The Supreme Court of Appeal awarded damages to the purchasers of a guesthouse which had a serious leaking roof because the seller failed to disclose the defects he was aware of. The voetstoots clause in the deed of sale was inapplicable because the claim was founded on delictual liability for fraudulent non-disclosure/misrepresentation and not on the implied warranty of a seller that the property is free of latent defects.
An action for fraudulent non-disclosure of latent defects in a thing sold may lead to a successful claim for damages if the purchaser can show that (a) a seller (at the time of the sale) was aware of the defects; (b) the seller deliberately failed to disclose the defect to the purchaser; and (c) with the aim to induce the purchaser to conclude the sale. The expert witness for the purchasers testified that the cause of the leaking roof was due to structural defects and characterised as extensive and long standing defects in the roof. The defects were considered latent because they would not have been visible or discoverable on inspection by the purchasers.
The evidence was that, to the knowledge of all parties, the property had been bought to run as a guesthouse. Merely three months after taking occupation of the property, the roof leaked so seriously that it could not be used as a guesthouse. The purchasers’ had to spend a large sum of money to replace the roof and lost income during the period of replacement. The denials of the seller were rejected by the court, the purchasers’ evidence regarding the fraudulent misrepresentation was accepted. The seller had failed to disclose the full extent of the leakage and defects in the roof by repeatedly reassuring the purchasers that the roof leaked but that it had been repaired and no longer leaked, in order to secure a sale and benefit himself. The seller had a duty to disclose the latent defects in the entire roof and he would have been aware that there were structural defects causing the leaks. The non-disclosure would clearly have played a crucial role in the purchasers’ decision of whether to acquire the property or not.