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[2023] ZAFSHC 402
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AV Theron and Swanepoel Inc and Another v Knott - Appeal (A129/2021) [2023] ZAFSHC 402 (19 October 2023)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable: YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
CASE
NUMBER: A129/2021
In
the matter between:
AV
THERON AND SWANEPOEL INC
FIRST
APPELLANT
MATTHYS
SWANEPOEL
SECOND
APPELLANT
And
NEILL
SEAN KNOTT
RESPONDENT
CORAM:
C REINDERS ADJP
et
EM
BALOYI-MERE AJ
JUDGMENT
BY:
EM BALOYI-MERE, AJ
HEARD
ON:
16 OCTOBER 2023
DELIVERED
ON:
19 OCTOBER 2023
[1]
In this judgment I will refer to the
Defendants in the
court a quo
as the Appellants (“First and Second Appellant”) and the
Plaintiff in the
court a quo
as the Respondent. This is an appeal by the Appellants and a cross
appeal by the Respondent against the order of the Honourable
Magistrate A Mnguni handed down in the Magistrates Court of the
District of Sasolburg on the 21
st
September 2021. The order by the Magistrate reads as follows:
1.
The First and Second Respondents are
ordered, jointly and severally, the one paying the other to be
absolved to:
(a) Pay the Plaintiff a
sum of R150 000.00 (one hundred and fifty thousand rands); and
(b) Interest thereon at a
rate of 10.5% per annum from date of summons to date of final
payment; and
(c) To pay Plaintiff cost
of suit at a party and party scale.
[2]
Both the Appellants and the Respondent
assail the findings of the Honourable Magistrate in this judgment,
albeit for different reasons.
The findings of the Magistrate are as
follows:
“
[17.1]
There is overwhelming evidence that second defendant accepted a
mandate from the plaintiff to perform certain legal services
in the
area in which the defendants were regarded as experts for him.
[17.2] Evidence also
shows that the defendants rendered some advice which turned out to be
erroneous and/or negligent.
[17.3] Evidence also
show that as a result of such erroneous and/or negligent advise, the
sale agreement between the plaintiff and
Blue Dot was cancelled;
[17.4] Plaintiff was
eventually able to sell his property to a third party at a later
stage at a reduced price.
[17.5] The sale
agreement with the third party (Trymore Investments) referred to the
sale of the immovable property together with
certain moveable assets
which were specifically named. No amounts were placed on the said
included movables.
[18] The agreement
between the plaintiffs Blue Dot has specifically spelled out that the
purchase price was R1 300 000.00
made up R700 000.00,
for the fixed property, R500 000.00 for furniture and
R100 000.00 for boat and trailer.
[19] For all intense
and purposes it remains obvious that the difference between the
agreements is a sum of R250 000.00. The
defendants argued that
this amount cannot be read to be representing the damages or loss
suffered by plaintiff mainly because there
was no proper assessment
of the damages suffered. It is also the defendants’ position
that; the question whether such erroneous
legal advice is connected
to the loss remains unanswered.
[19.1] The inexorable
conclusion in my judgment is that the plaintiff lost a deal as a
direct result of incorrect legal advice he
received from the
defendants, in this regard, the defendants are naturally guilty of
dereliction of duty and were negligent. The
argument that there is
lack of proximity to the wrongdoing by the defendants and the damages
suffered cannot be sustained as such
argument is not based on facts
but only on hypothesis and innuendos.
[20] The only question
that remains is, to what extent did the plaintiff suffer the damages?
The glaring reality is that it is unknown
where the boat and the
trailer ended. Although the plaintiff insists it went with the second
contract, this assertion remains suspicious.
I see no reason why same
was not specifically included in the agreement with the buyer. For
obvious reasons any damages awarded
in the plaintiff’s favour
must take into account this question.
[21] It is my finding
that the defendants breached the mandate from the plaintiff in that
they rendered incorrect advise to the
plaintiff which was detriment
to him. In so doing, defendants are liable for the consequences of
such negligence. The damages suffered
are easily quantifiable in view
of the documentary and oral evidence received.”
A
Brief Background of the Facts
[3]
The
Respondent entered into an oral professional service agreement on or
around April 2014 with the Appellants wherein the Appellants
would
provide expert advice in respect of the sale and transfer of his
property from Respondent to the entity Blue Dot Properties
1784 CC
(“Blue Dot”).
[1]
[4]
The
Appellants were also instructed to draw the relevant offer to
purchase, which, when accepted, would serve as a deed of sale
and to
attend to all necessary actions in order to ensure the effective sale
and transfer of the property from Respondent to Blue
Dot.
[2]
[5]
The
Appellants accepted the mandate. By accepting the mandate, and by
implication, Second Appellant held himself out as a specialist
practitioner having the relevant expertise, knowledge and skill in
that field of legal practice and that he would competently handle
Respondent’s mandate with the required care, diligence and
skill. This much was not disputed by either of the parties.
[3]
[6]
On
the 08
th
April 2014 the Respondent and Blue Dot signed a deed of sale in
respect of immovable property and a conditional movable property
sale.
[4]
[7]
The
Blue Dot deed of sale lapsed on the 08
th
May 2014 for failure to comply with the suspensive clause
[5]
within 30 days of the signing of the agreement. The purchase price
for the Blue Dot deed of sale was R1 300 000.00
[6]
.
[8]
The
Respondent was informed by the Appellants on the 16
th
May 2014 that the agreement with Blue Dot was cancelled.
[7]
Subsequent to the cancellation of the agreement between the
Respondent and Blue Dot, the Respondent continued to try and sell the
property in the market while still labouring under the impression
that he needed the consent of 100% of all owners in order to
extend
the floor area of the property.
[9]
On
or about the 21
st
September 2015 the Respondent sold the property to Trymore Investment
690 CC for a lesser amount of R1 050 000.00, that
is
R250 000.00 less than the original amount offered by Blue Dot in
terms of the first deed of sale.
[8]
[10]
An
annual general meeting of the Riverside Residence was held on the
31
st
October 2015 where it was clarified that an owner needs consent of
75% of home owners in order to extend the floor area of his
or her
unit onto the common property. The Respondent then realized he had
suffered a loss of R250 000.00 by following the
erroneous advise
of the Second Appellant.
[9]
[11]
Appellants
were alerted to their breach of the mandate by the Respondent and on
the 30
th
October 2015 the Respondent alleges that the Appellants admitted that
they erred in the advise on the percentage on consent and
apologized
and further waived the fees levied for attending to the mandate.
[10]
This was denied by the Appellant.
[11]
[12]
The
fact that the Second Appellant admitted and apologized to the
Respondent for the erroneous advise was also put in a letter
addressed to the Appellants and dated the 09
th
February 2016
[12]
by the Respondent’s attorneys. The Appellants simply sent a
letter with a
bare
denial
[13]
the same as their plea referred to herein above.
Common
Cause Facts
[13]
It is common cause between the parties that
an oral mandate in respect of the sale of both the immovable and some
moveable property
was concluded between the Respondent and the
Appellants. The Respondent’s immovable property encroached over
the common property
of Riverside Beach Club.
[14]
Although it was later confirmed by the AGM
that the Respondent required consent from 75% of the owners of
Riverside Beach Club to
formalize the extension of the floor area of
his unit onto the common property, the Second Appellant had
erroneously advised the
Respondent that he was required to obtain the
consent of 100% of the owners at Riverside Beach Club in the event of
him wanting
to formalize the transfer of the encroachment of his
property.
[15]
In the Blue Dot Properties’
deed of sale the purchase price of the immovable property was stated
as R700 000.00 and the
proposed sale of the property to Blue Dot
Properties was conditional on the sale of furniture plus a boat and
trailer valued at
R500 000.00 and R100 000.00 respectively.
[16]
The sale of the property to Blue Dot
Properties fell through and the Respondent eventually sold the
immovable property and some
of the movable property to Trymore
Investment 690 CC at a price of R1 050 000.00.
Findings
of the Court
[17]
As this was originally an action, the
Honourable Magistrate heard evidence when the trial was conducted. I
have already referred
to the findings by the Honourable Magistrate in
the
court a quo
in the preceding paragraphs and it is not necessary for me to repeat
the findings as mentioned in the judgment.
[18]
It
is trite that an Appellate Court will not likely interfere with the
decision of a lower court exercising a discretion when determining
an
issue unless the discretion was not exercised judicially and
properly. Put differently, when a lower court exercises a discretion
in the true sense, it would ordinarily be inappropriate for an
Appellate Court to interfere unless it is satisfied that this
discretion
was not exercised judicially, or that it had been
influenced by wrong principles or a misdirection of the facts. The
Constitutional
Court held as follows in relation to the discretion
exercised by a lower court in
Trencon
Construction v Industrial Development Corporation of South Africa
Limited and Another
[14]
:
“
A
discretion in the true sense is found where the lower court has a
wide range of equally permissible options available to it. This
type
of discretion has been found by the Court in many instances,
including matters of costs, damages and in the award of a remedy
in
terms of section 35 of their Restitution of Land Rights Act. It is
“true” in that the lower court has an election
of which
option it will apply and any option can never be said to be wrong as
each is entirely permissible. …”
[19]
The
Respondent in their heads of argument at paragraph 8 correctly
submitted that the
court
a quo’s
order is unassailable. This court agrees with this submission. Both
the Appellants and Respondent take issue with whether the suspensive
clause was included in the contract on the insistence of the
Respondent or of the Appellant. The
court
a quo
did not find that the inclusion of the suspensive clause is the
trigger to the loss or damages suffered by the Respondent. Instead
the loss or damages suffered by the Respondent are triggered by the
negligent advise given by the Appellant to the Respondent.
Therefore
the consequences flow from the incorrect advise given to the
Respondent and in breach of the contractual agreement entered
into
between the Respondent and the Appellant. The question to be asked in
this respect is aptly explained in
Life
Healthcare Group (Pty) Ltd v Suliman
[15]
as follows:
“
16.
In my considered view the court a quo, with due respect, asked the
wrong question in respect of factual causation. The correct
question
should have been: Was it more probable than not that the birth
injuries suffered by the baby could have been avoided if
Doctor
Suliman had attended the hospital earlier, after the 18h35 phone
call?....
17. All the evidence
shows that it is more probable than not that had Doctor Suliman
attended the hospital earlier the injuries
would have been avoided.
For that reason the hospital succeeded in proving factual causation
on a balance of probabilities.”
[20]
Further,
the “but-for test” was also considered in the matter of
ZA
v Smith and Another
[16]
:
“
In
this regard this court has said on more than one occasion that the
application of the “but-for test” is not based
on
mathematics, pure science or philosophy. It is a matter of common
sense, based on the practical way in which the minds of ordinary
people work, against the background of everyday-life experiences. In
applying this common sense, practical test, a plaintiff therefore
has
to establish that it is more likely than not that, but for the
defendant’s wrongful and negligent conduct, his/her harm
would
not have ensued. The plaintiff is not required to establish this
causal link with certainty.”
[21]
In this present matter, the question to be
asked is would the Respondent have suffered any loss if the Second
Appellant had given
him the correct advise, that is, he needed 75%
consent from all the owners of the units in that complex. Put
differently, would
the Respondent still have sold his moveable and
immovable property at a lesser price if he knew that he only needed
75% consent.
The answer to this question is in the negative. It is
therefore clear that the Respondent took the decision to sell his
property
for less than what he could have received from Blue Dot
because he knew that he could not get 100% consent.
[22]
I am in agreement with the evaluation of
the evidence and the conclusion that the
court
a quo
reached in that due to the Second
Appellant’s erroneous advise that the Respondent was required
to obtain 100% consent from
all owners of the communal property, the
Respondent having failed to obtain same as he stopped after failing
to obtain consent
from one of the members, then the suspensive
condition could not be met which led to the ultimate cancellation of
the contract
between the Respondent and Blue Dot. It is also not
rocket science to conclude that the Second Appellant, in ill advising
the Respondent,
committed an inexcusable breach of the contract
between attorney and client and that rendered the Appellant guilty of
dereliction
of duty of care as attorney specializing in property law.
This fact was admitted by the Appellants.
[23]
The
Appellants now approached the court and submits that this negligence
is “negligence in the air” in that no consequences
or
sanction can flow from that type of negligent advice. In considering
this argument by the Appellants, the court in the matter
of
Rose
Lillian Judd v Nelson Mandela Bay Municipality
[17]
per Justice Alkema at paragraph 9:
“
[9]
Because our law does not recognize negligence “in the air”,
it is now trite that the issue of wrongfulness must
be determined
anterior to the question of fault. The element of fault is only
capable of being legally recognized if the act or
omission can be
termed as legally wrong. In the absence of wrongfulness, the issue of
fault does not even arise. These are two
separate and distinct
elements of the same delict, each requiring its own test and
approach, and not to be confused or conflicted.”
[24]
And
more recently, in the matter of
Minister
of Safety and Security v Van Duivenboden
[18]
Justice Nugent formulated the principle on negligence as follows:
“
Negligence,
as it is understood in our law, is not inherently unlawful – it
is unlawful and thus actionable, only if it occurs
in circumstances
that the law recognizes as making it unlawful. Where the negligence
manifests itself in a positive act that causes
physical harm it is
presumed to be unlawful, but that is not so in a case of a negligent
omission. A negligent omission is unlawful
only if it occurs in
circumstances that the law regards as sufficient to give rise to a
legal duty to avoid negligently causing
harm. It is important to keep
that concept quite separate from the concept of fault. Where the law
recognizes the existence of
a legal duty it does not follow that an
omission will necessarily attract liability – it will attract
liability only if the
omission was also culpable as determined by the
application of the
separate
test
that has consistently
been applied by this court in Kruger v Coetzee namely whether a
reasonable person in the position of the defendant
would not only
have foreseen the harm that would also have acted to avert it.”
[25]
In this present case we are not dealing
with an omission but we are dealing with a positive act where a legal
practitioner incorrectly
advised a layperson and consequent to that
advise the layperson acted and suffered damages.
[26]
I am therefore in agreement with the
court
a quo
that the Respondent has suffered
damages as a result of the negligent advice that he received from the
Appellants.
[27]
On the issue of the sale of the boat, the
Respondent failed to give any evidence that the boat was sold. The
deed of sale signed
between the Respondent and Trymore Investment
specify that included in the sale of the immovable property, is the
moveable properties
that are specifically stipulated in section A9
and 12 of the agreement. The agreement does not make any provision
for the
inclusion of the boat in the sale agreement. I therefore
agree with the finding by the
court a
quo
that on a balance of probabilities
the boat was not part of the deal.
[28]
I therefore propose the following order:
1.
Both the appeal and the counter-appeal are
dismissed.
2.
The order of the court a quo is confirmed.
3.
Each party to pay its own costs.
EM
BALOYI-MERE AJ
I
concur.
C
REINDERS ADJP
On
behalf of the appellant:
Advocate
L Matsiela
Instructed
by
Fairbridges
Wertheim
Becker Attorneys
c/o
Symington De Kok Attorneys
169B
Nelson Mandela Drive
Westdene
Bloemfotein
(Ref:
D Moller/JD/FMK0105)
On
behalf of the respondent:
Advocate
D Hewitt
Instructed
by
Dempster
McKinnon Inc
c/o
Bezuidenhout Inc
104
Kellner Street
Westdene
Bloemfontein
(Ref:
D Milton/sg/ID 2603)
[1]
Record
volume 1 page 8 para 6.
[2]
Record
volume 1 pages 8 – 9 para 7.
[3]
Record
volume 1 page 9 para 8.
[4]
Record
volume 1 page 12 para 16.
[5]
Record
volume 1 page 11 para 13.
[6]
Record
volume 1 page 13 para 17.
[7]
Record
volume 1 page 14 para 20.
[8]
Record
volume 1 page 25 para 22.
[9]
Record
volume 1 page 15 para 23 and 24 and page 117 – 1120.
[10]
Record
volume 1 page 17 para 28.
[11]
Record
volume 1 page 82 para 28.
[12]
Record
volume 1 pages 125 – 131.
[13]
Record
volume 1 page 132.
[14]
2015
(5) SA 245
(CC) at para 85.
[15]
2019
(2) SA 185
(SCA) at para 16 and 17.
[16]
2015
(4) SA 574
(SCA) at para 30.
[17]
(
CA149/2010)
[2011] ZAECP EHC 4 (17 February 2011).
[18]
2002
(6) SA 431
(SCA) at para 12.