Excluding contractual liability: Exemption clause considered

Note: Footnotes omitted, emphasis added and certain personal details redacted to comply with law.

ZONDO CJ (Maya DCJ, Mbatha AJ, Mhlantla J, Rogers J and Tshiqi J concurring):

Introduction

[80] I have had the benefit of reading the judgment by my Colleague, Mathopo J, in this matter (first judgment). My Colleague concludes that this Court has jurisdiction. He also concludes that leave to appeal should be granted, the appeal should be upheld and the decision of the Supreme Court of Appeal set aside. I agree that this Court has jurisdiction and that leave to appeal should be granted. However, I am unable to agree that the appeal should be upheld. In my view, the appeal should be dismissed.

Brief background

[81] Although the first judgment has set out the background, I set out a very brief background that I consider necessary for the proper understanding of my approach in this judgment. Fujitsu Services Core (Pty) Ltd (Fujitsu), the applicant in this matter, is a registered company that imports, sells and distributes laptops and accessories. Schenker South Africa (Pty) Ltd (Schenker) conducts the business of a warehouse operator, freight forwarder, logistics manager, distributor and forwarding agent.

[82] Before the dispute that led to these proceedings between Fujitsu and Schenker arose, the two parties had done business with each other for some time which was based on different agreements. The present dispute is governed by an agreement concluded between the parties dated 10 July 2009. That agreement was called the National Distribution Agreement. It incorporated the Standard Trading Terms and Conditions of the SAAFF (Standard Trading Terms and Conditions).

[83] Clause 17 of the Standard Trading Terms and Conditions reads:

“GOODS REQUIRING SPECIAL ARRANGEMENTS
Except under special arrangements previously made in writing the Company will not accept or deal with bullion, coin, precious stones, jewellery, valuables, antiques, pictures, human remains, livestock or plants. Should the customer nevertheless deliver such goods to the Company or cause the Company to handle or deal with any such goods otherwise than under special arrangements previously made in writing the Company shall incur no liability whatsoever in respect of such goods, and in particular, shall incur no liability in respect of its negligent acts or omissions in respect of such goods. A claim, if any, against the Company in respect of the goods referred to in this clause 17 shall be governed by the provisions of clause 40 and 41.”

In this judgment I shall refer to the goods listed in clause 17 either as goods falling within the list in clause 17 or as goods of high-value.

[84] Fujitsu sent to Schenker goods falling within the list of goods in clause 17 without making any prior special arrangements in writing with Schenker as required by clause 17. An employee of Schenker, one Mr Lerama, stole those goods and disappeared forever. It is common cause that Mr Lerama was sent by Schenker to the airport to collect Fujitsu’s goods that he stole after he had collected them. He was supposed to bring them to Schenker but he stole them and never returned. Fujitsu contends that Schenker is liable for its loss. Schenker disputes liability and contends that, since the goods in question fell within the goods described in clause 17, Fujitsu was obliged to have made prior written special arrangements with Schenker before it could send those goods to Schenker and, as Fujitsu failed to make such special written arrangements in terms of clause 17, Schenker is not liable for Fujitsu’s loss.

High Court and Supreme Court of Appeal

[85] The High Court found for Fujitsu. The Supreme Court of Appeal found for Schenker.

In this Court

Jurisdiction

[86] The first judgment concludes that this Court has jurisdiction on both bases upon which this Court may have jurisdiction.

• • The one is that the matter raises a constitutional matter or issue and
  • the other is that this matter raises an arguable point of law of general public importance which deserves to be considered by this Court.

[87] I am unable to agree that this matter raises an arguable point of law of general public importance which deserves to be considered by this Court. In this regard I note that, although the first judgment says that this matter raises such a point of law, it does not articulate the point of law. Such a point of law should be stated without reference to the particular parties before the Court. An example would be a case that raises the following question: does the audi alteram partem rule apply to private relationships?

In this case the question of law is whether clause 17 of the Standard Trading Terms and Conditions exempts Schenker from liability for loss arising out of the theft of Fujitsu’s high-value goods by Mr Lerama. Although this may be an arguable point of law, it is not one of general public importance.

[88] There was a suggestion by Fujitsu that, since clause 17 is to be found in the agreement of the SAAFF, it stood to reason that it affected a large section of the population. I cannot accept this because there is no evidence before us of even how many members the SAAFF has. It may have 5, 10 or 15 entities under it. Schenker also submitted, correctly in my view, that we do not know even whether the Standard Trading Terms and Conditions which the parties incorporated in the present case are still current.

There is no evidence that this version of the Standard Trading Terms and Conditions is in widespread use or that the relevant terms in the version now in use are the same as those used in the present case. That would not be enough to make it a point of law of general public importance.

Therefore, in my view, there is not enough before us to enable us to say that the matter raises a point of law of general public importance.

[89] There is a reason why the drafters of the Constitution Seventeenth Amendment Act, which expanded this Court’s jurisdiction, chose to draft section 167(3)(b)(ii) of the Constitution in the way they did. They sought to make sure that, where a matter does not raise a constitutional issue but raises a point of law, that alone should not be enough to give this Court jurisdiction. If they considered that, if a matter raised a point of law, that should be enough to give this Court jurisdiction, they would have said so. They did not say so but decided to add other requirements that would need to be met before this Court could have jurisdiction where a matter does not raise a constitutional issue.

Those additional requirements are that the point of law must—

(a) be arguable;
(b) be of general public importance; and
(c) be a point of law that ought to be considered by this Court.

[90] The whole point that the drafters of the Constitution Seventeenth Amendment Act sought to make was that, if a matter does not raise a constitutional issue, there should be stringent requirements before it can be entertained by this Court. These stringent requirements serve a good purpose to ensure that non-constitutional matters that come before this Court truly deserve the attention of the highest Court in the land.

In this case the requirements of section 167(3)(b)(ii) have not been met.

Accordingly, we do not have jurisdiction on the basis of section 167(3)(b)(ii) of the Constitution.

[91] The next question is whether the matter raises a constitutional issue.

That takes me to a point which Fujitsu raised for the first time in this Court which it had not raised in any of the lower courts. That is Fujitsu’s contention that, if clause 17 means that Schenker is exempted from liability for loss suffered by Fujitsu due to the theft of its goods by Mr Lerama, it will be contrary to public policy and should, for that reason, not be enforced.

It is common cause that Fujitsu did not raise this point in any of the courts below and that, in raising it in this Court, it was raising this point for the first time. Counsel for Schenker contended that we should not entertain this point because it had not been raised in the lower courts.

In support of its contention, Schenker’s counsel referred to the judgment of this Court in Tiekiedraai. In Tiekiedraai this Court refused to entertain a point of law which had not been raised before in the lower courts. This Court said that it would have been different “where a point of law is apparent on the papers and the parties simply misunderstood the law. There a court can raise the legal point of its own accord.”

In the next paragraph this Court said:

“That is not the case here. This Court cannot be taxed to consider novel points not raised before simply because of its position as a super-appellate body over all other courts.”

[92] In Barkhuizen this Court had to consider when it could entertain a point of law raised for the first time before this Court.

This Court said:

“The mere fact that a point of law is raised for the first time on appeal is not in itself sufficient reason for refusing to consider it. If the point is covered by the pleadings, and if its consideration on appeal involves no unfairness to the other party against whom it is directed, this Court may in the exercise of its discretion consider the point. Unfairness may arise where, for example, a party would not have agreed on material facts, or on only those facts stated in the agreed statement of facts had the party been aware that there were other legal issues involved. It would similarly be unfair to the other party if the law point and all its ramifications were not canvassed and investigated at trial.”

[93] What is clear from this passage is that one of the requirements which must be met before this Court may entertain a point of law raised by a litigant for the first time on appeal is that the point must be “covered by the pleadings.” Another requirement is that the consideration of that point of law must not involve any unfairness to the other party against whom it is directed.

This Court said that:

“unfairness may arise where, for example, a party would not have agreed on material facts, or on only those facts stated in the agreed statement of facts had the party been aware that there were other legal issues involved. It would similarly be unfair to the other party if the law point and all its ramifications were not canvassed and investigated at trial.”

In Barkhuizen this Court said that, when those requirements have been met, then “this Court may in the exercise of its discretion consider the point.”

[94] It emerges from both this Court’s decisions in Barkhuizen and Tiekiedraai that, if the point of law being raised for the first time in this Court was not covered by the pleadings or was not foreshadowed in the pleadings, this Court will not entertain it. In Barkhuizen this Court entertained a point of law – which was the same as the one being raised in this case, namely, public policy argument – but in that case the point was covered by the pleadings.

In the present case the contract containing the clause that Fujitsu seeks to contend is contrary to public policy was annexed to the pleadings. It was not Schenker’s case that there would be unfairness to it if Fujitsu was allowed to raise the public policy argument. Schenker’s argument was firstly to baldly state without elaboration that it was impermissible for Fujitsu to raise this new argument when it had not raised it in the courts below but secondly to challenge comprehensively the soundness of Fujitsu’s argument based on public policy in case this Court allowed Fujitsu to raise this argument.

With Schenker not having argued that there would be any unfairness if Fujitsu is allowed to argue this point, the matter must be decided on the basis that there will be no unfairness. In this case the point was foreshadowed in the pleadings.

[95] Furthermore, I think that the nature of the point of law that Fujitsu seeks to argue is a point of law that this Court would have been entitled to raise mero motu. Fujitsu’s point of law is that, if the correct interpretation of clause 17 is that Schenker is exempted from liability for loss arising from the theft of Fujitsu’s high-value goods by one of Schenker’s employees, then clause 17 is contrary to public policy and unenforceable. A court that is asked to uphold any agreement or clause in an agreement has an obligation to satisfy itself that the agreement or clause is not contrary to public policy or is not illegal before it can uphold it because, if it is contrary to public policy or if it is illegal, it will not be enforceable.

Therefore, I think we should consider this point. I do not think that there would be any unfairness to Schenker because this is not a point which would have required any evidence to have been led in the court of first instance.

This then is the point that gives this Court jurisdiction in this matter because, as is clear from this Court’s judgment in Barkhuizen, a contention that an agreement or a clause in an agreement is contrary to public policy raises a constitutional issue.

Leave to appeal

[96] Fujitsu now applies to this Court for leave to appeal against the decision of the Supreme Court of Appeal.

Leave to appeal should be granted because it is in the interests of justice to determine whether a contractual provision which seeks to exempt a contracting party from liability for loss caused by the deliberate wrongdoing of an employee is contrary to public policy.

This legal question is one of general public importance, apart from also being a constitutional issue. In the course of answering the public policy question, it is first necessary to interpret clause 17 in order to decide whether it does, indeed, purport to exempt the contracting party, Schenker, from liability for loss caused by the deliberate wrongdoing of an employee because, only in that event, does the public policy issue arise. This question of interpretation is thus necessarily ancillary to the matter giving us jurisdiction. As I said earlier, the interpretation of clause 17 as a stand alone exercise is not a question of law of general public importance. However, it has to be addressed in this case in order to reach the public policy issue. Furthermore, there are reasonable prospects of success. It is, therefore, in the interests of justice that leave to appeal be granted.

The appeal

[97] Before us the issue is whether or not clause 17 of the Standard Trading Terms and Conditions means that Schenker is not liable for Fujitsu’s loss occasioned by the theft of Fujitsu’s high-value goods by Mr Lerama.

If clause 17 means that Schenker is not liable, the appeal by Fujitsu must fail.

If that is not what clause 17 means, Fujitsu’s appeal must be upheld and the Supreme Court of Appeal’s decision must be set aside and replaced with an order dismissing Schenker’s appeal to that Court. If that is done, the decision of the High Court will stand.

[98] Clause 17 has been quoted above. Ordinarily, it would not be necessary to quote clause 17 again because it has been quoted above. However, given its centrality to the determination of the appeal, I consider it convenient to quote it again. It reads:

“GOODS REQUIRING SPECIAL ARRANGEMENTS
Except under special arrangements previously made in writing the Company will not accept or deal with bullion, coin, precious stones, jewellery, valuables, antiques, pictures, human remains, livestock or plants. Should the customer nevertheless deliver such goods to the Company or cause the Company to handle or deal with any such goods otherwise than under special arrangements previously made in writing the Company shall incur no liability whatsoever in respect of such goods, and in particular, shall incur no liability in respect of its negligent acts or omissions in respect of such goods. A claim, if any, against the Company in respect of the goods to in this clause 17 shall be governed by the provisions of clause 40 and 41.”

[99] I draw attention to the heading of clause 17. The heading is: “GOODS REQUIRING SPECIAL ARRANGEMENTS”.

That tells the reader that clause 17 is a clause that applies to goods that require special arrangements. In the first sentence of clause 17 a list of goods is given. Those are the goods that require special arrangements. This means that, once goods fall within the list of goods in the first sentence of clause 17, they are subject to clause 17.

It is common cause that the goods that Mr Lerama stole fell within the list of the goods in the first sentence of clause 17.

In other words, the loss for which Fujitsu seeks to hold Schenker liable is loss of goods which fell within the list of goods in the first sentence of clause 17.

[100] Fujitsu contends that clause 17 does not apply to cases of deliberate or intentional conduct such as theft which was the case in this matter.

It refers to clauses 40 and 41 in support of its submission that the agreement could not cover a situation where an employee of Schenker stole a customer’s goods that had been sent to Schenker. Schenker, by contrast, contends that clause 17 is a stand alone clause that deals specifically with a certain category of goods which covered the goods to which Fujitsu’s claim relates. Schenker contends that clause 17 is wide enough to cover a case of a loss of goods as a result of theft by one of its employees.

Schenker contends that Fujitsu was required to make prior special arrangements in writing with Schenker before it sent the goods to Schenker but did not do so and that, for that reason, it could not look to Schenker for the recovery of goods listed in the first sentence of clause 17.

[101] It is difficult to understand why a freight forwarder which wants to protect itself against the risk that may be posed by its employees in the course of dealing with or handling or processing a customer’s goods would want a clause in a contract that protects it against the risk of negligent conduct by its employees but does not protect it against the risk of intentional conduct such as theft on the part of its employees.

What it would amount to is this: I will not be liable to you if any of my employees negligently drops one of your computers and it gets damaged but I will be liable to you if the same employee steals that computer. It is difficult to understand how any business person who wanted such an exemption clause would think such a clause would benefit them.

[102] In certain cases, the negligent act or omission may result in lesser damages than intentional conduct such as theft. Theft would entail stealing the whole computer. Negligent conduct may mean that a computer that is dropped gets damaged but may be repaired and can thereafter still be used whereas the theft of a computer will mean that the whole computer is gone and the costs of buying another one to replace it would be more than the costs of repairing the one that is dropped due to negligence. Logic dictates that, if a business person had to choose what to avoid in terms of liability, it would be the liability that might cost them more than that which would cost them less. On the approach of Fujitsu,

Schenker sought to protect itself against a lesser risk and not to protect itself against a bigger risk. Taken to its logical conclusion, this approach means that Schenker would have wanted to take out an insurance policy to cover the risk of liability for negligent acts or omissions but would not have wanted to take out an insurance policy to cover itself against liability for theft on the part of its employees or any other third party.

To my mind, it would not be business-like and would not make sense for a business person or entity to protect itself against the negligent conduct but not against intentional conduct such as theft. This construction of the agreement is neither sound nor sustainable.

[103] Once it is common cause that the goods to which the claim relates fall within the list in the first sentence of clause 17, then whether Schenker is or is not liable will depend upon whether Fujitsu satisfied the requirements of clause 17 which had to be satisfied before Schenker could be held liable.

[104] What requirements did clause 17 lay down or prescribe before Schenker could be liable for loss or damage or theft of goods listed therein? To answer that question, a clear understanding of what clause 17 means is required. Clause 17 is a long clause. It is not broken into sub-clauses. It is easy to understand it if one breaks it up, for convenience, to three sub-clauses, namely sub-clauses 17(1), (2) and (3).

I do this below.

With sub-clauses (1), (2) and (3), clause 17 reads as follows:

“17. GOODS REQUIRING SPECIAL ARRANGEMENTS
17.1. Except under special arrangements previously made in writing the Company will not accept or deal with bullion, coin, precious stones, jewellery, valuables, antiques, pictures, human remains, livestock or plants.

17.2. Should the customer nevertheless deliver such goods to the Company or cause the Company to handle or deal with any such goods otherwise than under special arrangements previously made in writing the Company shall incur no liability whatsoever in respect of such goods, and in particular, shall incur no liability in respect of its negligent acts or omissions in respect of such goods.

17.3. A claim, if any, against the Company in respect of the goods referred to in this clause 17 shall be governed by the provisions of clause 40 and 41”. (Emphasis added.)

[105] From the above sub-clauses of clause 17, the following is apparent:

(a) Sub-clause (1) – which is the first sentence of clause 17 – makes it clear that the parties agreed that Schenker would not deal with the goods listed in that sentence except if Fujitsu made prior special arrangements in writing. This means that, if prior special arrangements in writing were not made, Schenker would not deal with such goods. If prior special arrangements were made with Schenker in writing, Schenker would deal with such goods and that would be on the terms and conditions of the special arrangements agreed upon between the parties.

(b) Sub-clause (2) – which is the second sentence of clause 17 – makes it clear that if, despite the fact that Schenker would not deal with the goods listed in the first sentence of clause 17 if no prior special arrangements were made in writing, Fujitsu, nevertheless, sent such goods to Schenker without complying with the requirement of prior special arrangements in writing and Schenker dealt with such goods, Schenker would not incur any liability whatsoever. This is understandable because Fujitsu would not have complied with the requirement of making prior special arrangements in writing with Schenker before sending such high-value goods to Schenker. Fujitsu agreed that, if it did not make prior special arrangements in writing with Schenker before it sent high-value goods to Schenker, Schenker would not be liable.

(c) Sub-clause (3) – which is the third sentence of clause 17 – deals with a situation where there is a claim under clause 17. It provides that, if there is a claim in terms of clause 17, such a claim will be governed by clauses 40 and 41. A claim under clause 17 would arise only if Fujitsu had made prior special arrangements in writing with Schenker as contemplated in clause 17 before it sent high- value goods to Schenker. If no prior special arrangements were made in writing with Schenker, no claim would arise under clause 17. In this case it is common cause that Fujitsu did not make any prior special arrangements in writing with Schenker before sending the goods in question to Schenker and that those goods fell within the list in the first sentence of clause 17. For that reason, clauses 40 and 41 have no application in the present case.

[106] The upshot of the agreement between the parties is that they decided to have one liability dispensation for normal goods that Fujitsu was entitled to send to Schenker in terms of their business dealings and a different liability dispensation for a special category of goods.

The special category of goods was the category of goods listed in the first sentence of clause 17. The normal goods would be goods other than those listed in the first sentence of clause 17. The parties decided that in respect of normal goods that Fujitsu would send to Schenker, Fujitsu would not need to make any prior special arrangements in writing with Schenker in order for the latter to be liable for any loss or theft or damage to such goods.

However, the parties decided that in respect of the special category of goods – goods of high-value – Schenker would only be liable if Fujitsu had made prior special arrangements in writing with Schenker before sending such goods to Schenker. The parties agreed that there would be a need for prior special arrangements to be made in writing first before Schenker could be liable. In other words, the parties agreed that Schenker’s liability in respect of the special category of goods would depend on special arrangements that would have to be made between the parties in writing before Fujitsu could send such goods to Schenker.

[107] Clause 17 does not mean that Schenker was exempted from liability under all and any circumstances if goods falling within clause 17 were damaged or lost or stolen while they were being handled by it or by its employees. The clause allowed Schenker to be liable but only if Fujitsu had made prior special arrangements in writing with Schenker.

However, if Fujitsu did not make prior special arrangements in writing with Schenker in respect of goods falling within the list of goods in clause 17, then Schenker would not be liable. That was the deal between Fujitsu and Schenker as reflected in clause 17. That deal between the parties must be upheld unless there are valid reasons why it should not be upheld.

[108] It also seems that clause 17 creates reciprocal obligations for the parties. Clause 17 only contemplates liability on the part of Schenker if Fujitsu had made prior special arrangements in writing. Fujitsu has to show that it made special arrangements in writing with Schenker before Schenker can be held liable. No special arrangements, no liability for Schenker.

[109] I need to say something about the reference to negligence in clause 17 on which Fujitsu and the first judgment place some reliance. I do not think it was or is common cause that Mr Lerama was acting “in the course and scope of his employment”.

Vicarious liability was in dispute on the pleadings, at the pre-trial conference and at the trial. The High Court’s judgment recorded Schenker’s denial of vicarious liability and the question was then addressed by the High Court.

The High Court found that Mr Lerama was not acting within the course and scope of his employment but found against Schenker on the extended creation-of-risk basis.

The Supreme Court of Appeal said that vicarious liability was conceded in the High Court. It seems to have been conceded by the time of the application for leave to appeal. Certainly, in its written submissions before this Court Schenker conceded vicarious liability. The finding and concession were not that Mr Lerama had acted within the course and scope of his employment but that there was vicarious liability.

[110] Given the approach to vicarious liability in K as subsequently explained in F it seems to me that “within the course and scope of employment” is no longer the test in deviation cases, the focus now being on whether there was a sufficient connection between the conduct of the delinquent employee and their employment to render the employer liable. The establishment of this connection is a normative assessment.

[111] Fujitsu contended, which contention the first judgment accepts, that clause 17 cannot help Schenker because Mr Lerama was not executing the agreement between the parties when he stole Fujitsu’s high-value goods. Fujitsu contends that clause 17 only applies in the execution of the agreement.

[112] In support of its contention Fujitsu referred to clause 3 of the agreement. Clause 3 reads:

“APPLICATION OF TRADING TERMS AND CONDITIONS
Subject to clause 5, all and any business undertaken or advice, information or services provided by the Company, whether gratuitous or not, is undertaken or provided on these trading terms and conditions (as amended from time to time).”

[113] Fujitsu then submitted that clause 3 means that the Standard Trading Terms and Conditions apply if the activity in issue can be said to be “business undertaken” or “advice” or “information” or “services provided by Schenker”. It submitted that, if an activity falls outside any of these terms, the Standard Trading Terms and Conditions do not apply. Fujitsu said that, if the conduct is not the performance of the contract – that is, in the undertaking of business or giving advice, information or services – the exemption of liability in clauses 17 and 40 does not apply.

[114] There is no merit in this contention. If it were valid, it would mean that clause 17 protects Schenker from liability when, for example, its employee acts in accordance with the contract but not when he or she acts in breach of the contract. Exemption from liability is required for conduct that is in breach of the contract or law and not for conduct that is in line with the contract and with the law. A clause like 17 is required for criminal and wrongful conduct instead of lawful and acceptable conduct. An employer needs a clause that exempts him or her from liability arising from his or her employee’s conduct not because he thinks that the employees will behave as expected in terms of the agreement with a client or customer but because there is a risk that they may behave contrary to what is expected of them in terms of the agreement. If Fujitsu’s argument were valid, there would be very little value in exemption clauses such as clause 17.

[115] Furthermore, even if it was permissible to have regard to whether Mr Lerama was executing the agreement when he stole Fujitsu’s high-value goods, the position is that, until Mr Lerama deviated from the route he was supposed to follow in order to take the goods where he was supposed to take them, every step that he had taken was a step he would have taken in executing the agreement. In this regard it must be remembered that, in response to Fujitsu’s request for further particulars for trial, Schenker said: “[Schenker] did request Lerama, in writing, to collect certain goods between 19 and 23 June 2012.” This reference is a reference to goods that included Fujitsu’s goods that Mr Lerama stole. So, except for the fact that Mr Lerama may have gone to collect the goods with the intention to steal them, the position is that he had been instructed by Schenker to collect them for Schenker’s business but he decided to steal them. Therefore, there should be no suggestion that Schenker had not instructed Mr Lerama to collect the goods for Schenker’s business.

[116] Fujitsu’s contention and the first judgment’s conclusion that Schenker’s liability is not excluded because clause 17 only excludes Schenker’s liability where its employee is executing the agreement between the parties is in essence similar to an argument that police officers who rape a member of the public to whom they have given a lift are not executing their duties and that, therefore, the Minister of Police is not vicariously liable for their unlawful conduct. However, in K and F this Court concluded that the police officers involved in raping K and F had acted within the course and scope of their employment or that their conduct was sufficiently connected with their employment as police officers to justify holding the Minister of Safety and Security vicariously liable for their unlawful conduct.

[117] In this regard reference can be made to what O’Regan J said in K including the excerpts she quoted from Watermeyer CJ’s judgment in Feldman. O’Regan J said in K:

“It is clear that an intentional deviation from duty does not automatically mean that an employer will not be liable. In the early leading case of Feldman v Mall, a driver of the appellant’s vehicle had, after delivering the parcels he had been instructed to deliver, driven to attend to some personal matters of his own during which time he consumed enough beer to render him unable to drive the vehicle safely. On his way back to his employer’s garage, he negligently collided with and killed the father of two minor children. The case concerned a dependant’s claim for damages and the court, by a majority, held the employer to be vicariously liable.

In his judgment holding the employer liable, Watermeyer CJ captured the test for vicarious liability in deviation cases as follows:
‘If an unfaithful servant, instead of devoting his time to his master’s service, follows a pursuit of his own, a variety of situations may arise having different legal consequences.

(a) If he abandons his master’s work entirely in order to devote his time to his own affairs then his master may or may not, according to the circumstances, be liable for harm which he causes to third parties. If the servant’s abandonment of his master’s work amounts to mismanagement of it or negligence in its performance and is, in itself, the cause of harm to third parties, then the master will naturally be legally responsible for that harm; there are several English cases which illustrate this situation and I shall presently refer to some of them. If, on the other hand, the harm to a third party is not caused by the servant’s abandonment of his master’s work but by his activities in his own affairs, unconnected with those of his master, then the master will not be responsible.

(b) If he does not abandon his master’s work entirely but continues partially to do it and at the same time to devote his attention to his own affairs, then the master is legally responsible for harm caused to a third party which may fairly, in a substantial degree, be attributed to an improper execution by the servant of his master’s work, and not entirely to an improper management by the servant of his own affairs.’

In a later passage in the judgment, Watermeyer CJ continued as follows:

‘This qualification is necessary because the servant, while on his frolic may at the same time be doing his master’s work and also because a servant’s indulgence in a frolic may in itself constitute a neglect to perform his master’s work properly, and may be the cause of the damage.’

Watermeyer CJ explained the reason for the rule as follows:

‘I have gone into this question more fully than seems necessary, in the hope that the reasons which have been advanced for the imposition of vicarious liability upon a master may give some indication of the limits of a master’s legal responsibility, and the reasons are to some extent helpful. It appears from them that a master who does his work by the hand of a servant creates a risk of harm to others if the servant should prove to be negligent or inefficient or untrustworthy; that, because he has created this risk for his own ends he is under a duty to ensure that no one is injured by the servant’s improper conduct or negligence in carrying on his work and that the mere giving by him of directions or orders to his servant is not a sufficient performance of that duty. It follows that if the servant’s acts in doing his master’s work or his activities incidental to or connected with it are carried out in a negligent or improper manner so as to cause harm to a third party the master is responsible for that harm.’

Tindall JA formulated the approach in slightly different terms:

‘In my view the test to be applied is whether the circumstances of the particular case show that the servant’s digression is so great in respect of space and time that it cannot reasonably be held that he is still exercising the functions to which he was appointed; if this is the case the master is not liable. It seems to me not practicable to formulate the test in more precise terms; I can see no escape from the conclusion that ultimately the question resolves itself into one of degree and in each particular case a matter of degree will determine whether the servant can be said to have ceased to exercise the functions to which he was appointed.’

In subsequent cases the approaches advocated by Watermeyer CJ and Tindall JA and concurred in by Fischer AJA in Feldman’s case were held to constitute the majority judgment of the court. Both judgments have been repeatedly cited in subsequent cases and variations of the approach suggested have been adopted and applied.” (Footnotes omitted.)

[118] Of course, I appreciate that Fujitsu is raising this point to argue that Schenker is liable – not that it is not liable – but the principle is applicable. Fujitsu is advancing this argument to try and escape the consequences of its failure to make special arrangements with Schenker which clause 17 required it to make before it sent to Schenker the high-value goods if it wanted to look to Schenker for the recovery of its loss.

Fujitsu’s public policy argument

[119] Fujitsu submitted that in so far as this Court may hold that clause 17 of the agreement exempts Schenker from liability for loss arising from the theft of its employees, it is contrary to public policy and is, therefore, unenforceable. It, therefore, urged this Court not to enforce the clause. In Barkhuizen this Court had this to say about public policy:

“What public policy is and whether a term in a contract is contrary to public policy must now be determined by reference to the values that underlie our constitutional democracy as given expression by the provisions of the Bill of Rights. Thus a term in a contract that is inimical to the values enshrined in our Constitution is contrary to public policy and is, therefore, unenforceable.”

[120] The Court went on to say in the same case:

“In general, the enforcement of an unreasonable or unfair time limitation clause will be contrary to public policy. Broadly speaking, the test announced in Mohlomi is whether a provision affords a claimant an adequate and fair opportunity to seek judicial redress. Notions of fairness, justice and equity, and reasonableness cannot be separated from public policy. Public policy takes into account the necessity to do simple justice between individuals. Public policy is informed by the concept of ubuntu. It would be contrary to public policy to enforce a time limitation clause that does not afford the person bound by it an adequate and fair opportunity to seek judicial redress.”

[121] This Court went on deal with how fairness is to be determined in the context of public policy. It said:

“There are two questions to be asked in determining fairness. The first is whether the clause itself is unreasonable. Secondly, if the clause is reasonable, whether it should be enforced in the light of the circumstances which prevented compliance with the time limitation clause.
The first question involves the weighing-up of two considerations. On the one hand, public policy, as informed by the Constitution, requires, in general, that parties should comply with contractual obligations that have been freely and voluntarily undertaken. This consideration is expressed in the maxim pacta sunt servanda which, as the Supreme Court of Appeal has repeatedly noted, gives effect to the central constitutional values of freedom and dignity. Self-autonomy, or the ability to regulate one’s own affairs, even to one’s own detriment, is the very essence of freedom and a vital part of dignity. The extent to which the contract was freely and voluntarily concluded is clearly a vital factor as it will determine the weight that should be afforded to the values of freedom and dignity. The other consideration is that all persons have a right to seek judicial redress. These considerations express the constitutional values which must now inform all laws, including the common law principles of contract.
The second question involves an inquiry into the circumstances that prevented compliance with the clause. It was unreasonable to insist on compliance with the clause or impossible for the person to comply with the time limitation clause. Naturally, the onus is upon the party seeking to avoid the enforcement of the time limitation clause. What this means in practical terms is that once it is accepted that the clause does not violate public policy and non-compliance with it is established, the claimant is required to show that, in the circumstances of the case there was a good reason why there was a failure to comply.
It follows, in my judgement, that the first inquiry must be directed at the objective terms of the contract. If it is found that the objective terms are not inconsistent with public policy on their face, the further question will then arise which is whether the terms are contrary to public policy in the light of the relative situation of the contracting parties. In Afrox, the Supreme Court of Appeal recognised that unequal bargaining power is indeed a factor which together with other factors, plays a role in the consideration of public policy. This is a recognition of the potential injustice that may be caused by inequality of bargaining power. Although the court found ultimately that on the facts there was no evidence of an inequality of bargaining power, this does not detract from the principle enunciated in that case, namely, that the relative situation of the contracting parties is a relevant consideration in determining whether a contractual term is contrary to public policy. I endorse this principle. This is an important principle in a society as unequal as ours.” (Emphasis added.)

[122] Applying the approach outlined by this Court in Barkhuizen, I would say that there is nothing unfair or unreasonable about the terms of clause 17. On the contrary, the terms of clause 17 are very fair to both parties. Schenker took the position that, as a general rule, it would not handle such goods unless Fujitsu made special prior arrangements in writing with it before it sent the goods. This was obviously to avoid the risk that would come with handling goods of such high-value. This meant that, without any prior special arrangements having been made in writing, there would be no handling of such high-value goods by Schenker. Then the parties realised that, notwithstanding the requirement that Schenker would only handle such high-value goods if prior special arrangements had been made in writing between the parties, there could be situations where Fujitsu sent high-value goods to Schenker without having made prior special arrangements in writing with Schenker and Schenker did actually handle such goods. The parties agreed, as reflected in the second sentence of clause 17, that in such a case Schenker would not incur any liability whatsoever. If Fujitsu chose not to make prior special arrangements in writing with Schenker, it chose to voluntarily take the risk that, if something happened to the goods, including if they were stolen, it would take responsibility for its choice. Clause 17 means that, if Fujitsu made special arrangements with Schenker, Schenker could take out an insurance policy to cover the risk and pass on the cost to its customer by way of a higher fee but, if Fujitsu elected to send high-value goods to Schenker without making prior special arrangements in writing with Schenker, it and it alone bore the risk.

[123] As will have been seen in Barkhuizen the principle is that contracts that have been voluntarily and freely concluded should, as a general rule, be enforced unless there is something contrary to public policy about them. Furthermore, there is no suggestion that Fujitsu was in a weaker bargaining position than Schenker when the agreement was concluded. There is nothing unfair or unreasonable about clause 17. For that reason it is not contrary to public policy. Also, Fujitsu has not demonstrated why it did not comply with clause 17 by making prior special arrangements with Schenker before it sent the goods of high-value to Schenker. To make special arrangements would have been the easiest thing for Fujitsu to make but it did not make any and has offered no reason or explanation as to why it did not make the special arrangements with Schenker.

[124] Fujitsu’s contention that clause 17 does not cover intentional conduct such as theft by Schenker’s employees because that would be contrary to public policy is not supported by the authorities. Instead, the authorities reject the proposition that it is contrary to public policy to have a clause in a contract which exempts one of the parties from liability for loss arising from the intentional conduct of its employees such as theft. I refer to a few cases below in this regard.

[125] In Wells the respondent had sued the appellant for the purchase price of a plant in respect of which the appellant had concluded a sale agreement with the respondent. The appellant sought to avoid liability by alleging that the conclusion of the sale agreement had been induced by certain misrepresentations made to him by the respondent’s salesman. The appellant had signed an order which included the following:

“I hereby acknowledge that I have signed the order irrespective of any representations made to me by any of your representatives, and same is not subject to cancellation by me.”

[126] On appeal the Appellate Division held that the appellant was bound by the undertaking he had signed. This means that the Appellate Division upheld an undertaking not to rely on misrepresentations. However, the Court said that, had the representations not only have been incorrect but also fraudulent, the appellant would have escaped liability because courts will not enforce a stipulation to condone fraudulent conduct. The Appellate Division said:

“On grounds of public policy the law will not recognise an undertaking by which one of the contracting parties binds himself to condone and submit to the fraudulent conduct of the other. The Courts will not lend themselves to the enforcement of such a stipulation; for to do so would be to protect and encourage fraud.”

[127] It later said:

“Had the appellant alleged that the representations were not only untrue but fraudulent, he might, as a matter of pleading, have escaped the operation of the obnoxious clause. But he has not done so. And the language of the undertaking which he subscribed covers all non-fraudulent representations.”

[128] In Goodman Brothers, Cloete J, with Streicher J concurring, pointed out, correctly in my view, that Innes CJ’s statement in Wells referred to above could not be “interpreted as meaning that a fraud by a salesman would have been a fraud by the seller (as opposed to a fraud for which the seller would, in law and on grounds of public policy, have been liable) as such an interpretation would be contrary to other (and later) decisions of the Appellate Division”. In Goodman Brothers the court also said:

“Where a servant, acting within the scope of his authority makes a fraudulent misrepresentation and thereby induces another party to contract with his master, the master is liable. But ‘the liability of the principal is not based upon any constructive fraud on his part. Fraud is a wilful act, and therefore the principal cannot be held to be guilty of fraud of his servant even though he may be responsible for it’ (per Wessels JA in Ravene Plantations Ltd v Estate Abrey 1928 AD 143 at 153, and see also the remarks of Centlivres CJ in Levy v Central Mining & Investment Corporation Ltd 1955 (1) SA 141 (a) at 148B – D).”

[129] The Court also said in Goodman Brothers:

“An agent who concludes a contract for and on behalf of his principal, does so for the benefit of his principal. To allow the principal to take advantage of fraudulent misrepresentations by relying on a clause excluding liability for misrepresentations by the servant or agent, would encourage fraud, as Innes CJ said in the Wells case supra at 72 in the passage already quoted.”

[130] It also went on to say:

“The position is, however, different in the case of theft by an employee of goods that have been entrusted to his employer. Like the fraud, the theft by the servant is not theft by the employer; but, unlike the fraudulent misrepresentation, the theft is not for the benefit of the employer but for the benefit of the employee. To allow the employer to rely on a clause excluding liability in the case of a theft by an employee would not encourage theft. The reason is obvious; it is, ex hypothesi, the dishonest employee, and not the contracting party who stipulated for the exemption clause, who will benefit; and there is no greater risk of a theft being committed because the employer has stipulated for an exemption clause than there would be had he not done so.”

[131] In Fibre Spinners & Weavers the defendant, which was the respondent on appeal, was unable to deliver to the plaintiff, the appellant on appeal, grainbags it had stored for reward in terms of a contract of deposit between itself and the plaintiff because the grainbags had been stolen by one of its employees. In terms of a letter that formed part of the contract between the parties the respondent was “absolved from all responsibility for loss or damage howsoever arising in respect of the grainbags, in consideration for the respondent, inter alia, arranging and maintaining all risks insurance policy, covering the grainbags.”

[132] Counsel for the Government of the Republic of South Africa in the Fibre Spinners & Weavers matter submitted that the above exemption could not be construed so as to exclude liability caused by wilful acts of the defendant whether of a delictual nature or constituting a breach of contract. The Court, through Wessels ACJ, said that the principle contended for by counsel for the Government was not relevant to the matter before it because it was not part of the Government’s case that the defendant was in any manner guilty of any form of wilful misconduct.

The Court said:

“The defendant was unable to deliver the grainbags in question to the plaintiff because they had been stolen by its employee (the late RF Milburn) in the circumstances set out herein before. The theft was not an act committed by the defendant but one committed by its employee, who was required to attend to the safekeeping of the grainbags in the defendant’s warehouse within the scope, and in the ordinary course, of his employment as its chief security officer. In the circumstances the defendant (as employer) may, under the common law, be liable as bailee to compensate the plaintiff for the loss or damage to, the property in question because it is vicariously responsible for the tortious conduct of its employee. See Feldman (Pty) Ltd v Mall 1945 AD 733 and South British Insurance Co v Du Toit 1952 (4) SA 313 (SR) at 318 D – E. The question here is, however, whether or not such liability was excluded by the terms of paragraph 2 of the above mentioned letter dated 4 November 1969.”

[133] The Appellate Division held that the exemption clause operated within a limited field, namely where the insurance policy was in force and where the bags were stored in the premises referred to in paragraph 2 of the letter dated 14 November 1969. What the Appellate Division did in Fibre Spinners & Weavers was to draw a distinction between an exemption clause which would exempt a contracting party from liability for loss arising from its own wilful misconduct such as theft and a case where an exemption clause sought to exempt a contracting party from liability for loss arising from the wilful misconduct of its employees such as theft. The Court made it clear that an exemption clause purporting to exempt a bailee from liability for loss or damage arising from its own wilful conduct would not be enforceable because it would be contrary to public policy. The Court did not extend that to a case where an exemption clause exempted an employer from liability for loss or damage to property arising from the wilful misconduct (for example theft) of its employees or agents.

[134] The Court accepted, even if by implication, that a clause in a contract that exempted a contracting party from liability for loss arising from the wilful misconduct of its employees such as theft is not contrary to public policy. The Court construed paragraph 2 of the letter of 14 November 1969 and concluded that the wording was wide enough to exempt Fibre Spinners & Weavers from liability for loss arising from the theft of the grainbags by its employee. Wessels ACJ also added: “In construing the agreement in question, it must be borne in mind that the exemption was made conditional upon the defendant ‘arranging and keeping in force’ prescribed insurance with plaintiff’s ‘interest properly noted in the policies’”. He later said: “As I see it, the intention of the parties was to substitute in plaintiff’s favour a right of recourse against the insurance company in the place of such rights of recourse as plaintiff had against defendant as bailee.” This arrangement that was made by the parties in Fibre Spinners & Weavers is the kind of special arrangement that could have been agreed upon between Fujitsu and Schenker if, as required by clause 17, Fujitsu had made special arrangements with Schenker before it sent its high-value goods to Schenker.

[135] I agree with Cloete J in Goodman Brothers that Wessels ACJ did not in Fibre Spinners & Weavers say that Fibre Spinners & Weavers could not be exempted from liability for loss arising out of the intentional conduct of its employees.

[136] In Rosenblum a client of the First National Bank (FNB) had concluded an agreement with FNB in terms of which he rented a safe deposit box from FNB in which he was allowed to store certain items for a small annual fee. The safe deposit box was kept in the bank. The client’s contents in the safe deposit box were stolen by the bank’s employees, and in terms of the agreed statement of facts it was recorded that those employees had been acting within the course and scope of their employment. The theft occurred as a result of the negligence of the bank’s staff. Clause 2 of the agreement between the parties was relied upon by the bank to avoid liability. Clause 2 was an exemption clause. It read:

“The bank hereby notifies all its customers that while it will exercise every reasonable care, it is not liable for any loss or damage caused to any article lodged with it for safe custody whether by theft, rain, flow of storm water, wind, hail, lightning, fire, explosion, action of the elements or as a result of any cause whatsoever, including war or riot damage, and whether the loss or damage is due to the bank’s negligence or not.”

[137] Clause 3 was contended to be also relevant. It read:

“The bank does not effect insurance on items deposited and/or moved at the depositor’s request and the depositor should arrange suitable insurance cover.”

[138] In Rosenblum the Supreme Court of Appeal upheld clause 2. This means that the Court held that, while FNB may not have been entitled to protect itself from liability for loss arising from its own theft in the sense of theft committed by those who were the “controlling and directing minds” of the bank, it was permitted to protect itself from liability arising out of theft by its own employees.

The Court said:

“As for the contention that the principle in the case of Wells (supra) prohibits the bank from protecting itself effectively against vicarious liability for thefts or other wilful misconduct committed by its employees in the course and within the scope of their employment, I am unable to accept so widely formulated a proposition. It may well be that public policy will not countenance a situation in which an employer will derive a benefit from such conduct but where, as here, the bank does not seek to benefit, nor has it benefited, from the theft committed by its employee or employees, the position is very different. No authority was cited which clearly supports the proposition that in the latter situation the employer cannot validly seek protection against liability by way of an appropriately worded provision in the contract. Nor am I aware of any. On the contrary, there is authority to the contrary to be found in the decision of the Full Bench in Goodman Brothers (Pty) Ltd v Rennies Group Ltd 1997 (4) SA 91 (W) at 97H – 103G and 106G – 107D. In such a situation the considerations of public policy which require adoption of the principle are absent. The liability is only vicarious and the bank itself (as represented by its controlling or directing minds) has not committed theft or otherwise been guilty of wilful misconduct. In any event, as has been pointed out in Government of the Republic of South Africa v Fibre Spinners & Weavers (Pty) Ltd 1978 (2) SA 794 (A) at 803B, the principle is not relevant to the proper construction of an agreement; it is in essence a rule of law affecting its enforceability.”

[139] In Goodman Brothers a Full Court dealt with a clause in a contract that is similar to clause 17 in substance. In that case the clause in issue was clause 9 of the agreement. The question in that case was whether clause 9 of the agreement between the parties absolved the respondent in that case from any liability to the appellant when goods belonging to the appellant were stolen by employees of the respondent. Clause 9 read:

“Exclusion of Liability
The company shall not accept liability for the handling of any bullion, coins, precious stones, jewellery, valuables, antiques, pictures, bank notes, securities and other valuable documents or articles, livestock or plants, unless special arrangements have previously been made in writing with the company, whether or not it is aware of the nature of the goods, shall bear no liability whatsoever, for or in connection with any loss or damage to the goods.”

[140] In that case, too, employees of the respondent had collected valuable goods from Jan Smuts Airport – now OR Tambo International Airport – for delivery to the appellant’s premises but they stole the goods en route.

Talking about the cumulative effect of clauses 9, 28.1 and 28.2 in the Goodman Brother’s case Cloete J said:

“The cumulative effect of the clauses just quoted is that the respondent can be liable (in limited and defined circumstances) only for gross negligence. Clause 9 places a further limitation on the respondent’s liability where, inter alia, valuables are not to be conveyed: if ‘special arrangements’ for such conveyance are not made, clause 9 says explicitly that the respondent shall bear ‘no liability whatsoever’ – i.e. all grounds of liability are excluded in such a case.”

[141] I am in agreement with the Full Court in Goodman Brothers that there is nothing contrary to public policy with two contracting parties agreeing on exemption of the one party to the agreement from liability and leaving it to the other party to take out an insurance policy, should he wish to do so.

In Goodman Brothers the Full Court said:

“If two contracting parties can, as in the Fibre Spinners & Weavers case, validly agree to exempt the one from liability for the dishonesty of his employees in exchange for arranging a policy of insurance which would indemnify the other for the consequences of a theft by the former’s employees, I see no reason in principle or public policy why contracting parties could not simply agree without more on the exemption of the one from such liability and leave it to the other to take out a policy of insurance, should he wish to do so.”

[142] The making of prior special arrangements in writing by Fujitsu with Schenker before Fujitsu could send to Schenker goods falling within the list of goods given in the first sentence of clause 17 was a condition precedent to Schenker’ s liability for anything that happened to such goods including theft. Once it is accepted, as it is, that Fujitsu did not make such any special prior arrangements in writing, that means that the condition precedent for Schenker’ s liability has not been met or complied with and that, therefore, Schenker is not liable. That conclusion means that the Supreme Court of Appeal’s decision was correct and the appeal must fail with costs including the costs of two counsel. In my view, Goodman Brothers was correctly decided.

Order

[143] In the circumstances I make the following order:

1. Leave to appeal is granted.
2. The appeal is dismissed with costs, including the costs of two counsel.

 

Flynote:

[Interpretation of contracts] — [Exemption clauses] — [Exclusion of liability] — [Public Policy]

Media summary:

The following explanatory note is provided to assist the media in reporting on this case but the note is not binding on the Constitutional Court or any member of the Court.

[1] On Wednesday 28 June 2023 the Constitutional Court handed down its judgment in a matter between a company called Fujitsu Services Core (Pty) Ltd (Fujitsu) and
Schenker South Africa (Pty) Ltd (Schenker) concerning a dispute whether Schenker was liable to Fujitsu for the loss suffered by Fujitsu arising from the theft of Fujitsu’s
consignment of laptop computers in 2012 by an employee of Schenker, one Mr William Bongani Lerama.

[2] Fujitsu imports, sells and distributes laptop computers and accessories. Schenker conducts the business of a warehouse operator, freight forwarder, logistics manager,
distributor and forwarding agent. On 10 July 2009 the two companies concluded an agreement called the National Distribution Agreement. That agreement incorporated the Standard Trading Terms and Conditions of the South African Association of Freight Forwarders. The agreement between the parties contemplated that Schenker would collect, clear and carry Fujitsu’s goods and deliver them in accordance with Fujitsu’s instructions.

[3] Clause 17 of the agreement between the parties effectively identified two categories of goods that Schenker could deal with on behalf of Fujitsu, namely, high
value goods and normal or non-high value goods. High value goods included jewellery, precious stones, valuables and others. Clause 17 provided that Schenker would not accept or deal with high value goods on behalf of Fujitsu except under special arrangements made in writing in advance.

The clause further provided that, should Fujitsu, nevertheless, require Schenker or cause Schenker to handle or deal with goods of high value otherwise than under special arrangements made in writing in advance, Schenker would incur no liability, particularly in respect of its negligent acts or omissions in respect of such goods.

[4] In 2012 Fujitsu caused Schenker to handle or deal with goods of high value or goods listed in clause 17 without having made special arrangements with Schenker in
writing in advance. This is when Mr Lerama stole the consignment of laptops belonging to Fujitsu from an SAA Warehouse. Mr Lerama had been instructed by Schenker to collect the goods and bring them to Schenker.

[5] Fujitsu instituted an action in the High Court against Schenker for the recovery of the loss it had suffered as a result of the theft. Fujitsu argued that Schenker was
vicariously liable for its loss. Schenker argued in the High Court that it was not liable for Fujitsu’s loss because the laptops that were stolen fell within the list of goods in
clause 17 or were goods of high value to which clause 17 of the agreement between the parties applied. Schenker contended that, as Fujitsu had failed to make special
arrangements in advance with Schenker about such goods before requiring Schenker to deal with them or to handle them excused Schenker from liability. Fujitsu argued that clause 17 did not apply to intentional conduct such as theft. Fujitsu argued that clause 17 would apply where the conduct giving rise to the loss was conduct in execution of the contract.

The High Court rejected Schenker’s contention and upheld Fujitsu’s argument. It, accordingly, ordered Schenker to pay damages to Fujitsu. Schenker appealed to the Supreme Court of Appeal. That Court heard the same arguments between the parties. It upheld Schenker’s appeal with costs and set aside the order of the High Court which had ordered Schenker to compensate Fujitsu.

[6] Fujitsu then applied to the Constitutional Court for leave to appeal against the judgment and order of the Supreme Court of Appeal which Schenker opposed. The
parties advanced the same arguments before the Constitutional Court as they had done in the High Court and the Supreme Court of Appeal except that Fujitsu added an
argument to the effect that, if clause 17 was applicable to this case, then it (i.e. clause 17) was contrary to public policy and the Court should not enforce it.

[7] The Constitutional Court produced two judgments, one written by Justice R Mathopo, and the other, by the Chief Justice. Justice Mathopo concluded that
Schenker’s appeal should be dismissed because clause 17 of the agreement did not apply to intentional conduct such as theft and it only applies to situations where the loss occurs in the performance or execution of the contract between the parties. Justice Mathopo also concluded that, if clause 17 applied to the situation in this case, it would be contrary to public policy.

[8] The Chief Justice held that clause 17 was applicable in this case because the loss related to goods listed in clause 17 or goods of high value. He held that clause 17 was
not contrary to public policy because it was legitimate for a business entity to resort to an exemption clause to seek to protect its interests against theft. The Chief Justice said
that this is much more the case where the requirement that a party such as Fujitsu had to comply with in order to ensure that Schenker would be liable if Fujitsu’s high value
goods were stolen.

The Chief Justice said that Fujitsu failed to make special arrangements in advance before it required or caused Schenker to handle or deal with its high value goods and the consequence was that Schenker would not be liable. The Chief Justice said that there is no reason why clause 17 should not apply to intentional conduct because it is legitimate for a business entity to seek to protect itself by way of an exemption clause against intentional conduct such as theft.

[9] The Chief Justice concluded that clause 17 applied even if the conduct giving rise to the loss did not constitute the performance or execution of the agreement.

[10] In the end Justice Mathopo’s judgment was concurred in by Madlanga J, Kollapen J, Majiedt J and Baqwa AJ. Justice Mathopo would have dismissed the appeal.
Maya DCJ, Mhlantla J, Rogers J, Tshiqi J and Mbatha AJ concurred in the Chief Justice’s judgment, thus rendering it the majority judgment.

Accordingly, the Chief Justice dismissed the appeal with costs including the costs of two Counsel.