Delictual Action Based on Fraudulent misrepresentation

In Standard Bank of South Africa Ltd v Supa Quick Auto Centre 2006 (4) SA 65 (N) the plaintiff (SB) had allegedly been the victim of a fraudulent money-raising scheme in which one of its own employees was involved. The fraudulent scheme was devised for the benefit of the fourth defendant. SB had allegedly been induced by fraudulent misrepresentations made to it by the second defendant, acting on behalf of the first defendant, and by the fourth defendant, acting on behalf of the third defendant, to provide finance to the third defendant for the purchase of certain equipment by the third defendant from the first defendant. SB then claimed its damages in delict from the defendants.

Swain J held that in a delictual action based on fraudulent misrepresentation, the plaintiff (SB) was required to prove

• the representation;

• knowledge of its falsity;

• that it was induced by its falsity; and

• that it suffered loss as a result of the fraud.

It was not required to prove, in addition, that the defendant had intended the loss suffered by the plaintiff. It was sufficient that the loss followed from the plaintiff’s acting on the representation. (Read more...)