CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 32/22
In the matter between:
FUJITSU SERVICES CORE (PTY) LIMITED Applicant
and
SCHENKER SOUTH AFRICA (PTY) LIMITED Respondent
Neutral citation: Fujitsu Services Core (Pty) Limited v Schenker South Africa (Pty)
Limited [2023] ZACC 20
Coram: Zondo CJ, Maya DCJ, Baqwa AJ, Kollapen J, Madlanga J,
Majiedt J, Mathopo J, Mbatha AJ, Mhlantla J, Rogers J and
Tshiqi J
Judgments: Mathopo J (minority): [1] to [79]
Zondo CJ (majority): [80] to [143]
Heard on: 1 November 2022
Decided on: 28 June 2023
Summary: [Interpretation of contracts] — [Exemption clauses] — [Exclusion
of liability] — [Public Policy]
2
ORDER
On appeal from the Supreme Court of Appeal (hearing an appeal from the High Court
of South Africa, Gauteng Local Division, Johannesburg):
1. Leave to appeal is granted.
2. The appeal is dismissed with costs, including the costs of two counsel.
JUDGMENT
MATHOPO J (Baqwa AJ, Kollapen J, Madlanga J and Majiedt J concurring):
[1] This application for leave to appeal raises two issues on the merits: first, whether
the exemption clauses relied upon by Schenker South Africa (Pty) Limited (Schenker),
the respondent, can be interpreted as excluding liability for wrongful acts committed
outside the contractual context , including theft by an employee ; and second, whether
the exemption clause offends public policy. The issues surface in this application for
leave to appeal by Fujitsu Services Core (Pty) Limited (Fujitsu), the applicant, against
the judgment and order of the Supreme Court of Appeal. That Court reversed the
decision of the High Court, Gauteng Local Di vision, Johannesburg, which held that ,
properly interpreted, the exemption clause relied upon by Schenker did not apply in
circumstances where the contract is not being executed.
Background facts
[2] On 10 July 2009, Fujitsu, an importer, seller and distributor of laptops,
computers and accessories concluded a national distribution agreement with Schenker,
a company conducting business as a warehouse operator, freight forwarder, logistic s
MATHOPO J
3
manager, dist ributor and forwarding agent. 1 This agreement was subject to the
South African Association of Freight Forwarders (SAAFF) trading terms and
conditions. It was a material term of the agreement that Schenker would collect, clear
and carry goods and thereaft er deliver them to Fujitsu after attending to the necessary
custom clearance.
[3] In April 2012, Fujitsu purchased and imported a consignment of laptops from
Germany, whereupon it engaged the services of Schenker to assist it with the logistics,
freight forwarding, warehousing and clearing of the consignment. This would entail
Schenker importing the goods into South Africa, and receiving them from the airline.
A consignment of Fujitsu’s laptops and accessories arrived at the South African
Airways Cargo Wareh ouse (SAA Cargo Warehouse) at OR Tambo International
Airport (ORTIA) on 21 and 22 June 2012.
[4] At all material times Mr Wilfred Bongani Lerama, was employed by Schenker
as a drawing clerk responsible for, among other things , the collection of cargo at the
SAA Cargo Warehouse. Mr Lerama, having passed a vetting process was issued with
a security card known as an identity verification (IVS) card , was given all relevant
airways bills and custom clearances necessary for the cargo to be released from the SAA
Cargo Warehouse. On 23 June 20 12, driving an unmarked hired truck, Mr Lerama
collected the consignment of laptop s and accessories after producing the company’s
security and release documents. He disappeared with the goods and never returned to
work, thus effectively stealing the goods. As a result of the theft , Fujitsu instituted an
action for damages against Schenker.
[5] The central issue before the High Court and the Supreme Court of Appeal was
the proper interpretation of the exemption clauses. Schenker initially resisted the case
on the basis that Mr Lerama was acting on a frolic of his own and not within the course
1 Fujitsu Services Core (Pty) Limited v Schenker South Africa (Pty) Limited unreported judgment of the
High Court of South Africa, Gauteng Local Division, Johannesburg, Case No. 27830/2014 (25 March 2020)
(High Court Judgment).
MATHOPO J
4
and scope of his employment. Later, it became common cause in those courts that at
the time of the theft, Mr Lerama had acted within the course and scope of his
employment with Schenker and that, unless liability was excluded in terms of the
contract, Schenker was vicariously liable for the loss suffered as a result of Mr Lerama’s
theft. Even though vicarious liability was conceded , the High Court conducted a
comprehensive analysis of the principle and concluded that:
“[I]t follows from the aforegoing that Lerama’s actions were sufficiently and so closely
related to the functions he was required to perform that vicariously liability s hould be
visited on Schenker. Moreover, the aforegoing also, in my judgment, demonstrates that
Schenker created or enhanced the risk which, when applying the Stallion principles,
makes Schenker vicariously liable for the damages arising from the theft. If regard is
had to the recent development of the law relating to vicarious liability in ‘deviation
cases’ and the approach adopted in Stallion Security, there can in my view be no doubt
that the defendant is vicariously liable for the theft perpetrated by Lerama.”2
[6] The issues in this Court were expanded to include an attack on the exemption
clause on the basis that it is contrary to public policy. Accordingly, at the heart of the
matter is the proper interpretation of clauses 17, 40 , and 41 of the SAAFF standard
terms and conditions.
[7] Clause 17 provides:
“Except under special arrangements previously made in writing [Schenker] will not
accept or deal with bullion, coin, precious stones, jewellery, valuables, antiques,
pictures, human remains, livestock or plants. Should [Fujitsu] nevertheless deliver
such goods to [Schenker] or cause [Schenker] to handle or deal with any such goods
otherwise than under special arrangements previously made in writing [Schenker] shall
incur no liability whatsoever in respect of such goods, and in particular, shall incur no
liability in respect of its negligent acts or omissions in respect of such goods. A claim,
if any, against [Schenker] in respect of the goods referred to in this clause 17 shall be
governed by the provisions of clauses 40 and 41.”
2 Id at para 29.
MATHOPO J
5
[8] Clause 40, in relevant part, provides:
“40.1 Subject to the provisions of clause 40.2 and clause 41, [Schenker] shall not be
liable for any claim of whatsoever nature (whether in contract or in delict) and
whether for damages or otherwise, howsoever arising including but without
limiting the generality of the aforesaid—
40.1.1 any negligent act of omission or statement by [Schenker] or its
servants, agents and nominees; and/or
. . .
40.1.3 any loss damage or expense arising from or in any way connected with
the marking, labelling, numbering, non-delivery or mis-delivery of any
goods; and/or
. . .
Unless—
a) such claims arise from a grossly negligent act or omission on
the part of [Schenker] or its servants; and
b) such claim arises at a time when the goods in question are in
the actual custody of [Schenker] and under its control.”
[9] Clause 41 provides that:
“41.1 In those cases where [Schenker] is liable to the customer in terms of
clause 40.1, in no such case whatsoever shall any liability of [Schenker],
howsoever arising, exceed whichever is the least of the following respective
amounts:
41.1.1 the value of the goods evidenced by the relevant documentation or
declared by the customer for customs purposes or f or any purpose
connected with their transportation;
41.1.2 the value of the goods declared for insurance purposes;
41.1.3 double the amount of the fees raised by [Schenker] for its services in
connection with the goods, but excluding any amounts payable to
sub- contractors, agents and third parties.
41.2 If it is desired that the liability of [Schenker] in those cases where it is liable to
the customer in terms of clause 40.1 should not be governed by the limits
MATHOPO J
6
referred to in clause 41.1 written notice thereof must be received by [Schenker]
before any goods or documents are entrusted to or delivered to or into the
control of [Schenker] (or its agent or sub-contractor), together with a statement
of the value of the goods. Upon receipt of such notice [Schenker] may in the
exercise of its absolute discretion agree in writing to its liability being
increased to a maximum amount equivalent to the amount stated in the notice,
in which case it will be entitled to effect special insurance to cover its
maximum liability and the party giving the notice shall be deemed, by so doing,
to have agreed and undertaken to pay to [Schenker] the amount of the premium
payable by [Schenker] for such insurance. If [Schenker] does not so agree the
limits referred to in clause 41.1 shall apply.”
Litigation history
High Court
[10] Fujitsu instituted a delictual claim for damages against Schenker on the basis that
Schenker was vicariously liable for the loss suffered as a result of the theft. Schenker
disputed the claim on the ground that clause 17, read with clauses 40 and 41, exempted
it from liability.
[11] The High Court held that theft was an act outside the performance of the parties’
contract and that the exemption clause did not apply. The High Court reasoned that
Schenker should not be allowed to rely on the exemption clause in circumstances where
the contract was not being executed. It concluded that , if Schenker intended the
exclusion clauses to apply to the delictual claim of theft, it ought to have spelt it out
with the necessary precision and clarity. It held that the parties did not contemplate that
clauses 17, 40 and 41 would encompass a delictual claim based on theft. The Court
found that the clauses d id not exclude liability for theft. It relied on Hotels, Inns and
Resorts,3 where it was held that, absent a clear contrary intention, an exemption clause
should be restrictively interpreted, and should not be interpreted to apply to conduct
which does not constitute execution of the contract. Having found that the clau ses did
3 Hotels, Inns and Resorts (Pty) Ltd v Underwriters at Lloyds 1998 (4) SA 466 (C).
MATHOPO J
7
not exclude liability for theft , it upheld Fujitsu’s arguments. The High Court granted
leave to appeal to the Supreme Court of Appeal.
Supreme Court of Appeal
[12] Before the Supreme Court of Appeal, the sole issue for determination was
whether Fujitsu’s delictual claim based on theft was excluded by clauses 17 and 40 of
the standard terms.4 The Court expressed itself as follows:
“Consequently, Fujitsu instituted a delictual action for damages against Schenker in
relation to the th eft. Schenker con ceded in the High C ourt that, at the time of theft,
Mr Lerama had acted within the course and scope of his employment and that, unless
liability was excluded in terms of the contract, Schenker was vicariously liable for the
loss suffered as a result of Mr Lerama’s deviant conduct. The quantum was not
contested.”
[13] It accepted that the evidence established that Schenker was informed of the
arrival of Fujitsu’s goods at ORTIA and SAA Cargo Warehouse and the goods were
checked by Freight Surveillance Internati onal on the instructions of Schenker.
Mr Lerama had been issued with the IVS card; customs cleared the goods using the
documents prepared by Schenker and the goods were handed to him on the basis of
these documents. It further held that the goods were “handled”, “transported” or “dealt
with” by or on behalf of Schenker as contemplated in clause 1.3.35 of the contract.
[14] The Supreme Court of Appeal held that a claim against Schenker in respect of
the valuable goods , in terms of clause 17 , was governed by clause s 40 and 41 with
sub-clause 40.1 excluding Schenker’s liability for any claim of “whatsoever” nature
4 Schenker South Africa (Pty) Ltd v Fujitsu Services Core (Pty) Ltd [2022] ZASCA 7 (Supreme Court of
Appeal Judgment).
5 Clause 1.3.3 states:
“Goods’ means any goods, handled, transported or dealt with by or on behalf of or at the instance
of (Schenker) or which come under the control of the Company or its agents, servants, or
nominees on the instructions of the customer, and includes any container, transportable tank,
flat pallet, packag e or any other form of covering, packaging, container or equipment used in
connection with or in relation to such goods.”
MATHOPO J
8
(whether in contract or delict) and whether for damages or otherwise “howsoever
arising”. The Supreme Court of Appeal held that these words should be accorded their
ordinary and literal meaning and reasoned that they were “sufficiently wide enough in
their ordinary import to draw into the protective scope of the exemption the deliberate
and intentional conduct of the employees of Schenker”.6 I pause to state that in reaching
its conclusion, the Supreme Court of Appeal was aware of its earlier decision in G4S7
where that Court, in interpreting similar or identical words – “any loss or damage”, “any
consequential loss or damage”, “howso ever arising” ,“for any reason whatsoever” and
“however arising” – held that even though the words are broad they should not be
divorced from their context. Notwithstanding this ratio, it held that the facts and issues
raised in G4S are distinguishable from the present case.
[15] The Supreme Court of Appeal further held that , because the goods were
valuables, commercial rationale required that the goods be specified and special
arrangements be made with Schenker to enable it to take step s to mitigate the risk of
theft or any other potential claim. The Supreme Court of Appeal concluded that in the
absence of any written special arrangement, Schenker would not be liable “whatsoever”
in respect of such goods nor incur liability in respect o f its negligent acts or omission.
It relied on the decision of Goodman Brothers.8 In that case, the Full Court interpreted
an exemption clause , worded in terms almost identical to clause 17, as excluding
liability. The Supreme Court of Appeal did not co nsider the contractual context in
which the exemption clause in Goodman Brothers operated nor did it interrogate
whether there were other public policy considerations which militate d against the
enforcement of the exemption clause. In light of its holding s on the issues, t he
Supreme Court of Appeal reversed the decision of the High Court.
6 Supreme Court of Appeal judgment above n 5 at para 15.
7 G4S Cash Solutions SA (Pty) Ltd v Zandspruit Cash a nd Carry (Pty) Ltd [2016] ZASCA 113; 2017 (2) SA 24
(SCA).
8 Goodman Brothers (Pty) Ltd v Rennies Group Ltd 1997 (4) SA 91 (W).
MATHOPO J
9
Before this Court
Fujitsu’s submissions
[16] Fujitsu contends that this matter engages this Court’s jurisdiction as the matter
raises an arguable point of law of general public importance. It submits that the question
of whether the exemption clauses relied upon by Schenker exclude liability for a
delictual claim for theft by one of its employees thus interpreting key clauses in the
SAAFF’s standard terms and conditions. It further argues that this raises
“a quintessential point of law” that is of general public importance.9
[17] Fujitsu argues that in Tiekiedraai10 this Court held that the correct interpretation
of a contractual provision might be one of “general public importance” when it is
contained “in a standard form document in widespread use, affecting a large number of
[persons]”.11 It argues tha t the distribution agreement incorporates the SAAFF terms
and conditions, which are used across the freight forwarding industry in this country.
[18] Fujitsu argues that the judgment of the Supreme Court of Appeal must be
overturned and that the exemption clau se should not be interpreted to exclude theft by
Schenker’s employee , Mr Lerama. It submits that the approach adopted by the
Supreme Court of Appeal has a number of shortcomings. First, it interpreted the words
“dealt with” and “handled” without regard to the contractual context. This is regardless
of whether the person handling the goods is a thief. In so doing, it ignored the fact that
Mr Lerama’s actions were unlawful and not in accordance with the contract. Second ,
Fujitsu argues that clauses 17 and 40, read in the context of the agreement , must be
understood to apply to goods in transit that are “handled” or “dealt with ” in the
performance of a contract. Third, that the absurdity in that interpretation is that it
ignores that clause 17 does not encourage employees to steal but at the same time
9 For this submission, Fujitsu relies on Big G Restaurants (Pty) Limited v Commissioner for the South African
Revenue Service [2020] ZACC 16; 2020 (6) SA 1 (CC); 2020 (11) BCLR 1297 (CC) at para 11.
10 Tiekiedraai Eiendomme (Pty) Limited v Shell South Africa Marketing (Pty) Limited [2019] ZACC 14; 2019 (7)
BCLR 850 (CC).
11 Id at para 13.
MATHOPO J
10
indemnifies the employer once the theft has been committed by the employee. Fujitsu
argues that clause 17 cannot be permitte d to create impunity for Schenker to benefit
from its employee’s unlawful conduct. This is especially so because it conceded that it
was vicariously liable for the actions of Mr Lerama in the High Court, Supreme Court
of Appeal and before this Court.
[19] Fourth, Fujitsu contends that on a proper interpretation of clauses 17 and 40, the
words no claim “whatsoever” and “howsoever arising” do not include intentional acts.
To shore up its argument, Fujitsu contends that if Schenker could “deal with” the goods
in any manner “whatsoever” it must correspondingly owe some duty to Fujitsu. To
argue that Fujitsu has no rights and Schenker no duties is incongruent with the common
intention of the parties and the contractual terms.
[20] Fifth, Fujitsu further contends that the Supreme Court of Appeal failed to take
into account clause 3 12 of the standard terms and conditions which indicates that the
standard terms only apply to conduct in the course of legitimately executing or
performing a contract. This clause, according t o Fujitsu , essentially means that the
standard terms apply to “business undertaken, advice, information or services” provided
by Schenker. If an activity falls outside of any of these terms, the standard terms will
not apply.
[21] Fujitsu contends further tha t the Supreme Court of Appeal failed to properly
discern that theft of goods does not constitute a business undertaking, giving advice,
information or providing services. It submits that although clause 40.1 indicates that it
is silent on theft by an empl oyee and theft of the goods runs against the spirit, purport
and nature of the contract. It relied on the Canadian case of Punch13 where the Court
reasoned that “[i]f an employer wishes to be exempted from any responsibility for loss
12 Clause 3 states that : “all and any business undertaken or advi ce, information or services provided by the
Company, whether gratuitous or not, is undertaken or provided on these trading terms and conditions”.
13 Punch v Savoy’s Jewellers Ltd et al (1986) 14 O.A.C. 4 (CA).
MATHOPO J
11
arising from theft by his own employe es then good conscience requires that such an
exclusion be spelt out with clarity and precision.”
[22] Again, r elying on Barkhuizen14 and Beadica,15 Fujitsu argues th at
Goodman Brothers is incompatible with public policy and requires reconsideration by
this Court because an endorsement of clause 17 will deprive Fujitsu of its judicial
redress in circumstances inimical to constitutional values and contrary to public policy.
Fujitsu further contend s that enforcing a contractual term lik e this one would bring
exemption clauses out of step with the boni mores (values) of the community and erode
the very essence of the fundamental agreement between the parties.
Schenker’s submissions
[23] Schenker contends that this matter does not engage this Court’s jurisdiction as it
does not raise an arguable point of law of general public importance which ought to be
considered by this Court. Schenker relies on Tiekiedraai, where this Court held that an
appeal concerning the interpretation of a contract be tween two parties does not fall
within section 167(3)(b)(ii) of the Constitution, as it does not raise an arguable point of
law of general public importance. It contends that there is no evidence before this Court
nor a basis in law to conclude that the exemption clauses are incorporated, by reference,
across the freight forwarding industry. The issues in dispute are not of significant public
importance, but relate only to these two contracting parties.
[24] Regarding the merits, Schenker argues that the Supreme Court of Appeal’s
interpretation of the exemption clauses is correct. In support of this, Schenker submits
that the exemption clauses in question are clear, unambiguous and exclude a party’s
liability if the other party does not make special arrangements in advance and in writing
where the goods being transported are valuable . Schenker contends that the stolen
goods were valuables in terms of clause 17 (this was not disputed) and Fujitsu was
14 Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC).
15 Beadica 231 CC v Trustees for the Time Being of the Oregon Trust [2020] ZACC 13; 2020 (5) SA 247 (CC);
2020 (9) BCLR 1098 (CC).
MATHOPO J
12
required to make special arrangements in writing. By not making special arrangements,
Fujitsu assumed the risk and it was incumbent upon it to arrange its own insurance.
It further submits that clause 17 does not require acts or omission s in the performance
of the contract. The exemption cla use applies regardless of whether the company
handled the goods. Put simply, it does not matter whether the thief is connected to the
company or not. Schenker relies on Goodman Brothers where it was held that the
purpose of such clauses is to provide the party that will be dealing with the goods an
opportunity to get fidelity insurance or take other measures to protect itself against the
dishonesty of its employees.16
[25] Relying on the ratio of the Supreme Court of Appeal, Schenker submits that the
words “whatsoever” nature a nd “howsoever arising” do not limit liability, and the
phrase “any loss” are wide enough and must be given their ordinary and literal meaning
as being intended to exempt Schenker from liability and this includes loss or damage
caused by its own deliberate wrongdoing or negligent conduct or by that of its servants.
It submits that this is so irrespective of whether Fujitsu seeks to assert a claim in delict
or contract.
[26] Finally, Schenker submits that there is no merit in Fujitsu’s publi c policy
argument because it was not pleaded in the H igh Court and the
Supreme Court of Appeal. It argues that the commercial essence of the contract is not
undermined by the exemption clause. Had Fujitsu provided Schenker with prior written
notice, its delictual claim for the theft would not face any limitation of liability. Relying
on Goodman Brothers, Schenker contend s that public policy considerations do not
preclude it from relying on the exemption clauses.
Leave to Appeal
[27] It is axiomatic that in o rder for leave to appeal to be granted, a matter must
engage this Court’s jurisdiction and it must be in the interests of justice to grant leave
16 Goodman Brothers above n 8 at para 107.
MATHOPO J
13
to appeal. A matter engages this Court’s jurisdiction when it raises a constitutional
issue or an arguable poi nt of law of general public importance which ought to be
considered by this Court.17
[28] There is no doubt that our jurisdiction is engaged and that it is in the interests of
justice to grant leave to appeal. This matter raises an arguable point of law of gen eral
public importance, the consideration of which transcends the narrow interests of the
litigants. In addition, the public policy question raised by Fujitsu raises a constitutional
issue.
[29] I have had the benefit of reading the second judgment penned by Zondo CJ
(second judgment). The second judgment agrees that this Court ’s jurisdiction is
triggered in view of Fujitsu’s contention that clause 17 is contrary to public policy and,
as a consequence, raises a constitutional issue. Although the second judgm ent
acknowledges that the matter raises an arguable point of law, it disagrees with the view
that it is one of general public importance. I disagree with this interpretation.
[30] Paulsen18 tells us that “a point of law is arguable if it entails a degree of me rit.
Although the argument need not, of necessity, be convincing at this stage, it must have
a measure of plausibility” .19 The arguable point in this case is whether an exemption
clause of this kind can be construed as excluding liability for theft by an employee. The
argument by Fujitsu does have some degree of merit or a measure of plausibility as I
will demonstrate later in the judgment. To the extent that the Supreme Court of Appeal
dismissed the argument on the basis of Goodman Brothers , it behoves this Court to
reconsider the rationale of that judgment and decide whether it can coexist with the
decisions of this Court in Barkhuizen and Beadica.
17 Section 167(3)(b) of the Constitution. See also National Union of Metal Workers of South Africa v Aveng
Trident Steel (a division of Aveng Africa (Pty) Ltd) [2020] ZACC 23; [2021] 1 BLLR 1 (CC); (2021) 42 ILJ 6 7
(CC); 2021 (2) BCLR 168 (CC) at para 26.
18 Paulsen v Slip Knot Investments 777 (Pty) Limited [2015] ZACC 5; 2015 (3) SA 479 (CC); 2015 (5) BCLR
509 (CC).
19 Id at para 21.
MATHOPO J
14
[31] What is squarely implicated in this case is whether the SAAFF
terms and conditions transcend the narrow interest of the litigants. Contrary to the
argument advanced by Schenker , this issue implicates a significant part of the
general public. According to the membership directory on the SA AFF website, it has
over 406 members. The SAAFF lists each of these companies, including their addresses
and contact details. The site further informs us that the member companies manage
over 80% of South Africa’s international trade. A membership this large
unquestionably demonstrates a far wide interest in this litigation. This essentially means
that this matter transcends the narrow interest of the parties before us.
Freight forwarders and counterparties who make use of the standard terms constitute a
significant segment of the public which has an interest in a definitive judgment on the
proper interpretation of the exclusion of liability in these terms. The divergent
approaches by different courts afford this Court an opportunity to resolve the
uncertainty or confusion in respect of exemption clauses.
[32] More recently, Khampepe J in Auckland Park Theological Seminary held that:
“A point is of general public importance if its resolution transcends the interests of the
parties to a particular litigation. In other words, its resolution must benefit the
general public. There is no doubt in my mind that it is of general public importance
that this Court, amongst other things, clarifies the correct approach to contractual
interpretation.”20
[33] In Tiekiedraai, the Court found that the intricacies of the disputes frustrated only
the litigants, and this included the implications and practical effects. In a similar vein,
Cameron J expressly stated that if the lease agreement in question had been a standard
document in widespread use, affecting a large number of consumers, then Tiekiedraai’s
position would have been different. In other words, had that been the case, then
this Court’s jurisdiction would have been engaged. Tiekiedraai dispelled any
20 University of Johannesburg v Auckland Park Theological Seminary [2021] ZACC 13; 2021 (6) SA 1 (CC) ;
2021 (8) BCLR 807 (CC) at para 51.
MATHOPO J
15
misconception and buttressed the view that in matters where standard form terms of a
document are in widespread use and affecting a large number of corporations, the matter
transcends the interests of the litigants.
[34] Another strongly compelling argument is whether considerations of
public policy militate against the enforcement of the exemption clause of the kind
asserted by Schenker. This is no doubt a constitutional issue that engages this Court’s
constitutional jurisdiction . During argument , counsel for Schenker conceded that it
would not suffer prejudice or unfairness if Fu jitsu were to be given the opportunity to
present its argument regarding public policy for the first time before us. In an attempt
to row away from this concession, counsel for Schenker contended that it was
impermissible for this point to be raised becau se it was not canvassed before the
High Court and the Supreme Court of Appeal. I do not agree , and I will demonstrate
why later.
[35] This Court in Barkhuizen held:
“The mere fact that a point of law is raised for the first time on appeal is not in itself
sufficient reason for refusing to consider it. If the point is covered by the pleadings,
and if its consideration on appeal involves no unfairness to the other party against
whom it is directed, this Court may in the exercise of its discretion consider the point.”21
[36] Furthermore, in Alexkor22 this Court, relying on Fraser,23 held that “in terms of
that rule it is open to a party to raise a new point of law on appeal for the first time if it
involves no unfairness . . . and raises no new factual issues”.24
[37] Cameron J held that—
21 Barkhuizen above n 14 at para 39.
22 Alexkor Ltd v Richtersveld Community [2003] ZACC 18; 2004 (5) SA 460 (CC); 2003 (12) BCLR 1301 (CC).
23 Naude v Fraser [1998] ZASCA 56; 1998 (4) SA 539 (SCA) at 558A; 1998 (8) BCLR 945 (SCA) at para 960.
24 Alexkor above n 22 at para 44 (emphasis added).
MATHOPO J
16
“[o]bviously cases arise where this Court should consider points of law not considered
before. But there must be something extra . There is none here. Hall and Shell were
contractants dealing at arm’s length with each other, as were Tiekiedraai and Hall. So
far it may appear, the parties had enough legal resources to enable each of them to
secure their best interests in the courts below. That must be the end of the matter.”25
[38] The second judgment rightly holds that—
“[o]ne of the requirements which must be met before this Court may entertain a point
of law raised by a litigant for the first time on appeal is that the point must be ‘covered
by the pleadings.’ Another requirement is that the consideration of that point of la w
must not involve any unfairness to the other party against whom it is directed.
This Court said that ‘unfairness may arise where, for example, a party would not have
agreed on material facts, or on only those facts stated in the agreed statement of fact s
had the party been aware that there were other legal issues involved. It would similarly
be unfair to the other party if the law point and all its ramifications were not canvassed
and investigated at trial.’”26
[39] In Tuta, in the context of a criminal law matter, this Court held that it may still
continue to hear arguments raised by applicants for the first time where it is not only in
the interests of justice that it do es so but that there is also no prejudice to the parties .
Unterhalter AJ, writing for the majority, held:
“I cannot see any basis why this reasoning should not be extended to the situation
where an error of law is raised for the first time in oral argument . If the error of law
raises a constitutional issue or an arguable p oint of law of general public importance
and the interests of justice require our intervention because of the risk of an unsound
conviction, then if the issue can be determined on the papers as they stand and no
prejudice arises, this Court should not be p recluded from considering the matter. ”27
(Emphasis added.)
25 Tiekiedraai above n 10 at para 25.
26 Second judgment at [93].
27 Tuta v The State [2022] ZACC 19; 2023 (2) BCLR 179 (CC) at para 12.
MATHOPO J
17
[40] Similarly, in this case , no prejudice would be suffered by Schenker as the
constitutional issue can be determined on the papers and the interests of justice demand
that the position in Goodman Brothers be reassessed. Recently, this Court in Beadica
held that “[w]hether the enforcement of a contractual clause would be contrary to
public policy, in that it is inimical to constitutional values, is a constitutional issue ”.28
I align myself with the re marks made in Beadica that, in ensuring that contracts are
governed by good faith, courts would have to ensure that constitutional challenges to
contractual terms are properly interpreted to determine whether the term challenged is
contrary to public policy as evidenced by the constitutional values, in particular, those
found in the Bill of Rights.
[41] In th ese circumstances, it will be in the interest s of justice to grant leave to
appeal.
Issues for determination
[42] As stated earlier, the main issue is whether the exemption clauses, properly
interpreted, exclude liability for a delictual claim for theft by employees. At the heart
of this matter is the proper interpretation of clause s 17, 40 , and 41 of the
standard agreement.
Analysis
Do the exemption clauses a pply to activity or conduct that includes theft by an
employee?
[43] It was argued on behalf of Schenker that for liability to arise, Fujitsu must have
made special arrangement s in writing regarding the valuable goods it delivered to
Schenker. Absent any speci al arrangements, Schenker will not be liable or incur
liability in respect of its negligent acts or omissions in respect of such goods. It was
submitted that Fujitsu bore the onus of proving that theft does not fall within the
28 Beadica at above n 15 at para 16.
MATHOPO J
18
qualifying phrases “whatsoever” and “howsoever arising”. If it succeeded in proving
that, Schenker would then bear an evidential burden to prove that it was exempt from
liability by virtue of the exemption clauses.
[44] Dealing first with the qualifying phrases “any such goods whatsoeve r” and
“howsoever arising”, Schenker argued that the words should be understood to mean that
no liability for any claim of whatsoever nature (whether in delict or contract) ,
howsoever arising , would arise under such circumstances . The argument was
articulated in this way. The commercial purpose of the agreement was for Schenker to
provide services to Fujitsu. The stolen goods were valuables in terms of clause 17.
Fujitsu was required to make special arrangement s in writing and, absent any special
arrangement, clause 17 excluded Schenker’s liability for its employees ’ theft. In
essence, if any valuables are to be conveyed or transported, and special arrangements
for such conveyance have not been made, clause 17 is triggered and Schenker shall bear
no responsibility whatsoever for any loss.
[45] I do not agree with the submissions made by counsel for Schenker on this issue.
Even if it is accepted that the qualifying words or phrases limit the liability of Schenker,
there is no compelling reason to include theft from the exclusion of liability prescribed
by clause 17. Theft does not constitute the performance of the contract that requires
Schenker to collect and deliver the goods to or on behalf of Fujitsu. Furthermore, theft
of goods does n ot constitute an undertaking of business or the giving of advice,
information or services.
[46] The Supreme Court of Appeal obfuscated the issues by focusing too intently on
the dictionary meaning of the words “handle” or “dealt with”. The material flaw in the
Supreme Court of Appeal judgment is three -fold. First, it interpreted the words
“handle” or “dealt with” irrespective of whether the person handling or dealing with
them is a thief. Second, it applied the ordinary meaning of the words without any
consideration to the overall context in which those words appear in the agreement .
Third, it rejected Fujitsu’s case that clauses 17 and 40 , read in context , must be
MATHOPO J
19
understood to apply to goods in transit or dealt with in the course of Schenker’s
performance of the contract. It is inconceivable that the words must be construed
outside the terms of the contract. What must be gleaned from the contract is that the
parties intended that the terms or interpretation must fall in line with the terms of the
contract. Clauses 17 and 40 were intended to cover Schenker against acts or omissions
falling within the terms of the contract, not theft.
[47] The second judgment holds that the heading in clause 17 , “Goods requiring
special arrangements ”, tells the reader that the good s stolen by Mr Lerama required
special arrangements.29 This interpretation has its own shortcomings and fails to t ake
into account the established principles of interpretation. The manner in which the
second judgment would h ave us interpret the clauses to achieve the ir meaning cannot
produce the outcome contemplated by the parties. What, in my view, tends to diminish
the force of this argument is that it is not anchored in the proper interpretation of
contractual principles. This matter is essentially one of interpretation and the common
intention of the parties must be ascertained from the language used in the instrument.
There are v arious canons of interpretation that can be used to ascertain the parties’
common intention at the time of concluding an agreement – one of which is the language
used in the document.
[48] As I understand Endumeni,30 the language used in the document should be given
its grammatical and ordinary meaning unless this would result in some absurdity ,
repugnancy or inconsistency with the rest of the instrument. 31 The mode of
construction, however, should never be to interpret the particular word or phrase in
isolation. It is remiss to focus on individual aspects of the agreement and t o read the
entire agreement in a piecemeal fashion. The purpose of the impugned clauses requires
a court to counterpoise the purpose of the agreement , on the one hand, on the other to
29 Second judgment [99].
30 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA).
31 Id at para 25.
MATHOPO J
20
ensure that the contextual approach to the proper interpretation of the exemption clause
is not ignored.
[49] It is apparent that the agreement requires a proper examination and
understanding of the context within which clause 17 operates, giving effect to a sensible,
business-like meaning. This means that if conduct does not fall within the performance
of the contract or in the undertaking of business or the giving of advice, information or
services, the exemption of liability in clauses 17 and 40 does not arise. On these
grounds, the exemption clause (clause 17) can only apply when the contract is being
lawfully performed by Schenker.
[50] In Cinema City the following words of Lord Wilberforce in
Reardon Smith Line32 were quoted with approval:
“No contracts are made in vacuum: there is always a setting in which they have to be
placed. The nature of what is legitimate to have regard to is usually described as ‘the
surrounding circumstances’ but this phrase is imprecise: it can be illustrated but hardly
defined. In a commercial contract it is certainly right that the court should know the
commercial purpose of the contract and this in turn presupposes knowledge of the
genesis of the transaction, the background, the context, the market in which the parties
are operating.”33
[51] It is now accepted in our law that a contract such as the one under consideration,
in which different interpretations are attached to the meaning of the contested clauses,
ought to be interpreted against the background of the factual context in which it was
concluded. The literal or dictionary interpretation of clause 17 involves a radical
departure from the proper interpretation of the contract. As I have said, it would allow
Schenker to benefit from the unlawful conduct of its employees especially where it is
in conflict with other provisions of the contract. I would have expected clause 17 to
have been unambiguously formulated with precision and clarity. Counsel for Schenker
32 Reardon Smith Line v Hansen Tangen; Hansen Tangen v Sanko Steamship Co (1976) 3 All E 570 (HL).
33 Cinema City (Pty) Limited v Morgenstern Family Estates (Pty) Limited 1980 (1) SA 796 (A) at 805A-B.
MATHOPO J
21
sought to persuade us that clause 17 is a stand -alone provision. We must resist the
invitation, the provision of clause 17 cannot be read without regard to other clauses of
the agreement. Similarly, clause 40 cannot be construed as a carve out.
[52] I have also considered whether there is perhaps another rule of interpretation
which might, in the circumstances of this case , justify a result different from the one
which I have favoured. I could not find any compelling reason to the contrary to my
position. On my interpretation, the argument foisted upon us is not only undesirable
but also difficult to understand, would create anomalous results and would also lead to
unbusiness-like consequences. In Bothma-Batho Transport ,34 the Supreme Court of
Appeal said that the interpretation of contractual terms does not stop at the literal
meaning of words, but considers them in light of all relevant and admissible context. 35
Therefore, one cannot interpret the exemption clause by way of defining words alon e.
Interpretation is to be approached holistically: simultaneously considering the text,
context and purpose. Chisuse reiterated that interpretation is a unitary exercise .36
Intentional wrongful conduct by an employee cannot be covered under the exemptio n
clause. I find it hard to accept that Mr Lerama was enforcing the contractual terms
between his employer and Fujitsu.
[53] In Capitec Bank Holdings,37 the Supreme Court of Appeal stated that:
“[T]he meaning of a contested term of a contract (or provision in a statute) is properly
understood not simply by selecting standard definitions of particular words, often taken
from dictionaries, but by understanding the words and sentences that comprise the
contested term as they fit into the larger structure of the a greement, its context and
purpose. Meaning is ultimately the most compelling and coherent account the
34 Bothma-Batho Transport (Edms) Bpk v S Bothma and Seun Transport (Edms) Bpk [2013] ZASCA 176; 2014
(2) SA 494 (SCA).
35 Id at para 12. See also Chisuse v Director-General, Department of Home Affa irs [2020] ZACC 20; 2020 (6)
SA 14 (CC); 2020 (10) BCLR 1173 (CC) at para 52 and University of Johannesburg above n 20 at para 63.
36 Chisuse above n 35 at para 52.
37 Capitec Bank Holdings Limited v Coral Lagoon Investments 194 (Pty) Ltd [2021] ZASCA 99; 2022 (1) SA
100 SCA.
MATHOPO J
22
interpreter can provide, making use of these sources of interpretation. It is not a partial
selection of interpretational materials directed at a predet ermined result.” 38
(Emphasis added.)
[54] In the present case, the phrases “of whatsoever ” nature, “any such goods ”,
“howsoever arising”, “any loss damage or expense arising” and “whatsoever shall any
liability” are words of wide compass and meaning. In the context of the clause under
consideration, one can hardly state without reservation that the phrases will, under all
circumstances, encompass a total exemption of liability. In drafting this clause , the
contracting parties probably had in mind precisely what the qualification and phrase s
set out to do , which is to exclude liability for wrongful acts by employees committed
outside the contractual context.
[55] The broad language used in the exemption clause of words or phrases such as
“of whatsoever” nature, “any such goods”, “howsoever arising”, “any loss damage or
expense arising” and “whatsoever shall any liability” does not extend to the
unauthorised execu tion of the contract. In Punch, the Court reasoned that if an
employer wishes to exclude any responsibility for loss arising from theft by his own
employees, then good conscience requires that such an exclusion be spelt out with
clarity and precision.39
[56] Contractual clauses that limit liability must be interpreted narrowly, particularly
if the harm in question arises outside of the contract, unless the parties expressly agree
otherwise. It is a trite principle – that indemnity clauses are to be construed
restrictively.40 Related to this – if a party wishes to contract out of liability, it must do
so in clear and unequivocal terms. 41 In the case of doubt, ambiguity or secondary
meaning, the issue must be resolved against the proferens (the drafter of the contract).42
38 Id at para 50.
39 Punch above n 13.
40 Hutchison and Pretorius Law of Contract at 3ed (Oxford University Press, 2017) at 283.
41 Id at 281-2.
42 Id.
MATHOPO J
23
Absent a clear intention to the contrary, exemption clauses should not be construed in a
way that would excuse or limit the consequences of wrongful actions undertaken
outside the operation or authority of the contract. And where an exemption c lause
purports to exclude liability in general terms, the exemption clause must be given the
minimum degree of effectiveness by only excluding liability involving the minimum
degree of blameworthiness. More particularly for the purposes of this case, if a party
seeks to exclude liability for theft, it must do so in express terms.
[57] Another trite principle that must find application here is that a reference in a
statute or a contract to any action or conduct will be presumed, in the absence of any
clear indication to the contrary, to be a reference to lawful action or conduct . Properly
construed, the words “handled” and “dealt with” in clauses 1.3.3 and 17 must be taken
to mean “lawfully handled” and “lawfully dealt with”.
Whether the exemption clause applies to intentional conduct
[58] I next address the issue of whether the exemption clause applie s to intentional
conduct. The Supreme Court of Appeal construed clause 40.1 as including intentional
acts. This approach is incorrect. In my view, a proper reading of clause 40.1 indicates
that the clause is silent on the basis of this liability but only states liability in contract
or delict. A further reading of the clause speaks of negligent acts or omissions causing
loss or damage. It is difficult to comprehend how or why the parties could have intended
that where there is deliberate or intentional conduct such as theft and/or liability would
be excluded yet a different position is catered for in respect of negligent acts or
omissions. To expect clause 40 to exclude liability for theft but not for gross negligence
defies logic. On the accepted principle s of interpretation, clauses 17 and 40 make no
reference to intentional acts like theft. The argument advanced by Schenker is therefore
a radical d eparture from the contractual terms. Clause 17 cannot create impunity for
Schenker or permit it to profit from or benefit from the unlawful actions of its
employees. I reiterate that had Schenker intended or wished to cover itself against this
kind of loss , it should have specifically included theft. A clearer clause could have
avoided any absurdity or uncertainty.
MATHOPO J
24
[59] The second judgment further states —
“Schenker’s liability is not excluded because clause 17 only excludes Schenker’s
liability where its employee is executing the agreement between the parties is in essence
similar to an argument that Police Officers who raped a member of the public to whom
they had given a lift were not executing their duties and, that, therefore, the Minister of
Police was not vicariously liable for their unlawful conduct.”43
[60] The example posited by the second judgment is unfortunately inapt. I do not
find K44 applicable to the current matter. K dealt with deviation cases in determining
vicarious liability, a tes t which has since been developed more recently in F45 and
Stallion.
[61] What is clear is that a person cannot escape liability for fraud or dishonesty by
inserting an exemption clause to cover such conduct. By parity of reasoning , this also
applies to theft. If Schenker’s argument prevails, it would encourage parties to contract
out of liability for frau d, dishonesty and or theft. None of the clauses Schenker relied
upon support such a construction. Courts have repeatedly held that exemption clauses
should be interpreted restrictively . The rationale is to protect a party against more
extensive potential liability by confining the clause within reasonable bounds. In
Rosenblum, the Supreme Court of Appeal reasoned that, where a party to a contract
wishes to be exempted from an obligation , they have to clearly state their intention
without any ambiguity.46
[62] Marais JA stated that —
43 Second judgment at [116].
44 K v Minister of Safety and Security [2005] ZACC 8; 2005 (6) SA 419 (CC); 2005 (9) BCLR 835 (CC).
45 F v Minister of Safety and Security [2011] ZACC 37; 2012 (1) SA 536 (CC); 2012 (3) BCLR 244 (CC).
46 First National Bank of Southern Africa Ltd v Rosenblum [2001] ZASCA 77; 2001 (4) SA 189 (SCA).
MATHOPO J
25
“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.”47
[63] I have already indicated that the ordinary and literal interpretation as favoured
by the Supreme Court of Appeal is f raught with difficulties. It is not supported by the
text of the exemption clause read in its context. Schenker’s submissions are misguided.
It means the clauses would permit the enforcement of the exemption clause in
circumstances where the factual matrix, context and interpretation do not bear out such
enforcement. Furthermore, on Schenker’s interpretation, if the goods are stolen in its
custody, it would escape liability and point to the thief , regardless of whether the thief
is connected to it or not. This is unconscionable. Even if one adopts the literalist
approach, which sits on the extreme opposite end of the purposive interpretation, one is
bound to ask what happens when goods are stored and then stolen by employees. Does
the contract encourage a custodian party to simply shrug its shoulders and walk away?
I think not.
[64] In my view , Fujitsu’s argument not only bears out but also reinforces the text
and context of the agreement. It establish es the basic contractual principle s: the
intention of the parties , the commercial purpose of the contract, the genesis of the
transaction, the background, the context, and the market in which the parties are
operating. All of these factors must be given effect to. To my mind , the parties
deliberately applied their minds to the different forms of culpa and its impact on liability
and distinguished between gross negligence (for which Schenker would be liable if the
goods were in its possession) and ordinary negligence ( for which Schenker contracted
out of liability). They were silent as to deliberate conduct . It must follow that if they
47 Id at para 6.
MATHOPO J
26
did not contract out of gross negligence, it is inconceivable to infer that they contracted
out of deliberate and intentional conduct. It stretches the canons of interpretation simply
too far – it is illogical, not business -like and leads to absurd results. On this basis ,
Schenker would be liable for loss by theft if an employee acted with gross negligence
in leaving a warehouse unlocked. It would not, however, attract liability if the loss was
caused by an employee deliberately leaving the warehouse open as part of a plan to steal
the goods housed therein. This is another fallacy in Schenker’s argument.
[65] Another issue that requires attention is the Supreme Court of Ap peal’s decision
in G4S. This relates to the Supreme Court of Appeal’s finding that G4S is
distinguishable. In that matter , the retailers had concluded cash management and
ancillary services agreements with G4S. The issue on appeal was whether a
time-limitation clause in written agreements concluded by the parties precluded the
retailers from instituting delictual claims for damages against G4S.48 G4S submitted
that the employment of the phrases “howsoever arising or for any reason whatsoever
suffered”, “whatsoever and howsoever caused”, “such loss or damage whatsoever” and
“howsoever arising”, supports the broader interpretation.49 On a proper construction of
clause 9, the commercially sensible intention was to exclude liability on the part of G4S
for all claims related to the cash management services, save for claims arising from acts
of gross negligence or theft by G4S ’s employees.50 In the result, clause 9.9 was given
a wide and unrestricted meaning, encompassing the respondents’ delictual claims.
[66] Fourie AJA held that the main difficulty with this method of interpretation is that
the words and phrases emphasised by G4S “are read in isolation and not within the
contractual setting as appears from the agreements as a whole. ”51 The Court further
48 G4S above n 7 at para 1.
49 Id at para 17.
50 G4S above n 7 at para 18.
51 Id.
MATHOPO J
27
held that “to single out words and phrases in an attempt to arrive at a different
conclusion simply means that the context in which they are used is ignored”.52
[67] The principles enunciated in G4S are sound and support the correct interpretation
advanced by Fujitsu . The Supreme Court of Appeal erred in not following its own
jurisprudence. It is clear to me that the interpretation contended for by Schenker would
deprive the exemption clause of its business efficacy. It w ill be difficult for the client,
upon whom the onus on this aspect rests, to be able to prove or disprove the theft by the
service provider’s employees. I do not accept that it could have been the intention of
the parties to have placed this unusual , difficult and unreasonable burden of proof on
Fujitsu. I conclude that t he stance taken by Schenker that , in the absence of special
written arrangements, Fujitsu has no rights “whatsoever” , is misconceived. If Fujitsu
could deal with the goods in any manner whatsoever, surely it must owe s ome duty to
a party whose goods it has agreed to handle and exercise control over. If this is not a
duty that arises out of contract, can one say considerations of public policy support the
stance taken by Schenker? I now deal with this issue.
Does the exemption clause offend public policy?
[68] In Brisley,53 describing public policy , Cameron JA said: “[i]n its modern guise
‘public policy’ is now rooted in our Constitution and the fundamental values it
enshrines. These include human dignity, the achievement o f equality and the
advancement of human rights and freedoms, non-racialism and non-sexism.”54
[69] This principle was confirmed by this Court in Barkhuizen where Ngcobo CJ said:
“Ordinarily, constitutional challenges to contractual terms will give rise to the question
of whether the disputed provision is contrary to public policy. Public policy represents
the legal convictions of the community; it represents those values that are held most
52 Id.
53 Brisley v Drotsky [2002] ZASCA 35; 2002 (4) SA 1 (SCA).
54 Id at para 91.
MATHOPO J
28
dear by the society. Determining the content of public policy was once fraught with
difficulties. That is no longer the case. Since the advent of our constitutional
democracy, public policy is now deeply rooted in our Constitution and the values that
underlie it. Indeed, the founding provisions of our Constitution make it plain: our
constitutional democracy is founded on, among other values, the values of human
dignity, the achievement of equality and the advancement of human rights and
freedoms, and the rule of law. And the Bill of Rights, as the Constitution proclaims,
‘is a cornerstone ’ of that democracy; ‘it enshrines the rights of all people in our
country’.”55
[70] Whether a contractual term is contrary to public policy is determined by the
values that underpin the Constitution. A term in a contract that is contrary to the values
protected by the Constitution is contrary to public policy and will not be enforceable.
In Sasfin, the Appellate Division stated that the power to declare contracts against public
policy should be exercised “sparingly and only in the clearest of cases.”56 In that matter,
the appellant, Sasfin (Pty) Limited and the respondent, Dr Hendrik Beukes, entered into
a deed of cession which contained various provisions that h ad far -reaching
consequences for Dr Beukes. The majority held that the provisions in the deed of
cession were so unreasonable and unfair that their enforcement would be contrary to
public policy. The rationale was that Dr Beukes would have been virtually a slave
working for the benefit of Sasfin.57
[71] The values that underlie our Constitution should be taken as a benchmark to
measure the validity of the exemption clauses. I accept that fairness and reasonableness
do not qualify as free-standing requirements. Courts have a duty to express their
disapproval where a term in a contract deprives a party of the right to seek judicial
redress. In Schierhout58 the Court held:
55 Barkhuizen above n 14 at para 28.
56 Sasfin (Pty) Ltd v Beukes [1988] ZASCA 94; 1989 (1) SA 1 (A) at para 2.
57 Id at 13H.
58 Schierhout v Minister of Justice 1925 AD 417.
MATHOPO J
29
“If the terms of an agreement are such as to deprive a party of his legal rights generally,
or to prevent him from seeking redress at any time in the Courts of Justice for any
future injury or wrong committed against him, there would be good ground for holding
that such an undertaking is against the public law of the land.”59
[72] The proper approach is therefore to determine whether the exemption clauses
contended for by Schenker are inimical to the values of our Constitutional democracy.
The question to be asked is whether the Supreme Court of Appeal’s endorsement of
Goodman Brothers can coexist with our current jurisprudence. In Goodman Brothers,
the Court held that a clause similar to that in the instant matter was compatible with
public policy. In Beadica this Court held that “[f]reedom of contract can thus never be
absolute. It is constrained, inevitably. Modern remedies for regulating unfairness are
found primarily in doctrines of unconscionability and good faith.”60
[73] This Court in Barkhuizen held that “[t]he proper approach to the constitutional
challenges to contractual terms is to determine whether the term challenged is contrary
to public policy as evidenced by the constitutional values, in particular, those found in
the Bill of Rights”.61 Ngcobo CJ emphasised that:
“What public policy is and whether a term in a contract is contrary to public policy
must now be determined by reference to the values that underlie our constitutional
democracy as given expression by the provisions of the Bill of Rights. Thus a term in
a contract that is inimical to the values enshrined in our Constitution is contrary to
public policy and is, therefore, unenforceable.”62
[74] The Supreme Court of Appeal endorsed the ratio in Goodman Brothers and held
that the legal position articulated there s till holds sway and applies with equal force.
Although it did not express itself clearly, it would be wrong to hold that it did not
59 Id at 424.
60 Beadica above n 15 at para 123.
61 Barkhuizen n 14 at para 30.
62 Id at para 29.
MATHOPO J
30
consider the public policy argument. In my view, it did so by explicitly endorsing
Goodman Brothers. It now remains to be considered whether Goodman Brothers can
co-exist with Barkhuizen and Beadica.
[75] In Goodman Brothers, the applicant instituted action against the respondent for
damages suffered as a result of the t heft of its watches which was committed by the
employees of the respondent, a carriage company. Clause 9 of the contract between the
parties stipulated that the respondent would not accept liability for the handling of any
one o f a series of goods, including “ bullion coins, precious stones, jewellery (and)
valuables’ unless “special arrangements” were made beforehand. The clause went on
to state that, if a customer nevertheless delivered any such goods to the respondent or
caused the respondent to deal with them “ otherwise than un der (such) special
arrangements, the respondent would bear ‘ no liability whatsoever for . . . any loss or
damage to the goods ’”. The principal issue was whether clause 9 absolved the
respondent from liability for the loss. The court a quo held that it did. The applicant
contended that the watches were not “valuables” as intended in clause 9 and that special
arrangements were in fact made when the applicant mentioned (in its application for
credit facilities with respond ent) that it would be importing “watches, silverware,
pens etc”.
[76] On appeal, t he Full Court held that allowing the employer to rely on a clause
excluding liability in the case of theft would not have the effect of encouraging theft.
That Court , in distinguishing Wells,63 held that the latter case involved fraudulent
conduct as opposed to theft. It reasoned that , because theft is not for the benefit of the
employer, the exemption clause is permissible. The rational e of this case is that for as
long as an exemption clause does not allow a party to benefit from intentional
wrongdoing, the clause will not offend public policy. In that case, no mention was made
63 Wells v South African Alumenite Co 1927 AD 69 at 72 where Innes CJ stated that:
“On grounds of public policy the law will not recognise an undertaking by which one of the
contracting parties binds himself to condone and submit to the fraudulent conduct of the other.
The courts will not lend themselves to the enforcement of such a stipulation; for to do so would
be to protect and encourage fraud.”
MATHOPO J
31
of the Constitution , nor was any other policy rationale for enforcing the clause
considered.
[77] Beadica and Barkhuizen are milestones in the history of the South African law
of contract. They are the most extensive engagement by th is Court on the rules that
govern the power of courts to set aside or refuse to enforce terms, and the underlying
constitutional values that influence these determinations. Both matters provided clarity
regarding the proper constitutional approach to the judicial enforcement of contractual
terms, thus putting to rest the burning question of the court’s intervention between
contracting parties. In doing so, this Court established principles of fairness,
reasonableness, justice and ubuntu, and found that these constitutional values play a
fundamental role in the application and development of the rules of contract law in such
a manner as to give effect to the spirit, purport and objects of the Bill of Right s. The
important constitutional issue of public policy should not be lost or diluted by a
straitjacketed approach which borders on a narrow interpretation of contracts.
[78] The narrow approach in Goodman Brothers fails to take into account the
constitutional values of fairness, reasonableness and justice. It undermines the essence
of the contract and negates the contractual purpose of the contracting parties. In this
instance, Schenker agreed to collect and deliver the goods belonging to Fujitsu. A
clause that allows employees to steal goods in such circumstances and ex culpates the
employer from liability on the basis of the phrases “of whatsoever” nature, “any
such goods”, “howsoever arising”, “any loss damage or expense arising” and
“whatsoever shall any liability” offends the values of human dignity, the achievement
of equality, the advancement of human rights and most importantly, the rule of law.
[79] It is important to underscore that Goodman Brothers fails to recognise that in
some instances , as in the present case, exemption clauses may be unfair and
unreasonable from a customer’s perspective. In my view, the impugned clauses clearly
serve to prevent Fujitsu from obtaining judicial redress which would otherwise be
available to it. Enforcing an agreement in such circumstances would deprive the
MATHOPO J / ZONDO CJ
32
contracting party (Fujitsu) of its basic contractual rights and offend the principles of
good faith and fairness. In my view, an act of theft can never be said to be in furtherance
of a legally valid and enforceable contract. Any contract which envisioned, tolerated
or provided for the furtherance of theft would be contrary to the doctrine of legality and
public policy. Consequently, had I commanded majority, I would set aside the decision
of the Supreme Court of Appeal.
ZONDO CJ (Maya DCJ, Mbatha AJ, Mhlantla J, Rogers J and Tshiqi J concurring):
Introduction
[80] I have had the benefit of reading the judgment by my Colleague, Mathopo J, in
this matter (first judgment). My Colleague concludes that this Court has jurisdiction.
He also concludes that leave to appeal should be granted, the appeal should be upheld
and the decision of the Supreme Court of Appeal set aside . I agree that this Court has
jurisdiction and that leave to appeal should be granted. However, I am unable to agree
that the appeal should be upheld. In my view, the appeal should be dismissed.
Brief background
[81] Although the first judgment has set out the background, I set out a very brief
background that I consider necessary for the proper understanding of my approach in
this judgment. Fujitsu Services Core (Pty) Ltd (Fujitsu), the applicant in this matter, is
a registered company that imports, sells and distributes laptops and accessories.
Schenker South Africa (Pty) Ltd (Schenker) conducts the business of a warehouse
operator, freight forwarder, logistics manager, distributor and forwarding agent.
[82] Before the dispute that led to these proceedings between Fujitsu and Schenker
arose, the two parties had done business with each other for some time which was based
on different agreements. The present dispute is governed by an agreement concluded
between the parties dated 10 July 2009. That agreement was called the
ZONDO CJ
33
National Distribution Agreement. It incorporated the Standard Trading Terms and
Conditions of the SAAFF (Standard Trading Terms and Conditions).
[83] Clause 17 of the Standard Trading Terms and Conditions reads:
“GOODS REQUIRING SPECIAL ARRANGEMENTS
Except under special arrangements previously made in writing the Company will not
accept or deal with bullion, coin, precious stones, jewellery, valuables, antiques,
pictures, human remains, livestock or plants. Should the customer nevertheless deliver
such goods to the Company or cause the Company to handle or deal with any such
goods otherwise than under special arran gements previously made in writing the
Company shall incur no liability whatsoever in respect of such goods, and in particular,
shall incur no liability in respect of its negligent acts or omissions in respect of such
goods. A claim, if any, against the Company in respect of the goods referred to in this
clause 17 shall be governed by the provisions of clause 40 and 41.”
In this judgment I shall refer to the goods listed in clause 17 either as goods falling
within the list in clause 17 or as goods of high-value.
[84] Fujitsu sent to Schenker goods falling within the list of goods in clause 17
without making any prior special arrangements in writing with Schenker as required by
clause 17. An employee of Schenker, one Mr Lerama, stole those goods and
disappeared forever. It is common cause that Mr Lerama was sent by Schenker to the
airport to collect Fujitsu’s goods that he stole after he had collected them. He was
supposed to bring them to Schenker but he stole them and never returned. Fujitsu
contends that Schenker is liable for its loss. Schenker disputes liability and contends
that, since the goods in question fell within the goods described in clause 17, Fujitsu
was obliged to have made prior written special arrangements with Schenker before it
could send those goods to Schenker and, as Fujitsu failed to make such special written
arrangements in terms of clause 17, Schenker is not liable for Fujitsu’s loss.
ZONDO CJ
34
High Court and Supreme Court of Appeal
[85] The High Court found for Fujitsu. The Supreme Court of App eal found for
Schenker.
In this Court
Jurisdiction
[86] The first judgment concludes that this Court has jurisdiction on both bases upon
which this Court may have jurisdiction. The one is that the matter raises a constitutional
matter or issue and the other is that this matter raises an arguable point of law of general
public importance which deserves to be considered by this Court.
[87] I am unable to agree that this matter raises an arguable point of law of general
public importance which deserves to be considered by this Court. In this regard I note
that, although the first judgment says that this matter raises such a point of law, it does
not articulate the point of law. Such a point of law should be stated without reference
to the particular parties before the Court. An example would be a case that raises the
following question: does the audi alteram partem rule apply to private rel ationships?
In this case the question of law is whether clause 17 of the Standard Trading Terms and
Conditions exempts Schenker from liability for loss arising out of the theft of Fujitsu’s
high-value goods by Mr Lerama. Although this may be an arguable point of law, it is
not one of general public importance.
[88] There was a suggestion by Fujitsu that, since clause 17 is to be found in the
agreement of the SAAFF, it stood to reason that it affected a large section of the
population. I cannot accept this be cause there is no evidence before us of even how
many members the SAAFF has. It may have 5, 10 or 15 entities under it. Schenker
also submitted, correctly in my view, that we do not know even whether the Standard
Trading Terms and Conditions which the pa rties incorporated in the present case are
still current. There is no evidence that this version of the Standard Trading Terms and
Conditions is in widespread use or that the relevant terms in the version now in use are
ZONDO CJ
35
the same as those used in the present case. That would not be enough to make it a point
of law of general public importance. Therefore, in my view, there is not enough before
us to enable us to say that the matter raises a point of law of general public importance.
[89] There is a reason why the drafters of the Constitution Seventeenth Amendment
Act, which expanded this Court’s jurisdiction, chose to draft section 167(3)(b)(ii) of
the Constitution in the way they did. They sought to make sure that, where a matter
does not raise a constitution al issue but raises a point of law, that alone should not be
enough to give this Court jurisdiction. If they considered that, if a matter raised a point
of law, that should be enough to give this Court jurisdiction, they would have said so.
They did not say so but decided to add other requirements that would need to be met
before this Court could have jurisdiction where a matter does not raise a constitutional
issue. Those additional requirements are that the point of law must—
(a) be arguable;
(b) be of general public importance; and
(c) be a point of law that ought to be considered by this Court.
[90] The whole point that the drafters of the Constitution Seventeenth Amendment
Act sought to make was that, if a matter does not raise a constitutional issue, t here
should be stringent requirements before it can be entertained by this Court. These
stringent requirements serve a good purpose to ensure that non -constitutional matters
that come before this Court truly deserve the attention of the highest Court in t he land.
In this case the requirements of section 167(3)(b)(ii) have not been met. Accordingly,
we do not have jurisdiction on the basis of section 167(3)(b)(ii) of the Constitution.
[91] The next question is whether the matter raises a constitutional issue. That takes
me to a point which Fujitsu raised for the first time in this Court which it had not raised
in any of the lower courts. That is Fujitsu’s contention that, if clause 17 means that
Schenker is exempted from liability for loss suffered by Fujits u due to the theft of its
goods by Mr Lerama, it will be contrary to public policy and should, for that reason, not
ZONDO CJ
36
be enforced. It is common cause that Fujitsu did not raise this point in any of the courts
below and that, in raising it in this Court, it was raising this point for the first time.
Counsel for Schenker contended that we should not entertain this point because it had
not been raised in the lower courts. In support of its contention, Schenker’s counsel
referred to the judgment of this Court in Tiekiedraai. In Tiekiedraai this Court refused
to entertain a point of law which had not been raised before in the lower courts.
This Court said that it would have been different “where a point of law is apparent on
the papers and the parties simply m isunderstood the law. There a court can raise the
legal point of its own accord.”64 In the next paragraph this Court said:
“That is not the case here. This Court cannot be taxed to consider novel points not
raised before simply because of its position a s a super -appellate body over all other
courts.”65
[92] In Barkhuizen this Court had to consider when it could entertain a point of law
raised for the first time before this Court. This Court said:
“The mere fact that a point of law is raised for the first ti me on appeal is not in itself
sufficient reason for refusing to consider it. If the point is covered by the pleadings,
and if its consideration on appeal involves no unfairness to the other party against
whom it is directed, this Court may in the exercise of its discretion consider the point.
Unfairness may arise where, for example, a party would not have agreed on material
facts, or on only those facts stated in the agreed statement of facts had the party been
aware that there were other legal issues inv olved. It would similarly be unfair to the
other party if the law point and all its ramifications were not canvassed and investigated
at trial.”66
[93] What is clear from this passage is that one of the requirements which must be
met before this Court may entertain a point of law raised by a litigant for the first time
on appeal is that the point must be “covered by the pleadings.” Another requirement is
64 Tiekiedraai above n 10 at para 23.
65 Id at para 24.
66 Barkhuizen above n 14 at para 39.
ZONDO CJ
37
that the consideration of that point of law must not involve any unfairness to the other
party against whom it is directed. This Court said that:
“unfairness may arise where, for example, a party would not have agreed on material
facts, or on only those facts stated in the agreed statement of facts had the party been
aware that there were other legal issues i nvolved. It would similarly be unfair to the
other party if the law point and all its ramifications were not canvassed and investigated
at trial.”67
In Barkhuizen this Court said that, when those requirements have been met, then “this
Court may in the exercise of its discretion consider the point.”68
[94] It emerges from both this Court’s decisions in Barkhuizen and Tiekiedraai that,
if the point of law being raised for the first time in this Court was not covered by the
pleadings or was not foreshadowed in the pleadings, this Court will not entertain it.
In Barkhuizen this Court entertained a point of law – which was the same as the one
being raised in this case, namely, public policy argument – but in that case the point
was covered by the pleadings. 69 In the present case the contract containing the clause
that Fujitsu seeks to contend is contrary to public policy was annexed to the pleadings.
It was not Schenker’s case that there would be unfairness to it if Fujitsu was allowed to
raise the public policy argument. Schenker’s argument was firstly to baldly state
without elaboration that it was impermissible for Fujitsu to raise this new argument
when it had not raised it in the courts below but secondly to challenge comprehensively
the soundness of Fujitsu’s argument based on public policy in case this Court allowed
Fujitsu to raise this argument. With Schenker not having argued that there would be
any unfairness if Fujitsu is allowed to argue this point, the matter must be decided on
the basis that there will be no unfairness. In this case the point was foreshadowed in
the pleadings.
67 Id.
68 Id at para 38.
69 Id at para 40.
ZONDO CJ
38
[95] Furthermore, I think that the nature of the point of law that Fujitsu seeks to argue
is a point of law that this Court would have been entitled to raise mero motu. Fujitsu’s
point of law is that, if the correct interpretation of clause 17 is that Schenker is exempted
from liability for loss arising from the theft of Fujitsu’s high -value goods by one of
Schenker’s employees, then clause 17 is contrary to public policy and une nforceable.
A court that is asked to uphold any agreement or clause in an agreement has an
obligation to satisfy itself that the agreement or clause is not contrary to public policy
or is not illegal before it can uphold it because, if it is contrary to p ublic policy or if it
is illegal, it will not be enforceable.70 Therefore, I think we should consider this point.
I do not think that there would be any unfairness to Schenker because this is not a point
which would have required any evidence to have been led in the court of first instance.
This then is the point that gives this Court jurisdiction in this matter because, as is clear
from this Court’s judgment in Barkhuizen, a contention that an agreement or a clause in
an agreement is contrary to public policy raises a constitutional issue.
Leave to appeal
[96] Fujitsu now applies to this Court for leave to appeal against the decision of the
Supreme Court of Appeal. Leave to appeal should be granted because it is in the
interests of justice to determine whether a contractual provision which seeks to exempt
a contracting party from liability for loss caused by the deliberate wrongdoing of an
employee is contrary to public policy. This legal question is one of general public
importance, apart from also being a constitutional issue. In the course of answering the
public policy question, it is first necessary to interpret clause 17 in order to decide
whether it does, indeed, purport to exempt the contracting party, Schenker, from
liability for loss caused by the deliberate wrongdoing of an employee because, only in
that event, does the public policy issue arise. This question of interpretation is thus
necessarily ancillary to the matter giving us jurisdiction. As I said earlier, the
interpretation of clause 17 as a stand alone exercise is not a question of law of general
public importance. However, it has to be addressed in this case in order to reach the
70 Id at para 29.
ZONDO CJ
39
public policy issue. Furthermore, there are reasonable prospects of success. It is,
therefore, in the interests of justice that leave to appeal be granted.
The appeal
[97] Before us the issue is whether or not clause 17 of the Standard Trading Terms
and Conditions means that Schenker is not liable for Fujitsu’s loss occasioned by the
theft of Fujitsu’s high-value goods by Mr Lerama. If clause 17 means that Schenker is
not liable, the appeal by Fujitsu must fail. If that is not what clause 17 means, Fujitsu’s
appeal must be upheld and the Supreme Court of Appeal’s decision must be set aside
and replaced with an order dismissing Schenker’s appeal to that Court. If that is done,
the decision of the High Court will stand.
[98] Clause 17 has been quoted above. Ordinarily, it would not be necessary to quote
clause 17 again because it has been quoted above. However, given its centrality to the
determination of the appeal, I consider it convenient to quote it again. It reads:
“GOODS REQUIRING SPECIAL ARRANGEMENTS
Except under special arrangements previously made in writing the Company will not
accept or deal with bullion, coin, precious stones, jewellery, valuables, antiques,
pictures, human remains, livestock or plants. Should the customer nevertheless deliver
such goods to the Company or cause the Company to handle or deal with any such
goods otherwise than under specia l arrangements previously made in writing the
Company shall incur no liability whatsoever in respect of such goods, and in particular,
shall incur no liability in respect of its negligent acts or omissions in respect of such
goods. A claim, if any, agains t the Company in respect of the goods to in this clause
17 shall be governed by the provisions of clause 40 and 41.”
[99] I draw attention to the heading of clause 17. The heading is:
“GOODS REQUIRING SPECIAL ARRANGEMENTS”. That tells the reader that
clause 17 is a clause that applies to goods that require special arrangements. In the first
sentence of clause 17 a list of goods is given. Those are the goods that require special
arrangements. This means that, once goods fall within the list of goods in the first
ZONDO CJ
40
sentence of clause 17, they are subject to clause 17. It is common cause that the goods
that Mr Lerama stole fell within the list of the goods in the first sentence of clause 17.
In other words, the loss for which Fujitsu seeks to hold Schenker liable is loss of goods
which fell within the list of goods in the first sentence of clause 17.
[100] Fujitsu contends that clause 17 does not apply to cases of deliberate or intentional
conduct such as theft which was the case in this matter. It refers to clause s 40 and 41
in support of its submission that the agreement could not cover a situation where an
employee of Schenker stole a customer’s goods that had been sent to Schenker.
Schenker, by contrast, contends that clause 17 is a stand -alone clause that deal s
specifically with a certain category of goods which covered the goods to which Fujitsu’s
claim relates. Schenker contends that clause 17 is wide enough to cover a case of a loss
of goods as a result of theft by one of its employees. Schenker contends t hat Fujitsu
was required to make prior special arrangements in writing with Schenker before it sent
the goods to Schenker but did not do so and that, for that reason, it could not look to
Schenker for the recovery of goods listed in the first sentence of clause 17.
[101] It is difficult to understand why a freight forwarder which wants to protect itself
against the risk that may be posed by its employees in the course of dealing with or
handling or processing a customer’s goods would want a clause in a contract that
protects it against the risk of negligent conduct by its employees but does not protect it
against the risk of intentional conduct such as theft on the part of its employees. What
it would amount to is this: I will not be liable to you if any of my employees negligently
drops one of your computers and it gets damaged but I will be liable to you if the same
employee steals that computer. It is difficult to understand how any business person
who wanted such an exemption clause would think such a clause would benefit them.
[102] In certain cases, the negligent act or omission may result in lesser damages than
intentional conduct such as theft. Theft would entail stealing the whole computer.
Negligent conduct may mean that a computer that is dropped gets damaged but may be
repaired and can thereafter still be used whereas the theft of a computer will mean that
ZONDO CJ
41
the whole computer is gone and the costs of buying another one to replace it would be
more than the costs of repairing the one that is dropped due to negligence. Logic
dictates that, if a business person had to choose what to avoid in terms of liability, it
would be the liability that might cost them more than that which would cost them less.
On the approach of Fujitsu, Schenker sought to protect itself against a lesser risk and
not to protect itself against a bigger risk. Taken to its logical conclusion, this approach
means that Schenker would have wanted to take out an insurance policy to cover the
risk of liability for negligent acts or omissions but would not have wanted to take out
an insurance policy to cover itself against liability for theft on the part of its employees
or any other third party. To my mind, it would not be business-like and would not make
sense for a business person or entity to protect itself against the negligent conduct but
not against intentional conduct such as theft. This construction of the agreement is
neither sound nor sustainable.
[103] Once it is common cause that the goods to which the claim relates fall within the
list in the first sentence of clause 17, then whether Schenker is or is not liable will
depend upon whether Fujitsu satisfied the requirements of clause 17 which had to be
satisfied before Schenker could be held liable.
[104] What requirements did clause 17 lay down or prescribe before Sch enker could
be liable for loss or damage or theft of goods listed therein? To answer that question, a
clear understanding of what clause 17 means is required. Clause 17 is a long clause. It
is not broken into sub -clauses. It is easy to understand it if one breaks it up, for
convenience, to three sub -clauses, namely sub -clauses 17(1), (2) and (3). I do this
below.
With sub-clauses (1), (2) and (3), clause 17 reads as follows:
“17. GOODS REQUIRING SPECIAL ARRANGEMENTS
17.1. Except under special arrangements previously made in writing the Company
will not accept or deal with bullion, coin, precious stones, jewellery, valuables,
antiques, pictures, human remains, livestock or plants.
ZONDO CJ
42
17.2. Should the customer nevertheless deliver such goods to the Company or cause
the Company to handle or deal with any such goods otherwise than under
special arrangements previously made in writing the Company shall incur no
liability whatsoever in respect of such goods, and in particular, shall incur no
liability in respect of its negligent acts or omissions in respect of such goods.
17.3. A claim, if any, against the Company in respect of the goods referred to in this
clause 17 shall be governed by the provisions of clause 40 and 41”.
(Emphasis added.)
[105] From the above sub-clauses of clause 17, the following is apparent:
(a) Sub-clause (1) – which is the first sentence of clause 17 – makes it
clear that the parties agreed that Schenker would not deal with the
goods listed in that sentence except if Fujitsu made prior s pecial
arrangements in writing. This means that, if prior special
arrangements in writing were not made, Schenker would not deal
with such goods. If prior special arrangements were made with
Schenker in writing, Schenker would deal with such goods and that
would be on the terms and conditions of the special arrangements
agreed upon between the parties.
(b) Sub-clause (2) – which is the second sentence of clause 17 – makes
it clear that if, despite the fact that Schenker would not deal with
the goods listed in the first sentence of clause 17 if no prior special
arrangements were made in writing, Fujitsu, nevertheless, sent
such goods to Schenker without complying with the requirement
of prior special arrangements in writing and Schenker dealt with
such goods, Schenker would not incur any liability whatsoever.
This is understandable because Fujitsu would not have complied
with the requirement of making prior special arrangements in
writing with Schenker before sending such high -value goods to
ZONDO CJ
43
Schenker. Fujitsu agreed that, if it did not make prior special
arrangements in writing with Schenker before it sent high -value
goods to Schenker, Schenker would not be liable.
(c) Sub-clause (3) – which is the third sentence of clause 17 – deals
with a situation where there is a claim under clause 17. It provides
that, if there is a claim in terms of clause 17, such a claim will be
governed by clauses 40 and 41. A claim under clau se 17 would
arise only if Fujitsu had made prior special arrangements in writing
with Schenker as contemplated in clause 17 before it sent
high- value goods to Schenker. If no prior special arrangements
were made in writing with Schenker, no claim would a rise under
clause 17. In this case it is common cause that Fujitsu did not make
any prior special arrangements in writing with Schenker before
sending the goods in question to Schenker and that those goods fell
within the list in the first sentence of cla use 17. For that reason,
clauses 40 and 41 have no application in the present case.
[106] The upshot of the agreement between the parties is that they decided to have one
liability dispensation for normal goods that Fujitsu was entitled to send to Schenker in
terms of their business dealings and a different liability dispensation for a special
category of goods. The special category of goods was the category of goods listed in
the first sentence of clause 17. The normal goods would be goods other than those listed
in the first sentence of clause 17. The parties decided that in respect of normal goods
that Fujitsu would send to Schenker, Fujitsu would not need to make any prior special
arrangements in writing with Schenker in order for the latter to be liable for any loss or
theft or damage to such goods. However, the parties decided that in respect of the
special category of goods – goods of high -value – Schenker would only be liable if
Fujitsu had made prior special arrangements in writing with Schenker befo re sending
such goods to Schenker. The parties agreed that there would be a need for prior special
arrangements to be made in writing first before Schenker could be liable. In other
ZONDO CJ
44
words, the parties agreed that Schenker’s liability in respect of the sp ecial category of
goods would depend on special arrangements that would have to be made between the
parties in writing before Fujitsu could send such goods to Schenker.
[107] Clause 17 does not mean that Schenker was exempted from liability under all
and any circumstances if goods falling within clause 17 were damaged or lost or stolen
while they were being handled by it or by its employees. The clause allowed Schenker
to be liable but only if Fujitsu had made prior special arrangements in writing with
Schenker. However, if Fujitsu did not make prior special arrangements in writing with
Schenker in respect of goods falling within the list of goods in clause 17, then Schenker
would not be liable. That was the deal between Fujitsu and Schenker as reflected in
clause 17. That deal between the parties must be upheld unless there are valid reasons
why it should not be upheld.
[108] It also seems that clause 17 creates reciprocal obligations for the parties.
Clause 17 only contemplates liability on the part of Schenker if Fujitsu had made prior
special arrangements in writing. Fujitsu has to show that it made special arrangements
in writing with Schenker before Schenker can be held liable. No special arrangements,
no liability for Schenker.
[109] I need to say something about the reference to negligence in clause 17 on which
Fujitsu and the first judgment place some reliance. I do not think it was or is common
cause that Mr Lerama was acting “in the course and scope of his employment”.
Vicarious liability was in dispute on the pleadings, at the pre-trial conference and at the
trial. The High Court’s judgment recorded Schenker’s denial of vicarious liability71 and
the question was then addressed by the High Court. 72 The High Court found that
Mr Lerama was not acting within t he course and scope of his employment 73 but found
against Schenker on the extended creation-of-risk basis. The Supreme Court of Appeal
71 High Court Judgment above n 1 at paras 2 and 6.
72 Id at paras 17-30.
73 Id at para 19.
ZONDO CJ
45
said that vicarious liability was conceded in the High Court. It seems to have been
conceded by the time of the applicat ion for leave to appeal. Certainly, in its written
submissions before this Court Schenker conceded vicarious liability. The finding and
concession were not that Mr Lerama had acted within the course and scope of his
employment but that there was vicarious liability.
[110] Given the approach to vicarious liability in K74 as subsequently explained in F75
it seems to me that “within the course and scope of employment” is no longer the test
in deviation cases, the focus now being on whether there was a sufficient co nnection
between the conduct of the delinquent employee and their employment to render the
employer liable. The establishment of this connection is a normative assessment.76
[111] Fujitsu contended, which contention the first judgment accepts, that clause 17
cannot help Schenker because Mr Lerama was not executing the agreement between the
parties when he stole Fujitsu’s high -value goods. Fujitsu contends that clause 17 only
applies in the execution of the agreement.
[112] In support of its contention Fujitsu referr ed to clause 3 of the agreement.
Clause 3 reads:
“APPLICATION OF TRADING TERMS AND CONDITIONS
Subject to clause 5, all and any business undertaken or advice, information or services
provided by the Company, whether gratuitous or not, is undertaken or pro vided on
these trading terms and conditions (as amended from time to time).”
[113] Fujitsu then submitted that clause 3 means that the Standard Trading Terms and
Conditions apply if the activity in issue can be said to be “business undertaken” or
“advice” or “information” or “services provided by Schenker”. It submitted that, if an
74 K above n 43.
75 F above n 44.
76 Id at para 76.
ZONDO CJ
46
activity falls outside any of these terms, the Standard Trading Terms and Conditions do
not apply. Fujitsu said that, if the conduct is not the performa nce of the contract – that
is, in the undertaking of business or giving advice, information or services – the
exemption of liability in clauses 17 and 40 does not apply.
[114] There is no merit in this contention. If it were valid, it would mean that clause 17
protects Schenker from liability when, for example, its employee acts in accordance
with the contract but not when he or she acts in breach of the contract. Exemption from
liability is required for conduct that is in breach of the contract or law and not for
conduct that is in line with the contract and with the law. A clause like 17 is required
for criminal and wrongful conduct instead of lawful and acceptable conduct. An
employer needs a clause that exempts him or her from liability arising from his or her
employee’s conduct not because he thinks that the employees will behave as expected
in terms of the agreement with a client or customer but because there is a risk that they
may behave contrary to what is expected of them in terms of the agreement. If Fujitsu’s
argument were valid, there would be very little value in exemption clauses such as
clause 17.
[115] Furthermore, even if it was permissible to have regard to wheth er Mr Lerama
was executing the agreement when he stole Fujitsu’s high -value goods, the position is
that, until Mr Lerama deviated from the route he was supposed to follow in order to
take the goods where he was supposed to take them, every step that he had taken was a
step he would have taken in executing the agreement. In this regard it must be
remembered that, in response to Fujitsu’s request for further particulars for trial,
Schenker said: “[Schenker] did request Lerama, in writing, to collect certain goods
between 19 and 23 June 2012.” This reference is a reference to goods that included
Fujitsu’s goods that Mr Lerama stole. So, except for the fact that Mr Lerama may have
gone to collect the goods with the intention to steal them, the position is tha t he had
been instructed by Schenker to collect them for Schenker’s business but he decided to
steal them. Therefore, there should be no suggestion that Schenker had not instructed
Mr Lerama to collect the goods for Schenker’s business.
ZONDO CJ
47
[116] Fujitsu’s contention and the first judgment’s conclusion that Schenker’s liability
is not excluded because clause 17 only excludes Schenker’s liability where its employee
is executing the agreement between the parties is in essence similar to an argument that
police officers who rape a member of the public to whom they have given a lift are not
executing their duties and that, therefore, the Minister of Police is not vicariously liable
for their unlawful conduct. However, in K and F this Court concluded that the police
officers involved in raping K and F had acted within the course and scope of their
employment or that their conduct was sufficiently connected with their employment as
police officers to justify holding the Minister of Safety and Security vicariously liable
for their unlawful conduct.
[117] In this regard reference can be made to what O’Regan J said in K including the
excerpts she quoted from Watermeyer CJ’s judgment in Feldman.77 O’Regan J said in
K:
“It is clear that an intentional deviation from duty does not automatically mean that an
employer will not be liable. In the early leading case of Feldman v Mall, a driver of
the appellant's vehicle had, after delivering the parcels he had been instructed to
deliver, driven to attend to some personal matters of his o wn during which time he
consumed enough beer to render him unable to drive the vehicle safely. On his way
back to his employer’s garage, he negligently collided with and killed the father of two
minor children. The case concerned a dependant's claim for damages and the court, by
a majority, held the employer to be vicariously liable.
In his judgment holding the employer liable, Watermeyer CJ captured the test for
vicarious liability in deviation cases as follows:
‘If an unfaithful servant, instead of dev oting his time to his master's service,
follows a pursuit of his own, a variety of situations may arise having different
legal consequences.
77 Feldman (Pty) Ltd v Mall 1945 AD 733.
ZONDO CJ
48
(a) If he abandons his master's work entirely in order to devote his time to his own
affairs then his master may o r may not, according to the circumstances, be
liable for harm which he causes to third parties. If the servant's
abandonment of his master’s work amounts to mismanagement of it or
negligence in its performance and is, in itself, the cause of harm to third parties,
then the master will naturally be legally responsible for that harm; there are
several English cases which illustrate this situation and I shall presently refer
to some of them. If, on the other hand, the harm to a third party is not caused
by the servant's abandonment of his master’s work but by his activities in his
own affairs, unconnected with those of his master, then the master will not be
responsible.
(b) If he does not abandon his master's work entirely but continues partially to do
it and at the same time to devote his attention to his own affairs, then the master
is legally responsible for harm caused to a third party which may fairly, in a
substantial degree, be attributed to an improper execution by the servant of his
master's work, and not entirely to an improper management by the servant of
his own affairs.’
In a later passage in the judgment, Watermeyer CJ continued as follows:
‘This qualification is necessary because the servant, while on his frolic may at
the same time be doing h is master’s work and also because a servant's
indulgence in a frolic may in itself constitute a neglect to perform his master's
work properly, and may be the cause of the damage.’
Watermeyer CJ explained the reason for the rule as follows:
‘I have gone into this question more fully than seems necessary, in the hope
that the reasons which have been advanced for the imposition of vicarious
liability upon a master may give some indication of the limits of a master's
legal responsibility, and the reasons are to some extent helpful. It appears from
them that a master who does his work by the hand of a servant creates a risk of
harm to others if the servant should prove to be negligent or inefficient or
untrustworthy; that, because he has created this risk for his own ends he is
under a duty to ensure that no one is injured by the servant's improper conduct
or negligence in carrying on his work and that the mere giving by him of
ZONDO CJ
49
directions or orders to his servant is not a sufficient performance of that duty.
It follows that if the servant’s acts in doing his master's work or his activities
incidental to or connected with it are carried out in a negligent or improper
manner so as to cause harm to a third party the master is responsible for that
harm.’
Tindall JA formulated the approach in slightly different terms:
‘In my view the test to be applied is whether the circumstances of the particular
case show that the servant’s digression is so great in respect of space and time
that it cannot reasonabl y be held that he is still exercising the functions to
which he was appointed; if this is the case the master is not liable. It seems to
me not practicable to formulate the test in more precise terms; I can see no
escape from the conclusion that ultimately the question resolves itself into one
of degree and in each particular case a matter of degree will determine whether
the servant can be said to have ceased to exercise the functions to which he
was appointed.’
In subsequent cases the approaches advocat ed by Watermeyer CJ and Tindall JA and
concurred in by Fischer AJA in Feldman’s case were held to constitute the majority
judgment of the court. Both judgments have been repeatedly cited in subsequent
cases and variations of the approach suggested have be en adopted and applied.” 78
(Footnotes omitted.)
[118] Of course, I appreciate that Fujitsu is raising this point to argue that Schenker is
liable – not that it is not liable – but the principle is applicable. Fujitsu is advancing this
argument to try and escape the consequences of its failure to make special arrangements
with Schenker which clause 17 required it to make before it sent to Schenker the high -
value goods if it wanted to look to Schenker for the recovery of its loss.
78 K above n 43 at paras 26-30.
ZONDO CJ
50
Fujitsu’s public policy argument
[119] Fujitsu submitted that in so far as this Court may hold that clause 17 of the
agreement exempts Schenker from liability for loss arising from the theft of its
employees, it is contrary to public policy and is, therefore, unenforceable. It, therefore,
urged this Court not to enforce the clause. In Barkhuizen this Court had this to say
about public policy:
“What public policy is and whether a term in a contract is contrary to public policy
must now be determined by reference to the values that underlie o ur constitutional
democracy as given expression by the provisions of the Bill of Rights. Thus a term in
a contract that is inimical to the values enshrined in our Constitution is contrary to
public policy and is, therefore, unenforceable.”79
[120] The Court went on to say in the same case:
“In general, the enforcement of an unreasonable or unfair time limitation clause will be
contrary to public policy. Broadly speaking, the test announced in Mohlomi is whether
a provision affords a claimant an adequate and fair opportunity to seek judicial redress.
Notions of fairness, justice and equity, and reasonableness cannot be separated from
public policy. Public policy takes into account the necessity to do simple justice
between individuals. Public policy is informed by the concept of ubuntu. It would be
contrary to public policy to enforce a time limitation clause that does not afford the
person bound by it an adequate and fair opportunity to seek judicial redress.”80
[121] This Court went on deal with how fairness is to be determined in the context of
public policy. It said:
“There are two questions to be asked in determining fairness. The first is whether the
clause itself is unreasonable. Secondly, if the clause is reasonable, whether it should
be enforced in the light of the circumstances which prevented compliance with the time
limitation clause.
79 Id at para 29.
80 See Barkhuizen above n 14 at para 51.
ZONDO CJ
51
The first question involves the weighing -up of two considerations. On the one hand,
public policy, as informed by the Constitution, requires, in general, that parties should
comply with contractual obligations that have been freely and voluntarily undertaken.
This consideration is expressed in the maxim pacta sunt servanda which, as the
Supreme Court of Appeal has repeatedly noted, gives effect to the central constitutional
values of freedom and dignity. Self -autonomy, or the ability to regulate one’s own
affairs, even to one’s own detriment, is the very essence of freedom and a vital part of
dignity. The extent to which the contract was freely and voluntarily conclud ed is
clearly a vital factor as it will determine the weight that should be afforded to the values
of freedom and dignity. The other consideration is that all persons have a right to seek
judicial redress. These considerations express the constitutional values which must
now inform all laws, including the common law principles of contract.
The second question involves an inquiry into the circumstances that prevented
compliance with the clause. It was unreasonable to insist on compliance with the clause
or impossible for the person to comply with the time limitation clause. Naturally, the
onus is upon the party seeking to avoid the enforcement of the time limitation clause.
What this means in practical terms is that once it is accepted that the clause d oes not
violate public policy and non-compliance with it is established, the claimant is required
to show that, in the circumstances of the case there was a good reason why there was a
failure to comply.
It follows, in my judgement, that the first inquiry must be directed at the objective terms
of the contract. If it is found that the objective terms are not inconsistent with public
policy on their face, the further question will then arise which is whether the terms are
contrary to public policy in the light of the relative situation of the contracting parties.
In Afrox, the Supreme Court of Appeal recognised that unequal bargaining power is
indeed a factor which together with other factors, plays a role in the consideration of
public policy. This is a r ecognition of the potential injustice that may be caused by
inequality of bargaining power. Although the court found ultimately that on the facts
there was no evidence of an inequality of bargaining power, this does not detract from
the principle enunciat ed in that case, namely, that the relative situation of the
contracting parties is a relevant consideration in determining whether a contractual
term is contrary to public policy. I endorse this principle. This is an important principle
in a society as unequal as ours.”81 (Emphasis added.)
81 Id at paras 56-9.
ZONDO CJ
52
[122] Applying the approach outlined by this Court in Barkhuizen, I would say that
there is nothing unfair or unreasonable about the terms of clause 17. On the contrary,
the terms of clause 17 are very fair to both parties. Schenker took the position that, as
a general rule, it would not handle such goods unless Fujitsu made special prior
arrangements in writing with it before it sent the goods. This was obviously to avoid
the risk that would come with handling goods of su ch high-value. This meant that,
without any prior special arrangements having been made in writing, there would be no
handling of such high -value goods by Schenker. Then the parties realised that,
notwithstanding the requirement that Schenker would only handle such high -value
goods if prior special arrangements had been made in writing between the parties, there
could be situations where Fujitsu sent high -value goods to Schenker without having
made prior special arrangements in writing with Schenker and S chenker did actually
handle such goods. The parties agreed, as reflected in the second sentence of clause 17,
that in such a case Schenker would not incur any liability whatsoever. If Fujitsu chose
not to make prior special arrangements in writing with Schenker, it chose to voluntarily
take the risk that, if something happened to the goods, including if they were stolen, it
would take responsibility for its choice. Clause 17 means that, if Fujitsu made special
arrangements with Schenker, Schenker could t ake out an insurance policy to cover the
risk and pass on the cost to its customer by way of a higher fee but, if Fujitsu elected to
send high -value goods to Schenker without making prior special arrangements in
writing with Schenker, it and it alone bore the risk.
[123] As will have been seen in Barkhuizen the principle is that contracts that have
been voluntarily and freely concluded should, as a general rule, be enforced unless there
is something contrary to public policy about them. Furthermore, there is no suggestion
that Fujitsu was in a weaker bargaining position than Schenker when the agreement was
concluded. There is nothing unfair or unreasonable about clause 17. For that reason it
is not contrary to public policy. Also, Fujitsu has not demonstrated why it did not
comply with clause 17 by making prior special arrangements with Schenker before it
sent the goods of high -value to Schenker. To make special arrangements would have
ZONDO CJ
53
been the easiest thing for Fujitsu to make but it did not make any and has offered no
reason or explanation as to why it did not make the special arrangements with Schenker.
[124] Fujitsu’s contention that clause 17 does not cover intentional conduct such as
theft by Schenker’s employees because that would be contrary to public polic y is not
supported by the authorities. Instead, the authorities reject the proposition that it is
contrary to public policy to have a clause in a contract which exempts one of the parties
from liability for loss arising from the intentional conduct of its employees such as theft.
I refer to a few cases below in this regard.
[125] In Wells82 the respondent had sued the appellant for the purchase price of a plant
in respect of which the appellant had concluded a sale agreement with the respondent.
The appellant sought to avoid liability by alleging that the conclusion of the sale
agreement had been induced by certain misrepresentations made to him by the
respondent’s salesman. The appellant had signed an order which included the
following:
“I hereby acknowledge that I have signed the order irrespective of any representations
made to me by any of your representatives, and same is not subject to cancellation by
me.”83
[126] On appeal the Appellate Division held that the appellant was bound by the
undertaking he had sign ed. This means that the Appellate Division upheld an
undertaking not to rely on misrepresentations. However, the Court said that, had the
representations not only have been incorrect but also fraudulent, the appellant would
have escaped liability because courts will not enforce a stipulation to condone
fraudulent conduct. The Appellate Division said:
82 Wells above n 62.
83 Id at 72.
ZONDO CJ
54
“On grounds of public policy the law will not recognise an undertaking by which one
of the contracting parties binds himself to condone and submit to the fraudulent conduct
of the other. The Courts will not lend themselves to the enforcement of such a
stipulation; for to do so would be to protect and encourage fraud.”84
[127] It later said:
“Had the appellant alleged that the representations were not only untrue but fraudulent,
he might, as a matter of pleading, have escaped the operation of the obnoxious clause.
But he has not done so. And the language of the undertaking which he subscribed
covers all non-fraudulent representations.”85
[128] In Goodman Brothers , Cloe te J, with Streicher J concurring, pointed out,
correctly in my view, that Innes CJ’s statement in Wells referred to above could not be
“interpreted as meaning that a fraud by a salesman would have been a fraud by the seller
(as opposed to a fraud for whic h the seller would, in law and on grounds of public
policy, have been liable) as such an interpretation would be contrary to other (and later)
decisions of the Appellate Division”.86 In Goodman Brothers the court also said:
“Where a servant, acting within the scope of his authority makes a fraudulent
misrepresentation and thereby induces another party to contract with his master, the
master is liable. But ‘the liability of the principal is not based upon any constructive
fraud on his part. Fraud is a wilful act, and therefore the principal cannot be held to be
guilty of fraud of his servant even though he may be responsible for it’ (per Wessels JA
in Ravene Plantations Ltd v Estate Abrey 1928 AD 143 at 153, and see also the remarks
of Centlivres CJ in Levy v Central Mining & Investment Corporation Ltd 1955 (1) SA
141 (a) at 148B – D).”87
[129] The Court also said in Goodman Brothers:
84 Id.
85 Id at 73.
86 Goodman Brothers above n 8 at 98.
87 Id.
ZONDO CJ
55
“An agent who concludes a contract for and on behalf of his principal, does so for the
benefit of his principal. To allow the principal to take advantage of fraudulent
misrepresentations by relying on a clause excluding liability for misrepresentations by
the servant or agent, would encourage fraud, as Innes CJ said in the Wells case supra at
72 in the passage already quoted.”88
[130] It also went on to say:
“The position is, however, different in the case of theft by an employee of goods that
have been entrusted to his employer. Like the fraud, the theft by the servant is not theft
by the employer; but, unlike the fraudulent misrepresentation, the theft is n ot for the
benefit of the employer but for the benefit of the employee. To allow the employer to
rely on a clause excluding liability in the case of a theft by an employee would not
encourage theft. The reason is obvious; it is, ex hypothesi, the dishonest employee, and
not the contracting party who stipulated for the exemption clause, who will benefit; and
there is no greater risk of a theft being committed because the employer has stipulated
for an exemption clause than there would be had he not done so.”89
[131] In Fibre Spinners & Weavers 90 the defendant, which was the respondent on
appeal, was unable to deliver to the plaintiff, the appellant on appeal, grainbags it had
stored for reward in terms of a contract of deposit between itself and the plaintiff
because the grainbags had been stolen by one of its employees. In terms of a letter that
formed part of the contract between the parties the respondent was “absolved from all
responsibility for loss or damage howsoever arising in respect of the grainbags, in
consideration for the respondent, inter alia , arranging and maintaining all risks
insurance policy, covering the grainbags.”91
[132] Counsel for the Government of the Republic of South Africa in the Fibre
Spinners & Weavers matter submitted that the above exemption could not be construed
88 Id at 99.
89 Id.
90 Government of the Republic of South Africa v Fibre Spinners & Weavers 1978 (2) SA 794 (A).
91 Id at 794.
ZONDO CJ
56
so as to exclude liability caused by wilful acts of the defendant whether of a delictual
nature or constituting a breach of contract. The Court, through Wessels ACJ, said that
the principle contended for by counsel for the Gover nment was not relevant to the
matter before it because it was not part of the Government’s case that the defendant was
in any manner guilty of any form of wilful misconduct. The Court said:
“The defendant was unable to deliver the grainbags in question to the plaintiff because
they had been stolen by its employee (the late RF Milburn) in the circumstances set out
herein before. The theft was not an act committed by the defendant but one committed
by its employee, who was required to attend to the safekeeping of the grainbags in the
defendant’s warehouse within the scope, and in the ordinary course, of his employment
as its chief security officer. In the circumstances the defendant (as employer) may,
under the common law, be liable as bailee to compensate the plaintiff for the loss or
damage to, the property in question because it is vicariously responsible for the tortious
conduct of its employee. See Feldman (Pty) Ltd v Mall 1945 AD 733 and South British
Insurance Co v Du Toit 1952 (4) SA 313 (SR) at 31 8 D – E. The question here is,
however, whether or not such liability was excluded by the terms of paragraph 2 of the
above mentioned letter dated 4 November 1969.”92
[133] The Appellate Division 93 held that the exemption clause operated within a
limited field, namely where the insurance policy was in force and where the bags were
stored in the premises referred to in paragraph 2 of the letter dated 14 November 1969.
What the Appellate Division did in Fibre Spinners & Weavers was to draw a distinction
between an exemption clause which would exempt a contracting party from liability for
loss arising from its own wilful misconduct such as theft and a case where an exemption
clause sought to exempt a contracting party from liability for loss arising from the wilful
misconduct of its employees such as theft. The Court made it clear that an exemption
clause purporting to exempt a bailee from liability for loss or damage arising from its
own wilful conduct would not be enforceable because it would be contrary to
public policy. The Court did not extend that to a case where an exemption clause
92 Id at 803.
93 As the current Supreme Court of Appeal was known then.
ZONDO CJ
57
exempted an employer from liability for loss or damage to property arising from the
wilful misconduct (for example theft) of its employees or agents.
[134] The Court accepted, even if b y implication, that a clause in a contract that
exempted a contracting party from liability for loss arising from the wilful misconduct
of its employees such as theft is not contrary to public policy. The Court construed
paragraph 2 of the letter of 14 No vember 1969 and concluded that the wording was
wide enough to exempt Fibre Spinners & Weavers from liability for loss arising from
the theft of the grainbags by its employee. Wessels ACJ also added: “In construing the
agreement in question, it must be bor ne in mind that the exemption was made
conditional upon the defendant ‘arranging and keeping in force’ prescribed insurance
with plaintiff’s ‘interest properly noted in the policies’”. 94 He later said: “As I see it,
the intention of the parties was to subs titute in plaintiff’s favour a right of recourse
against the insurance company in the place of such rights of recourse as plaintiff had
against defendant as bailee.”95 This arrangement that was made by the parties in Fibre
Spinners & Weavers is the kind of special arrangement that could have been agreed
upon between Fujitsu and Schenker if, as required by clause 17, Fujitsu had made
special arrangements with Schenker before it sent its high-value goods to Schenker.
[135] I agree with Cloete J in Goodman Brothers that Wessels ACJ did not in Fibre
Spinners & Weavers say that Fibre Spinners & Weavers could not be exempted from
liability for loss arising out of the intentional conduct of its employees.96
[136] In Rosenblum a client of the First National Bank (FNB) had conc luded an
agreement with FNB in terms of which he rented a safe deposit box from FNB in which
he was allowed to store certain items for a small annual fee. The safe deposit box was
kept in the bank. The client’s contents in the safe deposit box were stolen by the bank’s
employees, and in terms of the agreed statement of facts it was recorded that those
94 Id at 805.
95 Id at 805-6.
96 See Goodman Brothers above n 8 at 100-1.
ZONDO CJ
58
employees had been acting within the course and scope of their employment. The theft
occurred as a result of the negligence of the bank’s staff. Clause 2 of the agreement
between the parties was relied upon by the bank to avoid liability. Clause 2 was an
exemption clause. It 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 th e loss or damage is due to the bank’s negligence or
not.”97
[137] Clause 3 was contended to be also relevant. It read:
“The bank does not effect insurance on items deposited and/or moved at the depositor’s
request and the depositor should arrange suitable insurance cover.” 98
[138] In Rosenblum the Supreme Court of Appeal upheld clause 2. This means that
the Court held that, while FNB may not have been entitled to protect itself from liability
for loss arising from its own theft in the sense of theft committed by th ose who were
the “controlling and directing minds” of the bank, it was permitted to protect itself from
liability arising out of theft by its own employees. The Court said:
“As for the contention that the principle in the case of Wells (supra) prohibits the bank
from protecting itself effectively against vicarious liability for thefts or other wilful
misconduct committed by its employees in the course and within the scope of their
employment, I am unable to accept so widely formulated a proposition. It may well be
that public policy will not countenance a situation in which an employer will derive a
benefit from such conduct but where, as here, the bank does not seek to benefit, nor has
it benefited, from the theft committed by its employee or employees, the position is
very different. No authority was cited which clearly supports the proposition that in
97 Id at para 3.
98 Id.
ZONDO CJ
59
the latter situation the employer cannot validly seek protection against liability by way
of an appropriately worded provision in the contract. Nor am I aware of any. On the
contrary, there is authority to the contrary to be found in the decision of the Full Bench
in Goodman Brothers (Pty) Ltd v Rennies Group Ltd 1997 (4) SA 91 (W) at
97H – 103G and 106G – 107D. In such a situation the considerations of public policy
which require adoption of the principle are absent. The liability is only vicarious and
the bank itself (as represented by its controlling or directing minds) has not committed
theft or otherwise been guilty of wilful misconduct. In any event, as has been pointed
out in Government of the Republic of South Africa v Fibre Spinners & Weavers (Pty)
Ltd 1978 (2) SA 794 (A) at 803B, the principle is not relevant to the proper construction
of an agreement; it is in essence a rule of law affecting its enforceability.”99
[139] In Goodman Brothers 100 a Full Court dealt with a clause in a contract that is
similar to clause 17 in substance. In that case the clause in issue was clause 9 of the
agreement. The question in that case was whether clause 9 of the agreement between
the parties absolved the respondent in that case from any liability to the appellant when
goods belonging to the appellant were stolen by employees of the respondent. Clause 9
read:
“Exclusion of Liability
The company shall not accept liability for the handling of any bullion, coins, precious
stones, jewellery, valuables, antiques, pictures, bank notes, securities and other
valuable documents or articles, livestock or plants, unless special arrangements have
previously been made in writi ng with the company, whether or not it is aware of the
nature of the goods, shall bear no liability whatsoever, fo r or in connection with any
loss or damage to the goods.”101
[140] In that case, too, employees of the respondent had collected valuable goods from
Jan Smuts Airport – now OR Tambo International Airport – for delivery to the
appellant’s premises but they stole the goods en route. Talking about the cumulative
effect of clauses 9, 28.1 and 28.2 in the Goodman Brother’s case Cloete J said:
99 Id at para 22.
100 Goodman Brothers above n 8.
101 Id at 94.
ZONDO CJ
60
“The cumulative effect of the clauses just quoted is that the respondent can be liable
(in limited and defined circumstances) only for gross negligence. Clause 9 places a
further limitation on the respondent’s liability where, inter alia, valuables are not to be
conveyed: if ‘special arrangements’ for such conveyance are not made, clause 9 says
explicitly that the respondent shall bear ‘no liability whatsoever’ – i.e. all grounds of
liability are excluded in such a case.”102
[141] I am in agreement with the Full Court in Goodman Brothers that there is nothing
contrary to public policy with two contracting parties agreeing on exemption of the one
party to the agreement from liability and leaving it to the other party to take out an
insurance policy, should he wish to do so. In Goodman Brothers the Full Court said:
“If two contracting parties can, as in the Fibre Spinners & Weavers case, validly agree
to exempt the one from liability for the dishonesty of his employees in exchange for
arranging a policy of insurance which would indemnify the other for the consequences
of a theft by the former’s employees, I see no reason in principle or public policy why
contracting parties could not simply agree without more on the exemption of the one
from such liability and leave it to the other to take out a policy of insurance, should he
wish to do so.”103
[142] The making of prior special arrangements in writing by Fujitsu with Schenker
before Fujitsu could send to Schenker goods falling within the list of goods given in the
first sentence of clause 17 was a condition precedent to Schenker’ s liability for anything
that happened to such goods including theft. Once it is accepted, as it is, that Fujitsu
did not make such any special prior arrangements in writing, that means that the
condition precedent for Schenker’ s liability has not been met or complied with and that,
therefore, Schenker is not liable. That conclusion means that the Supreme Court of
Appeal’s decision was correct and the appeal must fail with costs including the costs of
two counsel. In my view, Goodman Brothers was correctly decided.
102 Id at 96.
103 Id at 102.
ZONDO CJ
61
Order
[143] In the circumstances I make the following order:
1. Leave to appeal is granted.
2. The appeal is dismissed with costs, including the costs of two counsel.
For the Applicant:
For Respondent
G Marcus SC, J Marais SC, C Gibson
and N Ali instructed by EVH
Incorporated
P Stais SC , M Kruger and N Ferreira
instructed by Prinsloo Inc Attorneys