Hollier v Rambler Motors (A.M.C.) Ltd. [1971] EWCA Civ 12 (19 November 1971)

Mr Hollier's car was damaged by fire at the defendants' garage due to their negligence. The defendants sought to rely on an exclusion clause disclaiming responsibility for fire damage. The Court of Appeal held the clause was not incorporated by course of dealing and, even if it had been, did not effectively exclude liability for negligence.

Facts

The plaintiff, Mr Hollier, had his car repaired at the defendants’ garage on several occasions over five years. In March 1970, he telephoned to arrange repairs for an oil leak. The oral contract contained no reference to any exclusion clause. While at the garage, the car was damaged by fire caused by the defendants’ negligence arising from faulty electrical wiring. The defendants sought to rely on a clause appearing on invoice forms which stated: ‘The Company is not responsible for damage caused by fire to customer’s cars on the premises.’ The plaintiff had signed such forms on two or three previous occasions but had not read them.

Issues

First Issue: Incorporation by Course of Dealing

Whether the exclusion clause could be implied into the oral contract by reason of a course of dealing between the parties, where the plaintiff had only signed the relevant forms on three or four occasions over five years.

Second Issue: Construction of the Exclusion Clause

Whether, if incorporated, the clause was effective to exclude liability for damage caused by the defendants’ own negligence.

Judgment

Course of Dealing

The Court of Appeal held that three or four transactions over five years did not constitute a sufficient course of dealing to import the exclusion clause into the oral contract. Lord Justice Salmon distinguished the case from the Hardwick Game Farm case, where dealings occurred three or four times monthly over three years.

Construction of the Clause

The Court held that even if the clause had been incorporated, it would not exclude liability for negligence. Lord Justice Salmon emphasised that exclusion clauses must make their meaning plain to any ordinarily literate and sensible person. The words used would be understood by an ordinary person as a warning that the garage was not liable for fires not caused by their negligence, rather than as excluding liability for their own negligent acts.

The company is not responsible for damage caused by fire to customer’s cars on the premises.

Lord Justice Salmon stated that if defendants wished to exclude responsibility for fire caused by their own negligence, they ought to have done so in far plainer language.

The Court disapproved of the earlier decisions in Turner v Civil Service Supply Association Ltd and Fagan v Green & Edwards Ltd.

Implications

This case is significant for establishing that a course of dealing must be consistent and regular to import terms into subsequent contracts. Occasional transactions over several years are insufficient. The case also reinforces the principle that exclusion clauses must use clear and unambiguous language to exclude liability for negligence. Where words are capable of two constructions, one excluding negligence and one not, the latter construction will be preferred. The decision emphasises the courts’ reluctance to allow traders to shelter behind ambiguous language that might mislead ordinary consumers about their rights.

Verdict: Appeal allowed. The defendants were not entitled to rely on the exclusion clause as it was not incorporated into the oral contract by course of dealing, and even if it had been, the clause did not effectively exclude liability for the defendants' negligence. Damages to be assessed or agreed.

Source: Hollier v Rambler Motors (A.M.C.) Ltd. [1971] EWCA Civ 12 (19 November 1971)