THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case number :
280/03
Reportable

In the matter between :
F F HOLTZHAUSEN
APPELLANT
and
ABSA BANK LIMITED
RESPONDENT
CORAM :
HARMS, NAVSA, BRAND, CLOETE, HEHER JJA
HEARD :
7 SEPTEMBER 2004
DELIVERED :
17 SEPTEMBER 2004
Summary:   An action is maintainable in delict for a negligent misstatement
causing
pure pecuniary loss even if a concurrent action is available in contract. The
denial of
an action in delict in Lillicrap, Wassenaar and Partners v Pilkington Brothers
(SA) (Pty)
Ltd 1985 (1) SA 475 (A) is limited to the case where the negligence alleged
consists in
the breach of a term of a contract.
______________________________________________________
___

JUDGMENT
CLOETE JA/

CLOETE JA:
[1] The appellant as the plaintiff sued the respondent bank as the
defendant for damages. At the end of the plaintiff’s case the learned
trial judge (Van Coppenhagen J) absolved the bank from the
instance. The plaintiff was ordered to pay the bank’s costs up to the
date of delivery of the plea because the court considered that the
particulars of claim were excipiable. This appeal is with the leave of
the trial court.
[2] The factual background of the claim, as testified to by the
plaintiff, was the following. The plaintiff proposed delivering a
quantity of cut diamonds which he owned to a person, whom he had
met casually, as the agent for an unidentified purchaser, who would
pay R500 000 for them. The plaintiff undertook to pay the agent a
commission of R20 000 if the transaction was concluded. In due
course the agent advised the plaintiff that the amount of R500 000
had been paid into a Johannesburg bank for the credit of the
plaintiff’s bank account. He provided the plaintiff with three
telephone numbers to verify the information. The plaintiff obtained a
copy of his bank statement, which showed that such an amount had
indeed been credited to his account. He assumed (correctly, as it
transpired) that the deposit in the Johannesburg bank had been by
cheque. He then approached the manager of the defendant bank

where he kept his account, to ascertain whether he could safely
proceed with the transaction and hand over the diamonds. The
manager was apprised of the reason for the enquiry. The plaintiff
furnished the manager with the three telephone numbers given to
him. Although the plaintiff’s evidence was not always consistent on
this point, there are passages in his evidence where he said that
after making several telephone calls, the manager gave him the
assurance that the money was safe and that he could indeed
proceed with the transaction. The manager also personally
authorised the withdrawal by the plaintiff of the R20 000 commission
payable to the agent. It subsequently transpired that a fraud had
been perpetrated and the credit to the plaintiff’s bank account was
reversed.
[3] The basis of the plaintiff’s pleaded claim is not clear. The
plaintiff alleged that the bank manager undertook to, and did, have
the cheque cleared. The plaintiff also alleged that the bank manager
was under a legal obligation not to make a misrepresentation to him
and that the bank manager did so by representing that the cheque
had been honoured, whereas it had not. One thing is, however, clear
from the pleadings and the evidence and that is that the plaintiff did
not rely on the breach of any contract between himself and the bank
as constituting negligence for a claim based in delict. In this court

the plaintiff’s counsel nailed his colours to the mast by disavowing
any reliance on a claim based in contract, and advancing only a
claim in delict for pure economic loss suffered in consequence of a
negligent misstatement.
[4] In its judgment the trial court stated that according to the
plaintiff’s counsel the plaintiff’s claim was for damages in delict
based on the breach of a contractual term or obligation, and granted
absolution because of the decision of this court in Lillicrap,
Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985
(1) SA 475 (A). But that was neither the plaintiff’s pleaded case nor
the basis upon which the trial was conducted.
[5] Counsel who represented the bank when the heads of
argument were delivered (not the counsel who appeared to argue
the appeal) sought to justify the order made by the trial court by
submitting that a claim for pure economic loss is not maintainable in
delict when a claim can be maintained in contract. That, wrote
counsel, is the effect of Lillicrap. But it is not, as is apparent from
Bayer South Africa (Pty) Ltd v Frost 1991 (4) SA 559 (A). In Bayer,
this court decided that in principle a negligent misstatement inducing
the representee to enter into a contract with the respresentor may,
depending on the circumstances, give rise to a delictual claim for
damages at the suit of the representee. In reaching this conclusion,

Corbett CJ said at 569I-570D:
‘Before us appellants’ counsel referred to the case of Lillicrap, Wassenaar and
Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A) in which, so it
was submitted, a conservative approach to the extension of remedies under the
lex Aquilia was stressed; and to the case of Ericsen v Germie Motors (Edms)
Bpk 1986 (4) SA 67 (A) at 91E-G where, counsel said, the “apparent conflict”
between the Kern Trust case supra [Kern Trust (Edms) Bpk v Hurter 1981 (3)
SA 607 (C)] and the Lillicrap case was left open. The words, “apparent conflict”,
are counsel’s. The Court in Ericsen’s case merely stated that the plaintiff’s
advocate, in advancing a case based upon negligent misstatement inducing a
contract, relied upon Kern’s case and that defendant’s advocate, in opposing it
on legal grounds, cited Lillicrap’s case; and that because the misstatement had
not been shown to be negligent it was not necessary to decide this legal issue.
Lillicrap’s case itself was concerned with an entirely different issue, viz whether
the breach of a contractual duty to perform professional work with due diligence
is per se a wrongful act for the purposes of Aquilian liability, with the corollary
that if the breach were negligent damages could be claimed ex delicto. The
Court decided, mainly for reasons of policy, that it was not desirable to extend
the Aquilian action to the duties subsisting between the parties to such a
contract of professional service. Kern’s case was not discussed in either the
majority judgment or the minority judgment in Lillicrap’s case and I do not
consider the latter case to constitute any impediment to the recognition of a
cause of action founded upon a negligent misstatement inducing a contract.’
Counsel who appeared to argue the appeal for the bank was
accordingly correct in not persisting in the argument advanced by
his predecessor.

[6] Lillicrap decided that no claim is maintainable in delict where
the negligence relied on consists in the breach of a term in a
contract. That is quite apparent from what was said by Grosskopff
AJA at 499A-501H. The passage begins:
‘In applying the test of reasonableness to the facts of the present case, the first
consideration to be borne in mind is that the respondent does not contend that
the appellant would have been under a duty to the respondent to exercise
diligence if no contract had been concluded requiring it to perform professional
services.’
The learned judge emphasized at 499D-F:
‘The only infringement of which the respondent complains is the infringement of
the appellant’s contractual duty to perform specific professional work with due
diligence; and the damages which the respondent claims, are those which
would place it in the position it would have occupied if the contract had been
properly performed. In determining the present appeal we accordingly have to
decide whether the infringement of this duty is a wrongful act for purposes of
Aquilian liability.’
The following passage written by J C van der Walt in LAWSA vol 8
para 5 was approved (at 499I):
‘The same conduct may constitute both a breach of contract and a delict. This is
the case where the conduct of the defendant constitutes both an infringement of
the plaintiff’s rights ex contractu and a right which he had independently of the
contract.’ (The italics were added by the learned judge.)
The judgment went on to point out (at 500A-B) that:
‘Apart from the judgments in Van Wyk v Lewis (supra) this Court has never

pronounced on whether the negligent performance of professional services,
rendered pursuant to a contract, can give rise to the actio legis Aquiliae.’
The learned judge then gave reasons why Aquilian liability should
not be extended to cover the respondent’s claim (at 500F-501G) and
concluded (at 501G-H):
‘To sum up, I do not consider that policy considerations, require that delictual
liability be imposed for the negligent breach of a contract of professional
employment of the sort with which we are here concerned.’
[7] Lillicrap is not authority for the more general proposition that
an action cannot be brought in delict if a contractual claim is
competent. On the contrary, Grosskopff JA was at pains to
emphasize (at 496D-I) that our law acknowledges a concurrence of
actions where the same set of facts can give rise to a claim for
damages in delict and in contract, and permits the plaintiff in such a
case to choose which he wishes to pursue. Thus in Durr v ABSA
Bank Ltd 1997 (3) SA 448 (SCA), a case which concerned the
duties of an investment advisor recommending investment in debt-
financing instruments, Schutz JA found no difficulty in saying (at
453G):
‘The claim pleaded relied upon contract, alternatively delict, but as the case was
presented as one in delict, and as nothing turns upon the precise cause of
action, I shall treat it as such.’
[8] In the present matter the pleadings cover a claim for damages

for negligent misstatement. The plaintiff does not rely on the breach
of any contractual obligation which the defendant or its servants may
have owed him, as constituting the negligence for this claim. The
plaintiff’s case as it was presented in evidence was that a right
which he had independently of any such contract, was infringed. The
decision in Lillicrap is accordingly of no application.
[9] The same conclusion ought to have been reached in Pinshaw
v Nexus Securities (Pty) Ltd 2002 (2) SA 510 (C). In that matter the
plaintiff sued (as the second defendant) a director of an investment
company (Nexus, the first defendant) in delict for pure economic
loss occasioned by the bad investment by him of funds she had
entrusted to the company. The court correctly recognised (at 534J-
535A) that a legal duty giving rise to an action in delict can exist
independently of a contract. The court went on, however, to say the
following (at 535F-I):
‘Lillicrap’s case supra, was concerned with professional engineers rendering
their professional services in terms of a contract with Pilkington Brothers and
later in terms of a sub-contract. In my respectful opinion, Lillicrap should not be
extended to quasi-professionals, such as Nexus, offering financial services and
holding themselves out, expressly or by implication, as possessing appropriate
skills. Nor should Lillicrap be extended to the employees of such quasi-
professionals. This is not to say that companies offering financial services, or
their employees, will always attract a legal duty of care to their clients. That

must depend on the circumstances. It is more than 15 years since Lillicrap was
decided. The cases in this developing area of the law, in this country and
elsewhere, do not indicate a need to extend the Lillicrap embargo to a broader
class of defendants. On the contrary, the case law in my view supports the need
to retain flexibility.’
This finding, with respect, misinterprets the effect of the judgment in
Lillicrap and in particular, the remarks of Grosskopff JA at 501G-H
which I have already quoted (at the end of para [6] above). The
court in Pinshaw erred in two respects. First, the premise underlying
the reasoning is that Lillicrap decided that where delictual liability
coexists with liability for breach of contract, the aggrieved party is
limited to a claim in contract. That premise is wrong, as I have
already shown. Second, the remarks of Grosskopff AJA in the
passage just referred to reflect the facts of the case before the court
which concerned a contract of professional employment, and must
not be interpreted as limiting the principle laid down in that case to
such contracts.
[10] It would also be desirable to deal briefly with the decision in
Erasmus v Inch 1997 (4) SA 584 (W) where the court, as a part of
an extended obiter dictum, said at 595B-D:
‘The Supreme Court of Appeal will one day have to reconcile Standard
Chartered Bank of Canada v Nedperm Bank Ltd (supra) [1994 (4) SA 747 (A)],
where a party which contracted to perform a service was held liable in delict,
with Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd

(supra), in which a concurrent delictual remedy was denied.’
The difference between the two cases is simply this. In Standard
Chartered Bank the negligence relied on did not consist in the
breach of a contractual term. In Lillicrap, it did.
[11] Two arguments were advanced by counsel who appeared for
the bank to argue the appeal in an attempt to justify the order made
by the trial court. The first was that the conduct of the bank manager
could not be found to have been unlawful; the second, that the bank
manager could not be found to have been negligent. It is true that
the plaintiff’s evidence can be subjected to a number of criticisms
which could possibly lead to its rejection at the end of the case as a
whole. But absolution was granted at the end of the plaintiff’s case.
The test applicable is set out in Gordon Lloyd Page and Associates
v Rivera 2001 (1) SA 88 (SCA) para [2]. In my judgment there are
reasonable inferences and there is evidence which, considered
reasonably, could or might (not should or ought to) lead to a finding
for the plaintiff.
[12] So far as unlawfulness is concerned, the following findings
might be made on the evidence led thus far: That the statement by
the bank manager was made in response to a serious request; that
the plaintiff approached the bank manager because of his expertise
and knowledge of banking matters; and that the plaintiff’s purpose in

making the enquiry was, to the knowledge of the bank manager, to
ascertain whether he could safely proceed with the transaction. It
could be inferred that the bank manager realised that the plaintiff
would rely on his answer. On the evidence led thus far, it might
further be found that there are no considerations of public policy,
fairness or equity to deny the plaintiff a claim; that no question of
limitless liability could arise; and that an unfair burden would not be
placed on the manager or the bank if liability were to be imposed •
inasmuch as the manager could have refused to act on the plaintiff’s
request and could have protected himself and the bank against the
consequences of any negligence on his part by a disclaimer. See
Standard Chartered Bank at 770B-771B. Of course it goes without
saying that at the end of the case, the trial court might come to the
conclusion that no legal duty rested upon the bank manager to take
reasonable steps to ensure that any representation which he may
have made, was correct.
[13] So far as negligence is concerned, the defendant’s counsel
submitted that there was no evidence to support a finding that the
bank manager made a misstatement to the plaintiff in the terms
pleaded, namely, that the cheque would be honoured; and that at
best for the plaintiff, all the bank manager did was to give an honest
answer to the plaintiff’s enquiry which, submitted counsel, only

required the bank manager to telephone the three numbers provided
to him by the plaintiff in order to ascertain whether the purchaser
had sufficient funds. It is true that on the plaintiff’s evidence the bank
manager did not say in so many words that the cheque would be
honoured; and, as I have said, his evidence as to what precisely he
was told by the bank manager was not entirely consistent. But the
plaintiff did testify in cross-examination that the bank manager had
said that the money was safe and that he could proceed with the
transaction; and it appears to be common cause that the bank
manager also authorised the withdrawal of R20 000 when he knew
that unless the cheque was honoured, there would be no or
insufficient funds in the plaintiff’s bank account to meet this liability.
It
might
be
found
on
this
evidence
that
there
was
a
misrepresentation. It might also be found that if the information
elicited by the bank manager by telephoning the three numbers
furnished to him by the plaintiff was not sufficient to justify this
representation, the bank manager should not, without making further
enquiries, have made it.
[14] To sum up: The trial court was incorrect in granting absolution
from the instance on the basis which it did; and the bank’s counsel
has been unable to justify that order on any other grounds.
[15] The appeal is allowed, with costs. The order of the court below

is set aside and the following order substituted:
‘The application for absolution from the instance is dismissed, with
costs.
______________
T D CLOETE
JUDGE OF APPEAL
Concur:
Harms JA
Navsa JA
Brand JA
Heher JA