THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no:232/2019

In the matter between:
GAVIN ANTHONY BREETZKE NO
FIRST APPELLANT
MICHAEL JOHN BREETZKE NO
SECOND APPELLANT
MARGARET ANN BREETZKE NO
THIRD APPELLANT
and
ROBERT EDWARD ALEXANDER
FIRST RESPONDENT
ZININGI PROPERTIES (PTY) LTD
SECOND RESPONDENT
RODNEY JOHN TROTTER NO

THIRD RESPONDENT
BRETT DENNIS BERRIMAN NO
FOURTH RESPONDENT
ANGELA CLAIRE ALEXANDER NO        FIFTH RESPONDENT

Neutral citation: Breetzke and Others NNO v Alexander NO and Others
(232/2019) [2020] ZASCA 97 (2 September 2020)
Coram:
WALLIS,
MBHA,
MOCUMIE,
MOLEMELA
and
DLODLO JJA
Heard:
19 August 2020
Delivered: This judgment was handed down electronically by
circulation to the parties’ representatives by email, publication on the

Supreme Court of Appeal website and release to SAFLII. The date and
time for hand-down is deemed to be 09h45 on 2 September 2020.
Summary: Breach of fiduciary duty by trustee – trustee acquiring
property from trust – concealing from other trustees existence of an
opportunity to sell property to third party at a profit – trustee nominating
company owned or controlled by him to acquire property – company
reselling property at a profit – allegation that company knowingly
participated in trustee's breach of trust is an allegation that company acted
wrongfully – pleading not excipiable

ORDER

On appeal from: KwaZulu-Natal Division of the High Court,
Pietermaritzburg (Vahed J, sitting as court of first instance):
The appeal is upheld with costs, such costs to include the costs
consequent upon the employment of two counsel.
The order of the high court is altered to read as follows:
'The exception is dismissed with costs, such costs to include the costs
consequent upon the employment of two counsel.'

JUDGMENT

Wallis JA (Mbha, Mocumie, Molemela and Dlodlo JJA concurring)

[1] The Sleepy Hollow Trust (the Trust) owned a number of
commercially lettable properties in Pietermaritzburg, including one
known as the SARS property, presumably because of the identity of its
tenant. In September 2012 the Trust decided to dispose of this property
portfolio. In February 2013 the first respondent, Mr Alexander, one of the
trustees of the Trust, offered to purchase the properties. On 17 May 2013
the Trust concluded a sale agreement for the sale of the properties to the
second respondent, Ziningi Properties (Pty) Ltd (Ziningi), a company
nominated by Mr Alexander and owned and controlled by him. The total
purchase price was slightly more than R179.5 million. In determining that
price it was alleged that some R90 million related to the SARS property.

[2] The purchase price was duly paid in terms of the sale agreement
and the properties were transferred to Ziningi. Thereafter, on
6 November 2013, Ziningi sold the SARS property to Delta Property
Fund Limited (Delta) for R110 million. Based on the figure included in
the gross sales price of all the properties by the Trust to Ziningi, that
represented a gross profit of over R19 million in the space of six months.
This profit gives rise to the present claim, brought by one of the
beneficiaries of the Trust, the St Francis Trust (the SF Trust), represented
by its trustees, the four appellants, two of whom, the first and second
appellants were also trustees of the Trust. The other beneficiary of the
Trust was the June Alexander Family Trust (the JA Trust), which is
represented by its trustees, the first, third, fourth and fifth respondents.
The first and third respondents were its nominated trustees on the Trust.
Only Mr Alexander has played an active role in this litigation.

[3] The particulars of claim originally filed on behalf of the SF Trust
were successfully attacked by way of exception and have since undergone
substantial amendment. In their current form a further exception was
taken by both Mr Alexander and Ziningi and upheld by Vahed J in the
KwaZulu-Natal Division of the High Court, Pietermaritzburg. He struck
out the claim against Ziningi and granted leave to amend. The appeal is
with his leave. During the pendency of the appeal the appellants amended
the particulars of claim, but retained the disputed paragraph that
occasioned the exception. This caused an argument on peremption to be
raised, but it transpired in the course of the hearing that the parties have
agreed that this paragraph will be removed or retained depending on the
outcome of the appeal. That disposed of the argument on peremption.

THE CLAIM AGAINST ZININGI
[4] The following facts are pleaded as the background to the claims
against Mr Alexander and Ziningi. When the Trust first sought purchasers
for the property portfolio, Delta expressed interest in acquiring the
properties. Its offer to do so was rejected by the Trust on the grounds that
the price offered was too low. In February 2013 another entity, SA
Corporate Real Estate Fund, made an offer to purchase the properties at a
price acceptable to the Trust. Negotiations for it to do so were already far
advanced, when Mr Alexander opposed the sale and offered to purchase
the property portfolio himself through a company to be nominated by
him.

[5] The plaintiffs plead that when Mr Alexander offered to purchase
the properties on 18 February 2013, alternatively when the agreement
between the Trust and Ziningi was signed, alternatively when the
suspensive conditions to which it was subject were fulfilled,
Mr Alexander knew that Delta remained eager to purchase the SARS
property. Paragraph 27(b) of the particulars of claim alleges that:
‘An opportunity had, accordingly presented itself for the first defendant, either
personally or through the second defendant, to sell the SARS property to Delta, at a
profit, and, at the same time, to dispose of certain other properties (in which he had a
controlling financial interest) which the first defendant was keen to offload.’

[6] The plaintiffs allege that Mr Alexander was under a fiduciary duty
to disclose these facts to his fellow trustees (the first and second
appellants and the third respondent) and to obtain their informed consent
to his proceeding with the sale agreement to Ziningi at the prices offered
for the properties. In failing to make that disclosure it is alleged that
Mr Alexander breached his fiduciary duty to the Trust and its

beneficiaries, more particularly the SF Trust, by not acting with the
utmost good faith towards them; putting his own interests first;
alternatively, allowing his interests or those of the second defendant to
conflict with the interests of the beneficiaries. It is alleged that he ought
not to have purchased the property portfolio for himself; alternatively,
ought not to have done so without disclosure of the opportunity presented
to dispose of the SARS property at a profit. On that basis the appellants
contend that he is obliged to account to the St Francis Trust for its interest
in the benefit received from the sale, being half of the profit accruing to
Ziningi from the sale of the SARS property to Delta.

[7] The claim against Mr Alexander is not the subject of the exception.
Its target is the claim against Ziningi. That being so it is curious that
Mr Alexander has joined Ziningi in raising the exception, but nothing
seems to turn on this, save that it reflects an identity of interest between
him and Ziningi. The claim against Ziningi is founded upon the
allegations made in relation to the claim against Mr Alexander. Its
starting point is the allegation that Ziningi is a company owned and
controlled by Mr Alexander and in which he has a financial interest. The
only additional allegation is contained in para 32 of the amended
particulars of claim, which provides that in the alternative to the claim
against Mr Alexander:
‘The second defendant (the latter having knowingly participated in the first
defendant’s aforesaid breach of trust in the circumstances pleaded above) … is
obliged to pay to the St Francis Trust one half of the benefit accruing to it from the
sale of the SARS building to Delta.’

[8] As can be seen, the key allegation is that enclosed in parentheses,
namely that Ziningi knowingly participated in the alleged breach of trust

by Mr Alexander in circumstances where it, a company owned and
controlled by Mr Alexander, was nominated as the purchaser of the
property portfolio, and benefited from that breach of trust through the
profit it earned on the sale of the SARS property to Delta.

[9] Vahed J held that this was a conventional delictual claim to recover
pure economic loss and that it was for the appellants to plead, and at a
trial prove, wrongfulness. The heart of the judge's reasoning in upholding
the exception is to be found in the following paragraphs from his
judgment:
‘[22] The second defendant’s knowing participation in the sale of the SARS property
does not, in and of itself, suggest that its act was wrongful. The second defendant
must be judged to be a separate, at arm’s length, corporate entity and its commercial
activity, prima facie, is not wrongful in the ordinary course.
[23] Mr Acker has pertinently said that this case is not about piercing the corporate
veil and that the knowledge imputed to the first defendant is not to be imputed to the
second defendant. The second defendant could just as well have been a remote third
party sitting at a coffee shop and overhearing a conversation unfolding at a table
nearby.
[24] That being the case the plaintiffs must make out a separate and independent case,
properly grounded in delict, in order for it so succeed against the second defendant.
There are no allegations to sustain this and in my view the exception is well taken.’
The essential question before us is whether this is correct.

DISCUSSION
[10]  A helpful starting point is to consider the basis of the claim against
Mr Alexander. It is founded on the following passage from the judgment
of Innes CJ in Robinson v Randfontein Estates:1
‘Where one man stands to another in a position of confidence involving a duty to
protect the interests of that other, he is not allowed to make a secret profit at the

1 Robinson v Randfontein Estates Gold Mining Company Limited 1921 AD 168 at 177-178.

other’s expense or place himself in a position where his interests conflict with his
duty … There is only one way by which such transactions can be validated, and that is
by the free consent of the principal following upon a full disclosure by the agent …
Whether a fiduciary relationship is established will depend upon the circumstances of
each case.’
While the existence of a fiduciary duty in any given situation can only be
determined after a close examination of the facts2 there are certain
situations, such as, a trustee dealing with the trust of which they are
trustee, where the existence of a fiduciary duty will ordinarily arise.

[11] A breach of fiduciary duty in relation to a trust may give rise to
two different actions, one on behalf of the trust to which the duty is owed,
such as the Trust in the present case, the other by a beneficiary of the trust
claiming in their own right. Corbett CJ explained the difference between
the two in Gross v Pentz,3 where he said the following:
'… I should stress that a distinction must be drawn between actions brought on behalf
of a trust to, for instance, recover trust assets or to nullify transactions entered into by
the trust or to recover damages from a third party, on the one hand, and, on the other
hand, actions brought by trust beneficiaries in their own right against the trustee for
maladministration of the trust estate, or for failing to pay or transfer to beneficiaries
what is due to them under the trust, or transferring to one beneficiary what is not due
to him … for convenience of reference, I shall call the former type of action the
"representative action" and the latter "the direct action".'

[12] The action by the SF Trust against Mr Alexander is a direct action.
It presupposes that any profit that would have accrued to the Trust if it
had sold the SARS property to Delta would have been distributed to the

2 Bellairs v Hodnett and another 1978 (1) SA 1109 (AD) at 1128. See also Phillips v Fieldstone Africa
(Pty) Ltd and Another 2004 (3) SA 465 (SCA) para 31.
3 Gross and Others v Pentz 1996 (4) SA 617 (A) at 625E-H.

beneficiaries of the Trust in equal shares once it had been received and
seeks recovery of the portion that would have accrued to the SF Trust.

[13]  Accepting that the SF Trust had a direct claim as a beneficiary
against Mr Alexander, either to disgorge a secret profit that he had
received, or to compensate the Trust for the loss occasioned by the
diversion of the opportunity to sell the SARS property to Delta, on what
basis can a separate claim for the same amount be advanced against
Ziningi? The appellants contend that, in view of the relationship between
Mr Alexander and Ziningi, the allegation that Ziningi knowingly
participated in Mr Alexander's breach of trust, by first acquiring and then
disposing of the SARS property, while short of corroborating detail that
might in due course prompt a request for particulars for trial, suffices to
constitute an actionable claim. This wording, of knowing participation in
Mr Alexander's breach of trust, was taken from the description in the
particulars of claim in Gross v Pentz4 of the claims against the parties to
the impugned transaction. That was also a case where the breach of trust
by the trustee (Gross) in causing a property to be disposed of at an
undervalue had redounded to the benefit of third parties and they were
claimed to be liable to the trust because of their knowing participation in
Gross' breach of trust.

[14] The exception by the first and second respondents is framed in the
following terms:
'1
Ex facie the claim:
1.1
It is against the [First Respondent] upon the basis of his breach of fiduciary
duty to the Sleepy Hollow Trust and its beneficiaries;

4 Gross v Pentz at 622H-I.

1.2
The claim is against him in his personal capacity and in his representative
capacity …;
1.3
It is averred that the [First Respondent] is the sole director and a shareholder
of [Second Respondent];
1.4
The [Second Respondent] is a duly incorporated company which carries on
business in real estate activities;
1.5
[Second Respondent] is not alleged to be anything but a company;
1.6
[Second Respondent] was nominated as the purchaser of the 50% of the shares
from the Sleepy Hollow Trust and in respect of which it was averred:-
"a Company nominated by the [First Respondent] which was owned and/or controlled
by him and/or in which he had a financial interest";
1.7
[Second respondent] benefited by the increased price [paid by Delta];
1.8
[Second Respondent] is required to disgorge the benefit to the Sleepy Hollow
Trust;
1.9
The prayer indicated a claim against [Second Respondent];
1.10
[Second Respondent] knowingly participated in First Defendant's breach of
trust.
Consequently there are no averments of wrongdoing by or in respect of
[Second Respondent]. The averment is of knowledge of First Defendant's breach of
trust.
[Second Respondent] is a separate legal entity from [First Respondent].
…
It is not averred that [Second Respondent] has any duties to Plaintiffs.
In the premises the averments in the claim are insufficient to sustain a claim
against [Second Respondent].' (I have substituted references to the first and second
defendants in the high court with references to the first and second respondents in this
appeal.)

[15]  The crisp issue posed by the exception was whether Ziningi's
knowing participation in the alleged breach of trust by Mr Alexander
gave rise to a cause of action against it at the instance of the SF Trust as a
beneficiary of the Trust. In more general terms, if an independent third
party knows of a trustee's breach of the fiduciary duty owed to a trust and

acts in a manner that aids the trustee's wrongful conduct, or enables or
facilitates the breach of trust to occur, is it liable to either the trust or the
beneficiaries of a trust for the losses they have suffered arising from the
breach of trust?

[16] The respondents' argument that found favour with the high court
was that the particulars in this form lacked an essential allegation that
Ziningi's actions were wrongful in the sense that this expression is used in
our law of delict. The argument commenced with the truism that a
company is a separate legal entity from its shareholders and directors. It
was not a trustee of the Trust and accordingly owed no fiduciary duty to
the Trust, its trustees or its beneficiaries. Mere knowledge on its part that
Mr Alexander was engaged in breaching the fiduciary duties that he owed
to the Trust, his fellow trustees and the beneficiaries of the Trust, did not
impose upon Ziningi the same or similar fiduciary duties. Nor did its
participation in Mr Alexander's breach of trust, by acquiring the
properties, in conjunction with its knowledge that Mr Alexander was
acting in breach of his fiduciary obligations, suffice to constitute
wrongfulness on the part of Ziningi. Its position, so counsel submitted,
was no different from the hypothetical passer-by who ignores the
drowning child's cries for help.

[17] The first obstacle facing this argument was that it was contrary to
authority that held, in the pithy summary in Lawsa5 that: 'A person
assisting a trustee in the perpetration of a breach of trust is jointly liable
with him or her.’ A brief review of the authorities is called for.

5 LAWSA, Vol 31 (2 ed) para 585.

[18] The starting point is the decision of the Appellate Division in
Standard Bank v Van Rhyn.6 The executor of a deceased estate drew a
cheque on his personal account that would, if met, have exceeded his
overdraft limit. When told this by his bank manager, he proceeded to
draw a cheque in a matching amount on the estate bank account,
explaining that the estate owed him more than this amount for advances
made to the estate. The bank manager accepted this explanation and
deposited the cheque to the trustee's account. The trial judge found that he
could not say that the bank manager knew that the executor was
committing a breach of trust, but he was put on enquiry and should have
refused to honour the cheque drawn on the estate account. Had he done so
the estate would not have suffered the loss in question. Accordingly, the
bank was held liable for the loss.

[19]  On appeal it was necessary to identify when a bank would be
obliged to refuse to honour a cheque drawn by the executor on the estate
account and, as a necessary corollary, when a bank that honoured such a
cheque would be liable for any loss suffered as a result. In giving the
judgment of the court, Solomon JA cited7 with approval the following
passage from Lord Cairns LC:8
'… in order to hold a banker justified in refusing to pay a demand of his customer, the
customer being an executor, and drawing a cheque as an executor, there must, in the
first place, be some misapplication, some breach of trust intended by the executor, and
there must, in the second place, … be proof that the bankers are privy to the intent to
make this misapplication of the trust funds. And to that I think I may safely add, that
if it be shown that any personal benefit to the bankers themselves is designed or
stipulated for, that circumstance, above all others, will most readily establish the fact
that the bankers are in privity with the breach of trust which is about to be committed.'

6 Standard Bank v Estate Van Rhyn 1925 AD 266.
7 At 278.
8 Gray v Johnston 3 LRHL 1.

[20] The bank's obligation to refuse to honour the cheque, and the
correlative liability to compensate for any loss flowing from it being
honoured, depended upon two things. The first was that the cheque was
drawn in breach of a fiduciary duty. The second was that the bank was
privy to the intent to misapply the estate's funds. The trial court's finding
that the bank manager did not know that the executor was committing a
breach of trust resulted in the appeal succeeding.

[21] A similar issue arose in Yorkshire Insurance v Barclays Bank.9 A
professional trustee and liquidator, one Harris, paid a number of cheques
in respect of estates under his administration into his personal banking
account with Barclays Bank and stole the money. Yorkshire Insurance
had furnished him with bonds of security which were called up to meet
his defalcations. It took cession from the replacement executors, trustees
and liquidators of the affected estates of their claims against the bank. It
then sued the bank in a delictual action based on the Lex Aquilia.10 The
particulars of claim alleged that in paying the cheques unlawfully drawn
by Harris the bank ‘well knew that Harris had drawn the cheques
wrongfully, unlawfully and in breach of his trust, but nevertheless
honoured them; thereby the … bank had caused loss and damage to the
estates and companies in liquidation concerned’. Exception was taken to
that claim.

[22] Greenberg J dismissed the exception. He said:11
'. . . Harris’ actions in drawing cheques for purposes not authorised was the first stage
in the process of misappropriation, which misappropriation could not be effected

9 Yorkshire Insurance Co Limited v Barclays Bank (Dominion, Colonial & Overseas) 1928 WLD 199.
10 Matthews and Others v Young 1922 AD 492.
11 At 207.

unless the bank honoured the cheques. And if the bank honoured these cheques,
knowing that Harris had no right to draw them, then . . . it was a party to Harris’
unlawful conduct. Harris and the bank in such a case would be joint tort feasors. As
soon as Harris withdrew the money and before he had used it for any other purpose,
the cestui que trust could compel him to replace it or pay damages, and the same
rights would lie against any other person who with full knowledge assisted him in
withdrawing the money. The alternative declaration therefore alleges facts which
constitute an intentional infringement by Harris of the legal rights of the estates and
companies concerned, and which make the . . . bank a joint tort feasor with Harris,
and states that the bank’s conduct caused the plaintiff monetary loss. Prima facie,
therefore, the case is covered by the Lex Aquilia.'

[23] The judgment went on to discuss12 whether a personal benefit was
required in order to render the bank liable as privy to the breach of trust
and concluded that it was not. It said that being privy to the breach of
trust 'means no more than assisting in carrying out the intent, with
knowledge of such intent'. Although the existence of a personal benefit
might justify an inference of knowledge of the intent to breach the
trustee's fiduciary duty, where actual knowledge of the breach of trust is
proven the absence of proof of personal benefit is irrelevant. On the facts
of this case, of course, personal benefit to Ziningi is alleged.

[24] Yorkshire Insurance had also issued a summons against the
Standard Bank of SA Limited on a similar basis in relation to accounts
kept at that bank by Harris.13 The action was tried by Tindall J and the
claims were advanced on two bases, of which only the first is relevant for
present purposes. It was alleged in regard to certain of the cheques that
the bank knew that Harris had received them in his representative
capacity and was not entitled to the proceeds thereof, or in the case of

12 At 208-209.
13 Yorkshire Insurance Co Limited v Standard Bank of SA Limited 1928 WLD 251.

certain other cheques that Harris had no authority to draw them and had
no right to the proceeds. Tindall J said14 that:
' To succeed on this cause of action in the case of either claim it seems clear that the
plaintiffs must establish that the defendants were privy to an intent on the part of
Harris to misapply trust funds, that is, that the defendants knew that Harris intended
misapplying the proceeds of the cheques and therefore were parties to the
misapplication of trust funds; for this part of the plaintiff’s case must be based on the
contention that the defendants knowledge made them parties to the tortious acts of
Harris.'

[25] So far as I could establish, neither of these judgments, by two
highly regarded judges both of whom served in this court, has ever been
questioned. In the passage from Gross v Pentz quoted in para 11, Corbett
CJ cited Yorkshire Insurance v Barclays Bank as an example of a direct
action by a beneficiary arising from a breach of fiduciary duty by a
trustee. While the issue was the narrow one of whether the beneficiary of
a trust could sue on behalf of the trust in a representative action, Corbett
CJ said that in order to answer that question it was necessary to determine
the nature of the cause of action. The facts were very similar to those
alleged in this case. It was said that in breach of his fiduciary duty the
trustee, Gross, had caused the trust to sell property at an undervalue to the
second and third defendants and that they had 'knowingly participated in
this breach of trust'.

[26] The conclusion reached in Gross v Pentz was that the case against
Gross was one of maladministration of the trust, while the case against
the second and third defendants was 'knowing participation in this breach
of trust'. In respect of these two causes of action Corbett CJ said:15

14 At 271.
15 At 626D-E.

' The legal foundations for the liability of a trustee for maladministration of the trust
are established and expounded in Sackville West v Nourse and Another 1925 AD 516
…; and for the liability of others as joint wrongdoers in Yorkshire Insurance Co Ltd v
Barclays Bank (Dominion, Colonial & Overseas (supra)).'
It is clear that the Chief Justice regarded the judgment of Greenberg J as
being a correct exposition of our law in this area.

[27]  Counsel submitted that Gross v Pentz did not address the merits of
a claim formulated in the manner of the claim against the second and
third defendants in that case (respectively a shareholder in the purchasing
company and the purchasing company). This proposition was accepted by
the high court in distinguishing the authorities discussed above. Counsel
relied on a statement by Corbett JA that: 'The merits of the plaintiff's
cause of action are not, however, relevant for present purposes.' That
appeared in the same paragraph as the passage quoted in para 26, which
was followed by a comment that the claim was unusual because it was
not based on actions taken or omitted to be taken in the administration of
the trust, but on actions taken in regard to a company in which the trust
held a 35% interest. Read in context the remark about the merits arose
from the unusual factual basis for the claim, not the legal merits of the
pleaded cause of action. It was not a basis for distinguishing the law as
stated in these judgments.

[28] No direct attack was directed at the correctness of these decisions.
Gross v Pentz was distinguished on incorrect grounds and the heads of
argument dismissed Yorkshire Insurance v Barclays Bank rather airily in
the following terms:
'There is no need to revert to 1929 law (where an identification with English Law is
made) or foreign law. The law is now clear from the decisions of our courts.'

[29]  I do not accept that these authorities can be disregarded so easily.
It is true that Greenberg J used some expressions, such as tort feasor
instead of wrongdoer and cestui que trust instead of beneficiary, but such
usage was common at the time because of the perceived resemblance
between the principles of our law and those of English law on questions
of this type. However, Greenberg J commenced his discussion of this
claim with a reference to the judgment in Mathews v Young.16 That is an
important case because the oral argument printed in the report shows that
the plaintiff based his claim on English principles of tort, while the
respondent contended that the claim could only be brought under either
the actio injuriarum or the Lex Aquilia of the Roman-Dutch law in regard
to liability for civil wrongs. Greenberg J concluded that a claim as
described by him fell within the principles of the Aquilian action. There
is no reason to believe that he was applying English law and disregarding
the principles of our own.

[30] Counsel submitted that the need to allege wrongfulness on the part
of the alleged wrongdoer has been reinforced by a series of decisions in
this court and the Constitutional Court. He emphasised the decision of the
Constitutional Court in Country Cloud17 and that of this court in Za v
Smith18 as the culmination of this trend in our jurisprudence and
submitted that this requirement meant that a plaintiff pleading a claim for
economic loss in delict was obliged to plead (and prove at trial) that the
conduct of the defendant was wrongful in the sense described in these
cases.

16 Fn 9 supra.
17 Country Cloud Trading CC v MEC, Department of Infrastructure Development [2014] ZACC 28;
2015 (1) SA 1 (CC) paras 20-26.
18 Za v Smith [2014] ZASCA 75; 2015 (4) SA 574 (SCA) paras 14-21.

[31] In Country Cloud19 Khampepe J, giving the judgment of the court,
summarised the approach our law takes to wrongfulness in saying:
'… the wrongfulness enquiry focuses on—
"the [harm-causing] conduct and goes to whether the policy and legal
convictions of the community, constitutionally understood, regard it as
acceptable.  It is based on the duty not to cause harm – indeed to respect rights
– and questions the reasonableness of imposing liability."
The statement that harm-causing conduct is wrongful expresses the conclusion that
public or legal policy considerations require that the conduct, if paired with fault, is
actionable.  And if conduct is not wrongful, the intention is to convey the converse:
"that public or legal policy considerations determine that there should be no liability;
that the potential defendant should not be subjected to a claim for damages",
notwithstanding his or her fault.'
Wrongfulness must be established (and the grounds therefor pleaded) in
all cases, although there are some instances where the facts alone
illustrate why the conduct is wrongful, of which physical injury to a
person or property are the most obvious. In any doubtful case the court
must balance identifiable norms to determine whether it is right to hold
that liability should follow upon the defendant's fault, whether intentional
or negligent.

[32] Za v Smith stresses that wrongfulness should not be conflated with
negligence, because to do so results in the separate enquiries as to
wrongfulness and negligence receiving the same answer. The primary
purpose of wrongfulness is to act as a safety valve against over-extensive
liability in that it results in a defendant not being held liable even where

19 Para 21.

they have acted negligently.20 In many cases a negative answer to the
wrongfulness enquiry forestalls the need for any investigation into
negligence.21

[33] Counsel presented this judicial learning as if it were novel and
dispositive of the jurisprudence of earlier years. It is not. Our courts have
long since recognised that wrongfulness is an essential element of our law
of delict. As Professor Lee put it in his An Introduction to Roman-Dutch
Law:22
'It is common to both heads of liability that there must have been an antecedent duty
owed by the defendant to the plaintiff, for where there is no duty there is not right,
and there can be no invasion of a right.'
In Whitaker v Roos and Bateman23 De Villiers CJ said:
'The broad principle is that a delict is committed where a person is illegally harmed
contrary to his rights …'
Innes J described the defendant's actions as a 'wrongful and unlawful'
interference with the plaintiffs' rights.24 Solomon J cited Melius de
Villiers' Roman and Roman-Dutch Law of Injuries for the proposition
that an injuria required 'an aggression on the right of another'.25
Wrongfulness is concerned with whether conduct by the alleged
wrongdoer infringed the rights of another and the determination of that
question always has involved the question of the duties owed by the
alleged wrongdoer to the injured party. The basis for determining

20 Za v Smith para 19. Illustrations of this are provided by cases such as Telematrix (Pty) Ltd v
Advertising Standards Authority [2005] ZASCA 73; 2006 (1) SA 461 (SCA).
21 Knop v Johannesburg City Council 1995 (2) SA 1 (A) at 27F-G; Premier Western Cape v Faircape
Property Developers (Pty) Ltd 2003 (6) SA 13 (SCA) para 33; Olitzki Property Holdings v State
Tender Board and Another 2001 (3) SA 1247 (SCA); Steenkamp NO v Provincial Tender Board of the
Eastern Cape [2006] ZACC 16; 2007 (3) SA 121 (CC); Government of the Western Cape: Department
of Social Development v Barley and Others [2018] ZASCA 166; 2019 (3) SA 235 (SCA).
22 R W Lee An Introduction to Roman-Dutch Law 5 ed (1953) at 323. Wille Principles of South African
Law 5 ed (1961) at 483 said: 'A delict, injuria in the wide sense, is an act committed or omitted by one
person unlawfully, which infringes the legal rights of another …'
23 Whitaker v Roos and Bateman; Morant v Roos and Bateman 1912 AD 92 at 113.
24 At 122.
25 At 131.

wrongfulness has been refined in the recent jurisprudence of this court
and the Constitutional Court, especially in the light of the Bill of Rights,
but the requirement of wrongfulness has always been present.

[34] In Matthews v Young26 De Villiers JA said that there is no onus
upon a defendant 'until the plaintiff has proved that a legal right of his has
been infringed'. The case concerned the expulsion of the plaintiff from his
trade union and, as a result, his employment. The court said:
'In the absence of special legal restrictions a person is without doubt entitled to the
free exercise of his trade, profession or calling, unless he has bound himself to the
contrary. But he cannot claim an absolute right to do so without interference from
another. Competition often brings about interference in one way or another about
which rivals cannot legitimately complain. But the competition and indeed all activity
must itself remain within lawful bounds. All a person can, therefore, claim is the right
to exercise his calling without unlawful interference from others. Such an interference
would constitute an injuria for which an action under the lex Aquilia lies if it has
directly resulted in loss.'
Botha JA in Knop27 said that it was plain from these passages that De
Villiers JA was emphasising wrongfulness as an element of delictual
liability. In Phumelela Gaming and Leisure Ltd v Grundlingh28 the
Constitutional Court cited this passage from Matthews v Young as
authority for the proposition that any form of competition is potentially
harmful to a rival business, but not all competition is unlawful. It is only
'where competition is wrongful that it becomes actionable'. And
competition becomes wrongful when, according to the legal convictions

26 Fn 9 supra at 507.
27 Knop v Johannesburg City Council 1995 (2) SA 1 (A) at 24D-F.
28 Phumelela Gaming and Leisure Ltd v Grundlingh and Others 2006 ZACC 6; 2007 (6) SA 350 (CC)
para 32.

of the community it is not viewed as reasonable and fair when viewed
through the prism of the spirit, purport and objects of the Bill of Rights.29

[35]  Applying that approach in this case, there can be no quarrel with
the finding of Greenberg J that a person who knows that a person owing
fiduciary duties to others is acting in breach of those duties nonetheless
aids or facilitates the execution of the breach of trust, acts wrongfully and
attracts liability under the Aquilian action.

[36] Our law has always imposed fiduciary duties on certain persons
requiring them to act in good faith when dealing with the affairs of other
people that have been entrusted to them. Examples are a trustee, executor,
guardian or director of a company. The principle is discussed earlier in
para 10 of this judgment. The fiduciary must place the interests of the
other party to whom the duty is owed before their own. While many
breaches of fiduciary duty involve dishonesty, that is not always the case.
Nonetheless, any departure from the path of rectitude that such a duty
imposes will be visited with personal liability. The importance of such
duties is emphasised by the fact that several statutes concerned with
financial issues impose duties of good faith.30

[37] Where the execution of a breach of fiduciary duty involves or
requires the involvement or participation of a third party, and that third
party has knowledge that the transaction in question involves a breach of
a fiduciary duty, it seems to me clear that the legal convictions of the

29 Cases such as Dun & Bradstreet (Pty) Ltd v SA Merchants Combined Credit Bureau  (Cape) (Pty)
Ltd 1968 (1) SA 209 (C) at 216F-H; Atlas Organic Fertilisers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd
and Another 1981 (2) SA 173 (T) at 188-189 and Schultz v Butt 1986 (3) SA 667 (A) provide examples
of how courts addressed the issue of wrongfulness in this context in accordance with the legal
convictions of the community.
30 Companies Act 71 of 2008, ss 75-77; Financial Institutions (Protection of Funds) Act 28 of 2001, s 2.

community demand that the third party share the liability of the person
breaching the fiduciary duty. That is not because they owe a similar duty
to the injured party, but because by aiding, enabling or facilitating the
breach they are themselves equally responsible for the injury caused to, or
the loss suffered by, the injured party. I can think of no good reason why
the principal perpetrator would be liable, but the enabler should escape
liability, any more than I can see any reason why a criminal should be
subject to the rigours of the criminal law, but their accomplice, or an
accessory after the fact, should not. As we know that is not the case in the
criminal law because the legal convictions of the community would
regard it as intolerable. No reason was advanced and none occurs to me
why a breach of fiduciary duty would be viewed any differently.

[38] The reason for the law imposing fiduciary duties in certain
circumstances is to protect those who might otherwise be vulnerable to
exploitation by the person on whom the duty is imposed. The community
requires that the vulnerable should not be deprived of such protection and
it can make no difference that the deprivation involves not only the
person owing the primary obligation, but those who knowingly aid,
enable or facilitate the deprivation. Knowledge of the breach of fiduciary
duty is central to the liability of the third party. It is their guilty
knowledge that attracts liability and, as the two Yorkshire Insurance cases
demonstrate, that may not be easy to establish. However, where it is
established, the requirement of honesty and fairness in dealing with the
property and property interests of others demands that liability should
follow.

[39] It follows that knowledge that one is engaged in aiding, enabling or
facilitating a breach of fiduciary duty suffices to attract legal liability for

loss or damage occasioned by that breach of duty. As such, a pleading
that alleges knowledge of and participation in a breach of fiduciary duty
discloses a cause of action to recover loss or damage flowing from that
breach. The adequacy of the pleading can be tested by a question posed to
respondents' counsel. He was asked by several members of the bench
what more would need to be pleaded to disclose a cause of action. Insofar
as there was an answer, it was that there must be an allegation or
averment of the legal duty obliging the defendant not to assist the breach
of fiduciary duty. But no reason was advanced why knowledge that a
breach of fiduciary duty was being perpetrated did not suffice to establish
that duty.

[40] Counsel raised the spectre of limitless liability, but it was a
chimera. Only those with knowledge that a breach of fiduciary duty was
involved in the transaction in question would be liable. Innocent
participants – the bank that honoured a cheque; the conveyancer who
attended to the transfer – would not be liable. The threshold for liability is
high. Mere negligence does not suffice. A failure to make enquiries that
would, if pressed, lead to the conclusion that a breach of fiduciary duty
was involved would not attract liability. Nothing but actual knowledge is
required.

[41] One final point is relevant and it is well illustrated by the present
case. If a person who aids, enables or facilitates the execution of a breach
of trust with knowledge that the transaction involves a breach of fiduciary
duty can escape liability for their involvement it will render it relatively
easy for those who owe fiduciary duties to escape the consequences of
their wrongdoing. The use of corporate vehicles to execute business
transactions is commonplace. Here Mr Alexander is alleged to have

offered to purchase the properties through a nominee. Ziningi, a company
owned or controlled by him and in which he is alleged to have a financial
interest, was the nominee. In the passage from the high court's judgment
quoted in para 9 it was said that Ziningi was in effect an innocent
bystander – a person overhearing something in a coffee shop. That was
incorrect. It was Mr Alexander's chosen corporate vehicle to purchase the
properties. If the allegations regarding his connection to Ziningi are
established, I fail to see on what basis it can be said that Ziningi was in
the position of an innocent bystander. His knowledge would clearly be
attributed to Ziningi. It is against the legal convictions of the community
for people to assist others to breach their fiduciary duty. The law should
not make it easier for them to do so.

[42]  The necessary conclusion is that the allegation of knowing
participation in Mr Alexander's alleged breach of fiduciary duty was a
sufficient allegation of wrongfulness to constitute a cause of action
against Ziningi, in the same way as it was sufficient to constitute a cause
of action against the banks in the Yorkshire Insurance cases, and against
the second and third defendants in Gross v Pentz. There was no reason for
Greenberg J to have expanded upon this in his judgment, because, in my
opinion, the conclusion that such allegations suffice to attract legal
liability in accordance with the legal convictions of the community is
obvious. Accordingly, the exception should not have been upheld.

[43] I grant the following order:
The appeal is upheld with costs, such costs to include the costs
consequent upon the employment of two counsel.
The order of the high court is altered to read as follows:

'The exception is dismissed with costs, such costs to include the costs
consequent upon the employment of two counsel.'

_________________________
M J D WALLIS
JUDGE OF APPEAL

Appearances

For appellant:
B A Acker SC (with him A J Boulle)
Instructed by:
Barkers Attorneys, Durban;
Matsepes, Bloemfontein

For respondent:
A J Dickson SC

Instructed by:
J Leslie Smith & Company Inc, Pietermaritzburg;
McIntyre & Van der Post, Bloemfontein.

Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
2 September 2020
Status:
Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.

Breetzke and Others NNO v Alexander NO and others (232/2019) [2020]
ZASCA 97 (2 September 2020)

The SCA today upheld an appeal against a decision of the KwaZulu-Natal
Division of the High Court, Pietermaritzburg upholding an exception to
particulars of claim on the basis that they did not disclose a cause of action.

The case arose from the sale of a number of properties by the Sleepy
Hollow Trust (the Trust) to Zinzingi, a company nominated by the first
respondent, one of the trustees of the Trust. Within six months of transfer
one of these properties was re-sold at a profit in excess of R19 million. The
plaintiffs, representing another family trust, that was one of two
beneficiaries of the Trust, claimed that in arranging the purchase of the
properties the first respondent breached his fiduciary duties as trustee in
that he was aware of, and did not disclose to his co-trustees, the fact that
the party who purchased the one property from Zinzingi was a prospective

purchaser at the time when Zinzingi bought it. They claimed that the first
respondent was obliged to account to the Trust's beneficiaries for their
share of the secret profit earned in this way.

The exception related to the claim against Zinzingi. It was alleged
that it had knowingly participated in the first respondent's alleged breach
of his fiduciary duty. The high court held that this was insufficient to show
that its conduct as a separate legal entity was wrongful in relation to the
Sleepy Hollow Trust to which it did not owe any fiduciary duty. The SCA
reversed this decision on the basis that conduct that aided, enabled or
facilitated a breach of fiduciary duty by another was wrongful and gave
rise to a claim for damages. The order of the high court was altered to one
dismissing the exception with costs.