LAW OF DELICT IMMUNITY FROM SUIT

LAW OF DELICT ROB MIDGLEY* CASE LAW IMMUNITY
FROM
SUIT
In Dikoko v Mokhatla 2006 (6) SA 235 (CC), 2007 (1) BCLR 1 (also discussed in the chapters on Constitutional Law and Bill of Rights Jurisprudence) the applicant was the Executive Mayor of the Southern District Municipality and the respondent was the Municipalitys Chief Executive Ofcer. The applicant had failed to settle a debt in respect of cell phone use and the Provincial Auditor-General called upon him to account for this situation. In the course of his explanation the applicant made defamatory comments about the respondent, who instituted action. The applicant claimed that even though his statement was made outside the normal functions of Council, it was privileged in terms of the Constitution, the Local Government: Municipal Structures Act 117 of 1998 and the North West Municipal Structures Act 3 of 2000, the latter statutes providing protection for anything said in Council or in one of its committees (para 11); alternatively, that s 3(2) of the North West Provincial Legislatures Powers, Privileges and Immunities Act 5 of 1994 provides for privilege and immunity to persons who are not members of a provincial legislature but appear before it to give information (para 3). (It is clear from various passages in the judgment (paras 1, 46, 49 and 108) that the applicants case was not based on qualied privilege, but on absolute privilege, i e an immunity. For a discussion on terminology, see below.) The Constitutional Court rejected the applicants contention and in the course of the judgment the following principles relating to Parliamentary immunity either emerged or were reafrmed: Immunity extends to members of Parliament and Provincial Councils and to municipal councillors in respect of statements made in Parliament or the respective councils or in any of their committees. Its purpose in a constitutional democracy is to promote freedom of speech and expression, to encourage democracy and full and effec* B Com LLB (Rhodes) PhD (Cape Town), Advocate; Professor and Dean of Law, Rhodes University.
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tive deliberation, and to remove the fear of repercussion for what is said (para 39). The North West Provincial statute provides specically that the protection does not extend to non-members giving evidence to the legislature or one of its committees. Similarly, the plain meaning of the relevant statutes indicates that the protection does not extend to councillors acting outside of council (para 32). Nonetheless, the fact that a statement is made in Parliament or in Council, is not necessarily decisive: The business must have been that of Parliament [or Council] (para 35). Canadian courts have extended the protection to conduct outside the environment that is normally protected, provided that there is a reasonable connection between what was said and the business of the relevant institution (see paras 367). It was not necessary to decide the South African position in this instance because the applicant had not been about the business of the Council, but had been called upon to explain his personal indebtedness (para 40). However, the Constitutional Court did appear to favour an approach similar to the Canadian one: There is therefore much to be said for a conclusion that, if a councillor participates in the genuine and legitimate functions or business of council, whether inside or outside of council, the privilege afforded under s 28 ought to extend to her or him (para 39). Whether the protection extends not only to legislative functions, but also to executive functions, was similarly left open (para 41), but ones inclination is that protection in the form of immunity should not extend to the executive. The policy factors that underpin Parliamentary immunity (and also immunity in municipal council debates) freedom of expression and the freedom to monitor and oversee public activity without the constraint of possible litigation if ones enquiries or opinions turn out to be wrong are not present when one performs executive functions. That does not mean, however, that the activities of the executive should not be protected. Executive protection should take a different form, similar to those that protect administrative decisions, where the protection is not absolute, but privileged. The difference is explored in the next section. (also discussed further below and in the section on Interfering with a trial courts discretion. TERMINOLOGY: IMMUNITY The term immunity was frequently used in a number of cases falling within this review period. In Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) the court
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noted that when conduct is not deemed to be wrongful, [T]he defendant enjoys immunity against liability for such conduct, whether negligent or not (para 12). (See also Minister of Finance v Gore NO 2007 (1) SA 111 (SCA) para 82, where the lack of wrongfulness is said to grant a defendant an immunity.) And throughout the judgment in Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) the protection afforded to judicial ofcers and persons in similar positions is referred to as an immunity. For example, the court states:
To sum up: In different situations courts have found that public policy considerations require that adjudicators of disputes are immune to damages claims in respect of their incorrect and negligent decisions. The overriding consideration has always been that, by the very nature of the adjudication process, rights will be affected and that the process will bog down unless decisions can be made without fear of damages claims, something that must impact on the independence of the adjudicator. Decisions made in bad faith are, however, unlawful and can give rise to damages claims. (para 26)
It is important to note the distinction between an immunity and a privilege, which the above-mentioned Supreme Court of Appeal judgments failed to do. In Dikoko v Mokhatla 2006 (6) SA 235 (CC), 2007 (1) BCLR 1 the Constitutional Court dealt with a similar issue, popularly known as parliamentary privilege, and while the distinction is appreciated in the judgments, the words privilege and immunity are often used loosely and interchangeably. (See, for example, paras 8, 9, 11, 12, amongst others although the terminology is inuenced by the wording of the relevant statutes.) Courts should use these concepts with greater precision, however, and it is not merely a matter of terminological accuracy. There are fundamental differences between immunity and privilege, and the impact on parties and any litigation between them would differ vastly, depending upon the type of protection that applies. Persons are immune from suit irrespective of whether or not they might have committed a delict. Where an immunity exists, there is no risk of liability, even if the conduct would in ordinary circumstances be considered wrongful. The classic instances where immunity exists involve Parliamentarians (in the course of Parliamentary activity) and diplomats: They cannot be sued for any delicts they commit. The protection is absolute and the defendant is open to no risk. Parliamentarians, for example, are protected from suit, no matter whether they act maliciously. They cannot be sued for what they say in Parliament, even if they commit a delict, and they cannot be called upon to defend their parliamentary conduct in court.
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A privilege, on the other hand, offers less drastic protection. If a privilege is established there is no legal duty: The defendants conduct is considered reasonable and not wrongful (J C van der Walt & J R Midgley Principles of Delict 3 ed (2005) para 56). The defence is not absolute, but qualied: The defendant must prove that the circumstances of the case afford protection and face the risk of liability if a plaintiff can prove that a delict has been committed. Malice, for example, would forfeit the privilege. For instance justied ofcers are not immune from suit in the same way as Parliamentarians or diplomats are. They can be sued, and when this occurs, they are afforded the opportunity to establish a defence in Hohfeldian terms, a privilege to show that their conduct was not wrongful. The existence of malice would defeat such a defence, just as it would defeat the defence of truth and public benet or fair comment. So the defence that is available to judges is a privilege, not an immunity. NEHAWU v Tsatsi 2006 (6) SA 327 (SCA) (also discussed under Defamation and Priviledged occasion) concerned the defence of privilege. Although the court used standard terminology qualied privilege this case also provides another opportunity to plead for more precision. The defence is not one of qualied privilege, but of privileged occasion and the issue is not whether the statements were protected by qualied privilege (para 10), but whether the occasion was privileged. The prex qualied is also redundant. It is often used to distinguish privileged occasion from absolute privilege, but the latter is not a privilege (which is a defence against the wrongfulness or unlawfulness element), but in fact an immunity from suit (which protects a person from being sued, even where all the elements of a delict are present). So it is incorrect to say, as the court did, that the immunity would be forfeited (ibid) if the person had an improper motive. An improper motive would defeat the privilege, but an immunity remains even in malicious circumstances. CONCURRENCE
OF
ACTIONS
The question of concurrence of actions arose in two of the cases under review. In Hirschowitz Flionis v Bartlett 2006 (3) SA 575 (SCA) (also discussed under Attorneys and Contributory negligence) an attorney sued another who had made payments from a trust account into which the former attorney had deposited money. The facts are more fully set out below. The court rejected an argument
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that this case was analogous or comparable with Lillicrap, Wassenaar and Partners v Pilkington Brothers SA (Pty) Ltd 1985 (1) SA 475 (A) and rightly so, for the rst attorney had deposited the money anonymously and there was no prior interaction between the two parties. There was no contractual setting and so there was no question of concurrence of actions. The situation was not one in which parties could regulate their relationship through contractual stipulations (para 29) and public policy would not lean towards the denial of a remedy, as was the case in Lillicrap. On the contrary, the court said (para 30), policy considerations favoured the imposition of a legal duty: As a rm of practising attorneys, the appellant proclaimed itself to have expertise and trustworthiness; the respondent had reasonably relied on the fact that the money was being held in trust; protective measures could easily have been implemented; and lastly, the risk of harm arising from the appellants unreasonable conduct was foreseeable. On the other hand, concurrence was clearly at issue in Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) (also discussed under Negligent conduct causing pure economic loss) which involved a claim for pure economic loss arising from failures in aquarium exhibit tanks due to a negligent design by structural engineers. A core feature of the respondents exception was that the facts raised a concurrence of actions that would exclude delictual liability. The appellants sought to circumvent this approach by arguing that the harm suffered was physical damage to the exhibition tanks, in which event the harm was prima facie wrongful and public-policy issues as to whether or not Aquilian liability should be extended to these facts would be of no concern. The court rejected this contention, however, holding that this was not an instance of damage to properly-constructed tanks: They were defective from the very start and had always been of inferior quality. The tanks never deteriorated, so the harm was purely economic. The courts approach cannot be faulted, and moreover, was consistent with a similar nding in the Lillicrap case. The appellants second argument received similar short shrift. It went thus: The rationale for the Lillicrap decision was that delictual liability was not necessary because satisfactory contractual remedies were available to the plaintiff; and since in this instance there was no contract, and at the time of the negligent conduct the trust had not yet been in existence, there were no similar contractual remedies available. The court found that it was the parties ability to regulate their relationship contractually that was important, and not the
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mere absence of a contractual remedy. (The parties could have intended that there be no remedy.) Something more would be needed for policy considerations to impose an additional remedy (para 18). Again, one must agree with the courts nding. At the same time, however, one must point out that its conclusion was not that the existence of a contractual setting, irrespective of whether or not there is a remedy, trumps any argument for a delictual remedy. A delictual duty may still arise in both such instances, provided that there is a policy imperative for the law to superimpose a further remedy (ibid). The core difference between the situation in Two Oceans and that in Lillicrap was that the respondents negligent conduct occurred prior to the contractual relationship; but even that did not assist the appellants. Following the traditional cautious approach to the extension of liability, the court considered whether or not there was any need for an extension, and held that there was not (paras 1920). The parties had foreseen that the project would not proceed until a contractual relationship existed between them and the risk of any harm could have been covered in their contract, either by a stipulatio alteri or by a specic provision concerning prior decisions. The appellants had been in a position to avoid the risk of harm and it was not up to the court to rescue them. The court added a further reason, with reference to Lillicrap, namely that Aquilian liability does not t comfortably in a contractual setting (para 25) and, after postulating a number of situations, concurred with the view expressed in Lillicrap that contracting parties in general contemplate that the law of contract will regulate their reciprocal rights and obligations (paras 215). The way in which this additional reason was phrased is, with respect, disappointing. The court stated the rule more widely than it did in Lillicrap, which referred to a contractual setting like the present and which therefore allowed for the possibility of concurrence in some contractual settings. The Two Oceans case appears to exclude concurrence in all contractual settings where the loss in question is purely economic. If the courts intention was to close the door, its decision is a retrograde step, and also contrary to conclusions, discussed two paragraphs above, that policy might superimpose a further remedy. Far better, it is suggested, would have been for the court to have kept the Lillicrap formulation, with its proviso that any extension of liability in contractual settings should be granted with caution. Whether or not similar principles should extend to subsequent parties was expressly left open. It is suspected, however, given the
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Supreme Court of Appeals attitude in the Two Oceans case, that courts are unlikely to extend liability in such instances. In any event, the spectre of indeterminate liability looms too large. CIRCUMSCRIBING
THE
AMBIT
OF THE
LAW
OF
DELICT
Recent decisions give the impression that the Supreme Court of Appeal wishes to curtail the way in which the law of delict has been expanding, particularly in the area of pure economic loss. In both Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) and Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA) the need to circumscribe the ambit of delict appears to have been a strong underlying policy factor. In the Two Oceans case the Supreme Court of Appeal conrmed the Lillicrap approach and once again prevented delictual rules from encroaching on areas in which parties are able to set out their reciprocal rights and obligations. The law of delict has no place in such contractual circumstances, the court found, irrespective of whether the parties expressly set out their position, or whether they failed to do so. In Steenkamp, the same restrictive approach was followed in demarcating the border between delict and administrative law. Following the lead taken in Australia (the court referred specically to Sullivan v Moody (2001) 75 ALJR 1570 para 42; Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 para 102; State of New South Wales v Paige [2002] NSWCA 235 paras 1746; but see also Kitano v The Commonwealth of Australia (1974) 129 CLR 151 at 1745 and Dunlop v Woollahra Municipal Council [1981] 1 All ER 1202 (PC) 1208fg), the Supreme Court of Appeal expressed the need to preserve the general coherence of the legal system and to prevent the law of delict from subverting other principles of law. Any extension of delictual liability should be consistent with other legal doctrines, principles and policies (para 28). Steenkamp added a further restrictive measure in holding that in circumstances where statutory and common-law policy issues overlap, the statutory duty is decisive (para 22). One accepts that demarcated areas exist within our legal system, and that they should exist, but then, boundaries should not be rigid. For many years a clear divide existed between public and private law but gradually that divide was eroded and now, in a constitutional era, the inuence of public law on delict has been remarkably rejuvenating. A restrictive approach protecting traditional delictual principles from incursion would not have had such benecial consequences. Thus far the extensions of delictual liability have not
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been a threat to the logical ordering of our legal system. The conservative approach which courts have adopted when considering possible extensions of delictual liability into new areas (such as in the Lillicrap and Steenkamp cases) has prevented delict from becoming an unruly horse or a predator of other branches of law. To the extent that the above-mentioned decisions have a cautionary inuence on any expansion of delictual liability, they are to be welcomed. It is nonetheless hoped that their effect will not be that the law of delict has no role to play in areas on the border between it and other branches of the law, as now appears to be a real likelihood: In Two Oceans even the absence of contractual provisions proved to be decisive; and in Steenkamp, which is discussed in more detail below, administrative law and statutory provisions held sway. THE ORDER
OF
ENQUIRIES
INTO
DELICTUAL ELEMENTS
The signicance of First National Bank of Southern Africa Ltd v Duvenhage 2006 (5) SA 319 (SCA) lies in its explicit conrmation that, despite doctrinal logic, there is no xed order in which one must approach all enquiries into delictual liability. [T]he the human mind is sufciently exible, Nugent JA said, to be capable of enquiring into each element separately, in any order, with appropriate assumptions being made in relation to the others, and that is often done in practice to avoid prolonging litigation (para 2). In this instance the court found it appropriate to enquire at the outset whether the causation element was present. The respondent wished to purchase a farm and approached the bank manager for a loan. Although disputed, the court accepted for the present purposes, that he undertook to process their application, which he never did. The respondent also approached another company which indicated that it would be willing to assist provided that the respondent acquired the property and secured its loan by means of a second bond. In the meantime, the respondent undertook certain expenditure on overdraft and when the loan did not materialise, the bank foreclosed. The respondent counterclaimed, amongst others, in delict, alleging that he had suffered loss as a result of the bank managers wrongful conduct. Although the matter posed little difculty in the previous two hearings, the Supreme Court of Appeal chose to determine the matter on the causation issue:
But it was not because Roux failed to submit the application for a loan (as he ought to have done), nor because he assured the Duvenhages that a loan would be advanced (which he ought not to have done), that the
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venture failed. It failed because a loan was not secured, and the farm was not thereby acquired, before time ran out. There is no direct evidence that the Duvenhages would, indeed have secured a loan from the bank, had the application been submitted, and thereby acquired the farm. Nor is there direct evidence that they would have secured a loan from an alternative source had the bank refused to grant a loan. (para 18)
And:
The true cause of the expenditure of the money, and the loss of the opportunity to recover it and to prot, was that the Duvenhages embarked upon the venture when, unbeknown to them, because they misunderstood the terms of the permits, it was not capable of being completed before the permits expired. (para 21)
So the claim failed for want of a causal link, which obviated any discussion of other, possibly more contentious, issues. (The judgment in essence conrms Knobels view on the matter. See J C Knobel Die Samehang Tussen Onregmatigheid en Skade 2005 (68) THRHR 645.) The judgment serves as a reminder that while theory is important to ensure consistent treatment, ones approach to resolving issues should not be one-dimensional. The elements of a delict are often interrelated, but they remain distinct enquiries. And, while one can say, for example, that the fault enquiry presupposes that the conduct is wrongful (Van der Walt & Midgley op cit para 103), one must sometimes assume facts, as one would do, for example, when determining whether a negligent statement is wrongful. Nonetheless, logic surely dictates a natural order in which one ought to enquire into the delictual elements. First one should establish whether the plaintiff suffered actionable harm; and thereafter, whether there is any conduct, either an act or an omission, that could be attributed to the defendant. The third step is to establish a factual link between the conduct and the harm. Only once these essentially factual issues have been determined, does it become necessary to determine those elements that involve legal conclusions: Wrongfulness, fault and legal causation, not necessarily, in every instance, in that order (Truter v Deysel 2006 (4) SA 168 (SCA) para 17. See also Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA)). CONSTITUTIONAL DAMAGES In MEC Department of Welfare, Eastern Cape v Kate 2006 (4) SA 478 (SCA) it was found that constitutional damages are, in certain circumstances, an appropriate remedy for a constitutional breach.
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This case is discussed in detail in the chapter on Bill of Rights Jurisprudence. INTERFERING
WITH A
TRIAL COURTS DISCRETION
Various cases falling within this review period commented on the principles to be applied when an appellate court reviews a trial courts discretionary decision (see Transnet Ltd t/a Metro Rail v Tshabalala [2006] 2 All SA 583 (SCA) para 8; Road Accident Fund v Delport NO 2006 (3) SA 172 (SCA) para 25; Road Accident Fund v Guedes 2006 (5) SA 583 (SCA) paras 5 and 8 and Minister of Safety and Security v Seymour 2006 (6) SA 320 (SCA) para 11). Their gist, however, is encapsulated in both the majority and minority judgments in the Constitutional Court case of Dikoko v Mokhatla 2006 (6) SA 235 (CC), 2007 (1) BCLR 1. (discussed above under Immunity from suit and Terminology Immunity) An appellate court should be slow to interfere with a trial courts discretion and should only do so where the trial court misdirected itself, in the words of Moseneke DCJ for the majority (para 95), in the sense that it has awarded high or low damages on the wrong principle or when in the opinion of the appellate court the award is so unreasonable as to be grossly out of proportion to the injury inicted. . . . Ultimately, the test is whether in all the circumstances of the case the compensation is a reasonable and just measure of the harm. Similarly, the minority noted principles that the Supreme Court of Appeal has repeatedly laid down: Interference is warranted only if the award of the trial court was palpably excessive, clearly disproportionate in the circumstances of the case, grossly extravagant or unreasonable or so high as to be manifestly unreasonable (para 58). The application of these principles to the specic situations are reviewed below, but the differing approaches in Dikoko highlight a further principle that has not been apparent previously. Mokgoro J, who set out the views of the minority, thought that the trial courts conclusion regarding the damages award had not been motivated and, while it took some factors into account, there was no indication that it had considered any of the mitigating factors that the defendant had tendered, nor for that matter, any aggravating factors (paras 724). In not fully articulating its reasons, the trial court had misdirected itself, for it appeared from its discussion on the quantum that it had not considered other important factors (para 76). The minority view was that the award should have been reduced from R110 000 to R50 000. The majority disagreed. Moseneke DCJ said:
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In my view the approach of the trial court to xing damages should not be evaluated by the discussion in the judgment of the quantum of the compensation only. It must be gathered from the judgment read as a whole. One has to read the judgment, inclusive of the discussion on the merits and quantum, as a whole. The mere fact that certain considerations relevant to quantum are mentioned in the discussion on the merits only should not lead to the inference that they were not in the mind of the trial Court when it determined the extent of the damages. The very nature of an enquiry into whether an expression is a defamatory matter requires an examination of the very factors Mokgoro J says the trial court has omitted. The body of the judgment of the trial Court in fact traverses, as it must, the nature of the defamatory statement, the scope of its publication and effect and whether the applicant took any steps to rectify the harm done. (para 97)
The minority opinion would create an untenable position in practice, for judges would have to articulate every possible factor, lest they be accused of having overlooked something important. Fortunately for trial courts, the majority approach gives them some leeway. The more robust approach by the majority is certainly more practical. Nonetheless, one cannot but sympathise with the minoritys conclusion that there had been a misdirection: On a consideration of all the issues, the award seems to have been excessive. THE AQUILIAN ACTION WRONGFUL CONDUCT Wrongfulness issues on exception In Axiam Holdings Ltd v Deloitte & Touche 2006 (1) SA 237 (SCA) (also discussed under Public policy and Auditors) the court again emphasised that courts will not lightly determine wrongfulness issues on exception and indicated that courts should be loath to hold, at the exception stage, that a legal duty does not arise (paras 12 and 235). Although it might not be immediately apparent, the factual background could change after the evidence is scrutinised. The need for caution is greater in instances where there is no previous judicial pronouncement to provide guidance and in such instances it is all the more necessary to establish the full factual matrix before a nal pronouncement is made (para 25). The appropriate time for considering all the relevant factors is at the end of the trial after the evidence has revealed all the circumstances of the case (para 19). Implicit in the majority decision is an idea that auditors might be held liable in circumstances where they them-
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selves are to blame for their lack of knowledge and that it would be better to ventilate the issues than scuttling a claim before the relevant policy considerations are thought through. While courts should be cautious in settling wrongfulness issues on exception, this does not mean that they must as a matter of course wait to see what the evidence reveals. This point was made in Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) where the appellant had relied on Axiam Holdings in arguing that it was inappropriate to decide wrongfulness at the exception stage. The court pointed out that not all wrongfulness issues are fact-bound and that some policy considerations could be decided without a detailed exposition of the facts, as had often been the case in the past (para 2, and see also para 16). Later in the judgment the court added that wrongfulness does not always depend on the facts of a particular case, as some categories, like the liability of a collecting bank, have been demarcated by law, leaving only the issue of liability in a particular instance to be decided (para 15). From these cases, the position appears to be this: While the factual base for determining wrongfulness might have to be established later during the trial, in some instances, where broad policy factors are the determining factor, there is no bar to deciding the matter on exception. However, Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA) took the issue a step further. Although public policy issues are decided as questions of law, one should not react intuitively to a collection of arbitrary factors and evidence may be necessary to identify the policy considerations relevant to a particular set of facts (para 25). Public policy Courts have in recent years emphasised that while reference to the law in other common-law countries might be useful to obtain reassurance that our law is congruent with global commercial norms, the assessment ultimately should be based on the prevailing norms in South Africa. The majority judgment in Axiam Holdings Ltd v Deloitte & Touche 2006 (1) SA 237 (SCA) (also discussed under Wrongfulness issues on exception and Auditors) once again conrmed this approach (para 11, with reference to Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 16), and noted that particularly where South African courts have previously decided similar issues and set out the relevant principles, one should not ignore such cases and have resort to foreign law. This
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approach is clearly correct. Societal norms, especially, those which form the basis of the wrongfulness enquiry, should not be imported without a clear indication that they also reect local values. Nonetheless, where our law is silent, or where foreign jurisdiction could assist in giving direction in which our law could develop, resort to foreign cases should not be eschewed. This is what happened in Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA), for example, where the court considered it useful to look to foreign decisions in identifying policy considerations and the issues that need to be assessed (para 26). Legal duty, duty of care, and the distinction between wrongfulness and negligence There has been some academic sparring on the nature of the legal duty that forms the basis of the wrongfulness element. (See, for example, Anton Fagan Rethinking Wrongfulness in the Law of Delict (2005) 122 SALJ 90; J Neethling The conation of wrongfulness and negligence: Is it always such a bad thing for the law of delict? (2006) 123 SALJ 204; R W Nugent Yes, it is always a bad thing for the law: A reply to Professor Neethling (2006) 123 SALJ 557.) In three cases, Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA); Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA); and Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA), the Supreme Court of Appeal added its voice to the debate. The least controversial aspects are the courts cautioning against use of the term duty of care and its emphasis on distinguishing the wrongfulness and fault elements in our law. In Telematrix, for example, the court said:
To formulate the issue in terms of a duty of care may lead one astray. It cannot be doubted that the ASA owed a duty towards the plaintiff to consider and arrive at a decision without negligence, in a manner that was fair, justiable and reasonable, and within the ambit of the complaint, but it does not follow that a failure to have done so created an obligation to compensate. To illustrate: There is obviously a duty even a legal duty on a judicial ofcer to adjudicate cases correctly and not to err negligently. That does not mean that a judicial ofcer who fails in the duty, because of negligence, acted wrongfully. Put in direct terms: Can it be unlawful, in the sense that the wronged party is entitled to monetary compensation, for an incorrect judgment given negligently by a judicial ofcer, whether in exercising a discretion or making a value judgment, assessing the facts or in nding, interpreting or applying the appropriate legal principle? Public or legal policy considerations require that there
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should be no liability, ie, that the potential defendant should be afforded immunity against a damages claim, even from third parties affected by the judgment. (para 14)
Similarly, in the Steenkamp case, the Supreme Court of Appeal said the phrase duty of care is misleading, and may tend to place an over-emphasis on the foreseeability of harm, as if it were a sine qua non for wrongfulness (para 17). The correct perspective, the court said, was that foreseeability is a factor to be considered in the wrongfulness decision but it is never decisive of an issue:
Otherwise there would not have been any reason to distinguish between wrongfulness and negligence and since foreseeability also plays a role in determining legal causation, it would lead to a temptation to make liability dependent on the foreseeability of harm without anything more, which would be undesirable. (para 18)
One cannot quibble with these comments, for they correctly reect our law as it has evolved in the nal quarter of the twentieth century. The bone of contention lies in the way the legal duty is formulated, and let me hoist my ag at the outset: I fall into the camp that believes that the legal duty that a person owes is a duty not to harm another, or, put differently, not to infringe upon an interest or right of another. It is a duty to act reasonably, or reasonably to abstain from acting (Van der Walt & Midgley op cit para 63). The ipside of such a duty is that the other person has a right that deserves protection; for example, bodily integrity, patrimony or reputation. The infringement of the right or the breach of the legal duty will be wrongful, irrespective of the nature of the actors fault, provided that the infringement or breach occurred in a legally-reprehensible way. And it is in respect of this latter enquiry that the legal convictions of the community, the boni mores and public policy play their role. Although fault is not entirely irrelevant when considering wrongfulness (for example, the boni mores could accept negligent conduct in certain circumstances, but not intentional conduct), the enquiry into fault is a separate one relating to an independent element of delictual liability. The alternative view postulates that ones legal duty is to behave carefully towards another; in other words, the duty is not to behave negligently. This has been the way in which practitioners tend to phrase the duty in their papers (Hirschowitz Flionis v Bartlett 2006 (3) SA 575 (SCA) para 23; the Two Oceans case paras 7 and 8) and the Supreme Court of Appeal now appears to have endorsed that approach. In the Two Oceans case, for example, the court rst noted
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that in the case of omissions and pure economic harm wrongfulness depends upon the existence of a legal duty not to act negligently (para 10). (See also Minister of Transport NO v Du Toit 2007 (1) SA 322 (SCA) para 3, where the court noted that the parties had accepted the legal duty to act without negligence.) Later in Two Oceans the court added:
Perhaps it would have been better, in the context of wrongfulness, to have referred to a legal duty not to be negligent, thereby clarifying that the question being asked is whether in the particular circumstances negligent conduct is actionable, instead of just to a legal duty. I say this in passing and without any intention to change settled terminology. (para 12)
However, the courts focused exposition of the rationale for the wrongfulness criterion could hardly be said to have been in passing, for it is clear that the court was assessing whether there was a duty not to act negligently, and not, as many had thought settled, whether there was a duty to prevent harm to the plaintiff. Fortunately for those who feel otherwise, closer examination of the judgment provides some hope, for it reveals that the Supreme Court of Appeal is more concerned with the fact that the wrongfulness enquiry concerns the reasonableness of imposing liability on the defendant and that the term legal duty might lead the unwary astray (the Two Oceans case para 11 and the Telematrix case para 14). As to the oft-quoted general criterion of reasonableness the court had this to say:
It is sometimes said that the criterion for the determination of wrongfulness is a general criterion of reasonableness, i e whether it would be reasonable to impose a legal duty on the defendant. . . . Where that terminology is employed, however, it is to be borne in mind that what is meant by reasonableness in the context of wrongfulness is something different from the reasonableness of the conduct itself which is an element of negligence. It concerns the reasonableness of imposing liability on the defendant. . . . Likewise, the legal duty referred to in this context must not be confused with the duty of care in English law which straddles both elements of wrongfulness and negligence. . . . In fact, with hindsight, even the reference to a legal duty in the context of wrongfulness was somewhat unfortunate. (para 11 (references omitted); see also para 12)
The problem, it is suggested, lies not in the use of the term legal duty, but of the term duty of care. A duty of care connotes a duty to act carefully, ie not negligently, towards another. To use the phrase a legal duty not to be negligent, as the court suggests, would add to the confusion, for it would achieve exactly what the court
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would like to avoid: Confusion between the wrongfulness and fault elements. It would be far better to reserve the term legal duty for those instances in which the law imposes a duty upon a person to act reasonably towards another in other words, as a term forming part of the wrongfulness enquiry. It is therefore not the use of this term that is unfortunate, but the use of duty of care or duty not to act negligently. It is these latter two formulations, with respect, that lead the unwary astray. In Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 (3) SA 121 (CC), 2007 (3) BCLR 280 the majority in the Constitutional Court stayed clear of the fray concerning the distinction between wrongfulness and negligence, but its formulation of the wrongfulness criterion clearly supports the criticism levelled against the Supreme Court of Appeal judgments. The court said:
What is important is that wrongfulness lies in the failure to full a duty to prevent harm to another. In turn, whether or not a legal duty to prevent loss occurring exists calls for a value judgment embracing all the relevant facts and involving what is reasonable and, in the view of the court, consistent with the common convictions of society. (para 39)
Negligent conduct causing pure economic loss Certain fundamental principles were reiterated in Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA). As a rule, persons have to bear the loss that they suffer, and that burden only shifts to someone else when the elements of a delict are present. The fact that conduct is negligent does not automatically render it wrongful, although foreseeability is a factor to be taken into account when wrongfulness is considered (para 12). Pure economic loss is not prima facie wrongful and where such loss results, conduct is wrongful only if policy considerations dictate that the plaintiff is entitled to compensation in the circumstances (para 13; see also Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA) para 1). This case is discussed in greater detail later. Sufce it here to note that the court held that policy considerations militated against extending liability for pure economic loss suffered in situations where adjudicators have a duty to act impartially when considering conicting interests and exercising a discretion. Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) (also discussed under Concurrence of actions) involved a R14,9 million claim for pure economic loss arising from failures in aquarium exhibit tanks due to a negligent
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design by structural engineers. In the court a quo the respondent engineers had successfully excepted to the claim. The appeal focused on the respondents decision to waterproof the tanks by means of a lining instead of designing water-retaining concrete structures. The appellants had contracted the respondent to advise on the design and construction of the exhibit tanks. The issues on appeal related to the respondents alleged delictual duty, prior to the conclusion of the contract, to act without negligence in deciding upon an appropriate design (paras 7 and 9). The formulation of the legal duty in this way is criticised above. For the purposes of the exception, the court assumed that the respondents decision had been wrong and also negligent. That in itself, however, the court said, was not actionable. In addition, the conduct had to be wrongful. Positive conduct causing physical harm to person and property is prima facie wrongful, but in the case of omissions and pure economic harm wrongfulness depends upon the existence of a legal duty not to act negligently, which in turn is a matter for judicial determination involving criteria of public or legal policy consistent with constitutional norms (para 10). Later, the court expanded:
When we say that a particular omission or conduct causing pure economic loss is wrongful, we mean that public or legal policy considerations require that such conduct, if negligent, is actionable; that legal liability for the resulting damages should follow. Conversely, when we say that negligent conduct causing pure economic loss or consisting of an omission is not wrongful, we intend to convey that public or legal policy considerations determine that there should be no liability; that the potential defendant should not be subjected to a claim for damages, his or her negligence notwithstanding. In such event, the question of fault does not even arise. The defendant enjoys immunity against liability for such conduct, whether negligent or not. (para 12)
The upshot was that the aquariums claim failed. The parties had been in a contractual setting and could easily have regulated their rights and duties, but chose not to do so. As was the case in Lillicrap, Wassenaar & Partners v Pilkington Brothers (Pty) Ltd 1985 (1) SA 475 (A), this was an instance where public policy leaned towards a denial of the delictual remedy. An administrative law setting and the existence of a statutory duty provided the backdrop for determining whether liability for pure economic loss should arise in Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA). The Constitutional Court conrmed the Supreme Court of Appeals decision that it should not. This decision is discussed below under Liability
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imposed by statute and Liability for administrative decisions. Two other cases involving pure economic loss, Axiam Holdings Ltd v Deloitte & Touche 2006 (1) SA 237 (SCA) and Hirschowitz Flionis v Bartlett 2006 (3) SA 575 (SCA), are also discussed elsewhere. Unlawful competition The constitutionality of the wrongfulness test in the unlawful competition context came under the spotlight in Phumelela Gaming and Leisure Ltd v Grndlingh 2007 (6) SA 350 (CC), 2006 (8) BCLR 883 (CC). The applicant contended in the Constitutional Court that the Supreme Court of Appeal should have taken constitutional provisions into account when it considered whether or not the respondents conduct amounted to unlawful competition. (The Supreme Court of Appeal judgment is reported as Grndlingh v Phumelela Gaming and Leisure Ltd 2005 (6) SA 502 (SCA).) The Supreme Court of Appeal, so the applicant argued, should have developed the common law in line with s 39(2) of The Constitution of the Republic of South Africa, 1996 by taking into account s 25 of the Bill of Rights which protects rights to property (para 18). Although the applicant did not canvass these issues in the Supreme Court of Appeal, the Constitutional Court did not consider this to be a bar to it having jurisdiction to hear the matter (para 23). Nonetheless, when it came to the merits, the court did not uphold the applicants argument. A court, it said, should consider all relevant constitutional values when balancing conicting interests, not just those that favour one partys argument (paras 35 and 378). The Bill of Rights protects the right to property, but it also promotes and protects other freedoms, notably in this case, the right to freedom of trade, and while competition is not expressly mentioned in the constitution, it is a consequence of the right to freedom of trade and so the protection of competition is in the public welfare. All things considered, the protection of competition is in the public welfare (paras 33 and 36). As to the test, the court said the following:
The question is whether, according to the legal convictions of the community, the competition or the infringement on the goodwill is reasonable or fair when seen through the prism of the spirit, purport and objects of the Bill of Rights. Several factors are relevant and must be taken into account and evaluated. These factors include the honesty and fairness of the conduct involved, the morals of the trade sector involved, the protection that positive law already affords, the importance of competition in our economic system, the question whether the parties are
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competitors, conventions with other countries and the motive of the actor. (para 34)
The applicant did not succeed in this instance, but an important effect of this judgment is that it would be wise from now on for all courts to state clearly that they have considered constitutional norms and values in deciding the extent of delictual liability. The Constitutional Court once again reiterated that courts must at all times be aware of their constitutional duty to have regard to constitutional values whenever normative issues fall to be decided, and irrespective of whether or not the parties raised the issue in argument (paras 269). This point was also made in Carmichele v Minister of Safety and Security 2001 (4) SA 938 (CC) paras 3940 and K v Minister of Safety and Security 2005 (6) SA 419 (CC) para 17.) Liability imposed by statute Section 60(1) of the South African Schools Act 84 of 1996 holds the State liable for harm suffered as a result of conduct connected with any educational activity at a public school, subject to the exemption granted in s 20(10) in relation to certain contractual responsibilities. However, the exclusion of liability does not extend to delicts committed by personnel contracted by the school, thus rendering the State liable for such conduct. See LUR vir Onderwys en Kultuur, Vrystaat v Louw 2006 (1) SA 192 (SCA) which is also noted below under Schools and teachers. As noted above, the Supreme Court of Appeal made some important comments in Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA) (also discussed under Liability for administrative decisions) regarding the creation of a delictual legal duty in circumstances where statutory and common-law policy issues overlap. In the former instance, the existence of a legal duty is a matter of statutory interpretation; whereas a common-law duty depends upon policy considerations favouring liability in the circumstances (para 20). A feature of this judgment, however, is that the Supreme Court of Appeal appears to consider that in a statutory context, the existence of a statutory duty is decisive (para 22): If on a conspectus of the statute a damages claim arises, then there is no question of a common-law delictual duty; and similarly, if the statute does not provide relief, the common law cannot do so either, because that would be contrary to the statutory scheme and, If no conclusion can be drawn from the statute, it seems unlikely that policy considerations could weigh in favour of granting a commonlaw remedy (ibid).
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The decision went on appeal to the Constitutional Court Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 (3) SA 121 (CC), 2007 (3) BCLR 280 which summarised the factors to be considered when assessing liability for breaches of statutory duties as follows:
Our courts Faircape, Knop, Du Plessis and Duivenboden and courts in other common law jurisdictions readily recognise that factors that go to wrongfulness would include whether the operative statute anticipates, directly or by inference, compensation of damages for the aggrieved party; whether there are alternative remedies such as an interdict, review or appeal; whether the object of the statutory scheme is mainly to protect individuals or advance public good; whether the statutory power conferred grants the public functionary a discretion in decision-making; whether an imposition of liability for damages is likely to have a chilling effect on performance of administrative or statutory function; whether the party bearing the loss is the author of its misfortune; whether the harm that ensued was foreseeable. It should be kept in mind that in the determination of wrongfulness, foreseeability of harm, although ordinarily a standard for negligence, is not irrelevant. The ultimate question is whether on a conspectus of all relevant facts and considerations, public policy and public interest favour holding the conduct unlawful and susceptible to a remedy in damages. (para 42)
This Constitutional Court judgment tempers any impression that one might have had from the Supreme Court of Appeal decision that the statute is the sole determinant of liability. Decisions of tribunals The signicance of Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) is that it gives clear guidelines for how courts should deal with a decision reached in a process that may properly be described as adjudicative, for, although the ratio is conned to decisions by an administrative tribunal, the judgment contains strong obiter statements that the applicable principles apply equally to public or private ofcials, including arbitrators or quasi-arbitrators, who are called upon to make considered decisions in an impartial fashion:
To sum up: In different situations courts have found that public policy considerations require that adjudicators of disputes are immune to damages claims in respect of their incorrect and negligent decisions. The overriding consideration has always been that, by the very nature of the adjudication process, rights will be affected and that the process will bog down unless decisions can be made without fear of damages claims, something that must impact on the independence of the adjudicator.
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Decisions made in bad faith are, however, unlawful and can give rise to damages claims. (para 26)
The public policy rationale is to protect the independence of the adjudicator so that decisions can be made fearlessly. In instances such as these, although the oodgates argument is relevant (para 19), there cannot be blanket liability for imperfect administrative decisions. The judgment is a logical extension of the judicial protection and, since it has wider implications, it is important to note that this form of protection does not apply to every decision that an ofcial has to make. The protection applies only to those instances in which a discretion is exercised in circumstances in which the person has a duty to act impartially (ibid) and to weigh up conicting interests and exercise a value judgment (para 23). Liability for administrative decisions Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 (3) SA 121 (CC), 2007 (3) BCLR 280 is the culmination of a process that started in the Ciskei High Court, went on appeal to the Supreme Court of Appeal (Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA)) also discussed under Liability imposed by statute and from there to the Constitutional Court. The applicant was the liquidator of Balraz Technologies (Pty) Ltd. Balraz had submitted a tender to the State Tender Board to supply three sets of services relating to the payment of social pensions and welfare grants in the Eastern Cape Province. Of the tenders received, Balrazs tender was the lowest, but two technical advisory committees expressed concern about the effective cost of the tender and also about the companys ability to deliver the services. These reservations notwithstanding, the Board awarded Balraz a contract for one of the services and another company was contracted to deliver the other two. The Board believed that Balraz represented local interests and the decision would also support black empowerment. In preparing to provide the services as contracted, Balraz incurred out-of-pocket expenses amounting to R4,35 million. Meanwhile an unsuccessful tenderer took the Tender Boards decision on review and the Ciskei High Court set the Boards decision aside. A new round of tenders was called for, but Balraz, having in the meantime been placed in liquidation, did not participate. Thereafter the applicant claimed damages for the R4,35 million loss suffered, alleging that the Board owed Balraz a legal
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duty, in essence, to exercise its powers and perform its functions fairly, impartially and independently; to take reasonable care in evaluating the tenders; and to ensure that the ultimate award of the tender was reasonable. The High Court concluded that, in general, a tender board owes tenderers a legal duty, but nonetheless, dismissed the claim because Balraz had not been incorporated at the time when tenders had closed, which rendered the tender void and thus the Board did not owe Balraz a duty of care. The Supreme Court of Appeal dismissed the appeal against this nding on the ground that the Board did not owe tenderers a legal duty as well as by reason of the void tender. The courts view was that administrative law has developed its own remedies, in general, delictual liability will not be imposed for a breach of its rules unless convincing policy considerations point in another direction (para 27). The court then proceeded to consider the relevant policy factors. An important one in this instance was that the Board had to exercise a discretion and reach a decision based on a value judgment and the court conrmed its previous decisions that public policy does not favour liability for the wrong exercise of a discretion negligently made (para 32). The previous decisions referred to were Knop v Johannesburg City Council 1995 (2) SA 1 (A); Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA); and Premier, Western Cape v Faircape Property Developers (Pty) Ltd 2003 (6) SA 13 (SCA)). Other factors were that the Act governing the Tender Board was primarily directed at the Board and not tenderers as a group or individually (para 30; see also para 33); that it made no difference that the pure economic loss in this instance took the form of out-of-pocket expenses (para 36); that, while accountability was a relevant factor serving a constitutional imperative, a damages award would be ineffectual as the provincial government, and not the members of the Board, would be called upon to pay (para 39); that a damages remedy would amount to overkill and have a chilling effect on tender boards in a young democracy with limited resources, human and nancial (paras 37 and 40); that, while the availability of an adequate alternative remedy is a relevant factor, the fact that an unsuccessful tenderer could take a matter on review did not necessarily confer rights upon it that are not available to a successful tenderer (paras 413); that one should not discriminate by granting delictual claims to successful tenderers when unsuccessful ones do not have similar delictual
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rights (para 44); and, similarly, that one should not discriminate by granting tenderers in respect of public contracts remedies that private-contract tenderers would not have (para 45). On balance, policy considerations indicated that delictual damages could not be inferred from the statute in question (Provincial Tender Board Act (Eastern Cape) 2 of 1994, since repealed by the Provincial Tender Board Repeal Act (Eastern Cape) 6 of 2004 (Eastern Cape)) and the same considerations were relevant in recognising a common-law legal duty. (This case is also discussed from a corporate law perspective in the chapter on Company Law.) The Constitutional Court decision to dismiss the appeal from the Supreme Court of Appeal was not unanimous: Moseneke DCJ wrote the majority judgment, with which Sachs J concurred, save for one qualication, while Langa CJ and ORegan J wrote a joint dissent. The judgments also raise constitutional and administrative law issues, but this review is restricted to the courts comments that impact on delictual liability. Breaches of administrative justice, the court said, ordinarily attract public law remedies, not private law ones (para 29) and in cases involving tenders, the starting point is s 217 of the Constitution, which requires a fair, equitable, transparent, competitive and cost-effective process (para 33). But when a tender board acts inconsistently with the tenets of administrative justice, which amounts to a breach of a constitutional duty, that in itself does not render the breach wrongful for delictual purposes. Liability would depend upon policy considerations: Whether it is fair and reasonable to impose a duty (para 37). These policy considerations and the communitys sense of justice now derive from the values of the Constitution (para 41). The court also conrmed that the enquiry into wrongfulness, is an after the fact, objective assessment of whether conduct which may not be prima facie wrongful should be regarded as attracting legal sanction (ibid). And, for the purposes of formulating the appropriate test, it makes no difference that some instances involve claims from successful tenderers and other unsuccessful ones (para 40). The majority in the Constitutional Court conrmed the Supreme Court of Appeals decision. After summarising the factors to be considered when assessing liability for breaches of statutory duties (para 42, quoted in full above), the court concluded that the empowering constitutional provisions read with the governing statute do not contemplate affording a disappointed tenderer the right to delictual damages for an improper but honest exercise of discre-
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tion (para 47). For the majority, the fact that Balraz had been a successful tenderer did not alter the conclusion. Once the tender had been nullied, it was free to tender again. If successful, it would not have claimed damages; and if not successful, it would have had no claim (para 49). The law should therefore not discriminate been disappointed tenderers and those that were initially successful (para 54). The majority believed that the loss could have been avoided: The prudent thing for Balraz to do on receiving the tender was to have negotiated with the tender board for restitution of the expenses, which was a more suitable relief than a delictual remedy (para 50). The majority also conrmed the Supreme Court of Appeals view that policy required adjudicators of disputes to be protected in respect of negligent but honest decisions; that the legislation is directed primarily at ensuring a fair tender process; and that imposing liability would open the prospect of potential claims of tenderers who had won initially. Policy considerations might well differ in different circumstances, for example, where decisions are made in bad faith or under corrupt circumstances or completely outside the legitimate scope of the empowering provision, or where the manifest purpose [is] to extend protection to individual members of the public or groups (para 55). Given its conclusion on the question of wrongfulness, the majority had no need to consider the validity of the tender. The minority had no difculty in classifying the loss in this case as being purely economic (para 68). For some reason the majority (para 46) felt this was not clear, but the minority view is clearly correct. (See the comments below on Minister of Water Affairs and Forestry v Durr 2006 (6) SA 587 (SCA).) Save for that aspect, the minoritys reasoning differed very little from that of the majority. Its dissent was premised on two issues: Successful tenderers were in a different position from unsuccessful ones in that they had no alternative remedies (paras 80 and 83); and a claim for out-ofpocket expenses was notionally different from that of loss of prots, and being a more modest claim, raised different policy issues which favoured imposing liability (para 86). While enhancing accountability is an important consideration, the balance is tipped by the fact that the claim was for bona de expenses and a failure to compensate a tenderer could have a negative effect on the performance of tender obligations (paras 816). The minority reviewed all the factors, favourable and unfavourable, that affect the imposition of liability and in the end afforded more weight to those that
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leant towards a delictual remedy (paras 8795). The minoritys reasoning is detailed and the criticism of the majority approach is compelling. So what is the upshot of this litigation? In respect of negligent but bona de exercise of discretions, a tender board does not incur delictual liability towards any tenderer, whether successful or unsuccessful. However, liability could arise where the empowering provisions contemplate a delictual remedy, or where decisions are made in bad faith, or under corrupt circumstances or fall outside the scope of the empowering provisions. Auditors The focus in Axiam Holdings Ltd v Deloitte & Touche 2006 (1) SA 237 (SCA) (also discussed under Wrongfulness issues on exception and Public policy above) concerned an auditors liability in terms of s 20(9)(b)(ii) of the (now repealed) Public Accountants and Auditors Act 80 of 1991. The facts of the case and decision in the court a quo are set out in the chapter on Company Law. The appeal was upheld by a 32 majority. Navsa JA (Howie P and Jafta JA concurring) conrmed the court a quos decision to accept, at the exception stage, that a duty to speak arises where an auditor actually knew of misstatements in the nancial statements and audit report and also knew that the two companies would be relying on those statements (para 12). The issues regarding the alternative claim were slightly more complex, however. The majority conrmed that silence or inaction could amount to an actionable misrepresentation, provided that there is a duty to speak or act (para 15). The appellants claim relied on a negligent misstatement by omission . . . to the effect that [its] prior (negligent) certication was correct, a claim that could not be faulted either notionally or conceptually, (para 17) because it alleged that the audit and opinion did not comply with the provisions of s 20(1) of the Act and s 20(9)(b)(ii) provided that a third party may sue an auditor if, after such a negligent certication, it represents in any way that it was correct (ibid). The corresponding provision in the new Act (Auditing Profession Act 26 of 2005) is s 46(3)(b), and although it does not specically mention certicates as the previous provision did, there is no material change and this judgment remains relevant. A negligent representation falling within the terms of s 20(9)(b)(ii) (or s 46(3)(b) of the new Act.) is wrongful and whether silence falls within the sections ambit depends upon the
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existence of a duty to speak. In other words, said the court, the duty relied on for there having been a representation will be the same duty relied on for the allegation of wrongfulness (para 21). Relevant factors in determining a breach of any legal duty would be the nature, context, purpose of the statement and knowledge thereof . . . and so is the relationship between the parties (para 19; see also Minister of Law and Order v Kadir 1995 (1) SA 303 (A) at 318HJ). And if the factors relevant to omissions are considered, a conclusion is possible that ignorance of the negligent report should not be a bar to the existence of a legal duty:
It must be remembered that we are dealing with a situation where the legal convictions of the community could well consider it unacceptable that an auditing rm which issued a seriously negligent report should escape the legal duty to speak with care concerning that report simply because it was, possibly even negligently, ignorant of the negligence of its report. And what is more, in circumstances in which the latter negligence was something it ought to have known of. (para 22)
The minority would have conrmed the decision of the court a quo. For Cloete JA (with whom Heher JA concurred), a duty to speak cannot exist where a person has no reason to believe that he or she may have been negligent: You cannot disclose what you do not know and to hold a person liable for what that person ought to have known is to equate constructive knowledge with actual knowledge (para 30). (See also Universal Stores Ltd v OK Bazaars (1929) Ltd 1973 (4) SA 747 (A), a case which the majority distinguished (para 22), but which distinction Cloete JA criticises (ibid).) In addition, Cloete JA considered that public policy would not point towards a duty in these circumstances, for the spectre of limitless liability does arise; and an undue and unfair burden would be placed on an auditor (para 31). The mischief that s 20(9) (or s 46 of the new Act) is intended to curb is indeterminate liability in those instances that auditors assume responsibility, subsequent to an audit, for the audits accuracy. For that reason para (ii) requires both a representation and knowledge, and where an omission is alleged, facts which at least prima facie establish a duty to speak must be alleged (para 32). The position is the same at common law, for a legal duty does not arise merely because one knows that a third party intends to rely on the nancial statements or even where there is a foreseeable risk that this might happen (para 31). The driving sentiment behind Navsa JAs majority judgment is that courts should be loath to hold, at the exception stage, that a legal duty does not arise (paras 12 and 235). However, one must
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agree with the minority that s 20(9)(1)(b)(ii) requires more than a mere representation that the statements are correct in addition, the auditor should, at the time that the representation was made, have known that the third party would rely on the statements for a particular transaction, or the circumstance must have been such that the auditor could have been expected to know that such reliance would occur. As both the court a quo and the minority judgment indicate, the required contemporaneity appears to have been absent. The alleged representations were made during the period when the parties were negotiating the transaction. For the purposes of the alternative claim it was accepted that the auditors did not actually know at that time that the nancial statements were inaccurate. The majority, having distinguished the OK Bazaars case, were happy to place a duty on the auditors on the grounds that they ought to have known the situation. However, Cloete JAs criticism that the majority created distinctions without a difference has merit. The section does not provide for the constructive knowledge that the majority attributed to the auditors and the public policy that the majority invoked cannot ignore the Acts provisions, a point made in a subsequent Supreme Court of Appeal judgment, Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA). So the minority judgment appears to follow the better approach. However, one could question one aspect of the minoritys approach. The mischief that the section focuses on, it said, was indeterminate liability. With that one must agree, for the section is clearly designed to restrict auditors exposure to claims. But is this an instance in which indeterminate liability is a factor? It appears not. The classic expression of what should be guarded against liability in an indeterminate amount for an indeterminate time to an indeterminate class is to be found in Ultramares Corp v Touche (1931) 255 NY 170 at 179. The claim in this instance is a large one: R241 million, but single large claims, on their own, are not indeterminate. Rather, as in this case, their extent is clear. There are also no other amounts looming in the background. On the facts, no other companies have entered into transactions on the strength of the nancial statements. The extent of the claim, and any other potential claims, is certain. Similarly, there are two plaintiffs in the case, and there is no danger of a multiplicity of actions. The fact that auditors liability in general could be more extensive also does not necessarily create indeterminate liability: Much would depend upon the facts of each case and the way in which the rules are
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circumscribed. The fear of limitless liability should not have been raised on the facts of this case. It simply was not an issue. Medical practitioners and dentists McDonald v Wroe [2006] 3 All SA 565 (C) is primarily a causation case, but the court also afrmed certain general principles of liability where medical practitioners are involved. A medical practitioner has to exercise the degree of skill and care that one expects from a reasonably skilled practitioner. Greater skill and care is expected of a specialist. To undertake tasks that require skills that a practitioner does not have will amount to negligence. The court found on the facts that the dentist in question, a general practitioner, had not performed a surgical procedure beyond his level of competence and had not been obliged to refer the matter to a specialist. However, a practitioner has a duty to disclose material risks inherent in a planned procedure and the patient must give informed consent thereto. Materiality is determined by the circumstances, according to a two-fold test, whether (a) a reasonable person in the patients position, if warned of the risk, would be likely to attach signicance to it; or (b) the medical practitioner is or should reasonably be aware that the particular patient, if warned of the risk, would be likely to attach signicance to it (para 7). In this instance, the dentist did not warn the patient of possible complications that could arise when impacted wisdom teeth are removed a chance of less than 1% of permanent damage to the inferior alveolar nerve. This, it was conceded, was both wrongful and negligent (para 19). At issue, however, was causation: Counsel for the defendant argued that even if the patient had been warned, she would have agreed to the procedure and, secondly, there was no evidence to show that she would not have suffered similar damage had the procedure been performed at a later date. The court rejected counsels submissions. Having had regard to the evidence as a whole, it found that the patient would have gone for a second opinion, would have been referred to a specialist, and would have had the surgery performed by a specialist (para 22). The second contention received similar short shrift. The court preferred the expert evidence indicating that the risk of harm would have been reduced signicantly had a specialist surgeon performed the task. Even though the same risk would always be present, irrespective of
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who performs the surgery, the likelihood of that risk eventuating in the hands of a specialist surgeon, is less and the patient would probably not have suffered the consequence that she did (para 37). Legal causation was present not only because there was a direct link between the dentists failure to warn and the patients harm, but also because the dentist had violated the patients constitutional right to bodily integrity by subjecting her to surgery without obtaining her informed consent (para 39). Policy considerations based on reasonableness, fairness and justice dictated that the defendant should be held liable for whatever damages the plaintiff could prove. This case illustrates that medical practitioners should take especial care to explain to patients and warn them of possible risks in treatment or surgery. Both in South Africa and elsewhere courts have taken a strict approach to informed consent issues. Attorneys The facts in Hirschowitz Flionis v Bartlett 2006 (3) SA 575 (SCA), (also discussed under Concurrence of actions and Contributory negligence) substantially simplied, were as follows: The respondent, a commercial attorney, negotiated a transaction with one Hardaker involving the transfer of gold bullion to a Swiss company and, on Hardakers request, paid a R3,1 million goodwill deposit into the appellant attorneys trust account. He did not identify himself when doing so, and did not inform the appellant of the deposits purpose, but his rms identity could easily be established through tracing the deposit transaction. The evidence indicated that where the identity of a depositor is unknown, the correct procedure is to transfer the money into a suspense account until the identity and the purpose of the deposit are established. Trust money is dealt with according to the trust creditors instructions. However, on instruction from an overseas client, the appellant made several payments from the account, without the respondents knowledge. Subsequent to these payments, the respondent was told that the transaction had fallen through and so he requested the appellant to return his money, only to be informed that the money had been paid out. That was true, but another relatively small payment was made from the account the day after the respondents enquiry. The appellant accepted that it had been negligent, but denied that it had a legal duty to deal with the money without negligence. The court also had to determine whether the respondent had been
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contributorily negligent and to what extent, if any, the damages were to be apportioned. The court pointed out that the incidence of the legal duty to act without negligence is a matter of legal policy and depends on various factors, including prevailing ideas of justice and where the loss should fall (para 28) or, Put another way: If he were negligent, should the law impose on him liability for such negligence?(para 27). The court had no difculty in holding the appellant liable. Public policy did not lean towards the denial of a remedy. On the contrary, the court said, policy considerations favoured the imposition of a legal duty: As a rm of practising attorneys, the appellant proclaimed itself to have expertise and trustworthiness; the respondent had reasonably relied on the fact that the money was being held in trust; protective measures could easily have been implemented; and, lastly, the risk of harm arising from the appellants unreasonable conduct was foreseeable (para 30). Veld res In Lubbe v Louw [2006] 4 All SA 341 (SCA) a re which started on Lubbes farm spread to adjoining properties that Louw had leased. The High Court found that Louw had been under a legal duty to prevent the re from spreading and that he had not succeeded to rebut the statutory presumption of a landowners negligence in such instances (s 84 of the Forest Act 122 of 1984, since repealed by s 103 of Act 10 of 2004). The latter issue formed the basis of the appeal. The re was started by some of Louws employees (acting outside the course and scope of their employment) and another person, who had tried to smoke out bees so as to collect honey from the hive. While the re was small, they unsuccessfully tried to extinguish it using blue-gum branches and when they tried to use water from an irrigation system, the pipes were found to be too short. Had proper equipment been available at the outset, the re would have been extinguished. Counsel argued that the statutory presumption of negligence does not absolve a plaintiff from proving wrongfulness and that in this instance wrongfulness had not been established. Control of the property was not sufcient to establish such a duty, as was held in Administrateur, Transvaal v Van der Merwe 1994 (4) SA 347 (A) and the nature of the terrain and the burden that such a duty would impose militated against the imposition of such a duty.
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The court rejected Louws argument, however, and found that a landowner has a legal duty to ensure that res that arise on their properties do not escape beyond their boundaries (paras 137, with specic reference to HL & H Timber Products (Pty) Ltd v Sappi Manufacturing (Pty) Ltd 2001 (4) SA 814 (SCA) and Minister of Forestry v Quathlamba (Pty) Ltd 1973 (3) SA 69 (A)). The Administrateur, Transvaal case was distinguished on the basis that the Administrator had not been the landowner, but someone who controlled and supervised the land. In such a case, control was a necessary, but not sufcient, factor for determining liability, which was not the case in respect of landowners (para 16). As to the negligence issue, there was no evidence indicating what Louw could have done, nor what he in fact did. What was established, however, was that there had been several res in the area shortly before this one, that the grass was long and highly inammable, and that no precautionary measures such as the provision of elementary re-ghting equipment, had been taken. The presumption, the court found, had not been rebutted (para 18). The signicance of this case is its clear distinction between the wrongfulness and fault elements, and its exposition of the difference between the landowner and land controller situations. FAULT Veld res The facts of Minister of Water Affairs and Forestry & others v Durr & others 2006 (6) SA 587 (SCA) were as follows. The river below the Wemmershoek Dam altered its course when the dam was built in 1959, resulting in the formation of a piece of land, referred to as the island, between the old and the new river beds. The South African Forestry Company (Safcol) owned the land on one side of the river and the City of Cape Town owned the land on the other. Although in fact the island belonged to the City of Cape Town, everyone was under the impression that Safcol owned and exercised control over that land. Both Safcol and the City had plantations on their land. Department of Water Affairs and Forestry workers participating in Nature Conservations Working for Water Project had cleared alien vegetation, including wattle trees, along the river and stacked the felled trees on the island, thus creating an extreme re hazard. It was not disputed that once a re reached Safcols side of the river,
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Safcol would not be able to contain the re and prevent it from spreading to the other properties. In 1999 a re broke out on the island, spread to Safcols property, and from there to the properties of Durr, the Taylor Trust and Nature Conservation. Durr and Taylor subsequently sued Safcol, the Minister of Water Affairs and Forestry and Nature Conservation, and in each of these cases Safcol was joined as a third party. In a separate action, Safcol sued the Minister, Nature Conservation and the City of Cape Town. The three cases were consolidated. At the end of the trial, Durr and Taylors claims against Safcol were dismissed, but the Minister and Nature Conservation were held jointly and severally liable. In the Safcol matter, the Minister and Nature Conservation were held jointly and severally liable for 75 per cent of the harm, and the City for 25 per cent. The trial court nding was then taken on appeal which resulted in two judgments, Ponnan and Zulman JJA constituting the majority, with Combrinck AJA dissenting. Section 84 of the Forest Act 122 of 1984 does not create statutory liability any different from normal delictual liability. The usual elements of a delict still need to be present, but what the Act does do, once wrongful conduct is established, is to shift the onus of proof in respect of the negligence element to the owner of the land. (See H L and H Timber Products (Pty) Ltd v Sappi Manufacturing (Pty) Ltd 2001 (4) SA 814 (SCA).) It was not disputed on appeal that the City was the owner of the land, but the appellants, including the City, contended that the Act did not apply, as Safcol possessed and controlled the island and it was Safcol, not the City, that owed adjoining landowners the legal duty not to cause them harm. To resolve the issue, the court considered whether anything occurred subsequent to the Citys acquisition of the property in 1948, when it had the requisite legal duty that would alter the situation. It concluded that the incidents placed before the court did not establish that Safcol had control over the land and accordingly it was the City, not Safcol, that owed others the legal duty (paras 159). This brought the provisions of the Act into play and since the City was unable to rebut the statutory presumption of negligence, it was liable for its share of the damages (paras 201). The court also had no difculty in holding the Minister and Nature Conservation liable. The workers had created the re hazard and Nature Conservation not only knew of the hazard, but had been asked to ameliorate the danger, which it failed to do (para 22). The court rejected the contention that the remedial measures were
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impractical and expensive. Admirable socio-economic objectives poverty alleviation and ridding the area of alien vegetation did not exculpate the Minister; while proper training of workers, ceasing activities in hotspot areas, and controlled burning would have been effective and inexpensive measures to implement (para 26). While the outcome of the case is acceptable, two aspects of the majority judgment are open to criticism. The rst is that the court noted (para 10) that the appeal raised issues of liability in delict for so-called pure economic loss resulting from the ignition and spread of the re from the island to the neighbouring properties this means dealing with the issue on the basis of liability for certain omissions. This classication is erroneous. Pure economic loss is loss which is not associated with any physical injury to a plaintiffs person or property (Lillicrap, Wassenaar & Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A); Minister of Finance v Gore NO 2007 (1) SA 111 (SCA) para 82; see also Van der Walt & Midgley op cit para 68) and in such cases the approach to determining liability is different from harm resulting from physical injury. Physical harm is prima facie wrongful; pure economic harm is not (Van der Walt & Midgley op cit para 68; see also Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA). Fortunately, the error was not material to the outcome. The second reasoning error lies in the way in which the court dealt with the negligence issue. It concluded that the employees conduct was both wrongful and negligent but then proceeded to enquire whether a reasonable person in the position of the Minister and Nature Conservation would have taken steps to prevent the harm and if so, what steps would be taken (para 23). In the rst instance, this approach confuses the employers vicarious liability for their employees delict (which was the basis of the nding in the court below and which the parties accepted on appeal) (paras 8 and 20) with any direct liability that the Minister and Nature Conservation might have had (which appears not to have been the courts focus). (A similar issue also arose in the Gore case para 89.) If it is found that the employees behaved wrongfully and negligently, then preventative steps that the employers might have taken would be of no consequence. Secondly, even if one were to accept that the suggested distinction between direct and vicarious liability should not be made, it remains incorrect in principle to conclude that conduct was wrongful and negligent and then to proceed with an enquiry into possible preventative measures as if this enquiry is distinct from the wrongfulness and negligence issues. It is not. The
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burden of preventing harm and the cost of preventative measures are integral to the wrongfulness enquiry (Administrateur, Transvaal v Van der Merwe 1994 (4) SA 347 (A) at 361362; Van Eeden v Minister of Safety and Security 2003 (1) SA 389 (SCA) para 19) and has also always been a core feature of the Kruger v Coetzee formulation for determining negligence (Kruger v Coetzee 1966 (2) SA 428 (A) at 430; see also Van der Walt & Midgley op cit para 122). It is therefore incorrect to consider this aspect as if it were a defence to an existing nding of either wrongfulness or negligence. Preventative measures should have been considered when these elements were being looked at. The crux of Combrinck AJAs dissent is that in his view, Safcol, as controller of the island, had the legal duty to guard against creating re hazards, and not the City of Cape Town. In the absence of such a duty, it was not necessary for the City to rebut any statutory presumption. So instead of the City being responsible for 25 per cent of the damages, Safcol should have been. Lubbe v Louw [2006] 4 All SA 341 (SCA), which also dealt with negligence in the context of veld res, is discussed above. DAMAGES Calculation of damages Calculation of damages was at issue in Road Accident Fund v Delport NO 2006 (3) SA 172 (SCA). A 36-year-old woman had been totally disabled as a result of a motor vehicle accident and was awarded damages. On appeal, the Road Accident Fund contended that the award for loss of earning capacity should be reduced from approximately R1,85 million to R845 212, and that general damages for pain and suffering and loss of amenities of life should have been R800 000, not R1,25 million. The woman would never be able to work again. The RAFs real contention was that the court a quo should not have employed a ction that she would have entered the structured labour market but for the accident. Previously she had been employed, but immediately prior to the accident, she and her husband operated a restaurant, which had been sold. Their plan had been to go on holiday overseas and to purchase a new business on their return. The Supreme Court of Appeal rejected the contention, holding that the damages had been calculated on the basis of conservative estimates of earnings that redounded to the RAFs benet (para 17). Also, the amount had been calculated on the assumption that
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she would have ceased working at age 55, whereas the evidence indicated that she would probably have continued until she was 65 (para 18). The Supreme Court of Appeal declined to express an opinion on the submission that the damages for loss of earning capacity should have been reduced because the patients living expenses would be reduced as a result of now being conned in an institution for the rest of her life. There was no evidence indicating the nature and extent of such savings that could support such an argument. The court noted that the following issues were relevant: Prior to the accident the woman lived an active and energetic life, and was happily married. The accident left her with an alert and active mind trapped in a non-responsive body (para 15). She was hospitalised for lengthy periods and later permanently transferred to a frail care unit, where she is conned to a bed. She will require constant attention for the rest of her life, which was estimated to be another 22 years. She is unable to speak but has limited movement of her left hand which enables her to communicate with an alphabet board. She has no control over her bodily functions and is fully on a gastronomy feeding tube. She experiences severe pain and discomfort and suffers, amongst others, from headaches, cramps, bladder infections and pain in her hip. Her daughter visits her twice a day, but her marriage has broken down, which exacerbates her emotional suffering. After conrming that a court of appeal should not lightly interfere with a trial courts discretion regarding an award of damages (a point which was also made in Minister of Safety and Security v Seymour 2006 (6) SA 320 (SCA) para 11), the Supreme Court of Appeal noted that the court a quos decision in this instance is manifestly free of any misdirection or irregularity (para 23). Although high, the award was not excessive (para 25) and it was comparable with a previous decision, Marine & Trade Insurance Co Ltd v Katz NO 1979 (4) SA 961 (A), that was in many respects similar. (The award in the Katz case, after adjustments for changes in value, was slightly higher that the award in this instance, even though the consequences in that case were not as severe.) The court cautioned, however (with reference to De Jongh v Du Pisanie NO [2004] 2 All SA 565 (SCA) paras 64 and 65), that courts should not necessarily be wedded to previous awards, particularly those in which circumstances may differ (para 23). The Supreme Court of Appeal had harsh words regarding the RAFs deplorable conduct after the trial in failing to pay in full,
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despite various requests and a court application, at least those amounts in respect of which it had admitted liability. After the courts intervention the RAF tendered an apology and paid the outstanding undisputed amount of R1,6 million (para 268). In Road Accident Fund v Oberholzer [2006] 3 All SA 593 (E) a full bench of the Eastern Cape Division considered an appeal against a trial courts award for loss of earnings. The plaintiff and his wife owned a breglass factory. For all intents and purposes, the plaintiff was the driving force behind the operation, while his wife was concerned with administrative matters. At rst the business ran at a loss, but from 1996 it began showing a prot. In March 1997 the plaintiff was injured in an accident and he was unable to continue playing a meaningful role in the business. Three people were employed to perform his former duties. Nonetheless, the prots increased, primarily as a result of contracts that the plaintiff had entered into prior to his accident. In March 1999 the ownership structure of the business was reorganised, creating a situation where ownership vested in a company, the sole shareholder of which was a family trust. The plaintiff was the managing director and he and his wife from then on received salaries, as opposed to income previously reected as drawings. Business continued to blossom. The defendant appealed against the trial courts determination on three grounds: The particulars, as formulated, did not include a claim for past loss of income; the plaintiff did not suffer loss as his income did not decrease after the accident, but in fact increased; and even if there were a reduction in income, that amounted to a loss to the company that now owns the business, and not to the plaintiff. The rst contention has its origin in the fact that the sums indicated in the particulars of claim were estimates. The court rejected the argument that this indicated an intention to claim future loss only, especially since the plaintiff had elsewhere in the particulars specied that he had been unable to work immediately after the accident (para 17). As to the second contention that the plaintiff had suffered no loss the court had this to say:
In my view it is not the correct approach to simply ask whether there has been any increase in the protability of the business since the plaintiffs injury, and if the answer is in the afrmative, to conclude that the plaintiff has suffered no loss of income. The proper approach is to consider what the protability of the business would have been had the plaintiff not been injured and to compare that with what its protability
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has been since his injury. If the protability would have been greater, there has been a loss. (para 18)
In this instance, the increased prot resulted from contracts entered into prior to the accident; and secondly, people had to be employed to do the work that the plaintiff had done previously, resulting in a reduction of prot. Such reduced prot, the court said represents a loss (para 19). In dealing with the third contention, the court was faced with a Supreme Court of Appeal decision on similar, but not identical, facts. In Rudman v Road Accident Fund 2003 (2) SA 234 (SCA), the plaintiffs farming and hunting business was conducted through an ownership structure which was exactly the same as the one in Oberholzers case. The Supreme Court of Appeal concluded that Rudmans diminished earning capacity had not resulted in a loss to his estate or patrimony, for the increased expenses were in fact incurred by the company and there was no indication that Rudmans capacity to function as its chief executive ofcer had been affected. The distinguishing feature in Oberholzer, however, was that the plaintiff had been injured before the company was formed and so it was not the company that suffered the loss, but the plaintiff (para 21). So the issue in Oberholzer was not whether the plaintiffs or the companys earning capacity had been impaired, but whether the plaintiffs impairment had resulted in patrimonial loss to the plaintiff (para 22). And this, on the facts, was clearly the case, as the plaintiff had incurred expenses in employing persons to perform work that he had done previously. The interesting issue is whether the subsequent sale of his business to the company should have affected the nding, for as from March 1999, it was not the plaintiff that incurred these expenses, but the company. The court reasoned as follows: The plaintiffs patrimonial loss had been established and the issue it had to deal with was assessing the extent of such loss. There is nothing wrong in having regard to the salaries paid to the companys employees in order to determine the quantum, nor was the calculation method disputed (para 23). And the fact that the company took over the business did not result in a restoration of the plaintiffs earning capacity to previous levels (para 25). The court also accepted that the plaintiffs input into the family business would have generated greater income than the inputs of his replacements. This meant that the plaintiff had lost the additional benets that would have accrued to him (ibid; see also para 28).
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The obvious similarities between Rudman and Oberholzer are that in both instances the plaintiff was the companys managing director and in the same way as Rudmans income was not affected, Oberholzers salary from the company remained at previous income levels. For the court, this was merely a manifestation of what occurs in a family company (para 26) and while Oberholzer may have been in charge of his business, he could hardly have been described as the chief executive ofcer, as was the case with Rudman (para 28). In fact, Oberholzer had no administrative skills and, postaccident, did very little for the company: By no stretch of the imagination, the court said, can it be said that the amount presently earned by the plaintiff provides as true reection of his residual earning capacity (para 26). The nal point that the court had to consider was whether or not the trial courts failure to discount the future loss to its present value, which it ought to have done, should affect the amount awarded. The court found that this omission was off-set by the fact that the trial court had elsewhere made allowances which unduly favoured the defendant. Overall, the calculations on the correct assumptions would result in a higher award and so there was no reason to reduce the award (paras 2937). At rst blush one would expect similar results in Oberholzer and Rudman. Not only were the plaintiffs positions similar, but in both instances, they had suffered a loss of earning capacity. If one focuses on the applicable rule, however, a different picture emerges. Loss of earning capacity in itself is not sufcient to found a claim, as was pointed out in Rudman: A physical disability which impacts upon capacity to earn does not necessarily reduce the estate or patrimony of the person injured (para 11). So the material distinguishing feature is not that Rudman was the chief executive of the company at the time of the accident while Oberholzer was not. The true distinction lies in the fact that Rudman could not translate his loss of earning capacity into patrimonial loss, whereas Oberholzer could. What the Oberholzer case shows is that Rudman does not prevent an alter ego of a company from claiming damages in such circumstances: Such actions could be successful, provided that one can show that any loss or reduction in prots in the company will impact negatively on the plaintiffs patrimony. (See also Rudman para 13: For present purposes I am prepared to accept the proposition (without pronouncing nally upon it) that in appropriate circumstances a farmer in Rudmans position, who operates through a family company, may be able to prove and quantify his personal
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loss in a delictual claim with reference to the loss of income suffered by the company, provided that he does not fall into the trap of regarding the loss to the company as automatically and necessarily equivalent to his personal loss.) Collateral benets: Cost of living differentials One of the issues decided in DAmbrosi v Bane 2006 (5) SA 121 (C) was whether the cost of living differential the benet that the plaintiff could receive from residing in one place rather than another should be taken into account in assessing a claim for past and future loss of earnings or earning capacity. In this instance the plaintiff had intended to live and work in London, but, because of his injury this was no longer possible and he had to remain in Johannesburg. The contention was that while his higher income in London would have to be considered in assessing damages, so too should his higher living expenses in London, thus resulting in a lower damages award. The court concluded that the savings incurred by living in Johannesburg were relevant, but could not be regarded as a benet to be taken into account in computing damages for loss of earnings or earning capacity, primarily because of the speculative or hypothetical nature of such an enquiry (paras 349). However, such savings could be relevant when general damages or contingency adjustments are considered (para 34). Collateral benets: Medical aid scheme benets The second issue decided in DAmbrosi v Bane 2006 (5) SA 121 (C) was whether medical aid scheme benets should play a role in determining his claim for past and future hospital and medical expenses (para 2). In our law insurance benets are considered to be collateral to the assessment and thus excluded from calculations (Mutual and Federal Insurance Co Ltd v Swanepoel 1988 (2) SA 1 (A); Standard General Insurance Co Ltd v Dugmore NO 1997 (1) SA 33 (A)). Following Thomson v Thomson 2002 (5) SA 541 (W) at 547, the court concluded that medical aid benets are no different from indemnity insurance payments and accordingly do not reduce claims for past and future medical expenses. Whether this case has settled the matter is open to question, for it appears that the court overlooked or was unaware of other cases on the point. A number of cases to which the court was apparently not referred (Serumela v SA Eagle Insurance Co Ltd 1981 (1) SA 391 (T); Krugell v Shield Versekeringsmaatskappy Bpk 1982 (4) SA 95 (T),
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Gehring v Unie Nasionaal Suid-Britse Versekeringsmaatskappy Bpk 1983 (2) SA 266 (C)) draw a distinction between medical benets that are paid out in terms of contractual or statutory obligations and those where there is a discretion to make payments. The rule, it seems, is that obligatory payments are considered and reduce the damages, whereas discretionary payments are considered to be collateral. Boberg held a slightly different view on the effect of the case law. He pointed out that medical benets do not increase the size of ones patrimony for the value of the right to such a benet is the same as the benet that is eventually paid out (P Q R Boberg The Law of Delict (1984) 610. See also Van der Walt & Midgley op cit para 156) and while courts tend to seek inter-party justice in these cases instead of following strict principle, they do tend to consider benets arising as a right out of employment contracts while excluding those where payment of the benet is at the instance of another persons discretion (Van der Walt & Midgley op cit para 156). Unfortunately, neither approach was considered in the DAmbrosi case and it is not clear whether or not membership of the medical aid scheme was linked to the plaintiffs employment contract or whether the payments in question were obligatory or discretionary payments. APPORTIONMENT
OF
DAMAGES
Contributory negligence The facts in Hirschowitz Flionis v Bartlett 2006 (3) SA 575 (SCA) (also discussed under Concurrence of actions and Attorneys) are set out above. Of relevance here is that the respondent had deposited a large sum of money into the appellants trust account without disclosing his identity. The appellant made payments from this account without following proper procedures. It accepted that it had been negligent, but contended that the respondent had been contributorily negligent. Given the size of the deposit and the extent of the risk involved should things go awry, the court had no difculty in nding the respondent was contributorily negligent in not informing the appellant of the reason for and purpose of the deposit. The parties were about equally at fault as far as the deposit was concerned, the court said, but the appellant had been burdened with a special responsibility to safeguard trust monies. In the result, the appellant was assessed to have been 60 per cent at fault, and the respondent 40 per cent.
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At issue in Transnet Ltd t/a Metro Rail v Tshabalala [2006] 2 All SA 583 (SCA) was whether or not the appellant was liable for the consequences of the respondents injuries and whether or not the damages were correctly apportioned in that, so the appellant alleged, the respondent had acted with dolus eventualis in attempting to board the train. (Previously, Minister van Wet en Orde v Ntsane 1993 (1) SA 560 (A) held that damages should not be apportioned where one party acts intentionally.) The respondent had tried to alight a moving train which had its doors open. He held on to a vertical hand rail inside a coach, but lost his footing and fell onto the rail. His right foot was completely severed from his leg. The court a quo found that the respondent had been negligent in boarding the train and that the appellant had been negligent in operating the train with the doors open. The damages were apportioned equally. The Supreme Court of Appeal found that the respondent had not acted intentionally and also conrmed previous decisions (Road Accident Fund v Russell 2001 (2) SA 34 (SCA); Marine & Trade Insurance Co Ltd v Singh 1980 (1) SA 5 (A) at 12H13A) indicating that there was a causal connection between a train leaving a station with doors open and the injuries sustained by a plaintiff who then attempts to board a train (paras 6 and 7). The court further conrmed that an appeal court will not interfere with a trial courts assessment of the way in which the damages should be apportioned unless its own assessment differs substantially from that of the trial court (para 8, with reference to Shield Insurance Co Ltd v Theron NO 1973 (3) SA 515 (A) at 518BD). Had the plaintiff been sober when he attempted to board the train, the court said, it would have conrmed the trial courts assessment that the damages should be apportioned equally. However, the plaintiff had been somewhat intoxicated at the time and so his deviation from the norm had been greater than that of the appellant. Accordingly, the damages were reduced by two-thirds (para 9). In this instance, the court a quo had granted leave to appeal on whether the trial courts apportionment of fault was correct (para 1). However, the question is not one of apportionment of fault, however, but apportionment of damages. This is done, not by apportioning fault, but, according to the wording of the Act, by having regard to the extent of the plaintiffs fault (s 1(1)(a) of the Apportionment of Damages Act 34 of 1956). However, the Supreme Court of Appeal also failed to apply the Act correctly although its approach is consistent with the way in which courts have appor-
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tioned damages for many years in that it compared the extent to which the respondent had deviated from the norm with the extent to which the appellant had deviated from the norm (para 9). That is not what the Act enjoins one to do. The section is clear: Damages are not to be apportioned on the basis of comparative fault, but solely according to what is just and equitable having regard to the extent to which the respondent had deviated from the norm of the reasonable person. Had the court stated that the respondent had deviated from the norm by two-thirds and that it was equitable to reduce the damages accordingly, it would have applied the Act correctly. This might seem to be unnecessary nit-picking, as the result would have been the same, but in other instances a comparative approach could lead to a different result. The fact is that, according to the Act, the defendants degree of deviation should not be considered at all, except, perhaps, in assessing whether or not any adjustment according to the plaintiffs fault might lead to injustice inter partes. Joint wrongdoers When sued for damages by a passenger in his vehicle, the appellant (defendant in the court a quo) in Smith v Road Accident Fund 2006 (4) SA 590 (SCA) sought to join the Road Accident Fund as a joint wrongdoer. He alleged that the unknown driver of another vehicle was either wholly or in part responsible for the accident that led to the passengers injuries. The court rejected these contentions. The purpose of the statutory dispensation is to compensate victims of motor vehicle accidents for bodily injury and the appellant was not such a victim, having suffered pecuniary loss only. The designated beneciary is the person who suffered injury, not the driver, and any attempt to sue the Fund for a contribution would y in the face of the Acts express terms (para 9). In addition, the court said, the Apportionment of Damages Act 34 of 1956 does not create a cause of action, but instead provides a means of sharing the burden of liability. But, more specically, that Act states that apportionment also takes place where liability is imposed in terms of the Road Accident Fund Act 56 of 1996; and since the Fund is not liable towards the driver, the appellants argument was not tenable (para 10). The court indicated that there was no merit in the appeal and one cannot but agree. This case is discussed more fully in the chapter on Insuraance Law.
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THE ACTIO INIURIARUM WRONGFUL CONDUCT Defamation At issue in NEHAWU v Tsatsi 2006 (6) SA 327 (SCA) (also discussed under Terminology: Immunity and Priviledged occasion) were (a) whether statements made by the second respondent were defamatory; (b) whether they were made on a privileged occasion; and (c) whether the respondents were liable for republication of the material outside the alleged privileged occasion. The second appellant, a branch secretary of the National Education, Health and Allied Workers Union (NEHAWU), distributed a report at a general meeting of the union in which he criticised the respondents management. He compared it with that of her predecessor and commented that he had done very well in rooting out corrupt ofcials instead of embracing them (fraudsters). He stated further, however, that there is unprecedented harassment unleashed against various persons in the ofce and that [l]iterally the whole ofce is under siege since the arrival of the new ofce manager (para 3). The Supreme Court of Appeal conrmed the well-known test for assessing defamatory content an objective test as to whether or not the statements would lower the plaintiff in the estimation of the ordinary reader of the report (para 8, with reference to Johnson v Beckett 1992 (1) SA 762 (A) at 773CE). The court noted that the statements appeared to be used in a gurative sense and contained hyperbole. A suggestion that a person colludes with fraudsters and condones their activities would tarnish his or her social and professional standing, but the court doubted whether the same could be said of a statement that a manager harasses staff. Given the content and tone of the report, any defamation was negligible (para 9). There being no evidence as to who republished the material outside the meeting, liability for such republication was not established. While the obvious conclusion would have been that it must have been one or more of the unions members, no relational basis for any vicarious liability had been presented (para 16).The appeal accordingly succeeded. Although the court followed the traditional two-step approach, which is rst to ascertain the exact meaning of the words before assessing whether or not they are defamatory, its conclusions are not clearly articulated. It is, for example, unclear as to whether or
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not it found the statement regarding harassment defamatory. Ones impression is that the court accepted that the statement was defamatory, but only slightly so if viewed contextually. If that is indeed the case, then such a nding is open to criticism. Such statements are often used in the labour arena and they tend to convey no more than disapproval of management style, or at most, they would amount to mere abuse. On the other hand, one has difculty in accepting that association with fraudsters would be no more than slight defamation. No grounds for such a conclusion are stated in the passage of the report that is quoted in the judgment, and no consideration appears to have been given to the fact that the respondent was an advocate employed as a manageress in the magistrates court, in which case there must have been a further sting to the allegation. GROUNDS
OF JUSTIFICATION
Privileged occasion The appellant in Naylor v Jansen; Jansen v Naylor 2006 (3) SA 546 (SCA) (also discussed under Defamation: Presumptions and onus and Defamation: Evidence of a plaintiffs general bad character) (defendant in the court a quo) accepted that he had published a defamatory statement during a meeting between himself and Iscor representatives, but denied that it was unlawful or made with the necessary intention to defame. The appellants justication for his conduct rested on the defence of (qualied) privilege. The Supreme Court of Appeal noted that the nature of the parties relationship rendered the meeting a privileged occasion:
Viewed objectively, each party to the negotiations enjoyed a right or legitimate interest to make statements to, and receive statements from, the other. Furthermore, an explanation for Jansens absence from the meeting and the circumstances relating thereto would clearly have been germane to the occasion. (para 11)
The court conrmed that the truthfulness or otherwise of statements have no bearing on whether or not statements are germane (nor, one may add, on the privileged nature of the occasion). Nonetheless, the veracity of a statement is not entirely irrelevant. The privilege is a qualied one: When an untrue statement is made, one can infer that it was made with malice, unless the circumstances indicate otherwise (ibid, with reference to Borgin v De Villiers 1980
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(3) SA 556 (A) at 578H). A bald denial is not enough to rebut the inference (para 13). Although, strictly speaking, given its nding that the material was not defamatory, the court in NEHAWU v Tsatsi 2006 (6) SA 327 (SCA) (also discussed under Terminology: Immunity and Defamation) needed to go no further, it nonetheless, considered the issue of privilege, and whether or not the second appellant and the NEHAWU members had a reciprocal right and duty to make and receive the report and [whether] the defamatory statements were relevant or germane and reasonably appropriate to the occasion (para 10). The court emphasised the instrumental function of freedom of expression in labour relations and drew from the Constitutional Courts comments (in South African National Defence Union v Minister of Defence 1999 (4) SA 469 (CC) para 7) regarding trade unions that the Constitution recognises that individuals in our society need to be able to hear, form and express opinions and views freely on a wide range of matters (para 11). It further afrmed that there are no hard and fast rules for determining relevance and that the conclusion involves essentially a value judgment (para 12, with reference to Van der Berg v Coopers & Lybrandt Trust (Pty) Ltd 2001 (2) SA 242 (SCA)) in which the truthfulness or otherwise of the statements has no bearing (the Borgin case at 578H579A). Although the court did not clearly say so, the fact that the appeal succeeded indicates that it must have concluded that the occasion had been privileged. FAULT Defamation: Presumptions and onus The court in Naylor v Jansen; Jansen v Naylor 2006 (3) SA 546 (SCA) (also discussed under Privileged occasion and Defamation: Evidence of a plantiffs general bad character) conrmed the now almost trite approach to defamation claims: Publication of defamatory statements referring to a plaintiff gives rise to two presumptions that such publication was unlawful and made with the intention to defame. It is now settled, the court continued, that in either case a defendant may discharge the presumption on a balance of probabilities (para 7). This statement is open to question. While Joubert v Venter 1985 (1) SA 654 (A) held that a defendant bears the full onus to rebut the presumption of unlawfulness, the situation regarding intention is not that clear. For a while it was thought that a defen-
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dant had a lesser onus, an evidentiary burden (or weerleggingslas), to rebut the presumption of intention (on the strength of SA Uitsaaikorporasie v OMalley 1977 (3) SA 394 (A); see also para 10). Subsequent cases never fully addressed this issue and, in particular, the authority that the court relied upon, Mohamed v Jassiem 1996 (1) SA 673 (A) at 709HI made no mention of the onus regarding intention. Nonetheless, it appears likely that defendants will in future bear a full onus to rebut both presumptions and litigants should plan accordingly. In the absence of circumstances that support it, a bald denial that one did not intend what one had in fact said, does not carry sufcient weight to rebut the presumption of intention. Unless there is clear indication to the contrary, an inference is drawn that a person intends a statement to have the meaning that persons hearing it would ordinarily attribute to it (para 10). REMEDIES The purpose of a damages award In Dikoko v Mokhatla 2006 (6) SA 235 (CC), 2007 (1) BCLR 1 Mokgoro J commented that an award under the actio iniuriarum serves to provide solace to the injured person. Even if it also serves as a deterrent, such an award should not be designed to punish the defendant. Punishment is not a purpose of the law of delict: That is the purview of criminal law (paras 756). In delict, she said, an award of damages principally aims to serve as compensation for damage caused by the defamation, vindicating the victims dignity, reputation and integrity. Alternatively, it serves to console (para 76; see also para 112). Originally the actio iniuriarum had a punitive purpose, and some believe that it still has that objective (J Neethling, J M Potgieter & P J Visser Law of Delict 5 ed (2006), translated and edited by J C Knobel, talk of the punitive function of satisfaction at 233). Mokgoro Js comments dispel that view and are welcomed. Together with the general thrust of Sachs Js judgment in the same case (paras 105 121), the comments place the role of delict in proper perspective. In addition, there are strong indications that any punitive purpose in delict would be unconstitutional (Van der Walt & Midgley op cit para 143). Damages for unlawful arrest and detention In Minister of Safety and Security v Seymour 2006 (6) SA 320 (SCA) Seymour was awarded R500 000 in damages arising from his unlaw-
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ful arrest and unlawful imprisonment. The State argued on appeal that the amount was inappropriately high. The case provided an opportunity for the Supreme Court of Appeal to restate previous assessment guidelines and to give further guidance as to how general damages for this type of case ought to be assessed in a constitutional era. The court a quo had compared previous awards in similar instances, and placed particular emphasis on the fact that the Constitution now enshrines rights to personal freedom and dignity and this, it felt, should be reected in the amount that is awarded. The Supreme Court of Appeal, however, followed a more measured approach and indicated that courts had always had high regard for personal liberty and that there is no basis for concluding that courts were more tolerant towards incursions upon personal liberty in years gone by. It concluded: To the extent that the learned judge placed a jurisprudential premium on personal liberty that was absent before now, in my view, it was misdirected (para 14). A further misdirection, the court said, was the unexplained assumption that an amount of 1000 awarded forty years ago (In May v Union Government 1954 (3) SA 120 (N)) would now equate to R350 000 to R400 000. According to the consumer price index, that amount would now be approximately R116 000. While one should not slavishly rely on the index (AA Onderlinge Assuransie Assosiasie Bpk v Sodoms 1980 (3) SA 134 (A) at 141GH), it is still a useful guide for assessing the devaluation of money (para 16). Even so, the court advised caution when making comparisons, as few cases are directly comparable. Previous awards are a useful guide to what other courts have considered to be appropriate but they have no higher value than that (para 17; see also Protea Assurance Co Ltd v Lamb 1971 (1) SA 530 (A) at 535H536B). The court then reviewed the awards in a number of cases and after noting that there was no discernable pattern other than that our courts are not extravagant in compensating the loss, added: It needs also to be kept in mind when making such awards that there are many legitimate calls upon the public purse to ensure that other rights that are no less important also receive protection (para 20). The court summed up the salient considerations in this instance as follows:
In the present case Seymour was deprived of his liberty for a period of ve days. Throughout his detention at the police station he had free access to his family and medical adviser. He suffered no degradation beyond that that is inherent in being arrested and detained. After the
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rst period of about 24 hours the remainder of the detention was in a hospital bed at the Rand Clinic. There can be no doubt that the experience was throughout traumatic and caused him great distress. But yet there were no consequences that were of sufcient concern to warrant medical attention after Seymour was released. As to the continuing depression and anxiety I am not sure that that can be attributed solely to the arrest and detention. (para 21)
It considered an appropriate amount to be R90 000. The need to bear in mind the effect an award would have on the public purse is a sound injunction, but hopefully, like the Supreme Court of Appeal did in MEC, Department of Welfare, Eastern Cape v Kate 2006 (4) SA 478 (SCA) para 32, courts will not over-emphasise this aspect. Also welcome is the courts reminder, albeit obliquely, that a delictual claim is not a road to riches (see also Argus Printing and Publishing Co Ltd v Inkatha Freedom Party 1992 (3) SA 579 (A) at 590). A rights-based society, as ours has become, tends to encourage litigation and while it is important that infringements of rights should not go unnoticed, at the same time over-zealous litigation should be discouraged. Unlike the award of the court a quo, the Supreme Court of Appeals assessment strikes a sound balance between the various interests involved. Defamation: Evidence of a plaintiffs general bad character In Naylor v Jansen; Jansen v Naylor 2006 (3) SA 546 (SCA) (also discussed under Privileged occasion, and Defamation: Presumptions and onus) the Supreme Court of Appeal stated that for the purposes of assessing appropriate damages, evidence of a plaintiffs general bad character is admissible, but evidence of particular acts of misconduct is not (para 15). The Supreme Court of Appeal qualied the statement, however. Evidence that falls short of justifying conduct, could nonetheless mitigate the impact of the words: In some instances the evidence could show that, although not all of it, at least a portion of the statement was justied (Sutter v Brown 1926 AD 155 at 172), while others circumstances might be proved that are related to, or linked up with, the words complained of (ibid). This aspect of the case is discussed further in the chapter on the Law of Evedence. Retraction and apology In recent years some judges have considered whether an apology could be a suitable remedy in defamation cases. There is no unanimity on the issue, however. See, for example, Mineworkers Invest-
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ment Co (Pty) Ltd v Modibane 2002 (6) SA 512 (W) and Young v Shaikh 2004 (3) SA 46 (C). In Naylor v Jansen; Jansen v Naylor 2006 (3) SA 546 (SCA), Willis J in the court a quo made an order similar to one he had made previously in the Mineworkers Investment case. He ordered the plaintiff to pay damages, but directed that the order would not take effect if the defendant tendered a formal apology, which the court had formulated. This aspect of the judgment was not taken on appeal, however, so the Supreme Court of Appeal declined to comment on what it referred to as an order that was somewhat unusual (para 17). Clarity on the matter would therefore have to wait for another day. The role of a retraction and/or apology was discussed in two minority Constitutional Court judgments in Dikoko v Mokhatla 2006 (6) SA 235 (CC), 2007 (1) BCLR 1. In this instance the defendant had not apologised and the Mokgoro J and Sachs J each considered what effect that should have on a damages award. Mokgoro J emphasised that a retraction and/or apology should be sincere and adequate, and published as prominently as the defamatory statement. Its value as a compensatory measure restoring the integrity and human dignity of the plaintiff, cannot be exaggerated. Far more is involved than protecting freedom of speech from inordinate damages claims (para 67). The following comments, which fully set out the rationale for making more use of apologies in our law, are worth noting in full:
In our constitutional democracy the basic constitutional value of human dignity relates closely to ubuntu or botho, an idea based on deep respect for the humanity of another. Traditional law and culture have long considered one of the principal objectives of the law to be the restoration of harmonious human and social relationships where they have been ruptured by an infraction of community norms. It should be a goal of our law to emphasise, in cases of compensation for defamation, the reestablishment of harmony in the relationship between the parties, rather than to enlarge the hole in the defendants pocket, something more likely to increase acrimony, push the parties apart and even cause the defendant nancial ruin. The primary purpose of a compensatory measure, after all, is to restore the dignity of a plaintiff who has suffered the damage and not to punish a defendant. A remedy based on the idea of ubuntu or botho could go much further in restoring human dignity than an imposed monetary award in which the size of the victory is measured by the quantum ordered and the parties are further estranged rather than brought together by the legal process. It could indeed give better appreciation and sensitise a defendant as to the hurtful impact of his or her unlawful actions, similar to the emerging idea of restorative justice in our sentencing laws.
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The focus on monetary compensation diverts attention from two considerations that should be basic to defamation law. The rst is that the reparation sought is essentially for injury to ones honour, dignity and reputation, and not to ones pocket. The second is that courts should attempt, wherever feasible, to re-establish a dignied and respectful relationship between the parties. Because an apology serves to recognise the human dignity of the plaintiff, thus acknowledging, in the true sense of ubuntu, his or her inner humanity, the resultant harmony would serve the good of both the plaintiff and the defendant. Whether the amende honorable is part of our law or not, our law in this area should be developed in the light of the values of ubuntu emphasising restorative rather than retributive justice. The goal should be to knit together shattered relationships in the community and encourage across-theboard respect for the basic norms of human and social inter-dependence. It is an area where courts should be pro-active encouraging apology and mutual understanding wherever possible. (paras 689)
Sachs J agreed with Mokgoro J and added that there should be a remedial shift from almost exclusive preoccupation with monetary awards, towards a more exible and broadly-based approach that involves and encourages apology (para 105). It is the judicial nding that vindicates a damaged reputation, not the size of a damages award (para 110) and [t]he notion that the value of a persons reputation has to be expressed in rands in fact carries the risk of undermining the very thing the law is seeking to vindicate, namely the intangible, socially-constructed and intensely meaningful good name of the injured person (para 111). Sachs J called for greater focus on the human dimensions of the problem and less on the patrimonial ones and to make greater allowance in defamation proceedings for acknowledging the constitutional values of ubuntubotho with its emphasis on restorative justice (para 112; see also paras 1137). Since they articulate minority views, these judgments are obviously not binding upon courts. Nonetheless, they voice strong sentiments that cannot lightly be ignored. In my view, the use of retraction and apologies as delictual remedies has been long overdue and hopefully the Supreme Court of Appeal will take the cue and develop the common law accordingly. VICARIOUS LIABILITY POLICE In Minister of Safety and Security v Luiters (CC, 30 November 2006, case no CCT23/06, unreported), the Constitutional Court refused
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leave to appeal from the Supreme Court of Appeal (Minister of Safety and Security v Luiters 2006 (4) SA 160 (SCA)). The Minister had been held liable in damages for the conduct of an off-duty policeman who had shot Luiters with a service rearm for no apparent reason. The trial court found that the constable in question had subjectively placed himself on duty at the time as he had been looking for people who had robbed him, and was therefore acting as a policeman; and that the Minister had not shown that the constables conduct fell outside police duties. The Supreme Court of Appeal conrmed the trial courts ndings. The Constitutional Court applied the principles expressed in its previous decision, K v Minister of Safety and Security 2005 (6) SA 419 (CC), ie that policy and constitutional issues are inherent in all questions of vicarious liability; and that the test for liability has a subjective leg, which is a factual enquiry, and an objective one, which focuses on policy issues (para 18). Any development in respect of the scope of liability would also raise constitutional issues (paras 19 and 26), but an enquiry into issues falling within the subjective leg, or the application of the test, does not (para 27). The Constitutional Court declined to vary the rules of vicarious liability in instances where police are involved. The rules apply to all instances, it said, regardless of the identity of the employer or the status of the employee (para 36). But more signicantly, although not pertinently discussed in the judgment, the decision claries an important issue concerning the objective and subjective enquiries. In establishing whether or not the employee had acted in the course and scope of employment, the question is not whether the employee subjectively went about the employers business, coupled with an objective assessment as to whether the facts indicate that such business was indeed related to the interests of the employer. See, for example, ABSA Bank Ltd v Bond Equipment (Pretoria) (Pty) Ltd 2001 (1) SA 372 (SCA) para 5; Van der Walt & Midgley op cit para 29; Neethling et al 341. Instead, according to the K v Minister of Safety and Security test, the employees subjective decision to go about the employers affairs is sufcient to found the factual conclusion. The objective leg is then concerned with policy issues, and fairness and justice, and so focuses on the scope and breadth of liability (see paras 202 and 356). SCHOOLS
AND
TEACHERS
The crisp issue in LUR vir Onderwys en Kultuur, Vrystaat v Louw en n ander Louw 2006 (1) SA 192 (SCA) (also discussed under Liability
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imposed by statute) was whether or not the state should be liable for a delict committed by a contract employee of a public school. A scholar suffered brain damage after he had come close to drowning. The plaintiffs in this matter (the respondents in the Supreme Court of Appeal) instituted action against the MEC for Education and Culture and the school. They alleged that the defendants were liable for the negligent conduct of the duty teacher in terms of s 60(1) of the South African Schools Act 84 of 1996. Relying on the wording of the Afrikaans version of the Act, both defendants excepted on the grounds that s 20(10) of the Act exempted the state from liability in respect of staff that a public school employs on a contract basis. The court rejected their contentions, and held that the English version correctly reected the legislatures intention. The section excludes liability in respect of contractual obligations that a school incurs towards staff, but not liability which such staff incur towards third parties, even if the conduct stemmed from the contract with the school. The appeal accordingly failed. This decision must provide some relief to parents and to school governing bodies alike. Many schools have teachers in governing body posts and had the state not been held liable, such teachers and their governing bodies would have borne the liability for any delicts that the teachers commit. Fortunately for them, the case places such public responsibility on the state. LITERATURE
Alheit, K Delictual liability arising from the use of defective software: Comparative notes on the positions of parties in English and South African law (2006) 39 CILSA 265. Etsebeth, V The growing expansion of vicarious liability in the information age (part 1) (2006) 3 TSAR 564. Havenga, M Directors co-liability for debts (2006) 18 (2) SA Mercantile Law Journal 229. Hurter, E Some thoughts on current developments relating to class actions in South African law as viewed against leading foreign jurisdictions (2006) 39 CILSA 485. Kiggundu, J Choice of law in delict: The rise and rise of the lex loci delicti (2006) 18 (1) SA Mercantile Law Journal 97. Knobel, JC & Kruger, H The nasciturus ction and delictual liability for pre-natal injuries Road Accident Fund v M obo M, Road Accident Fund v Mtati (2006) 69 (3) THRHR 517. Loubser, M & Reid, E Liability for products in the Consumer Protection Bill 2006: A comparative critique (2006) 17 (3) Stellenbosch Law Review 412.
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Millard, D Models to assess personal injury: Lessons from Norwegian law? (2006) 3 TSAR 690. Mukheiber, A The nascituris ction and delictual claims RAF v M obo M [2005] 3 All SA 340 (SCA) (2006) 27 (1) Obiter 188. Mukheibir, A & Ristow, L An overview of sexual harassment: Liability of the employer (2006) 27 (2) Obiter 228. Neethling, J Blacklisting of a debtor as a credit risk infringement of a debtors rights to creditworthiness and earning capacity as personal immaterial property rights (2006) 18 (3) SA Mercantile Law Journal 376. Neethling, J Afwysing van n regslig op polisiebeamptes om the reg op die sies-psigiese integritiet en sekerheid van die persoon buiteom misdaadsituasies te beskerm: Die hoop beskaam Minister of Safety and Security v Rudman 2005 2 SA 16 (HHA); (2006) 27 (2) Obiter 369. Neethling, J The conation of wrongfulness and negligence: Is it always such a bad thing for the law of delict? (2006) 123 (2) SALJ 204. Neethling, J & Potgieter, JM Die regsoortuigings van die gemeenskap as selfstandige onregmatigheidskriterium (2006) 3 TSAR 609. Neethling, J Die nasciturus-ksie verdwyn van die delikteregtoneel Road Accident Fund v Mtati, RAF v M obo M (2006) 69 (3) THRHR 511. Neethling, J Owerspel, die vervreemding van gevoelens as persoonlikheids- en mensereg (2006) 69 (2) THRHR 342. Nugent, RW Yes, it is always a bad thing for the law: A reply to Professor Neethling (2006) SALJ 557. Okpaluba, C The law of bureaucratic negligence in South Africa: A comparative commonwealth perspective (2006) Acta Juridica 117. Okpaluba, C Delictual liability of public authorities Pitching the constitutional norm of accountability against the oodgates argument: Notes and comments (2006) 20 (2) Speculum Juris 248. Pretorius, CJ Damages in delict for prospective loss of prot (2006) 3 TSAR 385. Rautenbach, C Phenomenon of personal laws in India: Some lessons for South Africa (2006) 39 CILSA 241. Scott, J Negligence: Foreseeability of harm (2006) 39 (1) De Jure 213. Shultze, WG Delictual liability of a bank towards its client: A new prominence given to the element of causation (2006) 3 TSAR 834. Slabbert, MN Liability for the transfusion of blood in South Africa (2006) 69 (1) THRHR 29. Steyn, CR Breach of condentiality and the duty to warn in medical law: Examples from clinical psychiatry (2006) 31 (1) Tydskrif can Regswetenskap 134. Van den Heever, P Prenatal medical negligence in South African medical law: Wrongful life (the right not to be born) and the non-existence paradox (2006) 69 (2) THRHR 188. Van der Bijl, C Rape trauma syndrome under South African law: A focus on instituting civil damages for male and female victims of rape (part 2) (2006) 17 (2) Stellenbosch Law Review 289.
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Van Jaarsveld, M Words, words, words . . . more than just words in employment references? Some thoughts on the liability of employers for calamitous references (2006) 3 De Jure 620. Van Zyl, SP An employers vicarious liability with reference to the internet and email (2006) 1 De Jure 127. Van Zyl, SP Online defamation: Who is to blame? (2006) 69 (1) THRHR 139. Visser, PJ Gedagtes oor feitelike kousaliteit in die deliktereg (2006) 3 TSAR 581. Visser, PJ Kwantisering van skadevergoeding by liggaamlike beserings Algemene skade of persoonlikheidsnadeel (nie-vermoendskade) De Jongh v Du Pisanie NO (2006) 69 (4) THRHR 692. Visser, PJ Die moontlike toepassing van die actio de feris ten opsigte van die oordrag van snotsiekte (2006) 69 (2) THRHR 303. Visser, PJ Staataanspreeklikheid weens nalatige optrede deur persooneellid in diens van openbare skool LUR vir Onderwys, Vrystaat v Louw en Oosthuizen (2006) 69 (3) THRHR 523. Visser, PJ Some thoughts on the onus of proof in enquiries into improper conduct by members of the private security industry (2006) 3 De Jure 660. Visser, PJ Note on aspects of the statutory exclusions of legal liability (2006) 69 (3) THRHR 479.

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