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[2017] ZAWCHC 128
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Groep v Golden Arrow Bus Services (Pty) Ltd; Groep v W J Da Grass Attorneys (5338/2007; 2417/2011) [2017] ZAWCHC 128; [2018] 1 All SA 508 (WCC); 2018 (5) SA 248 (WCC) (15 November 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
REPORTABLE
CASE
NO’s:
5338/2007;
2417/2011
In
the matter between:
JAMES
JOHANNES
GROEP
Plaintiff
and
GOLDEN
ARROW BUS SERVICES (PTY)
LTD
Defendant
(Case
No 5338/2007)
WJ
DA GRASS
ATTORNEYS
Defendant
(Case
No 2417/2011)
JUDGMENT
DELIVERED ON WEDNESDAY 15 NOVEMBER 2017
GAMBLE,
J:
INTRODUCTION
[1]
The plaintiff, Mr. James Groep, is a 65
year old working man who, on 2 September 2002, took a bus to work as
he usually did. That
day he intended to travel on a bus operated by
Golden Arrow Bus Services (Pty) Ltd (“Golden Arrow”). As
the plaintiff
was in the process of boarding the bus, and while still
standing on the bottom step behind passengers ahead of him, it
started
to pull away. The plaintiff lost his footing and he was
severely injured as the bus drove over his legs.
[2]
The plaintiff suffered extensive
orthopaedic injuries and he sought to claim damages therefor. On 4
September 2002, only 2 days
after the accident and while still in
hospital, the plaintiff was visited by Mr. William Da Grass (“Da
Grass”), an
attorney practicing for his own account, who
accepted the plaintiff’s instructions to perform professional
services in relation
to the plaintiff’s claim for damages. Da
Grass, it seems professed experience in matters of this sort.
[3]
On 26 April 2007, under case no 5338/2007,
Da Grass issued summons out of this Court on behalf of the plaintiff
against Golden Arrow
alleging damages of the order of R915 000
as a consequence of his injuries. The particulars of claim stated
that the plaintiff
had been conveyed as a fare-paying passenger on a
Golden Arrow bus on 2 September 2002, that his statutory claim
against the Road
Accident Fund (“the RAF”) in terms of
Act 56 of 1996 was limited to R25 000, that he had received that
amount
from the RAF and that Golden Arrow was therefore liable to the
plaintiff for damages in the sum of R855 000. The claim
comprised
general damages in the sum of R500 000 with the
balance claimed in respect of special damages (past and future
medical expenses,
and past and future loss of income)
[4]
Golden Arrow defended the claim and raised
a special plea of prescription. It said that by no later than 2
September 2002, the plaintiff
was aware of both the identity of the
debtor which had caused him to suffer damages and the facts from
which that debt arose. It
alleged that, in the circumstances, the
plaintiff’s debt had prescribed in terms of the
Prescription
Act, 68 of 1969
by no later than 3 September 2005.
[5]
The plaintiff filed a replication to the
plea of prescription alleging that on 21 May 2004 he had lodged a
claim for compensation
against the RAF for both special and general
damages. He went on to allege that in consequence of
s21
of Act 56 of
1996 he was precluded from proceeding against the owner of the bus
that had caused his injuries. He claimed that on
20 June 2006 the RAF
determined that his claim was limited to R25 000 in terms of s17
of that act and that he accordingly
only acquired knowledge of the
identity of his debtor and facts giving rise to his claim against
Golden Arrow on that day. He accordingly
disputed that his claim had
prescribed.
[6]
The action initiated by Da Grass on behalf
of the plaintiff did not proceed and on 6 October 2010 he withdrew as
the plaintiff’s
attorney in the claim against Golden Arrow.
THE
CLAIM AGAINST DA GRASS AND THE SEPARATION OF ISSUES
[7]
The plaintiff then consulted the Cape Town
firm of A.Batchelor & Associates (“Batchelor”),
attorneys who apparently
specialise in personal injury claims. As a
consequence of advice furnished by Batchelor the plaintiff issued a
further summons
on 2 February 2011 (under case no 2417/2011), this
time against Da Grass claiming damages for professional negligence on
the basis
that he had permitted the plaintiff’s claim against
Golden Arrow to prescribe by failing to issue summons on or before 1
September 2005. It was alleged that the plaintiff had suffered
damages in the amount of R1,4m for which Da Grass was said to be
liable. In that claim the general damages were quantified in the
amount of R350 00 and the balance of the claim was said to be
made up
of special damages as before. For the sake of convenience I shall
refer to the plaintiff’s claim against Golden Arrow
as “the
first action” and the claim against Da Grass as “the
second action”.
[8]
One
of the defences raised by Da Grass in the second action included
reliance on a letter dated 26 June 2008 (written by Deneys
Reitz, the
attorneys who represented Golden Arrow at the time
[1]
)
as constituting an alleged waiver by Golden Arrow of its entitlement
to rely on the defence of prescription. In the light of this,
Batchelor requested Golden Arrow’s attorneys to indicate
whether their client persisted in its special plea of prescription.
Upon confirmation that prescription was still a live issue, the
plaintiff successfully applied for the consolidation of the first
and
second actions and the matter came before this Court for the
determination, in terms of Rule 33(4), of the question whether
Golden
Arrow had waived (or abandoned) its reliance on the special plea of
prescription.
[9]
It is common cause that determination of
the separated issue will have the following consequences –
·
Should Da Grass succeed in having the
separated issue decided in his favour, the plaintiff will have no
option but to withdraw the
second action and to proceed with the
first action against Golden Arrow;
·
If, on the other hand, Da Grass is
unsuccessful on the separated issue, the second action will proceed
whilst the special plea of
prescription will effectively put an end
to the first action.
[10]
At the hearing on the separated issue, the
plaintiff was represented by Adv. N.T. Louw, Da Grass by Adv. D.W.
Gess and Golden Arrow
by Adv. M Blumberg. The Court is indebted to
counsel for their detailed heads of argument which have facilitated
the delivery of
this judgment.
THE
RELEVANT PLEADINGS IN THE SECOND ACTION
[11]
In an amended plea filed on 7 January 2013
to the plaintiff’s particulars of claim, Da Grass made,
inter
alia,
the following allegations.
“
AD
PARAGRAPH 14
12. Without
derogating from the generality of the aforegoing denials, the
Defendant pleads that even had the claim by Plaintiff
against Golden
Arrow…. prescribed prior to service of Summons (which is
denied), that by reason of the waiver by Golden
Arrow….. [of
the plea of prescription] pleaded below, the Plaintiff suffered no
loss or damage as a consequence of any act
or omission on the part of
the Defendant, and the plaintiff is put to the proof thereof.
AD PARAGRAPH
15
13. It is
admitted that Summons was served on Golden Arrow….on 26 April
2007.
14. The further
allegations contained in this paragraph are denied as if specifically
traversed and the Plaintiff is put to the
proof thereof.
15. In
amplification of the denial that the Plaintiff’s claim against
Golden Arrow… has prescribed, and is accordingly
unenforceable, the Defendant pleads that:
15.1
On or about 2 October 2007 Golden Arrow… represented by the
firm of attorneys Deneys Reitz of Cape Town, filed a Special
Plea
contending that the Plaintiff’s claim had been (sic)
prescribed, in terms of the provisions of the
Prescription Act, Act
68 of 1969, by not later than 3 September 2005;
15.2
On or about 10 October 2007 the Defendant, on behalf of the
Plaintiff, filed a Replication to the Special Plea filed on behalf
of
Golden Arrow… in which it was denied that the Plaintiff’s
claim against Golden Arrow… had become prescribed
prior to the
service of Summons;
15.3
On or about 26 June 2008 a letter was received from Denys Reitz
Attorneys on behalf of Golden Arrow…, a copy of which
is
annexed hereto as Annexure” A”, in which Defendant was
informed that Golden Arrow… had instructed Denys Reitz
that it
no longer intended to persist with its Special Plea of Prescription;
15.4
Golden Arrow… accordingly waived the right to rely upon the
Special Plea of Prescription, which waiver was confirmed
in the
aforegoing letter, Annexure “A” hereto;
15.5
Accordingly, Golden Arrow… are precluding (sic) from further
relying upon the Special Plea of prescription in respect
of the claim
instituted against Golden Arrow… by the Plaintiff.”
For
the sake of convenience the Deneys Reitz letter of 26 June 2008 will
be referred to as “
Annexure A”
where appropriate.
[12]
In response to the amended plea, and on 16
January 2013, the plaintiff filed an initial replication to Da Grass’
plea, the
material averments whereof are as follows:
“
AD
PARAGRAPHS 15.3 AND 15.4 THEREOF
2.1 The
Plaintiff has no personal knowledge of the allegations herein and
accordingly denies each and every allegation is if specifically
traversed.
2.2 In respect
of the said Annexure “A”, the Plaintiff notes that the
defence sought to be relied upon related to a
letter allegedly
written by Deneys Reitz Attorneys on behalf of its client, Golden
Arrow… and addressed to the Defendant
on a “without
prejudice” basis and whereupon statements appeared to be made
without prejudice in the course of what
appears to be bona fide
settlement negotiations for settlement of a dispute. The Plaintiff
denies that such document is admissible
and contends that same cannot
be used in evidence unless privilege had been properly waived by the
party concerned. The requisite
waiver of privilege has not been
pleaded and the Plaintiff accordingly disputes the admissibility and
relevance thereof.”
[13]
The letter referred to above as Annexure A
reads as follows:
“
1. Our
client has indicated that, although it no longer intends to persist
with its Special Plea, it disputes that your client’s
claim
against the Road Accident Found was limited to R 25,000.00. Our
client’s view is that your client was at best entitled
to
recover R 25,000.00 in respect of his special damages and all of his
general damages from the Fund. In the circumstances, even
if your
client is successful in the action, our client will only be liable
for your client’s special damages, less any amounts
recovered
from the Road Accident Fund.
2. As part of
its on-going assessment of your client’s claim, our client has
instructed us to request any documentary evidence
your client may
have to support his alleged loss of earnings claim. Such
documentation will include copies of payslips and tax
returns. We
also request a brief outline from you explaining how your client’s
earning capacity has been diminished as a
result of his alleged
injuries.
3. We appreciate
that the gathering of this information can be time-consuming. In the
interim, please will you simply confirm that
your client is prepared
to furnish this information to us on a “without prejudice”
basis.”
[14]
During the course of the trial the parties
fine-tuned their pleadings to tie in with the evidence that had been
adduced. Accordingly,
on 17 February 2016, Golden Arrow filed a
comprehensive document headed “
Replication
in the
Consolidated
Action”,
and on 22 February 2016
Da Grass filed a rejoinder to the replication of 17 February 2016.
While there was no objection to either
amendment, it is necessary to
recite both documents in some detail to appreciate the impact
thereof.
[15]
In the consolidated replication Golden
Arrow says the following:
“
Ad
paragraph 15 of Da Grass’s plea
3. Golden Arrow
admits that:
3.1
On or about 2 October 2007, Golden Arrow, represented by Deneys Reitz
Attorneys, delivered a special plea in the first action
in which
Golden Arrow contended that the claim asserted by the plaintiff
against Golden Arrow in the first action had prescribed.
3.2
On or about 10 October 2007, the plaintiff filed a replication in the
first action in which the plaintiff denied that his claim
against
Golden Arrow had prescribed.
3.3
On or about 26 June 2008, Golden Arrow’s attorneys addressed
‘without prejudice’ correspondence to the plaintiff’s
erstwhile attorneys, Da Grass, a copy of which is annexed to Da
Grass’s plea in the second action marked ‘A’
(‘the
26 June 2008 letter’)
4. Save as
aforesaid, each and every allegation in the paragraph under reply is
denied as if individually here set forth and traversed,
including in
particular the allegation that the 26 June 2008 letter constituted a
waiver of Golden Arrow’s entitlement to
rely on the defence of
prescription, and that Golden Arrow is thereby precluded from so
relying on such special defence (as is
averred in paragraphs 15.4 and
15.5 of Da Grass’s plea in the second action).
5. In
amplification of the aforegoing denial (but without in any way
derogating from the generality thereof), Golden Arrows avers
that the
26 June 2008 letter:
5.1
was or formed part of a genuine attempt to settle the first action,
was clearly marked ‘WITHOUT PREJUDICE’, accordingly
has
the status of a without prejudice communication and is not admissible
into evidence and may not be used to prejudice the rights
of Golden
Arrow;
5.2
in any event, did not constitute a waiver of Golden Arrow’s
entitlement to rely on its pleaded special defence of prescription;
5.3
alternatively, in so far as the 26 June 2008 letter is held to be
admissible into evidence and to constitute a purported waiver
by the
author of the letter of Golden Arrow’s entitlement to rely on
its pleaded special defence of prescription, then in
that event,
Golden Arrow denies:
5.3.1 that such
waiver was authorised, expressly or impliedly, by either Golden Arrow
or its insurers, Stalker Hutchison Admiral
(Pty) Ltd (who were
responsible for providing instructions to Denys Reitz);
5.3.2
accordingly, that the purported waiver was binding on Golding Arrow.
6. Save to the
extent of the admissions made above, and save further to the extent
that Da Grass’s plea accords with that
of Golden Arrow in the
first action, Golden Arrow joins issue with the content of Da Grass’s
plea and persists with its contentions
in its plea and special plea
in the first action.”
[16]
The rejoinder filed on behalf of Da Grass
in response to this consolidated replication is to the following
effect:
“
1. The
present Rejoinder is conditional upon the above Honourable Court
holding, as pleaded by GOLDEN ARROW in paragraph 5.3 of
its
aforementioned Replication, that the waiver/abandonment of the
defence of prescription was not authorised, expressly or impliedly,
by either GOLDEN ARROW or its insurers, Stalker Hutchison Admiral
(Pty) Ltd (who are pleaded by GOLDEN ARROW as being responsible
for
providing instructions to Deneys Reitz).
2. DA GRASS
records his denial that such waiver/abandonment was not authorised,
either expressly or impliedly, and puts GOLDEN ARROW
to the proof
thereof.
3. DA GRASS
pleads that GOLDEN ARROW is estopped from denying the authorisation,
whether express or implied, of its attorneys, Deneys
Reitz, to make
the waiver/abandonment contained in the latter (sic) of 26 June 2008,
Annexure “A” to the DA GRASS plea,
inter alia in that:
3.1
GOLDEN ARROW, (alternatively its insurers, Stalker Hutchison Admiral
(Pty) Ltd acting on its behalf), by appointing Deneys Reitz
as its
attorneys of record to defend the claim instituted against GOLDEN
ARROW by GROEP, represented to GROEP (represented by DA
GRASS) that
Deneys Reitz had the usual and customary powers associated with such
appointment, these including but not being limited
to defend the
claim; draft the Plea and any Special Plea; to waive/abandon or
withdraw any Special Plea that was filed by them;
attend to all
pre-trial procedures and to make concessions and to take the matter
to final conclusion;
3.2
DA GRASS (and GROEP who he represented in such proceedings),
reasonably believed that such representation was correct;
3.3
Deneys Reitz communicated the said waiver/abandonment to DA GRASS
(and GROEP who he represented in such proceedings), as set
out in the
letter dated 26 June 2008, Annexure ‘A’ to the Plea (as
amended) filed on behalf of DA GRASS;
3.4
DA GRASS (and GROEP who he represented in such proceedings), received
such waiver/abandonment and relied upon same;
3.5
The said waiver/abandonment was persisted in from 26 June 2008, when
Annexure ‘A’ was dispatched to and received
by GROEP (and
DA GRASS who represented him), until on or about 15 April 2011 (a
period of almost 3 years), when Deneys Reitz dispatched
letters to
GROEP and the Legal Aid Board, in which they sought to rely upon the
Special Plea of prescription, and in effect to
resile from the
waiver/abandonment of the defense (sic) of prescription;
3.6
After receiving the letter of 26 June 2008, GROEP (and DA GRASS who
represented him), proceeded with the claim (and attempts
to settle
same) on the basis of an understanding that the defense (sic) of
prescription had been waived and/or abandoned by GOLDEN
ARROW, and
that the Special Plea would not be persisted with;
3.7
GROEP (and DA GRASS who represented him), would be prejudiced should
the defense (sic) of estoppel not be upheld;
3.8
It would neither be unjust or equitable to uphold the defense (sic)
of estoppel in the circumstances of the present matter.
4. DA GRASS
otherwise joins issue with all the allegations contained in the
aforesaid Replication filed by GOLDEN ARROW, insofar
as they all
inconsistent with what is pleaded in the Plea (as amended) file on
behalf of DA GRASS in case number 2417/2011.”
[17]
And so one sees from this exchange of
pleadings that while the plaintiff, who was badly injured more than
15 years ago and is yet
to be fully compensated, two insurance
companies (for it is common cause that Da Grass, too, has handed the
matter over to his
professional liability insurers) have embarked on
the “
blame game”
in
an endeavor to avoid the payment of compensation to a person who has
suffered disabling injuries which have allegedly severely
impacted on
his ability to work. It is a matter of deep concern that the parties
were unable to come to a suitable settlement but
elected rather to
spend many thousands of Rands in litigating a dispute in which the
pleadings bear the hallmark of an examination
paper in the law of
civil procedure. Little wonder then that lay persons so often express
their mistrust in the courts with asinine
comparisons and complaints
that “justice delayed is justice denied”. But that is
just an irksome judicial remark in
passing and it is to the evidence
that the focus must now move.
THE
EVIDENCE
[18]
Evidence
on the disputed issue was given by Da Grass personally, as well as by
Golden Arrow’s erstwhile attorney and Ms. Samantha
Clark, an
employee of Stalker Hutchison, Golden Arrow’s insurers. None of
the
viva
voce
evidence really took the matter much further other than providing
some understanding of the background and surrounding circumstances
relevant to the parties’ correspondence
[2]
.
At the end of the day the disputed issue falls to be determined with
reference to a limited number of documents located in that
correspondence between Da Grass and Deneys Reitz, and the application
of the legal principles relating to offers to settle disputes
and the
impact of without prejudice negotiations in that context.
[19]
The
evidence revealed that Da Grass first sued the RAF in May 2004,
claiming both special and general damages. The present papers
do not
reveal why, although he was instructed to recover damages just 2 days
after the accident, Da Grass took more than 18
months to iniate
the claim. Nevertheless, after limited success on behalf of the
plaintiff
[3]
in those proceedings Da Grass commenced the litigation on behalf of
the plaintiff against Golden Arrow in April 2007. His claim
in
subsequent pleadings in the first action that the claim against
Golden Arrow had not prescribed at that stage (a claim inconsistent
with the stance adopted in the second action) is an issue that need
not be dealt with now, given that it may form the basis of
later
investigation.
[20]
After
the claim had been instituted in April 2007, Golden Arrow’s
special plea of prescription and plea on the merits was
filed in
October 2007. Thereafter, in late 2007 and early 2008, Da Grass and
Deneys Reitz entered into correspondence in relation
to an assertion
by Da Grass that there was certain legal authority which would settle
the prescription point in the plaintiff’s
favour. Da Grass
undertook to procure same and eventually forwarded that authority to
Deneys Reitz on 7 February 2008, and reported
to the plaintiff on 22
February 2008 that having sent a “
highly
relevant court decision”
to
Golden Arrow, he was hoping to settle the matter with them.
[4]
[21]
Deneys Reitz responded immediately and
informed Da Grass that they were “
in
the process of considering your authority furnished and suspect to be
in a position to reply thereto shortly.”
Thereafter
things went quiet for 4 months and there appears to have been no
communication between the 2 firms of attorneys until
26 June 2008,
when Deneys Reitz sent the aforementioned Annexure “A” to
Da Grass.
[22]
Da Grass did not reply promptly to Annexure
“A” notwithstanding several reminders from Deneys Reitz.
Eventually, on
11 September 2008, Da Grass informed Deneys Reitz that
he was preparing documentation in support of the plaintiff’s
claim
“
on a completely without
prejudice basis”
and undertook to
forward same when they were to hand.
[23]
The next day Deneys Reitz replied to Da
Grass’s email of 11 September 2008 and directed the following
enquiry in a letter
similarly marked without prejudice.
“
3. Is it
safe to assume at this stage that you agree with the conclusion
reached in paragraph 1 of our facsimile of 26 June 2008?
You will
appreciate from the tone of that correspondence that our client is
considering settlement of the matter on the basis that
it pays your
client’s special damages, less any amounts he recovered from
the Road Accident Fund. Whether it is able to make
such a proposal
formally will ultimately depend on the documents received from your
client”
[24]
Approximately 6 months later, Da Grass
replied in an email dated 19 March 2009, also marked without
prejudice. Supporting documentation
was enclosed for Deneys Reitz’s
consideration who replied soon thereafter on 24 March 2009, also
without prejudice. They
sought additional information from the
plaintiff, including documentation if available, and concluded by
asking for a response
to paragraph 3 of their letter of 12 September
2008.
[25]
That response came a week later in another
without prejudice communication dated 31 March 2009. Da Grass
informed Deneys Reitz that
there was no further documentation
available which could be forwarded and went on to debate, with
reference to the law, the basis
of the plaintiff’s claim for
compensation other than that it was limited to special damages.
[26]
On 15 April 2009 Deneys Reitz replied,
still on a without prejudice basis, to the debate in regard to the
legal position (the issue
being whether the plaintiff was indeed
being conveyed for reward at the time he was injured) and concluded
the correspondence as
follows:
“
3. In
light of the above, we are prepared to recommend to our client that
this matter is settled on the basis that our client pays
your
client’s special damages and party and party costs. Obviously a
formal offer will be forthcoming once the quantum of
your client’s
special damages has been ascertained. At this stage, we simply want
to gauge your client’s attitude to
settlement in order to see
whether it is worth our client subjecting him to the necessary
medico-legal examinations. If your client
is not interested in
settlement, we will propose that merits and quantum are separated and
that the matter proceeds only on the
former.”
[27]
Notwithstanding various reminders, Da Grass
did not reply to this email until 19 November 2009 when a copy of
legal authority relating
to the circumstances under which a person is
conveyed for reward was forwarded to Deneys Reitz. The latter replied
a week later,
on 26 November 2009, taking issue with the import of
the alleged authority in relation to the conveyance for reward point.
Deneys
Reitz concluded by asking for a response to their proposal of
15 April 2009.
[28]
That response came some two and a half
months later when, on 4 February 2010, Da Grass responded curtly and
asked that Deneys Reitz’s
client “
table
a concrete rands and cents settlement [proposal] for consideration by
ours.”
The following day
Deneys Reitz, repeating its stance that it was only prepared to
consider the payment of special damages
asked for documentation in
support of the plaintiff’s claim for such damages. Certain
further details were furnished by Da
Grass on 19 June 2010 and once
again Deneys Reitz were asked to table an offer of settlement.
[29]
Thereafter, Da Grass ceased to act for the
plaintiff. In correspondence with the Legal Aid Board in September
2010 an “
associate”
of
Da Grass stated that the firm was no longer prepared to act in the
matter. He stated that they were of the view that, in light
of the
fact that the RAF had already paid out the plaintiff’s
statutory claim under the 1996 RAF Act, the matter was no longer
“
an
MVA matter and based on the fact that the RAF has already conceded
negligence, on Golden Arrow’s part, the matter has good
merits.”
He went on to say that
Da Grass’ problem was that it was “
unable
to sustain the litigation and cannot find Counsel who is prepared to
proceed on ‘spec’ “.
[30]
Thereafter, Batchelor stepped in to assist
the plaintiff in February 2011 and issued summons in the second
action against Da Grass.
During December 2014 the first and section
actions were consolidated pursuant to an order made by Kuschke AJ.
When the separated
issue was heard by this Court the
lis
was between Da Grass and Golden Arrow, with the plaintiff effectively
reduced to an innocent bystander awaiting his fate either
way.
THE
PRINCIPLES APPLICABLE TO PRIVILEGED COMMUNICATIONS
[31]
It is
by now trite that communications exchanged by litigants in the course
of legal proceedings in a
bona
fide
endeavour
to resolve their differences are protected from subsequent disclosure
at trial and from admission into evidence.
[5]
In
Naidoo
[6]
Trollip JA observed that the rule is based upon considerations of
public policy to encourage the extra curial resolution of disputes.
“
The
rationale of the rule is public policy: parties to disputes are to be
encouraged to avoid litigation and all the expenses (nowadays
very
high), delays, hostility, and inconvenience it usually entails, by
resolving their differences amicably in full and frank
discussions
without the fear that, if the negotiations fail, any admissions made
by them during such discussions will be used against
them in the
ensuing litigation.(
Kapeller v
Rondalia Versekeringskorporasie van Suid-Afrika Bpk
1964 (4) SA 722
(T) at 728F-G;
Schmidt
Bewysreg at 420;
Hoffmann
SA Law of Evidence 2
nd
ed at 155….)
[32]
In that matter Trollip JA was required to
deal with an argument by counsel that application of the privileged
communication rule
was limited to letters marked “
without
prejudice”
and, further, that
non-disclosure did not apply in relation to matters that did not
concern the subject-matter of the dispute.
“
Obviously,
any admissions that are quite unconnected with or irrelevant to the
settlement negotiations are not covered by the protection
of the rule
and are admissible in evidence. The authorities just mentioned
[7]
amply support that qualification. The presence or absence of any such
connection or relevance is essentially a question of fact
in which
the intention of the party making the admission, as objectively
manifested, may be of importance.
[8]
”
[33]
Furthermore,
it has repeatedly been held that there is no magic in the use of the
words “
without
prejudice”
as
a preface to a communication sought to be covered by privilege. To
enjoy protection the discussions must constitute a
bona
fide
attempt
to resolve a dispute and, even where the phrase is not used by the
party claiming privilege, the negotiations will be regarded
as
privileged if they were part of a genuine attempt to settle an
existing dispute.
[9]
[34]
In
argument on behalf of Golden Arrow, Mr. Blumberg referred to the
recent decision of the Supreme Court of Appeal in
KLD
Residential
[10]
and argued that the decision of Lewis JA for the majority permitted
an incursion into the rule protecting privileged communications
in
very limited circumstances. In that matter an admission of liability
had been made during without prejudice discussions and
was
subsequently sought to be disclosed for purposes of interrupting the
running of prescription in terms of
s14
of the
Prescription Act,
1969
. In permitting the disclosure Lewis JA observed that, in the
context of the facts at hand, it was important to preclude an abuse
of the rule.
“
[39] I
consider that the exception contended for is well-founded. Where
acknowledgements of liability are made such that, by virtue
of
s 14
of the
Prescription Act, they
would interrupt the running of
prescription, such acknowledgements should be admissible, even if
made without prejudice during
settlement negotiations, but solely for
the purpose of interrupting prescription. The exception itself is not
absolute and will
depend on the facts of each matter. And there is
nothing to prevent the parties from expressly or impliedly ousting it
in the discussions.
What the exception allows for, as I see it, is
the prevention of abuse of the without prejudice rule, and the
protection of a creditor.
The admission remains protected insofar as
proving the existence of the quantum of the debt is concerned. It is
not, as [was] suggested
in argument, a question of the without
prejudice rule trumping prescription. It is a question of recognising
that both
s14
of the
Prescription Act and
the without prejudice rule
protect policy interests, and recognising an exception so that both
interests are properly served.”
[35]
Having considered the
dictum
in
KLD
Residential
I
agree with Mr. Blumberg’s submission that the disclosure of the
admission of liability sanctioned in that case was expressly
permitted in the context of interrupting the running of in terms of
s14
of the
Prescription Act, and
does not constitute a general rule
permitting a court to go behind the “
protective
shield”
otherwise provided by
without prejudice discussions. And, to the extent that the present
matter does not involve the interruption
of prescription under the
aforesaid
s14
,
KLD Residential
falls
to be distinguished on the facts.
[36]
Mr.
Gess sought to persuade the court that the concession by Golden
Arrow’s attorneys in Annexure A not to rely on the special
plea
of prescription was excluded from protection because it was “
quite
unconnected with or irrelevant to the settlement negotiations”
[11]
.
Counsel
contended that while it was initially relevant to the negotiations,
once conceded by Deneys Reitz, the prescription point
taken in the
special plea somehow became “
disconnected”
from
the remainder of the train of discussion, and remained parked in some
remote siding, as it were.
[37]
That
argument flies in the face of the entrenched approach of the courts
both in South Africa and the United Kingdom (from whence
so much of
our law of evidence in regard to civil proceedings is derived
[12]
),
that a court should be most cautious to lift the protection offered
by the “
without
prejudice shield”
unless it is quite clear that this show ensue. In
Naidoo
[13]
Trollip JA cited with approval the
dictum
of
Ormrod J in the English Court of Appeal
[14]
that –
“
the
Court, in my judgment, should be very slow to lift the umbrella of
‘without prejudice’ unless the case is absolutely
clear.”
[38]
In
his minority judgment in
KLD
Residential
[15]
Schippers
AJA referred to the judgment of Lord Rodger in
Ofulue
[16]
in
which attention was drawn to an article in the Michigan Law
Review
[17]
cautioning against attempts to distill the unconnected elements of a
discussion from the connected whole.
“
If the
proper basis of the rule is privilege, is there any logical theory
under which the court can, by methods akin to chemistry,
analyse a
compromise conversation so as to precipitate one element of it as an
offer of settlement and the other as an independent
statement of
fact? Would not the lay man entering into a compromise negotiation be
shocked if he were informed that certain sentences
of his
conversation could be used against him and other sentences could
not?”
[39]
Of
course, there can be no problem in going behind the “
privilege
shield”
once
a matter has been resolved through, for example, settlement.
[18]
But until that occurs the overwhelming bulk of authority cautions
strongly against doing so.
CONCLUSION
[40]
In this matter, as I have attempted to
demonstrate above with reference to the relevant facts, the
undertaking by Golden Arrow not
to rely on the special plea of
prescription came at a relatively early stage of negotiations, all of
which were classified throughout
by the parties as being “
without
prejudice”.
And although that
concession was not expressly referred to again in the discussions
thereafter, it formed the very bedrock of Golden
Arrow’s offer
to settle. As such it can most certainly not be characterized as an
irrelevancy which was unconnected to the
settlement negotiations.
[41]
In the result, I am not persuaded that that
the Deneys Reitz letter of 26 June 2008 is admissible in evidence
against Golden Arrow.
Consequently, it is not necessary to go into
the questions of waiver, authority and estoppel so keenly contested
in argument. In
the circumstances, the separated issue must be
determined in favour of Golden Arrow and the special plea will
prevail.
COSTS
[42]
As between Da Grass and Golden Arrow, the
latter has been substantially successful and is entitled to its
costs. What of the costs
of the plaintiff? He has been required to be
on the sidelines throughout this phase of the matter but there can be
no doubt that
his presence at the hearing through counsel was
justified. Both Da Grass and Golden Arrow accepted that that the
plaintiff was
entitled to participate in this stage of the
proceedings but, somewhat predictably, neither party was prepared to
accept liability
for his costs in the event of it not succeeding on
the separated issue.
[43]
Throughout the plaintiff has maintained a
stance aligned to that of Golden Arrow and has not sought to contend
for the waiver of
the special plea of prescription. A costs order
must be underpinned by considerations of fairness and equity. Those
principles
demand that Da Grass be held liable for the plaintiff’s
costs in these proceedings.
ORDER
OF COURT:
A.
The separated issue is determined in favour
of Golden Arrow and it is declared that;
a.
the letter of 28 June 2008 written by
Deneys Reitz to Da Grass Attorneys is inadmissible in evidence;
b.
the special plea of prescription has not
been abandoned by Golden Arrow.
B.
Da Grass is ordered to pay the costs of
suit of Golden Arrow and the plaintiff in these proceedings relating
to the separation of
issues.
C.
The Registrar is directed to place the
consolidated actions on the
Rule 37(8)
conference roll for management
by Gamble J at the earliest available date.
__________________
GAMBLE, J
[1]
The evidence revealed that the firm changed its name from Deneys
Reitz to Norton Rose Fulbright after the initiation of the second
action.
[2]
KPMG Chartered Accountants
(SA) v Securefin Ltd and Another
2009 (4) SA 399
(SCA) at [39]
[3]
On 20 June 2006 the RAF determined and settled the plaintiff’s
claim in the amount of R25 000 on the basis that the
plaintiff
was a fare-paying passenger on the bus and hence his claim was
limited to that amount in terms of
s 17
of the erstwhile RAF
Act of 1996.
[4]
The authority,
Conradie v
Erasmus & Son
1951 (4)
SA 29
(T), indeed appears to deal (at least in part) with the
running of prescription of a claim against a wrongdoer whose
liability
is limited by statute – a forerunner of legislation
similar to the 1996 RAF Act..
[5]
Naidoo v Marine & Trade
Insurance Co Ltd
1978 (3)
SA 666
(A) at 677 A-D. See also
KLD
Residential CC v Empire Earth Investments
[2017] ZASCA 98
(6 July 2017) at [8];[19] – [28]
[6]
Ibid
[7]
Field v Commissioner for
Railways for NSW
[1957] HCA 92
;
(1957) 99
CLR 285
;
Kapeller v
Rondalia
, supra.
[8]
678H – 679A
[9]
Millward v Glaser
1950 (3) SA 547
(W) at 554G-H;
Gcabashe
v Nene
1975 (4) SA 912
(D)
at 914E-H;
Schwikkard and
van der Merwe
Principles
of Evidence, 3
rd
ed at 322.
[10]
F
ootnote
5,
supra.
[11]
Per Trollip JA in
Naidoo
at 678G; para [32]
supra.
[12]
KLD Residential
at
[44]
[13]
At 680B-C
[14]
Tomlin v Standard
Telephones & Cables Ltd
(1969)
1 WLR 1376
(CA) at 1385A
[15]
[73]
[16]
Ofulue and Another v
Bossert
[2009] 3 All ER 93
(HL) at [39]
[17]
JE Tracey
Evidence-Admissibility
of Statements of Fact made during Negotiation for Compromise
(1935-1936) 34 Michigan
Law Review 524
at 529
[18]
Gcabashe v Nene
supra
at 914H