SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 532/2024

In the matter between:

NELSON ATTORNEYS APPELLANT

and

AMORE SMIT N O FIRST RESPONDENT
ANTONIUS GERHARDUS
VAN DEN BERG SECOND RESPONDENT
MARGIE VAN DEN BERG THIRD RESPONDENT


Neutral citation: Nelson Attorneys v Smit N O & Others (532/2024) ZASCA 162
(24 October 2025)

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Coram: MBATHA ADP and MOTHLE, KGOELE and KEIGHTLEY JJA and
HENNEY AJA
Heard: 28 August 2025
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of Appeal
website and released to SAFLII. The time and date for hand -down is deemed to be
11h00 on 24 October 2025.
Summary: Law of Delict – pure economic loss – attorney and conveyancer –
wrongfulness – distinction between elements of wrongfulness and fault – whether
wrongfulness admitted – wrongfulness not established – plaintiffs could have taken
steps to avoid risk of loss – negligence not established – causation not established.

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ORDER
On appeal from: Eastern Cape Division of the High Court, Makhanda (Mjali J,
Norman J and Govindjee J, sitting as court of appeal):
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the full court is set aside and substituted with the following order:
‘The appeal is dismissed with costs, including the costs of two counsel where so
employed.’


JUDGMENT

Keightley JA (Mbatha ADP and Mothle and Kgoele JJA and Henney AJA
concurring):

Introduction
[1] The dispute that is the subject matter of this appeal had its origins in a
proposed residential property development located in Westering, Port Elizabeth
(now Gqeberha) in the mid -2000’s. Mrs Kelbrick (since deceased, and her estate
represented by the first respondent) and Mr and Mrs Van den Berg (second and third
respondents) owned adjoining immovable properties in the area. Together with the
owner of a third adjoining property, Mr Jonker (who is not a party to the appeal),
they entered into agreements (th e deeds of sale) in terms of which they sold their

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properties to the developer, Headline Trading 124 CC, trading as Status Homes
Developers (Status). The sole member and director of Status was Mr Lamour. As
the facts set out more fully below demonstrate, the transactions had unusual
characteristics.
[2] After the development failed, Status was liquidated , and Mr Lamour was
sequestrated. In a bid to recover their losses, Mrs Kelbrick and the Van den Bergs
(the respondents ) instituted an action against the appellant, Nelson Attorneys,
seeking to hold it delictually liable for their financial loss. The respondents’ claim
was for pure economic loss, that is a financial loss sustained by a plaintiff with no
accompanying physical harm to their person or property. 1 It is a loss that flows
directly from the negligent conduct itself.2 The respondents’ case was that had it not
been for Nelson Attorneys’ negligence, they would have succeeded in recovering
from Status or Mr Lamour the purchase price contractually due to them under the
deeds of sale. In effect , they sued Nelson Attorneys (which was not a party to the
contract) in delict for the value of the loss of their contractual bargain with Status.
[3] The action proceeded to trial before Rugunanan J (the trial court) in the
Eastern Cape Division of the High Court, Gqeberha (the high court). No evidence
was adduced in support of Mrs Kelbrick’s claim, as she had passed away in the
interim. Mr van den Berg testified personally and Mr Burman, a conveyancer, gave
expert evidence for the plaintiffs in the trial court. Mr Nelson had previously testified
for the appellant in the trial court on a separated issue. A transcript of that evidence
was accepted into evidence when the trial proceeded on the merits.

1 Country Cloud Trading CC v MWC, Department of Infrastructure Development [2014] ZACC 28; 2015 (1) SA 1
(CC) (Country Cloud) para 22.
2 Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA)
(Telematrix) para 1.

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[4] The action was dismissed by the trial court but, on appeal, a full court of the
high court set aside that decision. It directed Nelson Attorneys to pay delictual
damages to the respondents in the amounts claimed. The present appeal against the
full court’s judgment is with special leave of this Court.
Facts
[5] The seeds of the plan for the development were planted some time in 2005,
when Mr and Mrs van den Berg took a walk through their area and saw a small
development under construction. This sparked the idea that it might be possible for
them to do a development on half of their property. Status was the developer of the
site they had observed and, on approaching one of the builders on site, Mr van den
Berg was provided with Mr Lamour’s contact details. He contacted Mr Lamour, who
reacted positively to Mr van den Berg’s idea of constructing about eight or nine units
on their property. However, Mr Lamour had a better plan: he suggested that it would
be more viable to build a larger development, of about 20 units, over not only the
Van den Berg property, but also over the two adjoining properties of Mrs Kelbrick
and Mr Jonker and his wife.
[6] By way of background, it is worth noting that at this stage, the property market
in Gqeberha was buoyant. Many developments were under construction, with
opportunities to make substantial profits from buying and selling property.
Mr Lamour, trading through Status, was one of the developers involved in the
market.
[7] Mr Lamour approached the other owners individually with the development
idea. They all bought into the idea . Mr Nelson was not part of the picture at this
stage. All preliminary discussions were between Mr van den Berg and Mr Lamour,

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on behalf of Status, and between Mr Lamour and the other owners. Through these
discussions, broad agreement was reached on important aspects of the agreements.
[8] The Van den Berg property at that time was worth approximately R500 000,
with an outstanding mortgage bond of a little over R200 000. Mr Lamour and Mr van
den Berg agreed on a computation of the purchase price divorced from the value of
the property. Instead, the purchase price was based on an estimated value of
R700 000 in respect of each of the units to be built in the development. In terms of
the broa d agreement reached with Mr Lamour, the Van den Bergs were to take
transfer of two new units, in lieu of a cash payment. Consequently, the agreed
purchase price was R1,4 million. In addition, Status, would pay off the amounts due
on the Van den Bergs’ mortgage bond on transfer of the property.
[9] From his early interactions with Mr Lamour, Mr van den Berg was optimistic
about the development and confident in Mr Lamour’s ability to perform. Mr Lamour
gave them the plans for the development, which, according to Mr van den Berg ,
looked good. No doubt the Van den Bergs were looking forward to securing a
foothold in the buoyant property market and exchanging their existing modest
property holding for a substantially more valuable asset. However, as events
unfolded, this early optimism was soon dented by the Van den Bergs’ frustration at
the delay in getting the plan off the ground.
[10] It is not known precisely when Mr Nelson came into the picture. It must have
been by September 2005, as the Jonkers signed the first deed of sale with Status on
15 September 2005 . Mr Nelson, who was acting for Mr Lamour at that time , was
involved in the finalisation of the terms of the first deed of sale and signed as a
witness to the agreement.

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[11] Mrs Kelbrick and the Van den Bergs did not sign their deeds of sale until a
year later, in September 2006. It is not clear what the reason was for this anomaly,
but it is apparent from the evidence that the Van den Bergs were not happy with
what they perce ived to be the lack of progress in the development. On
8 December 2005, Mr van den Berg wrote to Mr Nelson voicing his concern. He
noted that he had met twice with Mr Lamour, who had assured him that ‘everything
was on track, and the development was going ahead’. However, Mr van den Berg
pointed out that no signage had yet been erected, and they had not received any
feedback about the objections lodged by neighbours. Mr van den Berg wanted a
timetable to indicate when building would start.
[12] Mr van den Berg also informed Mr Nelson that they had been approached by
another developer who had ‘seemed to know the answers’ to their problems. That
developer had even gone so far as to send a proposal to the Van den Bergs. The letter
ended with a request for information from Mr Nelson.
[13] The Van den Bergs wrote a follow-up letter to Mr Nelson a few months later,
on 10 February 2006. They again complained that Mr Lamour had not been very
forthcoming with information, and they expressed their concern that there might be
‘problems with the deal as a whole’. They again referred to the approach by the other
developer who, the letter stated, had told them that he would have no problems with
rezoning and would ‘guarantee a finalisation date’. If there were any problems, they
wanted them brought to their attention. The letter ended with a request that Mr
Nelson contact Mr Lamour urgently and get some answers for them because ‘… we
either get some form of commitment from him or we seek advice’.
[14] No response to these letters was contained in the evidence. Nor is there any
indication of what discussions might have been held between Mr Lamour and the

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Van den Bergs. However, what is apparent is that the Van den Bergs never pursued
the proposal submitted by the other developer, nor, it seems, did they seek the advice
they had alluded to . On 4 September 2006, the Van den Bergs and Mrs Kelbrick
signed the deeds of sale.
[15] The two deeds of sale were identical in all material respects. For simplicity, I
refer to the Van den Berg agreement. It recorded that Status wished to erect a
sectional townhouse development on the Van den Berg property, and that the scheme
required that the three affected erven (the Jonkers’, the Van den Bergs’ and Mrs
Kelbrick’s) be consolidated to provide sufficient land and to make the scheme a
viable financial proposition. Aligned with this, it was a condition precedent that the
agreement was subject to a similar agreement being concluded with the other
owners. A further condition precedent was the approval of a site development plan
by the Nelson Mandela Metropolitan Municipality (the Municipality).
[16] The purchase consideration for the transfer of the Van den Berg’s property to
Status was R1,4 million. It was expressly provided that: ‘In lieu of payment, Status
Homes undertakes to erect two dwellings for VAN DEN BERG, being unit
number 10 and unit number 8, as reflected on the site layout preliminary sketch
plan… .’ The value of each unit would be a sale value of between R700 000 and
R1,1 million. It was further recorded that as the two units chosen by the Van den
Bergs exceeded the purchase price, they agreed to contribute a sum of R300 000, by
way of the difference in value. Status would attempt to erect the two units chosen as
soon as possible.
[17] Transfer of the property was to be effected by Nelson Attorneys ‘as soon as
possible’. Status was to be responsible for the cancellation of any bond over the
property, and the registration of a new bond to the same value over the new property.

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The Van den Bergs were liable for the costs of registration of transfer of the new
units.
[18] The plans and working drawings were to be acceptable to the Van den Bergs
and to be approved by the Municipality. Specific provision was made for alternative
accommodation for the Van den Bergs. The deed of sale recorded that during the
construction period of their first unit, the Van den Bergs would be required to arrange
alternative accommodation for themselves. However, ‘[i]n the event of the period of
construction exceeding four months, Status Homes will be responsible for the cost
of alternative accommodation in the Linton Grange area or an equivalent area until
completion and handing over of the unit for the further period.’
[19] As security for Status’ obligations under the agreement, Mr Lamour bound
himself as surety and co-principal debtor ‘for the repayment on demand of any sums
of money owing and the due fulfilment of all obligations of Status Homes to VAN
DEN BERG’. Finally, of relevance is the breach clause. It provided that if a party
breached any provision capable of being remedied and failed to remedy such breach
within seven days of written notice, the other party would be entitled, at its
discretion, to cancel the agreement by giving written notice of such cancellation.
Subsequent events
[20] The background to the agreements, culminating in the deeds of sale, as well
as their terms demonstrate that these were unusual property transactions. The
original individual owners agreed to transfer their erv en to Status for consolidation
into one larger property. In exchange, instead of payment of the purchase price, they
acquired a personal right to demand transfer to them of the units that would be
constructed in the future, as part of the development. As no purchase price was
payable, there was no obli gation on Status to pay a deposit. Nor was there any

10


obligation on the conveyancer, Nelson attorneys, to ensure that it was placed in funds
sufficient to cover the purchase price before effecting transfer of the properties.
[21] This was the scheme that the Van den Bergs had agreed upon with Mr Lamour
before Mr Nelson came onto the scene. It was a scheme involving no small risk for
them, as they would give up their home, and would have to find alternative
accommodation for a period, pending the construction of the new units.
Significantly, however, the risk came with the promise of a substantial return for the
respondents. The purchase price agreed on was more than double the market value
of their property and they would acquire tw o sectional title units in exchange for
their single dwelling. Moreover, in the event of the construction requiring the Van
den Bergs to reside in alternative accommodation for more than four months, Status
would carry that cost.
[22] A further feature of the scheme is that for the development to become a reality,
several approvals had to be obtained from relevant public bodies. A site development
plan had to be approved by the Municipality. From the available evidence, it seems
this was in pla ce by January 2008, as it is referred to in an affidavit supporting an
application to the high court for the removal of restrictive title conditions, dated
15 January 2008. Correspondence introduced into evidence indicates that the
municipality granted approval for 16, rather than the 20 units originally envisaged,
requiring an amended plan to be produced. The removal of restrictive title conditions
was necessitated because the individual erven that were subsequently consolidated
had title conditions that were incompatible with a multi -dwelling, sectional title
scheme. The removal was authorised in approximately August 2008. Prior to this,
approval had to be obtained for the consolidation of the three separate erven into one
erf.

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[23] In addition, Status required capital to fund the development. This was
provided by Standard Bank through a development loan secured by the registration
of a mortgage bond over the consolidated e rf together with a personal suretyship
from Mr Lamour. It was a condition of the development loan that it could only be
accessed once a certain number of units had been pre -sold. In his evidence, Mr van
den Berg confirmed that he was aware that Mr Lamour would need to obtain working
capital for the development, and that for the scheme to be financially viable, units
would have to be pre-sold.
[24] The timeline of further events demonstrates that the development took a
considerable period to get off the ground. Despite the Kelbrick and Van den Berg
deeds of sale having been signed in September 2006, the transfer of their properties
to Status was only registered on 27 July 2007. At the same time, a certificate of
consolidated title was issued, consolidating the properties into erf 2[...] W[....]. Also
on the same date, a continuing covering mortgage bond was registered over the
consolidated property in favour of Standard Bank in the amounts of about
R8,7 million and R2,2 million. Status’ debt to the bank was further secured by a
personal suretyship from Mr Lamour.
[25] For reasons that are not clear from the evidence, the project did not proceed
with any urgency after consolidation and transfer. It appears that the Van den Bergs
vacated their house in approximately July 20 07 and moved into alternative
accommodation, after which demolition work began. Mr Lamour’s health seems to
have been a factor, as indicated in emails from the Van den Bergs. On
26 October 2007 the Van den Bergs addressed an email to Mr Nelson complaining
about the lack of progress and response. They acc used Mr Lamour of deliberately
stalling the process and playing games. They stated that they were fed up with the

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whole process, were going to seek legal advice and would not hesitate to act on it.
However, nothing came of this at the time.
[26] The application for the removal of restrictive conditions of title was launched
in January 2008. Without this approval, no construction work on the development
could properly begin. The approval was granted in approximately August 2008.
Some preliminary clearance and foundation work were undertaken on the site from
June 2008.
[27] Dissatisfied with the slow progress, the Van den Bergs and Mrs Kelbrick
eventually sought legal advice. On 1 September 2008 Mr Kitching, of Pierre
Kitching Attorneys, addressed a letter on their instructions to Burman Katz
Attorneys who, at that stage, acted for Status and Mr Lamour , Mr Nelson having
withdrawn as Status’ attorney. The letter demanded a written undertaking within ten
days that the units earmarked by Mr Kitching’s clients would be ready for transfer
and occupation within four months. The letter also demanded the amounts owing for
the alternative accommodation costs of the Van den Bergs and Mrs Kelbrick.
[28] On 31 October 2008, Mrs Kelbrick and the Van den Bergs issued summons
against Status and Mr Lamour based on Status’ breach of the deeds of sale. They
averred that more than a reasonable time had elapsed for the fulfilment of Status’
obligation to construct and t ransfer the new units. They claimed payment of the
amount of R1,4 million, being the purchase consideration under the deeds of sale, as
well as the amounts due in respect of rentals for alternative accommodation.
[29] Subsequently, on 21 November 2008, the respondents filed an application for
summary judgment. It is noteworthy that summary judgment was sought only in
respect of the claim for outstanding rentals, and not for the purchase price. Summary
judgment was granted for the rental claims on 7 July 2009.

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[30] In the interim, in approximately October 2008, building work began on the
development site. However, in February 2009 construction ceased and the builders
left the site after Standard Bank refused to allow further drawdowns from the
development bond. Accor ding to Mr Nelson, what ultimately led to this state of
affairs was a combination of construction being delayed until the restrictive title deed
conditions had been removed, together with a slump in the property market.
Consequently, prospective purchasers of the new units cancelled, leaving Status in
the position of having insufficient sold units to permit further drawdowns and, hence,
no capital to continue with the development. This led to the collapse of the scheme.
[31] In separate proceedings, Mr Jonker insti tuted an action against Status, Mr
Lamour and Nelson Attorneys on 16 September 2009. The claim against the latter
was settled on terms that are not known. An application for the liquidation of Status
was made on 23 December 2009. A provisional liquidation order was grant ed on
23 February 2010 and confirmation thereof on 15 June 2010. Mr Lamour was also
sequestrated on an unknown date. It was only after the settlement of the Jonker claim
that the respondents instituted their action against the appellant on 29 August 2011.
Pleadings
[32] The claim against Nelson Attorneys is premised on Mr Nelson having drafted
the deeds of sale as the representative, and on instructions of Status and/or Mr
Lamour. It is averred that at that time the respondents were, to the knowledge of Mr
Nelson, not rep resented by attorneys. It is further averred that Mr Nelson caused
transfer of the properties to be registered in the name of Status. The particulars of
claim state that Status failed to comply with the deeds of sale. Although action was
instituted against Status and Mr Lamour, and judgment granted in the respondents’
favour, the liquidation of the former and sequestration of the latter resulted in the

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respondents being unable to recover the monies due and payable to them. None of
these averments is materially disputed in Nelson Attorneys’ plea.
[33] Of significance is paragraph 23 of the amended particulars of claim. It reads:
‘By virtue of [Nelson Attorneys] drafting the agreements … and acting as conveyancer with
instructions to attend to the transfer of the properties of [Mrs Kelbrick and the Van den Bergs] to
[Status] in terms of [the deeds of sale] …, the cancellation of th e bonds… over [Mrs Kelbrick’s
and the Van den Bergs’] propert[ies] and subsequent appointment to register a development bond
over the property as consolidated with other immovable properties and [Nelson Attorneys’]
appointment as conveyancer to attend to the transfer of the completed units in the development to
[Mrs Kelbrick and the Van den Bergs], [Nelson Attorneys] owed [Mrs Kelbrick and the Van den
Bergs] a duty of care.’ (My emphasis.)
In its plea, Nelson Attorneys’ response to paragraph 23 is a simple ‘[a]dmitted’.
[34] Paragraph 25 of the amended particulars of claim deals with the alleged
negligent breach by Nelson Attorneys of its duty of care towards the respondents in
several listed respects. These include, among others:
a. failing to inform the respondents that in the event of Status breaching its
obligations under the deeds of sale after registration of transfer and
consolidation, the respondents would have no bank guarantee or other
guarantee that they would be paid the monies due to them;
b. failing to advise the respondents that they would also be unable to claim
restoration of their properties, as they would have been consolidated with
the other erven;
c. failing to protect the interests of the respondents adequately or at all by,
among others, delaying transfer of the properties until after the restrictive
conditions had been removed and other authorisations or approvals

15


obtained; delaying transfer ‘until such time as it was certain that the
removal of the restrictive conditions and rezoning would be achieved,
and the development would proceed’; not advising the respondents that
they could require a covering mortgage bond in their favour over the
consolidated property; preparing the deeds of sale that had the effect that
‘transfer of the properties would be passed to the corporation with no
guarantee whatsoever that the proposed development would ever come
to fruition’; and failing to inform the respondents of the risk of entering
into the deeds of sale with no guarantees in place;
d. failing to ascertain or reasonably for esee that Status and Lamour would
not be in a financial position to meet their obligations;
e. failing to inform the respondents of events, of which Mr Nelson allegedly
had knowledge, which placed the respondents at risk, including the fact
that legal proceedings were instituted against Status and Mr Lamour and
various judgments obtained; and the fa ct that Mr Lamour had divorced
his first wife and had transferred substantial assets to her; and
f. making certain misrepresentations to the respondents, but for which they
would not have allowed the transfers to proceed or would have acted to
mitigate their risks.
[35] In paragraphs 26 to 28 of the particulars of claim it is alleged that the
respondents suffered damages as a result of Nelson Attorneys’s breach of its duty of
care. The damages include the amount of R1,4 million, being the joint purchase price
that was not paid to them by either Status or Mr Lamour and which was irrecoverable
from their estates. Outstanding rentals for the alternative accommodation occupied
by the respondents are also claimed.

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[36] In its plea, Nelson Attorneys denies the averments that it acted negligently
and breached its duty of care. It also denies the averred damages suffered by the
respondent.
[37] The admission of the averments in paragraph 23 raises a pertinent issue: does
it constitute an unequivocal admission by Nelson Attorneys of the delictual element
of wrongfulness? Consequently, was it necessary for the trial court to consider and
determine the requirement of wrongfulness at all? The respondents contended,
which contention they maintain in this appeal, that it was unnecessary to do so. Their
view is that on the pleadings as they stand, the trial court was bound to proceed on
the basis that wr ongfulness was not placed in dispute and, thus, that it had been
established by the respondents.
[38] The trial court disagreed with the respondents’ interpretation of the pleadings,
finding that it conflated the elements of wrongfulness and that of negligence. It
proceeded on the basis that, notwithstanding the admission, the court was required
to inquire into and determine whether the element of wrongfulness was established.
The trial court concluded that the respondents had not satisfied their onus in this
regard.
[39] The full court, on the other hand, adopted the view that ‘given the admission
of [a] legal duty [in para 23] by [Nelson Attorneys], the issue of wrongfulness was
not before the [trial] court for determination.’ The full court reasoned that it is ‘an
established rule of evidence that admitted facts need not be proved’. It upheld the
appeal, finding that, wrongfulness having been established on the pleadings, the only
remaining issue was that of negligence. The full court was satisfied that that element,
on t he facts, and particularly on the expert evidence of Mr Burman, was also

17


established. It did not consider the remaining element of Aquilian liability, being
that of causation.
Issues on appeal
[40] It follows from this discussion of the pleadings that the issues aris ing for
determination in this appeal are:
a. Whether, on the pleadings, wrongfulness was admitted and hence
established.
b. If so, it is only necessary to determine whether the remaining elements of
Aquilian liability, being negligence, causation and damages have been
established. If any of these elements are found not to have been
established, the appeal must succeed.
c. If, on the other hand, wrongfulness is found not to have been admitted on
the pleadings, it follows that all the elements of Aquilian liability,
including wrongfulness, fall for consideration. If the respondents’ claim
in respect of any of these elements i s found wanting, the appeal must
succeed.
Wrongfulness
[41] In approaching the element of wrongfulness in this case, it must be
emphasised that the respondents seek to hold Nelson Attorneys liable for their pure
economic loss. There was no contractual nexus between them and Nelson Attorneys.
Nor do they allege that Mr Nelson bore any responsibility for the development
failing. In e ffect, based on his role as the drafter of the deeds of sale and the
conveyancer responsible for the transfers of property involved, they seek to hold him

18


liable for their loss of the purchase price under their contract with a third party,
Status.
[42] In cases like this, it is helpful to restate certain trite principles of Aquilian
liability. The Aquilian action is an exception to the first principle of delict, which
states that everyone must bear the loss they suffer. Put simply, loss lies where it falls.
Under the exception to this basic principle, a negligent act or omissi on that causes
the loss may result in Aquilian liability on the part of the wrongdoer, but only if that
negligent act or omission is, in addition, wrongful. 3
[43] It is accepted in our law that in some instances, wrongfulness is presumed: a
positive negligent act causing physical harm to one’s person or property is prima
facie wrongful. In those cases, the element of wrongfulness is seldom contentious.
However, wron gfulness becomes less straightforward in the case of negligent
omissions or negligently caused pure economic loss.4 Here, the negligent omission,
or act causing pure economic loss is not prima facie wrongful. More is needed to
establish liability. Wrongfulness in those circumstances will only be established if
policy considerations dictate that the plaintiff should be compensated for her loss.5
As the Constitutional Court succinctly put it in Country Cloud Trading CC v MEC,
Department of Infrastructure Development, Gauteng (Country Cloud), ‘[t]here is no
general right not to be caused pure economic loss.’6
[44] What is more, our law is generally reluctant to recognise pure economic loss
claims, especially where this would constitute an extension of the law of delict
beyond the limited categories of cases in respect of which it has been recognised.

3 Telematrix para 12.
4 Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) (Two Oceans
Aquarium) para 10.
5 Telematrix para 13.
6 Country Cloud para 22.

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The categories include intentional interference in contractual relations or negligent
misstatements, where the plaintiff can show a legally recognised interest that has
been infringed.7 Wrongfulness acts as a necessary check on liability because, due to
its nature, pure economic loss can lead to ‘liability in an indeterminate amount for
an indeterminate time to an indeterminate class’.8
[45] It follows that conduct causing pure economic loss is only wrongful if public
or legal policy considerations require that such conduct, if negligent, is actionable,
and that legal liability for the resulting damages should follow. However:
‘Conversely, when we say that negligent conduct causing pure economic loss or consisting of an
omission is not wrongful, we intend to convey that public or legal policy considerations determine
that there should be no liability; that the potential defendant should not be subjected to a claim for
damages, his or her negligence notwithstanding. In such event, the question of fault does not even
arise. The defendant enjoys immunity against liability for such conduct, whether negligent or not.’9
[46] This distinction between wrongfulness and fault is crucial in cases involving
pure economic loss. Too often these distinct delictual elements are confused. The
confusion sometimes arises from a further confusion between the concept of a ‘legal
duty’, which is associated with the element of wrongfulness, and that of a ‘duty of
care’, which is commonly used to frame the element of fault in the form of
negligence.10 This Court has repeatedly warned against this confusion, noting that it
may lead the unwary astray.11
[47] So too, the criterion of ‘reasonableness’ is sometimes used in the context of
both wrongfulness and negligence. When reference is made to ‘a general criterion

7 Country Cloud para 23.
8 Country Cloud para 24, quoting from Cardozo CJ in Ultramares Corporation v Touche 174 NE 441 (1931) at 444.
9 Two Oceans Aquarium para 12.

9 Two Oceans Aquarium para 12.
10 Hawekwa Youth Camp v Byrne [2009] ZASCA 156; 2010 (6) SA 83 (SCA) (Hawekwa):
11 Telematrix para 14; Two Oceans Aquarium para 11 and Hawekwa para 21.

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of reasonableness’, as determined by public and legal policy, in the context of
wrongfulness, it means something different from the reasonableness criterion
applied in respect of negligence. In respect of the former, the inquiry is into the
reasonableness of imposing liability on a defendant. On the other hand, with
negligence, the inquiry is into the reasonableness of the conduct in question.12
[48] The avoidance of these common confusions is not only necessary as a matter
of principle. It is also important as a matter of practice and procedure, and, of course,
in the adjudication by courts of claims for pure economic loss. Care must be taken
to avoid an approach that conflates the two. Practitioners and courts should guard
against the temptation to treat the wrongfulness inquiry as involving a consideration
of factors that correctly belong to the fault inquiry. Similarly, it is important to avoid
an a pproach in these cases that assumes conduct must be wrongful because it is
negligent. This is why a plaintiff claiming pure economic loss must allege
wrongfulness and plead the facts relied on to support the allegation.13
[49] With these principles in mind, I turn to the first issue arising in this appeal,
namely, whether wrongfulness was admitted on the pleadings. The crucial
paragraphs of the particulars of claim in this respect are 23 and 25. The respondents
contend that wron gfulness is pleaded in paragraph 23, and negligence in
paragraph 25. Their further contention, which the full court accepted, is that Nelson
Attorneys’ response in admitting paragraph 23 was an unequivocal admission of the
element of wrongfulness. Consequently, they argue that the element of wrongfulness
was ‘off the table’, so to speak, and that the trial court ought not to have considered
or made any determination on this element of liability.

12 Two Oceans Aquarium para 11.
13 Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd 2009 (2) SA 150 (SCA) (Fourway Haulage)
para 14.

21


[50] In accepting this proposition, the full court reasoned that:
‘The respondent admitted having a legal duty towards the appellants as stipulated in paragraph 23
of the … particulars of claim. … [T]hat paragraph on its own contains allegations which give rise
to a legal duty on the part of the respondent. … It is an established rule of evidence that admitted
facts need not be proved. The court … erred in holding that the issue of wrongfulness still had to
be determined.’
[51] Unfortunately, in its reasoning and conclusion the full court was led astray by
the respondents’ argument that paragraph 23 constitutes their pleading on the
element of wrongfulness. Inherent in this argument is the very confusion between
the elements of wrongfulness and negligence against which this Court has warned.
Paragraph 23 does not, in its express terms, refer to the element of wrongfulness, or
unlawfulness (as it may sometimes be framed) at all. On the contrary, what is
pleaded expressly is a ‘duty of care’. That ‘duty of care’ is pleaded as arising from
the fact that Mr Nelson drafted the deeds of sale and acted as conveyancer in the
various property transactions associated with the development.
[52] One cannot quibble with the averment that an attorney and a conveyancer
must act reasonably and diligently in his or her dealings with the parties to property
transactions. In other words, that he or she owes them a ‘duty of care’. In this respect,
there is nothing wrong with the case pleaded in paragraph 23. The d ifficulty for the
respondents is that in both its language and formulation, what is pleaded in paragraph
23 is not directed at the element of wrongfulness at all: it is directed at the element
of fault. This becomes even clearer when paragraph 23 is read in conjunction with
paragraph 25: that paragraph contains the averments in support of the respondents’
case that the ‘duty of care’ owed by Nelson Attorneys, as described in paragraph 23,
was negligently breached.

22


[53] Consequently, both paragraphs 23 and 25 address the element of fault, in the
form of negligence. The full court erred in reading paragraph 23 as dealing with the
element of wrongfulness. It compounded this error by finding that Nelson Attorneys
had admitted a ‘legal duty’ and hence that the element of wrongfulness was not in
dispute. As the trial court correctly found, the respondents’ argument conflated the
two elements of wrongfulness and negligence. The admission of paragraph 23 was
not an admission of t he wrongfulness element. Wrongfulness remained an element
that the trial court was required to determine and which the respondents bore the
onus to satisfy.
[54] The next question, then, is whether wrongfulness is established in this case,
bearing in mind that negligent conduct causing pure economic loss is not prima facie
wrongful. For purposes of the wrongfulness inquiry, negligence is presumed: the
question is whether there was a legal duty not to act negligently. In other words,
should legal liability be imposed for the financial loss arising from the (presumed)
negligent conduct.14
[55] The wrongfulness inquiry is a matter for judicial determination, involving
legal and public policy considerations consistent with constitutional norms.15 By its
very nature, this form of inquiry opens the door to potential uncertainty. This much
was recognised in Fourway Haulage . There this Court accepted that absolute
certainty is unattainable, and that there are no clear, bright lines between negligent
conduct causing pure economic loss that will be regarded, in terms of legal policy,
as actionable, and such conduct that will not.16

14 Two Oceans Aquarium para 12.
15 Two Oceans Aquarium para 10.
16 Fourway Haulage paras 16 – 22.

23


[56] What is clear, however, is that liability for pure economic loss does not depend
on the personal views of individual judges as to what is reasonable and fair. 17 In
other words, judges cannot pick out deserving cases when they see them. 18 The
determination of liability does not involve ‘an intuitive reaction to a collection of
arbitrary factors but rather a balancing against one another of identifiable norms’.19
The question in every case is whether there are persuasive legal policy reasons to
impose liability for the loss concerned. An example of an accepted policy
consideration is that liability may more readily be imposed (in other words,
wrongfulness established) in cases of a single loss for an identifiable plaintiff that
occurs only once. 20 This is thus one, albeit not a determinative, factor that is taken
into consideration in the wrongfulness inquiry.
[57] Another recognised policy consideration is whether the plaintiff was
‘vulnerable to risk’. If the plaintiff could reasonably have taken steps to protect itself
from the loss by other means, for example, contractual means, 21 then the plaintiff is
not ‘vulnerable to risk’. As a matter of legal policy, in these circumstances there is
no need for the law of delict to step in to protect him or her from the loss.
Vulnerability to risk is an important factor mitigating against a fi nding of
wrongfulness in pure economic loss cases. 22
[58] In sum, claims for pure economic loss involve a different approach to the
element of wrongfulness. 23 The onus on a plaintiff is considerable. As this Court
explained in Two Oceans Aquarium:

17 Fourway Haulage para 21.
18 Fourway Haulage para 17.
19 Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) (Van Duivenboden) para 21.
20 Fourway Haulage para 23.
21 Two Oceans Aquarium para 23.
22 Country Cloud para 51.
23 Fourway Haulage para 12.

24


‘When a court is requested in the present context to accept the existence of a “legal duty”, in the
absence of any precedent, it is in reality asked to extend delictual liability to a situation where none
existed before. The crucial question in that event is whether there are any considerations of public
or legal policy which require that extension.’24
[59] In the present matter, what the respondents seek is to hold Nelson Attorneys
liable for the financial loss suffered: first, as a result of Status breaching its obligation
under the deeds of sale and failing to deliver the units; and second, as a result of their
inability to recover the equivalent purchase price from either Status or Mr Lamour.
The main complaint against Mr Nelson is that he did not warn the respondents of the
risks associated with entering into the agreements without better security. Their
further complaint is that as the conveyancer, Mr Nelson ought to have delayed the
transfer and consolidation of the properties until the application for the removal of
restrictive conditions had been approved. Had he done so, as I understand the
argument, it is likely that the proposed development would have collapsed before
the transfer of title from the respondents to Status.
[60] In essence, what the respondents contend for is that Nelson Attorneys should
be held liable for the risk the respondents took that the development would fail, and
that Status and Mr Lamour would breach their contractual obligations. Are there any
pressing legal policy considerations for extending such liability in these
circumstances?
[61] By its very nature t he transaction was high -risk, with the prospect of
concomitant high value gains for the Van den Bergs and Mrs Kelbrick. It was an
arrangement that made sense in the context of the buoyant market for similar
developments prevailing at the time. Instead of receiving money in exchange for

24 Two Oceans Aquarium para 12.

25


their properties, they accepted a purchase consideration in kind. What is more, the
units to which they were entitled did not exist yet. In his evidence, Mr Nelson stated
that the parties understood the risks involved. Although Mr van den Berg denied
this, that denial cannot hold water when viewed in context.
[62] The terms of the deeds of sale were simple and clear: in exchange for their
properties and the demolition of their present homes, they would, in the future be
able to claim transfer of new units that still had to be constructed. It did not take a
legal mind to understand the basic scheme. Mr van den Berg understood the nature
of the agreement and he must have appreciated the inherent risk it involved.
[63] After all, it was Mr van den Berg who showed the initial interest and
approached Mr Lamour. He had seen the other developments Status had undertaken,
and he was impressed with Mr Lamour as a developer. Mr van den Berg agreed in
his evidence that he had confidence in Mr Lamour’s ability to perform under the
contract. He must have been satisfied, from the independent view he had formed of
Mr Lamour, that the risk was worth taking.
[64] Mr van den Berg was equally alive to the profit that he stood to gain from the
arrangement with Status. This, too, warranted the risk he agreed to assume. In his
evidence he acknowledged that he could have been driven by the profit margin when
entering into the agreement.
[65] It is important to note, too, that broad agreement was reached between the
Van den Bergs and Mr Lamour before Mr Nelson became involved. Although he
reduced the agreement to writing, it encapsulated the terms to which the parties had
already agreed. Nelson Attorneys had no direct client-attorney relationship with the
respondents. It represented Mr Lamour and Status, albeit that, as Mr Nelson
acknowledged, in finalising the terms of the deeds of sale, he had to act fairly

26


towards both the respondents and his client. There is nothing inherently unfair in the
terms of the deeds of sale. Nor is it the respondents’ case that Mr Nelson pressed
them to accept terms they were reluctant to accept.
[66] In these circumstances, it does not seem to me that there are persuasive legal
policy reasons to extend liability to Nelson Attorneys. There are two key
overwhelming reasons why this must be so. First, the real reason for the respondents’
loss was that the development failed. Mr Nelson bore no responsibility for this.
Multiple factors caused the collapse: the downturn in the property market, the
resultant inability to sell sufficient units and, ultimately, the consequential decision
by Standard Bank to close the taps of the development loan. None of these causative
factors was under Mr Nelson’s control.
[67] Legal policy considerations did not expect of Mr Nelson that he ought to have
predicted these future events. This is particularly so because it is clear from the facts
recorded earlier that the Van den Bergs were highly motivated and committed to the
deal going ahead. They maintained this stance consistently, even when they voiced
concern about whether the development was proceeding as planned. To hold Nelson
Attorneys liable in these circumstances would mean finding that he had a legal duty
to dissuade the respondents from their committed course of action. This cannot be
reasonable.
[68] The second reason to refuse the extension of liability in this case is that the
respondents were clearly not vulnerable to risk. They made several conscious
decisions to proceed with the arrangement with Status and Mr Lamour even when,
both objectively an d subjectively, there were reasons for them to reconsider their
position. As early as December 2005, the Van den Bergs were offered an alternative
proposal by another developer when they were already concerned about the slow

27


progress of affairs. They declined to follow up. In February 2006, again worried
about a lack of commitment from Mr Lamour, they threatened to obtain advice.
Nonetheless, seven months later, and with no evidence that they had taken any legal
advice, they signed the deeds of sale.
[69] Mr van den Berg was unable to explain why he had not proceeded to seek
advice before entering into the agreement, save to say that he was optimistic and
confident that Mr Lamour would be able to perform his obligations. The respondents
had ample opportunity to withdraw from the arrangement with Status prior to signing
the deeds of sale when they questioned Mr Lamour’s commitment. They elected not
to do so. Once again, in October 2007, the Van den Bergs threatened to get legal
advice but seemingly failed to do so. Instead, they resolutely remained committed to
their objective of seeing the contract through.
[70] Moreover, even after they had taken legal advice and instituted action against
Status and Mr Lamour for breach, the respondents made a conscious, deliberate
choice not to proceed with their claim for payment of the purchase price. Instead,
they chose to ho ld out for the transfer of the units. As Mr van den Berg put it, he
remained hopeful that the deal could be salvaged. Consequently, the respondents
could have taken reasonable steps to avoid their loss by enforcing their contractual
rights. They opted to ignore the clear signs of risk presented to them in the hope that
the substantial return on their investment would even tuate. Accordingly, they were
not vulnerable to risk and cannot expect the law of delict to come to their aid by
holding Mr Nelson, a third party to the contractual relationship, liable for the
financial loss they suffered consequent on their eventual inab ility to recover
damages in contract.

28


[71] For these reasons, I find that the trial court correctly found that the respondents
did not establish wrongfulness. This finding, on its own, is sufficient to uphold the
appeal. As a precautionary measure, and to remove any lingering concerns that may
arise, I proceed nonetheless to consider the remaining elements.
Negligence
[72] Nelson Attorneys admitted that it owed the respondents a duty of care insofar
as Mr Nelson had drafted the deeds of sale and acted as the conveyancer appointed
by Status to attend to the transfers and related conveyancing transactions arising
from the development. Mr Nelson also admitted that the duty extended beyond the
first transfers from the respondents to Status.
[73] As this Court noted in Margalit v Standard Bank Ltd and Another
(Margalit),25 conveyancers are expected to be fastidious in their work and to take
great care in the preparation of their documents. This obligation is expressed in
s 15(A) of the Deeds Registries Act 47 of 1937, which requires conveyancers to
accept responsibility for the correctness of the facts stated in the deeds or documents
prepared by them.26 However, this obligation is not directly applicable in the present
case as the claim against Nelson Attorneys is not founded on inaccuracies in the
conveyancing documents prepared by Mr Nelson. This case stands on a different
footing to that in Margalit.
[74] As appears under the heading ‘Pleadings’ above, the respondents’ pleaded
breaches of Nelson Attorneys’ duty of care are wide -ranging. For purposes of the
appeal, the respondents focused on two categories of the alleged breaches: first, and
prior to the signing of the deeds of sale, the alleged failure of Mr Nelson to warn the

25 Margalit v Standard Bank Ltd and Another [2012] ZASCA 208; 2013 (2) SA 466 (SCA) (Margalit).
26 Margalit para 26.

29


respondents of the risks attendant on entering into transaction without adequate
security; and second, post-signature of the deeds of sale, Mr Nelson’s failure to delay
transfer of the properties until the removal of restrictive conditions and rezoning was
achieved and it was certain that ‘the development would proceed’.
[75] The foundation for the respondents’ case for negligence rested on the expert
evidence of Mr Burman. The thrust of his opinion was that the personal suretyship
provided by Mr Lamour was inadequate. Further, that Mr Nelson should have done
full due diligence on Mr Lamour’s financial position before including this as a form
of security in the deeds of sale. Mr Burman buttressed his opinion by presenting a
2019 print -out of Mr Lamour’s immovable property holdings in 2006. They
indicated that Mr Lamour’s immovable properties were bonded and that, according
to Mr Burman, his property -holdings were insufficient to cover the amount of the
debt secured by his suretyship. In addition, Mr Burman pointed to the other personal
suretyships provided to Standard Bank by Mr Lamour as indicating the extent of his
indebtedness. Mr Burman’s view was that Mr Nelson ought to have advised the
respondents to obtain additional security in the form of a second bond over the
property.
[76] As to the second arm of the respondents’ case for negligence, Mr Burman
opined that it was not necessary to transfer and consolidate the properties before
applying for rezoning and removal of restrictive conditions. This aspect of his
evidence is easily de alt with, as Mr Burman conceded that it was acceptable
conveyancing practice to proceed as Mr Nelson had done. In any event, the deeds of
sale recorded that transfer would take place as soon as possible. In the circumstances,
it can hardly be said that Mr Nelson acted negligently in proceeding with the
transfers and consolidation before securing the necessary additional approvals. On
the contrary, he acted in accordance with the deeds of sale.

30


[77] Regarding the alleged failure of Mr Nelson to advise the respondents on
adequate security, as the trial court correctly observed, Mr Burman’s opinion was
not informed by the correct facts and appraisal of the circumstances. An expert
witness must base his or her opinion on stated facts. He or she should not omit to
consider material facts which could detract from his or her conclusion.27 Mr Burman
based his opinion solely on the deeds of sale, the pleadings and the transcript of Mr
Nelson’s earlier evidence. He did not consult with any of the respondents.
Consequently, his opinion was formed without reference to several material facts.
[78] For example, Mr Burman did not know that it was Mr van den Berg who had
conceived the idea for a development and had approached Mr Lamour. He did not
appreciate that Mr van den Berg had formed his own independent assessment of
Mr Lamour as a capable developer who could be trusted to perform. This was before
Mr van den Berg met Mr Nelson. Mr Burman did not know that prior to signing the
deed of sale Mr van den Berg had considered taking advice or approaching another
developer but had decided not to do so. No r did Mr Burman know that prior to
Mr Nelson’s involvement the parties had already reached agreement in broad strokes
and that Mr Nelson’s brief was to reduce that agreement to writing. This was
confirmed by Mr van den Berg in his evidence. Mr van den Berg further confirmed
that he was happy with accepting Mr Lamour’s suretyship as security, and that when
he signed the deed of sale, he knew there was no bank guarantee included in the
agreement. As Mr Burman gave evidence before Mr van den Berg, he did not t ake
any of this into account.
[79] As to the alleged over-indebtedness of Mr Lamour, and Mr Burman’s opinion
that Mr Nelson failed to do due diligence, this view was formed in hindsight, long

27 PriceWaterhouseCoopers Inc and Others v National Potato Co-Operative Ltd and Another [2015] ZASCA 2;

2015 JDR 0371 (SCA); [2015] 2 All SA 403 para 98.

31


after the development collapsed. It was based on limited access to information
regarding Mr Lamour and Status’ financial position, being restricted to their
immovable assets. Mr Burman did not consider the value of Status as a going
concern, or the value o f Mr Lamour’s membership in Status at the time.
Mr Burman’s opinion ignores the fact that both Mr Nelson and Mr van den Berg
relied on Status’ public reputation as a successful developer in Gqeberha at the time.
Importantly, his opinion also fails to explain why, had the development been risky,
and Mr Lamour’s suretyship valueless at the time, Standard Bank would have agreed
to extend a development loan and accept his suretyship as a form of additional
security.
[80] In light of these shortcomings, the trial court can’t be faulted for finding Mr
Burman’s opinion unpersuasive on the question of negligence. On the facts, when
the deeds of sale were entered into it was not reasonably foreseeable that four years
later the development would collapse due to a chain reaction triggered by a downturn
in the property market, and that both Status and Mr Lamour would be insolvent.
[81] It is also not apparent from the facts what steps Mr Nelson could reasonably
have taken to prevent the respondents’ eventual inability to recover contractual
damages from Status or Mr Lamour. Even if a second bond in favour of the
respondents had been registered against the consolidated property, it is unlikely that
this would have yielded any return, given that Standard Bank would have been the
first secured creditor. In any event, Mr van den Berg was happy with Mr Lamour’s
suretyship and decided not to ta ke advice before signing the contract. He admitted
that his commitment to the deal was driven by the handsome returns he stood to gain.
This being the case, it is unlikely that he would have walked away from signing the
agreement because of contrary advice from Mr Nelson.

32


[82] For these reasons, I find that the full court erred in concluding that the
respondents had established negligence on the part of Nelson Attorneys. Even if one
discounts the finding that wrongfulness was not established, the appeal should
succeed on this score. Nonetheless, and again as a precautionary measure, I consider
the element of causation.
Causation
[83] Neither the trial court no r the full court considered the element of causation.
The trial court did not do so as it was satisfied that wrongfulness was not established.
The full court’s failure to consider causation is inexplicable. It ought to have applied
its mind to the question of whether the respondents had satisfied this element of
delictual liability. It should have concluded that they had failed to do so.
[84] It is trite that causation has both a factual and legal component. Factually, the
question is whether the omission in question caused the harm. This is often expressed
as the ‘but-for’ test: if, but for the impugned conduct the harm would probably not
have been suffered, it can be concluded that factual causation is established. If not,
that is the end of the causation inquiry. If, however, on an application of the but-for
test a factual causal nexus between the conduct and the harm is established, liability
will only follow if, in addition, legal causation is established.
[85] Legal causation, or remoteness of damage, as it is sometimes called, acts as a
brake against indeterminate liability. In similar fashion to wrongfulness, it is
determined by policy considerations.28 Factors that play a role in the determination
of legal causation include the foreseeability of the harm, its proximity to the

28 Mashongwa v Passenger Rail Agency of South Africa [2015] ZACC 36; 2016 (3) SA 528 (CC) para 68.

33


impugned conduct, and the directness of the link between the conduct and the
harm.29
[86] In my view, neither factual nor legal causation is established in this case. It
cannot be concluded that but for Mr Nelson’s failure to advise the respondents of the
risk of proceeding with only a suretyship as security their loss would not have
occurred. As I indicated earlier, it is likely that Mr van den Berg would have
remained committed to the deal and would not have extricated himself from it. In
any event, there is no evidence that a more tangible form of security was a realistic
possibility or, even if it had been, that it would have led to a different outcome. The
key reasons for the ultimate collapse of the development, and the insolvency of
Status and Mr Lamour, were beyond Mr Nelson’s control. No form of security that
he might have advised the r espondents to insist upon , would have protected them
from the market collapse and the consequent failure of Mr Lamour’s development
enterprise.
Conclusion
[87] I conclude, for all the reasons set out above that the appeal must succeed. The
full court erred in upholding the appeal against the judgment and order of the trial
court. This is because, in the first place, and contrary to the findings of the full court,
wrongfulness was not established. In addition, and in any event, the respondents
failed to establish negligence on the part of Mr Nelson. Finally, neither legal nor
factual causation was established and for this reason, too, their appeal ought to have
been dismissed by the full court.


29 Fourway Haulage para 34.

34


[88] I make the following order:
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the full court is set aside and substituted with the following order:
‘The appeal is dismissed with costs, including the costs of two counsel where so
employed.’
___________________________
R M KEIGHTLEY
JUDGE OF APPEAL

35


Appearances
For the appellant: J J Nepgen SC and T Rossi
Instructed by: Munshi & Associates, Gqeberha
Honey Attorneys, Bloemfontein

For respondent: O H Ronaasen SC and B Westerdale
Instructed by: Meyer Incorporated, Gqeberha
Muller Gonsior Attorneys, Bloemfontein.