CIV/T/637/02
IN THE HIGH COURT OF LESOTHO
In the matter between:
INFO TECH (PTY) LTD Plaintiff
VS
SUN INTERNATIONAL OF LESOTHO (PTY)LTD Defendant
JUDGMENT
Delivered by the Honourable Mr. Justice WCM Maqutu On the 23rd March, 2005
Plaintiff (a lessee) brought an action of damages against the lessor in respect of the damage to its information technology electrical equipment that was caused by a fire when the lessors servants were maintaining a building in which the equipment was. Plaintiff has in its declaration given the particulars of the negligence that plaintiff accuses the defendants servants of. Defendant in its plea had denied liability in terms the exclusion of liability clause that exonerates the lessor for the negligence of its servants. Defendant has also denied the negligence and put plaintiff to the proof of the damages claimed.
The court has been called upon to settle one preliminary legal issue on the agreed statement of facts. The issue is whether at this stage of the relationship of landlord and tenant clause 18.1 of the sub-lease agreement is still part of the month to month lease that followed after the failure of the parties to renew the one year lease at the end of March 2002. Clause 18 provides:
18 Exclusions of liability
18.1 "Neither the sub-lessor nor any of its directors, agents, employees or servants shall be liable for personal injury to or the death of any person or the loss of or damage to any property of whatsoever nature on the premises or on the property, howsoever
arising or caused and whether by reason of the default or negligence of the sub-lessor or of any of the said persons or otherwise.
18.2 the sub-lessee hereby indemnifies the sub-lessor and its directors agents, employees and servants against any claim of whatever nature which may be made against any of them arising out of any of the aforegoing occurrences.."
Parties are in agreement that the lease was ex lege tacitly renewed. The submission of the plaintiff against clause 18 is succinctly put by Counsel for plaintiff as follows:
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"The crux of the matter is whether the exclusion clause excluding liability of a landlord in Lease Agreements can be renewed
impliedly or tacitly."
Plaintiff claim damages on account of the negligence of defendant's servants that allegedly caused a fire that damaged plaintiffs property.
Defendant says the entire lease was tacitly in operation during the period plaintiff was in occupation on a month to month basis. Consequently clause 18 was in operation. Therefore the defendant is not liable for the damage to plaintiffs property.
The disputed issues such as whether the damage to plaintiffs property was due to the negligence and proof of damages are deferred for evidence depending on the ruling of the court on the preliminary issue.
For purposes of making a ruling I have to proceed on the basis that the defendant's servants have been negligent. The issue for determination is whether their negligence notwithstanding, clause 18 is still part of the ex lege tacit renewal. If that is so the parties take the view that the issue of negligence will have been settled - as defendant is exempted from liability by clause 18.
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Mr Molete for defendant (for effect of exemption clauses) referred me to Central South African Railways v Adlington & Co 1906 TS 964 and South African Railway & Habours v Conradie 1922 AD 137. They are "owners risk cases" in transportation of goods where there are two prices. For "owners risk" a lower price is charged, and for goods requiring special care a higher price is charged. To that extent they were not helpful. They are not for that reason exemption clauses in leases - they are in fact part and parcel of well-grounded carriage of goods contracts and rules of the South African Railways and Harbours. They are fair and balanced.
In South African Railways & Habours v Lyle Shipping Co Ltd 1958 (3) SA 417 Steyn JA after noting that exemption clauses such as "owners risk" are directed against negligence, said they have to be read together with English admiralty laws consequently at page 420 said: " It follows from this that the exemption is not to be construed as excluding negligence." It should be clear from this that clause 18 of the contract if it applies has to be read together with the general law of landlord and tenant to determined whether it is incident to the relation of lessor and lessee in landlord and tenant law and practice where ex lege, a tacit renewal is deemed to have taken place.
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The case of First National Bank ofSA Ltd v Rosenblum & Another 2001 (4) SA 189 extends the exclusion of liability beyond culpa levis to include gross negligence, this case highlights the problem I have to deal with, because it oust the common law which normally would uphold the exclusion of negligence culpa levis but not gross negligence which is negligence culpa lata. As framed clause 18 exempts defendant from gross negligence as well. Consequently it might not follow that gross negligence is not included - as Mr Molete argued in trying to make clause 18 reasonable and fair.
The problem I have with the case of Levy v Blanket Holdings (Private) Ltd 1956 (3) SA 558 on which Mr Matoane relies is that its decision was based on its particular facts not on a general principle. The rubric of the case does not coincide with the facts and Tredgold CJ's analysis of them. The renewal of the lease was part of an ongoing dispute whose settlement contained a counter-offer which might be deemed to exclude the exemption of liability clause. The lessor on the other side was silent for two years while occupation was taken. Later the exemption from liability was insisted upon. There had never been (on the facts) any definite meeting of minds
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between the parties. Consequently in Levy v Blanket Holdings (Private) Ltd at page 563 Tredgold CJ said:-
"When a party to a composite agreement of this sort agrees to renew a lease he, unless the contrary is indicated, agrees to renew the lease and those features of the agreement that are an integral part of the lease, but no more."
In the case before me, there may or may not exist such complications. It might or might not be a simple and straight forward tacit renewal of the lease. Voet XIX .2.9 says:
"To make this more perfectly plain you should know that not only express but also tacit leases are approved in law. On those lines if the lessee does not at all hand back the use on completion of the time which was originally specified for hiring, but persists in using without objection from the lessor, the lease appears to have been prolonged or renewed. It is renewed together with any obligation of pledge which the lessee had established over his own property in security of the original lease or rent.
The exemption clause is not admitted by plaintiff to be part of the original contract when it was ex lege tacitly renewed. Defendant has argued that it is a term of the renewed contract while plaintiff has now disputed that it is a term of the tacit renewal. What Voet X1X.2.9 seem to have had in mind is the landlord's hypothec on the lessee property as security for rent, which is implied in every lease in modern times. This is not the same thing as a term of exclusion of liability in the tacitly renewed contract.
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In Morrison v Angelo Deep Gold Mines Ltd 1905 TS 775 an employee had been employed under a contract that exonerated the employer from liability for negligence of fellow employees towards that employee. That employee was dismissed for a few weeks as redundant. Two weeks later he was reemployed and was (not long thereafter) injured. The employee claimed damages on the ground that the exemption clause was not part of the reemployment contract, the court held it was part of the re-employment contract because it was implied.
The reasoning in Morrison v Angelo Deep Goldmines Ltd in 1905 - which was expressed a century ago - in my view would not readily meet with approval today. The concept of public policy has changed a great deal. There has been a shift towards protecting the weak from the strong. The judgment of Morrison v Angelo Deep Goldmines Ltd revolves inter alia on what Innes CJ said at pages 781 -82 to the effect that:
"The general rule is that any person may waive rights conferred by law solely for his benefit. Cuilibet licet renuntiare juri pro se introducto. But where public as well as individual interests are concerned, where public policy requires the observance of a statute, then the benefit of its provisions cannot be waived by the individual, because he is not the only person interested. Where a duty is imposed by common law, the result of its non-observance may be waived by the person interested unless public policy prevents his so doing. I cannot see that the same
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rule should not apply where the liability arises from the neglect of a duty imposed by statute."
In the case of Administrator Natal v Trust Bank Van Africa Bpk 1979 (3) SA 824 at page 833 to 834 Rumpff CJ quoted with approval the following passage from an English law book by Fleming The Law of Torts 4th Edition at page 136:
"In short, recognition of a duty of care is the outcome of a value judgment, that the plaintiffs invaded interest is deemed worthy of legal protection against negligent interference by conduct of the kind alleged against the defendant. In the decision whether or not there is a duty, many factors interplay: the hand of history, our ideas of morals and justice, the convenience of administering the rule and our social idea's as to where the loss should fall. Hence, the incidence and extent of duties are liable to adjustment in the light of the constant shifts and changes in community attitudes."
In Southernport Development (Pty)Ltd v Transnet Ltd 2005 (2) SA 202 at page 205. The Supreme Court of Appeal noted that private contracts like leases should not be treated in the same manner as contracts of employment where harmony in the work-place is in the national interest. Nevertheless it noted international trends from the European countries like Germany, Italy and Belgium. In particular at page 205 J the following was noted from a passage in the United Stated Uniform Commercial Code:
"Section 205 provides: 'Duty of Good Faith and Fair Dealing -Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement."
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The law and the courts today would consider it to be inequitable to regard exemption clauses as tacitly included in terms that can be considered not "fair dealing" in the performance and enforcement of contractual obligations. Such terms if they are to stand would have to be proved to have been unequivocally agreed by the parties. The court cannot favour the landlord at the expense of the tenant. In other words courts should avoid writing contracts for the parties and stick to their adjudicative role. Courts should enforce clearly negotiated undertakings: Southernport Developments (Pty) Ltd v Transent Ltd at page 21 1D.
What is clear to rne is that the exemption of common law liability through exclusion of liability clauses in contracts would require strict interpretation where rights conferred by the common law are waived by a contract. Consequently where reliance is put on a tacit ex- lege renewal it has to be in terms of what the common law regards as what a lease ex lege is expected to entail, unless the intention of the parties is proved to be otherwise. The onus of proof is on the party that claims the exclusion of liability clauses operate in its favour.
In Cardboard Packing Utilities v Edblo Transvaal Ltd 1960 (3) SA 178 the issue was an exclusion of liability clause in favour of the landlord. It was
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given a strict interpretation. The court gave it a strict interpretation in respect of man-made fire - and per Kuper J the court said at page 180:
"But be that as it may, the conclusion to which I have come is that the clause does not refer to claims of damages due to negligence on the part of defendant's servants in their capacity as agents of the lessor and certainly not to claims for damages due to such negligence when the servants were acting as agents of defendant in the conduct of its ordinary businesses and not as agents of the lessor in the performance of the lessor's obligations in terms of the lease."
In the case before me the servants of the lessor are specifically mentioned in the exclusion of liability clause. In Cardboard Packing Utilities v Edblo Transvaal Ltd they were not specifically mentioned. Damage by fire that was specifically mentioned could be caused by an act of God, or a riot -over which defendant had no control. Man-made fires were not specifically mentioned. The second difference is that the fire broke out when the lessor was discharging his obligations as landlord through servants. Wille's Principles of South African Law page 418 puts it as:
"The lessor must make such repairs to the leased premises as are necessary to maintain them in a condition reasonably fit for the purpose for which they were let."
See also Heerman 's Supermarket (Pty) Ltd v Mona Road Investments (Pty) Ltd 1975 (4) SA 391 at page 393.
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The next issue to determine is whether this particular exclusion of liability clause is incident to the relation of landlord and tenant. In Levy v Blanket Holdings Private Ltd 1956 (3) SA 558 - it was clear that a clause that imposes a restraint of trade was not normally an incident of the relationship of lessor and lessee. The problem I have is that these exclusion of liability clauses are found in many leases. It is not easy to assume they are collateral.
In Heerman 's Supermarket (Pty)Ltd v Mona Road Investment (Pty) Ltd 1975 (4) SA 391 Van Heerden J in a case of a lease dealt with a lease whose clause 7 inter alia had the following words:
"- but it is understood and agreed that the lessor shall not be responsible for any damage to the property of the lessee or any other persons from whatever cause arising."
In that case there was damage to plaintiffs meat and electrical equipment caused by a short circuit attributed to the failure of defendant's servants to maintain the roof. The court dealing with the matter by way of exception found these quite common and acceptable. This, however, still does not answer the question whether they are collateral. Cooper in Landlord and Tennant 2nd Edition page 349 says:
"In the absence of agreement to the contrary, on renewal of a lease its collateral parts (it has been said) are deemed to have been renewed. This statement, it is submitted, is too wide."
With this, I agree each case has to be dealt with on its merits. The right of pre-emption and a restraint of trade clauses, might not be automatic. That depends on the facts of a particular case - the case of Levy v Blanket Holding Private Ltd does not in my view establish a general principle of exclusion of the exemption of liability from all tacit relocation of tenants. The rubric or (case summary) does not (as I have shown) correspond with what was decided in the case.
In Doll House Refreshments v O Seia &Ors 1957 (1) SA 345 the problem was proof of the lessee's right of first refusal in a contract entered into in 1938 which expired after two renewals in 1952. The original lessor had died and the property had been inherited by the three sons of the lessor. The lessee had by this time bought the shares of two of the sons. The third son who had not sold his share to the lessee had died - leaving his share to his wife. The lessee had after the expiration of the lease remained in occupation and paid one third of the rent to her. The wife of the third son sold her share to some one else. The issue for the court's determination was whether the lessee could prove that the tacit relocation included the right of
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first refusal that the lessee had had since 1938, even after the lease was not formally renewed in 1952. Ramsbottom J held that the lessee had to prove that the right of first refusal was also tacitly renewed when the wife of the third son received the rental for her one third share of the original property. In Ramsbotton J's view, the grant of the right of first refusal was collateral to, and independent of the relationship of landlord and tenant - it is not incident to the relation of lessor and lessee.
In Shenker Brothers v Bester 1952 (3) SA 664 it was the lessee who was relying on terms of a verbal agreement of a renewal of lease. The majority in the appellate Division did not deal with effect of tacit relocation but held the matter revolved around the pleadings which stated there was a verbal agreement. It was the terms of this verbal contract on which that case should be determined and it was its terms that should be proved. The onus of proof was on the plaintiff. Van den Heever JA at page 677 BC of Shenker Brothers v Bester (in a dissenting judgment) said of the verbal renewal of the contract:
"In the absence of express stipulation to the contrary in the renewal of a lease, its collateral parts are also deemed to have been renewed. If this is so in the case of tacit relocation, it must apply to cases of express renewal. Dig 19.2.13.11.
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The majority in terms of the law of pleadings held the terms of the renewal had to be proved. According to Wille Principles of South
African Law 7Ih Edition pages 417 to 422 in the absence of special stipulations, the provisions which are incident to the relationship
of landlord and tenant are basically those that the law normally imposes. For the tenant these are:-
Payment of rent.
Care of lease property. For the landlord these are:
Delivery of occupation to tenant.
Guarantee of quiet enjoyment to tenant.
Repairs for the premises for the purpose they are leased.
Guarantee against defects known to landlord.
Payment of taxes.
Subletting or assignment in the absence of prohibition.
Ponnan AJA in the Supreme Court of Appeal case of Southernport Development (Pty) Ltd v Transenet 2005 (2) SA 202 at page 206 summarised the law in this way:
"The essentials of a contract of lease are that there must be an ascertained thing and a fixed rental at which the lessee is to have use and enjoyment of that thing."
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Those conditions that seek to avoid these legal obligations have to be a subject of a clear and specific contract. These cannot be tacit. They are collateral and independent of, and not incident to that relationship. If they are part of a renewed contract either expressly or tacitly they have to be proved.
In the case before me as Heerman 's Supermarket (Pty)Ltd V Mona Road investment (PTY) Ltd 1975 (5) SA 391 at page 393 per Van Heerden J
"The Roman -Dutch law imposes upon every lessor the duty of placing the leased premises in a condition reasonably fit for the purpose for which they are let."
A condition of a lease that derogates from a landlords legal obligations can only be deemed to apply to the lessee if there had
been a clear agreement to that effect. If the landlord claims that this condition applies to a tacitly relocated tenant the onus is on the landlord to prove that there was a consensus ad idem on this issue because it is not incident to the relation of landlord and tenant. "In each case, the real issue is the intention of the parties when they made a fresh agreement" see Doll House Refreshment (Pty) Ltd v O 'Shea & Ors 1957 (1) SA 345 at 351 A.
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The person in whose favour the exclusion of liability clause operates is called a preference. Consequently in Cardboard Packing Utilities (Pty) Ltd v Edblo Transvaal Ltd 1960 (3) SA 178 at page 179 G Kuper J said:
"In cases of doubt, the contract is interpreted against him who has stipulated and in favour of him who has contracted the
obligation."
In other words if a doubt arises, it must be resolved against the pr oference.
This has to be the position because of the drastic nature of the exclusion of liability clause that is strict and wide enough to cover actions of servants who could cause the lessee loss or damage to "property of whatsoever nature on the premises, howsoever, caused and whether by reason of the default or negligence of the sub-lessor or any of the said persons or otherwise."In short as Cooper in Landlord and Tenant 2nd Edition page 349 has said about the automatic renewal of collateral parts:
"This statement, it is submitted, is to wide. The proper approach is that when the lease is renewed simpliciter all terms are renewed that are incident to the relation of lessor and lessee.
The onus is therefore on the lessor to prove that when the lessee tacitly agreed to the renewal he tacitly agreed to a condition that when the landlord repaired the building at the end of the lease it can do it negligently through its servants. In First National Bank of SA Ltd v Rosenblum & Another 2001
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(4) SA 189 the above exclusion of liability clause, it was held would exempt the lessor from gross negligence as well (contrary to what Mr Molete argued). This therefore calls for strict interpretation.
I therefore hold that the defendant has to prove that it was the intention of the lessee to continue to be bound by clause 18 which ex lege is not incident to the relation of lessor and lessee. Furthermore the defendant also has to prove that this tacit month to month relocation of the lessee was not a renewal of the lease simpliciter, consequently it could include a collateral issue that derogated from those incident to the relation of landlord and tenant that are implied in every lease agreement of that type.
Having dealt with this preliminary legal issue the matter may now go to trial on the merits.
W.C.M MAQUTU
JUDGE
For Plaintiff: Mr Matooane
For Defendant: Mr Molete
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