Arthur E Abrahams & Gross v Cohen and Others

• Jurisdiction: South Africa
• Judge: Marais J and Selikowitz J
• Judgment Date: 18 April 1990
• Citation: 1991 (2) SA 301 (C)
• Hearing Date: 01 August 1988
• Court: Cape Provincial Division

Arthur E Abrahams & Gross v Cohen and Others
1991 (2) SA 301 (C)

1991 (2) SA p301

Citation	1991 (2) SA 301 (C)
Court	Cape Provincial Division
Judge	Marais J and Selikowitz J
Heard	August 1, 1988
Judgment	April 18, 1990

Flynote : Sleutelwoorde B

Negligence — Liability for — For causing pure economic loss unassociated with physical injury — Requirements of — Necessary to C establish that the possibility of loss of that kind reasonably foreseeable by defendant and that in all the circumstances defendant was under a legal duty to prevent such loss occurring — Neither possible nor desirable to define exhaustively the factors giving rise to duty to prevent loss occurring — Court to be satisfied that there are adequate D grounds for imposing such liability — Plaintiff to allege facts in claim giving rise to the duty to prevent loss occurring — Deceased having nominated plaintiffs as beneficiaries to his retirement annuity policies — Defendant, as attorneys for executor of deceased's estate, making claim to proceeds of policies adverse to beneficiaries — Insurer sending discharge forms to defendant for signature by plaintiffs and E their return to insurer — Defendant failing to comply therewith and failing to inform plaintiffs that they were beneficiaries under the policies — Defendant knowing that beneficiaries had not been informed of their entitlement under the policies — Appropriate that executor and therefore defendant should have duty to inform beneficiaries of their F entitlement imposed on them — Proceeds of policies paid out to plaintiffs only some five years after death of deceased — Such resulting in loss to plaintiffs — Such facts, if established, constituting a cause of action — Exception to particulars of claim as disclosing no cause of action dismissed. G

Headnote : Kopnota

A defendant may be held liable ex delicto for causing pure economic loss unassociated with physical injury but before he is held liable it will have to be established that the possibility of loss of that kind was reasonably foreseeable by him and that in all the circumstances of the case he was under a legal duty to prevent such loss occurring. It is not possible nor desirable to attempt to define exhaustively the factors which would give rise to such a duty because new situations not H previously encountered are bound to arise and societal attitudes are not immutable. However, that does not mean that capriciousness in the adjudication of claims of this kind is permissible. If liability is to be imposed, a court must satisfy itself that there are adequate grounds for doing so and be able to say what they are. It follows that the pleader of such a claim must allege the facts which give rise to the alleged duty. To merely plead the existence of the duty without pleading the facts or circumstances from which the duty arises would offend I against the elementary rule that conclusions of law may not be pleaded without pleading the facts or circumstances giving rise to the conclusions of law.

In an appeal against the dismissal in a magistrate's court of an exception to the plaintiff's particulars of claim, in which damages were claimed for losses suffered by the plaintiffs arising out of the failure of the defendant, a firm of attorneys employed by the executors of a deceased estate to do the work of the executor, to inform the plaintiffs J that they were beneficiaries under certain retirement annuity policies

1991 (2) SA p302

A entered into by the deceased and that they were required to return certain signed discharge forms to the insurer, it appeared that the plaintiffs had alleged that they had been nominated as beneficiaries under the said policies; that the defendant, in its aforesaid capacity, had forwarded the policies to the insurer and claimed the proceeds of the policies from the insurer, alleging a written agreement between the deceased and his former wife that such proceeds should be paid into the estate; that the insurer had sent discharge forms for signature by the B deceased's children (the plaintiffs) and had advised the defendant that the forms had to be returned to it; that the defendant had failed to return the forms to the insurer despite 13 different requests therefor; that the insurer had some five years later (in January 1987) advised the plaintiffs that they were the beneficiaries under the policies; that the defendant, in view of the contractual arrangement between it and the executors of the deceased estate, owed a duty of care to the deceased's children (the plaintiffs) to exercise reasonable professional skill and C diligence in arranging that the proceeds of the policies were paid within a reasonable time of the deceased's death in 1981; and that such duty of care had been breached. The Court held that for the purposes of the exception it had to be assumed that the defendant knew that the plaintiffs had not been informed of their entitlement to the proceeds of the policies. The Court further held that, although it might well be that the insurer would be the person upon whom it would be appropriate D to impose a duty of informing the beneficiaries of their entitlement in terms of the policies, an executor who was in possession of the policies, who knew of the beneficiaries' entitlement, who knew that the insurer had not informed the beneficiaries thereof and that the insurer was acting on the assumption that the executor had done so or would do so, and who had received from the insurer, and not returned to it, the appropriate discharge forms sent for signature by the beneficiaries, was no less appropriate a person upon whom to impose the aforesaid duty, and E that the attorney who had undertaken to do the executor's work for him could not expect to be regarded any differently. The Court accordingly held that the particulars of claim had disclosed a cause of action and that the magistrate had correctly dismissed the exception. Appeal dismissed.

Case Information

Appeal from a decision in a magistrate's court. The nature of the F pleadings appears from the reasons for judgment.

M S Jacobs (with him R G Goodman) for the appellant (defendant).

J R Whitehead for the respondents (plaintiffs).

Cur adv vult.

Postea (18 April 1990). G

Judgment

Marais J:

This is an appeal against the dismissal with costs by the magistrate of an exception taken by defendant to plaintiffs' particulars of claim. I shall refer to the parties as they were referred to in the court a quo. H

The pleadings

Particulars of plaintiffs' claim

'1.

The first plaintiff is Harold Ernest Cohen, an adult male of 127 Sevenoaks, Main Street, Newlands, Cape.

2.

The second plaintiff is Belinda Shoshana Cohen, an adult spinster I of B Linden Park, Liesbeeck Road, Rosebank, Cape.

3.

The third plaintiff is Eleonore Theresa Cohen (born Schweizer), a widow, of 5 The Park, Main Road, Claremont, Cape, who sues in her capacity as mother and natural guardian of her minor daughter Tanya J Vanessa Cohen (hereafter referred to as Tanya) of the same address.

1991 (2) SA p303

Marais J

4.

A The defendant is Arthur E Abrahams and Gross, a partnership of attorneys of 2 Long Street, Cape Town.

5.

Werner Cohen (hereafter referred to as the deceased), who died on 3 November 1981, was the father of the first and second plaintiffs and Tanya (hereafter where appropriate collectively referred to as B the deceased's children).

6. (a)

Prior to his death the deceased had entered into two retirement annuity insurance policies (hereafter referred to as the policies).

(b)

In terms of the policies the deceased's children were, on his death, stipulated as the beneficiaries.

7.

C At all material times the defendant, acting on behalf of the executors and administrators, nominated and appointed by the deceased in his last will and testament dated 18 August 1978:

(a)

was attending to the liquidation of the deceased's estate; and

(b)

had the policies in its possession.

8. (a)

D On 15 December 1981 the defendant duly forwarded the policies to the insurer and requested that the proceeds due in terms thereof should be paid by cheque in favour of the deceased's estate.

(b)

On 7 January 1982 the insurer informed the defendant that the E policies were retirement annuities and that the proceeds should be paid direct to the deceased's children.

(c)

On 11 January 1982 the defendant informed the insurer that, in terms of a written agreement between the deceased and his former wife, the proceeds from the policies should be paid to the administrators of the deceased's estate.

(d)

F On 22 January 1982 the insurer duly:

(i)

forwarded discharge forms for signature by the deceased's children to the defendant; and

(ii)

advised the defendant that the signed discharge forms should be returned to it.

(e)

G Thereafter on 13 occasions between 14 July 1982 and 21 November 1984, the insurer in writing requested the defendant to return the discharge forms duly signed by the deceased's children.

(f)

The defendant failed to do so.

9.

H During January 1987 the insurer advised the first plaintiff that he and the second plaintiff and Tanya were beneficiaries in terms of the policies.

10.

Prior to January 1987 neither the defendant nor the administrators or executors of the deceased's estate had advised the deceased's children that they:

(a)

I were beneficiaries in terms of the policies; and

(b)

were required to return signed discharge forms to the insurer.

11. (a)

The defendant, in view of the contractual relationship between it and the administrators and executors of the deceased's estate, owed the deceased's children a duty to exercise reasonable professional skill and diligence in J arranging, as set

...