Ensuring Contractual Fairness in Consumer Contracts after Barkhuizen v Napier 2007 5 SA 323 (CC) – part 1

• Jurisdiction: South Africa
• Published date: 27 May 2019
• Date: 27 May 2019
• Pages: 390-414
• Author: P J Sutherland

390

ENSURING CONTRACTUAL FAIRNESS

IN CONSUMER CONTRACTS AFTER

BARKHUIZEN V NAPIER 2007 5 SA 323 (CC) –

PART 1

PJ Sutherland

BComm LLB PhD

Professor of Mercantile Law, University of Stellenbosch*

1 Introduction

Barkhuizen v Napier1 concer ns a short-term in surance policy, c oncluded

between the appellant (the insured) and a Lloyds syndicate (the insurer),

represented by the res pondent. The insured suffered loss resu lting f rom

damage to his 1999 BMW 328i on 2 December 1999. He duly claimed

R181 000 representing the sum insured on the policy. On 7 January 20 00

the respondent repudiated the claim on the basis that cover was provided for

private use of the vehicle, but that the loss was suffered while it was being

utilized for bu siness purposes.2 The insu red only instituted a ction more than

two years after repu diation, on 8 January 2002.

The summons was met with a special plea alleging that the insurer had

been released f rom liability because of a time -limitation clause in the policy.

The clause was to the effect that a claim of the insured would lapse if he

failed to serve summons on the insu rer within 90 days of being notied of the

insurer’s repudiation of the claim. The insured conceded non-compliance with

the clause, but contended that the provision could not be enforced against him

because it contravened the Constitution of the Republic of South Africa, 1996

(“the Co nstitution”). The que stion was whether the cour t could impugn the

time-limitat ion clause. The parties agre ed to a terse statement of fact s which

set out this basic factua l matrix.

Time-limitation or time- bar clauses have come before courts oft en enough.

Technically, they are resolutive conditions. They extinguish claims upon non-

compliance.3 In some cases the cour ts have given effect to these clauses,4

while in othe rs they interpreted time-bar provisions restrictively and have

* I gratefully ack nowledge the valuable ad vice of Andre van de r Walt, Lourens du Plessis , Durand Cupido

and the anony mous reviewers.

1 2007 5 SA 323 (CC).

2 Paras 2, 182.

3 Reinecke, Van der Merwe, Van Niekerk & Havenga General Principles of Insuranc e Law 2 ed (2002) para

318.

4 Bierman v Mutua l & Federal Verseker ingsmaatskap py Bpk 2004 1 SA 205 (A); Santam Insura nce Ltd v

Cave t/a The Entertain ers and the Record Box 1986 2 SA 48 (A); Smit v Rondal ia Versekeringskorp orasie

van Suid Afri ka Bpk 1964 3 SA 338 (A).

(2008) 19 Stell LR 390

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found them not to be applicable on the facts.5 For some year s there have been

rumblings that time-ba r clauses could be unconstitutional,6 but the issue came

before court for the rst ti me in the Napier case.

The court of rst instance, per De Villiers J, initially found in favour of

the insured.7 The Supreme Court of Appeal overt urned this deci sion in a

unanimous judgment delivered by Cameron JA.8 Thereaf ter, Ngcobo J for

the majority in the C onstitutional Cou rt (Madala J, N kabinde J, Skweyiya

J, Van der Westhuizen J and Yacoob J) upheld the decision of the Supreme

Court of Appeal.9 Two separate concurring judgments were h anded down by

Langa CJ and O’Regan J, while two powerfu l dissent ing judgme nts eman ated

from the pens of Moseneke DCJ (Mokgoro J concur ring) and Sachs J.

2 The application of the Constitution to contracts and the law of

contract according to Napier

The insured i nitially contended that the time-lim itation provi sion was

contrary to public policy as it prescribed an u nreasonably short time for insti-

tuting action and was inconsistent with the right of the insured to seek the

assistance of the cour t. Furthermore, the insu red relied directly on section 34

of the Constitution which provides that:

“Everyone has the right to have any dispute that can be resolved by the application of law decided in

a fair public hearing before a court or, where appropriate, another independent and impartial tribunal

or forum”.10

In the court of rst instance the insured ulti mately preferre d to rely directly

on the Constitution and not on the a rgument that the time limitation offended

against public policy.11

Uncertaint y existed as to whether the Constit ution of the Republic of South

Africa Act 200 of 1993 (“the I nterim Constitut ion”) only engaged relation-

ships that also involved the st ate, and therefore applied vertically, or whether

it also applied horizontally, meaning that it also concerned relationships that

did not involve the state. Accordi ng to De Villier s J the (nal) Constitution

resolved these uncertainties. The Constitution now applies to all law, which

includes contract law, and the judiciary is bound to apply the Constit ution

5 IGI Insurance Co Ltd v Madasa 1995 1 SA 144 (Tk A); Pereira v Marine and Trade insurance Co Ltd 1975

4 SA 745 (A); Smith v Santam Bpk 1996 2 SA 334 (O). See also the discussion in Cape Town Mun icipality

v Allianz Insura nce Co Ltd 1990 1 SA 311 (C).

6 Hopkins “Insu rance Policies and the Bill of Right s: rethinki ng the Sanctity of Contract Par adigm” 2002

SALJ 155 and “ The influ ence of the Bill of Rights on t he enforcement of Contracts” 20 03 De Rebus 22;

Reinecke et al Gen eral Principles o f Insurance Law pa ra 318.

7 Barkhuizen v Napier TPD 17-09-200 4 case n o 33129/01 http://www.osall.org.za/docs/Hotdocs/

Barkhuizen_v_Napier_TPD_Sept2004.pdf (accessed 02-10-2008) Referen ces will be to pages a s set out

in the pdf vers ion of this case.

8 Napier v Barkhuizen 2 006 4 SA 1 (SCA).

9 Barkhuizen v Napier 2 007 5 SA 323 (CC).

10 Para 5. The su mmary of Cameron JA in Na pier v B arkhuizen 2006 4 SA 1 (SCA) pa ra 2 is somewhat

confusin g. He starts off by saying that the i nsured invoked the Const itution. But he then seems to su ggest

that the insure d submitted that (i) the limitatio n was against the public interest becau se it offended against

the common law r ight to invoke the cour ts and (ii) that he relie d on s 34 of Constitution .

11 Barkhui zen v Napier TPD 17-09-2004 cas e no 33129/01 5. This wa s addressed on the pa pers before court

in Barkhui zen v Napier 2007 5 SA 323 (CC) para 8.

BARKHUIZEN v NAPIER 391

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