Insurance - a factor when determining civil liability?

Roy Barendse and Marzia Gertse

Whether and to what extent the existence of insurance will influence a judge when deciding to impose civil liability on a defendant, remains unsettled in South African law. In foreign jurisdictions, such as America, the existence or absence of insurance is considered a major factor in the imposition of liability. To illustrate the status of insurance as a factor in imposing civil liability in South Africa, we consider the role of insurance in the interpretation of exemption clauses. More specifically, we examine the case of Durban’s Water Wonderland Ltd v Botha & Another 1999 (1) SA 982 (SCA) in this regard.


In the Durban’s Water Wonderland case, the plaintiffs were injured on a ride at an amusement park and subsequently claimed damages against the owner, the defendant. The defendant denied liability and relied on a notice which held that “we regret that the management…must stipulate that they are absolutely unable to accept liability or responsibility for injury or damage of any nature whatsoever howsoever”.

Court a quo

The court a quo held that any “reasonable person would assume, correctly in this case, that the proprietors are insured”. The defendant’s presumed insurance played an important factor in the court’s reasoning. The court reasoned that “the notice was capable of meaning no more than that the management…would not accept liability in the sense of admitting liability but would require any claimant to prove his or her claim, presumably in a court of law”. Hence, in light of the existence of insurance, the court interpreted the notice to not be an exemption of liability and consequently imposed liability on the defendant.

Supreme Court of Appeal

The Supreme Court of Appeal (SCA) rejected this interpretation and held that the words “unable to accept liability” used in the notice are unambiguous and hence exclude the defendant’s liability. The SCA held that the court a quo interpreted the clause as being, at most, a clause which informs users in advance that the owner will always litigate against claims made against the owner. The SCA held further that this interpretation did not serve the owner’s interests nor did it serve the interests of the owner’s insurers.

The SCA did not settle the moot question relating to the extent, if at all, insurance should be considered when determining civil liability, rather the SCA emphasised that where an exemption clause is drafted in unambiguous terms effect must be given to that meaning.

The SCA in relation to the court a quo’s reasoning did not rule that, in general, insurance is an irrelevant consideration in the imposition of civil liability. In fact, the SCA considers the insurer’s interests when reasoning against the court a quo’s interpretation. Furthermore, the SCA references Government of the Republic of South Africa v Fibre Spinners & Weavers (Pty) Ltd 1978 (2) SA 794 (A) as authoritative law. This case provided that “the agreement to insure was a satisfactory quid pro quo for the exemption”. Again, the SCA does not provide any remark and does not attempt to distinguish this case on the ground that the court used insurance as a factor in determining liability.

Public policy

The Durban’s Water Wonderland case deals with the interpretation of an exemption clause. Importantly, insurance may also be considered a factor in determining the validity of exemption clauses. It is well-established that exemption clauses contrary to public policy are invalid and unenforceable. To determine whether the exemption clause is contrary to public policy regard may be had to various open-ended factors. One such factor may be the existence or absence of insurance. There is thus room in which insurance as a factor can influence judicial decisions to hold that the relevant exemption clause is contrary to public policy, so as to render the exemption clause unenforceable and impose liability on the defendant.

Whether insurance should be a factor when determining a defendant’s liability remains a moot question in South African law. In the absence of decisive authority, there is the possibility of a defendant being held liable more readily due to the defendant being insured. This remains possible as there are judicial indications that have not been overturned, such as the references to insurance in the interpretation of the exemption clause in the Durban Water Wonderland case. Furthermore, when considering the validity of exemption clauses, the courts may consider open-ended factors, such as the existence or absence of insurance.



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