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[2019] ZAWCHC 27
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Jake Trading CC v Rambore (Pty) Ltd t/a Rambore Specialist Contractors and Another (11909/2017) [2019] ZAWCHC 27 (13 March 2019)
Republic of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No. 11909/2017
Before: The Hon. Mr Justice Binns-Ward
Date
of hearing: 7 March2019
Date
of judgment: 13 March 2019
In
the matter between:
JAKE
TRADING
CC
Plaintiff/Respondent
and
RAMBORE
(PTY) LTD t/a RAMBORE
SPECIALIST
CONTRACTORS
First
Defendant
LUCCA
DEVELOPMENTS CC t/a DRILLWERX
Second
Defendant/Excipient
JUDGMENT
BINNS-WARD
J:
[1]
Jake Trading CC has instituted action
proceedings against Rambore (Pty) Ltd t/a Rambore Specialist
Contactors and Lucca Developments
CC t/a Drillwerx, respectively, for
payment in damages in the sum of R722 053,41. The second
defendant has noted an
exception to the plaintiff’s particulars
of claim on the grounds that they fail to disclose a cause of action
against the
second defendant; alternatively, that they are vague and
embarrassing.
[2]
According to the pleading (which on any
approach is not a model of draftsmanship
[1]
),
the plaintiff engaged the professional services of the first
defendant as a nominated sub-contractor to effect certain work in
terms of a works contract between the plaintiff and the City of Cape
Town. The principal contract between the City, qua employer,
and the plaintiff, qua principal contractor, provided for the
plaintiff to render certain ‘repair and installation services
of electrical equipment for the Koeberg to Broad Road Number 1 66KV
Oil Filled Feeder’. It is alleged (somewhat opaquely)
that the services to be rendered by the first defendant in terms of
the sub-contract included, but were not limited to, ‘drilling
and complying with the way-leave stipulations and instructions from
Electricity Department of the City of Cape Town’.
The
specified services to be rendered by the first defendant were
labelled by the pleader as ‘
the
professional services
’.
[3]
It may be deduced from the pleading that it
was appreciated that the execution of the professional services by
the first defendant
would place certain underground cables at risk.
The plaintiff alleged in this regard (at para. 4.4 of the particulars
of
claim) that it was a term of the sub-contract between the
plaintiff and the first defendant (defined in para. 4 of the
pleading
as ‘
the agreement
’)
that ‘
The First Defendant would
bear the risk of damage and/or loss being sustained to cables,
provided that the cables were pointed out
’.
It will come as no surprise in the context of what I have
recorded thus far that the action concerns the consequences
of a
cable having been damaged.
[4]
It may be inferred from paragraph 23 of the
pleading, which reads –
As a result of the damage caused to the … cable,
the Plaintiff is liable to the Employer, the City of Cape Town, for
damages
in the sum of R722 053.41 being the reasonable and
necessary cost of repair of the … cable, …
that
the so-called ‘risk of damage’ liability was in point of
fact undertaken by the plaintiff in favour of the City
in the
principal contract. In the given context, the pleaded
allegation in para. 4.4 seems to imply the existence of
an
undertaking in the subcontract by the first defendant in favour of
the plaintiff to indemnify the latter in respect of its contingent
liability to the City in respect of damage caused to cables in the
execution of the contract work. The pleading would have
been
much clearer if the pleader had attached copies of the contracts, or
the pertinent parts thereof, as contemplated by Uniform
Rule 18(6);
alternatively, quoted the relevant terms
ipsissimis
verbis
. I shall do the best I can
in the circumstances by proceeding on the basis of my stated
understanding of the pleaded case
with reference to paras 4.4
and 23 read in the context of the rest of the document.
[2]
[5]
At
paras. 7-8 of its particulars of claim, the plaintiff alleges:
7. During or about June 2014, the First Defendant
employed the Second Defendant, (sic) as an employee and
sub-contractor under the
First Defendant, for the purpose of
rendering the professional services for reward (Hereinafter (sic)
referred to as “
the sub-contract
”).
8. The full and further particulars of the Second
Defendant’s employment as a sub-contractor under the First
Defendant, and
the terms of the sub-contract, (sic) are unknown to
the Plaintiff.
The
reference in paragraph 7 to the second defendant as ‘an
employee’ is confusing, but the thrust of the allegations,
when
the pleading is read as a whole, appears to be that the first
defendant engaged the second defendant as an independent
sub-contractor.
(I say ‘appears to be’ advisedly,
because there are further confusing references (in para. 5 of the
pleading) to the
second defendant, which is a juristic person, as
part of the ‘staff’ - i.e. an employee - of the first
defendant.)
Furthermore, what the pleader has chosen to label
as ‘
the sub-contract
’ must, in the context that I
have described, actually be a sub-subcontract.
[6]
The facts giving rise to the claim are
pleaded as follows in paras. 15-19 of the particulars of claim:
15.2 During [a] site inspection … two …
cables were found in the way of drilling operations. As a
result the
position of the drill had to be moved.
15.3 A site meeting was subsequently called to determine
a safe option for the drill position.
15.4 The position of the cables was pointed out to the
representatives of the Second Defendant by the representatives of the
City
of Cape Town …
15.5 As a result, the Second Defendant was fully aware
of the position of the cables …
15.6 Pursuant to the site meeting, the council staff of
the City of Cape Town caused the cables to be exposed, which cables
were
at a depth of about two metres, which hole (sic) would remain
open throughout the drill process, thus exposing the … cables.
16. On 3 July 2014, and subsequent to the cables being
exposed, a pilot bore was successfully drilled at the site rendering
the
… cables unharmed (sic).
17. On 9 July 2014 the Second Defendant unilaterally,
and without notification to any of the parties concerned, changed the
drilling
direction and commenced drilling from a new launch position.
18. At the new launch position, [a] … cable was
at a depth of approximately 1.1 metres.
19. As a result of the Second Defendant (sic) unilateral
deviation by drilling from a new launch position, [a] … cable
was
damaged.
[7]
In para. 20 of the particulars of claim it
is alleged that –
The damage to the … cable was caused by:
20.1 A wrongful breach by each of the Defendants of
their aforesaid legal duties (and where applicable, a breach of
contract by
the First Defendant);
20.2 The joint negligence of the First and Second
Defendants (and the employees,
alternatively
authorised
representatives of the First and Second Defendant (sic));
20.2.1
Alternatively
by the negligence of the
First Defendant (and its employees,
alternatively
authorised
representatives);
20.2.2
Further alternatively
the negligence of
the Second Defendant (and its employees,
alternatively
authorised representatives).
[8]
Insofar
as the second defendant is concerned, the nature of the ‘aforesaid
legal duties’ referred to in para. 20 of
the pleading is
pleaded in paras. 10-11 of the document as follows:
10. By reason of and flowing from the sub-contract and,
independently from the agreement, by reason of and flowing from the
fact
that the Second Defendant would be rendering the professional
services, the Second Defendant was at all material times hereto under
a legal duty to render the professional services with such skill,
care and diligence as could reasonably be expected of a specialist
sub-contractor in similar circumstances (which duty included, but was
not limited to, the obligations undertaken by the Second
Defendant
and referred to in paragraph 4 above).
11. As between the Second Defendant and the Plaintiff,
(sic) there is a sufficient relationship of proximity that, in the
reasonable
contemplation of the Second Defendant, carelessness and/or
negligence on its part may be likely to cause damage to the
Plaintiff,
in which case a
prima facie
duty of care arises.
(Paragraph
4 of the pleading, referred to in para. 10 thereof quoted above,
sets out the terms of ‘
the agreement
’ – i.e.
the subcontract between the plaintiff and the first defendant,
not
the terms of ‘th
e subcontract
’ – i.e. the
sub-subcontract between the first defendant and the second
defendant.)
[9]
It is reasonably clear therefore that the
plaintiff’s claim against the second defendant purports to be
pleaded in delict,
and that the damages claimed by it constitute the
amount by which it is allegedly out of pocket in consequence of its
contractual
liability to the City of Cape Town under the principal
contract. Its claim is not of the type falling under the
traditional
Aquilian action – a claim for compensation for
patrimonial loss occasioned negligently by the defendant physically
harming
the claimant’s person or corporeal property – but
rather for what is generally referred to as ‘pure economic
loss’, that is patrimonial loss that is not caused by injury to
persons or corporeal property. In the seminal judgment
in
Administrateur, Natal v Trust Bank van
Afrika Beperk
1979 (3) SA 824
(A),
[1979] 2 All SA 270
, the late Appellate Division put its seal of
approval on the recognition in principle of a basis for the
advancement of such claims
under what is termed ‘the extended
Aquilian action’.
[3]
[10]
The appeal court addressed the concern that
the extension of the delictual remedy might conduce to an unwholesome
situation of potentially
boundless or indeterminate liability by
reaffirming that the extended action would retain the elements of the
traditional Aquilian
action, thereby requiring claimants to prove
both negligence and wrongfulness on the part of the defendant in
order to succeed.
These requirements, it held, would rein in
any spectre of limitless liability.
[11]
Inasmuch as wrongfulness in the relevant
sense implies a breach by the defendant of a duty in law
(Afr.
regsplig
)
to the claimant in the given circumstances, whether the act or
omission in question in a claim for compensation for pure economic
loss was wrongful would fall to be determined on a case-by-case
basis.
[4]
Absent the establishment by the claimant of the breach of a pertinent
legal duty by the defendant, proof of wrongfulness
would be wanting.
The determination whether a ‘legal duty’ in the relevant
sense
[5]
exists in a given situation involves deciding what legal policy
should reflect. The exercise is sometimes described as
determining
what the legal convictions (appropriately informed by the
norms and values embodied in the Constitution) of the community would
expect. In essence it is directed at determining whether,
objectively, it would be reasonable in the circumstances for
liability
in law to be imposed on the defendant.
[6]
It is material to be mindful in undertaking the exercise that
acts
causing pure economic loss, unlike those causing physical harm or
injury, are not
prima facie
unlawful. The approach to
determining whether a breach of a legal duty has occurred in a pure
economic loss case is essentially
the same as that in cases arising
out of negligent omissions. The following pithily worded
observation by Lord Hoffmann in
Stovin v. Wise
[1996] UKHL 15
,
[1996] 3 All ER 801
(HL),
[1996]
AC 923
at 949 (AC), which was a negligent omission case,
illustrates that the position here in this respect is the same in
English law:
‘
The trend of authorities
has been to discourage the assumption that anyone who suffers
[pure
economic]
loss is prima facie entitled
to compensation from the person … whose act or omission can be
said to have caused it. The default
position is that he is not.
’
This emphasis on the proper point of departure in the required
analysis highlights the incidence of the requirement
that a plaintiff
in delictual claims for pure economic loss must plead in his
statement of claim sufficient allegations, which
if accepted, would
sustain a finding that the defendant had negligently breached a duty
in law to the plaintiff.
[12]
In the current case the question that
arises on the plaintiff’s particulars of claim is ‘Does
legal policy favour the
extension of a delictual claim to the
plaintiff to recover damages for having to perform under a
contractual obligation to indemnify
the City of Cape Town for the
costs of repair to property damaged in the course of the execution of
a works contract entered into
between the City and the plaintiff, to
which the second defendant is not privy?’. The pleaded
basis for the delictual
liability is the fact that second defendant
had been employed by the plaintiff’s subcontractor to carry out
part of the work,
and failed to do so with ‘such skill, care
and diligence as could reasonably be expected of a specialist
sub-contractor in
similar circumstances’ when there was ‘a
sufficient relationship of proximity’ between the second
defendant and
the plaintiff that the second defendant should have
foreseen that its negligent execution of the sub-subcontract work
might cause
the plaintiff to suffer loss.
[13]
The centrality of the second respondent’s
role as a party carrying out the part of the
contracted
work as the basis of its alleged delictual liability is emphasised by
the pleaded introduction to para. 10 of the particulars of
claim: ‘
By
reason of and flowing from the sub-contract and, independently from
the agreement,
[?and]
by
reason of and flowing from the fact that the Second Defendant would
be rendering the professional services, the Second Defendant
was at
all material times hereto under a legal duty to …
’.
[14]
The judgment in
Lillicrap,
Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd
[1984] ZASCA 132
;
1985 (1) SA 475
(A),
[1985] 1 All SA 347
serves as an illuminating
example of the considerations that fall to be weighed in the balance
in any determination of whether
a delictual remedy should be extended
where the legal duty contended for arises in a matrix of
obligationary relationships based
on contract. It is therefore useful
to dwell on it in some detail.
Lillicrap
was also decided on exception.
[15]
Grosskopf AJA summarised the factual
context of the matter in
Lillicrap
as follows:
In or about July 1974 the [plaintiff]
appointed the [defendant]
as
its
consulting
engineer
to
investigate
a
site
in
Springs
(which
investigation
would
include
a
soil investigation and
an analysis of its results) in order to determine the suitability of
the site for the erection of a glass
plant thereon. If the site were
found to be suitable, the [defendant] was further appointed to design
and supervise the construction
of the civil engineering and building
works for a glass plant which the [plaintiff] wished to have erected
there.
The
[defendant]
had
at
all
relevant
times
held
itself
out
as
having
the
expert
knowledge
and professional
skill
necessary
for
the
performance
of
these
duties,
and
it
knew
what
the
[plaintiff’s]
specific requirements
were for the work.
The [defendant] purported to carry
out the site investigation and advised the [plaintiff] that the site
was suitable for
the
construction
of
the
works
in
conformity
with
the
[plaintiff’s]
requirements.
Thereafter
the
[
defendant] purported
to design the works with due regard to the conditions on site (as
determined by the [defendant]) so as to give
effect to the
requirements of the [plaintiff]. In June 1975 a formal agreement was
executed by the parties which
inter
alia
confirmed the appointment of the [defendant] as consulting engineer
in respect of the design and supervision of the works. The
[plaintiff] had then already paid the [defendant] a sum of R100
051-72 in respect of professional services rendered prior to the
date
of the formal agreement.
Initially therefore there was a
contractual
nexus
between the parties. This situation changed in or about May 1976,
when the parties agreed that the formal agreement of June 1975
would
be assigned to Salanc Contractors (Pty) Limited
(“Salanc”).
Salanc
was
in
a
direct
contractual
relationship
with
the
[plaintiff],
and
the
effect
of
the assignment was
therefore to change the appellant's status to that of a
sub-contractor
vis-à-vis
the [plaintiff].
The [defendant] was aware that,
despite the assignment, the works were to be constructed for the
benefit of the [plaintiff] as the
owner thereof.
The
glass plant was in due course erected, but it became apparent that,
because of certain adverse site conditions that had not
been
identified by the defendant, it was subject to movement, which
rendered it unsuitable for its purpose. The site conditions,
had they been identified beforehand, could have been addressed in the
construction of the building. The cost of remediation
work ran
to R3 605 511, which was the amount of the plaintiff’s claim.
[16]
The plaintiff in
Lillicrap
’s
case alleged
that,
in
the
light
of
the
circumstances
described
above,
the defendant owed the respondent a duty in
law, both before and after the assignment of the contract, to carry
out properly and
with professional skill and care the various tasks
which it purported to perform. It alleged that the defendant,
in breach
of the said duty, had negligently failed to carry out those
tasks properly and with the necessary professional skill and care,
thereby causing the plaintiff damages in the sum of R3 605 511.
[17]
The following contentions were advanced in
support of the exception noted in
Lillicrap
:
a)
That,
on the facts alleged, the defendant did not owe the plaintiff a
delictual duty of care, more particularly in the light of
the
contractual relationship between the parties prior to May 1976, and
the assignment in 1976 of the contract of June 1975 to
Salanc;
and
b)
That
the facts alleged by the plaintiff did not give rise to any claim for
damages in respect of pecuniary or financial loss only,
more
particularly in the light of the circumstances mentioned in (a) above
(i.e. the contractual relationship between the parties
and the
assignment of the contract).
[18]
The appeal court pointed out in
Lillicrap
that our law adopts a conservative approach to the extension of
remedies under the
lex Aquilia
;
[7]
the first question always being whether there is a need for an
extension in the given circumstances. The essential bases
for
the court’s decision to uphold the exception on appeal were
that no need had been shown in the circumstances for an extension
of
the Aquilian remedy, and that the court of first instance had been
wrong to follow what it considered to be the relatively liberal
approach to the extension of delictual remedies then followed under
English law in accordance with the decision in
Anns v.
Merton London Borough Council
[1977] UKHL 4
[1978] A.C. 728
,
[1977] 2 All ER 118
(HL),
to which I
shall refer in more detail presently.
[19]
In the exception in issue in the current
matter the second defendant contends that the particulars of claim
fail to make out a cause
of action in support of the claim for
compensation for pure economic loss because the ‘
mere
conclusion of a subcontract
[as
mentioned, actually a sub-subcontract]
and
the defendant rendering the professional services under it
[negligently]
does not serve to make the
second defendant’s conduct wrongful vis-a vis the plaintiff
’.
Thus, the essence of the main ground of the second defendant’s
exception is that the mere undertaking by it
of the
sub-subcontractual obligations to the first defendant in respect of
the works commissioned by the City of Cape Town did
not impose on it
a duty in law to the plaintiff to perform its sub-subcontractual
obligations to the first defendant in a manner
that would not render
the plaintiff liable in terms of the strict liability clause in the
principal contract between the latter
and the City, to which the
second defendant was a stranger.
[20]
In my view there is no cogent basis in
legal policy to extend a delictual remedy to the plaintiff against
the second defendant in
the given circumstances. The evident
reason for the contractual remedy stipulated by the City of Cape Town
in its contract
with the plaintiff was to transfer to the plaintiff
the responsibility to ensure that anyone carrying out the contract
work did
so in a manner so as not to damage the cables, and to put
the risk of damage on the plaintiff if the work was not done in that
manner. It was within the plaintiff’s power to regulate
its exposure to liability for damage to the cables contractually,
just as the employer had done in regard to the plaintiff in the
principal contract. Indeed, as described by Schutz JA
in
Minister of Public Works and Land
Affairs v Group Five Building Ltd
[1999] ZASCA 36
;
[1999] 3 All SA 467
(A) in the closely analogous
context of building contracts, ‘The entire machinery [of
building sub-contracting], evolved
over many years, is designed to
avoid privity between the employer and the nominated sub-contractor,
whilst retaining substantial
control over the sub-contract works in
the employer’s hands. Anyone who has had experience of the
electrician driving a hole
through the wall after the plasterer has
completed his work, or the installer of the alarm lights putting
nails into the handiwork
of the waterproofer, will understand the
frustrations caused by everybody blaming someone else, in the absence
of a single contractor
to whom one may look to sort out such matters.
This is the main motive behind the avoidance of privity with
sub-contractors. But
the machinery does have disadvantages for the
contractor, who has to put up with a sub-contractor whom he might not
himself have
selected.’
[21]
In
the current case, the plaintiff contractually imposed the risk of
damage to what appear to have been the employer’s cables
on the
first defendant as the nominated sub-contractor. In doing so it
was stipulating for an indemnity in respect of its
own contractually
undertaken exposure to strict liability to the employer under the
principal contract. It could just as
easily, had it wished to
extend the ambit of parties against which it could seek redress if a
cable were damaged in circumstances
that rendered it liable to the
employer under the principal contract, have imposed an obligation on
the first defendant not to
engage a sub-subcontractor to render the
professional services without the inclusion in the sub-subcontract of
an undertaking by
the sub-subcontractor in its (the plaintiff’s)
favour to undertake joint and several liability with the first
defendant in
respect of the said risk.
[22]
High
authority holds that the ability of a plaintiff to avoid the need for
resort to a remedy involving an extension of the Aquilian
action is a
weighty legal policy consideration. The consideration, which
bears on the effect of the plaintiff’s ability
to manage its
vulnerability to risk, is closely related to the well-recognised
dissuasive effect of the existence of other established
means of
redress in given circumstances on the readiness of the courts to
extend the law to provide a new and additional remedy.
[8]
The observation by Brand JA in
Trustees
for the Time Being of Two Oceans Aquarium Trust v Kantey &
Templer (Pty) Ltd
[2005] ZASCA 109
;
[2007] 1 All SA 240
(SCA)
at para. 18,
as to one of the important points underpinning the policy decision
against recognising the availability of a delictual
action to the
plaintiff in
Lillicrap
seems to me very much in point: ‘
The point underlying
the decision in Lillicrap was that the existence of a
contractual relationship enables the parties
to regulate their
relationship themselves, including provisions as to their respective
remedies. There is thus no policy imperative
for the law to
superimpose a further remedy. Consequently, the mere absence of a
contractual remedy in the present case does not
by itself distinguish
it materially from Lillicrap.
’ Just as in the
current matter, there was no contractual remedy actually available to
the plaintiff in
Two Oceans Aquarium Trust v
Kantey & Templer
, but there could
have been had the plaintiff thought to protect itself by stipulating
for one.
[23]
The
fact that there was no relationship of contractual privity between
the plaintiff and the second defendant does not avail the
plaintiff
in contending for an action in delict to be afforded to it in the
circumstances of the current case. As the appeal
court held in
analogous circumstances in
Two Oceans
Aquarium Trust v Kantey & Templer
supra,
‘
Generally speaking, I can see no reason why the
Aquilian remedy should be extended to rescue a plaintiff who was in
the position
to avoid the risk of harm by contractual means, but who
failed to do so
’.
[9]
It makes no difference in principle that in this case it not the risk
of harm that could have been avoided, but a contractual
undertaking
essentially identical to that extracted from the first defendant that
could have been stipulated.
[24]
Moreover,
the imposition of a delictual duty on the second defendant in the
current circumstances would, in my view, also raise
difficulties of
the sort posited by Grosskopf AJA in the following passage in
Lillicrap
at 500G-501B:
When parties enter into such a contract, they normally
regulate those features which they consider important for the purpose
of
the relationship which they are creating. This does not of course
mean that the law may not impose additional obligations by way
of
naturalia
arising by implication of law, or, as I
have indicated above, those arising
ex delicto
independently
of the contract. However, in general, contracting parties contemplate
that their contract should lay down the ambit
of their reciprocal
rights and obligations. To that end they would define, expressly or
tacitly, the nature and quality of the
performance required from each
party. If the Aquilian action were generally available for defective
performance of contractual
obligations, a party’s performance
would presumably have to be tested not only against the definition of
his duties in the
contract, but also by applying the standard of
the
bonus paterfamilias.
How is the latter standard
to be determined? Could it conceivably be higher or lower than the
contractual one? If the standard imposed
by law differed in theory
from the contractual one, the result must surely be that the parties
agreed to be bound by a particular
standard of care and thereby
excluded any standard other than the contractual one. If, on the
other hand, it were to be argued
that the
bonus
paterfamilias
would always comply with the standards laid
down by a contract to which he is a party, one would in effect be
saying that the law
of delict can be invoked to reinforce the law of
contract. I can think of no policy consideration to justify such a
conclusion.
[25] I appreciate
that, unlike the position in
Lillicrap
, there was no, and
never had been any, contractual privity between the plaintiff and the
second defendant, but the plaintiff expressly
relies in its
particulars of claim on the second defendant’s ‘
vicarious
obligations to the First Defendant as sub-contractor, and as a
consequence in fulfilment of the First Defendant’s
vicarious
obligations to the Plaintiff to render the professional services of
the required standard …
’ It is plain therefore
that, notwithstanding the absence of contractual privity, the
plaintiff is predicating its allegation
that the second defendant was
in breach of a delictual duty towards it on the failure by the second
defendant to have executed
the contract work in accordance with the
standards stipulated in the contract between the plaintiff and the
first defendant.
[26]
The
allegation in para. 11 of the particulars of claim, premised on
‘a sufficient relationship of proximity’,
[10]
is on all fours, including the language employed in pleading it, with
the first leg of the two-leg test for delictual liability
formulated
by the House of Lords in
Anns
case supra. Indeed,
the plaintiff’s case against the second defendant is pleaded in
a very closely comparable manner
to that which, on analogous facts,
was recognised by the majority in
Junior
Books Ltd v Veitchi Co Ltd
[1982]
UKHL 4
,
[1983] AC 520
,
[1982] 3 All ER 201
(HL),
in which the
Anns
test was applied, as making out a case in
tort by an employer against a sub-contractor for damages arising out
of the negligent
execution by the latter of the contract works.
The facts of the matter and legal relationship of the parties in
Junior Books
were more in line with those in the present
matter than was the position in
Lillicrap
, and so the
attention paid to that case in the judgment in
Lillicrap
is
significant.
[27] The first leg
of the
Anns
test held that if there was a sufficient
relationship of proximity or neighbourhood between the claimant and
the alleged wrongdoer
such that, in the reasonable contemplation of
the former, carelessness on its part might be likely to cause damage
to the latter,
a duty of care was established
prima facie
,
which required an enquiry, in the second leg of the test, whether any
considerations pertained that ought to negative or reduce
or limit
the scope of the duty, or the class of person to whom it was owed, or
the damages to which a breach of it might give rise
. It was an
approach that was soon discarded in England, and never adopted in
South Africa. The Appellate Division
acknowledged that were it
to follow the approach of the majority in
Junior Books,
which,
as already mentioned, was predicated on the aforementioned
Anns
test, the exception in
Lillicrap
would fall to be
dismissed. The reasons for the court’s unwillingness to
follow
Junior Books
are fully set out in
Lillicrap
at
504E-505F, and do not require reiteration. Suffice it to say
that insofar as the plaintiff’s case against the second
defendant is expressly pleaded consistently with the incidence of the
first leg of the
Anns
test, it does not sustain a claim under
the extended Aquilian action. Our law does not presume a duty
of law to arise from
the pleaded degree of proximity. On the
contrary, it requires the plaintiff to establish the existence of
considerations
to show why the degree of proximity should in the
given circumstances give rise to a pertinent duty in law to it by the
defendant.
In the current case, the only consideration that has
been pleaded in the particulars of claim is the applicable
contractual matrix
and the standard of workmanship imposed by it.
[28] I also did not
find any basis in the jurisprudence in cases such as
Loureiro and
Others v iMvula Quality Protection (Pty) Ltd
[2014] ZACC 4
,
2014
(3) SA 394
(CC),
2014 (5) BCLR 511
and
Chartaprops 16 (Pty) Ltd
and Another v Silberman
[2008] ZASCA 171
;
2009 (1) SA 265
(SCA),
[2009] 1 All SA 197
(SCA); (2009) 30 ILJ 497 (SCA)), to which
reference was made by counsel in argument, to hold that the second
defendant’s
alleged negligent conduct was wrongful. The
factual context of those cases and the pertinent policy
considerations were materially
distinguishable from the current
matter. Both cases involved the defendants in those matters
having voluntarily entered into
undertakings for reward in
circumstances that if they were to discharge their functions
negligently, bodily harm to persons in
the position of the respective
plaintiffs in those cases was eminently foreseeable. As pointed
out in
Loureiro
at para. 56, the constitutional right of
everyone to personal safety or physical integrity is a ‘compelling
normative consideration’
in such situations. It does not
present in the current matter.
[29] It was not
argued on behalf of the plaintiff that the circumstances of the
current case gave rise to a need to develop the
common law as
provided for in terms of s 39(2) of the Constitution. Indeed, I
am unable myself to conceive of a cogent basis
for any such argument.
[30] The plaintiff’s
counsel did argue, however, that because of the potentially wide
range of considerations that can be
weighed in the balance in
determining legal policy, the matter did not lend itself to
determination on exception. Relying
on the following dicta of
Hefer JA in
Minister if Law and Order v Kadir
[1994] ZASCA 138
;
1995 (1) SA
303
(A) at 318E-I:
As the judgments in the cases referred to earlier
demonstrate, conclusions as to the existence of a legal duty in cases
for which
there is no precedent entail policy decisions and value
judgments which “shape and, at times, refashion the common law
[and]
must reflect the wishes, often unspoken, and the perceptions,
often dimly discerned, of the people” (per M M Corbett in a
lecture reported
sub nom
“
Aspects of the Role of
Policy in the Evolution of the Common Law
” in
(1987) SALJ
104
at 67). What is in effect required is that, not merely the
interests of the parties inter se, but also the conflicting interests
of the community, be carefully weighed and that a balance be struck
in accordance with what the Court conceives to be society's
notions
of what justice demands. (Corbett (op cit at 68); J C van der Walt
“
Duty of care: Tendense in die Suid-Afrikaanse en Engelse
regspraak
”1993 (56) THRHR at 563-4.) Decisions like these
can seldom be taken on a mere handful of allegations in a pleading
which
only reflects the facts on which one of the contending parties
relies. In the passage cited earlier Fleming rightly stressed the
interplay of many factors which have to be considered. It is
impossible to arrive at a conclusion except upon a consideration of
all the circumstances of the case and of every other relevant
factor.,
counsel contended
that the question of the existence or not of a legal duty by the
second defendant to the plaintiff should rather
be determined at the
end of a trial, with the benefit of evidence, than on exception.
[31] The plaintiff’s
counsel did not support his argument with any adumbration of the
nature of the evidence that might affect
the required determination
of legal policy. He pointed out that the plaintiff had pleaded
that it had no knowledge of the
terms of the contract between the
first and second defendants, and seemed to imply that insight into
that contract might affect
matters. But litigation is not meant
to proceed on an uncharted fishing expedition basis. A claimant
should know its
case sufficiently at the inception to be able to
competently plead its claim.
[32] I am not
persuaded that it is not possible or proper in this case to decide
the issue of whether a case for wrongfulness has
been made out on the
pleadings on exception. In
Telematrix (Pty) Ltd v
Advertising Standards Authority SA
[2005] ZASCA 73
;
[2006] 1 All
SA 6
(SCA),
2006 (1) SA 46
, Harms JA referred to a similar
argument that had been addressed in
Axiam Holdings Ltd v Deloitte
& Touche
[2005] ZASCA 61
;
[2005] 4 All SA 157
(SCA) to the
effect that it is inappropriate to decide the issue of wrongfulness
on exception because the issue is fact bound,
and pointed out (at
para. 2), ‘
That is not true in all cases. This court
for one has on many occasions decided matters of this sort on
exception. Three important
judgments that spring to mind are
Lillicrap, Indac
[
[11]
]
and Kadir. Some public policy considerations can be decided
without a detailed factual matrix, which by contrast is essential for
deciding negligence and causation.
’ The learned judge
proceeded (at para. 3), ‘
Exceptions should be dealt
with sensibly. They provide a useful tool to weed out cases
without legal merit.
’
[33] For all these
reasons I consider that the second respondent’s exception to
the plaintiff’s pleaded claim against
it is well taken.
In circumstances in which the pleaded claim against the first
defendant (which is founded in contract)
is unaffected by the
exception, the proper course would be to strike out from the
particulars of claim those parts of it that pertain
to the claim
sought to be advanced in support of the relief against the second
defendant. An order to that effect will issue.
[34] The following
order is made:
1. The second defendant’s exception to the plaintiff’s
particulars of claim is upheld with costs.
2. Pursuant to paragraph 1 of this order, the following parts of the
plaintiff’s particulars of claim are struck out:
paragraphs 7-11;
paragraph 20.1 insofar as it relates to the
alleged ‘legal duties’ of the second defendant, paragraph
22 insofar as
it alleges a breach by the second defendant ‘of
its aforesaid legal duty’, paragraph 24 insofar as it refers to
the
second defendant, and the prayers for judgment against the second
defendant jointly and severally with the first defendant.
3. The plaintiff is afforded a period of 15 days from the date of
this order within which to deliver notice of its intention to
amend
its particulars of claim in respect of any claim it might wish to
pursue against the second defendant, failing which its
claim against
the second defendant shall be deemed to have been dismissed with
costs.
A.G.
BINNS-WARD
Judge
of the High Court
APPEARANCES
Excipient /
Second Defendant’s counsel:
Andrew Morrissey
Excipient /
Second Defendant’s attorneys:
Everinghams
Attorneys
Cape Town
Respondent /
Plaintiff’s counsel:
R.A.J. Acton
Respondent /
Plaintiff’s attorneys:
Norton Rose Fulbright South Africa Inc
Sandton and Cape Town
[1]
The pleading was not drawn by
counsel who appeared for the plaintiff at the hearing of the
exception.
[2]
It is usual for sub-contracts in
building and works related matters to replicate, as between
contractor and sub-contractor, any
applicable onerous provisions in
the principal contract that burden the contractor in favour of the
employer; cf.
Minister
of Public Works and Land Affairs v Group Five Building Ltd
[1999] ZASCA 36
;
1999 (4) SA 12
(SCA),
[1999] 3 All SA 467
(A) (per
Schutz JA). This is ordinarily simply a manifestation of
businesslike astuteness and common sense.
And, in the case of
a nominated sub-contractor, the employer usually stipulates that the
contract between the contractor and
the sub-contractor must be the
same, at least in regard to the performance of the relevant part of
the principal contract, as
that concluded between it and the
contractor.
[3]
Rumpff CJ spoke, in
Administrateur,
Natal
(SALR at 832
in fine
),
of placing claims for pure economic loss ‘in die uitgebreide
trefgebied van die
lex
Aquilia
’.
[4]
Administrateur, Natal
(SALR at 833).
[5]
See
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority SA
[2005] ZASCA 73
;
[2006] 1 All SA 6
(SCA),
2006 (1) SA 461
at para.
14 and
Trustees for
the Time Being of Two Oceans Aquarium Trust v Kantey & Templer
(Pty) Ltd
[2005]
ZASCA 109
;
[2007] 1 All SA 240
(SCA) at para. 11, where certain
drawbacks in the use of the term are identified. Its use is
nonetheless well entrenched
in practice.
[6]
The following statement in Fleming
The Law of Torts
4th ed at 136:
In short, recognition of a duty of care is the
outcome of a value judgment, that the plaintiff’s invaded
interest is deemed
worthy of legal protection against negligent
interference by conduct of the kind alleged against the defendant.
In the decision
whether or not there is a duty, many factors
interplay; the hand of history, our ideas of morals and justice, the
convenience
of administering the rule and our social ideas as to
where the loss should fall. Hence, the incidence and extent of
duties are
liable to adjustment in the light of the constant shifts
and changes in community attitudes.
has
been endorsed in a number of judgments as correctly setting out the
general nature of the indicated enquiry; see e.g.
Lillicrap
at 498I,
Knop v Johannesburg City
Council
[1994] ZASCA 159
;
1995 (2) SA 1
(A)
at 27G-I and
Minister of Safety and Security
v Van Duivenboden
[2002] ZASCA 79
;
[2002] 3
All SA 741
(SCA) (a negligent omission case) at para. 13.
See also
Le Roux v Dey (Freedom of Expression
Institute and Restorative Justice Centre as Amici Curiae)
2011 (3) SA 274
(CC) at para. 122, where Brand AJ noted:
In the more recent past our courts have come to
recognise, … that in the context of the law of delict: (a)
the criterion
of wrongfulness ultimately depends on a judicial
determination of whether — assuming all the other elements of
delictual
liability to be present — it would be reasonable to
impose liability on a defendant for the damages flowing from
specific
conduct; and (b) that the judicial determination of that
reasonableness would in turn depend on considerations of public and
legal policy in accordance with constitutional norms. Incidentally,
to avoid confusion it should be borne in mind that, what is
meant by
reasonableness in the context of wrongfulness has nothing to do with
the reasonableness of the defendant's conduct,
but it concerns the
reasonableness of imposing liability on the defendant for the harm
resulting from that conduct.
(Footnotes
omitted.)
[7]
Cf. the remarks to equivalent effect
by Howie P in
Wagener
v Pharmacare Ltd; Cuttings v Pharmacare Ltd
2003
(4) SA 285
(SCA), at paragraph [30].
[8]
Cf. the observations of Nugent JA in
Van Duivenboden
supra, at para. 21. And see the following remarks of McHugh J
to similar effect in
Perre v Apand Pty
Ltd
1999 HCA 36
,
(1999) 198 CLR 180
,
[1999]
73 ALJR 1190
at paras.
118-120 (part of which was quoted with approval by Brand JA in
Cape Empowerment
Trust Ltd v Fisher Hoffman Sithole
[2013] ZASCA 16
,
[2013] 2 All SA 629
(SCA),
2013 (5) SA 183
at para.
28 and in
Country
Cloud Trading CC v MEC: Department of Infrastructure Development
[2013] ZASCA 161
,
2014 (2) SA 214
(SCA);
[2014] 1 All SA 267
at
para. 30):
118.
Cases where a
plaintiff will fail to establish a duty of care in cases of pure
economic loss are not limited to cases where imposing
a duty of care
would expose the defendant to indeterminate liability or interfere
with its legitimate acts of trade. In many
cases, there will be no
sound reason for imposing a duty on the defendant to protect the
plaintiff from economic loss where it
was reasonably open to the
plaintiff to take steps to protect itself. The vulnerability of the
plaintiff to harm from the defendant's
conduct is therefore
ordinarily a prerequisite to imposing a duty. If the plaintiff has
taken, or could have taken steps to protect
itself from the
defendant's conduct and was not induced by the defendant's conduct
from taking such steps, there is no reason
why the law should step
in and impose a duty on the defendant to protect the plaintiff from
the risk of pure economic loss.
119.
In Esanda
Finance Corporation Ltd v Peat Marwick Hungerfords
[(1997)
[1997] HCA 8
;
188 CLR 241]
,
an important factor in denying a duty of care was that the
plaintiffs were sophisticated investors well able in the
circumstances
to protect themselves. On the other hand, this Court
found a duty in Hill v Van Erp
[(1997)
188 CLR 159]
and in
Pyrenees Shire Council v Day
[(1998)
[1998] HCA 3
;
192 CLR 330]
partly
because of the defendant's control (and knowledge) and relative
inability of the plaintiffs to protect themselves.
120.
……
.
Pecuniary losses are one of the ordinary risks of business and, for
that matter, ordinary life. Business people frequently take,
or are
easily able to take, steps to minimise their business or economic
losses. Taking these steps will often be a more efficient
way of
dealing with the risk of these losses than requiring defendants to
have regard to the risk that others may suffer economic
loss. The
economic efficiency of a society requires that the person best able
to deal with or avoid the consequences of an economic
risk from a
cost view should be responsible for the risk and its consequences.
’
[9]
At para. 24.
[10]
See paragraph [8]
above.
[11]
Indac Electronics (Pty) Ltd. v
Volkskas Bank Ltd.
[1991] ZASCA 190
;
1992 (1) SA 783
(AD);
[1992] 1 All SA 411
(A).