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[2012] ZASCA 184
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Steyn NO v Ronald Bobroff & Partners (025/2012) [2012] ZASCA 184; [2013] 1 All SA 471 (SCA); 2013 (2) SA 311 (SCA) (29 November 2012)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No. 025/2012
Reportable
In the matter
between:
ELIZABETH
CATHERINA STEYN NO
.............................................
Appellant
and
RONALD BOBROFF &
PARTNERS .
................................................
Respondent
Neutral citation:
Steyn v Ronald Bobroff & Partners
(025/12)
[2012]
ZASCA 184
(29 November 2012)
Coram:
BRAND, BOSIELO AND SHONGWE JJA AND SOUTHWOOD AND
SALDULKER AJJA
Heard:
8
November 2012
Delivered:
29
November 2012
Summary: Attorney
– duty of an attorney to client – breach of mandate –
claim for damages for loss of interest
on the amount of damages
awarded to the appellant’s minor son in consequence of a delay
in prosecuting and finalising the
claim against the Road Accident
Fund (RAF) – whether the respondents acted in breach of the
written mandates – whether
a delay of 14½ months in
finalising the claim falls short of the standard of diligence, care
and skill which can reasonably
be expected of a practising attorney –
whether the appellant can legitimately claim mora interest as damages
when the respondents
did not owe her any debt.
ORDER
On appeal from:
South
Gauteng High Court, Johannesburg (Tsoka J sitting as a court of first
instance):
The appeal is
dismissed with costs.
JUDGMENT
BOSIELO JA
(
BRAND JA, SHONGWE JA, SOUTHWOOD AJA AND SALDULKER AJA
CONCURRING
):
[1] This appeal
raises the contentious question of the duties and obligations of an
attorney to his/her client and the circumstances
under which an
attorney can be held liable for want of the requisite care, skill and
diligence which he/she is expected to exercise
in handling the
affairs of his/her client.
[2] In
order to appreciate and understand the crucial role which a present
day attorney plays in many people’s affairs, I
deem it
necessary to give a brief evolution of the profession of an attorney
over the years. In his book,
The Judicial
Practice of South Africa,
(4 ed) vol 1, at p
31 G B Van Zyl said the following about the profession of an
attorney:
‘
In
ancient days the profession of an attorney was considered as
“
infamissima
vilitas
,”
servile, of no value, and contemptible. But under the Roman Emperors
Diocletian and Maximilian it became an office of respect
and good
repute. Many people still think at the present day as the ancients
did before the period of these Emperors. Even Lord
Macaulay, the
learned historian, who in all his professional career held only one
brief, for which he received a guinea, could
not refrain from
remarking: “That
pest
whom
mortals call attorneys.” But the present consensus of opinion,
all the civilised world over, is that the profession of
an attorney
is an honourable and respectable one, and to be held in the utmost
esteem. An attorney is nowadays an indispensable
adjunct to everyone,
not only in lawsuits but in many other private affairs, and his
office is deemed both necessary and praiseworthy.
It is essential,
therefore, that the relationship between him and the public should be
better known; as also what is expected of
him and what his
obligations are.’
[3]
Many years ago and whilst grappling with the liability of an attorney
who failed to give sufficient care and attention to the
affairs of
his/her client, De Villiers CJ said the following in
Van
der Spuy v Pillans
1875 Buch 133 at p 135:
‘
I
do not dispute the doctrine that an attorney is liable for negligence
and want of skill. Every attorney is supposed to be proficient
in his
calling, and if he does not bestow sufficient care and attention in
the conduct of business entrusted to him, he is liable,
and where
this is proved the Court will give damages against him.’
See
also
Armitage Trustees v Allison
1911 NDP 88.
The attorney’s
profession having become more diverse and sophisticated, these wise
words are, to my mind, more apt today than
they were during the time
of De Villiers CJ. Indubitably, this is the yardstick against which
the respondent’s conduct in
this case has to be adjudged.
[4] This matter is
on appeal before us from the South Gauteng High Court (Tsoka J)
with the leave of this court. To a large
extent, the facts of this
case are relatively simple and undisputed. Furthermore, the points of
law raised herein are short and
crisp. They are: whether in its
preparation, formulation, collation, submission and eventual
prosecution of the claim of the appellant’s
minor son Micah
(M), the respondent (a firm of attorneys) failed to act in accordance
with the reasonable diligence, care and skill
expected of a
practising attorney or, as the appellant contended, as ‘pre-eminent
specialists’ in the field of personal
injury claims. And if
not, whether the respondent can be held liable for the consequential
damages suffered by the appellant, being
the amount representing the
interest which the appellant lost on the capital amount paid by the
Road Accident Fund (the Fund) 14½
months late. Simply put, is
it competent for the appellant to claim mora interest as damages in a
matter where the respondent is
not her debtor.
[5] The salient
facts underpinning this case can be succinctly set out as follows:
On 17 March 2006,
the appellant instructed the respondent to institute a third party
claim against the Fund on behalf of M for damages
resulting from
injuries sustained in a motor vehicle accident which occurred on 28
August 2005. It is common cause that Micah had
sustained a fractured
skull. The appellant and respondent had entered into three written
agreements which in essence gave the respondent
the mandate to
investigate, process, lodge and prosecute the claim to finality.
These written agreements contain the essential
terms and the fee
arrangements agreed upon between the parties. Pursuant to the
mandate, the respondent lodged the claim with the
Fund on 27 February
2007. When the Fund failed to respond to the claim, the respondent
issued and served summons against the Fund
on 12 December 2007. On 16
May 2008 and after the pleadings had closed, the respondents applied
for a trial date. Subsequently,
the matter was enrolled for trial on
1 February 2010. The trial date was allocated some months after it
was applied for.
[6] The appellant
testified that some time in 2008 or 2009 (she was not certain of the
date) she met Mr Bezuidenhout of the respondent’s
firm who
advised her that the case had been enrolled for trial on 1 February
2010. It is common cause that some time in October
2009 and after the
respondent had notified the appellant about the trial date, she
terminated the respondent’s mandate and
took her file to
another firm of attorneys, Norman Berger & Partners Inc. She
never gave the respondents any reason for the
termination of its
mandate.
[7] The trial was
held from 1-5 February 2010 and judgment delivered in her favour on
11 February 2010. Insofar as it is relevant
to this appeal, the Fund
was ordered to pay the appellant R500 000 in respect of Micah’s
general damages and R2 060 099
in respect of his future
loss of earnings.
[8] On 16 February
2010, a mere five days after the judgment referred to above, the
appellant issued summons against the respondent
wherein she claimed
R479 485.20, representing damages she suffered as a result of
the interest which she allegedly lost and
which could have accrued on
the capital sum of R2 560 099 if the respondent had lodged
her claim timeously, ie 14½
months earlier.
[9] In order to
understand the appellant’s claim, it is important to have
recourse to her particulars of claim. Essentially,
the appellant
alleges that she instructed the respondent on the strength of the
fact that it had advertised itself widely, and
publicly held itself
out to be a firm of specialist personal injury attorneys. The
appellant avers further that it was an express,
alternatively implied
term of the agreements between the parties that the respondent would
carry out its mandate with due skill,
care, diligence and
professionalism expected of a specialist firm of attorneys who held
themselves out to be pre-eminent experts
and specialists in the field
of personal injury claims and third party matters. Importantly, the
appellant alleged that, in accepting
the mandate, the respondents
tacitly undertook to prepare, formulate, collate, submit and
prosecute her claim against the RAF with
due diligence and expedience
and within a reasonable time.
[10] The essential
facts which are alleged to constitute negligence and breach of duty
on the part of the respondent are set out
as follows in the
appellant’s particulars of claim:
‘
12
In breach of the written agreements aforesaid, Annexures “B1”,
“B2” and “B3”, and the duty
of care owed by
the Defendant to the Plaintiff in her capacity aforesaid, the
Defendant negligently and wrongfully failed and/or
neglected properly
to timeously prepare, formulate, collate, submit, institute and
prosecute the Plaintiff’s claim to recover
damages in that it:-
12.1 failed to
deliver the claim to the Road Accident Fund on or before 30 July 2006
when the Defendant could and should have done
so;
12.2 delivered the
claim to Defendant on 27 February 2007, some 7 months after it could
and should have done so;
12.3 failed to issue
and serve the Summons within a reasonable time after the expiry of
the 120 day period referred to in
Section 24(6)
of the
Road Accident
Fund Act 56 of 1996
which would have expired on 28 June 2007 and that
Summons accordingly could have been served on the Road Accident Fund
at any time
after 29 June 2007;
12.4 only issued and
served Summons on 12 December 2007, some 5½ months after it
could and should have done so;
12.5 failed to have
any regard to the fact that after the Road Accident Fund’s
Notice of Intention to Defend was served on
11 January 2008 and that
its Plea was due for service on or before Friday 8 February 2008;
12.6 failed to
deliver a Notice of Bar in terms of
Rule 26
of the Rules of this
Honourable Court when it could and should have done so on 11 February
2008;
12.7 failed to have
regard to the fact that had it served the Notice of Bar aforesaid the
pleadings would have closed alternatively
the Defendant’s Plea
would have received by no later than Monday 18 February 2008 and the
Plaintiff’s Plea to the Defendant’s
Counterclaims
delivered by Monday 17 March 2008 at which time the pleadings in the
action would have closed;
12.8 failed to
deliver the Notice of Bar aforesaid until 2 April 2008 with the
result that the Road Accident Fund’s Plea was
only served on 11
April 2008;
12.9 only delivered
the Plea to the Road Accident Fund’s Counterclaims on 7 May
2008 at which time the Pleadings closed;
12.10 only applied
for a trial date on 16 May 2008 when it could and should have applied
for a trial date on 17 March 2008, some
two months later that it
could and should have done so had it not been negligently dilatory as
set out above;
12.11 omitted
13. It was
foreseeable alternatively ought to have been foreseen by the
Defendant that the failure to timeously:-
13.1 deliver the
Plaintiff’s claim;
13.2 issue Summons;
13.3 ensure the
close of pleadings;
would result in the
Plaintiff suffering damages in her representative capacity.’
[11] Before I can
deal with the merits of this appeal, it is imperative to decide
first, whether the claim herein is based on delict
or contract. Mr
Ancer argued without conviction that this claim was delictual. His
main premise seems to be that it is because
the respondent held
itself out to be a firm of pre-eminent expert personal injuries
attorneys and further that by failing to lodge
the claim
expeditiously, the respondent was in breach of that duty. He was
however at great pains to explain how this claim could
be said to be
delictual whilst the appellant relied on a breach of a duty arising
out of the three written agreements she had signed
with the
respondent. When confronted with this intractable difficulty, he
conceded, rather reluctantly, that the pleadings herein
were not
felicitously drawn.
[12] I agree with Mr
Ancer that plaintiff’s particulars of claim are not a model of
clarity. The seeds of Mr Ancer’s
confusion lie in para [12]
quoted in full in para [10] above. It is plainly incongruous for the
appellant to allege a breach of
the written agreements aforesaid,
Annexures ‘B1’ ‘B2’ and ‘B3’ as
the basis of her claims (which
is clearly contractual) and in the
same breadth rely on an alleged breach ‘of the duty of care
owed by defendant to Plaintiff’
which is plainly a delictual
claim.
[13]
What is clear from the pleadings however, is that the appellant
relied on the three written agreements she had entered into
with the
respondent. Evidently, these are the three agreements which regulated
the relationship between the appellant and the respondent.
It follows
ineluctably that the appellant’s case is contractual and not
delictual. Dealing with a similar problem in
Lillicrap,
Wassenaar and Partners v Pilkington Brothers
(SA)
(Pty) Ltd
1985 (1) SA 475
(A), the Grosskopf
AJA stated the following at 499D-E.
‘…
In
the present case we do not have an infringement of any of the
respondent’s rights of property or person. The only
infringement
of which the respondent complains is the infringement of
the appellant’s contractual duty to perform specific
professional
work with due diligence; and the damages which the
respondent claims, are those which would place it in the position it
would have
occupied if the contract had been properly performed.’
[14]
Having had to determine whether the Acquilian action could be
comfortably accommodated in a purely contractual setting like
in this
case, Grosskopff AJA concluded in
Lillicrap
at p 501G-H that he considered that policy
considerations militated strongly against delictual liability being
imposed for the negligent
breach of a contract. The learned judge
enunciated the principle lucidly as follows at 499A-501H.
‘
In applying
the test of reasonableness to the facts of the present case, the
first consideration to be borne mind is that the respondent
does not
contend that the appellant would have been under a duty to the
respondent to exercise diligence if no contract had been
concluded
requiring it to perform professional services.
The learned judge
continued at 499D-F to emphasize that: the only infringement of which
the respondent complains is the infringement
of the appellant’s
duty to perform specific professional work with due diligence; and
the damages which the respondent claims,
are these which would place
it in the position it would have occupied if the contract had been
properly performed.’
Based
on the fact that the appellant’s main contention is that the
respondent, being a firm of attorneys, failed to execute
their
mandate with the necessary diligence, skill and care required of a
reasonable attorney as contemplated in their written agreements,
I
find, as Grosskopff AJA did in Lillicrap that this case has to be
resolved on the principles of contract and not delict. See
also
Holtzhausen v Absa Bank Ltd
2008
(5) SA 630
(SCA) at para [6].
[15] I now revert to
the salient facts of this case. In her evidence, the appellant
emphasized the fact that she had advised the
respondent through its
candidate attorney, one Ms Jacqueline Boucher (Boucher) that Micah
required urgent medical attention because
of his condition and as a
result she needed this case to be finalized quickly. Importantly the
appellant conceded that Boucher
had advised her that such matters do
take some time to finalize.
[16] I interpose to
state that the appellant was the only witness who testified during
the trial. The respondent closed its case
without presenting
evidence. It is clear from the appellant’s evidence that at all
material times during the processing of
this claim, she was uncertain
of the nature, extent and possible sequelae of the head injury
suffered by Micah. However, what is
clear from her evidence is that
she was at all times seriously worried about what would happen to
Micah. An EEG examination had
revealed some abnormalities.
Furthermore, during an MRI scan on 12 June 2006, it was discovered
that Micah had a tumor in the brain.
During a subsequent visit to Dr
Anderson, he advised her after consultation with one Dr Omar, Head of
Neurology, that Micah needed
an urgent operation. This operation was
done on 28 June 2006. Initially there was some doubt and fear whether
the tumour was linked
to the head injury until one Dr Louw opined
that he could not link the tumour to the head injury.
[17] Importantly,
the appellant testified that as Micah had never manifested these
symptoms in the past, she was confused and required
a second medical
opinion to allay her fears. This is understandable. This second
opinion was given later by Dr Marus. Sometime
in September 2009, she
met Bezuidenhout of the respondent who advised her that the case had
already been enrolled for trial and
further that they might get about
R2 million as damages.
[18] In October
2009, the appellant cancelled her mandate to the respondent and
instructed her present attorneys. Asked why she
did so, she explained
that she was aggrieved by the fact that, instead of taking Micah to
various doctors for further medical examination
and reports, the
respondent expected her to do that. She found this to be cumbersome
and unacceptable. It is clear from the evidence
that the appellant
never complained to the respondent of any delays regarding the
preparation, submission and prosecution of this
claim. Neither did
she write any letter to the respondent to register her
dissatisfaction in this regard. Even at the crucial time
when
Bezuidenhout advised her that the case had been enrolled for trial,
she never voiced any complaint regarding the alleged delays.
[19] The primary
issue to be decided in this appeal is, whether, given the
circumstances of this case, it can be said that the respondent’s
conduct by delaying the finalization of this claim by 14½
months (the delay is not disputed) amounted to a failure to measure
up to the conduct expected of a reasonable attorney acting with due
care, skill and diligence.
[20] Mr Ancer for
the appellant, argued forcefully that the respondent’s conduct
must be measured not against that of an ordinary
reasonable attorney
but that of a ‘pre-eminent specialist personal injury
attorney’. This argument was premised on
the fact, which was
common cause, that the respondent had widely advertised themselves as
‘specialists in major personal
injury law’. The logical
conclusion is that it should be held to the standard which it
professed to possess. It was contended
further that a pre-eminent
specialist personal injury attorney would have appreciated that the
appellant required this claim to
be finalized without any undue delay
and further that any undue delay would cause her financial loss in
the form of interest which
she could earn on the money if the claim
was finalized timeously and the money received was invested.
[21] The other issue
closely allied to the above, was the correct quantification of the
appellant’s damages. Mr Ancer submitted
that the appellant was
entitled to claim interest at 15,5% over a period of 14½
months on the capital amount of R2 560 099.
This is alleged
to be interest which she could have earned if the claim had been
lodged timeously and the money invested. The 14½
months period
represent the period during which the claim should have been lodged
and finalized (this was not disputed). He contended
that the interest
rate of 15,5% was based on the interest rate prescribed by the
Minister of Justice in terms of the Prescribed
Rate of Interest Act
55 of 1995. In consequence no evidence was adduced to prove this.
[22] On the other
hand, Mr Stockwell for the respondent submitted that the appellant is
bound by the written mandates she entered
into with the respondent.
He submitted that there is nothing in the three written mandates to
the effect that the respondent had
agreed or undertaken to execute
the mandate as ‘pre-eminent specialist personal injury
attorneys’. He contended that
as the respondent had accepted
the mandate as a firm of ordinary reasonable attorneys, its conduct
had to be measured against that
of an ordinary reasonable attorney.
He contended further that, in order to determine if the respondent
failed to live up to the
standard of a reasonable attorney, it was
imperative that evidence of an expert in third party claims should
have been adduced
to explain to the court how a reasonable attorney,
faced with the same facts as in this case, would have dealt with this
claim.
Absent such evidence, he contended that the court had nothing
against which to measure the respondent’s conduct. Mr Stockwell
submitted further that a determination of such a tricky question
would depend on the facts of the case, the nature of the injuries,
their sequelae and the complexity of the case, all of which was,
admittedly, never put before the court below.
[23] Regarding the
quantum, Mr Stockwell contended that as the respondent did not owe
the appellant any money, there was no underlying
debt and therefore
the appellant was in law not entitled to claim mora interest at the
prescribed rate. He submitted further that
it was incumbent upon the
appellant to adduce evidence of what she would have done with the
money, in other words, whether she
would have invested it and,
crucially, what interest she would have earned on such investment. He
concluded by contending that
the mere fact that there was some delay
(which was not disputed) does not, without more, mean that the
appellant suffered any financial
loss. He submitted that on the
contrary, the delay might have resulted in the amount ultimately
awarded to the appellant having
appreciated in the interim.
[24] The question
that we need to answer therefore is whether by lodging the claim 14½
months late, the respondent breached
the tacit terms of its written
agreements with the appellant. Otherwise stated, the question is
whether in so failing to comply,
the respondent failed to act with
the necessary care, skill and diligence expected of an ordinary
reasonable attorney.
[25] What is clear
from the above is that due to his injury to the head, Micah underwent
numerous medical tests to determine the
nature and extent as well as
the sequalae of his injuries. No evidence was led regarding the
amount of time which was spent in
attending to the various doctors,
the time it took to secure the appointments and how long it took for
the respondent to receive
the medical reports from the various
doctors. It is clear from the appellant’s evidence that this
was a sensitive and complicated
case which required patience and care
for it to be handled properly. It could not be rushed as it was
important that the true nature,
extent and sequelae of Micah’s
injuries be accurately assessed. Manifestly, such an assessment was
necessary for the accurate
quantification of Micah’s damages.
[26] The answer to
the two critical questions posed above lies paradoxically in another
question, namely, how does one determine
how a reasonable attorney
would have acted in similar circumstances. It is unfortunate that
there is paucity of evidence regarding
the nature and extent of the
injuries sustained by Micah, their impact and sequelae and,
importantly, whether Micah still required
further medical treatment
and if so, what kind of medical treatment and what its duration would
be. All that one could glean from
the record is that Micah had
suffered a fractured skull. Importantly, the first EEG test revealed
some abnormalities whilst the
CT scan showed calcification of the
back of his spine. The appellant feared that Micah might develop
epilepsy. To compound her
anxiety a tumor was discovered on his brain
during an MRI scan. She was later advised by Dr Anderson, after
discussion with Dr
Omar that Micah needed an urgent operation. In the
midst of all these, Dr Louw gave her a report that he did not think
that the
tumour in Micah’s brain was caused by the accident.
Understandably, as a result of all these developments, she was
confused
and required a second opinion. To my mind, all this is
eloquent testimony that this case was not one of the run-of-the-mill
cases.
It was complex and required due and proper care and attention
by a conscientious attorney. Importantly, the appellant was alive
to
this and as a result she was even amenable to a postponement of the
trial. I am driven to conclude that her belated complaint
of the
alleged delay was contrived and ill-conceived. Given the above
scenario, I am unable to find that a delay of 14½
months was
unreasonable.
[27] In
the absence of clear evidence to prove what a reasonable attorney in
the position of the respondent, faced with a similar
case under
similar circumstances, would have done, I am unable to conclude that
the respondent failed to act with the necessary
care, skill and
diligence which would ordinarily be expected from a reasonable
attorney. It is axiomatic that the conduct of a
reasonable attorney
concerning a case that he/she handles will primarily be determined,
amongst others, by the facts and circumstances
of the case, the
investigations which had to be done, the nature and extent of the
injuries suffered and the complexity of the
matter. It would in my
view be unwise to attempt to determine the conduct of a reasonable
attorney in vacuo. As Van Zyl eloquently
stated in his work, The
Judicial Practice of South Africa (above) at p 46, ‘…the
degree of negligence or want of prudence,
or useless work, must
depend upon the nature of each case.
’
[28] In any event,
none of the three written mandates concluded and signed by the
parties stipulated any specific time frames within
which the
respondent was expected to finalize this claim. The appellant never
testified that there were any such specific time
limits. All she
could say and did state is that she had impressed it on Boucher, the
candidate attorney that she would like this
matter to be finalized as
soon as possible. In the same vein she had been forewarned by Boucher
that such matters take time. Regrettably,
she never explained what
she meant by the expressions ‘as soon as possible’ or
‘within a reasonable time’.
Suffice to state that the
phrases ‘as soon as possible’ or ‘within or
reasonable time’ are nebulous and
relative and can only be
determined in relation to the facts and exigencies of the case as
well as its complexity. On the facts
of this case, I am unable to
find that the respondent failed to act within a reasonable time, or
for that matter with due diligence,
care and skill as an ordinary
reasonable attorney would have acted.
[29] To encapsulate:
(a) The appellant
set out to prove that the respondent had failed to execute its
mandate with the skill, diligence and care required
from a reasonable
attorney.
(b) The only
evidence proffered was, however, that of the appellant herself who
did not practice nor was she qualified as an attorney.
(c) Shorn of
unnecessary detail, her evidence established two things. First, that
her claim against the Road Accident Fund could
notionally have been
brought before the court much earlier and, secondly, she wanted her
claim to be finalized as a matter of urgency.
(d) In argument
counsel for the appellant contended that in the circumstances the
delays were so unreasonable that it justified
the inference of
negligence on the part of the respondent. Or, in legal parlance,
res
ipsa loquitur,
which literally means that the facts spoke for
themselves.
(e) But having
regard to the authorities, this is clearly not a case of
res ipsa
loquitur.
That expression only comes into play if the accident or
occurrence would ordinarily not have happened unless there had been
negligence,
the court is not entitled to infer that
res ipsa
loquitur
(see eg
Mostert v Cape Town City Council
2001 (1)
SA 105
(SCA) para 41). As I see it, the mere fact that the respondent
did not bring the matter before court in the shortest possible
time-frame
does not necessarily justify the inference of negligence.
Even on the assumption that the appellant took a long time which
could,
on the face of it, conceivably be described as unreasonable,
the enquiry whether this constituted lack of skill, diligence and
care on the part of the respondent would, in my view, still raise the
question: what were the circumstances? Logic dictates that
once that
question is raised
res ipsa loquitur
cannot apply.
(f) It follows that
the appellant could only establish her case through the expert
testimony of a practicing attorney that, in the
prevailing
circumstances, a reasonable attorney would have brought the matter to
court earlier, and if so, how much sooner.
(g) It is true, as
the appellant contended in argument, that the respondent led no
evidence to explain the delay in bringing the
matter to court. But
the onus remained on the appellant. Unless and until she established
a prima facie case of negligence, which
she did not, the respondent
was under no duty to give any explanation.
[30] Based on the
above exposition, I am of the view that the appellant failed to make
out a case entitling her to the relief sought.
[31] In the result
the appeal is dismissed with costs.
____________________
L O Bosielo
Judge of Appeal
BRAND JA
(BOSIELO, SHONGWE JJA, SOUTHWOOD AND SALDULKER AJJA CONCURRING IN THE
JUDGMENT OF BRAND JA)
[32] I have read the
judgment of my brother Bosielo JA in this matter and I agree with his
reasoning as well as his conclusion that
the appeal cannot succeed.
Yet I thought that perhaps I should say something about the
quantification of the damages claimed by
the appellant because it
appears to proceed from a premise which is fundamentally flawed.
Unless attention is called to this fundamental
flaw, it may
perpetuate and snare future litigants in the same trap.
[33]
The appellant led no evidence that, if she had received the award of
R2 560 099 fourteen and a half months earlier
she would
have earned any particular rate of interest or, indeed, that she
would have invested the money at all. She simply quantified
her claim
on the basis of the award times 15,5 per cent per annum divided by
twelve months times the fourteen and a half months.
In argument
counsel for the appellant confirmed the suspicion that the 15,5 per
cent was the rate prescribed by the Minister of
Justice in the
Government Gazette
of
1 October 1993 in terms of the
Prescribed Rate of Interest Act 55 of
1975
. For the proposition that the appellant could legitimately
calculate the damages sustained by her minor son in this way, she
sought
to rely on the following statements in
Bellairs
v Hodnett
1978 (1) SA 1109
(A) at 1145D-H:
‘
It
may be accepted that the award of interest to a creditor, where his
debtor is
in
mora
in
regard to the payment of a monetary obligation under a contract, is,
in the absence of a contractual obligation to pay interest,
based
upon the principle that the creditor is entitled to be compensated
for the loss or damage that he has suffered as a result
of not
receiving his money on due date . . .. This loss is assessed on the
basis of allowing interest on the capital sum owing
over the period
of
mora
.
. .. Admittedly, it is pointed out by Steyn,
Mora
Debitoris
,
p. 86, that there were differences of opinion among the writers on
Roman-Dutch law on the question as to whether
mora
interest
was lucrative, punitive or compensatory; and that, since interest is
payable without the creditor having to prove that
he has suffered
loss and even where the debtor can show that the creditor would not
have used the capital sum owing, this question
has not lost its
significance. Nevertheless, as emphasized by CENTLIVRES, C.J., in
Linton
v.
Corser
,
1952 (3) S.A. 685
(A.D.) at p. 695, interest is today the “life-blood
of finance” and under modern conditions a debtor who is tardy
in
the due payment of a monetary obligation will almost invariably
deprive his creditor of the productive use of the money and thereby
cause him loss. It is for this loss that the award of
mora
interest
seeks to compensate the creditor.’
[34] In
the circumstances contemplated in
Bellairs
,
where the claimant is entitled to
mora
interest at the rate prescribed by the Act,
our courts accept that interest constitutes a form of damages. But
they do not require
a claimant to prove that damages were actually
sustained. They act on the assumption that, had the payment been
made, the capital
sum would have been productively employed by the
claimant during the period of
mora
and
that the
mora
interest
consequently represents the damages flowing naturally from the
default (see eg
Bellairs
1146H-1147A;
Thoroughbred
Breeders’ Association v Price Waterhouse
2001
(4) SA 551
(SCA) paras 82-83). What is more, liability for
mora
interest is not dependent on fault. The claimant is
therefore not required to prove that the delay in payment was due to
the negligence
of the debtor. All that the claimant need prove is
that payment was not made on due date (see eg
Scoin
Trading (Pty) Ltd v Bernstein NO
2011 (2) SA
118
(SCA) paras 15-17).
[35]
But I believe that reliance on
Bellairs
in the circumstances of this case demonstrates a
fundamental misconception.
Bellairs
deals with
mora
interest.
So does the
Prescribed Rate of Interest Act. The
term
mora
simply means delay or default. The
mora
interest provided for in the Act is thus intended to
place the creditor, who has not received due payment of a monetary
debt on
due date, in the position he or she would have occupied had
due payment been made. Thus understood the
mora
interest contemplated in
Bellairs
and in the Act is what the Roman Dutch authorities
described as ‘belangende het gene aan de principale saak
toevallig is’
which was translated in
West
Rand Estates Ltd v New Zealand Insurance Co Ltd
1926
AD 173
at 177, with reference to these authorities as ‘ancillary
or accessory to the principal obligation’.
[36]
This is to be contrasted with a case such as the present where the
interest is not ancillary or accessory to any principal
monetary
debt, but is used as a component in the calculation of damages for
alleged breach of mandate. Differences between the
two situations are
explained thus by Fagan JA in
Union Government
v Jackson
1956 (2) SA 398
(A) at 411C-H:
‘
In
considering this question of taking into account the time that may
elapse between the date when a man is deprived of an asset
and that
of his being reimbursed by receiving compensation for it, we must be
careful to distinguish between two different approaches
that call
different legal principles into play and may therefore diverge
greatly in their application to particular circumstances.
The one
approach is to treat this lapse of time as merely an element –
one of many items – which the Court may be urged
to bring into
its reckoning in computing or estimating the damage which a plaintiff
has suffered and for which he should be recompensed.
. . .
The
other approach is that of dealing with the liability to pay interest
as a consequential or accessory or ancillary obligation
. . .
automatically attaching to some principal obligation by operation of
law. The best illustration of this type is the liability
for interest
a tempore morae
falling on a debtor who
fails to pay the sum owing by him on the due date. Here the Court
does not make an assessment; it does not
weigh the pros and cons in
order to exercise an equitable judgment as to whether, and to what
extent, the interest-bearing potentialities
of money are to be taken
into account in computing its award. The only issue is whether the
legal liability exists or not; if it
does, the rest is merely a
matter of mathematical calculation: the legal rate of interest on a
definite sum from a definite date
until date of payment.’
[37]
The same differences between the two situations can be illustrated
with reference to
Crookes Brothers Ltd v
Regional Land Claims Commission for the Province of Mpumalanga
[2012] ZASCA 128.
What the appellant, Crookes Brothers,
claimed was
mora
interest
at the prescribed rate of 15,5 per cent on the purchase price of land
which was not paid on the date agreed upon in the
deed of sale, but
only some months later. The court of first instance dismissed the
claim, essentially, on the basis that the claimant
enjoyed the
benefit of remaining in occupation of the land during the period of
its debtor’s default. On appeal this court,
however, referred
to the distinction between
mora
interest,
on the one hand, and interest as a component in the calculation of
damages, on the other, which was underscored by Fagan
JA in
Jackson
.
With reference to this distinction, this court then held that the
claim in
Crookes Brothers
fell
within the first category of
mora
interest.
In this light, so it was held, the claimant was entitled to
mora
interest calculated at the prescribed rate in
terms of the Act; that it was not required to prove any actual
damages; and that,
in that event, the fact that the claimant enjoyed
the benefit of possessing the land during the period of
mora
was of no consequence.
[38] By contrast, it
is clear to me that in this matter interest was not claimed as an
accessory or an ancillary obligation to a
principal debt. The Road
Accident Fund was the appellant’s debtor for the amount of the
award. The respondent was not. There
was therefore no principal debt
owing by the respondent. The rate of interest prescribed under the
Prescribed Rate of Interest Act therefore
simply did not apply. In
consequence I agree with the respondent’s argument that, absent
any evidence that had the appellant
received the amount of the award
fourteen and a half months earlier, it would have been invested at a
certain rate of return, the
appellant had failed to establish a
quantified claim for damages. For this reason alone – and apart
from all the other reasons
that appear from the judgment of Bosielo
JA – I therefore believe the appeal should fail.
___________________
F D J BRAND
JUDGE OF APPEAL
A
PPEARANCES
For Appellant: B
Ancer SC
Instructed by:
Norman Berger &
Partners Inc, Johannesburg
Lovius Block,
Bloemfontein
For Respondent: R
Stockwell SC
Instructed by:
Maluleke, Msimang &
Ass., Johannesburg
Matsepes,
Bloemfontein