London & others v Department of Transport, Roads and Public Works, Northern Cape & others

The four appellants were shareholders in Canton Trading 159 (Pty) Ltd, which concluded a public-private partnership fleet agreement with the Northern Cape Department of Transport, Roads and Public Works in January 2009. The agreement required the Department’s consent for Canton to cede its rights to a financier as security for loan funding. The Department allegedly unreasonably refused to grant such consent, which prevented Canton from obtaining finance. Canton was subsequently liquidated, rendering the appellants’ shares worthless. The appellants sued the Department, the Premier, and the MEC in delict for damages representing dividends they alleged they would have earned had Canton not been liquidated. The High Court upheld an exception that the particulars of claim did not disclose a cause of action, and the appellants appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs. The period of 20 days allowed by the High Court for the appellants to amend their particulars of claim was ordered to run from the date of the Supreme Court of Appeal judgment.

The case reaffirms the principle that shareholders cannot recover damages for reflective loss suffered as a result of harm to a company, particularly in claims for pure economic loss. It underscores the strict requirements for pleading wrongfulness and a legal duty in delict where no contractual privity exists, and clarifies the distinction between locus standi and the existence of a cause of action.