F F Holtzhausen v ABSA Bank Limited

The appellant (plaintiff) owned cut diamonds worth R500 000 which he proposed selling to an unidentified purchaser through an agent he had met casually. The agent advised that R500 000 had been deposited (by cheque) into the plaintiff's bank account with the respondent bank. The plaintiff approached the bank manager to verify whether he could safely proceed with the transaction and hand over the diamonds. The manager was informed of the purpose of the enquiry and was given three telephone numbers to verify the information. After making telephone calls, the bank manager allegedly assured the plaintiff that the money was safe and that he could proceed with the transaction. The manager also personally authorized the withdrawal of R20 000 commission for the agent. It subsequently transpired that a fraud had been perpetrated and the credit to the plaintiff's account was reversed. The plaintiff sued the bank for damages. At the end of the plaintiff's case, the trial court (Van Coppenhagen J) granted absolution from the instance based on the decision in Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A).

• Whether an action in delict for negligent misstatement causing pure economic loss is maintainable when a concurrent action in contract may be available
• Whether the principle in Lillicrap prevents a delictual claim where contractual remedies exist
• Whether the bank manager's conduct could constitute unlawful conduct in delict
• Whether there was sufficient evidence of negligent misstatement to resist absolution from the instance
• The correct interpretation and application of Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd

The appeal was allowed with costs. The order of the trial court granting absolution from the instance was set aside and substituted with an order dismissing the application for absolution from the instance, with costs.

An action is maintainable in delict for a negligent misstatement causing pure economic loss even if a concurrent action is available in contract. The denial of an action in delict in Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A) is limited to cases where the negligence alleged consists in the breach of a term of a contract. Where the plaintiff relies on the infringement of a right that exists independently of any contract, Lillicrap does not bar a delictual claim. South African law acknowledges a concurrence of actions where the same set of facts can give rise to claims for damages in both delict and contract, and permits the plaintiff to choose which to pursue.

The court made obiter observations about several previous decisions. It criticized the interpretation of Lillicrap in Pinshaw v Nexus Securities (Pty) Ltd 2002 (2) SA 510 (C), noting that the court in that case had misinterpreted Lillicrap by assuming it decided that where delictual liability coexists with liability for breach of contract, the aggrieved party is limited to a claim in contract. The court also clarified the apparent inconsistency between Standard Chartered Bank of Canada v Nedperm Bank Ltd 1994 (4) SA 747 (A) and Lillicrap that had been noted in Erasmus v Inch 1997 (4) SA 584 (W), explaining that in Standard Chartered Bank the negligence relied on did not consist in the breach of a contractual term, whereas in Lillicrap it did. The court further observed that at the end of the full trial, it would be open to the trial court to find that no legal duty rested on the bank manager, or that the plaintiff's evidence should be rejected.

This case is significant for clarifying the relationship between delictual and contractual remedies in South African law, particularly in the context of negligent misstatement. It authoritatively limits the principle in Lillicrap to situations where the negligence consists in breach of a contractual term, and confirms that a plaintiff may pursue a delictual claim for negligent misstatement causing pure economic loss even where a concurrent contractual claim might be available. The judgment reaffirms the doctrine of concurrence of actions and clarifies that a legal duty in delict can exist independently of contractual obligations. This is particularly important in professional and financial services contexts where both contractual and delictual duties may arise. The judgment also provides guidance on the test for absolution from the instance and the evaluation of evidence regarding unlawfulness and negligence in negligent misstatement cases.