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[2008] ZASCA 134
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Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd (653/07) [2008] ZASCA 134; 2009 (2) SA 150 (SCA) ; [2009] 1 All SA 525 (SCA) (26 November 2008)
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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case number: 653/07
In the matter between:
FOURWAY HAULAGE SA (PTY) LTD APPELLANT
and
SA NATIONAL ROADS AGENCY LTD RESPONDENT
Neutral citation:
Fourway Haulage
v SA National Roads Agency
(653/07)
[2008]
ZASCA 134
(26 November 2008)
CORAM: SCOTT, FARLAM, BRAND, LEWIS
ET
JAFTA JJA
HEARD: 5 November 2008
DELIVERED: 26 November 2008
CORRECTED:
SUMMARY
: Delict – pure
economic loss – meaning of – policy considerations
relevant in determining wrongfulness –
remoteness of damage –
application of flexible test
ORDER
On appeal from
: High Court,
Pretoria (Rabie J sitting as court of first instance)
The appeal is dismissed with costs
JUDGMENT
BRAND JA (Scott, Farlam, Lewis
et
Jafta JJA concurring)
[1] The appellant ('Fourway') is a long distance
haulier. The respondent ('the Agency') owes its existence to the
South African
National Roads Agency Limited and National Roads Act 7
of 1998 ('the Act'). The dispute between them originates from an
accident
which occurred in the early evening of 26 September 2003 on
the N1 national road between Polokwane and Mokopane in the Limpopo
province. The two vehicles involved were an articulated truck and a
light delivery van. The articulated truck was driven at the
time by
an employee of Fourway who was acting in the course and scope of his
employment.
[2] The articulated truck was on its way from an
asbestos mine in Zimbabwe to Durban harbour carrying about 34 tonnes
of chrysolite
asbestos, destined for export. As a result of the
collision, the truck overturned and spilled its cargo onto
practically the entire
surface of a portion of the national road and
its surroundings. Because of the hazardous nature of asbestos powder,
the spillage
required an extensive cleaning-up and decontamination
operation.
[3] To facilitate the cleaning-up and decontamination
process, the traffic authorities closed the section of the national
road involved
and diverted the traffic in both directions onto an
alternative road. This lasted for about 24 hours. The section of the
national
road which was closed forms part of a toll road. The
alternative route was not subject to toll. As a result of the
closure, two
toll plazas – as defined in the Act – could
not collect toll fees. Based on these facts, the agency as the entity
authorised
by s 27 of the Act to levy and collect toll fees on
toll roads, instituted an action in delict
against Fourway for the damages it allegedly
suffered in the form of loss of toll revenue in an amount of
R105 996.67.
[4] At the commencement of the trial, the parties asked
the court a quo (Rabie J) to order a separation of issues. In terms
of the
separation order, the issues relating to the liability of
Fourway were to be decided first, while the quantum of the Agency's
alleged
damages stood over for later determination. The preliminary
issues were decided in favour of the agency. Hence the court declared
Fourway liable for such damages as the Agency may prove in respect of
the lost revenue it would have collected at the two toll
plazas
involved, but for the closure of the road. It also ordered Fourway to
pay the costs of the preliminary proceedings. Fourway's
appeal
against that judgment is with the leave of the court a quo.
[5] Part of the controversy on appeal was brought about
by a shift in the focus of the defence advanced by Fourway and the
resulting
mutation of the issues involved. A convenient starting
point for an account of the mutation is the opening address by
counsel for
the Agency, as plaintiff, at the beginning of the trial.
With reference to the pleadings, counsel at that stage defined the
issues
between the parties as follows:
(a) Whether or not the respondent had the necessary
authority to collect toll fees on that portion of the toll road which
was closed
as a result of the collision.
(b) Whether the collision occurred as a result of the
negligence of the driver employed by Fourway.
(c) Whether the occurrence of the collision necessitated
the decontamination operation and the closure of the road.
[6] Counsel for Fourway did not react to this definition
of the issues. During the trial, Fourway formally conceded the issue
referred
to in (a) and the evidence led by the parties therefore
dealt exclusively with the issues in (b) and (c). But in argument at
the
end of the trial, Fourway's counsel, for the first time, raised
two further contentions. First he submitted that the Agency's claim
was for the recovery of pure economic loss which required the
existence of a legal duty on the part of Fourway and that the Agency
had failed to plead or establish the existence of such a legal duty.
Secondly he submitted that the Agency had failed to establish
the
requirement of legal causation with reference to the loss which
formed the basis of its claim.
[7] As we know from the result, the court a quo
dismissed all defences relied on by Fourway, including those
originally raised under
what I categorised as (b) and (c), as well as
the two new ones advanced for the first time in argument at the end
of the trial.
As to (b) and (c) the court found on the evidence
presented that the negligence of Fourway's employee was the cause of
the collision
which necessitated both the decontamination process and
the closure of the road. With regard to the defence based on the
concept
of pure economic loss, the court essentially held that the
damage suffered by the agency did not amount to pure economic loss
and
that the question regarding the existence of a legal duty
therefore did not arise. Finally the court held that the damages
claimed
could not be classified as too remote and that the
requirement of legal causation had thus been satisfied.
[8] On appeal, it was conceded on behalf of Fourway that
the court a quo was correct in deciding the issues under (b) and (c)
against
it. In consequence, the only issues on appeal turned on the
contentions that were raised for the first time in argument at the
end of the trial. They can be summarised thus:
(a) Whether the court a quo correctly came to the
conclusion that the Agency's claim is not a claim for pure economic
loss.
(b) If not, how the issue of wrongfulness should have
been dealt with in the light of the fact that it was not pertinently
raised
in the pleadings.
(c) Whether the court a quo correctly came to the
conclusion that the damages claim by the Agency cannot be regarded as
too remote.
[9] The court a quo's finding that the damages claimed
did not result from pure economic loss clearly emanated from its
understanding
of that concept. That understanding appears from the
following statements in the judgment:
'The economic loss in this sense comprises patrimonial
loss that does not result from a direct invasion of a subjective
right of
the person who suffered the loss.'
And that
'the aforesaid rights of the plaintiff. . . [ie the
Agency's statutory rights to operate a toll road and to collect toll
fees] were
clearly subjective rights worthy of protection and which
the plaintiff could enforce against other people.'
And that
'[c]onsequently, the loss suffered by the plaintiff is
not a so-called pure economic loss, but the direct result of a direct
infringement
of subjective rights which was as such unlawful.'
[10] I do not share the court a quo's understanding of
what is meant by 'pure economic loss' in the present context. I
believe its
meaning to be far less metaphysical. As explained by
Harms JA in
Telematrix (Pty) Ltd v Advertising
Standards Authority SA
2006 (1) SA 461
(SCA)
para 1, it means simply this:
'"Pure economic loss" in this context 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 the value of property.'
(See also
Lillicrap, Wassenaar
and Partners v Pilkington Brothers (SA) (Pty) Ltd
1985
(1) SA 475
(A) 497I-498H;
Trustees, Two Oceans
Aquarium Trust v Kantey & Templer (Pty) Ltd
2006
(3) SA 138
(SCA) para 14;
Wille's Principles
of South African Law
9 ed, (General editor:
Francois du Bois) sv 'Delict' by Daniel Visser, 1105; Neethling,
Potgieter & Visser,
Law of Delict,
5
ed 268
et seq
).
[11] Thus understood, the Agency's claim, in my view,
falls squarely within the ambit of pure economic loss. As formulated,
its
claim was for loss of revenue in the form of toll fees resulting
from the closure of the road. The Agency did not allege, nor did
it
set out to prove in evidence, that it was the owner of the road; that
the road was physically damaged by the collision; or that
the closure
of the road resulted from any physical damage to the road. The
Agency's argument on appeal, that in terms of s 7
of the Act it
was in fact the owner of the road on which the collision occurred, is
of no consequence and misses the point. For
present purposes the
question is not whether the Agency is in fact the owner of the road.
The point is that it did not rely on
such ownership to support its
claim.
[12] Recognition that we are dealing with a claim for
pure economic loss brings in its wake a different approach to the
element
of wrongfulness. This results from the principles which have
been formulated by this court so many times in the recent past that
I
believe they can by now be regarded as trite. These principles
proceed from the premise that negligent conduct which manifests
itself in the form of a positive act causing physical damage to the
property or person of another is prima facie wrongful. By contrast,
negligent causation of pure economic loss is not regarded as prima
facie wrongful. Its wrongfulness depends on the existence of
a legal
duty. The imposition of this legal duty is a matter for judicial
determination involving criteria of public or legal policy
consistent
with constitutional norms. In the result, conduct causing pure
economic loss will only be regarded as wrongful and therefore
actionable if public or legal policy considerations require that such
conduct, if negligent, should attract legal liability for
the
resulting damages (see eg
Minister of Safety
and Security v Van Duivenboden
2002 (6) SA
431
(SCA) paras 12 and 22;
Gouda Boerdery BK v
Transnet
2005 (5) SA 490
(SCA) para 12;
Telematrix (supra)
paras
13-14;
Trustees, Two Oceans Aquarium Trust
(supra)
paras 10-12).
[13] In this light, so Fourway contended on appeal, the
Agency was obliged to allege in its pleadings not only that the
negligent
conduct relied upon was wrongful, but that it also had to
allege and prove the facts relied upon to substantiate the
considerations
of policy giving rise to a legal duty on the part of
Fourway's employee. As a result of the Agency's failure to adhere to
these
rules of litigation, so the argument went, neither the policy
considerations relevant to the question of wrongfulness, nor the
factual basis underlying such policy considerations, were identified
and investigated during the trial. In consequence, so the argument
concluded, it would be prejudiced if the issue of wrongfulness were
to be summarily disposed of at the appeal. Fourway therefore
suggested that, unless this court upholds its contention that the
damages claimed are too remote – to which I shall presently
return – the issue of wrongfulness should be postponed and
decided with the rest of the issues concerning the quantum of
the
Agency's damages, which are standing over in any event.
[14] The proposition that a plaintiff claiming pure
economic loss must allege wrongfulness, and plead the facts relied
upon to support
that essential allegation, is in principle well
founded. In fact, the absence of such allegations may render the
particulars of
claim exipiable on the basis that no cause of action
had been disclosed (see eg
Trope v SA Reserve
Bank
1992 (3) SA 208
(T) at 214A-G;
Indac
Electronics (Pty) Ltd v Volkskas Bank Ltd
[1991] ZASCA 190
;
1992
(1) SA 783
(A) 797E;
Telematrix (supra)
para
2). But, as we know, Fourway did not file an exception. The trial
proceeded without any objection on its part. In the circumstances
it
would be futile to investigate whether an exception, if properly and
timeously taken, would have been successful. As I see it,
the
question is rather whether, despite the lack of necessary allegations
in the Agency's pleadings, Fourway had sufficient opportunity
to
produce the facts it would seek to rely on for the determination of
the policy considerations pertaining to wrongfulness in
its favour.
Conversely stated, the question is whether Fourway has shown
prejudice, in the sense that it would have conducted its
case in a
materially different way if the Agency's claim for pure economic loss
had been properly pleaded. (See eg
Shill v
Milner
1937 AD 101
at 105;
Robinson
v Randfontein Estates GM Co Ltd
1925 AD 173
at 198;
Collen v Rietfontein Engineering Works
1948 (1) SA 413
(A) at 433;
Stead
v Conradie
[1994] ZASCA 147
;
1995 (2) SA 111
(A) at 122A-H.)
[15]
As I see it, the proposal by Fourway that the issue
of wrongfulness be referred back for determination by the trial court
therefore
depends on the outcome of two discrete enquiries. First,
can this court, on the basis of the facts available, decide that, as
a
matter of policy, Fourway should be held liable for the loss of
revenue claimed by the Agency? If not, that would be the end of
the
matter. The Agency would have failed to make out a case. A decision
on the other hand that the issue of wrongfulness should
on the facts
available be determined in favour of the Agency will lead to the next
enquiry. The question is: can it be said that,
if the issue of
wrongfulness had been properly pleaded by the Agency, Fourway would
have conducted its case any differently? If
not, the Agency is
entitled to succeed. It is therefore only a finding of potential
prejudice on the part of Fourway that can justify
a referral back to
the trial court.
[16] The enquiry, whether as a matter of policy Fourway
should be held liable for the pure economic loss suffered by the
Agency,
raises a question which is logically anterior: what are the
considerations of policy that should be taken into account for
purposes
of the enquiry? In accordance with what criteria should the
relevant considerations of policy be identified? Must we accept that
policy considerations are by their very nature incapable of
pre-determination and that the identification of the policy
considerations
that should find application in a particular case are
to be left to the discretion of the individual judge? Does this mean
that
in the context of pure economic loss the imposition of liability
will depend on what every individual judge regards as fair and
reasonable? I believe the answer to the last two questions must be
'no'. Liability cannot depend on the idiosyncratic views of
an
individual judge. That would cloud the outcome of every case in
uncertainty. In matters of contract, for example, this court
has
turned its face against the notion that judges can refuse to enforce
a contractual provision purely on the basis that it offends
their
personal sense of fairness and equity. Because, so it was said, that
notion will give rise to legal and commercial uncertainty
(see eg
Brisley v Drosky
2002
(4) SA 1
(SCA) paras 21-25;
South African
Forestry Co Ltd v York Timbers Ltd
2005 (3)
SA 323
(SCA) para 27). I can see no reason why the same principle
should not apply with equal force in matters of delict. A legal
system
in which the outcome of litigation cannot be predicted with
some measure of certainty would fail in its purpose. As pointed out
by Lord Scott of Foscote in
Lagden v O'Conner
[2004] 1 AC 1067
(HL) para 86:
'One of the main functions of the law of obligations,
contractual or tortious, is to provide, or attempt to provide, a set
of yardsticks
for determining whether a legal injury has been
inflicted on a person (the claimant) by another person (the
defendant) and, if
so, for determining the amount of the damages that
the defendant must pay by way of reparation. If the two parties are
unable to
agree, an answer can be found by recourse to litigation.
But the cost of litigation, often excessive both in absolute terms
and
in relation to the amount in dispute, and the inevitable delay,
worry and anxiety that accompany court proceedings provide impelling
reasons why the yardsticks by means of which legal liability is to be
measured should be kept as simple and uncomplicated as practicable.'
[17] We therefore strive for certainty. The question is,
how can that be achieved in an area directed by considerations of
public
or legal policy? I believe we must accept at the outset that
absolute certainty is unattainable. The moment this court took the
first tier policy decision – in
Administrateur,
Natal v Trust Bank van Afrika Bpk
1979 (3) SA
824
(A) – to abolish the absolute exclusion of liability for
pure economic loss, it abandoned the bright line of absolute
certainty.
The second tier policy decision as to when liability
should be imposed must of necessity be accompanied by some degree of
uncertainty,
at least at the early stages of development in this area
of the law. That much was recognised and predicted by Rumpff CJ in
Administrateur, Natal
itself
(see 831B). This measure of resulting uncertainty also seems to be an
experience shared by those jurisdictions where the
same first tier
policy decision has been taken. Thus it was stated, for example, by
Gaudron J in the Australian High Court, in
Perre
v Apand (Pty) Ltd
[1999] HCA 36
;
1999 198 CLR 180
(HC of A)
para 25:
'The law as to liability for economic loss is a
"comparatively new and developing area of the law of
negligence". It has
not yet developed to a stage where there has
been enunciated a governing principle applicable in all cases.
Perhaps it never will.'
And by McLachlin J in the Canadian Supreme Court in
Canadian National Railway Co v Norsk Pacific
Steamship Co Ltd
(1992) 91 DLR (4
th
)
289 at 366:
'Judges seem able to pick out deserving cases when they
see them. The difficulty lies in formulating a rule which explains
why judges
allow recovery of economic loss in some cases and not in
others.'
(Compare also K Zweigert & H Kötz
An Introduction to
Comparative Law
3
ed 625
et seq
;
B S Markesinis
The
German Law of Torts, A Comparative Introduction
3 ed 42
et seq
;
Daniel Visser & Niall Whitty
The
Structure of the Law of Delict
in
Kenneth Reid and Reinhard Zimmermann
A History of Private Law in Scotland
Vol II
Obligations
461
et seq.
)
[18] What is more, it seems that in those jurisdictions
where attempts have been made to obtain certainty by formulating new
bright
line rules – in lieu of the old rule excluding all
liability for pure economic loss – there was little success in
achieving
this goal. In England, for example, the first such attempt
was made in
Anns v Merton London Borough
Council
[1977] UKHL 4
;
[1978] AC 728
[HL]. Under the
Anns
test the court will find wrongfulness – or in English legal
parlance, the existence of a duty of care – if the harm
was
foreseeable and there is no policy reason for negating liability. In
a number of subsequent judgments of the House of Lords,
there was,
however, a retreat from
Anns
because of its expansionist tendencies. Eventually
Anns
was expressly overruled in
Murphy
v Brentwood District Council
[1991] 1 AC 438
(HL) at 457.
[19] Another attempt at a bright line rule is often
referred to as 'the three-stage test' which is attributed to a
passage in the
speech of Lord Bridge of Harwich in
Caparo
Industries PLC v Dickman
[1990] UKHL 2
;
[1990] 2 AC 605
(HL)
at 617-618. (See eg
D v East Berkshire
Community Health NHS Trust
[2005] UKHL 23
;
[2005] 2 AC 373
(HL) para 2 where reference is made to 'the familiar test laid down
in
Caparo
'. See also
Sutradhar v Natural Environment Research
Council
[2006] UKHL 33
;
[2006] 4 All ER 490
(HL) para 32.)
According to this test a plaintiff can establish wrongfulness (in the
South African sense) only when it can prove
three things: first, that
the causing of damage was reasonably foreseeable; secondly, that a
relationship of 'proximity' or 'neighbourhood'
existed between the
parties; thirdly, that in all the circumstances of the case, it is
fair, just and reasonable to impose liability
on the defendant.
Somewhat ironically, however, Lord Bridge never claimed to create a
bright line rule. He did not even profess
to formulate a 'test'.
That, I think, is apparent from the very passage in his speech
usually relied upon in support of the 'three-stage
test'. After Lord
Bridge referred to the ingredients of foreseeability, proximity and
the situation in which the court considers
it fair, just and
reasonable to impose liability, he continued (at 618A-B):
'[T]he concepts of proximity and fairness . . . are not
susceptible of any precise definition as would be necessary to give
them
utility as practical tests, but amount in effect to little more
than convenient labels to attach to features of different specific
situations which . . . the law recognises pragmatically as giving
rise to a duty of care . . ..'
And in the same case Lord Oliver of Aylmerton said (at
633F):
'I think that it has to be recognised that to search for
any single formula which will serve as a general test of liability is
to
pursue a will-o'-the-wisp.'
[20] In some decisions of the House of Lords it is
explicitly recognised that the question whether the required
relationship of
proximity exists is dependent on policy factors (see
eg in
Barrett v Enfield Borough Council
[2001]
2 AC 550
(HL) at 559). And in
Cooper v Hobart
(2002) 206 DLR (4
th
)
193 para 37 the Supreme Court of Canada also recognised that,
whatever the test formulated, the imposition of liability ultimately
depends on 'residual policy considerations'. Proceeding from this
premise, academic authors have engaged in the constructive exercise
of identifying the relevant considerations of policy that can find
application in determining whether, in a particular case, the
negligent conduct of the defendant can sustain a claim for the
plaintiff's pure economic loss (see eg John Hartshorne
'Confusion, Contradiction and Chaos within
the House of Lords post
Caparo v Dickman
(2008) 16
Tort Law Review
8
et seq
; Jonathan
Burchell 'The Odyssey of Pure Economic Loss' in T J Scott &
Daniel Visser
Developing Delict
– first published as Acta Juridica 2000 – 99
et
seq
).
[21] Does this mean we are back to the proposition that,
in the field of pure economic loss, liability depends on the
idiosyncratic
views of the individual judge as to what is reasonable
and fair? Fortunately, I think the answer must again be 'no'. In the
first
instance some degree of certainty is established by the
identification of categories where liability will be imposed. In
Telematrix
(para 15)
one such category was recognised, by way of example, with reference
to the liability of collecting banks. Another example
is to be found
in
Perre v Apand
(paras 28-30) where liability for the failure to provide accurate
information or advice – ie for negligent misstatements
–
was recognised as a category of liability for pure economic loss in
the context of Australian law. (For the South African
law on the
topic of negligent misstatements, see eg
Kern
Trust (Edms) Bpk v Hurter
1981 (3) SA 607
(C);
Bayer South Africa (Pty) Ltd v Frost
[1991] ZASCA 85
;
1991
(4) SA 559
(A) at 568B-D;
OK Bazaars (1929)
Ltd v Standard Bank of South Africa Ltd
2002
(3) SA 688
(SCA) 695G-I.) I believe it can be predicted with
confidence that in time further categories will become discernible
and so the
law will develop in an incremental way.
[22] Further insurance against uncertainty and
unpredictability derives from the principle which was formulated as
follows by Nugent
JA in
Minister of Safety and
Security v Van Duivenboden
2002 (6) SA 431
(SCA) para 21:
'When determining whether the law should recognise the
existence of a legal duty in any particular circumstances what is
called
for is not an intuitive reaction to a collection of arbitrary
factors but rather a balancing against one another of identifiable
norms.'
(See also eg
Telematrix
paras
15-16). In a case like the present where the claim for pure economic
loss falls outside the ambit of any recognised category
of liability,
the first step is therefore to identify the considerations of policy
that are of relevance. As part of the identification
process
assistance can of course be gained from previous decisions, both at
home and abroad, as well as from the helpful analysis
by academic
authors such as those to which I have already referred.
[23] The policy consideration that immediately comes to
mind is directly linked to the initial doubt as to whether pure
economic
loss should be actionable at all. That reason was referred
to by Rumpff CJ in
Administrateur, Natal v
Trust Bank van Afrika Bpk (supra)
–
where this court eventually decided to cut the Gordian knot –
(at 833A) as 'die vrees van die sogenaamde oewerlose
aanspreeklikheid' (ie the fear of so-called boundless liability). In
the light of this fear the relevant consideration is succinctly
stated as follows by Gaudron J in
Perre v
Arpand (supra)
para 32:
'The first policy consideration is the law's concern to
avoid the imposition of liability in an indeterminate amount for an
indeterminate
time to an indeterminate class.'
(See also eg
Canadian National
Railway Co v Norsk Pacific Steamship Co
(1992)
91 DLR (4
th
) 289
at 359; M M Corbett 'The Role of Policy in the Evolution of our
Common Law'
1987
SALJ
52
at 59.)
[24] From this consideration it follows, in my view,
that liability will more readily be imposed for a single loss of a
single identifiable
plaintiff occurring but once and which is
unlikely to bring in its train a multiplicity of actions. That is the
reason why liability
was imposed, for example, in
Coronation
Brick (Pty) Ltd v Strachan Construction Co (Pty) Ltd
1982
(4) SA 371
(D) 386D-H and not in
Shell and BP
South African Petroleum Refineries (Pty) Ltd v Osborne Panama SA
1980
(3) SA 653
(D) at 659G-H. The present case self-evidently falls in
the same class as
Coronation Brick
and not in the class of
Shell and BP
.
The loss claimed was suffered by a single plaintiff and is finite in
its extent. To illustrate the point: the position could very
well be
different if the plaintiff was a businessman who claimed for the loss
he suffered because of a missed flight to London,
being the loss of a
lucrative business opportunity, owing to the closure of the road.
[25] But the absence of indeterminate liability itself
will not automatically give rise to the imposition of liability. That
much
was expressly held in
Trustees, Two
Oceans Aquarium Trust
para 20. The reason why
this court refused to come to the aid of the plaintiff in that case,
despite the absence of indeterminate
liability, was that the
plaintiff was in a position to avoid the risk of the loss claimed by
contractual means (see para 24). Conversely,
the plaintiff's
inability to protect itself by contract was one of the policy reasons
why this court decided in
Indac Electronics
(Pty) Ltd v Volkskas Bank Ltd
[1991] ZASCA 190
;
1992 (1) SA 783
(A) at 799H-J to impose liability on a collecting bank. Support for
the same consideration is to be found in Australian cases where
delictual liability was extended to plaintiffs who were said to be
'vulnerable to risk' because they were unable to protect themselves
against the risk of the particular loss by other means (see eg
Woolcock Street Investments (Pty) Ltd v CDG
(Pty) Ltd (formerly Cardno & Davies Australia (Pty) Ltd)
[2004]
HCA 16
(para 80);
Perre v Apand (supra)
para
11 (Gleeson CJ) and para 50 (McHugh J). In the present case the
Agency can, in my view, be said to be 'vulnerable' to
the risk of the
loss that eventuated because it could not readily protect itself
against that risk by concluding a contract with
every user of the
toll road.
[26] Another policy reason why the extension of
delictual liability is sometimes refused is that it would impose an
additional burden
on the defendant which would be unwarranted or
which would constitute an unjustified limitation of the defendant's
activities (see
eg
Minister of Law and Order v
Kadir
[1994] ZASCA 138
;
1995 (1) SA 303
(A) at 321C-J;
Steenkamp NO v Provincial Tender Board,
Eastern Cape
2006 (3) SA 151
(SCA) paras
37-40;
Road Accident Fund v Shabangu
2005
(1) SA 265
(SCA) para 18;
X (Minors) v
Bedfordshire County Council;
[1995] UKHL 9
;
[1995] 2 AC 633
(HL) at 750). The converse of this consideration appears from the
statement by McHugh J in
Perre v Apand (supra)
para 50 that the imposition of liability
would not 'unreasonably interfere with
Apand's
commercial freedom because it was already
under a duty to [a third party] to take reasonable care'. That, I
believe, is also the
position in this case. Fourway's driver was
already under an obligation towards other users of the road to drive
with reasonable
care. Imposing liability on him – and his
employer – for economic loss resulting from his negligent
driving would thus
not foist any additional burden upon him at all.
[27] The only policy consideration relied upon by
Fourway as to why it should not be saddled with the Agency's loss was
that it
would be more appropriate to spread the burden by increasing
toll fees in order to accommodate losses of this kind. I do not agree
with this argument. On the contrary, I can see no reason why innocent
users of the toll road should effectively be held responsible
for the
negligent conduct of Fourway's employee. The fact that the loss would
be spread more widely may alleviate the burden imposed
upon the
individual innocent motorist, but it does not detract from the
principle that it would be a choice to the prejudice of
the innocent
in favour of the negligent driver.
[28] During argument the issue was raised as to the
relevance of the consideration that Fourway's employee was
transporting chrysolite
asbestos which can, by all accounts, be
described as dangerous cargo. Is this another policy consideration
for imposing liability
on Fourway for the Agency's loss, or not? My
view is that it is not. As I see it, it would make no difference in
principle in the
determination of wrongfulness whether the cargo
consisted of asbestos or of an innocuous substance like sand. I have
given the
policy reasons why Fourway should, in my view, be held
liable. I cannot see that it would have any effect on any of them if
the
cargo was not asbestos, but sand. If the Agency lost revenue
because the toll road had to be closed in consequence of the
negligence
of Fourway's employee, Fourway should, in my view, in
principle be liable, whether the closure was necessitated by the
spillage
of asbestos, sand or cement. Where the dangerous nature of
the cargo could have a bearing is on the issue of foreseeability of
damage. I think it is more readily foreseeable that the closure of
the toll road will be necessitated by a spillage of asbestos
than a
spillage of sand. But by the same token I believe that the issue of
foreseeability should more appropriately be considered
under the
rubric of legal causation and not as part of determining
wrongfulness.
[29] Now that I have decided the issue of wrongfulness
in favour of the Agency, the further question arises as to whether it
can
be said that Fourway had been prejudiced by the Agency's failure
to specifically raise the issue of wrongfulness in its particulars
of
claim. I think not. The policy considerations that should, in my
view, be taken into account all appear from the allegations
in the
pleadings supported by the evidence which was led at the trial. In
argument, counsel for Fourway could not think of a single
policy
consideration in favour of their client that could have been
supported by evidence led on its behalf if the Agency had
specifically referred to the issue of wrongfulness in its pleadings.
In short, despite an express invitation to that effect, counsel
for
Fourway were unable to submit that their client's case would have
been presented any differently if the Agency's pleadings
were in
perfect order.
[30] That brings me to causation. In this regard it has
by now become well-settled that, in the law of delict, causation
involves
two distinct enquiries. First, there is the enquiry into
factual causation which is generally conducted by applying the
'but-for'
test, as described by Corbett CJ in
International
Shipping Co (Pty) Ltd v Bentley
1990 (1) SA
680
(A) at 700E-G. The facts that are common cause on appeal leave no
doubt that, but for the collision caused by the negligence of
Fourway's driver, the Agency would not have suffered the loss.
Factual causation is therefore not in issue. The dispute turns on
the
second enquiry, under the rubric of causation, namely whether the
negligent conduct of Fourway's driver is linked sufficiently
closely
or directly to the loss suffered by the Agency for legal liability to
ensue, or whether the loss is too remote. This issue
is referred to
by some as remoteness of damage and by others as legal causation.
[31] In the final analysis, the issue of remoteness is
again determined by considerations of policy. Broadly speaking,
wrongfulness
– in the case of omissions and pure economic loss
– on the one hand, and remoteness on the other, perform the
same
function. They are both measures of control. They both serve as
a 'longstop' where most right-minded people, including judges, will
regard the imposition of liability in a particular case as untenable,
despite the presence of all other elements of delictual liability.
[32] Since wrongfulness – in the context of
omissions and pure economic loss – and remoteness are both
determined by
considerations of policy, a certain degree of
overlapping is inevitable. However, wrongfulness and remoteness are
not the same.
They involve two different enquiries in respect of two
different elements of delict, each with its own characteristics and
content
(see eg
LAWSA,
2ed
Vol 8 (1) sv 'Delict' by J R Midgley and JC van der Walt, para 132).
Even where negligent conduct resulting in pure economic
loss is for
reasons of policy found to be wrongful, the loss may therefore, for
other reasons of policy, be found to be too remote
and therefore not
recoverable. An example of a case where this happened is to be found
in a decision of this court in
International
Shipping Co (Pty) Ltd v Bentley (supra)
.
[33] The question therefore remains: is the loss claimed
by the Agency too remote? With regard to this question it has been
held
that the test in our law for determining remoteness is a
flexible one (see eg
International Shipping Co
(Pty) Ltd v Bentley (supra)
701A-F;
Smit
v Abrahams
1994 (4) SA 1
(A) at 15E-G;
OK
Bazaars (1929) Ltd v Standard Bank of South Africa Ltd (supra)
para
23). According to the 'flexible' test, (also referred to as the
'supple' test), so Fourway submitted, remoteness is determined
by
considerations of reasonableness, fairness and justice. As support
for this submission it sought to rely on the judgment of
Botha JA in
Smit v Abrahams (supra)
at
14F-15G. I do not agree with this submission and I do not believe it
derives support from what Botha JA said. Considerations
of fairness
and equity must inevitably depend on the view of the individual
judge. In considering the appropriate approach to wrongfulness,
I
said that any yardstick which renders the outcome of a dispute
dependent on the idiosyncratic view of individual judges is
unacceptable.
The same principle must, in my view, apply with
reference to remoteness. That is why I believe we should resist the
temptation
of a response that remoteness depends on what the judge
regards as fair, reasonable and just in all the circumstances of that
particular
case. Though it presents itself as a criterion of general
validity, it is, in reality, no criterion at all. In essence I agree
with the following statement by McHugh J in
Perre
v Arpand (supra)
para 80:
'But attractive as concepts of fairness and justice may
be in appellate courts, in law reform commissions, in the academy and
among
legislators, in many cases they are of little use, if they are
of any use at all, to the practitioners and trial judges who must
apply the law to concrete facts arising from real life activities.'
[34] As to the dicta of Botha JA in
Smit
v Abrahams (supra)
it is apparent that they
are founded largely on the judgment of Van Heerden JA in
S
v Mokgethi
1990 (1) SA 32
(A) at 40I-41D.
What Van Heerden JA said in that case is not that the 'flexible' or
'supple' test supersedes all other tests such
as foreseeability,
proximity or direct consequences, which were suggested and applied in
the past, but merely that none of these
tests can be used exclusively
and dogmatically as a measure of limitation in all types of factual
situations. Stated somewhat differently:
the existing criteria of
foreseeability, directness, et cetera, should not be applied
dogmatically, but in a flexible manner so
as to avoid a result which
is so unfair or unjust that it is regarded as untenable. If the
foreseeability test, for example, leads
to a result which will be
acceptable to most right-minded people, that is the end of the matter
(see eg
LAWSA
(supra)
para 132).
[35] In this case it can, in my view, be accepted with
confidence that any of the various criteria will lead to the
conclusion that
the loss suffered by the Agency is not too remote.
If, for example, the direct consequences criterion is applied, it is
clear that
the loss followed directly from the wrongful and negligent
conduct of Fourway's driver; there was no so-called
novus
actus interveniens
that broke the chain of
events. If, on the other hand, one applies the foreseeability test,
it was in my view reasonably foreseeable
that a collision could cause
spillage and that, because of the dangerous nature of the cargo,
spillage could result in the closure
of the toll road which could
lead to a revenue loss by the Agency. What is more, I do not find the
conclusion that Fourway should
be held liable for the loss in any way
untenable. Consequently, considerations of fairness and equity do not
arise. In any event,
the only consideration of fairness advanced by
Fourway was that it would be fairer to spread the loss amongst users
of the toll
road by way of an increase in toll fees. As I have
indicated earlier under the heading of wrongfulness, I cannot see the
fairness
of this proposal at all.
[36] For these reasons the appeal is dismissed with
costs, including the costs of two counsel.
……………………
..
F D J BRAND
JUDGE OF APPEAL
APPEARANCES:
FOR
APPELLANT: J H DREYER SC
J
A DU PLESSIS
INSTRUCTED BY: MACGREGOR STANFORD KRUGER INC, PRETORIA
CORRESPONDENTS: E G COOPER ATTORNEYS, BLOEMFONTEIN
FOR
RESPONDENT: A C FERREIRA SC
I
ELLIS
INSTRUCTED
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