THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT
CASE NO: 573/2007
MASSTORES (PTY) LTD
Appellant

and

MURRAY & ROBERTS CONSTRUCTION
1st Respondent
(PTY) LIMITED
S ROCHE PROJECTS
2nd Respondent

Neutral citation: Masstores (Pty) Ltd v Murray & Roberts Construction
(Pty) Ltd (573/2007) 94 [2008] ZASCA  (12 September 2008)

Coram:
MPATI P, LEWIS, MLAMBO JJA, KGOMO AND
MHLANTLA AJJA

Heard:
22 AUGUST 2008

Delivered:
12 SEPTEMBER 2008

Summary:
Appeal against upholding of exception to claim for
damages for destruction of warehouse and its contents through
negligence on part of contractor effecting additions: excipient raised
exemption clause (indemnification by employer) as a bar to the claim.
Held that on the interpretation of the clause and the contract as a whole,
the clause did preclude an action by the employer against the contractor
for destruction of the warehouse and its contents: appeal dismissed.

ORDER

On appeal from:  High Court, Johannesburg (Schwartzman J sitting as court
of first instance).

The appeal is dismissed with costs, including the costs incurred by the
employment of two counsel.

JUDGMENT

LEWIS JA (MPATI P, MLAMBO JA, KGOMO AND MHLANTLA AJJA
concurring)
[1] The appellant (the plaintiff in the high court), Masstores (Pty) Ltd, a
wholesaler of a multitude of commodities, engaged the first respondent (the
first defendant), Murray & Roberts Construction (Pty) Ltd, to extend one of its
stores in Struben’s Valley, Roodepoort. I shall refer to the appellant either as
Masstores or as the employer, and to the respondent either as Murray &
Roberts or as the contractor. Their building contract was embodied in a
standard form published by the Joint Building Contracts Committee – a form
widely used in the construction industry in South Africa. The second
defendant in the matter was a subcontractor of Murray & Roberts and is not
party to this appeal.

[2] While employees of the second defendant were cutting the roof of
Masstores’ existing store with an angle grinder a fire broke out which

destroyed the store and its contents. Masstores sued Murray & Roberts for
breach of contract, claiming R169 365 175, the value of the structure
destroyed and its contents.

[3] The breaches alleged by Masstores – and which allegedly caused the
damage to its building and the contents – include:  failure to comply with all
laws and regulations; failure to carry out the work in a proper and workmanlike
manner; failure to ensure that subcontractors appointed by Murray & Roberts
complied with safety levels; and failure to ensure that the work was executed
safely and in such a way as not to endanger the lives and property of people
in the vicinity of the work. These failures are alleged to have been negligent or
grossly negligent.

[4] Murray & Roberts excepted to the particulars of claim on the basis that
clause 9.2.7 of the building contract precludes an action against it – exempts it
from liability for causing damage to Masstores’ existing structure. Clause 9
reads:
‘Clause 9 Indemnities
9.1 Subject to the provisions in terms of 9.2 the contractor indemnifies and holds the
employer harmless against any loss in respect of all claims, proceedings, damages,
costs and expenses arising from:
9.1.1 Claims from other parties consequent upon death or bodily injury or illness of
any person or physical loss or damage to any property, other than the works, arising
out of or due to the execution of the works or occupation of the site by the contractor

9.1.2 A non-compliance by the contractor with any law and regulation and bylaw of
any local or other authority arising out of or due to the execution of the works or
occupation of the site by the contractor
9.1.3 Physical loss or damage to any plant, equipment, or other property belonging to
the contractor or his subcontractors

9.2 The employer indemnifies and holds the contractor harmless against loss in
respect of all claims, proceedings, damages, costs and expenses arising from:
9.2.1 An act or omission of the employer, the employer’s servants or agents and
those for whose acts or omissions they are responsible
9.2.2 An act or omission of a direct contractor appointed in terms of 22.0
9.2.3 Design of the works where the contractor is not responsible in terms of 4.0
9.2.4 The use or occupation of the site by the works
9.2.5 The right of the employer to have the works or any part thereof executed at the
site
9.2.6 Interference with any servitude or other right that is the unavoidable result of
the execution of the works including the weakening of or interference with the support
of land adjacent to the site unless resulting from any negligent act or omission by the
contractor or his subcontractors
9.2.7 Physical loss or damage to an existing structure and the contents thereof in
respect of which this agreement is for alteration or addition to the existing structure
9.2.8 Physical loss or damage to the contents of the works where practical
completion has been achieved in terms of 24.0
9.2.9 The occupation of any part of the works by the employer or his tenants’ (my
emphasis).

[5] Schwartzman J in the high court upheld the exception, finding that
clause 9.2.7 precluded a claim against Murray & Roberts for negligent breach
of contract, but granted leave to appeal against his decision to this court.

[6] The sole question before us is whether clause 9.2.7 has the effect of
exempting Murray & Roberts from liability for negligent, or grossly negligent,
breaches of the building contract. And that depends on an interpretation of the
clause. Counsel for Masstores argue that the clause is ambiguous, riddled
with inconsistency and incoherent. The ambiguity contended for would enable
the court to interpret the clause in such a way as to conclude that Murray &
Roberts would be liable for negligently causing the damages alleged. Counsel
for Murray & Roberts, on the other hand, argue that the clause is clear,
unambiguous and consonant with the balance of the contract which
pertinently allocates various risks to the respective parties. It is a model of
clarity, they contend, and excludes Murray & Roberts’ liability for negligent
breach of contract.

[7] Before considering the alleged ambiguities that might lead to the
conclusion that the clause does not exclude liability for the damage caused to
the existing structure, it is important to state that an ambiguity is not, in my
view, a precondition for a court to interpret a provision by having regard to the
context of the contract and the surrounding circumstances. More than ten
years ago this court said in Pangbourne Properties Ltd v Gill & Ramsden (Pty)
Ltd1 that the time appeared to be ripe for this court ‘to reconsider the

1 1996 (1) SA 1182 (A) at 1187E-F.

limitations placed’ on the ‘use of surrounding circumstances’ in interpreting
documents’. That said, because this matter was determined on exception by
the high court, there is no evidence to which we can have regard in fathoming
the intention of the parties: the provision in issue must be construed by
examining the words used, the structure of the indemnity provision itself and
its meaning within the context of the contract as a whole. And it is as well to
recall at this point that there are no special rules that apply to the construction
of exemption provisions: Durban’s Water Wonderland (Pty) Ltd v Botha;2 First
National Bank of Southern Africa Ltd v Rosenblum3 and Van der Westhuizen
v Arnold.4

[8] The contract is one commonly used in the building industry. It
describes the subject matter as the ‘works’, defined as ‘the works  described
in general terms in the schedule, detailed in the contract documents, ordered
in contract instructions and including the contractor’s and his subcontractors’
temporary works. In 8.0 to 13.0, works shall further include materials and
goods . . .’. In the schedule the works description is ‘Alterations and additions
to existing Makro Store at Strubens Valley comprising steel framed building
with sheet steel profiled roof covering and cladding together with associated
siteworks’.

[9] Clause 7 deals with compliance with building regulations and bylaws,
and 7.1, on which Masstores relies, provides:

2 1999 (1) SA 982 (SCA) at 989H-J.
3 2001 (4) SA 189 (SCA) para 7.
4 2002 (6) SA 453 (SCA) paras 18 and 19. Some of the decisions that have questioned the
difference between surrounding and background circumstances are set out in paras 13 and
14.

‘The  contractor shall comply with all laws and all regulations and bylaws of local or
other authorities having jurisdiction regarding the execution of the works. . . .’
Clause 8.0 governs the risk in the works. Part of the provision is not strictly
relevant to the dispute before this court but I shall set much of it out since
Murray & Roberts argues that the allocation of risk in this provision is the only
basis of its liability under the contract. As the contractor, it takes responsibility
for the works, and only the works. The clause is headed ‘Works risk’ and it
reads:
‘8.1 The contractor shall take full responsibility for the works from the date on which
possession of the site is given to the contractor and up to the issue or the deemed
issue of the certificate of practical completion. Thereafter responsibility for the works
shall pass to the employer.
8.2 The contractor shall make good physical loss and repair damage to the works,
including clearing away and removing from the site all debris resulting therefrom,
which occurs after the date on which possession of the site is given and up to the
issue or deemed issue of the certificate of final completion and resulting from:
8.2.1 Any cause arising up to the date of issue of the certificate of practical
completion
8.2.2 The contractor or his subcontractors carrying out any operation complying with
the contractor’s obligations after the date of issue of the certificate of practical
completion
8.3 The contractor shall not be liable for the cost of making good physical loss and
repairing damage to the works where this results from the following circumstances:
. . .
[The provisions of 8.3.1 to 8.3.5 list circumstances clearly beyond the control
of the contractor such as war, rebellion, riot, strike, and confiscation.]

8.3.6 The use or occupation of any part of the works by the employer, the employer’s
servants or agents and those for whose acts or omissions they are responsible
8.3.7 An act or omission of the employer, the employer’s servants or agents and
those for whose acts or omissions they are responsible
8.3.8 An act or omission by a direct contractor  . . .
8.3.9 Design of the works where the contractor is not responsible . . .
8.3.10 A latent defect in materials and goods specified by trade name, where the
contractor has no right of substitution. The contractor hereby cedes any right of
action to the employer that may exist against the supplier and/or manufacturer of
such materials and goods.
8.4 The limit of the contractor’s liability shall not exceed the amount of the contract
works insurance. . . . The liability of the contractor in terms of 8.2 shall include:
8.4.1 The cost of making good loss and repairing damage
8.4.2 The replacement value of materials and goods supplied by the employer to the
contractor
8.4.3 The additional professional services required of the employer’s agents
. . . .’

[10] The effect of clause 8 is that the contractor assumes the risk of any
loss or damage to the works, as defined, until they are completed and handed
over to the employer. The exceptions to this lie where the loss is caused
either by factors beyond the control of the contractor, or when it is caused by
the employer and those for whom it is responsible. Nowhere in the clause is
provision made for the contractor to be liable other than for the works. And
insurance is required only in respect of the works. Nothing is said of the
existing structure, and indeed, as Murray & Roberts argues, that is to be
expected. Why should the contractor, it asks, assume responsibility for

damage to the existing structure when it is owned by Masstores and its value
is considerably greater than the cost of the works? Why would a contractor
undertake liability for the destruction of a structure and its contents worth
about R169m when the cost of the work to be done by it is only R13m?

[11] Masstores’ answer is that if Murray & Roberts did indeed intend to
exclude liability for their conduct, it did not succeed. It construes clause 9,
particularly 9.2.7, so as not to exclude Murray & Robert’s liability for the
damage negligently caused to the existing structure and its contents. The
effect of the provision, its counsel argue, is to indemnify the contractor against
claims by third parties only, or, alternatively, to exclude the contractor’s liability
only for its non-negligent conduct.

[12] To reach this conclusion Masstores argues that clause 9 is ambiguous.
It raises four respects in which the language of the provision gives rise to
uncertainty: the use of the words ‘indemnify and hold harmless’; the apparent
conflict between 9.1.2 and 9.2.7; the use of the words ‘any loss’ in 9.1 but only
‘loss’ in 9.2; and the failure to specify all the legal grounds for liability in 9.2.7,
especially negligent conduct. To some extent these arguments overlap but I
shall deal with each discretely.

Indemnify and hold harmless
[13] The language is not clear, Masstores contends, first, because of the
use of the words ‘indemnify’ and ‘hold harmless’. It will be recalled that clause
9.2 states that the ‘employer indemnifies and holds the contractor harmless

against loss in respect of all claims, proceedings, damages, costs and
expenses arising from’ – ‘9.2.7 Physical loss or damage to an existing
structure and the contents thereof in respect of which this agreement is for
alteration or addition to the existing structure’. The usual meaning of indemnify
is to protect a person against a claim by another – a third party. Similarly, one
would hold another harmless against the claim of a third party. Can one
indemnify a person against a claim brought by oneself? Thus, the argument
runs, the contractor is not indemnified against claims by the employer, but
only claims by third parties.

[14] The wording of the clause is admittedly not elegant. One would not
normally say ‘I indemnify you against claims against you brought by myself’.
The typical exclusion clause would state that claims by the other party are
excluded, or that a party is exempt from liability against the other. However,
although the use of the words ‘indemnify’ and ‘hold harmless’ may appear at
first to relate only to third party claims, there is ample authority that they mean
also ‘keep free from, or secure against (hurt, harm or loss);5 or to ‘secure
(someone) against legal responsibility for their actions’. Apart from dictionary
definitions, which are not decisive,6 a court must ascertain what words mean
by having regard to the intention of the parties, established, as I have said in
this case, from an examination of the contract in its entirety.

5 Shorter Oxford English Dictionary, 1973, Vol 1. See also Concise Oxford English Dictionary
10 ed (2002).
6 See also Jonnes v Anglo-African Shipping Co (1936) Ltd 1972 (2) SA 827 (A) at 835G-836B
where similar dictionary definitions of ‘indemnify’ are set out.

[15] The provision cannot, in my view, be construed to refer only to claims
brought by third parties. If the parties had intended clause 9.2.7 to govern
claims by third parties they would have said so. They have done so elsewhere
in the indemnity clause, in 9.1, which regulates the contractor’s liability to the
employer: the contractor indemnifies and holds the employer harmless against
‘claims from other parties consequent upon death or bodily injury or illness of
any person or physical loss or damage to any property, other than the works,
arising out of’ the execution of the works or occupation of the site (9.1.1) (my
emphasis). In my view this express reference to claims by third parties tends
to suggest that there is no implicit reference to such claims in 9.2.7. Moreover,
9.2 deals expressly and primarily with the situations in which the contractor
would be indemnified – for an act or omission by the employer or its servants,
or a direct contractor, or the contractor’s use and occupation of the site. These
are instances where the contractor might otherwise be liable. Why should
clause 9.2.7 be different?

[16] Masstores nonetheless argues that unless clause 9.2.7 operates only
to exclude claims by third parties, clauses 8.3.7, 8.3.8 and 8.3.9 would be
superfluous: they exclude the liability of the contractor in the same
circumstances. But clause 8 deals specifically with the works and not with the
existing structure. Clause 9.2.7, on the other hand, deals only with the existing
structure. The clauses regulate different situations. The argument that the
words ‘indemnify and hold harmless’ govern only claims by third parties must
thus fail.

The apparent conflict between clauses 9.1.2 and 9.2.7
[17] A second source of ambiguity contended for by Masstores lies in the
juxtaposition of clauses 9.1.2 and 9.2.7. The former, in the first part of the
clause that governs the indemnities given by the contractor to the employer,
indemnifies the employer against claims resulting from any non-compliance
with any law, regulation or bylaw on the part of the contractor. The claim by
the employer is in part for just that – non-compliance with safety regulations in
executing the works, resulting in physical damage. The high court found,
correctly in my view, that clause 9.1, being ‘subject to’ clause 9.2, is
subservient to it: the provisions of 9.2 thus prevail over those of 9.1, and to the
extent that 9.1.2 may appear to be in conflict with 9.2.7, the latter must prevail.
The indemnity given by the employer to the contractor for all claims for
damage to the existing structure thus limits the indemnity given by the
contractor to the employer in 9.1.2. The conflict is in any event more apparent
than real, for the contractor’s obligation is to execute the works in accordance
with the relevant regulations. The indemnity in 9.2.7 is in respect of the
existing structure.

‘Any loss’ and ‘loss’
[18] Counsel for Masstores argue further that clauses 9.1 and 9.2 employ
different language in regulating the parties’ respective rights. In 9.1 the
contractor indemnifies the employer against any loss arising in certain
situations, whereas in 9.2 the employer indemnifies the contractor against
only loss, thus causing uncertainty as to the ambit of the indemnities.  Clause
9.1 appears to be more extensive in its embrace than 9.2. The argument loses

sight of the use of the word ‘all’ that appears in 9.2 – the indemnity is against
loss in respect of ‘all claims. . . .arising from’ the various situations listed in the
provisions that follow. ‘All claims’, in the absence of evidence to the contrary,
has a very wide ambit. Not so, argues Masstores. Exemption clauses are to
be narrowly construed, particularly when a party seeks to escape liability for
negligence.

Failure expressly to exclude  negligent conduct as a ground of liability
[19] Masstores relies in this regard on a line of decisions commencing with
South African Railways & Harbours v Lyle Shipping Co Ltd7 in which it was
held that where an exemption clause in a contract specified various causes of
loss for which liability was excluded, but was silent on the question of
negligent conduct, liability for negligence was not excluded. The case
concerned a provision in a contract for the towing of a ship: it stated that the
ship owner accepted assistance or service ‘on the condition that [the tug
operator] will not be liable for any loss or damage that may be occasioned to
the said ship through accident, collision or any other incident whatsoever
occurring whilst the tug . . . is engaged in any operation in connection with
holding, pushing, pulling or moving the said ship’.8 It was alleged that the ship
in question was damaged as a result of the negligence of the tug operator. In
deciding the issue Steyn JA said:9
‘The question raised on appeal is whether or not the clause quoted above exempts
the appellant from liability for negligence. It does not do so either explicitly or in
general terms so all-embracing as clearly to draw such liability into the scope of the

7 1958 (3) SA 416 (A).
8 At 418F-G.
9 At 419A-F.

exemption. It refers in comprehensive language to possible events as a result of
which damages may be sustained, but not to the possible legal grounds of
responsibility for such damages on the occurrence of any such event, with the result
that, having regard only to the wording of the clause, it is open to the interpretation
that it bars actions arising from causes of one or more classes, leaving unaffected
those founded on causes of one or more other classes. The rule to be applied in
construing an exemption of this nature, appears from Essa v Divaris, 1947 (1) SA
753 (A) at 756. Generally speaking, where in law the liability for the damages which
the clause purports to eliminate, can rest upon negligence only, the exemption must
be read to exclude liability for negligence, for otherwise it would be deprived of all
effect; but where in law such liability could be based on some ground other than
negligence, it is excluded only to the extent to which it may be so based, and not
where it is founded upon negligence. Mr Cloete, for the appellant, did not seek to
cast any doubt upon the soundness of  this rule, either in equity or as a means,
indicated by the inherent improbability that any person would be content to forgo all
legal protection against the negligence of another, of ascertaining the probable
intention of parties to a contract.
What we accordingly have to examine, are the possible causes of action
which may arise in relation to this contract. Negligence, of course, is one of them. Is
there any other?’
Finding that a breach of contract could give rise to liability, the court held that
liability for negligence was not excluded.

[20] The principle is not applicable if there is no doubt but that negligent
conduct is included within the embrace of the provision in question. In
Government of the RSA v Fibre Spinners & Weavers (Pty) Ltd10 Wessels ACJ

10 1978 (2) SA 794 (A) at 805E-G.

said that it is only where the exemption provision is ambiguous – as he
considered the provision in SAR & H v Lyle to be – that there is room to
search for other legal causes of liability that would give meaning to the
provision in the absence of negligent conduct. Thus where a clause provided
‘you are hereby absolved from all liability for loss or damage however arising’
the wording was ‘sufficiently comprehensive’ to cover liability for negligent
conduct.

[21] In Durban’s Water Wonderland (Pty) Ltd v Botha11 a disclaimer posted
at an amusement park read:12
'The amenities which we provide at our amusement park have been designed and
constructed to the best of our ability for your enjoyment and safety. Nevertheless we
regret that the management, its servants and agents, must stipulate that they are
absolutely unable to accept liability or responsibility for injury or damage of any
nature whatsoever whether arising from negligence or any other cause howsoever
which is suffered by any person who enters the premises and/or uses the amenities
provided.'
Scott JA said, having discussed the manner in which the respondent and her
daughter had been injured at the park:13
‘Against this background it is convenient to consider first the proper construction to
be placed on the disclaimer. The correct approach is well established. If the language
of a disclaimer or exemption clause is such that it exempts the proferens from liability
in express and unambiguous terms, effect must be given to that meaning. If there is
ambiguity, the language must be construed against the proferens . (See Government
of the Republic of South Africa v Fibre Spinners & Weavers (Pty) Ltd. . .) But the

11 1999 (1) SA 982 (SCA).
12 At 988C-E.
13 At 989G-990B.

alternative meaning upon which reliance is placed to demonstrate the ambiguity must
be one to which the language is fairly susceptible; it must not be 'fanciful' or 'remote'
(cf Canada Steamship Lines Ltd v Regem [1952] 1 All ER 305 (PC) at 310C--D).
What is immediately apparent from the language employed in the disclaimer is that
any liability founded upon negligence in the design or construction of the amusement
amenities would fall squarely within its ambit. The first sentence contains specific
reference to the design and construction of the amusement amenities. Even if this
were to be construed as qualifying the 'negligence' contemplated in the second
sentence, that qualification would not therefore exclude from the ambit of the
disclaimer negligence in relation to such design or construction. Various grounds of
negligence were alleged in the particulars of claim. The Court a quo, however, found
the appellant to have been negligent in one respect only . . . . The ground of
negligence relied upon clearly related to the design or construction of the amenity. It
follows that the respondents' cause of action was one which fell within the ambit of
the disclaimer. I did not understand counsel to contend the contrary.’

[22] In First National Bank of Southern Africa Ltd v Rosenblum & another14
it was similarly argued that the absence of express reference to liability for the
dishonest conduct of the bank’s employees rendered an exemption clause
ambiguous, since not all the legal grounds on which liability could be based
had  been enumerated. According to the stated case before the court, articles
placed in the bank’s safe deposit box by the respondents had been stolen
from it by employees of the bank. It was assumed that the bank had been
negligent in allowing the employees access to the box. The clause had not
referred to all the ways in which the theft may have been committed, nor was
there reference to the bank’s vicarious liability for its employees’ wrongdoing.

14 2001 (4) SA 189 (SCA).

The respondents argued that not all possible manifestations of theft had been
covered, nor the bank’s liability for gross negligence.

[23] The Johannesburg High Court found for the respondents. On appeal
this court rejected the argument, finding that the bank had successfully
immunized itself from liability. The exclusion clause read:
‘The bank hereby notifies all its customers that while it will exercise every reasonable
care, it is not liable for any loss or damage caused to any article lodged with it for
safe custody whether by theft, rain, flow of storm water, wind, hail, lightning, fire,
explosion, action of the elements or as a result of any cause whatsoever, including
war or riot damage, and whether the loss or damage is due to the bank’s negligence
or
not.’15
Marais JA considered that the ambit of the clause was very wide: it covered
loss caused by factors beyond the control of the bank and the bank’s
negligent conduct. Even its employees’ dishonest conduct (given that their
states of mind could not be attributed to the bank) was included under ‘any
cause whatsoever’. He said of the general approach to the interpretation of
exemption clauses:16
‘Before turning to a consideration of the term here in question, the traditional
approach to problems of this kind needs to be borne in mind. It amounts to this: In
matters of contract the parties are taken to have intended their legal rights and
obligations to be governed by the common law unless they have plainly and
unambiguously indicated the contrary. Where one of the parties wishes to be
absolved either wholly or partially from an obligation or liability which would or could
arise at common law under a contract of the kind which the parties intend to

15 Para 2.
16 Paras 6 and 7.

conclude, it is for that party to ensure that the extent to which he, she or it is to be
absolved is plainly spelt out. This strictness in approach is exemplified by the cases
in which liability for negligence is under consideration. Thus, even where an
exclusionary clause is couched in language sufficiently wide to be capable of
excluding liability for a negligent failure to fulfil a contractual obligation or for a
negligent act or omission, it will not be regarded as doing so if there is another
realistic and not fanciful basis of potential liability to which the clause could apply and
so have a field of meaningful application. (See SAR&H v Lyle Shipping Co Ltd 1958
(3) SA 416 (A) at 419 D – E.)
It is perhaps necessary to emphasize that the task is one of interpretation of
the particular clause and that caveats regarding the approach to the task are only
points of departure. In the end the answer must be found in the language of the
clause read in the context of the agreement as a whole in its commercial setting and
against the background of the common law and, now, with due regard to any
possible
constitutional
implication.’17

[24] Masstores relies on the first paragraph quoted, Murray & Roberts on
the second. In my view, ambiguity need not be the open sesame18 to
construing an exemption clause by having regard to evidence of surrounding
circumstances.19 Given, however, that this appeal is against the upholding of
an exception there is no evidence other than the contract itself. It must be
viewed in its commercial setting, taking account of the structure and purpose

17 Contrast Johannesburg Country Club v Stott 2004 (5) SA 511 (SCA) where the court found
that a portion of an exemption clause purporting to exclude a club’s liability for injury to
members, their guests and their children was ineffective in so far as guests and children were
concerned, and did not cover a dependant’s claim for loss of support on the death of a
member. The decision turned on the inability of a member to forgo the independent claim of a
dependant.
18 The phrase used by Jansen JA in Cinema City (Pty) Ltd v Morgenstern Family Estates (Pty)
Ltd 1980 (1) SA 796 (A) at 805H-806A.
19 Van der Westhuizen v Arnold 2002 (6) SA 453 (SCA) para 22 and the cases cited there.

of the entire contract. I consider that scrutiny of the contract does not support
the contention that negligent conduct is excluded from the embrace of clause
9.2.7.

[25] First, the very way in which the contract is structured so as to allocate
risks between the parties suggests that it is the event or circumstance that
gives rise to liability rather than blameworthy conduct in the form of
negligence or otherwise. Clause 8 specifies circumstances that pertain to the
works where the contractor will bear the risk, and those, beyond its control,
where it is exempt from liability. Clause 9 provides for reciprocal indemnities
that pertain to different risks arising in different circumstances. Thus the
contractor takes responsibility for the works and bears the risk in them
(pursuant to clause 8) in clause 9.1. Under clause 9.2, however, the employer
takes the risk for the conduct of its employees or a direct contractor. Liability is
strict – not dependent on fault, save in clause 9.2.6. Thus the argument of
Masstores that the clause would exempt Murray & Roberts from non-negligent
conduct ordinarily giving rise to a claim – such as for innocent breach of the
bylaws or regulations which Murray & Roberts had undertaken to comply with
– does not succeed. The ground of liability suggested is, it is true, not fanciful
or remote, but the contract does not concern itself with fault – only with
specified events or circumstances.

[26] Second, clause 9.2.6 itself suggests a different construction from that
advanced by Masstores. It provides that the employer indemnifies the
contractor against loss arising from ‘[i]nterference with any servitude or other

right that is the unavoidable result of the execution of the works including the
weakening of or interference with the support of land adjacent to the site
unless resulting from any negligent act or omission by the contractor or his
subcontractors’ (my emphasis).

[27] In my view, the express inclusion of the one exception in the subclause
– liability for a negligent act or omission causing weakening of or interference
with adjacent support – indicates that the parties had considered liability for
negligent conduct in one situation, and specifically rendered the contractor
liable for it. The exclusion of any reference to an exemption from liability for
negligent conduct causing damage to the existing structure must be
deliberate. In clause 9.2.6 the contractor is made to bear the risk of a
negligent act or omission which results in the weakening of the adjacent
support of the site. But in clause 9.2.7 there is no exception made in relation
to negligence: hence the contractor is indemnified against liability for causing
damage to the existing structure irrespective of fault. The express exception in
9.2.6 strengthens the conclusion that in all the other subclauses of 9.1 and 9.2
the presence or absence of negligence plays no role.

[28] Third, the contract anticipates that the parties will insure themselves
against risk. Clause 10 regulates insurance. Clause 10.1 requires insurance
on the works in the joint names of the employer and the contractor. Clause
10.2 provides that when sections of the works are completed or when
alterations or additions to an existing structure are required the employer shall
effect insurance. Naturally the risk in respect of the existing building lies with

the employer, whose choice it is to insure it. The existing building is not the
responsibility of the contractor.

[29] Construed thus in the light of the other contractual provisions, clause
9.2.7 is clearly intended to exclude the contractor’s liability for negligently
damaging or destroying the existing structure and its contents. Masstores
argues that an excipient must show that on any reasonably possible
interpretation of the clause no cause of action exists. I consider that Murray &
Roberts has shown that the only reasonably possible interpretation of the
clause is that Masstores is precluded from suing it for the damage caused to
the existing structure and its contents by negligent breaches of the contract.

[30] Does the provision excluding the contractor’s liability for damage to the
existing structure and its contents also exclude liability for gross negligence?
In Government of the Republic of South Africa v Fibre Spinners & Weavers20
the court stated that there was no reason why a clause excluding liability for
negligence should not also exclude liability for gross negligence – assuming
there is a distinction between degrees of negligence – and that there was no
reason why public policy should preclude enforcement of such an exemption.
This was endorsed in First National Bank v Rosenblum.21 This argument must
also fail. In the circumstances I consider that the high court correctly upheld
the exception to the particulars of claim.

20 1978 (2) SA 794 (A) at 807C-E.
21 Above, para 26.

[31] The appeal is dismissed with costs, including the costs incurred by the
employment of two counsel.

______________
C  Lewis
Judge of Appeal

Appearances:

Counsel for Appellant:

C D A Loxton SC

I P Green

Instructed by:

Deneys Reitz Attorneys Johannesburg

Correspondent:

McIntyre & Van der Post Bloemfontein

Counsel for Respondent:
S A Cilliers SC

B Berridge

Instructed by:

Webber Wentzel Bowens Johannesburg
Correspondent:

Honey Attorneys  Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

12 September 2008
STATUS: Immediate
Masstores (Pty) Ltd v Murray & Roberts Construction (Pty) Ltd (573/2007)  94 [2008]
ZASCA (12 September 2008)

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal today dismissed an appeal against a decision of
Schwartzman J in the High Court, Johannesburg, in which he upheld an exception to the
claim of Masstores against Murray & Roberts for some R169m. The claim was based on
the alleged negligent conduct of Murray & Roberts in not taking steps to prevent a fire,
started by a subcontractor in the roof of a warehouse owned by Masstores, during the
course of effecting additions to the warehouse. The entire warehouse and its contents
were destroyed in the fire.

The contract between the parties provided that Masstores indemnified Murray & Roberts
against claims for damage to the existing structure and its contents. Masstores argued that
the provision related to claims only by third parties, and not itself, and was also
ambiguous, thus not covering negligent conduct.

The Johannesburg High Court found that the provision did exempt Murray & Roberts from
liability. The Supreme Court of Appeal, upholding this finding, concluded that the provision
at issue was not uncertain at all and the contract clearly allocated the risk in the existing
structure, irrespective of fault, to Masstores.
---------------------