Durr v Absa Bank Ltd and Another (424/96) [1997] ZASCA 44; [1997] 3 All SA 1 (A) (20 May 1997)

Durr v Absa Bank Ltd and Another (424/96) [1997] ZASCA 44; [1997] 3 All SA 1 (A) (20 May 1997)

The Supreme Court of Appeal held that the relevant standard of care was not that of an average broker, but that of a regional manager of a bank's broking division professing investment skills and offering expert advice. Stuart and Absa Bank held themselves out as experts and owed a duty to conduct proper independent investigations into the creditworthiness and security of the Supreme companies before recommending investments. Warning signs such as high commissions, high returns, lack of prospectus, and absence of audited financial statements should have prompted further enquiry. Stuart failed to seek assistance from qualified professionals within the bank and relied solely on superficial...

Citation
[1997] ZASCA 44
Parties
Appellant: Valerie Elsie Cornwell Durr; Respondent: Absa Bank Ltd; Respondent: Myles Stuart
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
20 May 1997
Case Number
424/96
Procedural Posture
Civil Appeal / Appeal From the Cape Provincial Division
Outcome
Appeal upheld. Respondents found negligent and held jointly and severally liable for the appellant's losses.
Judges
Smalberger, Nienaber, Marais, Schutz, Streicher
Legal Topics
Professional Negligence, Vicarious Liability, Investment Advice, Duty of Care, Assessment of Skill, Secured Debentures
Delict Banking and Finance Commercial and Corporate Professional Negligence Vicarious Liability Investment Advice Duty of Care Assessment of Skill +1 more

Case Brief

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Parties

Valerie Elsie Cornwell Durr

Appellant

Absa Bank Ltd

Respondent

Myles Stuart

Respondent

Procedural Posture

Civil Appeal / Appeal From the Cape Provincial Division

Legal Issues

  1. 1 What is the standard of skill and care required of a bank's investment advisor when recommending investments to clients?
  2. 2 Did the respondents act negligently in advising the appellant and her family to invest in Supreme debentures and preference shares?
  3. 3 Is the bank vicariously liable for the negligent conduct of its investment advisor?

Ratio Decidendi

The Supreme Court of Appeal held that the relevant standard of care was not that of an average broker, but that of a regional manager of a bank's broking division professing investment skills and offering expert advice. Stuart and Absa Bank held themselves out as experts and owed a duty to conduct proper independent investigations into the creditworthiness and security of the Supreme companies before recommending investments. Warning signs such as high commissions, high returns, lack of prospectus, and absence of audited financial statements should have prompted further enquiry. Stuart failed to seek assistance from qualified professionals within the bank and relied solely on superficial...

Court Disposition

Appeal upheld. Respondents found negligent and held jointly and severally liable for the appellant's losses.

Orders

  • The defendants are ordered, jointly and severally, to pay the plaintiff the sum of R772,845.50.
  • Interest thereon at the rate of 14 per cent per annum from 1 November 1995 to date of payment.