 29 January
2004 a number of men, aided and abetted by Tembi Sibanda, a security
guard employed by the respondent, who was
at the time acting within
the course and scope of his employment with the respondent, guarding
the premises, stole the appellant’s
property at the premises
and damaged the premises. The stolen goods were not recovered but the
premises were repaired. As a result
of the theft and the damage the
appellant suffered damages in the sum of R254 046,58.
(3) Sibanda’s
participation in the theft was a breach of the respondent’s
contractual obligation to reduce the appellant’s
risk of loss
or damage by theft, burglary, vandalism or arson.
(4) Clause 8 of the
agreement reads as follows:
‘
8.
CONTRACTOR’S RIGHTS AND OBLIGATIONS
8.1 The sole
function of the Services provided by the CONTRACTOR through the
Security Personnel is to reduce the risk of loss or
damage by theft,
burglary, vandalism or arson.
8.2 The CONTRACTOR
gives no warranty or guarantee that its Security Personnel will be
able to reduce or prevent the loss and/or
damage referred to in
clause 8.1 above.
8.3 The CONTRACTOR
shall not be liable to the CLIENT or any third party for any loss or
damage of whatsoever nature and howsoever
caused, whether direct or
consequential, save where such loss or damage is proved to be as a
result of gross negligence on the
part of the CONTRACTOR or any of
its Security Personnel acting within the course and scope of their
employment with the CONTRACTOR.
In such event the CONTRACTOR’S
liability shall be restricted to three times the monthly contract
price (as set out in clause
19 below or any amendment thereto) for
any one event or series of events arising from one occurrence.
8.4 In order to
succeed in a claim as set out in clause 8.3 above, the CLIENT shall
be obliged to comply with the following:
8.4.1 the CLIENT
shall notify the CONTRACTOR in writing at the CONTRACTOR’S Head
Office, within two working days after the
occurrence of the event
giving rise to such claim, of all the relevant facts relating to such
claim;
8.4.2 the CLIENT’S
summons for the recovery of such loss or damage shall be served on
the CONTRACTOR within three months after
the date upon which such
cause of action arose; and
8.4.3 such loss or
damage was not suffered by the CLIENT as a result of any breach by
the CLIENT of any term of this agreement (express
or implied) or as a
result of any negligent or wilful act or omission on the part of the
CLIENT or its employees.
8.5 Should the
statutory minimum wage payable to the CONTRACTOR’S Security
Personnel, be increased at any time, then the fee
payable by the
CLIENT in terms of this contract, or any amendment thereto shall be
increased with effect from the effective date
of such statutory
increase. The CONTRACTOR shall be entitled to adjust the fees for its
services simultaneously with the statutory
wage increase. The
aforesaid increases shall apply notwithstanding the fact that the
CONTRACTOR may be paying its Security Personnel
or employees more
than the statutory minimum wages as provided for in legislation.
8.6 It is recorded
that the services to be rendered by the CONTRACTOR to the CLIENT are
in respect of only the premises which are
occupied by the CLIENT and
the assets of the CLIENT and do not extend to any portion of the
premises which are occupied by third
parties nor to the assets of
third parties, unless specifically agreed to in writing between the
parties to this agreement.’
(5) The theft and
the loss suffered by the appellant occurred on 29 January 2004.
(6) The appellant
did not notify the respondent’s head office in writing of the
theft within two (2) days of the occurrence.
(7) The appellant
served its summons for payment of the damages suffered as a result of
the theft on 27 July 2004.
(8) The appellant
averred that the respondent is vicariously liable for the intentional
acts of Sibanda and that the provisions
of clauses 8.3 and 8.4 are
not applicable.
(9) In its plea the
respondent raised the contractual defences afforded to it by clauses
8.3 and 8.4.1 and 8.4.2 of the agreement
and the appellant did not
replicate thereto.
[4] The agreed
issues to be decided on the stated case are as follows:
(1) Did the
appellant’s non-compliance with clause 8.4.1 and 8.4.2 of the
agreement prevent it from claiming from the respondent
the damages
which it suffered as a result of the theft?
(2) Is the
appellant’s claim limited to R31 500 being three times the
monthly contract price in terms of the agreement, notwithstanding
the
appellant’s non-compliance with clauses 8.4.1 and 8.4.2 of the
agreement?
(3) Whether clauses
8.3, 8.4.1 and 8.4.2 are applicable in the light of Sibanda’s
intentional participation in the theft?
These issues give
rise to the following questions of interpretation:
(i) Does the
exemption provision in clause 8.3 exempt the contractor from
liability for loss or damage caused by theft by the contractor’s
security personnel? If so -
(ii) Does the saving
provision in clause 8.3 include loss or damage caused by theft by the
contractor’s security personnel?
If so -
(iii) Do the
provisions of clause 8.4 also apply to a claim against the contractor
based on loss or damage caused by theft by the
contractor’s
security personnel?
[5]
The appellant argues that clause 8.3 only exempts the respondent from
liability for negligence; that loss or damage due to an
intentional
act (such as theft) is not covered by the exemption contained in
clause 8.3 and accordingly that the procedural requirements
for a
valid claim set out in clause 8.4.1 and 8.4.2 are not applicable. The
appellant contends that to interpret clause 8.3 as
exempting the
respondent from liability for theft leads to absurdity, repugnance or
inconsistency with the contract as a whole
as the respondent is bound
by the contract to provide security services to reduce the risk of
loss or damage by
inter alia
theft
and burglary. For these contentions the appellant relies on
Grinaker
Construction (Tvl) (Pty) Ltd v Transvaal Provincial Administration
1982 (1) SA 78
(A)
at
97A-B and
Hotels, Inns & Resorts SA
(Pty) Ltd v Underwriters at Lloyds and others
1998
(4) SA 466
(C)
para
30.
[6] The respondent
contends that in accordance with the ordinary meaning of the words
used in the contract clause 8.3 does not exempt
the respondent from
liability for an intentional act (such as theft), accordingly that
the respondent would be liable for the theft
and that the appellant
would be entitled to succeed in its claim only if it had complied
with clause 8.4.1 and 8.4.2 of the contract.
[7]
The court a
quo
clearly
preferred the reasoning of the respondent.
[8] In their heads
of argument neither party has given close attention to the wording of
the contract which must be the starting
point for its interpretation.
The appellant has referred only to the alleged absurdity of
undertaking to provide security services
to reduce the risk of loss
or damage by theft and burglary while stipulating not to be liable
for loss or damage caused by either.
It has not referred to the clear
wording of clause 8.3 which unambiguously exempts the respondent from
liability for ‘any
loss or damage of whatsoever nature and
howsoever caused, whether direct or consequential’ and
explained why effect should
not be given to this provision. On the
other hand, the respondent has not properly explained how the saving
provision in clause
8.3 can relate to an intentional act such as
theft. Such a finding must rest on the wording of the savings
provision which simply
does not refer expressly or impliedly to an
intentional act and is pertinently limited to loss or damage caused
by the gross negligence
of the respondent or any of its security
personnel acting within the course and scope of their employment with
the respondent.
[9]
The rules of interpretation were comprehensively dealt with in
Coopers & Lybrand v Bryant
[1995] ZASCA 64
;
1995
(3) SA 761
(A)
at
767E-768E. The golden rule of interpretation is to give the language
of the document its grammatical and ordinary meaning unless
this
would lead to some absurdity or some repugnance or inconsistency with
the rest of the instrument. Particular words or phrases
must not be
interpreted on their own or
in vacuo.
The
correct approach to the application of the golden rule of
interpretation, after having ascertained the literal meaning of the
word or phrase in question is, broadly speaking, to have regard to -
(1) the context in
which the word or phrase is used with its interrelation to the
contract as a whole, including the nature and
purpose of the
contract; and
(2) the background
circumstances which explain the genesis and purpose of the contract,
i.e. the matters probably present to the
minds of the parties when
they contracted.
Reference may be had
to extrinsic evidence only when the language of the document is on
the face of it ambiguous.
[10]
The power of the court to deviate from the ordinary meaning of the
words used is limited. Where the ordinary sense necessarily
leads to
some absurdity, or to some repugnance or inconsistency with the rest
of the contract, the court may modify the meaning
just so much as to
avoid that absurdity or inconsistency but no more - see
Metcash
Trading v Credit Guarantee Insurance Corporation of Africa
2004 (5) SA 520
(SCA)
para
10. The court may not depart from the ordinary meaning merely because
it would be fair or equitable to do so - see
Scottish
Union and National Insurance Co v Native Recruiting Corporation
1934 AD 458
at
468;
SA Forestry Co v York Timbers
2005
(3) SA 323
(SCA)
paras
30-32. The court also may not deviate from the clear meaning because
it thinks the contract is a hard bargain - see
Scottish
Union and National Insurance Co v Native Recruiting Corporation supra
at
465:
SA Forestry Co v York Timbers supra
para
30.
[11]
It is also important to bear in mind that there is no general rule
that exemption clauses should be construed differently from
other
provisions in a contract but that where an exclusion clause limits or
ousts common law rights the court should consider with
great care the
meaning of the clause, especially if it is very general in its
application -see
Van der Westhuizen v Arnold
2002 (6) SA 453
(SCA)
paras
37-40. But, if the language of the exemption clause is such that it
exempts the
proferens
from
liability in express and unambiguous terms, effect must be given to
that meaning - see
Durban’s Water
Wonderland (Pty) Ltd v Botha
1999
(1) SA 982
(SCA)
at
989G-I. It is only where there is ambiguity that the language must be
construed against the
proferens
-
see
Government of the Republic of South Africa v
Fibre Spinners & Weavers (Pty) Ltd
1978
(2) SA 794
(A)
at
804C -or that recourse may be had to surrounding circumstances - see
Van der Westhuizen v Arnold supra
para
40;
Coopers & Lybrand v Bryant supra
at
768D-E.
[12] The parties
obviously approached this matter on the basis that the meaning of the
contract is clear. In my view it is clear
but not in the manner
contended by the parties. In my view the exemption provision in
clause 8.3 clearly and unambiguously excludes
liability on the part
of the respondent for all loss or damage caused by any unlawful and
intentional or negligent act (i.e. delictual
liability) or any breach
of contract (i.e. contractual liability) and provides that the
respondent will be liable only for loss
or damage caused by gross
negligence on the part of the respondent or any of its security
personnel acting within the course and
scope of their employment with
the respondent. This liability is so precisely defined by the
language of the contract that it cannot
be found to include liability
for an intentional act such as theft. That is effectively the end of
the matter.
[13]
I am not persuaded by the reasoning in
Hotels,
Inns & Resorts SA (Pty) Ltd v Underwriters at Lloyds and
others
1998 (4) SA 465
(C)
at
para 30 as it does not apply (or even refer to) the rules of
interpretation referred to in this judgment and is not based on
the
wording of the agreement. It is clearly the court’s view of
what would be fair and equitable. As already pointed out
the court
cannot ignore the clear and unambiguous language of the contract
simply because it leads to what the court considers
to be a harsh
result. As pointed out in
First National Bank of
SA Ltd v Rosenblum and Another
2001
(4) SA 189
(SCA)
para
12 a party may validly contract out of liability for theft even when
he or she is holding the stolen property in safekeeping.
[14] I am also not
persuaded that by interpreting the exemption clause as I have done
leads to an absurdity, repugnance or inconsistency
with the rest of
the agreement. The respondent was not prepared to agree that its
security personnel would be able to reduce or
prevent the loss or
damage referred to in clause 8.1 - it pertinently refused to give a
warranty or guarantee to that effect. This
can only be due to a
concern about the security personnel - their possible incompetence
and/or dishonesty and/or unreliability.
The respondent must therefore
protect itself against liability for damages caused by breach of
contract and negligent and intentional
delictual acts which could far
exceed in value what the respondent receives for providing the
service. Clearly that is why the
parties agreed that the respondent’s
liability for loss or damage caused by gross negligence would be
limited to three times
the monthly contract price. Potentially the
respondent could be liable for very large sums of damages while it
receives only R10
500 per month for its services. The present case
illustrates the point.
Order
[15] The appeal is
dismissed with costs.
B.R. SOUTHWOOD
JUDGE OF THE
HIGH COURT
I agree
A.P. LEDWABA
JUDGE OF THE
HIGH COURT
I agree
M.J. DOLAMO
ACTING JUDGE OF
THE HIGH COURT
CASE NO: A233/07
HEARD ON: 3 February
2010
FOR THE APPELLANT:
ADV. J.A. COETZEE SC
ADV. J. ROUX
INSTRUCTED BY: AJ
van Rensburg Inc.
FOR THE RESPONDENT:
ADV. I. GREEN
INSTRUCTED BY:
Friedland Hart Solomon & Nicolson
DATE OF JUDGMENT: 10
February 2010