Directors beware of obligations and liabilities under POPIA
Insurance & Reinsurance
The Eastern Cape Division of the High Court, Grahamstown recently dismissed a plaintiff’s claim for damages relating to a fracture in her right femur after stepping into a swimming pool at the Shamwari Game Reserve as no causation was established. Even if it had, the court found that the indemnity form which the plaintiff had signed excluded Shamwari’s liability. The decision will be of interest to insurers and their insureds, particularly on the issue of indemnity provisions/disclaimer notices, as it is only the second time that a court has evaluated an indemnity in the context of the Consumer Protection Act, 2008.
Ms Cooper visited the Shamwari Game Reserve in November 2016 with her husband and some friends. On the evening of her check-in and whilst walking towards her friends, she stepped into the pool on the pool deck, fracturing her right femur. She sued Shamwari in relation to the incident.
Ms Cooper contended that Shamwari owed a legal duty to the public and her to:
Ms Cooper alleged Shamwari negligently breached this legal duty, causing her injuries. Her version was that Shamwari, through its employees, failed to ensure her safety at its premises, or to properly demarcate, adequately light, cordon off and notify persons at the premises of the presence of the pool.
Shamwari accepted that it owed a legal duty to take all reasonable steps that could be expected of a reasonable person in its position to ensure no harm was occasioned to Ms Cooper while on the premises. However, it denied that it breached this duty and any negligence on its part. It also denied causation and pleaded contributory negligence on Ms Cooper’s part.
Alternatively, Shamwari pleaded that the indemnity which Ms Cooper had signed upon check-in excluded liability on its part. Ms Cooper argued that the indemnity is unenforceable, broadly because it is contrary to public policy and breached certain provisions of the Consumer Protection Act, 2008.
Ms Cooper’s testimony revealed that she had seen the pool during daylight and walked past it twice. Her husband, who did not testify, had been walking in front of her at the time of the incident and avoided the pool, as had her friends.
Shamwari did not lead any evidence.
Based on Ms Cooper’s testimony, the court concluded that she failed to keep a proper lookout and that if she had exercised the necessary care, she would not have stepped into the pool. It found that she failed to prove “causal negligence” on the part of Shamwari. Consequently, her claim could not succeed.
The court indicated that, even if it was wrong in its finding that Ms Cooper failed to establish causative negligence, her claim should still fail based on the indemnity she had signed, which excluded the liability of Shamwari and its employees towards third parties for claims relating to injury, death or bodily harm.
Referring to Durban’s Water Wonderland v Botha and Another 1999 (1) SA 982 (SCA), the court reiterated that where a disclaimer notice (in this case the indemnity) exempts a party from liability in express and unambiguous terms, effect must be given to it. Where there is ambiguity, the language must be restrictively interpreted against such party. The court found that the language in the indemnity was unambiguous and effect had to be given to it.
Ms Cooper argued that the indemnity was contrary to public policy, relying on section 48(2) of the Act, which states that a contractual term will be unfair, unreasonable or unjust if it is excessively one-sided in favour of someone other than the consumer or its terms are so adverse as to be inequitable. It was submitted by her counsel that there was unequal bargaining power between the parties and the indemnity effectively prevented Ms Cooper from seeking judicial redress.
The court acknowledged that, in terms of regulation 44 to the Act, certain contractual terms are presumed to be unfair, including those which seek to exclude or limit the liability of a supplier for death or personal injury caused to a consumer through its conduct. However, it also accepted that such term may nevertheless be found to be fair in the circumstances. In other words, the presumption is just that – a presumption – and it is rebuttable.
Referencing Barkhuizen v Napier 2007 (5) SA 323 (CC), the court applied a two-stage test in considering whether the indemnity was contrary to public policy, by:
On the issue of reasonability, the court did not accept that there was unequal bargaining power between the parties as Ms Cooper was free to choose any establishment for leisure and hospitality services and voluntarily signed the indemnity. The indemnity was not unusual in the hospitality industry. It also did not entirely prevent judicial redress, because Shamwari could still be held liable for grossly negligent and intentional conduct. The court concluded that the indemnity and its provisions were not unreasonable.
As to fairness, highlighting that Ms Cooper was aware of the presence of the pool, the court found that there was no good reason not to enforce the indemnity. In doing so, it distinguished the facts from those in Naidoo v Birchwood Hotel 2012 (6) SA 170 (GS), where a hotel patron had also signed an indemnity form and subsequently been injured when the hotel’s gate fell on him. In that case, the court determined that enforcing the indemnity would be unfair, because “a guest in a hotel does not take his life in his hands when he exits through the hotel gates”. The distinction was made on the basis that a pool is not an “unusual feature” at leisure facilities (but, neither is a gate, and so perhaps what the court was alluding to was the unusual character of the gate in the Naidoo case).
Ms Cooper also contended that Shamwari did not adhere to sections 49(2) and 58(1) of the Act. The former regulates contractual terms in relation to activities/facilities that are subject to risks:
and sets out requirements for how notice of such risks must be provided to a consumer. The latter concerns the obligations of suppliers of such activities/facilities to draw the fact, nature and potential effect of these risks to consumers’ attention in a way which complies with section 49.
The court observed that a pool is not an unusual or unexpected facility at holiday accommodation, and that it is not usually subject to unusual risks. Its presence was not something that a consumer could not reasonably be expected to be aware of. Neither did the activity of walking on the deck present unusual risks in the circumstances.
In the result, the court upheld Shamwari’s reliance on the indemnity and dismissed Ms Cooper’s arguments about why doing so would be contrary to public policy and the Act.
The court’s reference to “causative negligence” is odd, because it did not make a finding on whether Shamwari was in fact negligent. Our understanding of what the court meant is that even if negligence was established, causation was not.
A plaintiff pursuing a delictual action must prove the five elements of a delict. Oftentimes, a plaintiff will pursue a defendant simply because an injury occurred at the defendant’s premises. However, this ignores the principle that, in the first instance, harm must rest where it falls. It is only if a plaintiff can prove conduct, wrongfulness, fault, causation and damage that she will succeed with a delictual action. On the facts, the court found that Ms Cooper’s conduct was the sole cause of her injuries.
In relation to disclaimer notices, the court restated the usual rules which apply to them, and the test to be applied when considering whether contractual terms are contrary to public policy. Most usefully, the court provided guidance on the application of the Act to matters involving indemnity forms. Whilst the judgment is certainly not authority for a statement that indemnities are always enforceable, it provides a practical example of what factors a court may take into account in considering if an indemnity provision is impacted upon by the Act’s provisions.
Although the judgment is not authoritative in other divisions of the High Court, it could have persuasive value in other courts considering similar issues.
A copy of the judgment can be accessed here.