Summary of Judgment

1. Introduction

The matter concerned an appeal to the Gauteng Local Division, Johannesburg, against a judgment of Francis J (the court a quo), with leave to appeal having been granted by that court. The appeal was determined by a full bench comprising Kathree-Setiloane J, Wepener J, and Mashile J, with the judgment delivered by Wepener J.

The parties were the MEC for Education (first appellant) and the Minister of Education (second appellant), as appellants, and Saraphina Fikile Zwane as respondent. The respondent had been an employee in the appellants’ employ and sued the appellants for damages.

The procedural history, as reflected in the judgment, was that the court a quo heard evidence from the respondent and the appellants’ witnesses and then made an order that the appellants were liable for such damages as the respondent might prove, together with an adverse costs order against the appellants. The appeal was directed at that finding of liability and the associated costs order.

The dispute in substance concerned an alleged delictual claim (lex Aquilia) for pure economic loss said to have flowed from an alleged omission by employees of the appellants, namely the late issuing and transmission of a letter which, on the respondent’s version, would have prevented a sale in execution of her property following mortgage default and foreclosure proceedings by a bank.

2. Material Facts

It was common cause that the respondent was employed by the appellants and that she stayed away from work for a lengthy period. As a result, the appellants stopped paying her salary under a policy described as “no work and no pay”, with the respondent consequently not receiving remuneration for a period of years. The judgment records that it was unclear whether she was dismissed due to illness or whether she absconded, but this uncertainty did not become decisive to the appeal.

It was also common cause that the respondent had purchased a property financed by a bond with a bank. Due to her failure to meet her bond instalments, the bank foreclosed in 2008, obtained judgment against her, and caused the property to be attached and placed for sale in execution. The court emphasised that the respondent’s indebtedness to the bank and the bank’s enforcement steps were of her own making and not caused by the appellants. During argument, counsel for the respondent accepted that the bank had foreclosed, that the respondent owed the bank money, and that the bank had the right to sell the house.

The sale in execution was scheduled for 10h00 on 22 January 2010. On the morning of the scheduled sale, the respondent approached employees of the appellants and requested that they issue a letter stating that she would receive arrear salary in the immediate future. The respondent’s version included that she overheard (via a speakerphone conversation) that an auctioneer had said the auction would not proceed if a letter was provided stating she would receive her money the following Thursday. The alleged auctioneer was not called as a witness, and the appellate court noted that there was no demonstrated basis for admitting that hearsay evidence against the appellants.

On the respondent’s evidence, employees of the appellants agreed to issue and forward the requested letter to the auctioneer before 10h00, but the letter was sent too late, after the sale in execution had already taken place.

The court a quo found, on the material before it, that if the letter had been sent before 10h00 the bank would not have sold the house. The appellate court rejected this as an unsustainable factual finding on the record, and further held that the court a quo erred in its approach by stating that it need not consider causation.

3. Legal Issues

The appeal raised central questions of delictual liability under the lex Aquilia for pure economic loss arising from an alleged omission, and in particular whether the respondent had proved the necessary elements to establish liability.

The principal legal questions the appellate court was required to determine were whether the respondent had established wrongfulness in the form required for pure economic loss based on an omission, namely whether the appellants owed her a legal duty to act by issuing the letter, and whether there was causation between the failure to send the letter timeously and the loss claimed (the sale in execution and its consequences).

The dispute thus concerned a combination of legal questions (the requirements for wrongfulness and the need for a legal duty in cases of pure economic loss arising from omissions), application of law to fact (whether the proven facts supported the existence of such a duty and whether causation was shown), and a factual insufficiency issue (whether there was admissible evidence supporting the contention that the sale would probably have been halted had the letter been sent earlier).

4. Court’s Reasoning

The appellate court approached the matter by restating that, for a claim under the lex Aquilia, a plaintiff must prove the elements of delict, including wrongfulness and causation, among other requirements. The judgment emphasised that where the loss is pure economic loss and the claim is founded on an omission, wrongfulness is not presumed. In such matters, wrongfulness depends on whether there was an infringement of a right or the breach of a legal duty resting on the defendant to act.

On the facts as found relevant by the appellate court, the respondent did not establish that she had any right infringed by the appellants. The analysis therefore turned on whether the appellants, through their employees, owed the respondent a duty of care / legal duty to issue the letter, and whether failing to do so timeously could be regarded as wrongful conduct for purposes of delictual liability.

The court held that the court a quo should have determined the issue of wrongfulness (and therefore legal duty), but did not properly do so. On the appellate court’s assessment, no such legal duty existed on the appellants’ part. The mere failure by employees to send a letter, even if they had agreed to do so, could not “simpliciter” found delictual liability for pure economic loss, because such conduct is not prima facie wrongful. The court reasoned that the appellants’ employees had no duty to assist the respondent in her civil dispute with the bank, and no duty to issue the letter; at most, they undertook to do so as a courtesy.

The appellate court further held that the respondent was required to plead and prove the nature of the duty relied upon. It noted that the respondent abandoned all allegations of negligence and relied on an assertion framed in terms of staff negligence in failing to reply timeously to a request for a letter from the bank, characterised as “gross negligence”. The court held that there was neither a pleaded allegation that the appellants owed a legal duty nor evidence establishing such a duty, and consequently the element of wrongfulness was not proved.

In addition to wrongfulness, the appellate court dealt with causation as a separate and necessary element that the respondent had to establish. The court rejected the proposition advanced for the respondent that causation did not need to be proved at the hearing because liability and quantum had been separated. The appellate court held that causation is an integral component of Aquilian liability and must be proved before a defendant can be held liable, because only causal negligence (or, in this context, a causal breach of duty) can give rise to legal responsibility.

Applying those principles to the evidence, the appellate court held there was no admissible evidence showing that, had the letter been sent by 10h00, the respondent’s house would not have been sold in execution. The court considered that the appropriate witness to establish such a probability would have been someone from the bank, yet no such evidence was led. The judgment also found no probabilistic basis, on the record, to support the respondent’s contention that a letter to the auctioneer would have caused the bank to halt the sale and wait for later payment.

The appellate court additionally characterised the sale as effectively a fait accompli once foreclosure and judgment had occurred, and concluded that the respondent failed to demonstrate that the requested letter would have played a role in preventing the execution sale. On that basis, the respondent failed to prove causation as well.

On these grounds, the court concluded that the respondent failed on two essential elements of delictual liability in this context, namely wrongfulness (via legal duty) and causation, and accordingly could not succeed.

5. Outcome and Relief

The appeal was upheld with costs.

The order of the court a quo was set aside and substituted with an order that the plaintiff’s (respondent’s) claim is dismissed with costs.

Cases Cited

Coronation Brick (Pty) Ltd v Strachan Construction Co (Pty) Ltd 1982 (4) SA 371 (D)

Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A)

Minister of Law and Order v Kadir [1994] ZASCA 138; 1995 (1) SA 303 (A)

BOE Bank Ltd v Ries 2002 (2) SA 39 (SCA)

Minister of Finance and Others v Gore NO 2007 (1) SA 111 (SCA)

Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng 2015 (1) SA 1 (CC)

South African Railways and Harbours v Marais 1950 (4) SA 610 (A)

Minister of Police v Skosana 1977 (1) SA 3 (A)

Delphisure Group Insurance Brokers Cape (Pty) Ltd v Kotze and Others 2010 (5) SA 499 (SCA)

Lee v Minister of Correctional Services 2013 (2) SA 144 (CC)

Legislation Cited

No legislation was cited in the judgment.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the respondent’s claim was a claim for pure economic loss allegedly caused by an omission, and that in such circumstances the respondent was required to establish wrongfulness by proving the existence and breach of a legal duty on the appellants to act. The respondent did not plead or prove such a legal duty, and the conduct relied upon (a late letter issued as a courtesy) was not shown to be wrongful.

The court further held that causation is an essential element of Aquilian liability and must be proved even where issues of liability and quantum have been separated. On the evidence, there was no admissible basis to find that sending the letter before 10h00 would probably have prevented the sale in execution. The respondent therefore failed to prove both wrongfulness and causation, with the result that the claim could not succeed and was dismissed with costs.

LEGAL PRINCIPLES

Wrongfulness is a distinct element of delictual liability and is not presumed where the claim concerns pure economic loss arising from an omission. In such cases, the plaintiff must establish either an infringement of a right or, more typically, the breach of a legal duty resting on the defendant to act; absent such a duty, the omission is not wrongful.

A party who undertakes an act as a courtesy does not, without more, thereby assume a legal duty actionable in delict for pure economic loss. The existence of a legal duty must be both pleaded and proved on the facts.

Causation is an essential element of Aquilian liability and must be established to ground a finding of liability. The separation of issues between liability and quantum does not dispense with the requirement that the plaintiff prove a causal connection between the alleged wrongful conduct (or breach of legal duty) and the loss claimed before liability can be imposed.

Where a plaintiff alleges that an act (such as the provision of a letter) would have prevented an outcome (such as a sale in execution), the plaintiff bears the burden of producing admissible evidence that the outcome would probably have been avoided; absent such evidence, a finding of causation cannot be sustained.