THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Reportable

Case no:  149/07

In the matter between:

MERCURIUS MOTORS

Appellant

and

PAUL ALEXANDER PAVIA LOPEZ

Respondent
_______________________________________________________

Coram:
Streicher, Navsa, Ponnan, Maya JJA et Mhlantla AJA

Date of hearing: 7 March 2008
Date of delivery: 27 March 2008

Summary:
Loss of vehicle delivered to service depot ─ failure to safeguard keys ─
reliance on exemption clause ─ held that clause not part of contract of deposit ─ the
service depot held liable.

Neutral citation:  Mercurius Motors v Lopez (149/2007) [2008] ZASCA 22 (27 March
2008).
_______________________________________________________

NAVSA JA

NAVSA JA:

[1] During the morning of 23 July 2003 the respondent, Mr Paul Lopez,
delivered a Jeep Cherokee motor vehicle (the Jeep), which he was then leasing
from Daimler Chrysler Services South Africa (Pty) Ltd, to Mercurius Motors at its
East Rand Mall depot in Boksburg. Mercurius Motors (Mercurius) trades as a
motor dealer and service centre and is a division of the Imperial group of
companies. The vehicle was delivered to Mercurius to be serviced, for minor
repairs to be effected and for the installation of spotlights. The vehicle was still
under warranty and the costs of repairs and the service were to be borne by the
Daimler Chrysler company (hereafter Daimler Chrysler). The cost of the
installation of spotlights was to be borne by Mr Lopez.

[2] At the relevant time Daimler Chrysler was the manufacturer of Jeep and
other vehicles and Mercurius was the franchise dealer which sold vehicles to the
public.

[3] In terms of his lease agreement with Daimler Chrysler Mr Lopez bore the
risk of loss of the value of the vehicle.

[4] According to Mercurius, the East Rand Mall depot was broken into by
robbers during the night of 23 July 2003 ─ a lock on a gate was broken. It was
alleged that security guards employed by Colt Security, an entity contracted by
Mercurius to safeguard its property, were overpowered and abducted.1

[5] The next morning, at approximately 08h15, Mr Lopez was informed about
the theft of the Jeep. He had leased it for use by his wife. It was relatively new
(approximately six months old) and Mr Lopez and his wife were understandably

1 This information was conveyed to Mercurius by a representative of Colt Security and is
contained in statements by two security guards who did not testify. The admissibility of the
statements were in issue in the trial court. For reasons that will become apparent the present
appeal can be decided without reference to these statements. See para 34 below. I shall assume
in favour of Mercurius that the Jeep went missing in consequence of that robbery.

upset. The Jeep was fitted with a satellite tracking device and Mr Lopez informed
Netstar, the company that provided the tracking service, that the vehicle had
gone missing from Mercurius and instructed them to take steps to trace and
recover it. Unfortunately it could not be traced and has not been recovered.

[6] It is common cause that the Jeep was the only vehicle missing from the
depot. The keys to the Jeep that had been handed to Mercurius when the vehicle
was delivered could not be found. The established procedure was that the keys
to all the vehicles that had been brought in for service had to be safely locked
away at the end of a working day.

[7] The respondent’s wife insisted that, whilst steps were being taken to
recover the vehicle and until the question of liability for its loss was determined,
she should be provided with a ‘loan’ vehicle. Mercurius provided such a vehicle
for use by Mrs Lopez for a period of six months. This notwithstanding, Mercurius
denied liability for the loss of the Jeep, relying on exemption of liability clauses
contained in the documents Mr Lopez signed at the Mercurius workshop on the
morning on which he delivered the vehicle to the workshop.

[8] The plaintiff instituted action in the Johannesburg High Court against
Mercurius based on the contract of deposit, claiming damages for the loss of the
Jeep, the value of which was agreed in an amount of R245 000.

[9] In its plea Mercurius repeated its reliance on the exemption clauses and
denied that the loss of the Jeep was due to any negligence on its part.

[10] The Johannesburg High Court found in favour of Mr Lopez, ordering
Mercurius to pay him R245 000 with interest a tempore morae at the rate of 15.5
per cent per annum from 13 January 2004 to date of payment. Mercurius was
ordered to pay Mr Lopez’s costs. The present appeal is with the leave of this
court.

The exemption clauses

[11] The first exemption clause is contained in a document entitled ‘Warranty
Repair Order’. Instead of the expected Mercurius Motors appellation at the head
of the document, the name Daimler Chrysler appears. Immediately above the
space for a customer’s signature the following appears in fine print:
‘I hereby authorize the repair work to be done along with the necessary material, and hereby
grant you and/or your employees permission to operate the car or truck herein described on
streets, highways or elsewhere for the purpose of testing and/or inspection. An express
mechanic’s lien is hereby acknowledged on this car or truck to secure the amount of any charges
for work not covered by Daimler Chrysler’s warranty.’

[12] Immediately below the space for the customer’s signature the following
appears in capitals:
‘NOT RESPONSIBLE FOR LOSS OR DAMAGE TO CARS OR ARTICLES LEFT IN CARS IN
CASE OF FIRE, THEFT OR ANY OTHER CAUSE BEYOND OUR CONTROL.’
This exemption clause is clearly visible and can hardly be missed by a person
signing the form.

[13] The other exemption clause on which Mercurius relied is contained in a
second document described as a repair order form. On the left-hand side at the
top of the document, the words ‘MERCURIUS MOTORS’ are set out in large and
bold letters. Between a heading that reads ‘JOB INSTRUCTION / WERKOPDRAG’ and
a position indicating a signature by a customer is a space approximately 13 cm x
13 cm, to be completed by the Mercurius employee receiving instructions from
the customer regarding the work to be done.

[14] On the repair order form, immediately above the space indicated for a
customer’s signature, the following appears in capital letters:
‘PLEASE REMOVE PULL-OUT RADIOS AND VALUABLES FROM YOUR VEHICLE.
WE WILL NOT BE HELD RESPONSIBLE FOR ANY THEFT WHATSOEVER.’
This caption is prominent and should easily be noticed by anyone signing the
document.

[15] To the left of the caption referred to in the preceding paragraph, the
following appears in fine print:
‘I have read and agree to the conditions of Contract on the reverse side hereof. This is to certify
that no valuable or personal belongings have been left in the vehicle. Ek het die kontrak
voorwaardes op die keersy gelees en aanvaar sulke voorwaardes. Ek bevestig dat geen
waardevolle en/of persoonlike besittings in die voertuig gelaat is nie.’
It is necessary to record that this print is much smaller than appears
hereinabove, is starkly less prominent than the caption referred to in the previous
paragraph and does not attract one’s attention.

[16] The relevant part of the document is reproduced in this paragraph to
enable a better appreciation of how it appeared to Mr Lopez:

This reproduction is condensed ─ the original page on which the writing appears
is four centimetres wider than appears above. Consequently, in reality, the space
between what appears on the right and left-hand side of the document is wider.

[17] It is also necessary to note that the repair order form has a carbon copy
underneath and has to be detached in order to reveal the conditions on the
reverse side. The relevant condition on which Mercurius relied is in clause 5,
which reads:
‘I/we acknowledge that MERCURIUS shall not be liable in any way whatsoever or be responsible
for any loss or damages sustained from fire and/or burglary and/or unlawful acts (including gross
negligence) of their representatives, agents or employees.’
It is evident that the ambit of this exemption clause is wide.

[18] The evidence of Mr Lopez to the effect that his attention was not drawn to
the writing referred to in para 15, nor to the conditions themselves, by the

workshop manager who received the Jeep and who took down the instructions, is
uncontested.

The court below

[19] Tshiqi J, having regard to Mr Lopez’s reliance on a contract of deposit and
considering that Mercurius had pleaded that the contract was subject to
exemption clauses, correctly held that Mr Lopez as plaintiff bore the onus to
prove that the exemption clauses were not part of the contract.2

[20] The court below took into account the general principle in our law that,
when a person signs a contractual document, he or she agrees to be bound by
the contents of the document ─ otherwise referred to as the caveat subscriptor
rule.3 Tshiqi J weighed up this rule against Mr Lopez’s contention that he was
misled as to the nature, purport and contents of the document.

[21] Tshiqi J examined the warranty claim form and concluded that, viewed
objectively, the document was misleading and confusing and could be read to be
exempting Daimler Chrysler and not Mercurius.

[22] Interpreting the caption immediately above the space for the customer’s
signature in the repair order form, the court below held that the exemption could
only relate to theft from the vehicle of items such as radios and other valuables
and that the wording does not include an exemption in relation to the theft of the
vehicle itself.

2 In the case of the dispute as to the existence of such a clause as part of the contract of deposit,
it will be for the plaintiff depositor to prove that the clause was not a term of the contract. See
Stocks & Stocks (Pty) Ltd v T J Daly & Sons (Pty) Ltd 1979 (3) SA 754 (A) and Harms Amler’s
Precedents of Pleadings 6 ed (2003) p 145.
3 See R H Christie The Law of Contract in South Africa 5 ed (2006) pp 174-179 and the
authorities there cited.

[23] The trial judge considered that the reference on the left-hand side of the
repair order form to the conditions of contract was printed and located in such a
manner so as not to draw the reader’s attention. She held that Mr Lopez’s
contention, that he was misled by the form because it was unclear and confusing,
was justified.

[24] Having reached these conclusions in relation to the exemption clauses,
the high court then considered the liability of a depository for reward in regard to
the loss of items entrusted to him or her. The court rightly pointed out that a
depository could, of course, escape liability if there was no dolus or culpa on his
or her part.4

[25] In relation to negligence, Tshiqi J had regard to the instances of
negligence on which Mr Lopez relied. First, the failure by Mercurius to safeguard
the Jeep’s keys. Second, the failure immediately to determine which vehicle was
missing, and then to communicate the loss to Mr Lopez to enable him to instruct
the company responsible for the tracking device in the Jeep to take steps to
recover it.

[26] In respect of the loss of the key, the court below recorded that Mercurius
was unable to explain where the keys to the Jeep had been kept and how they
had got lost. Mercurius had tendered evidence to show that it was the duty of
apprentice mechanics to ensure, at the end of a working day, that no keys were
left in vehicles. Furthermore, employees of the security company, when they
came on duty, were themselves required to do a check to ensure the same. In
the event of keys being found they were obliged to remove the keys and hand
them to a patrol vehicle for safe custody. No evidence was tendered of such
steps having been taken.

4 See Stocks & Stocks supra at 762A-D.

[27] As stated earlier, no explanation was offered for the absence of the keys
from the bag containing the keys to all the other vehicles that had been in
safekeeping. The court below held that the probabilities indicated that the keys to
the Jeep were either left in the vehicle or in a place where they were easily
accessible. It noted that there was no evidence that the keys had been in the
possession of the guards or were kept safely. No reason was proffered by
Mercurius as to why the Jeep’s keys would have been kept separate from the
other sets of keys which were locked away safely.

[28] In respect of the second ground of negligence on which Mr Lopez relied,
the court below held that it had not been shown that, even if Mercurius had
identified the missing vehicle sooner and had informed Mr Lopez earlier, the
tracking company would have been able to locate the vehicle.

[29] Finally, Tshiqi J held that the conduct of Mercurius in relation to the keys
amounted to negligence and she consequently made the orders referred to in
para 10 above.

Conclusions

[30] In respect of the warranty claim form, the court below, in my view, placed
too much store on the fact that the Daimler Chrysler name appeared at the top of
the document. It can hardly be gainsaid that the authorisation referred to in para
11 above was an authorisation directed at Mercurius and that Mercurius was the
entity that would effect the repairs in accordance with the Daimler Chrysler
warranty.

[31] In any event, counsel for Mercurius did not place any reliance on the
clause in the warranty claim form. He accepted that the exemption relates to loss
or damage occasioned by causes beyond the control of Mercurius and that the
theft of the Jeep was not beyond its control.

[32] In relation to the caption in the repair order form referred to in para 14
above, Tshiqi J rightly held that the theft to which the exemption relates is of
valuables out of the vehicle, rather than of the vehicle itself.

[33] A person delivering a motor vehicle to be serviced or repaired would
ordinarily rightly expect that the depository would take reasonable care in relation
to the safekeeping of the vehicle entrusted to him or her. An exemption clause
such as that contained in clause 5 of the conditions of contract, that undermines
the very essence of the contract of deposit, should be clearly and pertinently
brought to the attention of a customer who signs a standard instruction form, and
not by way of an inconspicuous and barely legible clause that refers to the
conditions on the reverse side of the page in question. Moreover, the caption
immediately above the signature is misleading in that a customer is directed to
that provision and away from the more important provision in small print on the
left-hand side of the document which refers to the conditions on the reverse side
of the document which are themselves not easily accessible.5 It will be recalled
that Mr Lopez’s unchallenged evidence was that the conditions on which
Mercurius now relies were not brought to his attention.

[34] The test for negligence is as follows:
‘(a)
would a reasonable person, in the same circumstances as the defendant, have foreseen
the possibility of harm to the plaintiff;
(b)
would a reasonable person have taken steps to guard against that possibility;
(c)
did the defendant fail to take the steps which he or she should reasonably have taken to
guard against it?

5 See Spindrifter (Pty) Ltd v Lester Donovan (Pty) Ltd 1986 (1) SA 303 (A) at 318C; Kempston
Hire (Pty) Ltd v Snyman 1988 (4) SA 465 (T) at 467B-C and 468G-H; Keens Group Co (Pty) Ltd v
Lötter 1989 (1) SA 585 (C) at 590B-592C; Ndlovu v Brian Porter Motors Ltd 1994 (2) SA 518 (C)
at 526F; Diners Club SA (Pty) Ltd v Livingstone 1995 (4) SA 493 (W) at 495I-496A; Fourie NO v
Hansen 2001 (2) SA 823 (W) at 833F-834C. See also the very interesting article by Tjakie Naudé
and Professor Gerhard Lubbe Exemption Clauses ─ A Rethink Occasioned by Afrox Healthcare
BPK v Strydom (2005) 122 SALJ 441.

If all three parts of this test receive an affirmative answer, then the defendant has failed to
measure up to the standard of the reasonable person and will be adjudged negligent.’6

[35] By not safeguarding the keys to the Jeep, the employees of Mercurius did
not act as a reasonable person in their circumstances would have acted. It was
clearly foreseeable that theft of the vehicle would be facilitated by the availability
of the keys and no discernable steps were taken to guard against this.

[36] It was common cause that the theft of the Jeep took place. The precise
circumstances under which it occurred were not agreed upon. Counsel on behalf
of Mercurius did not seek, before us, to rely on the statements of the security
guards which had been ruled inadmissible by Tshiqi J. It is significant that the
only vehicle missing was the vehicle in respect of which the keys had not been
properly safeguarded. All the indications are that it is the negligence of the
employees of Mercurius which facilitated the theft of the Jeep. In any event,
Mercurius failed to discharge the onus of disproving dolus or culpa on its part.

[37] It is not necessary to deal with the delay in relation to the notification by
Mercurius to Mr Lopez of the loss of the vehicle. The material conclusions
reached by the court below cannot be faulted.

[38] The following order is made:
The appeal is dismissed with costs.

__________________
M S NAVSA
JUDGE OF APPEAL
CONCUR:

STREICHER JA
PONNAN
JA
MAYA
JA
MHLANTLA AJA

6 See Jonathan Burchell Principles of Delict (1993) p 86 and Kruger v Coetzee 1966 (2) 428 (A)
at 430.

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
27 March 2008
Status:
Immediate
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

On 27 March 2008 the Supreme Court of Appeal, in the case of
Mercurius Motors v PAP Lopez, dismissed an appeal against a
judgment of the Johannesburg High Court, in terms of which
Mercurius Motors, a motor dealer, was ordered to pay the
respondent, Mr Lopez, an amount of R245 000 with interest a
tempore morae at the rate of 15.5 per cent per annum from
13 January 2004 to date of payment. Mercurius was also ordered
to pay Mr Lopez’s costs.

Mr Lopez had sued Mercurius for the value of his Jeep Cherokee
motor vehicle which went missing from Mercurius allegedly as a
result of a robbery. The vehicle had been brought in for warranty

repairs and for the installation of spotlights. It appeared that the
keys to the Jeep had not been safeguarded. Mercurius had relied
on an exemption clause which it contended exempted it from
liability. The Johannesburg High Court held that the exemption
clause was printed and located in such a way so as not to draw the
reader’s attention to it. It held that the form in which the exemption
clause appeared was unclear and confusing. Furthermore, the
Johannesburg High Court held that in respect of the keys to the
vehicle, Mercurius had been negligent. Consequently Mercurius
was ordered to pay Mr Lopez the amount referred to above.

This court held that an exemption clause such as that relied on by
Mercurius which undermines the very essence of the contract in
terms of which a motor vehicle dealer could rightly be expected to
take reasonable care of the vehicle entrusted to it for repairs
should be clearly and pertinently brought to the attention of a
customer who signs a standard instruction form. It held that the
form in question was misleading and that it directed a person’s
attention away from the important provisions contained in small
print. It agreed that the failure by Mercurius to safeguard the keys
to the vehicle amounted to negligence. In the result the appeal was
dismissed with costs.

--ends--