Sandlundlu (Pty) Ltd v Shapsone and Wylie Inc. (8965/05) [2009] ZAKZDHC 44 (15 October 2009)
- Citation
- [2009] ZAKZDHC 44
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Kwazulu-Natal High Court, Durban
- Panel
- Nicholson
- Case number
- 8965/05
More details
- Court
- Kwazulu-Natal High Court, Durban
- Panel
- Nicholson
- Case number
- 8965/05
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The court found that the defendant, through its partner Breytenbach, breached its contractual duty to the plaintiff by failing to amend the lease agreement as instructed, resulting in the rental amount and escalation being incorrectly reflected. This negligence was a significant cause of the plaintiff's loss, and the damages claimed, including lost rentals and legal fees, flowed naturally and foreseeably from the breach. The court rejected the defendant's argument for apportionment, holding that in contract, a defendant is fully liable if its breach is a cause of the loss, regardless of other contributing factors. The court limited the period of damages to sixteen months, from December 2000 to March 2002, as this was the period reasonably contemplated by the parties for the lease to operate before transfer. Interest was awarded from the date of service of summons, and attorney and client costs for the arbitration were granted as they flowed directly from the breach.
Court disposition
Plaintiff's claim for damages arising from breach of contract is upheld.
Orders
- The defendant is ordered to pay the plaintiff damages in the sum of R824,000.00.
- The defendant is ordered to pay interest on the above amount at the rate of 15.5% per annum from the date of service of summons to date of payment.
- The defendant is ordered to pay the plaintiff's taxed attorney and client costs in respect of the arbitration conducted before Adv N Cassim SC.
- The defendant is ordered to pay the plaintiff's party and party costs in respect of this action.
02
Material facts
Parties
Sandlundlu (Pty) Ltd
Plaintiff Counsel: J G Wasserman SCShepstone & Wylie Inc
Defendant Counsel: J A Ploos van Amstel SCAmounts and remedies
- Damages Awarded: ZAR 824,000
03
Procedural history
Posture
Civil Trial / Final Judgment
04
Questions and positions
Legal issues
- 01
Whether the defendant, as attorney, breached its contractual duty of skill and care by failing to amend the lease agreement as instructed.
- 02
Whether the defendant's negligence was the cause of the plaintiff's financial loss.
- 03
Whether damages claimed by the plaintiff were foreseeable and flowed naturally from the breach.
- 04
Whether the damages should be apportioned due to the conduct of third parties.
- 05
For what period is the defendant liable for damages.
Party arguments
- Applicant
- The plaintiff argued that the defendant negligently failed to amend the lease agreement to reflect the correct rental amount and escalation, despite clear instructions and assurances. This failure resulted in the plaintiff receiving substantially less rental income, incurring legal fees for arbitration, and suffering further financial harm. The plaintiff contended that the damages claimed, including lost rentals and legal costs, were a direct and foreseeable consequence of the defendant's breach of contract.
- Respondent
- The defendant conceded negligence in failing to amend the lease agreement but argued that the damages claimed were not a direct or natural result of the breach, nor reasonably foreseeable. The defendant submitted that the arbitration and resultant losses were primarily caused by the dishonesty of Biz Afrika's representative, Michaelides, and that any damages should be apportioned accordingly. The defendant further contended that liability should be limited to the period until the anticipated transfer of the property.
05
Court’s reasoning
Legal principles
- 01
Bruce NO v Berman 1963 (3) SA 21 TPD
Damages for breach of contract must be those which normally flow from the breach or may reasonably be supposed to have been in contemplation of the parties as likely to result therefrom.
- 02
Thoroughbred Breeders Association v Price Waterhouse 2001 (4) SA 551 SCA
The test for causation in contract is whether the loss would have been suffered if the act complained of did not happen, and whether the loss is not too remote.
- 03
Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 3 SA 670 A
Damages should place the plaintiff in the position he would have occupied had the contract been performed, as far as possible by payment of money.
- 04
Prescribed Rate of Interest Act 55 of 1975
Interest on unliquidated debts runs from the date of demand or service of summons, unless otherwise agreed.
- 05
Nel v Waterberg Landbouwers Ko-operatieve Vereeniging 1946 AD 597
Attorney and client costs may be awarded where it is just to ensure the successful party is not out of pocket due to litigation caused by breach.
06
Ratio, limits and disposition
Ratio decidendi
The court found that the defendant, through its partner Breytenbach, breached its contractual duty to the plaintiff by failing to amend the lease agreement as instructed, resulting in the rental amount and escalation being incorrectly reflected. This negligence was a significant cause of the plaintiff's loss, and the damages claimed, including lost rentals and legal fees, flowed naturally and foreseeably from the breach. The court rejected the defendant's argument for apportionment, holding that in contract, a defendant is fully liable if its breach is a cause of the loss, regardless of other contributing factors. The court limited the period of damages to sixteen months, from December 2000 to March 2002, as this was the period reasonably contemplated by the parties for the lease to operate before transfer. Interest was awarded from the date of service of summons, and attorney and client costs for the arbitration were granted as they flowed directly from the breach.
Obiter and limits
- The dishonest conduct of Biz Afrika's representative, Michaelides, was opportunistic but did not negate the defendant's liability for the loss caused by its own breach.
- A diligent attorney must foresee that failure to carry out client instructions regarding contractual amendments may result in substantial financial loss.
- The Apportionment of Damages Act does not apply to contractual claims; full liability attaches unless the defendant's fault is negligible.
- The plaintiff was entitled to damages for the period during which the lease operated, not for the entire duration of the lease, as transfer was contemplated within a reasonable time.
Court disposition
Plaintiff's claim for damages arising from breach of contract is upheld.
- The defendant is ordered to pay the plaintiff damages in the sum of R824,000.00.
- The defendant is ordered to pay interest on the above amount at the rate of 15.5% per annum from the date of service of summons to date of payment.
- The defendant is ordered to pay the plaintiff's taxed attorney and client costs in respect of the arbitration conducted before Adv N Cassim SC.
- The defendant is ordered to pay the plaintiff's party and party costs in respect of this action.
Source and reliance status
Kwazulu-Natal High Court, Durban
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