Lecture notes
PL373 Law of Delicts notes
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Lecture notes of 9 pages for the course Law Of Delict at SUN (class notes)
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THEME 12. LIABILITY FOR A NEGLIGENT MISSTATEMENTAND LIABILITY FOR PURE ECONOMIC LOSS
Prescribed:
Loubser & Midgley: Chapter 15-16
Administrateur Natal v Trust Bank van Afrika Bpk 1979 (3) SA 824 (A)
Mukheiber v Raath and Another 1999 (3) SA 1065 (HHA)
Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd (653/07)
[2008] ZASCA
Introduction
Can ask theoretical questions on what pure economic loss is and how to determine
liability OR practical application question
Misstatement = statement that is factually incorrect
Trust bank case: Administrateur decided to expropriate property of Bijo, but sent the
letter to wrong P Bijo,
- Bo he went to trust bank to appoint as agent and asked that they must negotiate with
Administrateur to get compensation and found out he paid wrong person
- A wants to recoupe money he paid to wrong person and is now suing trust bank,
saying that bank made misstatement on whose immovable property must be
expropriated
Fourway Haulage → asbestos truck made accident and national road closed,
SANRAL lost toll income
Pure economic loss = telematrix case: Harmse J defined as pure economic loss
connotes loss that does not arise directly from damage to the plaintiff’s person or
property but rather in consequence of the negligent act itself, such as loss of profit,
being put to extra expenses or the diminution in value of property
NB can ask and ask to distinguish from consequential loss
injured and unable to work = bodily injury and loss of income due to injury =
consequential loss due to injury → economic loss flows from bodily harm, contrary to
defined in telematrix
Example = legal practitioner fails to insert clause allowing two testators daughters to
each inherit R1m, when he dies the daughters are disappointed beneficiaries and
institute claim against LP = pure economic loss
example case is SHELL BP case, where captain of ship damages where boats must
dock and other ships couldn’t doc. There is property damage for harbour owner, but
there is economic loss for other ships in bay that cannot dock, as well as for people who
must get the goods from these ships to sell
to determine whether consequential or pure: ask who is plaintiff, whether the loss arises from
bodily injury
distinction is important because if PEL then wrongfulness element becomes a stumbling
block, not under consequential
, Causation of pure economic loss
o Nature of harm = patrimonial harm
o Relevant remedy =
o Elements
Why focus on negligent misstatement?
Other forms of causation of pure economic loss → see Fourway Haulage
Historical developments
Important comments
Legal rule = causation of pure economic loss is not prima facie wrongful
Implication of rule = prove wrongfulness
LQ = court will enquire enquiry into whether reasonable to impose liability on
defendant for causing pure economic loss based on legal and public policy
considerations
Philosophical foundation and policy considerations (see discussion below)
Note can cause pure economic loss negligently or intentionally
Courts not easily impose liability due to two reasons:
1. Individualistic, capitalistic society → high premium on will of individual and
jurisprudence on liability comes from capitalistic society where one can cause
opponent pure economic loss and that it is a good thing to do it, this is why
courts don’t easily impose liability
2. Fear of unlimited liability: fear for indeterminate class of plaintiffs for
indeterminate of money → some instances can have chain reaction of loss
caused, the interconnectedness makes determining plaintiffs impossible (e.g.
BP case)
Brief summary of history
Before Trust Bank case = no liability for pure economic loss
In Trust Bank case liability for PEL as a result of negligent misstatement → court
says it is willing to recognise liability, confirmed requires all 5 elements of delict and
use aquilian action, ito limitless liability they held determine whether there was a legal
duty not to cause the pure economic loss ito fault, causation and wrongfulness
After Trust Bank = broader development of liability for PEL → liability recognised in
many other contexts such as Fourway Haulage, interfering with contractual
relationships, etc.
“In my opinion the ground of action can and ought to be placed in the extended range of application of
the lex Aquilia. From this it would follow that, according to our current norms, unlawfulness is required
and a guilty mind [fault]. The fear of the so-called ‘limitless liability’ can then only be allayed if in
every given case it is the task of the Court to decide whether in the particular circumstances there
was a legal duty resting on the defendant not to make a misstatement to the plaintiff, and also
whether the defendant, in the light of all the circumstances, exercised reasonable care, inter alia, in
determining the correctness of his representation. In the absence of a legal duty there is no
unlawfulness. The Court will also keep the ground of action within reasonable limits by giving proper
attention to the nature of the misstatement and the interpretation thereof and also by giving proper
attention to the problem of causation.” (832-833)
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