THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT

Case No: 262/09
In the matter between:

JOHAN DE LANGE
Appellant

and

ABSA MAKELAARS (EDMS) BEPERK
Respondent

Neutral Citation:
De Lange v Absa Makelaars (262/09) [2010] ZASCA
21 (23 March 2010)

Coram:
HARMS
DP,
VAN
HEERDEN,
CACHALIA,
SHONGWE JJA et THERON AJA

Heard:
1 March 2010

Delivered:
23 March 2010

Summary:
Contract – interpretation of contract of employment –
importation of tacit term – tacit term relied on by
employee imported into contract.

ORDER

On appeal from: Western Cape High Court (Cape Town) (Griesel J sitting
as court of first instance)
1 The appeal succeeds with costs.
2 The order of the high court is set aside and replaced with the
following:
‘Claims 4 to 15 are dismissed with costs.’

JUDGMENT

VAN HEERDEN JA (HARMS DP, CACHALIA and SHONGWE JJA,
THERON AJA concurring):
Introduction
[1] The main issue in this appeal is whether a clause in a contract
of employment between the respondent, Absa Makelaars (Edms)
Beperk (‘ABSA’), as employer, and the appellant, Mr Johan de
Lange (‘De Lange’), as employee, obliges ABSA to give De Lange a
hearing before making a decision which renders De Lange liable to
reimburse ABSA for ‘damages’ which the latter has paid out to its
client or clients in certain circumstances.

[2] The clause in question (clause 16.6) reads as follows:
‘Die Maatskappy is nie aanspreeklik vir enige verlies of skade wat gely mag word as
gevolg van opsetlike of nalatige foutiewe of onvolledige advies wat deur die
Werknemer of die Werknemer se agente verskaf is nie en indien die Maatskappy vir

enige sodanige
verlies
of
skade
aangespreek
word,
sal
die
Maatskappy
dienooreenkomstig ’n verhaalreg teen die Werknemer hê vir enige sodanige skade of
verlies wat deur die Maatskappy betaal word indien die Maatskappy van mening is dat
die Maatskappy regtens aanspreeklik was.’1

[3] De Lange was previously employed by ABSA as a broker.
According to the particulars of claim, De Lange, acting in the course
of his employment, gave certain financial and investment advice to
various clients, which advice was ‘incorrect or incomplete’ and that,
in giving such advice, De Lange acted intentionally or, alternatively,
negligently. The clients in question allegedly suffered loss as a result
of De Lange’s advice, for which they were compensated by ABSA.
Relying on the provisions of clause 16.6, ABSA sued De Lange for
recovery of the amounts paid to these clients by ABSA. There were
15 claims in all, but following a special plea of prescription, ABSA
abandoned the first three claims. At the outset of the trial, the parties
agreed that only two of the claims – claims 4 and 10 – would be
placed before the trial court for determination as ‘test cases’ and that
the fate of the remaining claims would follow the outcome of the
trial in respect of claims 4 and 10; in other words, if ABSA
succeeded with these two claims, then the remaining claims would
also succeed, and vice versa. ABSA’s claims 4 and 10 did indeed

1 ‘The Company is not liable for any loss or damage which may be suffered as a result of intentional or
negligent incorrect or incomplete advice given by the Employee or the Employee’s agents and if the
Company is held liable for any such loss or damage, the Company will accordingly have a right of
recovery against the Employee for any such damage or loss as is paid by the Company if the Company is
of the opinion that the Company was legally liable therefor.’ (My translation).

succeed in the court a quo, hence this appeal, which comes before us
with the leave of the court below.
Factual background
[4] De Lange was employed by ABSA as a broker from 1995 to
2001. On 6 December 2001, the parties concluded a written contract
of employment, effective from 1 September 2000, clause 2.1 of
which provided that any previous agreement, whether of
employment or otherwise, between the parties was cancelled, subject
to certain provisos, none of which is relevant to this appeal.
[5] During the course of his employment with ABSA, De Lange
gave financial and/or investment advice to various clients of ABSA,
including a Mr Loubser (claim 4) and a Mr and Mrs Honiball (claim
10). All three clients testified at the trial.
[6] According to Mr Loubser (‘Loubser’), he was 62 years old at
the time of the trial. He had formerly been a member of the South
African Police Service (‘SAPS’) and had invested the cash amount
which he received upon his retirement from SAPS. As the
investment turned out not to be a good one, causing him to lose a
considerable portion of his capital, he consulted De Lange in about
January 2001 (at which time he would have been about 54 years of
age) and requested him for investment advice. He wanted a safe
investment which would also provide him with a monthly income for
living expenses. On the strength of De Lange’s advice, he took out a
number of policies, investing his capital of R320 000 in a cashbuilder
(annuity) policy which gave him a monthly income, more than half
of which was used to fund the premiums on three endowment

policies with Liberty Group Ltd and two further endowment policies
with Momentum Ltd. The term of the latter two policies was ten
years, while that of the former three policies was five years. All the
endowment policies were invested in overseas shares, with no
distribution
of
risk
amongst
various
different
investment
‘destinations’.
[7] During August 2003, Loubser realised that the greater part of
his capital had been eroded. He thus made a statement which was
given to ABSA, setting out the background to his taking out the
various policies and pointing out that he had suffered loss as a result
of De Lange’s advice.
[8] Loubser’s position was investigated on behalf of ABSA by a
Mr van Reenen (‘Van Reenen’), an accountant in ABSA’s employ.
Van Reenen testified that, although he interviewed Loubser, he did
not contact De Lange and afford him the opportunity to explain his
version of events (first, because De Lange was no longer employed
by ABSA and, further, because he did not regard it as his duty, or
within the ambit of his authority as investigator, to do so). Van
Reenen further testified under cross-examination that, had De Lange
still been in ABSA’s employ, then the process of investigation would
also have required obtaining a statement from De Lange. Moreover,
although he tried to access Loubser’s ABSA client file, it was
missing and he was thus unable to ‘verify’ the information in that
file. He also indicated under cross-examination that a client file
should contain an analysis of the client’s investment needs and risk

profile, as well as the reasons for the broker’s ‘recommendation’ to
the client.
[9] In his report to the ABSA Head Office dated 12 May 2004,
Van Reenen concluded that De Lange had provided poor advice
(‘swak advies’) to Loubser and had given him a wrong impression
(‘[het] klient . . . onder ’n wanindruk geplaas’). He recommended
that ABSA compensate Loubser in the amount of R81 208.55 for the
loss which he had sustained. This amount was calculated by taking
the capital amount initially invested by Loubser, adding to it interest
at the money market rate over the relevant period, then subtracting
the total income paid out to Loubser in terms of the annuity policy,
as well as the total amount ultimately paid out under the endowment
policies.

[10] This recommendation was accepted by Mr le Roux, the
managing (and financial) director of ABSA, who was the person
with the authority to make the decision (in terms of clause 16.6)2
whether ABSA would compensate a client for loss allegedly
suffered. In making the decision that ABSA was indeed legally liable
(‘regtens aanspreeklik’) for Loubser’s loss, Le Roux also did not
afford De Lange any opportunity to give his version of events. The
abovementioned amount of R81 208.55 was paid out to Loubser on

2 The provisions of which are quoted in full in para 2 above.

about 14 May 2004. This was the amount that ABSA claimed from
De Lange under claim 4.

[11] As regards claim 10, Mr Honiball was a 68-year-old pensioner
at the time of the trial. He had previously worked for LTA as a
construction foreman and, upon his retirement, he had received a
lump sum pension payment of about R285 000. He had been a client
of Absa Bank for some 35 years and thus, in about May 2000 (when
he would have been about 59 years old), he sought advice from the
Mossel Bay branch of ABSA, in the person of De Lange, concerning
the investment of this lump sum in a manner which would provide
the Honiballs with a monthly income, as well as ensure that the
capital remained intact.

[12] De Lange recommended that the Honiballs cash in their other
investments (Absa Bank shares and several policies with Sanlam)
and that the proceeds thereof, together with the lump sum pension
payout (a total amount of R503 000), be invested in five Sanlam
cashbuilder (annuity) policies for a period of five years. Of the
monthly income generated by these policies, approximately two-
thirds was used to pay the premiums on five endowment policies
with Sanlam, two in the name of Mr Honiball and three in the name
of Mrs Honiball, the balance being paid to the Honiballs as a
monthly income. The term of all five endowment policies was 10
years. As in Loubser’s case, all the endowment policies were
invested in overseas shares, with no distribution of risk.

[13] In due course, Mr Honiball realised that his capital was
diminishing and made enquiries with ABSA’s Mossel Bay Branch,
only to discover that De Lange was no longer employed by ABSA
and that their files had been ‘frozen’. Thereafter, on 15 October
2004, Mr and Mrs Honiball wrote to ABSA, demanding that ABSA
(and Sanlam) investigate the matter and that they be compensated, at
the very least, for the capital which they had invested on De Lange’s
advice.

[14] The Honiball’s matter was then investigated on behalf of
ABSA by Ms Joubert (‘Joubert’), also an accountant in ABSA’s
employ. Part of the information which Joubert considered in the
course of her investigation was the letter written to ABSA by the
Honiballs. She also telephoned the Honiballs to enquire whether they
had additional information and they telefaxed to her several pages in
De Lange’s handwriting which were apparently used by De Lange to
explain various investment options to the Honiballs at the time they
sought his advice. She did not, however, ask De Lange for his
version of events or even for an explanation of his handwritten notes
– in her opinion any ‘input’ by De Lange would not have changed
the facts of the matter and she did not deem it necessary for the
purposes of her investigation. She conceded that she could have
contacted the Honiballs to ascertain the meaning of certain of the
handwritten pages (which she was unable to explain to the court), but
that she did not. According to Joubert, she did not take these pages
into account in making her ‘decision’. She also did not access the
ABSA client files of the Honiballs, although she conceded that a

client file should contain an analysis of the client’s existing
investments, as well as a risk analysis by the relevant broker to
determine what the client’s risk profile was.

[15] In a report and memorandum addressed to the ABSA Head
Office (both dated 22 November 2004), Joubert concluded that De
Lange was ‘guilty’, giving as her reasons the fact that the term of the
annuity policies was five years while that of the endowment policies
was ten years, meaning that the client would not be able to fund the
latter policies for the second five-year period. She also pointed out
the latter policies were invested in high-risk overseas shares, with no
distribution of risk. She thus recommended that an amount of
R188 809.77 be paid to the Honiballs as compensation for the loss
they had sustained. This amount was calculated in exactly the same
manner used in respect of claim 4 (ie Loubser’s claim).3

[16] Joubert’s recommendation was forwarded to Le Roux, who
decided (in terms of clause 16.6) that ABSA was legally liable to the
Honiballs and thus accepted Joubert’s recommendation. As in
Loubser’s case, Le Roux simply relied on the documents sent to him
by the investigator (Joubert) and made no further enquiries himself.
On or about 24 November 2004, Le Roux approved payment of the

3 See para 9 above.

abovementioned amount to the Honiballs. This was the amount
claimed by ABSA from De Lange in terms of claim 10.
The high court
[17] In interpreting clause 16.6 of the contract of employment, the
court below emphasised that the question was not whether ABSA
was, as a fact, ‘legally liable’ vis à vis the relevant clients, but rather
whether ABSA had reasonably formed the opinion that it was indeed
legally liable.  ABSA’s opinion was thus not unfettered, but had to
be based on reasonable grounds. In other words, ABSA’s discretion
in this regard had to be exercised arbitrium boni viri, ‘with the
judgment of a fair-minded person’. This set an objective standard,
with which the court would not normally interfere unless it was of
the view that the decision was so unreasonable, improper, irregular
or incorrect that it would give rise to obvious unfairness.4
[18] According to the high court, the audi alteram partem
principle was not ‘automatically’ included in the concept of
arbitrium boni viri. 5  The high court agreed with the argument
advanced by counsel for ABSA, pointing out the distinction drawn in
our law between arbitri (arbitrators), on the one hand, and
arbitratores (valuers or aestimatores), on the other. With reference

4 See the judgment of the Western Cape High Court (Case No. 10367/06), delivered on 10 March 2009,
para 20.
5 Ibid para 24, read with paras 21-22.

to Estate Milne v Donohoe Investments (Pty) Ltd & others 6 and
Perdikis v Jamieson,7 the high court appeared to regard ABSA’s role,
in the context of clause 16.6, as that of a ‘referee’ acting as a ‘valuer’
(arbitrator or aestimator), and not that of an arbitrator (arbiter) who
performs a quasi-judicial function.8 According to the court, therefore,
ABSA could decide the question before it without hearing either
party, and could form its opinion independently on its own
knowledge and experience.9
[19] In my view, this approach was incorrect. The matter is not
simply one of classification. In given circumstances valuers may, by
virtue of a tacit term, have at least to hear both sides. In any event, in
this case ABSA was neither an arbitrator nor a valuer. It was called
upon to judge an issue and create a liability. Having regard to the
main defence raised by De Lange,10 the first question to be asked in
interpreting clause 16.6 was whether it contained the tacit term relied
on by De Lange. If it did, then caedit questio.

Tacit term

6 1967 (2) SA 359 (A) at 373H-374C.
7 2002 (6) SA 356 (W) para 5.
8 See the judgment of the high court para 23.
9 See the judgment of the high court para 23-24, citing Estate Milne loc cit.
10 See the next paragraph.

[20] In his plea, De Lange contended that it was a tacit term of the
contract of employment that, when ABSA was ‘held liable’
(‘aangespreek word’) for loss or damage, in accordance with clause
16.6 of the contract, then, as part of the process of forming an
opinion in regard to the question whether ABSA was legally liable to
the relevant third party, ABSA –
‘1. alle relevante feite in ag sal neem, insluitende maar nie beperk nie tot die
omstandighede wat geheers het tydens die verskaffing van advies deur [De Lange] aan
derdes asook [De Lange] se weergawe van gebeure; en
2. [ABSA] die audi alteram partem-reël sal eerbiedig deur [De Lange] die geleentheid
te gee om sy kant van die saak te stel voordat [ABSA] ’n mening vorm met betrekking
tot die vraag of [ABSA] regtens aanspreeklik is teenoor ’n spesifieke derde.’11

[21] The test for establishing the existence of a tacit term, which
this court has recognised and applied in many cases, is the so-called
‘bystander’ or ‘officious bystander’ test. 12 In City of Cape Town
(CMC Administration) v Bourbon-Leftley & another NNO,13 Brand
JA set out the legal principles governing tacit terms as follows:

11 ‘1. will take into account all relevant facts, including but not limited to the circumstances prevailing at
the time [De Lange] gave advice to third parties, as well as [De Lange’s] version of events; and
2. will respect the audi alteram partem-rule by giving [De Lange] the opportunity to present his side of
the matter before [ABSA] forms an opinion in respect of the question whether [ABSA] is legally liable
to a specific third party.’ (My translation).
12 See eg Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA 506 (A) at
532H-533B; Wilkins NO v Voges 1994 (3) SA 130 (A) at 136H-137D; Botha v Coopers & Lybrand 2002
(5) SA 347 (SCA) paras 22-25 and Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd 2005 (6)
SA 1 (SCA) paras 50-51.
13 2006 (3) SA 488 (SCA).

‘[19] . . . [A] tacit term is based on an inference of what both parties must or would
necessarily have agreed to, but which, for some reason or other, remained unexpressed.
Like all other inferences, acceptance of the proposed tacit term is entirely dependent on
the facts. But, as also appears from the cases referred to, a tacit term is not easily
inferred by the courts. The reason for this reluctance is closely linked to the postulate
that the courts can neither make contracts for people nor supplement their agreements
merely because it appears reasonable or convenient to do so (see eg Alfred McAlpine &
Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA 506 (A) at 532H). It
follows that a term cannot be inferred because it would, on the application of the well-
known “officious bystander” test, have been unreasonable of one of the parties not to
agree to it upon the bystander's suggestion. Nor can it be inferred because it would be
convenient and might therefore very well have been incorporated in the contract if the
parties had thought about it at the time. A proposed tacit term can only be imported into
a contract if the court is satisfied that the parties would necessarily have agreed upon
such a term if it had been suggested to them at the time (see eg Alfred McAlpine (supra)
at 532H-533B and Consol Ltd t/a Consol Glass (supra) at para [50]). If the inference is
that the response by one of the parties to the bystander's question might have been that
he would first like to discuss and consider the suggested term, the importation of the
term would not be justified.
[20] In deciding whether the suggested term can be inferred, the court will have regard
primarily to the express terms of the contract and to the surrounding circumstances
under which it was entered into.  It has also been recognised in some cases, however,
that the subsequent conduct of the parties can be indicative of the presence or absence
of the proposed tacit term (see eg Wilkins v Voges (supra) at 143C-E; Botha v Coopers
& Lybrand (supra) at para [25].’14

14 Paras 19-20.

[22] An examination of the express provisions of clause 16.6
makes it clear that these do not ‘immediately exclude the possibility
of importing’15 the tacit term pleaded by De Lange. Clause 16.6
effectively makes it possible for ABSA to impose a potentially
unlimited liability upon De Lange simply by forming the ‘opinion’
that ABSA is legally liable vis à vis a client who has allegedly
suffered loss or damage as a result of intentional or negligent
incorrect or incomplete advice given by De Lange, and by paying out
to the client such loss or damage as ABSA may determine the client
has sustained. In my view, the importation of the tacit term pleaded
by De Lange would ensure that clause 16.6 ‘functions efficiently’16
and fairly. Indeed, the form for the so-called ‘report’ (‘verslag’) to
the ABSA Head Office, which must be completed by the ABSA
employee doing the investigation (and making the recommendation)
– in this case, Van Reenen and Joubert, respectively – and submitted
to Le Roux to enable him to make a decision (‘form an opinion’) in
terms
of
clause
16.6,
makes
provision
for
various
documents/information to be annexed to it. These include
‘toestemming tot debitering van rekening – makelaar’; ‘appèl teen
bevinding – makelaar’; ‘reëlings vir afbetaling met makelaar’;
‘dissiplinêre stappe word geneem’; ‘datum waarop verhoor

15 R H Christie, assisted by Victoria McFarlane The Law of Contract in South Africa 5ed (2006) p 169.
16 Wilkins NO v Voges above n 12 at 137B-C.

plaasvind’ and ‘klagstaat van dissiplinêre verhoor’. 17  All this
documentation/information presupposes the involvement of the
broker in the process of investigation and, in my view, indicates that,
at the time of concluding the contract of employment, ABSA itself
thought that, before a decision could be made in terms of clause 16.6,
the broker concerned would have had to be involved in the
investigative process.

[23] Counsel for ABSA argued that, while clause 16.6 may well
contain a tacit term of the kind relied upon by De Lange, this tacit
term would be limited to the situation where the ‘offending’ broker
was still in ABSA’s employ.

[24] In my view, there is no indication in clause 16.6 or in any of
the other provisions of the contract of employment that, should the
relevant tacit term be imported into clause 16.6 of the contract, it
would be limited in this way. It is true that, in terms of clause 27 of
the contract, if the broker in question is still in ABSA’s employ, he
or she can dispute the decision taken by ABSA in terms of clause
16.6 and, if the dispute cannot be resolved through the mediation
and/or conciliation process of the Commission for Conciliation,

17 ‘Consent to debiting of account – broker’; ‘appeal against finding – broker’; ‘arrangements with broker
for paying [the broker’s debt to ABSA] off’; ‘disciplinary steps are taken’; ‘date on which hearing takes
place’ and ‘charge sheet of disciplinary hearing’ (all my translation).

Mediation and Arbitration, then the broker can refer the dispute to
the Arbitration Foundation of Southern Africa for arbitration.

[25] It is also true that certain of the documents/information
referred to in paragraph 19 above as possible annexures to the report
(and recommendation) form submitted by the relevant ‘investigator’
to Le Roux appear to presuppose that the broker is still in ABSA’s
employ (eg the reference to disciplinary steps, a disciplinary hearing,
the charge sheet of the disciplinary hearing), but this is not the case
with other documents/information referred to (such as the consent by
the broker to debiting his or her account, an appeal by the broker
against the finding, arrangements with the broker for paying the
‘debt’ off). All the latter documentation would seem to apply equally
to a situation where the broker is no longer in ABSA’s employ. The
mere fact that, if still in ABSA’s employ, the broker concerned may
have additional remedies open to him or her, certainly does not
justify the contention by counsel for ABSA that, while a tacit term of
the kind pleaded by De Lange may well form part of the contract, it
does not apply to the situation where the broker is no longer in
ABSA’s employ.

[26] In considering the surrounding circumstances under which the
contract was entered into –

‘One is certainly entitled to assume, in the absence of indications to the contrary, that
the parties to the agreement are typical men of affairs, contracting on an equal and
honest footing, without hidden motives and reservations.’18
In this regard, the following evidence given by Le Roux under cross-
examination is particularly relevant:19
‘Het dit ooit oor u gedagtes gekom dat u miskien net vir die ondersoeker moet vra wat
sê mnr De Lange van hierdie beleggings? — Ek kan nie onthou of ek so iets gedink het
en dalk gevra het nie.
Hier skryf mnr Van Schalkwyk vir u ses maande voor die Honiball besluit daar is geen
inligting voor hom van die maakelaar nie. Toe die Honiball aanbeveling voor u dien, het
u nie gesê maar verskoon my net, wat sê mnr De Lange van hierdie saak nie? — Ek
weet nie. Ek kan nie onthou wat ek gesê het of gedink het nie.
Sal u met my saamstem, mnr Le Roux, dat ’n volledige ondersoek sal insluit dat die
ondersoeker beide kante van die saak ondersoek en nie net een kant nie? — Dit maak
vir my sin dat ja.
Dit is wat redelikerwys verwag word of verstaan word onder die woord “ondersoek”?
— Korrek.’20

18 Wilkins NO v Voges above n 12 at 141C-D.
19 Cf in this regard Richard Ellis South Africa (Pty) Ltd v Miller 1990 (1) SA 453 (T) at 460B-461B. See
also Christie op cit p 172, Schalk van der Merwe, LF van Huyssteen, MFB Reinecke & GF Lubbe
Contract – General Principles 3ed (2007) p 281-282 and the other authorities cited by these writers.
20 ‘Did it ever enter your mind that you should perhaps just ask the investigator what Mr de Lange says
about these investments? — I cannot remember whether I thought such a thing and perhaps did ask.
Here Mr van Schalkwyk writes to you, six months before the Honiball decision, that he has no
information from the broker before him. When you were considering the Honiball recommendation, did
you not say, excuse me, what does Mr de Lange say about this matter? — I do not know. I cannot
remember what I said or thought.
Will you agree with me, Mr le Roux, that a full investigation would include the investigator hearing both
sides of the matter and not just one side? — This makes sense to me.
This is what is reasonably expected or understood by the word “investigation”? — Correct.’ (My
translation).

[27] The allusion to the communication sent to Le Roux by Mr van
Schalkwyk (‘Van Schalkwyk’) refers to an e-mail dated 13 May
2004, sent by Van Schalkwyk to, inter alia, Le Roux. Le Roux
testified that Van Schalkwyk was a legal services consultant, the
head of ABSA’s legal services division. The e-mail dealt with the
complaint by Loubser (claim 4) and seems to have been sent around
the time Le Roux decided to accept Van Reenen’s recommendation
and pay ‘damages’ to Loubser. In this e-mail, Van Schalkwyk
indicated that he had perused the file relating to Loubser’s complaint
and highlighted various aspects which he thought required attention.
These included the following:
 There was no form of comment from the broker concerned. Van
Schalkwyk stated that he was aware of the fact that the broker was no
longer in ABSA’s employ, but that he could not find any attempt made by
ABSA to obtain the broker’s ‘side of the matter’.
 In spite of the fact that the broker concerned was plainly not given a
hearing in the course of the investigation, a decision was taken to pay an
amount of more than R80 000 to the client.
 Moreover, despite the fact that the broker’s version of events was not
obtained, it was nonetheless decided to hold him liable for this amount.
Van Schalkwyk pointed out that ABSA would have to sue the broker and
the relevant court would certainly take into account the fact that ABSA had
obtained no explanation from the broker and ‘possibly hold this fact
against’ ABSA (‘moontlik teen ons hou’). It was possible that the broker
would be able to give the court a good explanation of why he gave the
advice in question to the client and, in this case, ABSA would have paid
the client without needing to do so.

 Finally, Van Schalkwyk expressed the view that there was in any event
not enough information to form a ‘good’ opinion as to whether the broker
acted negligently/intentionally or was ‘innocent’.

[28] As indicated above, these concerns expressed by Van
Schalkwyk had been sent to Le Roux at about the same time that he
took the decision to pay Loubser’s ‘claim’, and more than six months
before he took the decision to pay the Honiballs’ ‘claim’. In spite of
this (and of his testimony set out in paragraph 23 above), he did not
require the respective investigators to give De Lange the opportunity
to furnish ABSA with the latter’s side of the story, nor did he find it
necessary to do so himself, before ‘forming his opinion’ in terms of
clause 16.6 and taking the decision to pay ‘damages’ to the
respective clients.

[29] All the above must also be seen in the light of the fact that, in
both cases, the so-called investigation did not include perusing the
client files of either Loubser or the Honiballs. In the case of the
former, it would appear from Van Reenen’s evidence that Loubser’s
file had gone missing, whereas in the case of the latter, Joubert’s
evidence was to the effect that she made no attempt to access the
Honiball’s client file at the Mossel Bay branch as she was of the
view that the information she had obtained from Sanlam about the
policies taken out by the Honiballs was ‘sufficient proof’ to make a
decision. This despite the fact that, like Loubser, she testified that the
client file should contain a risk analysis done by the broker to
ascertain the risk profile of the client in question. She also conceded

that it would not be inappropriate for a pensioner to make the kind of
investment taken out by the Honiballs on De Lange’s advice, if his or
her risk profile allowed it.
[30] Considering, as I am required to do, the express terms of the
contract and the surrounding circumstances under which it was
entered into, as well as the subsequent conduct of the parties, I am
firmly of the view that the tacit term pleaded by De Lange can, and
should, indeed be imported into the contract of employment between
ABSA and De Lange. To use the words of Scrutton LJ in the
frequently quoted case of Reigate v Union Manufacturing Co,21 it
can certainly be said that this tacit term –
‘. . . is necessary in the business sense to give efficacy to the contract; that is . . . it is
such a term that you can be confident that if at the time the contract was being
negotiated someone had said to the parties: “What will happen in such a case?” they
would have both replied: “Of course so-and-so. We did not trouble to say that; it is too
clear.” ’

[31] As it is common cause that this tacit term was not complied
with by ABSA in forming its opinion and making its decision in
terms of clause 16.6, it follows that ABSA’s claims against De
Lange, based entirely on the provisions of this clause, should have
been dismissed by the high court.

21 118 LT 479 at 483, as quoted by Corbett AJA in Alfred McAlpine & Son (Pty) Ltd v Transvaal
Provincial Administration above n 5 at 533A-B.

[32] This conclusion renders it unnecessary to deal with any of the
other arguments advanced by counsel for each party and I do not
propose to do so.

Order
[33] The following order is therefore made:
1.
The appeal succeeds with costs.
2.
The order of the high court is set aside and replaced with the
following:
‘Claims 4 to 15 are dismissed with costs.’

______________________
B J VAN HEERDEN
JUDGE OF APPEAL

Counsel For Appellant:
D J Coetzee
Instructed by:

Nico Smit Inc

GEORGE
Correspondents:

Honey Attorneys

BLOEMFONTEIN
Counsel for Respondent:
B C Stoop
Instructed By:

Erasmus Inc

p/a Bisset Boehmke McBlain

CAPE TOWN
Correspondents:

Naudes Attorneys

BLOEMFONTEIN
SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

23 March 2010

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form
part of the judgment.

Johan de Lange v Absa Makelaars (Pty) Ltd (262/09) [2010] ZASCA  21 (23 March 2010)

Media Statement

Today the Supreme Court of Appeal upheld an appeal against a judgment of the Cape Town High Court
which had allowed claims by Absa Makelaars (Pty) Ltd (ABSA) against one of its previous employees,
Johan de Lange (De Lange), for recovery of amounts paid out by ABSA to several of its clients.

De Lange was previously employed by ABSA as a broker. ABSA alleged that, acting in the course of his
employment, De Lange gave financial and investment advice to certain clients of ABSA, which advice was
incorrect or incomplete and that, in giving such advice, De Lange acted intentionally or, alternatively,
negligently. The clients in question allegedly suffered loss as a result of De Lange’s advice, for which they
were compensated by ABSA.

The appeal turned on the interpretation of a clause in the contract of employment between ABSA and De
Lange and, in particular, whether the clause obliged ABSA to give De Lange a hearing before making a
decision which rendered De Lange liable to reimburse ABSA for ‘damages’ which the latter had paid out to
its client or clients under certain circumstances. The clause provided that, if ABSA was held liable for loss or
damage suffered as a result of intentional or negligent incorrect or incomplete advice given by De Lange,
ABSA would have a right of recovery against De Lange for any such loss or damage as was paid by ABSA
if the latter was ‘of the opinion that it was legally liable therefore.’

In forming the opinion in respect of the claims instituted by ABSA against De Lange in the High Court,
ABSA did not contact De Lange and give him the opportunity to explain his version of events. The High
Court held that ABSA could decide the question before it without hearing either party, provided it acted
arbitrium boni viri (ie with the judgment of a fair-minded person), and that it could form its opinion
independently on its own knowledge and opinion. The SCA did not agree. It held that, on a proper
interpretation of the relevant clause, it contained a tacit term that, as part of the process of forming an
opinion in regard to the question whether it was legally liable to the third party concerned, ABSA had to give
De Lange the opportunity to give his version of events. This term was necessary in the business sense to
give efficacy to the contract – it was such a term that one could be confident that, if at the time the contract
was being negotiated, someone had said to the parties: “What will happen in such a case?” they would
have both replied: “Of course, so-and-so. We did not trouble to say that; it is too clear.”
As it was common cause that this tacit term was not complied with by ABSA in forming its opinion and
making its decision in respect of the claims in question, it followed that ABSA’s claims against De Lange,
based entirely on the provisions of the clause in question, should have been dismissed by the High Court.
The SCA thus upheld the appeal with costs and replaced the order of the High Court with an order that
ABSA’s claims against De Lange were dismissed with costs.

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