Jaffit v Garlicke & Bousfield Inc and Others (10142/2010, 10146/2010, 10144/2010, 10145/2010, 10186/2010, 858/2011) [2012] ZAKZPHC 1; 2012 (2) SA 562 (KZP); [2012] 2 All SA 95 (KZP) (27 January 2012)

Jaffit v Garlicke & Bousfield Inc and Others (10142/2010, 10146/2010, 10144/2010, 10145/2010, 10186/2010, 858/2011) [2012] ZAKZPHC 1; 2012 (2) SA 562 (KZP); [2012] 2 All SA 95 (KZP) (27 January 2012)

The court found that Robert and Nerak, given their knowledge and active participation in Cowan's irregular and unlawful finance bridging scheme, owed a legal duty to inform the defendant of Cowan's operations. Their failure to do so was wrongful and actionable, as public and legal policy considerations, including the need to combat economic offences and fraudulent activities, justified the extension of Aquilian liability in this context. The defendant was vulnerable to risk and could not have avoided the harm by contractual means, distinguishing this case from others where contractual remedies were available. The statutory obligations under FAIS further reinforced the duty of care....

Citation
[2012] ZAKZPHC 1
Parties
Plaintiff: David Jaffit; Defendant: Garlicke & Bousfield Incorporated; Applicant: PKF (Durban) Incorporated; Respondent: Patrick Robert; Respondent: Nerak Financial Services (Pty) Ltd; Plaintiff: Merlin Stuart Stols; Plaintiff: Erroll James Watt; Plaintiff: Neil Douglas Rodseth; Plaintiff: Tower Bridge South Africa (Pty) Ltd; Plaintiff: Dycomber (Pty) Ltd; Plaintiff: Cotton King Manufacturing (Pty) Ltd
Court
Kwazulu-Natal High Court, Pietermaritzburg
Jurisdiction
South Africa
Judgment Date
27 January 2012
Case Number
10142/2010
Procedural Posture
Civil Application / Exception to Third Party Notice
Outcome
Exception dismissed with costs; second and third parties ordered to pay costs jointly and severally.
Judges
Madondo
Legal Topics
Third Party Proceedings, Pure Economic Loss, Wrongfulness, Legal Duty, Estoppel, Financial Services Regulation
Civil Procedure Delict Commercial and Corporate Third Party Proceedings Pure Economic Loss Wrongfulness Legal Duty Estoppel +1 more

Case Brief

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Parties

David Jaffit

Plaintiff

Garlicke & Bousfield Incorporated

Defendant

PKF (Durban) Incorporated

Applicant

Patrick Robert

Respondent

Nerak Financial Services (Pty) Ltd

Respondent

Merlin Stuart Stols

Plaintiff

Erroll James Watt

Plaintiff

Neil Douglas Rodseth

Plaintiff

Tower Bridge South Africa (Pty) Ltd

Plaintiff

Dycomber (Pty) Ltd

Plaintiff

Cotton King Manufacturing (Pty) Ltd

Plaintiff

Procedural Posture

Civil Application / Exception to Third Party Notice

Legal Issues

  1. 1 Whether Robert and Nerak owed the defendant a legal duty to inform it of Cowan's conduct in the finance bridging scheme.
  2. 2 Whether the pleaded facts establish grounds for a legal duty of care on Robert and Nerak towards the defendant.
  3. 3 Whether the omission by Robert and Nerak is actionable under the Aquilian action for pure economic loss.

Ratio Decidendi

The court found that Robert and Nerak, given their knowledge and active participation in Cowan's irregular and unlawful finance bridging scheme, owed a legal duty to inform the defendant of Cowan's operations. Their failure to do so was wrongful and actionable, as public and legal policy considerations, including the need to combat economic offences and fraudulent activities, justified the extension of Aquilian liability in this context. The defendant was vulnerable to risk and could not have avoided the harm by contractual means, distinguishing this case from others where contractual remedies were available. The statutory obligations under FAIS further reinforced the duty of care....

Court Disposition

Exception dismissed with costs; second and third parties ordered to pay costs jointly and severally.

Orders

  • The second and third parties' exception to the annexure to the second third party notice is dismissed with costs.
  • The second and third parties are ordered to pay the costs jointly and severally, the one paying, the other to be absolved.