Barkhuizen v Napier

• Jurisdiction: South Africa

Barkhuizen v Napier
2007 (5) SA 323 (CC)

2007 (5) SA p323

Citation	2007 (5) SA 323 (CC)
Case No	CCT72/05
Court	Constitutional Court
Judge	Langa CJ, Moseneke DCJ, Madala J, Mokgoro J, Ngcobo J, Nkabinde J, O'Regan J, Sachs J, Skweyiya J, Van Der Westhuizen J and Yacoob J
Heard	May 4, 2006
Judgment	April 4, 2007
Counsel	K Hopkins for the applicant; P G Cilliers and S Odendaal for the respondent

Flynote : Sleutelwoorde B

Constitutional law — Common law — Development of — Common-law principles of contract — Contractual terms incompatible with constitutional principles unenforceable for being contrary to public policy — Time-limitation clause in insurance contract unenforceable if resulting in unfairness or C unreasonableness — Import of doctrine of pacta sunt servanda discussed.

Constitutional law — Human rights — Right of access to courts — Whether right unjustifiably limited by time-bar clause in insurance contract — Applicant failing to furnish reasons for non-compliance with clause — Court D therefore unable to determine that enforcement of clause would be unfair and contrary to public policy — Court declining to declare clause unenforceable.

Contract — Legality — Contracts contrary to public policy — Specific instances — Time-bar clause in insurance contract — Clause prescribing time period within which insured required to issue summons in event of insurer's repudiating liability on claim — Time bars E permissible subject to considerations of reasonableness and fairness — Import of doctrine of pacta sunt servanda discussed.

Headnote : Kopnota

When the applicant (the insured) instituted action in a High Court against the respondent (the insurer) on a short-term insurance F contract, the insurer raised a special plea that it had been released from liability under the contract since the applicant had failed to institute the action within the time period specified in the contract, namely 90 days from date of repudiation of the claim. The applicant replicated that the time-limitation clause was unconstitutional and unenforceable because it violated his right under s 34. G

2007 (5) SA p324

of the Constitution of the Republic of South Africa Act, 1996, to have the matter determined by a court. The High Court upheld the A applicant's contention, made an order declaring the time-limitation clause to be inconsistent with s 34 of the Constitution, and dismissed the special plea. On appeal to the Supreme Court of Appeal (SCA), the SCA found that s 34 of the Constitution did not prevent time-bar provisions in contracts that were entered into freely and voluntarily, but that it could not be determined on the evidence whether the clause B under consideration had been entered into freely and voluntarily. The SCA accordingly upheld the appeal (and the special plea). The applicant then approached the Constitutional Court (CC) for leave to appeal against the decision of the SCA. Before the CC the respondent contended, inter alia, that the provisions of s 34 had no application to constitutional challenges to contractual terms. C

Held, that public policy had to be determined with reference to the Constitution, so that a contractual term that violated the Constitution was by definition contrary to public policy and therefore unenforceable. (Paragraph [29] at 333E - F.)

Held, further, that the proper approach to constitutional challenges to contractual terms was to determine whether the term challenged was contrary to public policy as evidenced by our D constitutional values, in particular those found in the Bill of Rights. (Paragraph [30] at 333G - 334A.)

Held, further, that s 34 therefore not only reflected the foundational values that underlay the constitutional order, but also constituted public policy. (Paragraph [33] at 334G.) E

Held, further, that the proper approach to the present matter was to determine whether the time-limitation clause violated s 34 of the Constitution and was thus contrary to public policy. (Paragraph [36] at 335E - F.)

Held, further, that as a matter of public policy, (i) subject to the considerations of reasonableness and fairness, time-limitation clauses in contracts were permissible; and (ii) the right to seek judicial redress (as guaranteed by s 34 of the F Constitution) could be limited in circumstances where it was sanctioned by a law of general application and the limitation was reasonable and justifiable. (Paragraph [48] at 338F - G.)

Held, further, that while it was thus necessary to recognise the doctrine of pacta sunt servanda, courts could decline the enforcement of a time-limitation clause if implementation would result in unfairness or would be unreasonable for being contrary to G public policy. (Paragraph [70] at 344C - D.)

Held, further, as to (i) and (ii), that the test for reasonableness was whether the clause afforded the claimant an adequate and fair opportunity to seek judicial redress. If a contractual term provided for an impossibly short time for the dispute to be referred to a court of law, it was contrary to public policy and unenforceable. (Paragraphs [52] and [54] at 339F and 340E - F.) H

Held, further, as to the requirement of fairness, that there was a two-part test, ie (a) whether the clause itself was unreasonable, and if not, (b) whether it should be enforced in light of the circumstances that prevented compliance. (Paragraph [56] at 341A - B.) I

Held, further, that (a) entailed a weighing-up of the principle pacta sunt servanda and the right of all persons to seek judicial redress. (Paragraph [57] at 341B - D.)

Held, further, that (b) entailed proof by the claimant that he had good reason for is non-compliance with the time-limitation clause. In that regard, the relative equality or inequality of the bargaining positions of the parties was a relevant consideration. (Paragraphs [58], [59] and [65] at 341F, 341I and 343C.) J

2007 (5) SA p325

Held, further, that in the present case (a) the 90-day time limitation was not manifestly unreasonable; and A (b) nor was it manifestly unfair: there was no evidence that the contract had not been freely concluded between parties in equal bargaining positions or that the clause was not drawn to the applicant's attention. In the circumstances enforcement of the clause would not be contrary to public policy. (Paragraphs [63], [66] and [67] at 342H, 343D and 343F.) B

Held, further, that the difficulty in the present case was that the applicant had not furnished the reasons for his non-compliance with the time-limitation clause. Without those facts the Court was unable to say whether the enforcement of the clause against the C applicant would be unfair and thus contrary to public policy. (Paragraph [84] at 348C - F.)

Held, further, that the Court was thus compelled to conclude that enforcement of the clause would not be unjust to the applicant. It followed that the special plea was well taken. (Paragraph [86] at 348H.) Appeal dismissed.

Cases Considered

Annotations

Reported cases

Administrator, Transvaal, and Others v Traub and Others 1989 (4) SA 731 (A): referred to D

Afrox Healthcare Bpk v Strydom 2002 (6) SA 21 (SCA) ([2002] 4 All SA 125): referred to

Alexkor Ltd and Another v The Richtersveld Community and Others 2004 (5) SA 460 (CC) (2003 (12) BCLR 1301): dictum in para [44] applied E

Avex Air (Pty) Ltd v Borough of Vryheid 1973 (1) SA 617 (A): referred to

Bafana Finance Mabopane v Makwakwa and Another 2006 (4) SA 581 (SCA) ([2006] 4 All SA 1): referred to

Bank of Lisbon and South Africa Ltd v The Master and Others 1987 (1) SA 276 (A): dictum at 290 applied

Benning v Union Government (Minister of Finance) 1914 AD 29: referred to F

Brisley v Drotsky 2002 (4) SA 1 (SCA) (2002 (12) BCLR 1229): referred to

Carmichele v Minister of Safety and Security and Another (Centre for Applied Legal Studies Intervening) 2001 (4) SA 938 (CC) (2002 (1) SACR 79; 2001 (10) BCLR 995): referred to

Chief Lesapo v North West Agricultural Bank and Another 2000 (1) SA 409 (CC) (1999 (12) BCLR 1420): referred to G

Cole v Government of the Union of SA 1910 AD 263: dictum at 273 applied

Eastwood v Shepstone 1902 TS 294: referred to

Ex parte Minister of Justice: In re Nedbank Ltd v Abstein Distributors (Pty) Ltd and Others and Donelly v Barclays National Bank Ltd 1995 (3) SA 1 (A): referred to

Ex parte Women's Legal Aid Centre: In re Moise v Greater Germiston Transitional Local Council H 2001 (4) SA 1288 (CC) (2001 (8) BCLR 765): referred to

Gassner NO v Minister of Law and Order and Others 1995 (1) SA 322 (C): referred to

Geldenhuys & Joubert v Van Wyk and Another; Van Wyk v Geldenhuys & Joubert and Another 2005 (2) SA 512 (SCA) ([2005] 2 All SA 460): referred to I

Gibbons v Cape Divisional Council 1928 CPD 198: referred to

Islamic Unity Convention v Independent Broadcasting Authority and Others 2002 (4) SA 294 (CC) (2002 (5) BCLR 433): dictum in para [15] applied

Jajbhay v Cassim 1939 AD 537: dictum at 544 applied. J

2007 (5) SA p326

K v Minister of Safety and Security 2005 (6) SA 419 (CC) (2005 (9) BCLR 835): referred to A

Khumalo and Others v Holomisa 2002 (5) SA 401 (CC) (2002 (8) BCLR 771): dictum in para [10] applied

Lorimar Productions Inc and Others v Sterling Clothing Manufacturers (Pty) Ltd; Lorimar Productions Inc and Others v OK Hyperama Ltd and Others; Lorimar Productions Inc and Others v Dallas Restaurant 1981 (3) SA 1129 (T): referred to B

Mati v Minister of Justice, Police and Prisons, Ciskei 1988 (3) SA 750 (Ck): referred to

Member of the Executive Council for Development Planning and Local Government, Gauteng v Democratic Party and Others 1998 (4) SA 1157 (CC) (1998 (7) BCLR 855): dictum in para [32] applied C

Minister of Law and Order and Another v Maserumule 1993 (4) SA 688 (T): referred to

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