Viv's Tippers (Edms) Bpk v Pha Phama Staff Services (Edms) Bpk h/a Pha Phama Security

• Jurisdiction: South Africa
• Judge: Lewis JA, Van Heerden JA, Cachalia JA, Tshiqi JA and Theron AJA
• Judgment Date: 25 March 2010
• Citation: 2010 (4) SA 455 (SCA)
• Docket Number: 132/09
• Hearing Date: 08 March 2010
• Counsel: JHL Scheepers for the appellant. N van der Walt SC (with L Malan) for the respondent.
• Court: Supreme Court of Appeal

Lewis JA: D

[1] The primary issue in this appeal is whether the owner of a vehicle, stolen from premises protected by a guard employed by a security firm at the instance of the owner of the premises, has a claim in delict against the security firm for the loss, by theft, of its vehicle. In Compass Motors Industries (Pty) Ltd v Callguard (Pty) Ltd [1] the court said, obiter, that in E principle such a claim was recognised. I shall deal more fully with this proposition later in the judgment. In Longueira v Securitas of South Africa (Pty) Ltd [2] the court found the security company liable in similar circumstances, but on the basis that the third party had relied on the existence of security provided by the owner of the premises protected. The statement by the court in Compass Motors and the decision in F Longueira have been subjected to considerable criticism. [3] And the High Court in this matter considered the statement of the general principle in Compass Motors to be incorrect. This court is thus called upon to deal with the issue directly.

The facts G

[2] But first, the facts. The appellant, Viv's Tippers (Edms) Bpk (Viv's Tippers) lets trucks to construction firms. In September 2004 it let several trucks to Lone Rock Construction (Pty) Ltd (Lone Rock) which was carrying out construction works on a site at Kibler Park, Johannesburg. H The site was guarded by security guards employed by the respondent, Pha Phama Staff Services (Edms) Bpk h/a Pha Phama Security (Pha Phama) in terms of a contract between Lone Rock and Pha Phama. Viv's Tippers was aware of the security provided. The evidence of Mr Viviers, a director of Viv's Tippers, was that it was a term of its contract with Lone Rock that the site should be secured. I

Lewis JA

A [3] There was a long weekend from 23 to 26 September 2004. A Mercedes-Benz truck, belonging to Viv's Tippers, was parked on the site, which was enclosed, and which could be entered only through a locked gate. A security guard employed by Pha Phama was on duty. Two men arrived at the site on Sunday 26 September and presented a letter to the B guard, purporting to be from a firm of truck repairers. I shall deal with the terms of the letter more fully when dealing with the question whether the security guard acted negligently. In essence it stated that C mechanics would be sent to the site on that date to repair the diesel pump of the truck in question, for which the vehicle registration number was given. The letter also stated that, while the truck would be fixed on site, the mechanics would test-drive it. The guard allowed the men to drive the truck away from the site - and it was never seen again.

[4] Viv's Tippers instituted an action in delict against Pha Phama, claiming the value of the truck (which was agreed), contending that, as D owner of the stolen truck, it had suffered loss as a result of the theft; that Pha Phama was vicariously liable for the conduct of the security guard; and that Pha Phama owed it a legal duty, rendering it liable for the loss. Pha Phama denied liability on the basis that it had no legal duty and that, even if it did have, the guard was not negligent. Du Plessis J dismissed the claim, finding that there was no legal duty and that the E guard had not been negligent. The appeal to this court is with his leave.

Wrongfulness

[5] The first question before us is therefore whether the security guard's conduct, in allowing the two men to drive the truck away from the site F was wrongful (or, to use a synonym, unlawful), rendering Pha Phama vicariously liable. It is not disputed that the guard's conduct constituted a positive act. The question does not relate, therefore, to a wrongful omission. But the loss suffered is purely economic: so the law does not without more impose a legal duty on the guard to prevent loss. In Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA G [4] Harms JA said that pure economic loss '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'. The loss, through theft, of property, would also fall into this H class.

Economic loss

[6] Where loss sustained is purely economic the question must be asked whether public policy, or the convictions of the community, require that there should be such a duty. [5] That an action does lie for pure economic I loss, provided that public policy requires that it should, is now settled

Lewis JA

law. It is not necessary to enumerate the authorities. However, courts A have been circumspect in allowing a remedy because of the possibility of unlimited liability: the economic consequences of an act may far exceed its physical effect. There is a spectre of limitless liability. [6] It is established thus that a court, in deciding to impose liability on an actor, must consider whether it is legally and socially desirable to do so, having B regard to all relevant policy considerations, including whether the loss is finite and whether the number of potential plaintiffs is limited. [7] Where the success of an action could invite a multitude of claims, sometimes for incalculable losses, an action will generally be denied. [8] But in each case the imposition of liability must turn on whether, in the circumstances, C liability should be imposed. That will in turn depend on public or legal policy, consistent with constitutional norms: Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd. [9] To ensure that the question of legal or public policy is not determined arbitrarily, or unpredictably, a court is not required to react intuitively, but to have regard to the norms of D society that are identifiable: Minister of Safety and Security v Van Duivenboden [10] and Fourway Haulage. [11]

Economic loss in a contractual setting

[7] Where economic loss arises from a breach of contract, loss will of E course be limited. But a negligent breach of contract will not necessarily give rise to delictual liability. This court has held that where there is a concurrent action in contract an action in delict may be precluded: Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd. [12] But that case held only that no claim is maintainable in delict when the F negligence relied on consists solely in the breach of the contract. Where the claim exists independently of the contract (but would not exist, but for the existence of the contract), a delictual claim for economic loss may

Lewis JA

A certainly lie. This is made clear by Bayer South Africa (Pty) Ltd v Frost; [13] and Holtzhausen v Absa Bank Ltd. [14]

[8] Accordingly it is possible that the assumption of contractual duties is capable of giving rise to delictual liability. The question is whether there are considerations of public or legal policy that require the imposition of B liability to cover pure economic loss in the particular case. [15]

Public or legal policy on imposing liability

[9] Viv's Tippers argued that liability should be imposed on Pha Phama. It relied, of course, on the statement in Compass Motors to which I have C referred. In that case Callguard had undertaken to Imperial Motors to provide security guards at its premises at night. According to the contract between the parties the only function of the security service provided was to minimise the risk of loss through theft or vandalism. Callguard expressly did not guarantee that they would succeed in this endeavour, and also excluded liability to Imperial Motors or any third party for loss D or damage arising out of the conduct of its staff, including negligent conduct or omissions.

[10] Vehicles belonging to Compass Motors, lawfully parked at the Imperial Motors premises, were stolen one night. In an action in delict for damages caused by the omission by the guards to protect the E premises, Van Zyl J regarded the contract between Imperial Motors and Callguard as irrelevant. The learned judge said: [16]

'When considerations of public policy and its concomitants, justice, equity and reasonableness, are applied to the facts and circumstances of F the present case, I believe that both these questions [whether a legal duty was owed by the security firm to the entity whose vehicles were stolen, and whether that liability should be restricted] should be answered in the negative. The contractual restriction or limitation of liability is, in my view, totally irrelevant for purposes of establishing the delictual liability of one or both contracting parties in respect of a third person who suffers injury arising from an act or omission pursuant to the contract in G question [my emphasis]. The community's sense of justice, equity and reasonableness will undoubtedly be offended by strictures placed on delictual liability towards third persons, simply because the contract limits the contractual liability of the parties inter...