Bayer South Africa (Pty) Ltd v Frost

• Jurisdiction: South Africa
• Citation: 1991 (4) SA 559 (A)

Bayer South Africa (Pty) Ltd v Frost
1991 (4) SA 559 (A)

1991 (4) SA p559

Citation	1991 (4) SA 559 (A)
Court	Appellate Division
Judge	Corbett CJ, Hefer JA, Kumleben JA, Friedman JA and Preiss AJA
Heard	May 13, 1991
Judgment	August 15, 1991

Flynote : Sleutelwoorde

Negligence — Liability for — Negligent misstatement causing pure economic loss — Negligent misstatement inducing contract — In principle, negligent misstatement inducing person to enter into contract may, depending upon circumstances, give rise to delictual claim for damages at the suit of person to whom misstatement made — To avert C danger of limitless liability and to keep cause of action within reasonable bounds, Court has duty to (a) decide whether, on facts of case, there rested upon defendant a legal duty not to make misstatement to plaintiff and whether defendant, in light of circumstances, exercised reasonable care to ascertain correctness of statement; and (b) give D proper attention to nature of misstatement and interpretation thereof, and to question of causation.

Headnote : Kopnota

(Per Corbett CJ; Hefer JA, Kumleben JA, Friedman JA and Preiss AJA concurring): In terms of the decision in Administrateur, Natal v Trust E Bank van Afrika Bpk 1979 (3) SA 824 (A) a delictual action for damages is available to a plaintiff who can establish (i) that the defendant, or someone for whom the defendant is vicariously liable, made a misstatement to the plaintiff; (ii) that in making this misstatement the person concerned acted (a) negligently, and (b) unlawfully; (iii) that the misstatement caused the plaintiff to sustain loss; and (iv) that the damages claimed represent proper compensation for such loss. In principle there is no good reason why, in the recognition of such a F cause of action based upon negligent misstatement, any distinction should be drawn between a misstatement made which induces a contract and one made outside the contractual sphere. If justice requires a remedy for a negligent misstatement made by and to persons who are not in any contractual relationship, then justice equally requires that there be a remedy for a negligent misstatement which is made by one contracting party to the other and which induces the contract. The law should provide adequate protection for persons induced to contract by a G negligent misstatement emanating from the other

1991 (4) SA p560

A contracting party and not incorporated as a term of the contract; and in many instances this can only be done by granting the party concerned compensation for consequential loss suffered as a result of the misstatement.

Accordingly and in principle, a negligent misstatement which induces a person to enter into a contract may, depending upon the circumstances, give rise to a delictual claim for damages at the suit of the person to B whom it was made. The circumstances will determine the vital issues of unlawfulness and whether there is a causal connection between the making of the misstatement and the loss suffered by the plaintiff. In order to avert the danger of limitless liability and to keep the cause of action within reasonable bounds, the Court has a duty to (a) decide whether, on the facts of the case, there rested upon the defendant a legal duty not to make a misstatement to the plaintiff (or whether the making of the statement was in breach of such duty and, therefore, unlawful) and whether the defendant, in the light of the circumstances, exercised C reasonable care to ascertain the correctness of his statement; and (b) give proper attention to the nature of the misstatement and the interpretation thereof, and to the question of causation.

The respondent was the lessee of three farms, one of which was Jasonskloof. The cultivated land on Jasonskloof comprised eight vineyards and six 'other lands' on which cash crops were raised. The vineyards and other lands were intermingled, and in some instances lay adjacent to one another. The proper maintenance of the vineyards D required that weeds growing between the vines be eliminated. From 1980, the weeds were eliminated by using herbicides sprayed downwards from a boom attached to a tractor at knee-height. The time taken for the application of herbicide to the vineyards on all three farms by this method was approximately one month. In 1985 the respondent decided to use a new product, 'Sting', marketed by the appellant, and to have the herbicides sprayed onto his vineyards from the air by means of a helicopter. During the spraying operation, which had taken place on 17 E August 1985, certain amounts of Sting landed on the onion and wheat crops growing on the other lands at Jasonskloof, causing severe damage, quantified by agreement at R55 000.

The respondent instituted action against the appellant in a Provincial Division, claiming in respect of the damage to his crops. One of the causes of action pleaded was that he had been induced to use Sting on his vineyards, applied from the air by helicopter, by an unlawful and F negligent misstatement made by certain of the appellant's employees, acting as the appellant's authorised representatives. The respondent had pleaded that the appellant's duly authorised representatives, one W and one T, acting in the course of their employment with the appellant, and in order to induce the respondent to enter into the contract for the supply and application of Sting to the respondent's vineyards, had G represented to the respondent's manager, one L, and respondent's son, both acting on behalf of the respondent, that Sting could suitably be applied from the air by helicopter without causing damage to the cash crops on the adjacent land. More particularly, T, as the appellant's authorised representative, had introduced Sting to farmers, including the respondent's authorised representative, L, at a meeting on 30 June by (a) representing that the best method of applying Sting was from a helicopter; (b) representing that if Sting were so applied there would be a clear-cut line ('afsnylyn') which would prevent adjacent crops H being damaged by that method of application and that, although the cut-off line would not be a straight line, it would be not more than three to five metres from the edge of the vineyard being sprayed; (c) representing that appellant would arrange everything with regard to such application; and (d) failing to indicate any risk of damage to adjacent crops which could arise from application by helicopter, thereby representing that there was no such risk. It was argued that, by reason of the aforegoing representations, the appellant had been under a legal I duty to ensure that such representations were correct; and that the respondent had been induced to apply the Sting purchased by him by means of a helicopter, something he would not otherwise have done. Since the representations had not been correct and since they had been a direct and/or foreseeable cause of the damage suffered by the respondent, which damage had arisen because the appellant, in breach of the aforesaid legal duty, unlawfully and negligently had made the aforesaid representations without ensuring that they were correct and/or feasible, J the appellant had

1991 (4) SA p561

A been legally liable to compensate the respondent for the loss he had suffered. The action succeeded and damages in the agreed amount were awarded to the respondent.

On appeal, after finding that, in principle, an action in delict was available to a person who had been induced to enter into a contract as a consequence of a negligent misstatement, the Court (per Corbett CJ; Friedman JA and Preiss AJA concurring) dealt with the following issues: (1) whether the appellant's representatives had made the statements B attributed to them in the respondent's pleadings; (2) whether such statements had materially been false; (3) whether there had rested upon the appellant's representatives a legal duty to take reasonable steps to ensure that the statements made were correct (this being pertinent to the question of unlawfulness); (4) whether the appellant's representatives had failed to carry out that legal duty, ie had acted negligently in the making of the statements; and (5) if the appellant's representatives negligently had failed in the carrying out of the legal duty referred to in (3) above, whether such failure had caused the C respondent's loss.

As to the representation ((1) above), the evidence of L, the respondent's authorised representative, was that he had first heard about Sting early in 1985 when W had visited the farm; and that on the respondent's instructions he had attended the farmers' meeting on 30 June 1985 at which T, the appellant's technical advisor in the area, had addressed the meeting on the merits of Sting, had stated that it could D safely be sprayed from the air by helicopter and had demonstrated its application and effectiveness by means of photographic slides. With reference to one of the slides W had pointed to the cut-off line along the edge of the area of application and had stated that the appellant had done tests to demonstrate how accurately Sting could be sprayed and controlled where there were adjacent crops. This latter point being of particular importance with regard to Jasonskloof, L had asked W after the presentation what the maximum distance was over which damage could be expected outside the vineyard being sprayed. T had reiterated that E although it would not be a straight line, the cut-off line would be no more than three to five metres beyond the edge of the vineyard being sprayed. L regarded this as the most important statement made that evening. T had also informed the farmers that the appellant would make all the necessary arrangements for the application of Sting by helicopter, and that all that farmers would have to do would be to provide persons to act...