Aucamp and Others v University of Stellenbosch

• Jurisdiction: South Africa

Aucamp and Others v University of Stellenbosch
2002 (4) SA 544 (C)

2002 (4) SA p544

Citation	2002 (4) SA 544 (C)
Case No	A19/01
Court	Cape Provincial Division
Judge	van Zyl J, Cleaver J and Fitzgerald AJ
Heard	August 1, 2001
Judgment	March 15, 2002
Counsel	E Fagan for the appellants.; I J Trengove for the respondent.

Flynote : Sleutelwoorde E

Delict — Wrongfulness — Breach of legal duty — Test for wrongfulness restated. F

Delict — Wrongfulness — Breach of legal duty causing pure economic loss — Factors to be taken into account in assessing whether defendant able to avoid reasonably foreseeable damages by taking reasonable steps to avoid it enumerated — Such not constituting numerus clausus of such factors.

Delict — Wrongfulness — Negligent misrepresentation causing pure economic loss — Similar principles to those applicable to wrongfulness and as to G whether defendant having legal duty in particular case in general delictual context applying — Additional guidelines for cases of negligent misrepresentation enumerated.

Negligence — Liability for — Claim by 'disappointed beneficiary' — Disappointed beneficiaries have claim in delict against person who wrongfully and negligently caused them loss or H damage despite there being no direct legal relationship between them — In casu, widow of deceased employee instituting 'disappointed beneficiary' claim against deceased husband's former employer for pure economic loss sustained as result of employer's failure to ensure deceased's membership of employer's group life insurance scheme — Fiduciary nature of employer-employee relationship I imposing upon employer duty to ensure that deceased fully and properly apprised of availability of group life insurance benefits to its employees, and duty to give deceased opportunity to subscribe to such benefits — Employer failing in such duty — Deceased also misled by employer's misrepresentation that deceased a member of group life insurance scheme — Employer at all times J

2002 (4) SA p545

aware or ought by exercise of reasonable care to have been aware that widow would benefit from A deceased's membership of scheme — As intended beneficiary, widow depending and relying upon employer's giving deceased appropriate advice and guidance — Fiduciary relationship between employer and deceased extending to relationship between employer and widow and giving rise to duty of care — Employer, through its financial B representative, having sufficient skill, competence and specialised knowledge to prevent financial loss to widow resulting from deceased's failure to become member of scheme — Widow's claim succeeding.

Headnote : Kopnota

It is trite that in order to succeed in a delictual claim for pure economic loss the plaintiff has to show, inter alia, that C the conduct causing pure economic loss was wrongful in the sense that it infringed upon a subjective right of the plaintiff or breached a legal duty owed to the plaintiff. The legal duty as such must be directed at preventing reasonably foreseeable damage being caused to the plaintiff. In considering whether or not the conduct in question is wrongful the Court is required to make a value judgment. In doing so it must weigh up the interests of the parties and of the community at D large against the background of the relevant facts and circumstances. In addition, it must strive, impartially and objectively, to apply the values of justice, fairness and reasonableness, while taking into account considerations of good faith (bona fides) and good morals (boni mores), otherwise known as public policy reflecting the legal convictions of the community. (Paragraph [68] at 567I - 568B/C.) E

While there is no numerus clausus of factors to be taken into consideration in assessing whether or not the defendant was able to avoid reasonably foreseeable damages by taking reasonable steps to avoid it, the following are among such factors:

(a)

whether the defendant had known or had subjectively foreseen that his or her negligent conduct would cause damage to the plaintiff; F

(b)

whether the defendant could have taken reasonably practical steps to prevent such damage;

(c)

whether the defendant possessed or had professed to possess special skill, competence or knowledge;

(d)

whether special protection against economic loss had been required;

(e)

whether a finding in favour of the plaintiff would lead to a multiplicity of actions or indeterminate liability which G would have severe social consequences;

(f)

whether a statutory provision required the prevention of economic loss;

(g)

whether the plaintiff had been able to protect him- or herself against potential economic loss; and

(h)

whether the defendant had been able to protect him- or herself against such loss, for example by arranging adequate H insurance cover. (Paragraph [69] at 568F - I/J.)

In the case of negligent misrepresentation, wrongfulness is determined by establishing whether or not the defendant had breached a legal duty to furnish correct information to the person entitled to such information. Similar principles to those applicable with regard to wrongfulness in a general delictual context apply, as do similar I guidelines as to whether or not the defendant had a legal duty in a particular case. The following additional guidelines might be useful in cases of negligent misrepresentation:

(a)

whether the parties had a contractual or fiduciary relationship requiring that correct information concerning any matter arising from such relationship be supplied; J

2002 (4) SA p546

(b)

whether the defendant had certain exclusive information which was not readily accessible to the plaintiff or other A parties;

(c)

whether the defendant had furnished information by virtue of his or her professional knowledge and competence;

(d)

whether the defendant had been aware, or ought by the exercise of reasonable care to have been aware, of the existence and identity of persons who would rely on his or her negligent misrepresentation; and B

(e)

whether the defendant had been aware, or ought by the exercise of reasonable care to have been aware, of the existence and identity of persons who would suffer damage should the misrepresentation not be corrected, and would benefit should it be corrected. (Paragraph [70] at 568J - 569E.)

South African law recognises that disappointed beneficiaries have a claim in delict against a person who has wrongfully and negligently C caused them loss or damage, despite there being no contractual or other direct legal relationship between them. Although the defendant in many of the cases in which a claim by a disappointed beneficiary has been recognised was an attorney or solicitor, liability is not restricted to a legal representative of the deceased. (Paragraph [88] at 574F - G/H.) D

The appellant's deceased husband had been employed by the respondent university from 1 July 1966 until his death on 16 February 1995. He had become a member of an optional group life insurance scheme (the old scheme) administered by the respondent on 26 March 1970. The respondent introduced a compulsory group life insurance scheme (the new scheme) with effect from 1 January 1971 which, although compulsory for all employees commencing employment E after that date, was not compulsory for those who had commenced employment before that date. In a notice dated 11 February 1971 from the office of the respondent's financial registrar, the latter group, which included the deceased, were offered four options, being (a) to join the new scheme unconditionally and without proof of insurability; (b) to remain in the old scheme but acquire additional cover under the new scheme; (c) to F terminate membership of the old scheme and join the new scheme; or (d) to be a member of both the old and new schemes. Employees were required to exercise their options by 15 February 1972, failing which the right to acquire membership of the new scheme would be forfeited. Proof of insurability would be required from those failing to join the new scheme before 15 May 1971. G

The deceased had not accepted any of the four options and had thus not become a member of the new scheme. In a notice from the financial registrar dated 11 June 1971 the cut-off date for joining the new scheme without proof of insurability was extended to 30 June 1971. A form offering two options and allowing for only a 'yes' or 'no' from the person responding was attached to the notice. These options were (1) to join the new scheme unconditionally and without proof of H insurability; and (2) to retain membership of the old scheme. The first option was made available only to persons who were not members of the old scheme, while the second was available only to members of the old scheme. The deceased completed and signed the form on 22 July 1971. He ignored the first option and inserted the word 'ja' in the block next to the second option. Some time thereafter, some unknown person in the respondent's financial administration I offices inserted, in a different coloured ink, the word 'nee' next to the first option on the deceased's form, and dated and initialled the insertion.

The former head of personnel finance matters in the respondent's administration, one S, testified that his department had been under the impression that there was overwhelming support for the new scheme. The notice of J

2002 (4) SA p547

11 June 1971 had been directed at obtaining a final decision. On 21 May 1975 S recommended to the respondent's A registrar that the old scheme be terminated as at 1 June 1975. His rationale was that the only persons who remained members of the old scheme were employees who had retired prior to the introduction of the new scheme. It was suggested...