IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case number :   416/99
In the matter between :
THOROUGHBRED BREEDERS’ ASSOCIATION
OF SOUTH AFRICA
Appellant
and
PRICE WATERHOUSE
Respondent
CORAM :
NIENABER, MARAIS, OLIVIER, FARLAM JJA
and BRAND AJA
HEARD :
2 - 3 MAY 2001
DELIVERED :
1 JUNE 2001
Auditor - duties of vis-à-vis client - negligent failure by auditor, in auditing the
books of a company, to appreciate the significance of (and pursue) certain
unusual features and discrepancies in the company’s books of account - had it
done so it would have led to the discovery that the company’s financial manager
was engaged in large-scale thefts from the company - company suing auditor for
damages for breach of contract for the losses it suffered because the thefts
continued for a further period after the audit - company itself careless in failing to
properly supervise the activities of its financial manager, knowing that he had
previously been convicted of and imprisoned for theft - auditor not so informed
- causation and remoteness - test for - whether the Apportionment of Damages
Act 1956 applies to breach of contract - additional interest payable on increased
overdraft - whether claimed as special damages or as mora interest - interest on
the amount awarded as damages - from when and on what scale - costs on
attorney and own client scale.

JUDGMENT
NIENABER JA/

NIENABER JA :
[1] Introduction
This is a case of a client suing its auditor for damages for breach of contract.
The complaint is that the auditor, in the course of a routine annual audit, failed to
realise that the client’s own financial manager, a man with a criminal record for
theft of which the client but not the auditor was aware, had been systematically
stealing from it in the past and, if undetected, would be likely to continue to do
so in the future.
[2] The appellant, the plaintiff in the court below, hereinafter referred to
simply as “TBA”, is a statutory juristic person registered in terms of s 18 of the
Livestock Improvement Act, 25 of 1977.  It is a non-profit making association of
breeders of thoroughbred horses, as its name implies.  Membership of TBA is a
precondition for the registration of horses to be entered into the stud book
maintained by the Jockey Club of South Africa, the body administering horse

racing in this country.  TBA has some 700–800 members, scattered throughout
the country, who are predominantly farmers.  TBA furthermore acts as
auctioneer and sales agent for the sale of thoroughbred horses and it derives its
income principally from membership fees and from the commissions it earns on
auctions and sales.
[3] In 1991 TBA appointed one John Mitchell as its financial manager.  During
his three months probationary period it was discovered that he had been
convicted in 1985 of theft and sentenced to a period of imprisonment of eight
years of which he served approximately 18 months.  Even though he withheld
this information from TBA when applying for the position (and indeed supplied
false information to it about his employment during the period of his
incarceration) it was nevertheless resolved by TBA’s council (a) to confirm his
employment, (b) to monitor his activities in future, (c) not to disclose his past

history to other members of the staff, and accordingly (d) not to minute the
discussion and the resolution.
[4] Mitchell’s performance was in fact monitored for the first eighteen months
or so of his employment and proved to be entirely satisfactory.  Indeed, he was
highly regarded by his co-employees and the council alike for his competence in
significantly improving the manner in which TBA’s financial affairs were
conducted.  By all accounts he was the dominant figure in TBA’s entire
management team.
[5] Since the early 1970’s Messrs Richardson Reid acted as auditors to TBA
and prepared its annual financial statements.   The responsible partner was a Mr
Reid.  It was part of the modus operandi of Richardson Reid to do what was
described in the trial as a “reperformance” of the annual year-end bank
reconciliation.  This was described by TBA expert witness, Wainer, as “a
redoing of the task that has already been done by the entity being audited.”

[6] During 1990 Richardson Reid amalgamated with Price Waterhouse
Meyernel (as it was known at the time the trial commenced), a partnership of
public accountants, hereinafter referred to simply as “PW”.  PW was the
defendant in the Court below and is the respondent in this Court.  Reid
continued to be responsible for the audit of the TBA’s books of account but,
following PW’s new procedures, he no longer caused a reperformance of the
year-end bank reconciliations to be done.  What Reid did not know, since he
was never told and could not have discovered it from the appropriate minutes,
was that Mitchell had a record of proven dishonesty.
[7] The last set of financial statements prepared under the supervision of Reid
was for TBA’s financial year ending October 1993.  The actual field work was
done by three audit clerks in January 1994.  Their work was initially reviewed by
the audit manager, Greyling, but ultimately by Reid himself.  The core of TBA’s
case against PW is that there were a series of discrepancies in TBA’s books of

account which ought to have alerted the auditing team, but did not, that
something was amiss;  that if these matters had been pursued as they should
have been, Mitchell’s misdemeanours would have been discovered in January
1994; and that the thefts he committed thereafter with the consequent losses to
TBA would have been averted.
[8] It was only during November 1994 that it was discovered that Mitchell had
consistently stolen large sums from TBA.  He had done so by a process
described in the trial as “teeming and lading” or “rolling over”.  This consisted of
misappropriating cash or cheque payments made by members or customers of
TBA and using them to “clear” earlier defalcations, thereby ostensibly
“balancing” the books for the time being.  When Mitchell was confronted he
immediately confessed to the fact but not necessarily to all the details of his
embezzlement.  At that stage it was believed that the thefts had commenced after
October 1993 i.e. after the period  on which PW had focused for purposes of its

last audit.  PW, more particularly Reid, was thereupon commissioned to
investigate and prepare a full report on the extent of Mitchell’s thefts.  This he
did.  He uncovered a massive series of thefts which he quantified as being of the
order of R 1 697 929.28.  Mitchell was dismissed.  TBA obtained summary
judgment against him based on Reid’s report.  (An amount in the vicinity of
R100 000 was recovered from him.)  At the same time and at TBA’s insistence
he was prosecuted, convicted and again imprisoned.
[9] TBA’s complaint
During  the course of these investigations it became apparent that Mitchell had
also stolen considerable sums during 1993, later estimated to be about
R300 000.  It was this disclosure, that Mitchell’s thefts predated the 1993 audit,
that became the source of the present proceedings against PW.   PW, it was
common cause, was contractually bound to exercise reasonable care in the
execution of its audit and not to do the work negligently.  The allegation is that it

failed in that respect;   that had the work been done properly, Mitchell’s theft
would have been uncovered in January 1994;  and that all the direct losses
suffered by TBA due to Mitchell’s subsequent thefts and his inability to repay
were accordingly for the defendant’s account.   The factual basis of TBA’s
quantification of its claim, much to PW’s indignation, was Reid’s special report
commissioned by TBA after the thefts were initially discovered in November
1994.
[10] PW’s defence
PW in its plea denied that it was negligent and accordingly that it committed a
breach of contract vis-à-vis TBA.  In the alternative it denied that any breach it
may have committed was a cause of TBA’s loss.  The true cause of the TBA’s
loss, so it alleged, was TBA’s own negligence first, in employing Mitchell;
secondly, in retaining him as its financial officer after discovering that he had a
criminal record;  thirdly, in failing to inform PW thereof;  and fourthly, in failing,

due also to its own admittedly inadequate and lax internal controls, to properly
supervise and control Mitchell’s activities.   It was furthermore alleged by PW in
its plea that the parties at all material times contemplated and agreed that PW’s
appointment was made on the basis that it would not be liable to TBA “for any
loss suffered by the latter as a result of the defendant’s breach of contract, if the
plaintiff’s own negligence was the primary cause, or alternatively a material
cause, or alternatively a cause of its loss”.  As a final alternative it was pleaded
that TBA’s claim was liable to be reduced because TBA was itself negligent,
because its negligence was a contributory cause of its loss and because the
Apportionment of Damages Act, 34 of 1956 (“the Act”) was applicable to its
cause of action.
[11] The issues and the Court a quo’s findings thereon
The first major issue before the Court a quo (Goldstein J sitting in the
Witwatersrand Local Division of the High Court) was whether PW was negligent

(and hence committed a breach of contract) in not being sufficiently alert in
conducting its October 1993 audit.  The Court a quo held that it was and since it
was common cause that TBA had suffered a loss (the quantification of which
was eventually settled between the parties), the next major issue was whether
such negligence was the cause of such loss.    And that issue posed the next
two, namely, whether TBA was not itself negligent and if so, whether such
negligence was not the true cause of its loss.  The Court a quo found that TBA
was indeed negligent and that its negligence was the real and dominant cause of
its loss.  Despite that finding Goldstein J held that TBA was not non-suited
because the claim was partly rescued by the Act, even though it was not framed
in delict but in contract.  It further held that TBA was eighty percent to blame for
its own loss and that the damages it was otherwise entitled to recover had
accordingly to be reduced by that percentage.  The judgment has been reported

as Thoroughbred Breeders’ Association of South African v Price Waterhouse
1999 (4) SA 968 (W).
[12] The parties had earlier agreed on the quantification of Mitchell’s
misappropriations of cash receipts and cheques payments as being
R1 389 801.90.  The Court a quo deducted R143 403,44, in respect of moneys
stolen before 31 October 1993.  In the result the Court a quo calculated that
TBA was entitled to R1 246 398,46 less eighty percent, resulting in an award of
R249 279,69.  Both parties were in agreement before us that the amount of
R143 403.44 was wrongly deducted and that, consistently with the Court a
quo’s apportionment of liability, the sum should have been R277 960.38 (being
twenty percent of R1 389 801.90).
[13] TBA disputed, as a matter of law, the finding that the Act was applicable
to a claim founded on breach of contract and it disputed, as matters of fact,
both the finding and the Court a quo’s assessment of the proportion of TBA’s

own negligence.  There were other issues as well.  PW had instituted a
counterclaim for the payment of its agreed fees for the preparation of the special
report referred to earlier.  This was initially disputed by the TBA on the basis
that its “obligation to pay is reciprocal to [PW’s] obligation to produce a report
which is accurate and true”.  The Court a quo found that there was no merit in
this defence and the point was not pursued by TBA.  Nor did TBA dispute its
obligation to pay the agreed fees on the ground that these were foreseeable
consequences of PW’s alleged breach of the routine audit contract.  The agreed
fee of R74 000 is accordingly to be deducted from the amount, if any, to be
awarded to TBA.  Other issues which remain alive are whether PW was liable to
TBA for the interest TBA was obliged to pay its bank on the amount by which,
due to Mitchell’s undiscovered theft, its overdraft was inflated;  and from what
date and at what rate interest on its claim was otherwise to be calculated.   And
finally there was the question of costs.  Save for a special order against PW in

respect of the time spent in proving the quantum which was eventually agreed
(in respect of which there is still an outstanding issue, namely, whether such
costs should have been awarded on the scale as between attorney and client or
attorney and own client), the Court, in the exercise of its discretion, initially
resolved to make no order as to costs in respect of  the trial.
[14] The orders made
After a trial which commenced in May 1997 and concluded, with interruptions,
some seventeen months later and generated a record of close to 6 500 pages, the
Court a quo on 7 July 1999 and at 1038B-F of the report made the following
order:
“1.
The defendant is ordered to pay the sum of R249 279.69 to the
plaintiff together with interest thereon at Nedbank’s prime rate to its
most favoured customers and reckoned from date of judgment to
date of payment.
2.
The plaintiff is ordered to pay to the defendant the sum of R74 100
together with interest thereon at 15,5% per annum from 6 February
1996 to date of payment.

3.
The defendant is ordered to pay the plaintiff’s costs, including the
costs of two counsel, of 14 days’ trial spent on quantum on the
scale as between attorney and client and including the costs of the
argument on the admissibility of J W Mitchell’s admissions at his
criminal hearing.
4.
The defendant is to pay the plaintiff’s costs, including the costs of
2 counsel, of consultation with Mr D Dorfan and the latter’s
qualifying fees.
5.
Save as aforesaid there will be no order as to costs.
6.
…”
[15] Both parties sought leave to appeal.  At the same time the Court a quo
considered the aftermath of a secret payment into court of R281 680 which PW
had made on 16 April 1997 (before the commencement of the trial) in terms of
Supreme Court rule 34(12).  Leave to appeal was duly granted to both parties
but in the light of the secret payment and allowing for a spatium deliberandi
until 24 April 1997, the Court a quo amended its earlier order and  on 22
September 1999 (at 1038H-1039D) substituted for it the following order:
“1.
…

2.
The order of 7 July 1999 is amended by the deletion of paragraphs
3, 4 and 5 and the substitution therefor of the following:
‘3.
The defendant is ordered to pay the plaintiff’s costs,
including the costs of two counsel and the qualifying fees of
the plaintiff’s expert, Harvey Elliot Wainer, incurred on or
before 24 April 1997.
4.
The plaintiff is ordered to pay the defendant’s costs,
including the costs of two counsel and the qualifying fees of
the defendant’s expert witness, Mr. Guy Smith, incurred after
24 April 1997 subject to the contents of paragraph 5 below.
5.
The defendant shall not be entitled to recover costs in respect
of 14 days’ trial spent on quantum, including the costs of the
argument on the admissibility of J W Mitchell’s admissions at
his criminal hearing.’
3. …
4.1
…
4.2
…
4.3
…”
[16] This, then, is the appeal against certain aspects of that order.
[17] The first and perhaps foremost issue is whether PW breached its
agreement with TBA to act as its auditor and hence to audit its financial

statements for the financial period ending 1993.  That question presents itself in
two parts:  (a) what were the terms of the agreement between the parties;  and (b)
did PW breach any of those terms?
[18] The terms of the agreement
The agreement in respect of the audit for 1993 was concluded when PW was
routinely appointed in March 1993 as TBA’s auditors by its Annual General
Meeting.  This has been a recurring annual item on the agenda since the 1970’s
when Richardson Reid was first appointed as auditors to TBA and Reid became
the partner primarily responsible for the TBA account, both before and after
Richardson Reid was absorbed into PW in 1990.  The actual terms of the
appointment were never formalised as such.  The relationship between the parties
was accordingly governed by such terms as were customary in South Africa at
the time between a client and his auditor.

[19] There has been a fair measure of recent learning in various cases in various
jurisdictions about an auditor’s contractual duties and responsibilities vis-à-vis
his client.  We were referred to a host of authorities of which I list the more
prominent ones as a source for future reference:  In re London and General
Bank (No. 2) [1895] 2 Ch 673 (CA);  In re Kingston Cotton Mill Co (No 2)
[1896] 2 Ch 279 (CA);  In re City Equitable Fire Insurance Co Ltd [1925] 1 Ch
407 (CA);  Fomento (Sterling Area) Ltd v Selsdon Fountain Pen Co Ltd [1958]
1 All ER 11 (HL);  Re Thomas Gerrard & Son Ltd [1967] 1 Ch 455;  Pacific
Acceptance Corporation Ltd v Forsyth and Others  (1970) 92 WN(NSW) 29;
Tonkwane Sawmill Co v Filmalter 1975 (2) SA 453 (W);  Alexander and
Others v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310;  Fletcher v
National Mutual Life [1990] 3 NZLR 641 (HC Auckland);  AWA Ltd v Daniels
t/a Deloitte Haskins & Sells (1992) 7 ACSR 759;  Galoo Ltd (in liq) and
Others v Bright Grahame Murray (a firm) and Another [1995] 1 All ER 16

(CA);  Dairy Containers Ltd v NZI Bank Ltd [1995] 2 NZLR 30 (HC
Auckland).
[20] For present purposes it is not necessary to delve into these authorities or
to discuss controversies such as whether and to what extent an auditor in
conducting an audit is bound nowadays to actively search for, detect, pursue
and, if needs be, prevent fraud and other illegal acts (in contradistinction to mere
inaccuracies, irregularities and errors) that may have been committed during the
year under review.  It is not so necessary because it was common cause between
the parties in this case that the plaintiff would conduct its audit “in accordance
with generally accepted auditing standards” (GAAS) and “with due professional
care required of an auditor in public practice and would not act negligently”.  It
was so alleged by TBA and so admitted by PW.  Being admitted, there is no
need to enquire whether these were tacit terms arising ex consensu or by
operation of law.  Nor is it necessary to enquire whether TBA succeeded in

proving the additional term which it alleged (but PW disputed) that PW would
“properly verify investments shown in the accounts of the plaintiff”.  Whether
the failure to do so (which was common cause) constituted the breach of a
particularised term or a particular manifestation of the breach of a general term is
not conclusive.  However it is presented, PW would have been in breach if it had
been careless in the execution of any aspect of its mandate, measured against the
general standards prevailing in the profession at the time.
[21] Those standards are to be gathered from relevant legislative enactments (in
this case the Public Accountants’ and Auditors’ Act, 80 of 1991), from the
profession’s own codifications of an auditor’s duties (such as the material issued
by the South African Institute of Chartered Accountants), from authoritative
publications and legal decisions, here and abroad, and from expert evidence
presented to the court.  AU130 of the statement issued by the South African
Institute of Chartered Accountants states generally:

“Due professional care must be exercised during the examination and in
the preparation of the report.
This standard requires the auditor to perform his work with due care and
imposes a responsibility upon each person within an auditor’s organisation
to observe the required standards of field work and reporting.  Exercise of
due care requires critical review at every level of supervision of the work
done and of the judgment exercised by those assisting in the examination.
The application of due care concerns what the auditor does and how well
he does it.  For example, due care in the matter of working papers requires
that their content be sufficient to provide an important support to the
auditor’s opinion and to show compliance with generally accepted
auditing standards.”
In this respect the evidence of the expert witnesses, Wainer for TBA and Reid
and Smith for PW, was perhaps more directly in point than the other sources
mentioned.  The issue before the trial court, once again, was not whether it was
incumbent on PW, as a particularised term of its agreement with TBA, to
unmask Mitchell as a thief.  The issue was whether PW was careless and thus
negligent and therefore in breach of the uncontested general term in not
recognising and reacting to certain irregularities and anomalies in TBA’s books

of account which TBA alleges should reasonably have alerted it to Mitchell’s
deviousness.  TBA’s allegation, which was hotly disputed by PW, was that the
work on the financial statements for the period ending 31 October 1993 was
negligently done in that respect and that PW was accordingly liable for the
consequences flowing from its failure to pick up and follow Mitchell’s trail.  The
first enquiry with which this case is accordingly concerned is whether PW was
negligent in two respects in particular:  (a)  in not verifying the promissory note
included in the item “investments” in the Futurity race programme;  and (b)  in
not appreciating the significance in the bank reconciliations of the items
described as “outstanding deposits”.  I deal in sequence with each of these
alleged manifestations of negligence and hence of breach of contract.
[22] The promissory note
The TBA 1993 financial statements reported separately on the Futurity race
programme.  That was a programme designed to provide additional stake money

collected from all breeders and participating owners to be distributed to such
breeders and owners whose horses finished within the first four in any of a series
of designated races.  The funds so collected were retained in a separate bank
account and in certain selected investments.  The financial statement relating to
this programme showed investments of R423 665.  The working papers of Ms
Smit, who was responsible for the field work on this part of PW’s audit,
indicated that this investment consisted of only two items, one being the balance
of a secured mortgage debenture of R315 165 and the other a promissory note
issued by the Department of Trade and Industry (“DTI”) and dated 7 February
1993.  (The face value of the note, issued by DTI to Snoek Wholesalers (Pty)
Ltd, and which TBA obtained at the discounted price of R108 500 was
R138 864.)  A note in Smit’s working papers referred back to PW’s 1992
working papers, which meant that she must have appreciated, if she applied her
mind to it, that the date 7 February 1993 could not have been the date of issue

but could only be its date of maturity and that the difference of R30 364 between
the face value and the discounted value remained unaccounted for.  Smit did not
demand to see the original of the promissory note.  Had she done so it could not
have been produced to her.  The reason was that TBA no longer held it.
Mitchell had earlier arranged with DTI to replace the note which in the meantime
had gone stale with a cheque for R138 864 which he had deposited on 3 May
1993 in the TBA sales account (not the Futurity programme bank account) and
which was dealt with in the books as if it constituted a payment received from
another TBA debtor, one Wilensky.  In this manner Mitchell contrived to cover,
in TBA’s books, payments previously made by Wilensky to TBA but which he
had misappropriated.  The net effect was that Wilensky was no longer reflected
as a debtor but that TBA had lost the R108 500 which it had initially invested (as
well as the difference between that sum and the face value of the note), although

it was still reflected in the financial statements of the Futurity race programme as
a current asset.
[23] TBA’s complaint is that it was negligent of Smit, knowing as she did that
TBA’s system of internal control was lax (which was common cause), not to
have verified the continued existence of the document when it was patent that it
had matured and had thus gone stale since the previous audit in 1992.  Had she
done so, instead of simply relying on what had been done in 1992, she would
have discovered that the document no longer existed.  That discovery would
have set in motion a chain of enquiry, so it is alleged, which would inevitably
have led to Mitchell’s exposure and the prevention of his future defalcations.
This is not, therefore, the sort of case where suspicions were aroused but not
pursued;  this is a case, says TBA, where suspicions were not aroused when,
reasonably, they should have been aroused and pursued.

[24] Reid, PW’s partner who supervised the audit and testified on its behalf,
conceded that the existence of the document should have been verified and that
an explanation for its absence ought to have been asked for.  If Smit had not
asked for an explanation “then she did not perform her work properly”.  Smit
was not called as a witness by PW although she was still in PW’s employ at the
time of the trial.  The inference is inescapable that she did not ask Mitchell for an
explanation.  Reid testified that if she had done so “I cannot imagine what
explanation … was or was not offered, if any”.  Mr Smith, an experienced and
respected auditor, who also gave expert evidence on behalf of PW, likewise
confirmed that in the circumstances, more especially the fact that the maturity
date had obviously expired, Smit should have insisted on seeing the document
and should have demanded an explanation from Mitchell if it could not be
produced.  Nevertheless this failure, according to Smith, did not amount to
negligence on PW’s part.  One reason was that the promissory note was not in

auditing terms a material item; and, that being so, it did not imperatively call for
separate “verification” by the auditor concerned.  (The other reason is discussed
in para 42.)
[25] Materiality in this context is understood to refer to an item or matter which
is significant in relation to the substantial correctness of the financial statements
as a whole and which would ordinarily be calculated to influence a client (or any
other regular reader of the financial statements) in his assessment thereof.  As it
was put by Reid in evidence:  “Well, material means important in the context of
the presentation of the annual financial statement.”  AU010.03 of the statement
issued by the South African Institute of Chartered Accountants reads:
“The elements of “materiality” and “audit risk” underlie the application of
all the standards, particularly the standards of fieldwork and reporting.
The concept of materiality is inherent in the work of the auditor.  There
should be stronger grounds to sustain the auditor’s opinion with respect
to items which are relatively more important and with respect to those in
which the possibilities of material error are greater than with respect to

those of lesser importance or those in which the possibility of material
error is remote.”
[26] From an auditing perspective the promissory note, according to Smith,
was not a material item, that is to say, an audit risk which demanded separate
attention.  He gave a number of reasons for saying so:
a)
Quantitatively, being an asset of only approximately R100 000 and
representing less than 1% of TBA’s total asset holdings of R16m, it
was relatively trivial.
b)
The fact that it was separately treated in the financial statements as part
of the Futurity race programme and reflected “an operating profit” of
R79 000, whereas it was in truth a loss situation, was also not of any
great consequence.  That is so, firstly, because PW did not purport to
render a separate report on the Futurity account on its own but
reported on TBA’s financial statements as a whole;  nor did TBA,

which was in the habit of transferring assets freely from one fund to
another, administer the Futurity programme separately.  Secondly, the
financial statements did not in any event reflect the true situation of
TBA (including the Futurity account) because of a deliberate change in
the accounting policy of TBA in 1993, when it was decided to write
back the provision made in 1992 for doubtful debtors and to make no
further provision therefor in the 1993 statement.  This had the effect, so
Smith contended, of inflating its 1993 “operating profit” by R385 388
and the value of its 1993 assets by R991 907.  In the result PW felt
constrained to qualify its 1993 audit report in that respect.  The
consequence was that the ostensible operating profit of R79 000 in the
Futurity programme paled into insignificance and would not, in the light
of PW’s qualification of the financial statements, have impressed any
reasonably informed reader.

c)
The inclusion in the financial statements of the promissory note as an
asset did not represent “an audit risk” and diminished the need for
verification.  Once it had been raised as an asset in TBA’s books of
account, it could only be removed by either a payment or by writing it
off as a separate item.   Since neither eventuality was likely to occur its
loss by theft was bound to be discovered at the next audit.
Consequently it was not vital that it should have been detected in the
current one.
d)
Finally, materiality is a matter for the judgment of the auditor
concerned.  Smit, and those above her, Greyling, the audit manager,
and Reid, the partner, adjudged that it was not necessary to verify the
existence of the promissory note.  That being so it cannot be said that
Smit’s judgment call was negligent in the circumstances.

[27] Smith’s opinion that the promissory note was not material and that the
failure to verify it was accordingly of no significance in the broad scheme of
things was contradicted by PW’s own principal witness, Reid, and by TBA’s
expert witness, Wainer.  That concession makes the discussion about materiality
somewhat academic but it was persisted in in argument and must accordingly be
considered.  In my opinion and for the reasons that follow Smith’s assertion that
the non-verification of the promissory note was not material, must be rejected.  I
deal with the points made by Smith in the same order.
[28] As to (a) and (b):  The assets of the Futurity programme were separately
identified in the financial statements.  A loss (which should have been reflected)
instead of a profit (which was), would doubtless have been heeded by
management and members as something which required investigation and
attention.  It would have tended, if reported as a loss, to have instilled a sense of
disquiet rather than one of comfort.  Nor does the change in TBA’s accounting

policy, however ill-advised it may have been, assist PW.  It is a red herring.  A
greater falsity in the books for which TBA was responsible does not nullify a
lesser one for which PW was responsible.  That TBA changed its policy as
regards the treatment of debtors could not therefore relieve PW of the obligation
of reflecting a true state of affairs in the financial statements.
[29] As to (c):  It is true that the unavailability of the promissory note would in
due course, probably at the next audit, have been detected.  On the other hand, it
was not detected during the 1993 audit and, if it was missed once, it could have
been missed twice.  In the meantime, because of its non-detection, Mitchell was
enabled to misappropriate moneys in excess of a million rand.  An item which
might otherwise not have been regarded as an audit risk (and hence as material)
may become material precisely because it stands out, or ought to do so to the
alert auditor, as being anomalous, irregular, unusual or illegal and as such as
demanding of further investigation.  As it is stated in PW’s own audit manual:

“Sometimes a matter may not be significant in itself but may have
implications for other matters which are material.”
That would be particularly so when such an item may be indicative of a recurring
irregularity or of a flaw in the system or of dishonesty.  This, according to TBA,
was such a case.  I agree.  Materiality should not be judged in isolation.  It does
not depend merely on the magnitude or not of the item relative to the whole but
also on its actual or potential implications relative to other items or relative to the
future.  The stale promissory note was an anomaly which it was common cause
between the witnesses for both sides, called for further investigation.  In the
absence of a satisfactory explanation from management the stale promissory
note could be a pointer to other irregularities in TBA’s books of account.  As
such it was material.
[30] As to (d):  It may well be that materiality is initially a matter for the
judgment of the auditor himself.  That does not invest him with immunity should

his judgment afterwards be adjudged to have been so conspicuously wrong as to
be symptomatic of carelessness on his part.  In this case, moreover, it is by no
means clear from her working note whether Smit consciously exercised any
judgment at all not to verify the promissory note.  This was conceded by Reid.
She simply reproduced the item from the 1992 statements and either overlooked
or ignored the warning signal that it was outdated.  This is in contrast to the
manner in which the promissory note was treated in the 1992 audit where it
received meticulous attention.  By way of further contrast other items in the 1993
audit with a value far less than R100 000 were in fact closely scrutinised.
[31] The Court a quo’s treatment of this aspect (at 1005H-J of the report) was
odd.  It expressed a preference for Smith’s view, notwithstanding Reid’s
concession to the contrary, that the non-verification of the promissory note was
not material.  It then stated:

“Furthermore, the TBA is an association not for profit.  An
operating loss of about R30 000 in place of a profit of R79 893 does not
seem of great significance when one considers that the TBA has the
substantial number of 800 members.
It seems to me too that there is a fatal flaw in TBA’s case relating to
materiality of the promissory note, and that is that no evidence has been
led on Mitchell’s financial position as at 31 October 1993.  If he were able
to repay the amount stolen by him on that date, the figures in the operating
profit would have been unaffected and Mitchell’s debt would have
replaced the promissory note as an asset.”
The first paragraph contains a non sequitur.  The second entails a disregard of
both the significance of a discovery that the note was missing and of the
probabilities.  As to the former, the significance of such a discovery would have
been that Mitchell’s inability to produce the note coupled with an inability to
provide a plausible explanation as to how it was accounted for (a matter dealt
with in para 42), would have led to his unmasking as a thief.  His ability, if any,
to repay the amount misappropriated would not have altered that and would have
been irrelevant to the materiality of the misappropriation.  As to the latter, in the

light of Mitchell’s proven gambling addiction, and his thefts which commenced
in March 1993 and appear to have increased exponentially until November 1994
it is surprising to learn that he might have been able to make good his
defalcations in October 1993.  There was not an iota of evidence that pointed in
that direction.  The Court then continued (at 1006B-D):
“It follows from the aforegoing that I am of the view that TBA did not
discharge its onus in regard to materiality.  In reaching this conclusion I do
not overlook that Reid says that he would have verified the promissory
note and that Smith too, despite his evidence against materiality, says that
he would have done so.  These factors are, however, not weighty enough.
It follows, too, that I cannot find that Smit should have verified the
promissory note even if there was no indication of anything amiss in
regard thereto.”
Having first found that Smit need not have verified the promissory note, the
Court then proceeded to find that she should at least have examined it and that
she was negligent in not doing so.  This finding is a little difficult to reconcile
with the earlier finding that the promissory note was not a material item.  If it was

not a material item there was no duty on Smit to examine it and consequently she
would not have been negligent in failing to do so.
[32] For the reasons stated earlier I am of the view that the Court a quo erred
in finding that the promissory note was not a material feature of the financial
statements requiring verification.  It follows that there was a duty on PW to do
so and that its failure was negligent in the circumstances and constituted a breach
of contract.  I deal with the consequences of that finding later in this judgment in
conjunction with the next issue viz, whether PW committed a breach of contract
in not appreciating the significance of what was described during the trial as the
“outstanding deposits”.
[33] The outstanding deposits:
The audit clerk who was deputed to perform the field work on this part of the
audit was a Mr A. Ford.  Like his counterpart, Ms Smit, he was still, at the time
of the trial, in the employ of PW but was not called to give evidence on its

behalf.  His working papers reveal that he had reviewed the bank reconciliations
and that he reported that “the overall results were satisfactory”.  His working
papers were reviewed by Greyling, the audit manager, who was likewise not
called to give evidence, and by a partner of PW, Reid, who was.
[34] TBA operated several accounts with its bank.  One of them was the sales
bank account, known as “TBA Sales”.  Ford’s duties in terms of his working
programme included the duty to:
“examine monthly bank reconciliations and investigate any unusual
reconciling items, outstanding deposits, etc.”
This involved a comparison and reconciliation of TBA’s cash book and its
monthly and year-end bank statements.   Ford’s note, in elaboration of  what he
had “done”, reads:
“Work done

Examined monthly bank recons for Authorisation of Bank recons by John
Mitchell and for large and unusual items.
Results
1.
John Mitchell (accountant) sighnes (sic) the bank recons monthly as
evidence of his reviews (not all recons were sighned) (sic).
2.
Unpaid cheques were not written back.
3.
Overall results were satisfactory.”
Mitchell in fact did not sign the monthly bank reconciliations.  Ford also omitted
to mention the “outstanding deposits”.  Those referred to a series of entries in
the monthly bank reconciliations routinely done by Ms Gloria Seamen, an
employee of TBA who worked under Mitchell.  These bank reconciliations
reveal that payments received by TBA and recorded in the cash book, and for
which receipts were issued, were not, as one would have expected, immediately
banked.  So for example the bank reconciliation as at 25 April 1997 reflected
three payments of R23 700, R52 700 and R25 300 respectively for which
receipts had been issued but which had not been deposited at the bank.  The

first two items were still undeposited a month later and the amount of R23 000,
which in the meantime had been listed with other items described as “outstanding
deposits”, was still recorded as “outstanding in the bank reconciliation of
September 1993”.  It was only “cleared” (as were all the other “outstanding
deposits” totalling as at that date, R148 903,44), at the end of September 1993,
in time for the year-end reconciliation of October 1993 which Mitchell knew
would be reviewed by the auditor.  As the Court a quo remarked (at 978G-H):
“Of course, a long-outstanding deposit is a cause for suspicion.  Money,
and especially cash, ought to be deposited as soon as possible.  If this
does not occur a reasonable suspicion arises that the money has been
stolen.”
The Court a quo regarded it (at 979J-980A) as an:
“overwhelming probability arising from Ford’s working papers that he
must have overlooked the outstanding deposits despite his having perused
the bank reconciliations, or at least, that he failed to recognise their
significance if he saw them.”

[35] A further feature, not commented on by Ford, was the manner in which
the outstanding deposits were ‘cleared’.  This was done inter alia by two
cheques of R25 000 and R18 000 respectively signed by Mitchell and drawn on
the TBA sales account in favour of itself.  This could conceivably have been a
legitimate means of reconciling the bank statements with the cash book on paper
but only if there were vouchers substantiating that the payments which had not
been banked had been used in the course of TBA’s operations.  It is common
cause that there were none.  In the circumstances it is difficult to escape the
conclusion that the clearing of the outstanding deposits in this manner was
simply a ruse by Mitchell to pull the wool over the auditors’ eyes.
[36] According to Wainer the outstanding deposits as an item was not the only
anomaly that Ford should have picked up but did not.  It is common cause that
if Ford had done a reperformance of the 1993 year-end bank reconciliations he
would, in the words of Wainer, have identified

“numerous deposits in the cash books which were not in agreement with
the bank statement entries.  The differences identified indicate deposits in
the cash book  not appearing in the bank statements;  deposits in the bank
statement not appearing in the cash book,  and deposits where the amount
in the cash book is not in agreement with the amounts per the bank
statement ...”
There is a difference between Wainer and Smith as to whether it was necessary
for PW to have done such a reperformance.  According to Wainer it should
have been done because TBA was a relatively small and tightly-knit entity with
admittedly poor internal controls.  Smith disagreed.  The Court a quo preferred
the view expressed on this point by Wainer.  It also analysed and commented on
other discrepancies, not noted by Ford, which would have become apparent
from a reconciliation of the deposits in the cash book and the bank statements
during the period September to October 1993, and which caused it to conclude
(at 981I-982A):
“None of the above discrepancies, anomalies or coincidences appear from
Ford’s working papers.  On the contrary, as we have seen, his working

papers indicate that he was satisfied that none such existed.  The inference
is accordingly inescapable, in the absence of an explanation from him, that
his investigation of unusual reconciling items was superficial and
inadequate – a matter to which I shall return below.”
[37] It is an issue between the parties whether PW was obliged to do a
reperformance of the year-end bank reconciliation.  TBA pleaded that it was a
specific term of the agreement that such a reperformance should have been
done.  Had such  term been proved it would have been the end of the matter
because its breach was common cause and its consequences were clear:
Mitchell’s manipulations would have been exposed forthwith.  But the existence
or not of such a specific term was not a matter that ever exercised TBA’s mind.
Until 1990 when Richardson Reid was absorbed by PW it was the practice to
reperform the year-end bank reconciliation.  This practice was discontinued (in
favour of PW’s own “standard procedure”) when PW took over Richardson
Reid (but was, incidentally, reinstated in the case of small entities as a result of

PW’s experience in this case).  TBA left it to PW to decide how to conduct its
audit.  Its agreement with PW was in the broad terms that it should do its work
with proper and reasonable care.  In the circumstances it cannot be said that
TBA discharged the onus of establishing the specific term pleaded.  Nor can it
confidently be said that the failure to do such a reperformance was a
manifestation of work carelessly done.  It is in any event not necessary to resolve
this issue between Wainer and Smith for whatever differences there may be
between them on that point, all the experts, including Reid, were agreed that
Ford was remiss in not examining the outstanding deposits and in not insisting
on an explanation from management.  It was conceded in argument that Ford did
not do his work properly in that regard.  His failure to do so was not picked up
and corrected by either Greyling or Reid who were supposed to supervise his
work.  To that extent it appears to be common cause that PW did not give that

particular aspect of its audit the attention it deserved and accordingly that it was
negligent and hence in breach of its contract with TBA.
[38] It follows from what has been said above that TBA succeeded in proving
that PW was negligent and hence committed a breach of its contract with TBA in
at least the two respects outlined above, the failure to appreciate the significance
of and to react to the non-existent promissory note and the failure to appreciate
the implications of the recurring item “outstanding deposits” in the bank
reconciliation statements.
[39] It is central to TBA’s case that if PW had been more astute in either of
these respects it would have prompted what was described as “a train of
enquiry” which, if done competently, would in the ordinary course of the audit
inevitably have revealed that Mitchell was systematically siphoning off funds for
which he would have been unable to account.  This is disputed by  PW.  But
what can hardly be disputed is that Mitchell was embezzling vast sums of money

from TBA.   When ultimately confronted he immediately capitulated.  Reid’s
own special report established the extent of Mitchell’s larceny and Mitchell,
having confessed,  pleaded guilty and was sentenced to a term of imprisonment
on the strength thereof.  If the earlier thefts had been uncovered in January 1994
there can, moreover, be little doubt that Mitchell, given his past record, would
have been dismissed or at the very best for him prevented from committing the
massive thefts that occurred after February 1994 and that he would have been
unable to repay the missing amounts.
[40] The quantum of TBA’s losses was finally agreed between the parties to
be R1 389 801.90.  That sum includes thefts committed prior to February 1994
but since it was established that Mitchell made good his earlier thefts by later
ones in order to “clear” the earlier ones in TBA’s books of account, the full
amount was in principle recoverable from PW.  This was not contested by PW.
[41] Causation

The next issue is whether TBA succeeded in showing that the breach of contract
it proved caused the losses it sustained.  This is disputed by PW on three main
grounds:
(a)
Mitchell would have been able to deflect any enquiries directed  to him;
(b)
The loss suffered by TBA, having regard to the test for causation in a
claim for damages for breach of contract, was too remote;
(c)
The dominant cause of TBA’s loss was its own negligence.
I deal in turn with each of these topics.
[42] Would the discrepancies have been explained away?
Reid and even more so Smith were adamant that if Smit or Ford or Greyling or
even Reid himself had asked Mitchell about any of the matters that should have
concerned them he would have been able to satisfy them in January 1994 that
nothing was fundamentally amiss.  That is because they would not have been

predisposed to suspect dishonesty let alone larceny, on Mitchell’s part.  This
was not, after all, a forensic audit and PW’s personnel, not having been briefed
about Mitchell’s past, had no cause to approach any explanation he may have
furnished with scepticism and suspicion.  By all accounts Mitchell was an
intelligent, skilled and plausible person who commanded the unqualified respect
of his co-employees.  He was able to keep them at bay and he would likewise
have been able, so it was contended, to explain any matter relating to TBA’s
books to the satisfaction of any reasonable auditor, at least until the next audit.
(As it happens his defalcations were discovered in November 1994 when the
scale of his gambling losses reached such proportions that they could no longer
be covered up by a manipulation of TBA’s books of account.)  But when asked
what possible explanation Mitchell could have given which in February 1994
would have satisfied a reasonable auditor Reid was unwilling to speculate and
Smith’s speculations were unconvincing.  Mitchell may have been able to

hoodwink his colleagues; it by no means follows that he would likewise have
been able to bluff an observant auditor investigating apparent irregularities in
TBA’s books of account.
[43] But perhaps most significantly neither Smit nor Ford was called by PW to
explain whether either of them paid any attention to the anomalies described
earlier, whether it occurred to them to confront Mitchell, whether they asked him
for any explanations and what explanations could conceivably have been given
which would have satisfied them.  In the absence of such evidence it is idle to
conjure up possible explanations, as Smith sought to do.  What is at least clear is
that there were no obviously plausible explanations, for if there had been any
Smith would have thought of them.
[44] According to the Court a quo Mitchell might yet have been able to explain
away the missing promissory note but not the outstanding deposits.  As to the
promissory note the Court a quo said (at 1011D-G):

“I return to Smit and Mitchell and the promissory note.  Smith speculates
that Mitchell may well have proffered the following explanation to Smit:
that he had in error not presented the note on due date, that he had
thereafter contacted the Department of Trade and Industries and requested
a replacement cheque, that he had returned the note to the department and
been promised such a cheque when funds became available, that such had
not yet occurred but that in the new financial year the department would
have the funds and would pay the TBA.  Mitchell might even have
produced a letter from his computer, directed to the department and
confirming these arrangements.  Mitchell was by all accounts, Smith
points out, a plausible liar and given his seniority Smit would have been
entitled to believe him and do nothing further.  There is no basis for me to
reject this evidence of Smith on a balance of probabilities and I shall
accept that Mitchell may have been able to overcome the hurdle of the
promissory note when it was presented to him on or just prior to 20
January 1994.  The matter does, of course, not end there.”
As to the outstanding deposits the Court a quo said (at 1012G-I):
“Of course, he [Ford] could have confronted Mitchell himself but I think,
overwhelmingly on the probabilities, he would have consulted his
immediate superior, Smit, and explained the disturbing facts to her.  She
would then have recalled the missing promissory note and Mitchell’s
explanation of it.  In my view, she would then, as a reasonable diligent
auditor, have decided that it was necessary to question Mitchell on the
outstanding deposits and to revisit the problem of the promissory note.
Before doing so she ought, in my view, to have reperformed or caused

Ford to reperform the October bank reconciliation to see how the
outstanding deposits were cleared.”
And if that had been done, so the Court finds, she and Ford would have become
aware of the serious discrepancies which are apparent when the cash book is
compared to the deposits on the October 1993 bank statement.  The Court then
concluded (at 104A-B):
“In my view, this was clearly a case with so much calling for explanation
that the level of suspicion of the reasonably astute auditor ought to have
been so high that a thorough investigation was called for; the matter
required in fact a ‘probe ... to the bottom’.”
(Of course, as stated earlier, if such a probe had been attempted Mitchell’s thefts
would have been uncovered.)
[45] I agree with the conclusion which can in my opinion be reached by a more
direct route.  On the supposition that Smit discovered the non-existence of  the
promissory note, that Ford appreciated the significance of the outstanding

deposits, that they reported these peculiarities to their superiors and that PW
realised that something was seriously out of kilter, the scale thereof would have
driven the auditors firstly, to seek corroboration for any possible explanation
Mitchell might have furnished them and secondly, to reconcile the cash book, the
receipts, and the deposits reflected on the bank statements, especially the
October 1993 bank statement.  Had they done so it would have revealed the
other discrepancies detailed by the Court in its judgment.  The thefts would then
have been discovered.  Further thefts would have been averted.  TBA would not
have suffered its loss.
[46] Does the loss flow from the breach?
Factual causation being a given, was the loss not too remote?  The traditional
approach for determining remoteness in a contractual context was restated in
1977 by Corbett JA in Holmdene Brickworks v Roberts Construction Company
1977 (3) SA 670 (A) 687D-F in the following terms:

“To ensure that undue hardship is not imposed on the defaulting party …
the defaulting party’s liability is limited in terms of broad principles of
causation and remoteness, to (a) those damages that flow naturally and
generally from the kind of breach of contract in question and which the
law presumes the parties contemplated as a probable result of the  breach,
and (b) those damages that, although caused by the breach of contract,
are ordinarily regarded in law as being too remote to be recoverable
unless, in the special circumstances attending the conclusion of the
contract, the parties actually or presumptively contemplated that they
would probably result from its breach (Shatz Investments (Pty.) Ltd. v.
Kalovyrnas, 1976 (2) S.A. 545 (A.D.) at p. 550).  The two limbs, (a) and
(b), of the above-stated limitation upon the defaulting party’s liability for
damages correspond closely to the well-known two rules in the English
case of Hadley v. Baxendale, 156 E.R. 145, which read as follows (at p.
151):
‘Where two parties have made a contract which one of them has broken,
the damages which the other party ought to receive in respect of such
breach of contract should be such as may fairly and reasonably be
considered either arising naturally, i.e., according to the usual course of
things, from such breach of contract itself, or such as may reasonably be
supposed to have been in the contemplation of both parties, at the time
they made the contract, as the probable result of the breach of it.’
As was pointed out in the Victoria Falls case, supra, the laws of Holland
and England are in substantial agreement on this point.  The damages
described in limb (a) and the first rule in Hadley v. Baxendale are often
labelled “general” or “intrinsic” damages, while those described in limb (b)
and the second rule in Hadley v. Baxendale are called “special” or
“extrinsic” damages.

It was suggested in argument that in the present case the damages
claimed were special or extrinsic and had to be considered in terms of the
test laid down in limb (b) above.  As a corollary to this the Court was
invited to resolve the controversy as to whether in this connection the
“contemplation principle” or the “convention principle” should prevail (see
Shatz’s case, supra at pp. 552-4, in which the point was left open).  In my
opinion, however, for the reasons which follow, it is limb (a) that is
relevant and I see no need to accede to counsel’s invitation.”
[47] It is apparent from the above dictum that “contemplation” is the minimum
desideratum common to both so-called limbs or sub-rules.  The controversy
referred to in the dictum, which was identified in Shatz Investments (Pty) Ltd v
Kalovyrnas, 1976 (2) SA 545 (A) at 552 and which remains unresolved to this
day, relates to limb (b) and not to limb (a):  it is whether “the rationale of special
damages is the parties’ convention and not merely their contemplation” (Shatz at
552C), that is to say, whether the contemplation of the parties must be shown
“virtually to be a term of the contract” (at 552D).  One of the disputes in this
case was precisely whether TBA’s claim was to be classed under limb (a)

(termed the “default position” by Cartwright in 1996 Cambridge L J 488 490
513) or limb (b).  TBA pleaded its case in the alternative under both limbs but
contended that it was properly to be accommodated under limb (a).  PW on the
other hand contended that it was immaterial under which limb the claim was
advanced because even at the lesser threshold of limb (a), requiring proof of the
parties’ actual or presumed contemplation of the loss as a “probable” result of
the breach, TBA must fail.
[48] According to PW the kind and extent of loss suffered by TBA could
never have been in the contemplation of the parties, either actually or
presumptively, as a probable result of the type of breach committed by PW.
PW’s breach of contract, so it was contended, if any, was that it was negligent
not in the actual performance of its audit but in failing to appreciate the full
implications of certain admitted irregularities.  TBA sustained a loss because its
financial manager stole its money and his thefts remained undetected;  that loss

could not be said to have been of the kind “that flows naturally and generally”
from PW’s breach of contract;  such thefts are not according to the usual course
of things the probable result of a mere oversight;  it might conceivably be a
foreseeable risk but it was never a probable result.  That was the argument.
[49] It is not altogether clear whether the word “probable” in the phrase “which
the law presumes the parties contemplated as a probable result of the breach” in
the dictum from the Holmdene Brickworks case, quoted earlier, (previously
endorsed by Innes CJ in Victoria Falls & Transvaal Power Co Ltd v
Consolidated Langlaagte Mines 1915 AD 1 22 (“likely”) and by Curlewis JA in
Lavery & Co Ltd v Jungheinrich 1931 AD 156 169 (“probable”)) is to be
understood in the sense of “more likely to occur than not”.  Corbett JA was not
in the quoted phrase formulating the rule (i.e. damages flowing naturally and
generally from the breach) but only its supposed rationale (the presumed
contemplation of the parties) and it is far from certain that he meant to introduce

“high probability” as a further limiting factor under the first sub-rule.  In this field
South Africa has tended to follow the contours of the English law.  English law
deferred to Pothier (Obligations sec 159-162) and South African law deferred to
Pothier and the English law (compare Hadley v Baxendale (1854) 9 Ex 341 354;
Emslie v African Merchants Ltd 1908 EDC 82 90-91;  Victoria Falls and
Transvaal Power Co Ltd v Consolidated Langlaagte Mines, supra, 22;
Lavery & Co Ltd v Jungheinrich, supra, 165-166;  Erasmus (1975) 38 THRHR
363-364;  Cartwright op cit  Cambridge L J 488;  Zimmermann, The Law of
Obligations 829-830).  In England the degree of likelihood required for purposes
of the contemplation test has in recent years attracted close attention.  These
developments are discussed in some detail in the standard text books (such as
McGregor on Damages, 16th ed, para 248-274; Chitty on Contracts, 28th ed,
para 27-039-051;  Cheshire, Fifoot & Furmston, Law of Contract, 13th ed, 611-
617;  Treitel, The Law of Contract, 8th ed, 855-859; Atiyah, The Law of

Contract, 3rd ed, 318-323 and 15 Stair Memorial Encyclopaedia para 903-905),
with particular reference to what was said in Koufos v C Czarnikow Ltd (The
Heron II) [1969] 1 AC 350 (HL) and the cases following it, such as Balfour
Beatty Construction (Scotland) Ltd v Scottish Power plc 1994 SC 20 (HL).
(See, too, the helpful exposition in Kerr, The Principles of the Law of Contract,
5th ed 700-709).  The formulae used ranged from ‘real danger’ or ‘very
substantial’ to ‘easily foreseeable’, ‘liable to result’ or ‘not unlikely’ (Treitel, op
cit, 857).  The Heron II, supra, was referred to in both Shatz’s case, supra, and
Holmdene Brickworks, supra, but in neither case, unlike this one, was the exact
shading or nuance of meaning of any consequence.  Even so, it is not necessary
to trace the minute developments in the English decisions in this case for I
believe that McGregor in para 264 of the work cited has fairly captured the
essence of current English thinking on the point when he stated:

“The important factor is therefore whether the particular type of loss
which occurs is within the contemplation of the contracting parties as a
serious possibility …”
Or, as it was put by Goff J in The Pagase [1981] 1 Ll R 175  182:
“…but the thread running through the speeches [in the Heron II] is that the
damages must have been within the contemplation of the defendant, not in
the sense that they were probable (which would be too strict a test) but
rather in the sense that there was a serious possibility of their occurrence
or that they were not unlikely to occur.”
That approach, postulating as it does not a likelihood (at the upper end of the
scale) of the harm complained of occurring but (at the lower end) a realistic
possibility thereof, appears to me to be sensible and sound.    Parties cannot
contemplate what they cannot foresee.  In the end it will usually turn on the
degree of foreseeability of the kind of harm incurred (compare McElroy Milne v
Commercial Electronics Ltd [1993] 1 NZLR 39(CA)  43  45).  What matters to
the law is of course  not infinite but reasonable foreseeability.  Leaving aside
atypical situations (such as, for instance, a circumstance which was foreseeable

by only one of the parties or only at the time of breach and not also at the time
of contract), what is required to be reasonably foreseeable is not that the type of
event or circumstance causing the loss will in all probability occur but minimally
that its occurrence is not improbable and would tend to follow upon the breach
as a matter of course.
[50] I cannot agree that the loss suffered by TBA did not in that sense flow
naturally and generally from PW’s breach (compare Bruce NO v Berman 1963
(3) SA 21 (T) 23G-24E).  Both the non-existent promissory note and the
outstanding deposits should have struck Smit and Ford, if they had done their
work properly, as odd.  There would have been a reason for it.  That reason
could have been either innocent or not innocent – although any possible innocent
explanation was clearly not an obvious one or Reid and Smith would
immediately have suggested it in evidence.  If the reason was not an innocent one
it was an indication either of neglect or of dishonesty on the part of one or more

of TBA’s personnel.  Dishonesty was consequently one of three conceivable
and predictable reasons.  It was a realistic possibility.  PW’s breach consisted
not only of the failure to read the warning signs but also in its failure to probe
them further.  Had it done so Mitchell’s past thefts would as a matter of course
have been uncovered and his future ones avoided.  A competent auditor would
know that the failure to recognise, identify and engage a problem of this kind
may well lead to a prospective loss of this nature for his client which cannot be
redeemed from the thief.  This is what happened.  TBA’s loss, in the words of
Corbett JA in Holmdene Brickworks, supra, at 687D-F, did “flow naturally and
generally” from PW’s breach.
[51] That being so it is not strictly speaking necessary to revisit, in general, the
dichotomous orthodox approach of this Court to remoteness in contract. Nor is
this the occasion, as it was not the occasion in both Shatz Investments, supra,
554F-G and Holmdene Brickworks, supra, 688A, to review limb (b) in

particular.  (The “convention principle” embraced by Wessels JA in Lavery &
Co v Jungheinrich, supra, at 176 has long been discredited in England.
Compare The Pegase, supra, 182-183;  Cartwright, op cit, 492.)  But it may be
worth noting that this Court’s approach to legal causation within other disparate
fields such as crime, delict, insurance and latterly, perhaps, estoppel, has
undergone considerable evolution in recent years by the development of a new
model for causation sometimes termed the flexible or supple test.  (Compare S v
Mokgethi en Andere 1990 (1) SA 32 (A) 39I-41A;  International Shipping
Company (Pty) Ltd v Bentley 1990 (1) SA 680 (A) 700H-701F;  Smit v
Abrahams 1994 (4) SA 1 (A) 15B-18H;  Stellenbosch Farmers’ Winery Ltd v
Apostolos Vlachos t/a Liquor Den case number 117/99, not yet reported.)  In
Standard Chartered Bank of Canada v Nedperm Bank Ltd 1994 (4) SA 747
(A) at 765A-B the new test was described, again by Corbett CJ, as:

“… a flexible one in which factors such as reasonable foreseeability,
directness, the absence or presence of a novus actus interveniens, legal
policy, reasonability, fairness and justice all play their part.”
[52] When the matter, which was deferred for future consideration in Shatz’s
case, supra, does eventually come before this Court as a pertinent issue, it may
be appropriate to employ the learning developed in those cases to good
advantage.  With breach of contract, as in delict and estoppel but unlike
insurance (which entails the interpretation of the terms of the policy – compare
Napier v Collett and Another 1995 (3) SA 140 (A)), the exercise would involve
measuring the consequences of wrongful conduct by a composite legal
yardstick.  Admittedly there is an important factor present in contract and absent
in the other categories mentioned and that is the competence of the parties to
regulate, limit or expand by arrangement amongst themselves the consequences
of any prospective breach (compare Kerr, op cit  648).  Such arrangements can
and must of course be accommodated in any flexible test.  A conjectured

application of the flexible test will not mean that the collected wisdom of past
cases is summarily to be discarded.  Both limbs of the current conventional test
can readily be blended into an integrated test as being relevant factors to be taken
into account.  The fact that both parties had particular consequences in mind
when they concluded their agreement will still be conclusive.  There may be
instances where the time of breach will be more appropriate than the time of
contract.  The circumstances of each case will determine where the emphasis
belongs.  Reasonable foreseeability, one imagines, will govern most but not all
cases (compare Holmdene Brickworks, supra, 688G-H;  Smit v Abrahams,
supra, 17 D-F;  Kerr, op cit  718).  Ultimately it may be practical common sense
based on the judicial officer’s years of experience – and not dogma – that has to
cut the Gordian knot.  (Compare Alexander v Cambridge Credit Corporation
Ltd (1987) 9 NSWLR 310, 315B-C;  358B-C.)  As  has recently been said by

Lord Steyn in a slightly different context in Smith New Court Securities v
Scrimgeour Vickers (Asset Management) [1996] 4 All ER 769 (HL) 794j-795b:
“The development of a single satisfactory theory of causation has taxed
great academic minds …  But, as yet, it seems to me that no satisfactory
theory capable of solving the infinite variety of practical problems has
been found.  Our case law yields few secure footholds.  But it is settled
that at any rate in the law of obligations causation is to be categorised as
an issue of fact.  What has further been established is that the ‘but for’
test, although it often yields the right answer, does not always do so.  That
has led judges to apply the pragmatic test whether the condition in
question was a substantial factor in producing the result.  On other
occasions judges assert that the guiding criterion is whether in common
sense terms there is a sufficient causal connection …   There is no material
difference between these two approaches.  While acknowledging that this
hardly amounts to an intellectually satisfying theory of causation, that is
how I must approach the question of causation.”
[53] The only fundamental difference between the current and the suggested
approaches is that there will be a more expansive solvent more suitable for all
circumstances (compare Kerr, op cit  716).  The exclusive criteria of the past will
become auxiliary criteria in the future.  There may of course be other

repercussions relating to matters such as pleadings of which time alone will tell
but those are not the problems of today but of tomorrow.
[54] Was TBA itself negligent?
The primary cause for TBA’s loss was of course the dishonesty of its own
financial manager, Mitchell, who stole and continued to steal its money.  PW laid
great stress on TBA’s own alleged negligence, rather than on PW’s own breach,
as being the true, real, effective, dominant or overwhelming cause of TBA’s loss.
PW accused TBA of being negligent in not protecting its own assets and in not
forestalling its own loss in one or more of several respects with which, before
returning to the issue of causation I deal in the paragraphs that follow.  (Since
TBA owes itself no legally enforceable duty to protect its assets against the risk
of theft by its own personnel, it is perhaps more accurate to speak of
carelessness in this connection rather than negligence.)

[55] The first complaint is that TBA confirmed Mitchell’s appointment in the
sensitive position of financial manager when, during his period of probation,
TBA discovered that he had been convicted of theft, had served a term of
imprisonment and had lied to it in his application for the position.  But was it
irresponsible or, as it was put on PW’s behalf, “reckless” of TBA to do so?  In
our view not necessarily so.  It may have been a calculated risk, but it was not
careless in itself.  It would only have been negligent in the broad sense if it was
reasonably foreseeable that Mitchell, far from being reformed as he claimed to
be, would steal from it in future.  There was no warrant in the facts for making
that assumption.  What is of course true, as a matter of common experience, is
that a man with a criminal record for theft is more likely to steal than someone
with no such precious convictions.  Consequently an employer should be even
more cautious in giving such a person unsupervised access to sizable sums of
money.  The “negligence”, if any, would have consisted not in his appointment

as such but in TBA’s failure to introduce sufficient hedging mechanisms to
prevent a repetition of Mitchell’s past misdeeds.  The point is dealt with further
in para 59 below.  Indeed, it was a humanitarian act on TBA’s part to confirm
Mitchell’s appointment on the basis of his potential.  In turn that meant that the
information about his criminal past had to be kept hidden from  the other
members of staff.  That is also the reason why the discussion of the matter and
the decision of council were not minuted or disclosed to its auditor or insurers.
(TBA paid a price for its magnanimity: a potential claim in terms of its fidelity
insurance policy was for that reason not even made.)  Mitchell’s permanent
appointment, even if open to criticism, was anterior to and was thus overtaken
by PW’s later breach of contract.  PW, as auditors, were entrusted with the
auditing of TBA’s financial statements.  There was admittedly no contractual
obligation on PW to detect and prevent illegal acts (as opposed to bona fide
irregularities and errors) on the part of management.  But TBA’s complaint

against PW was not that it failed to detect and prevent Mitchell’s thefts but that it
failed to read the signs of possible illegal activities within the ranks of its
management team and that it failed to respond thereto when it would have been
reasonable for it to have done so.  The complaint is that PW, had it interpreted
the signs correctly, would have been able to intercept Mitchell’s later thefts.  In
our view the confirmation of Mitchell’s appointment as such, notwithstanding his
criminal record, was therefore not per se “negligent” and was not a relevant
cause of TBA’s loss.
[56] The second complaint was that TBA’s financial management of its affairs
and its business practices and controls were notoriously inadequate, thereby
enabling Mitchell to exploit the weaknesses in its system to his own dishonest
advantage.  It disregarded, so it was contended, the provisions of its own
constitution and bye-laws, such as clause 11.2 which required all cheques to be
signed by two of its officials.  It was common cause that this did not happen and

that this was one of the means by which Mitchell was able to siphon off money
from TBA.  The difficulty with this argument is that PW was fully aware that
TBA’s controls were lax.  It undertook its mandate to audit TBA’s financial
statements on that very basis.  As such there was in our opinion a duty on PW
to be extra attentive;  and it was not open to it to complain of a form of neglect
which it was contracted to take into account.
[57] The next complaint is that TBA did not advise PW when it was
commissioned to do the audit that Mitchell, who was in charge of its financial
affairs, had a criminal record involving theft and dishonesty.  Was it careless of
TBA not to inform PW of Mitchell’s past and if so, was this the crucial or at the
very least a relevant cause of TBA’s loss?  The first observation to be made is
that the omission had no effect on PW’s breach of contract as such.  PW
committed its breach unaware of Mitchell’s track record and purely on its own
terms.  If, as has been held earlier, PW should in the course of its ordinary audit

have uncovered Mitchell’s past thefts without the benefit of any knowledge of
his past record, then it is irrelevant for purposes of its breach whether PW was
so informed or not.   If the information had been given to PW in advance it may
conceivably have enhanced PW’s capability of discovering Mitchell’s thefts.
But that had no effect on its contractual obligations.  Since PW was obliged in
the particular circumstances of this case to discover the thefts when it was, so to
speak, blindfolded to the risk posed by the employment of Mitchell, it is no
defence for it to say that it would have discovered the thefts if only it could see.
The omission to inform PW would only have been relevant to PW’s breach if it
would have made its task more onerous, not more easy.  This failure so to
inform PW accordingly had no effect on PW’s breach as such.
[58] But of course the question is not whether TBA was negligent vis-à-vis PW
but whether it was “negligent” vis-à-vis the protection of its own interests and the
avoidance of its own loss.  The proper question for purposes of causation is

thus whether TBA should have appreciated that the loss could and would have
been avoided if TBA had briefed PW about Mitchell’s criminal past.  At best for
PW it was argued that the failure on TBA’s part to disclose information
concerning Mitchell’s dishonesty precluded PW “from properly assessing the
risk” and “from planning their audit accordingly”.  But the evidence fell far short
of establishing that if Smit and Ford had been told (even on condition of
complete confidentiality) they would have approached their task differently and
they would have uncovered the thefts.  Smit and Ford were not called to say
that.  Had it been PW’s case that TBA should have appreciated this and that it
would probably have discovered Mitchell’s defalcations if only it had been told
of his prior criminal record in advance of the audit being undertaken, the failure
so to inform PW may indeed be said to have been the effective cause of TBA’s
loss.  But that was not the case pleaded by PW nor was it the thrust of its
evidence.  There was a passing suggestion that PW would not have accepted the

commission as auditors if it had been told of Mitchell’s previous
misdemeanours, but that allegation, if accepted, would not in itself have been a
self-sufficient defence to TBA’s claim based on PW’s breach of contract.
[59] The final and perhaps major complaint was that TBA, knowing of
Mitchell’s criminal past, placed him in charge of the administration of TBA’s
accounts when TBA’s business had an annual turnover of R40m, much of it in
cash.  By the admission of TBA’s own witness, Bladergroen, it “had the fox
looking after the hen coop”.  TBA’s real “negligence” therefore consisted, so it
was alleged, (a) in placing Mitchell in a situation where he could freely manipulate
TBA’s affairs to his own advantage and (b) in failing to properly monitor and
supervise his activities.  Peter Fenix, a member of TBA’s council, who held the
“finance and administration” portfolio, was initially entrusted with the
responsibility of supervising Mitchell’s performance.  This he did for
approximately 18 months until March 1993, when he was succeeded by Allem.

Allem testified that he was not aware that he was supposed to scrutinise
Mitchell’s work.  Hawkins, TBA’s chief executive officer during much of that
period, had been told of Mitchell’s past but by all accounts (except his own, for
he was not called to testify) lacked the personality, the expertise and the
experience to keep a firm hold on Mitchell’s activities.  It is not without
significance that Mitchell’s first known defalcation commenced when Fenix’s
term as council member ended.  I agree with the criticism expressed by PW and
accepted by the Court below that TBA’s supervision of Mitchell, given his
background, was demonstrably inadequate and constituted carelessness on its
part.  Such lack of supervision continued after the 1993 audit and until Mitchell
was eventually exposed.
[60] The cumulative effect of the relevant factors mentioned above is that it can
fairly be said that TBA’s conduct fell short of the standard and degree of care

and attention which an organisation of this nature ought to have exercised over
its own management and ought to have devoted to its own affairs.
[61] Was TBA’s carelessness the sole or dominant cause of its loss?
Both parties were careless.  Can it be said that TBA’s carelessness was the
exclusive cause of its loss?  I do not think so.  This is not the sort of case where
harm can be said to have been caused by either one or the other of two
competing causes, one for which a plaintiff and the other for which the
defendant was responsible.  On a finding to that effect, a plaintiff, bearing the
onus to prove causation, must lose if he fails to prove that it was the cause for
which the defendant was responsible.  This case is better typified as one where
two unrelated determinants converged in causing the loss complained of.
Whether and to what extent it is necessary to disentangle and apportion between
them their respective degrees of carelessness in relation to that loss is a matter to
which I return later in this judgment.

[62] The Court a quo made the following finding (at 1024B-D):
“Applying these principles of our common law and approaching the
matter mindful of the cases, I conclude that both causes operated
significantly in bringing about the result complained of.  Price
Waterhouse’s failure to perform their contractual duties as auditors was an
important cause of the loss.  But, in my view, the highly irresponsible
employment of a convicted thief in so vulnerable an area of the TBA’s
business and with so little check on his behaviour was the predominant,
effective or real cause of the loss suffered.  It follows, applying the
common law, that the TBA’s claim must fail because its own negligence in
employing Mitchell as it did was the causa causans of its loss.”
It was submitted on behalf of PW, on the assumption that both parties were to
blame for the loss and in support of that finding, that its own negligence was so
slight and TBA’s failure to guard against the loss it suffered was so dominant
that PW’s breach was to be disregarded as a sufficiently significant cause of the
loss.
[63] In my view both the dictum and, following it, the submission are wrong
both in fact and in law.  It is wrong as a conclusion of fact since it cannot as a

matter of practical common sense be said that PW’s negligence was so minimal
in comparison to TBA’s carelessness as to be nullified as an effective cause of
the loss.  It is wrong as a proposition of law since it seeks to convert an
approach which is more appropriate to the law of delict to the law of contract
where it is not appropriate.
[64] In the law of delict where there is culpa on both sides the so-called “all or
nothing principle” has been applied since Roman times.  This is dealt with in
extenso by Zimmermann, op cit, 1010-1013  1030 and 1047-1048.  At 1030 it is
stated:
“The fault of the plaintiff/victim was, in a way, ‘set off’ against that of the
defendant/wrongdoer, with the result that ‘culpa culpam abolet’.  Hence
the expression of compensatio culpae or culpa compensation that came to
be used to label the uncompromising approach to the problem of
contributory negligence.  Whether every contributory fault on the part of
the victim – even culpa levissima – was originally taken to deprive him of
his remedy is not quite clear.  In the later usus modernus, at any rate, the
issue appears to have been decided on the basis of a preponderance of
fault:  only if he had displayed the same or a greater degree of negligence
than the wrongdoer did the victim lose his claim.  Where, on the other

hand, his negligence was less significant, when compared with that of the
wrongdoer, his claim for damages remained completely unaffected.”
In South Africa, under the influence of English law (compare Zimmermann and
Visser, Southern Cross 575-6), the all or nothing approach prevailed and its
application was, in the words of Boberg, The Law of Delict, vol 1 653,
“uncompromising”.  He continued:
“A plaintiff who was part author of his own loss could recover nothing at
all.  No provision existed for comparing the negligence of the parties and
awarding proportionate compensation.  The plaintiff’s fall from grace, no
matter how venial, cost him his remedy, and the defendant – through
possibly far more negligent than the plaintiff – went scot-free.  The
defence was a complete one.”
[65] A similar clear-cut statement is absent in the law of contract.  There is a
conspicuous dearth of express authority in the Roman-Dutch law either admitting
or denying the existence of a defence of preponderance of own fault to a claim
for damages for breach of contract.  None was quoted to us by counsel and we
were unable to find any ourselves, as to the applicability or non-applicability of

an all- embracing “all or nothing principle”, or any variant thereof, in a
contractual setting.  Nowhere is it expressly stated that a plaintiff who sued a
defendant for negligently performing his contract but who was himself careless
was thereby non-suited, except of course where his culpa was held to be the
sole cause of his loss.  On the other hand, there is also no direct authority to the
effect that such a plaintiff was entitled to full payment notwithstanding his proven
lack of care.  Not surprisingly there is likewise no authority for the intermediate
situation i.e. that a plaintiff’s claim is to be reduced in those circumstances in
proportion to his own lack of precaution in preventing or minimising his loss.
[66] The defence of a preponderance of fault on the part of the plaintiff, on
which the Court a quo appears to rely, is incongruent within the field of contract.
Where a plaintiff can prove that the breach of the defendant was a cause of the
loss (as opposed to the cause thereof) he should succeed even if there was
another contributing cause for the loss, be it an innocent one, the actions of a

third party (compare Nedcor Bank Ltd t/a Nedbank v Lloyd-Gray
Lithographers (Pty) Ltd 2000 (4) SA 915 (SCA) para 10-12), or, logically, the
carelessness of the plaintiff himself in failing to take reasonable precautions to
avoid it.  A defendant who commits a breach of contract does so independently
of any of the extraneous factors mentioned above.  All the requirements for his
liability will have been fulfilled.  In the absence of a contrary term in the
agreement itself or of legislative intervention excluding or reducing his claim, he
should therefore be held fully liable, regardless of whether the plaintiff’s culpa
was the dominant or pre-eminent cause of the loss.  What was said for Australia
in Alexander v Cambridge Credit Corporation Ltd and Another, supra, 315B,
applies, I believe, with equal force to South Africa:
“It is irrelevant to inquire whether the defendants’ default was the
dominant, effective or real cause of the plaintiff’s loss.  If the evidence is
suggestive of multiple causation, the inquiry to be made is whether the
defendants’ default was a cause of the plaintiff’s loss:  Fitzgerald v Penn
(1954) 91 CLR 268 at 273.”

And again, at 357G-358A:
“In my opinion the above cases do not establish the proposition that a
plaintiff in an action for breach of contract must prove that the breach of
contract was the real and efficient or dominant cause of the loss which he
suffered.  In the law of tort it is well-established that it is sufficient that the
wrongful act or omission of the defendant is a material cause of the
plaintiff’s injury or damage.   In principle the same rule must apply in the
law of contract unless the terms of the contract require the sole or
dominant cause to be determined.  In Simonius Vischer & Co v Holt &
Thompson [1979] 2 NSWLR 322, Samuels JA, with whose judgment on
this point Moffit P and Reynolds JA agreed, said (at 346) that in an action
for breach of contract against an auditor it was ‘sufficient for the plaintiffs
to establish that the defendants’ breaches were a cause of the loss
notwithstanding that there may have been other concurrent causes’.”
[67] A plaintiff who sues for damages for breach of contract for a loss
allegedly sustained through the negligence of the defendant but who was himself
careless in relation to the non-avoidance of such loss may therefore be non-
suited: (a) if there was a term in the contract to that effect; (b) if the plaintiff’s
own carelessness is held to be the sole cause of the loss, either in its totality or,
to that extent, in relation to a particular segment thereof; or (c) if the defendant’s

negligence was, comparatively speaking, so negligible or minimal as to be
discountable as a significant cause of the loss, which, strictly speaking, is simply
an instance of (b).
[68] In the present case PW did indeed seek to invoke a contractual term to
that effect.  It pleaded:
“8.3
The parties at all material times contemplated and made and
accepted the defendant’s appointment on the basis that the
defendant would not be liable to the plaintiff for any loss suffered
by the latter as a result of the defendant’s breach of contract, if the
plaintiff’s own negligence was the primary cause, or alternatively a
material cause, or alternatively a cause of its loss.”
No serious attempt was, however, made in evidence or in argument to press for
the acceptance of the term so pleaded and it may for present purposes be
disregarded.
[69] The Court a quo’s finding that TBA’s carelessness was “the predominant,
effective or real cause of the loss sustained” involved a qualitative and

quantitative comparison between the one party’s breach of contract and the
other party’s lack of precaution.  Nevertheless there was common ground
capable of  comparison:  The failure by both parties to prevent the loss by the
exercise of due care.  What the Court a quo  in effect found was that TBA’s
carelessness was so gross that PW’s negligence paled into insignificance and
was accordingly neutralised as a causative factor.  I disagree with that factual
finding.  Both sets of carelessness contributed to the loss.  The defendant’s
negligence was a cause of the loss.  TBA accordingly succeeded in proving the
causative element of its cause of action.
[70] The Apportionment of Damages Act
Having wrongly concluded, as stated in para 62 above, that TBA must lose the
Court a quo  proceeded to say (at 1024D-E):
“This conclusion does not end the matter for the question which now
arises is whether the TBA’s claim is not at least partly saved by the

provisions of chap 1 of the Apportionment of Damages Act 34 of 1956
(the Act), ...”
My approach is somewhat different.  The issue is not whether the Act can
salvage something from a lost cause but whether a good cause is to be abated.
The foremost question on that approach is whether the Act is applicable to a
claim for damages for breach of contract where the breach consists of the
negligent performance of a professional duty.  To that question I now turn.
[71] Chapter 1 of the Act which is the portion thereof which is relevant for
present purposes, provides as follows:
“1.
Apportionment of liability in case of contributory
negligence.– (1) (a)  Where any person suffers damage which is caused
partly by his own fault and partly by the fault of any other person, a claim
in respect of that damage shall not be defeated by reason of the fault of
the claimant but the damages recoverable in respect thereof shall be
reduced by the court to such extent as the court may deem just and
equitable having regard to the degree in which the claimant was at fault in
relation to the damage.
(b)  Damage shall for the purpose of paragraph (a) be regarded as
having been caused by a person’s fault notwithstanding the fact that

another person had an opportunity of avoiding the consequences thereof
and negligently failed to do so.
(2)  Where in any case to which the provisions of subsection (1)
apply, one of the persons at fault avoids liability to any claimant by
pleading and proving that the time within which proceedings should have
been instituted or notice should have been given in connection with such
proceedings should have been instituted or notice should have been given
in connection with such proceedings in terms of any law, has been
exceeded, such person shall not by virtue of the provisions of the said
subsection, be entitled to recover damages from that claimant.
(3)
For the purposes of this section “fault” includes any act or
omission which would, but for the provisions of this section, have given
rise to the defence of contributory negligence.”
[72] I have had the considerable benefit of reading in draft the opposing
judgments of Marais JA, Farlam JA and Brand AJA, on the one hand and Olivier
JA on the other.  The two judgments, I would suggest, comprehensively cover
the entire field and it would serve little purpose for me to traverse the same
territory.  My sympathies and inclination are wholly on the side of the views
expressed by Olivier JA.  There is, I believe, for the reasons stated by him, a
pressing need for legislative intervention in a situation such as the present where

the defendant’s breach of contract is defined in terms of his negligent conduct
but the plaintiff, by his own carelessness, contributed to the ultimate harm.  But
having said that, I am afraid that I have reluctantly come to the conclusion that
this particular piece of legislation does not fulfil that function.  I state my reasons
for saying so with a minimum of elaboration.
[73] The core concept in chapter 1 is “the defence of contributory negligence”
which is foreshadowed in the words “shall not be defeated” in ss 1(a) and which
is expressly referred to in ss 3.  Section 1 envisages:
a)
a claim by a claimant against a defendant for damages (the loss) he
sustained as a result of the fault (i.e. causative negligence) of the
defendant;
b)
fault (causative negligence) on the part of the claimant himself which
partly caused the loss;
c)
a defence of contributory negligence, based on such fault, which,

but for the provisions of s 1, would have availed the defendant
against the claim of the claimant.
[74] As was stated in paras 63-67 above the extraneous defence of culpa
compensatio was known to the common law in the law of delict but not in the
law of contract.  In the law of contract the claim of the claimant would not have
been “defeated” by his own culpa.  (Of course, it would have been a defence
available to a defendant, even in a contractual setting, if the claimant’s
carelessness was the sole cause of the loss – but that would ex hypothesi not
have been a case where the damage was caused “partly by his own fault and
partly by the fault of any other person”.)  That remained the position at the time
the Act was promulgated in 1956.  The intention of the legislature as to the scope
and range of the Act must be determined in the light of the situation prevailing at
the time it was enacted.  At that time the concepts of both contributory
negligence and “last opportunity” were unknown to a claim based on breach of

contract.  That being so, it seems to me to follow that the Act was designed to
address and correct a particular mischief that was identified as such within the
law of delict;  that it was confined to that particular mischief;  and that the
corresponding problem that might arise within the law of contract was never
within the legislature’s compass.  The express wording used in the Act does not
fit a contractual claim.  In my view the comfort of the Act was accordingly not
available to PW in this case to counter or curtail TBA’s claim for damages.
[75] It follows from that approach that it is not open to this Court to seek to
determine whether and to what extent TBA’s claim should be reduced “having
regard to the degree in which the claimant was at fault in relation to the damage”.
I turn, then, to the other issues remaining alive between the parties.
[76] Interest
As was stated in para 13 above it remained an issue between the parties on what
basis and to what extent PW was liable to TBA for the payment of interest on its

claim, which was eventually quantified at R1 389 801.90 and accepted by the
parties as being the amounts stolen by Mitchell during the period February to
November 1994.
[77] TBA’s main claim for interest was calculated at the rate of interest levied
by its banker, Nedbank, on every individual amount stolen by Mitchell from the
date upon which that particular amount was stolen.  Because of the thefts TBA’s
overdraft, so it was contended, was inflated and the excess attracted interest at
the higher rates charged by a banker to its customer on overdraft.  The factual
basis relied upon for this claim is that during the financial year under
consideration, i.e. 1994, TBA consistently operated its bank account in overdraft
and that, but for the misappropriations by Mitchell, its overdraft would have
been reduced by the exact amount stolen on the very day it was so stolen.  In
those circumstances, so TBA maintained, it suffered damages not only in the
form of the capital amounts stolen but also in the form of additional interest for

which it became liable to its banker on an overdraft that would otherwise have
been reduced.  TBA’s case was that these additional damages flowed naturally
from PW’s breach of contract, alternatively, that the additional interest which it
was thus liable to pay on overdraft was a matter which fell squarely within the
contemplation of the parties, particularly since PW acted as TBA’s auditors and
as such was fully aware of the existence of its perennial overdraft.
[78] Thus formulated, TBA’s claim was one not for ordinary mora interest but
for additional damages in the form of interest.  But as a further alternative TBA
contended that it was entitled to mora interest at the rate charged by Nedbank on
the appellant’s overdraft from a date upon which the quantum of TBA’s
damages became reasonably ascertainable by PW.  In this regard various dates
were mooted by TBA, the latest being the date of Reid’s final report on
Mitchell’s defalcations, i.e. 24 January 1995.
[79] PW’s contention, on the other hand, was that TBA was entitled to no

more than mora interest on the capital amount, calculated in accordance with the
provisions of the Prescribed Rate of Interest Act 55 of 1975 (“the latter Act”).
In terms of this Act TBA would be entitled to interest on the capital sum
calculated at the prescribed rate of 15,5% per annum from the date of demand or
summons, whichever date is the earlier.  Since no demand prior to summons was
proved, the date for the commencement of the calculation would therefore be the
date upon which summons was served, that is 3 November 1995.
[80] The relevant provisions of the latter Act are:
“1.   Interest on a debt to be calculated at a prescribed rate in
certain circumstances.- (1)  If a debt bears interest and the rate at which
the interest is to be calculated is not governed by any other law or by an
agreement or a trade custom or in any other manner, such interest shall be
calculated at the rate prescribed under subsection (2) as at the time when
such interest begins to run, unless a court of law, on the ground of special
circumstances relating to that debt, orders otherwise.”
(2)   “The Minister of Justice may from time to time prescribe a rate
of interest for the purposes of subsection (1) by notice in the Gazette.
(3) …
2A.   Interest on unliquidated debts.-(1)  Subject to the provisions of

this section the amount of every unliquidated debt as determined by a
court of law, or an arbitrator or an arbitration tribunal or by agreement
between the creditor and the debtor, shall bear interest as contemplated in
section 1.”
(2) (a)  Subject to any other agreement between the parties the interest
contemplated in subsection (1) shall run from the date on which payment
of the debt is claimed by the service on the debtor of a demand or
summons, whichever date is the earlier.
(b) …”
[81] The Court a quo made an award of interest, quoted in para 14 above,
from the date of judgment at Nedbank’s prime rate, which is substantially higher
than the 15,5% per annum prescribed in terms of the latter Act.  The award left
both sides dissatisfied, not without justification, since it does reveal some
confusion.  If the award was one for mora interest there is no reason why,
having regard to s 2A of the latter Act, interest should only run from date of
judgment and not from date of summons (compare Adel Builders (Pty) Ltd v
Thompson 2000 (4) SA 1027 (SCA) para 10).  By the same token, and having
regard to s 1(2), there is no reason why mora interest should be calculated at

Nedbank’s prime rate instead of at the prescribed rate.  It is therefore clear that
the interest award as formulated by the Court a quo cannot stand.  What order
should it have made?
[82] The approach to a claim for interest was formulated by this Court in
Bellairs v Hodnett and Another 1978 (1) SA 1109 (A) 1146H-1147C in these
terms:
“As previously pointed out, mora interest in a case like the present
constitutes a form of damages for breach of contract.  The general
principle in the assessment of such damages is that the sufferer by the
breach should be placed in the position he would have occupied had the
contract been performed, so far as this can be done by the payment of
money and without undue hardship to the defaulting party.  Accordingly,
such damages only are awarded as flow naturally from the breach or as
may reasonably be supposed to have been in the contemplation of the
contracting parties as likely to result therefrom (Victoria Falls and
Transvaal Power Co. Ltd. v. Consolidated Langlaagte Mines Ltd., 1915
A.D. 1 at p.22).  In awarding mora interest to a creditor who has not
received due payment of a monetary debt owed under contract, the Court
seeks to place him in the position he would have occupied had due
payment been made.  The Court acts on the assumption that, had due
payment been made, the capital sum would have been productively
employed by the creditor during the period of mora and the interest

consequently represents the damages flowing naturally from the breach of
contract.  The practice of awarding such interest at the legal rate of 6 per
cent obviates the need to prove in every case what the capital sum would
naturally and probably have earned had it thus been productively
employed.  A party wishing to recover a higher rate of interest would, in
the absence of any alteration in this practice, have to establish by way of
evidence as to current rates of interest on investment, etc. (such as was
adduced in, for instance, the Enteka case, supra) that the loss naturally
and probably suffered by him through the non-employment of his capital
exceeded the accepted legal rate.”
[83] If TBA’s claim for interest is advanced as a claim for damages it must, as
the law now stands, be accommodated under either limb (a) or limb (b) of the
dictum in Holmdene Brickworks, supra, discussed in para 46 and following
above.  I do not believe that the additional interest for which TBA became liable
to its banker can for the purpose of limb (a) be said to flow naturally from PW’s
breach.  Thinking away, as one must, the particular knowledge PW had that
TBA was habitually operating on overdraft, it does not tend to follow as a matter
of course that where an auditor is negligent his client will (a) operate on overdraft
(b) apply the exact amounts stolen from him because of an oversight on the part

of his auditor to the reduction thereof and (c) be unable factually to recover such
monies from the thief.
[84] The next question is then whether TBA’s claim can be accommodated
under limb (b).  Here TBA is perhaps on firmer ground.  PW’s working
knowledge of TBA’s chronic overdraft is germane.  Even so, and regardless of
whether the “contemplation” or the “convention” approach is to be adopted, I
do not believe that it can confidently be said that both parties were intent on that
consequence.  Be that as it may, there is in any event a more elementary reason
why TBA’s claim for interest qua damages, be it general or special, cannot
succeed and that is that it lacks the factual underpinning to support it.  It is
crucial to TBA’s case in this regard that it became liable to its banker for the
additional interest now claimed.  The only evidence proffered related to the
actual rates of interest that were in fact charged by Nedbank.  I agree with the
submission made on behalf of PW that in order to substantiate its claim TBA at

the very least had to prove:  (a) the existence of the overdraft agreement between
it and its banker;  (b) the specific terms of that agreement, including the
applicable terms as to the basis upon and the rate at which interest would be
charged on the various levels of the overdraft;  to which I would add (c) that had
it not been for Mitchell’s thefts its overdraft would have been reduced by the
exact amounts of the thefts (and would not, for instance, have been employed
for another purpose such as an investment).  TBA’s only witness on this issue,
Bladergroen, testified that the terms of TBA’s overdraft agreement with Nedbank
were embodied in a document which Bladergroen undertook to produce, but
never did.  The factual basis for the claim was accordingly lacking.  It follows
that TBA’s claim for interest qua damages cannot succeed (compare Bellairs v
Hodnett and Another, supra, 1147C-H).
[85] That leaves the claim for mora interest on the residual basis.  Our courts
accept without requiring special proof that a party who has been deprived of the

use of his capital for a period of time has suffered a loss.  At the same time it is
accepted that in the normal course of events such a party will be compensated
for his loss by an award of mora interest (see e.g. Bellairs v Hodnett and
Another, supra, 1145D-H).  The first issue in this regard relates to the rate at
which such interest should be calculated.  PW contends for the rate prescribed
pursuant to the provisions of s 1 of the latter Act, i.e.15,5% per annum.  TBA’s
opposing contention is that interest should, in the exercise of the court’s
discretion provided for in s 1 of the latter Act, have been awarded at the higher
rate charged by TBA’s banker on its overdraft.  In my view TBA has failed to
make out any case for the exercise of such a discretion in its favour.  At best for
TBA it is accordingly entitled to interest at 15,5% per annum.
[86] The only remaining issue regarding TBA’s claim for mora interest relates
to the date from which such interest should be calculated.  TBA’s contention is
that the commencement date should be a date earlier than the date of summons

because the quantum of its damages was readily ascertainable by PW at such
earlier date.  I disagree.  In the first place the quantum was by no means capable
of easy and ready proof and the fact that Reid reported on it cannot be held as
an admission by PW against itself.  In the second place it fails to recognise the
fundamental principle that however liquidated a plaintiff’s claim for damages may
be, mora interest can only be calculated from the date when mora commenced.
This principle is formulated by Solomon JA in West Rand Estates Ltd v New
Zealand Insurance Co Ltd 1926 AD 173 at 182:
“Here … the amount of loss in respect of each item of the claim was
ascertained by agreement between the parties before issue of summons …
It follows therefore that by our law interest began to run on the amount of
defendant’s liability from the date of mora.  And that brings me to
consider the question of what that date is.”
and at 183:
“There is no satisfactory reason for following any other practice, and we
think that we should now definitively lay down the rule that mora begins to
run from the date of receipt of the letter of demand.  It of course follows
that, where there has been no letter of demand, there would be no mora

until summons has been served on defendant.”
(see also Standard Chartered Bank of Canada v Nedperm Bank Ltd 1994 (4)
SA 747 (A) 778A-B).  It is idle to contend that PW was in mora on the very date
each amount was stolen by Mitchell or for that matter on the date Reid submitted
his report.  For these reasons TBA should have been awarded interest on the
capital amount of its claim, calculated at the rate of 15.5% per annum from date
of summons, being 3 November 1995, to date of payment.
[87] Costs
The initial costs order by the Court a quo was made on 7 July 1999 and is
quoted in para 14 above.  It can be separated into two parts.  The first part
related to the 14 days of trial during which TBA set out to prove the quantum of
its claim.  With regard to this period of 14 days PW was ordered to pay TBA’s
costs on the scale of attorney and client.  The second part of the order provided

that, save for the quantum-related period of 14 days dealt with in the first part,
there would be no order as to costs, i.e. that each party was liable for its own
costs.
[88] After 7 July 1999 it was disclosed to the Court that PW had made a
“without prejudice” tender as contemplated in rule 34 on 14 April 1997 i.e.
shortly before the commencement of the trial.  This is referred to in para 15
above.  Since the amount tendered exceeded the damages awarded in the first
order PW asked the Court to reconsider its original costs order.  The Court
acceded to PW’s request and as a result the revised order which is quoted in
para 15 above was substituted.  In terms of the revised order PW was ordered
to pay TBA’s costs incurred up to 24 April 1997 while TBA was ordered to pay
PW’s subsequent costs, save for the costs incurred by PW during the stipulated
quantum-related period of 14 days.  With reference to this 14 days period PW
was deprived of its costs.

[89] On the view I hold on the merits of the appeal the tender of 24 April 1997
is no longer of any consequence.  I did not understand PW’s counsel to contend
that in these circumstances this Court is to deviate from the general principle that
costs should follow the result.  Accordingly, PW is to pay the trial costs
incurred by TBA.
[90] The only remaining issue regarding the costs in the Court a quo relates to
the scale of the costs awarded to TBA during the quantum-related period of 14
days.  Though both sides maintained that the Court a quo erred when, in its
original order of 7 July 1997, it awarded those costs to TBA on a scale as
between attorney and client, their respective contentions as to what the Court
should have ordered differ diametrically.  TBA contended that the Court should
have awarded those costs not only on an attorney and client scale but on the
even more punitive scale as between attorney and own client.  PW’s contention,
on the other hand, is that the special order of costs was unwarranted and that the

costs should have been awarded on the ordinary party and party scale.
[91] From the judgment of the Court a quo it is apparent that it did not
appreciate the import of TBA’s request for attorney and own client costs.  What
also appears from the judgment is that the reason for its special costs order was
the finding that in all the circumstances PW acted “grossly unreasonably” in only
conceding quantum after the matter was bitterly contested for fourteen days of
the trial.  In weighing up these opposing contentions it is unnecessary to dwell in
detail on the trial court’s stated reasons for its finding of gross unreasonableness
on PW’s part.  Although it may be that I would not have made a similar order,
sitting as a court of first instance, it is a discretionary decision with which this
Court, in the absence of a misdirection, will be slow to interfere.  PW’s case is
not that the Court a quo misdirected itself.  In all the circumstances there is in
my view no basis for interfering with the Court a quo’s conclusion that a special
costs order was justified.

[92] This brings me to TBA’s counter-submission that the costs pertaining to
the quantum-related period of 14 days should have been awarded on the even
more punitive scale of attorney and own client.  Since the Court a quo appears
not to have appreciated that TBA’s request was for an order in its refined form
this Court is at liberty to reconsider the issue de novo.  Having done so, I believe
that the grounds advanced by TBA in support of its submission fall short of
justifying a cost order which is even more punitive than the one already made in
its favour.  That being the case, and in the absence of full argument on the
matter, it is not called for to express a firm view on whether an order in that form
is a competent one.  I may in passing mention that the Full Bench of the Cape
Provincial Division has recently expressed the considered view, in Law Society
of the Cape of Good Hope v Windvogel 1996 (1) SA 1171 (C), that an order for
attorney and own client costs is not appropriate since it is not generically
different from an order for attorney and client costs.  On the other hand, there

are considered decisions to the contrary in other Divisions (see e.g. Cambridge
Plan AG v Cambridge Diet (Pty) Ltd and Others 1990 (2) SA 574 (T);
Fidelity Bank v Three Women (Pty) Ltd and Others [1996] All SA 368 (W) and
Ben McDonald Inc and Another v Rudolph and Another 1997 (4) SA 252 (T)).
Moreover, in Sentrachem v Prinsloo 1997 (2) SA 1 (A) 22B-D and Cape
Pacific Ltd v Lubner Controlling Investments (Pty) Ltd 1995 (4) SA 790 (A)
807C-D, this Court appears to have accepted in principle, but without pertinent
consideration, that an order for attorney and own client costs would in
appropriate circumstances be competent.  This remains yet another issue for
future consideration by this Court (see generally, Cilliers, Law of Costs, 3rd ed
para 4.08.)
The following order is made:
1.
The appeal succeeds with costs including the costs of two counsel.
2.
The following order is substituted for the orders made by the Court

a quo:
‘1.
The defendant is ordered to pay the sum of R1 389 801.90 to
the plaintiff together with interest thereon at the rate of 15,5%
per annum from 3 November 1995 to date of payment.
2.
The plaintiff is ordered to pay to the defendant the sum of
R74 100 together with interest thereon at the rate of 15,5%
per annum from 6 February 1996 to date of payment.
3.
The defendant is ordered to pay the plaintiff’s costs,
including the costs of two counsel and the qualifying fees of
the plaintiff’s expert witnesses, Wainer and Dorfan.  Save for
paragraph 4 below, the plaintiff is awarded such costs on a
party and party scale.
4.
The defendant is ordered to pay the plaintiff’s costs,
including the costs of two counsel, of 14 days’ trial spent on

quantum on the scale as between attorney and client.’
…………………
P M NIENABER
JUDGE OF APPEAL
MARAIS JA, FARLAM JA, BRAND AJA:
[1] With one reservation we concur in the judgment of Nienaber JA.  The
reservation relates to what has been referred to as the “supple” test in assessing
what damages are recoverable.  While the approach has attractions, we have not
explored its possible disadvantages in sufficient depth to enable us to affirm its
soundness.  We too prefer to leave the question for another day.  We have also
had the advantage of reading the informative judgment of Olivier JA.
Regrettably, we are unable to agree with his conclusion that the Act is applicable
in this case.
[2] At the risk of stating what should be obvious we remind ourselves that the
enquiry is what the legislature intended when it enacted the Act.  The exercise is

one of interpretation of a statute and does not involve “reforming” either the law
of delict or the law of contract.  Nor does it involve developing the common law
in the manner contemplated by s 39(2) of the Constitution of the Republic of
South Africa Act 108 of 1996.  The manner in which the common law might
now be reformed or developed in terms of that provision is logically irrelevant to
the interpretation of the Act.  What is relevant to its interpretation is what the
common law was commonly understood to be in 1956 when the legislature
decided to alter it by legislation.  It is so of course that s 39(2) of the
Constitution enjoins us “when interpreting any legislation” to “promote the spirit,
purport and objects of the Bill of Rights”, but that postulates that the
interpretation which it is proposed to place upon legislation is indeed one which
would demonstrably promote an identifiable value enshrined in the Bill of Rights
and also one of which the legislation is reasonably capable.  To this aspect of the
matter we shall return.
[3] We have no doubt that in 1956 the common understanding of the
common law of South Africa was that contributory negligence (a well-
known term of art evolved in and peculiar to the law of delict) was a
concept alien to the law of contract.  It is true of course that the

negligence of a plaintiff was not always entirely irrelevant in a contractual
claim.  It might be regarded from a purely causative point of view as the
only or true cause of the plaintiff’s loss or it might form the basis for a
successful contention that the plaintiff had unreasonably failed to mitigate
the loss.  However, in such cases no question of contributory negligence
and hence of apportionment of liability could arise.  The plaintiff either
succeeded or failed in the claim or, in the case of unreasonable failure to
mitigate part of the loss, had the claim reduced to the extent that the loss
could have been mitigated.  But factual causation was the key concept,
not respective degrees of culpa.
[4] Where, as here, the stated object of the Act in its long title is “To
amend the law relating to contributory negligence and the law relating to
the liability of persons jointly or severally liable in delict for the same
damage, and to provide for matters incidental thereto”, one is

immediately led to think that it was the law of delict which the legislature
had in mind to amend.  A fortiori when one recalls the dissatisfaction
which existed at the time in regard to the common law principle in the law
of delict which put a plaintiff entirely out of court if he or she was
concurrently negligent, even if the degree of the defendant’s negligence
was much greater.  It led to considerable sophistry in the search for a last
opportunity to avoid loss which could be said to have been available to the
defendant in order to rescue the plaintiff from being non-suited because of
his or her contributory negligence.  But even where such an opportunity
could be identified, it was generally thought to be unfair that the plaintiff’s
negligence should then be entirely ignored and the defendant be held
liable for the full amount of the loss.  There was thus a notorious mischief
in the common law of delict to which the Act would be expected to be
intended to put an end.  No comparable state of public and professional

disaffection with the extent to which the law of contract catered for
negligence on the part of a plaintiff existed and, in the absence of a clear
indication in the Act that it was intended to amend the law of contract in
that respect, one would hesitate to conclude that it did.
[5] As one reads on, one finds provisions which plainly show that the
law of contributory negligence in the common law of delict was being
amended but precious little, if anything, to show that negligence in the law
of contract was also being addressed.  Indeed, one finds indications to the
contrary.  One need waste no time on the former.  It has never been
doubted that the Act was intended to amend, at least, the law of delict in
so far as it related to contributory negligence.  But what of the latter?
[6] First there is the choice of language.  We have already observed
that contributory negligence is a term of art which had its fons et origo in
the law of delict.  It is a concept entirely foreign to the law of contract.

Yet that is the expression which the legislature has employed in the long
title of the Act, as the heading to Chapter I, and in s 1(3).
[7] Next there is s 1(1)(b).  It  provides that  for  the  purposes of
paragraph (a) of s 1(1), damage shall be regarded as having been caused
by a person’s fault notwithstanding the fact that another person had an
opportunity of avoiding the consequences thereof and negligently failed to
do so.  It was obviously intended to abolish the last opportunity rule which
was also a common law rule associated with the law of delict.
[8] Then there are the consequences of accepting that the Act was
intended to apply to contracts.  The plaintiff sues the defendant for
damages for breach of contract.  No negligence is entailed in the breach;
the obligation is absolute and fault is irrelevant.  As a fact the plaintiff’s
negligent conduct has contributed to the happening of the loss-causing
event.  There being no damage caused partly by the defendant’s fault, s 1

(1)(a) cannot apply and the defendant cannot claim an apportionment of
liability.  If, on the other hand, negligence was entailed in the breach of
contract, the defendant would be entitled to an apportionment of liability.
The inequity is manifest:  the defendant who is at fault may invoke the
plaintiff’s negligence to reduce the claim;  the defendant who is not at
fault, may not.  That bizarre result is not satisfactorily explained by saying
that the contractual obligation of the latter was “absolute” whereas that
of the former was relative and dependent upon the existence of
negligence.  The former was under just as absolute an obligation not to be
negligent.  Why would he or she have been allowed to invoke the Act after
breaching the contract by being negligent, but the latter not be entitled to
do so after breaching the contract in a manner which does not entail
negligence?  The distinction seems absurd.  What is more, there is a clear
distinction between a contractually imposed obligation to take care in

discharging a stated obligation and a contractually imposed obligation to
perform a stated obligation failure to perform which will constitute a
breach of contract whether or not the breach was in fact due to lack of
care.  In the case of the latter, is the defendant who is blameless in
breaching the contract to be liable in full but the defendant who is
negligent in breaching the contract to have the benefit of the Act?  It is
difficult to accept that, if the legislature did intend the Act to apply to
contracts generally or even to only some contracts, it would have enacted
so blunt an instrument and left fundamental questions such as these
unanswered.
[9] In our view, the random and inconsistent results of the
indiscriminate application of the Act to contracts negative the existence of
any intention on the part of the legislature to have the Act apply to
contracts, whether or not they are contracts which require to be

performed in a manner which is not negligent.
[10] There are still further indications that such is the correct
conclusion.  Section 1(1)(a) provides that a claim “shall not be defeated by
reason of the fault of the claimant”.  In the law of delict that was of
course something which could and did happen.  A claim valid in all
respects could be defeated by the plaintiff’s contributory negligence.  In
the law of contract it could not.  The negligence of a plaintiff could not
“defeat” his claim.  The point was made by Watermeyer J in OK Bazaars
(1929) Ltd and Others v Stern and Ekermans 1976 (2) SA 521 (C) at 528F.
If his own negligence was held to be the true or real cause of his loss and
he was non-suited on that account it was implicit that there never was a
justifiable claim against the defendant.  If he negligently failed to mitigate
his loss, that too did not “defeat” his claim.  It disabled him from pursuing
a valid claim if the entire loss could have been avoided and merely

reduced it if part of the loss could have been avoided.
[11] Section 1(3) provides that “ ‘fault’ includes any act or omission
which would, but for the provisions of the section, have given rise to the
defence of contributory negligence”.  Here again it is necessary to repeat
that the law of contract knew no “defence of contributory negligence”.
Moreover, “fault” must obviously be confined to negligence.  The context
of the Act shows that to be so.  Dolus is a form of fault in the wide sense
but it is obviously not included.  The legislature did not exclude it by name
because the context of the Act showed plainly enough that it was to be
excluded.  If it be suggested that fault is always involved in a breach of
contract and therefore contracts are covered by the Act the suggestion
would be wrong.  Contracts may be breached in circumstances where no
fault can be identified.  If it be said that at least those contracts breach of
which entails fault are covered, the questions raised in para [8] arise.  All

these considerations point inexorably to the conclusion that the law of
contract was far from the mind of the legislature when it enacted the Act
and that it did not intend the Act to amend the law of contract.
[12] We cannot agree with the approach of the Court a quo to the
interpretation of the Act.  It entailed isolating s 1(1)(a) and attempting to
accommodate  contractual claims within what was said to be the plain language
of the provision.  Such an approach ignores the colour given to the language by
the context of the Act read as a whole and by the long title, the use of the
expression contributory negligence, and the other considerations raised in this
judgment.  The days are long past when blinkered peering at an isolated
provision in a statute was thought to be the only legitimate technique in
interpreting it if it seemed on the face of it to have a readily discernible meaning.
As was said in University of Cape Town v Cape Bar Council 1986 (4) SA 903
(A) at 914D-E “I am of the opinion that the words of s 3(2)(d) of the Act, clear
and unambiguous as they may appear to be on the face thereof, should be read
in the light of the subject-matter with which they are concerned, and that it is only
when that is done that one can arrive at the true intention of the Legislature”.  The

well-known passage in the dissenting judgment of Schreiner JA in Jaga v
Dönges NO and Another;  Bhana v Dönges NO and Another 1950 (4) SA 653
(A) at 662G-663A was also quoted with approval.  It is of course clear that the
context to which reference is made in the latter case must include the long title
and chapter headings.  (Cf Swart v Cape Fabrix (Pty) Ltd 1979 (1) SA 195 (A)
at 202C.)
[13] The decision of Watermeyer J and Steyn J in the OK Bazaars case,
supra, that the Act does not apply to claims in contract has stood for 26 years.
Its correctness has not been challenged in our courts.  The legislature has
amended the Act on three occasions since the decision and, if the decision did
indeed frustrate its desire to amend the law of contract, we find it very strange
that remedial legislative steps were not taken on any of those three occasions.  It
is so that it was not a decision of this Court which would have bound every
court in the land but it was a decision of two judges in a provincial division
which would bind single judges in the Cape Provincial Division and magistrates
throughout the country.  That the legislature has acquiesced in the decision for
nigh on 30 years is significant.  The remarks made in Kergeulen Sealing and
Whaling Co Ltd v CIR 1939 AD 487 at 505 also have some bearing on the
matter.  In that case the decision of two judges of the Cape Provincial Division in

a prior case which had remained unchallenged for over 20 years and on which
the commercial community had presumably acted on the assumption of its
correctness was described as one which “one would hesitate now to disturb”.
Such a consideration can obviously not be conclusive.  Its weight will depend
upon the circumstances of the case and the extent to which existing legal
relations affecting many members of society may be retrospectively nullified by
disturbing the commonly accepted interpretation.  We say “retrospectively”
because that would be the effect of a decision by a court reversing the
previously held view.  It has never been suggested that South African courts
have the power to limit the operation of such judge-wrought changes in the law.
(See Hahlo &  Kahn, The  South  African  Legal  System  and  its  Background,
p 145 n 13 and pp 249-50.)  We should add that, in any event, we consider the
reasoning of Watermeyer J to be sound.
[14] We do not find it helpful to examine how courts elsewhere have
interpreted their own domestic legislation dealing with contributory
negligence.  Their legislation falls to be interpreted against the
background of a common law regime which, while similar in important
respects to our own, is or may be in other respects very different.  The

language of the legislation is also not identical to our own.  None the less
and because the legislation elsewhere clearly influenced ours and the
interpretation of it might be thought to be persuasive we shall indicate
briefly why we do not find it to be so.
[15] We do not think that the difference in wording between the English
definition of “fault” in section 4 of the Law Reform (Contributory
Negligence) Act, 1945 8 & 9 Geo. 6, c.28 and the definition of “fault” in s
1(3) of our Act indicates an intention on the part of the South African
legislature to make the Act apply in contractual cases.  The English
definition of “fault” is:
“ ‘fault’ means negligence, breach of statutory duty or other act or
omission which gives rise to a liability in tort or would, apart from this
Act, give rise to the defence of contributory negligence.”
Our definition is in s 1(3) of the Act and reads as follows:
“(3)  For the purpose of this section ‘fault’ includes any act or

omission which would, but for the provisions of this section have
given rise to the defence of contributory negligence.”
[16] In English law in a case where both a plaintiff employee and a
defendant employer are not negligent but are in breach of their statutory
duties under the factories legislation and the regulations made thereunder
the damages suffered by the plaintiff will be subject to apportionment
under the 1945 Act because the employee’s non-negligent breach of
statutory duty is “fault” specifically covered by the definition in s 4 of that
Act:  see Boyle v Kodak Ltd [1969] 1 WLR 661 (HL).  In that case Lord
Diplock pointed out (at 672B) that a new branch of the law of civil wrongs
was developed in England by judicial decisions based on the Factories Act
(9 & 10 Eliz 2, c. 34) and its predecessors and by regulations made
thereunder.

[17] Although our law recognizes an action for damages for breach of a
statutory duty where the statute was intended to give a right of action (see
McKerron, The Law of Delict, 7th edition, p 276), where it does not the courts
may yet hold that the breach may be evidence of negligence.  Compare Rawles v
Barnard 1936 CPD 74 at 77 and Olitzki Property Holdings v State Tender
Board and the Premier of the Province of Gauteng (SCA, 28.3.2001, as yet
unreported, at para [13]).)  Our courts have not by judicial decision built up a
new branch of the law of civil wrongs relating to breach of statutory duties
imposed by legislation akin to the English Factories Acts.  It may well be that for
that reason our legislature decided to omit from the definition of “fault” in the
Act a reference to breach of statutory duty such as was found in the English
1945 Act.  Furthermore, liability for delict in our law is based in general on fault,
unlike in English law where in an appreciable number of torts strict liability exists.
That would explain why our legislature omitted any reference to other acts or
omissions which give rise to strict liability and was content to make
apportionment available only in cases where fault in its ordinary sense was
present, subject only to the inclusion of contributory negligence for the reason
given in the next paragraph.  Moreover, as Lord Diplock said (at 674H) in Boyle
v Kodak Ltd, supra, it is difficult to apportion the respective shares of

responsibility for damage of parties who were not blameworthy in any way and
who are only regarded as being at “fault” because of the application of strict
liability to their case.  We therefore do not think that the differences between the
definitions of “fault” appearing in the English and South African Acts indicate an
intention on the part of our legislature to make the Act apply not only in the
context of actions ex delicto but also of those ex contractu.
[18] The fact that our definition is introduced by the word “includes” and not
“means”, as is the English definition, is explicable in our view on the simple
ground that because a plaintiff is said to be guilty of contributory negligence
where he is careless in safeguarding his own person or property, even if his
carelessness puts no-one else’s person or property at risk, it was considered
advisable to make it clear that the blameworthy conduct of the plaintiff which
was to form the basis of the apportionment was to include contributory
negligence in this sense.  Aquarius (Watermeyer CJ) in his article Causation and
Legal Responsibility (1941) 58 SALJ 232 at 248 made this aspect of
contributory negligence clear when he said:
“It is negligence in the sense of a failure to look after his own interests,
and not necessarily negligence in the sense of a breach of a duty to take
care which is owed to another.”

[19] In para 11 (a) and again in para 12 of his judgment Olivier JA states that,
by virtue of the decision of this Court in Lillicrap, the approach followed in
England and New Zealand is not open to us.  We have difficulty in seeing the
relevance of the decision in Lillicrap  to the solution of the problem. The
approach followed in England and New Zealand involves drawing a distinction
between three categories of breach of contract and an acceptance of the
proposition that their Acts only apply to the third category, being the category of
concurrent contractual and delictual liability.  This approach is dictated by the
definition of fault in their Acts, more particularly, the requirement in the definition
that the defendant’s conduct must give rise to a liability in tort.  It follows that if
the defendant is only liable in contract and not in tort there is no “fault” on the
part of the defendant and the English Act cannot apply.  That is the very essence
of the Glanville Williams theory.  However, as is emphasised by Olivier JA in
para 5 (a) and again in 9 (f), the expression “which gives rise to liability in tort”
does not form part of the definition of “fault” in our Act.  The existence of
concurrent liability in delict and contract therefore appears to be irrelevant when
construing our Act.
[20] However, even if it were open to us to adopt the approach of the English
courts and accept that the Act could apply to what was identified as the third

category of case in Forsikringsaktieselskapet Vesta v Butcher [1986] 2 All ER
488, namely, where concurrent liability in both contract and delict exists, this is
not such a case.  It falls within the second category of case identified by
Hobhouse J at 508 (and approved by the Court of Appeal:  see [1989] AC 852
at 865D-E, 867F-G and 875F-G) in which an apportionment on the basis of
contributory negligence is not available:  see further Raflatac Ltd v Eade [1999]
1 Ll R 506 (QB) at 510.
[21] The decision of the Court of Appeal in Vesta was given by a majority
(O’Connor LJ and Neill LJ).  The third member of the court, Sir Roger Ormrod,
dissented, saying (at 879 A-B) that he remained unconvinced that “contributory
negligence, as such, at common law had any relevance in a claim in contract”.
[22] On the other hand one of the factors mentioned by O’Connor LJ (at 867
F-G) in favour of the view that there is a power to apportion in a category (3)
case even though the claim is made in contract was “that contributory negligence
was a defence in category (3) cases pleaded in contract before 1945”.  He
continued:  “The argument is supported by railway cases and banking cases.”
[23] The majority in the High Court of Australia in Astley v Austrust Ltd (1999)
197 CLR 1 based their decision in part on a finding that prior to 1945

contributory negligence did not operate as a defence to a breach of contract.
Further support for that view is to be found in an article by N E Palmer and P J
Davies, “Contributory Negligence and Breach of Contract – English and
Australian  Attitudes Compared” published in (1980) 29 ICLQ 415, who state (at
418-9) that contributory negligence was never a defence to an action for breach
of contract at common law and refer to a decision of the Court of Appeal,
Becker v Medd (1897) 33 TLR 313, in which it was specifically held that a claim
in contract could not be defeated by proof of negligence on the plaintiff’s part.
[24] The point need not detain us further in this case because, whatever the
position was in English law, it was not suggested that contributory negligence by
the plaintiff was a defence to a contractual claim in our law.
[25] During the course of the argument counsel for the respondents referred us
to the texts of draft bills which were published in the Government Gazette before
the Act was passed by Parliament.  These texts showed, so it was submitted,
that although it was originally proposed to limit the operation of the Act to
delictual claims this intention was departed from in the text which was eventually
passed by the Legislature.  Counsel for the appellant responded to this material
by placing before us the text of the Hansard report of the proceedings in the

House of Assembly which clearly showed, particularly from the speech of the
Minister of Justice, who introduced the Second Reading of the Bill, that the
discussions related solely to delictual claims.  In view of the fact that we have
without reference to this material come to the conclusion that the Act only
applies to delictual claims it is unnecessary for us to decide whether material of
this kind can be looked at by a court when legislation falls to be interpreted and,
in particular, whether the decision of the House of Lords in Pepper v Hart
[1993] AC 593 (HL) is in accordance with our law.
[26] It remains to observe that we are unable to discern in the Bill of Rights any
societal value which is imperilled by the conclusion that the Act does not apply
to claims based on breach of contract and that we do not consider the Act to be
reasonably capable of a contrary interpretation in the light of all the indicia to the
contrary which exist.
[27] We conclude, therefore, that there can be no reduction of the damages
proved to have been suffered by the appellant.  Whether there were other ways
at common law in which the respondent could have exploited the negligence of
the appellant does not fall to be considered.  Those that were suggested and
covered by the pleadings have been dealt with  in the judgment of Nienaber JA.

[28] By drawing attention to some of the implications of boldly applying the
Act to cases in contract (even if only to those where a breach entails negligence),
we do not wish to be thought to be hostile to the very idea of extending the
operation of the Act to contract cases by legislation.  All that we would caution
against is a decision to do so without a full appreciation and consideration of all
its implications.  These matters are, so we understand, being considered by the
Law Commission and it will doubtless take into account all the relevant
implications, including those touched upon in the case of Austrust, supra, at
paras 47 and 48.

R M MARAIS
JUDGE OF APPEAL

I G FARLAM
JUDGE OF APPEAL

F D J BRAND

ACTING
JUDGE
OF
APPEAL
Olivier  JA
[1] I am in respectful agreement with the judgment of my colleague, Nienaber
JA, that there was a failure by both TBA and PW to prevent the loss suffered by
TBA by the exercise of due care.   I also agree with his approach to the
questions of interest and costs.   Unfortunately, I disagree with my learned
colleagues that s 1 (1) (a) of the Apportionment of Damages Act, 34 of 1956
('the Act') is not applicable in the present case.   I readily concede that the
question whether the Act is applicable to contractual claims is controversial.   In
the end the opposing judicial views may well depend on differing philosophical

and jurisprudential points of departure.
A minority judgment is usually short and to the point.   In the present case
I consider it necessary to explain my views somewhat more fully, also because
the Act is presently under review by the South African Law Commission and a
somewhat more complete overview may be helpful to it.
[2] While it is undisputed that the Act applies to claims based on delict, the
question of the applicability of the Act and its counterparts to contractual
clauses has elicited strongly opposed views and judgments in England, Australia,
New Zealand and Canada and in our country.   All the Commonwealth countries
just mentioned share apportionment legislation.   But the wording of the various
acts differ;  so do the lenses through which we look at the statutes.   In
particular,  South African lawyers are required to keep our common law  -  the
Roman-Dutch law  -  in mind as a background factor in interpreting our
legislation.   What is important, though, is the quest for recognition of the

underlying principles and philosophies developed by other courts as an aid in
clarifying our own thoughts.   I will first examine the position in our common law
and, for the sake of clarity, distinguish between delictual and contractual claims.
[3] Apportionment in delictual actions
(a)
Originally, in Roman law, due to the procedural formula applicable to the
Aquilian action, a strict all-or-nothing approach prevailed.   Reinhard
Zimmermann, The Law of Obligations : Roman Foundations of the Civilian
Tradition, (1990), at 1010 concludes :
'If somebody suffered harm through his own fault, he was denied recovery, unless
the tortfeasor had acted intentionally (in which case he could recover his full
damages).   The strict principle of all-or-nothing was predetermined by the
procedural formula.   The judge only had the alternative to condemn in the full
amount or to absolve the defendant  -  tertium non datur.'
This principle appears from two texts in the Digesta dealing with general
principles applicable to the Aquilian action, D 9.2.9.4 in fine (Ulpianus) and D
9.2.31 (Paulus).   But two peculiar cases have elicited involved debates through

the ages.   The first is the case of the athlete who is training at javelin throwing,
discussed in D.9.2.9.4.   A slave is passing by and is injured by the javelin.   If
this happens on a proper sports field, the athlete is not held liable;  if outside a
recognised sports field, he is liable.   Is this a case of contributory negligence?
Or, rather, volenti non fit injuria?   The second case is that of the barber who
sets up his chair in the immediate vicinity of a playing field.   While shaving a
slave, the barber's hand is hit by a ball thrown or kicked by one of the players.
The slave is injured.   The text (D.9.2.11 pr) mentions three opinions, none of
which applies an apportionment of damages.   Mela says the one who is
negligent, is liable.   But who is negligent  :  the player or the barber? Mela does
not say.   Proculus thinks the barber is negligent for setting up his chair in a
dangerous place.   Ulpian states that it is rightly said that the slave only had
himself to blame, because
' … it is no bad point in reply that if someone entrusts himself to a barber who has
his chair in a dangerous place he has only himself to blame for his own misfortune.'

(See Zimmermann op cit 1011 - 1013 for a discussion of the texts.) We do not
know how the Romans actually solved the problem.   Mela and Proculus clearly
think that the answer lay in the field of culpa.   Does Ulpian invoke the volenti
defence?   What emerges is that the problem of concurrent causation of the loss
by a plaintiff and a defendant was not solved by what Flemming, Torts, p 244
calls 'the abracadabra of causation', but by having regard to fault or
wrongfulness.
(b)
There is, however, another text which later assumed more importance than
the discussions by the classical scholars of the cases of the javelin thrower and
the barber.   It is D.50.17.203, a text ascribed to Pomponius and which appears
in the 50th book of the Digest, dealing with general rules and principles.   The
text lays down :
'If anyone incurs loss which is his own fault, he is not regarded as incurring loss'
(c)
This principle was used by medieval lawyers to begin to develop a theory

applicable to cases of concurrence of fault in the field of delict.   Zimmermann
op cit 1030, citing Lauterbach (1618 - 1678) and a gloss to D.9.2.9.4, explains
that the approach of the Roman law was retained, but it was now more clearly
explained in terms of fault:
'The fault of the plaintiff  /  victim was,  in a way,  "set off"  against that of the
defendant/wrongdoer, with the result that "culpa culpam abolet".   Hence the
expression of compensatio culpae or culpa compensation that came to be used to
label the uncompromising approach to the problem of contributory negligence.
Whether every contributory fault on the part of the victim  -  even culpa levissima  -
was originally taken to deprive him of his remedy is not quite clear.   In the later
usus modernus, at any rate, the issue appears to have been decided on the
basis of a preponderance of fault;  only if he had displayed the same or a
greater degree of negligence than the wrongdoer did the victim lose his claim.
Where, on the other hand, his negligence was less significant, when compared
with that of the wrongdoer, his claim for damages remained completely
unaffected.'   (My emphasis)
(d)
On the continent of Europe, the Romanistic principle of D.50.17.203 and
the idea of culpa compensatio, as described above, prevailed ( see
Zimmermann op cit 1047).

(e)
The South African law of delict, cut off from its historical roots
in the 19th and early 20th centuries
' … became completely entrapped in the "abracadabra" of the causal approach to
contributory negligence.   Ultimately, therefore, only the legislator was able to save
the day.'   (Zimmermann op cit 1049)
Our courts simply adopted the English law according to which the
contributory negligence of a plaintiff was a complete bar to relief in an action in
tort, rather than the relative fault principle of our common law.   This was
lamented by Watermeyer CJ in Pierce v Hau Mon 1944 AD 175 at 195 :
'The law relating to the subject of contributory negligence which is applied by our
Courts has been taken over from English law and it is seldom that any Roman-Dutch
authority is referred to.   In fact there is plenty of authority in Roman law (see
Grueber, Lex Aquilia (2.7.4, p. 228 et seq.) and also in Roman-Dutch law (see
Voet (9.2.17;  9.2.22)), and the principle of culpa compensatio was referred to by
De Villiers, C.J., in Lennon's case (1914, A.D. 1),  by Kotze, J.A., in Jacobs v
Union Government (1919, A.D. 325) and by Gardiner, A.J.A., in the case of
Union Government v Lee (1927, A.D. 202).   It may be that if Roman - Dutch
authorities  had  been  more  fully  referred to in earlier South African cases that our
law of contributory negligence might have developed on different lines from the

English law.   However, if we take the English law on the subject as it now is, and as
it had been adopted in our Courts, we shall find that there are still doubts and
difficulties about its application in certain classes of cases.'
(f)
Our courts, not enchanted with the 'all-or-nothing' approach, adopted the
'last opportunity' rule  :  the party who had the last opportunity to avoid the loss
is liable.   This was a manifestation of the proximate cause theory of causation.
(g)
In the Commonwealth countries, in the field of torts, the law in respect of
contributory negligence was changed by legislation first in 1924 in Ontario, later
in England by the Law Reform (Contributory Negligence) Act of 1945 and in
other Commonwealth countries.   Some of these statutes were specifically
designed and phrased to be applicable to delictual claims only;  others were
worded in general terms.   Our legislator followed suit in 1956 with the Act which
in its terms differs from that of the other Commonwealth statutes.   Overall the
Act was not well-drafted  -  see the scathing remarks of Holmes J in Taylor v
South African Railways and Harbours 1958 (1) SA 139 (D) at 142 A - B.

Since 1956 our courts have developed a substantial body of jurisprudence as
regards the application of the Act to delictual claims.   In that field our law has
now, broadly speaking, stabilised in a system which seems to be equitable.
[4] Apportionment in contractual actions
(a)
We must now return to the field of contract and ascertain how the
phenomenon of concurrent fault was dealt with in our common law.   The
subject is a difficult one, mainly because of the absence of clear texts or well-
developed rules.
(b)
Culpa played a significant role in the Roman and Roman-Dutch law
relating to breach of contract.
In post-classical Roman law all claims for breach of contract were given
content ex aequo et bono.   From now on, through medieval law, usus modernus
and Roman-Dutch law :
'What mattered was simply whether the debtor had complied with his contractual
obligations and, if not, whether his failure to perform (properly) was attributable to

his fault;  hence the emphasis throughout the various periods of the ius commune on
the subjective requirements for liability for breach of contract and the attempts to
analyse, refine and systematize the various degrees of culpa (in the broad sense of
the word).'   (Zimmermann op cit 807 et seq;  Ramsden Supervening
Impossibility of Performance in the South African law of Contract.
1985 19 et seq).
(c)
The important point is that the basic requirements for contractual and
delictual liability in our common law did not differ fundamentally.   Both kinds of
liability were based, in the end, on culpa.   The incidence of onus may have been
different, and the quantum of damages may have been different, but there was a
basic unitary approach.   No wonder that, as Zimmermann (op cit at 808
footnote 176) points out, during the time of the usus modernus liability arising as
a consequence of deficient performance 'tended to be based on the lex Aquilia
rather than on contractual principles.'
(d)
I must pause here to refer to and emphasise the fundamental difference
between our common law roots and that of the English law in relation to the role

played by culpa as a requirement for an action on contract.   Zimmermann op cit
814 puts it as follows :
'Contrary to the tradition of the ius commune, the debtor's liability [in English law]
does not depend on fault.   The reason is, of course, that the common law regards
all contractual promises as guarantees:
"[W]hen [a] party by his own contract creates a duty or charge
upon himself, he is bound to make it good, … notwithstanding any
accident by inevitable necessity." '
The harsh and uncompromising rule of English contract law led to the creation
of fictional 'implied' terms and 'implied' conditions to assist the debtor.   But it
has also led to the view that as fault is not relevant in contract cases, the principle
of apportionment could not become relevant  -  and this explains, in my view, the
omission in the English Act of 1945 of a reference to actions based on contract.
(e)
The question remains  :  how did our common law deal with cases where
the plaintiff, suing on contract, was also at fault in respect of the loss suffered by
him?   Did the principle of culpa compensatio or the last

opportunity rule or apportionment of liability apply?   We simply do not know.
The old authorities do not give us any guidance.   Neither our old writers nor our
early reported cases are helpful in this respect.   There simply is no authority for
the proposition that the contributory negligence of a plaintiff who sues in
contract was ever considered to be relevant;  nor for the opposite point of view.
The principle of our common law that both delictual and contractual liability
depend in various ways on culpa was never expressly rejected;  nor the common
law principle, recognised so clearly in delictual claims, that the greater culpa of
the plaintiff neutralises the lesser culpa of the defendant.   We could find no
pertinent authority for the proposition that the principles relating to delict  applied
did not apply to contractual claims.
[5] The legislation
I now turn to the legislative intrusion, especially in England and in our country in
respect of contributory negligence in delict and contract.

(a)
In England, the question of apportionment of damages is dealt with in the
Law Reform (Contributory Negligence) Act 1945.   S 1 reads as follows :
‘(i)
Where any person suffers damage as a result partly of his own fault
and partly of the fault of any other person or persons, a claim in
respect of that damage shall not be defeated by reason of the fault
of the person suffering the damage, but the damages recoverable in
respect thereof shall be reduced to such extent as the court thinks
just and equitable having regard to the claimant's share in the
responsibility for the damage :
Provided that  -
• this subsection shall not operate to defeat any
defence arising under a contract;
• where any contract or enactment providing for the
limitation of liability is applicable to the claim, the
amount of damages recoverable by the claimant by
virtue of this subsection shall not exceed the
maximum limit so applicable.’
S 4 of the English Act contained a definition of fault, viz
‘ “fault” means negligence, breach of a statutory duty or other act or omission which
gives rise to a liability in tort or would, apart from this Act, give rise to the
defence of contributory negligence.’(My emphasis)

In South Africa, the Apportionment of Damages Act 34 of 1956 ("the
Act") came into operation on 1 June 1956.   Its long title states that its purpose
is
'To amend the law relating to contributory negligence and the law relating to the liability of
persons jointly and severally liable in delict for the same damage, and to provide for matters
incidental thereto.'
Chapter 1 bears the title 'Contributory Negligence' and Chapter 2 the title 'Joint
or Several Wrongdoers'.   For our purposes Chapter 1 (consisting of only one
section) is of direct and immediate importance; Chapter 2 becomes relevant only
insofar as it may be said to illuminate the ambit and scope of Chapter 1.
(b)
Chapter 1 reads as follows :
‘1.   Apportionment of liability in case of contributory negligence. -
(1) (a)   Where any person suffers damage which is caused partly by his own fault
and partly by the fault of any other person, a claim in respect of that damage shall
not be defeated by reason of the fault of the claimant but the damages recoverable in
respect thereof shall be reduced by the court to such extent as the court may deem
just and equitable having regard to the degree in which the claimant was at fault in

relation to the damage.
(b)   Damage shall for the purpose of paragraph (a) be regarded as having
been caused by a person’s fault notwithstanding the fact that another person had an
opportunity of avoiding the consequences thereof and negligently failed to do so.
(2)   Where in any case to which the provisions of sub-section (1) apply, one of the
persons at fault avoids liability to any claimant by pleading and proving that the time
within which proceedings should have been instituted or notice should have been
given in connection with such proceedings in terms of any law, has been exceeded,
such person shall not by virtue of the provisions of the said sub-section, be entitled
to recover damages from that claimant.

(3)   For the purposes of this section ‘fault' includes any act or omission which
would, but for the provisions of this section, have given rise to the defence of
contributory negligence’
(c)
Is Chapter 1 applicable to cases where the plaintiff who sues for damages
caused by a breach of contract by the defendant is himself causally negligent in
respect of the said damage?
[6] South African case law

In the past, two Provincial Divisions of what is now the High Court have
said 'no'.   This is the first occasion that the question has come before this
Court.   The Provincial decisions are those in Barclays Bank D.C.O. v Shaw
1965 (2) SA 93 (O) (‘Shaw’) and O.K. Bazaars (1929) Ltd. and Others v Stern
and Ekermans 1976 (2) SA 521 (C) (‘OK Bazaars’).
(a)
In Shaw the plaintiff sued his bank on contract for damages in the sum of
R999.   The plaintiff had issued a bearer cheque for R1, which amount was
unlawfully altered by a bearer to R1000.   The latter amount was negligently paid
out by the bank.   The defendant argued that the plaintiff was also negligent and
that s 1 of the Act should be applied.   The court (quite wrongly) held that the
plaintiff’s claim was not one for damages.   It was said (at 99 E), clearly obiter
and without any researches into the authorities, that the Act was historically not
intended to apply to claims based on contract.
(b)
In the second case mentioned above, O K Bazaars sued the defendant, a

firm of land surveyors, for damages for breach of a contract to survey a
property in order to determine the correct boundaries and site limits thereof, and
to prepare an up-to-date site diagram.   The plaintiff alleged that the contract
incorporated an implied term, requiring the defendant to exercise reasonable skill
in the performance of its obligations.   It then alleged that the defendant, in
breach of its obligations, failed to set out the correct boundaries, etc, as a
consequence of which the plaintiff suffered the damage alleged.   In its plea the
defendant alleged, inter alia, that the plaintiff was partly at fault in relation to the
occurrence of the damage, it being negligent in a number of respects, set out by
the defendant.   It relied on s 1 of the Act, claiming an apportionment.   The
plaintiff excepted to this part of the plea on the basis that the Act deals only with
delictual claims and not with
claims based on breach of contract.

(c)
The Court held that the plaintiff’s claim was based solely on breach of
contract (at 525 H).   The Court (per Watermeyer J;  Steyn J concurring) held
that s 1 of the Act does not apply to such a claim, for the following reasons :
It was argued that the word ‘fault’ in s 1 of the Act, in so far as it
refers to the defendant, was wide enough to include a breach of
contract (at 528 A - B).   But, held Watermeyer J, (at 528 B) fault
normally connotes a degree of blameworthiness; a contract can be
breached by a party through no fault of his own.   If s 1 is then
construed as covering claims based upon breach of contract,
should it be held to apply to certain breaches of contract only and
not to others?
The history of the Act shows that it was intended to apply to
delictual actions only.   Prior to the passage of the Act, contributory
negligence on the part of the plaintiff had the effect of completely
defeating his or her claim.   To alleviate this harsh consequence the
‘last opportunity’ rule was developed, but even this was not
satisfactory.   Chapter 1 of the Act was designed to overcome this
state of affairs (at 528 C - E).
The aforesaid object of the Legislature seems to be borne out by
the words ‘shall not be defeated by reason of the fault of the

claimant’ in s 1 (1).   Watermeyer J said :
‘Although in a claim based upon breach of contract negligence on
the part of the plaintiff might be relevant in determining whether or
not the damages claimed flowed from the defendant’s breach, it
would not be apposite to say that such negligence (fault) “defeated”
the plaintif’s claim.  The plaintiff’s claim would fail because he did
not show that the damages flowed from the breach.’(at 528 F)

The learned judge also stated that whilst this reasoning may not be
entirely conclusive, it seems to be far more likely that the Legislature
had in mind the well-known defence of contributory negligence to a
delictual claim.
A further indication is that contributory negligence was not normally
one of the recognised defences to a claim based upon a breach of
contract (at 528 H).
The meaning of s 1, if it is ambiguous, has then to be found by
applying the canons of construction, which all indicate that the
section is not applicable to actions based upon breach of contract,
inter alia, that the legislature knows the existing state of the law;
that an ambiguous statute should be interpreted in such a way as to
conform to the existing law, and that in cases of obscurity the long
title may be looked to.   The learned judge remarked that the long
title makes it clear that the Act is one to amend the law relating to

contributory negligence (at 529 A).
Inasmuch as prior to the passing of the Act contributory negligence
was not one of the recognised common law defences to a claim
based upon a breach of contract it seems unlikely that, had the
legislature intended to introduce a radical change in the law, it would
have done so in an oblique way and without using clear language to
express such an intention (at 529 F - G).
An alternative argument was raised by the defendant.   It was that
even if s 1 of the Act did not apply to all claims for breach of
contract, then it should at least be construed as covering claims for
breaches of contract which import a duty not to be negligent (at 529
G - H).   Counsel for the defendant relied on a number of English
cases, viz Sayers v Harlow Urban District Council (1958) 2 All E.
R. 344 ;  Quinn v Burch Bros. (Builders) Ltd. (1965) 3 All E.R.
801, (1966) 2 All E.R. 283 and De Meza and Stuart v Apple, Van
Straten, Shena and Stone (1974) 1 Lloyd’s Law Reports 508
(Q.B.).   Watermeyer J held that the first case mentioned above
appears to have been brought in tort, the second was decided on
the basis of causation, and the last was unconvincing.   Apart from
these considerations, Watermeyer J held that the English common
law is not the same as ours and that there are material differences

between the English Act and our Act.   The alternative was thus also
rejected.
(d)
The present state of our case law is that laid down in O K Bazaars:  the
Act is not applicable to contractual claims, not even where the contract imports a
duty not to be negligent.   Where the plaintiff has clearly elected to sue in
contract, ‘ ... it does not lie in the defendants mouth to say that the defendant
might also have been liable to the plaintiff in delict.’ (per Watermeyer J at 527 A).
(e)
Counsel for the defendant in this Court, PW, invited us to revisit the
question now under consideration and to subject O K Bazaars to close scrutiny.
They asked this Court to consider the latest trends in England and New Zealand,
especially in view of the fact that the question of apportionment of damages is
dealt with in these two countries in legislation largely similar to our Act.
Counsel contended that in those two countries an apportionment can take place,
in certain circumstances, even where the claim is based on a breach of contract.
Counsel for the plaintiff, on the other hand, referred to the Australian law, where,

they contended, an apportionment cannot take place if the claim is based on a
breach of contract.
[7] Comparative Law  :  England
(a)
Conflicting views were expressed by English judges as to whether the Act
of 1945 was applicable to claims based on breach of contract.   Eventually, the
matter came before the Court of Appeal in Forsikringsaktieselskapet Vesta v
Butcher [1989] 1 AC 852 (CA) (‘Vesta v Butcher').   The matter came on appeal
from a judgment by Hobhouse J.   For our purpose, it is sufficient to state that
the plaintiff, Vesta, having correctly settled a claim against it, instituted action
against the first defendant, an underwriter, for indemnification by virtue of a
policy of reinsurance.   In the alternative, Vesta claimed damages against the
second and third defendants (insurance brokers), alleging that they failed to
obtain a valid contract of reinsurance and furthermore that they failed to inform
the first defendant that the insured could not comply with a clause requiring it to

provide a 24-hour watch over its operations, thus allowing the first defendant to
escape liability.   The second and third defendants denied liability.   Hobhouse J
found that the third defendants were in breach of their duty towards the plaintiff,
but that the plaintiff was contributorily negligent in not making sure that the
matter of the 24-hour watch problem had been solved by the third defendants.
He held that the Act of 1945 was applicable and assessed the respective degrees
of fault as 75% to the plaintiff and 25% to the third defendants.
(b)
The decision of Hobhouse JAs regards the applicability of the Act of
1945 to claims based on breach of contract was upheld by the Court of Appeal
(O’Connor L J; Neill L J and Sir Roger Ormrod).   Hobhouse J in the Court a
quo approached the question now under consideration as follows :  (see [1986]
2 All ER 488 at 508)
‘The question whether the 1945 Act applies to claims brought in contract can arise
in a number of classes of case.   Three categories can conveniently be identified.
(1) Where the defendant’s liability arises from some contractual provision which

does not depend on negligence on the part of the defendant.   (2) Where the
defendant’s liability arises from a contractual obligation which is expressed in terms
of taking care (or its equivalent) but does not correspond to a common law duty to
take care which would exist in the given case independently of contract.   (3) Where
the defendant’s liability in contract is the same as his liability in the tort of negligence
independently of the existence of any contract.’
(c)
Hobhouse J held that  Vesta v Butcher fell into category (3).
He said, at 509 :
‘The category (3) question has arisen in very many different types of case and the
answer is treated as so obvious that it passes without any comment.   It is
commonplace that actions are brought by persons
who have suffered personal injuries as the result of the negligence of the person
sued and that there is a contractual as well as tortious relationship.   In such cases
apportionment of blame is invariably adopted by the court notwithstanding that the
plaintiff could sue in contract as well as in tort.   The example normally cited in the
present context is the decision of the Court of Appeal in Sayers v. Harlow Urban
District Council [1958] 1 W.L.R. 623, which concerned a contractual visitor to
premises (a lady who had paid to use a public lavatory).   The Court of Appeal said
it did not matter whether the cause of action was put in tort or in contract and
proceeded to apportion blame awarding her three-quarters of her damages.   This
was a decision on a category (3) case.   The power to make an apportionment was

part of the ratio decidendi and is binding on me.   There are innumerable similar
decisions to the same effect which could be cited, very many by appellate courts.’
(d)
O’Connor L J came to the conclusion that the claim of Vesta against the
brokers fell into category (3) and was, therefore, subject to apportionment.
Neill L J, now convinced that he was wrong in the decision given by him in A.B.
Maintrans v Comet Shipping Co. Ltd. [1985] 1 W.L.R. 1270 (to the effect that
apportionment could not be applied where the claim was one in contract), agreed
that Vesta’s claim fell into category (3) inter alia
‘Where the broker’s liability in contract is the same as their liability would have been
in tort.   Accordingly, I would agree that as the claim against the brokers could have
been framed in this action as a breach of a duty of care in tort any damages
awarded to Vesta can properly be reduced and apportioned in accordance with the
Act of 1945.' (at 875 F - G).
(e)
Sir Roger Ormrod, the third member of the bench, held that the context of
the Act of 1945 and the language of s 1 made it clear that the Act is concerned
only with tortious liability.   The power to apportion only arises where the

defendant is liable in tort and that concurrent liability in contract, if any, is
immaterial (at 879 C - D).   However, notwithstanding that Vestas claim against
the brokers was framed as one on contract,
‘ ... the existence of the contract created a degree of proximity between Vesta and
the brokers sufficient to give rise, on ordinary principles, to a duty of care and,
therefore, to a claim in negligence.   Consequently, I agree with Hobhouse J that this
is a case for apportionment of damages.’  (at 879 E - F).
(f)
Vesta v Butcher went on appeal to the House of Lords.   The appeal only
dealt with the liability of the re-insurers (they were held liable) and the alternative
claim against the brokers fell away and consequently the question of
apportionment was not considered.
[8] Comparative law  :  New Zealand
(a)
In New Zealand, where the Contributory Negligence Act 1947 follows the
wording of the English Act of 1945, the case of Dairy Containers Ltd v N Z I
Bank Ltd;  Dairy Containers Ltd v Auditor-General [1995] 2 NZLR 30 (H C

Auckland) (‘Dairy Containers’) raised the very difficulties with which we are
now confronted.   In that case, the Auditor-General was the auditor of the Dairy
Containers Ltd (‘DCL’) by virtue of a contract between them.   DCL sued the
Auditor-General for damages, relying on a breach of contract by the latter,
alleging a number of negligent acts and omissions.   Thomas J held that the
Auditor-General had been negligent and had thus committed a breach of
contract.   The Auditor-General argued that the damages awarded against him
should be reduced having regard to DCL’s contributory negligence, inter alia, in
failing to provide any clear direction or supervision in respect of a major part of
the companys business (at 80 line 30 et seq).
(b)
In discussing the approach to be taken to the test for contributory
negligence the learned judge touched upon the heart of the matter, viz the policy
underlying the approach to the apportionment question.   He said (at 76 line 29 et
seq):

‘Difficult though the exercise may at times be, the Act requires a Court to recognise
the plaintiff’s failure to meet the standard of care required of it for its own protection
where that failure is partly the cause of the loss.   It is an attempt to ensure that
liability coincides with the responsibility of the parties for the damages in issue.   As
Cook P said in Mouat v Clark Boyce (at p 563), it would be strange if after all
these centuries the common law, using that word in its widest sense, had been able
to produce only instruments of remedy so blunt and inefficient that apportionment of
responsibility where it rightly belongs is impossible.   The President did not believe
that this was so.   And nor do I.
The Contributory Negligence Act was enacted to remedy the arbitrary
consequences of the all-or-nothing approach which developed where the plaintiff
was in part responsible for the loss which he or she suffered.   It is now
inappropriate to approach the application of the Act in a manner which would
perpetuate arbitrary consequences, although less dramatic, of the kind which the Act
was designed to remedy.   It is for the Courts, in implementing the Act, to fashion a
regime under the Act which is fair and efficient in apportioning responsibility for the
loss to where it rightly belongs.
In the context of this case there is no merit in providing DCL with immunity
from the consequences of its negligence where that negligence has clearly
contributed to cause the loss simply because the Auditor-General was also
negligent.   One can paraphrase Rogers CJ’s question, posed in a different context,
in AWA v Daniels (at p 1003) and ask why the negligent auditor should be exposed
to the payment of the whole of the loss when much of the damage lies at the door of

the company?   The answer is clear.   It would be wrong in principle if the Auditor-
General could be sued for failing to report the unauthorised investments and detect
the frauds which occurred and yet not be able to rely upon DCL’s own acts which
permitted the unauthorised investments and frauds to occur in the first place.’
(c)
In the result apportionment was applied and DCL’s damages were
reduced by 40% (see 83 line 31).
[9] Comparative law  :  Australia
(a)
The opposite approach prevails in Australia.   In Astley and Others v
Austrust Limited [1999] HCA 6 (197 CLR 1), the High Court of Australia had to
deal with the following problem.   Austrust, the plaintiff, was a trustee company.
It had sought advice from the defendant, Astley, a firm of solicitors, as to
whether it should assume the position of trustee of an existing trading trust.  The
attorneys advised that it could so and Austrust took office.   Shortly thereafter
the trust failed and Austrust was held personally liable for its debts in an amount
exceeding the value of the trust property.   It alleged that the solicitors were at

fault in failing to advise it not to accept the office of trustee unless its personal
liability for losses arising in the course of carrying out the trust was excluded.
The defendant denied liability but pleaded, in the alternative, contributory
negligence on the part of Austrust.   The trial judge found negligence on the part
of both parties and, pursuant to the provisions of s 27 A of the Wrongs Act
1936 of South Australia, which Act was applicable to the dispute, apportioned
the damages payable by the solicitors.   On appeal to the Full Court it was held
that the finding of contributory negligence on the part of Austrust was wrong,
and Astley was held liable for the full extent of the damage proved by Austrust.
(b)
On a further appeal to the High Court it was held that the Full Court erred
in finding that Austrust was not guilty of contributory negligence.   However,
notwithstanding this finding and the fact that Austrust had sued in contract as
well as in tort, it was held that Austrust was entitled to recover the whole of the
damage that it suffered because damages awarded pursuant to a claim in contract

cannot be reduced by reason of conduct that would constitute contributory
negligence for the purposes of the Wrongs Act.   It was held that the history,
text and purpose of the Wrongs Act made it clear that the Act was not intended
to apply to claims for breach of contract (per Gleeson CJ McHugh, Gummow
and Hayne JJ).   Callinan J, in a minority judgment, was of the opposite opinion
and expressed the view that the trial court was correct.
(c)
The majority first defined the concept of contributory negligence.   It held
that at common law contributory negligence consisted in the failure of a plaintiff
to take reasonable care for the protection of his or her person or property.
Proof of contributory negligence defeated the plaintiff’s cause of action in
negligence.   Furthermore, although conduct amounting to contributory
negligence may also constitute the breach of a duty which the plaintiff owes to
the defendant, a plaintiff can be guilty of contributory negligence in the absence
of such a duty  :  a pedestrian owes no duty to a speeding driver to avoid being

run down but is guilty of contributory negligence if he or she fails to take
reasonable care to keep a proper lookout for speeding vehicles.
(d)
The majority then dealt with the proposition raised in Australia and the
USA in a number of decisions, especially in cases where auditors were sued, that
contributory negligence cannot arise where the very purpose of the duty owed
by the defendant was to protect the plaintiffs interests.   Following the decision
of the New South Wales Court of Appeal in Daniels v Anderson (1995) 37
NSWLR 438, the majority held that no such rule should apply :
‘Thus, a plaintiff who carelessly leaves valuables lying about may be guilty of
contributory negligence, calling for apportionment of loss, even if the
defendant was employed to protect the plaintiffs valuables.’ (at para
29).
This is also the case where there was a statutory duty to protect the plaintiff
(paras 31 - 32).
(e)
Having come to the conclusion that Austrust was contributorily negligent

in the present case, and that contributory negligence requires an apportionment
of damages in an action in tort, the majority held that the question is whether
such negligence also requires apportionment where the plaintiff has sued in
contract in circumstances where he or she has, or could have, sued in tort. (para
37).
(f)
S 1 of the Wrongs Act 1936 (South Australia) defines ‘fault’ as follows :
‘ “fault” means negligence, breach of statutory duty or other act or omission which
gives rise to a liability in tort or would, apart from this Act, give rise to the
defence of contributory negligence’  (My emphasis)
S 27 A (3) reads:
‘Where any person suffers damage as the result partly of his own fault and partly of
the fault of any other person or persons, a claim in respect of that damage shall not
be defeated by reason of the fault of the person suffering the damage, but the
damages recoverable in respect thereof shall be reduced to such extent as the court
thinks just and equitable having regard to the claimant’s share in the responsibility for
the damage  ...’
(g)
The majority held that the natural and ordinary meaning of s 27 A (3), read

in the light of the definitions contained in the section, leads to the conclusion that
the section was concerned with claims in tort rather than claims in contract :
‘The sub-section was designed to remedy the evil that the negligence of a plaintiff,
no matter how small, which contributed to the suffering of damage, defeated any
action in tort in respect of that damage.’ (para 41)
And :
‘Nothing in s 27 A (3) suggests that “fault”  - in either of its uses in s 27 A (3)  -
includes rights and obligations arising from a breach of contract.   Nor is there
anything in the ordinary and natural meaning in the section that can be said to assume
or by necessary implication authorise the apportionment of damages in claims for
breach of contract.   On its face, s 27 A deals only with actions in tort.’ (para 42).
(h)
The question the majority posed is whether s 27 A of the Wrongs Act was
not applicable where the defendant’s obligation under the contract coincides with
the duty imposed by the general law of negligence i e concurrent delictual and
contractual liability were present. (para 43)
(i)
The majority then examined the case law on this subject, as well as the
influential views of Professor Glanville Williams in his book Joint Torts and

Contributory Negligence, 1951, in which he advanced the proposition that
apportionment legislation always applied to claims based on breach of contract
because contributory negligence always constituted a possible defence to an
action for damages for breach of contract.   This last mentioned point of view
was rejected by the majority : the plaintiffs negligence never gave rise to a
defence of contributory negligence in an action for breach of contract according
to the common law.
‘No doubt a plaintiff’s conduct, which could be equated with contributory
negligence” in an action in tort, could defeat an action in contract.   It might, for
example, show that there was no causal connection between the plaintiff’s damage
and the breach of contract.   But “contributory negligence”, that is, negligence which
contributed to the damage was not as such a defence to an action for breach of
contract.’ (para 53)
(j)
Reference was also made to the English case of Vesta v Butcher  and a
judgment of Pritchard J in New Zealand in Rowe v Turner Hopkins & Partners
[1980] 2 NZLR 550, where apportionment was applied to contractual claims

because there was or could have been concurrent tortious claims.   These views
were followed in a number of Australian cases but were unambiguously rejected
by the majority in Astley v Austrust.
(k)
The majority argued as follows:
(i) The tripartite division adopted and applied in Vesta v Butcher is
unacceptable.   The legislation does not hint at such a distinction.
The reasoning in cases applying apportionment to contractual
claims 'is generally sparse to the point of non-existence'. (para 69)
(ii)
The decisions in the UK which have applied apportionment
legislation to breaches of contract are wrong and should not be
followed in Australia.   The interpretation of the legislation is
strained.   It relies principally, if not exclusively, on the use of the
term 'negligence' in the definition of 'fault'.   But it ignores the
context of the said words in the legislation and ignores the
mischief which the legislation was intended to remedy. (para 70)
(iii) A breach of contract does not come within the meaning of fault;
the word 'negligence' is furthermore limited by the words 'which
gives rise to a liability in tort';  if this qualification is taken away, it

would mean that all breaches of statutory duty would fall under
'fault', and not only those that constituted a tort. (para 72)
(iv) Ss 27 A (3) and (4) support the view that an award for damages
under a contractual claim is treated differently from an award in
tort, and should not be subject to apportionment. (paras 73 - 75)
(v) The state of the pre-existing law and the purpose of the legislation
made it clear that the legislation does not affect actions for breach
of contract.    At common law contributory negligence was a
complete defence to an action in tort for negligence.   But no case
could be found where contributory negligence, as such, was ever
held to be a defence to an action for breach of contract.   No trace
of such a defence could be found in the great works on pleading
written in the 19th century.   This pointed 'irresistibly' to the
conclusion that the apportionment legislation is concerned only
with actions in tort and did not affect awards of damages based on
breach of contract:
'To what, other than a common law action in tort, can s 27 A (3) be
referring when it says that a claim in respect of damage shall not be
defeated by reason of the fault of the person suffering the damage”?
It makes no sense now, and it made even less sense when the
legislation was passed, to speak of an action in contract being

defeated by "negligence, breach of statutory duty or other act or
omission which gives rise to a liability in tort or would, apart from
this Act, give rise to the defence of contributory negligence!".' (para
80)
In view of the history of the legislation in England, in Admiralty and
in Canada, the majority said :
‘It would be strange if a rule introduced to do away with an absolute
defence to a claim in negligence, diminished the rights of a plaintiff
who sued in contract.’
(Para 81;  see also paras 82 and 84)
It was also said :
‘The section was designed to increase the rights of plaintiffs, not reduce them.’
(para 59; see also para 83)
(vi) The majority also found support for their views in policy
considerations.   The view that it would be anomalous or unfair or
both not to apply apportionment legislation to contractual claims
was rejected.   In an action based on contract, the defendant
could have limited its liability;  in a claim based on tort, the
respective duties of the parties are imposed on them by law.   In

the former case there seems to be no reason to apply the
apportionment principle. (paras 84 - 87)
(l)
In the result it was held that, although Austrust was correctly held to have
been 'contributorily negligent', no apportionment could be applied.
(m)
The decision in Astley v Austrust was subjected to criticism by Geoff
Masel and David Kelly see Contributory Negligence and the Provision of
Services  :  A Critique of Astley, in 74 Australian Law Journal 306 et seq.   In
particular, I draw attention to the remarks at 324 :
'In principle, the rules of our legal system should be consistent with one
another.   At least presumptively, there should not be a different answer in
tort from the one given in contract on precisely the same issue  -  liability
for negligent advice in performing a contract.   If a plea of contributory
negligence is available in one action, why not also in the other?   If the
plea can lead to apportionment in one action, why not also in the other?   If
we expect our legal system to be efficient and to be respected, we cannot
tolerate overlaps and inconsistencies which have no rational foundation,
but which are explicable only in terms of procedural history.'

[10] Comparative Law  :  Canada
In Canada the position seems to be that the wording of the various provincial
statutes dealing with the problem now under consideration differs  -  and thus
also the decisions of the provincial courts  (see G H L Fridman The Law of
Contract in Canada 3rd ed., 756).   In Giffels Associates Ltd v Eastern
Construction Co ((1978) 84 D.L.R. (3d) 344) the Supreme Court of Canada left
the matter undecided.   In two Ontario decisions the courts reached a result
similar to apportionment by developing a doctrine of 'anticipatory mitigation'.
(Fridman op cit 756 - 757.
Fridman (loc cit) concludes :
'It would seem that the issue is unresolved by Canadian courts.   On principle there
should be no barrier to the application of the idea of apportionment in breach of
contract cases.   Even if the legislation that applies to tort cannot be interpreted to
extend to contract situations, the need to establish a casual connection between the
plaintiff's loss and the defendant's breach of contract, to which reference has been
made should logically lead to the conclusion that where the plaintiff has been partially

responsible for his loss he should bear that proportion by a reduction in his
damages.   Whether Canadian courts will finally arrive at this conclusion remains to
be seen.'
[11] South Africa  :  Quo vadis?
(a)
The approach followed in Vesta v Butcher in England and Dairy
Containers in New Zealand i e that if the defendant is concurrently liable in delict
and contract, apportionment can be applied, is not open to us.   This is so by
virtue of the decision of this Court in Lillicrap, Wassenaar and Partners v
Pilkington Brother (SA) (Pty) Ltd 1985 (1) SA 475 (A) ('Lillicrap').   The
plaintiff, a glass manufacturer, wished to build a glass plant on a particular
property.   It concluded a contract with the defendant, a firm of consulting
structural engineers, to investigate the site and to determine its suitability, and if
suitable, to design the plant.   The defendant did the work, but, according to the
plaintiff, negligently.   Having paid a part of the defendant's fees, the plaintiff
sued the defendant for payment of damages in the sum of   R3,6 million.   The

plaintiff sued in delict only, more particularly basing its claim on the actio le gis
Aquiliae in its modern and extended form.   To this claim the defendant raised
an exception, particularly on two bases : (a) that, in the light of the contractual
relationship between the parties, the defendant did not owe the plaintiff a
delictual duty of care; and (b) that, in the light of the contractual relationship
between the parties, the alleged facts did not give rise to any claim for damages
in respect of pecuniary or financial loss only. (at 495 D - E)
(b)
The majority, per Grosskopf AJA, held that in principle our law
recognises concurrent contractual and delictual claims, and allows the plaintiff to
choose the remedy which he wishes to pursue.   Thus, the facts giving rise to a
claim for damages under the lex Aquilia could in Roman and Roman-Dutch law
overlap with those founding an action under certain types of contract, e g
deposit, commodatum, lease, partnership or pledge.   The learned judge
concluded at 496 H - I :

'The mere fact that the respondent might have framed his action in contract therefore
does not per se debar him from claiming in delict.   All that he need show is that the
facts pleaded establish a cause of action in delict.   That the relevant facts may have
been pleaded in a different manner so as to raise a claim for contractual damages is,
in principle, irrelevant.'
(c)
The learned judge then held that in the case under consideration there was
no physical damage to the plaintiff or his property but that, per se, would not be
fatal to a claim based on the lex Aquilia   - our law already recognises Aquilian
liability for negligent misstatements which cause pure financial loss.
(Administrateur, Natal v Trust Bank van Afrika Bpk 1979 (3) SA 824 (A)).   In
casu, the learned judge held (at 499 A et seq) that it was not alleged by the
plaintiff that the defendant would have owed it a duty to exercise diligence if no
contract had been concluded between them requiring it to perform professional
services.  In this respect the case differed from those in which a physician
operates on a person found unconscious in the street  -  if the doctor was
negligent in performing the operation, he would only be liable ex delicto.   But if

there was a contract between the physician and his patient, there would be, in the
case of negligence, concurrent actions in contract and delict against the
physician, because even in the absence of a contract, there would have been a
violation of an existing right i e that of physical integrity.
(d)
But, Grosskopf AJA held, the only infringement of which the present
plaintiff complained was that of the defendant's contractual duty to perform
specific professional work with due diligence (at 499 D - E).   Is the infringement
of this duty a wrongful act for purposes of Aquilian liability? (at 499 E - F).
Grosskopf AJA held that those cases in our common law where concurrent
liability was recognised, occurred when the conduct of the defendant constituted
both an infringement of the plaintiff's rights ex contractu and a right which he
had independently of the contract. (My emphasis, see at 499 H - I and also Van
Wyk v Lewis 1924 AD 443.)
(e)
Is an extension of Aquilian liability justified in cases where the right

allegedly infringed is one created by a contract for delivery of professional
services?   Is there a need therefor?   Grosskopf AJA answered in the negative.
(at 500 F)
'While the contract persisted, each party had adequate and satisfactory remedies if
the other were to have committed a breach.   Indeed the very relief claimed by the
respondent [plaintiff] could have been granted in an action based on breach of
contract.'
(f)
Grosskopf AJA further held (at 500 G et seq) that the Aquilian action does
not fit comfortably in a contractual setting like the present.  Contracting parties
contemplate, generally speaking, that the relationship between them should be
regulated by their agreement.   If one superimposes Aquilian liability on claims
for breach of contract, a party's performance would, so Grosskopf AJA said (at
500 I), presumably have to be tested not only against his contractual duties but
also by applying the standard of the bonus paterfamilias.   But how is the latter
standard to be determined?   Are there two standards?   There are no policy

considerations for invoking the law of delict to reinforce the law of contract. (at
501 A - B)   In the result, it was held that
'To sum up, I do not consider that policy considerations, require that delictual
liability be imposed for the negligent breach of a contract of professional
employment of the sort with which we are here concerned.' (at 501 G - H)
(g)
Finally, Grosskopf AJA, after reviewing English cases such as Anns v
Merton London Borough Council 1978 AC 728;  Donoghue v Stevenson 1932
AC 562;   Hedley Byrne & Co Ltd v Heller and Partners Ltd, supra;   Home
Office v Dorset Yacht Co. Ltd (1970) AC 1004 and Junior Books Ltd v Veitchi
& Co Ltd 1983 AC 520, noted the difference on the matter now under
discussion between English and South African law  :  English law adopts a liberal
approach to the extension of a duty of care;  South African law approaches the
matter in a more cautious way (at 504 A - G).   Also, the policy considerations
underlying the two approaches may be different (at 504 H - I).
[12] Thus, in a nutshell  :  in the light of the judgment in Lillicrap the

'concurrent liability' solution is not available to us to apply in the present case, i e
in the category 2 type of situation referred to in Vesta v Butcher.   In this respect
it must be noted, perhaps en passant, that our law now lags far behind the
English law on this point  -  see Henderson and Others v Merrett Syndicates Ltd
and Others [1994] 3 All ER 506 (HL).
[13] This is not the end of the matter, because we must now examine the
position where, although it cannot be said that the defendant is not liable in
delict, and only committed a breach of contract, he or she did so negligently, i e
was 'at fault'.   As I have said, the present case falls into the category 2 class of
case developed in Vesta v Butcher, supra.   That negligence in such a case
becomes highly relevant for success for the plaintiff is so because the contract
imports that standard.   What is more, in our law s 20 (9) (a) of the Public
Accountants' and Auditors' Act 80 of 1991 provides that an auditor shall not
incur any liability in respect of a statement, account or document certified by him

unless it was certified maliciously or pursuant to a negligent performance of his
duties.
[14] Although the full ramifications and implications of the matter might require
a full dissertation, expedience requires that we set out as succinctly as possible
the arguments pro and contra the proposition that the Act is applicable to
contractual claims.
A
The pro arguments and counter submissions
The plain meaning of s 1 of the Act.
1.1
The first argument is that if the golden rule of statutory
interpretation is applied, the provisions of s 1 of the Act do seem to
be applicable  to contractual claims.   The rule has been stated in
Adampol (Pty) Ltd v Administrator, Transvaal 1989 (3) SA 800
(A) at 804 B - C as follows:
'The plain meaning of the language in a statute is the safest guide to

follow in construing the statute.   According to the golden or general
rule of construction the words of a statute must be given their
ordinary, literal and grammatical meaning and if by so doing it is
ascertained that the words are clear and unambiguous, then effect
should be given to their ordinary meaning unless it is apparent that
such a literal construction falls within one of those exceptional cases
in which it would be permissible for a court of law to depart from
such a literal construction, eg where it leads to a manifest absurdity,
inconsistency, hardship or a result contrary to the legislative intent."
1.2
For the sake of convenience, s 1 of the Act will be repeated :
'1.   Apportionment of liability in case of contributory
negligence. - (1) (a)   Where any person suffers damage which is
caused partly by his own fault and partly by the fault of any other
person, a claim in respect of that damage shall not be defeated by
reason of the fault of the claimant but the damages recoverable in
respect thereof shall be reduced by the court to such extent as the
court may deem just and equitable having regard to the degree in
which the claimant was at fault in relation to the damage.
(b)   Damage shall for the purpose of paragraph (a) be regarded as
having been caused by a person’s fault notwithstanding the fact that
another person had an opportunity of avoiding the consequences
thereof and negligently failed to do so.

…

(3)   For the purposes of this section "fault" includes any act or
omission which would, but for the provisions of this section, have
given rise to the defence of contributory negligence.
'
1.3
The argument is that s 1 of the Act is clear and unambiguous.   The
only threshold requirement is causative fault on both sides.   Fault,
at the very least, includes negligence.   S 1 of the Act does not
specify the categories of obligations in which the 'fault' can occur, i
e delict, contract, statute or ex variis causarum figuris.   There is
nothing in the language of s 1 (1) (a) that limits its operation to
claims in delict;  by its plain wording it is equally apposite to claims
for damages flowing from a negligent breach of a statutory duty or
a breach of a contractual duty to exercise reasonable care.
1.4
The counter-submission on this aspect was that the wording is not
all that clear.   It was argued that there are two provisions indicating

that s 1 was not intended to apply to claims in contract :
(a)
the long title of the Act, and
(b)
Chapter 2 of the Act
1.5
But this counter-submission, so it was argued, is flawed.   It is true
that the long title of the Act, and other provisions of the Act can
and should be taken into account when s 1 is interpreted (see
Stellenbosch Farmers' Winery Ltd v Distillers Corporation (SA)
Ltd and Another 1962 (1) SA 458 (A) at 476 E - F;  Commissioner
of Taxes v First Merchant Bank of Zimbabwe Ltd 1998 (1) SA 27
(ZSC) at 30 I - 32 E).   But neither the long title nor the provisions
of Chapter 2 of the Act support the view that s 1 of the Act is not
applicable to contractual claims, so it was submitted.
1.6
Counsel for PW for ease of reference numbered the components of
the long title as follows:
'1
To amend

(a)
the law relating to contributory negligence and
(b)
the law relating to the liability of persons jointly or severally
liable in delict for the same damage, and
to provide for matters incidental thereto.'
S 1 of the Act gives effect to part 1 (a).   Ss 2 and 3 (Chapter 2)
give effect to part 1 (b).   Ss 4 to 6 give effect to part 2.   Counsel
for PW submitted that this analysis of the long title into its
components clearly shows that it was not the legislature's intention
that s 1 (1) (a) or part 1(a) above should apply only to claims in
delict.   Part 1 (a) is at least equally consistent with the very
opposite interpretation, i e that whereas part 1 (b) specifically refers
to claims in delict, part 1 (a) does not do so.   If it had been the
intention of the legislature to limit the application of both parts to
claims in delict, it would, and should, have said so in plain,
conjunctive terms.   That it has not done so, PW's counsel argued,
supports its side of the argument.

1.7
What is more, it was submitted by PW, there was a good reason
why the legislature made part 1 (b) applicable to delictual joint
wrongdoers, but not to contractual co-debtors.   While delictual
joint wrongdoers were, in our common law, always jointly and
severally liable, contractual co-debtors may according to the
intention of the parties, be liable jointly or severally or jointly and
severally (see Christie, The Law of Contract in South Africa, 3rd ed
1996 at 279, et seq).   It was thus both unnecessary and impossible
to make the philosophy underpinning Chapter 2 of the Act
applicable to contractual co-debtors.
1.8
This analysis indicates, so it was argued, that there was a sound
reason for distinguishing between Chapter 1 and Chapter 2 of the
Act in so far as it concerns contractual vis-à-vis delictual claims.
The analysis elucidates the wording of the preamble and the

interpretation of s 1 (1) (a) the Act.   It supports the pro-argument,
so it was submitted.
Purposive and teleological interpretation of the Act
But the pro-argument does not rest solely on the golden rule of interpretation.   On
behalf of PW it was argued that weighty considerations favour the purposive or
teleological approaches.   The last-mentioned approach, in particular, not only
'encapsulates in a synthesis the meritorious aspects of other theories and excludes their
limitations' (Devenish, Interpretation of Statutes, 1992 at 53) but also gives expression
to the fundamental principles and ethos of the legal system as a whole:  it is a value-
coherent approach which best accords with the values of our Constitution (see, in
general, Devenish, op cit, 39 - 55).
The pro-argument, so it was submitted, is supported by both a purposive or
teleological approach to the Act.   Both approaches recognise the importance of the
genesis and legislative history of the Act.   We have discussed the common law

background above.   We now turn to the specific legislative history of the Act.
2.1
S 1 was modelled on the English Law Reform (Contributory Negligence)
Act of 1945.   It closely followed the language of s 1 (1) of the English
Act which we repeat for the sake of convenience:
'Where any person suffers damage as the result partly of his own fault and partly of
the fault of any other person or persons, a claim in respect of that damage shall not
be defeated by reason of the fault of the person suffering the damage, but the
damages recoverable in respect thereof shall be reduced to such extent as the court
thinks just and equitable having regard to the claimant's share in the responsibility for
the damage:  Provided that -
•
this subsection shall not operate to defeat any defence arising under a
contract;
•
where any contract or enactment providing for the limitation of liability is
applicable to the claim, the amount of damages recoverable by the
claimant by virtue of this subsection shall not exceed the maximum limit so
applicable.'
2.2
As appears from a comparison of the two texts, the main provision
of the English s was substantially reproduced in s 1 (1) (a) of our
Act, and

•
the provisos of the English section were substantially
reproduced in our ss 4 (1) (b) and (c).
2.3
The only significant departure from the English text is in the
definition of 'fault'.   S 4 of the English Act defines it as follows:
' ... "fault" means negligence, breach of statute or duty or other act or omission
which gives rise to a liability in tort or would, apart from this Act, give rise to the
defence of contributory negligence.' (My emphasis)
2.4
When this definition of fault is read into s 1 (1) of the English Act,
its effect clearly appears to be to confine s 1 (1) to claims in tort.
(a)
The definition purports to be an exhaustive definition of
'fault' (' ... fault means ...')
(b)
The first part of the definition refers to the fault of the
defendant (' ... negligence, breach of statutory duty or other
act or omission which gives rise to a liability in tort ... ') and
the second part to the fault of the plaintiff (' ... or other act or

omission which ... would, apart from this Act, give rise to the
defence of contributory negligence ...').
(c)
The description of the defendant's 'fault' in the first part of
the definition seems to suggest that it was limited to claims in
delict (' ... which gives rise to liability in tort ...').
(d)
This inference is fortified by the description of the plaintiff's
fault in the second part of the definition because it is confined
to conduct which would previously have given rise to a
defence of contributory negligence, which was in English law
a defence in delict but not in contract.
2.5
However, in 1951 Professor Glanville Williams published his Joint
Torts and Contributory Negligence in which he argued forcefully
and persuasively that the Act also applied to claims in contract.
His argument was directed at the interpretation of the definition of

'fault' because that was considered to be the only obstacle to the
application of the Act to claims in contract:
'Whether the Act applies in contract depends largely upon the
wording of the definition of 'fault'.   At first sight the definition ... may
appear to be limited to actions in tort, but it is submitted that where
a breach of contract occurs through the negligence of the defendant,
the Act will apply whether the action is framed in contract or in tort.'
(329)
He proposed various arguments in support of this interpretation
(328 - 332).   The second of those arguments eventually prevailed in
the English courts :
'There is another line of argument.   Even if the interpretation just
advanced is thought to be too fine-spun it is submitted that where
the same act or omission constitutes both a tort and a breach of
contract, so that in its tort aspect the case is subject to the
provisions of the Act, then the case is subject to the provisions of
the Act even in its contract aspect.' (330)   (See also Cheshire,
Fifoot & Furmston's Law of Contract 12th ed 619;
Jackson and Powell on Professional Negligence 4th ed

60 to 62;  and Treitel The Law of Contract 10th ed 915
to 919.)
2.6
The point is that our departure from the English text strongly
suggests that our s 1 (1) (a) was intended to apply to claims in
contract as well.
2.7
Our Act was only enacted in 1956, well after the publication of the
treatise of Professor Glanville Williams which triggered the
controversy abroad.
2.8
The differences between the definition of 'fault' in the English Act
and our Act are significant :
(a)
The English definition exhaustively defines 'fault' (' ... fault
means ...').   Our section is open-ended
('
...
fault
includes ...').   The effect of our section is in other words
merely to extend the ordinary meaning of 'fault' and not to
limit it in any way.

(b)
The only real obstacle to the application of the English
section to claims in contract, lay in the first part of their
definition of 'fault' which defined the defendant's fault, and
therefore the plaintiff's cause of action, as conduct giving rise
to liability in tort.   That part of the definition has been
wholly omitted from our section.
(c)
The combined effect of these two changes is that the only
real obstacle to the application of the English Act to claims in
contract, has been removed from our Act, and apparently
deliberately so.
2.9
It is also significant, so it was submitted on behalf of PW, that there
was a simultaneous and comparable but opposite amendment of s 2
of our Act which deals with joint wrongdoers and which expressly
limits its application to persons liable in delict.

2.10
It accordingly seems clear, so it was argued, that our Act was
deliberately drafted so as to differ from the English text to remove
from s 1 the limitation of its operation to claims in delict, and
•
to introduce in s 2 an express limitation of its
operation to joint wrongdoers in delict.   On behalf
of PW it was accordingly submitted that the
legislative history of our Act, when compared to its
English parentage, overwhelmingly suggests that it
was deliberately tailored so as to make the principle
of apportionment also applicable to claims in
contract when there is a similar co-incidence of
negligence.
2.11
But both approaches to the interpretation of statutory interpretation
mentioned above also attach importance to the purpose of the

legislation, i e the mischief aimed at and the societal and legal ends
desired.   The phenomenon of causative negligence of the part on
both a plaintiff and a defendant is not limited to delictual claims.   It
is obvious that in many instances of contractual claims for damages
there can and will be a co-incidence of both contractual and
delictual liability (i e if there was damage of the kind giving rise to
Aquilian liability, e g in the case of a physician's negligence, as in
Van Wyk v Lewis 1924 AD 438 or Mukheiber v Raath 1999 (3) SA
1065 (A)).   If the plaintiff sues in delict, the Act would apply and
the plaintiff would be liable only in part;  if the action is brought in
contract, the plaintiff would succeed totally if one follows the
approach of our courts at present, OK Bazaars, supra.   Why
should there be a difference, it was rhetorically asked by PW,
depending not on the acts or the respective degrees of fault or

blameworthiness of the parties, which are the same in both actions,
but on the form of action chosen by one of the parties viz the
plaintiff?   Commenting on the position in the English law, Buckley
(The Modern Law of Negligence, 3rd ed 1999 at 84) says of the
approach in Vesta v Butcher that it is sensible, and proceeds:
'A rigid demarcation between tort and contract would seem
mechanistic and outdated today, not least in the expanding field of
professional negligence where allegations, amounting in substance to
claims that defendants failed to take reasonable care, are often
advanced in a contractual context.'
2.12
South African legal writers, it was pointed out by counsel for PW,
have also remarked on the indefensibility of the distinction between
contractual and delictual claims as far as the applicability of s 1 (1)
(a) of the Act is concerned.   Christie (The Law of Contract in
South Africa,. 3rd ed 1996 at 613 - 614) is of the view that
' … it is undesirable to leave the law in a state where the

employment of purely technical skill in pleading may lead to a result
fundamentally different from that which would be reached if a lesser
degree of technical skill were employed.   When a contract contains
an express or implied term imposing an obligation not to be negligent
(which very frequently happens) a breach of this term may equally
well be described as a breach of contract or a delict giving rise to
Aquilian liability.   Under our law as it presently stands a skilful
pleader, by pleading such a case in contract, could avoid the danger
of a reduction of damages by apportionment under the Act, whereas
a less skilful pleader, pleading the same facts in delict, would lay his
client open to a reduction in damages … This degree of knife-edge
technicality should be eliminated from the law where possible … '
(In similar vein, see also D J Lötz Vermindering van kontraktuele
skadevergoeding in 1996 TSAR 172; P H Havenga Contractual
Claims and Contributory Negligence (2001) 64 THRHR 125 -
126.) Commenting on the judgment of the Court a quo in the
present case, Havenga, who supports the judgment, states at 128 :
'Goldstein J's interpretation of the Act is to be commended.   It is
not absurd, inconsistent or anomalous.   Quite the contrary  :  it is

absurd to non-suit a plaintiff merely because he or she has suffered
damage caused partly by his or her own fault.   In this case, it would
be inconsistent and anomalous to have different rules for claims
based on breach of contract and for claims founded in delict.
B
Thus far the pro-arguments.   We now turn to the contra
arguments and the counter-submissions thereto.
The Act, so it was argued by TBA's counsel , is not applicable to
contractual claims because contributory negligence was never by our common
law and pre-1956, considered as a factor to be taken into account where a
plaintiff sues in contract.   This is borne out, so it was argued, by s 1 (3) of the
Act.   It was argued that the section says 'fault' 'includes any act or omission
which would, but for the provisions of this section, have given rise to the
defence of contributory negligence'.   TBA argued that such a defence was not
in the common law applicable to a plaintiff's claim in contract, therefore it must
have been the legislature's intention that s 1 of the Act would apply to delictual
actions only  -  where contributory negligence was a defence.   This is the

strongest argument presented on behalf of TBA, and the one on which the other
judgments in the present case are based.   The argument submitted on behalf of
TBA is, perhaps, best formulated by Masel and Kelly (op cit at 313 - 314) and
also best refuted by them.
'The 1945 English reform and subsequent apportionment legislation allows for
apportionment where a person suffers damage as a result partly of his or her own
fault and partly of the fault of another person.   It is the definition of "fault" which has
given rise to the problem, as it was defined ambiguously to mean "negligence, breach
of statutory duty or other act or omission which gives rise to a liability in tort or
would, apart from this Act, give rise to the defence of contributory negligence".
The drafters presumably intended this provision to apply to actions in tort.
They probably assumed that contributory negligence was not a defence to an action
in contract.   If it had been, it would have been a complete bar to a plaintiff's action
and it would have been necessary to protect plaintiffs by extending the legislation to
that situation.   As the majority judgment states:  "The section was designed to
increase the rights of plaintiffs, not reduce them."   However, the legislation was
passed at a time when it was thought that contract and tort were completely discrete
in their coverage, and there was no suggestion of concurrent liability.   The relatively
recent emergence of the principle of concurrent liability, which was reaffirmed by the
High Court in Astley, has given rise to a new question.   The question is whether the

application of the legislation to avoid the anomaly that arises if the legislation is
restricted to actions brought in tort.
The majority judgment analyses those decisions which have applied the
apportionment legislation in cases where the defendant's obligation under contract
was commensurate with his or her duty in tort.   It recognises that the concluding
phrase of the definition of "fault"  -  "which gives rise to a liability in tort or would,
apart from this Act, give rise to the defence of contributory negligence"  -  might be
interpreted as only governing "other act or omission" and not as governing the
opening words "negligence, breach of statutory duty".   But it fails to follow up the
possibility.   It also notes, but does not adopt, the suggestion made by Pritchard J in
Rowe v Turner Hopkins & Partners that :
"The second limb of the definition means simply and logically that no
act or omission of the plaintiff will entitle the defendant to a
reduction of damages unless it amounts to the sort of conduct which,
prior to the enactment of the Contributory Negligence Act, would
have afforded a defence of contributory negligence."
The majority interprets the apportionment legislation as being restricted to an action
in tort.   But there is nothing in the legislation itself that requires that result.   The
legislation defines fault in terms of conduct which would give rise to a defence of
contributory negligence.   The plaintiff's conduct would have given rise to that
defence in an action in tort.   Consequently, the legislation applies.   The fact that the
particular action is one in contract, not tort, is irrelevant.   The basis for the action  -
the defendant's breach of the duty of care  -  is precisely the same in each case.

Why not apply the legislation?'
But there is a further argument, once again based on a clear difference between
our Act and the English statute.   The English Act specifically states in s 4 that
fault
'means negligence, breach of a statutory duty or other act or omission which gives
rise to a liability  in tort or would, apart from this Act, give rise to the defence of
contributory negligence.'
Our s 3 reads :
'For the purposes of this section "fault' includes any act or omission which would,
but for the provisions of this section, have given rise to the defence of contributory
negligence.'
The wording of the English section is much stronger than ours.   'Fault' is
defined in definite terms  -  it 'means' only what is described in the section.   In
our section, fault is not so defined.   Fault only 'includes' the acts or omissions
described, but does not exclude other acts or omissions which in law would also
amount to 'fault'.   In our Act, this definition could simply signify an attempt to

indicate that the well-known rule of contributory negligence in the law of delict is
to be retained, i e to leave no doubt that contributory negligence is a species of
'fault'.
At best for TBA, s 1 (3) is ambiguous.   We thus have this position  :  s 1
(1) (a), on its wording, unambiguously would allow apportionment in contractual
claims.   S 1 (3) is ambiguous and possibly excludes apportionment in such
claims.   In such a case  -  and even if one views section1 (3) as unambiguous  -
the situation is that two conflicting interpretations can be given to s 1.   In such a
case the correct approach, in my view, is the one laid down by this Court as
long ago as 1931 in Principal Immigration Officer v Bhula 1931 AD 323 at 336
per Wessels JA as follows :
'There is another principle which ought to be invoked in this case, and which would
lead to the same interpretation.   It has been repeatedly laid down by this Court that
where a statute is clear, the Court must give effect to the intention of the Legislature,
however harsh its operation may be to individuals affected thereby.   Where,
however, two meanings may be given to a section, and the one meaning leads to

harshness and injustice, whilst the other does not, the Court will hold that the
Legislature rather intended the milder than the harsher meaning.   This principle is
thus stated by Maxwell (3rd ed., p. 299):  "A sense of the possible injustice of an
interpretation ought not to induce judges to do violence to well-settled rules of
construction, but it may properly lead to the selection of one rather than the other of
two possible interpretations per Lord Herschel in Arrow Shipping Co  v Tyne
Commissioners (1894) A.C. 516.   Whenever the language of the Legislature
admits of two constructions, and if construed in one way would lead to obvious
injustice, the Courts act upon the view that such a result could not have been
intended unless the intention had been manifested in express words";  and cases
cited.'
There can be no doubt that, for the reasons discussed above, fairness and
justice favour the approach that s 1 of the Act should apply also to contractual
claims.
The second contra-argument was based on the precedents created by the
decisions in Shaw and OK Bazaars, supra.
2.1
The two said decisions were, to put it mildly, not well received by our
academic writers (see inter alia Boberg 1965 Annual Survey of South
African Law 179 - 180;  Jean Davids, Altered cheques : Apportionment of

loss (1965) (82) SA Law Journal 289;  Jean Davids, Apportionment and
contractual damages  (1966) 83 SA Law Journal 226; Boberg, The Law
of Delict, vol 1, 1984, 710 - 713;  Louise Tager, 1976 Annual Survey of
South African Law 87 - 88;  DJ Lötz Vermindering van kontraktuele
skadevergoeding, in (1996) TSAR  170 - 174;  P H Havenga Contractual
Claims and Contributory Negligence in 2001 THRHR 124 - 130;
Christie, op cit 613 et seq.   In a submission to the SA Law Commission
Professor A J Kerr opposes the view that the Act is applicable to
contractual claims but favours apportionment on the basis of causation.)
2.2
The judgment in OK Bazaars was and can be  criticised on the following
bases:
(a)
The main argument in OK Bazaars in favour of applying the
Act was that the word 'fault' in s 1 of the Act was wide
enough to include a breach of contract.  Watermeyer J
dismissed this argument : some forms of breach of contract
do not require fault on the part of the debtor.   It follows that
if s 1 of the Act is applicable, it would apply to some
breaches of contract (where fault is required) but not to
others.   This was the first and seemingly most important
reason why Watermeyer J rejected the argument.
With respect, this argument is not convincing.   The

object of the Act was to regulate those cases where both
parties acted negligently.   It excluded from its operation
cases of strict liability, statutory liability and contractual
liability which do not depend on proof of negligence.   S 1
(1)  (a) of the Act specifically refers to cases where both
parties are at 'fault'.   How can the argument that the section
cannot be applied, even if this particular defendant is at fault,
because other defendants in contracts may be liable without
any fault, be sound?
(b)
It was also held in OK Bazaars that the history of the Act
shows that it was intended to apply to delictual actions only.
But, as was argued by counsel for PW, this argument loses
sight of the crucial difference between our Act and the
English Act.   If our Legislature intended s 1 to apply to
delictual actions only, why did it not simply follow the
English Act?
(c)
It was also held in OK Bazaars that the words in s 1 '... a
claim in respect of that damage shall not be defeated by
reason of the fault of the claimant' support the view that the
section was intended to apply to delictual claims only: it
would not be apposite to say that fault on the part of the

plaintiff who sued on contract would 'defeat' his or her claim;
the plaintiff's claim would fail because he would not be able
to show the causal connection between the defendant's act
and the damage.
The argument, so it was argued, is untenable.   The
very same can be said of a claim in delict  :  by 1956 a
plaintiff's claim in delict was not 'defeated' by reason of his
or her fault  -  it would fail, sometimes, because the plaintiff's
conduct, and not that of the defendant, was the proximate
cause of the loss (i e he or she had the last opportunity to
avoid the loss).
(d)
It was then said in OK Bazaars that the rule in s 1 (1) (b) that
damage, for the purpose of s 1 (1) (a) shall be regarded as
having been caused by a person's fault notwithstanding the
fact that another person had the last opportunity of avoiding
the consequences thereof and negligently failed to do so,
showed that the apportionment was intended to apply to
delictual claims only.
But the argument seems to be a non sequitur.   Even if
it is assumed that s 1(1)(b) was enacted to overcome the line
of decisions based on the 'abracadabra' criterion of causation

and the last opportunity rule, non constat that the new
apportionment principle cannot and should not be equally
applicable to contractual claims.   S 1 (1) (a) is the dominant
clause, not s 1 (1) (b).
(e)
It was also held by Watermeyer J that contributory negligence
is not normally one of the recognised defences to a claim
based upon a breach of contract.   On behalf of PW it was
submitted that this argument overlooks the wording of the
whole of the Act and the principle laid down in Principal
Immigration Officer v Bhula, supra, viz that in the case of
conflicting or ambiguous provisions, the fair and equitable
interpretation should be followed, rather than a harsh and
uncompromising one or, one can add, rather than an
approach which leads to unjustifiable discrimination
between classes of defendants.
(f)
It was also held that the application of various
canons of
constructions, inter alia relating to the long title of the Act
which refers to contributory negligence, indicates that the Act
was intended to apply to delictual claims only.
PW submitted that there is no canon of construction
which militates against the view that the Act applies to

contractual claims.   On the contrary, it was argued, an
analysis of the wording of the long title (as done above) and
of s 1 (1) (a) shows the opposite.
(g)
It was also held in OK Bazaars that, inasmuch as
contributory negligence was, before the passing of the Act,
not a valid defence to a claim based upon a breach of
contract, then, if it was the legislature's intention to change
the legal position, it would have done so explicitly.   Based
on its previous submissions, PW argued that it was clear
what the legislature intended to do;  furthermore, if it was the
legislature's intention to apply the Act only to delictual claims,
why did it not simply follow the English Act?
(h)
Finally, the argument was put before the
court in OK
Bazaars that even if the Act did not apply to all contractual
claims, it should at least be construed as covering claims for
breach of contracts which import a duty not to be negligent i
e at fault, in committing the breach of contract.   Watermeyer
J was not convinced by the English authorities and
distinguished them.
But, PW argued, the substance of the argument was
not addressed : if the breach of contract by the defendant

requires proof of fault to found a claim for damages against
the defendant, and the plaintiff is also at fault, why should s 1
(1) (a) of the Act, according to its clear terms, and as a
matter of logic, legal policy, fairness and justice not be
applicable?
The status of OK Bazaars
The next argument submitted by TBA was that the decision in OK Bazaars has
now stood for more than two decades and should not be overturned even if
wrong, except by a clear legislative intervention.
This Court has on several occasions rejected this approach.   In Dukes v
Marthinusen 1937 AD 12 Stratford ACJ said at 23 :
'If the decisions had disregarded fundamental principles of our law, we might have to
reassert those principles even at the cost of reversing judgments of long standing.'
(See also S v Bernardus 1965 (3) SA 287 (A) at 297 in fine - 299 A;
Peri-Urban Areas Health Board v Munarin 1965 (3) SA 367 (A) at 376
E - G.)

[15] Conclusion
(a)
What is plain from the above discussion is that the feasibility of a plea of
contributory negligence in the case of a claim for breach of contract on the
defendant's failure to exercise due care depends upon an exercise of statutory
interpretation.   Behind this, however, lies important policy considerations.   That
being so, there are two interrelated considerations which cause me to lean in
favour of the applicability of s 1 to claims of a contractual nature.   These are :
(i) the need for its applicability.   This is not simply an academic exercise:
there is a definite lacuna in the law if such a defence is to be denied in the
narrow circumstance which apply in this case.
(ii) the glaring inequity of denying the existence of such a defence in
circumstances such as those prevailing in this case.
(b)
The facts of the current case provide a perfect illustration of both
propositions.   It would be patently unfair if PW should have to bear the full

brunt of the entire loss when TBA was itself partly to blame for its occurrence.
The greater the comparative degree of a plaintiff's lack of precaution in relation
to the harm of which he complains, the more apparent will be the inequity of the
denial of a plea of contributory negligence.
(c)
One can readily conjure up other comparable instances.   One that was
much discussed during the course of argument is this:  a contract is entered into
between a building owner and a contractor.   The specifications furnished by the
building owner to the contractor negligently stipulate an incorrect mix for the
concrete he is to use.  The contractor, on the other hand, is negligent in that,
contrary to proper specifications about reinforcing, he provides inadequate
reinforcing.   As a result a wall collapses.   According to expert evidence both
factors contributed thereto.   The building owner sues the contractor for the
damage it sustained as a result thereof.  Is it fair that the plaintiff should succeed
in full or not at all?  Another telling example is furnished in the recent report of

the Scottish Law Commission entitled Report on Remedies for Breach of
Contract” (1999) which, in part 4 thereof, deals with this very issue.   In para
4.10 it is stated:
'On principle it would seem to be desirable to take into account the
conduct of the aggrieved party in contributing to the loss or harm.  This is
just an extension of the policy underlying the well-established rules on
mitigation of loss.  In cases where loss of damage is sustained as a result
of breach of contract it will often be the case that the aggrieved party is
partly to blame for the loss or harm.  To force courts into an all or nothing
choice is likely to produce unreasonable results.
Example.  A contractor contracts with an electricity supply
company for a continuous supply of electricity.  The
company, in breach of the contract, allows an interruption in
the supply.  This is one of the causes of a loss to the
contractor who has to re-lay a large column of concrete.
Another causal factor was that the contractor failed to take
reasonable steps to see that a back-up system was
available before beginning a task for which a continuous
supply of concrete was indispensable.
In a case like this, awarding the contractor full damages or no damages
may be equally unattractive.  The reasonable course may be to apportion

the liability, taking the conduct of both parties into account.  Other, more
commonplace, examples could easily be imagined.  For example, a party
to a contract for the carriage of goods gives the carrier a wrong address
and then, when the carrier fails to take all reasonable steps to ascertain
the correct address in time, claims damages for late delivery.  Or a
person who has bought sophisticated electronic equipment which is not in
all respects conform to contract causes damage to it by ignoring the clear
instructions supplied with it and taking foolish and unreasonable steps to
remedy the small defect.  Or a woman injures herself in foolishly and
unreasonably attempting to climb over a high gate which ought, in terms
of a contract, to have been left open.  In some such cases the effect of the
existing law may be that the aggrieved party recovers nothing.  A court,
faced with arguments that there is no room for apportioning liability, may
feel obliged to hold that the aggrieved party’s conduct was the sole
cause, or the sole effective cause, of the loss.'
(d)
Other examples of how unfairly the denial of such a plea would
operate are suggested by the facts in O K Bazaars, quoted above or
British South African Co v Lennon Bros Ltd 1913 SR 94.   Contrast,
with these cases the judgment of the Queen's Bench Division (per

Brabin J) in De Meza and Stuart v Apple, Van Straten, Shena and
Stone [1974] 1 Lloyds Rep 508 (Q.B.).   There the defendant auditors
were found to have been negligent, but also the instructing plaintiff, a
firm of solicitors.   Relying on a number of previous cases and well-
known text-books, the learned judge found that the contract had
imported a duty on the part of the auditors not to be negligent, and held
that the English Law Reform (Contributory Negligence) Act of 1945 did
apply.   The fairness of this result speaks for itself.
(e)
What is clear is that the corrective which the English law invented
as a counter to the denial of a claim to a plaintiff who was himself
negligent, namely, the last opportunity rule, formed no part of the
Roman-Dutch law and was imported into this country from England.
One of the motivations for the Act was undoubtedly to regularise the

position in this country as far as the last opportunity rule was concerned.
That could of course only be done if the principle of apportionment was
introduced as a balancing factor.  This was clearly a peculiarity of the
law of delict.   It may be that the Act was primarily concerned to rectify
the kind of problem which occurred consistently in the law of delict and
less so in the law of contract.   But the ultimate question is not whether
the Act was designed to rectify a problem of the law of contract but
whether, in its terms and as a corollary of treating a problem surfacing
more directly in the sphere of delict, it managed also to provide a
satisfactory answer to a problem which, although it may have occurred
less often in the law of contract, was nevertheless a real one.
(f)
In the result I would apportion the loss suffered by TBA according
to the standard laid down by s 1 (1) (a) of the Act.   Having regard to the

analysis of the facts by my colleague Nienaber JA, I am of the view that
both parties were equally at fault, with the result that the claim of TBA
should be reduced by 50%.
(g)
The effect of my approach is that the appeal succeeds but not to
its full extent.   In the court a quo TBA's claim was reduced by 80%.   In
my view it should only be reduced by 50%.   This means that although
its appeal succeeds only partly, it is successful in getting R694 909,00
instead of R249 279,69 awarded to it a quo.   This represents
substantial success, and TBA is therefore entitled to its costs of appeal.
As far as the remaining orders made by my colleague Nienaber
JA are concerned, I would not suggest any changes.
P J J OLIVIER