Afrox Healthcare Ltd v Strydom,[1] an important case in South African contract law, was heard in the Supreme Court of Appeal (SCA) on May 13, 2002, with judgment handed down on May 31.
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The appellant, Afrox Healthcare, was the owner of a private hospital. The respondent, Strydom, had been admitted to the hospital for an operation and post-operative medical treatment. On his admission, an agreement was concluded between the parties. According to Strydom, it was a tacit term of this agreement that Afrox's nursing staff would treat him in a professional manner and with reasonable care.
After the operation, certain negligent conduct by a nurse led to complications which caused Strydom to suffer damages. Strydom argued that this conduct amounted to a breach of contract and instituted an action holding Afrox responsible for the damages suffered.
The admission document signed by Strydom during his admission to the hospital contained an exemption clause, providing that he
absolved the hospital and/or its employees and/or agents from all liability and indemnified them from any claim instituted by any person (including a dependant of the patient) for damages or loss of whatever nature (including consequential damages or special damages of any nature) flowing directly or indirectly from any injury (including fatal injury) suffered by or damage caused to the patient or any illness (including terminal illness) contracted by the patient whatever the cause/causes are, except only with the exclusion of intentional omission by the hospital, its employees or agents.
Afrox relied on this clause to avoid liability for Strydom's damages. Strydom, in response, advanced several reasons why the provisions of the exclusion clause could not operate against him, contending
The grounds on which Strydom based his reliance on the public interest were
Strydom alleged that, while it was Afrox's duty as a hospital to provide medical treatment in a professional and caring manner, the relevant clause went so far as to protect it from even gross negligence on the part of its nursing staff. This was contrary to the public interest.
Strydom argued further that the Constitution of the Republic of South Africa obliged every court, when developing the common law, to promote the spirit, purport and object of the Bill of Rights.[2] The effect of this was that, in considering the question of whether a particular contractual term conflicted with the public interest, account had to be taken of the fundamental rights contained in the Constitution. It was argued that the relevant clause conflicted with the spirit, purport and object of the constitutional guarantee of each person's right to medical care,[3] and as such was in conflict with the public interest.
As an alternative, Strydom argued that, even if the clause did not conflict with the public interest, it was still unenforceable as it was unreasonable, unfair and in conflict with the principle of bona fides or good faith. As a further alternative it was argued that Strydom had, when signing the admission document, been unaware of the provisions of the clause. The evidence was that he had signed the document without reading it, even though he had had an opportunity to do so. Strydom contended, however, that the admission clerk had had a legal duty to inform him of the content of the clause and had failed to do so. Strydom's reason for contending that such a legal duty existed was that he did not expect a provision such as this to be found in an agreement with a hospital.
A Provincial Division found for Strydom.
In an appeal, the SCA held that, as far as exclusionary and indemnity clauses were concerned, the common legal approach was that such clauses should be interpreted restrictively. The fact that exclusionary clauses were generally held to be operative did not mean that a specific exclusionary clause could not be declared contrary to public policy and as such unenforceable. The standard to be applied in respect of exclusionary clauses was no different to that applicable to other contractual terms, which were invalid as a result of considerations of public policy. The question was whether upholding the relevant exclusionary clause or other contractual term would conflict with the interests of the public as a result of extreme unfairness or other policy issues.[4]
The court found, however, that there was no evidence indicating that Strydom had indeed occupied a weaker bargaining position than Afrox during the conclusion of the contract,[5] and that he had not relied on gross negligence on the part of Afrox's nursing staff in his pleadings. The question of whether the contractual exclusion of a hospital's liability for damages caused by the gross negligence of its nursing staff was in conflict with the public interest was accordingly not relevant to the instant matter; furthermore, even if that were the case, it would not entail the automatic invalidity of the relevant clause. The provisions would probably rather have been restricted to exclude gross negligence.[6]
With regard to the constitutional argument, the court held that it had first to be decided whether section 39(2) of the Constitution empowered and obliged the Court to consider constitutional provisions not yet in operation when the contractual relationship between the parties had commenced. The agreement had been concluded in August 1995, whereas the Constitution had only become operative in February 1997.
With regard to direct damages, the Constitution had no restrospectivity. Conduct which was valid when it was committed was accordingly not rendered retrospectively invalid as a result of the direct application of the Constitution. The question, however, surrounding the possible retrospective influence of the Constitution in an indirect manner, as envisioned in section 39(2), had not been pertinently decided; it was unnecessary, though, to try to answer that question in the present matter. For the purposes of the judgment, it was accepted in favour of Strydom that the provisions of section 27(1)(a) of the Constitution had to be taken into account, even though the section had not been operative at the time of the conclusion of the relevant agreement.[7]
In considering the question of whether or not a particular contractual provision was in conflict with the interests of the community, the values underpinning the Constitution had to be taken into account.[8] The elementary and basic general principle was that it was in the public interest that contracts entered into freely and seriously, by parties having the necessary capacity, should be enforced. Strydom's contention—that a contractual term in which a hospital could exclude liability for the negligent conduct of its nursing staff was not in the public interest—could accordingly not be supported.[9]
It appeared from the judgment of the court a quo that it had been of the opinion that the principles of stare decisis as a general rule did not apply to the application of section 39(2) of the Constitution. That opinion was, at least as far as post-constitutional decisions were concerned, clearly incorrect.[10] As far as pre-constitutional decisions of the SCA regarding the common law were concerned, a distinction had to be drawn between three situations which could develop in the constitutional context:
Although abstract considerations such as good faith or bona fides were the basis and reason for the existence of legal rules, and also led to the creation and amendment of those rules, the court held they were not in themselves legal rules. When it came to the enforcement of contractual terms, the Court had no discretion and did not operate on the basis of abstract ideas; it operated on the basis of established legal rules.[12]
The court found further that a person who signed a written agreement without reading it did so at his own risk and was consequently bound by the provisions contained therein as if he were aware of them and had expressly agreed thereto. There were exceptions, such as in the event of a legal duty to point out certain of the provisions in the contract,[13] but Strydom's subjective expectations about the content of the agreement played no role in the question of whether a legal duty rested on the admission clerk to point out the content of the exclusionary clause to him. What was important was whether or not such a provision was, objectively speaking, unexpected.
Today, the court found, exclusionary clauses in standard contracts were the rule rather than the exception. There was no reason in principle to differentiate between private hospitals and other service providers. The relevant clause in the admission document was accordingly not, objectively speaking, unexpected. The admission clerk had accordingly had no legal duty to bring it to Strydom's attention, and Strydom was bound by the terms of the clause as if he had read and had expressly agreed to it.[14]
The appeal was thus upheld and the decision in the Transvaal Provincial Division in Strydom v Afrox Healthcare Bpk reversed.
Afrox Healthcare Ltd v Strydom 2002 (6) SA 21 (SCA).