THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Case No: 188/05
REPORTABLE

In the matter between

FIRST NATIONAL BANK OF SOUTHERN AFRICA
LTD
APPELLANT

and

KAREN ELEANORE DUVENHAGE
RESPONDENT

___________________________________________________________________

Coram:
HARMS, CAMERON, NAVSA, BRAND AND NUGENT JJA
Heard:
17 MARCH 2006
Delivered:
30 MARCH 2006
Summary:
Claim in delict – causal connection of the loss – value of
enquiring into its existence before embarking on the remaining
enquiries.

Neutral citation:
This judgment may be referred to as First National Bank v
Duvenhage [2006] SCA 47 (RSA).

___________________________________________________________________

JUDGMENT
___________________________________________________________________

NUGENT JA

NUGENT JA
[1] Of the three elements that combine to constitute a delict founded on
negligence – a legal duty in the circumstances to conform with the standard of the
reasonable person,1 conduct that falls short of that standard,2 and loss consequent
upon that conduct – the last often receives the least attention. Yet it is as essential
as the others for without it there is no delictual liability. Indeed, in a recent
illuminating note J C Knobel suggests, on doctrinal grounds, that loss, and its
causal connection, might even be the proper starting point for the enquiry.3

[2] But whatever sequence doctrinal logic dictates4 the human mind is
sufficiently flexible to be capable of enquiring into each element separately, in any
order, with appropriate assumptions being made in relation to the others, and that is
often done in practice to avoid prolonging litigation.5 For though the elements are
naturally interrelated each involves a distinct enquiry. The first element (in the
sequence I have described) is directed to whether in the circumstances the law
should recognise an action for the recovery of loss caused negligently. That is a
question of legal policy in relation to which, in the often-quoted words of Fleming
The Law of Torts,6 ‘the hand of history, our ideals of morals and justice, the
convenience of administering the rule and our social ideas as to where the loss
should fall’, interplay, and is often capable of being disposed of on exception.7 The

1 Indac Electronics (Pty) Ltd v Volkskas Bank Ltd 1992 (1) SA 783 (A) 797E; Knop v Johannesburg City Council
1995 (2) SA 1 (A) 27J-28A; Cape Metropolitan Council v Graham 2001 (1) SA 1197 (SCA) para 6; Minister of
Safety and Security v van Duivenboden 2002 (6) SA 431 (SCA) para 12; Gouda Boerdery BK v Transnet 2005 (5)
SA 490 (SCA) para 12; Local Transitional Council of Delmas v Boshoff 2005 (5) SA 514 (SCA) para 19; Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) para 13.
2 Kruger v Coetzee 1966 (2) SA 428 (A) 430E-G, which has been applied by this court in countless cases.
3 JC Knobel ‘Die Samehang Tussen Onregmatigheid en Skade’ 2005 (68) THRHR 645.
4 For example, Millner Negligence in Modern Law 230, points out that ‘[u]ntil the law acknowledges that a particular
interest or relationship is capable in principle of supporting a negligence claim, enquiries as to what was reasonably
foreseeable are premature.’
5 But see the criticisms by J Neethling and JM Potgieter ‘Die Toets vir Deliktuele Nalatigheid Onder die Soeklig’
2001 (64) THRHR 476;
6 4th ed 136.
7 Indac Electronics (Pty) Ltd v Volkskas Bank Ltd 1992 (1) SA 783 (A) 797E-801D; Telematrix, above, para 16.

second is directed to whether the defendant’s conduct conforms with the standard
expected of the reasonable person in the circumstances,8 which (and this is often
overlooked) might not require the defendant to have taken any steps at all.9 That
question is quite capable of being asked on the assumption that the defendant was
legally bound to conform with that standard. And the third is directed to whether
there were causally-connected consequences, which is a factual enquiry initially
(though the outcome will sometimes need to be tempered so as to contain liability
within reasonable bounds)10 that is also capable of being asked on the assumption
that the conduct that is complained of was both wrongful and negligent.

[3] The present appeal demonstrates why in practice it is useful at times to
consider whether the loss for which damages are claimed is causally connected to
the allegedly unlawful conduct before addressing the more abstract normative
questions. It concerns a farming venture that was embarked upon by Mrs
Duvenhage and her husband, which they intended conducting through the medium
of a close corporation in which they had the sole interest. (It is not necessary for
present purposes to determine which of those parties was properly vested with the
claim.)

[4] The Duvenhages hired a farm in the KwaZulu-Natal midlands intending to
cultivate cash crops. They soon discovered, in about the middle of 1996, that two
permits had been issued in terms of s 7(2) of the Forest Act 122 of 1984 for the
afforestation of 288 hectares of the farm.11 After making enquiries they also

8 Kruger v Coetzee 1966 (2) SA 428 (A) 430E-G.
9 Despite the remarks of Holmes JA in Kruger v Coetzee, above, at 430G, it continues often to be overlooked .
10 International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA 680 (A) 700E-701F.
11 ‘7(1) Without the prior written approval of the director-general no land…may be used for the planting of trees to
produce timber for commercial or industrial purposes.
(2) An owner who intends to establish a commercial timber plantation on any land, shall apply in the prescribed
manner for the approval required in terms of subsection (1), and the director-general may in his discretion grant the
approval on such conditions as he may deem fit.’

established that SAPPI (a company with timber interests) would be willing to
provide financial assistance – free seedlings and a loan of up to R1 200 per hectare
– to establish plantations on the farm.

[5] The Duvenhages decided to embark upon that venture but time was against
them. The two permits (one permitting the afforestation of 200 hectares and the
other 88 hectares) were due to expire on 15 May 1997 and 28 August 1997
respectively, and enquiries they made of the forestry department revealed that it
was unlikely that the periods would be extended. But planting is possible only
during the summer rainfall months commencing in about September or October and
ending in February. There was no prospect of preparing the land and completing
the planting before the season ended in February 1997. But what was required at
least, as the Duvenhages understood the terms of the permits, was that the land
should be prepared before the permits expired, whereupon planting would then be
permissible during the next season.

[6] The owner of the farm was willing to extend the period of the lease for the
period required for the timber to mature. The Duvenhages commenced immediately
to prepare the land so as to complete the preparation before the permits expired,
financing the work with money advanced to Mrs Duvenhage on overdraft by the
appellant bank. In the course of preparing the land they also planted a relatively
small number of seedlings that they obtained from SAPPI on credit.

[7] In about November 1996 the owner of the farm offered to sell it to the
Duvenhages on favourable terms. At that time the Land Bank held a mortgage bond
over the farm as security for a loan that had been advanced to the owner. Mr
Duvenhage enquired of the Land Bank whether it would be willing to transfer the
loan, which would enable the Duvenhages to acquire the farm, but the Land Bank

was unwilling to do so. The Land Bank suggested instead that the Duvenhages
obtain finance from a commercial bank to acquire the farm, that they then establish
the plantation with the financial assistance of SAPPI, and that therefore it would
consider extending a loan with which the commercial bank could be repaid. This
appealed to the Duvenhages and they approached Mr Roux, the manager of the
appellant’s Greytown branch, where Mrs Duvenhage had an account.

[8] They met with Roux on 9 December 1996. The evidence as to what occurred
at the meeting is contentious. What was found by the full court in that regard (those
findings are not on appeal before us) is not altogether clear but I have accepted for
present purposes the submission by Mrs Duvenhage’s counsel that Roux undertook
to submit an application for a loan to the relevant department of the bank, but told
them that that was a mere formality, and assured them that the loan would be
advanced. He also suggested that the Duvenhages should in any event establish
whether SAPPI might be willing to grant a loan for the acquisition of the farm
because they would then benefit from a lower rate of interest.

[9] During January 1997 Mr Duvenhage discussed the matter with SAPPI but
was told that SAPPI was not interested in financing the acquisition of land. What
he did secure from SAPPI, however, was an undertaking to provide the assistance
that had been discussed earlier, if the Duvenhages acquired the property, permitted
a second bond to be registered as security for repayment of the loan, and completed
the planting by the end of January 1998.

[10] Meanwhile the Duvenhages continued preparing the land, with money that
Roux continued to advance to Mrs Duvenhage on overdraft, in the expectation that
they would receive a loan from the bank and acquire the farm, which would in turn
give them access to the loan from SAPPI with which the overdraft would be repaid.

[11] So matters continued through the winter. Enquiries were made of Roux from
time to time, who assured them that the formalities for the advance of a loan were
in hand, but when summer arrived it had not materialised. By then Mrs Duvenhage
was in debt to the bank, SAPPI was unwilling to supply the seedlings that needed
to be planted until it had the security of a second bond, and Roux was fobbing off
enquiries. In January 1998 Mrs Duvenhage insisted on seeing somebody at the
bank’s head office. Before Roux could arrange a meeting he was removed from his
post. In early February 1998 Mrs Duvenhage made contact with the regional office
and ultimately she met with the credit manager at the bank’s head office in
Johannesburg. There she learned for the first time that Roux had never submitted
the request for a loan in the first place. (Roux’s explanation for not having done so
is not now material but the bank did nothing to defend his conduct, which both the
trial court and the full court subjected to well-justified criticism.)

[12] But by then the planting season was almost over, the permission to plant had
all but lapsed (on the Duvenhage’s understanding of its terms), SAPPI’s
undertaking to provide assistance had lapsed, and SAPPI was demanding payment
for the seedlings that had been advanced on credit. The venture was at an end and
the stage was set for the present litigation. (An attempt was made the following
year to have the permits extended but that was unsuccessful.)

[13] The bank sued Mrs Duvenhage for repayment of the money that had been
advanced on overdraft. To that claim she had no defence. But she responded with a
counterclaim for damages for breach of contract. Mrs Duvenhage alleged that
Roux, on behalf of the bank, had agreed to advance a loan with which to acquire
the farm, and that the bank had breached the agreement. In consequence, so Mrs
Duvenhage alleged, she had lost the opportunity to make profits, both from the sale

of timber and from other farming activities, and to recover the expenditure she had
incurred in preparing the land. Later her pleadings were amended to introduce an
alternative claim in delict in which it was alleged that the losses were caused by
Roux’s negligence and that the bank was vicariously liable for the consequent
damages. The bank pleaded, amongst other things, that the counterclaims had
prescribed.

[14] The action was tried by P C Combrinck J in the High Court at
Pietermaritzburg. At the outset of the trial he ruled that ‘the issue of liability on the
counterclaim will be decided as a first issue and all the other issues will stand
over.’ Ultimately he found that the evidence did not establish the agreement upon
which the main counterclaim was founded (that finding is not contentious and
nothing more need be said about it) and that the alternative claim had prescribed.
The counterclaim was dismissed and judgment was entered for the money that was
owed to the bank.

[15] On appeal to the full court (J Combrink, Magid and Nicholson JJ) the finding
on prescription was reversed and the delictual claim succeeded. (The judgment is
reported as Duvenhage v Eerste Nasionale Bank van SA Bpk [2005] 4 All SA 41
(N).) It was held that Roux, acting in the course and scope of his employment, had
conducted himself wrongfully and negligently and that his conduct was the cause
of the losses for which the damages were sought. The orders of the trial court were
set aside and substituted with a declaration that the bank was liable for such
damages as might have been suffered. (What remained was only for a court in due
course to determine the amount of the damages, if they could not be agreed upon,
by assessing the extent of the losses and attaching to them a monetary value, in
accordance with the trial court’s ruling.) This appeal against that declaratory order
is before us with the special leave of this court, which was limited to the question

whether the losses that Mrs Duvenhage suffered were caused by Roux’s unlawful
conduct.

[16] On that issue the conclusions of the full court were perfunctory:
‘Applied to the present facts factual causality presents little problem. If it had not been for
Roux’s wrongful and negligent conduct the purchase of the farm would not have fallen through
and the SAPPI financing would not have lapsed and [Duvenhage] would not have suffered any
loss of profit and the expenditure … would not have been needlessly incurred.’

[17] The approach to causation, both in contract and in delict, is well established.
In both cases the wronged party is entitled to be compensated for the consequences
of the unlawful conduct. In the former case the unlawful conduct lies in the breach
and the wronged party is to be placed in the position that he or she would have been
in had it not occurred and the promise had instead been fulfilled. In the latter case
the wronged party is to be placed in the position that he or she would have been in
had the wrongful and negligent conduct not occurred.12 And in determining that
question
‘… one must make a hypothetical enquiry as to what probably would have happened but
for the wrongful conduct of the defendant. This enquiry may involve the mental elimination of
the wrongful conduct and the substitution of a hypothetical course of lawful conduct and the
posing of the question as to whether upon such an hypothesis plaintiff’s loss would have ensued
or not. If it would in any event have ensued, then the wrongful conduct was not a cause of the
plaintiff’s loss; aliter, if it would not so have ensued. If the wrongful act is shown in this way not
to be a causa sine qua non of the loss suffered, then no legal liability can arise.’ 13

[18] It goes without saying that when the venture was abandoned in January 1998
Mrs Duvenhage lost the opportunity to make profits from the venture and the
opportunity to recover the expenditure she had incurred. But it was not because

12 Trotman v Edwick 1951 (1) SA 443 (A) 449B-C.
13 International Shipping Co (Pty) Ltd v Bentley, above, 700F-H.

Roux failed to submit the application for a loan (as he ought to have done), nor
because he assured the Duvenhages that a loan would be advanced (which he ought
not to have done), that the venture failed. It failed because a loan was not secured,
and the farm was not thereby acquired, before time ran out. There is no direct
evidence that the Duvenhages would indeed have secured a loan from the bank had
the application been submitted, and thereby acquired the farm. Nor is there direct
evidence that they would have secured a loan from an alternative source had the
bank refused to grant a loan. Despite the efforts of Mrs Duvenhage’s counsel to
persuade us to the contrary the evidence also does not permit of the inference that a
loan would have been forthcoming from either source. And without a loan to
acquire the farm in time for the 1997 planting season the project would necessarily
have failed, irrespective of Roux’s conduct, with consequent loss of the opportunity
to profit and to recover the expenditure.

[19] It was also submitted on behalf of Mrs Duvenhage that she would not have
expended the money in the first place if not for the assurance that was given by
Roux and that at least that portion of the loss was recoverable irrespective of
whether they would have secured a loan and acquired the farm. But that, too, was
not established by the evidence. On the contrary, the evidence suggests that they
would have incurred the expenditure in any event. For Mrs Duvenhage said that
even if Roux had positively refused a loan (had he told her that he did not intend to
submit her application that would have come to the same thing) she would not have
abandoned the project but would have sought finance elsewhere. Bearing in mind
that they had only until 15 May 1997 to prepare the land before the expiry of the
permit to plant 200 hectares, and then until 28 August 1997 to prepare the land for
the remaining 88 hectares, which was essential to the success of the project (on
their understanding of the permits) it is most unlikely that preparations would have
stopped while alternative finance was sought. Indeed, they had commenced

incurring the expenditure in about November 1996, before Roux had uttered a
word, and there is no reason to think that they would not have continued to do so.

[20] Yet even had it been established that a loan would have been secured there is
a further insuperable hurdle to establishing the causal connection between the
negligent conduct and the loss, which is that the venture was in any event doomed
from the start, although the Duvenhages did not know it at the time. Clearly it was
not possible to acquire the farm and complete planting by the end of February
1997, which was when that planting season ended, even if the bank had
immediately advanced a loan. And on a proper construction of the permits – the
undisputed evidence of an official of the Department of Water Affairs and Forestry
was to the same effect – it would have been illegal to plant once the permits
expired on 15 May 1997 and 28 August 1997 respectively, which was before the
next planting season commenced. The project was thus always bound to fail.

[21] The true cause of the expenditure of the money, and the loss of the
opportunity to recover it and to profit, was that the Duvenhages embarked upon the
venture when, unbeknown to them because they misunderstood the terms of the
permits, it was not capable of being completed before the permits expired. Even the
contractual claim was bound to fail for want of a causal connection between the
breach and the loss. And if the contractual claim was bound to fail the claim in
delict was bound to follow.

[22] At times it is worth giving thought to causation at the outset, as suggested by
Knobel, even if not on doctrinal grounds, because in practice claims often fail for
want of a causal connection between the unlawful conduct and the loss.

[23] The appeal is upheld with costs. The order of the court below is set aside and
substituted with an order dismissing the appeal with costs.

________________________
R.W. NUGENT
JUDGE OF APPEAL

CONCUR:
HARMS JA)
CAMERON JA)
NAVSA JA)
BRAND JA)