Road Accident Fund v Shabangu and Another

• Jurisdiction: South Africa

Road Accident Fund v Shabangu and Another
2005 (1) SA 265 (SCA)

2005 (1) SA p265

Citation	2005 (1) SA 265 (SCA)
Case No	75/03
Court	Supreme Court of Appeal
Judge	Marais JA, Zulman JA, Cameron JA, Cloete JA and Southwood AJA
Heard	March 16, 2004
Judgment	March 30, 2004
Counsel	J O Williams SC for the appellant.; J F Mullins SC for the respondents.

Flynote : Sleutelwoorde H

Motor vehicle accidents — Road Accident Fund — Claims against — Liability of attorney to repay Fund amount of fraudulent, settled claim — Attorney innocently submitting claim to Fund on behalf of woman claiming to be widow of person killed in car I accident — Fund claiming attorney negligent in failing to ascertain true identity of client — Attorney who submits claim on behalf of client not thereby tacitly warranting client's locus standi to make claim any more than attorney tacitly warranting truth of facts on which claim based or correctness of quantum of damages claimed — J

2005 (1) SA p266

Attorney owed no legal duty to Fund to ascertain whether client indeed whom she A purporting to be — Statutory function of Fund to investigate claims in terms of Act and if Fund relying on attorneys authorised to bring claims under Act to verify identity of claimants, it not entitled to hold those attorneys liable in damages even if negligent.

Attorney — Rights and duties — Authority of attorney — Attorney submitting claim on behalf of client not thereby and without more tacitly warranting client's locus B standi to make claim any more than tacitly warranting truth of facts on which claim based or correctness of quantum of damages claimed.

Attorney — Rights and duties — Authority of attorney — Attorney-client relationship imposing duty on attorney to advance interests of client even at costs of harm to C opposite party, and in general no liability to opposite party in doing so — Said relationship not, however, protecting attorney against unlawful conduct — Attorney not entitled nor obliged to advance client's interests at all costs — Impossible to lay down test as to when attorney under legal duty towards person other than client — Question of wrongfulness in each case one of legal policy. D

Headnote : Kopnota

The question arising in the present appeal was whether an attorney was liable to repay the appellant (the Fund) the amount of a fraudulent claim that had been settled. The attorney had innocently submitted a claim to the Fund on behalf of someone claiming to be the widow of a person who had been killed in a car accident. The Fund approached a Provincial Division with a claim in which it averred, E inter alia, that the respondents had been negligent in failing to ascertain the true identity of the client when they submitted the claim and when they paid over the settlement amount. It consequently had to be determined whether the respondents had owed a legal duty to the Fund. If they had not owed a legal duty to the Fund, they would not be liable and an enquiry into negligence would not F arise. The Court a quo held that no such duty was owed to the Fund and dismissed the claim.

Held, that an attorney who submitted a claim on behalf of a client did not thereby tacitly warrant the client's locus standi to make the claim any more than he or she tacitly warranted the truth of the facts on which the claim was based or the correctness of the quantum of damages claimed. (Paragraph [7] at 270E - F.) G

Held, further, that the attorney-client relationship imposed a duty on an attorney to advance the interests of his client, even where such a course would cause harm to the opposite party. This relationship and the duty owed to the client did, however, not protect the attorney either civilly or criminally against unlawful conduct such as fraud. The attorney was not entitled nor obliged to advance his client's interests at all costs. (Paragraph [11] at 271G and 271I - J.) H

Held, further, that it was impossible to lay down an all-embracing test as to when an attorney would be held to owe a legal duty towards a person other than the client where that person relies on a negligent misrepresentation inducing a contract or on negligent omissions on the part of the attorney to safeguard that person's interests when the attorney is performing the duty he owes to his client. The question of wrongfulness that arose in each such case was I essentially one of legal policy. (Paragraph [12] at 272B - C.)

Held, further, that in the circumstances of the matter it could be stated without qualification that the respondents had owed no legal duty to the Fund to ascertain whether their client was indeed whom she purported to be. On the contrary, it was the statutory function of the Fund to investigate claims in J

2005 (1) SA p267

terms of the Act. If the Fund relied on attorneys authorised to bring claims under the Act to A verify the identity of claimants, it was not entitled to hold those attorneys liable in damages even if they were negligent. In the absence of a statutory or contractual obligation to do so, policy did not require the imposition of such a duty in delict. The Fund was entitled to assume that an attorney was not a party to any fraud. (Paragraphs [16] and [17] at 273I - J and 274F/G - H.) B

Held, further, that an attorney was not obliged to treat a client with suspicion and obtain independent corroboration for the client's instructions. Circumstances may, however, arise where an attorney would be put on his guard and in such circumstances, the attorney would be obliged to make further inquiries as the failure to do so would amount to fraud. (Paragraphs [17] and [18] at 274H, 274J and 275B.) C

Held, accordingly, that even if the respondents had owed the Fund a legal duty, there had been no negligence in the circumstances. (Paragraph [19] at 275E.) Appeal dismissed.

The decision of the Transvaal Provincial Division in Road Accident Fund v Shabangu and Another confirmed.

Cases Considered

Annotations D

Reported cases

BOE Bank Ltd v Ries 2002 (2) SA 39 (SCA) ([2002] 2 All SA 247): referred to

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

Cape Town Municipality v Bakkerud 2000 (3) SA 1049 (SCA) ([2000] 3 All SA 171): dictum at para [9] applied E

Claude Neon Lights (SA) Ltd v Daniel 1976 (4) SA 403 (A): compared

Connell v Odlum [1993] 2 NZLR 257: referred to

Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd and Another [2004] 1 All SA 1 (SCA): referred to

Dean v Allin & Watts [2001] 2 Lloyds Rep 249 (CA): referred to F

Dutton v Bognor Regis Urban District Council [1972] 1 QB 373 (CA): referred to

Ericsen v Germie Motors (Edms) Bpk 1986 (4) SA 67 (A): compared

Hedley Byrne and Co Ltd v Heller and Partners Ltd [1964] AC 465 (HL(E)): referred to

Hill v Van Erp [1996 - 1997] 188 CLR 159: referred to G

Kamahap Enterprises Ltd v Chu's Central Market Ltd [1990] 64 DLR (4th) 167: referred to

Kruger v Coetzee 1966 (2) SA 428 (A): dictum at 430F - G applied

Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A): referred to

Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) ([2002] 3 All SA 741): H referred to

Minister van Polisie v Ewels 1975 (3) SA 590 (A): referred to

R v Myers 1948 (1) SA 375 (A): referred to

Ross v Caunter [1980] 1 Ch 297: considered. I

South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282: referred to

White v Jones [1995] 2 AC 207 (HL(E)): considered

Case Information

Appeal from a decision in the Transvaal Provincial Division (Van der Walt J). The facts appear from the judgment of Cloete JA.

J O Williams SC for the appellant.

J F Mullins SC for the respondents. J

2005 (1) SA p268

In addition to the authorities referred to in the judgment of the Court, counsel for the parties referred to the following A authorities:

AA Mutual Insurance Association Ltd v Gcanga 1980 (1) SA 858 (A)

Barlow Rand Ltd v Lebos and Another 1985 (4) SA 335 (T)

Blower v Van Noorden 1909 TS 890 at 906

Chief Constable of North Yorkshire v Audsley and Others [2000] PNLR 675 (Q) B

Collin v Wright [1857] 8 E&B 647 (120 ER 241)

Constantia Insurance Co Ltd v Nohamba 1986 (3) SA 27 (A)

David Trust v Aegis Insurance Co Ltd 2000 (3) SA 289 (SCA)

Hillview Properties (Pty) Ltd v Strijdom and Another 1978 (1) SA 302 (T) C

Jowell v Bramwell-Jones 1998 (1) SA 836 (W)

Lieberman v Santam Ltd 2000 (4) SA 321 (SCA)

Mokgohloa v Multilateral Motor Vehicle Accidents Fund 1993 (4) SA 503 (T)

Motorvoertuigassuransiefonds v Mavundla 1989 (1) SA 558 (T)

Pinshaw v Nexus Securities (Pty) Ltd and Another 2002 (2) SA 510 (C) D

Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA)

SA Eagle Insurance Co Ltd v Bavuma 1985 (3) SA 42 (A)

Sechold Financial Services (Pty) Ltd v Gazankulu Development Corporation Ltd 1997 (3) SA 391 (A)

Swart en 'n Ander v Cape Fabrix (Pty) Ltd 1979 (1) SA 195 (A) E

Thoroughbred Breeders' Association of South Africa v Price Waterhouse 2001 (4) SA 551 (SCA)

Van Rensburg en Andere v Taute en Andere 1975 (1) SA 279 (A).

Cur adv vult. F

Postea (March 30).

Judgment

Cloete JA:

[1] The question which arises in the present appeal is whether an attorney and his firm, who innocently submitted a claim for G compensation to the Road Accident Fund (the Fund) on behalf of an impostor claiming to be the widow of a person killed in a motor vehicle accident and the mother of his children, are liable to repay to the Fund the amount for which the fraudulent claim was settled. H

[2] The first respondent was one of two partners in the second respondent, a firm of attorneys. The respondents lodged a claim with the Fund for compensation in terms of the Multilateral Motor Vehicle Accidents Fund Act 93 of 1989...