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

Ranger v Wykerd and Another

Case Overview

• Citation: 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 (Keywords)

• Fraud: Fraudulent misrepresentation, damages, assessment basis.
• Misrepresentation regarding the structural soundness of a swimming bath.
• Purchaser's damages are the reasonable cost of repairs at the contract date, representing patrimonial loss from the fraud.

Headnote (Summary)

• Plaintiff purchased a dwelling with a swimming pool from the second defendant, married out of community of property to the first defendant.
• The plaintiff paid R22,000, took occupation, and received transfer.
• The swimming pool leaked, and the plaintiff claimed R1,250 from the first defendant for fraudulently representing that the pool was structurally sound.
• The claimed amount was the cost to render the pool structurally sound.
• Plaintiff alleged the misrepresentation induced the R22,000 payment; without it, he would have paid only R20,750.
• Alternatively, he claimed the same amount from the second defendant for fraudulently concealing the pool's structural defects.
• In amended pleadings, the plaintiff claimed R1,250 as the difference between the price paid and the market value.
• At trial, the plaintiff stated he would not have paid more than R20,750 had he known the true condition.
• The trial Court found the reasonable repair cost at the contract time was at least R1,000 but granted absolution from the instance, stating that the plaintiff had not proven that the market value of the property with the defect was less than R22,000.
• The appeal was based 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 appellant's claim was the cost of repairing the swimming bath.
• The reasonable cost of repairs at the contract date, viz. R1,000, should have been awarded as representing appellant's patrimonial loss directly flowing from the fraud, because the respondents must have foreseen it as an inevitable consequence.
• JANSEN, J.A., dissented regarding the claim against the first respondent.
• The decision in the Durban and Coast Local Division in Ranger v Wykerd and Another, was reversed.

Case Information

• Appeal from a decision in the Durban and Coast Local Division (HOWARD, J.).

Arguments

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

• Damages for fraud should be the difference between what the representee paid and what he would have paid without the fraud.
• Market value is significant evidence to determine what the representee would have paid without the fraud.
• Cited cases: De Jager v Grunder, Bill Harvey's Investment Trust (Pty.) Ltd. v Oranjegezicht Citrus Estates (Pty.) Ltd., Scheepers v Handley.
• The question is whether the representee suffered patrimonial loss due to the representation.
• Consider damnum emergens and lucrum cessans in assessing patrimonial loss.
• Even if the purchaser made a good bargain, they are entitled to damages if they would have made an even better bargain without the fraud.
• The Court a quo adopted too rigid an approach to whether the appellant had proved that a sale would have concluded at a more favourable price without fraud and the quantum of appellant's damages.
• A formalistic approach to damage assessment should be avoided because it depends on the facts of the particular case.
• The Court a quo erred by requiring proof of the market value of the merx as the only way to prove damages.
• Sufficient evidence existed to establish that the fair market value of the merx at the time of the sale was the sum of R22 000 less the cost of repairing the swimming pool.
• Authorities support fixing the market price by accepting the buyer's offered price and subtracting the cost of remedying defects.
• Fixing the true market value of the merx at the time of the sale would have been difficult and expensive, especially given the elapsed time and the improvements, repairs, and alterations made.
• McInnes v White and Heckroodt v Nurick were wrongly decided or distinguishable.
• The claim against the second respondent is similar to Crawley v Frank Pepper (Pty.) Ltd.
• If a representation has two meanings, the appellant must show they acted on it in the sense in which it was false.
• If the appellant failed to prove damages, the Court a quo should have granted appellant the costs of the action or deprived respondents of their costs because of the fraud or false evidence.

Respondents' Argument (F. J. Bashall)

• If a representation bears two meanings, the appellant must show the first respondent intended it to be acted upon in the false sense.
• Cited cases: William Smith v David Chadwick and Others, Adam v Curlewis Citrus Farms Ltd., Geary & Son (Pty.) Ltd. v Gove.
• Liability for the first respondent could only be based on non­disclosure if a duty to disclose was owed by the first respondent to the appellant.
• No causal link exists between damages and the conduct of first respondent without such duty.
• The measure of damages is the amount by which the representee's patrimony has been reduced by reliance on the misrepresentation.
• The representee must prove that they would not have paid more than the actual value but for the representation.
• Damages based on delict and damages based on contract may coincide in their quantum but not in their measure, lest purchasers enforce contractual claims under the mantle of delict.
• On an analogy with the actio quanti minoris, no question of necessary expenditure enters directly into the calculation of the measure of damages.
• McInnes v White was not inconsistent with the ratio decidendi in De Jager v Grunder, as it is of evidential value.
• Heckroodt v Nurick is similar to the instant issue and applies the appropriate test.
• The Court a quo did not misdirect itself in finding that proof of the market value was of purely evidential significance.
• The Court a quo did not adopt a rigid or formalistic approach inconsistent with the ratio decidendi in De Jager v Grunder.
• There is nothing on record to suggest that evidence supporting the appellant's measure of damages was unobtainable or difficult or expensive of attainment, having pleaded that the value of the property at the time of the sale was R20 750.
• 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.
• There is no presumption or rule that the market price approximates the purchase price.
• Costs are a matter in the discretion of the Judge, and an appellate tribunal will interfere with an award only where it is shown that the Court a quo did not exercise a judicial discretion.

Judgment (JANSEN, J.A.)

• On November 10, 1970, the appellant purchased a property from the second respondent, wife of the first respondent, for R22 000.
• The property included a dwelling house, outbuildings, 0.75 acres of land, and a swimming pool.
• The appellant was attracted to the property by the swimming pool, which was later found to be leaking in April 1971.
• The pool had a latent structural defect at the time of purchase, with reasonable repair costs then estimated at R1,000.
• The purchase was subject to a voetstoots clause.
• The appellant sued both respondents for R1,250 in damages, alleging fraudulent misrepresentation by the first respondent and fraudulent concealment by the second respondent.
• The Court a quo found all allegations against the second respondent to have been proven.
• As to the first respondent, the Court found he knew the nature and extent of the defects and told the appellant that the pool would be in 100% condition on occupation.
• The Court absolved both respondents from the instance, with costs, because the appellant had failed to prove patrimonial loss.
• The Court a quo had been favourably impressed by Hartogh and Mrs. Ware as witnesses, despite certain criticisms of their evidence, whereas the second respondent did not make a good impression.
• The court found that evidence of fraudulent concealment had been established.
• As to the first respondent, the finding that he had been told what Hartogh had said by the second respondent has not been challenged.
• The main submission on behalf of the first respondent is that, on the appellant's own evidence, it has not been established that the first respondent made any representation as to the structure of the pool.
• The context implied the representation was that there was nothing amiss with the pool, barring obvious defects.
• The assurance that the pool would be in 100% condition was plainly an implied representation that except for the obvious defects there was nothing amiss with the pool, and the appellant's understanding of what the first respondent said was fully justified.
• Fraudulent misrepresentation and concealment were thus both present.
• The appellant's case relied on an allegation that, but for the wrongful act, he wouldn't have paid more than R20,750 for the property.
• The damages of R1,250 he claimed was the difference between the purchase price of R22,000 and the said maximum he would otherwise have been prepared to pay.
• At the trial's end, a substantive measure of damages, not related to what the appellant would have been prepared to pay, was seriously mooted.
• The Court a quo found that the appellant had failed to establish the true market value. The appellant's opinion was said to be based on a comparison between it and the other properties which he had seen in the course of his househunting activities, but he did not make any real attempt to prove that the comparison was a valid one.
• The Court a quo didn't consider the appellant's evidence proof of damnum.
• The findings of the Court a quo were not in conflict with the majority judgments of STEYN, C.J., and WESSELS, J.A.
• Given instances of fraudulent misrepresentation by a party to the contract, and not someone extraneous to the contract, a contractual measure of damages (viz. making good the representation) may be applied in appropriate circumstances, despite the fact that the representee's action is not based upon the contract, but founded in delict.
• The second respondent is liable for damages in the sum of R1 000, with costs, and the first respondent is absolved from the instance with costs.

Judgment (TROLLIP, J.A.)

• Appeal should succeed against both respondents.
• The finds of JANSEN, J.A., cannot be disturbed.
• Both claims by appellant against the respondents were founded on delict, so the appellant can only recover the appropriate delictual and not any contractual measure of damages.
• The measure of damages claimable for delict is its application to the particular facts of a case founded on fraudulent misrepresentation or concealment.
• The approaches to the problems adopted by this Court in the quartet of cases mentioned above were merely guides for determining the quantum of patrimonial loss awardable in each case for the wrongdoer's fraud; they were not intended to be exhaustive or invariably applicable; indeed, this Court, in propounding them, expressly disavowed any such intention and emphasized the factual nature of the inquiry in each case.
• The reasonable and necessary cost to the appellant of remedying the defects of the swimming bath must constitute the patrimonial loss that he suffered through the respondents' fraud.
• It is not a presumption or rule of law, but purely as a fact, that the agreed price for the property (R22 000) was prima facie its actual market value in its represented condition at the relevant time. After all, that was the price the parties themselves agreed on after they had chaffered at arm's length over it for some time.
• (1903) 1 Ch. D. 546 (C.A.). There a shareholder of a company sued a third party, the chairman and director of the company, for damages for a fraudulent misrepresentation contained in its prospectus on the strength of which he had subscribed for and had been allotted certain shares at par.
• The misrepresentation was that the company had already acquired a valuable property, which in fact it had not.
• It is true, too, that in Scheepers' case at p. 59D ­ H reference was made to the authorities relating to the action on contract for a reduction of the price for the shortfall in the land delivered; but, as I read the judgment, the reason was to get assistance in determining, not the correct measure of damages to apply, but how to evaluate the shortfall for the purpose of awarding delictual damages.
• Because of the assumption I have made in the present case that the respondents' fraud causally related to and affected the whole transaction and not merely the swimming bath and the price agreed upon for the property, the decisions in the Bill Harvey's and Scheepers' cases and by the majority in De Jager's cases are, strictly speaking, distinguishable.
• The determination of disputes like the present one turn essentially on the particular facts of each case.
• The above conclusion really disposes of this appeal.
• $1.\;$ The appeal is upheld, the orders of the Court a quo are set aside, and the following orders are substituted ­
  • "(a) Judgment is granted in favour of the plaintiff for R1 000 against first defendant, and alternatively, against second defendant, who shall become liable to satisfy the judgment in the event of first defendant's failure to do so.
  • (b) The costs of the action, including the reasonable qualifying fees of the witness Hartogh, shall be paid by the defendants jointly and severally. Plaintiff is declared to be a necessary witness."
• $2.\;$ The costs of appeal shall be paid by the respondents jointly and severally.

Judges Concurrence

• DE VILLIERS, J.A., KOTZÉ, J.A. and MILLER, J.A., concurred in the judgment of TROLLIP, J.A.