Afrox Healthcare Ltd v Strydom
Encyclopedia
Afrox Healthcare Ltd v Strydom, 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.
. 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
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. 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, 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.
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, 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.
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.
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. 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.
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. 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.
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, 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.
The appeal was thus upheld and the decision in the Transvaal Provincial Division in Strydom v Afrox Healthcare Bpk reversed.
South African contract law
South African contract law is "essentially a modernised version of the Roman-Dutch law of contract," which is itself rooted in Roman law. In the broadest definition, a contract is an agreement entered into by two or more parties with the serious intention of creating a legal obligation...
, was heard in the Supreme Court of Appeal
Supreme Court of Appeal of South Africa
The Supreme Court of Appeal is an appellate court in South Africa; it is the highest appeal court except in constitutional matters, which are ultimately decided by the Constitutional Court...
(SCA) on May 13, 2002
2002 in South Africa
-January:* 29 January – Doctors Without Borders, an international humanitarian organisation, begins importing a cheap, generic version of patented AIDS drugs into South Africa in a direct defiance to South Africa's patent laws-March:...
, with judgment handed down on May 31.
Facts
The appellant, Afrox Healthcare, was the owner of a private hospitalPrivate hospital
A private hospital is a hospital owned by a profit company or a non-profit organisation and privately funded through payment for medical services by patients themselves, by insurers, or by foreign embassies. This practice is very common in the United States and Australia...
. 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
Nursing
Nursing is a healthcare profession focused on the care of individuals, families, and communities so they may attain, maintain, or recover optimal health and quality of life from conception to death....
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
Damages
In law, damages is an award, typically of money, to be paid to a person as compensation for loss or injury; grammatically, it is a singular noun, not plural.- Compensatory damages :...
. Strydom argued that this conduct amounted to a breach of contract
Breach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....
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 liabilityLiabilityA liability can mean something that is a hindrance or puts an individual or group at a disadvantage, or something that someone is responsible for, or something that increases the chance of something occurring ....
and indemnifiedIndemnityAn indemnity is a sum paid by A to B by way of compensation for a particular loss suffered by B. The indemnitor may or may not be responsible for the loss suffered by the indemnitee...
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 injuryInjury-By cause:*Traumatic injury, a body wound or shock produced by sudden physical injury, as from violence or accident*Other injuries from external physical causes, such as radiation injury, burn injury or frostbite*Injury from infection...
(including fatal injury) suffered by or damage caused to the patient or any illness (including terminal illnessTerminal illnessTerminal illness is a medical term popularized in the 20th century to describe a disease that cannot be cured or adequately treated and that is reasonably expected to result in the death of the patient within a short period of time. This term is more commonly used for progressive diseases such as...
) contracted by the patient whatever the cause/causes are, except only with the exclusion of intentional omission by the hospital, its employees or agents.
Arguments
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- that it was contrary to the public interestPublic interestThe public interest refers to the "common well-being" or "general welfare." The public interest is central to policy debates, politics, democracy and the nature of government itself...
; - that it was in conflict with the principles of good faithGood faithIn philosophy, the concept of Good faith—Latin bona fides “good faith”, bona fide “in good faith”—denotes sincere, honest intention or belief, regardless of the outcome of an action; the opposed concepts are bad faith, mala fides and perfidy...
or bona fides; and - that it had been the legal duty of the admission clerk, which he had not fulfilled, to draw his attention to the relevant clause.
The grounds on which Strydom based his reliance on the public interest were
- the alleged unequal bargainingBargainingBargaining or haggling is a type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement. Bargaining is an alternative pricing strategy to fixed prices...
positions of the parties at the conclusion of the contract; - the nature and ambit of the conduct of the hospital personnel for which liability was excluded; and
- the fact that Afrox was the provider of medical services.
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
Gross negligence
Gross negligence is a legal concept which means serious carelessness. Negligence is the opposite of diligence, or being careful. The standard of ordinary negligence is what conduct one expects from the proverbial "reasonable person"...
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
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
, to promote the spirit, purport and object of the Bill of Rights. 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, 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.
Judgment
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.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, 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.
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
1995 in South Africa
-January:* 10 January - General Johan van der Merwe, Police Commissioner of the South African Police Service resigns and is succeeded by General George Fivaz...
, whereas the Constitution had only become operative in February 1997
1997 in South Africa
-March:* 19 March - Denel and Aérospatiale sign a co-operation agreement* 28 March - Nelson Mandela, President of South Africa and H. D. Deve Gowda, Prime Minister of India sign the Red Fort Declaration on a Strategic Partnership while Mandela was on a state visit to India-April:* 23 April - Eugène...
.
With regard to direct damages, the Constitution had no restrospectivity
Ex post facto law
An ex post facto law or retroactive law is a law that retroactively changes the legal consequences of actions committed or relationships that existed prior to the enactment of the law...
. 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.
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. 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.
It appeared from the judgment of the court a quo that it had been of the opinion that the principles of stare decisis
Stare decisis
Stare decisis is a legal principle by which judges are obliged to respect the precedents established by prior decisions...
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. 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:
- where the High Court was convinced that the relevant rule of the common law was in conflict with a constitutional provision, in which case the court was obliged to depart from the common law, as the Constitution was the supreme law;
- where the pre-constitutional decision of the SCA was based on considerations such as boni mores or public interest, in which case, if the High Court was of the view, taking constitutional values into account, that such a decision no longer reflected the boni mores or public interest, it was obliged to depart from the decision, which would not be in conflict with the principles of stare decisis, as it had to be accepted that boni mores and considerations of public policy were not static concepts; and
- where a rule of the common law, determined by the SCA in a pre-constitutional decision, was not in direct conflict with any specific provision of the Constitution, where the decision was also not reliant on any changing considerations such as boni mores, but where the High Court was nevertheless convinced that the relevant common-law rule, upon the application of section 39(2), had to be changed to promote the spirit, purport and object of the Constitution—in which case the principles of stare decisis still applied and the High Court was not empowered by the provisions of section 39(2) to depart from the decisions of the SCA, whether such decisions were pre- or post-constitutional.
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.
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, 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.
The appeal was thus upheld and the decision in the Transvaal Provincial Division in Strydom v Afrox Healthcare Bpk reversed.
Books
- Du Plessis, Jacques, et al. The Law of Contract in South Africa. Edited by Dale Hutchison, Chris-James Pretorius, Mark Townsend and Helena Janisch. Cape TownCape TownCape Town is the second-most populous city in South Africa, and the provincial capital and primate city of the Western Cape. As the seat of the National Parliament, it is also the legislative capital of the country. It forms part of the City of Cape Town metropolitan municipality...
, Western CapeWestern CapeThe Western Cape is a province in the south west of South Africa. The capital is Cape Town. Prior to 1994, the region that now forms the Western Cape was part of the much larger Cape Province...
: Oxford University PressOxford University PressOxford University Press is the largest university press in the world. It is a department of the University of Oxford and is governed by a group of 15 academics appointed by the Vice-Chancellor known as the Delegates of the Press. They are headed by the Secretary to the Delegates, who serves as...
, 20102010 in literatureThe year 2010 in literature involved some significant events and new books.-Events:*February - The Wheeler Centre, Australia's "literary hub", officially opened.*April 3 - First release of the Apple iPad, electronic book reading device....
.