Omissions Chapter 14 Negligent Misstatements Chapter 15

Negligent Misstatements IntroductionConduct or words that mislead a person to act to his/her detriment (Administrateur, Natal v Trust Bank van Afrika Bpk)Conduct: omission or commissionPossibility to claim for any kind of loss based on any of the 3 Delictual actions - as specific form of damnum iniuria datum PEL only

Introduction (continued)Initially, only intentional misrepresentation was actionableRoman and Roman-Dutch law: actio doliEnglish Law: Intentional misrepresentationAdministrateur, Natal v Trust Bank van Afrika Bpk 832: Confirms --Aquilian action available for negligent misrepresentationRequirements/Elements (continued)Existence of Misrepresentation question of fact based on circumstances of caseStandard Bank of SA Ltd v OK Bazaars (1929) Ltd: Element of conduct (misrepresentation/misstatement) includes Statement, which isFalse;Misstatement was material (influence to act);Defendant intended plaintiff/person in plaintiffs position to act upon misstatement;Plaintiff in fact relied on misstatement.Important ConsiderationsBasis for liabilityDefendant has legal duty to provide correct infoPlaintiff has a right to correct infoEg contractual relationship; public office etc (see factors under Wrongfulness below)Conduct vs WordsCautious approach to (verbal) statements [words] take effect in combination with innumerable facts and other words ~ Hedley caseElements mainly in issue-WrongfulnessFault (Negligence)CausationWrongfulnessNegligent misrepresentation that causes pure economic harm is not prima facie wrongfulUsually breach of legal dutyReasonableness and boni mores as criteriaJudicial value-judgment (Dersley case)Guidelines from case law (not numerus clausus)General Rule: In principle, no legal duty where info given informally (but improper motive may render misrepresentation prima facie unlawful) -- Except where the following factors are presentWrongfulness (continued)Exceptions to General Rule that indicate the existence of a legal duty:Statutory DutyContractual undertaking to give correct informationContractual relationship duty inter partes in terms of matters relating to contractPre-contractual negotiationsPublic officeInformation in exclusive possession of person in particular occupationBy reason of occupation, claims to have professional knowledgeWrongfulness (continued)Above factors indicate wrongfulness, butLiability doesnt ensue just because one/more of these are present: must prove that legal duty owed to particular plaintiffDefendant subjectively foresaw plaintiff as person/category of persons who would rely on the (incorrect) informationEven if all these factors are present courts can still deny existence of legal duty due to policy considerations (EG Electric case p706)9NegligenceReasonable person test and principles of reasonable foreseeability and preventabilityMukheiber v Raath; Standard Bank of SA v OK BazaarsContributory fault of plaintiff?CausationFactual causal nexus between misrepresentation, misunderstanding and harm (Administrateur, Natal v Trust Bank 833): Plaintiff misled by misrepresentation (subjectively believed)Plaintiff acted to his/her detriment as a result of the misrepresentationCausation (continued)Legal causation: factors/requirements that indicate sufficiently close linkPlaintiff him-/herself acted to own detriment due to misrepresentationStatutory duty on auditors and public accountants: duty wider than common law reasonable foreseeability requirementBayer South Africa (Pty) Ltd v Frost 1991 4 SA 559 (A): liability for negligent misrepresentation that induces a contractCausation (continued) Legal causation: Factors (continued)

Concurrence of delictual and contractual claim based on PEL? Preference to contractual claim (Lillicrap case)Negligent performance of professional (contractual) service contractual claim due to contractual duty (Cf Chapter 10, Textbook)Interference with a Contractual RelationshipIntroductionPlaintiff not able to obtain performance ito contract due to 3rd partys conductORPlaintiffs contractual obligations are increased due to 3rd partys conduct

3rd partys conduct: Intentional and without lawful justification (Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd) 202F-H); Intentional InfringementUnion Government v Ocean Accident and Guarantee Corporation Ltd: In general no liability for negligent infringement of contractual relationshipDantex Investment Holdings (Pty) Ltd v BrennerMeaning of intentional and wrongfulKnowledge of harm to plaintiff?Lanco Engineering CC v Aris Box Manufacturers (Pty) LtdUncertainty as to whether negligence sufficient?Thus -- No liability beyond historically justified cases: E.g.:Action of Dependants; Possessor of property ito contract with owner; Seller as owner of damaged propertyIntentional Infringement (continued)Aquilian action for any intentional conduct which causes infringement of contractual personal right / increase of contractual obligationSame approach to wrongfulness as in PEL casesInterference must be contra bonos mores or unreasonable Lanco Engineering CC v Aris Box Manufacturers (Pty) LtdNot a requirement that wrongful & culpable interference result in breach of contract or inducement to breach contract (but can serve as important factors to determine wrongfulness)

Instances of intentional interference recognised in Case LawIncitement to commit breach of contractAtlas Organic Fertilizers v Pikkewyn GhwanoContracting party does not obtain performance to which he/she is entitled ex contractu, but without breach of contract/enticementDantex Investment Holdings (Pty) Ltd v Brenner Inducement to lawfully terminate contractAtlas Organic Fertilizers v Pikkewyn GhwanoLanco Engineering CC v Aris Box Manufacturers (Pty) LtdIncreasing contracting partys contractual obligationsShell and BP SA Petroleum Refineries (Pty) Ltd v Osborne Panama SAInstances recognised in Case Law(continued)Unlawful CompetitionIntroductionGeneral principles of Lex Aquiliae applicableParticular importance (and difficulty): element of wrongfulnessRight to goodwill of enterprise (Cf Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd)Infringement of right to goodwill entails:Factual disturbance + violation of legal norm contrary to the spirit of capitalism / free competitionNorm of honesty and fairness in trade and competition + general wrongfulness criterionTolgaz Southern Africa v Solgas (Pty0 Ltd & another; Easygas (Pty) Ltd v Solgas (Pty) Ltd & another 2009 (4) SA 37 (W): (see para 44-45)Elements of Unlawful Competition; wrongfulness requirementsWrongfulness: Honesty and FairnessFactors to take into account when determining wrongfulness (Tolgaz case):Fair-play / Honesty and fairness of relevant conduct (statements included Atlas case)Business ethics of particular sectorExisting positive law regulation / protectionPrinciples and importance of free market and strong competitionAre the parties competitors?Conventions with other countries?MotiveCompetition PrincipleYardstick to concretise the abstract, vague boni mores criterion where competitors interests conflictVan Heerden: Performance / Merit based Competition Competitor who delivers best & fairest performanceSame performance at better price / Better performance at same priceConduct not based on merit / performance = wrongfulIndirect Infringement of GoodwillCompetition is in principle lawful (performance competition)Unlawful competition = Wrongdoer uses own goodwill in unreasonable manner to infringe on goodwill of a competitorUnreasonable?Weigh interests of competitors based on factors of honesty & fairness in trade, competition principle:Unjustified imbalance between benefit to one competitor and prejudice to the other?Indirect Infringement of Goodwill (continued)Important Forms:Misleading public - ordinary client test (misrepresentation regarding quality, character, price, extent of own performance; does not necessarily constitute passing off)Passing off (trade name / -mark, get-up) probability of misleading clients. Prove 2 things:Plaintiffs distinguished sign gained reputationDefendants copy creates probability of misleading clients: -- Klimax Manufacturing Ltd & another v Van Rensburg & another 2005 (40 SA 445 (O)likely to deceivegeneral appearance while looking casually at the product; imperfect recollection of consumers Indirect Infringement of Goodwill (continued)Leaning on: Use of advertising signs (trade mark/service mark) (made like / similar to)Cf Stellenbosch Wine Trust Ltd v Oude Meester Group LtdCf Lorimar Productions Inc v Sterling Clothing Manufacturers (Pty) LtdUndue influencing of public with regard to own performanceMisappropriation of trade secrets / confidential business information of competitor: STT Sales (Pty) Ltd v Fourie 2010 (6) SA 272 (GSJ)Atlas case

Indirect Infringement of Goodwill (continued)Misappropriation of a competitors performance (direct copying of performance)Cf Schultz v ButtInterference with contractual relationship of competitor (commercial bribery?)Atlas caseWoodlands Dairy (Pty) Ltd v Parmalat SA (Pty) LtdCompetition in breach of statutory dutyNetstar (Pty) Ltd & others v Competition Commission of South Africa & another 2011 (3) SA 171 (CAC)direct Infringement of GoodwillDirect attack on a competitorNo question of performance / merit competition rather an act to prevent competitors performance from gaining reputationIn principle wrongfulDefences: private defence, necessity, public interestdirect Infringement of Goodwill (continued)Important Examples:Disparaging statements regarding competitors undertaking, products, services in a false or truthful mannerWoodlands Dairy (Pty) Ltd v Parmalat (SA) (Pty) LtdInstigating a boycott against a competitorCf Deneys Reitz v SA Commercial, Catering and Allied Workers Union Physical / Psychological pressure on potential clients, employees, suppliersDirect attack that infringes subjective right of competitorProduct LiabilityContext of industrialised provision of commoditiesConstant risk of harm due to defective productsComplexity regarding mechanisation of manufacturing processUntil recently based on Aquilian action NOW legislation that imposes STRICT liabilityRelatively new field in SA law comparative law important (A Gibb & Son : USA and UK jurisprudence)IntroductionWagener and Cuttings v Pharmacare (2003)Questions raised with regard to a shift towards strict liabilityThe role of the legislature in law reform as paramountThe Consumer Protection Act 68 of 2008: Came into operation in October 2010Strict LiabilityFactors to Justify shift towards strict liability:Manufacturing of defective products creates unusual high risk for consumersSuch risk often unavoidableDifficulty of proving fault on part of manufacturerConstitutional rights of physical-mental well-being dictates highest standards in manufacturing goodsMarketing inspires confidence that products are safeIncentive to manufacturer to take utmost careEconomic perspective: manufacturer most capable of absorbing and spreading risk of damage by price increases and insuranceStrict Liability (continued)Application of the Acts5(1): General application s5(2): Exemptionss5(5): goods supplied in terms of exempted transaction - s60 and s61 still apply to goods, importer or producer, distributer or retailers6: Monetary threshold applicable to sizes of juristic persons (read with s5(2)(b))The Consumer protection ActSections particularly relevant for Delict:Part H: ss53-61s53: Definitionss54: Consumers right to demand quality services55: Consumers right to good, quality goodsS56-57: Implied warranty of quality on new and repaired goodss58: Warning concerning fact and nature of risks59: Waste managements60: Safety monitoring and recalls61: Liability for damage caused by goods

The Consumer protection ActWho is liable? s61(1)Producer; Importer; Distributor; Supplier/Retailer (defined in s 1)Supplier/supply: Wide meaning (sell, rent, exchange, hire ordinary course of particular business)Services: Sell, perform/cause to perform/provide product; grant access to premises, event, activity, facilityIncl: leasing, hire-purchasing, land transactions ito legal interest in property other than interest covered by definition of service (e.g. Liability for structural design defects; hazards that occur on land)Also: damages to product (land/buildings)Problem: well-established principles in contract and property law far-reaching and unforeseen effects...?

The Consumer protection Act (continued)36Nature of Liability: Strict - s 61(1) action against producer, importer, distributor, retailer without proof of negligence; consumer can be purchaser or user; action not limited by ambit of warranty given for productWhy strict liability?Issues of fairness, difficulty in proving negligence, economic efficiency, deterrence, etc (see factors lsited above).Efficiency argument: burden of harm resulting from defective product should fall on producer

The Consumer protection ActConsumer: s 1Person to whom goods are marketed in ordinary course of suppliers businessPerson who has entered into transaction with supplier (subject to s5(2) and (3))If context permits user, recipient, beneficiary not necessarily party to transaction Franchisee, subject to ambit provided for in s5(6)(b)-(e)The Consumer protection Act (continued)Goods for purposes of strict liability: s1When are goods defective? s 53(1)(a)Any material imperfection in manufacture/goods/components/performance of services that renders goods/results less acceptable than would generally be reasonably expected in the circumstancesAny characteristic of goods/components that renders goods less useful/ practicable/ safe than what could reasonably be expected in the circumstancesThe Consumer protection Act (continued)Defect adequately defined? (Reference in act to unsafe, failure in product, hazardous...)Inadequate instructions/warnings regarding any hazardIncorrect information: Appears to be no distinction between incorrect instructions and incorrect information from product (e.g. medical equipment; books) issue of limitless liability where information products are concernedStandard of reasonable consumers expectations: does this have same effect as fault-based liability?The Consumer protection Act (continued)Liability for what kind of harm? s 61(5)Death, injury, illness of natural personAny loss of, or physical damage to, any property (movable, immovable, defective product itself)Any economic loss resultant from the above (e.g. Loss of profit)THUS: Act allows for damages over and above contractual remedies. Issue of limitless liability?The Consumer protection Act (continued)Injury or Death of Another---Action of DependantsIntroductionGeneral Principle: Loss suffered due to death or injury of another person is NOT recoverableDeviation from general principle: is there a duty to support / be supported?Instances where Loss not recoverable: (i.e. no legal duty recognised)(1) Parents & Employers cannot recover loss suffered due to injury to child or employee: Union Government v Ocean Accident and Guarantee Corporation Ltd(2) Contracting parties and the effect of injury or death on the contractual relations: Union Government v Ocean Accident and Guarantee Corporation Ltd(3) Heirs & Legatees Reduced inheritance:Lockhats Estate v North British and Mercantile Insurance Co Ltd Is this situation different from that of a disappointed beneficiary?Introduction (continued)Instances where recoverable:(1) Heirs and Immediate family can recover funeral expensesClaim based on duty to bury / cremate (actio funeraria)Critique?(2) Executor:In certain circumstances can claim o.b.o. estate against wrongdoer: Medical expenses to treat eventual fatal injuries; loss of income from time of injury to time of death only; (NOT future loss of income) funeral costs; Introduction (continued)(3) Persons with duty to support: (Action of dependants)Action is based on breach of legal duty towards dependant. E.g.: Argument that, in principle, breadwinner can claim for monetary loss for e.g. hospitalisation due to injury to child, but claim not based on duty to support? Neethling et al: unacceptable Legal duty not to increase scope of duty to support? Cf Apportionment of Damages Act: Dependant as joint wrongdoer ( breadwinner claims for delict committed against him/herself )

Action of Dependants

Death of Breadwinner: Legal Insurance Co Ltd v BotesRoman-Dutch law recognised this as compensation for loss of maintenance (actio utilis) (Likely of Germanic origin: revenge money divided among deceaseds children, parents, blood relatives) Purpose to place dependants in position they would have been in, had breadwinner not died. Different from normal Aquilian action? Delict against breadwinner gives rise to independent claim for benefit of dependants: separate cause of action (Evins v Shield Insurance Co Ltd 837E-838C)Nature of Action of DependantsDirect action: Jamesons Minors v Central South African RailwayDependants claim based on infringement of personal right of support from breadwinnerPactum de non petendo concluded by support-provider ineffective to prohibit action of dependantsSupport-provider / dependant as joint wrongdoer: s2(1B), Apportionment of Damages ActEvins v Shield Insurance Co Ltd: Determine fault & wrongfulness with regard to death of support-giver AND consequent harm suffered by dependantsRequirements to Claim for Loss of support2 Requirements (Brooks v Minister of Safety & Security; Santam Bpk v Henery; Amod v MMVA Fund; Du Plessis v RAF)Deceased had a duty to support dependant/claimant, provided thatLegally recognised dutyDependant in need of supportBreadwinner capable to provide the supportDependant had a right to such supportLegally protected rightExistence of such right determined according to boni mores criterion of wrongfulness: Amod case at 1326; Henery case.Legally Recognised sources of right / duty to support: Basis in Family LawMarriage or Similar RelationshipAmod v Multilateral Motor Vehicle Accidents Fund: emphasis on flexibility of the remedy Customary Unions; Civil Unions ActUnion Government (Minister of Railways & Harbours) v Warneke eces49Legally Recognised sources of right / duty to support: Basis in Family LawBlood Relation(Biological / Adopted) Children (minor or major) has right of support from both parents (Du Plessis v Road Accident Fund)Brooks v Minister of Safety and SecurityIndigent Parents have right of support from children (minor or major)Grandparents have a right to support from their grandchildren if children not able: Barnes v Union and SWA Insurance Co

DamagesPatrimonial Harm = Loss of support onlyDependants should be placed in position they would have been in, had the support-provider not died (Legal Insurance Co Ltd v Botes)Lambrakis v Santam Ltd: if estate of deceased support-provider generates support as before the death No loss sufferedSupport-providers prospective income: Calculated on annuity basis with the purpose to provide periodic income for remainder of dependencyNo loss recoverable if support-provider earned illegallyPossibility of lawful earnings in future?Flexible approach necessary in order not to punish dependants for actions of support-provider?Injury to the Support-giverIn principle no distinction between action of dependants for death / injury Abbot v Bergman; Erdman v Santam Insurance Co LtdHowever, De Vaal v Messing: Injured breadwinner must institute claim for loss of earnings/future income which should be utilised as support for dependantsPoints to Ponder:If dependants can prove loss, Apportionment of Damages Act allows wrongdoer and (injured) breadwinner to be joint wrongdoersShould not any loss proved be recoverable, provided that wrongdoer does not pay double?