Herschel v Mrupe

• Jurisdiction: South Africa
• Judge: Centlivres CJ, Schreiner JA, Van Den Heever JA, Hoexter JA and Fagan JA
• Judgment Date: 25 May 1954
• Citation: 1954 (3) SA 464 (A)
• Hearing Date: 04 March 1954
• Court: Appellate Division

D Centlivres, C.J.:

I have had the privilege of reading the judgments prepared by my Brethren and find myself in the unfortunate position of being constrained to differ from them. It is unnecessary for me to set out the facts which appear fully in my Brother VAN DEN HEEVER'S judgment.

E The first question which arises in this case is: Does an action lie for damages suffered as a result of a negligent statement made by a defendant to a plaintiff in circumstances which show that the defendant knew that that statement would be acted on by the plaintiff? In Perlman v Zoutendyk, 1934 CPD 151, it was alleged in the declaration that F the defendant, an auctioneer and sworn appraiser, had negligently issued to Pienaar, the owner of certain land, a certificate of valuation in terms of which he appraised and valued that land at the sum of £4,500; that in issuing the certificate the defendant knew or ought to have known that the certificate would or might be used by the owner of G the land for the purpose, inter alia, of inducing other persons to lend money to the owner of the land upon the security of the land; that the actual value of the land was not more than £300; that the plaintiff, relying upon the certificate of valuation, advanced money on mortgage of the land concerned; that the owner of the property became insolvent and that the plaintiff lost a considerable sum of money. The plaintiff accordingly claimed damages. To this declaration the defendant excepted H on the ground that it disclosed no cause of action. The Court in dismissing the exception said at pp. 161 and 162:

'Taking the law as laid down by INNES C.J., in the case of Cape Town Municipality v Paine, 1923 AD 207, and applying it to this case, the question is whether defendant owes a duty of care and diligence in making his valuation towards the plaintiff. Whether he owed that duty or not depends on whether as a reasonable man he should have foreseen the likelihood of harm being

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caused to someone in the position of the plaintiff. That depends upon the facts of the case, but for the present, as the matter is before us on exception, we must assume that the facts are as stated in the declaration, viz., that the defendant knew, or ought to have known, that the signed certificate would or might be used by Pienaar, for the purpose of borrowing money on the security of the property. Now defendant is a sworn appraiser, and it seems to me clear that a sworn appraiser who is a reasonable man and knows that his certificate of A appraisement is to be used for the purpose of inducing someone to lend money on the mortgage of the property valued by him, ought to foresee that a negligently made valuation assessing the property at a grossly inflated value is likely to mislead and cause harm to the mortgagee.'

The word 'likelihood' in the above quotation must be understood to mean a possibility of harm against which a reasonable man would take precautions. See Joffe & Co. Ltd v Hoskins and Another, 1941 AD 431 at p. 451 and Stride v Reddin, 1944 AD 162 at p. 172.

B Accepting, as I do, the law as stated in Perlman v Zoutendyk, supra, it is necessary to be clear in one's own mind as to what is meant by the words 'a duty of care and diligence . . . towards the plaintiff'. In coming to its conclusion the Court relied on the following statement by INNES, C.J., in Cape Town Municipality v Paine, supra, at p. 217:

C 'The question whether, in any given situation a reasonable man would have foreseen the likelihood of harm and governed his conduct accordingly, is one to be decided in each case upon a consideration of all the circumstances. Once it is clear that the danger would have been foreseen and guarded against by the diligens paterfamilias, the duty to take care is established, and it only remains to ascertain whether it has been discharged.'

D In order to determine whether there is a duty to take care one must first ascertain the answer to the question put by INNES, C.J.: if that question is answered in the affirmative 'the duty to take care is established'. If that question is answered in the negative there is no duty to take care. (Per INNES, C.J., in Union Government v National Bank of South Africa Ltd., 1921 AD 121 at p. 130).

E In the last mentioned case INNES, C.J., said at p. 129:

'Every man has a right that others shall not injure him in his person or property by their actions or conduct, and'

(according to the original judgment filed of record the word 'but' in the printed report is a mistake for 'and')

'that involves a duty to exercise proper care. The test as to the F existence of the duty is, by our law, the judgment of a reasonable man. Could the infliction of injury to others have been reasonably foreseen? If so, the person whose conduct is in question must be regarded as having owed a duty to such others - whoever they might be - to take due and reasonable care to avoid such injury.'

The proper approach in Roman-Dutch law to the solution of the problem G set this Court in the present case is clear from the authorities I have cited. 'The result shows' as INNES, C.J., points out in Paine's case, supra, at p. 216 'that our law applies a wider test of liability than is recognised by English Courts'. According to many decided cases in England the first question seems to be: Did the defendant owe a duty to the plaintiff? That seems to me to be a different approach from the H approach of Roman-Dutch law and, this being so, I do not consider it necessary to refer to any English authorities, excepting to say that the very able (if I may be allowed to say so) dissenting judgment of DENNING, L.J., in Candler v Crane, Christmas and Co., 1951 (2) K.B. 164 is more in accordance with the principles of our law than the majority judgments in that case.

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In my view the case of Perlman v Zoutendyk, supra, was correctly decided. It may be said that the principles there enunciated should be confined to those cases where negligent statements are made by persons who hold themselves out to the public as being proficient in their A professions e.g. sworn appraisers, actuaries, accountants and surveyors. There is nothing in the judgment in that case which suggests that those principles should be so confined nor do I think that they should be so narrowly confined. If a person who is not a professional man wishes to raise money for a company in which he is largely interested and negligently supplies inaccurate information in order to B obtain a loan for the company I do not see why he should not be held liable on the ground of negligence for any damage suffered by a person who has advanced the money on the strength of that inaccurate information. I shall, however, assume for the purpose of this case that some limitation should be placed upon the application of the principles C enunciated in Perlman v Zoutendyk. The question therefore arises whether there is any reason why those principles should not apply to the present case. I can see no such reason. Which insurance company had insured the offending vehicle was a matter within the peculiar knowledge of the respondent herself. Apart from the insurance company concerned, D the respondent was the one person in the world who would be expected to know, or, if she left the management of her affairs to an agent, to find out with which company she had insured the vehicle. Just as, for example, a person is entitled to rely on the accuracy of information given by an accountant, so too, in my opinion, is a person entitled to rely on the accuracy of information given by the owner of a motor E vehicle, which has caused damage, as to the company which insured the vehicle, when the owner knows that that person is going to act on the information by claiming damages from the insurance company concerned.

It now remains to be considered whether on the facts of the present case F the appellant had a cause of action against the respondent. The letter written by the appellant's attorney to the respondent and asking for the name of the insurance company concerned clearly indicated that the appellant would be claiming from that company damages resulting from the alleged negligence of the driver of respondent's vehicle. The reason for wanting to know the name of the insurance company must have been G apparent to respondent when she read the letter and she must have been aware that the request made by the appellant's attorney was no idle enquiry. She was under no legal obligation to answer the letter and might have left the appellant to claim the right given her by sec. 22 (2) of Act 29 of 1942 to inspect the declaration of insurance whereby the motor vehicle in question was insured. The respondent, however, chose to answer the letter. A reasonable person in her position would H have realised that, if she answered the letter and gave the name of the insurance company concerned, the information so given would be acted on by the appellant and would have foreseen the possibility of wasted costs incurred as a result of incorrect information. Respondent was therefore under a duty towards the appellant to exercise due care in seeing that she

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correctly gave the name of the insurance company concerned. She, herself, gave no evidence at the trial to show that she took any steps to satisfy herself which insurance company insured the motor vehicle in question. It is obvious that if she had taken any such steps she would not have given the incorrect reply. Evidence was given by her attorney A from which it appears that the respondent owned several motor vehicles in respect of which more than one insurance company issued an insurance under Act 29 of 1942. No doubt in giving the incorrect information she acted bona fide in mistakenly giving the name of one of those insurance companies which caused the injuries to the...