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[2021] ZAECPEHC 13
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Ferreira v Rademeyer (1256/15) [2021] ZAECPEHC 13 (23 February 2021)
OF
INTEREST
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
In
the matter
between:
CASE NO: 1256/15
THOMAS
IGNATIUS
FERREIRA
Plaintiff
and
DEON
RADEMEYER
Defendant
JUDGMENT
GOVINDJEE,
AJ:
[1]
The parties approached this Court by way of a Stated Case on an issue
of prescription.
[2]
The Plaintiff obtained an order on 7 August 2012, subsequent to
motion
proceedings before Pickering J (as he then was) under case
number 239/2012 (“the Order”). The material part of the
Order is as follows:
‘
2.
That the respondent is to comply with his obligation in terms of the
Agreement of Sale of the immovable property known as Erf
4097
Theescombe, in the Nelson Mandela Metropolitan Municipality, division
of Port Elizabeth, Province of the Eastern Cape, in
extent 1119
square metres, as concluded between the Applicant and the Respondent
on 27 August 2008, and more specifically that
the Respondent is to
sign all transfer documents required to effect registration of
transfer of the aforementioned property into
the name of the
Respondent within 3 days of service on him or his attorneys of record
of this Order (if any), and, simultaneously
therewith, to provide any
and all documents as required by the conveyancing attorneys for
purposes thereof…
4.
That in the event of the Respondent failing to comply with his
obligations within five (5) days of the service of this order
upon
the Respondent, cancellation of the said Agreement of Sale and
damages.’
[3]
The Defendant failed to comply with his obligations arising from this
Order and the Plaintiff instituted the present proceedings during
April 2016, alleging cancellation of the Agreement of Sale in
July
2015, and claiming damages. The Defendant filed a special plea to the
claim, arguing that the claim has prescribed.
[4]
In
particular, the Defendant contends that the Plaintiff had elected to
claim cancellation and that such cancellation occurred,
as a matter
of law, five days after service of the Order upon the Defendant. As
paragraph 4 of the Order constitutes a ‘debt’
for
purposes of section 11(d) of the Prescription Act, 1969
[1]
(the Act) but not a ‘judgment debt’ as envisaged in
section 11(a)(ii), so the argument goes, the claim prescribed three
years subsequent to 23 August 2012.
[5]
The Defendant’s contention that the Plaintiff elected to cancel
the contract and claim damages in the event of non-performance must
be accepted, given the manner in which the application was formulated
and the relief sought therein, which resulted in the wording of the
Order. Regarding prescription, Plaintiff submits that the service
of
the original application papers on the Defendant interrupted
prescription of the Plaintiff’s cause of action, which included
the cause of action in respect of the damages claim. The present
claim relates to the same cause of action and, it is argued, has
therefore not prescribed. Alternatively, the Plaintiff pleads that
the Order constitutes a judgment debt in terms of the Act, so
that a
30-year period of prescription is applicable.
[6]
The
starting point must be to determine the manifest purpose of the
Order, read within the legal context of the words used.
[2]
In this case it is clear that the purpose of the Order was to direct
specific performance in order to remedy the Defendant’s
breach
of contract, and to provide further relief in the form of
cancellation and damages in the event that the Defendant failed
to
comply with paragraph 2 of the Order within five days of the Order
being served. What the Order clearly failed to specify was
the
quantum of damages payable in the event of cancellation.
[7]
Reference
must also be made to the relevant provisions of the Act, particularly
s 15.
[3]
The prescription period
applicable in the present matter, insofar as the original dispute was
concerned, was three years. In terms
of s 15(1) of the Act, read with
s 15(6), the running of prescription was interrupted by the service
on the debtor of a process
by way of notice of motion, commencing
legal proceedings for specific performance and, in the event of
failure to perform, cancellation
of the agreement of sale and
damages.
[4]
[8]
The
‘process in question’, for purposes of s 15(2) must, at
face value, relate to the process triggered by the Notice
of Motion
in case 239/2012, which culminated in the judgment of Pickering J. As
Smallberger J held in
Van
der Merwe v Protea Insurance Co Ltd
:
[5]
‘
The
“process in question” is clearly that by which
prescription was originally interrupted. It is that process which
must be successfully prosecuted to final judgment by the creditor,
and not any other. The reference to “final judgment”,
in
the context, contemplates judgment in the court in which process is
instituted…When a creditor is successful in the court
in which
the process in question commences legal proceedings prescription
stands interrupted until the judgment is abandoned or
set aside on
appeal.’
[9]
In this
case the ‘process in question’ involved a claim for
specific performance and, failing compliance, cancellation
and
(unspecified) damages. Importantly, it has been held that the Act
does not deal with the period within which
the
process must be completed
and this period has to be determined by the rules of court.
[6]
The practical effect was descripted by Munnik CJ in
Titus
v Union & SWA Insurance Co Ltd
as follows:
[7]
‘…
should
a plaintiff, eg, have absolution granted against him at the end of
his case, then he cannot be said to have successfully
prosecuted his
claim to final judgment or, if an exception is taken to his claim and
he cannot amend but has to issue fresh summons
or a fresh
declaration, then the process by which he commenced the proceedings
is deemed not to have interrupted prescription and
the running of
prescription is deemed not to have been interrupted thereby…’
[10]
While there
is no question in this matter of a withdrawal or an abandonment of
the claim, the key question is whether the plaintiff
‘prosecuted’
the claim documented in the motion proceedings to ‘final
judgment’. That claim dealt in the
first place with specific
performance but quantification of the damages pursuant to
cancellation was absent.
[8]
In
this respect the decision of Harms DP (as he then was) in
Cadac
(Pty) Ltd v Weber-Stephen Products Company and others
[9]
would appear to be instructive. In that matter, the applicant applied
on an urgent basis to set aside a warrant issued in terms
of the
Counterfeit Goods Act, 1997
,
[10]
together with a declaration that the goods seized were not
counterfeit and for an inquiry into damages. The application was
upheld
(by Schwartzman J), but the prayer relating to an inquiry into
damages was postponed
sine
die
and
the applicant failed to take further steps in relation to that matter
until three years and two days after the original judgment.
Its
subsequent step was, understandably, met with a defence of
prescription, based on the provisions of s 15(2) of the Act.
[11]
On appeal,
the SCA held as follows:
[11]
‘
One
finds regularly that parties agree or courts order that issues
concerning liability are to be decided first and
quantum
thereafter. But the present rigid system requires of a plaintiff to
particularise its damages when instituting action, sometimes
a costly
exercise which may prove to have been unnecessary. I cannot see any
objection why, as a matter of principle and in a particular
case, a
plaintiff who wishes to have the issue of liability decided before
embarking on quantification, may not claim a declaratory
order to the
effect that the defendant is liable, and pray for an order that the
quantification stand over for later adjudication.
It works in
intellectual property cases albeit because of specific legislation
but in the light of a court’s inherent jurisdiction
to regulate
its own process in the interests of justice – a power derived
from common law and now entrenched in the Constitution
(section 173)
– I can see no justification for refusing to extend the
practice to other areas. The plaintiff may run a risk
if it decides
to follow this route because of the court’s discretion in
relation to interest orders. It might find that interest
is only to
run from the date when the debtor was able to assess the
quantum
of the claim. Another risk is that a court may conclude that the
issues of liability and
quantum
are so interlinked that it is
unable to decide the one without the other. Once the principle is
accepted for trial actions there
is no reason why it cannot apply to
application proceeding…’
[12]
Relying on
Cape
Town Municipality and another v Allianz Insurance Co Ltd
,
[12]
the SCA held further that the notice of motion in
Cadac
‘was a process whereby proceedings were instituted as a step in
the enforcement of a claim for payment of a debt’,
so that
prescription was interrupted in terms of s 15(1) of the Act.
Significantly, the Court dealt specifically with the argument
that
prescription had not been interrupted and that the claim had
therefore prescribed because of the wording of s 15(2), on the
basis
that the applicant had not timeously prosecuted its claim to a
final
judgment
.
As was the case in argument before me (in relation to the Pickering J
Order), counsel in that case argued that the claim had prescribed
three years after the judgment of Schwartzman J. That argument was
unequivocally rejected, with reference to
Titus
,
on the basis that s 15(2) contains no time limit within which a claim
must be prosecuted with success.
[13]
The Court held that extinctive prescription limits the time within
which proceedings must be
instituted
,
but once instituted its continuance is governed by the rules of
court. It is only if a creditor’s claim
fails
that s 15(2) would come into force. Examples cited include the
granting of absolution, an exception requiring a fresh summons or
withdrawal of an action in one court in order to institute it in
another, so that the first summons was not successfully
prosecuted.
[14]
The Court
concluded that although the manner in which the applicant had
conducted the case was lackadaisical, the respondent debtor
could
have had some say in the running of prescription by enforcing the
rules of court, and could have enrolled the case for dismissal
of the
postponed relief.
[15]
[13]
A similar
sentiment was expressed in
A
Adams (Pty) Ltd v Vermaak NO and others
,
in the context of a debtor company in liquidation. Again relying on
Allianz
Insurance
,
[16]
the Court concluded that:
[17]
‘
The
plaintiff could have interrupted the running of prescription by
instituting and prosecuting to a successful conclusion an action
in
ordinary form, even though he would still have to prove his claim,
now based upon that judgment, in the winding up of the company.
It is
to be noted in this regard that s 15(2) makes the obtaining of
judgment (or of course its non-abandonment or its not being
set aside
on appeal), not the execution upon it, the determining factor in
deciding whether the interruption shall lapse or not.
Section 15(4)
does no more than fix the date upon which the period of prescription
in respect of the judgment shall begin to run…’
[14]
Counsel for
both parties placed reliance on
Allianz
to
support their interpretation. The case is indeed important given that
the SCA has supported its reasoning in both
Cadac
and
Peter
Taylor & Associates v Bell Estates (Pty) Ltd
.
[18]
In particular, the following passage was brought into issue, and
demonstrates the similarity between that case and the case at
hand:
[19]
‘
Ignoring
for present purposes second plaintiff’s belated monetary claim,
if defendant refused to pay, further litigation would
have to ensue
in order to compel payment. Moreover, the issues defined on the
present pleadings do not include the issue of the
quantum
of
the loss. Even if there were no other issues to be decided by such
further litigation than
quantum
, the further proceedings could
not simply be a shortly-worded application seeking payment of the sum
already determined in the
present proceedings. The further litigation
would have to take the form of an action and attendant trial. Such
further proceedings
would have to be launched under a different
process. If, thereby, judgment were obtained for payment, what would
then be executable
would be that judgment, not the judgment obtained
in the present proceedings. It follows that judgment for plaintiffs
in the present
action would not be final and executable.’
[15]
What that
quotation, read in isolation, fails to convey is the sentiment
expressed in the very next line of that judgment,
[20]
together with the detailed s 15 analysis that follows. This explains
the ultimate rejection of the defendant’s submissions
and
support for the conclusion that prescription was interrupted (in
terms of s 15, by the service of plaintiffs’ summonses)
and
remained interrupted, so that the special pleas were dismissed with
costs.
[21]
In
Allianz
the
crux of the defendant’s contention was that for prescription to
be judicially interrupted in terms of s 15, the process
had to have
been one whereby payment of the debt was claimed. Since defendant’s
debt could only be discharged by paying money,
the claim, in order to
effect interruption of prescription, had to be one sounding in money.
Since plaintiffs had not claimed money
but merely sued for
declarators, the summonses were not for ‘payment of the debt’
within the meaning of s 15(1) and
prescription had not been
interrupted. In addition, defendant’s counsel in
Allianz
argued that the declarators could never ‘become executable’
as required by s 15(4).
[22]
Despite the clear similarities with the defendant’s position in
this matter, it was nonetheless argued that that case was
distinguishable on the basis that an amendment to proceedings had
been sought in
Allianz
,
so that the initial declaratory relief was supplemented with a claim
for actual financial loss. In fact, it was only the second
plaintiff
who abandoned its claim for declaratory relief and replaced this with
a claim for the full sum insured in
Allianz
.
[23]
The first plaintiff amended
the
terms of its desired declarator
but without specifying any actual financial loss, and the Court
confirmed that nothing important turned on that amendment.
[24]
[16]
It was also argued that there may be some significance to quantifying
the damages under
the same case number, without the need to issue
fresh proceedings, and that even a permissible two-step process would
require damages
to be quantified and claimed within three years from
the declaratory relief granted. My reading of
Allianz
(as
supported by
Cadac
) suggest that these submissions must be
rejected. The principles emanating from the judgment of that court
are instructive in explaining
this conclusion and, in order to fully
convey the rationale of this judgment, will be dealt with at some
length:
-
It is in
keeping with the purposes of prescription and its operation in common
law to apply ‘elasticity of language’
when interpreting s
15(1) so that a legal proceeding may be instituted ‘as a step
in the enforcement of a claim or right
whereby the creditor formally
involves his debtor in court proceedings for the enforcement of his
claim’.
[25]
-
A
favourable judgment for a plaintiff claiming declaratory relief
regarding liability will only be final in the sense of being
appealable,
so that the liability issue is
res judicata
. This
judgment is, however,
not
executable
, and the only
final executable judgment which could be given in respect of
defendant’s liability would be one ordering the
payment of
money (i.e. a judgment that quantifies the damages payable).
-
It is
tempting to interpret the s 15(2) words ‘his claim under the
process in question’ to mean the original claim,
but in a
fashion that permits any subsequent final executable judgment from
other proceedings to flow from that original claim.
This
interpretation is problematic and unacceptable, and the preferred
interpretation is provided below.
[26]
-
It could be
suggested that the ‘once and for all’ rule prohibits
further proceedings to obtain recovery of the money,
and should bar
‘double-litigation’ occasioned by an initial judgment on
liability only. These submissions must be rejected.
[27]
-
Further
proceedings to exact payment are permissible on the basis that the
initial proceeding is only concerned with the issue of
liability.
While that dimension would be
res
judicata
once judgment is delivered in the initial matter, the two legal
proceedings together will still only deal with one cause of
action.
[28]
-
Although
the relief to be sought in the second legal proceeding will differ
from the first, the precise form of the relief and,
if it is monetary
relief, the quantum thereof, are not elements of the cause of
action.
[29]
As a result, the
cause of action on which the first legal proceedings are based is the
same cause of action as that on which the
future litigation will be
founded.
[30]
-
It may then
be said that prescription has been effectively interrupted when there
is a right enforceable against a party (in respect
of which
extinctive prescription is running) and a process is served on that
party instituting legal proceedings (for the enforcement
of the same
or substantially the same right as would otherwise be rendered
unenforceable by lapse of time).
[31]
-
Permitting
this two-stage process is a departure from the usual position, but
this is irrelevant to the issue of prescription and
the
undesirability of suing piecemeal should not be allowed to influence
interpretation of the Act.
[32]
-
It is
uncontroversial that the expression ‘under the process in
question’ in s 15(2) covers the situation where a final
executable judgment is obtained ‘under’ a process in
terms of which process and judgment constitute the beginning and
the
end of
one
and the same
legal proceeding.
[33]
As a
matter of direct cause and effect it might then be suggested that an
order for payment is not obtained ‘under’
the process in
question when further legal proceedings are required in order to
secure an order for payment. But it is undoubtably
the case that the
order
establishing
liability
would be obtained ‘under the process in question’. And,
crucially, there is unquestionably an essential link between
that
initial process and the final executable judgment, ‘notwithstanding
that some further process will be required to initiate
the
supplementary proceedings’.
[34]
-
This
interpretation, construing the contemplated final executable judgment
as being obtained by (or via) prosecution of the claim
‘under
the present process’, does not defeat any objectives of the
Act.
[35]
-
S 15 must
be interpreted so that it is sufficient for purposes of interrupting
prescription to serve an initial process as a step
in the enforcement
of a claim for payment of a debt.
[36]
-
A party
prosecutes a claim under that initial process to final, executable
judgment not only when the process and the judgment constitute
the
beginning and end of the same legal process. This is also the case
where the initial process triggers a judgment which finally
disposes
of some elements of the claim, and the remaining elements are
disposed of by way of a supplementary legal process instituted
pursuant to and dependent upon the original judgment.
[37]
-
The
facts in
Cadac
make it clear that the extinction of a
claim by prescription does not arise merely because there is more
than a three-year gap between
the two legal processes in question.
[17]
Applying
these principles and authorities to the case at hand results in the
conclusion that judicial interruption of prescription
occurred when
the Notice of Motion in case 239/2012 was served on the defendant,
including a claim for cancellation and damages
in the event of the
respondent failing to comply with his obligations in terms of the
Agreement of Sale.
[38]
That
interruption of prescription has not lapsed in terms of s 15(2),
despite two processes being required to bring the matter
to
conclusion. These processes pertain to a single cause of action. The
first process, under case 239/2012, resulted in the judgment
of
Pickering J and finally disposed of the issue of liability. There is
an inextricable link between that judgment and the action
instituted
in this matter for damages, which will ultimately yield an executable
judgment in future (assuming that the parties
are unable to settle
the issue of quantum before then). Such a judgment must be considered
as being obtained by (or via) the original
prosecution of the claim
by notice of motion in case 239/2012 in such a way that the judicial
interruption of prescription has
not lapsed in terms of s 15(2). The
judgment of Pickering J has not been set aside and there is no
suggestion before me of
abandonment. The argument that the second
step should have been taken within three years of the Order being
served on the Defendant
is ultimately defeated by the wording of s
15(4) and the
Allianz
interpretation,
which has subsequently found SCA support as indicated above.
Prescription, having been successfully interrupted
in terms of s
15(1), only commences to run afresh on the
day
on which the judgment of the court becomes executable
.
That day is sometime in the future.
[18]
The
conclusion of the court in
Allianz
is worth repeating:
[39]
‘…
I
think that defendant’s contention that plaintiffs are out of
Court because they have not claimed in the present proceedings
an
order sounding in money is unacceptable. To hold that that contention
is right in the present case would lead to a result so
inconsistent
with the purpose behind prescription as a legal institution, so
contrary to relevant case law and so out of keeping
with the aim and
scope of the
Prescription Act, that
the Legislature could not, in my
view, have intended it.’
[19]
These
sentiments must be endorsed and speak of an interpretation of the Act
that affords a party time to take judicial steps to
recover damages
when initial attempts at securing specific performance have failed.
Prescription should not continue running while
the law takes its
course.
[40]
This
interpretation appears to me, ultimately, to give effect to the
manifest purpose of the Order, read in context, as well as
the
constitutional right to have any dispute resolved by the application
of law before court.
[41]
[20]
On the approach I take to the matter the plaintiff’s
alternative submissions are
unwarranted and it is unnecessary to
determine or express a view whether the Order amounts to a judgment
debt for purposes of s
11 of the Act. In conclusion, the prescription
defence is without merit and must be rejected. The special plea is
accordingly dismissed
with costs, and the action instituted is to
proceed in respect of the computation of the Plaintiff’s
damages.
[21]
I make the following order:
The
special plea is dismissed with costs.
A.
GOVINDJEE
ACTING
JUDGE OF THE HIGH COURT
Applicant’s
Counsel
Adv T.J.D Rossi
Instructed
by
:Friedman Scheckter
75
2
nd
Avenue, Newton Park, Port Elizabeth
Tel:
041 395 8406
Ref:
M J Scheckter
Respondent’s
Counsel
:Adv R.G Buchanan SC
Instructed
by
:Liston Brewis & Co
35
Albany Road, Port Elizabeth
Tel:
041 585 3363
Ref: S
Brewis
Heard
:15
February 2021
Delivered
:23 February 2021
[1]
Act 68 of 1969.
[2]
See
Finishing
Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South Africa Ltd and
Others
[2012] ZASCA 49
par 13, cited with approval in
National
Union of Metalworkers of South Africa obo M Fohlisa and 41 Others v
Hendor Mining Supplies (a division of Marschalk Beleggings
(Pty) Ltd
[2017]
ZACC 9
para 11. The principle has been established that, where
relevant, when a court has to ascertain the meaning of a court
order,
it should give the court order a meaning that is in
conformity with the Constitution of the Republic of South Africa,
1996 (the
Constitution), rather than one that is inconsistent with
the Constitution where it is reasonably possible to do so and where
such an interpretation is not unduly strained.
[3]
‘15. Judicial interruption of prescription.- (1) The running
of prescription shall, subject to the provisions of subsection
(2),
be interrupted by the service on the debtor of any process whereby
the creditor claims payment of the debt.
(2)
Unless the debtor acknowledges liability, the interruption of
prescription in terms of subsection (1) shall lapse, and the
running
of prescription shall not be deemed to have been interrupted, if the
creditor does not successfully prosecute his claim
under the process
in question to final judgment or if he does so prosecute his claim
but abandons the judgment or the judgment
is set aside.
(3)
…
(4)
If the running of prescription is interrupted as contemplated in
subsection (1) and the creditor successfully prosecutes his
claim
under the process in question to final judgment and the interruption
does not lapse in terms of subsection (2), prescription
shall
commence to run afresh on the day on which the judgment of the court
becomes executable.
(5)
…
(6)
For the purposes of this section, ‘process’ includes a
petition, notice of motion, a rule
nisi
, a pleading in
reconvention, a third party notice referred to in any rule of court,
and any document whereby legal proceedings
are commenced.’
[4]
See
Melamed
and another v BP Southern Africa (Pty) Ltd
2000
(2) SA (W) at 614 621.
[5]
1982 (1) SA 770
(E) 793A-C, cited with approval in
Melamed
621.
[6]
Melamed
at 621. Also see
Titus
v Union & SWA Insurance Co Ltd
1980
(2) SA 701
(Tk) at 703A-B and 704A-H.
[7]
1980
(2) SA 701
at
704D-E.
[8]
See
Van
der Merwe v Protea Insurance Co Ltd
1982
(1) SA 770(E)
at 773H and
Evins
v Shield Insurance Co Ltd
1980 (2) SA 814
(A) at 827G-828-B.
[9]
[2011] 1 All SA 343 (SCA).
[10]
Act 37 of 1997.
[11]
Paras 12-14, references omitted.
[12]
1990 (1) SA 311
(C) at 334G-J.
[13]
Cadac
para
21.
[14]
Cadac
para
22, 23.
[15]
Cadac
para 24.
[16]
1993
(1) SA 107 (N).
[17]
At 110J-111B.
[18]
2014 (2) SA 312
(SCA).
[19]
At 328G-H.
[20]
“However, that is not an end of the matter.”
[21]
At 335C-D.
[22]
At 327I-328A.
[23]
At 316I.
[24]
At 317A-C. It will also be noted that the paragraph at 328G, quoted
above, commences with ‘Ignoring for present purposes
second
plaintiff’s
belated
monetary claim…’
[25]
At
331D-E.
[26]
At 332 B-C.
[27]
At 332 I. The Court held that: ‘If further proceedings are
instituted by plaintiffs in due course to exact payment from
defendant pursuant to judgment in the present case, such further
action will be necessary by reason of the fact that the present
action is only concerned with the issue of liability, and the
further action will cover elements of plaintiff’s claim not
canvassed in the current action.’
[28]
At 332I-J.
[29]
At 333A.
[30]
At 333C and 334E.
[31]
Neon
and Cold Cathode Illuminations (Pty) Ltd v Ephron
1978 (1) SA 464
(A) at 470H-471C, as quoted in
Allianz
at
333C-D.
[32]
At 333E-F. In support of this, the Court in
Allianz
noted that evidence may establish that quantum was hardly in
dispute, and in any event any unnecessary expenditure on the part
of
the defendant could be met with an appropriate cost order: at 333G.
[33]
At 333H.
[34]
At 333I-334A.
[35]
At 334A.
[36]
At 334H.
[37]
At 334I-J.
[38]
On
s 15 generally, see
Peter
Taylor & Associates v Bell Estates (Pty) Ltd and another
[2013]
ZASCA 94
;
Nativa
Manufacturing (Pty) Ltd v Keymax Investments 125 (Pty) Ltd and
others
[2019]
ZAGPPHC 618 at para 12.
For
an example of an instance where prescription was upheld because of a
failure to include a prayer for declaratory relief in
its notice of
motion, see the
obiter
remarks
by Revelas J in
Avante
Fishing Enterprises v Rafel Ondernemings CC
[2008] ZAECHC 62
par 35.
[39]
At 334F-G.
[40]
Murray
& Roberts Construction (Cape) (Pty) Ltd v Upington Municipality
1984 (1) SA 571
(AD) at 578.
[41]
S 34 of the Constitution. See
Kruger
v National Director of Public Prosecutions
[2019] ZACC 13
para 14.