F F Holtzhausen v ABSA Bank Limited

The appellant, Mr Holtzhausen, owned cut diamonds which he proposed selling through an intermediary to an unidentified purchaser for R500 000. The intermediary informed him that the purchase price had been deposited into his bank account and provided telephone numbers to verify this. The appellant’s bank statement reflected a credit of R500 000. Concerned about the safety of the funds, the appellant approached the manager of his bank, ABSA Bank Ltd, explained the transaction, and requested confirmation that it was safe to proceed. After making enquiries, the bank manager assured him that the money was safe and authorised the withdrawal of R20 000 as commission for the intermediary. Relying on these assurances, the appellant handed over the diamonds. It later emerged that the transaction was fraudulent and the cheque deposit was reversed, resulting in pure economic loss to the appellant.

The appeal was upheld with costs. The order granting absolution from the instance was set aside and replaced with an order dismissing the application for absolution, with costs.

The case is a leading authority clarifying the scope of Lillicrap and confirming that South African law recognises the concurrence of delictual and contractual actions. It affirms that negligent misstatements causing pure economic loss may found delictual liability even where a contractual relationship exists, provided the negligence does not consist merely of a breach of contract.