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[2010] ZASCA 124
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ATB Chartered Accountants (SA) v Bonfiglio (648/09) [2010] ZASCA 124; [2011] 2 All SA 132 (SCA) [2011] 2 All SA 132 (SCA) (30 September 2010)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 648/09
No Precedential Significance
In the matter:
ATB CHARTERED ACCOUNTANTS (SA)
............................................
Appellant
and
EDNA BONFIGLIO
.................................................................................
Respondent
Neutral citation:
ATB Chartered Accountants
(SA) v Edna Bonfiglio
(648/09)
[2010] ZASCA 124
(30 September
2010)
Coram:
NUGENT, CLOETE JJA, R PILLAY,
BERTELSMANN AND EBRAHIM AJJA
Heard:
27 AUGUST 2010
Delivered:
30 SEPTEMBER 2010
Summary:
Extinctive Prescription –
Prescription Act 68 of 1969
– subsections 12(1) and 12(3) –
prescription begins to run from the time the debt becomes due –
subsection 12(3)
–from time creditor acquires knowledge of
facts from which debt arises – claim based on contract to
render professional
advice in relation to agreement of sale of
business to third party – default by purchaser – regard
to circumstances
– debt prescribed.
ORDER
On appeal from: Gauteng North High Court (Pretoria)
(Pretorius J sitting as court of first instance)
1.
(a) The appeal is upheld with costs.
(b) The order of the North Gauteng High Court is set
aside in its entirety and substituted with the following order:
'The
special plea of prescription is upheld and the plaintiff's action is
dismissed with costs.'
JUDGMENT
R PILLAY AJA (Nugent, Cloete JJA and Bertelsmann and
Ebrahim AJJA concurring)
[1]
The issue in this appeal is whether the court below, which granted
leave to appeal, was correct in dismissing the appellant's
special
plea of prescription.
[2]
The respondent sued the appellant (ATB), a firm of Chartered
Accountants, for damages. The summons was served on 30 June 2006
.Her
claim was based on the alleged failure of ATB to properly carry out a
contractual mandate with adequate knowledge and diligence
that could
reasonably be expected of chartered accountants, alternatively,
negligence in that it breached a duty of care towards
the respondent
in advising and negotiating the sale of her business.
[3]
The respondent was the sole member of a close corporation, M Klisser
CC (the corporation), a stationery retailer. ATB was its
auditor. The
respondent requested ATB to find a buyer for the corporation, which
was experiencing financial hardship. On 5 April
2002 ATB and the
respondent concluded an oral agreement in terms of which ATB
undertook to procure a buyer for her interest and
loan account in the
corporation and to render professional advice in regard thereto. ATB
was represented by Mr Martin Venter (Venter).
[4]
On the same day Venter introduced her to Jacobus Wilhelm Raath
(Raath) another of ATB's clients, as a prospective buyer. Thereafter,
Venter drafted a document headed 'Offer to Purchase' and presented it
to the respondent after Raath had already signed it. The
respondent
signed it and accepted the offer, thereby selling her interest and
loan account in the corporation for R825 000-00.
Payment was to take
place in terms of a stipulated schedule of monthly instalments, the
first of which was to be paid on 30 April
2002, in an amount of R10
000-00 'plus interest'. All concerned, including the respondent, knew
that Raath intended to finance
payment of the purchase price for the
respondent's interests in the corporation out of the profits of its
retail operations. After
the conclusion of the written agreement,
Raath took over the running of the stationery business. It turned out
that he later converted
the corporation into a company, namely, C
Klisser Co (Pty) Ltd.
[5] Raath failed to make the first payment. Thereafter
respondent, legally represented, entered into correspondence with
Raath and
ATB. It is not necessary to deal with all the
correspondence, save for a few material letters. Early in May 2002,
respondent's
attorneys wrote a letter to ATB expressing concern about
Raath's failure to pay. They also wrote a subsequent letter dated 7
August
2002 to ATB, the relevant portion of which reads as follows:
'We
also have instructions to inform you at this early stage, that our
client will hold you liable for all damages and losses she
may suffer
as a result of the transaction she entered into with Mr J W D Raath
on your advice, and particularly as a result of
the 'offer to
purchase' you drew up and assisted our client in signing.'
[6] Further communication between the legal
representatives of the respondent and Raath resulted in a new short
term schedule for
the payment of the purchase price being negotiated
and finally agreed upon by the respondent and Raath. ATB was informed
of the
new arrangements by letter dated 11 November. Raath's
financial position did not improve to any great extent and he made
infrequent
payments to the respondent, in breach of the new schedule.
[7] On 19 March 2003, respondent
instituted action against Raath for the balance of the purchase
price. On 3 April 2003 she received
a letter, dated 1 April 2003,
from Raath's attorney, the effect of which was that Raath was unable
to make payment to her and that
C Klisser Co (Pty) Ltd had been
liquidated.
1
On 22 May 2003 respondent nonetheless
obtained summary judgment against him. On 26 June 2003 a warrant of
execution was issued against
the property of Raath and pursuant
thereto, the sheriff filed a
nulla
bona
return on 7
July 2003.
[8]
The respondent then turned her attention to ATB. She instituted
action against ATB in the High Court, Pretoria claiming damages
in an
amount of R856 400-10 on the basis that it had failed to comply with
the terms of the contract it had entered into with her.
She alleged
that in advising and negotiating the transaction referred to above,
ATB expressly, tacitly or impliedly undertook:
(i) to take reasonable
steps to ensure that the purchaser was in a sound financial position
in order to comply with his financial
obligations; (ii) to ensure
that proper security was furnished and (iii) that it would exercise
the care, knowledge and diligence
reasonably expected of chartered
accountants in rendering professional services and would execute its
duty in a proper professional
manner and without negligence. The
alternative claim is based on negligence for breaching a duty of care
and was couched in similar
terms.
[9]
ATB entered a special plea of prescription, the validity of which, as
indicated above, is the issue in this appeal. It asserted
that
prescription in relation to the respondent's claim commenced to run,
in terms of
section 12(1)
of the
Prescription Act 68 of 1969
on 5
April 2002 when she entered into the agreement of sale (upon the
advice of ATB). Alternatively, at best for the respondent,
so ATB
contended, the debt became due when her attorney informed it by
letter dated 7 August 2002, that she intended to hold it
liable for
any losses that she may have suffered as a result of entering into
the agreement of sale on its advice.
[10]
In her replication to the special plea, the respondent denied that
prescription commenced to run on 5 April 2002 or at any
time before 7
July 2003 when a nulla bona
return
was filed. She contended that she only then became aware that the
debt as against ATB had become due.
[11]
At the hearing of this appeal, ATB applied to amend its special plea.
The application was not opposed and this court granted
the
amendments. The effect thereof is that the alternative date from
which it contended prescription had begun to run, namely,
7 August
2002 was amended to 1 April 2003, being the date of the letter
informing the respondent that Raath was unable to pay her
and that C
Klisser Co (Pty) Ltd had been liquidated. It was alleged that the
claim was therefore extinguished on 31 March 2006.
[12]
It is common cause that the respondent's claim falls within the
parameters of subsection 11(d) of the Act which provides a
prescription period of three years.
[13]
Section 12
of the Act sets out when prescription starts to run. The
relevant subsections provide:
'(1) Subject to the provisions
of subsections (2), (3) and (4), prescription shall commence to run
as soon as a debt is due.
(2) . . .
(3) A debt shall not be deemed
to be due until the creditor has knowledge of the identity of the
debtor and the facts from which
the debt arises: Provided that a
creditor shall be deemed to have such knowledge is he could have
acquired it by exercising reasonable
care.
(4) . . .'
[14] In
Truter
& another v Deysel
2
at para 16 the following was said:
'For
the purposes of the Act, the term 'debt due' means a debt including a
delictual debt, which is owing and payable. A debt is
due in this
sense when the creditor acquires a complete cause of action for the
recovery of the debt, that is, when the entire
set of facts which the
creditor must prove in order to succeed with his or her claim against
the debtor is in place or, in other
words, when everything has
happened which would entitle the creditor to institute action and to
pursue his or her claim.'
[15] It was submitted on behalf of the appellant that
the respondent's debt became due when ATB breached the contract with
the respondent
when the latter concluded the sale agreement on the
alleged negligent advice of ATB. It was submitted further that it was
then
that the wrong occurred and that the respondent sustained the
loss although it was not yet apparent.
[16] There is support for that
submission in various cases cited in R H Christie:
The
Law of Contract in South Africa.
3
Thus in
Burger
v Gouws & Gouws (Pty) Ltd
4
,
for example, in
which the defendant breached a contract by delivering to the
plaintiff the wrong variety of onion seed, Franklin
J said the
following at 588 A:
‘
The
plaintiff has claimed damages as a result of the defendant’s
breach of contract in failing to deliver the “Caledon
Globe:”
variety of seed. That was the single completed wrongful act by the
defendant; and the fact that the nature and extent
of the damages
ultimately sustained by the plaintiff may only manifest themselves
after the seed has been planted is in my view
irrelevant, provided
that it is proved at the trial that the plaintiff suffered damages as
a result of that single completed wrongful
act.’
[17] The respondent's counsel, on the
other hand, submitted that the right of action was complete only when
the writ of execution
resulted in a nulla bona
return.
It was not before that event, so it was submitted, that it could be
said that Raath was unable to pay the purchase price.
I do not think
that can be correct. On that approach it might just as well be said
it would not be known that Raath was unable
to discharge his debt to
the respondent until the judgment debt had expired after the period
of thirty years because at any time
before then he may have acquired
the necessary funds to do so.
[18] But I do not think it is necessary to decide in
this case precisely when the right of action arose. I have pointed
out that
s 12(3)
of the Act delays the running of prescription until
the creditor has knowledge of the identity of the debtor and the
facts from
which the debt arises (a creditor is deemed to have such
knowledge if he or she could have acquired it by exercising
reasonable
care). The purchase price of the corporation (company) was
to be paid from the profits that it made but on 3 April 2003, the
respondent
was advised not only that Raath had been unable to make
payment, but also that the company had been placed in liquidation.
There
can be no doubt that at least by that time the prospect of
receiving the purchase price was minimal, if it existed at all. Had a
court been called upon to determine at that date, as a matter of
probability, whether the respondent had suffered loss, it is plain
what its finding would have been. I think it must follow that by no
later than that date the respondent's right of action had indeed
accrued, and that she had knowledge of all the facts which gave rise
to that right of action.
[19] Thus in my view prescription had commenced to run
from no later than 3 April 2003 and the claim prescribed no later
than three
years thereafter ie on 2 April 2006. The summons was
issued only thereafter – on 30 June 2006 – and the
special plea
ought to have been upheld.
[20] In the result, the following order is made:
(a) The appeal is upheld with costs.
(b)
The order of the North Gauteng High Court is set aside in its
entirety and substituted with the following order:
'The
special plea of prescription is upheld and the plaintiff's action is
dismissed with costs.'
___________________
R PILLAY
ACTING JUDGE OF APPEAL
APPEARANCES:
For
appellant: H H STEYN
Instructed
by: Couzyn Hertzog & Horak, Pretoria
Naudes
Inc, Bloemfontein
For
respondent: T W G BESTER
Instructed
by: Corrie Nel Attorneys
c/o Jacques Roets Attorneys, Pretoria
Christo
Dippenaar Attorneys,
Bloemfontein
1
'Dit
spyt ons om u mee te deel dat ons kliënt nie in staat was om
finansieël die mas op te kom nie. Alle gelde wat oor
die
afgelope ses (6) maande gein is, moes aangewend word om betalings
aan uitstaande skuldeisers te maak.
Ons bevestig dan dat M Klisser & Co (Pty) Ltd dan
gelaas gelikwideer is.'
2
[2006] ZASCA 16
;
2006
(4) SA 168
(SCA).
3
R
H Christie assisted by Victoria McFarlane 5ed p 487.
4
1980
(4) SA 583
(W)