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LILLICRAP, WASSENAAR AND PARTNERS v PILKINGTON BROTHERS (SA) (PTY) LTD 1985 (1) SA 475 (A)

1985 (1) SA p475 Citation 1985 (1) SA 475 (A) Court Appellate Division Judge Kotzé JA, Cillié JA, Van Heerden JA, Smuts AJA and Grosskopf AJA Heard May 15, 1984 Judgment November 20, 1984 Annotations Link to Case Annotations

Flynote : Sleutelwoorde

Negligence - Action for damages - Breach of contractual duty to perform professional work with due diligence - Such breach not per se a wrongful act for purposes of Aquilian liability - Examples of a concursus actionum in our law limited to cases where requirements of contractual and Aquilian actions were independently satisfied - Exception raised against delictual claim for damages upheld where the wrongful act was alleged to be a breach of a contractual under-taking by a firm of engineers - Firm initially contracting directly with claimant owner for performance of professional duties, but contract thereafter assigned to third party, with engineers continuing to perform services as subcontractors - Such assignment held

1985 (1) SA p476

not to affect issue - Same arguments which militate against a delictual duty where the parties are in a direct relationship apply to tripartite relationships - Delictual remedy unnecessary and parties should not be denied their reasonable expectation that their rights and obligations would be governed by their contractual arrangements. Headnote :

Kopnota

There would appear to be no authority in our law for the proposition that a breach of a contractual duty to perform specific professional work with due diligence is per se a wrongful act for the purposes of Aquilian liability (with the corollary that, if the breach were accompanied by culpa, damages could be claimed ex delicto ). The examples in our common law of a concursus actionum are all cases where the defendant satisfied the independent requirements of both a contractual and an Aquilian action. In general, contracting parties contemplate that their contract should lay down the ambit of their reciprocal rights and obligations. If the Aquilian action were generally available for defective performance of contractual obligations, a party's performance would presumably have to be tested not only against the definition of his duties in the contract, but also by applying the standard of the bonus paterfamilias, with untenable results. If it were, on the one hand, to be argued that the bonus paterfamilias would always comply with the standards laid down by the contract to which he is a party, one would in effect be saying that the law of delict can be invoked to reinforce the law of contract, and there is no policy consideration which would justify such a conclusion. If, on the other hand, the standard imposed by law differed in theory from the contractual one, the result must be that the parties agreed to be bound by a particular standard of care and thereby excluded any standard other than the contractual one. The appellant, a firm of consulting and structural engineers, undertook to perform professional services in connection with the planning and construction of a glass plant for the respondent. After such services had been performed in part, the parties agreed


that the agreement was to be assigned to a third party, the assignment having the consequence that the appellant's status changed from that of a contractor to a subcontractor vis-à-vis the respondent. In an action for damages arising from alleged deficiencies in the siting, design and construction of the plant, the respondent contended that the appellant had owed it a duty of care, both before and after the assignment of the contract, to carry out properly and with professional skill and care the various tasks which it purported to perform. However, so the respondent alleged, the appellant, in breach of the said duty of care, failed to carry out these tasks properly and with the necessary professional skill and care, thereby causing respondent damages. It was common cause that the respondent's case was based on delict and, more particularly, the (extended) actio legis Aquiliae. Before the Court a quo, the appellant unsuccessfully excepted to respondent's particulars of claim as, inter alia, not disclosing that appellant's conduct was wrongful for the purposes of Aquilian liability, particularly in view of the contract between the parties and the subsequent assignment thereof. Held, in the light of the consideration outlined above (per GROSSKOPF AJA; KOTZÉ, CILLIÉ and VAN HEERDEN JJA concurring, SMUTS AJA dissenting), that it would be undesirable to extend the Aquilian action to the duties subsisting between the parties to a contract of professional service like the one in issue. Held, further, that these considerations did not fall away in view of the assignment of the contract: the same arguments which militated against a delictual duty where the parties were in a direct contractual relationship, applied where the relationship was tripartite, namely that a delictual remedy was unnecessary and that the parties should not be denied their reasonable expectation that their reciprocal rights and obligations would be regulated by their contractual arrangements and would not be circumvented

1985 (1) SA p477

by the law of delict. Held, accordingly, allowing the appeal, that the exception had to be allowed with costs, respondent being given leave to amend its particulars of claim. The decision in the Witwatersrand Local Division in Pilkington Brothers (SA) (Pty) Ltd v Lillicrap, Wassenaar and Partners 1983 (2) SA 157 (W) reversed. Case Information

Appeal and cross-appeal from a decision of the Witwatersrand Local Division (MARGO J) dismissing an exception to plaintiff's (respondent's) amplified particulars of claim. The nature of the pleadings appears from the judgment of GROSSKOPF AJA and that of the Court a quo reported at 1983 (2) SA 157 (W) . S Kentridge SC (with him M Tselentis ) for the appellant: The respondent, in couching its claim in delict, alleges that the appellant failed to carry out properly and with the necessary professional care and skill the site and subsoil investigation and/or analysis of the results thereof, the design of the works and the supervision of the construction of the works. These duties are co-extensive with the appellant's contractual obligations under the agreements concluded between it and the respondent. The standard of care alleged by the respondent, namely the obligation to carry out the work undertaken "... properly and with professional skill and care" is also the measure of a consulting engineer's contractual obligations to his contractual employer. Skippon v De Witt (1904) 21 SC at 511. De Wet v Steynsrust Municipality 1925 OPD at 157-158; Greaves & Co (Contractors) Ltd v Baynham Meikle and Partners [1975] 1 WLR at 1101E. Halsbury's Laws of England 4th ed vol 4 para 1330 at 680. Randaree and Others v W H Dixon & Associates 1983 (2) SA at 3E and 4D - H. This duty was expressly stated in the contract. The first issue which arises is whether the appellant, as a consulting engineer, had a


non-contractual duty of care to the owner, by whom he was employed, namely the respondent, during the period July 1974 to March 1976, the breach of which rendered it liable in delict for damages for economic loss as claimed by the respondent, and which duty was co-extensive with his contractual duties to the owner. If this issue is decided in favour of the appellant, the particulars of claim do not disclose a cause of action in respect of any acts of the appellant which are alleged to have taken place prior to the assignment of March 1976. The second issue is whether the appellant is liable in delict to the respondent for the negligence which is alleged to have taken place after the assignment of March 1976, when there was no longer a contractual relationship between the parties. With reference to both these issues, the following submissions are apposite. Although the lex Aquilia was originally limited to cases of bodily injury or physical damage to corporeal things, both in Roman and Roman-Dutch law it was extended by the actio in factum to certain instances of purely economic loss. See Van der Walt "Delict" in Joubert Law of South Africa vol 8 paras 13, 24. However, in Roman-Dutch law there is no general principle of liability for economic loss negligently caused. The broad touchstone of delictual liability stated in Cape Town Municipality v Paine 1923 AD at 216 - 217, namely whether a reasonable man would have foreseen harm and guarded against it, is not applicable

1985 (1) SA p478

where the damage is merely economic or where the negligence is in words, not deeds. In such cases the Courts will, case by case, examine the alleged duty situation and the allegedly unlawful conduct in order to determine whether the Aquilian remedy should be extended to the particular economic loss situation. Herschel v Mrupe 1954 (3) SA at 477D - G, 478C - G, 484B - 485C, 488B, 490G - H; Union Government v Ocean Accident and Guarantee Corporation Ltd 1956 (1) SA at 585F - 586A; Administrator, Natal v Trust Bank van Afrika Bpk 1979 (3) SA at 832 in fine - 833; Alliance Building Society v Deretitch 1941 TPD at 206. In particular, while an action undoubtedly exists for negligent verbal conduct in particular circumstances, actionability in particular cases depends on considerations of need, justice and public policy. Administrateur, Natal v Trust Bank van Afrika Bpk (supra at 833 - 834). Suid-Afrikaanse Bantoetrust v Ross and Jacobsz 1977 (3) SA at 187E - G. One of the factors to be taken into account is whether recognition of the remedy in the case of pure economic loss would entail "indeterminate liability" to a multiplicity of plaintiffs. But this is not the only test. Considerations of the justice, the need and the "practical convenience" of the remedy are also relevant. Union Government v Ocean Accident case supra at 584G - H; Greenfield Engineering Works (Pty) Ltd v NKR Construction (Pty) Ltd 1978 (4) SA at 916 - 917; Van der Walt (op cit at 36 para 24); Franschhoeks Wynkelder (Ko-op) Bpk v SAR & H 1981 (3) SA at 40 - 41; Shell & BP SA Petroleum Refineries (Pty) Ltd v Osborne Panama SA 1980 (3) SA at 659E - F, upheld on appeal sub nom, Osborne Panama SA v Shell & BP SA Petroleum Refineries (Pty) Ltd 1982 (4) SA at 900G - 901A. Where it is sought to rely on a duty of care of a special nature, the facts giving rise to it should (as was done in this case) be pleaded fully and precisely. There is no reason to assume the existence of any additional facts. De Harde v Protea Assurance Co Ltd 1974 (2) SA at 115A. There is clear authority that in certain situations negligence in performing a contractual obligation may give rise to liability in both contract and delict. The case of the negligent surgeon is the clearest example. Van Wyk v Lewis 1924 AD 443 - 444. But this was a case of physical injury and of a duty which, while co-existent with the contractual duty, was not dependent on the existence of the contract. There is no general rule in our law (as there may be in England - see Esso Petroleum Co Ltd v Mardon [1976] 1 QB at 820) that a professional man's breach of his contractual duty, causing economic loss, is per


se a delict. On the contrary, the weight of South African authority is against that approach. In the first place, there is the strong dictum in Hamman v Moolman 1968 (4) SA at 348E - G which indicates that it is unnecessary and undesirable to extend delictual liability for negligent statements where well-established contractual remedies exist. Cf the Administrateur, Natal case supra at 834F. The Cape Provincial Division has not followed this dictum: Kern Trust (Edms) Bpk v Hurter 1981 (3) SA at 607. But it has, correctly, been adopted in the Transvaal. Latham v Sher 1974 (4) SA at 695H - 696A; Du Plessis v Semmelink 1976 (2) SA at 503A - F. More particularly, where a professional man is

1985 (1) SA p479

negligent in carrying out his contractual duty (absent physical damage), there is much authority that only an action in contract lies. This was for many years accepted law in England. Steljes v Ingram [1903] 19 TLR 534 (architect); Groom v Crocker [1939] 1 KB 194 (solicitor). This view of the law survived the decision in Hedley Byrne & Co Ltd v Heller & Partners Ltd 1964 AC 465. See Bagot v Stevens Scanlan & Co [1966] 1 QB 197 (architect); Clark v Kirby-Smith 1964 Ch 506 (solicitor); Cook v Swinfen [1967] 1 WLR 457 (solicitor). However, tortuous liability for negligent statements in England has now been extended holus-bolus into the field of contract. Esso Petroleum Co Ltd v Mardon [1976] 1 QB 801; Midland Bank Trust Co v Hett, Stubbs & Kemp 1979 Ch 384. Natal has followed suit - Rampal (Pty) Ltd and Another v Brett, Wills & Partners 1981 (4) SA at 365E - 366E. In the Transvaal, however, there is Full Bench authority that the action lies only in contract. Bruce NO v Berman 1963 (3) SA at 23F - H. See also Honey & Blanckenberg v Law 1966 (2) SA at 46; Mouton v Die Mynwerkersunie 1977 (1) SA at 142H. (In Tonkwane Sawmill Co Ltd v Filmalter 1975 (2) SA at 453 and in Broderick Properties (Pty) Ltd v Rood 1964 (2) SA at 310 this point was not raised.) For the reasons which follow, there is no reason of need, convenience or policy to extend the liability of a professional into the delictual field, and policy and convenience in fact point the other way. See also Van der Walt (op cit at 8 para 5); McKerron (1973) 90 SALJ at 1. The recognition of a duty of care (during the period of their contractual relationship) in the terms alleged by the respondent would impose upon the appellant no substantive obligation which it did not owe to the respondent under the contract between them. The two sets of obligations, as has been seen, would be co-extensive. This would constitute an invasion by the law of delict of an area which is already fully and satisfactorily occupied by other legal rules. There is no ground of legal policy which calls for or justifies such an invasion. Herschel v Mrupe (supra at 478C). Hamman v Moolman 1968 (4) SA at 348E. If liability in delict were allowed in principle in such a situation, the distinction between contract and delict would be unnecessarily undermined where the delictual duty of care arises exclusively by virtue of the contractual relationship between the parties (as was the position here) and is precisely co-extensive with the contractual duty. Further, for the reasons given below, the type of damages sought by the respondent are appropriate only to a contractual claim and are alien to our principles of delictual liability. It is wrong in principle to allow a contracting party, whose rights and obligations have been determined by his agreement and that of the other contracting party, to circumvent the consensual definition of the parties' rights and obligations by proceeding in delict. This is particularly so in the present case where the appellant's contractual duties have been set out in detail in the agreement. In such a situation it is implicit that the parties intended the contractual definition of their rights and obligations to be exclusive of any other liabilities. See W J Hosten "Concursus Actionum of Keuse van Aksies" 1960 THRHR at 267 - 269. Bagot v Stevens, Scanlan & Co [1966] 1 QB 197. Justice and practical convenience do not call for the additional


1985 (1) SA p480

remedy. In some cases it is resorted to because of more favourable prescription provisions. But this is not in law or policy a good ground for granting a remedy in delict where a contractual remedy was previously available. The ruling that the various contractual considerations and in particular the question of a frustration of the contract by allowing a claim in delict are matters for pleading, not exception, is incorrect: they are matters of policy and therefore relevant to the existence of the duty of care. Other authorities which caution against an undue extension of delictual liability grounded on negligence into an area covered by contract are Alliance Building Society v Deretich 1941 TPD at 206; Atkinson Oates Motors Ltd v Trust Bank of Africa Ltd 1977 (3) SA at 198. See also the Canadian cases of J Nunes Diamonds Ltd v Dominion Electric Protection Co (1972) 26 DLR (3d) (Canadian Sup Ct) at 727 - 8. (Cf 723); Sealand of the Pacific v Robert C McHaffie Ltd 1974) 51 DLR (3d) 792 (British Columbia CA). The Judge a quo incorrectly held that the minority judgment of SPENCE J in the J Nunes Diamonds case accords with the overwhelming weight of authority in our law: it is rather the majority judgment of PIGEON J which accords with the weight of South African authority and in particular the approach to the question of extending delictual liability in the cases cited above. For the same reason the minority judgment of WILSON JA in Dominion Chain Co Ltd v Eastern Construction Co Ltd (1976) 68 DLR (3d) at 394 and 395 is preferable to that of the majority. The various heads of damage relied upon by the respondent fall essentially into the following categories: the costs of a new geological and soil investigation and costs ancillary thereto; the costs of relevelling operations, the installation of jacks and steelwork to various parts of the works, the redesign and reconstruction of aspects of the works and the stabilising of foundations; the costs of breaking out and relaying a storm water drain; additional melting costs and additional costs of wear and tear. The Judge a quo held that the costs referred to under the first head above were a claim for contractual damages. The classification of those costs as essentially contractual damages is correct and in any event the cross-appeal relating to the striking out should be dismissed. However, all four heads of damages are contractual rather than delictual in the sense explained in Trotman v Edwick 1951 (1) SA at 449B - C (followed in, inter alia, Ranger v Wykerd and Another 1977 (2) SA at 986D, 991B - D); in the absence of any allegation of actual or potential damage to any part of the works, all the damages claimed represent the cost of rendering the works suitable for their intended purpose and therefore the cost of ensuring that the respondent gets its contractual bargain. Although in its developed and extended form the basis of the lex Aquilia is a diminution in the plaintiff's patrimony and not a diminution in the value of a corporeal item (Van den Heever Aquilian Damages at 30 - 33), the nature of Aquilian liability remains that of damnum injuria datum, ie damage unlawfully caused, and the construction of works which do not answer to their contractual or intended purpose cannot, in any sense consistent with the ordinary use of language, be equated with damage to those works or to the patrimony of the owners thereof: compare Junior Books Ltd v Veitchi & Co Ltd

1985 (1) SA p481

[1982] 3 WLR at 485H. The dangers of extending delictual liability to this type of loss were adverted to by Lord BRANDON of Oakdale in his dissenting judgment in that case at 499D - 500C. The majority judgments have certainly narrowed the difference between tort and contract in English and Scottish law: see Holyoak "Tort and Contract after Junior Books" 99 LQR 591 (October 1983). The judgment of Lord BRANDON is more in accordance with the principles of Aquilian liability than the majority judgments. The


considerations which Lord BRANDON regarded as particularly relevant are the effect of allowing a remedy in delict which would be to create, as between two persons not in any contractual relationship to each other, obligations which are only really appropriate when they arise under a contract (at 499F - G); the consequent problem of determining the standard or standards of quality by which the question of defectiveness would fall to be decided (at 499 in fine - 500C); and the creation, if delictual liability is allowed in this kind of case, of implied warranties of suitability as to purpose between parties who are not contractually bound to each other (at 499G - H). Lord KEITH of Kinkel concurred with this aspect of Lord BRANDON's judgment (at 485C - 486F) and his remarks concerning the non-recoverability of delictual damages where the product is defective, valueless or useless but not damaged are particularly pertinent in the present context. Reference will also be made in this regard to Dutton v Bognor Regis UDC [1972] 1 QB at 414. The Judge a quo found that the constructional defects in the present matter were clearly to be equated to physical damage on the basis that the defects had to be removed or remedied because they threatened to cause injury to persons or damage to property. This in effect unjustifiably equates the present case to Dutton's case, because there is no allegation or suggestion in the pleadings of impending or potential injury to persons or damage to property. The ruling that only the costs referred to under the first head above constituted economic loss is incorrect for the same reasons, and also because there is no difference in principle between such costs and those referred to under the further heads. The facts set out in the particulars of claim and the further particulars thereto, accordingly, do not disclose the existence of a duty of care on the part of the appellant towards the respondent in the period up to March 1976. The assignment of March 1976 was designed to, and did, bring about a situation where the appellant was in contractual privity only with Salanc Contractors (Pty) Ltd, with which company the respondent had an agreement for the construction of the works. Although the appellant remained the consulting engineer in respect of the project, therefore, the effect of the assignment was to make it a subcontractor as far as the respondent was concerned. Although there was no longer contractual privity, the original context of the appellant's relationship with the respondent was contractual. The respondent had deliberately divested itself of its contractual rights against the appellant and created the well-known chain of employer-contractor-subcontractor in which the appellant's obligations were to Salanc, and if work was illdone, respondent had its rights against Salanc. Now the respondent

1985 (1) SA p482

asserts in effect rights against both, notwithstanding its deliberate assignments of its rights and obligations. Indeed, if the respondent is right, it has by the assignment worsened the appellant's position and improved its own - a result which could hardly have been intended by the parties to the assignment. Whatever the position may have been prior to March 1976, the effect of the cession was to create additional policy factors against the recognition of a duty of care. The policy considerations referred to above, which operate against the recognition of a delictual duty on the basis only of the contractual relationship between the parties, are of even greater force where one of the parties has destroyed that contractual relationship by assigning his rights and obligations under the contract to a third party. Where the delictual rights which the respondent seeks to enforce against the appellant would not have existed had it not been for the contract, it would be contrary to both reason and equity to recognise a duty of care if the contractual relationship has disappeared by voluntary act of the respondent. Initially, the respondent contracted with the appellant. Thereafter, to suit its own convenience, the respondent assigned all its contractual rights and obligations to Salanc, an arrangement


to which the appellant agreed to oblige the respondent. Now the respondent seeks to come, as it were, through the back door and nevertheless claim that it has rights against the appellant. Admittedly the rights claimed are not contractual rights, but they are rights that had their origin in the assigned contract, and which on the respondent's own case would never have existed without it. The respondent should look to Salanc, and Salanc, if liable to the respondent, should look to the appellant. If the present claim were competent, it would place the respondent in a better position than that in which it would have been had it remained in contractual privity with the appellant. This is shown by the fact that there is an arbitration clause in the contract. Had the contract not been assigned, the respondent would have been bound to submit the present dispute to arbitration. The benefit of this clause was part of what was assigned. Can it be the law that, merely by framing the present action in delict, the respondent can now go behind the arbitration clause and bring this matter to Court? This also shows that, if the present claim were competent, the appellant (in contrast with the defendant in the Hedley Byrne case) would have no way of protecting itself against claims of this type. A contractor who assumes contractual obligations is entitled, and reasonably expects, to have its rights and duties defined by the contract. A subcontractor may stipulate with the main contractor for exclusions or limitations of liability or arbitration provisions, but all of these would be nugatory if its contractual protection could be subverted by an action in delict by the employer. It is true that the same would apply if the claim were one for physical harm (eg no contractual provision could deprive a third party of his remedy in delict if a subcontractor dropped a brick on his head or caused physical damage to the property), but the present claim is not one for physical harm. Wrongfulness is not an issue in such cases. It is in the present case. Where, as here, the respondent's loss is an economic one that could only arise through the appellant's default in

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the performance of its own contractual obligations to Salanc, policy considerations favour denying the respondent a remedy outside its contract with the main contractor. The relationship between the respondent, Salanc and the appellant is the well-known one of owner, main contractor and subcontractor. In this traditional situation the parties expect, and for many years have assumed, that the owner will look to the main contractor and the main contractor will look to the subcontractor for redress. To allow the present claim would subvert these legitimate assumptions and plunge the law into a state of confusion. One consequence would be that an owner whose contract with the main contractor contains an exclusion or limitation of liability would be able to evade both this clause and a similar clause in the contract between the main contractor and the subcontractor by suing the latter in delict. There is no social need which calls for the drastic extension of a subcontractor's liabilities. To allow the present claim would also raise the spectre of a multiplicity of actions, for a subcontractor would be exposed to an action by both the owner and the main contractor. Where the subject-matter of a claim is entirely contractual (in the sense that it is wrongful only because of a prior contractual undertaking - which distinguishes it from dropping a brick or causing a flood, which are wrongful in any event), where the loss is purely economic, where the plaintiff was initially the other contractant who assigned the contract to suit itself, and where contractual remedies are entirely adequate to protect the plaintiff - all of which apply in the present case - it would be an unjustified extension of Aquilian liability, and an undesirable invasion of the field of the contractual relationships, to grant a delictual remedy. The situation in Combrinck Chiropraktiese Kliniek (Edms) Bpk v Datsun Motor Vehicle Distributors (Pty) Ltd 1972 (4) SA 185, is comparable to the situation which arose after the assignment, in that there, too, the plaintiff, having contracted to obtain a car from an


intermediate party, sought to recover damages from a third party whose negligence in assembling the car had caused the plaintiff economic loss. The reasoning in the judgment has had a varied reception: see McKerron (1973) 90 SALJ 1 and Boberg 1972 Annual Survey 131. This notwithstanding, Combrinck's case was correctly decided and is persuasive authority before this Court of the undesirability of allowing a circumvention of contractual arrangements by extending delictual liability (see at 192A - D). Following the broad extension of liability in cases following the Hedley Byrne case, there have been a number of cases concerning buildings in England and New Zealand in which the owners of buildings have obtained damages against surveyors, architects or engineers for losses following upon the negligent issue of certificates or similar forms of negligence. See in this regard the first supplement to the 10th edition of Hudson's Building and Engineering Contracts at 63 - 75, 82 and 123. A similar South African case is E G Electric Co (Pty) Ltd v Franklin 1979 (2) SA 702. However, an analysis of the leading English cases shows that relief was granted in those actions on the basis that the defendants were negligent in not guarding against physical damage which had either occurred or could be anticipated. See in particular

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Dutton v Bognor Regis UDC [1972] 1 QB 373; Anns v Merton Local Borough Council 1978 AC 728. In the latter case, in particular, Lord WILBERFORCE, who gave the main judgment, repeatedly stressed the element of danger to physical safety or health which had to be guarded against. See Duncan Wallace "Tort Demolishes Contract in New Construction" 94 LQR at 63; Duncan Wallace "Negligence and Economic Loss" 94 LQR at 333. Reference will also be made to Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 1 All ER 65 (HL), where it was assumed at 70F that damages are only recoverable in tort against a consulting engineer where the resulting defects in the building cause damage to it, but not for the defects themselves (see also the comment on this case in 46 MLR at 512 - 3). See also Rivtow Marine Ltd v Washington Iron Works (1973) 40 DLR (3d) (Canadian Supreme Court) at 533 - 534, 546, 548, 552. The case of Junior Books Ltd v Veitchi & Co Ltd (supra) represents the most recent extension of liability in English law inasmuch as the majority of the House of Lords recognised a duty of care in tort on the part of a subcontractor to avoid causing pure economic loss by reason of faults in the work itself where such faults did not amount to actual or threatened damage but rendered the works unsuitable for their intended purpose. In view of the type of damages claimed by the respondent, the submissions made above on the basis of the minority judgment in that case are as applicable to the second issue as they are to the first: in particular the creation of implied warranties and the imposition of a liability in damages designed to give to a plaintiff what is in essence the benefit of a contractual bargain would, if imposed on a subcontractor in favour of an owner with whom there is no contractual privity, impose on the subcontractor the major disadvantages of a contractual relationship with the owner without any of the advantages in the form of a right to remuneration, exclusion of liability, arbitration clause etc. Regard should accordingly be had to the compelling policy considerations referred to by Lord BRANDON. Even in England, and notwithstanding the Hedley Byrne case, the problem of awarding damages for economic loss has troubled the Courts and led them (albeit on a basis of remoteness) to draw a distinction between direct loss caused by physical damage and economic loss. SCM (United Kingdom) Ltd v W G Whittall & Son Ltd [1971] 1 QB 337; Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd [1973] 2 QB 27. Street On Torts 6th ed at 112. The problem is that although the economic loss may be as foreseeable as physical damage, the granting of the remedy may impose an


intolerable burden on persons who perform a useful function in society such as (presumably) professional men. The present is not the classical case of the "unidentified plaintiff" but it is a case where the liability is indeterminate. The law provides clearly that a negligent defendant must pay for physical damage which he ought to have foreseen as the result of his negligence. The damages in such cases may doubtless be very large. But in cases such as the present one, where economic loss may be caused, whether in the form of loss of business or the cost of altering industrial premises to enable the business to be carried on, the scale of loss may be incalculable and far

1985 (1) SA p485

beyond the means of any professional man to pay, whether directly or by purchasing insurance. See in this regard Jackson and Powell Professional Negligence para 1.42 at 19. Consequently policy considerations are strongly against extending the remedy in delict to an employer as against an independent subcontractor, whether a tradesman or a professional man. Contractual liability may be limited but in delictual actions such as this there is no limit to the potential liability. It is noteworthy that Lord DENNING, who was himself instrumental in bringing about the vast extension of tort liability in the fields of negligent statements and professional negligence, said the following on this very subject in The Discipline of the Law at 280 - 281: "I sometimes wonder whether the time has not come - may indeed be already with us - when the Courts should cry Halt! Enough has been done for the sufferer. Now remember the man who has to foot the bill - even though he be only one of many." The appeal should be upheld with costs, including the costs of two counsel, and the order of the Court a quo substituted with an order allowing the exception. I A Maisels QC (with him R S Welsh QCi* and R D Levin) for the respondent. It is common cause that the responent's claim is based in delict. The Court a quo correctly decided that the duty of care relied on is that the appellant owed the respondent a duty not to give advice negligently, that is, not to make a negligent misstatement in giving advice; and not to be negligent in the subsoil investigation or in the design and supervision of the construction of the works. It correctly held that, save for the written report of the soil investigation, the negligence alleged consisted of conduct in the investigation, design and supervision of the construction. This is apparent from the pleadings themselves and the appellant's attempt to justify its submission that respondent's claim is essentially an allegation of negligence in making statements on the basis of causation is artificial and unrealistic. See Hedley Byrne & Co Ltd v Heller & Partners Ltd 1964 AC at 516 - 517. In any event there is much to be said for the view that in the same way as "... there is no general duty not to make careless statements", there is likewise no "... general duty to be careful in action" and that "the duty is limited to those who can establish some relationship of proximity such as was found to exist in Donoghue v Stevenson 1932 AC 562". (Per Lord DEVLIN in the Hedley Byrne case supra at 514 - 515.) It is the appellant's case that the damage suffered by the respondent is pure economic loss. By pure economic loss or mere pecuniary damage is meant "financial loss sustained without the interposition of a physical lesion or injury to a person or corporeal property". Van der Walt in Joubert The Law of South Africa vol 8 para 24 at 35; McKerron Delict 7th ed at 3 note 21; Pauw "Weereens Nalatige Wanvoorstelling" 1978 THRHR at 54 - 55 and footnotes 10 - 13. The effect of the author's views is that pure economic loss must be completely unrelated to a right in a corporeal object. The same author in 1975 De Jure at 23 says "Aanspreekheid vir suiwer vermoënskade beteken dat die skade wat gely word, nie verband hou met 'n saak nie, maar dat daar alleen 'n vermindering van die vermoë plaasvind." See too Greenfield Engineering Works (Pty) Ltd v NKR Construction (Pty) Ltd 1978 (4) SA at


1985 (1) SA p486

911G - 917D; Dutton v Bognor Regis Urban District Council [1972] 1 QB at 396. Batty v Metropolitan Realisations Ltd [1978] 1 QB at 571D - F and the authorities cited by the Court a quo, especially Anns v Merton London Borough Council 1978 AC at 759F - 760B and the cases referred to at 760A. In this case the damage is financial loss sustained by the plaintiff with the clear interposition of corporeal property, namely the works. The negligent advice, design and supervision of the works by the defendant are alleged to have resulted in the need for, inter alia, the further investigations, the re-levelling of the works and the jacking operations. The damage therefore cannot in any sense be described as resulting in pure economic loss alone. The Court a quo decided that the loss was both "economic" and "physical". Although all the loss was physical and although the distinction is no longer of any relevance, we will nevertheless make submissions on the recoverability of "economic loss" in a claim based on delict. The appellant contends that, inasmuch as the "... damages claimed represent the cost of rendering the works suitable for their intended purpose and therefore the cost of ensuring that the respondent gets its contractual bargain", such damages ought not to be recoverable in a delictual claim based on the lex Aquilia. The respondent's claim is not simply for recovery of the cost of ensuring that it gets its contractual bargain. The respondent's damages are, in a real sense, the diminution in its patrimony brought about by reason of damage to the works as an efficient, safe and functional float glass plant. Such damages are recoverable under the lex Aquilia which is available "... in respect of every kind of patrimonial loss suffered..." Van den Heever Aquilian Damages in South African Law at 32. The basis on which damages are claimed by the respondent and the method of computation thereof are fully in accord with the criteria laid down in the authorities and are not in conflict with Trotman v Edwick 1951 (1) SA 443 referred to by the appellant. Erasmus v Davis 1969 (2) SA at 8H - 9D and 17F et seq and the authorities there referred to, inter alia, Scrooby v Engelbrecht 1940 TPD at 102; Holyoak "Tort and Contract after Junior Books" 99 LQR at 593, 595 and 597; Anns v Merton London Borough Council (supra at 759 - 760 and 771c-d ); Esso Petroleum Co Ltd v Mardon [1976] 1 QB at 819B - 820C. See also Duncan Wallace "Tort Demolishes Contract in New Construction" (1978) 94 LQR at 67 and 69 - 70; Batty v Metropolitan Realisation and Others [1978] 1 QB at 555b-c and 566a - 567d; Rivtow Marine Ltd v Washington Iron Works (1973) 40 DLR at 548 - 553 and particularly at 552. We now turn to the recoverability of damages for "economic" loss. It is now clear in our law that a negligent misstatement causing pure financial loss alone can found an action in delict. Administrateur, Natal v Trust Bank van Afrika Bpk 1979 (3) SA at 832 in fine - 834F. The Court a quo correctly held, that a fortiori Aquilian liability can arise for negligent misstatement causing physical loss and for negligent conduct causing pure economic loss. Hefer v Van Greuning 1979 (4) SA at 958H - 959A; Van der Walt The Law of South Africa vol 8 para 24 at 35 - 36; footnote 13 at 37. To this extent at least Combrinck Chiropraktiese Kliniek (Edms) Bpk v Datsun Motor Vehicle Distributors 1972 (4) SA

1985 (1) SA p487

at 185 can no longer be regarded as having been correctly decided and must be regarded as having been overruled by the Administrateur, Natal case and Van Greuning's case. See Shell & BP Petroleum Refineries (Pty) Ltd and Others v Osborne Panama SA 1980 (3) SA at 659A - 659D; Coronation Brick (Pty) Ltd v Strachan Construction Co (Pty) Ltd 1982 (4) SA at 381 - 384; (1980) 97 SALJ at 12, 13; (1981) 98 SALJ at 1 and the authorities there cited.


In England it has finally been laid down, after a comprehensive review of the authorities, that where "... the proximity between a person who produced faulty work or a faulty article and the user was sufficiently close, the duty of care owed by the producer to the user extended beyond a duty merely to prevent harm being done to the faulty work or article and included a duty to avoid faults being present in the work or article itself, so that the producer was liable for the cost of remedying defects in the work or article or for replacing it and for any consequential economic or financial loss, notwithstanding that there was no contractual relationship between the parties". Junior Books Ltd v Veitchi Co Ltd [1982] 3 WLR 477. See also Dove v Banhams Patent Locks Ltd [1983] 1 WLR 1436. We adopt the judgment of the Court a quo in this regard. The Court a quo dealt with this aspect fully and correctly. The inquiry is accordingly whether "there is a sufficient relationship (between the parties) to generate the foreseeability of harm through negligence" and "whether there are any policy considerations against allowing the claim". As regards the question whether the appellant had a duty of care to the respondent in the circumstances of this case, Van der Walt (loc cit para 22) says that "The duty of care is not a general duty; it is not necessarily owed to each and every person. The duty to take care is particular, relative or directional in the sense that it is owed to a particular person or persons, or to a particular class of persons. Unless the plaintiff is such a particular person or belongs to such a class of persons, he has no cause of action against the defendant. The plaintiff is owed a duty by the defendant only if he was a so-called 'foreseeable plaintiff'. This implies that a defendant owes a duty of care to persons to whom harm may reasonably be foreseen. The foreseeability of harm in itself will not generate a duty towards persons who are not apparently within the field of the foreseeable risk." See Herschel v Mrupe 1954 (3) SA 464 at 480B - F. The test relied on there refers to delictual liability in relationships arising "out of contract or otherwise". It has long been accepted that the true position in South African law is that the same conduct may constitute a breach of contract and a delict. Van der Walt says that the same conduct may constitute both a breach of contract and a delict "... where the conduct of the defendant constitutes both an infringement of the plaintiff's rights ex contractu and a right which he has independently of the contract". Joubert Law of South Africa vol 8 para 5 at 7 and note 1 at 9; Van Wyk v Lewis 1924 AD at 445, 445 - 456; McKerron Law of Delict 7th ed at 3. Other instances of cases in which delictual claims were permitted, despite the existence of a contractual relationship between the parties, are, for example, Tonkwane Sawmill Ltd v Filmalter 1975 (2) SA at 454H (an auditor of a company being

1985 (1) SA p488

sued in delict); Bloom's Woollens (Pty) Ltd v Taylor 1961 (3) SA at 253 - 4 (confirmed on appeal, 1962 (2) SA 532); Rampal and Another v Brett Wills and Partners 1981 (4) SA at 366A - E; Sachs v Henderson [1902] 1 KB at 616; Western Alarm System (Pty) Ltd v Coini and Co 1944 CPD at 276 - 7; Nocton v Lord Ashburton 1914 AC at 956; Donoghue v Stevenson 1932 AC at 610; Lister v Romford Ice and Cold Storage Co Ltd 1957 AC at 573, 587; Arenson v Arenson 1977 AC at 438; Midland Bank Trust Co Ltd and Another v Hett, Stubbs and Kemp [1979] 1 Ch at 419 - 428; Batty v Metropolitan Realisation [1978] 1QB at 566C - 567D. The appellant attempts to draw a distinction between this case and Van Wyk v Lewis (supra), inter alia, on the ground that that was a case of physical injury. This is irrelevant. A surgeon is in no different a position than any other professional person. Hedley Byrne and Co Ltd v Heller and Partners (supra at 517); Robertson v Bannigan 1964 SLT at 318 - 319; Rondel v Worsley [1969] 1 AC at 280E - F; the Midland Bank Trust case supra at 420D - F; Dominion Chain Co Ltd v Eastern Construction Ltd (1976) 68 DLR (3d) at 391 - 392, 395. Our Courts have often found that


a delictual duty to speak with care can arise by reason of the contractual relationship between the parties. In this regard we refer to an article by Hutchison in (1981) 98 SALJ at 496 note 75 to 497; the Western Alarm case supra; Union Government v National Bank 1921 AD at 128 - 129. The obiter dictum of WESSELS JA in Hamman v Moolman 1968 (4) SA 340 and judgments which have applied the dictum, such as Latham v Sher 1974 (4) SA 687 and Du Plessis v Semmelink 1976 (2) SA 500, are irrelevant to the present enquiry as they were concerned only with negligent misstatements which induced and resulted in a contract. Suid-Afrikaanse Bantoetrust v Ross and Jacobsz 1977 (3) SA at 186H - 187A; Hutchison (op cit at 496 - 497). The dictum in Hamman v Moolman was, in any event, departed from by a Full Bench of the Cape Provincial Division in Kern Trust (Edms) Bpk v Hurter 1981 (3) SA 607, where it was held that a negligent mistatement inducing a contract can, as a matter of principle, give rise to a claim for delictual damages. The Cape approach is supported by modern authority and is to be preferred. In English law, following Groom v Crocker [1939] 1 KB 194, it was long felt that a solicitor's liability to his client was a contractual one only and that no delictual liability could emanate from unsound advice given in that contractual relationship. This proposition has now been finally rejected. Hedley Byrne and Co v Heller and Partners Ltd (supra); particularly at 502 in fine - 503, Esso Petroleum v Mardon [1976] 1 QB at 802, 819 - 820; Junior Books Ltd v Veitchi (supra at 488 - 491); Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp (supra, particularly the reference at 412D to Lord DENNING'S judgment in Chandler v Crane Christmas and Co [1951] 2 KB at 179 - 182); Dutton v Bognor Regis Building Society [1972] 1 QB at 415C; the Esso case supra at 428 - 430; Batty v Metropolitan Property Realisations Ltd [1978] 1 QB at 566C - 567D (referred to in Charlesworth On Negligence 4th cumulative supplement to the 6th ed para 925); Photo Production Ltd v Securicor Transport Ltd [1978] 3 All ER at 150, 151; Ross v Caunters [1980] 1 Ch at 308B - E. The ability to sue in delict can, as the English cases show, sometimes prove vital since the cause of

1985 (1) SA p489

action may accrue earlier in contract than in delict. Midland Bank Trust Co Ltd v Hett, Stubbs and Kent (supra at 406F - H); Robertson v Bannigan (supra); Hosten 1960 THRHR at 270; Holyoak (op cit at 594). This is in fact what happened in this case. The cases of Bruce NO v Berman 1963 (3) SA 21 and Bagot v Stevens Scanlan and Co Ltd [1966] 1 QB 197 relied on by the appellant for the proposition that a solicitor's liability to his client, and hence the appellant's liability in this case, lies only in contract, are based on Groom v Crocker (supra) which, in the light of subsequent decisions in England, eg Batty v Metropolitan Property Realisations Ltd (supra at 566), Esso Petroleum v Mardon (supra at 818 - 820) and the Midland Bank Trust case supra, is no longer good law. The decision in Bruce v Berman is also in conflict with Van Wyk v Lewis (supra). That case is in any event not binding on this Court. The true test, therefore, both in English and in South African Law, is that referred to by McKerron The Law of Delict 7th ed at 29 as follows: "'Whenever one person', says BRETT MR (in Heaven v Pender (1883) 11 QBD 503) 'is by circumstances placed in such a position with regard to another that everyone of ordinary sense who did think would at once recognise that if he did not use ordinary care and skill in his own conduct with regard to those circumstances he would cause danger of injury to the person or property of the other, a duty arises to use ordinary care and skill to avoid such danger'. 'The rule that you are to love your neighbour,' says Lord ATKIN, 'becomes in law you must not injure your neighbour; and the lawyer's question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be - persons who


are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question'." (My italics.) Van der Walt (op cit para 22 at 25) puts it as follows: "Whether the conduct of the defendant was of such a nature that harm to someone was reasonably foreseeable, depends entirely on the particular circumstances of the case. The mere fact that harm was reasonably foreseeable does not suffice to generate a duty of care. If in the particular circumstances a reasonable man would not, in spite of the foreseeability of harm, have taken precautionary measures, no duty of care arises. In general a reasonable man might, depending on the circumstances of the case, refrain from taking steps to prevent the occurrence of reasonably foreseeable harm if the risk was remote or slight, the probable consequences not serious, or the cost of precautionary measures particularly high. No hard and fast rule can, however, be formulated. In Herschel v Mrupe, the Court observed: 'But the circumstances may be such that a reasonable man would foresee the possibility of harm but would nevertheless consider that the slightness of the chance that the risk would turn into actual harm, correlated with the probable lack of seriousness if it did, would require no precautionary action on his part'." It is difficult to visualise a case in which the respondent was a more "foreseeable plaintiff" than the instant case. At the time of the

1985 (1) SA p490

commencement of the relationship and the giving of the advice the appellant knew that the respondent would act on such advice and intended the respondent to do so. When the contract was assigned, the appellant knew that despite the assignment the work was still for the benefit of the respondent as owner of the works erected and to be erected by various contractors. As far as the duty of care is concerned, the initial contractual relationship and the assignment made no difference whatsoever. This seems to be conceded by the appellant. The contractual situation does not affect the respondent's right to sue in delict. Van Wyk v Lewis (supra) and the other authorities cited above. In Van Wyk v Lewis at 443 INNES CJ stated: "The compensation demand is in respect of injury alleged to have been sustained by reason of the respondent's negligence and lack of skill. No doubt the duty to take care arose from the contractual relationship between the parties; and it was a duty the breach of which was actionable under the Aquilian procedure." Van der Walt (op cit para 5 at 9, note 2) is of the view that the statement of the Chief Justice that the delictual duty arose from the contract between the parties leads to a confusion of delictual liability and liability flowing from a breach of contract. He says that delictual duty is imposed by law, not by contract, and that the existence of a contract is only a factor creating a relationship of proximity between the plaintiff and the defendant. This proximity and the actual undertaking of an operation on the plaintiff in Van Wyk's case induced the law to impose, apart from any contractual duties, a delictual duty. McKerron (op cit at 3); Sachs v Henderson (op cit at 616); Midland Bank v Hett, Stubbs and Kemp (op cit at 416G - H). It was not necessary for the respondent in this case to rely on the terms of the agreement in order to establish its case against the appellant. Nor does it do so. The agreement is pleaded in order to show the history and relationship of proximity between the plaintiff and the defendant. The duty arises as a matter of law because of the relationship between the parties. The appellant submits that there is "... no reason of need, convenience or policy to extend the liability of a professional into the delictual field, and that policy and convenience in fact point the other way". We have already dealt with the present state of the authorities here and in England. The authorities recognise such an action and overwhelming policy consideration should rather be to allow a remedy to recover damages than to deny one. Apart from


professional indemnity insurance, more favourable prescription provisions are a relevant consideration in allowing the remedy. As to the questions of policy in allowing a remedy, see McLoughlin v O'Brian and Others [1982] 2 All ER at 319b - 320g. The case of Bagot v Stevens Scanlan and Co (supra) relied upon by appellant is not good law. See Midland Bank v Hett, Stubbs and Kemp (supra and the conclusion of OLIVER J at 432D - G); Esso Petroleum Co Ltd v Mardon (supra at 819) and Batty v Metropolitan Realisation Co (supra at 566 - 567). Hosten "Concursus Actionum of Keuse van Aksies" 1960 THRHR at 267 - 269, relied on by appellant, should not be understood to support the contention that it is implicit from the parties' initial contract that the contractual

1985 (1) SA p491

definition of their rights and obligations should be exclusive of any other liabilities. The appellant could contractually have limited its possible delictual liability to the respondent. Van der Walt (op cit at 8, para 5). It did not do so and should not now be permitted to obtain the benefit such an exclusionary provision would have conferred on it. The Court a quo's conclusion that the allegations in the respondent's pleadings cover all the requirements of delictual liability and that there are no policy considerations precluding the grant of the relief sought should be supported. The assignment did not put an end to the duty of care which existed from the beginning of the respondent's relationship with the appellant. On the contrary, the assignment made the duty of care crystal clear since the appellant was called upon to agree to the assignment and knew that despite the assignment the work continued to be for the benefit of the respondent as the owner of the works. If the assignment has any effect, then it is to render the respondent a stranger to the contract and the test of liability as propounded in Heaven v Pender, and the other authorities cited above, applies in the new situation. It is contended by the appellant that, as a result of the assignment, it is now in the position of a subcontractor and that as such is not liable to the respondent (the employer). That argument is invalid because of the general proposition that in South African law a "foreseeable plaintiff' can sue in delict in any situation, whether he be a contractor or subcontractor or employer. In England the question of delictual liability to an employer by a subcontractor has been specifically dealt with. Halsbury's Laws of England 4th ed vol 4 para 1265; Junior Books Ltd v Veitchi Co Ltd (supra); SCM (UK) Ltd v W J Whittall and Son Ltd [1971] 1 QB at 342H - 346F; Spartan Steel and Alloys Ltd v Martin and Co (Contractors) Ltd [1973] 2 QB at 37D - 38D, 45A - D. In South African law each case must be dealt with on its merits. This was the approach adopted in the Administrateur, Natal case supra at 834A. Combrinck v Chiropraktiese Kliniek (supra) (assuming it was correctly decided) is relevant only to that part of respondent's claim unconnected with the advice given by the appellant, ie the negligent design and supervision of the works. In so far as the advice is concerned, Combrinck's case did not deal with negligent misstatements at all. This situation is governed by the Administrateur, Natal case. As far as the damages arising from the negligent supervision and design are concerned, the instant case is distinguishable in that the true rationale behind the judgment in Combrinck's case was that the damages were too remote. Further, the appellant's damages in that case were "purely economic" because they did not arise from any damage to the plaintiff's property, he being merely a lessee of the motor vehicle. The Court's concern in that case with the possibility of a multiplicity of actions, even if justified (as to which, see Boberg 1972 Annual Survey of SA Law at 133 - 134), is not a factor here. Even if the loss were to be regarded, whether wholly or in part, as resulting from pure economic loss, on the facts of this case and having regard to the state of the authorities the extent of the loss is finite and the appellant need not speculate as to the indentity of


the possible 1985 (1) SA p492

claimant. In addition, it is a case which will not bring in train a multiplicity of actions and it is a direct, as opposed to an indirect, economic consequence of the appellant's negligence. See Junior Books Ltd v Veitchi Co Ltd (supra at 481 - 2, 488); Greenfield Engineering v NKR Construction (supra at 916H - 917A); Hefer v Van Greuning (supra at 958H - 959A); EG Electric Co (Pty) Ltd v Franklin 1979 (2) SA at 706 - 707; Franschhoekse Wynkelder (Ko-op) Bpk v SAR and H 1981 (3) SA at 40 - 41; Coronation Brick (Pty) Ltd v Strachan Construction Co (Pty) Ltd 1982 (4) SA 371. The considerations which Lord BRANDON relied on in his minority judgment in the Junior Books case, are not apposite to this case. The so-called policy considerations relied upon by appellant in regard to the position after the 1976 assignment do not bear closer scrutiny and are without merit. There is no reason in law or in fact why the exception should be upheld or why the application to strike out should succeed. As regards the cross-appeal: the Court a quo held that, if a duty arose only as a contractual obligation or, put differently, if the duty was wholly dependent on the contract for origin and content, there would be no basis for collateral liability in delict. Having said this the Court a quo held further that "... the test for delictual liability in the contractual setting is not whether there is an independent liability for breach of contract, but whether all the elements of delictual liability are present, including the legal duty to exercise due skill and care (even if such duty was assumed because of a contract), fault (intention or culpa in failing to discharge that duty), causation and damages of a kind recoverable ex delicto." The latter proposition quoted above, which is in accordance with authority, is acceptable but it is difficult to reconcile it with the first proposition, which is not good in law. Based on the first proposition, the Court a quo held that in one respect the respondent's case rests on a contractual base only and is accordingly not supportable in delict. This was found to be the cost of carrying out a proper soil investigation. The judgment is to the effect that, on the pleadings, this is a claim for the cost of doing work which the respondent contracted to do but did not do properly. This arises out of an error on the part of the Judge in construing the pleadings. The paragraphs in the further particulars struck out relate not to the initial work done but to what was and will be essentially part and parcel of the remedial work required in order to repair the damage caused. The onus is always upon the excipient to establish that the pleading in question is excipiable. Kotsopoulos v Bilardi 1970 (2) SA at 395C - D. The allegedly offending allegations are those contained in para 8 (a) and (b) of the first further particulars. However these particulars must be read in conjunction with the other particulars of damages. On the proper analysis of the particulars, the respondent was alleging that, because that part of the work which the appellant should have done in relation to the site investigation was not done properly, it became necessary, in 1979, properly to investigate, monitor and assess the subsoil situation in order to establish the cause of and remedy the defects which manifested themselves due to the appellant's negligence. It could hardly be suggested that the respondent could be

1985 (1) SA p493

GROSSKOPF AJA expected to remedy the defects without establishing their cause and extent and thereby enable it to take a properly informed decision as to the remedial measures needed in the circumstances. In any event, the test in regard to the interpretation of pleadings at the exception stage is that, if the pleadings can reasonably bear an unexcipiable meaning, that is the meaning which should be attributed to them. Amalgamated Footwear and


Leather Industries v Jordan and Co Ltd 1948 (2) SA at 893; Fairlands (Pty) Ltd v Inter-Continental Motors (Pty) Ltd 1972 (2) SA at 275; McKelvey v Cowan NO 1980 (4) SA at 526D - E. The pleadings in this regard do support a delictual claim for damages arising from defective work. In any event, all the elements of delictual liability are present. The appeal should be dismissed with costs; the cross-appeal should be upheld with costs and the order of the Court a quo striking out para 8 (a) and (b) of the respondent's first further particulars should be altered to read that the appellant's application to strike out be dismissed with costs. All the orders should include the costs of two counsel. Kentridge SC in reply. Cur adv vult. Postea (November 20). Judgment

GROSSKOPF AJA: The respondent is a glass manufacturer. The appellant, a firm of consulting and structural engineers, performed professional services in connection with the planning and construction of a glass plant for the respondent. The respondent was not satisfied with the manner in which the appellant performed its duties, and issued summons in the Witwatersrand Local Division in which it claimed compensation for damages which it had allegedly suffered as a result of the appellant's professional negligence. After two sets of further particulars had been furnished, and the respondent's particulars of claim had been substantially amended, the appellant excepted to the particulars of claim, as amended and amplified, on the grounds that they lacked averments necessary to sustain an action. In the alternative the appellant applied for the striking out, as being irrelevant, of one or more of the individual heads of damage set out in the respondent's further particulars. The matter came before MARGO J, who dismissed the exception, but ordered certain paragraphs of the respondent's further particulars to be struck out. Having obtained the necessary leave and given the necessary consents, both parties now appeal to this Court: the appellant against the dismissal of the exception, and the respondent against the granting of the striking out order. The judgment of the Court a quo was reported as Pilkington Brothers (SA) (Pty) Ltd v Lillicrap, Wassenaar and Partners 1983 (2) SA 157 (W) and, when dealing with that judgment, I propose providing references to the published text. Moreover, inasmuch as the judgment of the Court a quo contains a full summary of the relevant pleadings, I propose doing no more than to set out herein the aspects thereof

1985 (1) SA p494

GROSSKOPF AJA which I consider necessary for an understanding of this judgment. The facts alleged by the respondent are broadly as follows. In or about July 1974 the respondent appointed the appellant as its consulting engineer to investigate a site in Springs (which investigation would include a soil investigation and an analysis of its results) in order to determine the suitability of the site for the erection of a glass plant thereon. If the site were found to be suitable, the appellant was further appointed to design and supervise the construction of the civil engineering and building works for a glass plant which the respondent wished to have erected there. The appellant had at all relevant times held itself out as having the expert knowledge and professional skill necessary for the performance of these duties, and it knew what the respondent's specific requirements were for the work. The appellant purported to carry out the site investigation and advised the respondent that the site was suitable for the construction of the works in conformity with the


respondent's requirements. Thereafter the appellant purported to design the works with due regard to the conditions on site (as determined by the appellant) so as to give effect to the requirements of the respondent. In June 1975 a formal agreement was executed by the parties which inter alia confirmed the appointment of the appellant as consulting engineer in respect of the design and supervision of the works. The respondent had then already paid the appellant a sum of R100 051,72 in respect of professional services rendered prior to the date of the formal agreement. Initially therefore there was a contractual nexus between the parties. This situation changed in or about May 1976, when the parties agreed that the formal agreement of June 1975 would be assigned to Salanc Contractors (Pty) Ltd ("Salanc"). Salanc was in a direct contractual relationship with the respondent, and the effect of the assignment was therefore to change the appellant's status to that of a subcontractor vis-à-vis the respondent. The appellant was aware that, despite the assignment, the works were to be constructed for the benefit of the respondent as the owner thereof. The respondent contends in its particulars of claim that, in the light of the circumstances set out above, the appellant owed the respondent a duty of care, both before and after the assignment of the contract, to carry out properly and with professional skill and care the various tasks which it purported to perform. However, so the respondent alleges, the appellant, in breach of the said duty of care, negligently failed to carry out these tasks properly and with the necessary professional skill and care, thereby causing the respondent damages in the sum of R3 605 511,00. Further particulars in respect of the appellant's alleged negligence were furnished and are set out at 160A - E of the judgment of the Court a quo. They may be summarised by saying that the plaintiff negligently failed to ascertain the extent to which precautions were necessary when building on the site to prevent movement of the works; that its designs did not incorporate sufficient precautions against such movement; and that its supervision was deficient in not recognising the occurrence of such movement or not taking or advising appropriate

1985 (1) SA p495

GROSSKOPF AJA steps to counteract it. Also the items of damage were particularised by the respondent (see the judgment of the Court a quo at 159D - in fin ). They encompass the costs relating to the following: (a) a proper soil investigation;

(b) relevelling certain parts of the works and securing them at their correct levels;

(c) breaking out and relaying a certain drain;

(d) wear and tear and additional melting costs.

It is common cause that the respondent's case is based on delict, and, more particularly, the actio legis Aquiliae as it has been extended and applied in our law. The appellant's exception places in question whether the averments in the particulars of claim (as amended and amplified) sufficiently allege the elements of the cause of action in delict on which the respondent relies. The particulars of the grounds of the exception, as amended, are set out at 160F in fine of the judgment a quo. Two specific contentions are advanced, viz, (a) that, on the facts alleged, the appellant did not owe the respondent a delictual duty of care, more

particularly in the light of the contractual relationship between the parties prior to May 1976, and the assignment in 1976 of the contract of June 1975 to Salanc; and


(b) that the facts alleged by the respondent did not give rise to any claim for damages in respect of pecuniary or financial loss only, more particularly in the light of the circumstances mentioned in (a) above (ie the contractual relationship between the parties and the assignment of the contract).

As has been noted, the Court a quo dismissed the exception, but struck out certain paragraphs relating to individual heads of damage. These were the paragraphs which, in effect, claimed the cost of a proper soil investigation. The basis of the cross-appeal is that the paragraphs, which were ordered to be struck out, did not allege heads of damage which differed in principle from those which were regarded as unobjectionable. In their context, it was contended, the particulars were capable of meaning that the costs of a proper soil investigation formed a part of the remedial work required in order to repair the damage caused by the negligent acts or omissions of the appellant, and their fate should accordingly be the same as that of other remedial expenses. Whether any of the remedial expenses claimed by the respondent are recoverable in a delictual action forms the subject-matter of the appellant's appeal. The present case thus raises fundamental questions relating to delictual liability, and, more particularly, its relationship with liability for breach of contract. At the outset I may note in passing that the nature and legal basis of the liability arising from breach of contract is to some extent controversial, and the view has been propounded that it is itself scarcely distinguishable, if distinguishable at all, from delictual liability. See, for instance, the discussions by W J Hosten "Concursus Actionum of Keuse van Aksies" 1960 THRHR 251 at 253 - 255; J Holyoak "Tort and Contract after Junior Books" 99 LQR 591; N J van

1985 (1) SA p496

GROSSKOPF AJA der Merwe and P J J Olivier Die Onregmatige Daad in die Suid-Afrikaanse Reg 4th ed at 484. Interesting as these discussions may be, they do not in my view bear on the present issue. Even if a breach of contract should properly be classified as a form of delict, that would not alter its essential characteristics or eliminate the differences which exist between an action for damages arising ex contractu and liability pursuant to the extended Aquilian action which the respondent has sought to invoke in the present case. See for instance Hosten (op cit at 256 - 7); OK Bazaars (1929) Ltd and Others v Stern & Ekermans 1976 (2) SA 521 (C) ; Holyoak (op cit at 599). Even if one were to classify a claim for damages for breach of contract as delictual in nature, one would still have to determine whether there is a line of demarcation between this form of liability and that arising from the lex Aquilia, and, if so, where this lines is to be drawn. In the present case it is common cause that the damages which the respondent is claiming pursuant to the Aquilian action could, in so far as they arose before the assignment of the contract to Salanc, have been claimed on the basis of breach of contract. The respondent's contention is that in the circumstances of the present case the facts gave rise to both causes of action. In principle there would be no objection in our law to such a situation. Roman law recognized the possibility of a concursus actionum, ie the possibility that different actions could arise from the same set of facts. More particularly, the facts giving rise to a claim for damages under the lex Aquilia could overlap with those founding an action under certain types of contract such as deposit, commodatum, lease, partnership, pledge, etc. In such a case a plaintiff was in general entitled to elect which actio to employ (although he could of course not receive compensation under both). See, eg, D 9.2.7.8; 9.2.18; 9.2.27.11; 9.2.27.34; 9.2.42 and 44.7.34. The same principles were accepted and applied in Roman-Dutch law. See Voet Commentarius ad Pandectas 9.2.31 (Gane's trans vol 2 at 592 - 4). In modern South African law we are of course no longer bound by the formal actiones of Roman law, but


our law also acknowledges that the same facts may give rise to a claim for damages ex delicto as well as one ex contractu, and allows the plaintiff to choose which he wishes to pursue. See Van Wyk v Lewis 1924 AD 438; Hosten (op cit at 262); R G McKerron Law of Delict 7th ed at 3; J C van der Walt in Joubert The Law of South Africa vol 8 para 5 at 7 - 11. The mere fact that the respondent might have framed his action in contract therefore does not per se debar him from claiming in delict. All that he need show is that the facts pleaded establish a cause of action in delict. That the relevant facts may have been pleaded in a different manner so as to raise a claim for contractual damages is, in principle, irrelevant. The fundamental question for decision is accordingly whether the respondent has alleged sufficient facts to constitute a cause of action for damages in delict. In the present case we are concerned with a delictual claim for pecuniary loss, and, as mentioned above, it is common cause that the claim was founded on the principles of the extended Aquilian action. It is trite law that, to succeed in such a claim, a plaintiff must allege and prove that the defendant has been guilty of conduct

1985 (1) SA p497

GROSSKOPF AJA which is both wrongful and culpable; and which caused patrimonial damage to the plaintiff (see eg Van der Walt (op cit para 2 at 2)). What has been placed in issue by the appellant is whether, on the facts pleaded, the appellant's conduct was wrongful for purposes of delictual liability, and whether the damages alleged to have been suffered, are recoverable in a delictual action. I deal with these two aspects in turn. The element of wrongfulness in the requirements for delictual liability is sometimes overlooked, because most delictual actions arise from acts which are, prima facie, clearly wrongful, such as the causing of damage to property or injury to the person. And, indeed Mr Maisels, who appeared for the respondent, contended that the present is a case of damage to property. In this regard he supported a finding of the Court a quo, which reads as follows (at 162F - 163C): "In Dutton v Bognor Regis Urban District Council [1972] 1 QB 373 (CA) Lord DENNING MR at 396,

dealing with the claim by a houseowner against a local authority for damages in tort for the cost of investigating and repairing defects in the house, by reason of the negligence of the latter's building inspector in failing to check faulty foundations during construction, in consequence of which serious defects developed in the internal structure of the house, said this:

'Mr Tapp submitted that the liability of the Council would, in any case, be limited to those who suffered bodily harm: and did not extend to those who only suffered economic loss. He suggested, therefore, that, although the Council might be liable if the ceiling fell down and injured a visitor, they would not be liable simply because the house was diminished in value. He referred to the recent case of SCM (United Kingdom) Ltd v W J Whittall & Son Ltd [1971] 1 QB 337.

I cannot accept this submission. The damage done here was not solely economic loss. It was physical damage to the house. If Mr Tapp's submission were right, it would mean that, if the inspector negligently passes the house as properly built and it collapses and injures a person, the Council are liable: but if the owner discovers the defect in time to repair it - and he does repair it - the Council are not liable. That is an impossible distinction. They are liable in either case.

I would say the same about the manufacturer of an article. If he makes it negligently, with a latent defect (so that it breaks to pieces and injures someone), he is undoubtedly liable. Suppose that the defect is discovered in time to prevent the injury. Surely he is liable for the cost of repair.'

I am in respectful agreement with that approach. See Duncan Wallace on 'Tort Demolishes Contract in New Construction' (1978) LQR 60 and see also Peter F Cane on 'Physical Loss, Economic Loss and Products Liability' (1979) LQR 117 at 129 et seq, under the heading of 'The cost of repairing defects per se'. See further the speech of Lord WILBERFORCE in Anns v London Borough of Merton [1977] 2 All ER 492 (HL). In my view, it is a question of fact whether a defect in the construction of a building or plant


is such as to constitute physical damage. A constructional defect, in a building housing a glassmaking plant, which has to be removed or remedied because it threatens to cause injury to persons or damage to property, is clearly to be equated to physical damage, as Lord DENNING indicated in the Dutton case supra. On the pleadings there are sufficient allegations to support the inference that the defects in construction, unless removed or remedied, create the danger of damage to the plaintiff's property."

With respect, I cannot agree with this finding by the learned Judge a quo. I could find nothing in the respondents' pleadings which alleged or implied that the defects in the construction of the plant created a danger of damage to the respondent's property. The respondent's sole

1985 (1) SA p498

GROSSKOPF AJA case seems to be that the defects in the construction of the plant rendered it unsuitable or less suitable for its purpose. If I may adopt the language of Lord KEITH of Kinkel in Junior Books Ltd v Veitchi & Co Ltd 1983 AC 520 at 536 ([1982] 3 WLR 477) (a case to which I shall revert later), the plant had, according to the allegations in the respondent's particulars of claim, inherent defects in it from the start. The appellants did not, in any sense consistent with the ordinary use of language, damage the respondent's property, or create a risk of damage thereto. I need accordingly not consider whether and in what circumstances the creation of "the danger of damage" by a defendant would be sufficient to found an action for damages against him. If the respondent's case is not based on wrongful damage to property, what then is the nature of the wrongfulness upon which the respondent relies? It is clear that in our law Aquilian liability has long outgrown its earlier limitation to damages arising from physical damage or personal injury. Thus, for instance, in Administrateur, Natal v Trust Bank van Afrika Bpk 1979 (3) SA 824 (A) this Court held that Aquilian liability could in principle arise from negligent misstatements which caused pure financial loss, ie loss which was caused without the interposition of a physical lesion or injury to a person or corporeal property (see Van der Walt (op cit para 24 at 35)). The Court (per RUMPFF CJ) however added the following cautionary remarks at 832H - 833A: "Na my mening kan en behoort die eisgrond in die onderhawige saak in die uitgebreide trefgebied van

die lex Aquilia geplaas te word. Hieruit sou volg dat, volgens ons heersende norme, daar onregmatigheid vereis word en skuld. Die vrees van die sogenaam de 'oewerlose aanspreeklikheid' kan ook alleen dan besweer word, indien by elke gegewe geval dit die taak van die Hof is om te beslis of daar in die besondere omstandighede 'n regsplig op die verweerder gerus het om nie 'n wanbewering teenoor eiser te doen nie, en ook of die verweerder in die lig van al die omstandighede, redelik sorg uitgeoefen het, onder andere, om die korrektheid van sy voorstelling vas te stel. By afwesigheid van 'n regsplig, is daar geen onregmatigheid nie."

And at 835 the Court found that, in the circumstances of that case, the defendant was not under a legal duty to exercise care in making the statement which it did. In so doing, this Court applied what JANSEN JA (in Marais v Richard 1981 (1) SA 1157 (A) at 1168C - E) called the "algemene redelikheidsmaatstaf" (general criterion of reasonableness) in determining whether an act or omission is to be regarded as wrongful for the purposes of delictual liability. See Marais v Richard (loc cit) and authorities there quoted; particularly Minister van Polisie v Ewels 1975 (3) SA 590 (A) at 596F - 597F. This criterion of reasonableness involves policy considerations, and in Administrateur, Natal v Trust Bank van Afrika Bpk (supra at 833 - 4) RUMPFF CJ quoted the following passage from Fleming Law of Torts as being relevant also to our law: "In short, recognition of a duty of care is the outcome of a value judgment that the plaintiff's invaded

interest is deemed worthy of legal protection against negligent interference by conduct of the kind alleged against the defendant. In the decision whether or not there is a duty, many factors interplay: the hand of history, our ideas of morals and justice, the convenience of administering the rule and our social ideas as to where the loss should fall. Hence, the incidence and extent of duties are liable to adjustment


in the light

1985 (1) SA p499

GROSSKOPF AJA of the constant shifts and changes in community attitudes."

In applying the test of reasonableness to the facts of the present case, the first consideration to be borne in mind is that the respondent does not contend that the appellant would have been under a duty to the respondent to exercise diligence if no contract had been concluded requiring it to perform professional services. In this respect the present case differs from Van Wyk v Lewis (supra) upon which Mr Maisels placed much reliance. In Van Wyk's case the defendant, Dr Lewis, was accused of professional negligence in the performance of an operation. Although there was a contract between the parties in that case, Dr Lewis would have been liable to his patient for professional negligence even in the absence of a contract between the parties, eg if he had operated on a person found unconscious in the street, or if he had contracted with a third person to perform an operation on the patient. The wrongfulness of his conduct would have arisen (at least prima facie ) from his infringement of the patient's bodily integrity; and if the other elements of the actio legis Aquiliae had been present (more particularly culpa and resultant damage) an action by the patient would have been competent. In the present case we do not have an infringement of any of the respondent's rights of property or person. The only infringement of which the respondent complains is the infringement of the appellant's contractual duty to perform specific professional work with due diligence; and the damages which the respondent claims, are those which would place it in the position it would have occupied if the contract had been properly performed. In determining the present appeal we accordingly have to decide whether the infringement of this duty is a wrongful act for purposes of Aquilian liability. No authority in Roman or Roman-Dutch law has been quoted, nor have I found any, for the proposition that the breach of such a contractual duty is per se a wrongful act for purposes of Aquilian liability (with the corollary that, if the breach were accompanied by culpa, damages could be claimed ex delicto ). The examples in our common law of concursus actionum to which I have referred above were all cases where the acts of the defendant satisfied the independent requirements of both a contractual and an Aquilian action. Where, for instance, a lessee negligently damages the leased property which he is under a contractual obligation to return in an undamaged state he would be liable ex delicto for negligently causing damage to the lessor's property, and ex contractu for failing to return the property in a proper state pursuant to the lease. The former liability would, however, have arisen even in the absence of a contract of lease. As noted above, Van Wyk v Lewis (supra) was a similar case. As Van der Walt states (op cit para 5 at 7); "The same conduct may constitute both a breach of contract and a delict. This is the case where the

conduct of the defendant constitutes both an infringement of the plaintiff's rights ex contractu and a right which he had independently of the contract."

(Italics added). This passage was strongly relied upon by Mr Maisels, but if proper regard is had to the italicized words it seems to me to be against him. I propose dealing later with certain dicta in the judgments in Van Wyk v Lewis (supra) which may at first blush appear inconsistent with what I

1985 (1) SA p500

GROSSKOPF AJA have said.


Apart from the judgments in Van Wyk v Lewis (supra) this Court has never pronounced on whether the negligent performance of professional services, rendered pursuant to a contract, can give rise to the actio legis Aquiliae. Although an attorney's liability was in issue in Mouton v Die Mynwerkersunie 1977 (1) SA 119 (A), the Court did not decide whether such liability is based on contract, delict, or both. Divergent views on this issue have been expressed in some Provincial Divisions. Compare, for instance, Rampal (Pty) Ltd and Another v Brett, Wills and Partners 1981 (4) SA 360 (D) at 365E - 366E with Bruce NO v Berman 1963 (3) SA 21 (T) at 23F - H. See also Honey & Blanckenberg v Law 1966 (2) SA 43 (SR) at 46E. As far as this Court is concerned, it would accordingly be breaking fresh ground if it were to recognize the respondent's cause of action as valid, at any rate in so far as the cause of action arose prior to the assignment of the contract of June 1975. Our law adopts a conservative approach to the extension of remedies under the lex Aquilia. See Herschel v Mrupe 1954 (3) SA 464 (A) at 478C; Union Government v Ocean Accident and Guarantee Corporation Ltd 1956 (1) SA 577 (A) at 584H; Hamman v Moolman 1968 (4) SA 340 (A) at 348D in fin; Administrateur, Natal v TrustBank van Afrika Bpk (supra at 831B and 832H - 833A); Shell & BP South African Petroleum Refineries (Pty) Ltd and Others v Osborne Panama SA 1980 (3) SA 653 (D) at 659D - E, 660A, confirmed on appeal subnom, Osborne Panama SA v Shell & BP South African Petroleum Refineries (Pty) Ltd and Others 1982 (4) SA 890 (A) at 900H - 901A. In considering whether an extension of Aquilian liability is justified in the present case, the first question that arises is whether there is a need therefor. In my view, the answer must be in the negative, at any rate in so far as liability is said to have arisen while there was a contractual nexus between the parties. While the contract persisted, each party had adequate and satisfactory remedies if the other were to have committed a breach. Indeed the very relief claimed by the respondent could have been granted in an action based on breach of contract. Moreover, the Aquilian action does not fit comfortably in a contractual setting like the present. When parties enter into such a contract, they normally regulate those features which they consider important for the purpose of the relationship which they are creating. This does not of course mean that the law may not impose additional obligations by way of naturalia arising by implication of law, or, as I have indicated above, those arising ex delicto independently of the contract. However, in general, contracting parties contemplate that their contract should lay down the ambit of their reciprocal rights and obligations. To that end they would define, expressly or tacitly, the nature and quality of the performance required from each party. If the Aquilian action were generally available for defective performance of contractual obligations, a party's performance would presumably have to be tested not only against the definition of his duties in the contract, but also by applying the standard of the bonus paterfamilias. How is the latter standard to be determined? Could it conceivably be higher or lower than the contractual one? If the standard imposed by law differed

1985 (1) SA p501

GROSSKOPF AJA in theory from the contractual one, the result must surely be that the parties agreed to be bound by a particular standard of care and thereby excluded any standard other than the contractual one. If, on the other hand, it were to be argued that the bonus paterfamilias would always comply with the standards laid down by a contract to which he is a party, one would in effect be saying that the law of delict can be invoked to reinforce the law of contract. I can think of no policy consideration to justify such a conclusion. See in this regard the dissenting speech of Lord BRANDON in the Junior Books case supra at 551E


- 552E with which Lord KEITH of Kinkel agreed at 536G - 537D of the report. In the present case, the respondent repeatedly emphasized in its pleadings that it was its detailed requirements, as laid down in the contract between the parties, which defined the ambit of the appellant's obligations. It is these requirements which, according to the respondent, set the standard by which negligence falls to be determined. See para 4 (b) of the respondent's amended particulars of claim read with para 1 (a) of the respondent's further particulars dated 19 August 1981, as also paras 5, 6 and 7 of the particulars of claim and para 10 (d) of the said further particulars. It seems anomalous that the delictual standard of culpa or fault should be governed by what was contractually agreed upon by the parties. Apart from defining the parties' respective duties (including the standard of performance required) a contract may regulate other aspects of the relationship between the parties. Thus, for instance, it may limit or extend liability, impose penalties or grant indemnities, provide special methods of settling disputes (eg by arbitration) etc. A Court should therefore in my view be loath to extend the law of delict into this area and thereby eliminate provisions which the parties considered necessary or desirable for their own protection. The possible counter to this argument, viz that the parties are in general entitled to couch their contract in such terms that delictual liability is also excluded or qualified, does not in my view carry conviction. Contracts are for the most part concluded by businessmen. Why should the law of delict introduce an unwanted liability which, unless excluded, could provide a trap for the unwary? To sum up, I do not consider that policy considerations, require that delictual liability be imposed for the negligent breach of a contract of professional employment of the sort with which we are here concerned. The respondent, in arguing the contrary, relied heavily on Van Wyk v Lewis 1924 AD 438, and I now turn to a closer discussion of the judgments in that case. The case, as I have said, concerned the performance of an operation by a doctor, and the allegation was that he had acted negligently. At 443 INNES CJ said the following: "There was some discussion during the argument as to whether the action had been framed in contract

or in tort. One of the appellant's contentions indeed assumed that the basis of her claim was contractual. Now the line of division where negligence is alleged is not always easy to draw, for negligence underlies the field both of contract and of tort. Cases are conceivable where it may be important to decide on which side of that line the cause of action lies. But the present is not such a case; no mere omission is relied on, nor is the

1985 (1) SA p502

GROSSKOPF AJA basis upon which damages should be calculated in dispute. But as the point has been raised I must say

that, in my opinion, the claim is based on tort. The compensation demanded as in respect of injury alleged to have been sustained by reason of the respondent's negligence and lack of skill. No doubt the duty to take care arose from the contractual relationship between the parties; but it was a duty the breach of which was actionable under the Aquilian procedure."

It seems clear that these remarks were obiter dicta. This is apparent from the learned CHIEF JUSTICE'S statement that the case before him did not require a decision on which side of the line between contract and tort the cause of action lay. Nevertheless even an obiter dictum by a lawyer of such eminence as INNES CJ must be accorded high authority. In the present case the words which present difficulty are: "No doubt the duty to take care arose from the contractual relationship between the parties...".

Taken literally, these words seem, in my respectful opinion, to justify the criticism expressed as follows by Van der Walt (supra in footnote 2 at 9): "The view expressed in the Van Wyk case... that the delictual duty arose from the contract between the


parties, leads to a confusion of delictual liability and liability flowing from a breach of contract. The delictual duty is imposed by law, not by the contract."

However, as Van der Walt himself points out in footnote 16 at 10 of the same work, INNES CJ may have regarded the contractual relationship merely as a fact which brought the plaintiff within the class of persons towards whom the defendant was under a duty to perform his professional duties with due skill. This interpretation seems probable if one has regard to the unlikelihood that INNES CJ would have intended to suggest that a medical doctor could not be delictually liable for his negligence unless there was a contractual relationship between him and his patient. It consequently seems to me that the obiter dicta quoted above do not provide authority for either the proposition that medical negligence can found an action in delict only where there is a contractual relationship between the parties, or for the proposition that a legal duty in the delictual sense would necessarily arise from every contract which requires one of the parties to exercise care or diligence, whether or not it relates to the property or person of the other. The same comments apply to the dicta of WESSELS JA at 455 - 6, as to which see also Hosten (op cit at 262 - 3). Up to the present I have considered the policy considerations which, in my view, render it undesirable to extend the Aquilian action to the duties subsisting between the parties to a contract of professional service like the present. Would these considerations fall away if the contract were assigned, as happened in 1976? In my view the answer must be in the negative. The relationship between the three parties is still one which has its origin in contract. One must assume that their respective rights and obligations were regulated to accord with their wishes, and that the contractual remedies which would be available were those which the parties desired to have at their disposal. The same arguments which militate against a delictual duty where the parties are in a direct contractual relationship, apply, in my view, to the situation where the relationship is tripartite, namely that a delictual remedy is unnecessary and that the parties should not be denied their

1985 (1) SA p503

GROSSKOPF AJA reasonable expectation that their reciprocal rights and obligations would be regulated by their contractual arrangements and would not be circumvented by the application of the law of delict. The conclusion which I have reached is at variance with that of the learned Judge a quo, and I propose indicating briefly the grounds on which we differ. I have already pointed out that I cannot, with respect, agree with his finding (at 163C) that there are sufficient allegations in the respondent's pleadings to support the inference that the defects in construction, unless removed or remedied, create a danger to the respondent's property. The danger of damage to the respondent's property formed the basis upon which the decision of the Court a quo rested in dismissing the exception. To the extent that the respondent claimed damages for what the Court a quo considered not to constitute damage to property, the relevant items of damage were ordered to be struck out. As noted above, these related to the costs of carrying out a proper soil investigation (at 163C - D read with 172H - in fin ). In the result, therefore, the Court's reasoning relating to non-material damage or loss must be regarded as obiter dicta which the Judge a quo pronounced, with commendable thoroughness, to assist the parties in the future conduct of the case (see the judgment at 163G - in fin ). This part of the judgment assumes that the respondent's case was based upon negligent misstatement causing purely economic loss. After a full review of the authorities, both here and in some other countries, the Court a quo concluded that such a claim was competent in the circumstances of this


case (save, of course, for the items of damage which were ordered to be struck out). At the outset I should state in parentheses that in my view no useful purpose would be served by considering whether the claim in the present case should be categorized as one based upon negligent misstatement. It is true that the judgment in Administrateur, Natal v Trust Bank van Afrika Bpk 1979 (3) SA 824 (A) removed whatever doubt there may have been about the validity of such a claim as a matter of principle, but the same case rendered it clear that liability in a concrete case would depend inter alia on whether the defendant's conduct was wrongful in the delictual sense, which in turn involves policy considerations, as I have attempted to demonstrate above. In this respect misstatements do not differ, in principle, from other forms of allegedly wrongful conduct. In assessing the relevant policy considerations I have not in fact found it helpful in the present case to determine to what extent the appellant's conduct which is alleged to be wrongful should be regarded as misstatements, as distinct from other forms of conduct. Nor, indeed, do I read the judgment of the Court a quo as having placed undue emphasis on the fact (which the Court assumed) that the respondent's case was based upon misstatements by the appellant. Whether or not the respondent's case is based on alleged misstatements is accordingly not fundamental to the difference between my judgment and that of the Court a quo. The main point of difference relates to the Court's approach to the question of wrongfulness, which involves the extension of delictual liability in the present case to cir-

1985 (1) SA p504

GROSSKOPF AJA cumstances not covered by existing authority. In this regard the Court a quo adopted the following pronouncement of Lord WILBERFORCE in Anns v Merton London Borough Council 1978 AC 728 at 751 (judgment of the Court a quo at 167F - H): "Through the trilogy of cases in this House, Donoghue v Stevenson; Hedley Byrne & Co Ltd v Heller &

Partners Ltd and Home Office v Dorset Yacht Co Ltd, the position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist.

Rather the question has to be approached in two stages. First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage, there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter, in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise..."

(Italics added). This pronouncement is authoritative in Britain, and was recently again followed in Junior Books Ltd v Veitchi & Co Ltd 1983 AC 520. No doubt the application of the principle stated in Anns' case, as applied in the Junior Books case by the majority of the Court, might lead to the dismissal of the appellant's exception in the present case, as was indeed found by the Court a quo. However, the approach of English law seems to me to be different from ours. As appears from the italicized portion in the above quoted passage, English law adopts a liberal approach to the extension of a duty of care. If there is a sufficient relationship of proximity between the parties such that, in the reasonable contemplation of the alleged wrongdoer, carelessness on his part may be likely to cause damage to the plaintiff, there is a prima facie duty of care, which is excluded only if the Court considers that there are considerations which ought to negative, reduce or limit the scope of the duty. South African law approaches the matter in a more cautious way, as I have indicated, and does not extend the scope of the Aquilian action to new situations unless there are positive policy considerations which


favour such an extension. Not only is there thus a difference of approach between English law and South African law to the extension of delictual remedies to new situations, but there is also no reason to assume that the actual policy considerations which led the majority of the Court in the Junior Books case (supra) to favour the extension of delictual liability to a case very much like the present, should also apply in South Africa. As Mr Kentridge, who appeared for the appellant, pointed out, there were several forceful dissents among members of the Court in the Junior Books case (see the speeches of Lord KEITH at 534 and Lord BRANDON at 547). Academic comment has not been entirely uncritical (see, eg J Holyoak "Tort and Contract after Junior Books" 99 LQR at 591; A J A Jaffey "Subcontractors - Privity and Negligence" 1983 Cambridge Law Journal at 37). We were also referred to earlier decisions in Britain and other common law jurisdictions in which views different to that in the Junior Books case had been expressed. Some of these cases

1985 (1) SA p505

GROSSKOPF AJA are discussed in the judgment of the Court a quo (see at 171E - H). I do not propose analysing these cases. They show that prior to the decision in the Junior Books case there was no unanimity even in common law jurisdictions on the need to extend the concept of a duty of care as far as has now been done in the Junior Books case. In view of the different principles applicable in different legal systems, I do not however consider that the views prevailing in common law systems can carry great weight in deciding what policy considerations should be applied by this Court. As Mr Kentridge demonstrated, the development in English law of liability in tort for professional negligence was, to some extent at least, influenced by the rule of English law that, in general, an agreement is not enforceable unless there is "valuable consideration". Thus in Hedley Byrne & Co Ltd v Heller & Partners Ltd 1964 AC 465 Lord DEVLIN described the problem of professional negligence in that case as "a by-product of the doctrine of consideration" (at 525). And at 526 he said: "The respondents in this case cannot deny that they were performing a service. Their sheet anchor is

that they were performing it gratuitously and therefore no liability for its performance can arise. My Lords, in my opinion this is not the law. A promise given without consideration to perform a service cannot be enforced as a contract by the promisee; but, if the service is in fact performed and done negligently, the promisee can recover in an action in tort."

This illustrates the danger of assuming that policy considerations which may be valid in one legal system would necessarily also be applicable elsewhere. To sum up, therefore, I differ from the learned Judge a quo firstly by approaching the extension of Aquilian liability in a more conservative manner, and secondly, in considering that there are valid policy considerations why such liability should not be extended to a case like the present. Up to the present I have been dealing with the first leg of the appellant's argument, viz, that the respondent's allegations do not disclose that the appellant's conduct was wrongful for purposes of Aquilian liability. In view of the conclusion which I have reached, it may not be strictly necessary to deal with the second leg of the argument, viz that the damages claimed are in any event not such as are recoverable in delict. For the sake of completeness, and also because the computation of damages has some relevance to the possible extension of the Aquilian action to the facts of the present case, I propose dealing briefly with this aspect. The essential difference between computing damages for, respectively, breach of


contract and delict was succinctly stated as follows by VAN DEN HEEVER JA in Trotman and Another v Edwick 1951 (1) SA 443 (A) at 449B - C: "A litigant who sues on contract sues to have his bargain or its equivalent in money or in money and

kind. The litigant who sues on delict sues to recover the loss which he had sustained because of the wrongful conduct of another, in other words that the amount by which his patrimony has been diminished by such conduct should be restored to him."

Although this principle has not always been easy to apply (see Ranger v Wykerd and Another 1977 (2) SA 976 (A) and earlier cases discussed therein at 986B - 987H (per JANSEN JA), at 991B - 994A, 995H -

1985 (1) SA p506

SMUTS AJA 998B (per TROLLIP JA; DE VILLIERS JA, KOTZÉ JA and MILLER JA concurring)), its authority remains unimpaired and unquestioned in the field of Aquilian liability. The question to be asked in a case like the present is accordingly: what loss has the respondent sustained because of the appellant's alleged negligent conduct? The respondent computes its loss, broadly speaking, as being the amount which would have to be spent to bring the plant up to the standard laid down by the contract. This amount does not, however, in my view represent a loss in the ordinary sense of the word. For all we know the respondent's patrimony may have been enhanced by the erection of the plant despite its alleged defects. The respondent has not alleged that the value of the plant is less than the respondent has paid for it. What the respondent does, in effect, is to sue for the equivalent in money of its bargain. That is the contractual measure of damages. That the wrong measure has been applied in computing damages would, by itself, be a further reason for allowing the appeal. Moreover, the reason why the wrong measure has been applied illustrates why I consider this not to be an appropriate case for an extension of Aquilian liability. The respondent's complaint is that its glass manufacturing plant does not comply with its requirements. This complaint cannot be met by pointing out (if those be the facts) that the respondent has not suffered any loss but has been enriched by obtaining at a low cost, a building which is ideally suitable, say, for a motor vehicle assembly plant or a textile factory. To remedy the wrong of which the respondent complains, its damages must be computed according to the contractual measure because the wrong itself is essentially a breach of contract, not a delict. I am accordingly of the view that the exception should have been allowed. If such an order had been made, there would have been no room for the striking out order, which forms the subject of the crossappeal. The appeal is accordingly allowed with costs, including the costs of two counsel. The cross-appeal is dismissed with costs. The order of the Witwatersrand Local Division is altered to read as follows: 1. The exception is allowed with costs, including the costs of two counsel.

2. The plaintiff is given leave to amend its particulars of claim and further particulars, if it so wishes, within six weeks of the date of the order of the Appellate Division in this matter.

KOTZÉ JA, CILLIÉ JA and VAN HEERDEN JA concurred. Judgment

SMUTS AJA: I have had the advantage of reading the judgment of GROSSKOPF AJA. I do not however, with respect, share the view that appellant, a firm of consulting and structural engineers, is not liable in delict for the negligent performance of a duty contractually undertaken by it in its professional capacity or for negligent misstatements


made in the course of performing its contractual obligations. As this is a minority judgment I will express my views as briefly as the arguments advanced will allow.

1985 (1) SA p507

SMUTS AJA The relevant pleadings are to be found in the judgment of the Court a quo which, as appears from the judgment of GROSSKOPF AJA, has been reported as Pilkington Brothers (SA) (Pty) Ltd v Lillicrap, Wassenaar and Partners 1983 (2) SA 157 (W) . At 169 of the reported judgment MARGO J in my respectful view correctly states the following: "In principle there is no obstacle to Aquilian liability on the ground only that the wrongful and negligent

acts or omissions necessary to sustain a claim in delict also constitute breach of an express or implied contractual obligation owed by the defendant to the plaintiff."

Support for this view is to be found in the decisions referred to by the learned Judge, which are Van Wyk v Lewis 1924 AD 438; Tonkwane Sawmill Co Ltd v Filmalter 1975 (2) SA 453 (W) ; Rampal (Pty) Ltd and Another v Brett, Wills and Partners 1981 (4) SA 360 (D) at 366D. Yet another decision in which an action in delict was recognised, although an action in contract also lay, is Western Alarm Systems (Pty) Ltd v Coini & Co 1944 CPD 271. I see no reason for limiting this statement to cases where there would be liability for damages in delict independently of the contractual relationship entered into by the parties. The decisions referred to above certainly do not support such a view. The cases of Tonkwane (supra) and Rampal (Pty) Ltd (supra), are in fact cases where no action in delict could ever have arisen in the absence of a contract whereby the services of the defendants, as professional people, were engaged. In the Tonkwane case the defendant was an auditor who was sued in delict for alleged negligence in the performance of the duties he had been employed to perform. In the Rampal case the defendants were attorneys whose services had been engaged by the plaintiff for the investment of money. The fact that these professional men could have been sued in contract for the negligent performance of their duties did not debar an action in delict based on the same negligence. Had they not been employed in their professional capacities there could of course never have been any cause for an independent action in delict. I can see no reason why the fact that a party to a contract has an action for damages in contract for the negligent performance of a contractual obligation should exclude an action for damages in delict based on the same negligent act or acts. The following extract from the judgment of SPENCE J in the Canadian case of J Nunes Diamonds Ltd v Dominion Electric Protection Co 1972 (26) DLR (3d) 649 at 727 - 8 is apposite in this regard. "The agreement between the parties is of importance insofar as it established a relationship between

them, and thus provided a basis upon which, in the light of subsequent events, the appellant could rightly assess that the negligent misrepresentations of the respondent were made in breach of a duty of care to the appellant. I cannot agree that the mere existence of an antecedent contract foreclosed tort liability under the Hedley Byrne principle."

I share the view expressed by MARGO J that this statement is in accord with the legal position in this country. It was contended that where, as in the present case, the appellant's contractual duties have been set out in detail in clauses 2 and 3 in the agreement of June 1975, it is implicit that the parties intended the contractual

1985 (1) SA p508

SMUTS AJA


definition of their rights and obligations to be exclusive of any other liabilities. There is certainly no express stipulation in the agreement which limits appellant's liability to breach of contract or which excludes liability in delict. Applying the test for an implied term stated in Reigate v The Union Manufacturing Co 118 LT 483, and approved by this Court in Barnabas Plein & Co v Sol Jacobson & Son 1928 AD 25 at 31 and Mullin (Pty) Ltd v Benade Ltd 1952 (1) SA 211 (A) at 215, it can certainly not be said that had respondent been asked whether the agreement between the parties excluded delictual liability, the reply would have been "of course, that is the case. We did not trouble to say that; it is too clear." Policy considerations do not, to my mind, require that liability in delict on the part of a person rendering professional services pursuant to a contract of the nature presently under consideration, be not recognised. In the present case the respondent has not alleged that fraudulent misstatements were made. It relies on negligent misstatements. Were it to have relied on fraudulent misstatement or misstatements made as the result of gross negligence, considerations of policy appear to me to demand the recognition of a claim in delict notwithstanding that a remedy in contract was at an earlier stage available. I say "an earlier stage" as the Court was informed by Mr Maisels that the reason why the present action was framed in delict by respondent was that its cause of action in contract had become prescribed. One of the advantages to be gained by the recognition of a claim in delict is therefore that it will enable a plaintiff whose contractual claim has become prescribed to proceed in delict. Where the delictual claim is based on fraud or gross negligence it appears to me to be unarguable that policy considerations, and those of fairness and justice, require that such a claim be recognised. A party to a contract cannot validly contract out of fraud. See D 9.2.27.29; 2.14.27.3; 50.17.23. I can accordingly see no reason for denying, as a matter of law, an action in delict on the ground of fraud in the case of a professional person simply because he has contractually bound himself to render professional services. I can also see no valid reason why an action in delict based on negligent misstatement or negligent breach of an obligation undertaken in a contract should be treated differently as a matter of policy or for any other reason. Any contracting party who wishes to protect himself against an action in delict has a remedy readily available. He can simply have a clause inserted excluding liability in delict for negligence. The facts alleged by respondent fall, to my mind, within the recognised principles which give rise to delictual liability where the claim is based on negligence. In Cape Town Municipality v Paine 1923 AD 207 INNES CJ stated the requisites for liability in delict as follows at 216 - 217: "It has repeatedly been laid down in this Court that accountability for unintentioned injury depends upon

culpa - the failure to observe that degree of care which a reasonable man would have observed. I use the term reasonable man to denote the diligens paterfamilias of Roman law, the average prudent person. Every man has a right not to be injured in his person or property by the negligence of another, and that involves a duty on each to exercise due

1985 (1) SA p509

SMUTTS AJA and reasonable care. The question whether, in any given situation, a reasonable man would have

foreseen the likelihood of harm and governed his conduct accordingly, is one to be decided in each case upon a consideration of all the circumstances. Once it is clear that the danger would have been foreseen and guarded against by the diligens paterfamilias, the duty to take care is established, and it only remains to ascertain whether it has been discharged."

In Herschel v Mrupe 1954 (3) SA 464 (A) VAN DEN HEEVER JA pointed out at 485 that the essential element of unlawfulness was omitted by INNES CJ in this statement,


perhaps because it was so obvious that it was unnecessary to mention it. This passage has also been criticised as unnecessarily incorporating the concept of a duty of care. Bearing in mind these two respects in which the said statement of the law may be said to be incomplete or inaccurate, it is nevertheless clear therefrom that where a person is by circumstances, which may include the conclusion of contract with another, placed in a position where it would be clear to a reasonable man that a failure to exercise care is likely to result in unlawful harm being done to another, a failure to exercise that care, with resultant harm to the other, will entail delictual liability. See also Union Government v National Bank of South Africa Ltd 1921 AD 121 at 128. As appears from the judgment of GROSSKOPF AJA "(i)t is clear that in our law Aquilian liability has long outgrown its earlier limitation to damages arising

from physical damage or personal injury".

This view is in accord with the decision of this Court in Administrateur, Natal v Trust Bank van Afrika Bpk 1979 (3) SA 824 (A) where it was held that liability in delict could in principle arise from negligent misstatement which cause pure financial loss unrelated to physical damage to property or injury to a person. It was also the view of Mr Justice VAN DEN HEEVER that all patrimonial loss unlawfully suffered is recoverable under the Aquilian law in its developed form. See his work Aquilian Damages in South African Law at 31. See further Matthews and Others v Young 1922 AD 492 at 504. To cause patrimonial or economic loss can therefore, for the purposes of Aquilian liability, be as wrongful as to inflict physical damage to corporeal property or injury to a person. In the present case it is alleged that appellant, who held itself out to respondent as having expert knowledge and the professional skill necessary and required for the carrying out of site investigations including subsoil investigation and the analysis of the results thereof, in relation to the suitability or otherwise of a particular site for a civil engineering project such as the one which respondent intended having erected, was employed by respondent to do the necessary investigation and to design and erect the works required by respondent on the site in conformity with the results of the analysis carried out by it on the said site. It follows that a reasonable man, on the basis of the facts alleged, would have foreseen that a proper analysis was essential and that a faulty analysis resulting in an inadequate structure being erected would in all probability cause respondent patrimonial loss. Respondent alleges that the analysis carried out by appellant was done negligently in the respects stated in para 10 (d) (i) (aa ) to (ff ) of the further particulars dated 19 August 1981. It is further alleged that

1985 (1) SA p510

SMUTS AJA appellant negligently advised respondent that the site was suitable for the purpose of erecting the works which respondent contemplated erecting; it is also alleged that appellant knew that respondent would rely upon and intended that respondent should rely upon such advice and the designs prepared by appellant pursuant to and in conformity with the results of the analysis which it had undertaken to do. On the basis of these allegations it follows that a reasonable man, in the position of appellant, would have realised that faulty advice tendered by him to a person in the position of respondent was likely to cause patrimonial loss and he would have guarded against giving faulty advice. To avoid that danger it would be necessary to ensure that the site investigation and analysis was performed without negligence. To my mind the factual allegations made by respondent bring its case within the principles of the developed Aquilian law and will, if proved, entail liability for any patrimonial loss suffered by respondent as the result of the negligence alleged. The


contract is the factor which resulted in appellant being placed in a position wherein a failure to exercise reasonable care could cause respondent reasonably foreseeable patrimonial loss. All the requisites for Aquilian liability are present. A failure to exercise due care in the soil analysis which in turn would result in wrong advice being given, would result in loss being caused to respondent unlawfully and as a result of culpa. Respondent need allege and prove no more than that to succeed against appellant. For the reasons I have already stated I do not think that the mere fact that respondent at an earlier stage could have recovered the same loss by suing in contract deprives him of the right to invoke the Aquilian principles in order to recover the loss sustained by him. The considerations which have resulted in the Courts exercising care in applying, to new situations, the principles which give rise to Aquilian liability are the fear of opening the door of liability too wide and creating an unmanageable situation or indeterminate liability. See Greenfield Engineering Works (Pty) Ltd v NKR Construction (Pty) Ltd 1978 (4) SA 901 (N) at 916 and 917. To grant a party in the position of respondent a remedy in delict cannot result in indeterminate liability or an unmanageable situation. Whether respondent's claim is based on negligent misstatement, as was contended on behalf of appellant, or on negligent conduct, makes no difference. Even if it is to be regarded as based on negligent misstatement, it discloses a cause of action. MARGO J dealt fully with this aspect of the matter at 163 et seq of his judgment and I am in respectful agreement with his reasons and the conclusions reached by him. I think that the argument that respondent's cause is based on negligent misstatement is in any event an unjustifiably narrow interpretation of the pleadings. Respondent is clearly also relying on negligent conduct in that appellant failed to exercise due care in making the soil and site analysis. That in turn gave rise to the subsequent misstatements and was the root cause of respondent's alleged patrimonial loss. To my mind respondent's pleadings disclose a cause of action for damages sustained prior to the assignment of the contract in 1976. After the assignment respondent's position could not be worse than it was beforehand. Respondent was thereafter in the position it would

1985 (1) SA p511

SMUTS AJA have been in had appellant initially been a subcontractor to the later assignee. As a subcontractor with no contractual privity with respondent, it would certainly have been foreseeable that negligence in the execution of its contractual duties with the contractor could result in patrimonial loss to respondent. A failure to exercise due care would have resulted in Aquilian liability to respondent. It was argued that appellant's position has been worsened by the assignment since the contract between appellant and respondent contained an arbitration clause and that had the contract not been assigned respondent would have been bound to submit the present dispute to arbitration. It was however open to appellant, when the assignment was effected, to have inserted a clause to the effect that any claim by respondent against it would still be subject to arbitration. It failed to do so and respondent's rights under the Aquilian principles can accordingly be enforced in the ordinary way. It was contended that the possibility of appellant, as a subcontractor, being sued by both the owner and the main contractor is a reason for refusing an action against appellant. I agree with MARGO J that the prospect of appellant being held liable twice for the same loss is too remote to justify a denial of a remedy in delict. The other considerations already referred to, which have influenced Courts not to apply the principles of Aquilian liability to new sets of facts, are also not present in the case of a claim of the nature presently being considered. To allow a claim against appellant after


the assignment will not create a situation "fraught with an overwhelming potential liability". See the Greenfield case supra at 917A. In my view respondent's pleadings disclose a cause of action for damages suffered also after assignment took place. The contention that the damages claimed are in any event not such as are recoverable in delict cannot in my view also be upheld. The difference in the method of computing damages for, respectively, breach of contract and delict was stated by VAN DEN HEEVER JA in Trotman v Edwick 1951 (1) SA 443 (A) at 449B - C as follows: "A litigant who sues on contract sues to have his bargain or its equivalent in money or in money and

kind. The litigant who sues on delict sues to recover the loss which he has sustained because of the wrongful conduct of another, in other words that the amount by which his patrimony has been diminished by such conduct should be restored to him."

The fact that respondent seeks to recover the cost of the work done, and yet to be done, as detailed in the judgment of MARGO J at 159C - H, and that the performance of this work might result in the plant being brought into the condition it ought to have been in had appellant performed its obligation under the contract adequately, does not necessarily mean that respondent's claim is framed with the object or for the purpose of being placed in the position it would have been in had appellant fully performed its obligations under the contract; in other words, that the damages claimed are contractual. In Ranger v Wykerd and Another 1977 (2) SA 976 (A) this Court dealt with an action framed in delict. The plaintiff had bought a property on which was a house and a swimming bath. He had paid R22 000 for the property and thereafter found that the swimming bath was defective. As damages

1985 (1) SA p512

SMUTS AJA he claimed the cost of repairing the swimming bath, which was found to be R1 000. It was argued on behalf of the defendant that the damages thus computed were really contractual and not delictual in that the plaintiff was thereby seeking to be placed in the position he would have been in had the contract been properly performed by the delivery of a sound swimming bath. In regard to this argument the following was said by TROLLIP JA, whose judgment was concurred in by DE VILLIERS JA, KOTZÉ JA and MILLER JA: "It is also objected, however, that the damages so computed are really contractual and not delictual. That

objection, in my view, is not well founded. It is true that awarding the reasonable cost of repairing the swimming bath has also the effect of making good the representation as to its soundness and condition as if it were an express or implied contractual warranty in similar terms (see Maennel v Garage Continental Ltd 1910 AD 137; Crawley v Frank Pepper (Pty) Ltd 1970 (1) SA 29 (N) ). But it does not follow that such damages are therefore exclusively contractual and cannot also be delictual, any more than it can be said that they are purely delictual and cannot also be contractual. It has never been held, or even suggested as far as I know, that, in the case of a wrongful act causing physical damage to property, the reasonable cost of repairs should not be taken as measuring the claimant's patrimonial loss because it results in contractual and not delictual damages being awarded. It just so coincidentally happens that in one case such cost of repairs may represent the amount required to make good the warranty in a contract, and in another case it also measures the patrimonial loss caused by a delict."

In the present case respondent is entitled to be placed in the position in which it was before it suffered loss due to appellant's negligent acts. If, prior to the contract it possessed, say, R10 000 000 and spent this amount to construct the works which appellant designed for it and the structure was on account of the negligent advice in regard to the suitability of the site and the inadequacy of the structural design done by appellant worth not R10 000 000 but only R5 000 000, respondent would be entitled to claim that difference as damages. That would be the amount required to restore


respondent to the position it occupied before the delict was committed by appellant. Respondent would, however, be bound to mitigate its loss by all reasonable means at its disposal. If by spending R3 000 000 it could restore the value of its patrimony to what it was before the delict it would be entitled, in fact obliged, to do so and it could then claim the amount of R3 000 000 as damages. In the present case respondent has not pleaded the value of its patrimony before and after the commission of the delict and then stated the amount it claims to be the necessary expense to mitigate its loss. The failure to do so will however not disentitle it to lead that evidence. In Erasmus v Davis 1969 (2) SA 1 (A) it was stated by MULLER JA at 15 - 16 that "I cannot agree with the submission that a plaintiff, who has particularised his claim on the basis of one

method of calculating damages, is prevented at the trial from employing instead or in addition another method; provided, of course, that such other method is appropriate in the particular circumstances."

This statement was applied by this Court in Ranger's case supra at 995. It was there argued that the plaintiff was precluded from claiming, as the measure of his damages, the cost of repairing the swimming bath because the measure of damages alleged in the pleadings was the difference between the price which the plaintiff was induced to pay for the property and the price he would have been prepared to pay but for

1985 (1) SA p513

SMUTS AJA the defendant's fraud. In regard to this argument TROLLIP JA stated the following at 995: "Here it suffices to say simply that a similar point concerning pleadings was raised in Erasmus v Davis

1969 (2) SA 1 (A) . There the measure of damages plaintiff had claimed in her pleadings for damage to her motor car caused by the negligence of the defendant was the difference between the pre-accident and the post-accident values of the vehicle. She failed to prove the latter value, but she proved the reasonable cost of repairing the vehicle. The award of the latter amount as her damages was approved by four Judges of this Court, but all were unanimous that the form of her pleadings did not preclude that amount from being awarded as damages. See especially at 5C - F, 8 - 9, 11B - C, and 16A."

The reference to 8 - 9 is a reference to the following words by POTGIETER JA: "I am in entire agreement with my Brother MULLER that plaintiff was at the trial not prevented from

proving his damages by establishing the estimated reasonable and necessary cost of repairs to the body of the vehicle in spite of the way the alleged damages were particularised in the summons, should the circumstances show that proof of such cost was an inappropriate yardstick to measure the damages. I also agree with his reasons for coming to that conclusion."

In the present case it is not even clear that an inappropriate yardstick is being employed; the most that can be said is that more should have been averred to obtain clarity. The complaint against the respondent's particulars of claim is however not that it is vague and embarrassing but that it discloses no cause of action. It may be that evidence will show that the building as it was constructed can be used as a parking garage and that its value as such is the equivalent of what respondent paid out. If those be the facts respondent will have failed to prove damages. It may however also be proved that owing to its situation and structure the building, in its present condition, is of no use at all or merely of limited use with the result that respondent's patrimony has been substantially diminished. The exception can accordingly also not succeed on this ground. In regard to the cross-appeal I am of the view that, if it was necessary to have the site, the soil and the subsoil property investigated and for that purpose to have all the other work, referred to in paras 8 (a) and (b) of the first set of further particulars, done in order to be able to take the necessary steps to mitigate respondent's loss, those expenses are recoverable as part of respondent's damages. To my mind these are not contractual damages and paras 8 (a) and (b) should accordingly not have been struck out.


I would accordingly dismiss the appeal with costs and allow the cross-appeal with costs. I would alter para 2 of the order of the Court a quo to read: "The application to strike out is dismissed with costs."

I would further delete paras 2 and 4 of the said order and substitute therefor an order that the defendant - appellant - is to pay the costs of the exception and the application to strike out. Appellant's Attorneys: Deneys Reitz, Johannesburg; Webber & Newdigate, Bloemfontein. Respondent's Attorneys: Webber, Wentzel & Co, Johannesburg; McIntyre & Van der Post, Bloemfontein.

iR S Welsh QC did not sign the heads of argument, but appeared at the hearing of the appeal in the place of J Browde SC - Eds.

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Lillicrap Wassenaar and partners v Pilkington brothers …learning.ufs.ac.za/DEL314_ON/Resources/1 RESOURCES/COURT CAS… · LILLICRAP, WASSENAAR AND PARTNERS v PILKINGTON BROTHERS