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[2008] ZASCA 94
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Masstores (Pty) Ltd v Murray & Roberts Construction Ltd. (Pty) Ltd. and Another (573/2007) [2008] ZASCA 94; 2008 (6) SA 654 (SCA) ; [2009] 1 All SA 146 (SCA) (12 September 2008)
Links to summary
THE SUPREME COURT OF
APPEAL
OF SOUTH AFRICA
CASE
NO: 573/2007
MASSTORES
(PTY) LTD
a
ppellant
and
MURRAY
& ROBERTS CONSTRUCTION 1
st
Respondent
(PTY)
LIMITED
S
ROCHE PROJECTS 2
nd
Respondent
Neutral
citation: Masstores (Pty) Ltd v Murray & Roberts Construction
(Pty) Ltd (573/2007)
94
[2008] ZASCA (12
September 2008)
Coram
: MPATI
P, LEWIS, MLAMBO JJA, KGOMO AND MHLANTLA AJJA
Heard
:
22
AUGUST 2008
Delivered:
12
SEPTEMBER 2008
Summary:
Appeal
against upholding of exception to claim for damages for destruction
of warehouse and its contents through negligence on part
of
contractor effecting additions: excipient raised exemption clause
(indemnification by employer) as a bar to the claim. Held
that on the
interpretation of the clause and the contract as a whole, the clause
did preclude an action by the employer against
the contractor for
destruction of the warehouse and its contents: appeal dismissed.
ORDER
On appeal from:
High Court,
Johannesburg
(Schwartzman
J sitting as court of first instance).
The appeal is dismissed with costs, including the costs
incurred by the employment of two counsel.
JUDGMENT
LEWIS JA (MPATI P, MLAMBO JA, KGOMO AND MHLANTLA AJJA
concurring)
[1] The appellant (the plaintiff in the high court),
Masstores (Pty) Ltd, a wholesaler of a multitude of commodities,
engaged the
first respondent (the first defendant), Murray &
Roberts Construction (Pty) Ltd, to extend one of its stores in
Struben’s
Valley, Roodepoort. I shall refer to the appellant
either as Masstores or as the employer, and to the respondent either
as Murray
& Roberts or as the contractor. Their building contract
was embodied in a standard form published by the Joint Building
Contracts
Committee – a form widely used in the construction
industry in South Africa. The second defendant in the matter was a
subcontractor
of Murray & Roberts and is not party to this
appeal.
[2] While employees of the second defendant were cutting
the roof of Masstores’ existing store with an angle grinder a
fire
broke out which destroyed the store and its contents. Masstores
sued Murray & Roberts for breach of contract, claiming R169
365
175, the value of the structure destroyed and its contents.
[3] The breaches alleged by Masstores – and which
allegedly caused the damage to its building and the contents –
include:
failure to comply with all laws and regulations; failure to
carry out the work in a proper and workmanlike manner; failure to
ensure that subcontractors appointed by Murray & Roberts complied
with safety levels; and failure to ensure that the work was
executed
safely and in such a way as not to endanger the lives and property of
people in the vicinity of the work. These failures
are alleged to
have been negligent or grossly negligent.
[4] Murray & Roberts excepted to the particulars of
claim on the basis that clause 9.2.7 of the building contract
precludes
an action against it – exempts it from liability for
causing damage to Masstores’ existing structure. Clause 9
reads:
‘Clause 9 Indemnities
9.1
Subject to the provisions in terms of 9.2
the contractor
indemnifies and holds the employer harmless against any loss in
respect of all claims, proceedings, damages, costs
and expenses
arising from:
9.1.1 Claims from other parties consequent upon death or bodily
injury or illness of any person or physical loss or damage to any
property, other than the works, arising out of or due to the
execution of the works or occupation of the site by the contractor
9.1.2 A non-compliance by the contractor with any law and regulation
and bylaw of any local or other authority arising out of or
due to
the execution of the works or occupation of the site by the
contractor
9.1.3 Physical loss or damage to any plant, equipment, or other
property belonging to the contractor or his subcontractors
9.2 The employer indemnifies and holds the contractor harmless
against loss in respect of all claims, proceedings, damages, costs
and expenses arising from:
9.2.1 An act or omission of the employer, the employer’s
servants or agents and those for whose acts or omissions they are
responsible
9.2.2 An act or omission of a direct contractor appointed in terms of
22.0
9.2.3 Design of the works where the contractor is not responsible in
terms of 4.0
9.2.4 The use or occupation of the site by the works
9.2.5 The right of the employer to have the works or any part thereof
executed at the site
9.2.6 Interference with any servitude or other right that is the
unavoidable result of the execution of the works including the
weakening of or interference with the support of land adjacent to the
site unless resulting from any negligent act or omission
by the
contractor or his subcontractors
9.2.7
Physical loss or damage to an existing structure and the
contents thereof in respect of which this agreement is for alteration
or
addition to the existing structure
9.2.8 Physical loss or damage to the contents of the works where
practical completion has been achieved in terms of 24.0
9.2.9 The occupation of any part of the works by the employer or his
tenants’ (my emphasis).
[5] Schwartzman J in the high court upheld the
exception, finding that clause 9.2.7 precluded a claim against Murray
& Roberts
for negligent breach of contract, but granted leave to
appeal against his decision to this court.
[6] The sole question before us is whether clause 9.2.7
has the effect of exempting Murray & Roberts from liability for
negligent,
or grossly negligent, breaches of the building contract.
And that depends on an interpretation of the clause. Counsel for
Masstores
argue that the clause is ambiguous, riddled with
inconsistency and incoherent. The ambiguity contended for would
enable the court
to interpret the clause in such a way as to conclude
that Murray & Roberts would be liable for negligently causing the
damages
alleged. Counsel for Murray & Roberts, on the other hand,
argue that the clause is clear, unambiguous and consonant with the
balance of the contract which pertinently allocates various risks to
the respective parties. It is a model of clarity, they contend,
and
excludes Murray & Roberts’ liability for negligent breach
of contract.
[7] Before considering the alleged ambiguities that
might lead to the conclusion that the clause does not exclude
liability for
the damage caused to the existing structure, it is
important to state that an ambiguity is not, in my view, a
precondition for
a court to interpret a provision by having regard to
the context of the contract and the surrounding circumstances. More
than ten
years ago this court said in
Pangbourne
Properties Ltd v Gill & Ramsden (Pty) Ltd
1
that the time appeared to be ripe for this court ‘to reconsider
the limitations placed’ on the ‘use of surrounding
circumstances’ in interpreting documents’. That said,
because this matter was determined on exception by the high court,
there is no evidence to which we can have regard in fathoming the
intention of the parties: the provision in issue must be construed
by
examining the words used, the structure of the indemnity provision
itself and its meaning within the context of the contract
as a whole.
And it is as well to recall at this point that there are no special
rules that apply to the construction of exemption
provisions:
Durban’s Water Wonderland (Pty) Ltd v
Botha
;
2
First National Bank of Southern Africa Ltd v
Rosenblum
3
and
Van der Westhuizen
v Arnold
.
4
[8] The contract is one commonly used in the building
industry. It describes the subject matter as the ‘works’,
defined
as ‘the works described in general terms in the
schedule, detailed in the contract documents, ordered in contract
instructions
and including the contractor’s and his
subcontractors’ temporary works. In 8.0 to 13.0, works shall
further include
materials and goods . . .’. In the schedule the
works description is ‘Alterations and additions to existing
Makro Store
at Strubens Valley comprising steel framed building with
sheet steel profiled roof covering and cladding together with
associated
siteworks’.
[9] Clause 7 deals with compliance with building
regulations and bylaws, and 7.1, on which Masstores relies, provides:
‘The contractor shall comply with all laws and all regulations
and bylaws of local or other authorities having jurisdiction
regarding the execution of the works. . . .’
Clause 8.0 governs the risk in the works. Part of the
provision is not strictly relevant to the dispute before this court
but I
shall set much of it out since Murray & Roberts argues that
the allocation of risk in this provision is the only basis of its
liability under the contract. As the contractor, it takes
responsibility for the works, and only the works. The clause is
headed
‘Works risk’ and it reads:
‘8.1 The contractor shall take full responsibility for the
works from the date on which possession of the site is given to
the
contractor and up to the issue or the deemed issue of the certificate
of practical completion. Thereafter responsibility for
the works
shall pass to the employer.
8.2 The contractor shall make good physical loss and repair damage to
the works, including clearing away and removing from the
site all
debris resulting therefrom, which occurs after the date on which
possession of the site is given and up to the issue or
deemed issue
of the certificate of final completion and resulting from:
8.2.1 Any cause arising up to the date of issue of the certificate of
practical completion
8.2.2 The contractor or his subcontractors carrying out any operation
complying with the contractor’s obligations after the
date of
issue of the certificate of practical completion
8.3 The contractor shall not be liable for the cost of making good
physical loss and repairing damage to the works where this results
from the following circumstances:
. . .
[The provisions of 8.3.1 to 8.3.5 list circumstances
clearly beyond the control of the contractor such as war, rebellion,
riot,
strike, and confiscation.]
8.3.6 The use or occupation of any part of the works by the employer,
the employer’s servants or agents and those for whose
acts or
omissions they are responsible
8.3.7 An act or omission of the employer, the employer’s
servants or agents and those for whose acts or omissions they are
responsible
8.3.8 An act or omission by a direct contractor . . .
8.3.9 Design of the works where the contractor is not responsible . .
.
8.3.10 A latent defect in materials and goods specified by trade
name, where the contractor has no right of substitution. The
contractor hereby cedes any right of action to the employer that may
exist against the supplier and/or manufacturer of such materials
and
goods.
8.4 The limit of the contractor’s liability shall not exceed
the amount of the contract works insurance. . . . The liability
of
the contractor in terms of 8.2 shall include:
8.4.1 The cost of making good loss and repairing damage
8.4.2 The replacement value of materials and goods supplied by the
employer to the contractor
8.4.3 The additional professional services required of the employer’s
agents
. . . .’
[10] The effect of clause 8 is that the contractor
assumes the risk of any loss or damage to the works, as defined,
until they are
completed and handed over to the employer. The
exceptions to this lie where the loss is caused either by factors
beyond the control
of the contractor, or when it is caused by the
employer and those for whom it is responsible. Nowhere in the clause
is provision
made for the contractor to be liable other than for the
works. And insurance is required only in respect of the works.
Nothing
is said of the existing structure, and indeed, as Murray &
Roberts argues, that is to be expected. Why should the contractor,
it
asks, assume responsibility for damage to the existing structure when
it is owned by Masstores and its value is considerably
greater than
the cost of the works? Why would a contractor undertake liability for
the destruction of a structure and its contents
worth about R169m
when the cost of the work to be done by it is only R13m?
[11] Masstores’ answer is that if Murray &
Roberts did indeed intend to exclude liability for their conduct, it
did not
succeed. It construes clause 9, particularly 9.2.7, so as not
to exclude Murray & Robert’s liability for the damage
negligently
caused to the existing structure and its contents. The
effect of the provision, its counsel argue, is to indemnify the
contractor
against claims by third parties only, or, alternatively,
to exclude the contractor’s liability only for its
non-negligent
conduct.
[12] To reach this conclusion Masstores argues that
clause 9 is ambiguous. It raises four respects in which the language
of the
provision gives rise to uncertainty: the use of the words
‘indemnify and hold harmless’; the apparent conflict
between
9.1.2 and 9.2.7; the use of the words ‘any loss’
in 9.1 but only ‘loss’ in 9.2; and the failure to specify
all the legal grounds for liability in 9.2.7, especially negligent
conduct. To some extent these arguments overlap but I shall
deal with
each discretely.
Indemnify and hold harmless
[13] The language is not clear, Masstores contends,
first, because of the use of the words ‘indemnify’ and
‘hold
harmless’. It will be recalled that clause 9.2
states that the ‘employer indemnifies and holds the contractor
harmless
against loss in respect of all claims, proceedings, damages,
costs and expenses arising from’ – ‘9.2.7 Physical
loss or damage to an existing structure and the contents thereof in
respect of which this agreement is for alteration or addition
to the
existing structure’. The usual meaning of indemnify is to
protect a person against a claim by another – a third
party.
Similarly, one would hold another harmless against the claim of a
third party. Can one indemnify a person against a claim
brought by
oneself? Thus, the argument runs, the contractor is not indemnified
against claims by the employer, but only claims
by third parties.
[14] The wording of the clause is admittedly not
elegant. One would not normally say ‘I indemnify you against
claims against
you brought by myself’. The typical exclusion
clause would state that claims by the other party are excluded, or
that a
party is exempt from liability against the other. However,
although the use of the words ‘indemnify’ and ‘hold
harmless’ may appear at first to relate only to third party
claims, there is ample authority that they mean also ‘keep
free
from, or secure against (hurt, harm or loss);
5
or to ‘secure (someone) against legal responsibility for their
actions’. Apart from dictionary definitions, which are
not
decisive,
6
a court must ascertain what words mean by having regard to the
intention of the parties, established, as I have said in this case,
from an examination of the contract in its entirety.
[15] The provision cannot, in my view, be construed to
refer only to claims brought by third parties. If the parties had
intended
clause 9.2.7 to govern claims by third parties they would
have said so. They have done so elsewhere in the indemnity clause, in
9.1, which regulates the contractor’s liability to the
employer: the contractor indemnifies and holds the employer harmless
against ‘claims from
other
parties consequent upon death or bodily injury or illness of any
person or physical loss or damage to any property, other than
the
works, arising out of’ the execution of the works or occupation
of the site (9.1.1) (my emphasis). In my view this express
reference
to claims by third parties tends to suggest that there is no implicit
reference to such claims in 9.2.7. Moreover, 9.2
deals expressly and
primarily with the situations in which the contractor would be
indemnified – for an act or omission by
the employer or its
servants, or a direct contractor, or the contractor’s use and
occupation of the site. These are instances
where the contractor
might otherwise be liable. Why should clause 9.2.7 be different?
[16] Masstores nonetheless argues that unless clause
9.2.7 operates only to exclude claims by third parties, clauses
8.3.7, 8.3.8
and 8.3.9 would be superfluous: they exclude the
liability of the contractor in the same circumstances. But clause 8
deals specifically
with the works and not with the existing
structure. Clause 9.2.7, on the other hand, deals only with the
existing structure. The
clauses regulate different situations. The
argument that the words ‘indemnify and hold harmless’
govern only claims
by third parties must thus fail.
The apparent conflict between clauses 9.1.2 and 9.2.7
[17] A second source of ambiguity contended for by
Masstores lies in the juxtaposition of clauses 9.1.2 and 9.2.7. The
former, in
the first part of the clause that governs the indemnities
given by the contractor to the employer, indemnifies the employer
against
claims resulting from any non-compliance with any law,
regulation or bylaw on the part of the contractor. The claim by the
employer
is in part for just that – non-compliance with safety
regulations in executing the works, resulting in physical damage. The
high court found, correctly in my view, that clause 9.1, being
‘subject to’ clause 9.2, is subservient to it: the
provisions of 9.2 thus prevail over those of 9.1, and to the extent
that 9.1.2 may appear to be in conflict with 9.2.7, the latter
must
prevail. The indemnity given by the employer to the contractor for
all claims for damage to the existing structure thus limits
the
indemnity given by the contractor to the employer in 9.1.2. The
conflict is in any event more apparent than real, for the
contractor’s obligation is to execute the
works
in accordance with the relevant regulations.
The indemnity in 9.2.7 is in respect of the existing structure.
‘
Any loss’ and ‘loss’
[18] Counsel for Masstores argue further that clauses
9.1 and 9.2 employ different language in regulating the parties’
respective
rights. In 9.1 the contractor indemnifies the employer
against
any loss
arising in certain situations, whereas in 9.2 the employer
indemnifies the contractor against only
loss
,
thus causing uncertainty as to the ambit of the indemnities. Clause
9.1 appears to be more extensive in its embrace than 9.2.
The
argument loses sight of the use of the word ‘all’ that
appears in 9.2 – the indemnity is against loss in
respect of
‘
all claims. . . .arising from
’
the various situations listed in the provisions that follow. ‘All
claims’, in the absence of evidence to the
contrary, has a very
wide ambit. Not so, argues Masstores. Exemption clauses are to be
narrowly construed, particularly when a
party seeks to escape
liability for negligence.
Failure expressly to exclude negligent conduct as a
ground of liability
[19] Masstores relies in this regard on a line of
decisions commencing with
South African
Railways & Harbours v Lyle Shipping Co Ltd
7
in which it was held that where an exemption clause in a contract
specified various causes of loss for which liability was excluded,
but was silent on the question of negligent conduct, liability for
negligence was not excluded. The case concerned a provision
in a
contract for the towing of a ship: it stated that the ship owner
accepted assistance or service ‘on the condition that
[the tug
operator] will not be liable for any loss or damage that may be
occasioned to the said ship through accident, collision
or any other
incident whatsoever occurring whilst the tug . . . is engaged in any
operation in connection with holding, pushing,
pulling or moving the
said ship’.
8
It was alleged that the ship in question was damaged as a result of
the negligence of the tug operator. In deciding the issue Steyn
JA
said:
9
‘The question raised on appeal is whether or not the clause
quoted above exempts the appellant from liability for negligence.
It
does not do so either explicitly or in general terms so all-embracing
as clearly to draw such liability into the scope of the
exemption. It
refers in comprehensive language to possible events as a result of
which damages may be sustained, but not to the
possible legal grounds
of responsibility for such damages on the occurrence of any such
event, with the result that, having regard
only to the wording of the
clause, it is open to the interpretation that it bars actions arising
from
causes of one or more classes,
leaving unaffected those founded on causes of one or more other
classes. The rule to be applied in
construing an exemption of this
nature, appears from
Essa v Divaris,
1947
(1) SA 753
(A)
at 756. Generally speaking, where in law the
liability for the damages which the clause purports to eliminate, can
rest upon negligence
only, the exemption must be read to exclude
liability for negligence, for otherwise it would be deprived of all
effect; but where
in law such liability could be based on some ground
other than negligence, it is excluded only to the extent to which it
may be
so based, and not where it is founded upon negligence. Mr
Cloete, for the appellant, did not seek to cast any doubt upon the
soundness
of
this rule, either in
equity or as a means, indicated by the inherent improbability that
any person would be content to forgo all
legal protection against the
negligence of another, of ascertaining the probable intention of
parties to a contract.
What we accordingly have to examine, are the possible causes of
action which may arise in relation to this contract. Negligence,
of
course, is one of them. Is there any other?’
Finding that a breach of contract could give rise to
liability, the court held that liability for negligence was not
excluded.
[20] The principle is not applicable if there is no
doubt but that negligent conduct is included within the embrace of
the provision
in question. In
Government of
the RSA v Fibre Spinners & Weavers (Pty) Ltd
10
Wessels ACJ said that it is only where the
exemption provision is ambiguous – as he considered the
provision in
SAR & H v Lyle
to be – that there is room to search for other legal causes of
liability that would give meaning to the provision in the
absence of
negligent conduct. Thus where a clause provided ‘you are hereby
absolved from all liability for loss or damage
however arising’
the wording was ‘sufficiently comprehensive’ to cover
liability for negligent conduct.
[21] In
Durban’s Water
Wonderland (Pty) Ltd v Botha
11
a disclaimer posted at an amusement park read:
12
'The amenities which we provide at our
amusement park have been designed and constructed to the best of our
ability for your enjoyment
and safety. Nevertheless we regret that
the management, its servants and agents, must stipulate that they are
absolutely unable
to accept liability or responsibility for injury or
damage of any nature whatsoever whether arising from negligence or
any other
cause howsoever which is suffered by any person who enters
the premises and/or uses the amenities provided.'
Scott JA said, having discussed the manner in which the
respondent and her daughter had been injured at the park:
13
‘Against this background it is convenient to consider first the
proper construction to be placed on the disclaimer. The correct
approach is well established. If the language of a disclaimer or
exemption clause is such that it exempts the
proferens
from
liability in express and unambiguous terms, effect must be given to
that meaning. If there is ambiguity, the language must be
construed against the
proferens
. (See
Government of the
Republic of South Africa v Fibre Spinners & Weavers (Pty) Ltd. .
.
) But the alternative meaning upon which reliance is placed to
demonstrate the ambiguity must be one to which the language is fairly
susceptible; it must not be 'fanciful' or 'remote' (cf
Canada
Steamship Lines Ltd v Regem
[1952] 1 All ER 305
(PC) at 310C--D).
What is immediately apparent from the language employed in the
disclaimer is that any liability founded upon negligence in the
design or construction of the amusement amenities would fall squarely
within its ambit. The first sentence contains specific reference
to
the design and construction of the amusement amenities. Even if this
were to be construed as qualifying the 'negligence' contemplated
in
the second sentence, that qualification would not therefore exclude
from the ambit of the disclaimer negligence in relation
to such
design or construction. Various grounds of negligence were alleged in
the particulars of claim. The Court
a quo
, however, found the
appellant to have been negligent in one
respect
only . . . . The ground of negligence relied upon clearly related to
the design or construction of the amenity. It follows
that the
respondents' cause of action was one which fell within the ambit of
the disclaimer. I did not understand counsel to contend
the
contrary.’
[22] In
First National Bank of
Southern Africa Ltd v Rosenblum & another
14
it was similarly argued that the absence of express reference to
liability for the dishonest conduct of the bank’s employees
rendered an exemption clause ambiguous, since not all the legal
grounds on which liability could be based had been enumerated.
According to the stated case before the court, articles placed in the
bank’s safe deposit box by the respondents had been
stolen from
it by employees of the bank. It was assumed that the bank had been
negligent in allowing the employees access to the
box. The clause had
not referred to all the ways in which the theft may have been
committed, nor was there reference to the bank’s
vicarious
liability for its employees’ wrongdoing. The respondents argued
that not all possible manifestations of theft had
been covered, nor
the bank’s liability for gross negligence.
[23] The Johannesburg High Court found for the
respondents. On appeal this court rejected the argument, finding that
the bank had
successfully immunized itself from liability. The
exclusion clause read:
‘The bank hereby notifies all its
customers that while it will exercise every reasonable care, it is
not liable for any loss
or damage caused to any article lodged with
it for safe custody whether by theft, rain, flow of storm water,
wind, hail, lightning,
fire, explosion, action of the elements or as
a result of any cause whatsoever, including war or riot damage, and
whether the loss
or damage is due to the bank’s negligence or
not.’
15
Marais
JA considered that the ambit of the clause was very wide: it covered
loss caused by factors beyond the control of the bank
and the bank’s
negligent conduct. Even its employees’ dishonest conduct (given
that their states of mind could not
be attributed to the bank) was
included under ‘any cause whatsoever’. He said of the
general approach to the interpretation
of exemption clauses:
16
‘Before turning to a consideration of the
term here in question, the traditional approach to problems of this
kind needs to
be borne in mind. It amounts to this: In matters of
contract the parties are taken to have intended their legal rights
and obligations
to be governed by the common law unless they have
plainly and unambiguously indicated the contrary. Where one of the
parties wishes
to be absolved either wholly or partially from an
obligation or liability which would or could arise at common law
under a contract
of the kind which the parties intend to conclude, it
is for that party to ensure that the extent to which he, she or it is
to be
absolved is plainly spelt out. This strictness in approach is
exemplified by the cases in which liability for negligence is under
consideration. Thus, even where an exclusionary clause is couched in
language sufficiently wide to be capable of excluding liability
for a
negligent failure to fulfil a contractual obligation or for a
negligent act or omission, it will not be regarded as doing
so if
there is another realistic and not fanciful basis of potential
liability to which the clause could apply and so have a field
of
meaningful application. (See
SAR&H
v Lyle Shipping Co Ltd
1958 (3) SA
416
(A) at 419 D – E.)
It is perhaps necessary to emphasize that the
task is one of interpretation of the particular clause and that
caveats regarding
the approach to the task are only points of
departure. In the end the answer must be found in the language of the
clause read in
the context of the agreement as a whole in its
commercial setting and against the background of the common law and,
now, with due
regard to any possible constitutional implication.’
17
[24] Masstores relies on the first paragraph quoted,
Murray & Roberts on the second. In my view, ambiguity need not be
the open
sesame
18
to construing an exemption clause by having regard to evidence of
surrounding circumstances.
19
Given, however, that this appeal is against the upholding of an
exception there is no evidence other than the contract itself.
It
must be viewed in its commercial setting, taking account of the
structure and purpose of the entire contract. I consider that
scrutiny of the contract does not support the contention that
negligent conduct is excluded from the embrace of clause 9.2.7.
[25] First, the very way in which the contract is
structured so as to allocate risks between the parties suggests that
it is the
event or circumstance that gives rise to liability rather
than blameworthy conduct in the form of negligence or otherwise.
Clause
8 specifies circumstances that pertain to the works where the
contractor will bear the risk, and those, beyond its control, where
it is exempt from liability. Clause 9 provides for reciprocal
indemnities that pertain to different risks arising in different
circumstances. Thus the contractor takes responsibility for the works
and bears the risk in them (pursuant to clause 8) in clause
9.1.
Under clause 9.2, however, the employer takes the risk for the
conduct of its employees or a direct contractor. Liability
is strict
– not dependent on fault, save in clause 9.2.6. Thus the
argument of Masstores that the clause would exempt Murray
&
Roberts from non-negligent conduct ordinarily giving rise to a claim
– such as for innocent breach of the bylaws or
regulations
which Murray & Roberts had undertaken to comply with – does
not succeed. The ground of liability suggested
is, it is true, not
fanciful or remote, but the contract does not concern itself with
fault – only with specified events
or circumstances.
[26] Second, clause 9.2.6 itself suggests a different
construction from that advanced by Masstores. It provides that the
employer
indemnifies the contractor against loss arising from
‘[i]nterference with any servitude or other right that is the
unavoidable
result of the execution of the works including the
weakening of or interference with the support of land adjacent to the
site unless
resulting from
any negligent act
or omission by the contractor or his subcontractors
’
(my emphasis).
[27] In my view, the express inclusion of the one
exception in the subclause – liability for a negligent act or
omission causing
weakening of or interference with adjacent support –
indicates that the parties had considered liability for negligent
conduct
in one situation, and specifically rendered the contractor
liable for it. The exclusion of any reference to an exemption from
liability
for negligent conduct causing damage to the existing
structure must be deliberate. In clause 9.2.6 the contractor is made
to bear
the risk of a negligent act or omission which results in the
weakening of the adjacent support of the site. But in clause 9.2.7
there is no exception made in relation to negligence: hence the
contractor is indemnified against liability for causing damage
to the
existing structure irrespective of fault. The express exception in
9.2.6 strengthens the conclusion that in all the other
subclauses of
9.1 and 9.2 the presence or absence of negligence plays no role.
[28] Third, the contract anticipates that the parties
will insure themselves against risk. Clause 10 regulates insurance.
Clause
10.1 requires insurance on the
works
in the joint names of the employer and the contractor. Clause 10.2
provides that when sections of the works are completed or when
alterations or additions to an existing structure are required the
employer shall effect insurance. Naturally the risk in respect
of the
existing building lies with the employer, whose choice it is to
insure it. The existing building is not the responsibility
of the
contractor.
[29] Construed thus in the light of the other
contractual provisions, clause 9.2.7 is clearly intended to exclude
the contractor’s
liability for negligently damaging or
destroying the existing structure and its contents. Masstores argues
that an excipient must
show that on any reasonably possible
interpretation of the clause no cause of action exists. I consider
that Murray & Roberts
has shown that the only reasonably possible
interpretation of the clause is that Masstores is precluded from
suing it for the damage
caused to the existing structure and its
contents by negligent breaches of the contract.
[30] Does the provision excluding the contractor’s
liability for damage to the existing structure and its contents also
exclude
liability for gross negligence? In
Government
of the Republic of South Africa v Fibre Spinners & Weavers
20
the court stated that there was no reason why
a clause excluding liability for negligence should not also exclude
liability for
gross negligence – assuming there is a
distinction between degrees of negligence – and that there was
no reason why
public policy should preclude enforcement of such an
exemption. This was endorsed in
First National
Bank v Rosenblum
.
21
This argument must also fail. In the circumstances I consider that
the high court correctly upheld the exception to the particulars
of
claim.
[31] The appeal is dismissed with costs, including the
costs incurred by the employment of two counsel.
______________
C Lewis
Judge of Appeal
Appearances:
Counsel
for Appellant: C D A Loxton SC
I
P Green
Instructed
by: Deneys Reitz Attorneys Johannesburg
Correspondent: McIntyre
& Van der Post Bloemfontein
Counsel
for Respondent: S A Cilliers SC
B
Berridge
Instructed by: Webber Wentzel Bowens Johannesburg
Correspondent: Honey
Attorneys Bloemfontein
1
1996 (1) SA 1182
(A) at 1187E-F.
2
1999 (1) SA 982
(SCA) at 989H-J.
3
2001 (4) SA 189
(SCA) para 7.
4
2002 (6) SA 453
(SCA) paras 18 and 19. Some of
the decisions that have questioned the difference between
surrounding and background circumstances
are set out in paras 13 and
14.
5
Shorter Oxford English Dictionary, 1973, Vol 1.
See also Concise Oxford English Dictionary 10 ed (2002).
6
See also
Jonnes v
Anglo-African Shipping Co (1936) Ltd
1972 (2) SA 827
(A) at 835G-836B where similar dictionary
definitions of ‘indemnify’ are set out.
7
1958 (3) SA 416
(A).
8
At 418F-G.
9
At 419A-F.
10
1978 (2) SA 794
(A) at 805E-G.
11
1999 (1) SA 982
(SCA).
12
At 988C-E.
13
At
989G-990B.
14
2001 (4) SA 189
(SCA).
15
Para 2.
16
Paras 6 and 7.
17
Contrast
Johannesburg
Country Club v Stott
2004 (5) SA 511
(SCA) where the court found that a portion of an exemption clause
purporting to exclude a club’s liability for injury
to
members, their guests and their children was ineffective in so far
as guests and children were concerned, and did not cover
a
dependant’s claim for loss of support on the death of a
member. The decision turned on the inability of a member to forgo
the independent claim of a dependant.
18
The phrase used by Jansen JA in
Cinema
City (Pty) Ltd v Morgenstern Family Estates (Pty) Ltd
1980
(1) SA 796
(A) at 805H-806A.
19
Van der Westhuizen v Arnold
2002
(6) SA 453
(SCA) para 22 and the cases cited there.
20
1978 (2) SA 794
(A) at 807C-E.
21
Above, para 26.