Barkhuizen v Napier (CCT72/05) [2007] ZACC 5

passed by Ngobo J

FACTS
- Mr. Barkhuizen entered into an insurance policy with Napier against the loss amongst
other things, of his 1999 BMW 328i.
- Unfortunately, on the 24th of November 1999, Mr. Barkhuizen’s BMW was involved in
a car accident and was written-off. Instead of reporting this to the insurer, Napier
immediately thereafter, Mr. Barkhuizen only notified them on the 2 December 1999
and claimed for an amount of R 181 000.
- On the 7th of January 2000, the insurer, Napier repudiated the claim on the assertion
that the car had been used for a contrary purpose to that it was insured for. Put
succinctly, the car had been insured for private purpose only whereas Mr. Barkhuizen
was using the car for business purposes.
- Aggrieved by this, Mr. Barkhuizen decided to institute legal proceedings against
Napier, however this was two years after having received their repudiation. Upon
sending Napier summons, Napier made a special plea alleging that they were
absolved of liability because Mr. Barkhuizen failed to institute the legal proceedings
within the 90 day prescription contained in the insurance policy – which barred legal
action taken beyond 90 days of having received a repudiation feedback.
- Responding to this, Mr. Barkhuizen argued that the time clause was contrary to
public policy in that it prescribes an unreasonably short time to institute action and is
an infringement of the Constitutional right to access to courts.

High Court Judgement

- In this court, Mr. Barkhuizen only pleaded that the clause was unconstitutional in
terms of s 34 (access to courts), he did not argue that it was also against public
policy. Because of this, the court only dealt with the former plea.
 - The HC held that the clause was indeed inconsistent with s 34 of the Constitution and
that this limitation was not reasonable and justifiable.
Supreme Court of Appeal Judgement
- The SCA confirmed that a contractual term which is contrary to public policy is
unenforceable and that public policy now derives from the Constitutional values of
human dignity, the achievement of equality and the advancement of human rights
and freedoms, non-racialism and non sexism.
- However, looking at the case before it, the SCA argued that there was not enough
evidence to show that the clause violated Mr. Barkhuizen’s constitutional rights. To
this end the SCA held that the High Court’s judgement ‘’was not self-evident on
record and moreover that the evidence did not warrant such a finding.’’
- The SCA however cautioned that ‘’the fact that a term in a contract is unfair or may
operate harshly does not, by itself, lead to the conclusion that it offends the values
of the Constitution.’’ To drive this assertion the court argued that there need to be a
balance struck between the right to dignity and autonomy (contractual freedom) and
the constitution ensuring that the former is not in excess. To this end the SCA held;
‘’that intruding on apparently voluntarily concluded agreements is a step that Judges
should countenance with care, particularly when it requires them to impose their
individual conceptions of fairness and justice on parties individual agreements’’
- The SCA confirmed that when parties do not have equal bargaining power, this
entrenches on the constitutional value of equality and dignity. In such a
circumstance, the court is employed to determine whether ‘’the [affected party] was
forced to contract with the other party to enter into the contract of which violated
their constitutional rights’’ .
- To this end the SCA held that there was no evidence that Mr. Barkhuizen was forced
(did not exercise contractual freedom) into the contract with the insurer. Thus there
was no breach to the Constitution. Is this court using the subjective or objective test
to determine whether the term is contra public policy or not. An objective approach
would not necessarily look at the materialised harm but would look at the tendency
of the contract at the time it was concluded. As also held in Sasfin and Nyadeni case,
if the contracts implementation is contra public policy but the tendency of the
contract is neutral then the contract is said to be valid and enforceable. A subjective
approach would look at the materialized harm.
OBITER 1.
‘’All law, including the common law of contract is now subject to constitutional control. The
validity of all law depends on their consistency with the provision of the Constitution and
the values that underlie our Constitution. The application of the principle of pacta
sunt servanda is, therefore subject to constitutional control’’ (PARA 15)
OBITER 2.
‘’ Ordinarily, constitutional challenges to contractual terms will give rise to the
question of whether the disputed provision is contrary to public policy. Public policy
represents the legal convictions of the community; it represents those values that are
held most dear by the society. Determining the content of public policy was once
fraught with difficulties. That is no longer the case. Since the advent of our
constitutional democracy, public policy is now deeply rooted in our Constitution and

the values which underlie it…. What public policy is and whether a term in a
contract is contrary to public policy must now be determined by reference to
the values that underlie our constitutional democracy as given expression by
the provisions of the Bill of Rights. Thus a term in a contract that is inimical to the
values enshrined in our Constitution is contrary to public policy and is, therefore,
unenforceable’’ (para 28 -29)

LEGAL ISSUE
What is the proper approach to constitutional challenges based on
a direct constitutional right brought against contractual terms?

RATIO DECEDENDI

the proper approach to the constitutional

‘’in my view,
challenges to contractual terms is to determine whether
the term challenged is contrary to public policy as envisaged by the
Constitutional values, in particular, those found in the Bill of Rights.
This approach leave space for the doctrine of pacta sunt servanda to
operate, but at the same time allow courts to decline to enforce
contractual terms that are in conflict with the constitutional values
even though the parties may have consented to them.’’ (PARA 30)
LEGAL ISSUE
Is the limitation clause in the policy a violation of s 34 of the
Constitution inimical to the values that underlie our constitution as
given expression by s 34 of the Constitution ie. Public policy?

APPLICATION
- In determining whether time limitation clauses are within public policy
themselves -- The Court did confirm that time limitation clauses in
contracts are a feature in both our statutory and contractual law and
that their effect is immaterial where they rise as both have the same
effect in both statutory context and common law context. The court
adds, this is because they deny the right to seek the assistance of the
court once the action gets barred because an action was not instituted in
time. ‘’this is true regardless of the amount of time they allow.’’ Despite
this limitation, on equal footing the court recognizes the importance of
time limitation clauses. To this end it cites in confirmation to Mohlomi
where the court stated;
‘’Rules that limit the time during which litigation may be lanched are common in our legal
system as well as many others. Inordinate delays in litigating damage the interests of
justice. They protract the disputes over the rights and obligations sought to be enforced,
prolonging the uncertainty of all concerned about their affairs. Nor in the end is it always
possible to adjudicate satisfactorily on cases that have gone stale. By then witnesses may no longer
be available to testify. The memories of ones whose testimony can still be obtained may have faded
and become unreliable. Documentary evidence may have disappeared. Such rules prevent
procrastination and those harmful consequences of it. They thus serve a purpose to which no
exception in principle can cogently be taken’’ (PARA 47)

- In light of the above the court argues that that time limitation clauses
accepted by our public policy however ofcourse subject to other public
policy considerations [sourced from the Constitution] such as fairness
and reasonableness.
- Further the court affirms that the right to access to court ie. S 34 is not
without any limitation. The limitation of s 34 is permissible if it is
reasonable and justifiable. And this too is public policy.

LEGAL ISSUE
Okay Okay, how then do we determine whether a time limitation clause
(which is accepted in public policy) is reasonable and justifiable?

LEGAL PRINCIPLE
The court accepted the test established in Mohlomi it held that the right to
access to courts (s 34) ‘’depends upon the availability of an internal
opportunity to exercise the right that amounts, in all circumstances … to real
and fair one. (PARA 50) This means that the test to determine whether the
right to access to courts and whether the limitation of that right is justifiable
and reasonable is to determine whether there was an internal opportunity to
exercise the right ie. Tribunal or arbitration and whether the internal
opportunity is fair. If there is no internal opportunity to exercise this right –
then it can be accepted that the limitation is not justifiable and reasonable.

APPLICATION
- Turning to the facts of the case, the court held that in general, an
encroachment of the right to access to courts is contrary to public policy.
‘’notions of fairness, justice and equity and reasonableness
cannot be separated from public policy. Public policy is
informed by the concept of ubuntu. It would be contrary to
public policy to enforce a time limitation clause that does not
afford the person bound by it an adequate and fair
opportunity to seek judicial redress’’ this point implies that public
policy includes considerations of fairness, justice, equity and reasonableness – these
considerations cannot be divorced from the enquiry of whether a term is accepted
by the public policy or not.
- to this end, the court argued that the SCA’s refusal to accept Mohlomi’s test of
reasonableness and justifiability to time clauses was ‘’narrow and formalistic’’. The
court argues that such a rejection fails to recognise that it has been accepted by our
courts that contracting parties may not prevent one another from having disputes
arising from the contract resolved by a court of law. Thus, if a contract provides
an ‘’impossibility short period of time for the dispute to be referred to
court…that term will be contrary to public policy and unenforceable.
 This is because our Constitution recognises the importance of disputes
being resolved by courts and independent tribunals.’’

CONCLUSION
1. The court thus affirmed that whilst a time-limitation clause is not
contrary to public policy (constitutional right to access to courts) it can
be if it does not confer a reasonable time period and fair opportunity to
have the matter to be referred to the court – thus a short time period
violates the essential idea of reasonableness.
2. To determine whether a time limitation clause is contrary to public policy
or not the court MUST recognize freedom of contract (pacta stunt
servanda) on the one hand and public policy on the other. A court MUST
NOT ‘’let blind reliance on the principle of freedom to contract to
override the need to ensure that contracting parties must have access to
courts. (PARA 55)
Legal issue
1. In this particular case, can it be said that the time
period of 90 days was fair and reasonable?

2. Determine whether the party’s challenge of the time-

bar on a ground of fairness is indeed reasonable/
whether his non-compliance with the clause should be
overlooked or not.

LEGAL PRINCIPLE
1. To determine whether it is fair and reasonable, the court should
balance contractual autonomy/pacta sunt servada (ie. Public
policy 1) with the Constitution (Public Policy 2). This balancing
task must first objectively speaking determine whether the
term of the contract is contrary to public policy (constitution)
objective test/tendency of the contract.

2. To determine whether the party’s challenge of the contractual

term ie. the time bar is reasonable in the particular
circumstances. the court must determine whether the
term is contrary to public policy in light of the relative
situation of the contracting parties subjective test (NB.
The judge is not invited to impose his own idea of what
is fair or not)
APPLICATION
- OBJECTIVE TEST: to affirm objectively speaking whether the
contractual term is contrary to public policy, the court holds
that indeed that there are manifest examples of time-bars not
being reasonable or contrary to public policy. This is where they
are unreasonably short and do not serve the purpose of having
a dispute heard. The court also held that besides the time
period being too short another factor could be whether the
time-limitation clause is flexible or not – if it is inflexible it can
be said that it is objectively unconstitutional or contrary to
public policy. In this case, the court held that the 90 day period
was not a manifestly unreasonable period because all he had to
do was to furnish summons against the insurer upon their
feedback. At this time he already knew the party to sue, the
amount to sue etc. thus it cannot be said that 90 days is
objectively unfair or unreasonable.
- SUBJECTIVE TEST: To determine whether the time-bar was in
the particular circumstances reasonable for the contractual
parties, the court again conceded that unequal bargaining
power is a relevant consideration in this enquiry. To this end,
the court holds that there is no evidence to show that the
contract was not freely concluded between Mr. Barkhuizen and
the insurer, nor is there evidence to show that there was
unequal bargaining power. Instead, Mr. Barkhuizen was fully
aware of the time limitation clause at the time of concluding
the contract. Another factor that the court considered was the
flexibility of the time limitation clause ie. Whether looking
when looking at the particular case, were there justified
reasons as to why Mr. Barkhuizen did not or could not comply
with the clause. The court affirmed that if forcing compliance
against a claimant who was shortly after repudiation lapsed into
a coma and came around 6 months later then indeed the
 circumstances of the case would point to unreasonableness. A
term is said to be flexible when it allows for deviation in good
faith. This is because if a term insist on compliance even when
it would result in unjust results would be inflexible and may
point to being contrary to public policy. Note however good-
faith is not a self standing principle but is an underlying value
given expression by the existing rules of law/ the public policy
. again in this particular case, MR. Barkhuizen failed to show
any good cause as to why he deviated from the 90 day time
limitation clause – because of this, the court accepted that the
enforcement of the clause was not unfair and unreasonable.
Because the enforcement is not subjectively unfair, then it
would run contrary to the doctrine of pacta sunt servanda to
allow Mr. Barkhuizen to escape the contract with Napier.

OBITER
‘’While it is necessary to recognise the doctrine of pacta
sunt servanda, courts should be able to decline the
enforcement of a time limitation clause if it would result in
unfairness or would be unreasonable. This [assertion]
would require the person [alleging the term to be contrary
to public policy] to demonstrate, in the particular
circumstances it would be unfair to insist on compliance
with the clause’’
CONCLUSION
- The court held that from both an objective and subjective
analysis of the constitutionality of the 90 day time limitation
clause, it cannot be said that it is so unreasonable that it runs
contrary to the public policy (ie. Constitutional right to access to
courts)