On 1 January 1993 a newly built cold storage facility at Duncan Dock, Table Bay Harbour, operated by Duncan Dock Cold Storage (Pty) Ltd, was destroyed by fire after a distress flare fired by an unknown person landed in the roof gutter and ignited combustible materials. Sea Harvest Corporation (Pty) Ltd and South Atlantic Islands Development Corporation had deposited frozen fish and lobster products at the cold store under oral contracts of deposit. All deposited goods were destroyed. The cold store had been designed without a sprinkler system after the Portnet port engineer classified it as a low-risk (J3) occupancy under the National Building Regulations, despite a recommendation from the City of Cape Town fire officer that it be classified as moderate-risk (J2) requiring sprinklers. The appellants sued the cold store operator and Portnet in contract and delict, alleging negligence in failing to install a sprinkler system and in permitting combustible insulation to protrude into roof gutters. The trial court dismissed the claims on liability, finding no negligence. The appellants appealed to the Supreme Court of Appeal.