The Legal Approach Towards Time Barring Clauses in Insurance Contracts

The Constitutional Court, in the case of Barkhuizen v Napier 2007 (5) SA 323 (CC), dealt with the issue of “time-barring clauses” in contracts entered into between private persons.

The salient facts of the case are as follows:

The Applicant had entered into a short-term insurance contract with the Respondent for insurance of his motor vehicle. On 24 November 1999 the motor vehicle was involved in an accident which caused the vehicle damages beyond economic repair. The Applicant thus claimed the insured sum, i.e. R181 000 from the Respondent. The respondent repudiated the claim on the grounds that the Applicant had used the vehicle for business purposes despite the insurance agreement providing that the vehicle must be used for private purposes only.

On 8 January 2002, two years later, the Applicant instituted legal proceedings against the Respondent claiming payment of the insured sum together with interest thereon. The Respondent responded to the action with a special plea, claiming that they were released from liability due to the Applicant’s failure to adhere to the time-limitation clause which formed part of the contract. The relevant clause read as follows: “if we reject liability for any claim made under this policy we will be released from liability unless summons is served… within 90 days of repudiation”. In essence the Applicant was time barred from instituting proceedings to pursue his claim.

The Applicant argued that the time-limitation clause was unconstitutional as it was contrary to public policy and thus invalid. The basis of the Applicant’s contentions in this regard was that the clause sought to prescribe an unreasonably short period of time within which to institute legal proceedings and as a result it infringed on the right to seek redress from the Court and the right to access the Court.

The Court, inter alia, considered whether public policy tolerates time-limitation clauses. The Court held that it did, subject to the considerations of reasonableness and fairness. Furthermore, the Court reiterated that the Constitution recognises that the right to seek legal redress may be limited in certain instances.

Relying on the Mohlomi decision the Court held further that the general test for enforceability is whether the provision affords the Applicant an “adequate and fair opportunity to seek judicial redress. Notions of fairness, justice and equity, and reasonableness cannot be separated from public policy”. The Court also formulated a test for fairness viz, firstly, whether the clause itself is unreasonable and secondly, if the clause is reasonable whether it should be enforced in the circumstances.

The Court found that in respect of the first leg of the test two considerations would need to be weighed up against one another. One being the maxim, pacta sunt servanda and the other being the right to seek legal redress. The Court found that clauses of this type are reasonable and thus operational within our law. The Court thereafter moved on to examine the circumstances in which the clause would operate, in order to assess whether same should be enforced.

The Court ultimately found that the clause should be enforced in this matter because the Appellant failed to show why he had failed to act in accordance with the provisions of the time-bar clause. The Court explained that had the Applicant been unaware of the time limitation clause or the consequences thereof, or failed to act in accordance with same due to factors outside of his control then the clause would operate unfairly and the Court would not enforce same. However, the appellant seemed to be fully aware of the clause and the effect of same. Thus, in the circumstances, the Court found that the clause operated reasonably.

This decision opened the door for the Courts to refuse enforcement of certain, unfair clauses in contracts between private persons and laid the foundation of the grounds on which to do so.

 

The Policyholder Protection Rules

On 01 January 2018 the amended policyholder protection rules came into force. Various Rules have been in place regarding time barring since 2011, which the new Rules amplify. The rules build on the position laid down by the Court in Barkhuizen v Napier.

The Rules firstly provide that insurers must accept, repudiate or dispute a claim or the quantum thereof within a reasonable period of time. Thereafter, insurers must give written notice of their decision to the claimant within 10 days of making same.

In the event that an insurance claim is rejected or disputed by the insurer, the Rules provide for a rather stringent set of disclosure obligations which the insurer must fulfil. This ensures that claimants are equipped with the necessary information to properly pursue claims which they feel have been wrongly rejected. Insurers are required to inform the insured of the following:

 

  • The reasons for the decision “in sufficient detail to enable the claimant to dispute such reasons if the claimant so chooses”;
  • That the insured party may within 90 days make further representations in respect of its claim;
  • Details of the internal claim escalation and review process required by Rule 17.5. Rule 17.5 provides that an insurer must establish and maintain an appropriate internal process for claim decision escalation and/or review and for resolution of claim related disputes;
  • That the insured party has a right to lodge a complaint against the insurer with the relevant Ombudsman, together with the relevant contact details of same, any applicable time limitations, and other relevant legislative provisions relating to the lodging of such a complaint; and
  • Of any time limitation provision for the institution of legal actions contained in the policy, as well as the implications thereof or, in the absence of same, of the operation of the Prescription Act, the prescription period applicable and the implications of the Act.

 

It is also clear that mere notification of the clauses and processes is insufficient. Insurers must also ensure that claimants are made aware of the relevant details and implications thereof in order for them to be well equipped to deal with such clauses and/or to pursue such processes successfully. It is thus the obligation of the insurer to provide information regarding the protection provided by the rules available and accessible to their clients – which provides some redress to the unequal positions private persons find themselves in when dealing with insurance companies.

   

   The Rules further state:

“ 17.6.8      Any time limitation provision for the institution of legal action that may be provided for in a policy entered into on or after 1 January 2011-

(a)   may not include the period referred to in rule 17.6.3(b) in the calculation of the time limitation period; and

(b)   must provide for a period of not less than 6 months after the expiry of the period referred to in rule 17.6.3(b) for the institution of legal action.

 17.6.9   Despite the expiry of the period allowed for the institution of legal action in a time limitation clause provided for in a policy entered into before or after 1 January 2011, a claimant may request the court to condone non-compliance with the clause if the court is satisfied, among other things, that good cause exists for the failure to institute legal proceedings and that the clause is unfair to the claimant.

 17.6.10 For the purposes of section 12(1) of the Prescription Act, 1969 (Act 68 of 1969) a debt is due after the expiry of the period referred to in rule 17.6.3(b).”

 

The Rules confirm the Court’s power to condone non-compliance with time-limitations should they operate unfairly, as well as in circumstances where the policyholder can show their failure to institute legal proceedings timeously was due to a good cause. It is submitted that the test for fair operation of such a clause remains as decided by the Court in Barkhuizen. It must also be noted that the above requirements must be fulfilled in conjunction with one another. However, what exactly “among other things” refers to in this provision is currently unclear.

Insurers are also precluded from imposing unreasonably short time-limitations, as the Rules state that any time-limitation imposed in a policy entered into after 2011 may not be shorter than six months.

The Rules now require insurers to ensure that the policyholder is well aware of the existence of the time-limitation clause, as well as the implications thereof. This protects policyholders from being prejudiced by clauses which they previously would not have been made aware of, or fully understood. It also provides the policyholder with ample opportunity to dispute repudiated claims and follow the correct processes in order to have their claims reconsidered.

Should an Insurer fail to act in accordance with the Rules, a policyholder may lay a formal complaint against the insurer. As a result, the Rules have created a more onerous position for the Insurer and this should ensure that they act in accordance therewith.

The Rules provide some welcome redress to the unequal power that insurance companies hold over policyholders. Furthermore, the new amendments to the Rules obligate Insurers to inform policyholders of the protection in place which makes it more accessible to the policyholder and easier to follow.

 

Claire Wolmarans

THE ROLE PLAYERS IN THE CONSTRUCTION PROFESSION AND THEIR RESPONSIBILITIES

  1. INTRODUCTION

The different duties and functions of the role players involved in a typical construction project are fundamental in the understanding of the proper operation of a construction site.   The purpose of this article is to provide clarity as to the functions of certain of the professionals involved in a typical construction site. Simply put, who does what?

It is intended to address the different role-players involved on a typical construction site and the relationships and responsibilities of such role-players in a relatively simple construction project.

The typical construction site can be quite complex, not only in the technical sense, but also because the various professional disciplines must work in unison, as a team, to achieve the required result. In most cases “the required result” includes the delivery of the agreed product, within budget, and within the agreed timeframe. The three primary considerations are usually “scope”, “cost” and “time”.

Apart from these three considerations, safety on site is also one of the key requirements of the modern construction operation. In the modern construction framework numerous safety requirements are prescribed by legislation. Ensuring compliance with these requirements involves the ongoing monitoring of operations on site by a dedicated safety officer.

Over and above the safety officer, the typical construction team involves a number of professionals from different disciplines within the engineering sector. They are usually highly qualified individuals who have specialized knowledge in their own field of expertise.

The professionals that need closer attention are architects, engineers, quantity surveyors and project managers.

Other professionals will include the Land Surveyor and the Landscape Architect. A discussion of these professions does not fall within the ambit of this article.

 

  1. THE ARCHITECT

Architects are artists. They combine architectural history, science and art within the built environment to produce designs that will not only meet the client’s requirements, but also enhance the environment.

The Shorter Oxford English Dictionary describes the architect as:

“One whose profession it is to prepare plans of edifices and exercise a general superintendence over their erection.”

An architect is usually the first professional to be contracted by the client. They are also the leaders of the construction team. In many building projects the role of the architect is to co-ordinate a team of specialist consultants, such as landscape architects, engineers, quantity surveyors, interior designers, and even contractors and sub-contractors.

An architect must be professionally qualified and lawfully registered to practise. They also subscribe to a code of conduct that requires them to perform all duties with professional integrity.

An architect can make a valuable contribution to any project, even before any design work commences, particularly in the following respects:

  • Feasibility Studies

 

It may be necessary to establish the economic relationship between factors influencing the cost of a development on the one hand, and the estimated return from the project that a client could expect. Most architects are able to assist with such a basic financial analysis.

  • Site Selection

 

Architects are able to advise clients on the selection of a suitable site based on the client’s needs. This advice can often reduce the cost of the project through the appropriate assessment and selection process of a site. Architects may consider and advise clients on issues such as sub-soil conditions, availability of services, local building regulations, heritage implications, site orientation and views, as well as solar energy design requirements.

  • Budget Planning

 

Experienced architects can provide a client with a reasonable estimate of expected costs for the different phases of a building development. These estimates can be broken down into the site development phase, construction phase, the cost of furniture and fittings, the estimated cost of landscaping and other external works. They may also provide the client with some indication of the expected cost of finance and consultants’ fees, as well as possible ongoing maintenance costs.

  • Preparation of a project schedule

 

On smaller projects, architects are sometimes engaged by clients to prepare a project schedule of events. This is normally done at an early stage in the project in order to allow for the ongoing monitoring of the project activities and to what extent certain activities are being completed. It also gives the client an indication of whether or not certain deadlines will be met.

With larger projects, this task is within the responsibility of a project manager. In recent times the development of the project management profession has, to some extent, depleted the role of the architect on this particular issue. The management of resources and activities, and ultimately time and money, is increasingly becoming the responsibility of the project manager.

  • Schematic Design

 

Architects will prepare, at the outset of the project, a schematic design based on the information and initial brief given to them by the client. The schematic design will also take into consideration the architect’s understanding of statutory requirements. Government and local councils may have specific regulations which affect design solutions and the project schedule. This is also the opportune time for the client to make any amendments to proposed designs. Any changes at this stage would be far less expensive than significant design changes at a later stage when detailed designs have been completed by the architect. The design process therefore starts with the schematic design and leads through a progression of designs. The client develops the design with the architect into a final design which, at the end of the process, should be in accordance with the client’s requirements. During the design process the architect will also explore and illustrate the cost options for each design and any changes made thereto. The client should therefore be in a position to take the cost factors into consideration when a design is being developed.

  • Obtaining Approvals

 

Approvals for any project must be obtained from a number of authorities. An architect can submit applications for approval, together with the required information on a client’s behalf and may also respond to any technical queries raised by any of the approving authorities.

A number of authorities may be involved in the approval process inter alia:

  • The Local Authority
  • ESKOM
  • Fire Services
  • Liquor Control Authority
  • Environmental Protection Authority
  • Heritage Authority
  • Health Authority

The architect will also be au fait with the national building regulations. Any design prepared by the architect should be in compliance with the national building regulations, as well as certain requirements that the local authorities may have in this regard.

  • Preparing Documentation for Construction

 

Following the approval of the design by the client, as well   as the   relevant authorities, the architect   will prepare drawings and specifications which will be used during the construction process. These documents will be used during the identification of suitable contractors. They will also be used, where necessary, to obtain further designs from relevant professionals such structural engineers, mechanical engineers and electrical engineers. The construction documents can be detailed and complex. They require skill, experience and time to prepare. It will normally include a set of large- and small scale fully dimensioned and detailed drawings, known as “the working drawings”.

This set of drawings is accompanied by a written, bound volume giving full descriptions, details and direction in relation to all work to be carried out. The set of drawings is known as “the specification”. The documents prepared by the architect may often also include further drawings and specifications prepared by any specialist consultants appointed by either the client or the architect on the client’s behalf. Architects, in their role as leaders of the design team, have a good knowledge of the building and construction industry, as well as available technology. They also know providers of specific products and services and may make valuable recommendations to clients. During the design stage many building projects will require specialist consultants in specific areas of the work to be executed. These consultants include engineers (structural, civil, mechanical and electrical), quantity surveyors, project managers, land surveyors, landscaping architects, etc. An architect will advise the client on the need for such consultants, may recommend certain preferred consultants and will also advise on the roles that they will play.

  • Regulation of the Architects Profession

 

Architects are regulated by the Architectural Profession Act 44 of 2000. The Act makes it an offence to practise as an architect without proper registration. The Act also provides for the registration of architects, senior architectural technologists, architectural technologists and architectural draft persons.

The Act regulates the relationship between the South African Council for the Architectural Profession and the Council for the Built Environment. This entity is called into being by the Council for the Built Environment Act, 43 of 2000.

In recent times, the identification of work to be executed by the relevant professional bodies has been the focus of the Council for the Built Environment. Most of the Councils regulating their individual professions are now finalizing their “Identification of Work” documents within their own professions. It has also been instrumental in the co-ordination of the various Councils that were established through their respective Acts in 2000.

The Architectural profession is no exception. The identification of work provides for categories of work within which registered persons are permitted to operate.

The aim is to regulate the conduct of registered persons to ultimately protect the public in their dealings with registered persons and to maintain the integrity of the architectural and/or other regulated professions in the construction and engineering industry.

 

  1. THE ENGINEER

Engineering has been an aspect of life since the beginning of human existence. Civil engineering might be considered properly commencing between 4000 and 2000 BC in Ancient Egypt and Mesopotamia when humans started to abandon a nomadic existence, thus causing a need for the construction of shelter. During this time, transportation became increasingly important leading to the development of the wheel and sailing.

The construction of Pyramids in Egypt in approximately 2700-2500 BC might be considered the first instances of large structure constructions. Other ancient historic civil engineering constructions include the Parthenon in Ancient Greece (447-438BC) and the Great Wall of China in 220 BC.

In ancient times, engineers were typically referred to as architects or master builders. In the 18th century, the term civil engineering was first used to recognize it as a separate field from military engineering. The first self-proclaimed civil engineer was John Smeaton who constructed the Eddystone Lighthouse.

An engineering qualification is highly sought after in South Africa at the moment. According to the Human Sciences Research Council, the growth in the demand for labour in the engineering sector is expected to rise. This has put significant pressure on the limited professionals presently available in the market.

There are many different types of engineering qualifications. Without dealing with the detail of every engineering discipline, some of the main ones are:

    • Civil engineering
    • Electrical engineering
    • Mechanical engineering
    • Metallurgical engineering
    • Industrial engineering
    • Clinical engineering
    • Mining engineering
    • Chemical engineering
    • Aeronautical engineering

Perhaps the most recognized branch of engineering is Civil Engineering, the reason being that it directly affects the infrastructure used by society. Civil engineers are commonly involved in all aspects of community infrastructure, housing and construction. Our homes, roads, airports and bridges are built thanks to the involvement of civil engineers.

Civil engineering includes the following different specialties:

    • Environmental Engineering
    • Geotechnical Engineering
    • Hydraulic Engineering
    • Materials Science
    • Structural Engineering
    • Transportation Engineering

Engineers are regulated by the Engineering Profession Act 46 of 2000. The Act makes it an offence to practise as an engineer without proper registration. The Act also provides for the registration of engineers, candidate engineers and specified categories in the engineering profession. The Act regulates the relationship between the Engineering Council of South Africa and the Council for the Built Environment. The identification of work to be executed by the relevant professional bodies has been the focus of the Council for the Built Environment. Most of the Councils regulating their individual professions are now finalizing their “Identification of Work” documents within their own professions. It has also been instrumental in the co­ordination of the various Councils that were established through their respective Acts in 2000.

The Engineering profession is no exception. The identification of work provides for categories for work within which registered persons are permitted to operate. The aim is to regulate the conduct of registered persons to ultimately protect the public in their dealings with registered persons and to maintain the integrity of the engineering and/or other regulated professions in the construction industry.

 

  1. THE QUANTITY SURVEYOR

The quantity surveying profession emerged in England at the beginning of the 19th century. Prior to the first recorded usage of term “quantity surveyor” in 1859, the term “measurer”, “custom surveyor” or “surveyor” were used. In those early days the quantity surveyor acted as master tradesman, measuring the work at completion and frequently submitting final accounts to the building owner.

As a direct result of these activities it often became the the practice of building owners to have the work executed under contract and to call for tenders before any work was undertaken. A procedure therefore developed whereby building owners would approach an architect to design a building.

Drawings and specifications were distributed to selected master builders, who would then submit tenders for the total price rather than a collection of prices from master tradesmen. The task of arriving at an accurate estimate of cost or tender can be carried out in only one way, that of measuring the quantities of all materials and labour necessary to complete the work, i.e. preparing bills of quantities.

As each builder had to prepare his/her own bills of quantities for each project, they realized soon that it would be more economical for them, as a group, to employ one surveyor to measure quantities for all of them. They would thus share the costs of the surveyor, obtain identical bills of quantities which ensure that they would all be tendering on exactly the same basis. The builder owner subsequently realized that it would be to his/her personal advantage to appoint and pay the fees of the quantity surveyor. Thus the independent professional quantity surveyor gained consultant status.

Quantity surveyors become involved in the various stages of the project as essentially a financial consultant to the client. The client would normally engage an architect to prepare a design and the required drawings for the construction of a project. The architect’s drawings, being specific structural designs, be required, are then passed on to the design engineer. The engineer will then prepare designs for the specific design elements that would be required.

From the engineer, the finalised drawings would be passed on to the quantity surveyor in order to “measure” from the designs and prepare bills of quantities. The measurement from the finalised drawings involves the determination of the quantity materials and resources that would be required to complete the project.

Anything and everything from volume of concrete, tons of steel, number of bricks to square metrics of paint would be detailed. The bills of quantities are normally broken down into specific sections of measured items according to a pre-arranged and/or agreed strategy. The bills of quantities normally would form one of the cornerstone documents of a construction contract.

Professional quantity surveyors render a wide spectrum of services to their clients, but naturally attend to gain experience or concentrate their services in a specific field. The services that quantity surveyors could offer include:

 

  • Estimating and costs advice using techniques and an intimate knowledge of building and construction economics.
  • Cost planning enables clients to make informed decisions on various design alternatives with actual costs constantly monitored against original budgets.
  • Property development advice provide a pre-design study involving technical and/or economic investigations enabling the client to decide whether, and in what form, a project is to be proceeded with.
  • Valuation of work in progress, cash flow assessment of budgets and final account preparation in respect of a contract. The quantity surveyor measures and valuates the work in progress, determines the value of any variations ordered by the principle agent and ensures that a reasonable settlement of the cost of a project is achieved.

 

Quantity Surveyors are regulated by the Quantity Surveying Profession Act 49 of 2000.

The Act makes it an offence to practise as a quantity surveyor without proper registration. The Act also provides for the registration of quantity surveyors specified categories in the quantity surveying profession. The Act regulates the relationship between the South African Council for the Quantity Surveying Profession and the Council for the Built Environment. The Act also prescribes that a Professional Code of Conduct be published and subscribed to by all registered members of the Association of Quantity Surveyors. The Code of Professional Conduct is included in the bundle of documents.

 

  1. PROJECT AND CONSTRUCTION MANAGEMENT PROFESSIONS

As a discipline, project management developed from different fields of application including construction, engineering and defense. In the United States, the forefather of project management is Henry Gantt, developed planning and control techniques. He is famous for his use of the Gantt chart as a project management tool. The 1950s marked the beginning of the modern project management era. Again, in the United States, prior to the 1950s, projects were managed on an ad hoc basis, using mostly Gantt Charts and informal techniques and tools. At the same time, technology for project cost estimating, cost management and engineering economics was evolving.

Project management involves the planning, monitoring and control of all aspects of the project and the motivation of all those involved in it to achieve the project objectives on time and to the specified cost and standard.

The project manager seldom participates directly in the activities that produce the end result, but rather strives to maintain the progress and productive mutual interaction of various parties in such a way that overall risk of failure is reduced.

A project manager is also often a client representative and has to determine and implement the needs of the client. The ability to adapt to the various internal procedures of the contracting parties, and to form close links with the nominated representatives is essential in ensuring that the key issues of cost, time, quality as well as client satisfaction can be realized.

Traditionally, three constraints have been listed as “scope”, “time” and “cost”. These are also referred to as the “Project Management Triangle”, where each side represents a constraint. One side of the triangle cannot be changed without affecting the others.

The time constraint refers to the amount of time available to complete a project. The cost constraint refers to the budgeted amount available for the project. The scope constraint refers to what must be done to produce the project’s end result.

These three constraints are often in conflict i.e.:

        • Increased scope typically means increased time and increased cost
        • Time constraints could mean increased costs and reduced scope
        • Budgetary constraints could mean increased time and reduced scope

The discipline of project management is about providing the tools and techniques that enable the project team (not just the project manager) to organize their work to meet these constraints.

Another approach to project management is to consider the three constraints as finance, time and human resources. If you need to finish a job in a shorter time, you can throw more people at the problem, which in turn will raise the cost of the project, unless by doing this task quicker we will reduce costs elsewhere in the project by an equal amount.

Project management is composed of several different types of activities such as:

  • Analysis and design of objectives and events
  • Planning the work according to the objectives
  • Assessing and controlling risk (or Risk Management)
  • Estimating resources
  • Allocation of resources
  • Organizing the work
  • Acquiring human and material resources
  • Assigning tasks
  • Directing activities
  • Controlling project execution
  • Tracking and reporting on progress
  • Analyzing the results based on the facts achieved
  • Defining the products of the project
  • Forecasting future trends in the project
  • Quality Management
  • Issues management

Project and Construction Managers are regulated by the Project and Construction Management Professions Act 48 of 2000. The Act makes it an offence to practise as a project and construction manager without proper registration. The Act regulates the relationship between the South African Council for the Project and Construction Management Professions and the Council for the Built Environment.

 

  1. THE PROCESS OF A TYPICAL CONSTRUCTION SITE

After the finalization of the design process between the client and the architect, the architect will refer the finalized design to a specialist structural engineer for the preparation of any detailed structural designs that may be required and may influence the costing of the project.

Any other designs that may be required, such as storm water drainage and electrical systems, may also be referred to specific design consultants such as a civil engineer, as well as an electrical engineer.

As soon as these designs have been completed the architect may refer the various designs, including the detailed designs and specifications to a quantity surveyor.

The quantity surveyor will in turn prepare, from the drawings and specifications, a bill of costs. This process is normally referred to as “measuring”.

The bill of quantities can be used to secure the correct contractor to execute the work. There are several ways to select a building contractor, however the most common are:

  • Tendering – public (open) and private (selective)
  • Negotiated contracts
  • A combination of both

Public Tendering is done by invitation through the press and is open to all builders, irrespective of their qualifications or experience.

Private Tendering usually involves a pre-select group of builders who are known to be familiar with, and have a good track record in the particular type of project at hand. Selective, or private tendering, usually involves an invitation to tender that is extended to, at most, five or six building contractors.

In selecting a contractor, it is essential to consider more than one tender price. The architect, civil engineer, quantity surveyor and I or project manager should be able to assist a client in evaluating tenders received, by considering:

  • Value for money
  • The tender’s ability to meet the project schedule, appropriately staff the project, and provide the necessary plant and equipment to execute the works.
  • The tenderer’s experience in the specific type of project, as well as the tenderer’s reputation for quality of work.
  • The tenderer’s reputation for co-operation, particularly if the project involves extensions to occupied premises.
  • The tenderer’s financial stability.

In private or selective tendering, it is essential that most of this information be obtained and assessed before the contractors are invited to tender. In this process it is usually understood that the lowest tender will be accepted, i.e. the invited contractors would not have been approached by the client if they had not been pre-qualified and accepted on the above mentioned grounds. In general, the contractor should be selected on the overall value that they represent, and not merely the tendered price.

A preferred contractor represents real value in reliability, speed, quality of work and in the fact that the project may ultimately cost the client less if executed by the contractor, as opposed to a contractor of lesser ability, who has tendered at a lower price.

Negotiated Contracts comes into play when a client (or the consultant advising the client) has identified a preferred contractor, the contract is normally concluded through negotiation.

The negotiation process can be facilitated by the professional advising the client and the contract can be concluded between the client and the contractor directly. A further option is for the contract to be concluded between the contractor and the consultant advising the client, such as the architect, acting as the client’s agent.

In most cases where negotiated contracts are concluded, the client must be made aware of the fact that the price for the execution of the works is not given in competition. The client should therefore seek expert advice on whether or not the price received from the contractor is reasonable.

Most standard contracts include provisions for the contract to be administered by an architect, or an alternative consultant acting as the client’s principle agent.

The principle agent will be responsible for:

  • Assessing and certifying payments to be made by the client to the contractor. These payments are also known as “progress payments”. The principle agent therefore acts as the agent of the client when approving and certifying for payment of work executed.
  • Assessing, issuing, referring and authorising any contract variations or additional work. The principle agent will also determine the value of any variations or additional work, as advised by the appropriate consultant (normally the quantity surveyor) tasked with the determination of the value of the work executed.
  • Assessing and determine any requests for extensions of time.
  • Assessing compliance of materials and workmanship with the quality specified in the contract.
  • Being the custodian of the contract documents and shall keep a set of signed documents in his possession for safekeeping.
  • Assessing the progress that is being made with the completion of the works and will give guidance to the contractor as to the state of completion of the works required in order to certify practical completion.
  • Certifying practical completion of the works. The principle agent will then issue a works completion list to the contractor within a specified time of the certification of practical completion.
  • Assessing the status of completion of any work included in the works completion list. As soon as the work has satisfactorily been completed by the contractor, the principle agent shall issue a certificate of works completion.
  • At the end of the defects liability period, the principle agent shall inspect the works and issue a certificate of final completion of the works if the works has, in the opinion of the principle agent, reached final completion.
  • The final account will also be compiled by the project manager, the quantity surveyor or any other consultant responsible therefore. The final account will be issued to the client and contractor by the principle agent.
  • In order to execute the required tasks, the principle agent will have to attend on-site on a regular basis, in order to perform the duties required from a principle agent.
  • During the course of construction the respective consultants will, as part of their responsibility to supervise the work, inspect the works with the specific purpose in mind, attend regular site meetings, comment on any site minutes that may have been prepared, advise the contractor on the proper execution of the works and issue instructions.

The purpose of the involvement of the consultants, as well as the principle agent, is to ensure that the work being executed by the contractor is in accordance with the terms of the contract, including the specifications and drawings. The duty however, remains with the contractor to closely supervise the construction of the works and to ensure complete compliance with the requirements of the contract. For the duration of the contract, the principle agent, as well as the various consultants involved in the construction process, must maintain effective communication with the contractor to allow proper performance, as required by the contract. Communication also involves clear instructions to the contractor where direction is required on the rectification of any defects in the construction. Instructions or directions of this nature may include explanatory sketches and drawings.

If any instruction involves a variation in the cost of the works, it is the contractor’s responsibility to notify the principle agent of any changes in the project costs, before executing any such instructions. Where an instruction may cause a significant variation to the cost of the works, the principle agent will submit the variation to the client for assessment and will then revert to the contractor in accordance with the client’s instructions.

Situations may arise where the contractor is unable to complete all the contractual obligations by the stipulated date for practical completion. In such cases, the principle agent is required to consider the contractor’s claim and, if appropriate, grant an extension of time, effectively adjusting the date for practical completion.

Delays may be caused by factors beyond the contractor’s control, such as:

  • Local Authorities
  • Variations to the original contract
  • Industrial disputes
  • Disputes with neighbours
  • Inclement weather
  • Delays in issuing instructions
  • Delays in receiving appropriate designs from the professional team

In cases where delay is beyond the contractor’s control, the contract usually will require that the contractor be remunerated adequately for costs incurred as a result of the delay.

The possibility of delays occurring during the contract period can be minimised by:

  • Properly preparing the contract documents issued to the contractor
  • Establishing that the contract price is fair
  • Establishing trust and co-operation between the parties
  • Adequate time allowed for construction of the works
  • Prompt and informed decision-making
  • Maintaining effective communication between the parties involved in the contract throughout the contract period

The date for practical completion is the date nominated in the contract on which the works must be completed and available for use.

Practical completion can be defined as:

“the state of completion of the works where, in the opinion of the principle agent, completion has been substantially achieved and the works can effectively be used for the purpose intended”.

The date for practical completion may be subject to change, as discussed above.

The principle agent will issue the notice or certificate of practical completion after being satisfied that the work has been completed in accordance with the contract, that all requirements and services are fully operational and that the project is fit for occupation.

Before issuing the notice, the principle agent will undertake a comprehensive inspection of the works and list any items which require further attention by the contractor. Once the certificate of practical completion is issued, the client may occupy the building and must also insure the building from that date.

The terms of the normal building contract usually dictate that the contractor will remain liable to remedy defects in workmanship and materials which become apparent during the “defects liability period” specified in the contract.

The contractor is required to rectify such defects during the period and I or at the end of the period, as instructed by the principle agent.

Prior to the completion of the defects liability period, the principle agent will undertake a “final certificate inspection” and list any unsatisfactory items for the contractor’s further attention.

All items listed by the principle agent must be rectified to the principle agent’s satisfaction before a final certificate will be issued. This provides the client with protection against faults developing after occupation for the length of the defects liability period. The defects liability period can be as long as twelve months, depending on the terms of the contract.

At the satisfactory completion of the required rectification work, the principle agent will issue the final certificate. This signifies the successful completion of the defects liability period and formally completes the contract between the client and the contractor.

 

 

 

THE AFFECT OF SPLUMA ON ACTS OF REGISTRATION OF LAND SITUATED IN THE JURISDICTION OF TSHWANE

Introduction

The purpose of this note is to briefly set out the practice and procedure pertaining to diverse acts of registration affected by the Spatial Planning and Land Use Management Act, 16 of 2013 (“SPLUMA”) and the Tshwane LUM By – Law.

Any land development application submitted before 1 July 2015 will not be affected by SPLUMA and will be dealt with under the legislation in terms of which it was submitted. Where this is the case the provisions in the legislation relating to consent by the Municipality for purposes of registration with the Registrar of deeds shall still be required with a proviso from the Council that section 53 of SPLUMA does not apply.

The different acts of registration will then be according to the legislation that is applicable.

Removal of Restrictive Conditions

Section 16(2) of the LUM By-law provides for the removal of restrictive conditions and the following must be provided to the Registrar of Deeds for the endorsement of the title deeds:

An Application in terms of section 3 (1) (v) of the Deeds Registries Act 47 of 1937, accompanied by:

  • Notice in the Provincial Gazette;
  • The affected titles;
  • In terms of Section 16(f) to (i) the applicant shall deliver the notice of the removal contemplated in section 16(2) plus the provincial Gazette notice;
  • The Registrar shall in terms of section 16(2)(g) endorse the title deed with the removal of the conditions – Only if there are conditions to be complied with prior to the endorsement shall a section 16(10) be required but this will be clear in the decision of the Municipality that is presented to the Registrar.

Opening of a Township Register

Section 16(4) provides for the process of the township establishment and the process for the opening of a township register and the following must be lodged with the application for the opening of a township register in terms of section 16(7) of the LUM By-law:

  • Consent in terms of Act 70 of 1970(if required);
  • Notification in terms of Section 16(4)(m) of the approval of the township establishment application for purposes of determining the date of validity in terms of section 43(2) of SPLUMA;
  • The approved Conditions of Establishment contemplated in section 16(4)(f);
  • An approved layout plan of the township;
  • Certificate by Municipality that all pre-proclamation conditions have been complied with (Section 16(7)(b)) and if required the registration transaction that may be done simultaneously with the opening of the township register;
  • The approved General Plan of the township;
  • Letter for an extension of time if applicable as contemplated in section 16(6) (12 months) of the LUM By-law, which extension shall not be for a period longer than 5 years as contemplated in section 43(2) of SPLUMA.

Subdivision and Consolidations

Section 16(12)(a) provides land development applications for the subdivision and consolidation of land , excluding consolidation of farm land and agricultural holdings, (first have to be excised) but including the subdivision of farm land, and the following must be lodged:

  • Notification by the Municipality in terms of Section 46(1);
  • The approval of the consolidation or subdivision;
  • Other consents required by virtue of other legislation;
  • Certificate of Compliance with conditions of approval in terms of Section 16(10)(b);
  • Extension of time in terms of Section 16(13) and (14) if not lodged within 12 months;
  • Proof of new conditions from Municipality.

Opening of a Sectional Title Register

  • Notification by the Municipality in terms of Section 46(1);
  • Certificate of Compliance in terms of Section 16(10)(b) or a certificate in terms of section 28 (9) of the Act to the effect that all land use is in place.

Note: For the Extension of a scheme or a unit you still need to get a section 28(9) confirmation of land use rights.

General

A compliance certificate, in terms of Section 16(10) (b) read with Section 53 of SPLUMA, will also have to be lodged for the following acts of registration:

  • First transfer or registration from the township;
  • First transfer or registration from the subdivision;
  • First transfer or registration from the consolidation;
  • First transfer or registration from the scheme, unless section 28 (9) of the Act has already been afforded;
  • Incision.
  • Amendment or cancellation of a general plan.

 

ALLEN WEST

 

 

 

AUTHENTICATION OF DOCUMENTS FOR USE IN AND OUTSIDE SOUTH AFRICA

Introduction

Have you ever had to legalise documents within South Africa for use abroad or vice versa?

If you have, then you have no doubt experienced the frustration of having same signed/executed only to find out later that the documents are not legally valid or acceptable

Herewith a brief summary of the requirements for authentication

  1. Documents must be properly authenticated to ensure that they are legally valid for use either within South Africa or abroad.
  2. The country in which the documents will be used will determine the authentication process required.
  3. The process of authentication is simplified where the country is a party to The Hague Convention of 5 October 1961 (which abolishes the requirement of diplomatic and consular legalization for public documents originating in one Convention country for use in another). Documents issued in a Convention country which have been certified by a Convention Apostille are entitled to recognition in any other Convention country without any further authentication. Such recognition is an obligation on the part of the United States to the other countries party to the Convention and the federal courts and state authorities have been alerted to this obligation. Consular officers in Convention countries are prohibited from placing a certification over the Convention Apostille.
    Public documents include:
    • Documents emanating from an authority or an official connected with the courts or tribunals of the state, including those emanating from a public prosecutor, a clerk or a process server;

    • Administrative and notarial documents; and

    • Official certificates which are placed on documents signed by persons in their private capacity, such as official certificates recording the registration of a document or the fact that it was in existence on a certain date and official; and notarial authentications of signatures.

    If you have a document which you want legalized for use in another Convention country, the Convention certification called an Apostille must be affixed to the document by a competent authority. The Apostille is a pre-printed form prescribed by the Convention.

  4. Documents are authenticated with a Certificate of Authentication and/or an Apostille Certificate.
  5. Rule 63 of The Rules of the High Court of South Africa regulates the requirements for authentication where documents are signed / executed outside South Africa for use within South Africa.

To ensure that your documents are legally valid the following is required

SIGNING / EXECUTING OF DOCUMENTS WITHIN SOUTH AFRICA FOR USE OUTSIDE OF SOUTH AFRICA.

  1. Where countries are party to The Hague Convention:
    Currently 77 states including most European countries, the United Kingdom, The United States of America and South Africa1.1 Documents are signed and/or executed in the presence of a Notary Public. The Notary Public will attach his Certificate of Authentication to the documents which must bear his signature, stamp and seal.
    1.2 Documents are then forwarded by the Notary Public to The High Court in the area in which the Notary Public practices. The Court will then attach an Apostille Certificate authenticating the Notary Public’s signature; or-
  2. Where countries are not party to The Hague Convention:2.1 Documents are signed and/or executed in the presence of a Notary Public. The Notary Public will attach his Certificate of Authentication to the documents which must bear his signature, stamp and seal.
    2.2 Documents are then forwarded by the Notary Public to The High Court in the area in which the Notary Public practices. The Court will then attach an Apostille Certificate authenticating the Notary Public’s signature.
    2.3 Documents are then submitted to the Legalisation Section at DIRCO (The Department of International Relations and Co-operation) based in Pretoria to be legalised.
    2.4 Once legalised by DIRCO the documents are then forwarded to the Embassy/Consulate of the country in which they are intended to be used for further authentication.

SIGNING / EXECUTING OF DOCUMENTS OUTSIDE SOUTH AFRICA FOR USE WITHIN SOUTH AFRICA.

Rule 63 of the Uniform Rules of the High Court regulates the requirements for authentication.

In terms of Rule 63 a document is sufficiently authenticated by means of a Certificate of Authentication which bears the signature and seal of office of:

  1. a head of a South African diplomatic or consular mission or a person in the administrative or professional division of the public service serving at a South African diplomatic, consular or trade office abroad; or
  2. a consul-general, consul, vice-consul or consular agent of the United Kingdom or any person acting in any of the aforementioned capacities or a pro-consul of the United Kingdom; or
  3. any Government authority of such foreign place charged with the authentication of documents under the law of that foreign country; or
  4. any person in such foreign place who shall be shown by a certificate of any person referred to in paragraph (i), (ii) or (iii) or of any diplomatic or consular officer of such foreign country in the Republic to be duly authorised to authenticate such document under the law of that foreign country; or
  5. a Notary Public in the:- United Kingdom of Great Britain and Northern Ireland (England or Ireland);
    – Zimbabwe;
    – Lesotho;
    – Botswana;
    – Swaziland; or
  6. a Commissioner Officer of the South African Defence Force as defined in section 1 of the Defence Act, 1957 (Act 4 of 1957) in the case of a document executed by any person on active service.

DOCUMENTS EXECUTED IN NAMIBIA

Documents executed in Namibia cannot be authenticated before a Notary Public.

However, Namibia is a party to The Hague Convention and the documents can thus be authenticated via these formalities.

POWER OF ATTORNEY EXECUTED IN LESOTHO, BOTSWANA OR SWAZILAND

A Power of Attorney which is executed in these countries and which gives authority to a person to take, defend or intervene in any legal proceedings in a Magistrate’s Court within The Republic of South Africa shall not require authentication. However the Power of Attorney must be duly signed and the signature must have been attested by two competent witnesses.

Fairness and the FIDIC Silver Book

The FIDIC General Conditions of Contract, contained in the Silver Book version, requires the Employer to act in the “traditional” role of the Engineer. The purpose of this article is to examine the Employer’s power to make determinations in respect of the Contractor’s claims in terms of Clause 3.5 of the Silver Book Contract, and the manner in which he/she is to make same.

The clause in question reads as follows:

“Whenever these Conditions provide that the Employer shall proceed in accordance with this Sub-Clause 3.5 to agree or determine any matter, the Employer shall consult with the Contractor in an endeavour to reach agreement. If agreement is not achieved, the Employer shall make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances.

The Employer shall give notice to the Contractor of each agreement or determination, with supporting particulars. Each Party shall give effect to each agreement or determination, unless the Contractor gives notice, to the Employer, of his dissatisfaction with a determination within 14 days of receiving it. Either Party may then refer the dispute to the DAB in accordance with Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision].”

The Employer is thus required to consult with the Contractor, hear the Contractor’s side and attempt to come to an agreement with same regarding the Contractor’s claim against him or her. At this stage it is abundantly clear that this process may cause some tension between parties. Should such an agreement not be reached the Employer must proceed to make a “fair determination” regarding the Contractor’s claim. However, in doing so he/she becomes the judge of his/her own case.

E Baker et al in FIDIC Contracts: Law and Practice 2009 at page 292 alludes to the fact that the duty of the Employer to act fairly may not be a “meaningful duty” as the position is clearly conflicting. However, it is concluded that whilst it may be difficult for the Employer to act fairly in these circumstances it is still, in fact, possible. They rely on English authority (the Sheldebouw BV v St James Homes (Grosvernor Dock) Ltd 2006 BLR 124) to reach this conclusion. In the aforementioned matter counsel argued that it was impossible for the Employer to act fairly as a contract administrator, however, the Court found that this was not the case, but conceded that it would be more difficult for him/her to do so.

E Baker et al further argues that the protective measures provided in the Silver Book safeguards the Contractor’s interests from the Employer’s potential failure to act fairly. They refer to the portion of Clause 3.5 which provides that the Employer’s determination shall not be enforceable if the Contractor notifies the Employer of his/her dissatisfaction with the determination within 14 days of same being made. While this safeguard does allow the Contractor an easy mechanism to escape the enforceability of an unfair determination, this safeguard does not cure the internal conflict that arises when the Employer is empowered to make such determinations.

The interpretations of the word “fair” requires that a determination must be bona fide, professional, honest and arguably impartial. Whether the Employer will be able to act in such a manner when determining a claim which affects his/her own rights and position is almost unimaginable. Even where the Employer acts honestly, his/her position as Employer alone jeopardizes his ability to act bona fide toward the Contractor and to take all relevant considerations into account. There is also risk that he/she will naturally treat his/her own circumstances with more gravitas simply because he/she views same from his/her own perspective. As stated by the Court in Sheldebouw: “it is more difficult for the organisation itself to make a decision which is contrary to its own interests”.

Furthermore, the likelihood of the Contractor ever accepting the Employer’s determinations as satisfactory where it is negative towards him/her seems slim. The process of making determinations in terms of the Silver Book is thus inherently somewhat flawed. It is submitted that negative determinations by the Employer will be submitted for endless review by way of adjudication– rendering the process inefficient, time-consuming and potentially costly.

In practice, the removal of the “independent” Engineer creates a contract where the Employer holds the power and the Contractor stands to be prejudiced. It also creates a determination process wrought with potential inefficiency and which may prove difficult to navigate.

That being said, the Silver Book does allow for contract administration without the “middle man” (the Engineer) which in some circumstances may allow for the parties to work together more efficiently and directly. In some circumstances the conduct of the Engineer may hinder the progress of a project or complicate the channel of communication. In circumstances where the Employer and Contractor are comfortable with the Silver Book determination procedure, the Silver Book is certainly workable. Thus with the right parties – it could work.

In conclusion, Contractors should give due consideration to the impact of the Silver Book and whether it is comfortable with the Employer taking on the role of the Engineer before entering into such a contract. All parties should be aware of the pitfalls contained therein in order to ensure that the Silver Book Agreement is the appropriate contract choice.

Claire Roux

Defective works and succeeding contractor’s liability.

When a contractor is replaced by a new contractor it is of the utmost importance that the succeeding (new) contractor must understand the provisions of his/her appointment agreement, as well as the liabilities imposed in terms of the agreement. Depending on the intention of the parties to the contract, the contractor’s liability regarding defective works could be exempted.

In the recent unreported case of Trencon Construction (Pty) Ltd v South African Airways (Pty) Ltd 2015 JDR 0090 (GJ) the court had to determine whether the replacement contractor was liable for the defective works caused by the former contractor on the project.

In this case, Trencon Construction (“Trencon”) was appointed as the contractor for the construction of a departure lounge at OR Tambo International Airport, subsequent to the liquidation of the initial contractor. The parties concluded a written agreement and the general conditions applicable were the Joint Building Contract Committee: Principal Building Agreement (“JBCC”). When Trencon issued an invoice to South African Airways (“SAA”) for work done in terms of the appointment, the principal agent contended that there was defective works which had to be remedied before a certificate of final completion could be issued. It should be noted that when the Applicant was appointed as contractor the design, manufacture and installation of the shop fronts, which were alleged to be defective by the principal agent and SAA, was done by the previous contractor.

SAA and the project manager relied on clause 8.2 of the JBCC which provides that: “The contractor shall make good any physical loss and repair damage to the works, including clearing away and removing from site, all debris resulting therefrom, which occurs after the date on which the possession of the site is given and up to date of issue of the deemed certificate of final completion…” [my own emphasis]

The court held that clause 8.2 implies that the contractor shall make good the physical loss and repair and damage to works which occurs after the date on which possession of the site is given. It is common cause that the loss or damage occurred after the date on which possession was given to Trencon, and accordingly they were therefore not obliged to make good the loss or repair the damage.

Furthermore, the principal agent never issued a defects list, despite Trencon’s notification that same was outstanding. Accordingly in terms of clause 26.4 of the JBCC, the certificate of final completion is deemed to be issued, and as a result final completion is deemed to have been achieved.

The court also referred to clause 8.5 of the JBCC which provides that: “The contractor shall not be liable for the cost of making good any physical loss or repairing any damage of works where this resulted from the following circumstances: …

8.5.9. design of the works where the contractor is not responsible in terms of clause 4.0…”

It was common cause that Trencon was not responsible for the design of the works which the principal agent and SAA contends to be defective. This is therefore another reason why Trencon cannot be held liable for the loss or damages.

To conclude, due to the provisions of the JBCC and due to the fact that the loss or damage did not occur after the date of possession of the site, Trencon was not responsible for the loss or damaged works that occurred. Should an employer therefore require the succeeding contractor to take responsibility for remedying defects or damages caused by the preceding contractor, the employer must expressly state its intention and ensure that it is included in the agreement.

It should be noted that the JBCC applicable in the Trencon case was the JBCC published in 2007, and in the latest edition of the JBCC published in 2014, clause 8.2 is amended.

It terms of the 2014 JBCC version, clause 8.2 states that: “The contractor shall make good physical loss and repair damage to the works caused by or arising from:

8.2.1.  any cause before the date of practical completion;

8.2.2. any act or omission of the contractor, in the course of any work carried out in pursuance of the contractor’s obligations after the date of practical completion.”

It is clear that the words “which occurs after the date on which the possession of the site is given” has been omitted and accordingly this could have an influence on the liability of the contractor. Clause 8.5 of the 2014 JBCC, however, still excludes the contractor’s liability for the loss or repair of damages caused by the design works for which the contractor is not responsible, and this could ultimately still be a defence for the contractor, should the preceding contractor’s works include design.

In light of the aforementioned it is therefore evident that depending on the type of JBCC edition applicable, the contractor will have a valid defence in these circumstances. However, every situation will have to be determined on its own merits and facts.

 

Anjo Rheeders

Safety Requirements for Swimming Pools

Swimming Pools represent a safety risk and for this reason the legislature deemed it prudent to promulgate regulations that govern the safety measures applicable to swimming pools.

Part D4 of the National Building Regulations, (“regulations”) requires that an owner of any site which contains a swimming pool must ensure that access to such swimming pool is controlled. The regulations also provide that any owner who fails to comply with this requirement shall be guilty of an offence. Additionally, a home owner can also be sued for negligence should someone drown in their swimming pool, depending on whether negligence was present. A pool that does not meet the required safety standards, or where those measures are not effective
can, provide the necessary grounds for showing negligence on the part of the owner.

In addition, Part D5 of the regulations further also provides that an owner shall be deemed to have satisfied the necessary control requirements where access to the swimming pool complies with the relevant South African National Standards (“SANS”), as published by the South African Bureau of Standards(SABS).

In terms of SANS 10400-D the following requirements must be met for swimming pools and swimming baths:

  • A wall or fence must be provided by the owner of a site which contains a swimming pool or a swimming bath to ensure that no person can have access to such pool or bath from any street or public place or any adjoining site other than through:
    • self-closing and self-latching gate with provision for locking in such wall or fence, or
    • A building where such building forms part of such wall or fence.
  • A wall or fence shall be provided in any interconnected complex which contains a swimming pool or swimming bath to ensure that no person can have access to such pool or bath from any street or public place or anywhere within the complex other than through a self-closing and self-latching gate with provision for locking in such wall or fence.
  • Such wall or fence and any such gate therein shall be not less than 1.2 metres high, measured from the ground level, and shall not contain any opening that will permit the passage of a 100mm diameter ball.
  • The constructional requirements of any steel fence or gate must comply with the requirements in SANS 1390.

Extra protection, such as pool covers, pool nets and warning devices can also be used in addition to a fence, with such protective measures having to meet certain SANS compliance standards.

Owners should be aware that some municipalities may have imposed by-laws that govern, and may even provide for stricter safety measures regarding a private swimming pool, and the requirements of these bylaws will have to be adhered to.

Finally, it is important that any pool owner ensures that the safety measures in place are adhered to i.e. that the gate latch works and that the pool cover is secured, etc. Negligence can still exist where reasonable efforts are not taken to ensure that the safety measures are effective.

Allen West

Exciting development at Markram Inc!

Markram inc is excited to announce a new development within the firm. As of January 2018, Mr Anton Theron has stepped into the shoes of director at Markram Inc and has taken the wheel from Hendrik and Amelia Markram, the founders of the firm. Hendrik and Amelia Markram retain a close working relationship with the firm and continue to provide their valuable insights and assistance as expert consultants to the firm. Anton Theron, who is an admitted attorney, notary and conveyancer and the director of Tonkin Clacey Pretoria, brings some 35 years’ worth of experience to the firm. Anton has extensive litigation experience from over ten years spent with the State Attorney’s office. Anton is also a property law expert, and specialises in all aspects of conveyancing. He is currently the convenor for the conveyancing examination, vice-chairperson of the Gauteng Law Council and current member of the central committees and property committees of the Pretoria and Johannesburg Attorneys’ Association, as well as the Gauteng Law Council and the Law Societies of South Africa. Anton is also the drafter and examiner of the conveyancing national exam in South Africa. Markram Inc looks forward to the future and development of the of the firm under the careful and diligent guidance of Anton Theron.

 

THE LIABILITY OF THE ARCHITECT IN THE SOUTH AFRICAN LAW

THE LIABILITY OF THE ARCHITECT IN THE SOUTH AFRICAN LAW

 

McKenzie’s “Law of Building and Engineering Contract and Arbitration 7th Edition, p 129” defines an architect as “a duly qualified professional person whose function it is to design and supervise the erection of buildings.” In the Shorter Oxford English Dictionary an architect is described as “One whose profession it is to prepare plans of edifices and exercise a general superintendence over their erection.” One may only practise as an architect in South Africa if you are registered as such in terms of the Architectural Profession Act No 44 of 2000. Section 27 of this Act provides that the South African Council for the Architectural Profession must compile a code of conduct for all registered persons. Such registered persons must adhere to the terms as included in this code and failure to do so will constitute improper conduct.

 

The preamble of the Code of Professional Conduct, issued under BN 154 of 2007, Government Gazette 32731, 27 November 2009, provides that “it is an overriding obligation under the rules that, in carrying out professional work, a registered person is expected to act with due skill, competency and integrity”. Once an architect is appointed by the employer, a binding contract comes into existence between the parties. This means that a claim for negligence could be instituted against the architect in terms of the contract, or based on delict. Tacitly included in the terms of the agreement is that the architect does in fact have the required skills and ability to be reasonably proficient in his/her calling.

 

It is trite law in South Africa that a person who does not practice with the due skill and diligence will be regarded as negligent. In the Supreme Court of Appeal matter, Goliath v MEC for Health, Eastern Cape 2015 (2) SA 97 (SCA), the Court referred to the matter of Van Wyk v Lewis 1924 A.D 438 in which the test for negligence has been defined as “the failure of a professional person to adhere to the general level of skill and diligence possessed and exercised at the same time by the members of the branch of the profession to which he or she belongs would normally constitute negligence.” In the English matter of Nye Sanders & Partners v Alan E Bristow (1987) 37 BLR 92 (CA) the Court held the following with reference to the position of an architect: “Where there is a conflict as to whether he has discharged that duty [to use reasonable skill and care], the courts approach the matter upon the basis of considering whether there was evidence that at the time a responsible body of architects would have taken the view that the way in which the subject of enquiry had carried out his duties was an appropriate way of carrying out the duty, and would not hold him guilty of professional negligence merely because there was a body of competent professional opinion which held that he was at fault.”

 

Should it therefore be found that an architect’s conduct falls short of the conduct that would have been reasonable exercised by another person of the same profession, the architect will be held liable for damages to his/her employer.

 

In the recent matter of Bentel Associate International (Pty) Ltd v Loch Logan Waterfront (Pty) Ltd 2015 JDR 0323 (FB) the Court had to decide inter alia as to whether the defendant’s claim in reconvention, alleging that it has suffered damages as a result of the plaintiff’s failure to perform its obligations in a professional and workmanlike manner and without negligence, should be upheld. The Court held that “the architect’s liability is not absolute in the sense of being liable for whatever occurs. The architect is liable for substantial negligence (Dodd v Estate Cloete and Another 1971 (1) SA 376 (ECD)).” It further alluded to the matter of De Wet v Steynsrust Municipality 1925 OPD 151 where it was held that “an architect must exercise the general level of skill and diligence exercised by other persons exercising the same profession, being skilled and experienced persons.” The learned Judge referred with approval to the position in international law pertaining to the liability of the architect and quoted John R. Heisse from his article “The Measure of Malpractice” Journal of the American College of Construction Lawyers Vol 5, Nr 2, 2011: “Noting that architects and engineers deal in somewhat inexact sciences and are continually called upon to exercise their skilled judgment in order to anticipate and provide for random factors which are incapable of precise measurement the courts have reasoned that the indeterminate nature of these factors makes it impossible for professional service people to gauge them with complete accuracy in every instance.”

 

The benchmark regarding the standard of care that should be applied by an architect in the law of the United States has been defined in the Maine Supreme Court matter of Coombs v Beede 89 Me. 187 A 104 (1896). The Court held that the responsibility of the architect is the same as a doctor to patient or lawyer to client, in that the architect has “some skill and ability in some special employment and offers his services to the public on account of his fitness to act in the line of business for which he may be employed.” The Court further held that the undertaking of the architect implies that he/she consequently possesses the “skill and ability, including taste, sufficient to enable him to perform the required services at least ordinarily and reasonably well; and that he will exercise and apply, in the given case, his skill, ability, judgment and taste, reasonably and without neglect.” The Court then attempted to define the exclusions from the architect’s duty of care, submitting that “the undertaking does not imply or warrant a satisfactory result. It will be enough that any failure shall not be the fault of the architect. There is no implied promise that miscalculations may not occur. An error in judgment is not necessarily evidence of want of skill or care, for mistakes and miscalculations are incidents to all business of life.” Negligence should therefore be evident from the conduct of the architect and it will not suffice to simply state that a mistake was made by the architect.

 

In the matter of Bloomsbug Mills, Inc, v Sordoni Construction Co 401 Pa. 358 (1960), the Pennsylvanian Court confirmed that “an architect is bound to perform with reasonable care the duties for which he contracts. His client has the right to regard him as skilled in the science of the construction of buildings and to expect that he will use reasonable and ordinary care and diligence in the application of his professional knowledge to accomplish the purpose for which he is retained. While he does not guarantee a perfect plan or a satisfactorily result, he does by his contract imply that he enjoys ordinary skill and ability in his profession and that he will exercise these attributes without neglect and with a certain exactness of performance to effectuate work properly done. While an architect is not an absolute insurer of perfect plans, he is called upon to prepare plans and specifications which will give the structure so designed a reasonable fitness for its intended use, and he impliedly warrants their sufficiency for that purpose.”

 

CONCLUSION

 

When the architect thus enters into an agreement, it is implied that he/she is able to perform the work with reasonable skill and diligence. It does, however, not warrant that the result will be without fault and the architect therefore will not be held liable for the fault arising from defects in the plans because he/she does not imply or warrant a satisfactory result.    

Construction Law – Governance of the architectural professions as a whole and the legislative framework determining inter alia architects’ scope of practice and registration requirements

1. In terms of the Council for the Built Environment Act, 43 of 2000 (hereinafter referred to as “the Built Environment Act”), a “registered person” means a person registered in terms of any of the professions’ Acts. These professions’ Acts are defined as the following:

1.1 The Architectural Profession Act, 2000.

1.2 The Project and Construction Management Professions Act, 2000.

1.3 The Engineering Profession Act, 2000.

1.4 The Landscape Architectural Profession Act, 2000.

1.5 The Property Valuers Profession Act, 2000.

1.6 The Quantity Surveying Profession Act, 2000.

2. The Council for the Built Environment thus to a certain extent oversees the architectural, engineering, landscape architectural, project & construction management, property valuators and quantity surveying professions. Each of these professions also have their own professional council and legislation governing them.

3. In terms of section 20(1) of the Built Environment Act:

The council must, after receipt of the recommendations of the councils for the professions submitted to it in terms of the professions’ Acts, and before liaising with the Competition Commission in terms of section 4(q) –

(a) Determine policy with regard to the identification of work for the different categories of registered persons;
(b) Consult with any person, body or industry that may be affected by the identification of work in terms of this section.”

4. In terms of section 20(2) of the Built Environment Act, “the council must, after consultation with the Competition Commission, and in consultation with the councils for the professions, identify the scope of work for every category of registered persons”.

5. The Council for the Built Environment is thus responsible for determining scope / identification of work for each of the professions overseen by it. This will, however, be done based on inter alia the submissions of each of the professional councils in respect of what work persons registered with them may do.

6. The Architectural Profession Act, No 44 of 2000 (hereinafter referred to as “the Architects Act”) provides in section 18(1) that the categories in which a person may register in the architectural profession are as follows:

6.1 Professional architect;

6.2 Professional Senior Architectural Technologist;

6.3 Professional Architectural Technologist; or

6.4 Professional Architectural Draughtsperson.

7. The section also provides for candidates that may be registered in each of the mentioned categories, who must perform work in the architectural profession only under the supervision and control of a professional registered in a specific category.

8. In terms of section 18(2) “a person may not [our emphasis added] practise in any of the categories contemplated in subsection (1), unless he or she is registered in that category”.

9. It is an offence for a person to perform architectural work if he or she is not registered in the appropriate category.

10. In terms of section 26(1):

The council must consult with –
(a) All voluntary associations;
(b) Any person;
(c) Any body; or
(d) Any industry

That may be affected by any laws regulating the built environment professions regarding the identification of the type of architectural work which may be performed by persons registered in any of the categories referred to in section 18, including work which may fall within the scope of any other profession regulated by the professions’ Acts referred to in the Council for the Built Environment Act, 2000.”

11. In terms of section 26(2), “after the process of consultation the council must submit recommendations to the CBE regarding the work identified in terms of subsection (1), for its consideration and identification in terms of section 20 of the Council for the Built Environment Act, 2000”.

12. In terms of section 26(3)(a), “a person who is not registered in terms of this Act, may not perform any kind of work identified for any category of registered persons”.

13. In terms of section 26(4), “subsection 3(a) may not be construed as prohibiting any person from performing work identified in terms of this section, if such work is performed in the service of or by order of and under the direction, control, supervision of or in association with a registered person entitled to perform the work identified and who must assume responsibility for any work so performed”.

14. A person may thus perform work falling within the identification of work of a specific professional under the direction, control and supervision of that registered professional but only if that registered professional assumes the ultimate liability and responsibility for any work so performed.

15. In terms of section 41(1), “a person contravening section 18(2) [our emphasis added], 23, 25(8) or 31(8)(a), (b), (e) or (f) is guilty of an offence”.

16. In terms of section 41(3), “a person convicted of an offence in terms of section 18(2), may be liable to a fine equal to double the remuneration received by him or her for work done in contravention of section 18(2) or to a fine equal to the fine calculated according to the ratio determined for three years imprisonment in terms of the Adjustment of Fines Act, 1991”.

17. In terms of the definitions contained in the Code of Conduct published under the Architectural Act, members of closely allied professions are once again defined as persons registered in terms of the following:

17.1 The Architectural Act;

17.2 The Engineering Profession Act No 46 of 2000;

17.3 The Landscape Architectural Profession Act No 45 of 2000;

17.4 The Project and Construction Management Professions Act No 48 of 2000;

17.5 The Quantity Surveying Profession Act No 49 of 2000;

17.6 The Planning Professions Act No 36 of 2002;

17.7 The Property Valuers Profession Act No 47 of 2000.

18. In terms Rule 2.1 of the Code of Conduct published under the Architectural Act, “a registered person shall only undertake architectural work which is identified for the category of registration in which he/she is registered in terms of section 18 of the Act and in accordance with the registration categories in force”.

19. Practising outside a registration category is thus not only an offence in terms of the Architectural Act but may also form the subject of disciplinary action by the Council.

20. Each of the Acts listed in paragraphs 17.2 – 17.7 contain substantively similar provisions to those of the Architectural Act as discussed above i.e.:

20.1 There are specific categories of registration.

20.2  A person may not practise in any of these categories unless he / she is registered and it is an offence to practice without being properly registered.

20.3 The council must make submissions w.r.t identification of work to the Council for the Built Environment.

20.4 A person who is not registered in terms of the specific Act may not perform any kind of work identified for any of its categories of registered persons, unless such work is performed under the direction, control and supervision of a registered person entitled to perform the work identified. It is imperative that such registered person must assume responsibility and liability for any work so performed.

20.5 A person who practices in a category without being registered may be liable to a fine.

21. Similarly, each of the Codes of Conduct published under the Acts listed in paragraphs 17.2 – 17.7 contain some manner of provision stating that registered persons shall undertake only work which falls within their applicable registration category and failure to comply therewith may result in disciplinary action.

22. In terms of an Interim Policy on the Identification of Work for the Architectural Profession, published by the South African Council for the Architectural Profession and dated 12 June 2013, the following:

22.1 Regulation 2.1 provides that “no person who is registered in any category referred to in Section 18 of the Act, may undertake architectural work unless such work is demarcated for the relevant category of registration in accordance with Schedules 1 and 2, provided that a person registered in any particular category may perform the work demarcated for any lower category. Where work is not specified in the schedules, SACAP should be consulted”.

22.2 Regulation 2.3 provides that “subject to Section 26(4) of the Act, any person who undertakes identified architectural work without being registered with SACAP, is contravening the Act and is guilty of an offence”.

22.3 In terms of Regulation 3(b), “work which falls within the scope of a profession regulated by the different Built Environment Acts and which may be performed by a person registered in terms of section 18(1)(a) of the Architectural Profession Act will be recorded in the applicable CBE Board Notice after it has been confirmed by the relevant council. This will include for aspects of work common to more than one Council and / or discipline, where recognised requisite skill and competence permit the professional within one Council to undertake work demarcated within the scope of work of another Council, without need for dual registrations”.

22.4 Schedule 1 contains a “demarcation of architectural work matrix”, Schedule 2 sets out “specialised services” and Schedule 3 sets out the “definition of architectural work and competencies”.

23. It is thus important for registered persons to familiarise themselves with the identification of work in order to ensure that they are performing work which falls within that of their registration category.

24. In terms of a draft Board Notice published by the Council for the Built Environment during November 2011:

24.1 Section 11(1) states that “a person registered as a professional architect in terms of the Architectural Profession Act, principal consultant or principal agent may perform the scope of services or any one or combination of the services determined in Annexure B which falls within the scope of services of the project and construction management professions regulated by the Project and Construction Management Professions Act, 2000 (Act No. 48 of 2000) if the qualification, training and experience of that person have specifically rendered him or her competent to perform those services and the services are performed within the framework of architectural work”. Annexure B is, however, marked as “to be completed” and no work is listed there as yet.

24.2 Section 11(2) states that “a person registered in a category of registration in terms of the Architectural Profession Act may perform the scope of services relating to costing determined in Annexure C which falls within the scope of services of the quantity surveying profession regulated by the Quantity Surveying Profession Act, 2000 (Act No. 46 of 2000), if the qualification, training and experience of that person have specifically rendered him or her competent to perform those services and the services are performed within the framework of architectural work”. Annexure C is, however, marked as “to be completed” and no work is listed there as yet.

24.3 Section 12 states that “a person registered in a category of registration may perform the scope of work determined in Annexure D which falls within the scope of the engineering profession regulated by the Engineering Profession Act, 2000 (Act 46 of 2000), if the qualification, training and experience of that person have specifically rendered him or her competent to perform that work and the work is performed within the framework of architectural work”. Annexure D does, however, not list any such work.

25. Bearing in mind that the Board Notice mentioned in paragraph 24 supra is only a “draft”, it is not of legal force and effect as yet. It appears that the process of identifying overlapping areas of work is still ongoing. There are, however, not such identified areas as yet and members of the architectural profession would be best serve by adhering to their identification of work.

26. There appear to be similar identifications of work and board notices published by and in respect of the councils for the various associated professions, some of which deal in more detail with inter-council overlap of work and the work that those registered persons may perform although it may be regarded as part of other registered persons’ identification of work. This does, however, not apply to architectural professionals and will not be discussed in more detail here.

27. In conclusion, the following:

27.1 The Council for the Built Environment has a mandate to assess identification of work of the various registration categories of the various professions regulated by the Act set out in paragraph 17.1 – 17.7 supra.

27.2 There may potentially be an overlap in respect of the various professions’ scope / identification of work but this has not been dealt with in so far as the architectural profession is concerned.

27.3 Architectural professionals may thus perform the work identified in their identification of work policy. Work falling within the identification of work of any other professional (such as engineers, quantity surveyors etc.) must be done by said professional, who must assume the responsibility therefor.

27.4 Architects performing work for which they are not registered (whether in the architectural profession or in one of the associated professions) may be found guilty of an offence and may be liable for fines / disciplinary action in respect thereof.

27.5 In addition, any assumption of liability / responsibility for work which falls to be performed by another professional in terms of identification of work will be contrary to legislative provisions and as such unlawful and may therefore be uninsurable.

Construction Law – Governance of the architectural professions as a whole and the legislative framework determining inter alia architects’ scope of practice and registration requirements

1. In terms of the Council for the Built Environment Act, 43 of 2000 (hereinafter referred to as “the Built Environment Act”), a “registered person” means a person registered in terms of any of the professions’ Acts. These professions’ Acts are defined as the following:

1.1 The Architectural Profession Act, 2000.

1.2 The Project and Construction Management Professions Act, 2000.

1.3 The Engineering Profession Act, 2000.

1.4 The Landscape Architectural Profession Act, 2000.

1.5 The Property Valuers Profession Act, 2000.

1.6 The Quantity Surveying Profession Act, 2000.

2. The Council for the Built Environment thus to a certain extent oversees the architectural, engineering, landscape architectural, project & construction management, property valuators and quantity surveying professions. Each of these professions also have their own professional council and legislation governing them.

3. In terms of section 20(1) of the Built Environment Act:

The council must, after receipt of the recommendations of the councils for the professions submitted to it in terms of the professions’ Acts, and before liaising with the Competition Commission in terms of section 4(q) –

(a) Determine policy with regard to the identification of work for the different categories of registered persons;
(b) Consult with any person, body or industry that may be affected by the identification of work in terms of this section.”

4. In terms of section 20(2) of the Built Environment Act, “the council must, after consultation with the Competition Commission, and in consultation with the councils for the professions, identify the scope of work for every category of registered persons”.

5. The Council for the Built Environment is thus responsible for determining scope / identification of work for each of the professions overseen by it. This will, however, be done based on inter alia the submissions of each of the professional councils in respect of what work persons registered with them may do.

6. The Architectural Profession Act, No 44 of 2000 (hereinafter referred to as “the Architects Act”) provides in section 18(1) that the categories in which a person may register in the architectural profession are as follows:

6.1 Professional architect;

6.2 Professional Senior Architectural Technologist;

6.3 Professional Architectural Technologist; or

6.4 Professional Architectural Draughtsperson.

7. The section also provides for candidates that may be registered in each of the mentioned categories, who must perform work in the architectural profession only under the supervision and control of a professional registered in a specific category.

8. In terms of section 18(2) “a person may not [our emphasis added] practise in any of the categories contemplated in subsection (1), unless he or she is registered in that category”.

9. It is an offence for a person to perform architectural work if he or she is not registered in the appropriate category.

10. In terms of section 26(1):

The council must consult with –
(a) All voluntary associations;
(b) Any person;
(c) Any body; or
(d) Any industry

That may be affected by any laws regulating the built environment professions regarding the identification of the type of architectural work which may be performed by persons registered in any of the categories referred to in section 18, including work which may fall within the scope of any other profession regulated by the professions’ Acts referred to in the Council for the Built Environment Act, 2000.”

11. In terms of section 26(2), “after the process of consultation the council must submit recommendations to the CBE regarding the work identified in terms of subsection (1), for its consideration and identification in terms of section 20 of the Council for the Built Environment Act, 2000”.

12. In terms of section 26(3)(a), “a person who is not registered in terms of this Act, may not perform any kind of work identified for any category of registered persons”.

13. In terms of section 26(4), “subsection 3(a) may not be construed as prohibiting any person from performing work identified in terms of this section, if such work is performed in the service of or by order of and under the direction, control, supervision of or in association with a registered person entitled to perform the work identified and who must assume responsibility for any work so performed”.

14. A person may thus perform work falling within the identification of work of a specific professional under the direction, control and supervision of that registered professional but only if that registered professional assumes the ultimate liability and responsibility for any work so performed.

15. In terms of section 41(1), “a person contravening section 18(2) [our emphasis added], 23, 25(8) or 31(8)(a), (b), (e) or (f) is guilty of an offence”.

16. In terms of section 41(3), “a person convicted of an offence in terms of section 18(2), may be liable to a fine equal to double the remuneration received by him or her for work done in contravention of section 18(2) or to a fine equal to the fine calculated according to the ratio determined for three years imprisonment in terms of the Adjustment of Fines Act, 1991”.

17. In terms of the definitions contained in the Code of Conduct published under the Architectural Act, members of closely allied professions are once again defined as persons registered in terms of the following:

17.1 The Architectural Act;

17.2 The Engineering Profession Act No 46 of 2000;

17.3 The Landscape Architectural Profession Act No 45 of 2000;

17.4 The Project and Construction Management Professions Act No 48 of 2000;

17.5 The Quantity Surveying Profession Act No 49 of 2000;

17.6 The Planning Professions Act No 36 of 2002;

17.7 The Property Valuers Profession Act No 47 of 2000.

18. In terms Rule 2.1 of the Code of Conduct published under the Architectural Act, “a registered person shall only undertake architectural work which is identified for the category of registration in which he/she is registered in terms of section 18 of the Act and in accordance with the registration categories in force”.

19. Practising outside a registration category is thus not only an offence in terms of the Architectural Act but may also form the subject of disciplinary action by the Council.

20. Each of the Acts listed in paragraphs 17.2 – 17.7 contain substantively similar provisions to those of the Architectural Act as discussed above i.e.:

20.1 There are specific categories of registration.

20.2  A person may not practise in any of these categories unless he / she is registered and it is an offence to practice without being properly registered.

20.3 The council must make submissions w.r.t identification of work to the Council for the Built Environment.

20.4 A person who is not registered in terms of the specific Act may not perform any kind of work identified for any of its categories of registered persons, unless such work is performed under the direction, control and supervision of a registered person entitled to perform the work identified. It is imperative that such registered person must assume responsibility and liability for any work so performed.

20.5 A person who practices in a category without being registered may be liable to a fine.

21. Similarly, each of the Codes of Conduct published under the Acts listed in paragraphs 17.2 – 17.7 contain some manner of provision stating that registered persons shall undertake only work which falls within their applicable registration category and failure to comply therewith may result in disciplinary action.

22. In terms of an Interim Policy on the Identification of Work for the Architectural Profession, published by the South African Council for the Architectural Profession and dated 12 June 2013, the following:

22.1 Regulation 2.1 provides that “no person who is registered in any category referred to in Section 18 of the Act, may undertake architectural work unless such work is demarcated for the relevant category of registration in accordance with Schedules 1 and 2, provided that a person registered in any particular category may perform the work demarcated for any lower category. Where work is not specified in the schedules, SACAP should be consulted”.

22.2 Regulation 2.3 provides that “subject to Section 26(4) of the Act, any person who undertakes identified architectural work without being registered with SACAP, is contravening the Act and is guilty of an offence”.

22.3 In terms of Regulation 3(b), “work which falls within the scope of a profession regulated by the different Built Environment Acts and which may be performed by a person registered in terms of section 18(1)(a) of the Architectural Profession Act will be recorded in the applicable CBE Board Notice after it has been confirmed by the relevant council. This will include for aspects of work common to more than one Council and / or discipline, where recognised requisite skill and competence permit the professional within one Council to undertake work demarcated within the scope of work of another Council, without need for dual registrations”.

22.4 Schedule 1 contains a “demarcation of architectural work matrix”, Schedule 2 sets out “specialised services” and Schedule 3 sets out the “definition of architectural work and competencies”.

23. It is thus important for registered persons to familiarise themselves with the identification of work in order to ensure that they are performing work which falls within that of their registration category.

24. In terms of a draft Board Notice published by the Council for the Built Environment during November 2011:

24.1 Section 11(1) states that “a person registered as a professional architect in terms of the Architectural Profession Act, principal consultant or principal agent may perform the scope of services or any one or combination of the services determined in Annexure B which falls within the scope of services of the project and construction management professions regulated by the Project and Construction Management Professions Act, 2000 (Act No. 48 of 2000) if the qualification, training and experience of that person have specifically rendered him or her competent to perform those services and the services are performed within the framework of architectural work”. Annexure B is, however, marked as “to be completed” and no work is listed there as yet.

24.2 Section 11(2) states that “a person registered in a category of registration in terms of the Architectural Profession Act may perform the scope of services relating to costing determined in Annexure C which falls within the scope of services of the quantity surveying profession regulated by the Quantity Surveying Profession Act, 2000 (Act No. 46 of 2000), if the qualification, training and experience of that person have specifically rendered him or her competent to perform those services and the services are performed within the framework of architectural work”. Annexure C is, however, marked as “to be completed” and no work is listed there as yet.

24.3 Section 12 states that “a person registered in a category of registration may perform the scope of work determined in Annexure D which falls within the scope of the engineering profession regulated by the Engineering Profession Act, 2000 (Act 46 of 2000), if the qualification, training and experience of that person have specifically rendered him or her competent to perform that work and the work is performed within the framework of architectural work”. Annexure D does, however, not list any such work.

25. Bearing in mind that the Board Notice mentioned in paragraph 24 supra is only a “draft”, it is not of legal force and effect as yet. It appears that the process of identifying overlapping areas of work is still ongoing. There are, however, not such identified areas as yet and members of the architectural profession would be best serve by adhering to their identification of work.

26. There appear to be similar identifications of work and board notices published by and in respect of the councils for the various associated professions, some of which deal in more detail with inter-council overlap of work and the work that those registered persons may perform although it may be regarded as part of other registered persons’ identification of work. This does, however, not apply to architectural professionals and will not be discussed in more detail here.

27. In conclusion, the following:

27.1 The Council for the Built Environment has a mandate to assess identification of work of the various registration categories of the various professions regulated by the Act set out in paragraph 17.1 – 17.7 supra.

27.2 There may potentially be an overlap in respect of the various professions’ scope / identification of work but this has not been dealt with in so far as the architectural profession is concerned.

27.3 Architectural professionals may thus perform the work identified in their identification of work policy. Work falling within the identification of work of any other professional (such as engineers, quantity surveyors etc.) must be done by said professional, who must assume the responsibility therefor.

27.4 Architects performing work for which they are not registered (whether in the architectural profession or in one of the associated professions) may be found guilty of an offence and may be liable for fines / disciplinary action in respect thereof.

27.5 In addition, any assumption of liability / responsibility for work which falls to be performed by another professional in terms of identification of work will be contrary to legislative provisions and as such unlawful and may therefore be uninsurable.

Contract Law – Our Courts’ approach to exemption clauses and the potential impact of the Consumer Protection Act thereon

Introduction:

1. Exemption clauses are provisions in a contract in terms of which a party is protected from certain claims in respect of damages, loss, negligence, non-performance etc. An example of an exemption clause is the following:

“The buyer shall not have or acquire any claim against the seller, nor shall the seller be liable in contract or delict for any general, special or consequential damages sustained by the buyer or any third party flowing directly or indirectly from this contract whether due to acts, omissions or otherwise of the seller or its employees or agents or any other person for whom the seller may be held liable, and the buyer hereby indemnifies the seller and holds it harmless against any such claim as aforesaid.”

2. Such clauses can obviously have onerous implications for the non-benefitting party as they have the effect of excluding or limiting liability on the part of one of the contracting parties. Our Courts have, on a number of occasions, been tasked with assessing whether or not such clauses can be enforced. Recent cases in this regard will be discussed below, in order that our Courts’ historic approach to exemption clauses may be illustrated.

3. Since these decisions were handed down, the Consumer Protection Act, Act 68 of 2008, (hereinafter referred to as “the Act”) has come into force. This Act deals extensively with exemption clauses and the relevant provisions thereof will also be discussed below as this will have an impact on how our Courts approach such exemption clauses in future.

Case law dealing with enforcement of exemption clauses prior to the Act coming into force:

4. The matter of Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) may be considered as one of the most well-known and controversial decisions dealing with the enforcement of exemption clauses.

The facts of the matter are briefly as follows:

4.1 The respondent was admitted for an operation and post-operative medical treatment at the appellant’s hospital facilities.

4.2 After the respondent had undergone the operation, a nurse in the employ of the appellant negligently caused him injury by applying a bandage too tightly, cutting off the blood supply to a part of his body.

4.3 The respondent then instituted a claim against the appellant, who denied liability based on an exemption clause contained in the admission agreement. The court a quo held that the exemption clause could not be enforced and the matter was taken on appeal.

4.4 The exemption clause which the appellant sought to have enforced read as follows:

“I absolve the hospital and / or its employees and / or agents from all responsibility and indemnify them from any claim instituted by any person (including a dependant of the patient) for damages or loss of whatever nature (including consequential damages or special damages of any nature) flowing directly or indirectly from any injury (including fatal injury) suffered by or damage caused to the patient or any illness (including terminal illness) contracted by the patient, whatever the causes are, except only with the exclusion of intentional omission by the hospital, its employees or agents.”

4.5 The respondent argued that he should not be bound by the exemption clause as the same was against public policy for the following reasons:

4.5.1 There was an unequal position between the parties concluding the agreement, with the hospital being in a stronger bargaining position;

4.5.2 The exemption clause had the effect of exempting the hospital and its employees from properly carrying out their duties;

4.5.3 The clause exempted hospital personnel from gross negligence; and

4.5.4 The exemption clause conflicted with the constitutional right of access to healthcare.

4.6 In the alternative to his argument that the exemption clause was contrary to public policy, the respondent argued that the clause was unenforceable for being unreasonable, unfair and contrary to the principles of good faith which underlie our law of contract.

4.7 In the further alternative, the respondent argued that his attention should have been drawn to the clause and the appellant’s failure to do so constituted a breach of a legal duty owed to the respondent.

4.8 In its consideration of the matter, the Supreme Court of Appeal expressed the view that an exemption clause excluding the appellant from gross negligence would indeed be contrary to public policy. In this case, however, the Court found that gross negligence had not been alleged by the respondent and, as such, this consideration did not find application in the matter.

4.9 The Court held that:

4.9.1 Clauses of this nature are the norm not the exception, are sound business practice and not contrary to public policy.

4.9.2 There was no evidence that the respondent was in a weaker bargaining position than the appellant.

4.9.3 There are sufficient sanctions by professional bodies and legislation to ensure that medical professionals perform their duties properly in compliance with their professional rules.

4.9.4 The clause does not conflict with the Constitution as contractual freedom is also a constitutionally enshrined right.

4.9.5 While the principle of good faith is one of the foundations of our law of contract, it is not a rule of law based on which the exemption clause can be set aside.

4.9.6 There was no duty on the appellant’s clerk to explain the clause to the respondent nor could the respondent allege that he did not expect such a clause bearing in mind that such clauses have become the norm instead of the exception.

4.10 The exemption clause was, accordingly, upheld by the Supreme Court of Appeal.

5. In the matter of Mercurius Motors v Lopez 2008 (3) SA 572 (SCA) the Court dealt with exemption clauses that undermine the very essence of a contract The facts of the matter are briefly as follows:

5.1 The respondent delivered a vehicle that he was leasing to the appellant for a service and certain minor repairs. The vehicle was stolen while on the premises.

5.2 The respondent instituted action based on his contract of deposit with the appellant. The appellant denied that the loss of the vehicle was due to any negligence on its part and relied on exemption clauses in the contract of deposit, one of which appeared on the reverse side of the repair order form (under a carbon copy which had to be detached to reveal the terms and conditions) and read as follows:

“I/we acknowledge that Mercurius shall not be liable in any way whatsoever or be responsible for any loss or damages sustained from fire and / or burglary and / or unlawful acts (including gross negligence) of their representatives, agents or employees.”

5.3 The court a quo held that the exemption clauses were printed in such a manner so as not to draw the reader’s attention thereto and, as such, the respondent had been misled and the clauses could not be upheld. The Court a quo further found that the appellant had not taken reasonable steps to secure the vehicle as there were inter alia not adequate processes in place to ensure that the keys were not left in the vehicle overnight.

5.4 The respondent’s claim was awarded with costs.

5.5 On appeal, the Supreme Court of Appeal held that a person delivering a motor vehicle to be serviced or repaired would ordinarily rightly expect that the depositary would take reasonable care in relation to the safekeeping of the vehicle entrusted to him or her. An exemption clause such as the one relied upon by the appellant, that undermines the very essence of the contract of deposit, should be clearly and pertinently brought to the attention of the customer who signed a standard-form contract, not by way of an inconspicuous and barely legible clause that referred to the conditions on the reverse side of the page in question. The exemption clause was thus not upheld.

5.6 The Supreme Court of Appeal further held that, by not safeguarding the keys to the vehicle, the employees of the appellant did not act as a reasonable person in their circumstances would have acted.

5.7 The appeal was thus dismissed with costs.

6. In the more recent matter of Naidoo v Birchwood Hotel 2012 (6) SA 170 (GSJ), the Court held a different view on the enforcement of an exemption clause.  The facts of the matter are briefly as follows:

6.1 The plaintiff was a guest at the Birchwood Hotel (hereinafter referred to as “the hotel” and wanted to exit the hotel premises.

6.2 He found that the gate to one of the entrances of the hotel was closed and waited for a security guard to open the gate. When realising that the gate was still not opening, the plaintiff alighted from his vehicle and walked towards the gate himself.

6.3 The gate had jammed and the wheels had come off the rails. The gate fell on the plaintiff as he approached and caused serious bodily injuries.

6.4 The plaintiff sought to recover damages from the hotel based on his assertions that the hotel had been negligent and could have prevented the harm from occurring had it:

6.4.1 Properly maintained the gate;

6.4.2 Ensured that the gate was safe for public usage; and

6.4.3 Warned the public of the potential danger created by the state of disrepair of the gate.

6.5 The hotel denied negligence and relied on an exemption clause on the back of the hotel registration card, which stated that:

“The guest hereby agrees on behalf of himself and the members of his party that it is a condition of his / their occupation of the Hotel that the Hotel shall not be responsible for any injury to, or death of any person or the loss or destruction of or damage to any property on the premises, whether arising from fire, theft, or any cause and by whomsoever caused or arising from the negligence (gross or otherwise) or wrongful acts of any person in the employment of the Hotel.”

6.6 Guests were directed to the exemption clause by an instruction on the registration card which read “Please read terms and conditions on reverse!”

6.7 The Court found that the security guard had failed to take reasonable steps to prevent the accident by warning the plaintiff to keep at a distance. The Court further found that reasonable steps on the part of the hotel would entail regular checks to ensure that every gate was well maintained and functioning properly at all times. If a gate was not functioning well, the hotel should have warned the public of the potential danger posed by the gate.

6.8 Turning to deal with whether or not the exemption clause was binding on the plaintiff and if it was not against public policy the Court applied the test formulated in Barkhuizen v Napier 2007 (5) SA 323 (CC) in which it was stated that, when challenging a contractual term, the question of public policy inevitably arises. But that this was no longer difficult to determine because:

“Public policy represents the legal convictions of the community; it represents those values that are held most 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 and affirms the democratic [founding] values of human dignity, equality and freedom.

… 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.”

6.9 The Court stated that, according to the two-stage enquiry espoused in the Barkhuizen case, it may first examine whether a term in a contract is objectively reasonable. If it finds that it is, the next enquiry is whether it should be enforced in the particular circumstances. The Court expressed the view that exemption clauses that exclude liability for bodily harm in hotels and other public places have the effect, generally, of denying a claimant judicial redress.

6.10 The Court thus held that a guest in a hotel does not take his life in his hands when he exits through the hotel gates. To deny him judicial redress for injuries he suffered in doing so, which came about as a result of the negligent conduct of the hotel, offends against notions of justice and fairness.

6.11 The plaintiff’s claim thus succeeded.

The provisions of the Act which may impact the enforcement of exemption clauses

7. The above decisions are somewhat divergent when it comes to upholding exemption clauses.

8. The position has, however, been clarified to a certain extent by the Act, which came into effect on 01 April 2011 and which sets the promotion and advancement of the economic welfare of consumers in South Africa as its primary purpose. The Act seeks to protect vulnerable consumers and, at present, the Act applies to consumers with an annual turnover not exceeding R2 000 000.00 (two million rand), subject to further exemptions / exclusions which may apply (as set out in section 5 of the Act).

9. The Act prescribes certain fundamental “consumer rights” of which the right to “fair, just and reasonable contract terms” may significantly impact the validity and enforceability of exemption clauses as terms that do not comply with the requirements of the Act may be declared unlawful and set aside by the Court.

10. Section 48 of the Act contains a general prohibition on unfair, unreasonable and unjust contract terms and also prohibits any agreement that requires a consumer to waive any rights, assume any obligations or waive any liability of a supplier on terms that are unfair, unreasonable or unjust or if such terms are imposed as a condition of entering into an agreement. The section also lists criteria in order to determine whether a condition of a contract is unfair, unreasonable or unjust terms, which include the following:

10.1 Terms that are “excessively one-sided in favour of any person other than the consumer or other person to whom goods or services are to be supplied”.

10.2 Terms which are “so adverse to the consumer as to be inequitable”.

10.3 If the consumer relied upon a false, misleading or deceptive representation or statement of opinion provided by or on behalf of the supplier, to the detriment of the consumer.

11. Section 48(2) of the Act also requires that, if the agreement is subject to a term, condition or notice that may be unfair, unreasonable, unjust or unconscionable in terms of the criteria listed above, the fact, nature and effect of that term, condition or notice must specifically be drawn to the attention of the consumer in a manner and form that satisfies the formal requirements set out by the Act. If this provision is not complied with the Court may set aside the specific terms and conditions that were not drawn to the attention of the consumer.

12. Section 49(1) of the Act states that provisions in consumer agreements must be drawn to the consumers’ attention if such provisions:

12.1 In any way limit the risk or liability of the supplier or any other person.

12.2 Constitute an assumption of risk or liability by the consumer.

12.3 Impose an obligation on the consumer to indemnify the supplier or any other person for any cause.

12.4 Are an acknowledgement of any fact by the consumer.

13. In addition to the above, section 49(2) states that, if a provision or notice concerns any activity or facility which is subject to risks, the supplier must specifically draw the fact, nature and potential effect of those risks to the consumer’s attention. The consumer must agree thereto by signing or initialling or otherwise indicating acknowledgment thereof. This is required for any risks:

13.1 That are of an unusual character or nature.

13.2 The presence of which the consumer could not reasonably be expected to be aware of or notice, which an ordinarily alert consumer could not reasonably be expected to notice or contemplate in the circumstances.

13.3 That could result in serious injury or death.

14. Section 49(3) and 49(4), read together with section 22, states that any such provisions, conditions or notices must be written in plain language and must be drawn to the attention of the consumer in a conspicuous manner and form likely to attract the attention of an ordinarily alert consumer having regard to the circumstances. Furthermore, this must be done before the consumer:

14.1 Enters into the agreement,

14.2 Begins to engage in the activity;

14.3 Enters or gains access to the facility; or

14.4 Is required or expected to pay for the transaction.

15. In terms of section 49(5), the consumer must be given adequate opportunity in the circumstances to receive and comprehend the provision or notice.

16. Section 51 of the Act further contains certain outright prohibitions on the terms that can appear in contracts and states inter alia the following:

“A supplier must not make a transaction or agreement subject to any term or condition if –

(b) it directly or indirectly purports to –
(i) waive or deprive a consumer of a right in terms of this Act;
 (ii) avoid a supplier’s obligation or duty in terms of this Act;
 (iii) set aside or override the effect of any provision of this Act; or
 (iv) authorise the supplier to –
  (aa) do anything that is unlawful in terms of this Act; or
  (bb) fail to do anything that is required in terms of this Act …”

17. Section 51(1)(c)(i) of the Act further specifically prohibits terms that purport to “limit or exempt a supplier of goods or services from any liability for a loss directly or indirectly attributable to the gross negligence of the supplier or any person action for or controlled by the supplier …”.

18. Section 51(1)(c)(i) accords with the Court’s decision in the Afrox case in which it was held that the exclusion of gross negligence in an exemption clause is contrary to public policy.

19. In terms of section 52 of the Act, if the Court determines that provision was (in whole or in part) unconscionable, unjust, unreasonable or unfair, the Court may make a declaration to that effect and make any order that it deems just and reasonable in the circumstances. This includes an order to compensate the consumer for losses and expenses.

Conclusion

20. It is clear that the Act does not preclude a party form including an exemption clause in an agreement. The Act does, however, offer a more clear recourse to a non-benefitting party who seeks to impugn the enforceability of such a clause.

21. There seems to be an argument to be made that, had the Act been in force when the Afrox matter was decided, the outcome may have been different, specifically with regard to the obligation to draw the patient’s attention to the exemption clause. The decisions in the Mercurius Motors and Naidoo matters seems to be more in line with the provisions of the Act.

22. The Act does, however, not have retrospective effect and the provisions can only be relied on in respect of agreements entered into after 01 April 2011. The manner in which our Courts will approach the provisions of the Act remains to be seen as there has not been reported case law on the subject as yet.

23. It will be of particular interest how the Court will approach the question whether or not an exemption clause is so adverse as to be inequitable. It may well be that the test laid down in the Naidoo matter may find application, i.e. that a clause will be found to be inequitable if it has the effect of denying judicial redress to such an extent that it offends against notions of justice and fairness.

24. For a further discussion on the effect of the Act on product liability claims, please refer to an article by the same author titled “Our Courts’ approach to product liability claims and the impact of the Consumer Protection Act thereon, with specific reference to manufacturers’ and suppliers’ liability”.

Contract Law – Our Courts’ approach to exemption clauses and the potential impact of the Consumer Protection Act thereon

Introduction:

1. Exemption clauses are provisions in a contract in terms of which a party is protected from certain claims in respect of damages, loss, negligence, non-performance etc. An example of an exemption clause is the following:

“The buyer shall not have or acquire any claim against the seller, nor shall the seller be liable in contract or delict for any general, special or consequential damages sustained by the buyer or any third party flowing directly or indirectly from this contract whether due to acts, omissions or otherwise of the seller or its employees or agents or any other person for whom the seller may be held liable, and the buyer hereby indemnifies the seller and holds it harmless against any such claim as aforesaid.”

2. Such clauses can obviously have onerous implications for the non-benefitting party as they have the effect of excluding or limiting liability on the part of one of the contracting parties. Our Courts have, on a number of occasions, been tasked with assessing whether or not such clauses can be enforced. Recent cases in this regard will be discussed below, in order that our Courts’ historic approach to exemption clauses may be illustrated.

3. Since these decisions were handed down, the Consumer Protection Act, Act 68 of 2008, (hereinafter referred to as “the Act”) has come into force. This Act deals extensively with exemption clauses and the relevant provisions thereof will also be discussed below as this will have an impact on how our Courts approach such exemption clauses in future.

Case law dealing with enforcement of exemption clauses prior to the Act coming into force:

4. The matter of Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) may be considered as one of the most well-known and controversial decisions dealing with the enforcement of exemption clauses.

The facts of the matter are briefly as follows:

4.1 The respondent was admitted for an operation and post-operative medical treatment at the appellant’s hospital facilities.

4.2 After the respondent had undergone the operation, a nurse in the employ of the appellant negligently caused him injury by applying a bandage too tightly, cutting off the blood supply to a part of his body.

4.3 The respondent then instituted a claim against the appellant, who denied liability based on an exemption clause contained in the admission agreement. The court a quo held that the exemption clause could not be enforced and the matter was taken on appeal.

4.4 The exemption clause which the appellant sought to have enforced read as follows:

“I absolve the hospital and / or its employees and / or agents from all responsibility and indemnify them from any claim instituted by any person (including a dependant of the patient) for damages or loss of whatever nature (including consequential damages or special damages of any nature) flowing directly or indirectly from any injury (including fatal injury) suffered by or damage caused to the patient or any illness (including terminal illness) contracted by the patient, whatever the causes are, except only with the exclusion of intentional omission by the hospital, its employees or agents.”

4.5 The respondent argued that he should not be bound by the exemption clause as the same was against public policy for the following reasons:

4.5.1 There was an unequal position between the parties concluding the agreement, with the hospital being in a stronger bargaining position;

4.5.2 The exemption clause had the effect of exempting the hospital and its employees from properly carrying out their duties;

4.5.3 The clause exempted hospital personnel from gross negligence; and

4.5.4 The exemption clause conflicted with the constitutional right of access to healthcare.

4.6 In the alternative to his argument that the exemption clause was contrary to public policy, the respondent argued that the clause was unenforceable for being unreasonable, unfair and contrary to the principles of good faith which underlie our law of contract.

4.7 In the further alternative, the respondent argued that his attention should have been drawn to the clause and the appellant’s failure to do so constituted a breach of a legal duty owed to the respondent.

4.8 In its consideration of the matter, the Supreme Court of Appeal expressed the view that an exemption clause excluding the appellant from gross negligence would indeed be contrary to public policy. In this case, however, the Court found that gross negligence had not been alleged by the respondent and, as such, this consideration did not find application in the matter.

4.9 The Court held that:

4.9.1 Clauses of this nature are the norm not the exception, are sound business practice and not contrary to public policy.

4.9.2 There was no evidence that the respondent was in a weaker bargaining position than the appellant.

4.9.3 There are sufficient sanctions by professional bodies and legislation to ensure that medical professionals perform their duties properly in compliance with their professional rules.

4.9.4 The clause does not conflict with the Constitution as contractual freedom is also a constitutionally enshrined right.

4.9.5 While the principle of good faith is one of the foundations of our law of contract, it is not a rule of law based on which the exemption clause can be set aside.

4.9.6 There was no duty on the appellant’s clerk to explain the clause to the respondent nor could the respondent allege that he did not expect such a clause bearing in mind that such clauses have become the norm instead of the exception.

4.10 The exemption clause was, accordingly, upheld by the Supreme Court of Appeal.

5. In the matter of Mercurius Motors v Lopez 2008 (3) SA 572 (SCA) the Court dealt with exemption clauses that undermine the very essence of a contract The facts of the matter are briefly as follows:

5.1 The respondent delivered a vehicle that he was leasing to the appellant for a service and certain minor repairs. The vehicle was stolen while on the premises.

5.2 The respondent instituted action based on his contract of deposit with the appellant. The appellant denied that the loss of the vehicle was due to any negligence on its part and relied on exemption clauses in the contract of deposit, one of which appeared on the reverse side of the repair order form (under a carbon copy which had to be detached to reveal the terms and conditions) and read as follows:

“I/we acknowledge that Mercurius shall not be liable in any way whatsoever or be responsible for any loss or damages sustained from fire and / or burglary and / or unlawful acts (including gross negligence) of their representatives, agents or employees.”

5.3 The court a quo held that the exemption clauses were printed in such a manner so as not to draw the reader’s attention thereto and, as such, the respondent had been misled and the clauses could not be upheld. The Court a quo further found that the appellant had not taken reasonable steps to secure the vehicle as there were inter alia not adequate processes in place to ensure that the keys were not left in the vehicle overnight.

5.4 The respondent’s claim was awarded with costs.

5.5 On appeal, the Supreme Court of Appeal held that a person delivering a motor vehicle to be serviced or repaired would ordinarily rightly expect that the depositary would take reasonable care in relation to the safekeeping of the vehicle entrusted to him or her. An exemption clause such as the one relied upon by the appellant, that undermines the very essence of the contract of deposit, should be clearly and pertinently brought to the attention of the customer who signed a standard-form contract, not by way of an inconspicuous and barely legible clause that referred to the conditions on the reverse side of the page in question. The exemption clause was thus not upheld.

5.6 The Supreme Court of Appeal further held that, by not safeguarding the keys to the vehicle, the employees of the appellant did not act as a reasonable person in their circumstances would have acted.

5.7 The appeal was thus dismissed with costs.

6. In the more recent matter of Naidoo v Birchwood Hotel 2012 (6) SA 170 (GSJ), the Court held a different view on the enforcement of an exemption clause.  The facts of the matter are briefly as follows:

6.1 The plaintiff was a guest at the Birchwood Hotel (hereinafter referred to as “the hotel” and wanted to exit the hotel premises.

6.2 He found that the gate to one of the entrances of the hotel was closed and waited for a security guard to open the gate. When realising that the gate was still not opening, the plaintiff alighted from his vehicle and walked towards the gate himself.

6.3 The gate had jammed and the wheels had come off the rails. The gate fell on the plaintiff as he approached and caused serious bodily injuries.

6.4 The plaintiff sought to recover damages from the hotel based on his assertions that the hotel had been negligent and could have prevented the harm from occurring had it:

6.4.1 Properly maintained the gate;

6.4.2 Ensured that the gate was safe for public usage; and

6.4.3 Warned the public of the potential danger created by the state of disrepair of the gate.

6.5 The hotel denied negligence and relied on an exemption clause on the back of the hotel registration card, which stated that:

“The guest hereby agrees on behalf of himself and the members of his party that it is a condition of his / their occupation of the Hotel that the Hotel shall not be responsible for any injury to, or death of any person or the loss or destruction of or damage to any property on the premises, whether arising from fire, theft, or any cause and by whomsoever caused or arising from the negligence (gross or otherwise) or wrongful acts of any person in the employment of the Hotel.”

6.6 Guests were directed to the exemption clause by an instruction on the registration card which read “Please read terms and conditions on reverse!”

6.7 The Court found that the security guard had failed to take reasonable steps to prevent the accident by warning the plaintiff to keep at a distance. The Court further found that reasonable steps on the part of the hotel would entail regular checks to ensure that every gate was well maintained and functioning properly at all times. If a gate was not functioning well, the hotel should have warned the public of the potential danger posed by the gate.

6.8 Turning to deal with whether or not the exemption clause was binding on the plaintiff and if it was not against public policy the Court applied the test formulated in Barkhuizen v Napier 2007 (5) SA 323 (CC) in which it was stated that, when challenging a contractual term, the question of public policy inevitably arises. But that this was no longer difficult to determine because:

“Public policy represents the legal convictions of the community; it represents those values that are held most 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 and affirms the democratic [founding] values of human dignity, equality and freedom.

… 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.”

6.9 The Court stated that, according to the two-stage enquiry espoused in the Barkhuizen case, it may first examine whether a term in a contract is objectively reasonable. If it finds that it is, the next enquiry is whether it should be enforced in the particular circumstances. The Court expressed the view that exemption clauses that exclude liability for bodily harm in hotels and other public places have the effect, generally, of denying a claimant judicial redress.

6.10 The Court thus held that a guest in a hotel does not take his life in his hands when he exits through the hotel gates. To deny him judicial redress for injuries he suffered in doing so, which came about as a result of the negligent conduct of the hotel, offends against notions of justice and fairness.

6.11 The plaintiff’s claim thus succeeded.

The provisions of the Act which may impact the enforcement of exemption clauses

7. The above decisions are somewhat divergent when it comes to upholding exemption clauses.

8. The position has, however, been clarified to a certain extent by the Act, which came into effect on 01 April 2011 and which sets the promotion and advancement of the economic welfare of consumers in South Africa as its primary purpose. The Act seeks to protect vulnerable consumers and, at present, the Act applies to consumers with an annual turnover not exceeding R2 000 000.00 (two million rand), subject to further exemptions / exclusions which may apply (as set out in section 5 of the Act).

9. The Act prescribes certain fundamental “consumer rights” of which the right to “fair, just and reasonable contract terms” may significantly impact the validity and enforceability of exemption clauses as terms that do not comply with the requirements of the Act may be declared unlawful and set aside by the Court.

10. Section 48 of the Act contains a general prohibition on unfair, unreasonable and unjust contract terms and also prohibits any agreement that requires a consumer to waive any rights, assume any obligations or waive any liability of a supplier on terms that are unfair, unreasonable or unjust or if such terms are imposed as a condition of entering into an agreement. The section also lists criteria in order to determine whether a condition of a contract is unfair, unreasonable or unjust terms, which include the following:

10.1 Terms that are “excessively one-sided in favour of any person other than the consumer or other person to whom goods or services are to be supplied”.

10.2 Terms which are “so adverse to the consumer as to be inequitable”.

10.3 If the consumer relied upon a false, misleading or deceptive representation or statement of opinion provided by or on behalf of the supplier, to the detriment of the consumer.

11. Section 48(2) of the Act also requires that, if the agreement is subject to a term, condition or notice that may be unfair, unreasonable, unjust or unconscionable in terms of the criteria listed above, the fact, nature and effect of that term, condition or notice must specifically be drawn to the attention of the consumer in a manner and form that satisfies the formal requirements set out by the Act. If this provision is not complied with the Court may set aside the specific terms and conditions that were not drawn to the attention of the consumer.

12. Section 49(1) of the Act states that provisions in consumer agreements must be drawn to the consumers’ attention if such provisions:

12.1 In any way limit the risk or liability of the supplier or any other person.

12.2 Constitute an assumption of risk or liability by the consumer.

12.3 Impose an obligation on the consumer to indemnify the supplier or any other person for any cause.

12.4 Are an acknowledgement of any fact by the consumer.

13. In addition to the above, section 49(2) states that, if a provision or notice concerns any activity or facility which is subject to risks, the supplier must specifically draw the fact, nature and potential effect of those risks to the consumer’s attention. The consumer must agree thereto by signing or initialling or otherwise indicating acknowledgment thereof. This is required for any risks:

13.1 That are of an unusual character or nature.

13.2 The presence of which the consumer could not reasonably be expected to be aware of or notice, which an ordinarily alert consumer could not reasonably be expected to notice or contemplate in the circumstances.

13.3 That could result in serious injury or death.

14. Section 49(3) and 49(4), read together with section 22, states that any such provisions, conditions or notices must be written in plain language and must be drawn to the attention of the consumer in a conspicuous manner and form likely to attract the attention of an ordinarily alert consumer having regard to the circumstances. Furthermore, this must be done before the consumer:

14.1 Enters into the agreement,

14.2 Begins to engage in the activity;

14.3 Enters or gains access to the facility; or

14.4 Is required or expected to pay for the transaction.

15. In terms of section 49(5), the consumer must be given adequate opportunity in the circumstances to receive and comprehend the provision or notice.

16. Section 51 of the Act further contains certain outright prohibitions on the terms that can appear in contracts and states inter alia the following:

“A supplier must not make a transaction or agreement subject to any term or condition if –

(b) it directly or indirectly purports to –
(i) waive or deprive a consumer of a right in terms of this Act;
 (ii) avoid a supplier’s obligation or duty in terms of this Act;
 (iii) set aside or override the effect of any provision of this Act; or
 (iv) authorise the supplier to –
  (aa) do anything that is unlawful in terms of this Act; or
  (bb) fail to do anything that is required in terms of this Act …”

17. Section 51(1)(c)(i) of the Act further specifically prohibits terms that purport to “limit or exempt a supplier of goods or services from any liability for a loss directly or indirectly attributable to the gross negligence of the supplier or any person action for or controlled by the supplier …”.

18. Section 51(1)(c)(i) accords with the Court’s decision in the Afrox case in which it was held that the exclusion of gross negligence in an exemption clause is contrary to public policy.

19. In terms of section 52 of the Act, if the Court determines that provision was (in whole or in part) unconscionable, unjust, unreasonable or unfair, the Court may make a declaration to that effect and make any order that it deems just and reasonable in the circumstances. This includes an order to compensate the consumer for losses and expenses.

Conclusion

20. It is clear that the Act does not preclude a party form including an exemption clause in an agreement. The Act does, however, offer a more clear recourse to a non-benefitting party who seeks to impugn the enforceability of such a clause.

21. There seems to be an argument to be made that, had the Act been in force when the Afrox matter was decided, the outcome may have been different, specifically with regard to the obligation to draw the patient’s attention to the exemption clause. The decisions in the Mercurius Motors and Naidoo matters seems to be more in line with the provisions of the Act.

22. The Act does, however, not have retrospective effect and the provisions can only be relied on in respect of agreements entered into after 01 April 2011. The manner in which our Courts will approach the provisions of the Act remains to be seen as there has not been reported case law on the subject as yet.

23. It will be of particular interest how the Court will approach the question whether or not an exemption clause is so adverse as to be inequitable. It may well be that the test laid down in the Naidoo matter may find application, i.e. that a clause will be found to be inequitable if it has the effect of denying judicial redress to such an extent that it offends against notions of justice and fairness.

24. For a further discussion on the effect of the Act on product liability claims, please refer to an article by the same author titled “Our Courts’ approach to product liability claims and the impact of the Consumer Protection Act thereon, with specific reference to manufacturers’ and suppliers’ liability”.

Product Liability – Our Courts’ approach to product liability claims and the impact of the Consumer Protection Act thereon, with specific reference to manufacturers’ and suppliers’ liability

Prior to the Consumer Protection Act, Act 68 of 2008, (hereinafter referred to as “the Act”) coming into force, a person seeking to recover damages from a supplier in respect of defective goods could rely on either contractual remedies or the common law warranty against latent defects. A person seeking to recover damages from a manufacturer in respect of defective goods was, in the absence of a contractual relationship with said manufacturer, required to claim in delict. This last-mentioned claim, due to its very nature, necessitated inter alia that negligence on the part of the manufacturer be alleged and proved in order for the claim to succeed.

This position was confirmed in the matter of CIBA-GEIGY (Pty) Ltd v Lushof Farms (Pty) Ltd and Another 2002 (2) SA 447 (SCA). The facts of the matter are briefly as follows:

1. A farmer purchased pesticide, on recommendation from the supplier, for purposes of combatting weeds in his pear orchards.

2. The pesticide caused physical damage to the farmer’s pear trees, which resulted in crop failure.

3. The farmer instituted a claim against the supplier, based on a breach of the common law warranty against latent defects, and against the manufacturer, based on delict.

4. The supplier, in turn, claimed indemnification from the manufacturer in respect of any of the farmer’s damages for which it was held liable.

5. The court a quo upheld the farmer’s claims against both the manufacturer and the supplier as well as the supplier’s claim against the manufacturer. The manufacturer appealed this decision.

The Supreme Court of Appeal (hereinafter referred to as “the Court”) confirmed that the court a quo had been correct in upholding the farmer’s claim against the supplier and in upholding the supplier’s claim for indemnification from the manufacturer.

Turning to deal with the farmer’s claim against the manufacturer, the Court summarised the claim as follows:

1. The claim is delictual in nature, based on the manufacturer’s alleged negligence in manufacturing and marketing a product intended inter alia for use on pear trees without conducting sufficient tests of the product on such pear trees, while the application of the product in the recommended manner could potentially be harmful.

2. In so far as the farmer had not purchased the product directly from the manufacturer, its alleged liability comes down to what is sometimes known as “product liability”.

The manufacturer’s defences to the farmer’s claim were two-fold, namely that the court a quo did not make any finding in its judgment as to what its duty of care to the farmer would supposedly be and that the farmer did not prove that it had been negligent in any way.

With reference to the duty of care aspect, the manufacturer argued that this can only be founded on an agreement and, since it had no agreement with the farmer, there was thus no wrongfulness in this instance. According to the Court, although the historical origin of the manufacturer’s liability is an agreement between the manufacturer and the distributor, the liability extends via the other contracting party to any third party who utilises the product in the prescribed manner and suffers damage as a result thereof. The Court further found that it follows as a matter of course that a manufacturer who distributes a product commercially, which, in the course of its intended use, and as the result of a defect, causes damage to the consumer thereof, acts wrongfully and thus unlawfully according to the legal convictions of the community.

With reference to the negligence aspect, the Court stated that the farmer did not require so-called strict liability (i.e. liability without proof of negligence) to be imposed on the manufacturer but rather that any liability on the part of the manufacturer would require proof of negligence. According to the Court, this accorded with the positive law which applied at the hearing of the matter.

The Court held that if a manufacturer produces and markets a product without conclusive prior tests, when the utilisation thereof in the recommended manner is potentially hazardous to the consumer, such negligence on the part of the manufacturer may expose him to delictual liability to the consumer. The Court concluded that the farmer had succeeded in proving that the manufacturer had not performed conclusive tests in respect of specifically pear trees’ sensitivity to the product in question prior to the commercial release thereof for use on such trees. The Court accordingly found that the manufacturer was negligent and delictually liable to the farmer. The appeal was dismissed.

The position as outlined in the above matter has, however, been changed by section 61(1) of the Act, which introduces strict liability of inter alia manufacturers and suppliers and which reads as follows:

“(1)  Except to the extent contemplated in subsection (4), the producer or importer, distributor or retailer of any goods is liable for any harm, as described in subsection (5), caused wholly or partially as a consequence of –

(a) Supplying any unsafe goods; or

(b) A product failure, defect or hazard in any goods; or

(c) Inadequate instructions or warnings provided to the consumer pertaining to any hazard arising from or associated with the use of any goods.
irrespective of whether the harm resulted from any negligence on the part of the producer, importer, distributor, or retailer, as the case may be.”

In terms of section 61(4), liability of a particular person in terms of the section will not arise if:

(a) The unsafe product characteristic, failure, defect, or hazard that results in harm is wholly attributable to compliance with any public regulation;

(b) The alleged unsafe product characteristic, failure, defect or hazard –

(i) Did not exist in the goods at the time it was supplied by that person to another person alleged to be liable; or

(ii) Was wholly attributable to compliance by that person with instructions provided by the person who supplied the goods to that person, in which case subparagraph (i) does not apply;

(c) It is unreasonable to expect the distributor or retailer to have discovered the unsafe product characteristic, failure, defect or hazard, having regard to that person’s role in marketing the goods to consumers;

(d) The claim for damages is brought more than three years after the –

(i) Death or injury of any natural person;

(ii) Earliest time at which a person had knowledge of the material facts about any illness of any natural person;

(iii) Earliest time at which a person with an interest in any property had knowledge of the material facts about the loss of or physical damage to that property (whether it is movable or immovable);

(iv) Latest date on which a person suffered any economic loss that results from harm contemplated in paragraphs (i) to (iii) above.

While the Act has limited application in terms of section 5 thereof, section 5(5) specifically states that:

 “If any goods are supplied within the Republic to any person in terms of a transaction that is exempt from the application of this Act, those goods, and the importer or producer, distributor and retailer of those goods, are nevertheless subject to section 60 and 61.”

The Act has thus introduced the concept of strict liability when it comes to damages suffered as a result of defective products, in terms of which manufacturers and suppliers, amongst others, may be held liable. This strict liability may be applied even to transactions which would normally be exempt from the application of the Act, provided that the parties to the transaction acted in the ordinary course of business (as per the Act’s definition of a “transaction”).

The manner in which our Courts will approach the strict liability provisions of the Act remains to be seen as there has not been reported case law on the subject as yet.

Product Liability – Our Courts’ approach to product liability claims and the impact of the Consumer Protection Act thereon, with specific reference to manufacturers’ and suppliers’ liability

Prior to the Consumer Protection Act, Act 68 of 2008, (hereinafter referred to as “the Act”) coming into force, a person seeking to recover damages from a supplier in respect of defective goods could rely on either contractual remedies or the common law warranty against latent defects. A person seeking to recover damages from a manufacturer in respect of defective goods was, in the absence of a contractual relationship with said manufacturer, required to claim in delict. This last-mentioned claim, due to its very nature, necessitated inter alia that negligence on the part of the manufacturer be alleged and proved in order for the claim to succeed.

This position was confirmed in the matter of CIBA-GEIGY (Pty) Ltd v Lushof Farms (Pty) Ltd and Another 2002 (2) SA 447 (SCA). The facts of the matter are briefly as follows:

1. A farmer purchased pesticide, on recommendation from the supplier, for purposes of combatting weeds in his pear orchards.

2. The pesticide caused physical damage to the farmer’s pear trees, which resulted in crop failure.

3. The farmer instituted a claim against the supplier, based on a breach of the common law warranty against latent defects, and against the manufacturer, based on delict.

4. The supplier, in turn, claimed indemnification from the manufacturer in respect of any of the farmer’s damages for which it was held liable.

5. The court a quo upheld the farmer’s claims against both the manufacturer and the supplier as well as the supplier’s claim against the manufacturer. The manufacturer appealed this decision.

The Supreme Court of Appeal (hereinafter referred to as “the Court”) confirmed that the court a quo had been correct in upholding the farmer’s claim against the supplier and in upholding the supplier’s claim for indemnification from the manufacturer.

Turning to deal with the farmer’s claim against the manufacturer, the Court summarised the claim as follows:

1. The claim is delictual in nature, based on the manufacturer’s alleged negligence in manufacturing and marketing a product intended inter alia for use on pear trees without conducting sufficient tests of the product on such pear trees, while the application of the product in the recommended manner could potentially be harmful.

2. In so far as the farmer had not purchased the product directly from the manufacturer, its alleged liability comes down to what is sometimes known as “product liability”.

The manufacturer’s defences to the farmer’s claim were two-fold, namely that the court a quo did not make any finding in its judgment as to what its duty of care to the farmer would supposedly be and that the farmer did not prove that it had been negligent in any way.

With reference to the duty of care aspect, the manufacturer argued that this can only be founded on an agreement and, since it had no agreement with the farmer, there was thus no wrongfulness in this instance. According to the Court, although the historical origin of the manufacturer’s liability is an agreement between the manufacturer and the distributor, the liability extends via the other contracting party to any third party who utilises the product in the prescribed manner and suffers damage as a result thereof. The Court further found that it follows as a matter of course that a manufacturer who distributes a product commercially, which, in the course of its intended use, and as the result of a defect, causes damage to the consumer thereof, acts wrongfully and thus unlawfully according to the legal convictions of the community.

With reference to the negligence aspect, the Court stated that the farmer did not require so-called strict liability (i.e. liability without proof of negligence) to be imposed on the manufacturer but rather that any liability on the part of the manufacturer would require proof of negligence. According to the Court, this accorded with the positive law which applied at the hearing of the matter.

The Court held that if a manufacturer produces and markets a product without conclusive prior tests, when the utilisation thereof in the recommended manner is potentially hazardous to the consumer, such negligence on the part of the manufacturer may expose him to delictual liability to the consumer. The Court concluded that the farmer had succeeded in proving that the manufacturer had not performed conclusive tests in respect of specifically pear trees’ sensitivity to the product in question prior to the commercial release thereof for use on such trees. The Court accordingly found that the manufacturer was negligent and delictually liable to the farmer. The appeal was dismissed.

The position as outlined in the above matter has, however, been changed by section 61(1) of the Act, which introduces strict liability of inter alia manufacturers and suppliers and which reads as follows:

“(1)  Except to the extent contemplated in subsection (4), the producer or importer, distributor or retailer of any goods is liable for any harm, as described in subsection (5), caused wholly or partially as a consequence of –

(a) Supplying any unsafe goods; or

(b) A product failure, defect or hazard in any goods; or

(c) Inadequate instructions or warnings provided to the consumer pertaining to any hazard arising from or associated with the use of any goods.
irrespective of whether the harm resulted from any negligence on the part of the producer, importer, distributor, or retailer, as the case may be.”

In terms of section 61(4), liability of a particular person in terms of the section will not arise if:

(a) The unsafe product characteristic, failure, defect, or hazard that results in harm is wholly attributable to compliance with any public regulation;

(b) The alleged unsafe product characteristic, failure, defect or hazard –

(i) Did not exist in the goods at the time it was supplied by that person to another person alleged to be liable; or

(ii) Was wholly attributable to compliance by that person with instructions provided by the person who supplied the goods to that person, in which case subparagraph (i) does not apply;

(c) It is unreasonable to expect the distributor or retailer to have discovered the unsafe product characteristic, failure, defect or hazard, having regard to that person’s role in marketing the goods to consumers;

(d) The claim for damages is brought more than three years after the –

(i) Death or injury of any natural person;

(ii) Earliest time at which a person had knowledge of the material facts about any illness of any natural person;

(iii) Earliest time at which a person with an interest in any property had knowledge of the material facts about the loss of or physical damage to that property (whether it is movable or immovable);

(iv) Latest date on which a person suffered any economic loss that results from harm contemplated in paragraphs (i) to (iii) above.

While the Act has limited application in terms of section 5 thereof, section 5(5) specifically states that:

 “If any goods are supplied within the Republic to any person in terms of a transaction that is exempt from the application of this Act, those goods, and the importer or producer, distributor and retailer of those goods, are nevertheless subject to section 60 and 61.”

The Act has thus introduced the concept of strict liability when it comes to damages suffered as a result of defective products, in terms of which manufacturers and suppliers, amongst others, may be held liable. This strict liability may be applied even to transactions which would normally be exempt from the application of the Act, provided that the parties to the transaction acted in the ordinary course of business (as per the Act’s definition of a “transaction”).

The manner in which our Courts will approach the strict liability provisions of the Act remains to be seen as there has not been reported case law on the subject as yet.

Medical law – “Negligent misstatement” of a patient’s HIV status: what risk befalls the health care provider?

 1. In the matter of Geldenhuys v National Health Laboratory Services 2014 JDR 1656 (GP) the appellant (Ms Geldenhuys) instituted action against the respondents (the National Health Laboratory Services and the MEC for Health and Welfare, Limpopo) for damages suffered as a result of an alleged negligent misstatement in respect of her HIV status. The Court a quo dismissed the claim and the appellant brought the matter on appeal.

Background Facts

2. After presenting with certain untoward symptoms during February 2002, the appellant decided to undergo two blood tests at the Provincial Hospital in Pietersburg in order to establish her HIV status. She underwent the first test on 8 February 2002, the results of which revealed that she was “reactive”, which meant that she was HIV positive.

3. The attending doctor at the time instructed the matron of the hospital to inform the appellant of the results of the first test. The doctor thereafter destroyed the test results.

4. The matron testified that she commenced the interview with the appellant in her office on 11 February 2002 but did not continue as the results of the second blood test became available for collection. The matron left the consulting room to collect the said blood test result in order to inform the appellant of its contents.

5. The second blood test, which had been taken on 10 February 2002, revealed an indeterminate result, i.e. the antibodies of the appellant were insufficient to confirm the HIV serology. In laymen’s terms, the appellant’s blood would not allow for a conclusive test and thus the test did not confirm the appellant’s HIV status.

6. The appellant testified that she was informed by the matron that she was, in fact, HIV positive. The matron, on the other hand, testified that she informed the appellant of the result of the second blood test as being indeterminate but that the appellant should in any case treat herself as HIV positive until she could confirm her HIV status by undergoing further conclusive HIV tests. The matron then destroyed the second blood test, which she later testified was standard procedure and done in order to protect the appellant’s privacy.

7. On the respondent’s version of events, since the second blood test was indeterminate and it could not be established whether the appellant was HIV positive or not, she was advised by the matron to repeat the test in six weeks.

8. The appellant underwent a further blood test on 12 February 2002, which revealed that she was “incontrovertibly” HIV negative.

Court a quo

9. On an agreement between the parties the Court a quo was called on to decide:

9.1. Whether the appellant had been told she was HIV positive;

9.2. Whether the appellant thereafter tested negative for the syndrome;

9.3. The aspect of negligence; and

9.4. The aspect of damages.

10. It would appear that the Court a quo had some difficulty evaluating either party’s version as both sets of the blood test results (8 and 10 February 2002) were destroyed. The Court a quo could therefore not consider the content of such blood tests and neither party attempted to recreate copies of the said blood tests in order to assist the Court a quo in its evaluation of the evidence.

11. The Court a quo ruled in favour of the respondents on the basis that it favoured the version of events put forward by the matron, which was the more likely of the two versions on the basis that the matron was an experienced HIV counsellor. The Court a quo held further that the appellant had suffered no damages. As such, the matter was brought on appeal by the appellant on both these findings.

12. In order for the appeal to have succeeded, the appellant was required to establish that the Court a quo’s evaluation of the evidence was flawed.

Appeal Court

13. On the basis that the appellant’s cause of action was based on a negligent misstatement, the appeal Court considered two possible scenarios with regard to the available evidence:

13.1. If the appellant’s version is to be accepted, the first scenario whereby the matron informed the appellant that she is HIV positive (based on the content of the first blood test) as was conveyed to the matron by the attending doctor, does not qualify as a misstatement, but a mere conveyance of the facts as they were at that stage.

13.2. Secondly, on the premise that the attending doctor misinterpreted the first blood test and it did not, in actual fact, reveal the appellant to be “reactive”, then a misstatement would have indeed occurred (the matron informing the appellant that she is HIV positive based on the doctor’s misinterpretation of the first blood test). The appellant has, however, not pleaded her cause of action as one based on the matron’s negligence in “not checking” the doctor’s advice. Had the appellant not relied on a negligent misstatement as her cause of action, the outcome may have been different.

14. Consequently, the appeal Court held that the appellant had failed to prove that the Court a quo had erred in its evaluation of the evidence and the appeal could not succeed.

15. The appeal Court went on to consider a further reason why the appellant could not succeed.

16. The appellant underwent a further blood test which revealed that she was HIV negative three days after she was informed of her status by the Matron. On the appellant’s version she considered herself HIV positive for the three day period but on the matron’s version the appellant thought that she may have been HIV positive for the three day period. The appeal Court had to consider the damages suffered by the appellant during this three day period on both versions put before it.

17. The appeal Court agreed with the Court a quo that the appellant had failed to prove that she had suffered damages during the said three day period between thinking that she was or may have been HIV positive and having her negative HIV status confirmed.

Conclusion

18. In terms of section 13 of the National Health Act 61 of 2003 (“the Act”), the person in charge of a health establishment must ensure that a health record containing such information as may be prescribed is created and maintained at that health establishment for every user of health services. The Act also creates an obligation that all information concerning a patient, including information relating to his or her health status, treatment or stay in a health establishment is confidential.

19. The Ethical Guidelines for Good Practice with regard to HIV of the Health Professions Council of South Africa further creates a duty on health care practitioners to treat HIV test results of patients with the highest possible level of confidentiality. Health care establishments and health care practitioners (hereinafter collectively referred to as “health care providers”) need further bear in mind that all persons with HIV or AIDS have the legal right to privacy in terms of the Constitution of South Africa.

20. In casu, the matron testified that the act of destroying the HIV blood test results was in accordance with standard procedure and with a view to protect the appellant’s privacy. It must be noted, however, that there is no provision made in legislation whereby health care providers are required to destroy HIV blood test results.

21. In order to adhere to the provisions of the Act and to avoid situations of “he-said-she-said” with regard to disclosures of a patient’s HIV status as is seen in this case, health care providers must maintain patient records. Furthermore, it is shrewd for health care providers to be aware that, in general, insurance policies include provisions relating to the keeping of records and a failure to maintain proper records may prejudice a health care provider’s cover in terms of its insurance policy.

22. The crucial element with regard to maintaining patient records is that such records remain confidential. It would appear that there is a duty on health care providers to take reasonable steps to safeguard such records in order to prevent a breach of that confidentiality and a patient’s right to privacy. It must be borne in mind that, with regard to records relating to a patient’s HIV status, a stricter criterion is applicable, being the highest possible level of confidentiality.

Medical Law – “Negligent misstatement” of a patient’s HIV status: what risk befalls the health care provider?

 1. In the matter of Geldenhuys v National Health Laboratory Services 2014 JDR 1656 (GP) the appellant (Ms Geldenhuys) instituted action against the respondents (the National Health Laboratory Services and the MEC for Health and Welfare, Limpopo) for damages suffered as a result of an alleged negligent misstatement in respect of her HIV status. The Court a quo dismissed the claim and the appellant brought the matter on appeal.

Background Facts

2. After presenting with certain untoward symptoms during February 2002, the appellant decided to undergo two blood tests at the Provincial Hospital in Pietersburg in order to establish her HIV status. She underwent the first test on 8 February 2002, the results of which revealed that she was “reactive”, which meant that she was HIV positive.

3. The attending doctor at the time instructed the matron of the hospital to inform the appellant of the results of the first test. The doctor thereafter destroyed the test results.

4. The matron testified that she commenced the interview with the appellant in her office on 11 February 2002 but did not continue as the results of the second blood test became available for collection. The matron left the consulting room to collect the said blood test result in order to inform the appellant of its contents.

5. The second blood test, which had been taken on 10 February 2002, revealed an indeterminate result, i.e. the antibodies of the appellant were insufficient to confirm the HIV serology. In laymen’s terms, the appellant’s blood would not allow for a conclusive test and thus the test did not confirm the appellant’s HIV status.

6. The appellant testified that she was informed by the matron that she was, in fact, HIV positive. The matron, on the other hand, testified that she informed the appellant of the result of the second blood test as being indeterminate but that the appellant should in any case treat herself as HIV positive until she could confirm her HIV status by undergoing further conclusive HIV tests. The matron then destroyed the second blood test, which she later testified was standard procedure and done in order to protect the appellant’s privacy.

7. On the respondent’s version of events, since the second blood test was indeterminate and it could not be established whether the appellant was HIV positive or not, she was advised by the matron to repeat the test in six weeks.

8. The appellant underwent a further blood test on 12 February 2002, which revealed that she was “incontrovertibly” HIV negative.

Court a quo

9. On an agreement between the parties the Court a quo was called on to decide:

9.1. Whether the appellant had been told she was HIV positive;

9.2. Whether the appellant thereafter tested negative for the syndrome;

9.3. The aspect of negligence; and

9.4. The aspect of damages.

10. It would appear that the Court a quo had some difficulty evaluating either party’s version as both sets of the blood test results (8 and 10 February 2002) were destroyed. The Court a quo could therefore not consider the content of such blood tests and neither party attempted to recreate copies of the said blood tests in order to assist the Court a quo in its evaluation of the evidence.

11. The Court a quo ruled in favour of the respondents on the basis that it favoured the version of events put forward by the matron, which was the more likely of the two versions on the basis that the matron was an experienced HIV counsellor. The Court a quo held further that the appellant had suffered no damages. As such, the matter was brought on appeal by the appellant on both these findings.

12. In order for the appeal to have succeeded, the appellant was required to establish that the Court a quo’s evaluation of the evidence was flawed.

Appeal Court

13. On the basis that the appellant’s cause of action was based on a negligent misstatement, the appeal Court considered two possible scenarios with regard to the available evidence:

13.1. If the appellant’s version is to be accepted, the first scenario whereby the matron informed the appellant that she is HIV positive (based on the content of the first blood test) as was conveyed to the matron by the attending doctor, does not qualify as a misstatement, but a mere conveyance of the facts as they were at that stage.

13.2. Secondly, on the premise that the attending doctor misinterpreted the first blood test and it did not, in actual fact, reveal the appellant to be “reactive”, then a misstatement would have indeed occurred (the matron informing the appellant that she is HIV positive based on the doctor’s misinterpretation of the first blood test). The appellant has, however, not pleaded her cause of action as one based on the matron’s negligence in “not checking” the doctor’s advice. Had the appellant not relied on a negligent misstatement as her cause of action, the outcome may have been different.

14. Consequently, the appeal Court held that the appellant had failed to prove that the Court a quo had erred in its evaluation of the evidence and the appeal could not succeed.

15. The appeal Court went on to consider a further reason why the appellant could not succeed.

16. The appellant underwent a further blood test which revealed that she was HIV negative three days after she was informed of her status by the Matron. On the appellant’s version she considered herself HIV positive for the three day period but on the matron’s version the appellant thought that she may have been HIV positive for the three day period. The appeal Court had to consider the damages suffered by the appellant during this three day period on both versions put before it.

17. The appeal Court agreed with the Court a quo that the appellant had failed to prove that she had suffered damages during the said three day period between thinking that she was or may have been HIV positive and having her negative HIV status confirmed.

Conclusion

18. In terms of section 13 of the National Health Act 61 of 2003 (“the Act”), the person in charge of a health establishment must ensure that a health record containing such information as may be prescribed is created and maintained at that health establishment for every user of health services. The Act also creates an obligation that all information concerning a patient, including information relating to his or her health status, treatment or stay in a health establishment is confidential.

19. The Ethical Guidelines for Good Practice with regard to HIV of the Health Professions Council of South Africa further creates a duty on health care practitioners to treat HIV test results of patients with the highest possible level of confidentiality. Health care establishments and health care practitioners (hereinafter collectively referred to as “health care providers”) need further bear in mind that all persons with HIV or AIDS have the legal right to privacy in terms of the Constitution of South Africa.

20. In casu, the matron testified that the act of destroying the HIV blood test results was in accordance with standard procedure and with a view to protect the appellant’s privacy. It must be noted, however, that there is no provision made in legislation whereby health care providers are required to destroy HIV blood test results.

21. In order to adhere to the provisions of the Act and to avoid situations of “he-said-she-said” with regard to disclosures of a patient’s HIV status as is seen in this case, health care providers must maintain patient records. Furthermore, it is shrewd for health care providers to be aware that, in general, insurance policies include provisions relating to the keeping of records and a failure to maintain proper records may prejudice a health care provider’s cover in terms of its insurance policy.

22. The crucial element with regard to maintaining patient records is that such records remain confidential. It would appear that there is a duty on health care providers to take reasonable steps to safeguard such records in order to prevent a breach of that confidentiality and a patient’s right to privacy. It must be borne in mind that, with regard to records relating to a patient’s HIV status, a stricter criterion is applicable, being the highest possible level of confidentiality.

 

Medical law – Res Ipsa Loquitur debate

It has until recently been accepted that the maxim of res ipsa loquitur (the facts speak for themselves) does not find application in cases involving medical negligence in accordance with the findings of the Appeal Court in the matter of Van Wyk v Lewis [1924 AD 438].  This position was recently reconsidered by the Supreme Court of Appeal (“SCA”) in the matter of Goliath v MEC for Health, Eastern Cape 2015 (2) SA 97 (SCA).

Generally speaking, for a plaintiff to succeed with his case, he carries the onus to prove on a balance of probabilities that the defendant was, inter alia, negligent.  In matters involving allegations of medical negligence, this would mean that the plaintiff has to prove that the defendant’s conduct did not meet the general level of skill and diligence possessed and exercised at the time by members of the defendant’s profession.

The maxim of res ipsa loquitur provides for instances where a court may, on the mere facts presented to it, draw an inference of negligence against the defendant in instances where the incident in question could not have occurred in the absence of negligence.  The application of the maxim was expressed in the matter of Sardi & others v Standard General Insurance Co Ltd 1977 (3) SA 776 (A) as “where the only known facts, relating to negligence, consist of the occurrence itself”.  

Certain requirements have crystallised over the year in case law, many of which relate to motor vehicle accidents, regarding the application of the maxim.  These include:

• The facts of the matter must be such as to give rise to an inference of negligence on the part of the wrongdoer.  The Court in the matter of Stacey v Kent 1995 (3) SA 344 (E) held that the maxim “gives rise to an inference, not a presumption of negligence”.  It further held that a court is not compelled to draw the inference.

• The maxim can only be invoked where the negligence depends on absolutes.  The matter of Pringle v Administrator, Transvaal 1990 (2) SA 379 (W) involved the tearing of the plaintiff’s superior vena cava during surgery.  The court held that, if the evidence presented was such as to show that the mere fact of the perforation indicated negligence, the maxim could be applied.  However, on the particular facts of the case no such evidence emerged and, as such, the maxim did not find application.  On this basis, the question of negligence had to be decided on all the surrounding circumstances of the case.

• The maxim may assist a plaintiff who has little or no evidence at his disposal to persuade a court of the defendant’s negligence.  This is particularly so in instances where the facts of the incident are solely under the control of or within the knowledge of the defendant.  It assists the plaintiff in these instances in that the defendant cannot hide behind his own silence to the detriment of the plaintiff by not giving evidence.

• Once the plaintiff has proven the incident from which the inference of negligence on the part of the defendant is drawn, the defendant has the opportunity to adduce evidence to show that the incident did not occur due to negligent conduct on his part.  To quote the learned Judge in the Stacey case:  “. . . he [referring to the defendant] must tell the remainder of the story or risk judgement being given against him.”  In the absence of an acceptable explanation as to why the defendant was not negligent, a court may make a finding of negligence against him.

• The court in the Stacey case further held that the defendant’s explanation must have “substantial foundation in fact” and must be sufficient to eradicate any inference of negligence made by the court.  Insofar as the assessment of the applicability of the maxim is concerned, the defendant does not, however, carry an onus to prove on a balance of probabilities the correctness of his explanation.  Only once all the evidence is considered at the end of the case will aspects such as the probability and credibility of the defendant’s version be taken into account.   

• The maxim has no bearing on the onus of proof, which remains that of the plaintiff (Madyosi v SA Eagle Insurance Co Ltd 1990 (3) SA 442 (A)).  The court in the Sardi matter warned against a piecemeal approach of “(a) first drawing the inference of negligence from the occurrence itself, and regarding this as a prima facie case; and then (b) deciding whether this has been rebutted by the defendant’s explanation”.  The court held that, just as would be the case in any other matter involving negligence, at the end of the trial it has to decide whether the plaintiff has discharged his onus of proving negligence on a balance of probabilities having regard to all the evidence, the probabilities and the inferences drawn.  

The question of the application of the maxim in medical negligence cases again came before the SCA in the matter of Goliath v MEC for Health, Eastern Cape 2015 (2) SA 97 (SCA).  Coincidentally, this case, as with the Van Wyk matter, involved a swab being left behind in the patient’s body following surgery.  In the appellant’s case, it was a gauze swab left behind during a routine hysterectomy for a fibroid uterus.  The appellant had to subsequently undergo a laparotomy performed by a certain Dr Muller for removal of the gauze and sued the respondent as the employer of all the medical staff involved (the medical practitioners and the nursing staff) in the surgery.

Both the appellant and Dr Muller testified in support of the appellant’s case.  Dr Muller testified that “leaving an abdominal swab in the abdomen invariably causes abdominal infections” and that “it should not happen ever”.  He further testified that “it’s . . .  a very rare situation to have a swab left in an abdomen after an operation” as there are strict procedures to be followed at all times after surgery to ensure that all swabs are accounted for to avoid exactly the appellant’s situation. 

No witnesses were called by the Respondent.

The court a quo dismissed the appellant’s action on the basis that she failed to discharge the onus of proving negligence, however, granted leave to appeal.  In its decision, the court a quo held that it is bound by the decision in the Van Wyk case in accordance with the stare decisis legal precedent system and had no alternative but to apply the findings of that judgement to the effect that the maxim does not apply to medical negligence cases.  Judge Lowe, however, commented that had he been entitled to rely on the said maxim, the outcome may have been different as “the absence of an explanation by the defendant may well have been sufficient, by way of inferential reasoning, to establish negligence on the part of the medical staff concerned”.

The SCA in its judgement opined that it may well be time for us to eliminate the term res ipsa loquitur from our legal vocabulary.  It summarised the nature and requirements of the maxim as crystallised in case law and discussed above.  The court reiterated that a piecemeal approach as warned against in the Sardi matter should not be adopted and that the question at the end of the case remains whether a plaintiff has, when regard is had to all the evidence led, probabilities and inferences, discharged his onus to prove negligence on the part of the defendant.

The SCA reiterated that it depends on the facts of every particular case as to whether and inference of negligence is justified and to what extent expert evidence is necessary.  It further reiterated that a court is not called to decide the issue of negligence until such time as all evidence has been led.  As such, any explanation proffered by the defendant would form part of the evidential material to be considered in deciding whether the plaintiff has proved negligence.

Turning to the facts of the particular case, the SCA held that the matter must be approached on the basis that one of the swabs was not removed following surgery as it could not have found its way into the appellant’s abdomen in any other way.  As the appellant was under general anaesthetic during the surgery, she did not have full knowledge of what occurred during the operation.  The facts of what occurred during surgery were solely within the knowledge of the respondent’s employees, none of whom were called to testify.  As such, no evidence was led as to whether a swab count did indeed take place prior to completing the surgery, whether the strict protocols that Dr Muller alluded to had been followed, the level of training of the particular employee responsible for the swab count, etc.  

The SCA emphasised that it is not necessary for a plaintiff in a civil case to prove that the inference she seeks the court to draw is the only reasonable inference.  It suffices for her to convince the court that the inference is the “most readily apparent and acceptable inference from a number of possible inferences”

The SCA held that the appellant adduced sufficient evidence for an inference of negligence to be drawn against the employees of the respondent involved in her surgery.  The respondent, by failing to adduce any evidence whatsoever to show that reasonable care was indeed taken during the surgery, took the risk of judgement being given against him.  The court further drew a negative inference against the respondent that his failure to call the relevant employees to testify could be indicative of a concern that their evidence would expose unfavourable facts.

The SCA found that the appellant discharged her onus to prove her case on a balance of probabilities when regard is had to all the evidence, probabilities and inferences and upheld the appeal with costs.

CONCLUSION

It would therefore appear that the SCA in the Goliath matter has overturned the position established in the Van Wyk matter with regard to the application of the maxim of res ipsa loquitur in medical negligence cases.   Even though the SCA does not specifically name it as such, it applied the principles of the maxim to draw an inference of negligence from the mere fact that a swab was left behind after surgery. 

Practically speaking, it will not suffice for the plaintiff to merely establish a causal link between the healthcare provider’s conduct and the adverse result on order for him to succeed with an argument based on the maxim, i.e. that the inference of negligence should be drawn against the defendant.  The plaintiff will also have to produce evidence to the effect that the incident could not have occurred in the absence of negligence on the part of the healthcare provider, which evidence will have to be adduced by a medical expert.  The SCA in the Goliath matter relied heavily on the evidence provided by Dr Muller, including that a swab should never be left behind following surgery, in order to arrive at the conclusion that the incident could not have happened in the absence of negligence.

Once a plaintiff has adduced sufficient evidence from which an inference of negligence can be drawn by reliance on the maxim, it is up to a defendant to provide an explanation as to why no negligence should be found on his part.  A defendant should therefore consider very carefully before deciding not to lead evidence in circumstances where the maxim may be found by a court to apply.   As Lord Justice Brooke stated in the matter of Ratcliffe v Plymouth and Torbay Health Authority [1998] EWCA Civ 2000“It is likely to be a very rare medical negligence case in which the defendants take the risk of calling no factual evidence, when such evidence is available to them, of the circumstances surrounding a procedure which led to an unexpected outcome of a patient.  If such a case should arise, the judge should not be diverted away from the inference of negligence dictated by the plaintiff’s evidence by mere theoretical possibilities of how that outcome might have occurred without negligence:  the defendants’ hypothesis must have the ring of plausibility about it . . .”

Medical Law – Res Ipsa Loquitur debate

It has until recently been accepted that the maxim of res ipsa loquitur (the facts speak for themselves) does not find application in cases involving medical negligence in accordance with the findings of the Appeal Court in the matter of Van Wyk v Lewis [1924 AD 438].  This position was recently reconsidered by the Supreme Court of Appeal (“SCA”) in the matter of Goliath v MEC for Health, Eastern Cape 2015 (2) SA 97 (SCA).

Generally speaking, for a plaintiff to succeed with his case, he carries the onus to prove on a balance of probabilities that the defendant was, inter alia, negligent.  In matters involving allegations of medical negligence, this would mean that the plaintiff has to prove that the defendant’s conduct did not meet the general level of skill and diligence possessed and exercised at the time by members of the defendant’s profession.

The maxim of res ipsa loquitur provides for instances where a court may, on the mere facts presented to it, draw an inference of negligence against the defendant in instances where the incident in question could not have occurred in the absence of negligence.  The application of the maxim was expressed in the matter of Sardi & others v Standard General Insurance Co Ltd 1977 (3) SA 776 (A) as “where the only known facts, relating to negligence, consist of the occurrence itself”.  

Certain requirements have crystallised over the year in case law, many of which relate to motor vehicle accidents, regarding the application of the maxim.  These include:

• The facts of the matter must be such as to give rise to an inference of negligence on the part of the wrongdoer.  The Court in the matter of Stacey v Kent 1995 (3) SA 344 (E) held that the maxim “gives rise to an inference, not a presumption of negligence”.  It further held that a court is not compelled to draw the inference.

• The maxim can only be invoked where the negligence depends on absolutes.  The matter of Pringle v Administrator, Transvaal 1990 (2) SA 379 (W) involved the tearing of the plaintiff’s superior vena cava during surgery.  The court held that, if the evidence presented was such as to show that the mere fact of the perforation indicated negligence, the maxim could be applied.  However, on the particular facts of the case no such evidence emerged and, as such, the maxim did not find application.  On this basis, the question of negligence had to be decided on all the surrounding circumstances of the case.

• The maxim may assist a plaintiff who has little or no evidence at his disposal to persuade a court of the defendant’s negligence.  This is particularly so in instances where the facts of the incident are solely under the control of or within the knowledge of the defendant.  It assists the plaintiff in these instances in that the defendant cannot hide behind his own silence to the detriment of the plaintiff by not giving evidence.

• Once the plaintiff has proven the incident from which the inference of negligence on the part of the defendant is drawn, the defendant has the opportunity to adduce evidence to show that the incident did not occur due to negligent conduct on his part.  To quote the learned Judge in the Stacey case:  “. . . he [referring to the defendant] must tell the remainder of the story or risk judgement being given against him.”  In the absence of an acceptable explanation as to why the defendant was not negligent, a court may make a finding of negligence against him.

• The court in the Stacey case further held that the defendant’s explanation must have “substantial foundation in fact” and must be sufficient to eradicate any inference of negligence made by the court.  Insofar as the assessment of the applicability of the maxim is concerned, the defendant does not, however, carry an onus to prove on a balance of probabilities the correctness of his explanation.  Only once all the evidence is considered at the end of the case will aspects such as the probability and credibility of the defendant’s version be taken into account.   

• The maxim has no bearing on the onus of proof, which remains that of the plaintiff (Madyosi v SA Eagle Insurance Co Ltd 1990 (3) SA 442 (A)).  The court in the Sardi matter warned against a piecemeal approach of “(a) first drawing the inference of negligence from the occurrence itself, and regarding this as a prima facie case; and then (b) deciding whether this has been rebutted by the defendant’s explanation”.  The court held that, just as would be the case in any other matter involving negligence, at the end of the trial it has to decide whether the plaintiff has discharged his onus of proving negligence on a balance of probabilities having regard to all the evidence, the probabilities and the inferences drawn.  

The question of the application of the maxim in medical negligence cases again came before the SCA in the matter of Goliath v MEC for Health, Eastern Cape 2015 (2) SA 97 (SCA).  Coincidentally, this case, as with the Van Wyk matter, involved a swab being left behind in the patient’s body following surgery.  In the appellant’s case, it was a gauze swab left behind during a routine hysterectomy for a fibroid uterus.  The appellant had to subsequently undergo a laparotomy performed by a certain Dr Muller for removal of the gauze and sued the respondent as the employer of all the medical staff involved (the medical practitioners and the nursing staff) in the surgery.

Both the appellant and Dr Muller testified in support of the appellant’s case.  Dr Muller testified that “leaving an abdominal swab in the abdomen invariably causes abdominal infections” and that “it should not happen ever”.  He further testified that “it’s . . .  a very rare situation to have a swab left in an abdomen after an operation” as there are strict procedures to be followed at all times after surgery to ensure that all swabs are accounted for to avoid exactly the appellant’s situation. 

No witnesses were called by the Respondent.

The court a quo dismissed the appellant’s action on the basis that she failed to discharge the onus of proving negligence, however, granted leave to appeal.  In its decision, the court a quo held that it is bound by the decision in the Van Wyk case in accordance with the stare decisis legal precedent system and had no alternative but to apply the findings of that judgement to the effect that the maxim does not apply to medical negligence cases.  Judge Lowe, however, commented that had he been entitled to rely on the said maxim, the outcome may have been different as “the absence of an explanation by the defendant may well have been sufficient, by way of inferential reasoning, to establish negligence on the part of the medical staff concerned”.

The SCA in its judgement opined that it may well be time for us to eliminate the term res ipsa loquitur from our legal vocabulary.  It summarised the nature and requirements of the maxim as crystallised in case law and discussed above.  The court reiterated that a piecemeal approach as warned against in the Sardi matter should not be adopted and that the question at the end of the case remains whether a plaintiff has, when regard is had to all the evidence led, probabilities and inferences, discharged his onus to prove negligence on the part of the defendant.

The SCA reiterated that it depends on the facts of every particular case as to whether and inference of negligence is justified and to what extent expert evidence is necessary.  It further reiterated that a court is not called to decide the issue of negligence until such time as all evidence has been led.  As such, any explanation proffered by the defendant would form part of the evidential material to be considered in deciding whether the plaintiff has proved negligence.

Turning to the facts of the particular case, the SCA held that the matter must be approached on the basis that one of the swabs was not removed following surgery as it could not have found its way into the appellant’s abdomen in any other way.  As the appellant was under general anaesthetic during the surgery, she did not have full knowledge of what occurred during the operation.  The facts of what occurred during surgery were solely within the knowledge of the respondent’s employees, none of whom were called to testify.  As such, no evidence was led as to whether a swab count did indeed take place prior to completing the surgery, whether the strict protocols that Dr Muller alluded to had been followed, the level of training of the particular employee responsible for the swab count, etc.  

The SCA emphasised that it is not necessary for a plaintiff in a civil case to prove that the inference she seeks the court to draw is the only reasonable inference.  It suffices for her to convince the court that the inference is the “most readily apparent and acceptable inference from a number of possible inferences”

The SCA held that the appellant adduced sufficient evidence for an inference of negligence to be drawn against the employees of the respondent involved in her surgery.  The respondent, by failing to adduce any evidence whatsoever to show that reasonable care was indeed taken during the surgery, took the risk of judgement being given against him.  The court further drew a negative inference against the respondent that his failure to call the relevant employees to testify could be indicative of a concern that their evidence would expose unfavourable facts.

The SCA found that the appellant discharged her onus to prove her case on a balance of probabilities when regard is had to all the evidence, probabilities and inferences and upheld the appeal with costs.

CONCLUSION

It would therefore appear that the SCA in the Goliath matter has overturned the position established in the Van Wyk matter with regard to the application of the maxim of res ipsa loquitur in medical negligence cases.   Even though the SCA does not specifically name it as such, it applied the principles of the maxim to draw an inference of negligence from the mere fact that a swab was left behind after surgery. 

Practically speaking, it will not suffice for the plaintiff to merely establish a causal link between the healthcare provider’s conduct and the adverse result on order for him to succeed with an argument based on the maxim, i.e. that the inference of negligence should be drawn against the defendant.  The plaintiff will also have to produce evidence to the effect that the incident could not have occurred in the absence of negligence on the part of the healthcare provider, which evidence will have to be adduced by a medical expert.  The SCA in the Goliath matter relied heavily on the evidence provided by Dr Muller, including that a swab should never be left behind following surgery, in order to arrive at the conclusion that the incident could not have happened in the absence of negligence.

Once a plaintiff has adduced sufficient evidence from which an inference of negligence can be drawn by reliance on the maxim, it is up to a defendant to provide an explanation as to why no negligence should be found on his part.  A defendant should therefore consider very carefully before deciding not to lead evidence in circumstances where the maxim may be found by a court to apply.   As Lord Justice Brooke stated in the matter of Ratcliffe v Plymouth and Torbay Health Authority [1998] EWCA Civ 2000“It is likely to be a very rare medical negligence case in which the defendants take the risk of calling no factual evidence, when such evidence is available to them, of the circumstances surrounding a procedure which led to an unexpected outcome of a patient.  If such a case should arise, the judge should not be diverted away from the inference of negligence dictated by the plaintiff’s evidence by mere theoretical possibilities of how that outcome might have occurred without negligence:  the defendants’ hypothesis must have the ring of plausibility about it . . .”

Medical Law – A claim for compensation arising from a failed sterilisation could include damages suffered during parturition

Introduction

1. It is trite that our law recognises a claim by parents in respect of the financial costs involved in supporting a child born following a failed sterilisation. The matter of The Premier of the Western Cape Province v Loots 2011 (SCA) 32, however, concerned a delictual claim for damages suffered by the mother following a failed sterilisation in respect of harm suffered during the birth process that went “terribly wrong”. The Court was called on to answer whether the damages flowing from the birthing complication fulfilled the foreseeability requirement as an element of negligence, as well as the requirements of legal causation.

Factual Background

2. The claim was brought by Johannes Hendrik Loots N.O. who acted in his capacity as the duly appointed curator ad litem for Mrs Johanna Cecelia Erasmus (the mother). Mrs Erasmus suffered brain damage as a result of complications during parturition resulting in her being unable to manage her own affairs.
 
3. Mrs Erasmus underwent a sterilization operation during 1999 performed by the Second Appellant, a clinical assistant at that stage in the employ of the First Appellant. The operation involved a laparoscopic occlusion of both fallopian tubes.  Mrs Erasmus, however, fell pregnant soon thereafter. It later transpired that the Second Appellant had mistakenly occluded Mrs Erasmus’ round ligaments instead of her fallopian tubes.
 
4. Mr and Mrs Erasmus were offered the option to terminate the pregnancy by the Tygerberg Hospital, which they declined for religious reasons.

5. During November 1999, Mrs Erasmus was admitted to the Tygerberg Hospital for hypertension.  As the baby was in distress, an emergency caesarean section was performed.  Sadly, the baby was severely compromised and did not survive. 

6. The experts for both the Appellants and the Respondent speculated that either shortly before, during or after the caesarean section Mrs Erasmus must have developed what is known as “amniotic fluid embolism” (AFE), which occurs when foetal antigens enter the maternal circulation.  The AFE probably caused Mrs Erasmus to suffer severe haemorrhaging and cardiac arrest, which in turn led to brain anoxia and eventually the irreversible brain damage.

Defences raised and distinction drawn with regard to the foreseeability requirement insofar as both negligence and legal causation are concerned.
 
7. The Court a quo found in favour of the Respondent and the Appellants appealed the judgment.  The Appellants persisted with only two defences in their appeal.
 
8. The first defence was that the Second Appellant was not negligent with regard to the consequences of the failed sterilization for which Mrs Erasmus sought to hold him liable. 

9. The Appellants relied on the concrete or relative approach to negligence as the basis for their defence, which approach does not require that the “precise nature and extent of the actual harm which occurred was reasonably foreseeable”. The Supreme Court went on further to comment that the relative approach need not require “reasonable foreseeability of the exact manner in which the harm actually occurred”. In effect, all that is required to establish negligence based on the relative approach is that the “general nature of the harm that occurred and the general manner in which it occurred was reasonably foreseeable”.

10. The Appellants argued that the harm which Mrs Erasmus actually suffered was not of a general kind reasonably foreseeable as AFE is an unpredictable and unpreventable event which occurs in about 1 out of every 8 000 to 30 000 deliveries. 

11. The Supreme Court of Appeal did not accept this argument.  In light of the expert testimony presented on behalf of Mrs Erasmus in the Court a quo, which was unchallenged by the Appellants, the Supreme Court of Appeal accepted firstly that “pregnancy was a generally foreseeable consequence of a failed sterilization”, and secondly that “pregnancy is a dangerous condition associated with a myriad of potential complications, one of which being AFE”.  As such, the Supreme Court of Appeal held that the AFE was reasonably foreseeable as a complication of pregnancy and concluded that the Second Appellant was therefore negligent with regard to the harm that Mrs Erasmus had suffered.
 
12. The second defence brought by the Appellants was that the causal nexus between the Second Appellant’s negligence and the harm suffered by Mrs Erasmus was too remote or not linked closely enough to the conduct (the failed sterilization) to hold the Appellants liable.

13. The element of causation involves two distinct enquiries, being factual causation and legal causation. In casu, the Supreme Court of Appeal held, by making use of the “but-for” test, that factual causation could be established. The matter of legal causation, however, required further consideration.

14. The purpose of the requirement of legal causation is to restrict the causal effect of the wrongdoer’s conduct so as not to create unlimited liability. In general, the Supreme Court of Appeal has opted for a “flexible umbrella criterion”, which determines the closeness of the link according to what is fair, reasonable and just. Our Courts decide the question of legal causation on the basis of a number of factors that relate essentially to public policy, the latter being informed by the values and principles enshrined in the Constitution.

15. The Appellants relied on the direct consequence theory with regard to legal causation and argued that Mr and Mrs Erasmus’ decision not to abort constituted a novus actus interveniens. The Supreme Court of Appeal, however, held that in order for the conduct of Mr and Mrs Erasmus to qualify as a novus actus interveniens, it had to be proved to be unreasonable. The Court found the conduct of Mr and Mrs Erasmus in their decision not to abort reasonable in light of the circumstances of the particular matter and, as such, the Appellants’ argument based on the principle of novus actus interveniens could not succeed. The Supreme Court of Appeal mentioned as obiter dictum that the parents’ decision not to abort may have been considered to be unreasonable were there any medical indications that parturition could be accompanied by any risks or complications.

16. The Appellants further relied on the reasonable foreseeability test with regard to legal causation, in that expert evidence showed that “the complication of AFE that led to the harm was so rare that it would not have been foreseen by the reasonable surgeon”. The Court in this instance accepted that foreseeability played a role in determining the issue of legal causation, the definition of which should be distinguished between its application in the context of negligence versus causation.

17. As already mentioned, the Supreme Court of Appeal held that the test for foreseeability with regard to negligence encompassed harm of a general kind, whereas with regard to legal causation foreseeability of the actual harm (as opposed to harm of a general kind) was required. On this basis the Court accepted that “because of the unforeseen intervention of AFE, the actual harm suffered by Mrs Erasmus was not a reasonably foreseeable consequence of Second Respondent’s negligence”.

18.  The Court, however, went on to hold that, on the other hand, AFE was not unknown to medical science and was therefore not the kind of “freakish occurrence” that has never happened before and will not happen again in future.
 
19. Ultimately, the Supreme Court of Appeal concluded that, taking into account all the circumstances of the particular case, considerations of reasonableness, justice and fairness dictated that the Appellants should be held liable for the harm suffered by Mrs Erasmus. The Supreme Court of Appeal consequently dismissed the appeal with costs.

Conclusion

20. In light of the Supreme Court of Appeal’s decision in this matter, the question can be asked whether a medical practitioner may also be held liable for damages resulting from complications suffered during pregnancy following a failed sterilisation. An example would be if the mother has to remain bedridden for an extended period of time during pregnancy, as a result of which she suffers damages in the form of medical expenses and a loss of income.

21. Moreover, if the baby in casu survived but suffered harm during birth as a result of the AFE, such as cerebral palsy, would the medical practitioner responsible for the failed sterilisation have been held liable for the additional damages relating to the disability over and above a claim for the normal financial costs expected from the support of a healthy child?

22. As mentioned before, the purpose of the requirement of legal causation is to prevent unlimited liability on the part of the wrongdoer. It would appear from the judgement under consideration that our Courts’ application of said requirement has become more lenient in favour of Plaintiffs, resulting in an extended liability on the part of wrongdoers.

Assisted by: 

Sheila-Ann Roos
Attorney, Markram Incorporated Attorneys
Tel: 012) 346 1278
Cell: 072 213 9706
www.markraminc.co.za

Medical Law – A claim for compensation arising from a failed sterilisation could include damages suffered during parturition

Introduction

1. It is trite that our law recognises a claim by parents in respect of the financial costs involved in supporting a child born following a failed sterilisation. The matter of The Premier of the Western Cape Province v Loots 2011 (SCA) 32, however, concerned a delictual claim for damages suffered by the mother following a failed sterilisation in respect of harm suffered during the birth process that went “terribly wrong”. The Court was called on to answer whether the damages flowing from the birthing complication fulfilled the foreseeability requirement as an element of negligence, as well as the requirements of legal causation.

Factual Background

2. The claim was brought by Johannes Hendrik Loots N.O. who acted in his capacity as the duly appointed curator ad litem for Mrs Johanna Cecelia Erasmus (the mother). Mrs Erasmus suffered brain damage as a result of complications during parturition resulting in her being unable to manage her own affairs.
 
3. Mrs Erasmus underwent a sterilization operation during 1999 performed by the Second Appellant, a clinical assistant at that stage in the employ of the First Appellant. The operation involved a laparoscopic occlusion of both fallopian tubes.  Mrs Erasmus, however, fell pregnant soon thereafter. It later transpired that the Second Appellant had mistakenly occluded Mrs Erasmus’ round ligaments instead of her fallopian tubes.
 
4. Mr and Mrs Erasmus were offered the option to terminate the pregnancy by the Tygerberg Hospital, which they declined for religious reasons.

5. During November 1999, Mrs Erasmus was admitted to the Tygerberg Hospital for hypertension.  As the baby was in distress, an emergency caesarean section was performed.  Sadly, the baby was severely compromised and did not survive. 

6. The experts for both the Appellants and the Respondent speculated that either shortly before, during or after the caesarean section Mrs Erasmus must have developed what is known as “amniotic fluid embolism” (AFE), which occurs when foetal antigens enter the maternal circulation.  The AFE probably caused Mrs Erasmus to suffer severe haemorrhaging and cardiac arrest, which in turn led to brain anoxia and eventually the irreversible brain damage.

Defences raised and distinction drawn with regard to the foreseeability requirement insofar as both negligence and legal causation are concerned.
 
7. The Court a quo found in favour of the Respondent and the Appellants appealed the judgment.  The Appellants persisted with only two defences in their appeal.
 
8. The first defence was that the Second Appellant was not negligent with regard to the consequences of the failed sterilization for which Mrs Erasmus sought to hold him liable. 

9. The Appellants relied on the concrete or relative approach to negligence as the basis for their defence, which approach does not require that the “precise nature and extent of the actual harm which occurred was reasonably foreseeable”. The Supreme Court went on further to comment that the relative approach need not require “reasonable foreseeability of the exact manner in which the harm actually occurred”. In effect, all that is required to establish negligence based on the relative approach is that the “general nature of the harm that occurred and the general manner in which it occurred was reasonably foreseeable”.

10. The Appellants argued that the harm which Mrs Erasmus actually suffered was not of a general kind reasonably foreseeable as AFE is an unpredictable and unpreventable event which occurs in about 1 out of every 8 000 to 30 000 deliveries. 

11. The Supreme Court of Appeal did not accept this argument.  In light of the expert testimony presented on behalf of Mrs Erasmus in the Court a quo, which was unchallenged by the Appellants, the Supreme Court of Appeal accepted firstly that “pregnancy was a generally foreseeable consequence of a failed sterilization”, and secondly that “pregnancy is a dangerous condition associated with a myriad of potential complications, one of which being AFE”.  As such, the Supreme Court of Appeal held that the AFE was reasonably foreseeable as a complication of pregnancy and concluded that the Second Appellant was therefore negligent with regard to the harm that Mrs Erasmus had suffered.
 
12. The second defence brought by the Appellants was that the causal nexus between the Second Appellant’s negligence and the harm suffered by Mrs Erasmus was too remote or not linked closely enough to the conduct (the failed sterilization) to hold the Appellants liable.

13. The element of causation involves two distinct enquiries, being factual causation and legal causation. In casu, the Supreme Court of Appeal held, by making use of the “but-for” test, that factual causation could be established. The matter of legal causation, however, required further consideration.

14. The purpose of the requirement of legal causation is to restrict the causal effect of the wrongdoer’s conduct so as not to create unlimited liability. In general, the Supreme Court of Appeal has opted for a “flexible umbrella criterion”, which determines the closeness of the link according to what is fair, reasonable and just. Our Courts decide the question of legal causation on the basis of a number of factors that relate essentially to public policy, the latter being informed by the values and principles enshrined in the Constitution.

15. The Appellants relied on the direct consequence theory with regard to legal causation and argued that Mr and Mrs Erasmus’ decision not to abort constituted a novus actus interveniens. The Supreme Court of Appeal, however, held that in order for the conduct of Mr and Mrs Erasmus to qualify as a novus actus interveniens, it had to be proved to be unreasonable. The Court found the conduct of Mr and Mrs Erasmus in their decision not to abort reasonable in light of the circumstances of the particular matter and, as such, the Appellants’ argument based on the principle of novus actus interveniens could not succeed. The Supreme Court of Appeal mentioned as obiter dictum that the parents’ decision not to abort may have been considered to be unreasonable were there any medical indications that parturition could be accompanied by any risks or complications.

16. The Appellants further relied on the reasonable foreseeability test with regard to legal causation, in that expert evidence showed that “the complication of AFE that led to the harm was so rare that it would not have been foreseen by the reasonable surgeon”. The Court in this instance accepted that foreseeability played a role in determining the issue of legal causation, the definition of which should be distinguished between its application in the context of negligence versus causation.

17. As already mentioned, the Supreme Court of Appeal held that the test for foreseeability with regard to negligence encompassed harm of a general kind, whereas with regard to legal causation foreseeability of the actual harm (as opposed to harm of a general kind) was required. On this basis the Court accepted that “because of the unforeseen intervention of AFE, the actual harm suffered by Mrs Erasmus was not a reasonably foreseeable consequence of Second Respondent’s negligence”.

18.  The Court, however, went on to hold that, on the other hand, AFE was not unknown to medical science and was therefore not the kind of “freakish occurrence” that has never happened before and will not happen again in future.
 
19. Ultimately, the Supreme Court of Appeal concluded that, taking into account all the circumstances of the particular case, considerations of reasonableness, justice and fairness dictated that the Appellants should be held liable for the harm suffered by Mrs Erasmus. The Supreme Court of Appeal consequently dismissed the appeal with costs.

Conclusion

20. In light of the Supreme Court of Appeal’s decision in this matter, the question can be asked whether a medical practitioner may also be held liable for damages resulting from complications suffered during pregnancy following a failed sterilisation. An example would be if the mother has to remain bedridden for an extended period of time during pregnancy, as a result of which she suffers damages in the form of medical expenses and a loss of income.

21. Moreover, if the baby in casu survived but suffered harm during birth as a result of the AFE, such as cerebral palsy, would the medical practitioner responsible for the failed sterilisation have been held liable for the additional damages relating to the disability over and above a claim for the normal financial costs expected from the support of a healthy child?

22. As mentioned before, the purpose of the requirement of legal causation is to prevent unlimited liability on the part of the wrongdoer. It would appear from the judgement under consideration that our Courts’ application of said requirement has become more lenient in favour of Plaintiffs, resulting in an extended liability on the part of wrongdoers.

Assisted by: 

Sheila-Ann Roos
Attorney, Markram Incorporated Attorneys
Tel: 012) 346 1278
Cell: 072 213 9706
www.markraminc.co.za

Medical law – Requirements for valid surrogacy agreements and the sanctions that medical practitioners may face if these requirements are not complied with

Medical practitioners involved in artificial fertilisation or involved in rendering assistance in artificial fertilisation in respect of surrogacy should familiarise themselves with the relevant provisions of the Children’s Act 38 of 2005 (hereinafter referred to as “the Act”) or face possible criminal sanctions in respect of a contravention of the Act.

Prior to the Act coming into operation, South Africa did not have enacted legislation dealing specifically with surrogacy and surrogacy agreements. The Act changed this position and surrogate motherhood in South Africa is now regulated by Chapter 19 of the Act, which Chapter came into operation on 01 April 2010.

Chapter 19 of the Act limits surrogacy agreements to competent and suitable persons who are domiciled in South Africa and sets certain requirements and stipulations in respect of surrogacy agreements. These requirements include that:

• The agreement must be in writing and signed by all parties thereto.
• The agreement must be concluded in South Africa.
• The commissioning parent(s) must be domiciled in South Africa at the time of the conclusion of the agreement.
• The surrogate must be domiciled in South Africa at the time of the conclusion of the agreement. The Court may, however, on good cause shown dispose with this requirement.
• The consent of the husband, wife or partner of the commissioning parent and the surrogate must be provided in writing and such husband, wife or partner must become a party to the agreement. Should this consent be unreasonably withheld the Court may confirm the agreement without such consent.
• The commissioning parents must be unable to give birth to a child and the condition must be permanent and irreversible, and the surrogates must have had at least one healthy (still living) child prior to the surrogacy agreement being concluded.
• At least one of the potential commissioning parent(s)’ gametes must be used in the process of artificial fertilisation.
• The agreement may not to be entered into for financial gain, and any such commercial surrogacy agreements are illegal. The only compensation which may be exchanged is for the reasonable expenses incurred as a result of the in vitro treatment, the pregnancy and post-delivery care.

The agreement must be confirmed by the High Court prior to the surrogate mother being artificially fertilised in order for the agreement to be valid and enforceable. The Court will be tasked with determining whether all of the requirements imposed by the Act have been met and whether the agreement will be in the best interests of the child (once born). The interests of the child are of paramount importance in such cases. A few recent cases illustrate the Court’s approach in this regard.

In the matter of In Re Confirmation of Three Surrogate Motherhood Agreements 2011 (6) SA 22 (GSJ ) the South Gauteng High Court held that when it is presented with an application to confirm a surrogate motherhood agreement it is, as the upper guardian of all children, duty-bound to ensure that the interests of the child (once born) are best served by the contents of the agreement. The applicants will thus be required to supply proper and full details regarding themselves in order that the Court may determine whether the commissioning parents are indeed fit and proper to be entrusted with full parental responsibilities. The Court requires detail as to who the commissioning parents are, what their financial position is, what support systems (if any) they have in place, what their living conditions are and how the child will be taken care of. According to the Court, further good practice would be following the requirements for adoptions, where expert assessment reports from social workers are required together with a police clearance certificate to demonstrate the suitability of the adoptive parents. An expert report can also be obtained to address the suitability of the surrogate.

In the matter of Ex Parte WH and Others 2011 (6) SA 514 (GNP) the North Gauteng High Court dealt further with the information that the Court will require before confirming the agreement. The Court held that the applicants’ affidavit should contain:

• All the factors set out by the Act together with documentary proof thereof where applicable;
• Details of any previous applications for surrogacy;
• Reports by a clinical psychologist in respect of the commissioning parents and the surrogate;
• Medical report in respect of the surrogate;
• Details and proof of payment of any compensation for services rendered;
• All agreements between the surrogate and any intermediary;
• Full particulars if any agency was involved; and
• Whether any of the commissioning parents have been charged with or convicted of a violent crime or crime of a sexual nature.

As a general rule, the surrogacy agreement must be concluded and confirmed by the Court prior to the artificial fertilisation taking place. It has, however, recently been held in the matter of Ex Parte MS and Others 2014 (3) SA 415 (GP) that the conclusion and confirmation of the agreement may take place retrospectively, i.e. after the artificial fertilisation of the surrogate, provided that it is in the interests of the unborn child. In such an instance, the applicants would have to explain why the confirmation is being sought at a late stage and would have to satisfy the Court that the application is not aimed at (or will have the effect of) circumventing the objectives of the statutory regime. For example, post-fertilisation applications should be refused if the pregnancy was not the result of artificial fertilisation and the real object is to allow the commissioning parents to circumvent the adoption process.

The Court, however, pointed out that the fact that the conclusion and confirmation of the agreement may take place retrospectively does not mean that the parties are free to ignore the general requirement that surrogacy agreements must be confirmed by a Court before artificial fertilisation takes place. Generally, the Court’s discretion to confirm such agreements retrospectively will only be exercised in exceptional circumstances and when the best interests of the child demand confirmation. The window-period for such confirmation exists only during the period before the child is born. At birth, the child is deemed to be the child of the surrogate mother and the parties will have to explore other available options such as adoption, a parental rights-and-responsibilities agreement under section 22 of the Act or an application for guardianship of the child under section 24 of the Act.

The Court further pointed out that it is important to bear in mind that it remains an offence for any person to artificially fertilise a woman in the execution of a surrogate motherhood agreement or to render assistance in such artificial fertilisation without authorisation from a Court. Medical practitioners involved in the pre-confirmation fertilisation may thus remain open to criminal prosecution, notwithstanding that the relevant surrogacy agreement may have been confirmed by a Court subsequent to the fertilisation. Medical practitioners should thus insist on authorisation from a Court before agreeing to assist the parties in the artificial fertilisation process. A practitioner found guilty of contravening the Act may be liable to a fine or to imprisonment for a period not exceeding ten years, or to both a fine and such imprisonment.

In the event that the agreement is confirmed by the Court, and subject to the agreement not being validly terminated, the child born from the agreement is considered to be the child of the commissioning parent(s) from the moment of birth and the commissioning parents have full parental rights and responsibilities in respect of the child. The surrogate is obliged to hand the child over to the commissioning parent(s) as soon as is reasonably possible after birth and neither the surrogate nor her husband, partner or relatives have any parental rights in respect of the child.

It is clear from what has been stated above that Chapter 19 of the Act sets stringent requirements and stipulations in respect of surrogacy agreements. Commissioning parents and / or surrogates would be well served by obtaining legal advice prior to concluding a surrogacy agreement while medical practitioners dealing with aspects of artificial fertilisation would be well served by familiarising themselves with the salient provisions of the Act in order to avoid unwittingly participating in contraventions thereof which may result in serious implications for the medical practitioner.

Medical Law – Requirements for valid surrogacy agreements and the sanctions that medical practitioners may face if these requirements are not complied with

Medical practitioners involved in artificial fertilisation or involved in rendering assistance in artificial fertilisation in respect of surrogacy should familiarise themselves with the relevant provisions of the Children’s Act 38 of 2005 (hereinafter referred to as “the Act”) or face possible criminal sanctions in respect of a contravention of the Act.

Prior to the Act coming into operation, South Africa did not have enacted legislation dealing specifically with surrogacy and surrogacy agreements. The Act changed this position and surrogate motherhood in South Africa is now regulated by Chapter 19 of the Act, which Chapter came into operation on 01 April 2010.

Chapter 19 of the Act limits surrogacy agreements to competent and suitable persons who are domiciled in South Africa and sets certain requirements and stipulations in respect of surrogacy agreements. These requirements include that:

• The agreement must be in writing and signed by all parties thereto.
• The agreement must be concluded in South Africa.
• The commissioning parent(s) must be domiciled in South Africa at the time of the conclusion of the agreement.
• The surrogate must be domiciled in South Africa at the time of the conclusion of the agreement. The Court may, however, on good cause shown dispose with this requirement.
• The consent of the husband, wife or partner of the commissioning parent and the surrogate must be provided in writing and such husband, wife or partner must become a party to the agreement. Should this consent be unreasonably withheld the Court may confirm the agreement without such consent.
• The commissioning parents must be unable to give birth to a child and the condition must be permanent and irreversible, and the surrogates must have had at least one healthy (still living) child prior to the surrogacy agreement being concluded.
• At least one of the potential commissioning parent(s)’ gametes must be used in the process of artificial fertilisation.
• The agreement may not to be entered into for financial gain, and any such commercial surrogacy agreements are illegal. The only compensation which may be exchanged is for the reasonable expenses incurred as a result of the in vitro treatment, the pregnancy and post-delivery care.

The agreement must be confirmed by the High Court prior to the surrogate mother being artificially fertilised in order for the agreement to be valid and enforceable. The Court will be tasked with determining whether all of the requirements imposed by the Act have been met and whether the agreement will be in the best interests of the child (once born). The interests of the child are of paramount importance in such cases. A few recent cases illustrate the Court’s approach in this regard.

In the matter of In Re Confirmation of Three Surrogate Motherhood Agreements 2011 (6) SA 22 (GSJ ) the South Gauteng High Court held that when it is presented with an application to confirm a surrogate motherhood agreement it is, as the upper guardian of all children, duty-bound to ensure that the interests of the child (once born) are best served by the contents of the agreement. The applicants will thus be required to supply proper and full details regarding themselves in order that the Court may determine whether the commissioning parents are indeed fit and proper to be entrusted with full parental responsibilities. The Court requires detail as to who the commissioning parents are, what their financial position is, what support systems (if any) they have in place, what their living conditions are and how the child will be taken care of. According to the Court, further good practice would be following the requirements for adoptions, where expert assessment reports from social workers are required together with a police clearance certificate to demonstrate the suitability of the adoptive parents. An expert report can also be obtained to address the suitability of the surrogate.

In the matter of Ex Parte WH and Others 2011 (6) SA 514 (GNP) the North Gauteng High Court dealt further with the information that the Court will require before confirming the agreement. The Court held that the applicants’ affidavit should contain:

• All the factors set out by the Act together with documentary proof thereof where applicable;
• Details of any previous applications for surrogacy;
• Reports by a clinical psychologist in respect of the commissioning parents and the surrogate;
• Medical report in respect of the surrogate;
• Details and proof of payment of any compensation for services rendered;
• All agreements between the surrogate and any intermediary;
• Full particulars if any agency was involved; and
• Whether any of the commissioning parents have been charged with or convicted of a violent crime or crime of a sexual nature.

As a general rule, the surrogacy agreement must be concluded and confirmed by the Court prior to the artificial fertilisation taking place. It has, however, recently been held in the matter of Ex Parte MS and Others 2014 (3) SA 415 (GP) that the conclusion and confirmation of the agreement may take place retrospectively, i.e. after the artificial fertilisation of the surrogate, provided that it is in the interests of the unborn child. In such an instance, the applicants would have to explain why the confirmation is being sought at a late stage and would have to satisfy the Court that the application is not aimed at (or will have the effect of) circumventing the objectives of the statutory regime. For example, post-fertilisation applications should be refused if the pregnancy was not the result of artificial fertilisation and the real object is to allow the commissioning parents to circumvent the adoption process.

The Court, however, pointed out that the fact that the conclusion and confirmation of the agreement may take place retrospectively does not mean that the parties are free to ignore the general requirement that surrogacy agreements must be confirmed by a Court before artificial fertilisation takes place. Generally, the Court’s discretion to confirm such agreements retrospectively will only be exercised in exceptional circumstances and when the best interests of the child demand confirmation. The window-period for such confirmation exists only during the period before the child is born. At birth, the child is deemed to be the child of the surrogate mother and the parties will have to explore other available options such as adoption, a parental rights-and-responsibilities agreement under section 22 of the Act or an application for guardianship of the child under section 24 of the Act.

The Court further pointed out that it is important to bear in mind that it remains an offence for any person to artificially fertilise a woman in the execution of a surrogate motherhood agreement or to render assistance in such artificial fertilisation without authorisation from a Court. Medical practitioners involved in the pre-confirmation fertilisation may thus remain open to criminal prosecution, notwithstanding that the relevant surrogacy agreement may have been confirmed by a Court subsequent to the fertilisation. Medical practitioners should thus insist on authorisation from a Court before agreeing to assist the parties in the artificial fertilisation process. A practitioner found guilty of contravening the Act may be liable to a fine or to imprisonment for a period not exceeding ten years, or to both a fine and such imprisonment.

In the event that the agreement is confirmed by the Court, and subject to the agreement not being validly terminated, the child born from the agreement is considered to be the child of the commissioning parent(s) from the moment of birth and the commissioning parents have full parental rights and responsibilities in respect of the child. The surrogate is obliged to hand the child over to the commissioning parent(s) as soon as is reasonably possible after birth and neither the surrogate nor her husband, partner or relatives have any parental rights in respect of the child.

It is clear from what has been stated above that Chapter 19 of the Act sets stringent requirements and stipulations in respect of surrogacy agreements. Commissioning parents and / or surrogates would be well served by obtaining legal advice prior to concluding a surrogacy agreement while medical practitioners dealing with aspects of artificial fertilisation would be well served by familiarising themselves with the salient provisions of the Act in order to avoid unwittingly participating in contraventions thereof which may result in serious implications for the medical practitioner.

Construction Law – Certain instances where the NHBRC could be held liable by a home owner for rectification of major structural defects in a new home

INTRODUCTION:

1. In the unreported matter of Stergianos v National Home Builders Registration Council 2012 JDR 1982, the Plaintiff, Mr Stergianos, issued summons against the National Home Builders Registration Council (“NHBRC”), alleging that the NHBRC is obliged to remedy the defects evident in his home.

2. In our law the Housing Consumers Protection Measures Act 95 of 1998 (“the Act”) protects home owners in certain circumstances from the effects of poor workmanship on the part of home builders who are registered with the NHBRC.

3. Before we delve into the facts of the aforesaid matter, the following relevant Sections of the Act should be taken into consideration where a home owner wishes to hold the NHBRC liable for defects evident in a home resulting from defective workmanship on the part of a home builder:

3.1. Section 3 of the Act specifies the objectives of the NHBRC which include, inter alia, the following:
3.1.1. Representing the interests of housing consumers by providing warranty protection against defects in new homes;
3.1.2. Regulating the home building industry;
3.1.3. Providing protection to home owners where home builders fail to comply with their obligations in terms of the Act; and
3.1.4. To establish and promote ethical and technical standards in the home building industry.

3.2. In terms of Section 10(1) of the Act, a “home builder” is required to be registered with the NHBRC prior to the commencement of construction and if not, no payment may be received from a housing consumer in respect of the sale or construction of a home.  Section 10(2) determines that where a “home builder” is not registered with the NHBRC, he is prohibited from constructing a home.

3.3. The NHBRC is required, in terms of Section 12, to publish a Home Building Manual (“HBM”) which contains technical standards with which home builders must comply.

3.4. Further, Section 14(1) of the Act determines that a home builder is not allowed to commence building a home before:
3.4.1. the prescribed documentation, information and fee have been submitted to the NHBRC;
3.4.2. the NHBRC has accepted the aforesaid and entered same into its records; and
3.4.3. a certificate of proof of enrolment has been issued.

3.5. Section 15(2) states that the NHBRC is allowed to disburse any amount contemplated by Section 17(1) of the Act.  In terms of Section 17(1) the NHBRC shall pay an amount for rectification from the fund established for that purpose in terms of Section 15(4), where:
3.5.1. within:
3.5.1.1. five years of the date of occupation, a major structural defect has emerged in a home as a result of non-compliance with the NHBRC Technical Requirements and the home builder has been notified accordingly within that period;
3.5.1.2. twelve months of the date of occupation, a roof leak attributable to workmanship, design or materials has manifested itself in respect of a home and the home builder has been notified accordingly within that period;
3.5.2. the home builder is in breach of the home builder’s obligations in terms of Section 13(2)(b)(i) regarding the rectification of such defect;
3.5.3. the relevant home was constructed by a registered home builder, had been enrolled with the Council and, at the occupation date, the home was enrolled with the Council subject to Section 14(4), (5) and (6);
3.5.4. the home builder no longer exists or is unable to meet his obligations; and
3.5.5. in the case of a home that has been enrolled with the Council on a project basis in terms of Section 14(2), the application has been made by the MEC pursuant to an agreement in terms of Section 15(4)(c).

3.6. In terms of Section 17(2) the NHBRC is empowered to either reduce any amount that may be expended in terms of Section 17(1), in exceptional circumstances, make a payment to a home owner in full and final settlement instead of rectifying the defect, or refuse any claim.

BACKGROUND FACTS:

4. In the aforesaid matter, the Plaintiff concluded a contract with the Contractor, Herrington Construction CC, for the building of a home for the Plaintiff.  The home was constructed with a number of difficulties along the way, where after the Plaintiff took occupation thereof.

5. During the first year of occupation, cracks began to develop in the concrete floor slab which worsened progressively.  Attempts to fill the cracks failed as they continued to open.  The Plaintiff appointed a structural engineering expert, Mr Kleinhans, to determine the cause of the cracks.  Mr Kleinhans was of the view that the cause was structural.

6. The Plaintiff then issued summons against the NHBRC in terms of Section 17 of the Act, seeking orders that the NHBRC was responsible for the rectification of the structural defects in the home, and to rectify the defects within 180 days and to pay its costs.

7. The NHBRC refused the Plaintiff’s claim.  All the elements of the cause of action set out in Section 17(1) of the Act have either been admitted by the NHBRC or were not in dispute.  The only element in dispute, which had to be determined by the Court, is the cause of the defect.  If it were to be found that the cracks in the floor slab were caused by a major structural defect, the Plaintiff would be entitled to the relief contemplated by Section 17(1), otherwise the action will fail.

8. Section 1 of the Act defines the term “major structural defect” as:
“a defect which gives rise or which is likely to give rise to damage of such severity that it affects or is likely to affect the structural integrity of a home and which requires complete or partial rebuilding of the home or extensive repair work to it, subject to limitations, qualifications or exclusions that may be prescribed by the Minister.”

9. According to Kleinhans, the site on which the home was built had, right from the start, presented certain technical challenges as the home was built on a primary dune and the characteristics of the site signalled that special precautions had to be taken when building on a dune as same is mobile.

10. Kleinhans required to assess the relevant documentation in order to determine whether the home complies with technical requirements and prescribed standards, however, very little documentation could be found in this regard.  Kleinhans regarded a record of three Dynamic Cone Penetrometer (“DCP”) tests conducted before building commenced as most likely to classify the soil type in order to designate a class to the site as required in terms of the Home Building Manual.  According to Kleinhans, the said results raised concern, as well as a need to take remedial measures.

11. He then conducted a DCP test to determine the density of the fill below the slab and also evaluated the “health of the structure” by taking relevant photographs of the cracks, recording them on a plan and examining same for a pattern.  Most cracks were in the floor slab, while some were in the ceiling and walls.

12. Mr Kleinhans came to the conclusion that the defects in the concrete floor slab of the home were indeed caused by major structural defects in the substructure of the home and consequent settling of the slab.  The test results also confirmed that the fill beneath the slab was not sufficiently compacted to bear the weight of the slab.

13. The NHBRC also appointed an expert, Mr Mathibeli, who was of the view that the cracks were caused by shrinkage as a result of poor workmanship when the concrete slab was poured and secondly, the builder’s failure to place expansion joints in the slab where required.  Mr Mathibeli, who has not conducted any tests, came to the conclusion that the defects in the slab were not structural in nature.

CONCLUSION:

14. After assessing both experts’ views, the Court ordered the NHBRC to rectify the structural defects in the Plaintiff’s home in terms of Section 17 of the Act, subject to the maximum amount prescribed by regulation 13(1), read with regulation 13(2), of the regulations promulgated in terms of the Act.  The Court also ordered the NHBRC to pay the Plaintiff’s costs.