De Lange v Absa Makelaars (Edms) Beperk

Johan de Lange, a former broker employed by Absa Makelaars (Edms) Beperk, provided financial and investment advice to various ABSA clients while in ABSA’s employ. Certain clients (including Loubser and the Honiballs) suffered losses and complained to ABSA. Relying on clause 16.6 of De Lange’s employment contract, ABSA investigated the complaints internally, formed the opinion that it was legally liable to compensate the clients, paid compensation to them, and then sued De Lange to recover those amounts. In conducting its investigations and forming its opinion under clause 16.6, ABSA did not afford De Lange an opportunity to give his version or be heard. The High Court upheld ABSA’s claims (claims 4 and 10 as test cases). De Lange appealed to the Supreme Court of Appeal, contending that a tacit term of the contract required ABSA to observe audi alteram partem and consider his version before forming the opinion that rendered him liable.

The appeal succeeded with costs. The order of the Western Cape High Court was set aside and replaced with an order dismissing claims 4 to 15 with costs.

The case is significant for South African contract and employment law as it affirms the strict requirements for importing tacit terms into contracts and confirms that contractual discretions which create liability must be exercised fairly. It underscores that, even in private contractual contexts, the audi alteram partem principle may be imported as a tacit term where necessary to ensure fairness and proper functioning of the contract.