Old Mutual Unit Trust Managers Limited v Living Hands (Pty) Ltd and Others

Old Mutual Unit Trust Managers Limited (OMUT), a registered manager of collective investment schemes, managed investments on behalf of Living Hands (Pty) Ltd, the sole trustee of the Living Hands Umbrella Trust. Following a takeover of Living Hands by the Fidentia Group, Living Hands instructed OMUT in October 2004 to liquidate its entire investment portfolio and pay the proceeds into its bank account. OMUT complied and paid out approximately R1.13 billion. Thereafter, directors and employees of the Fidentia Group misappropriated the funds. The trustees of the Trust sued OMUT in delict for pure economic loss, alleging that OMUT wrongfully and negligently paid out the funds without taking steps to protect the Trust and its beneficiaries, relying on statutory duties under various financial and trust-related statutes and the Constitution.

The appeal was upheld with costs, including the costs of three counsel. The order of the High Court was set aside and replaced with an order dismissing the plaintiffs’ claim with costs.

The case is significant for reaffirming the restrictive approach in South African law to delictual claims for pure economic loss, particularly where liability is sought to be based on omissions. It clarifies that financial institutions do not owe an open-ended legal duty to third-party beneficiaries of their clients and that regulatory statutes do not lightly give rise to private delictual claims. The judgment underscores the role of wrongfulness as a control mechanism limiting indeterminate liability.