Dormell Properties 658 (Pty) Ltd v Rowmoor Investments 513 (Pty) and Another (1072/2010) [2013] ZAWCHC 152 (9 October 2013)

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[2013] ZAWCHC 152
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Dormell Properties 658 (Pty) Ltd v Rowmoor Investments 513 (Pty) and Another (1072/2010) [2013] ZAWCHC 152 (9 October 2013)

THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT)
Case No: 1072/2010
In the matter between:
DORMELL PROPERTIES
658 (PTY) LTD
PLAINTIFF
And
ROWMOOR
INVESTMENTTS 513 (PTY) LTD
FIRST
DEFENDANT
AUCTION ALLIANCE
(PTY) LTD
SECOND
DEFENDANT
Coram
: ROGERS J
Heard: 6, 7, 11 - 14, 19 & 20 MARCH 2013; 5 –
8 & 12 – 14 AUGUST 2013; 2-3 SEPTEMBER 2013
Delivered: 9 OCTOBER 2013
______________________________________________________________
JUDGMENT
______________________________________________________________
ROGERS J:
Introduction
The plaintiff (‘Dormell’) sues the two
defendants (‘Rowmoor’ and ‘Auction Alliance’
respectively)
for damages of R25 million allegedly caused by
misrepresentations and non-disclosure which induced Dormell to
purchase Erf 257
Camps Bay situated at 35 Victoria Road Camps Bay
(‘the property’) for a price of R44 million (inclusive
of commission)
whereas it would otherwise only have paid R19
million. Rowmoor was the owner and seller of the property. Auction
Alliance was
the auctioneer mandated by Rowmoor to sell the
property. Dormell was represented by Mr AR Sholto-Douglas SC leading
Ms L Kieck;
Rowmoor by Mr PB Hodes SC leading Mr SC Goddard; and
Auction Alliance by Mr Rose-Innes SC leading Mr D van Reenen.
Dormell purchased the property on 6 March 2008. The
property had been put up for auction that morning. Dormell bid at
the auction
but the property was knocked down to another bidder for
R36 million. Rowmoor did not accept that price. Pursuant to
negotiations
which took place immediately after the auction, Dormell
ended up buying the property for R40 million plus R4 million
auctioneer’s
commission in accordance with the conditions of
sale on which the auction had been conducted.
Broadly stated, Dormell’s complaint is that the
defendants represented in the auction brochure and stated verbally
at the
auction that there were approved building plans for a
three-storey building on the property as depicted in the brochure or
that
there were statements which, in the absence of further
disclosure, conveyed that impression. It is common cause that
various
development rights for the proposed building had been
obtained by the time of the auction but that the building plans had
not
yet been approved. It is also common cause that in the event the
building plans were never approved though the circumstances giving

rise to the absence of approval will require explanation. The
content of the representations is not in dispute: they are contained

in the brochure and in the transcript of what the auctioneer said
(the auction was filmed).
The issues which were argued at the end of the trial
were in summary the following:
[a] whether the statements in the brochure and at the
auction have the meaning alleged by Dormell (misrepresentation by
commission);
[b] alternatively, whether there was a duty to disclose
that building plans had not yet been approved (misrepresentation by
omission);
[c] whether the defendants made the
misrepresentations by commission negligently; or whether they made
the misrepresentations by
omission fraudulently or negligently;
1
[d] whether Dormell, represented by one of its directors
Ms Suzette Main (‘Main’), knew by the time of the
purchase
that building plans had not yet been approved;
[e] whether, assuming Main did not know, the knowledge
of Mr Dudley Annenberg (‘Annenberg’), whom she asked to
investigate
the property with a view to advising her on the proposed
purchase and who undoubtedly knew at the time of the auction that
building
plans had not yet been approved, is attributable to Dormell;
[f] whether the fact that building plans had not been
approved would have made any difference to the price paid by Dormell
and if
so what that difference would have been;
[g] related to issue [f], whether the evidence adduced
by Dormell to the effect that the market value of the property at the
auction
date was R19 million (corresponding to the alleged lesser
price Dormell would have paid but for the misrepresentations/
non-disclosure)
was cogent and should be accepted by the court;
[h] whether, assuming these various issues were decided
in favour of Dormell, the defendants are shielded from liability by a
disclaimer
in the auction brochure or an exemption clause in the
conditions of sale (it was accepted by the defendants, though, that
these
protections would not be available if fraud were proved).
Factual overview
Dormell’s two directors at all material times
have been Main and Gary Tullis (‘Tullis’). Main is an
affluent
woman in her own right and is married to Paul Main, a
successful and wealthy businessman. Tullis was a director of various
companies
in which Suzette and Paul Main were interested. He is a
chartered accountant and effectively functioned as a financial
director.
Paul Main was not involved in Dormell and played no part
in the events with which this case is concerned. Main through
Dormell
was as at March 2008 the owner of an establishment in
Plettenberg Bay known as the Grand Cafe & Rooms which operated
as a
restaurant and boutique hotel (she had acquired this in late
2007/early 2008).
Rowmoor purchased the property in July 2004. Its sole
director was Selwyn Fabian. Although the outside world would not
have known
this, Rowmoor was the general partner in an
en
commandite
partnership in which the ownership and development of
the property were effectively divided into three shares: a third
held by
a trust in which Selwyn and his brother Frank were
interested; another third held by a trust in which Dennis Fabian and
his brother
Jeff were interested; and the final third held by
various business associates of the Fabians. The fact that this
partnership
existed was not regarded by the litigants as a matter of
significance.
Dennis Fabian is a successful and well-known architect.
He was at all material times the leading figure in a firm of
architects
called Dennis Fabian & Berman Architects (‘DFBA’).
All references in this judgment to Fabian are to Dennis Fabian

unless otherwise indicated.
The property is 476 m
2
in extent. As at
July 2004 there existed on the property a two-storey building
covering about one-third of the erf. There was
a restaurant on the
ground floor and a function facility on the upper floor. Rowmoor had
in mind to develop the property in a
way which would require various
title deed restrictions to be removed or amended and various
departures to be granted from the
zoning scheme. The restrictions
had to do with building setbacks; the area of the erf which could be
covered by buildings; and
the activities which could be conducted on
the property. In some instances these matters were dealt with in
both the title deed
and the zoning scheme though in different ways.
There existed in Camps Bay an extremely active and vigilant
ratepayers association
(‘the Association’). The changes
which Rowmoor had in mind could be expected to attract the critical
attention of
the Association and of various neighbours.
Shortly after purchasing the property Rowmoor engaged
DFBA as architects to assist in the design of the proposed
development.
The main professionals at DFBA who dealt with the
project were Dennis Fabian and Marius van Lonkhuyzen (‘Van
Lonkhuyzen’).
Rowmoor engaged an experienced town planner,
Tommy Brummer (‘Brummer’), to guide Rowmoor through the
difficult process
of obtaining the necessary alterations to the
title deed and zoning restrictions. Brummer had an associate, Arina
de Villiers,
who also had some involvement in the project.
The removal and amendment of title deed restrictions
were governed by the Removal of Restrictions Act 84 of 1967 (‘the
Removal
Act’). The power to grant removal and amendment lay
with the Department of Environmental Affairs and Development
Planning
in the Western Cape Provincial Government (‘the
Province’). The Act laid down a process of application,
publication
and objection. Such applications were made to the
Province through the relevant local authority (in this case, the
City of Cape
Town – ‘the City’) which was required
to make a recommendation to the Province. Ultimately the competent
authority
in the Province had to determine whether he or she was
satisfied that it was desirable to remove or amend the relevant
restrictions
in the interests of the establishment or development of
the township or area or in the public interest (see s 2(1)(a)
of
the Removal Act).
Departures from the zoning scheme, by contrast, were a
matter for the City. The departures had to be sought in terms of
s 15
of the Land Use Planning Ordinance 15 of 1985 (‘LUPO’).
Again there is a prescribed process of application, publication
and
objection. In terms of s 36 of LUPO the test focuses on the
desirability of the proposed departure, the safety and welfare
of
the members of the community, the preservation of the natural and
developed environment and the effect of the departures on
existing
rights.
In December 2004 Brummer submitted to the City
Rowmoor’s application for the removal and amendment of certain
title deed
restrictions (‘the removal application’) and
Rowmoor’s application for departures from various terms of the
zoning scheme (‘the departures application’). The
consolidated application was accompanied by a set of sketch plans

collectively styled the Site Development Plan (‘SDP’)
with floor plans for the various levels plus certain elevations
and
sections of the structure as a whole.
As was perhaps to be expected, there were objections
from the Association and from various neighbours (‘the
affected parties’).
Rowmoor and Brummer engaged over a period
of several years with the affected parties and with the City with a
view to reaching
a compromise. In this process the sketch plans
constituting the SDP underwent various alterations.
On 22 June 2006 there was a meeting of the City’s
Spatial Planning Environment and Land Use Management Department
(‘SPELUM’).
By that stage some but not all of the
objections of the affected parties had been accommodated. For
convenience I shall refer
to the SDP sketches as they existed at
this stage as the June 2006 SDP. The SPELUM meeting was attended by,
among others, representatives
of the Association and affected
neighbours and by Brummer. Despite the remaining objections, SPELUM
resolved, in item 1 of its
resolution passed on that date, to
recommend to the Province the granting of the removal application.
As to the departures application,
items 2 and 3 of the resolution
read thus:
‘
2.
that, subject to the approval of 1 above
[ie
the granting by the Province of the removal application]
,
the Departures as set out in Annexure “A” to the report,
to enable the owners to construct a three story building,
comprising
retail (restaurant) and a parking garage in the basement and on the
ground floor with flats on the first and second
floor BE APPROVED in
terms of Section 15 of the Land Use Planning Ordinance 15 of 1985,
subject to the conditions as set out in
the tabled Annexure “A”,
and
3. that the Development Plan, as
per drawings SDP-1351-1000-1005 & 3000-3001 (Amended February,
March and June 2006) BE APPROVED.’
The departures thus approved involved the reduction (in
most instances to zero) of various setbacks specified in the zoning
scheme
from Victoria Road (to the west) and Van Kamp Street (to the
south). Among the conditions to which the departures were subject

were [a] that not more than 11 dwelling units be developed on
the property; and [b] that one on-site parking bay for
each
dwelling be provided on the property.
The affected parties had a right to appeal to the
Province against SPELUM’s decision. This was naturally
something Rowmoor
wished to avoid. Moreover, the Province had not
yet approved the removal application. Rowmoor thus continued to
negotiate with
the affected parties. Compromises were made on both
sides which led to minor alterations in the SDP. The altered SDP
sketches
were dated November 2006, and I shall refer to this version
as the November 2006 SDP. Eventually a written agreement was
concluded
between Rowmoor and the affected parties (‘the
APA’), the last signature being procured on 4 June 2007. In
terms
of the APA the affected parties withdrew their objections to
the removal and departures applications and waived all rights of
appeal. Clause 2 of the APA contained various terms for the benefit
of the affected parties. In terms of clause 2.1 the development
was
to be in accordance with the November 2006 SDP sketch plans annexed
to the APA ‘and in particular, the external envelope
as
indicated on the Plans for the habitable areas of the development
that shall define any future development in terms of set-backs
from
boundaries and heights above mean sea level’. Clause 2.2
contained various height restrictions in order to preserve
a sea
view for two objecting owners. Clause 3 stipulated that certain of
these provisions were to be registered as a notarial
deed of
praedial servitude against the property’s title deed in favour
of certain specified neighbouring properties. (Such
registration
occurred on 23 March 2008, about two weeks after the auction.)
Brummer immediately notified the Province of the
conclusion of the APA. On 5 October 2007 the Province granted the
removal application.
The effect was to remove restrictions which
specified a setback of 4,72 m from Victoria Road and which
limited building
coverage to one-third of the area of the erf; and
the amendment of a condition which prohibited the sale of spiritous
liquors
so as to make an exception for the sale of alcoholic
beverages to parties visiting any restaurant conducted on the site.
The
removal of the one-third coverage restriction meant that the
property could now benefit from the more generous provisions of the

zoning scheme which permitted 100% coverage. (The removal and
amendment of the title deed conditions were formally endorsed on
the
title deed on 31 October 2007.)
The Province’s granting of the removal
application coupled with the waiver of appeal rights in the APA
cleared the way for
the City to give final notification to Rowmoor
of the approval of the departures, which the City did by way of a
letter dated
15 October 2007. Although the November 2006 SDP
differed slightly from the June 2006 SDP approved by the City, there
is an internal
note by a City official dated 17 October 2007 to the
effect that the later version was more favourable to affected
parties than
the earlier one, ie that the alterations did not stand
in the way of final notification. This internal note is dated 17
October
2007 which is, I suspect, the date when the final
notification letter dated 15 October 2007 was released by the City.
Attached
to the final notification letter was the SPELUM resolution
of 22 June 2006 together with copies of the June 2006 SDP drawings,

each bearing the City’s signed stamp ‘Departures Granted
12 Oct 2007’.
There was a debate between the experts (David Saunders
for Dormell and Brummer for Auction Alliance) as to the precise
import
of the decision in item 3 of the SPELUM resolution, namely
the approval of the June 2006 SDP drawings. Saunders said that the
approval of the departures was not formulated on the condition that
the proposed structure had to be in accordance, or even

substantially in accordance, with the SDP drawings – the SDP
merely illustrated the extent of the departures. Brummer thought

otherwise. If Saunders were right, it would mean that item 3 of the
resolution was really of no effect since the approval of
the SDP
would have no other relevance. Whatever the correct legal position
may be, I consider that
de facto
the City would, in the light
of items 2 and 3 of the resolution read together, have declined to
approve building plans which took
advantage of the departures but
did not substantially correspond with the SDP drawings. This would
have presented a practical
difficulty for anyone wishing
substantially to change the plans.
Rowmoor was intending to do the development itself. In
order to construct the building for which development rights had
been obtained
through the removal and departures application it was
necessary to obtain approval from the City of building plans
complying
with the National Building Regulations and Building
Standards Act 103 of 1997 (‘the NBA’). The grant of such
approval
is governed by s 7(1) of the NBA. The local authority
must first satisfy itself that the application for plan approval
complies
with the requirements of the NBA and any other applicable
law (sub-para (a)). If so satisfied, the local authority must
approve
the building plans unless it is satisfied that the proposed
building will probably disfigure the area or be unsightly or
objectionable
or derogate from the value of adjoining or
neighbouring properties or be dangerous to life or property
(sub-para (b)). The application
must be approved or refused (in the
case of a proposed building of the size here involved) within 60
days. In terms of s 7(6)
the local authority may, prior to
approval, grant provisional authorisation for the applicant to begin
construction of the building
to which the application relates.
Because of the 60-day limit, a practice evolved by
which the City would, prior to the formal submission of an
application for
approval, consider the proposed building plans for
possible problems. This was known as pre-scrutiny. Once the plans
passed the
pre-scrutiny phase the applicant would pay the prescribed
scrutiny fee, the date of such payment being treated as the formal

submission of the application (thus triggering the 60-day limit).
Rowmoor, through DFBA, lodged its building plans for
pre-scrutiny in late August 2007. As is commonly done, DFBA engaged
a third
party, in this case a firm called Architectural Services, to
attend to the more tedious aspects of ‘walking’ the

plans through officialdom. The plans were cleared by various
departments within the City over the ensuing few months. By 5
February
2008 the building plans had successfully passed the
pre-scrutiny phase. Rowmoor immediately issued a cheque for the
scrutiny
fee (the cheque, oddly, is dated 4 February 2008). There
was no documentary evidence as to when precisely the cheque was
delivered.
Fabian believed that it would in the ordinary course have
been delivered shortly after the cheque was issued. In any event,
the
cheque was only banked by the City on 19 March 2008 which was
thus accepted by the litigants as being the formal date of the

application for building plan approval. (The auction, it will be
recalled, took place on 6 March 2008.)
Towards the end of 2007, and while the building plans
were wending their way through the pre-scrutiny phase, Rowmoor began
to
give thought to the possibility of selling the property rather
than doing the development itself. Auctions of prime properties
were
achieving good prices and there was an air of optimism arising from
the award of the 2010 FIFA World Cup to South Africa.
The Rowmoor
partners discussed this. Some were more bullish than others on
price. Eventually and on 1 February 2008 Rowmoor gave
Auction
Alliance a written mandate to sell the property on auction or by
private treaty at a price of R42 million net to Rowmoor
(or such
lesser price as Rowmoor might accept). Auction Alliance’s
commission was to be 10%. Fabian’s evidence was
that the
proposed price was arrived at (very roughly) by calculating the
costs already incurred by Rowmoor (inclusive of interest)
at R20
million and by calculating the projected profit if Rowmoor were
itself to undertake the development at a further R20 million.

Fabian’s evidence was that if Rowmoor did not achieve an
acceptable price they would have gone ahead with the development

without delay.
The auction was scheduled for 6
March 2008. By mid-February at the latest Auction Alliance had
issued a promotional brochure.
Rowmoor accepted that the content of
the brochure carried its approval. Contact details were given for
Auction Alliance’s
Christian Stewart (‘Stewart’)
and Kim Faclier (‘Faclier’). The title page announced
that the auction
presented a ‘Platinum Mile Redevelopment
Opportunity’. Paragraph 3 of the brochure recorded the zoning
of the property
as being General Business B1
2
and proceeded:
‘
All
restrictions pertaining to the subject site are as per the Site
Development Plan (SDP) attached. Approval has been granted for
the
removal and amendment of restrictive title conditions and departures
to allow for such development. Attached, please [find]
the Final
Notification Letter granting such approval, as well as the signed
agreement between Rowmoor Investments 513 (Pty) Ltd
and The Affected
Parties’.
(The SDP sketches were not in truth attached to the
brochure nor were the final notification letter and APA.)
In paragraph 5, under the heading ‘Description of
Property’, the following was said against the sub-heading
‘Approved
Development’:
‘
A
three story building comprising parking with the basement, parking
and commercial space on the ground floor and flats on the first
and
second floor.
The accommodation breakdown is
as follows:
4 Shops;
11 Apartments;
2 Levels of parking (17 bays);
11 Storerooms
The approved and detailed plans,
depicting each level of accommodation are attached to this document.’
(As noted, those plans were not in fact attached.)
Under the further sub-heading ‘Accommodation
Areas’ the following was recorded:
‘
Approved
Plans indicate the following building areas:
Basement parking & stores
450m
2
Ground floor parking 250m
2
Retail 210m
2
Apartments (100m
2
each)
1 100m
2
Total
2 010m
2
Immediately beneath this text was a further sub-heading
(capitalised and in bold print) ‘DISCLAIMER’ reading
thus:
‘
Whilst
all reasonable care has been taken to obtain the correct information,
neither Auction Alliance (Pty) Ltd, nor any of its
subsidiaries and
related companies, nor the Sellers, guarantee the correctness of the
information, and none of the aforementioned
will be held liable for
any direct or indirect damages or loss, of whatsoever nature,
suffered by any person as a result of errors
or omissions in the
information supplied, whether due to the negligence or otherwise of
Auction Alliance, its subsidiaries and
related companies, the
Sellers, or any other person.’
The brochure contained an artist’s impression (in
the form of a photographic montage) of the west and south facade of
the
proposed building and of the interiors of two proposed
apartments.
Dormell alleges that the material in the brochure was
intended to mean or would reasonably have conveyed to the public
that the
relevant authorities, including the City, had approved
construction of the proposed building, ie that there were
inter
alia
approved building plans.
Main testified that she learnt of the auction on the
evening of Friday 29 February 2008. She was immediately taken with
the idea
of buying the property and converting it into an
establishment similar to the one she had in Plettenberg Bay –
as she put
it, she wanted to introduce her brand, the Grand Cafe &
Rooms, to Cape Town. She sought advice and assistance from Tullis
and Annenberg. She had already worked with the latter on a property
development in Fish Hoek. Annenberg was an experienced property

broker in Cape Town.
It so happened that about two weeks previously, on 15
February 2008, the auction brochure as well as the SDP sketches,
final notification
letter and APA had been emailed by Faclier to
Emmanuelle Marescia (‘Marescia’) who had an interest in
a company called
Dayspring Property Holdings SA (Pty) Ltd
(‘Dayspring’) of which Tullis was the CEO though Main
described it as really
being her husband’s company. Dayspring
had a modest commercial property portfolio. Marescia had wanted to
see whether the
property might be a suitable acquisition for
Dayspring. She quickly dropped the idea but not before sending the
brochure and
other documents to Tullis for advice. The latter thus
coincidently had the brochure and the missing attachments when Main
became
interested in the property on 29 February 2008. Main said
that she herself only ever saw the colour brochure, not the intended

attachments.
Main asked Annenberg to look into the property and give
her his view as to whether she should buy it and if so at what
price.
Annenberg did so, and for that purpose made contact with
Auction Alliance and Fabian prior to the auction. Annenberg prepared
what he described as somewhat hurried feasibility calculations, and
Tullis did the same (based on Annenberg’s input on
property-related matters).
As background to the pre-auction communication which
Annenberg had with Auction Alliance, one needs to know that on 28
February
2008 Stewart of Auction Alliance had emailed Fabian to say
that the response to the promotion of the auction had been
phenomenal.
Stewart continued: ‘Excuse my ignorance as I am
not a developer! – A few questions from potential purchasers:’

The second question was whether there was a QS report regarding
current construction costs. The third question was:
‘
Exactly
what else is needed in terms of the construction beginning the day
the new owners take transfer. Does the Final Notification
letter,
dated 15 October 2007 – Application for removal of restrictions
and departures – a copy of which we have and
have been
forwarding to clients – give the necessary permissions by all
parties to begin construction? In other words are
these the stamped
and approved final plans?
Fabian replied on the same day, providing estimated
figures for construction costs, contingencies and escalation and
responding
as follows to the third question:
‘
The
development plan has been fully approved (you have a copy) and
building plans are awaiting final sign-off and is a mere formality
–
we would warrant permission for construction commencement prior to
transfer if required.’
Shortly after Main’s request to him for advice,
Annenberg obtained a copy of the brochure from Auction Alliance. As
noted,
the SDP sketch plans, notification letter and APA were not
physically part of the brochure. Annenberg testified that he did not

ask for and never saw the APA. He did, however, view the SDP
sketches at DFBA’s offices when he visited Fabian a couple
of
days before the auction to discuss the property. Both Fabian and
Annenberg testified that Fabian told Annenberg that the building

plans were in council for approval and would be approved within a
matter of weeks.
Presumably pursuant to discussions earlier in the day,
Faclier on the evening of Monday 3 March 2008 sent an email to
Annenberg
containing (by way of cut-and-paste) Fabian’s
answers to the second and third questions Stewart had posed to
Fabian on
28 February 2008. This included the statement that the
building plans were awaiting final sign-off which was a mere
formality.
(Annenberg testified that he was aware that the
substantive content of Faclier’s email to him was a quotation
of what Fabian
had written to Auction Alliance – the content
did not comprise Auction Alliance’s own statements.)
It is thus beyond doubt that Annenberg knew, prior to
the auction, that building plans had not yet been approved –
he knew
this both from the Faclier email and from what Fabian said
to him at their meeting. Whether Main also knew is a disputed
question.
Main testified that she believed at the time of the
auction that building plans had been approved and was not told
otherwise
by Annenberg. The latter, who attended consultations with
the legal representatives of all the litigants prior to the trial
and
was ultimately called by Rowmoor, could not independently recall
whether or not he told Main what Fabian had said about the building

plans. Because Fabian regarded building plan approval as a mere
formality which would only take a few weeks – a view which

Annenberg had no hesitation in accepting given its eminent source –
he said it was possible he did not mention the status
of the
building plans to Main. My impression was that while he thought it
likely he would have mentioned it to Main, he was reluctant
in the
absence of independent recollection positively to refute her denial.
Annenberg’s brief feasibility calculations were
done on two scenarios: a boutique hotel development with 23 (later
20) rooms
(in line with Main’s desire); and a mixed
residential development (ie along the lines of the DFBA design),
though only
the former survives in the form which Annenberg himself
produced. The upshot was that he advised Main not to bid more than
R24,5
million (ie R27 million inclusive of commission). Tullis also
ran some numbers and was content to approve a bid of up to R35

million net of commission. I should record here that Main was the
driving force behind the proposed acquisition. She was clearly

enraptured by the whole idea and it was my distinct impression,
having seen and heard both her and Tullis’ evidence, that

Tullis – while taking his duties as a co-director of Dormell
seriously – was anxious if at all possible not to thwart
her
dreams.
Main was nervous about doing the bidding herself. Thus
it was that on 5 March 2008 (the day before the auction) she and
Annenberg
executed a bidding authority in terms whereof Main
authorised Annenberg to bid up to R35 million or such higher amount
as she
might direct at the auction. (Although the authorisation
recorded that the figure of R35 million was inclusive of commission,
the common understanding seems to have been that it excluded
commission.) The authorisation, which was drawn by Annenberg, stated

that if Annenberg’s bid was successful Main undertook to sign
the conditions of sale and indemnified Annenberg against
any claim
that might arise as a result of his actions on her behalf.
The auction proceeded as advertised on Thursday 6 March
2008. Annenberg registered and obtained a bidding card. The DVD
recording
of the proceedings was played in court and the transcript
adduced. The auction was conducted by Auction Alliance’s
managing
director, Rael Levitt, with Stewart and Faclier in
attendance to monitor the bidding. In a pre-recorded introduction
broadcast
at the auction, bidders were told that it was essential to
read the conditions of sale and buyers guide, and that if they had
any questions the Auction Alliance team would be able to assist.
Levitt then took over. He referred to the information pack which

attendees should have been given (it is unclear on the evidence
whether this was just the brochure or also the intended attachments)

which, he said, gave information about the property, including ‘the
proposed plans and diagrams’. He repeated the
importance of
bidders’ acquainting themselves with the conditions of sale
and that there were qualified professionals on
hand to assist with
any questions. He then went into promotional patter about the
location and the property. This included the
following passage
(underlining added):
‘
In
terms of the property itself we are obviously selling ladies and
gentlemen the opportunity over here in terms of development
plans
which have been approved for the site, we’ve got 2 010
square metres approximately of mixed use residential. This
property
amazingly has taken four long hard years with a very strong
professional team to get approval for the site to put up a
block of
flats upstairs as well as retail and underneath us in terms of the
approvals is a basement parking
.
In fact
quite amazingly those plans were approved and the Camps Bay
Ratepayers Association… have given the thumbs up to this

development
and
anyone who has dealt with them they protect the rights of Camps Bay
and its area with bulldog tenacity and the fact that they’ve

given the rights to this development and our friends, our big
property owners in the area will say yes it is true,
the
fact that they’ve given
the
hesche
,
3
the
approval means
ladies
and gentlemen
that
you can go right ahead. The plans are in place, the rights are in
place
,
this is easy ladies and gentlemen,
you
can start developing here as soon as possible so you are ready for
2010
.
In terms of the development
plans we’ve got four retail shops on the front here with not
bad views, downstairs would be a
basement parking, there would be
some parking up here as well, there will be 17 parking bays. Probably
those parking bays will
be the most valuable parking bays in this
country and on the African continent. There will also be 11 stores
here ladies and gentlemen.
The property will be great as an apartment
block….’
Dormell pleaded that the passages I have underlined
were representations intended to mean or reasonably conveying to the
public
that the relevant authorities, including the City, had
approved construction of the building.
In the event, there were two serious bidders, Zunaid
Moti (for his company Zimbrotti Investments 25 (Pty) Ltd) and
Annenberg on
behalf of Main. Levitt asked for an opening offer of
R40 million but the first bid was R20 million. Annenberg testified
that
when the bidding got to R24,5 million he told Main they should
stop but she asked him to carry on. (There was not in fact a bid
of
R24,5 million – the bidding went from R24 million to R25
million.) Annenberg testified that he again urged her to withdraw

when the bidding got to R30 million but she again said he should
continue. He testified that at R35 million he was simply not

prepared to participate in further bidding. (It seems, though, from
the transcript that he must have made a bid of R35,5 million,

because the final bid was R36 million, which was Moti’s.) The
property was knocked down to Moti at R36 million, subject
to
Rowmoor’s confirmation.
After the auction a disappointed Main, together with
Annenberg and Main’s assistant Jonitha McKenzie, retired to a
nearby
restaurant for coffee. Annenberg, in emailing Faclier to
congratulate Auction Alliance on the excellent price obtained,
fortuitously
learnt that Rowmoor had not accepted the final bid of
R36 million and that Moti had raised his offer but was digging in
his heels
at R39,5 million. Her hopes rekindled, Main phoned Tullis
who did some quick calculations. Main said that Tullis’ view

was that although the viability would be ‘tight’ at a
price of R40 million the project could still work. The way Tullis

put it in evidence was that he told her it would be ‘very
tight’ but that if she really wanted to buy the property
she
would be able financially to afford it and could go ahead. He
acknowledged in evidence that Main was very passionate about
the
proposed acquisition and that he took her passion into account when
considering whether to go along with a price of R40 million.
Main
told Annenberg (against his strong advice, he testified) that she
would offer R40 million. Auction Alliance told them that
there would
be no more horse-trading – Moti would be given the opportunity
to match R40 million, failing which Rowmoor
would sell to Main at
that price.
Moti was not willing to increase his offer. Main then
signed the conditions of sale at a price of R40 million plus
commission
of 10%. Dormell was the selected vehicle through which
Main bought the property. Clause 13.1 was a standard voetstoots
clause.
In clause 13.3 Dormell acknowledged that it had fully
acquainted itself with the property. In between these was clause
13.2,
an exemption in the following terms:
‘
The
PURCHASER hereby acknowledges that he has not been induced into
entering into this agreement by any express or implied information,

statement, advertisement or representation made by the AUCTIONEER or
any other person, or by on behalf of the SELLER. The PURCHASER
hereby
waives any rights whatsoever which he may otherwise have obtained the
against the SELLER as a result of such information,
statement,
advertisement or representation made by all on behalf of the SELLER.’
In terms of clause 23.1 the signed conditions of sale
constituted the whole agreement as to the subject matter of the sale
‘and
no agreement, representation or warranty between the
parties other than those set out herein are binding on the parties’.
As mentioned previously, Dormell’s case was that
it would only have paid R19 million if it knew that there were no
approved
building plans for the DFBA design.
Transfer of the property into Dormell’s name was
registered on 4 June 2008.
Extensive oral and documentary evidence was presented
in regard to the events which occurred after the auction until (and
even
after) the issue of summons on 21 January 2010. This evidence
was directed variously at showing or refuting [a] that Main

knew at the date of purchase that there were no approved building
plans; [b] that even if she did not know, it would have
made no
or little difference to her decision to buy. One of the themes
pursued in this regard was the extent to which Main was
or was not
wedded to the idea of developing the property into a restaurant and
boutique hotel and whether she would seriously
have contemplated the
alternative of the residential development contemplated by the DFBA
design. It would be tedious to relate
all this evidence. I shall
attempt to summarise some of its more important features.
On the day following the auction Brummer, at
Annenberg’s request, emailed Fabian to say that Annenberg
would like to meet
with Fabian on Monday 10 March 2008 – ‘it
is with the client who wants to do the hotel’. This was a
reference
to Main, whom Fabian did not know prior to the auction and
had met for the first time briefly after the conditions of sale were

signed. The meeting duly took place on Monday 10 March 2008 at
DFBA’s offices. Despite Main’s contrary recollection,
it
is clear from the other evidence that Fabian was not present except
perhaps to say hello to her before excusing himself for
another
engagement. Van Lonkhuyzen represented DFBA. Brummer, Annenberg and
Main were also in attendance. Brummer explained that
a hotel
development would be difficult and time-consuming. It was not within
the scope of the APA and various further planning
approvals would
probably be needed. The meeting ended (from Main’s
perspective) on a glum note. An arrangement was made
that Van
Lonkhuyzen would arrange for Annenberg to get a set of the building
plans and the elemental bill of quantities prepared
by Rowmoor’s
quantity surveyors. It appears that these were needed for the
finance which Dormell intended to seek from
Nedbank. At this stage
it was an open question whether Main would use DFBA as Dormell’s
architects.
On 12 March 2008 Annenberg emailed Fabian (not copied
to Main) to say that they had met with Van Lonkhuyzen on 10 March
2008 and
that the latter had promised to let Annenberg have ‘a
set of the plans that are in Council for approval’ plus an

updated bill of quantities, both of which Main needed urgently for
the bank. Annenberg and Brummer could not positively say that
at the
meeting of 10 March 2008 the status of the building plans was
discussed. On 13 or 14 March 2008 Annenberg collected the
documents
in question and delivered them to Nedbank. He did not look at the
building plans.
In the meanwhile and sometime after Annenberg had
emailed Fabian on 12 March 2008 (which was at 08h31) Fabian,
according to his
evidence, had a telephonic discussion with Main.
His evidence was that Rowmoor obviously had no further interest in
the approval
of the building plans and he had even, in the interests
of Rowmoor, prepared a letter to the City in Rowmoor’s name
dated
11 March 2008 (signed by Bernard Osrin) requesting that the
building plans be withdrawn and asking for the return of a guarantee

of R50 000 which Rowmoor had provided in respect of
landscaping. However, as the leading partner in DFBA he had a
commercial
and professional interest in his firm’s continued
involvement in the project. He knew that Main wanted to do a hotel
development
but he believed that there was no prospect of such a
development receiving approval. He thus made contact with Main to
persuade
her that DFBA should continue with the process of getting
approval of the building plans because she might decide to go ahead
with the DFBA design. He said he made a contemporaneous note of this
conversation on the design brief for the boutique hotel which
Main’s
friend Gail Behr had prepared and which Fabian’s colleague,
Van Lonkhuyzen, had been given at a meeting at
Behr’s home the
previous evening. The note reads thus:
‘
12/03/08
SM wants us to resubmit the plans that I told her I have withdrawn as
they may go ahead as we proposed with the building
plan submission. ‘
The defendants argued that Main’s failure to
remonstrate at this point showed that she knew the true position. In
Fabian’s
cross-examination, however, Mr Sholto-Douglas put to
him that the note was a later fabrication, a proposition which
Fabian indignantly
denied. Main in her evidence denied any such
conversation with Fabian.
As a fact, DFBA kept the building plans in council and
pursued the process of approval, though Fabian said that once it
became
apparent that Main intended to engage another architect (this
was in April 2008) DFBA’s efforts were somewhat desultory –

it was, as it were, on the backburner in case Main should eventually
give up on the hotel idea and come back to Fabian.
On 15 March 2008 Main sent an email to Tullis saying
into alia
that she now had ‘the original plan as well
as the approved plans done by Dennis Fabian for 35 Victoria Road’.
She
went on to refer to preliminary discussions with the proposed
building contractor, GVK, to the effect that because of the
water-table
Dormell could not start building before the end of
January 2009. She thus mooted the idea of transforming the current
structure
(as an interim measure) into a Grand Cafe (with no rooms)
and a retail shop. The ‘original plan’ was the plan of

the existing structure. The ‘approved plans’ seem most
naturally to be a reference to the building plans which Annenberg

had delivered to the bank a day or two previously. The email might
thus be evidence that Main thought that building plans
were
approved though she may have meant that she had now received the
building plans for the approved development. The latter but
not the
former would be consistent with Fabian’s version of the
telephonic discussion of 12 March 2008. (This email only
came to
light together with several other documents after Main had completed
her testimony and while Tullis was giving evidence.
It was one of
several documents he found on his computer following a rule 35(3)
notice. Main was thus not questioned about the
document.)
Although Main had in mind a boutique hotel development,
she told Tullis in an email of 17 March 2008 that in Dormell’s
presentation
to Nedbank for finance she would like to project 11
apartments with a Grand Cafe and shop on the ground floor: ‘We
fit
perfectly into the footprint of what is designed @present. We
will dress the building differently.’
There were several meetings between Tullis, Main and
Nedbank’s Gill Leech. An internal bank memorandum of 28 March
2008
recorded that the previous owner (Rowmoor) had already had
plans drawn up and approved for a mixed-use development but that
Main
was undecided whether she would use the existing plans. On 10
April 2008 a Nedbank valuer, Mr Neville Janari, prepared a valuation

of the property. The valuation was of the property as vacant land
but with the development rights granted pursuant to the removal
and
departures applications. The valuation correctly recorded that plans
(ie building plans) had not yet been approved by the
City. The
valuation was R45 million. There was no evidence as to the source of
the bank’s information that building plans
had not yet been
approved – it could have been from a representative of Dormell
or from independent enquiry to the City.
On 27 April 2008 the bank
granted Dormell various credit facilities for the development, the
details of which are unimportant.
In the meanwhile, Annenberg wrote to Main on 31 March
2008. He had undertaken various further investigations. He thought
that
the share block, fractional ownership and time-share options
could only work if the building were redesigned as a traditional
hotel but that there was inadequate parking for a hotel so that an
additional basement would be needed (this flowed from the City’s

zoning scheme). He also thought that the projected room rates and
occupancy rates were optimistic and that the common areas required

for a hotel would leave very little space for the Grand Cafe. He was
also against Main’s idea of transforming the existing
building
into a Grand Café as an interim measure – it would give
the impression that she had not succeeded. His
opinion was that she
should make the current retail space available to a third party
operator and market the 11 apartments by
way of a conventional
sectional title scheme.
Annenberg for practical purposes falls out of the
picture at this stage. It is doubtful whether his advice was what
Main wished
to hear. There also seems to have been a souring of
their relationship arising from something to do with the Fish Hoek
project.
In March or April 2008 Main approached a
Johannesburg-based architect, Bernard Viljoen (‘Viljoen’).
On 23 April 2080
Viljoen obtained from Van Lonkhuyzen the CAD
version of the DFBA building plans (not yet approved). Main also
engaged a firm
of quantity surveyors, SBDS, in the person of Mariki
Terblanche (‘Terblanche’).
In about May or June 2008 Main and Viljoen met with
Brummer at the latter’s Pinelands office. The primary purpose
seems
to have been for Viljoen to educate himself about the Cape
Town zoning scheme so that he could determine what could and could
not be done. Brummer repeated his negative view about the prospect
of obtaining approval for a hotel development.
There are subsequent documents indicating that what
Viljoen and Terblanche had in mind was that Viljoen would prepare
rider building
plans reflecting Dormell’s alterations to the
DFBA building plans. A rider plan is an amendment to an approved
plan (cf
Camps Bay Ratepayers’ and Residents’
Association & Another v Harrison & Another
2010 (2) All
SA 519
(SCA) paras 33-35). However, the fact that the preparation of
rider plans was envisaged would not necessarily mean that Dormell’s

team thought that the DFBA building plans had already been approved
– one might equally contemplate rider plans in respect
of main
plans which have progressed some distance but not yet themselves
been approved. The evidence did not establish what limits,
if any,
there are to the alterations which can be effected by way of rider
plans. The submission of rider plans would presumably
save the
developer the payment of a fresh scrutiny fee. However, the rider
plans would still require approval, and the more extensive
the
changes the more protracted would be the approval process.
As noted, Viljoen had already
obtained the CAD version of the DFBA building plans on 23 April
2008. It appears that sometime later
he asked Van Lonkhuyzen also to
send him the approved SDP plans. On 1 July 2008 Van Lonkhuyzen
emailed him various plans. The
attachments were described as
‘2007-06-11-Approved SDP Proposal.zip’. The attached
sketches were not in fact the
SDP sketches approved by SPELUM in
June 2006 nor the SDP sketch plans attached to the APA. What Van
Lonkhuyzen sent Viljoen were
sketch plans corresponding to (though
with less detail than) the building plans submitted by DFBA in
August 2007 and which were
still awaiting council approval. The
building plans (and the structure depicted in the auction brochure)
in fact differed somewhat
from the June 2006 and November 2006 SDP
sketch plans. The main change was in the roof detail of the Victoria
Road elevation
– the SDP plans of June and November 2006
showed that the second floor mezzanine areas would have a skylight
window running
across the length of the roof. The building plans,
and the corresponding sketch plans sent by Van Lonkhuyzen to Viljoen
on 1
July 2008, showed three dormer windows instead of the skylight
window.
4
This was presumably an attractive
change for potential buyers as the dormer windows would command fine
views over the ocean. Nobody
appears to have noticed, until I raised
the matter during Fabian’s evidence, that the building plans
and the depiction
in the brochure differed in this respect from the
approved SDP and that what Van Lonkhuyzen sent to Viljoen on 1 July
2008 were
not the approved SDP sketches but a later variation.
The SBDS project minutes of 15 July 2008 recorded that
SBDS was to formulate a brief to serve as an overall guide –
the
end product was to be ‘a well integrated design that
combines luxury accommodation and exquisite dining experience based

on, but not a replica of the Grand in Plettenberg Bay and which is
aimed at a specific up-market clientele’. Apart from
the
reference to the Grand in Plettenberg Bay, the minutes are
non-specific as to whether the development would be a boutique
hotel
or separate apartments plus retail space.
On 22 July 2008 Viljoen sent to
Terblanche his initial sketches on the basis that the brief was ‘An
Urban interpretation
of The Grand Cafe + Rooms – Plettenberg
Bay, within the outlines of the approved Fabian Plans’. From
what follows
it is apparent that what this meant was that Dormell’s
new design would be ‘within all the agreed set backs, height

restrictions and view lines of the approved Fabian plans by Council
and the [Association]’. After summarising what had
already
been approved (11 residential units, 16 parking bays and 196 m
2
of retail space
– this accorded with the sketch plans which Van Lonkhuyzen had
sent him on 1 July 2008)
5
,
Viljoen set out the features of the new design – these would
still include 11 residential units on the first and second
floors
but there would now be 20 parking bays and two additional basements.
The Grand Cafe would be on the ground floor together
with retail
space and a lobby area for the apartments. In the first basement
there would be a bar together with kitchen and storage.
In the new
second and third basements they would be restrooms for the cafe, a
wine cellar/private dining/ spa, 20 parking bays
and 10 storage
rooms. He acknowledged in cross-examination that these plans were a
radical departure from the approved SDP drawings
and reflected
commercial areas (504 m
2
) way
in excess of the approved SDP drawings. (In the Fabian design
substantially all the retail space was on the ground
floor which is
where any kitchen space for use by a restaurant would have had to be
located. The Fabian plans did not expressly
identify any portion of
the retail space as being for utilisation as a restaurant. In
Viljoen’s drawings he located the
kitchen and toilets in what
were then his first and second basement levels.)
Main and her professional team met at the Grand in
Plettenberg Bay a couple of days later to determine which of its
features could
form the basis of the architectural brief for the
Camps Bay project and which if any could be replicated ‘to
form the basis
of a national branding strategy’ (see the SBDS
report of 1 August 2008). The SBDS report of the meeting noted that
the
Plettenberg Bay establishment lacked certain features normally
associated with a hotel. The predominant view of the team was that

only certain distinctive architectural and decor features could be
borrowed and that certain of the absent features normally
associated
with a hotel should be introduced. The branding for Camps Bay ‘would
concentrate more on the Restaurant than
on the hotel’.
On 6 August 2008 Terblanche emailed
De Villiers (of Brummer’s office) asking various questions
relating to the zoning scheme.
It seems from this letter that
Terblanche had not been shown the final notification letter, the
approved SDP plans and the APA.
In her reply of 8 August 2008 De
Villiers made some general introductory observations. She noted that
departures from the City’s
zoning scheme had been granted for
the Fabian scheme. Viljoen’s ‘rider plans… to the
approved Dennis Fabian
plans’ would be assessed for compliance
with the zoning scheme, and any departures additional to those
already granted
would have to be sought, advertised for comment and
so forth. She also reminded Terblanche that the Association and
neighbours
would be watchdogs to ensure compliance with the APA. She
proceeded to answer Terblanche’s specific questions. She noted

that while Viljoen’s rider plans (actually sketches at that
stage) complied with the external envelope of the Fabian scheme,
the
alteration of the ground floor and basement differed significantly
from the Fabian scheme, the biggest difference being an
increase in
the commercial floor area – a departure from the prescribed
bulk factor of 1,2 would be needed which was likely
to attract much
resistance.
6
Also, an additional setback
departure would be needed for the revised first basement floor
because it was no longer wholly below
ground level – this
would also need to be advertised. An endeavour to increase the
commercial space could delay approval
of the building plans for
several months, even years.
De Villiers was not called as a witness. The source of
her belief that the Fabian building plans had already been approved
is
thus not known. Brummer testified for Auction Alliance. He did
not have any independent recollection of knowing the status of the

building plans but would have expected in the ordinary course that
they would have been approved by August 2008.
I have mentioned that DFBA had retained the building
plans within the City’s approval system. A technical query was
raised
by an official which Edwina of Architectural Services (the
plan walkers) had communicated to Van Lonkhuyzen on 4 June 2008.
Edwina
reported that once the required amendment to the plans was
done, the amended plans could go for approval to Neil Moir (‘Moir’),

the City’s Building Control Officer (‘BCO’) –
Moir was effectively the final voice on building plan approval.

Having not had a response, Edwina sent a chaser to Van Lonkhuyzen on
1 July 2008, to which he responded the next day to the effect
that
he would discuss the matter with Fabian – ‘The new
client is busy with a reapplication so I don’t know
whether
we’re still going ahead’. No further action seems to
have been taken by DFBA until 21 August 2008 when the
building
plans, amended in accordance with the official’s requirements,
were returned to the City. (This is, I think, an
example of the
desultory manner in which DFBA was dealing with plan approval.)
Of importance, arising from the foregoing, is that on 8
August 2008 Edwina forwarded to Viljoen her email to Van Lonkhuyzen
of
4 June 2008. Viljoen had presumably wanted to know what the
status of the DFBA plans was. By 8 August 2008 Viljoen thus knew

that the DFBA building plans had not yet been approved. Although
both Viljoen and Main testified that they only discovered this
fact
when they visited Greg September of the City’s zoning
department in early September 2008 in order to discuss the changes

needed to the existing building to get a liquor license, at least
Viljoen must have known the true position by 8 August 2008.
The
alternative is that the visit to the City occurred earlier than 8
August 2008. (Viljoen was unable to pin down the date of
the visit
with reference to contemporaneous documents.) Viljoen’s
evidence was that when he learnt that the DFBA building
plans had
not yet been approved, he was told by Architectural Services and by
Van Lonkhuyzen that the issues raised by the City
were minor and
that the DFBA plans would be approved in time for Viljoen to submit
his rider plans.
At any rate, there is no evidence that Viljoen reacted
to Edwina’s email of 8 August 2008 by expressing surprise or
by reporting
the matter to Main.
On 15 August 2008 Viljoen sent
Terblanche amended sketch plans apparently intended to meet the
comments in De Villiers’
email of 8 August 2008. There were
now to be 10 habitable rooms and a gym as a communal recreational
area for all tenants. The
reduction in habitable rooms, Viljoen
evidently believed, would enable Dormell to increase the commercial
space to 231 m
2
.
(The
de facto
commercial space
in the June and November 2006 SDPs was only 210 m
2
and was only
195 m
2
when
calculated in accordance with the zoning scheme.) His revised plans
now made provision for only two basement levels. (Again,
the June
and November 2006 SDPs made provision for a single basement.)
Viljoen noted that the toilets in the second basement
did not fit
into the permissible bulk and a departure might be necessary.
As noted, Main testified that she learnt that the
building plans had not been approved during a visit to the City’s
Greg
September (‘September’) in early September 2008.
This was in the context of an enquiry about changes needed in order

to obtain a liquor licence for the existing structure (in which Main
wished to commence temporary operations as a Grand Cafe).
September,
she said, was quite negative and aggressive, saying that the
building even as it stood was unapproved and that the
DFBA plans
were only at stage 3 of an 11-stage approval process. Terblanche,
Main testified, was with her when this was said.
If Main’s
evidence is correct, the visit to the City must have been on 1 or 2
September 2008, because the SBDS project
minutes of a meeting held
on 2 September 2008 (attended by Main, Terblanche, Viljoen and the
engineer) recorded that the current
DFBA drawings had been submitted
and were in the approval process – ‘approximately 2
weeks to go’. Viljoen
said that this estimate would have come
from Architectural Services or Van Lonkhuyzen. It thus appears that
if, as Main testified,
September had expressed a negative view in an
earlier encounter, this was not taken too seriously. The minutes
also recorded
that Viljoen was to proceed with the preparation of
rider plans for approval, with construction aimed to start in
February 2009.
On 15 September 2008 Viljoen sent to the Dormell team
his preliminary CAD drawings in preparation for a meeting the next
day.
These were the same or similar to the sketches of 15 August
2008.
At the SBDS project meeting on 16 September 2008 it was
noted that the DFBA plans had been sent back (by the BCO, Moir) to
September
in respect of a ‘small query’. Terblanche was
to ascertain the reasons. Every effort was to be made to have full

approvals and tender drawings by December 2008 (this would include
Viljoen’s rider plans).
On 23 September 2008 Terblanche made a depressing
report to Main that the engineering advice indicated that the second
basement
was going to be problematic because the soil was
waterlogged and sandy. This would require ‘major changes’
–
it would be necessary to reduce the number of apartments to
seven though there could then be a larger restaurant.
Following further discussion, Viljoen produced revised
sketch plans which he sent to the team on 7 October 2008. His plans
depicted
only five (larger) residential units and a single basement.
Viljoen again acknowledged in cross-examination that these sketch
plans called for commercial space substantially in excess of the
approved SDP – Mr Rose-Innes put to him that the commercial

space was 427 m
2
. (The kitchen and public toilet
areas were now located in the single basement level.) I doubt
whether the City would have regarded
building plans in accordance
with these sketch drawings as being substantially in accordance with
the approved SDP drawings.
There would in any event have been the
further difficulty that in terms of the opening stipulation in
clause 2.1 of the APA,
the development had to be in accordance with
the November 2006 SDP drawings. Although clause 2.1 went on to refer
in particular
to the external envelope (with which Viljoen’s
drawings may have complied), the affected parties might well have
taken
the view that this did not derogate from the opening
stipulation in the clause. Building plans in accordance with
Viljoen’s
drawings might thus well have attracted objections
from the affected parties.
At the project meeting on 14 October 2008 the change in
Viljoen’s design was noted. It was also noted that there was
still
no further information about the ‘small query’
which the City had raised in regard to the DFBA plans.
Although not so explained in
evidence, I suspect that the reduction in the number of habitable
rooms (from 11 to 5) in Viljoen’s
sketches of 7 October 2008
reflected the result of the increased retail space for which his
design called and the application
of the habitable room factor to
the remaining bulked-up area. For example, if the commercial space
properly calculated in accordance
with the zoning scheme was 400 m
2
,
the remaining bulked-up area would be 171 m
2
,
which would allow only five habitable rooms.
7
About two weeks earlier, on 29 September 2008,
Terblanche had emailed Main to ask whether she (Terblanche) could
talk to Tullis
‘regarding the approvals that was sold to you
by Fabian’. She said that she did not like the ‘delays
and hickups
now with a plan that was sold as “approved”’.
Terblanche also wrote to Annenberg on 30 September 2008 complaining

that they were having problems with the City and asking whether
there had been any guarantees of which he was aware regarding
plan
approvals – she could not see anything in the purchase
agreement ‘but both Gary [Tullis] and Sue [Main] seems
to
think that they bought the building with approved plans’.
Annenberg forwarded this query to Faclier, who emailed Fabian
to say
that as far as she was aware the plans for the property were
‘confirmed and in place’. (We know from contemporaneous

documents that both Annenberg and Faclier knew prior to the auction
that the building plans had not yet been approved though
their
approval in the future was regarded as a formality.) Fabian replied
that Annenberg had been given copies of the stamped
approvals;
Fabian asked whether Faclier wanted further copies. What Fabian then
put out for collection by Faclier were the approved
SDP drawings.
(The ‘stamped approvals’ must have been the departure
approvals stamped on each of the June 2006 SDP
drawings.) It would
thus seem that Fabian and Terblanche were at cross-purposes. This
was the state of play when the project
meeting of 14 October 2008
took place which I have already mentioned.
I should record here that Terblanche’s query of
29 September 2008 is susceptible of two meanings. It could mean that
she
believed the understanding of Main and Tullis to have been that
the building plans had already been approved at the time of the

sale. It could also mean, though, that she understood from them that
there was an undertaking or warranty that the building plans
would
be approved. The initial muted response from Dormell’s team to
the fact that the DFBA building plans had been sent
back because of
a minor query and the later annoyance with the continued delay in
plan approval could be consistent with the
second of these meanings.
Terblanche, as noted, was not called as a witness.
On 24 October 2008 Terblanche sent
Main a feasibility study based on the five-apartment scheme. This
reflected that net income
from the sale of the five apartments would
be R88 839 830 while the cost of the entire structure
(including the Grand
Cafe to be retained by Dormell) would be
R103 221 793, meaning that the net cost to Dormell of the
Grand Cafe would
be R14 381 963. What the team had been
aiming for was at least a break-even position in which the income
from the sale
of the apartments would cover all expenses, leaving
Dormell with the Grand Cafe at no additional cost. Main testified
that even
at a cost for the Grand Cafe of R14 481 963 she
would have gone ahead with the project. However, no feasibility
figures
seem to have been prepared to show that a reasonable return
on the Grand Cafe could be made at an initial capital cost of
R14 381 963.
8
If the project had proceeded, this would only have been
in the next year. In the meanwhile Dormell had submitted plans in
respect
of the existing structure with minor alterations so that
Main could at least start operating the Grand Cafe. The Grand Cafe
opened
its doors around October 2008, and the plans for that
structure were approved in December 2008.
Without much more having happened, Terblanche on 19
November 2008 wrote a letter to the professional team notifying them
that
the project was being aborted, at least for the time being:
‘
After
many many meetings and number crunching we regrettably had to inform
Sue that the scheme in its current status is not financially
viable.
Sue has decided to abort all
work on this in favour of going for an application for more bulk. We
hope that we will have a more
viable alternative around middle next
year when we will again contact you all regarding services required.’
Terblanche’s reference to ‘more bulk’
was to the obtaining of more commercial space for the Grand Cafe
than
the commercial space contemplated in the DFBA plans.
Importantly, the abort letter did not state that the delay
associated with
the approval of the DFBA building plans was the
reason, or even one of the reasons, for the abort decision. In an
internal Nedbank
memorandum dated 4 May 2009 the bank recorded that
Dormell had decided not to move ahead with the proposed mixed-use
development
‘due to the present economic climate and the fact
that it would be difficult to sell the residential component right
now’.
This information must have come from Main or Tullis. The
‘present economic climate’ would be a reference to the
global
financial crisis which struck around September/October 2008
and which
inter alia
had an adverse effect on property
values. Main and her team had no further communication with Rowmoor
or DFBA prior to the issue
of summons about 14 months later on 21
January 2010. Main has continued to operate the Grand Cafe from the
existing structure
(after making minor alterations).
In terms of the City’s final notification letter
of 15 October 2007 the approved departures would lapse if not
exercised
within two years, ie by 15 October 2009. Main evidently
wished to keep the approved departures in place in case she should
decide
to utilise them, because on 7 September 2009 a town planner
engaged by her, David Saunders (‘Saunders’), wrote to
the City asking in terms of s 15(2) of LUPO for a two-year
extension (ie to 11 October 2011). He stated in the letter that
the
building plans had taken substantially longer than normal to be
approved for a number of ‘technical reasons’.
His letter
included the following statement:
‘
My
client is committed to develop this important property in accordance
with the approvals given and the conditions attached to
this
approval. My client has however not been able to achieve approval for
a set of final building plans submitted to the City
some seventeen
months ago. This application for an extension of time for the
departures is a precautionary step given that only
a month remains
for the City and my client to resolve any outstanding issues
pertaining to the plans currently in your Zoning Department.
In this
regard we await your instructions.’
Main testified that she had no such commitment and that
this statement was probably made by Saunders because otherwise the
City
would not have granted the extension. Saunders, who was called
by Dormell as an expert, agreed. Dormell was not in truth engaging

either with the City or with DFBA regarding the approval of the
plans then with the City. The extension, which was granted, was

merely a precautionary step.
As it happens, though, DFBA (which had heard nothing
from Dormell) continued to try to get the building plans approved in
case
(so said Fabian) Dormell should eventually decide to go ahead
with the DFBA proposal. I have already mentioned the query raised
in
Architectural Services’ email to Van Lonkhuyzen of 4 June 2008
in response to which DFBA had submitted amended drawings
to the City
on 21 August 2008. (On 20 August 2008 Van Lonkhuyzen sent Viljoen,
at the latter’s request, the amended drawings,
which seemingly
related only to the basement and ground floor.) The plans were put
up to the BCO for approval. On 3 September
2008 the BCO (Moir)
returned the plans to the Zoning Department for reasons which do not
clearly appear. This must have been
the ‘small query’
noted in SBDS’ minutes of 16 September 2008. It appears that
DFBA did nothing further for
some time in response to the query,
only delivering amended drawings to the City on 3 December 2008. On
9 December 2008 Greg
September noted a concern that heights should
be shown for certain areas set aside for hot water cylinders (‘HWC’)

and heat ventilation air conditioning (‘HVAC’). He
wanted comfort that these were not disguised habitable rooms.
On 29
January 2009 the plans were returned to DFBA to insert the necessary
detail. The amended plans which DFBA submitted on
2 February 2009
still did not satisfy September. Architectural Services had to seek
clarification from September as to what exactly
his difficulty was.
In early April 2009 Architectural Services ascertained that he
wanted sections drawn through all the HVAC
areas. Van Lonkhuyzen
expressed annoyance because September had told him the previous year
that only one additional section was
needed. On 6 April 2009 DFBA
resubmitted the plans with the further section drawings. On 24 April
2009 September noted that his
difficulty had now been resolved. He
sent the plans to Moir for approval.
On 29 April 2009 Moir declined to approve the plans in
their current form, noting that the (second floor) mezzanine formed
part
of the main containing wall, and that the containing wall thus
exceeded the 10-metre height restriction specified in section 98
of
the zoning scheme. There was sporadic communication between
Architectural Services and the City. It is unclear whether the

10-metre issue was communicated to DFBA. It seems that there may
have been internal disagreement within the City concerning Moir’s

opinion, because the zoning department sent the plans back to him on
9 September 2009 for approval. Moir did not at that stage
repeat the
10-metre height issue but sent the plans back to the City’s
environmental and heritage branch because the heritage
demolition
permit (issued on 25 August 2004 with a 36-month validity period)
had lapsed and because the proposed construction
was within 100
metres of the high watermark, thus requiring an environmental
authorisation in terms of the National Environmental
Management Act
107 of 1998 (‘NEMA’).
On 13 October 2009 Fabian, with understandable
frustration, emailed Architectural Services (with a copy to Moir’s
superior
Jaco Theron, the official who would give final building
approval on Moir’s recommendation) saying that the City’s
conduct was ‘ridiculous’ and that the plans had to be
approved as a matter of urgency ‘to avoid serious
repercussions’.
Theron replied that the City had to comply
with the law and that the NBA did not allow the City to approve
building plans unless
there had been compliance with all applicable
law (ie including heritage and environmental law). Although Fabian
said that the
‘serious repercussions’ he had in mind
were the repercussions if Dormell should eventually engage to DFBA
proceed
with the Fabian design, I would not exclude the possibility
that he felt distinct embarrassment as towards Dormell (even though

there was no communication between Dormell and DFBA). However, this
embarrassment would not necessarily point to a conclusion
that he
felt guilty for having represented to Dormell at the time of the
purchase agreement that there were approved building
plans; the
embarrassment could as readily be explained by the fact that he had
predicted to Annenberg and to Auction Alliance
that plan approval
was a mere formality and would only take a few weeks.
Without further steps having been taken to deal with
the impasse, Dormell on 21 January 2010 issued summons. On 8
February 2010
Brummer met with Moir to establish why the building
plans had not yet been approved – this apparently at the
request of
Auction Alliance’s attorneys. Moir then told him
about the 10-metre height issue (this was a matter arising from the
city’s
zoning scheme – the heritage and environmental
issues concerned other public bodies). Moir informed Auction
Alliance’s
attorneys of this in a letter dated 9 February
2010. He pointed out that Moir’s interpretation of section 98
apparently
differed from that of other City officials. On 24
February 2010 Architectural Services notified the City that Fabian
wanted to
collect the building plans to make the required changes.
However, from Fabian’s evidence it seems that around this time
the Rowmoor partners decided on legal advice that in the light of
the summons DFBA should take no further steps to have the building

plans approved.
As noted, Dormell itself took no further steps to
obtain approval either for the DFBA plans or for plans drawn by its
own architect.
The approved departures lapsed on 15 October 2011. By
the time the matter came to trial the approval of building plans
would
thus have required a new process of seeking departures with
all the advertising and objections which this might attract.
The unresolved issues in connection with the building
plans as at February 2010 were [a] the need for a heritage
demolition
permit; [b] the need for NEMA authorisation for
construction within the 100-metre zone; [c] Moir’s
10-metre height
issue. These issues did not arise from the technical
requirements of the NBA but from heritage and environmental
legislation
and from the zoning scheme, these being other laws with
which there needed to be compliance before the City could in terms
of
s 7(1)(a) approve building plans.
The trial
The factual witnesses for Dormell were Main, Tullis,
Faclier (who had left Auction Alliance a few months after the
auction) and
Viljoen. Dormell called two expert witnesses, Philip
Jackson regarding the valuation of the property and Saunders on town
planning
matters. Rowmoor called Fabian, Annenberg and Moir, and
Auction Alliance called Brummer. Although expert summaries were
delivered
in respect of the evidence of Moir, Fabian and Brummer,
they (particularly Fabian and Brummer) testified on factual matters
as
well. An expert summary on heritage matters was delivered by
Rowmoor in respect of the evidence of Chris Snelling but the parties

accepted the content of his report without the need for him to be
called.
As to the factual evidence, none of the witnesses made
an unfavourable impression on me in their demeanour. Factual
disputes must
thus be resolved, where necessary, with regard to
other factors bearing on credibility and with reference to the
inherent probabilities
(cf
Stellenbosch Farmers’ Winery
Group Ltd & Another v Martell et Cie & Others
2003 (1)
SA 11
(SCA) para 5). The primary credibility attacks were directed
at Main and Fabian respectively. As I have already mentioned, Tullis

worked in a broad sense for the Mains in their various enterprises.
Viljoen was friendly with Main, had apparently been with
her in New
York in late March 2008 shortly after Dormell bought the property,
and was working for Main on design aspects of the
Grand Café
by the time of the trial, having given up his practice as an
architect. Neither Tullis nor Viljoen could thus
be viewed as
entirely independent witnesses. In regard to Annenberg and Brummer,
I bear in mind that although neither has a direct
interest in the
affairs of the defendants, they operate in a sphere where the
maintenance of good relationships with a leading
firm of architects
such as DFBA might be viewed by them as beneficial.
On town planning matters, Saunders, Moir and Brummer
gave their evidence in a fair and balanced way and I am satisfied
they were
doing their best to assist the court. Ultimately the
differences between them were slight.
Jackson’s evidence on valuation, by contrast, did
not impress me. Its content, objectively viewed, was in my view
deeply
flawed and nothing about the way in which he gave his
testimony made it more convincing.
Misrepresentation – the law
Dormell’s pleaded case is [a] that the
statements I have set out from the brochure and transcript of the
auction were
representations which meant, alternatively reasonably
conveyed to the public including Dormell, that the relevant
authorities,
including the City, had approved construction of the
building as described in the advertising and promotional material;
[b] that
the defendants knew, alternatively Auction Alliance
ought reasonably to have known, that the representations were false;
[c] that
Auction Alliance (Rowmoor’s agent) made the
representations intending persons such as Dormell to act thereon by
purchasing
the property at Rowmoor’s reserve price of R40
million excluding commission, alternatively to conclude the purchase
at
an inflated price; [d] that Dormell was induced by the
representations to buy the property for R40 million excluding
commission,
whereas if Dormell had known the true facts it would
have paid not more than R19 million including commission, which
amount represents
the market value of the property at the date of
purchase; and [e] that Dormell has, as a result of Auction
Alliance’s misrepresentation,
suffered damages of R25 million
for which both defendants are jointly and severally liable. In
argument, though, the allegation
of fraud in relation to the primary
cause of action was abandoned.
There is an alternative cause of
action which alleges [a] that at the time of the purchase the
defendants knew that there
were no approved building plans for the
building described, depicted and displayed by Auction Alliance;
[b] that the defendants
were aware that Dormell did not know
that building plans had not been approved; [c] that the
defendants thus had a duty
to inform Dormell thereof; [d] that
the defendants intentionally failed to inform Dormell of the true
state of affairs with
the intention of inducing Dormell to purchase
the property at R40 million excluding commission, alternatively
negligently
failed to inform Dormell of the true state of affairs;
[e] that as a result of the non-disclosure Dormell was induced
to
conclude the purchase at a price of R40 million excluding
commission; [f] that as a result of the negligent or
intentional
non-disclosure, Dormell suffered damages of R25 million
for which the defendants are jointly and severally liable.
9
There is thus a primary case based on positive
misrepresentation made negligently and an alternative case based on
fraudulent
or negligent misrepresentation by non-disclosure.
Although there is no allegation of
wrongfulness, the case was argued on the footing that Dormell was
advancing a delictual claim
for fraudulent alternatively negligently
misrepresentation or non-disclosure. That such a case based on
negligence can be advanced
by a party who claims to have been
induced to conclude a contract by the counter-party was, despite
earlier controversy, accepted
in
Kern
Trust (Edms) Bpk v Hurter
1981
(3) SA 607
(C) and confirmed in
Bayer
South Africa Pty Ltd v Frost
[1991] ZASCA 85
;
1991
(4) SA 559
(A).
Because the contract in this case is
one of sale, Dormell could notionally have asserted the aedilitian
remedy of the
actio
quanti minoris
without
having to allege or prove negligence or fraud, because the alleged
representations were statements bearing on the quality
of the
merx
,
ie
dicta et
promissa
(see
Phame (Pty) Ltd v
Paizes
1973 (3) SA
397
(A)).
As observed
in Christie
The Law
of Contract in South Africa
6
th
Ed at 311, one of the reasons why
recognition of the delictual claim for negligence in the contractual
setting was such a drawn
out affair was because most representations
which came before the courts were in respect of sales where the
existence of a delictual
remedy was unnecessary.
Dormell’s allegations in the
present case might have been sufficient unwittingly to cover the
actio quanti
minoris
. However,
no reference to this remedy was made during argument. I assume that
Dormell chose to pursue a delictual claim because
[a] the
aedilitian remedy could only have been asserted against Rowmoor;
[b] negligence or fraud not being a requirement
of the
aedilitian remedy, its invocation would have been defeated by the
disclaimer in the brochure or the exemption clause in
the purchase
agreement, whereas (as will appear) Dormell argued that these
clauses did not protect the defendants in respect
of negligent
conduct.
In
Bayer
supra
the elements
of the delictual remedy in relation to negligence were stated in
broad outline to be [a] that the defendant
or someone for whom
he is vicariously liable made a misstatement to the plaintiff;
[b] that the maker acted (i) negligently
and (ii) unlawfully;
[c] that the misstatement caused the plaintiff to sustain loss;
and [d] that the damages claimed
represent the proper
compensation for such loss (at 568B-F).
Counsel made their submissions on
the basis that Dormell needed to prove, regardless of whether one
was dealing with fraud or
negligence, that the misrepresentation was
material, was intended to induce Dormell to enter into the contract,
and did induce
Dormell to do so. Reference was made
inter
alia
to the
judgment of Gautschi AJ in
Standard
Bank of South Africa Ltd v OK Bazaars (1929) Ltd
2000
(4) SA 382
(W) at 392F-393G.
10
The
learned judge recognised that these three elements were not
specifically stated in
Bayer
nor in several other leading
Appellate Division cases. However, that these were requisites for
actionable misrepresentation was
held to be the case in
Novick
& Another v Comair Holdings Ltd & Others
1979 (2) SA 116
(W) at 149D-150D,
and Gautschi AJ considered that in
Bayer
and other cases
these requirements were either taken for granted or recognised in
other aspects of the court’s reasoning.
He concluded that
materiality, intention to induce and actual inducement were distinct
elements of the cause of action and should
be pigeonholed under the
unlawfulness enquiry.
I would respectfully suggest that the flexible
policy-based assessment of wrongfulness does not compel one to
insist on these
three elements as distinct indispensable
requirements of wrongfulness. Actual inducement appears to me to
belong most naturally
to the causation requirement. Materiality may
be a factor in assessing wrongfulness (see
Bayer
at 575A) but
it might generally suffice to take it into account at the stage of
factual and legal causation: if the misrepresentation
was one to
which a reasonable person would not have attached weight (ie was
objectively immaterial), this might militate against
a finding that
the plaintiff was in fact induced; and might in any event result in
a finding that the policy-based element of
legal causation was not
satisfied and that the loss was too remote (considerations relevant
to wrongfulness and legal causation
may overlap – see
Cape
Empowerment Trust v Fisher Hoffman Sithole
2013 (5) SA 183
(SCA)
paras 35-36). Materiality may also play a role in determining
negligence – less care might need to be taken before
making an
objectively immaterial statement. As to the need for an intention to
induce, I do not see why this should be a requirement
of a claim for
negligent misrepresentation in this context. Where a third party
(such as a firm of auditors) makes a negligent
misrepresentation
which induces one party to conclude a transaction with another,
intention to induce the transaction does not
have to be proved and I
do not see why it should be different as between the contracting
parties. Part of the negligence may
lie in the very fact that a
reasonable person in the defendant’s position would have
appreciated (though the defendant
did not) that the other party
would rely on the statement in question.
Novick
was decided
before
Kern Trust
recognised a delictual claim for negligence
in the contractual setting and was furthermore a claim for
rescission for innocent
misrepresentation, not a delictual action
for damages.
Silence (non-disclosure) may amount to a
misrepresentation where there is a duty to communicate the omitted
information. There
may be particular circumstances, usually
associated with the prior conduct of the person who remained silent,
that require such
person to speak – Christie
supra
at
288 gives as examples where only part of the truth has been told and
the omission of the remainder gives a misleading impression;
where a
true representation has been made and the facts subsequently change;
and where the person has done something (albeit
innocently) having
the effect of concealing the true facts. Outside of particular cases
of this kind, there is in general no
duty on one contracting party
to tell the other everything material to the transaction –
policy only requires him to speak
if the information falls within
his exclusive knowledge (so that the counter-party must needs rely
on the other) and the information
is such that the right to have it
communicated ‘would be mutually recognised by honest men in
the circumstances’
(
Absa Bank Ltd v Fouche
2003 (1) SA
176
(SCA) para 5).
Was there a misrepresentation?
The question whether a misrepresentation has been made
is a matter of ordinary interpretation, determined with reference to
the
context, surrounding circumstances and the intended recipients.
In this case the recipients were potential purchasers of a prime

commercial property with valuable development rights and likely to
cost many millions of rands. The question is whether, properly

interpreted, the brochure and transcript represented that building
plans had been approved for the development described in the

brochure.
The brochure did not expressly say that building plans
had been approved. It referred in para 3 to the restrictions
pertaining
to the property with reference to the SDP and also with
reference to the final notification letter and APA. In para 5
reference
was made to the ‘approved development’ and it
was said that ‘the approved and detailed plans, depicting each

level of accommodation, are attached to this document’.
Although the attachments mentioned in paras 3 and 5 may not have

physically been attached to the colour brochure, they did exist and
were presumably made available to any person interested in
bidding
for the property. They were as a fact in Dormell’s position.
The statements in the brochure must thus be interpreted
in the
context of those other documents, because the brochure was drafted
on the supposition that the recipients would have reference
to the
detail in the additional documents mentioned in the brochure.
What the reader would have seen, on obtaining the
documentation mentioned in the brochure, was that the City had, in
its final
notification letter, approved various departures as well
as the SDP drawings. Attached to the notification letter were the
SDP
drawings, each one containing an SDP drawing reference and the
City’s stamp ‘Departures granted 12 Oct 2007’.
The
reader would also have seen that the APA set out the terms on which
the affected parties had withdrawn their objections to
Rowmoor’s
removal and departures applications, and that attached to the APA
were drawings again containing SDP references.
The APA would not
have appeared to the reasonable reader to be a document executed at
a time when building plans yet existed,
because it contained the
basis on which objections were drawn to applications which would
necessarily have been preliminary to
the submission of building
plans.
In context, therefore, the approved plans which were
mentioned in the brochure were the SDP drawings which, in turn, had
the purpose
of defining and depicting the restrictions which had
been removed or altered and the departures which had been granted so
as
to allow development of the property along the lines described in
the brochure.
Persons like Fabian, Annenberg and Brummer knew that
SDP drawings were not building plans and I think on the evidence I
can accept
that anyone with experience in property development would
probably have known that. Although bidders at the auction might
perhaps
not have been experienced property developers, there was
enough in the overall context of the final notification letter and
APA
to indicate that the ‘approved plans’ were the plans
with reference to which the Province and the City had granted
the
removal and departures applications and that these would necessarily
precede the submission of building plans in terms of
the NBA. The
SDP drawings did not contain the extensive detail one would expect
in a building plan pursuant to the requirements
of the NBA.
I thus do not think that the brochure represented that
building plans had been approved. What the brochure conveyed was
that the
relevant authorities had, with reference to the SDP
drawings, removed and amended certain title deed restrictions and
granted
certain departures so that a building of the kind described
in the brochure could be built.
At best for Dormell, the brochure was in this respect
unclear. There is in my opinion an important difference between
making a
statement which the reasonable reader would understand as
meaning X; a statement which the reasonable reader would understand
as meaning Y; and a statement which would leave the reasonable
reader uncertain whether the meaning was X or Y. The first and

second would be statements of known content which might be true or
untrue; the third would be a statement of unclear content,
and in
such a case it cannot be said that the maker was making statement X
or that he was making statement Y at the election
of the reader,
because in the posited circumstances the reasonable reader would
seek clarification. In the present matter, if
the statements in the
brochure did not in their context clearly convey that what had been
approved were SDP drawings in the context
of defining the
development rights needed before building plans could be submitted,
the statements were at best for Dormell unclear
to the reasonable
reader. This being so, there was still no representation that
building plans had been approved. A reasonable
reader to whom this
question was important would have made enquiry to clarify the
matter. The fact that subjectively a particular
reader latched onto
one meaning which the reasonable reader would not have taken as the
clear import of the statement is not
relevant at the stage of
determining whether a misrepresentation has been made.
I am prepared to accept that some potential bidders may
have been uncertain on this question – perhaps because they
did
not go to the trouble of asking for or examining the brochure in
the context of the documents which it mentioned as intended

attachments. Stewart’s email to Fabian of 28 February 2008
indicates that some potential purchasers wished to know ‘what

else is needed’ to start immediate construction and whether
what already existed constituted ‘stamped and approved
final
plans’. Stewart himself professed ignorance as he was not a
property developer. These are the sorts of queries one
might expect
if the brochure was unclear or if the potential buyer had not read
the documents carefully. It is no evidence that
there were potential
purchasers who understood the brochure as clearly meaning that there
were approved building plans or that
such an understanding was
reasonable.
We know that Fabian responded to Stewart’s
question by stating that building plans had not yet been approved
though he regarded
this as a mere formality. It was accepted by
Dormell’s counsel that this represented Fabian’s genuine
opinion at
the time.
The statements made by Levitt at the auction were the
patter of an excited auctioneer. Levitt commenced his remarks by
referring
to the information pack, and what followed would have been
understood by his hearers as being his flamboyant summary of that

material. He spoke on several occasions of the ‘development
plans’ which had been approved and of the long fight to
get
the ‘rights to this development’. It is true that he
said at one point that because these approvals had been
given a
buyer could ‘go right ahead’ and could ‘start
developing here as soon as possible so you are ready
for 2010’
and that in this context he said that the ‘plans are in place,
the rights are in place’; but I do
not accept that a
reasonable bidder, having seen the brochure and intended
attachments, would have understood Levitt’s
remarks to be
making claims for the property different from the documents or as
being intended to clarify that building plans
were indeed in place
(he nowhere mentioned building plans). On several occasions before
bidding started, attendees were invited
to ask questions.
I thus find that the alleged misstatements were not
made by positive assertion.
If that is right, I do not think it has been shown that
the defendants had a duty to disclose that building plans had not
yet
been approved. This is not a case where only part of the truth
had been told. On my interpretation of the representations, they

were to the effect that development approvals (ie removal/amendments
of title deed restrictions and departures from the zoning
scheme)
had been given to allow an owner to build the described structure,
not that building plans had yet been approved. The
truth was told on
one particular attribute of the property (the existence of the
development approvals) while nothing was said
about another aspect
(the existence or non-existence of approved building plans). There
was no relevant change of circumstances
nor did the defendants
conceal any hidden problem. The fact that the property did not yet
have the arguably attractive feature
of approved building plans did
not mean that it suffered from some concealed defect (as, for
example, in
Dibley v Furter
1951 (4) SA 73
(C)).
If one then falls back on the general rule stated in
Absa Bank Ltd v Fouche supra
, I do not consider that there
was a duty of disclosure. The question whether there were approved
building plans did not lie within
the exclusive knowledge of the
defendants; the status of the building plans could have been
ascertained upon enquiry to the City
(which is the source from which
Dormell’s counsel surmised that Nedbank may have ascertained
the facts when undertaking
its valuation of 10 April 2008). From the
defendants’ perspective, Rowmoor (represented by Fabian)
honestly viewed the
approval of building plans as a mere formality
and thus not a matter of great moment; and this view had been
communicated by
him to Auction Alliance on 28 February 2008 who no
doubt, like Annenberg, accepted that view. The attributes which they
regarded
as truly noteworthy and valuable were those which had been
achieved by obtaining development rights through the approval of the

removal and departure applications.
It follows, in my opinion, that’s Dormell fails
at the threshold requirement of a misstatement by commission or
omission.
Wrongfulness
If I am wrong on the
misrepresentation point, I accept that there was a legal duty on the
defendants to exercise care in making
the relevant statements. I was
not addressed on the issue of wrongfulness. The statements in the
brochure were made in order
to make the property attractive to
potential buyers. The statements were made in the context of a
proposed transaction of substance
and where the necessary proximity
existed between the defendants and potential bidders such as
Dormell. There was no danger of
limitless liability –
essentially only one person, the successful bidder, could be a
potential claimant. These considerations
favour the imposition of a
legal duty (see, in general,
Standard
Chartered Bank of Canada v Nedperm Bank Ltd
[1994] ZASCA 146
;
1994
(4) SA 747
(A) at 769I-771B;
Delphisure
Group Insurance Brokers Cape (Pty) Ltd v Dippenaar & Others
2010
(5) SA 499
(SCA) para 25.)
11
(This issue is relevant only to
negligence – the wrongful nature of fraudulent
misrepresentation is uncontroversial.)
Although materiality might perhaps be a factor relevant
to an assessment of wrongfulness, I find it preferable in this
particular
case to address it in the context of causation and
damages.
After the close of argument my
attention was drawn to the case of
Cape
Empowerment Trust Ltd v Fisher Hoffman Sithole
2013
(5) SA 183
(SCA) though no supplementary submissions were made as to
the implications of that judgment for the present case. In
Cape
Empowerment Trust
the
court, in upholding the cross-appeal, held that no legal duty had
rested on a firm of auditors in respect of a profit certificate

issued by them. An important part of Brand JA’s reasoning on
the wrongfulness issue was a consideration of the plaintiff’s

vulnerability to risk as a relevant consideration. If a plaintiff
was not vulnerable to risk in that there were steps reasonably
open
to it by which it could have protected itself from harm, this is a
factor militating against the imposition of a legal duty
(paras 28).
In that case the plaintiff (the purchaser of businesses) had indeed
protected itself against the risk by procuring
an express profit
warranty from the sellers but through its own conduct allowed its
contractual remedies to lapse. One might
say, in the present case,
that Dormell was not vulnerable to risk because it could have
protected itself by insisting on a warranty
that there were approved
building plans. However, in
Bayer
supra
Corbett CJ,
in confirming that a delictual remedy for damages could in principle
be brought for negligent misrepresentation inducing
a contract,
rejected a contention that such a remedy should not be recognised
because a contracting party can safeguard itself
against loss by
requiring the representor to guarantee the truth of his
representation (at 569E-G). Perhaps no firm rule can
be laid down in
that regard; the question of wrongfulness, including vulnerability
to risk, depends on the precise facts of the
case. In
Cape Empowerment Trust
the enquiry into non-vulnerability
was facilitated by the fact that there the purchaser of the
businesses had in fact obtained
a warranty and it was thus
unnecessary to investigate whether, had there not been a warranty in
the contract, the purchaser could
reasonably have been expected to
insist on one and how matters would have been affected if on the
evidence the seller was likely
to have refused the warranty. In the
present case an auction was conducted on standard conditions of
sale. Although strictly
speaking Dormell did not buy at the fall of
the hammer and only signed following post-auction discussions, it
may not be reasonable
to expect that changes to the standard
conditions would have been countenanced. In the absence of evidence
and argument directed
at that question, I am not prepared to find
that there was no legal duty in this case on account of Dormell’s
non-vulnerability.
In reaching my conclusion on wrongfulness I have
disregarded the existence in the auction brochure of the disclaimer.
On the pleadings
the disclaimer was relied upon by both defendants
as having contractual force. As I shall indicate when dealing later
in this
judgment with the disclaimer (see para 211 below), the
existence of a disclaimer when information is furnished might will
be
relevant, in a delictual claim, to the wrongfulness issue, in
which case it would be unnecessary for the defendants to prove that

the disclaimer operated as (or as part of) a contract. It is
possible that the defendants’ pleas would entitle them to

raise this argument (because once the disclaimer has been alleged,
its significance to wrongfulness might be regarded as a matter
of
law) but since the matter was not argued along those lines it would
be preferable for me not to base my judgment on that approach.
Fraud
Fault for delictual purposes can take the form of fraud
or negligence. Both have been alleged in this case, and Dormell
bears
the onus on both. I shall take fraud first. Although in a
civil case an allegation of fraud only has to be proved on a balance

of probability, a court does not lightly find that fraud has been
shown (
Gates v Gates
1939 AD 150
at 155;
Loomcraft Fabrics
v Nedbank Ltd & Another
[1995] ZASCA 127
;
1996 (1) SA 812
(SCA) at 817G-H).
The allegation of fraud is pressed only in relation to
the alternative claim based on non-disclosure (misrepresentation by
omission)
though the argument on the duty to disclose still relied
inter alia
on the context of the statements in the brochure
and transcript – ie that in the absence of further disclosure
only ‘half
the truth’ had been told. I find it difficult
in these circumstances to disentangle the primary and alternative
claims
in relation to the fraud element. In particular, I cannot
conceive how a non-disclosure in this case could be fraudulent
unless
the fraudsters knew that the brochure or transcript would, in
the absence or more, leave potential buyers under a false
apprehension
and intended to leave them in that mistaken state of
mind. I understand the case of fraud to be that Rowmoor allowed its
agent
Auction Alliance to make the statements in the brochure and
transcript in circumstances where both of them knew that in the
absence
of disclosure about the status of the building plans a buyer
such as Dormell would be misled, and that they both intended by

their silence on this question to induce potential buyers to
purchase the property or to pay more for it than it was really
worth.
The amended particulars of claim do
not identify the persons whose fraudulent intentions are
attributable to Rowmoor and Auction
Alliance respectively. The trial
particulars furnished by Dormell are non-specific: in the case of
Rowmoor, reference is made
to ‘one or more of the directors’
of the company and to the knowledge of Rowmoor’s agent,
Auction Alliance;
in the case of Auction Alliance, the relevant
individuals are alleged to have been Levitt and/or Stewart and or
unknown employees.
12
I mention here that Faclier, whose
involvement on behalf of Auction Alliance was known to Dormell prior
to the issue of summons
and who passed on certain information to
Main prior to the issue of summons
13
and was subsequently called by
Dormell as a witness, was not alleged to have had fraudulent intent.
In the oral evidence and argument, the fraud case
against Rowmoor seems to have been directed at Fabian. He was at no
material
time a director of Rowmoor – its only director was
Selwyn Fabian, Dennis’ cousin. What Selwyn Fabian did or did
not
know about the status of the building plans was not established.
Since no reference was made in argument to any limitations arising

from the trial particulars furnished by Dormell, I shall assess the
case against Rowmoor on the basis that Fabian’s knowledge
is
attributable to Rowmoor or that an assumption can be made (of which
I am by no means certain) that Selwyn Fabian would have
known as
much as Dennis Fabian did.
One must be clear on the nature of the alleged fraud.
If the brochure had expressly stated that there were approved
building plans,
it would clearly have been fraudulent for Fabian,
Stewart or Faclier to have associated themselves with the statement
because
they knew it was untrue and because it would only have
appeared in the brochure as a piece of information potentially
relevant
to a buyer. But the brochure does not contain such a
statement in express terms, nor did Levitt make it at the auction.
If, contrary
to my earlier conclusion, it were held that the
brochure or transcription would nevertheless have been understood by
the reasonable
reader or listener as meaning that there were
approved building plans or might have been so understood, the
question, insofar
as fraud is concerned, is whether Fabian or
Auction Alliance’s representatives, by failing to say more,
intended to leave
potential buyers under that impression and
intended thereby to induce potential bidders to act to their
prejudice.
In answering that question, one is
not concerned with conflicting versions. Main’s witnesses,
apart perhaps from Faclier,
could not speak as to the state of mind
of Rowmoor or Auction Alliance. Faclier’s evidence was that
although at the time
she read the email exchange between Stewart and
Fabian on 28 February 2008 it did not ‘register’ in her
mind, she
accepted at the time that the approval of building plans
would be a mere formality, a
fait
accompli
. If she
and Stewart had thought otherwise, they would have required the true
position to be made known. Her own email to Annenberg
of 3 March
2008, where she copied and pasted from Fabian’s response to
Stewart, confirms that she knew the status of the
building plans
(this letter emerged, unfortunately, only after she had completed
her evidence). She conceded in cross-examination
that she knew that
the SDP drawings mentioned in the brochure were not building plans.
Her evidence under cross-examination about
not having really taken
cognisance of para 3 of Fabian’s reply to Stewart struck me as
somewhat feeble and implausible,
as did her evidence that she did
not recall why she had sent the Stewart/Fabian email exchange of 28
February 2008 to Main on
5 March 2009 (after she had left Auction
Alliance and well after Dormell’s abort decision of 19
November 2008 – it
seems clear to me that she must have known
that Main was looking for evidence to mount a case against one or
both of the defendants).
Having observed Fabian in the witness box, I would not
readily find that he was capable of the fraud alleged against him.
Even
if certain aspects of his evidence were subject to criticism (I
shall mention these later), they are not criticisms consistent
only
with a finding of fraud.
Fabian testified that he never intended to represent
that building plans had already been approved and he denied that the
brochure
had that meaning or that anything said by Levitt at the
auction made him uncomfortable. This evidence is incompatible with
fraudulent
non-disclosure. I cannot reject this version,
particularly since in my view it is supported by the inherent
probabilities:
[a] If Fabian intended to inveigle bidders into
buying (or paying more for) the property on the false basis that
there were
approved building plans, why not say so expressly rather
than by statements which are at best ambiguous?
[b] It was accepted by Dormell’s counsel that
Fabian’s honest view was that the building plans would be
approved
in the near future and that such approval was a mere
formality. I think Mr Sholto-Douglas for Dormell was inclined to
deploy that
version in support of an argument that Fabian would
probably have told the lie at the time of the auction because he was
confident
that the false representation would soon come to fruition
and thus be unproblematic. It is more probable, I think, that if
Fabian
intended in the brochure to convey anything about the status
of the building plans he would have given his honest view, because
he
would have expected others to share it and because on that basis it
would not have been a matter of great moment to potential
buyers.
[c] The lie would have been a silly one to tell and
easily exposed. What if the successful bidder had intended to do the
precise
development depicted in the brochure and had immediately
asked for the approved building plans? Fabian would on the
probabilities
also have expected that anyone willing to bid millions
for a prime Camps Bay property would have made their own
investigations
and would have enquired (if it was important to them)
about the status of building plans, at which point the true position
would
emerge. There was thus no point in making a contrary
representation whether by commission or omission. Indeed, we know
that Main,
with Annenberg’s assistance, made enquiries and was
told about the status of the building plans. (There was no evidence
as
to what investigations, if any, Moti undertook. Whether he knew or
cared that building plans had not yet been approved is unknown.)
[d] When Stewart posed his questions to Fabian on
28 February 2008, the latter without prevarication gave an honest
reply –
that the building plans were in council awaiting final
sign-off which he thought to be a mere formality. Fabian knew that
Stewart’s
email was the result of queries from potential buyers
and would thus have expected Stewart to pass on the information to
them.
If Fabian wished potential buyers to be under the false
impression that building plans had been approved, he would have told
Stewart
that there were approved building plans.
[e] When Annenberg met with Fabian a few days
before the auction, Fabian again gave him an honest answer regarding
the status
of the building plans. Fabian did not at that stage know
for whom Annenberg was acting but he would have realised that
Annenberg
would or might to convey the information to the party on
whose behalf he was making the enquiries.
[f] Given Fabian’s experience in property
development and his involvement in the arduous process Rowmoor had
followed
to achieve success in the removal and departures
applications, the brochure and auction patter could quite plausibly
to him have
been perfectly clear in making no claim about the status
of building plans. Even Stewart’s email query of 28 February
2008
did not say that potential buyers believed from the brochure
that building plans were in place – they wanted to know what

more was needed for construction to be able to begin without delay.
Stewart then asked whether the plans attached to the final

notification letter were the final stamped and approved plans –
this could as well have been
his
question as that of the
potential buyers: in other words, he wanted to know whether he could
tell buyers that the plans attached
to the notification letters were
plans which enabled construction to begin.
My conclusion is that the case of fraud against
Rowmoor, based on Fabian’s state of mind, has not been proved.
Turning to Auction Alliance, there is no evidence as to
what knowledge Levitt had concerning the status of the building
plans.
I do not believe that he was intending to make the claim that
there were approved building plans, even if his statements were to

be construed as reasonably conveying that impression. And if Levitt
did intend to make that claim, it has not been shown that
he knew it
to be false.
Stewart and Faclier both knew, by the time of the
auction, that building plans had not yet been approved. Faclier was
called as
Dormell’s witness. She is not identified in
Dormell’s readings or trial particulars as a person who had
fraudulent
intent on behalf of Auction Alliance. Unless she were
behaving dishonestly at the time of the auction, one must accept
that she
did not understand the brochure and Levitt’s patter
to be claims that building plans were approved, because she says she

would have intervened if a wrong claim was being made.
The probabilities suggest, to my mind, that at the time
the brochure was prepared the persons at Auction Alliance who were
involved
with Rowmoor in its preparation did not particularly apply
their minds to the question of building plans. They would have
obtained
the information appearing in paras 3 and 5 of the brochure
from Rowmoor. Stewart’s email of 28 February 2008 indicates

that when potential buyers asked about the requirements for
immediately commencing with construction, he needed to refer to
Fabian.
If he had harboured the intention of making a dishonest
claim in the brochure, he would simply have told buyers that there
were
approved building plans.
The absence of fraudulent intent by Faclier is shown by
the readiness with which she replied to Annenberg’s query in
her
email of 3 March 2008. She passed on to him exactly what Fabian
had said to Stewart. Her evidence was that both she and Stewart

fielded queries from buyers, and that if any buyer had asked about
the status of building plans they would have given the answer
that
the plans were in council awaiting approval. Her evidence is not
consistent with the view that she intended the brochure
or Levitt’s
patter to be making the claim that building plans had already been
approved.
A final consideration bearing on the inherent
probabilities is that although Auction Alliance stood to make a
substantial commission
from the sale (in the event, R4 million), the
additional commission (if any) which might have been generated by a
false claim
that building plans had already been approved was hardly
such as to have induced a substantial and then reputable auction
house
to act dishonestly in marketing the property.
The claim of fraud against Auction Alliance thus also
fails.
Negligence
I must assess negligence on the footing that, contrary
to my earlier conclusion, the brochure and transcript would have
conveyed
to the reasonable reader/listener that approved building
plans existed. If this is what the reasonable reader would have
understood,
it is also what the reasonable author or auctioneer
would have appreciated. It follows, in my opinion, that in framing
the brochure
as they did, the defendants departed from the standard
of the reasonable person and were negligent. On the same basis,
Levitt
was negligent in speaking as he did and Rowmoor, whose
representatives Selwyn and Dennis Fabian were both present, were
negligent
in failing to correct him.
Causation – Dormell’s knowledge
There are two main questions under the heading of
causation: [a] whether Dormell knew at the time of the auction
that there
were no approved building plans (if so, Dormell could not
have been induced to act to its prejudice by a contrary
representation);
and [b] whether, if Dormell did
not
know the true position, it would have acted differently from the way
it did. I shall take these two questions in turn.
A third question in respect of causation was raised by
the defendants to the effect that nothing said by Levitt at the
auction
(as distinct from the content of the brochure) affected the
way Dormell acted because by the time Main and Annenberg arrived at

the auction Dormell already intended, with the approval of Tullis
(who did not attend the auction and did not hear what Levitt
said),
to bid up to R35 million; and that what caused Dormell thereafter to
offer a price of R40 million was not anything said
by Levitt at the
auction but the fact that Main was very keen to lay her hands on the
property, that Rowmoor would not accept
less than R40 million, and
that Moti was not prepared to go beyond R39,5 million. I accept that
argument. I would put it thus:
If there was no misrepresentation by
commission or omission in the brochure, Levitt’s statements
did not change the position;
and if, conversely, there was a
misrepresentation by commission or omission in the brochure,
Levitt’s statements would
not have disabused a bidder’s
mind of any misapprehension created by the brochure.
Returning to the first of the two main causation
issues, the question of Dormell’s knowledge raises two
sub-issues: [a] Did
Main or Tullis know the true position?
[b] If not, is Annenberg’s knowledge attributable to
Dormell?
The knowledge of Main and Tullis
Main denied that she knew at the time of the auction
that there were no approved building plans. Tullis said that he was
also
under that impression. Their evidence indicated that they were
not, at the time of the auction, familiar with the planning field

and did not necessarily understand the difference between SDP
drawings and building plans. It is possible that their evidence

really amounts to this: that they did not know what was needed to
start construction immediately and did not consciously think
about
the existence or otherwise of approved building plans but thought
that everything was in place, with ‘everything’

encompassing (as they subsequently learnt) building plans approved
under the NBA and not only the SDP drawings referred to in
the
brochure. If that was their state of mind, it would tend to confirm
that there was no misrepresentation in the brochure or
transcript
and that such effect as their view may have had on the decision to
buy the property was the result of their own error
and not the
result of inducement by misrepresentation.
However, I shall approach this part of the case on the
basis that the brochure and transcript conveyed to the reasonable
reader
that approved building plans existed and that Dormell alleges
this to have been its state of mind.
There is no direct evidence that Main was told the true
position prior to signing the purchase agreement. There are,
however,
certain facts, both pre- and post-auction, suggestive that
Main did know that the building plans had not yet been approved.
Firstly, she asked Annenberg to make enquiries about
the property and give her advice. Although Annenberg could not
positively
assert that he told her about the status of the building
plans, he had no reason to conceal the information. If such
information
was important (which is the premise of Dormell’s
case) it increases the likelihood that he would have mentioned it to
her,
as they had a number of interactions prior to and at the
auction.
If Annenberg did
not
volunteer the information
to Main, and if she was attaching importance to the existence of
approved building plans, it would
be odd if she had not asked the
question directly to Annenberg or Faclier (who testified that she
knew Main), given that the
brochure was certainly not explicit on
the point.
Then there is the fact that Main and Annenberg met with
Van Lonkhuyzen on 10 March 2008 at DFBA’s offices. It was
agreed
at this meeting that a set of the building plans would be
made available to Annenberg. Main met again with Van Lonkhuyzen and
Stephan Karl (both of DFBA) at Gail Behr’s home on the late
afternoon of 11 March 2008. A design brief was discussed at
the
latter meeting. Since there are no minutes of these meetings, the
witnesses would have to rely on memory. The defendants
did not call
Van Lonkhuyzen or Karl, and Annenberg and Brummer could not
positively state that the status of the DFBA building
plans was
specifically discussed at the first meeting. Nevertheless, it seems
odd to me that at neither of these meetings anything
should have
been said about the status of the DFBA plans, even if just in
passing (Van Lonkhuyzen, Karl and Annenberg would have
had no reason
to be secretive about it). The likelihood that something was said
about the status of the plans is increased by
Annenberg’s
email to Fabian on 12 March 2008 where he referred to the meeting on
10 March 2008 with Van Lonkhuyzen, saying
‘he promised to let
me have a set of the plans that are in Council for approval…’.
That must be a reference
to something said to Annenberg at the
meeting. What is clear is that if the status of the building plans
was mentioned at either
of these meetings, Main did not react as one
who had been misled.
A further important consideration is Fabian’s
evidence of his alleged discussion with Main on 12 March 2008. His
evidence
in this respect was criticised on several grounds. The
first was that Rowmoor’s counsel had put to Main in
cross-examination
that Fabian would testify that he phoned her on 12
March 2008 and that his contemporaneous note was made on that
occasion, whereas
Fabian testified in chief that he phoned Main on
the previous day and left a message for her to contact him, which
she did on
12 March 2008. It was put to him in cross-examination
that he had tailored his evidence to fit in with the telephone
records
that had been produced after Main’s testimony but
prior to Fabian’s testimony. The second criticism was that it
was
not his usual practice to make a contemporaneous note of phone
conversations and that this particular note had a defensive quality

about it in circumstances where, if it were truly contemporaneous,
there was no reason to expect controversy. It was put to Fabian
that
if he was trying to keep DFBA involved in the project he would not
have told Main that the building plans had been withdrawn
– he
would simply have got her permission to carry on processing them.
Another possible criticism is that it might seem
peculiar for Fabian
to have had this conversation with Main on 12 March 2008 at the very
time that Rowmoor was writing a letter
to the City to withdraw the
building plans.
I accept that Fabian may have adapted his evidence to
correspond with the telephone records but this would simply show
that he
previously had a faulty recollection of the precise sequence
of events on 11/12 March 2008, which is hardly surprising.
Apparently
Main’s cellphone records (which were not adduced as
an exhibit) did show that he made a short telephone call to Main at
17h29 on 11 March 2008, sufficient for leaving a message. This at
least tends to confirm that he was trying to get hold of her.
Fabian
gave explanations for the other criticisms, in which he
distinguished between Rowmoor’s position after the sale
and
his own position as the senior partner at DFBA. To reject his
version I would need to find that he deliberately fabricated
a
purportedly contemporaneous note (post-summons, it was put to him)
and then perjured himself on the matter in the witness box
–
both extremely serious allegations. As Rowmoor’s counsel
observed, there was no room for honest error – either
Fabian
was telling the truth or he deliberately concocted the note and lied
about it in court.
There is nothing inherently implausible about Fabian’s
version. Indeed, I can understand that he might have wanted to
retain
the project for his firm. His view that Main’s hotel
idea was a non-starter was genuinely held and apparently shared by
Brummer. Fabian had no reason
not
to speak with Main (and the
telephone records show that he made an attempt to do so on 11 March
2008) or to withhold information
from her about the status of the
building plans. By 12 March 2008 Fabian knew that Main was the
person on whose behalf Annenberg
had made enquiries a few days
earlier. He also would have remembered his email to Stewart of 28
February 2008. Fabian had no
reason to think on 12 March 2008 that
what he said to Main about the building plans would come as a
surprise to her.
In Main’s case the contrast between perjury and
the truth may not be so stark. If she had learnt from Annenberg
before the
auction or from Fabian shortly after the auction that the
DFBA plans were likely to be approved in the near future, it may not

have made a great impression on her and she may not have remembered
the discussion with Fabian. She had very different ideas
about the
development, as post-auction events show, so the existence of
approved DFBA building plans as at March 2008 was not
critical to
anything she wanted to do there and then. Over the months, and as
her dream of a Grand Cafe & Rooms (a restaurant
and boutique
hotel) crumbled and the financial feasibility even of selling off
apartments was called into serious doubt, she
may have begun to
convince herself that the real fault lay with someone else rather
than her own somewhat hasty decision to buy
the property at what
everyone else seemed to think was a very high price.
Main’s architect, Viljoen, certainly knew the
true position by 8 August 2008. There appears to have been no
reaction at
that stage indicative of surprise that the building
plans had not yet been approved. This does not tally with the
testimony of
Main and Viljoen regarding the manner and timing of
their discovery that building plans had not been approved.
The SBDS project minutes of 2 September 2008 refer in
very muted terms to the fact that the DFBA building plans were still
awaiting
approval. We know that the matter was not taken up with
Rowmoor or Auction Alliance then or at any time prior to the issue
of
summons nor did Main challenge Annenberg.
Terblanche, who was not called as a witness, was the
one who started asking questions about the ‘approvals’
that were
sold to Dormell. This was in an email of 29 September
2008. What was subsequently delivered to her in early October 2008
were
the approved SDP drawings. There is no evidence that she or
Main reacted to this by complaining that Rowmoor or Auction Alliance

had promised more than this.
I have not overlooked Main’s email to Tullis of
15 March 2008 where she said that she now had the original plans ‘as

well as the approved plans done by Dennis Fabian’. This can
certainly be construed as supporting her version of her belief
but
the email could also be construed as a loose reference to the
building plans for the approved Fabian development, ie the

development in accordance with the rights granted by the City with
reference to the SDP drawings.
The onus of proof on causation rests on Dormell. This
requires proof on a balance of probability
inter alia
that
Dormell did not know the true position when it bought the property.
I feel unable to make a finding that Fabian concocted
the note of 12
March 2008. That evidence (including the lack of remonstration from
Main), taken together with the other considerations
I have
mentioned, lead me to conclude that on this particular issue the
probabilities are at best for Dormell equipoised. This
conclusion is
fatal to a favourable finding for Dormell on causation.
Attribution of Annenberg’s knowledge
Annenberg knew prior to the auction that the building
plans had not yet been approved. Assuming that Main and Tullis did
not also
know, is Annenberg’s knowledge attributable to
Dormell? Both defendants amended their pleadings to advance this
defence.
The law in this regard is normally stated with
reference to agency. An agent in the narrow sense is one with
authority to perform
a juristic act on behalf of a principal,
typically concluding a contract in the name of the principal.
Generally the knowledge
of such an agent on a matter bearing on the
transaction will be attributed to the principal. But our law goes
further –
it is sufficient, in order to attribute knowledge,
that the agent was instructed to receive or ascertain information
for his
principal, a so-called ‘agent to know’ (see, for
example,
Ying & Another v South British Insurance Company
Limited
1957 (2) SA 194
(E) at 198C-G). Such a person will not
necessarily be an agent in the strict sense. For example, an
employee of a company or
an official of a local authority may, in
regard to matters of a specific kind, be an ‘agent to know’
in the broad
sense even though he has no authority to conclude a
contract for his employer (see, for example,
Farmer v Robinson
Gold Mining Company Limited
1917 AD 501
at 518 and 532-3;
Town
Council of Barberton v Ocean Accident and Guarantee Group Ltd
1945
TPD 306
at 310-311). Whether knowledge of the ‘agent’ is
to be attributed to the ‘principal’ will depend on the

scope of the former’s authority and the importance or
materiality of such knowledge to the principal. Information will
be
material if it is ‘such that in the ordinary course of
business a reasonable man would be expected to impart such knowledge

to the person who has delegated to him the conduct and control of
his affairs’ (
Town Council of Barberton supra
at 311).
A mandatary’s mandate, though falling short of power to
conclude a contract for the mandator, may include a duty
to impart
information to the mandator (
LAWSA
17
th
Ed
Mandate
and Negotiorum Gestio
para 12).
In the present case Annenberg was formally mandated to
bid for Main at the auction. Although she bound herself to sign the
conditions
of sale, she would in any event have been bound at the
fall of the hammer. In a sense, therefore, Annenberg had authority
to
perform a juristic act which would result in Main (or Dormell)
being bound by a contract in accordance with the conditions of sale.

However, this is not in my view the relevant arrangement which might
cause Annenberg’s knowledge to be attributed to Dormell
but
was rather a later manifestation of an earlier broader confidence
which she had reposed in him. This had occurred shortly
after Main
learnt of the auction on 29 February 2008. She testified in chief
that she
‘…
gave
him the mandate to, you know, come with me to the auction and bid but
before then he would go into the detail of, you know,
the building
and make sure that it is what it is and that we can actually go to
the auction and bid on the building’.
She agreed, in cross-examination, that she expected
Annenberg to investigate aspects such as zoning, restrictions,
planning approval
and building plan approval, that there were
report-back meetings before the auction, and that she placed reliance
on Annenberg’s
advice and guidance. Annenberg’s evidence
in chief was that she told him she was interested in the property
‘…
and
she asked me to investigate, get the information on the property and
look at the feasibility of possibly buying it. …
Well she
wanted me to advise her as to what she – (a) whether she should
buy it you know is it viable and (b) you know what
sort of price she
should pay for the property.’
Under cross-examination by Mr Sholto-Douglas he was
asked whether, apart from the bidding authority, he had been given an
authority
to do anything else on behalf of Dormell or Main. He
replied:
‘
MR
ANNENBERG
:
‘No, … her instructions to me was: will you please
investigate this property on my behalf as I would like to buy
it and
look at what potential it has… and give me a sense of what I
should pay for the property.
MR SHOLTO-DOUGLAS
:
So it was to determine a reasonable price for the property in
essence? … Correct.
Both Main and Tullis agreed that it was important for
Dormell to have a property expert such as Annenberg to assist them
and that
Annenberg was the only property expert engaged by Dormell.
Although no specific remuneration was agreed or
contemplated for the work which Annenberg did for Main in the days
leading up
to the auction (and thereafter), I reject the notion (if
it were relevant) that Annenberg was merely assisting Main out of
friendship.
He conducted business in the property field, and there
was an expectation that if Main bought the property and the
development
came to fruition Annenberg would receive commission on
the sale of apartments. The investigative work he did for and the
advice
he gave to Main reflected a serious business relationship.
The evidence satisfies me, therefore, that Main
delegated to Annenberg the task of investigating the property with a
view to advising
on its proposed purchase and on an appropriate
price. There was a mutual expectation that Annenberg would report to
Main on anything
material to the proposed acquisition. She certainly
knew he would talk to Auction Alliance. She also knew he was in
contact with
Fabian.
I would thus regard Annenberg as having been, in the
broad sense, an ‘agent to know’. Consider it from the
perspective
of Fabian: assume Annenberg had specifically identified
Main or Dormell as the person for whom he was investigating the
property
and had asked about the status of the building plans. Even
if Fabian had hitherto been aware that Main was under a
misapprehension
about the status of the building plans, he would
surely have said, in response to any later complaint, ‘But I
told the
very person whom you asked to investigate the property.’
In other words, a person in Fabian’s position would not have

thought it necessary to go further and communicate the information
directly to Main.
In arguing to the contrary, Mr Sholto-Douglas referred
me
inter alia
to
Estate Francis v Land Sales (Pty) Ltd &
Others
1940 NPD 441.
There a company, through its director
Motala, decided to bid for a property at an auction. Certain
representations concerning
the property were made by the auctioneer
in an advertisement. Motala was unable to attend the auction so
authorised one Pather
to attend and bid on behalf of the company up
to a certain amount. Before bidding began the auctioneer corrected
an erroneous
representation which had been made in the
advertisement. Pather did not regard the correction as a matter of
great moment. After
the property was knocked down to the company,
the latter refused to complete the transaction, alleging that it had
been induced
by an innocent misrepresentation to conclude the sale.
Broome J held that Pather’s knowledge was not attributable to
the
company and that the company (represented by Motala) would not
have bought the property had it been aware of the true state of

affairs. This case, if correctly decided, is distinguishable because
Pather’s only authority was to bid for the property.
He was
not mandated to perform any prior investigative work in relation to
the property.
What then remains is the question whether the
information regarding the status of the building plans, which
Annenberg learnt both
from Fabian and Auction Alliance, was material
as contemplated in
Town Council of Barberton
. Dormell’s
case is based on the supposed materiality of the information –
so material that it allegedly made a difference
of R25 million to
the price Dormell would have paid for the property.
Although the authority to bid was in the name of Main
and although Dormell was not specifically named when Main asked
Annenberg
to look into the property, I do not think it was seriously
contended by Mr Sholto-Douglas that if Annenberg’s knowledge
was attributable to Main it was not also attributable to Dormell.
Main did not testify that she ever intended to buy the property
in
her own name. Dormell had recently purchased the Grand in
Plettenberg Bay, and Main intended to extend the brand to Cape Town.

If Annenberg did not specifically know about Dormell, both Main and
he would have understood that he was making investigations
for the
benefit of Main or whichever entity she chose to use for the
acquisition.
On this further basis, Dormell must fail in regard to
causation, since it must be treated as having known the true
position.
Causation – what difference, if any, did it
make?
The second main question is whether, if Dormell did not
know the true position, a disclosure of the truth would have
affected
its conduct. I have remarked previously that Main was very
enthusiastic about the proposed acquisition and the extension of her

Grand brand to Cape Town. She seems personally to have paid very
little attention to matters of detail. Despite the references
in the
brochure to a final notification letter, the approved SDP drawings
and the APA, she did not call for them and showed no
interest in
them. She disregarded Annenberg’s perhaps conservative view on
price, authorising him to bid up to R35 million
rather than his
recommendation of R23,5 million. Shortly after losing out at the
auction when Annenberg declined to top Moti’s
bid of R36
million, she was willing in the post-auction discussions to jump up
to R40 million in order to lay her hands on the
property. Her ideas
for the property were very different from those of Rowmoor and DFBA,
even if, in a vague sense, she knew
she would have to stay within
the ‘Fabian envelope’.
It is in this setting that one must consider how events
would have unfolded if Fabian or Auction Alliance had made the
disclosure
which they hypothetically should have done to remove the
alleged misrepresentation. One must not answer this question with
the
benefit of hindsight – one knows in the event that the
process of building plan approval was protracted by a combination
of
slow officialdom, unforeseen technicalities of debatable merit and a
lack of energy by DFBA (brought about by the fact that
it was no
longer on brief and did not know that anything would come from the
approved plans); one must ask how matters would
have been dealt with
in late February/early March 2008 with the knowledge the parties
then had. We know from Fabian’s oral
statements to Annenberg
and from Fabian’s email to Stewart of 28 February 2008 what
Main and Tullis would themselves have
been told if they had asked
directly: that the building plans were in council for approval which
was viewed as a mere formality
and would take only a few weeks. If
further information had been sought, Main and Tullis would probably
also have been told that
the building plans had successfully passed
the pre-scrutiny phase. In the ‘but-for’ enquiry which
must be undertaken
in regard to factual causation, this is the
hypothetical lawful course of action one would substitute for the
alleged misrepresentation
or non-disclosure (cf
International
Shipping Co (Pty) Ltd v Bentley
1990 (1) SA 680
(A) at 700E-I).
This was Fabian’s honest opinion, and it is the
view which Rowmoor and Auction Alliance would have accepted as
correct and
would have conveyed upon request (or would have included
in the brochure, if that were necessary). If Fabian had told Main
herself
what he in fact said to Annenberg and to Stewart, Main
would, one can safely assume, have asked Annenberg what he thought.
And
we know what Annenberg would have thought because Fabian did in
fact tell him: Annenberg accepted Fabian’s statement and
thus
did not regard the matter as being of great moment. On a balance of
probability, Main would have accepted Annenberg’s
advice and
not been deterred by what she would have understood was a formality
which would take only a few weeks. There was no
suggestion that DFBA
would even have billed her for completing the building approval
phase – Fabian’s firm had already
been paid by Rowmoor
for that phase, though he would have expected a further fee if DFBA
was engaged to supervise the construction
of the building. Main did
not say in her evidence what she would have done if she had been
told what Annenberg was told by Fabian
and she certainly did not say
that she would then have bid only up to R19 million (nor did
Tullis). I consider that in all probability
she would still have
bought the property for R40 million.
Tullis indicated in his evidence that had he been told
that the building plans had not yet been approved he might have
required
the inclusion of a suspensive condition or warranty
regarding building plan approval. I am somewhat sceptical about that
though
in fairness to Tullis he was simply hypothesising as to what
he might have done. After all, Tullis and Main did not insist on any

warranty relating to the facts which, on their evidence, they
assumed to be correct and germane to the transaction. Be that as
it
may, Dormell’s pleaded case is not that but for the
misrepresentation the sale would have been concluded at the same

price though subject to a suspensive condition. Whether Rowmoor
would have accepted a suspensive condition and if so what the
terms
of that condition would have been and whether the condition would
(with the exercise of the requisite diligence and vigour
from all
concerned) have been fulfilled are matters of speculation.
It may be said that the hypothetical disclosure would
have been negligent because Fabian should not have said that
building plan
approval was a mere formality and would happen within
a few weeks. However, the only representation of fact in the
hypothetically
honest answer was that the building plans were in
council for approval, ie were not yet approved, and that was the
crucial piece
of information allegedly withheld. Whether approval
was a formality and would only take a few weeks were expressions of
opinion.
Fabian did not misrepresent his state of mind (which would
have been a fraudulent misrepresentation – see
Ruto Flour
Mills (Pty) Ltd v Adelson
1959 (4) SA 120
(T) at 122G-123C;
Presidency Property Investments (Pty) Ltd & Others v Patel
2011 (5) SA 432
(SCA) para 28); it was accepted that this was
his honest view.
I accept that in the law of delict the negligent
expression of an opinion may in appropriate circumstances give rise
to liability
if there is a legal duty to take care in the expression
of the opinion and it is expressed without taking such steps as a
reasonable
person would take in the circumstances to satisfy himself
that the opinion is justified (cf
Kern Trust supra
at
618A-D). However the case against the defendants was based on the
alleged factual misrepresentation or misstatement of the
simple fact
that building plans had already been approved. Whether the opinions
which we know would have accompanied a correct
disclosure concerning
that simple fact would have been actionably negligent was not the
subject of the trial. I very much doubt
whether Dormell could
successfully have sued Rowmoor or Auction Alliance merely because
Fabian expressed the view that the approval
of the building plans
was a mere formality and would only take a few weeks. That was a
matter on which Dormell could have formed
its own opinion and taken
its own advice. The evidence in this case suggests that once SDP
plans have been approved and once
the building plans themselves have
passed the pre-scrutiny phase, building plan approval does follow as
a matter of course in
the vast majority of cases. None of the
problems which bedevilled the approval in this case were foreseen,
or I venture to suggest
foreseeable, at the time of the auction. The
evidence also indicates that the issues raised by officialdom were
either resolved
or could have been resolved, and that all of this
might have happened a lot quicker if the approval process had been
energetically
pressed.
Dormell has thus not proved on a balance of probability
that the alleged misrepresentation or non-disclosure factually
caused
it to pay more for the property than it would otherwise have
done. In view of this conclusion it is unnecessary to discuss legal

causation, an issue which was barely touched upon in argument, save
to record that if Dormell had succeeded on all other issues
I doubt
whether it would have failed at this hurdle.
Damages
if I am wrong in finding that the
alleged misrepresentation or non-disclosure made no difference, the
damages enquiry focuses
on how much difference it would have made.
In delict the proper measure of damages is the amount by which the
wronged party’s
patrimony has been diminished in consequence
of the delict, so-called negative
interesse
(see the majority
judgment in
Ranger
v Wykerd
1977 (2)
SA 976
(A)). The method of quantifying this amount will depend on
the circumstances of the case.
In the present matter the appropriate method seems to
me to be to be the difference between the price actually paid by
Dormell
for the property (R44 million inclusive of commission) and
the market value of the property without approved building plans.

The latter price (assumed to be lower than the price actually paid)
would either have been accepted by Rowmoor, in which event
Dormell
would have paid that much less; or the lower price would have been
rejected by Rowmoor, in which case Dormell, one must
assume at this
stage, would not have bought the property at all (a conclusion I
actually regard as unlikely for reasons explained
in the previous
section), in which event Dormell’s loss is the difference
between the market value of the property of which
it acquired
ownership and the higher amount of cash with which it parted as the
purchase price.
Dormell called Jackson as an expert to determine the
lower value as R19 million. Whether this would exclude commission
payable
by a buyer on auction is unclear from his evidence but Mr
Sholto-Douglas treated Jackson’s evidence as establishing the
lower gross market value as being R20,9 million inclusive of
commission as against the R44 million actually paid, yielding
damages
of R23,1 million.
Jackson valued the property as at 6
March 2008 not only on the assumption that there were no approved
building plans but also
on the assumption that the title deed
restrictions had not been removed and amended in accordance with the
removal application
and that no departures had been granted in
accordance with the departures application. (That he disregarded the
outcome of the
removal application as distinct from the departures
application is by no means clear from his expert report, because he
annexed
the title deed of 4 June 2008 including the endorsements
which reflected that prior to the valuation date of 6 March 2008
various
title deed conditions had been removed or amended. However,
he confirmed under cross-examination by Mr Hodes that he had not

taken into account the value flowing from either the granting of the
removal or the departures application.
14
In argument Mr Sholto-Douglas
confirmed that this was the basis of the valuation.) Mr
Sholto-Douglas’ argument in that regard
was that the granting
of the removal and departures applications counted for nothing
unless one could actually erect the new
building, for which approved
building plans were needed. Jackson adopted that view in his
evidence.
In my view, Jackson’s valuation assumptions are
profoundly flawed. Perhaps he was asked to make the assumptions he
did in
the light of the subsequent history and eventual lapsing of
the approved departures on 15 October 2011. However, that is not a

proper valuation of the property as at 6 March 2008, and Mr Jackson
should have known that. As at 6 March 2008 the existence
of what I
shall call the development rights was highly material to a valuation
of the property. The obtaining of development
rights by way of the
removal and departure applications after an arduous process lasting
about three years undoubtedly enhanced
the value of the property
relative to the unrealistic assumptions Jackson made. A willing
buyer who knew that it would have to
engage town planners and
architects and fight trench warfare with the Association, neighbours
and officialdom over a period of
several years before it could even
submit building plans for approval of the structure described in the
brochure would, it is
quite evident to me, have paid considerably
less for the property than if those steps had already been
successfully completed.
Even the assumption as to the non-existence
of approved building plans needs to be more nuanced than Jackson’s
approach
– it is not a case that building plans had been
rejected or could not be approved. A willing buyer as at 6 March
2008 would
have formed a view as to the likelihood of the building
plans being approved.
The additional value a willing buyer would have
attached to the existence of approved building plans as at 6 March
2008 is what
should have been the focus of the expert evidence but
there was no evidence directed to that question. It is quite
conceivable
to me that an expert who had objectively and diligently
investigated that question might have concluded that the difference
was
so insubstantial, if any, as to be
de minimis
. We know
what Fabian’s view was as at 6 March 2008 – he thought
plan approval was a formality which would take only
a few weeks. We
know that Annenberg, an experienced property broker, accepted that
view. There was no evidence to indicate that
any of the problems
that actually arose subsequently would have been foreseen or
foreseeable to a willing buyer as at 6 March
2008. The removal and
departures applications entailed a process of public participation
and value judgments by the relevant
decision-makers but those
hurdles had been crossed. A value judgment can also arise in respect
of building plan approval by virtue
of sub-para (b) of s 7(1)
of the NBA, but the prospect that the building plans in this case
would have been rejected on
that basis was virtually nil, because
the factors listed in sub-para (b) would already have received
attention in the procedures
followed in the removal and departures
applications and in the APA. The City was thus for all practical
purposes obliged to approve
the building plans (and to do so within
60 days) if they met the technical requirements of the NBA and if
there was compliance
with other laws. The fact that the removal and
departures applications were granted and that the building plans
themselves successfully
passed the pre-scrutiny phase would have
given a high degree of confidence that the building plans would be
approved timeously.
If a potential buyer wanted in the meanwhile to
begin demolition and basement work, this could have been done by a
provisional
authorisation in terms of s 7(6) – it was not
necessary that approved building plans should already exist.
We know that the Rowmoor partners granted Auction
Alliance a mandate to sell for R42 million (excluding commission)
and that they
ultimately accepted R40 million (again excluding
commission). They, we can assume, knew the true facts (ie that the
building
plans were in council but not yet approved). As willing
sellers, they were holding out for R40 million on a property with
development
rights but where the building plans were not yet
approved. Faclier testified that one of the Fabians (she thought it
was Jeff)
told her before the auction that Rowmoor was adamant that
if it did not get R40 million nett it would not sell but rather
continue
with the development. Fabian’s evidence was that if
Rowmoor had not achieved its price of R40 million it would not have
sold the property and would instead immediately have sought
authorisation to commence work in terms of s 7(6) pending
building
plan approval. That is confirmed by the DFBA technical
minutes of 13 February 2008 which stated that the building plans
were
progressing through council and that the program required
construction to begin on 10 March 2008 with completion on 30
November
2008. That is some evidence of Rowmoor’s own view as
a willing seller of the property’s value as matters truly
stood
on 6 March 2008 and shows the degree of confidence that
existed in the Rowmoor camp. (Jeff Fabian also told Main on 6 March
2008,
shortly after the sale had been clinched, that if Rowmoor had
not sold the property they would have commenced demolition ‘on

Monday’.)
We do not know as a fact what Moti, who was prepared to
pay R39,5 million plus commission, knew about the status of the
building
plans. It seems at least as likely as not that he was one
of the interested buyers to whom Auction Alliance would have passed
on the information given to Stewart on 28 February 2008.
We also know that in April 2008 Nedbank valued the
property at R45 million, taking into account the development rights
but in
the knowledge that the building plans had not yet been
approved. The bank’s valuer, Mr Janari, was not called as a
witness
but his valuation was performed and apparently relied upon
by the bank in the context of an actual transaction in which the
bank
lent a large sum of money to Dormell.
I do not need to rely on these matters to reach a final
view as to the value of the property with its development rights but
with
as-yet unapproved building plans. The point I make is that it
should not be assumed that there would necessarily have been a

difference of substance between the price a willing buyer would have
paid for the property with and without approved building plans,

given the likelihood which then existed that building plans would
shortly be approved.
Jackson’s valuation of R19 million I find to be
of no assistance because his assumptions were simply wrong. Whether
his
valuation would have been correct on the basis of the
assumptions he was instructed to make I need not decide. His choice
of
comparables was criticised for being too remote in point of time,
too restrictive as to geographic location and to be based on
an
absence of proper enquiry into and discernment between the differing
planning attributes of the supposedly comparable properties.
There
is some force in these criticisms but I am content to discount his
evidence on the simple basis that he failed to conduct
a valuation
of the property with reference to the true state of affairs as at 6
March 2008.
Ordinary common sense tells one that it is pure fantasy
to say that as at 6 March 2008 a willing buyer would have attached a
value
of R23,1 million to the additional attribute of approved
building plans (the difference between R44 million and R20,9
million),
ie that more than half of the value of this prime Camps
Bay property with its development rights and with the expectation of

approval of building plans in the near future hinged on whether
approval for the building plans already existed on 6 March 2008.
Mr Sholto-Douglas argued that if I should be of this
view I was nevertheless bound to do my best to arrive at a fair sum
as damages
if it has shown that some damage has been suffered.
However, reliance on this sensible approach presupposes that the
litigant
has produced all the evidence available to him at the time
of the trial (see, for example,
Monumental Art Co v Kenston
Pharmacy (Pty) Ltd
1976 (2) SA 111
(C) at 118C-F;
Esso
Standard SA (Pty) Ltd v Katz
1981 (1) SA 965
(A) at 970D-H;
Aaron’s Whole Rock Trust v Murray & Roberts Ltd &
Another
1992 (1) SA 652
(C) at 655F-656F). In this case I have
no reason to doubt that an expert, properly directed to the right
question, could have
assisted the court in determining the type of
value which a willing buyer might have attached to the additional
attribute that
building plans in circumstances such as the present
case had not only been submitted against the known historical
background
but already approved. I have already given reasons why I
am by no means satisfied that an expert so directed would have
concluded
that this additional circumstance would have made any or a
material difference. If I were now to award an amount as damages, it

would be pure guesswork.
The subsequent problems that arose with the DFBA
building plans appear to me not to be directly relevant to any of
the questions
I have to answer. However, because there may be a
temptation to allow subsequent events to cast a negative
retrospective shadow
on the value of the property as at 6 March
2008, I briefly note the following. If a developer had decided,
after buying the property
on 6 March 2008, to improve the property
in line with the DFBA design and had forthwith engaged DFBA (or a
similarly competent
firm) to finalise building plan approval and to
supervise the works, I have no doubt that the entire process would
have occurred
far more expeditiously than it did and that the
problems subsequently raised by the City would have come to light
and been dealt
with a lot sooner. The question of the HVAC areas was
merely a matter of inserting additional detail on the building
drawings,
not a design obstacle. The lapsing on 25 August 2007 of
the heritage demolition permit issued on 25 August 2004 was an
oversight
easily corrected – there was no dispute about this.
The evidence regarding the need for NEMA authorisation was similarly

to the effect that it was not an issue of great moment. The
properties on the mountainside of Victoria Road are in an area

characterised by building development. For a time the City approved
building plans without regard to (or perhaps ignorant of) the
NEMA
issue (the 100-metre restricted zone was only introduced in 2006);
subsequently the City did insist on environmental authorisation
from
the Province before approving building plans but such authorisations
for properties above Victoria Road were routinely granted
within a
month or so of application. Dormell’s own expert, Saunders,
did not think this would have been a problem.
This leaves Moir’s 10-metre
height issue, based on section 98 of the zoning scheme.
15
This had not been raised during the
processing of the departures application nor during the pre-scrutiny
of the building plans.
It was also not mentioned by the City’s
zoning department in the formal approval process. It was a belated
issue raised
by Moir. From a practical perspective a developer may
not have been able to persuade Moir that his interpretation of
section
98 was incorrect – that depended on whether the
insertion of dormer windows in a sloping roof caused the dormers to
become
part of the ‘facade’, ie a ‘main containing
wall of a building’ for purposes of section 98. I was not
asked to determine that question. Whether Moir would have raised the
same point if the building plans had remained exactly in
accordance
with the June or November 2006 SDP drawings (where there was a
skylight window rather than dormer windows) is not
entirely clear.
Be that as it may, Moir testified that a ‘technical departure’
would probably have been granted,
ie the City would have approved a
departure from the 10-metre height restriction without requiring a
process of publication and
objection. This was because the ‘real’
height of the building had not changed from that approved by the
affected
parties in the APA. (In terms of s 15(2)(a) of LUPO,
advertising is required only if the relevant official is of the
opinion
that any person may be adversely affected by the departure.)
Moir thought the technical departure could have been finalised
within
about three weeks. Fabian and Brummer were of the same view.
Moir was not himself the official who would have
decided whether advertising should take place. Saunders, Dormell’s
expert,
thought that advertisement might well have been insisted
upon, though it is not apparent from his evidence on what basis the

relevant official could properly have been formed the opinion that
any person would be adversely affected by the departure (having

regard to the departures already approved and the terms of the APA).
If Moir could not have been persuaded that he was wrong
about his interpretation of section 98 and if the relevant official
had
not permitted a departure without advertisement, the evidence of
Moir was that the difficulty posed by section 98 could have been

resolved by retracting the section of the roof where the dormers
were situated by about 1 to 1 ½ metres. Fabian testified
that
if the City’s stance would otherwise have led to delay, that
is the solution he would have adopted. (He said that
in order to get
the building plans approved promptly he would have amended them to
reflect a retraction of the dormers and would
then have sought the
‘technical’ departure so that he could revert to the
original idea.)
It is not possible to say by what date all these
matters would have been put to rest had the approval of the DFBA
plans been pursued
energetically by someone with an intention to
build according to that design, but I am confident that this could
have been achieved
considerably sooner than February 2010, when DFBA
was told by Rowmoor to take no further steps. DFBA did not have a
strong commercial
motive to press the approval of the building plans
during 2008 and 2009 because it was not Dormell’s chosen
architectural
firm and had no client (such as Rowmoor) pushing it.
Main herself was pursuing other ideas for the property. When she
aborted
the development in November 2008 it was, I consider, for the
reasons stated in Terblanche’s letter of 19 November 2008 and

the bank’s memorandum of 4 May 2009. The fact that the DFBA
plans had not yet been approved was not one of the stated reasons

and I do not accept Main’s evidence that this was the real
reason. Terblanche was not called by Dormell to explain her
letter
of 19 November 2008 but the reasons recorded therein ring true in
the context of surrounding events. She would have had
no reason to
refrain from referring to the non-approval of the DFBA plans if that
were perceived to be the real problem. There
was no known issue of
serious import in relation to the DFBA building plans as at November
2008. Viljoen’s own rider plans
would have taken some time to
assess (indeed, despite the expression ‘rider plans’,
each page of the DFBA plans would
have had to be changed and
replaced in order to give effect to Viljoen’s design, and
there is no saying that the City officials
may not have picked up
other problems in relation to the rider plans which were not
applicable to the DFBA plans). Provisional
authorisation to start
work in terms of s 7(6) of the NBA could have been sought in
the meanwhile. In my view, Terblanche’s
gloomy feasibility
report of 24 October 2008, furnished as the global financial crisis
was unfolding, coupled with the fact that
the boutique hotel concept
(Main’s initial idea in buying the property) appeared to face
insuperable planning challenges
and that her Grand Café
(which she was set on conducting) demanded more retail space than
allowed for the in the approved
SDP, led Main to decide rather
simply to conduct a Grand Cafe from the existing structure. The
extended approval of the departures
only lapsed on 15 October 2011.
I have little doubt that building plans substantially in accordance
with what was described and
depicted in the brochure could have been
passed well before that time had somebody pressed the matter.
My conclusion is thus that even if earlier issues were
decided in favour of Dormell, it has not proved the amount of its
damages,
if any.
The disclaimer and exemption clauses
The remaining issues, which arise if Dormell (contrary
to my view) were to succeed on all issues other than fraud, concern
the
effect of the disclaimer in the brochure and exemption provision
in the conditions of sale, both of which I have quoted. It is

necessary to deal with Rowmoor and Auction Alliance separately. The
onus is naturally on the defendants to bring themselves within
the
disclaimer or exemption as the case may be (
Drifters Adventure
Tours CC v Hircock
2007 (2) SA 83
(SCA) para 9).
Rowmoor
Although Rowmoor pleaded both the disclaimer and the
exemption clause, Mr Hodes accepted the proposition I put to him in
argument
that the whole-contract provision in clause 23.1 of the
conditions of sale precluded Rowmoor from relying on the disclaimer
in
the brochure.
The correct approach to the interpretation of an
exemption provision such as clause 23.1 is set out, with reference
to earlier
cases, in
Masstores (Pty) Ltd v Murray & Roberts
(Pty) Ltd & Another
2008 (6) 654 (SCA) paras 19-24 and
Viv’s
Tippers (Edms) Bpk v Pha Phama Staff Services (Edms) Bpk h/a Pha
Phama Security
2010 (4) SA 455
(SCA) paras 15-17. The question
is one of ordinary contractual interpretation – the answer
will be found in the language
of the clause read in the context of
the agreement as a whole in its commercial setting and against the
background of the common
law and with due regard to any possible
constitutional implications. If there is ambiguity the clause must
be construed against
the
proferens
but the alternative
meaning upon which reliance is placed to demonstrate the ambiguity
must be one to which the language is fairly
susceptible – it
must not be fanciful or remote.
Part of the immediate context within which clause 13.2
must be construed are the related provisions of clauses 13.1, 13.3
and
23.1, all seeking in various ways to protect the seller. Part of
the broader factual matrix is that the parties knew that information

had been supplied in the brochure, in advertisements, orally at the
auction and upon
ad hoc
enquiries from potential buyers.
Clause 13.2 comprises two sentences but they must be
read together to determine the meaning of the clause as a whole. The
phrase
in the first sentence ‘any express or implied
information, statement, advertisement or representation’ is as
wide
as could be (for convenience I shall refer compendiously to the
specified forms of information simply as ‘representations’).

The phrase would plainly cover a representation, whether by
commission or omission, that building plans for the Fabian design

had been approved. Dormell’s acknowledgement in the first
sentence thus includes an acknowledgement that Dormell had not
been
induced to conclude the agreement by the (alleged) representation
that building plans had been approved. That is an acknowledgement
of
a fact, the focus being the non-inducing effect of the
representation – it would not matter for that purpose whether

the information were conveyed by the seller or its agent innocently,
negligently or fraudulently (though we know that fraud unravels
all
and that the exemption would thus be unavailing in the case of fraud
on grounds of policy despite its wide terms). The second
sentence
gives legal effect to the acknowledgement in the first sentence by
containing a waiver by the purchaser of ‘any
rights
whatsoever’ which it might otherwise have obtained against the
seller as a result of representations mentioned in
the first
sentence. The rights waived are expressed in the broadest terms.
I accept that if clause 13.2 were confined to innocent
representations it would still have a significant field of operation
–
it would exclude rescission or the
actio quanti minoris
arising from innocent misrepresentation. I nevertheless regard
as fanciful the proposition that the phrase ‘any rights
whatsoever’
does not include rights arising from
representations made negligently. The purchaser’s
acknowledgement in the first sentence
is that no representations (ie
beyond those incorporated as terms of the contract) have induced it
to enter into the agreement,
and a purchaser could not plausibly
claim that what induced him to enter into the contract was not the
representation
per se
but the fact that it was negligently
rather than innocently made; the acknowledgement in the first
sentence does not permit a
rational distinction between the state of
mind with which the seller or its agent has made the representation,
and there is thus
no basis for importing that distinction into the
second sentence, particularly given its very wide language.
Mr Sholto-Douglas argued that Dormell could not waive
the right which it seeks to enforce in the present action because it
did
not know that building plans had not been approved. That is a
fallacious submission. Clause 13.2 by its very nature is directed
at
representations which in the event turn out to be incorrect; no
claim could arise in respect of representations which were
either
true or known by the buyer when purchasing to be untrue. On
Dormell’s case, it understood when it bought the property
that
there were approved building plans – that was a
representation, and in clause 13.2 it nevertheless acknowledged that

it was not concluding the agreement on the basis of (
inter alia
)
that representation and knowingly waived ‘any rights
whatsoever’ which it might otherwise have obtained against

Rowmoor as a result of the representation (meaning, obviously, if
the representation turned out to be incorrect).
I thus conclude that Rowmoor is entitled to ward off
Dormell’s claim unless fraud has been proved, which it has
not.
Auction Alliance
Auction Alliance also relied both on the disclaimer and
the exemption clause. Because of the whole-contract clause in the
conditions
of sale, one must begin with that agreement. Auction
Alliance signed the agreement, and certain of its provisions deal
with the
auctioneer’s rights, for example in regard to the
conduct of the auction (though these events would all pre-date the
signing
of the conditions) and the payment of commission (clause 5).
Clause 13.2 refers to the auctioneer in the first sentence but the

waiver in the second sentence is only a waiver of rights as against
the seller (Rowmoor). Mr Rose-Innes for Auction Alliance
argued that
the second sentence should, in the context of the first sentence and
the rest of the contract, be construed as incorporating
a waiver
also for the benefit of Auction Alliance. He referred to
Soobramoney
v Another v R Acutt & Sons (Pty) Ltd
1965 (2) SA 899
(T) but
there the exemption was expressly given in favour of both the seller
and the agent.
It is true in the present case that the first sentence
appears to distinguish between representations made ‘by the
Auctioneer
or any other person’ and those made ‘by or on
behalf of the Seller’. However, the exemption could not have

been intended to operate in favour of the world at large (‘or
any other person’), ie persons unrelated to the auctioneer
or
the seller. It would make sense, in the context of an exemption in
favour of the seller, to make reference in the first sentence
to
representations made
inter alia
by the auctioneer because the
auctioneer is a person for whose representations the seller might
otherwise be held liable. The
auctioneer might in any event be
encompassed by the phrase ‘by or on behalf of the Seller’
but the express reference
to the auctioneer in the first sentence is
understandable as a precaution. Without a claim for rectification
(and there was no
such claim) I cannot construe the clause as a
whole as exempting the auctioneer from liability for
representations. Clause 13.2
stands in contrast, in this respect,
with clause 13.1, where the auctioneer as well as the seller are
absolved from responsibility
for pointing out surveyor’s pegs
or beacons. (Clause 13.2 is, on my interpretation of it, the reverse
of the clause which
featured in
Faure en ‘n Ander v Joubert
en ‘n Ander NO
1979 (4) SA 937
(A), where clause 8 of the
relevant conditions of sale protected the auctioneer but not the
seller. The majority held that the
seller could not rely on the
clause.)
The next question is whether Auction Alliance can fall
back on the disclaimer in the brochure, given the whole-contract
provision
in clause 23.1 of the conditions of sale. Mr
Sholto-Douglas for Dormell did not, when it came to the disclaimer,
contend that
it was inapplicable because of clause 23.1 of the
conditions of sale. On the contrary, his submission (in regard to
clause 13.2)
was that Auction Alliance was not a party to the
purchase agreement save for accepting the benefit of commission,
that there
was no
stipulatio alteri
in favour of Auction
Alliance, and that the word ‘Seller’ in clause 13.2
could thus not be read as including the auctioneer.
In my view, the phrase ‘between the parties as to
the subject matter hereof’ in clause 23.1 should be construed
as
referring to the contract between purchaser and seller as to the
sale of the property. If, prior to the fall of the hammer and
the
signing of the conditions, a separate contract was concluded between
bidders and Auction Alliance incorporating the disclaimer
in the
brochure, clause 23.1 of the conditions of sale would not preclude
Auction Alliance from relying on that separate disclaimer.
The scope
of clause 13.2 reinforces that view. I have been persuaded that it
does not provide protection in favour of Auction
Alliance. If the
earlier disclaimer (which undoubtedly does at least in some
circumstances purport to provide protection for
Auction Alliance)
could not be invoked because of clause 23.1 of the conditions of
sale, the disclaimer would invariably be unavailing,
because the
conditions of sale (including clause 23.1) were Auction Alliance’s
standard auction conditions and it seems
likely that the disclaimer
in the brochure was also Auction Alliance’s standard
disclaimer.
Turning then to the disclaimer, the case for Auction
Alliance was that the disclaimer was operative between the parties
as a tacit
agreement in accordance with the so-called ticket cases
(see
Durban’s Water Wonderland (Pty) Ltd v Botha &
Another
1999 (1) SA 982
(SCA) at 991D-992A; Christie
op cit
at 186-190).
In the present case interested buyers were furnished
with the auction brochure. Dormell certainly was. The disclaimer
appeared,
albeit in small print, on the front cover of the brochure
and in ordinary print in para 5 under a bold capitalised heading
‘DISCLAIMER’.
Main testified that she would have looked
at para 5 of the brochure – indeed the information in para 5
and the impression
it allegedly made on her was a large part of
Dormell’s case – but said she could not remember reading
the disclaimer,
she only read what she interested her. I have
examined the brochure and do not consider that a person could have
read the information
in para 5 without seeing the heading
‘DISCLAIMER’. The disclaimer was contained on the same
page as some of the information
in para 5. Tullis testified that he
saw the disclaimer but did not read it because he sees many
disclaimers in the course of
his business activities.
A reader who received the brochure and saw in para 5
that there was a disclaimer would know that the brochure contained a
term
relating to the basis on which information was supplied. I
think that was proved to be the case in relation to Dormell. It is
thus not necessary to determine whether, if the evidence did not
establish this, Auction Alliance nevertheless did what was

reasonably sufficient to give Dormell notice of the disclaimer.
In the ordinary ticket cases the question is usually
whether the disclaimer or exemption is incorporated as a term of a
contract
undoubtedly concluded between the parties (for example
deposit, conveyance and so forth). Here the disclaimer in a sense
stands
on its own – it is not alleged to have been
incorporated into the conditions of sale or as part of some other
contract.
However, a person with knowledge that information has been
supplied subject to a disclaimer could reasonably be expected to
know
that if he proceeds to participate in an auction the disclaimer
would be operative. Otherwise its insertion in the brochure would
be
utterly pointless. I am satisfied that the disclaimer operated as
the contractual basis on which Auction Alliance supplied
information
in the brochure.
I was referred to the cases dealing with the test to be
applied in determining whether a tacit contract has been concluded.
Differing
versions of the test have been mentioned in decisions of
the Supreme Court of Appeal(Christie
op cit
86-90). I think
those cases are concerned with the process of inferential reasoning
where the existence and content of the contract
are to be inferred
entirely from conduct. The present case is somewhat different. The
disclaimer was expressed in writing and
was clearly intended to have
the effect that persons who came into possession of the brochure
would not be entitled to sue Auction
Alliance if, even because of
negligence, the information turned out to be incorrect or
incomplete. Once it is established that
a recipient of the brochure
saw the disclaimer, the latter’s conduct in bidding at the
auction constitutes acceptance by
conduct of the express terms of
the disclaimer. Formulated in terms of offer and acceptance, the
bidder’s conduct is an
acceptance by conduct of an express
offer.
During the opening address and in closing argument I
raised with counsel the question whether, when information is
supplied subject
to a disclaimer, it is necessary – in order
to rely on the disclaimer – to prove that the disclaimer has
contractual
force. Somewhat to my surprise, neither of the
defendants’ counsel pursued that question. In my view there
might well be
a non-contractual basis on which a disclaimer could in
appropriate circumstances operate to relieve a party of liability in
delict.
If a person makes representations to another but immediately
adds that he does not take responsibility for the accuracy or
completeness
of the representations and will not accept liability
for their accuracy or completeness, the representations as a whole,
inclusive
of the added disclaimer, might be viewed on grounds of
policy as not being wrongful. In the English law of torts it has
been
held by the English Court of Appeal that a disclaimer in an
estate agent’s advertisement is relevant to the question
whether
a duty of care arises and thus should not be analysed along
contractual lines (
McCullagh v Lane Fox & Partners
[1996]
PNLR 205
(CA) at 237 [neutral citation
[1995] EWCA Civ 8]
, reliance
being placed
inter alia
on the landmark decision of the House
of Lords on negligent misstatement in
Hedley Byrne & Co Ltd v
Heller & Partners Ltd
[1963] UKHL 4
;
[1964] AC 465
(HL), where the
plaintiff failed in essence because of the defendant’s
disclaimer; see also
Avrora Fine Arts Investment Ltd v Christie
Manson & Woods Ltd
[2012] EWHC 2198
(Ch) para 124; Fleming
The Law of Torts
9
th
Ed at 708-709;
Clerk &
Lindswell on Torts
20
th
Ed paras 8.121 –
8.123). In
Standard Chartered Bank of Canada supra
Corbett
CJ, in determining whether there rested on the bank a legal duty not
to furnish a false bank report, took into account
that the bank
could have refused to give the report or could have protected itself
against the consequences of a negligent report
by a disclaimer
(771A-B; see also
Holtzhausen v Absa Bank Ltd
2008 (5) SA 630
(SCA) para 12). If this were the preferable line of reasoning, it
would render irrelevant (in relation to the disclaimer) the
question
whether clause 23.1 of the conditions of sale precluded Auction
Alliance or for that matter Rowmoor from relying on
the disclaimer.
It would be unnecessary to investigate whether the disclaimer
constituted, or formed part of, a contract between
the parties. What
would happen, one may ask, if the recipient of information
accompanied by a disclaimer were to say to the representor
that he
thanks him for the information but rejects the disclaimer? There
could then clearly be no contract incorporating the
disclaimer yet
it strikes me as absurd in such a situation that the representor
would be deprived of the benefit of the disclaimer.
The disclaimer
might – on a non-contractual basis – lead to a
conclusion in the present case that neither of the
defendants acted
wrongfully. I need not, however, express a final opinion on that
question.
If the disclaimer were found to be binding, Mr
Sholto-Douglas argued that the opening phrase ‘Whilst all
reasonable care…’
was a pre-condition for the ensuing
exemption to operate. He placed strong reliance on
Minister of
Education and Culture (House of Delegates) v Azel & Another
1995
(1) SA 30
(A) where the court dealt with a disclaimer signed by
parents in connection with a school excursion. However, there are
important
differences between the formulation of the disclaimer in
that case and in the present one. There the ‘reasonable
precautions/care’
phrase appeared at the end of the
disclaimer; was introduced by the words ‘in the knowledge
that’; and was formulated
in the future tense (ie referring to
the reasonable precautions which the principal and his staff would
take in the future for
the safety and welfare of the
schoolchildren). The main body of the disclaimer did not refer
expressly to negligence, and the
‘reasonable precautions’
phrase only restricted the indemnity insofar as it concerned
negligence by the principal
or his staff (not by other employees)
and only in so far as it concerned claims relating to the safety and
welfare of the children
(not damage to property).
In the present case, by contrast, the ‘reasonable
care’ phrase is placed at the beginning of the disclaimer and
is
phrased in the past tense. The body of the disclaimer expressly
refers to an exemption from liability for negligence and covers
all
the information contemplated in the ‘reasonable care’
phrase and the full range of persons who might have supplied
the
information. To interpret the disclaimer as meaning that Auction
Alliance, its subsidiaries and related companies would only
be
exempt for negligent errors or omissions in the information if they
had taken reasonable care to obtain the correct information
would be
nonsensical – the very sort of antithesis rejected in cases
such as
Elgin Brown & Hamers v Industrial Machinery Supplies
(Pty) Ltd
[1993] ZASCA 55
;
1993 (3) SA 424
(A) at 428D-429C and
First National
Bank of SA Limited v Rosenblum & Another
2001 (4) SA 289
(SCA) para 16.
I thus find that Auction Alliance can avoid liability
on the strength of the disclaimer in the absence of fraud (which has
not
been proved).
Conclusion
For these reasons Dormell’s action must be
dismissed with costs. All the parties engaged two counsel, which was
reasonable.
The costs order is subject (by agreement) to the
qualification that Rowmoor is to pay the wasted costs of Dormell and
Auction
Alliance caused by the postponement of the matter on 12
August 2013 for one day in consequence of the notice of amendment
delivered
by Rowmoor on that morning.
Rowmoor is entitled to Moir’s qualifying costs.
Although an expert notice was delivered in respect of Fabian’s
evidence,
Mr Hodes conceded that the latter’s testimony was
overwhelmingly factual and that no qualifying costs should be
allowed
for him.
Auction Alliance asked for the qualifying expenses of
Brummer. He gave both factual and expert evidence. His narrative of
the
history of the removal and departures applications was
essentially factual in nature as was his evidence about his
post-auction
involvement in meetings and correspondence. Based on
his oral evidence, my rough assessment is that 30% of the costs
associated
with his attendances (pre-trial and in court) should be
allowed as qualifying expenses. Because I was not addressed on this
aspect,
my order will be provisional.
I make the following order:
[a] The action is dismissed.
[b] Subject to [c], the plaintiff shall pay the
defendants’ costs, in each case including the costs of two
counsel.
[c] The first defendant shall pay the wasted costs
of the plaintiff and the second defendant arising from the
postponement
of the matter on Monday 12 August 2013 for one day,
including the costs in each instance of two counsel.
[d] The costs order in favour of the first
defendant shall include the reasonable qualifying and attendance
costs of the first
defendant’s expert Mr Moir.
[e] The costs order in favour of the second
defendant shall include the reasonable qualifying and attendance
costs of the second
defendant’s expert Mr Brummer, such costs
to be reckoned at 30% of all attendances in which Mr Brummer was
involved, including
his attendances at court.
[f] The order in [e] is provisional. The plaintiff
and second defendant respectively shall be entitled, within two weeks
of
this order, to deliver written submissions as to why the said
order should be varied. If such submissions are delivered, the court

shall if necessary give further directions. If no such submissions
are delivered the order in [e] shall become final.
______________________
ROGERS J
APPEARANCES
For Plaintiff: Mr AR Sholto-Douglas SC and Ms L Kieck
Instructed by:
Davout Wolhunter & Associates
10
th
Floor, Guarantee House
37 Burg Street
Cape Town
For First Defendant: Mr PB Hodes SC and Mr SC Goddard
Instructed by:
Maurice Phillips-Wisenberg
20
th
Floor, 2 Long Street
Cape Town
For Second Defendant: Mr LA Rose-Innes SC and Mr D van
Reenen
Instructed by:
Bernadt Vukic Potash & Getz
11
th
Floor, 1 Thibault Square
Cape Town
1
The
pleaded case of fraudulent misrepresentation by commission was
jettisoned in argument.
2
In
terms of this zoning the property had a bulk factor of 1,2 and a
habitable room factor of 34. The manner in which these factors

applied in the context of the Fabian SDP was as follows: The
property was 476 m
2
in
extent. The bulk factor increased this to 571 m
2
.
The retail area of the Fabian design, calculated in accordance with
the zoning scheme, was 195 m
2
(differing, because of the calculation rules,
from the
de facto
retail
area of 210 m
2
shown
on the plans and mentioned in the brochure). This would leave 376 m
2
for habitable rooms in a
residential
development. The latter area, divided by the
habitable room factor of 34, thus permitted 11 rooms. Although the
calculation notionally
allocates 34 m
2
to each habitable room, the zoning scheme
permitted a three-storey building, and the rules regarding height
and mezzanine levels
permitted the 11 rooms to cover a considerably
larger floor area than 376 m
2
–
in the Fabian design, the actual floor
area of the 11 apartments, spread across two floors and two
mezzanine levels, was 1 100 m
2
.
(The rules relating to
hotels
were different. The zoning scheme favoured hotels
of 30 rooms or more, allowing common/circulation areas to be
excluded from the
bulked-up area of 571 m
2
.
For a hotel with fewer than 30 rooms (and the property in this case
was not large enough for such a hotel), the common/circulation
areas
could not be excluded, which would impose a severe limitation on the
number of rooms one could have.)
3
This
is a Yiddish term meaning 'seal of approval'.
4
In
the sketch plans, the contrast is between the Victoria Road
elevation in the November 2006 SDP (exhibit A18) and the later

version at exhibit A331.8.
A visual sense of this
change can be seen by comparing the artist’s impression of the
Victoria Road view of the structure
as per the SDP (at exhibit B174)
with the depiction in the brochure (at exhibit C4).
5
The
auction brochure referred to 17 parking bays. Since the SDP plans as
well as the sketch plans sent by Van Lonkhuyzen to Viljoen
on 1 July
2008 made provision for 16 parking bays, it is unclear where the
figure in the brochure came from. No point was made
of it. The
retail area stated in the SDP and the plans sent on 1 July 2008 was
actually 195 m
2
.
6
See
footnote 2 above.
7
171
÷ 34 (see
footnote 2 above). The five
habitable rooms might still have covered an area of 1 100 m
2
as
per the Fabian design but would have been much larger apartments. To
make the project feasible, each of the five larger apartments
would
have to be sold at a significantly higher price than each of the 11
smaller Fabian apartments.
8
Reference
was made by Mr Sholto-Douglas in Main’s re-examination to
Nedbank’s valuations of the property in November
2009 and June
2010 [A486-488 and A503-515]. These were internal bank documents but
as I read them the bank valued the restaurant
(as distinct from the
potential of the remaining unutilised space or developable area) at
R8 363 714 [A488] and R9 221 250
[A509 read with
A513] respectively, based on the restaurant’s capitalised net
rental value. The expenses taken into account
by the bank in
arriving at the net rental value of the restaurant do
not
include finance costs on the initial capital
expenditure of R14 381 963 predicted by Terblanche. On the
bank’s
figures it would certainly not have made any sense to
pay R14 381 963 for the restaurant.
9
Para
19 of the amended particulars of claim is inelegantly formulated and
as it stands does not make sense. I have restated the
elements of
this cause of action in accordance with the obvious intention of the
draftsman.
10
This
decision was in the result upheld on appeal
(2002 (3) SA 688
(SCA))
but these particular aspects were not touched upon in the appeal.
11
I
would respectfully suggest that in the first bullet point in para 25
of
Delphisure
the
reference to a ‘disclaimer’ appears inapposite – I
think the learned Judge of Appeal had in mind the avoidance
by a
plaintiff
of
risk through the obtaining of a warranty. What is also relevant,
though, in assessing whether a legal duty should be imposed
is
whether the
defendant
(the
maker of the representation) could have protected itself by adding a
disclaimer when finishing the information (see
Standard
Chartered Bank of Canada supra
at
763A-B).
12
See
para 5 of plaintiff's reply to first defendant's request for trial
particulars at P178.
13
On
5 March 2009 Faclier forwarded to Main the email exchange which had
taken place between Stewart and Fabian on 28 February 2008
–
see A210.
14
Transcript
1032.
15
Section
98 was handed up as exhibit H.