Case no 410/82

MC

IN THE SUPREME COURT OF SOUTH AFRICA

(APPELLATE DIVISION)

Between:

LILLICRAP WASSENAAR AND PARTNERS Appellant

- and -

PILKINGTON BROTHERS (SOUTH AFRICA)

(PROPRIETARY) LIMITED Respondent

CORAM: KOTZé, CILLIé, VAN HEERDEN JJA et

SMUTS, GROSSKOPF AJJA.

HEARD: 15 MAY 1984

DELIVERED: 20 NOVEMBER 1984

J U D G M E N T
 2.

SMUTS AJA :-

I have had the advantage of reading the judgment of

Grosskopf AJA. I do not however, with respect, share the

view that appellant, a firm of consulting and structural

engineers, is not liable in delict for the negligent

performance of a duty contractually undertaken by

it in its professional capacity or for negligent mis-its

statements made in the course of performing/contractual

obligations. As this is a minority judgment I will

express my views as briefly as the arguments advanced

will allow.

The relevant pleadings are to be found in the

judgment of the Court a quo which, as appears from the

judgment of Grosskopf AJA, has been reported as Pilkington

Brothers / .........
 3.

Brothers S.A. (Pty) Ltd vs Lillicrap, Wassenaar and

Partners 1983 (2) S.A. 157 (W).

At page 169 of the reported judgment Margo J

in my respectful view correctly states the following:

"In principle there is no obstacle to

Aquilian liability on the ground,only that
the wrongful and negligent acts or omissions
necessary to sustain a,claim in delict also
constitute breach of an express or implied
contractual obligation owed by the defendant
to the,plaintiff."

Support for this view is to be found in the

decisions referred to by the learned Judge which are

van Wyk vs Lewis 1924 A.D. 438; Tomkwani Sawmill Co Ltd

vs Filmalter 1975 (2) S.A. 453 (W); Rampal Pty Ltd and

another vs Brett, Wills and Partners 1981 (4) S.A. 360

(D) at p. 366 D. Yet another decision in which an

action / ..........
4

action in delict was recognised, although an action in

contract also lay, is Western Alarm Systems Pty Ltd vs

Corni & Co 1944 C.P.D. 271.

I see no reason for limiting this statement to

cases where there would be liability for damages in de

lict independently of the contractual relationship en

tered into by the parties. The decisions referred to

above certainly do not support such a view. The cases

of Tomkwani, (supra), and Rampal Pty Ltd, (supra), are

in fact cases where no action in delict could ever have

arisen in the absence of a contract whereby the services

of the defendants, as professional people, were engaged.

In the Tomkwani case the defendant was an auditor who

was sued in delict for alleged negligence in the per

formance / ...........................................
 5.

formance of the duties he had been employed to perform.

In the Rampal case the defendants were attorneys whose

services had been engaged by the plaintiff for the in-

vestment of money. The fact that these professional men

could have been sued in contract for the negligent

performance of their duties did not debar an action in

delict based on the same negligence. Had they not been

employed in their professional capacities there could

of course never have been any cause for an independent

action in delict.

I / ................
 6. I can see

no reason why the fact that a party to a contract has

an action for damages in contract for the negligent

performance of a contractual obligation should exclude

an action for damages in delict based on the same

negligent act or acts. The following extract from the

judgment of Spence J in the Canadian case of

J Nunes / ..........
 7. J

Nunes Diamonds Ltd vs Dominion Electric Protection Co

1972 26 D.L.R. 3rd 649 at 727-8, is apposite in this

regard. "The agreement between the parties is of impor-

tance insofar as it established a relationship between

them, and thus provided a basis upon which, in the light

of subsequent events, the appellant could rightly assess

that the negligent misrepresentations of the respondent

were made in breach of a duty of care to the appellant. I

cannot agree that the mere existence of an antecedent

contract foreclosed tort liability under the Medley Byrne

principle." I share the view expressed by Margo J that

this statement is in accord with the legal position in

this country.

It was contended that where, as in the present

case / .............
8.

case, the appellant's contractual duties have been set

out in detail in clauses 2 and 3 in the agreement of

June 1975, it is implicit that the parties intended the

contractual definition of their rights and obligations

to be exclusive of any other liabilities. There is

certainly no express stipulation in the agreement which

limits appellant's liability to breach of contract or

which excludes liability in delict. Applying the test for

an implied term stated in Reigate vs The Union Manu-

facturing Co 118 L.T. 483, and approved by this Court in

Barnabas Plein & Co vs Sol Jacobson & Sons 1928 A.D. 25 at

p. 31 and Mullin Pty Ltd vs Benade Ltd 1952 (1) S.A. 211

at p. 215, it can certainly not be said that had res-

pondent been asked whether the agreement between the

parties / ..........
 9.

parties excluded delictual liability, the reply would

have been "of course, that is the case. We did not

trouble to say that; it is too clear".

Policy considerations do not, to my mind, require

that liability in delict on the part of a person render-

ing professional services pursuant to a contract of the

nature presently under consideration, be not recognised.

In the present case the respondent has not alleged that

fraudulent misstatements were made. It relies on negligent

misstatements. Were it to have relied on fraudulent

misstatement or misstatements made as the result of gross

negligence, considerations of policy appear to me to

demand the recognition of a claim in "delict notwithstand-

ing that a remedy in contract was at an earlier stage

available. / ... . . .
 10.

available. I say "an earlier stage" as the Court was

informed by Mr Maisels that the reason why the present

action was framed in delict by respondent was that its

cause of action in contract had become prescribed. One of

the advantages to be gained by the recognition of a claim

in delict is therefore that it will enable a plaintiff

whose contractual claim has become prescribed to proceed

in delict. Where the delictual claim is based on fraud or

gross negligence it appears to me to be unarguable that

policy considerations, and those of fairness and justice,

require that such a claim be recognised. A party to a

contract cannot validly contract out of fraud. See D.

9.2.27.29, 2.14.27.3, 50.17.23.

I / ...............
 11.

I can accordingly see no reason for denying, as a matter

of law, an action in delict on the ground of fraud in the

case of a professional person simply because he has con-

tractually bound himself to render professional services.

I can also see no valid reason why an action in delict

based on negligent misstatement or negligent [breach of an

obligation undertaken in a contract should be treated

differently as a matter of policy or for any other reason.

Any contracting party who wishes to protect himself

against an action in delict has a remedy readily avail-

able. He can simply have a clause inserted excluding

liability in delict for negligence.

The facts alleged by respondent fall, to my mind

within / ..........
 12.

within the recognised principles which give rise to

delictual liability where the claim is based on negli-

gence. In Cape Town Municipality vs Paine 1923 A.D. 207

Innes CJ stated the requisites for liability in delict

as follows at p. 216-217:

"It has repeatedly been laid down in this

Court that accountability for unintentioned
injury depends upon culpa, - the failure to
observe that degree of care which a
reasonable man would have observed. I use
the term reasonable man to denote the
diligens paterfamilias of Roman law, - the
average prudent person. Every man has a
right not to be injured in his person or
property by the negligence of another, -and
that involves a duty on each to exercise due
and reasonable care. The question whether,
in any given situation a reasonable man
would have foreseen the likelihood of harm
and governed his conduct accordingly, is one
to be decided in each case upon a
consideration of all the circumstances. Once
it is clear that the

danger / ...........
 13.

danger would have been foreseen and guarded

against by the diligens paterfamilias, the
duty to take care is established, and it
only remains to ascertain whether it has
been discharged."

In Herschel vs Mrupe 1954 (3) S A . 464 (A) van den

Heever JA pointed out at p. 485 that the essential

element of unlawfulness was omitted by Innes CJ in this

statement, perhaps because it was so obvious] that it was

unnecessary to mention it. This passage has also been

criticised as unnecessarily incorporating the concept of

a duty of care. Bearing in mind these two respects in

which the said statement of the law may be said to be

incomplete or inaccurate,it is nevertheless clear there-

from that where a person is by circumstances, which may

include the conclusion of contract with another, placed

in / ...............
 14 . in a

position where it would be clear to a reasonable man that a

failure to exercise care is likely to result in unlawful

harm being done to another, a failure to exercise that

care, with resultant harm to the other, will entail

delictual liability. See also Union Government vs National

Bank of South Africa Ltd 1921 A.D. 121 at p. 128.

As appears from the judgment of Grosskopf AJA "(i)t

is clear that in our law Aqullian liability has long

outgrown its earlier limitation to damages arising from

physical damage or personal injury". This view is in

accord with the decision of this Court in Administrator,

Natal vs Trust Bank van Afrika Bpk 1979 (3) S.A. 824 (A)

where it was held that liability in delict could in

principle / .......
 15.

principle arise from negligent misstatements which cause

pure financial loss unrelated to physical damage to

property or injury to a person. It was also the view of

Mr Justice van den Heever that all patrimonial loss

unlawfully suffered is recoverable under the Aquilian

law in its developed form. See his work "Aquilian

Damages in South African Law" at p. 31. See further

Matthews and others vs Young 1922 A.D. 492 at p. 504.

To cause patrimonial or economic loss can there-

fore, for the purposes of Aquilian liability, be as

wrongful as to inflict physical damage to corporeal

property or injury to a person. In the present case it

is alleged that appellant,

who / ..............
 16 .

who held itself out to respondent as having expert

knowledge and the professional skill necessary and requi-

red for the carrying out of site investigations including

subsoil investigation, and the analysis of the results

thereof, in relation to the suitability or otherwise of a

particular site for a civil engineering

project such as the one which respondent intended having

respondent

erected, was employed by respondent to do the necessary

investigation and to design and erect the works required

by respondent on the site in conformity with the results

of the analysis carried out by it on the said site. It

follows that a reasonable man,on the basis of the facts

alleged, would have foreseen that a proper analysis was

essential and that a faulty analysis resulting in

an / ...
 17.

an inadequate structure being erected would in all

probability cause respondent patrimonial loss. Respondent

alleges that the analysis carried out by appellant was

done negligently in the respects stated in paragraph 10

(d) (i) (aa) to (ff) of the further particulars dated 19

August. 1981. It is further alleged that appellant

negligently advised respondent that the site was suitable

for the purpose of erecting the works which respondent

contemplated erecting; it is also alleged that appellant

knew that respondent would rely upon and intended that

respondent should rely upon such advice and the designs

prepared by appellant pursuant to and in conformity with

the results of the analysis which it had undertaken to do.

On the basis of these allegations

it / ...
 18. it

follows that a reasonable man, in the position of

appellant, would have realised that faulty advice ten-

dered by him to a person in the position of respondent,

was likely to cause patrimonial loss and he would have

guarded against giving faulty advice. To avoid that

danger it would be necessary to ensure that the site

investigation and analysis was performed without negli-

gence.

To my mind the factual allegations made by res-

pondent bring its case within the principles of the

developed Aquilian law and will, if proved, entail

liability for any patrimonial loss suffered by respon-

dent as the result of the negligence alleged. The con-

tract is the factor which resulted in appellant being

placed / ..........
 19.

placed in a position wherein a failure to exercise rea-

sonable care could cause respondent reasonably foreseeable

patrimonial loss. All the requisites for Aquilian liability

are present. A failure to exercise due care in the soil

analysis which in turn would result in wrong advice being

given, would result in loss being caused to respondent

unlawfully and as a result of culpa. Respondent need allege

and prove no more than that to succeed against appellant.

For the reasons I have al-ready stated I do not think that

the mere fact that respondent at an earlier stage could

have recovered the same loss by suing in contract deprives

him of the right to invoke the Aquilian principles in order

to recover the

loss sustained by him. The considerations which have

resulted / ...
 20.

resulted in the Courts exercising care in applying, to

new situations, the principles which give rise to Aquilian

liability are the fear of opening the door of liability

too wide and creating an unmanageable situation or

indeterminate liability. See Greenfield Engineering

Works vs N K R Construction 1978 (4) S.A. 90 1 (N) at pp.

916 and 917. To grant a party in the position of res-

pondent a remedy in delict cannot result in indeterminate

liability or an unmanageable situation.

Whether respondent's claim is based on negligent

misstatement, as was contended on behalf of appellant, or

on negligent conduct, makes no difference. Even if it is

to be regarded as based on negligent misstatement, it

discloses a cause of action. Margo J dealt fully

with / .............
 21.

with this aspect of the matter at pp. 163 et seq of his

judgment and I am in respectful agreement with his

reasons and the conclusions reached by him. I think that

the argument that respondent's cause is based on

negligent misstatement is in any event an unjustifiably

narrow interpretation of the pleadings. Respondent is

clearly also relying on negligent conduct in that

appellant failed to exercise due care in making the soil

and site analysis. That in turn gave rise to the

subsequent misstatements and was the root cause of res-

pondent's alleged patrimonial loss.

To my mind respondent's pleadings disclose a cause

of action for damages sustained prior to the assignment

of the contract in 1976. After the assignment respon

dent's / ...............................................
 22.

dent's position could not be worse than it was before-

hand. Respondent was thereafter in the position it

would have been in had appellant initially been a

sub-contractor to the later assignee. As a sub-con-

tractor with no contractual privity with respondent, it

would certainly have been foreseeable that negligence

in the execution of its contractual duties with the

contractor could result in patrimonial loss to

respondent. A failure to exercise due care would have

resulted in Aquilian liability to respondent. It was

argued that appellant's position has been worsened by

the assignment since the contract between appellant and

respondent contained an arbitration clause and that had

the contract not been assigned respondent would have

been / .............
 23.

been bound to submit the present dispute to arbitration.

It was however open to appellant, when the assignment

was effected, to have inserted a clause to the effect

that any claim by respondent against it would still be

subject to arbitration. It failed to do so and res-

pondent rights under the Aquilian principles can ac-

cordingly be enforced in the ordinary way.

It was contended that the possibility of ap-

pellant, as a sub-contractor, being sued by both the

owner and the main contractor is a reason for re-

fusing an action against appellant. I agree with

Margo J that the prospect of appellant being held

liable twice for the same loss is too remote to jus-

tify a denial of a remedy in delict.

The / ..............
 24.

The other considerations already referred to, which

have influenced Courts not to apply the principles of

Aquillan liability to new sets of facts, are also not

present in the case of a claim of the nature presently

being considered. To allow a claim against appellant

after the assignment will not create a situation

"fraught with an overwhelming potential liability". See

the Greenfield case (supra), at p. 917 A.

In my view respondent's pleadings disclose a

cause of action for damages suffered also after as-

signment took place.

The contention that the damages claimed are in

any event not such as are recoverable in delict can in

my / ...............
 25.

my view also not be upheld. The difference in the

method of computing damages for, respectively, breach

of contract and delict was stated by van den Heever JA

in Trotman vs Edwick 1951 (1) S.A. 443 (A) at p. 449

B-C as follows:

"A litigant who sues on contract sues to

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

The fact that respondent seeks to recover the cost

of the work done, and yet to be done, as detailed in

the judgment of Margo J at p. 159 paragraphs (c) to

(h) / ..............
 26.

(h) and that the performance of this work might result

In the plant being brought into the condition it ought

to have been in had appellant performed its obligation

under the contract adequately, does not necessarily

mean that respondent's claim is framed with the object

or for the purpose of being placed in the position it

would have been in had appellant fully performed its

obligations under the contract, in other words, that

the damages claimed are contractual. In Ranger vs

Wykerd 1977 (2) S.A. 976 (A) this Court dealt with an

action framed in delict. The plaintiff had bought a

property on which was a house and a swimming bath. He

had paid R22 000,00 for the property and thereafter

found / ............
 27.

found that the swimming bath was defective. As damages

he claimed the cost of repairing the swimming bath which

was found to be Rl 000,00. It was argued on behalf of

the defendant that the damages thus computed were really

contractual and not delictual in that the plaintiff was

thereby seeking to be placed in the position he would

have been in had the contract been properly performed

by the delivery of a sound swimming bath. In regard to

this argument the following was said by Trollip JA, whose

judgment was concurred in by de Villiers JA, Kotzé JA

and Miller JA:

"It is also objected, however, that the

damages so computed are really contractual

and / .............
 28.

and not delictual. That objection, in my view,

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

present case respondent is entitled to be placed in the

position in which it was before it suffered loss due to

appellant's negligent acta. If, prior to the contract it

possessed, say, ten million rand and spent this amount to

construct the works which appellant designed for it and

the structure was on account of the negligent a d v i c e in

regard to the suitability of the site and the inadequacy of

the structural design done by appellant worth not R 1 0

million but only R5 million rand respondent would be

entitled to claim that difference as damages. That would

be the amount required to restore respondent to the

position it occupied before the delict was committed by

appellant. Respondent would, however, be bound to mitigate

its loss by all reasonable

means / ...
 30.

means at its disposal. If by spending three million rand

it could restore the value of its patrimony to what it was

before the delict it would be entitled, in fact obliged,

to do so and it could then claim the amount of three

million rand as damages. In the present case respondent

has not pleaded the value of its patrimony before and

after the commission of the delict and then stated the

amount it claims to be the necessary expense to mitigate

its loss. The failure to do so will however not

disentitle it to lead that evidence. In Erasmus vs Davis

1969 (2) S.A. 1 (A) it was stated by Muller JA at pp 15

to 16 that "I cannot agree with the submission that a

plaintiff, who has particularised his claim on the basis

of one method

of / ...
31

of calculating damages, is prevented at the trial from

employing instead or in addition another method; pro-

vided, of course, that such other method is appropriate

in the particular circumstances". This statement was

applied by this Court in Ranger's case, (supra), at p.

995. It was there argued that the plaintiff was precluded

from claiming, as the measure of his damages, the cost of

repairing the swimming bath because the measure of damages

alleged in the pleadings was the difference between the

price which the plaintiff was induced to pay for the

property and the price he would have been prepared to pay

but for the defendant's fraud. In regard to this argument

Trollip JA stated the following at p. 995:

"Here / ............
 32.

"Here it suffices to say simply that a

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

The reference to p 8-9 is a reference to the following

words by Potgieter JA,:

"I am in entire agreement with my Brother

MULLER that plaintiff was at the trial not

prevented from proving his damages by

establishing the estimated reasonable and

necessary....
 33.

necessary cost of repairs to the body of

the vehicle in spite of the way the alleged

damages were particularised in the summons,

should the circumstances show that proof of

such cost was an inappropriate yardstick to

measure the damages. I also agree with his

reasons for coming to that conclusion."

In the present case it is not even clear that an

inappropriate yardstick is being employed; the most that

can be said is that more should have been averred to

obtain clarity. The complaint against the respondent's

particulars of claim is however not that it is vague and

embarrassing but that it discloses no cause of action. It

may be that evidence will show that the building as it was

constructed can be used as a parking garage and that its

value as such is the equivalent of what respondent paid

out. If those be the facts respondent will

have / ...
 34.

have failed to prove damages. It may however also be proved

that owing to its situation and structure the building, in

its present condition, is of no use at all or merely of

limited use with the result that respondent's patrimony

has been substantiallydiminished.

The exception can accordingly also not succeed

on this ground.

In regard to the cross-appeal I am of the view that

if it was necessary to have the site, the soil and the

sub-soil property investigated and for that purpose to

have all the other work, referred to in paragraphs (a) and

(b) of the first set of further particulars, done in order

to be able to take the necessary steps to mitigate

respondent's loss, those expenses are recoverable as part

of / ...
 35.

of respondent's damages. To my mind these are not

contractual damages and paragraphs 8 (a) and (b) should

accordingly not have been struck out.

I would accordingly dismiss the appeal with costs

and allow the cross-appeal with costs. I would alter

paragraph 2 of the order of the Court a quo to read:

"The application to strike out is dismissed

with costs."

I would further delete paragraphs 2 and 4 of the said

order and substitute therefor an order that the defen-

dant - appellant - is to pay the costs of the exception

and the application to strike out.

F S SMUTS AJA.