AB Ventures Ltd v Siemens Ltd

• Jurisdiction: South Africa
• Judge: Nugent JA, Cloete JA, Ponnan JA, Snyders JA and BOSIELO JA
• Judgment Date: 31 March 2011
• Citation: 2011 (4) SA 614 (SCA)
• Docket Number: 294/10
• Hearing Date: 10 March 2011
• Counsel: DM Fine SC (with AWT Rowan) for the appellant. JJ Reyneke SC for the respondent.
• Court: Supreme Court of Appeal

Nugent JA (Cloete JA, Ponnan JA, Snyders JA and Bosielo JA H concurring):

[1] The appellant (AB Ventures) sued the respondent (Siemens) in the North Gauteng High Court for damages in delict. Siemens excepted to the particulars of claim on the grounds that they lacked averments I necessary to found an action. The exception was upheld by Fabricius AJ, and AB Ventures now appeals with the leave of that court.

[2] An exception of this kind must be determined as if the allegations of fact in the particulars of claim have been established. I do not intend setting out those allegations in detail. It is sufficient for present purposes for them to be summarised. J

Nugent JA (Cloete JA, Ponnan JA, Snyders JA and Bosielo JA concurring)

A [3] AB Ventures concluded a written agreement with Lumwana Mining Company Ltd (Lumwana), under which AB Ventures undertook to construct to completion the Lumwana Copper Mine in northern Zambia. A joint venture between Ausenco Americas LLC and Bateman International Projects BV was to supply four specialised electrical units B (referred to in the particulars of claim as 'the drives') that were to be used by AB Ventures in the project. The joint venture concluded a written agreement with Siemens under which Siemens undertook to engineer, design, manufacture, supply and commission the drives.

[4] Siemens delivered, installed and commissioned the drives at the C construction site. After the drives had been commissioned they malfunctioned, resulting in a failure of the transformers in which the drives were used. That caused the completion of the project to be delayed, in consequence of which, AB Ventures alleged, it became liable to Lumwana for penalties or damages under the construction contract, and it D also incurred additional expenses. AB Ventures alleged that the malfunction of the drives and the resultant loss were caused by negligence on the part of Siemens, and it claimed damages to compensate for its loss.

[5] Although not elegantly expressed, the issue that was presented by the exception was whether the conduct of Siemens — which must be E accepted to have been negligent for present purposes — was wrongful and thus actionable at the hands of AB Ventures. That is quintessentially a matter that is capable of being decided on exception. [1]

[6] Liability for negligent conduct has been developed and continues to develop incrementally as the expectations and needs of society evolve. F The law has for long recognised that physical loss caused by a positive act of negligence is actionable. It is now 32 years since this court in Administrateur, Natal v Trust Bank van Afrika Bpk [2] took a significant step in the development of the law when it placed its imprimatur [3] on the recognition of a claim for recovery of damages for pure economic loss G caused by a misstatement that is made negligently. [4] Since then the law has been developed further to recognise that a bank may be liable to the true owner of a cheque that it collects negligently, [5] and to recognise

Nugent JA (Cloete JA, Ponnan JA, Snyders JA and Bosielo JA concurring)

claims for pure economic loss in other diverse circumstances, [6] and no A doubt the law will continue its development to include other circumstances. This is one such case, in which we are asked to take another step in that direction.

[7] Various epithets have been used to express the nature of the enquiry to be made when the law is sought to be developed in that way [7] — B whether the 'legal convictions of the community' call for the recognition of liability, whether the plaintiff's interest falls within 'the range of interests that the law sees fit to protect against negligence', the 'boni mores' of society, the 'general criterion of reasonableness' — but in each case the expression is so wide as not to be a true test at all. They C nonetheless help to direct attention to the nature of the enquiry.

[8] Cases that have been decided in this court for 30 years and more make it clear that the enquiry underlying those expressions is whether contemporary social and legal policy calls for the law to be extended to the exigencies of the particular case. [8] Thus as early as Trust Bank D Rumpff JA said that when 'legal duty' (wrongfulness) is under consideration 'policy considerations' come into play. [9] He likened it to the 'duty concept' in the English tort of negligence, which Millner Negligence in Modern Law [10] described as 'a device of judicial control over the area of actionable negligence on grounds of policy'. He went on to cite the E description by Fleming The Law of Torts, [11] of the nature of that policy enquiry:

Nugent JA (Cloete JA, Ponnan JA, Snyders JA and Bosielo JA concurring)

A 'In short, recognition of a duty of care [in the parlance of this country, whether the conduct is wrongful] is the outcome of a value judgment, that the plaintiff's invaded interest is deemed worthy of legal protection against negligent interference by conduct of the kind alleged against the defendant. In the decision whether or not there is a duty, many factors interplay: the hand of history, our ideas of morals and justice, the B convenience of administering the rule and our social ideas of as to where the loss should fall. Hence, the incidence and extent of duties are liable to adjustment in the light of the constant shifts and changes in community attitudes.'

[9] For in each such case a court is being asked to extend the common C law, and all of the common law, from its beginnings, is the product of contemporaneous social and legal policy. That was aptly captured by the famous statement of Oliver Wendell Holmes Jr in the introduction to his lectures on the common law — 'the life of the common-law has not been logic: it has been experience' — and from what followed: [12]

D 'The felt necessities of the time, the prevalent moral and political theories, intuitions of public policy, avowed or unconscious, even the prejudices which judges share with their fellow-men, have had a good deal more to do than the syllogism in determining the rules by which men should be governed. The law embodies the story of a nation's development through many centuries, and it cannot be dealt with as if E it contained only the axioms and corollaries of a book of mathematics. In order to know what it is, we must know what it has been, and what it tends to become . . . The substance of the law at any given time pretty nearly corresponds, so far as it goes, with what is then understood to be convenient. . . .'

F [10] Thus by the very nature of the enquiry it will generally not be helpful in a particular case to look to what has been decided in other cases of an altogether different kind. Where the case is not one that fits within the social and legal policy that has led to liability being recognised in other cases, then what is called for instead is reflection upon what considerations there might be that necessitate the law also being G advanced to meet the new case. That calls not for a mere intuitive reaction to the facts of the particular case, but for the balancing of identifiable norms. [13]

[11] For in Telematrix (Pty) Ltd v Advertising Standards Authority SA [14] Harms JA reminded us that the first principle of the law of delict is that H loss ordinarily lies where it falls, and that Aquilian liability provides an exception to that rule. He went on to say that —

'(w)hen dealing with the negligent causation of pure economic loss it is well to remember that the act or omission is not...