SCA confirms property developer’s attorney not delictually liable to non-clients

In October 2025, the Supreme Court of Appeal held that an attorney and conveyancer acting exclusively for a developer in a complex property transaction is not delictually liable to other parties, who were not the attorney’s clients, for not warning them against the risks of the transaction.

The claimants had agreed to transfer their adjoining properties to a developer for consolidation and development into a residential scheme. In lieu of cash, they were to receive units in the completed development. The developer’s attorney prepared and finalised the deeds of sale. Each deed was subject to conditions precedent, including that all adjoining owners would conclude similar agreements and that the local municipality would grant the necessary approvals. Owing to the atypical nature of the arrangement, the deeds did not require that the conveyancer be placed in funds before transfer. Transfer of the consolidated properties was accordingly registered.

The court characterised the transaction as high risk, albeit with the potential for substantial reward. The claimants were not represented nor advised on the transaction by attorneys. The development ultimately failed for several reasons, including a market downturn, leading to the collapse of the scheme, the developer’s liquidation, and the sequestration of its sole member and director. Unable to recover from the insolvent developer, the claimants sued the developer’s attorneys, alleging that, although they were not clients of the attorneys, the attorneys owed them a “duty of care”.

The claimants contended that the developer’s attorney negligently failed to warn them that they lacked security if the developer breached the contract and that, after consolidation of the properties, they could no longer reclaim their properties, and that proceeding with transfer exposed them to undue risk.

This was a claim for pure economic loss with no contractual link between the parties. To succeed in delict, the claimants had to establish wrongfulness, which in cases of pure economic loss turns on policy considerations. The law is generally cautious about recognising claims for pure economic loss beyond the limited, settled categories.

Crucially, the court distinguished between wrongfulness and negligence. The confusing phrase “duty of care” was held in the context to refer to negligence not wrongfulness. The attorney’s acknowledgment of a “duty of care” to act reasonably and diligently toward all participants in conveyancing processes did not amount to an admission of wrongfulness.

On the facts and policy considerations, the court declined to extend delictual liability to the developer’s attorney. The claimants knowingly entered a high risk/high reward transaction and did not take prudent steps to protect their own interests, including obtaining independent legal advice or insisting on security or funding safeguards prior to transfer. Imposing liability on the developer’s attorney to non-clients in these circumstances would unduly expand the scope of delict for pure economic loss and disrupt settled professional roles in conveyancing. The claim failed.

The decision is significant for professionals and their liability insurers. It underscores the court’s reluctance to recognise novel pure economic loss claims against professionals by non-clients and reaffirms that the existence of a professional duty does not, without more, establish the wrongfulness required for delictual liability.

Nelson Attorneys v Smit N O & Others (532/2024) ZASCA 162 (24 October 2025)