THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case no:  437/2009

In the matter between:

DELPHISURE GROUP INSURANCE BROKERS
CAPE (PTY) LTD

Appellant

and

GYSBERT JOHANNES KOTZé DIPPENAAR
First Respondent
GERRIT ANDRIES VISSER

Second Respondent
BEXSURE (PTY) LTD

Third Respondent

Neutral citation:  Delphisure Group Insurance Brokers Cape v Dippenaar
(437/09) [2010] ZASCA 85 (31 May 2010)

Coram:        MPATI P, NUGENT, MALAN and LEACH JJA and
SERITI AJA
Heard:          4 May 2010
Delivered:    31 May 2010
Summary      Delict – negligence – claim for damages for negligent
misrepresentation – claim upheld.

______________________________________________________________

ORDER
______________________________________________________________

On appeal from:  Western Cape High Court (Cape Town) (Ms Acting Justice
Dicker sitting as court of first instance):

1.
The appellant’s appeal in respect of the claim of the first respondent
is dismissed.
2.
The appeal in respect of the claim of the second respondent is
upheld, and para 3 of the order of the court a quo is set aside and
substituted with the following:
‘The second plaintiff’s claim against the second defendant is dismissed,
and the second plaintiff is to pay 30 per cent of the second defendant’s
costs.’
3.
The appellant is to pay the first and third respondent’s costs of
appeal, such costs to include the costs of two counsel where so
employed.
4.
The second respondent is to pay 30 per cent of the appellant’s
costs of appeal, such costs to include the costs of two counsel.

______________________________________________________________

JUDGMENT
______________________________________________________________

LEACH JA (MPATI P, NUGENT, MALAN JJA and SERITI AJA concurring):

[1] This case involves a delictual claim for pure economic loss suffered
as a result of a misrepresentation of fact. The first and second respondents
farm wheat in the Piketburg district of the Western Cape. The appellant
(‘Delphisure’) is an insurance brokerage that devised a crop insurance
product known as Farmsure which was marketed by the third respondent
(‘Bexsure’) for the 2004 growing season.  Both the first and second
respondents applied for Farmsure insurance, but it later transpired that no
such product in fact existed as, despite all its efforts, Delphisure had not
succeeded in having it underwritten by an insurer. When their crops failed, the
first and second respondents instituted action in the High Court, Cape Town
against both Delphisure and Bexsure whom they alleged had misrepresented
that the Farmsure product was in place, thereby causing them not to take out
insurance with another insurer, Mutual and Federal Insurance Company Ltd
(‘Mutual & Federal’), and claiming as damages the amounts they would have
been paid by Mutual & Federal if it had insured their crops. The claim
succeeded solely against Delphisure (the court a quo held that Bexsure had
not known that Farmsure did not exist at the material time). With leave of the
court a quo, it appeals to this court against that decision.

[2] Not only does Delphisure sell insurance on behalf of insurance

companies but it acts as an administrator of insurance products sold to third
parties and is an accredited agent of the international insurer Lloyds of
London (‘Lloyds’) on whose behalf it has been mandated to market a range of
short term insurance policies. Farming in this country is an enterprise often
afflicted by natural perils, and many farmers insure their crops against failure.
In 2002 and 2003, Delphisure marketed a crop insurance policy in the
Northern Cape. Underwritten by Lloyds and issued by the Cape Insurance
Company Ltd, this was a policy devised for the benefit of the members of the
Griqualand West Co-operative Society. It generated considerable interest and
Mr ‘Vango’ Kolovos, at the time Delphisure’s general manager, was
approached by a representative of Bester Feed & Grain Exchange (Pty) Ltd, a
substantial player in the grain industry in the Western Cape that handled the
wheat of several hundred wheat farmers, to ascertain whether it would be
possible to arrange a similar crop insurance product for farmers in the
Western Cape.

[3] Kolovos recognised crop insurance as being a potentially lucrative
product, particularly in the Western Cape where wheat is produced on a large
scale, and entered into negotiations involving the third respondent (‘Bexsure),
a company in the same stable as Bester Feed & Grain, as well of
representatives of Lloyds, to see if it would be possible to devise a suitable
product. In doing so, Kolovos attempted to devise an insurance model that
would satisfy Lloyds’ requirements to underwrite the product. Crucial to its
acceptance were what Kolovos described as the necessary demographics,
which included the geographical situation of the farms to be insured, the likely

quantities of wheat to be produced and insured, and the anticipated value of
the insured risk. It was of importance to Lloyds for the risk to be spread, and
consequently any model in which most of the farmers taking insurance were
from the same district was regarded as undesirable as a localised crop failure
in that district could hold disastrous consequences for an insurance
underwriter.

[4] In addition, in order to provide a new product likely to sell, Kolovos
had to come up with a model that had advantages over the products of
competitors already in the market. In this regard, other insurers offered cover
for no more than 65 per cent of a farmer’s anticipated crop and did not offer
so-called ‘emergence cover’ which insured farmers in the event of their crops
not germinating and emerging from the ground. Indeed, the other cover
available was conditional upon a certificate of emergence being issued once
sufficient germination and emergence had taken place. Kolovos decided to
better this in his model by providing for a product allowing a farmer an election
to take up to 100 per cent crop cover and also to include emergence cover
(the attraction of the latter being that if germination did not take place the
farmers would still receive compensation for their production costs in
preparing the soil and planting).

[5] All of this required ongoing consultations and negotiations. In a letter
addressed to Kolovos on 25 February 2003, the financial director of Bexsure,
after providing certain information relevant to a potential insurance product,
concluded ‘ . . . we need to be assured that you will be able to supply us with

a product as described with the necessary underwriting and legal
requirements being met’. Kolovos responded by expressing the opinion that
Bexsure’s requirements were achievable but that it would be necessary to
provide an extremely detailed presentation to insurers in London to obtain
approval.

[6] It soon became clear that it was too late to arrange any insurance for
the 2003 season and it was decided to attempt to do so in the following year.
Consultations continued, during which Lloyds stated that the policy should use
the terms of policies that were tried and tested. This led to the policy wording
of Mutual & Federal’s crop insurance being used, adapted to provide for both
a choice of up to 100 per cent crop cover as well as emergence insurance. In
addition, a schedule of premium rates was prepared and the product was
given the name ‘Farmsure’. The suggestion by Kolovos of a condition that at
least half the farmers in each co-operative should take the cover was
regarded by Bexsure as impractical, as Kolovos ultimately conceded. But
despite all of this, Lloyds did not give Kolovos its unconditional support, and
still needed to be persuaded by the demographics before agreeing to
underwrite the product.

[7] Rumours about a new crop insurance product to be marketed by
Bexsure began to do the rounds in the farming community of the Western
Cape as the 2004 growing season approached. As a result, and as it was the
intention for Farmsure to be marketed through farmers’ co-operatives who
would collect the premiums from their members by debiting their accounts,

Bexsure arranged a meeting in Stellenbosch on 21 April 2004 to which it
invited representatives of a number of  co-operatives, including Mr Danie
Gouws, an insurance consultant who was at the time employed by the co-
operative known as Boland Agri. In addition, a number of private insurance
brokers also attended, including Mr Le Roux van Wyk, who had persuaded
Lizelle Scott (a director of Bexsure who was primarily involved in the
marketing of Farmsure) to allow him to attend as he had a number of farming
clients who were interested in the rumoured new crop insurance product.

[8] The meeting was addressed by Kolovos who, when he later testified,
attempted to persuade the court a quo that he had explained that Farmsure
was not yet in existence but was conditional upon acceptance by Lloyds, and
that such acceptance was in turn conditional upon the demographics of the
model being met by the number of sales, the amount of insurance that was
taken up, the average percentage of the crops insured and the geographical
spread of the farmers who purchased the product. As against this allegation,
the weight of the evidence led from the witnesses Scott, Van Wyk and Gouws,
was that Kolovos formally announced the Farmsure product, stated that it was
fully underwritten by Lloyds and stressed its advantages by providing
emergence cover and a choice of insurance for up to 100 per cent of the crop.
In the light of the weight of this evidence and the inherent probabilities, the
court below correctly found that Kolovos’s evidence on this score could not be
accepted and that he had indeed created the impression that the Farmsure
product was available and was underwritten by Lloyds.

[9] Presumably Kolovos did not make it plain that Lloyds had not yet
approved the Farmsure policy as it would have been impossible to market
non-existent insurance. However, he did ask the co-operatives to complete
questionnaires in order to ascertain how many members in each co-operative
were likely to insure their wheat crops during the forthcoming season, what
premiums were likely to be generated, and the anticipated quantity of wheat
likely to be insured. These completed questionnaires were returned to him
within a day. As time was of the essence (farmers were due to begin planting
within a few weeks and it had been agreed that the final cut-off date for
Farmsure applications would be 10 May 2004) on 26 April 2004, Kolovos
telefaxed the following letter to Bexsure:
‘This serves to confirm and indicate the parameters of the anticipated insurance.
1.
As per the attached, being the minimum figures for crop per each Co-op
and the minimum in total to have a successful crop model.
2.
Acceptance by Lloyds of London of the exclusion of the 50% ruling as
indicated by your motivational letter.
3.
Premiums to be paid by the Co-op or the farmers by no later than the end
of the month of the effective date of the crop policy.
4.
All policies to be written by no later than 10 May 2004.
5.
Based on the presales figures, a final decision of acceptance will be made
by the underwriter.
The crop certificates are in the process of being created and will be available by
Wednesday 28 April.’

[10] The schedule attached to this letter contained a synopsis of the
information contained in the completed questionnaires, including details of the

geographical areas in which the farmers who were likely to purchase
Farmsure conducted their farming operations and the anticipated quantity of
the crops that would be insured. Scott testified that on receipt of this letter she
was both anxious and confused as she wanted urgently to start marketing the
product and had understood Kolovos at the Stellenbosch meeting to say that
it was in place. She therefore contacted him, and he advised her that
everything was in fact in order but that she should not start marketing until he
provided the necessary documentation. To that end, a Bexsure logo was e-
mailed to Delphisure for incorporation onto application forms. These
documents, once so prepared, were generated by Delphisure’s computer
system and made available to Bexsure.

[11] On 28 April 2004, Kolovos gave Scott the go-ahead to market
Farmsure. As part of her marketing strategy, she arranged a meeting on 5
May 2004 at the Winkelshoek building at Piketberg, commonly known as the
’Rietdak’. This meeting was attended by a number of farmers, including the
first and second respondents, both of whom had already applied to Mutual &
Federal for crop insurance for the season. The application of the first
respondent had already been accepted, although it was conditional upon the
issue of an emergence certificate, while that of the second respondent was
subject to approval after an inspection of his farm had been conducted (an
issue to which I shall return in due course). However, both had been so
intrigued by the rumours of the Farmsure product that they had arranged for
their insurance broker, Van Wyk, to obtain quotations of the anticipated cost
of premiums from Bexsure on their behalf.

[12] At the meeting, Scott gave details of what Farmsure offered,
explained that the cut-off date for applications was 10 May 2004 and informed
those present that the product was in existence and was fully underwritten by
Lloyds. The first and second respondents found the product to be so attractive
that, immediately after the meeting, they both contacted their broker, Van
Wyk, through whom they had placed their applications for crop insurance for
the season with Mutual & Federal, and asked him to see if he could arrange
for those applications to be withdrawn or cancelled. Van Wyk went ahead and
succeeded in doing so. Meanwhile the first and second respondents applied
to Bexsure for Farmsure insurance for the 2004 season.

[13] Unfortunately for all concerned, the sales of Farmsure for various
reasons failed to meet the demographic requirements of Lloyds. Despite
meetings and negotiations being held with various farmers and other
interested parties, and attempts being made to attract underwriting from other
quarters, none of which is necessary to detail for purposes of this judgment, it
proved impossible to obtain underwriting for Farmsure which therefore never
saw the light of day. While this was going on, the crops planted by the first
and second respondents germinated but, despite their initial promise,
ultimately failed due to adverse weather conditions. As the first and second
respondents were left uninsured due to the Farmsure policies for which they
had applied having been still-born and their Mutual & Federal applications
having been cancelled, they were understandably aggrieved. And so, in due
course, they instituted action claiming the amounts they alleged they would

have recovered from Mutual & Federal had they not cancelled their
applications on the strength of Scott’s misrepresentation at the Rietdak
meeting that the Farmsure cover was in place and fully underwritten by
Lloyds.

[14] It is convenient at this stage to consider Delphisure’s contention that
Scott knew at the time of the Rietdak meeting that the Farmsure product was
not finally in place and was dependent upon the demographics obtained from
the sales of the product being sufficient to persuade Lloyds to accept the
model – it being its contention either that it could not be held responsible for
Scott’s failure to inform the meeting of the true state of affairs, alternatively,
that even if it was responsible, Scott was a joint wrongdoer whose actions
rendered Bexsure jointly and severally liable with it to the first and second
respondents.

[15] Scott denied that she was aware that Farmsure still had to be
accepted by Lloyds at the time and testified that Kolovos had brought her
under the impression that everything was in order. It was argued by
Delphisure that she could not be believed, particularly in the light of the fifth
point in the letter of 26 April 2004 in which it was stated that a final decision
on acceptance would be made by the underwriter based on the ‘pre-sales
figures’ which, so it contended, were the figures which would be forthcoming
after the policy had been marketed. This cannot be so. Not only would it be a
contradiction in terms to refer to the figures of actual sales as a ‘pre-sales
figures’ but, bearing in mind that the schedule attached to the letter contained

an analysis of anticipated sales derived from the questionnaires which had
been completed, the reference therein to pre-sales figures could only have
meant those figures set out in the schedule. Accordingly, the letter meant only
one thing, namely, that Delphisure was awaiting a final decision by the
underwriter (Lloyds) to be taken on strength of the information set out in the
schedule.  Accordingly, when Kolovos later told Scott everything was in order
and subsequently, on 28 April 2004, gave her the green light to go ahead to
market Farmsure, she was entitled to think that on the strength of pre-sales
figures attached to the schedule to the letter of 2 April, Lloyds had agreed to
underwrite the product. In any event, Scott was not likely to go out and market
a product which to her knowledge did not exist, and the probabilities are
overwhelming that she only did so as she was under the impression that since
26 April Lloyds’ requirements had been met and that it had agreed to
underwrite the product. The argument that Scott was thus aware at the
Rietdak meeting on 5 May that the Farmsure product was not in place cannot
be sustained.

[16] This conclusion is relevant to the question of negligence, an issue to
which I now turn, the test for which is so well known that it need not be
repeated. In considering the question of negligence, it is necessary to
consider the foreseeability of harm, an issue which is also relevant to the
question of legal causation as I shall mention in due course.

[17] In regard to foreseeability, a reasonable person in Kolovos’ position
when he instructed Scott to commence her marketing operations would have

appreciated that she would be under the false impression that Lloyds had
agreed to underwrite Farmsure and that, in marketing the product, she would
represent that it was available and underwritten by Lloyds. Indeed that would
be a major marketing tool, and he therefore caused Scott to go out into the
farming community to spread false information in order to sell crop insurance
in the hope that the sales which were forthcoming would persuade Lloyds to
agree to underwrite the product.

[18] In order to avoid the obvious consequences flowing from such
conduct, counsel for Delphisure argued that it had not been reasonably
foreseeable at the time that any farmer who applied for Farmsure cover would
suffer a loss in the event of Lloyds ultimately declining to underwrite the
product.  This contention was based on the fact that no other crop insurance
was available as all other insurers had already closed their applications for the
2004 season. Accordingly, so it was argued, the only farmers who it could be
foreseen might apply for Farmsure cover were those who would not have
been insured against crop failure in any event, and that a reasonable person
would not have foreseen that farmers who had already applied for insurance
cover would cancel or withdraw their applications in respect of that cover – or,
at the very least, would only have foreseen that those who had already
applied for insurance would only cancel such applications once they had
applied for and been granted Farmsure insurance.   Consequently, so the
argument went, the loss suffered by the first and second respondents, who
had withdrawn their applications for crop cover from Mutual & Federal and

who were left without cover when the Farmsure product was stillborn, was not
reasonably foreseeable

[19] These contentions, too, must be rejected. Farmsure’s selling point
was that it was a product superior to the other crop insurance then available,
offering both crop cover of up to 100 per cent and emergence cover – both of
which were not elsewhere available. A reasonable person would therefore
have realized that farmers who had already applied for crop insurance from
competitors such as Mutual & Federal might seek to resile therefrom and
apply for Farmsure insurance instead. The likelihood of such action was all
the more real in the light of, first, the considerable interest and enthusiasm
that Farmsure had generated in the farming community as had become
apparent at the meeting at Stellenbosch on 24 April 2004, secondly, that even
though the cut–off date for other insurances had passed such applications
might not yet have been accepted (as was indeed the case with the
application of the second respondent) and, thirdly, that even if such
applications for other insurance products had been accepted, the insurance
would still be conditional upon the issue of a certificate of emergence after
germination of the crop, and that it was only at that stage that farmers who
had applied for such insurance would be obliged to pay their premiums. As
planting for the 2004 season was still to take place, the issue of emergence
certificates and the obligation to pay premiums were still a long way off and, in
these circumstances, a reasonable person in Kolovos’s postion would have
foreseen that farmers who had already applied for crop insurance for the 2004
season, on hearing of the considerable advantages of the Farmsure product,

might well decide to cancel their applications for other insurance before they
had to pay their premiums and, instead, apply for a Farmsure policy – and
that in doing so they would not necessarily wait to see if their Farmsure
applications were successful. After all, they would have no reason to think that
those behind a new product would not wish to accommodate as much
business as possible and reject their applications. Nor would they wish to run
the risk of becoming obliged to pay crop insurance premiums to two different
insurers. It was thus clearly foreseeable that farmers might well cancel their
applications for crop cover that were still pending and, in that event, they
would be left without crop insurance for the 2004 season should Lloyds
decline to underwrite Farmsure and would suffer financial loss if their crops
were to fail.  The loss suffered by the first and second respondents was
therefore reasonably foreseeable.

[20]    Also relevant to the question of negligence is whether steps could
have been taken to guard against the loss. It was a simple matter for Kolovos
to have done so.  All that was required of him was to tell the truth, something
which would in any event have been expected from an honest insurance
broker. Had he not misrepresented to Scott that the Farmsure product was
fully underwritten by Lloyds when he instructed her to go out to market it, she
would not have brought the first and second respondents under the
impression that the Farmsure product was available. Although, as Kolovos
emphasised, the Farmsure application form proclaimed that the insurance
would only become effective upon acceptance of the application, that is a
standard term in all applications for insurance. And there is a considerable

difference between representing, on the one hand, that an insurance policy
exists but that an application has to be accepted before it becomes effective
and, on the other, that an insurance policy does not exist and may only come
into existence should the underwriter in the future agree to act as insurer. The
standard terms of the policy if anything added to the misrepresentation of the
existence of the product.

[21] Kolovos in fact took no steps to guard against the clearly foreseeable
harm which might be suffered by persons in the position of the first and
second respondents in the event of them being enticed into applying for
Farmsure cover. In these circumstances, negligence on the part of Kolovos
was clearly established, and the fact that Scott was the person who made the
actual misrepresentation to the first and second respondents in marketing the
policy on his instructions does not entitle Delphisure to escape responsibility.1

[22] At the same time, Delphisure’s argument that Scott was also
negligent can be rejected. As I have said, there was no reason for her to have
suspected that the Farmsure product had not been approved by Lloyds and
she was clearly under the impression that the necessary underwriting was in
place. That misunderstanding was a reasonable one, and I am not persuaded
that the court a quo in any way erred in finding that Scott had not acted
negligently in misrepresenting the position to the first and second
respondents. Its finding in that regard must stand.

1 Ruto Flour Mills (Pty) Ltd v Moriates & another 1957 (3) SA 113 (T) at 115F-116A.

[23] I turn now to consider the question of the wrongfulness of Kolovos’s
misrepresentation. Where a claim is for pure economic loss,2 even if the
conduct causing such loss is negligent, it will only be regarded as unlawful
and therefore actionable if there are public or legal policy considerations
which require liability to follow for the damage it caused.3

[24] As has been correctly observed, it is something of an understatement
to say that liability always depends on the facts of each given case as there
are certain categories of cases in which liability will almost indubitably follow.4
But each case must be considered on its own merits and there is no simple
litmus test that can be applied to determine whether in all cases liability
should follow. Despite that, in Fourway Haulage SA (Pty) Ltd v SA National
Roads Ltd 5 Brand JA expressed the view that our law has moved beyond the
stage where liability will be dependent upon the ‘idiosyncratic views of the
individual judge as to what is reasonable and fair’, and echoed the words of
Nugent JA in Minister of Safety and Security v Van Duivenboden6  that ‘what
is called for is not an intuitive reaction to a collection of arbitrary factors but
rather a balancing against one another of identifiable norms’. To that may be
added that such a process involving criteria to which recognition has been
given in the past as either favouring or operating against the recognition of
liability will advance the cause of certainty in judicial decisions, a result to
which it is always necessary to strive.

2 As that concept was explained in Telematrix (Pty) Ltd t/a Matrix Vehicle Trading v
Advertising Standards Authority 2006 (1) SA 461 (SCA); [2006] 1 All SA 6 (SCA)  para 1.
3 See eg Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd 2009 (2) SA 150
(SCA): [2008] ZASCA 134 para 12 and the cases there cited.
4 Telematrix  para 15.
5 Para 21.
6 2002 (6) SA 431 (SCA) para 21.

[25] Bearing that in mind, I turn to considerations of policy which are
relevant. One important factor is of course the fear of so called ‘boundless
liability’ and an appreciation that the law will recognise liability more readily
where there is not a limitless number of claimants likely to bring a multiplicity
of actions.7 Gleaned from previous decisions, important considerations to
which regard may be had are the following (the list is not intended to be
exhaustive):
 Whether the plaintiff was vulnerable to the risk (which would favour a
finding of liability) or could have avoided it by contractual means such
as a disclaimer (which would operate against liability);
 Whether the extension of liability would impose an unwarranted burden
on a defendant or, conversely, whether it would not unreasonably
interfere with the defendant’s commercial activities as the defendant
was already under a duty to take reasonable care in respect of third
parties;
 The nature of the relationship between the parties, contractual or
otherwise;
 Whether the relationship between the parties was one of ‘proximity’ or
closeness;
 Whether the statement was made in the course of a business context
or in providing a professional service ;
 The professional standing of the maker of the statement;

7 Fourways paras 23 and 24.

 The extent to which the plaintiff was dependant upon the defendant for
information and advice;
 The reasonableness of the plaintiff relying on the accuracy of the
statement.

[26] In considering these factors, it is of considerable importance that this
is not a case in which there is likely to be boundless liability involving an
unlimited number of claimants. The misrepresentation was made to a limited
class, being the farmers to whom Farmsure was offered. Counsel for
Delphisure also correctly conceded that this was not a case in which the risk
could have been avoided by contractual means or in which the extension of
liability would impose an unwarranted burden upon Delphisure. It is also
relevant that Kolovos knew that the representation that Lloyds had
underwritten the Farmsure product was of great importance in persuading
farmers to purchase it, and his misrepresentation in that regard was made in
the course of his business by a man of substantial professional standing to
parties who were vulnerable to the risk and were dependant upon him for the
accuracy of the information.

[27] In the light of all the features that I have just mentioned, this is a clear
case in which considerations of policy should impose liability for the negligent
misrepresentation if it caused the loss suffered by the first and second
respondents.

[28] Having determined the issue of wrongfulness against Delphisure, it
becomes necessary to consider the issue of causation. This involves two
distinct enquiries: first, the application of the so-called ‘but-for’ test in order to
determine whether the particular action concerned can be identified as the
cause without which the loss in question would not have been suffered;8  the
second being the question of legal causation, sometimes referred to as
remoteness of damage,9 being whether the wrongful act is sufficiently closely
linked to the loss to attract legal liability. The latter enquiry is also determined
by considerations of policy but, although there may be an overlapping with the
factors to be taken into account, wrongfulness should not be confused with
legal causation or remoteness: and conduct which may be regarded as
wrongful may well also be too remote for liability to follow.10

[29] It was common cause on appeal that both factual and legal causation
had been established in respect of the claim of the first respondent who, had
he not withdrawn his application for insurance with Mutual & Federal after
Scott’s promotion at the Rietdak meeting on 5 May 2004, would have insured
his crop with Mutual & Federal and been paid compensation when it failed. In
these circumstances, it was correctly common cause that the loss suffered by
the first respondent was a direct result of the misrepresentation and
sufficiently closely linked to the misrepresentation to attract legal liability.

8 Cf International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA 680 (A) at 700F-G.
9 Cf Fourway Haulage  para 30-31.
10 Cf Fourway Haulage para 31-32.

[30] On the other hand, the issue of factual causation in respect of the
second respondent’s claim is not as straight-forward. It was contended that
the second respondent had not shown that but for Scott’s presentation at the
Rietdak meeting his loss would not have been suffered. The argument in this
regard was twofold. First, it was argued that even had the misrepresentation
relating to Farmsure not been made, the second respondent would in any
event have cancelled his application to Mutual & Federal and would thus have
been uninsured during the forthcoming growing season.  Secondly, it was
argued that even if the second respondent had been insured by Mutual &
Federal, it would in all probability have refused to pay him compensation
under the policy due to misrepresentations he had made in his application
form.

[31] Before Mutual & Federal would accept the second respondent’s
application for insurance cover, it was necessary for his farm to be inspected
to verify that it was likely to produce the anticipated yield reflected in the
application. Although this was really nothing more than a formality according
to the witness Mr E D Rabie, who admired the second respondent as a farmer
and in whose hands the decision on acceptance lay, it led to Mr Lou
Robertson, an agricultural insurance assessor, being delegated by Janie
Louw Brokers to visit the second respondent’s farm. This he did on 3 May
2004. Unfortunately for him, he arrived without having made an appointment
and incurred the ire of the second respondent for failing to do so. However,
the second respondent invited him into his office where they discussed the
provisions of Mutual & Federal’s policy. It immediately became apparent that

the second respondent had a problem with the policy being conditional upon
satisfactory emergence of the crop. Robertson telephoned the offices of Janie
Louw Brokers and obtained confirmation that the insurance was indeed
conditional upon acceptable emergence after germination, that the policy did
not include emergence cover and that, consequently, pre-emergence input
costs would not be covered. According to Robertson, when the second
respondent heard this he said he would not take the cover. Robertson then
left the farm without doing the necessary inspection.

[32] There is no reason not to accept Robertson’s evidence in this regard,
his testimony having been corroborated by the content of a contemporaneous
note he made shortly after the incident. The second respondent’s evidence in
this regard was most unsatisfactory. He stated that he could not recall the
conversation but that emergence cover was of no real consequence to him as
germination was never a problem in the district in which he farmed. However,
he appears to have attempted to downplay the importance of emergence
cover as, shortly after Robertson had left the farm, he telephoned his
insurance broker, Van Wyk, who had sent Robertson to inspect the farm.
According to Van Wyk, although the second respondent complained about
Roberson having arrived at his farm without having arranged to do so, they
also discussed the provisions of Mutual & Federal’s policy and whether it
provided for emergence cover (which provides support for Robertson’s
version). Their conversation appears to have become heated and, accordingy
to Van Wyk, he told the second respondent to keep his Mutual & Federal
application ‘on the table’ – from which it must be inferred that the second

respondent had said that he wished to withdraw it – until there was certainty
over what Farmsure would offer. It was only on 5 May 2004, after the
presentation by Scott at the Rietdak meeting, that the second respondent
telephoned and instructed him to cancel his Mutual & Federal application.

[33] There is no reason to reject Robertson and Van Wyk, whose
evidence on this issue, supported as it is by Robertson’s contemporaneous
note, is far more compelling than that of the second respondent.  It is clear
from this that emergence cover was of importance to the second respondent.
Not only did he tell Robertson that he did not want Mutual & Federal’s policy
as it lacked emergence cover but he refused to allow him to carry out his
inspection while knowing it was necessary for his application to be approved.
Although this may in part have been due to his anger at Robertson’s
unannounced arrival, he subsequently told Van Wyk that he did not want to
proceed with his application. In these circumstances the fact that Van Wyk
persuaded him not to withdraw his application until he had found out more
about the Farmsure product so that he could make an informed decision,
does not indicate a fixed intention to persist with his application should
Farmsure not prove to be more attractive.

[34]  In order to succeed, the second respondent must show that even if there
had been no talk of the Farmsure product, he would have insured his crop
with Mutual & Federal. Van Wyk persuaded the second respondent not to
immediately withdraw his application to Mutual & Federal only because he
believed the Farmsure product existed. There is nothing to show that he

would have persuaded the second respondent not to withdraw his Mutual &
Federal application if there had been no talk of Farmsure, and at no stage did
the second respondent testify that he would have elected to persist with his
application had the Farmsure option not been offered to him. In the light of the
evidence of Robertson and Van Wyk, his denial that he had said that he did
not want Mutual & Federal’s insurance was clearly false. But in the light of his
denial, he could hardly have testified that he would have changed his mind
had he known the true state of affairs in regard to the Farmsure product, and
there is no acceptable evidence that justifies such a conclusion.

[35]   The second respondent has therefore failed to show that but for the
misrepresentation that was made by Kolovos he would have been insured by
Mutual & Federal. That being so, he failed to establish the necessary element
of causation and his claim ought to have been dismissed. The appeal in
respect of his claim must be upheld.

[36]    Consequently, Delphisure is liable to the first respondent for
whatever damages he suffered as a result of Kolovos’ negligent
misrepresentation that led to him not being able to recover compensation from
Mutual & Federal when his crop failed. The quantum of his damages is
agreed, being the sum he was awarded in the court a quo, and the appeal in
respect of his claim must accordingly fail. However, the appeal in respect of
the second respondent’s claim must be upheld as he failed to prove that the
appellant’s misrepresentation caused him to suffer loss. In the light of this

conclusion, only paragraph 3 of the order of the court a quo which dealt with
the second respondent’s claim needs to be altered.

[37]   The general rule is for costs to follow the event. The present matter is
made more complicated by Delphisure having failed in respect of the claim of
one plaintiff but succeeded in respect of the claim of the other. In these
circumstances it would be unfair to burden the unsuccessful plaintiff (the
second respondent) with all of Delphisure’s costs. An examination of the
record shows that about 30 per cent of the duration of the trial related solely to
the claim of the second respondent. In addition, the second respondent was
one of three respondents in the appeal, and the only one that was
unsuccessful. In these circumstances I think it is fair to all to order the second
respondent to pay 30 per cent of Delphisure’s costs in both the trial and the
appeal.

[38]   Two other issues must be briefly mentioned in regard to costs. First,
Delphisure contended in its heads of argument that if it was to be held liable
so, too, should Bexsure as a result of Scott’s negligence. In response,
Bexsure contended in its heads that it could not be held liable at this stage as
Delphisure had not served a notice on it under rule 13(8) and there was no lis
between them as defendants.  This gave rise to Delphisure bringing a
conditional application for leave to serve a notice under rule 13(8) should
Bexsure’s contentions be upheld. There is no merit in Bexsure’s argument
and its counsel, wisely, abandoned the point during the appeal.  In any event,

in the light of the finding that Scott had not been negligent, the issue is
academic and I mention it only in order to record that we were informed by
counsel for the parties that no costs order relating to this application would be
sought. Secondly, certain parties employed two counsel, and the costs
attendant upon doing so are justifiable.

[40] It is therefore ordered:
1 The appellant’s appeal in respect of the claim of the first respondent is
dismissed.
2 The appeal in respect of the claim of the second respondent is upheld,
and para 3 of the order of the court a quo is set aside and substituted
with the following:
‘The second plaintiff’s claim against the second defendant is dismissed,
and the second plaintiff is to pay 30 per cent of the second defendant’s
costs.’
3 The appellant is to pay the first and third respondent’s costs of appeal,
such costs to include the costs of two counsel where so employed.
4 The second respondent is to pay 30 per cent of the appellant’s costs of
appeal, such costs to include the costs of two counsel.

___________________

L E LEACH
JUDGE OF APPEAL

APPEARANCES

APPELLANT:

D Mitchell SC (with him A Kantor)

Instructed by

Edward Nathan Sonnenbergs, Cape Town

Webbers, Bloemfontein

FIRST AND SECOND:

N Treurnicht SC (with him H du Toit)
RESPONDENT                             Instructed by Werksman, Tyger Valley

McIntyre & Van der Post, Bloemfontein

THIRD RESPONDENT:

R S van Riet SC

Instructed by

Rufus Dercksen & Partners, Stellenbosch

Honey Attorneys Inc, Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
31 May 2010

Status:
Immediate

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal

DELPHISURE GROUP INSURANCE BROKERS CAPE (PTY) LTD

versus

GYSBERT JOHANNES KOTZé DIPPENAAR
GERRIT ANDRIES VISSER
BEXSURE (PTY) LTD

The first and second respondents, wheat farmers from Piketberg, cancelled
applications they had made to Mutual & Federal Insurance Co Ltd for crop insurance
for the 2004 growing season upon the appellant having marketed an alternative
product known as Farmsure for which they applied instead. When it later became
apparent that Farmsure did not exist, it was too late for them to obtain other
insurance and, when their crops failed, they suffered financial loss which they were
unable to recoup from insurance. They sued the appellant for damages, contending
that as a result of the appellant’s negligent misrepresentation that the Farmsure
product existed they had suffered loss. Their claims succeeded in the Western Cape
High Court.

The appellant appealed to the Supreme Court of Appeal, which today upheld the

appeal in part, the court having concluded that the second respondent would
probably have withdrawn his crop insurance application to Mutual & Federal and
been uninsured even had the appellant’s misrespresentaton not been made.
However the appeal against the claim of the first respondent was dismissed, the
court holding that the misrepresentation had been negligently made, that it had been
unlawful and that it caused the first respondent to suffer loss in circumstances in
which the appellant should be held liable.