Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd

• Jurisdiction: South Africa
• Judge: Scott JA, Farlam JA, Brand JA, Lewis JA and Jafta JA
• Judgment Date: 26 November 2008
• Citation: 2009 (2) SA 150 (SCA)
• Docket Number: 653/07
• Hearing Date: 05 November 2008
• Counsel: JH Dreyer SC (with JA du Plessis) for the appellant. AC Ferreira SC (with I Ellis) for the respondent.
• Court: Supreme Court of Appeal

Brand JA:

[1] The appellant (Fourway) is a long-distance haulier. The respondent I (the Agency) owes its existence to the South African National Roads Agency Limited and National Roads Act 7 of 1998 (the Act). The dispute between them originates from an accident which occurred in the early evening of 26 September 2003 on the N1 national road between Polokwane and Mokopane in the Limpopo province. The two vehicles involved were an articulated truck and a light delivery van. The J

Brand JA

A articulated truck was driven at the time by an employee of Fourway who was acting in the course and scope of his employment.

[2] The articulated truck was on its way from an asbestos mine in Zimbabwe to Durban harbour carrying about 34 tonnes of chrysolite asbestos, destined for export. As a result of the collision, the truck B overturned and spilled its cargo onto practically the entire surface of a portion of the national road and its surroundings. Because of the hazardous nature of asbestos powder, the spillage required an extensive cleaning-up and decontamination operation.

[3] To facilitate the cleaning-up and decontamination process, the traffic C authorities closed the section of the national road involved and diverted the traffic in both directions onto an alternative road. This lasted for about 24 hours. The section of the national road which was closed forms part of a toll road. The alternative route was not subject to toll. As a result of the closure, two toll plazas - as defined in the Act - could not D collect toll fees. Based on these facts, the Agency as the entity authorised by s 27 of the Act to levy and collect toll fees on toll roads, instituted an action in delict against Fourway for the damages it allegedly suffered in the form of loss of toll revenue in an amount of R105 996,67.

[4] At the commencement of the trial the parties asked the court a quo E (Rabie J) to order a separation of issues. In terms of the separation order, the issues relating to the liability of Fourway were to be decided first, while the quantum of the Agency's alleged damages stood over for later determination. The preliminary issues were decided in favour of the agency. Hence the court declared Fourway liable for such damages as the Agency may prove in respect of the lost revenue it would have F collected at the two toll plazas involved, but for the closure of the road. It also ordered Fourway to pay the costs of the preliminary proceedings. Fourway's appeal against that judgment is with the leave of the court a quo.

[5] Part of the controversy on appeal was brought about by a shift in the G focus of the defence advanced by Fourway and the resulting mutation of the issues involved. A convenient starting point for an account of the mutation is the opening address by counsel for the Agency, as plaintiff, at the beginning of the trial. With reference to the pleadings, counsel at that stage defined the issues between the parties as follows:

(a)

H Whether or not the respondent had the necessary authority to collect toll fees on that portion of the toll road which was closed as a result of the collision.

(b)

Whether the collision occurred as a result of the negligence of the driver employed by Fourway.

(c)

I Whether the occurrence of the collision necessitated the decontamination operation and the closure of the road.

[6] Counsel for Fourway did not react to this definition of the issues. During the trial Fourway formally conceded the issue referred to in (a) and the evidence led by the parties therefore dealt exclusively with the J issues in (b) and (c). But in argument at the end of the trial Fourway's

Brand JA

counsel, for the first time, raised two further contentions. First he A submitted that the Agency's claim was for the recovery of pure economic loss which required the existence of a legal duty on the part of Fourway and that the Agency had failed to plead or establish the existence of such a legal duty. Secondly he submitted that the Agency had failed to establish the requirement of legal causation with reference to the loss B which formed the basis of its claim.

[7] As we know from the result, the court a quo dismissed all defences relied on by Fourway, including those originally raised under what I categorised as (b) and (c), as well as the two new ones advanced for the first time in argument at the end of the trial. As to (b) and (c) the court C found on the evidence presented that the negligence of Fourway's employee was the cause of the collision which necessitated both the decontamination process and the closure of the road. With regard to the defence based on the concept of pure economic loss, the court essentially held that the damage suffered by the Agency did not amount to pure economic loss and that the question regarding the existence of a legal D duty therefore did not arise. Finally the court held that the damages claimed could not be classified as too remote and that the requirement of legal causation had thus been satisfied.

[8] On appeal it was conceded on behalf of Fourway that the court a quo was correct in deciding the issues under (b) and (c) against it. In E consequence, the only issues on appeal turned on the contentions that were raised for the first time in argument at the end of the trial. They can be summarised thus:

(a)

Whether the court a quo correctly came to the conclusion that the Agency's claim is not a claim for pure economic loss. F

(b)

If not, how the issue of wrongfulness should have been dealt with in the light of the fact that it was not pertinently raised in the pleadings.

(c)

Whether the court a quo correctly came to the conclusion that the damages claim by the Agency cannot be regarded as too remote.

[9] The court a quo's finding that the damages claimed did not result G from pure economic loss clearly emanated from its understanding of that concept. That understanding appears from the following statements in the judgment:

The economic loss in this sense comprises patrimonial loss that does not result from a direct invasion of a subjective right of the person who H suffered the loss.

And that -

the aforesaid rights of the plaintiff . . . [ie the Agency's statutory rights to operate a toll road and to collect toll fees] were clearly subjective rights worthy of protection and which the plaintiff could enforce against I other people.

And that -

(c)onsequently, the loss suffered by the plaintiff is not a so-called pure economic loss, but the direct result of a direct infringement of subjective rights which was as such unlawful. J

Brand JA

A [10] I do not share the court a quo's understanding of what is meant by 'pure economic loss' in the present context. I believe its meaning to be far less metaphysical. As explained by Harms JA in Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) ([2006] 1 All SA 6) para 1, it means simply this:

B 'Pure economic loss' in this context connotes loss that does not arise directly from damage to the plaintiff's person or property but rather in consequence of the negligent act itself, such as a loss of profit, being put to extra expenses or the diminution in the value of property.

(See also Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) C (Pty) Ltd 1985 (1) SA 475 (A) at 497I - 498H; Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) ([2007] 1 All SA 240) para 14; Wille's Principles of South African Law 9 ed (general editor: Francois du Bois) sv 'Delict' by Daniël Visser at 1105; Neethling, Potgieter & Visser Law of Delict 5 ed at 268 et seq.)

[11] Thus understood, the Agency's claim, in my view, falls squarely D within the ambit of pure economic loss. As formulated, its claim was for loss of revenue in the form of toll fees resulting from the closure of the road. The Agency did not allege, nor did it set out to prove in evidence, that it was the owner of the road; that the road was physically damaged by the collision; or that the closure of the road resulted from any physical E damage to the road. The Agency's argument on appeal, that in terms of s 7 of the Act it was in fact the owner of the road on which the collision occurred, is of no consequence and misses the point. For present purposes the question is not whether the Agency is in fact the owner of the road. The point is that it did not rely on such ownership to support F its claim.

[12] Recognition that we are dealing with a claim for pure economic loss brings in its wake a different approach to the element of wrongfulness. This results from the principles which have been formulated by this court so many times in the recent past that I believe they can by now be G regarded as trite. These principles proceed from the premise that negligent conduct which manifests itself in the form of a positive act causing physical damage to the property or person of another is prima facie wrongful. By contrast, negligent causation of pure economic loss is not regarded as prima facie wrongful. Its wrongfulness depends on the existence of a legal duty. The imposition of this legal duty is a matter for H judicial determination involving criteria of public or legal policy consistent with constitutional norms. In the result, conduct causing pure economic loss will only be regarded as wrongful and therefore actionable if public or legal policy considerations require that such conduct, if negligent, should attract legal liability for the resulting damages (see eg Minister of Safety and Security v Van Duivenboden I 2002 (6) SA 431 (SCA) ([2002] 3 All SA 741) paras 12 and 22; Gouda Boerdery BK v Transnet 2005 (5) SA 490 (SCA) ([2004] 4 All SA 500) para 12; Telematrix (supra) paras 13 - 14; Trustees, Two Oceans...