Ranger v Wykerd and Another 1977 (2) SA 976 (A)

Fraudulent Misrepresentation - Damages

• Case: Ranger v Wykerd and Another 1977 (2) SA 976 (A)
• Court: Appellate Division
• Judges: Jansen JA, Trollip JA, De Villiers JA, Kotzé JA, Miller JA
• Heard: August 23, 1976
• Judgment: March 28, 1977

Flynote (Key Words)

• Fraud: Fraudulent misrepresentation.
• Damages: Basis of assessment.
• Fraudulent misrepresentation that swimming bath structurally sound.
• Purchaser establishing that reasonable cost of repairs at date of contract the measure of his damages.
• Damages: Measure of.
• Fraudulent misrepresentation that swimming bath structurally sound.
• Purchaser establishing that reasonable cost of repairs at date of contract the measure of his patrimonial loss flowing directly from the fraud.

Headnote (Summary)

• Plaintiff purchased a dwelling with outbuildings and a swimming pool from the second defendant, married out of community of property to the first defendant.
• The agreed price was R22,000, occupation was taken, and transfer received.
• The swimming pool leaked, and the plaintiff had it repaired.
• Claim: R1,250 from the first defendant for fraudulently representing that the swimming pool was structurally sound.
• The amount claimed was the cost to render the pool structurally sound.
• Allegation: Induced to pay R22,000 due to fraudulent misrepresentation, whereas he would have paid R20,750 otherwise.
• Alternative claim: Damages from the second defendant for fraudulently concealing serious structural defects in the pool.
• Amended pleadings: R1,250 represented the difference between the price paid and the market value.
• Trial court found the reasonable cost of repair at the time of the contract was not less than R1,000 but granted absolution, holding that the plaintiff had not proved the market value of the property with the defect was less than R22,000.
• Appeal: Plaintiff's claim against both respondents was founded on delict.
• The agreed price of the property (R22,000) was its actual market value in its represented condition at the relevant time.
• The essence of the claim for damages was the cost of repairing the swimming bath.
• The reasonable cost of repairs at the date of the contract, viz. R1,000, should have been awarded as representing the appellant's patrimonial loss directly flowing from the fraud, as the respondents must have foreseen it as an inevitable consequence of their fraud.
• JANSEN, J.A., dissenting in respect of the claim against the first respondent.
• The decision in the Durban and Coast Local Division in Ranger v Wykerd and Another, reversed.

Case Information

• Appeal from a decision in the Durban and Coast Local Division (HOWARD, J.).
• Facts appear from the judgments of JANSEN, J.A. and TROLLIP, J.A.

Arguments

Appellant's Argument (A. I. J. Chadwick)

• The measure of damages in an action for fraud is the difference between what the representee paid and what he would have paid but for the fraud.
• The measure of damages is not the difference between what was paid and the market value, but the latter is significant as evidence to determine what the representee would have paid without the fraud.
• Cited cases: De Jager v Grunder, 1964 (1) SA at p. 450F ­ G; Bill Harvey's Investment Trust (Pty.) Ltd. v Oranjegezicht Citrus Estates (Pty.) Ltd., 1958 (1) SA at p. 485F; Scheepers v Handley, 1960 (3) SA at p. 59H.
• The real question is whether the representee suffered any patrimonial loss due to the representation.
• Cited cases: De Jager v Grunder, supra at p. 451B; Scheepers v Handley, supra at p. 59B; Trotman and Another v Edwick, 1951 (1) SA at p. 450C; Pockets Holdings (Pvt.) Ltd. v Lobel's Holdings (Pvt.) Ltd., 1966 (4) SA at p. 248E ­ H.
• In assessing patrimonial loss, both damnum emergens and lucrum cessans should be considered.
• Even if the purchaser made a good bargain despite the fraud, they are entitled to damages if they could have driven an even better bargain without the fraud.
• Cited cases: De Jager v Grunder, supra at p. 468G; Pockets Holdings (Pvt.) Ltd. v Lobel's Holdings (Pvt.) Ltd., supra at p. 248F.
• The Court a quo adopted an unduly rigid approach to proving the probability of a sale at a more favorable price and the quantum of damages.
• A formalistic approach to damage assessment should be avoided.
• Cited cases: De Jager v Grunder, supra at p. 251A ­ C; Erasmus v Davis, 1969 (2) SA at p. 5F ­ G; Crawley v Frank Pepper (Pty.) Ltd., 1970 (1) SA at p. 38D; Monumental Art Co. v Kenston Pharmacy (Pty.) Ltd., 1976 (2) SA at p. 118A ­ F.
• The Court a quo erred by holding that the only method of proving damages was by adducing proof of the market value.
• Sufficient evidence existed to establish that the fair market value was R22,000 less the cost of repairing the swimming pool.
• In the absence of contrary evidence, it would be proper to fix the market price by accepting the price offered by the purchaser and subtracting the cost of remedying defects.
• Cited cases: Crawley v Frank Pepper (Pty.) Ltd., supra at pp. 37, 38; Maennel v Garage Continental Ltd., 1910 AD at p. 45.
• Fixing the true market value at the trial would have been difficult and expensive due to the time that had passed and the improvements/repairs effected.
• McInnes v White, 1962 (1) SA 26 and Heckroodt v Nurick, 1966 (4) SA 76 must be regarded as wrongly decided given De Jager v Grunder, supra.
• The facts of the present case are distinguishable from McInnes v White and Heckroodt v Nurick.
• Re: the claim against the second respondent, the facts are indistinguishable from Crawley v Frank Pepper (Pty.) Ltd., supra, and the latter was correctly decided.
• If the representation is capable of bearing two meanings, the appellant must show that he acted on it in the sense in which it was false.
• In the event of failure to prove damages, the Court a quo should have exercised its discretion to grant costs to the appellant or deprive respondents of their costs due to the fraud or the second respondent's false evidence.

Respondents' Argument (F. J. Bashall)

• Where a representation bears two or more meanings, the appellant must show that the first respondent intended it to be acted upon in the false sense.
• Cited cases: William Smith v David Chadwick and Others, (1884) 9 A.C. at pp. 190 ­ 191; Adam v Curlewis Citrus Farms Ltd., 1930 T.P.D. at p. 84; Geary & Son (Pty.) Ltd. v Gove, 1964 (1) SA at p.441.
• At best for the appellant, liability could only be based on non-disclosure, if a duty to disclose was owed by the first respondent to the appellant.
• In the absence of such duty, there was no causal link between any damages sustained and the conduct of the first respondent.
• The onus of proving causal connection rested upon the appellant.
• Cited cases: Bill Harvey's Investment Trust (Pty.) Ltd. v Oranjegezicht Citrus Estates (Pty.) Ltd., 1958 (1) S.A. at p. 485D; Trotman and Another v Edwick, 1951 (1) SA at p. 450C.
• Alternatively, the appellant's claims sound in delict.
• The measure of damages is the amount by which the patrimony of the representee has been reduced by reliance on the misrepresentation.
• Cited cases: Trotman and Another v Edwick, supra at p. 449B; Bill Harvey's Investment Trust v Oranjegezicht Citrus Estates, supra at p. 483E ­ F; Scheepers v Handley, supra at p. 59H.
• Appellant cannot claim to be placed in the same position as he would have been in had the representation been true, resulting in compensatory damages based on contract.
• Cited cases: Maennel v Garage Continental Ltd., 1910 A.D. at p. 145; Caxton Printing Works (Pty.) Ltd. v Transvaal Advertising Contractors, 1936 T.P.D. at p. 215.
• In a purchase and sale contract, the representee has no claim for damages if he retains the item and did not pay more than its worth.
• The representee must prove that he would not have paid more than the actual value but for the representation.
• Cited cases: De Wet and Yeats, Kontraktereg en Handelsreg, 3rd ed., p. 38; De Jager v Grunder, 1964 (1) SA at p. 457G.
• Contrast the case of Crawley v Frank Pepper (Pty.) Ltd., 1970 (1) SA at p. 37E, where the cause of action was not based on delict and where compensatory damages were awarded.
• Damages based on delict and damages based on contract may coincide in quantum but not in their measure.
• Cited case: De Jager v Grunder, supra at p. 458C.
• On an analogy with the actio quanti minoris, no question of necessary expenditure enters directly into the calculation of the measure of damages.
• The measure of damages in McInnes v White, 1962 (1) SA 26, was not inconsistent with the ratio decidendi in De Jager v Grunder, supra, inasmuch as it is of evidential value.
• Heckroodt v Nurick, 1966 (4) SA 76, is on all fours with the instant issue.
• The Court a quo did not misdirect itself in finding that, whilst proof of the market value was of purely evidential significance, in the absence of other evidence to show what the purchaser would have paid, it might well be decisive of that issue.
• The Court a quo did not adopt a rigid or formalistic approach inconsistent with the ratio decidendi in De Jager v Grunder, supra.
• There is nothing on record to suggest that evidence in support of appellant's measure of damages was unobtainable or difficult to attain.
• To attempt to arrive at the market value by deducting the cost of repairing the pool from the purchase price is a claim for compensatory damage.
• It further begs the probabilities that the second respondent would not have accepted less than the market price.
• There is no presumption or rule that the market price approximates the purchase price.
• On the question of costs, these are a matter in the discretion of the Judge.
• An appellate tribunal will interfere with an award only where it is shown that the Court a quo did not exercise a judicial discretion.
• Cited cases: Fripp v Gibbon & Co., 1913 AD at p. 357; Merber v Merber, 1948 (1) SA at p. 452; Cronje v Pelser, 1967 (2) SA 589.

Judgment (Jansen, J.A.)

• On 10 November 1970, the appellant purchased a property from the second respondent, the wife of the first respondent.
• The property consisted of a dwelling­house and outbuildings, with 0.75 acres of land and a swimming­ pool.
• The appellant took occupation of the property on 6 December 1970 and received transfer on 10 February 1971.
• The appellant was attracted to the property by the swimming­pool, but in April 1971, the pool was found to be leaking.
• The pool had a latent structural defect at the time of purchase, making it subject to cracking and leaking.
• The reasonable costs of repair would have been at least R1,000. The purchase had been subject to a voetstoots clause.
• The appellant sued the first and second respondent in the alternative for damages in the sum of R1 250.
• The first respondent orally represented that the swimming pool was structurally sound, knowing the representation to be false, and induced the appellant to enter into the contract.
• The second respondent knew of serious structural defects, did not disclose these, thus fraudulently inducing the appellant to enter into the agreement.
• The appellant alleged that, had he been aware of the defects, he would not have paid more than R20 750 for the property.
• The Court found all allegations in respect of the second respondent to have been proved.
• As to the first respondent, the court found that he knew the nature and extent of the defects and told the appellant that the pool would be in 100 percent condition on occupation, implying structural soundness.
• the Court, however, absolved both the respondents from the instance, with costs, on the ground that the appellant had failed to prove any patrimonial loss by reason of fraudulent misrepresentation or fraudulent concealment.
• Counsel for the respondents attacked the findings of the Court, contending that finding the second respondent dishonest was an error.
• The second respondent had called in Hartogh to repair the pool in May and June 1970 when it was leaking. Hartogh testified that he told the second respondent that the pool was not a sound structure and that mere superficial repairs would not last.
• A neighbor, Mrs. Ware, testified that the second respondent had told her at the time that Hartogh had only done