by Kirsty Melville-Nieman Camargue Risk Manager

A recent judgement by the Western Cape High Court (December 2014) highlights the dangers of vicarious liability and gross negligence that companies potentially face despite having indemnity waivers in place.

Newlywed American banker Chis Tallman came to South Africa in April 2008, just months after his nuptials to fulfil his dream of shark-cage diving in the Western Cape. He was accompanied by his friend Casey Lajeunesse. As is standard procedure, Tallman was asked to sign an indemnity waiver by White Shark Projects, the tour operator.  In so doing, Tallman acknowledged that “cage diving, shark diving and boating are hazardous  activities” and he accepted “any and all risks of injury or death”.

Just over two hours after the boat (a 10.7m catamaran named Shark Team) departed Kleinbaai on 13 April, it was struck by a large wave which caused it to capsize. Tragically three of the tourists on board drowned with Chris Tallman and Casey Lajeunesse among the fatalities.

Following Tallman’s death, his wife, Sarah Tallman, turned to the Western Cape High Court to find the owners of Shark Team liable for her husband’s death. She claimed that her husband had died as a result of the defendant’s “negligence” and the capsizing of Shark Team. She asked for an amount of $2.2 million (R24 million) in compensation for loss of support.

The three defendants, namely Shark Team (the vessel), White Shark Projects and the skipper Grant Tuckett all denied the allegations and stated that Chris Tallman signed an indemnity that protected them from lawsuits.

The court found that Tuckett was negligent in his failure to check the depth in front of the vessel (the shallower the depth, the greater the risk that a swell will break) as well as for not keeping a proper lookout in respect of swell conditions. It was also the court’s view that Tuckett acted negligently in not taking reasonable steps to determine whether all the passengers had been rescued.

White Shark Projects argued that, even if Tallman’s death was caused by negligence on the part of Tuckett, his death was caused without “actual fault or privity” on its part. The Court, however, did not accept this argument.

All three defendant’s pleaded reliance on the indemnity waiver that Tallman signed before the dive in which he was “releasing any claims” he had against White Shark Projects or its employees arising inter alia from “wrongful death”.

However they did concede that as a matter of South African law a dependant’s action is not compromised by an indemnity or waiver given by the deceased.

The court held the defendants jointly and severally liable for Tallman’s death.

The damages will be decided in a separate hearing. If you would like to read the case in full you can do so online: http://www.saflii.org/cgibin/disp.pl?file=za/cases/ZAWCHC/2014/202.html&…

It is vital for companies to realise that indemnity waivers do not hold the weight that they once did. Under the Consumer Protection Act, a supplier is no longer able to exempt itself from gross negligence. Section 61 (1) states that a supplier must not make a transaction to an agreement subject to any term or condition if it purports to limit or exempt a supplier of goods or services from liability for any loss directly or indirectly attributable to the gross negligence of the supplier or any person acting for or controlled by the supplier. Furthermore Regulation 44 also states that any term in a consumer agreement that excludes or limits the liability of the supplier for death or personal injury caused to the consumer through an act or omission of that supplier is deemed to be an unfair term.

Further, Section 113, holds a supplier liable for the actions of their employees “for anything done or omitted in the course of that person’s employment activities” on behalf of the supplier. This liability is joint and several but does not apply in respect of criminal liability.

As the above case highlights, an indemnity waiver does not exempt the dependent/s of the deceased from instituting a claim against the supplier where the supplier has been found to be negligent.

It is therefore vital to ensure that suppliers have adequate liability insurance cover in place. Those suppliers who handle tourist or foreigner indemnities should note that the quantum of potential liability is much greater as a result of South Africa’s exchange rate