Cape Group Construction (Pty) Ltd t/a Forbes Waterproofing v Government of the United Kingdom (99/2002) [2003] ZASCA 51; [2003] 3 All SA 496 (SCA) (23 May 2003)

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[2003] ZASCA 51
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Cape Group Construction (Pty) Ltd t/a Forbes Waterproofing v Government of the United Kingdom (99/2002) [2003] ZASCA 51; [2003] 3 All SA 496 (SCA); 2003 (5) SA 180 (SCA) (23 May 2003)

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
Case No: 99/2002
REPORTABLE
In
the matter between
Cape Group Construction (Pty) Ltd
t/a Forbes Waterproofing Appellant
and
The Government of the United Kingdom
Respondent
Coram: Schutz, Cloete JJA and Heher
AJA
Heard: 19 May 2003
Delivered: 23 May 2003
Exemption
clause – faxed quotation not including same – whether fax to be
construed as including same nonetheless – whether
‘ticket’
cases apply – whether reasonable steps taken to bring to attention
of recipient of fax – whether consequent quasi-mutual
assent.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
SCHUTZ
JA
[1] The
issue in this appeal is whether the appellant, Cape Group
Construction (Pty) Ltd t/a Forbes Waterproofing (‘Forbes’) was
successful in its attempt to introduce its standard terms into a
contract concluded with the Government of the United Kingdom (‘the
Government’).
[2] The facts are not in dispute. The
Government owned a house in Bishopscourt, Cape Town, which was placed
at the disposal of the
High Commissioner. The Government was the
first plaintiff
a quo
. The two other plaintiffs are not
involved in this appeal, so the Government is the only respondent
before us. The roof of the house
developed a leak. Forbes, the
defendant below, was called in. It telefaxed a quotation to Mrs
Woolley. She was employed by the British
Consulate and was its
estates manager in Cape Town. This was on or about 24 June 1999.
[3] The fax is on a standard letterhead with the logo of
Forbes. It reads: (I have attempted to reproduce the various sizes of
the
typeface):
‘BAH/pg/30860
24 June 1999
British High Commission
P O Box 500
CAPE TOWN
8000
ATTENTION:
MRS LISA WOOLEY
Dear Madam
RE:
ROOF REPAIRS AT
THE BRITISH HIGH COMMISSION IN BISHOPSCOURT
We thank you for your
valued enquiry and take pleasure in presenting our quotation as
follows.
SCOPE OF WORK
Strip and remove the
roofing membrane of the staircase roof and remove the ceiling panels
below. Supply and fit a galvanised metal
flashing from the staircase
roof to underneath the thatch roof and apply a heatbonded membrane
onto the staircase roof, dress into
the gutter and onto the metal
flashing. Replace the staircase ceiling and redecorate the ceiling
and wall surfaces below.
PRICE: R5 850.00
VAT
@ 14 %
R 819.00
R6
669.00
Assuring
you of our best attention and co-operation at all times.
Yours
faithfully
FOR:
FORBES WATERPROOFING
(Sgd)
BODO HOFFMANN
FORT
KNOKKE, 183 SIR LOWRY ROAD
°
CAPE TOWN 8001
P.O.
BOX 892
°
CAPE TOWN 8000
TEL:
(021) 461-4422
°
FAX 461 1389
DIRECTORS:
P. JÄCK (MANAGING), B.HOFFMAN
A DIVISION OF CAPE
GROUP CONSTRUCTION
Reg.
No. 67/03120/07
SEE
TERMS AND CONDITIONS OVERLEAF
’
[4] Only that one page was sent. There was no
‘overleaf’. Nor did Woolley notice the concluding words ‘See
Terms and Conditions
Overleaf’. The repair was urgent and she
accepted the quotation telephonically. At that point the contract was
concluded and any
subsequent communication by Forbes could not affect
its terms.
[5] The issue is whether what were called
in argument Forbes’s ‘standard’ terms, form part of it. On
about 28 June 1999 the
original quotation, which did contain certain
‘Standard Terms and Conditions’ overleaf, was posted. Clause 8,
headed ‘Limitation
of Liability’ (Blignault J,
a quo
, with
justice described this heading as euphemistic), excludes liability
for loss or damage caused by Forbes in sweeping terms. It
reads:
‘
8. LIMITATION OF LIABILITY
8.1 Subject to the provisions of any guarantee, neither
the contractor nor any of the contractors, suppliers, associate
companies,
officers, employees or agents shall be liable for any loss
or damage whether direct, indirect, consequential or otherwise,
suffered
by the employer as a result of any cause arising in
connection with any dealings between the contractor and the employer
or the execution
of the works (including without limitation, late
completion for whatsoever reason and any cause arising from anything
done or not
done pursuant to the contract) whether such loss or
damages results from breach of contract (whether fundamental/material
or otherwise)
delict negligence or any other cause without
limitation.
8.2 Without limitation to the aforesaid general
limitation of liability the contractor shall not be liable for:-
8.2.1 any delays caused by political unrest, strikes or
union action nor any delays caused by an Act of God, war, fire and
floods,
excessive rains and dangerous winds;
8.2.2 any loss or damage to any property or injury or
death of any person or any loss of any person caused by or arising
out of the
use of or interference with plant, machinery or means of
access by persons other than employee of the contract and the
employer indemnifies
the contractor against claims by third parties
in respect of such loss, damage injury or death;
8.2.3 any damage arising from instruction issued to its
employees without its authority;
8.2.4 any damage to the property of the employer,
including the works, whether such damages are consequential,
reasonably foreseeable
or otherwise;
8.2.5 any loss by the employer including any loss
amounting to consequential loss or lost profit;
8.2.6 any leakages occasioned by abnormal causes or
agencies, including non-specified traffic, interference by third
parties, including
abnormal use and design faults.’
[6] Woolley
was on leave from 30 June to 12 July 1999 and did not see the
original posted quotation until after the roof of the house
had
caught fire, as a consequence of the negligence of one of Forbes’s
workmen. Hence the action, in which the Government accepted
the onus
of proving the terms of the contract on which it relied, that is that
Forbes’s standard terms did not form part of it.
It was conceded by
Forbes, on the other hand, that if the terms and conditions had not
been incorporated, it had the contractual
duty to carry out the
repairs in a proper and workmanlike manner, and without negligence.
Construction
of the writing in faxed form
[7] Although
Blignault J found for the Government on other points, he did not
decide the logically anterior question; whether on a
proper
construction of the fax it purported to incorporate Forbes’s
standard terms and conditions.
[8] The argument for the Government is a simple one. The
injunction ‘See Terms and Conditions Overleaf’ does not convey
that there
are standard terms, which would be available for
inspection if the addressee wished to see them. The natural meaning,
so the argument
proceeds, is that if no additional terms or
conditions are transmitted, there are none applicable to this
particular contract. I
agree with the argument. The meaning contended
for is the natural interpretation, a more probable one than that
there were standard
terms hovering in the background, and that it was
for the Government to obtain them if it wished to ascertain their
content.
[9] A comparable case is
Home Fires
Transvaal CC v van Wyk and Another
2002 (2) SA 375(W).
An order
was faxed to van Wyk. At the foot appeared the words:
‘This order can only be cancelled
on payment of 15 % of the total amount: see reverse side for further
conditions.’
The reverse
side was not transmitted. Van Wyk read the document, including these
words. Believing that they dealt with cancellation,
he signed it. He
was later to discover that they dealt with much more than
cancellation, in terms adverse to him. The supplier contended
that
the well-established rule, you are bound by what you sign, applied.
Farber AJ’s response (at 381J to 382D) was:
‘It need hardly be stated that
the rule can have no application if, on a proper construction of the
agreement, the terms which it
is suggested bind the signatory have
not been incorporated therein. (Compare
Stocks Construction (OFS)
(Pty) Ltd v Metter-Pingon
(Pty) Ltd
1980 (1) SA 507
(A) at
519B-F.)
Approaching the matter on an objective basis, which I am
enjoined to do, it seems to me that by omitting to send the reverse
side
of the order to the respondents, the appellant must be held not
to have intended to conclude a contract on the basis of the terms
and
conditions therein set forth. To this end, the words appended at the
foot of the face of the ‘order’ which refer to the conditions
embodied on the reverse side thereof are meaningless and must be
considered
pro non scripto
. Reducing the matter to fundamental
principle, the appellant, by its conduct, submitted a written offer
to the respondents. The reverse
side of the document embodying the
offer was not sent to them, founding the inference that what was
there set forth was not intended
to form part thereof. The
respondents in turn must be held to have accepted the offer on the
basis of what had been submitted to
them. In short, the contract
which arose in consequence of the appellant’s offer and the
respondents’ acceptance thereof falls
to be approached on the basis
that the terms on the reverse side of the order were not intended to
form part thereof.’
Goldstein
and Boruchowitz JJ concurred.
[10] Forbes’s counsel have sought to distinguish this
case on the basis that Van Wyk had read the clause and concluded that
it referred
to conditions of cancellation only. I fail to follow the
contention, as, for purposes of the present argument –
construction â€“
Mrs Woolley is to be treated as if she had read
the words at the foot of the fax. The test is objective.
[11] A similar case is
Poseidon Freight
Forwarding Co Ltd v Davies Turner Southern Ltd and Another
[1996]
2 Lloyd’s LR 388 (CA). The nature of the issue in the case and the
manner of its resolution appear from the following passage
from the
judgment of Leggatt LJ (at 394):
‘This is not a case where a party
declares that the terms are available for inspection. It is a case
where, on documents sent by
fax, reference is made to terms stated on
the back, which are, however, not stated or otherwise communicated.
Since what was described
as being on the back was not sent, it was a
more cogent inference that the terms were not intended to apply.’
[12] Counsel for Forbes, however, have
relied on the case of
Africa Solar (Pty) Ltd v Divwatt (Pty) Ltd
2002 (4) SA 681
(SCA) at 706I-707A para [62]. A form had been
faxed to a customer which included a paragraph reading:
‘All purchases will be made in
terms of and subject to the conditions of trade of Helios Power (Pty)
Ltd, as printed on the reverse
hereof, which by signing this, I
acknowledge having read, understood and accepted.’
Again ‘the reverse’ had not been
transmitted. The majority of the court held that the customer was not
bound by the terms of this
paragraph as there had been no
animus
contrahendi
(for reasons not relevant to the case before us). But
the minority (Streicher and Nugent JJA) held that the
animus
had been established and that the customer was bound by the
‘conditions of trade’ for the reason that ‘the reverse’
referred
to was clearly the reverse of of the original document and
not that of the incomplete faxed copy. As a matter of construction I
have
no difficulty with that conclusion. The distinction between the
words in that case and in this one may be subtle, but it is
nonetheless
evident. As a matter of construction, the customer in the
Africa Solar
case was told that by signing he was committing
himself to what was clearly an existing set of conditions. In the
case before us
she was not.
[13] Accordingly, applying the primary
rules of construction, I consider that the Government has established
that the non-attendant
terms and conditions did not form part of the
contract. Should I be wrong in that, then the last resort in the
interpretation arsenal
– the
contra proferentem
rule –
would come into play, against Forbes. See
Cairns (Pty) Ltd v
Playdon & Co Ltd
1948 (3) SA 99
(A) at 121-123. On page 121
Grotius is quoted as giving the reason why there is a rule that works
against the
proferens
, ‘for he has himself to blame for not
speaking more plainly’.
[14] Finally, on the question of
construction – it is the fact that over the years, exemption
clauses as a class have attracted
much scathing judicial indignation
and wit, most of it well-deserved. Despite that, I agree with Lewis
JA where she stated in
Van der Westhuizen v Arnold
2002 (6) SA
452
(SCA) at 469D-E, that there does not appear to be any clear
authority for a general principle that exemption clauses should be
construed
differently from other provisions in a contract. However, I
also agree with what follows (at 469E-G):
‘But that does not mean that
courts are not, or should not be, wary of contractual exclusions,
since they do deprive parties of
rights that they would otherwise
have had at common law. In the absence of legislation regulating
unfair contract terms, and where
a provision does not offend public
policy or considerations of good faith, a careful construction of the
contract itself should ensure
the protection of the party whose
rights have been limited, but also give effect to the principle that
the other party should be
able to protect himself of herself against
liability insofar as it is legally permissible. The very fact,
however, that an exclusion
clause limits or ousts common law rights
should make a court consider with great care the meaning of the
clause, especially if it
is very general in its application.’
[15] And in this connection I would also
agree with what Denning LJ said in
Anglo- Saxon Petroleum Co Ltd v
Adamastos Shipping Co Ltd
[1957] 2 QB 233
(CA) at 269 i f:
‘We have repeatedly refused to
allow a party to a contract to escape from his just liability under
it by reason of an exempting
clause, unless he does so by words which
are perfectly clear, effective and precise.’
[16] The question of construction with which we are concerned is not
that of an exempting clause itself but with the provision said
to
incorporate it, but the same need for caution is applicable there
too.
Alternatively,
the ‘ticket’ cases
[17] Even
if there had, as a matter of construction, been an incorporation of
the standard terms, I consider that Forbes should in
any event fail.
The parties are agreed that the ‘ticket’ cases would apply and
they are also agreed as to what the consequent
applicable principles
are. But they are not agreed as to their application to the facts.
The principles are conveniently restated
in the judgment of Scott JA
in
Durban’s Water Wonderland (Pty) Ltd v Botha and Another
1999 (1) SA 982
(SCA) at 991D-992A.
‘Had
Mrs Botha read and accepted the terms of the notices in question
there would have been actual consensus and both she and Mariska’s
guardian, on whose behalf she also contracted, would have been bound
by those terms. Had she seen one of the notices, realised that
it
contained conditions relating to the use of the amenities but not
bothered to read it, there would similarly have been actual
consensus
on the basis that she would have agreed to be bound by those terms,
whatever they may have been. (
Central South African Railways v
James
1908 TS 221
at 226.) The evidence, however, did not go that
far. Mrs Botha conceded that she was aware that there were notices of
the kind in
question at amusement parks but did not admit to having
actually seen any of the notices at the appellant’s park on the
evening
concerned, or for that matter at any other time. In these
circumstances, the appellant was obliged to establish that the
respondents
were bound by the terms of the disclaimer on the basis of
quasi-mutual assent. This involves an inquiry whether the appellant
was
reasonably entitled to assume from Mrs Botha’s conduct in going
ahead and purchasing a ticket that she had assented to the terms
of
the disclaimer or was prepared to be bound by them without reading
them. (See
Stretton v Union Steam Ship Co Ltd
(1881) 1 EDC 315
at 330-1;
Sonap Petroleum (SA) (Pty) Ltd (formerly known as
Sonarep (SA) (Pty) Ltd v Pappadogianis
[1992] ZASCA 56
;
1992 (3) SA 234
(A) at
239F-240B.) The answer depends upon whether in all the circumstances
the appellant did what was ‘reasonably sufficient’
to give
patrons notice of the terms of the disclaimer. The phrase ‘reasonably
sufficient’ was used by Innes CJ in
Central South African
Railways v McLaren
1903 TS 727
at 735. Since then various phrases
having different shades of meaning have from time to time been
employed to describe the standard
required. (See
King’s Car Hire
(Pty) Ltd v Wakeling
1970 (4) SA 640
(N) at 643G-644A.) It is
unnecessary to consider them. In substance they were all intended to
convey the same thing, viz an objective
test based on the
reasonableness of the steps taken by the
proferens
to bring
the terms in question to the attention of the customer or patron.’
[18] Forbes
concedes that as Woolley did not read the section at the foot of the
fax there could be no actual consensus to include
it; actual in the
sense of a meeting of minds on terms the content of which both
parties were aware.
[19] Forbes’s
argument is mainly based on the second leg of the proposition set out
by Scott JA. The argument is that Woolley read
the body of the
quotation and realised that it contained contractual terms. So far
that is correct. Notwithstanding, the argument
however proceeds, she
did not trouble to find out what all the terms were, but simply
accepted the quotation, thus binding herself
to all the terms,
whatever they might be. The court
a quo
found in the
Government’s favour on this point, stating that Woolley was
entitled to assume that the contractual terms were set
out in the
body of the quotation above Mr Hoffmann’s signature. I agree with
that reasoning, especially as the body of the quotation
contains no
reference to further conditions. Forbes’s counsel criticise this
finding, saying that a person in Woolley’s position
is not entitled
to read only portions of a contract, or only those composed of large
print, or ignore those that ‘appeared in annexures’.
As to the
last submission there was, of course, no annexure. As to the first
two, the essence of the second proposition set out by
Scott JA is
that a party knows that there are contractual terms which he has not
read, but by which he is content to be bound. It
is clear from
Woolley’s uncontradicted evidence that that was not her state of
mind.
[20] That
Woolley should not have read the words ‘See Terms and Conditions
Overleaf’ is unsurprising. They were tucked away beneath
Forbes’s
address, telephone numbers, names of directors, a further description
of the company and its number, and were in printing
of a size which
did not distinguish it from what had gone before and in no different
colour to the preceding information. Counsel
for the Government go on
to submit that if the argument for Forbes be correct then a party may
conceal contractual terms in most
unlikely corners of a document
which contains contractual matter. There is no reason, they submit,
why different parts of a document
may not serve different purposes.
They further submit that the body of the quotation, from salutation
to signature, serves to impart
the contractual terms. What follows is
preprinted information on a standard letterhead not relevant to the
terms of the contract,
after which, without obvious separation,
Forbes seeks to insert further contractual terms where the reader
would not expect to find
them.
[21] I
agree entirely with Government counsel’s submissions in this
regard. To make reference to further terms in this way whilst
at the
same time not transmitting the terms is to set a trap, whether
consciously or unconsciously. The doctrine in the ‘ticket’
cases
is designed to bind one who is indifferent as to the extent of his
commitment, not one who, although acting reasonably, is
ignorant of
what is sought to be imposed upon him.
Reasonable
steps to draw attention to terms?
[22] This leads to a consideration of the third
proposition set out by Scott JA. If there was no actual consensus,
the party relying
on his terms having been incorporated may yet
succeed on the basis of quasi-mutual assent if he demonstrates that
he took steps reasonably
sufficient to give notice of his terms to
the other party. Blignault J held that Forbes did not pass this test.
I agree. It would
have been the natural thing for the person sending
the fax to turn it over after the first transmission and then to fax
the standard
terms, that is if he or she was alive to the fact that
there were terms on the reverse side. Or a reference to the same
could have
been inserted in the body of the letter, particularly if
it had been stated that the terms were standard ones. Or the words
relied
on could have been given much greater prominence in some
manner or another. Instead they were tucked away with non-contractual
matter,
as has been explained already.
[23] For all of these reasons the appeal is dismissed
with costs including the costs of two counsel.
_____________
W P SCHUTZ
JUDGE OF APPEAL
CONCUR
CLOETE
JA
HEHER
AJA