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[2011] ZASCA 76
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Anglorand Securities Ltd v Mudau and another (125/10) [2011] ZASCA 76 (26 May 2011)
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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 125/10
ANGLORAND
SECURITIES LIMITED
...................................................
Appellant
and
DIVHANI
DAVID MUDAU
..........................................................
First
Respondent
RUDOLPH
RASHAMA
..........................................................
Second
Respondent
____________________________________________________________
Neutral
citation:
Anglorand Securities Ltd v Mudau & another
(125/10)
[2011] ZASCA 76
(26 May 2011)
BENCH:
HEHER, PONNAN, MAYA JJA, MEER and PLASKET AJJA
HEARD: 20 MAY 2011
DELIVERED: 26 MAY 2011
SUMMARY:
Prescription Act 68 of 1969
– prescription – commencement
of running of – whether interrupted.
____________________________________________________________
___________________________________________________________________
ORDER
___________________________________________________________________
On
appeal from
:
Limpopo High Court (Thohoyandou)
(Hetisani J sitting as court of first instance).
The
appeal is allowed with costs.
The
order of the court below is set aside to be replaced with:
‘
The second defendant’s special plea
of prescription is upheld and the plaintiff’s claim is
dismissed with costs.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
PONNAN JA (HEHER, MAYA JJA, MEER and PLASKET AJJA concurring):
[1] This appeal raises two linked questions: the first concerns the
commencement of the running of prescription in regard to the
claim of
Mr Divhani David Mudau, the plaintiff in the court below (the
plaintiff), against the present appellant, Anglorand Securities
Ltd
(Anglorand); and the second is whether an interruption took place.
[2] Those issues arise for determination against the following
backdrop. The plaintiff instituted action in the Limpopo High Court
(Thohoyandou) against Anglorand as the second defendant and one of
its former employees Mr Rudolph Rashama (Rashama) as the first
defendant. Rashama took no part in the proceedings. The basis of the
plaintiff’s claim is contained in paragraphs 5 –
11
inclusive of his declaration, which reads:
‘
5
During or about December 2001, and at THOHOYANDOU, the
2
nd
Defendant being represented by Rudolph Rashama (1
st
Defendant) who was at that time within the scope of his employment,
and the Plaintiff acting personally, entered into an oral agreement
of sale of shares and investment in terms of the following:-
5.1.1 That the Plaintiff must deposit an amount of R160
000-00 (One Hundred and Sixty Thousand) rands to the 2
nd
Defendant’s banking account no: 4052178047 (ABSA) Bank Limited
being for sale of shares which the Plaintiff was purchasing
from
Johannesburg Stock Exchange.
5.1.2 That the Defendant(s) will buy shares for the
Plaintiff immediately after the Plaintiff deposited the said money
into the
2
nd
Defendant’s Banking account and invests
the remaining amount with any banking institution in the Republic of
South Africa.
5.1.3 That the Defendant(s) shall within 7 (seven)
working days after deposit of the said money provide the Plaintiff
with investment
booklet reflecting the rate of interests which will
accrue to the money deposited by the Plaintiff.
5.1.4 That the Plaintiff shall have the right to
withdraw the capital amount deposited at anytime after the period of
3 (three)
months from the date of the deposit of the money.
5.1.5 That the Defendant(s) will at all the material
times act as agents for the Plaintiff in the said transaction.
6
On or about the 04
th
day of December 2001,
the Plaintiff duly deposited an amount of R160 000-00 (One Hundred
and Sixty Thousand) rands to the 2
nd
Defendant’s
Banking account no: 4052178047 (ABSA) Bank Limited at THOHOYANDOU
branch as per agreement between the parties.
7
From the period 15
th
of December 2001 until
the period March 2002, the Plaintiff was at all the material times
thereto keep on checking his postal box
to see if investment booklet
had already been sent to him from the Defendants.
8
During the period April 2002, the Plaintiff went to the
2
nd
Defendant’s premises to enquire about his
shares, investment and the money which he had deposited into the 2
nd
Defendant’s Banking account.
9
At the 2
nd
Defendant’s premises, the
Plaintiff was advised by one of the directors of the 2
nd
Defendant that his money is reflecting in the 2
nd
Defendant banking account but same could not be withdrawn at that
time since insurance claim had been lodged against Rudolph Rashama
for an alleged fraud and that repayment of the Plaintiff’s
money would be effected within 6 (six) month.
10
During November 2002, on the 2
nd
Defendant’s
premises, the Plaintiff demanded withdrawal of his capital amount
which he had deposited into the 2
nd
Defendant’s
banking account, and one of the directors of the 2
nd
Defendant advised the Plaintiff that cheque of the capital amount
will be drawn on Plaintiff’s favour within 6 (six) month.
11
Despite promises on several occasions and on demand,
11.1 The cheque was never drawn to the Plaintiff’s
favour from the Defendants;
11.2 Investment booklet(s) was never sent to the
Plaintiff from the Defendants;
11.3 Shares were never bought for the Plaintiff from
Johannesburg Stock Exchange or anywhere by the Defendants;
11.4 the Defendants never refunded an amount of R160
000-00 to the Plaintiff.’
[3] For a better appreciation of the history to the matter it is
necessary to record that with effect from 1 March 2001 Anglorand
purchased from Cahn Shapiro Incorporated (Cahn Shapiro), a member of
the Johannesburg Stock Exchange (JSE), the latter’s
client
base, which included the plaintiff. By that stage, so the allegation
went, the plaintiff had already invested or more accurately
believed
that he had invested R300 000 with Cahn Shapiro to enable it to
purchase on his behalf listed securities, financial instruments
and
money market investments as defined in the JSE’s Rules. That
investment of R300 000 the plaintiff had made through Rashama,
who
was then employed by Cahn Shapiro. It, like the subsequent one for
R160 000, was allegedly misappropriated by Rashama.
[4] The plaintiff’s summons elicited, in response, inter alia,
the following special plea:
‘
8
Plaintiff’s claim is based on an alleged oral
agreement concluded between Plaintiff and Second Defendant during or
about December
2001.
9
Plaintiff, through his appointed attorneys, and in
writing, demanded payment from Second Defendant on 14 October 2002. A
copy of
the demand is annexed, marked “B”.
10
Plaintiff’s claim according became due on 14
October 2002.
11
Plaintiff had to serve Summons commencing action on
Second Defendant before or on 13 October 2005.
12
Plaintiff’s Summons under Case No. 1312/06 was
served on Second Defendant on 16 August 2006.
ALTERNATIVELY
13
Plaintiff pleads that during November 2002 one of the
directors of Second Defendant advised Plaintiff that a cheque for the
capital
amount will be drawn on (sic) Plaintiff’s favour within
six month (sic).
14
Six months would have expired during May 2003.
15
Plaintiff had to serve Summons commencing action on
Second Defendant during or before May 2006.
16
Plaintiff’s Summons in case No. 1312/06 was served
on Defendant on 16 August 2006.
17
Second Defendant accordingly pleads that Plaintiff’s
claim against Second Defendant became prescribed prior to service, on
Second Defendant, of a Summons commencing action.
WHEREFORE Second Defendant prays that its Second Special
Plea be upheld and Plaintiff’s claims be dismissed with costs.’
[5] The plaintiff’s letter of demand dated 14 October 2002
(Annexure B to the defendant’s plea) was marked ‘urgent’
by the plaintiff’s then attorney. It reads:
‘
We wish to advise that we act
on behalf of Mr Mudau in the above matter who instructs us as
follows:-
1. That he invested a total amount of R460 000-00 since
1999 to date initially through CAHN SHAPIRO and subsequently with
Anglorand
Securities (yourselves).
2. That all the funds were deposited in Account No:
01029071698 (Cahn Shapiro) 4052178047 (Anglorand Securities).
3. That the initial account code was 237370 but when our
client made the last investment of R160 000-00 one Rudy Rashama, your
employee
phoned our client advising him to use the account code
4230728 and it later transpired that it was his personal account.
4. That you advised our client that the account given to
our client by one Rudy Rashama was in the names of your said
employee.
5. That our client became suspicious with regard to his
investments as he was no longer receiving the normal portfolio
valuation
statements but some papers which had the logo of Anglorand
Securities.
6. That our client approached your company regarding his
investments of funds totalling R460 000-00 but in vain.
We have been instructed to kindly request yourselves to
refund/pay back our client’s investment of R460 000-00.
We have written this long letter to yourselves with the
hope that the matter could be resolved amicably without resorting to
civil
litigation of which your company will be liable to pay legal
costs incurred.
However should the matter not be resolved we will have
no option but to proceed with further legal steps.
Kindly let us have your response within 10 (ten) days of
receipt of this letter.’
[6] The plaintiff replicated to the special plea of prescription as
follows:
‘
Save for denying that the
Plaintiff had to serve summons commencing action to the second
Defendant during or before May 2006,
The Plaintiff avers that he was always promised that,
his money will be refunded even after the expiry of six month on
demand, and
therefore there was no reason for the Plaintiff to issue
summons at the time of the promises in bona fide belief that his
money
will be refunded and was further advised that, insurance claim
was lodged for an alleged fraud committed by the 1
st
Defendant and the Plaintiff will be informed of the
“future” progress of his claim.’
[7] The high court (per Hetisani J) was asked to adjudicate the
special plea as a preliminary issue. What the learned judge was
called upon to decide was whether the claim had become prescribed
before the issue and service of the plaintiff’s summons
on 16
August 2006. Hetisani J concluded ‘the claim by the Plaintiff
of refund of his R160 000 is hereby upheld against [Anglorand]
with
costs’. In entering judgment for the plaintiff the learned
judge ranged beyond the remit of the limited agreed preliminary
issue
placed before him for adjudication. He thus plainly misdirected
himself and in the result his conclusion cannot stand.
[8] Of the special plea of prescription Hetisani J concluded:
‘
It is perhaps not surprising
that this Court’s conclusion on the defence against Plaintiff’s
claim of refund of his
R16.000.00 is nothing but 2
nd
Defendant’s efforts to
escape liability, by mere tactics based on legal technicalities . .
.’
.
Although the learned judge did not specifically say so, given the
conclusion reached by him, he must be taken to have dismissed
the
special plea of prescription with costs. It thus remains to consider
whether that conclusion is sustainable.
[9] Prescription commences to run against the debt
on the day it becomes due unless delayed or interrupted. It will
continue to
run until it has completed its course (
Aussenkehr
Farms (Pty) Ltd v Trio Transport CC
2002
(4) SA 483
(SCA) at 495). As stated in
Umgeni
Water v Mshengu
(para 5 and 6)
[2010]
All SA 505
(SCA); 2010 ILJ 88 (SCA):
‘
Section 10 of the Prescription
Act 68 of 1969 (the Act), provides for the extinction of a debt after
the lapse of periods determined
in s 11. The period of prescription
applicable to the plaintiff’s claim is that provided for in s
11(d) of the Act, namely
3 years. According to s 12(1) of the Act,
prescription shall commence to run “as soon as the debt is
due”. The words
“debt is due” must be given their
ordinary meaning.
1
In its ordinary meaning a debt
is due when it is immediately claimable by the creditor and, as its
correlative, it is immediately
payable by the debtor. Stated another
way, the debt must be one in respect of which the debtor is under an
obligation to pay immediately.
2
A debt can only be said to be claimable immediately if a
creditor has the right to institute an action for its recovery. In
order
to be able to institute an action for the recovery of a debt a
creditor must have a complete cause of action in respect of it. The
expression “cause of action” has been held to mean:
“
... every fact which it would
be necessary for the plaintiff to prove, . . . in order to support
his right to judgment of the Court.
It does not comprise every piece
of evidence which is necessary to prove each fact, but every fact
which is necessary to be proved”;
or slightly differently
stated “the entire set of facts which give rise to an
enforceable claim and includes every fact which
is material to be
proved to entitle a plaintiff to succeed in his claim. It includes
all that a plaintiff must set out in his declaration
in order to
disclose a cause of action. Such cause of action does not ‘arise’
or ‘accrue’ until the occurrence
of the last of such
facts and consequently the last of such facts is sometimes loosely
spoken of as the cause of action.”
’
3
A plaintiff must thus have a complete cause of
action at the stage when summons is issued or at any rate when the
summons is served.
4
[10] At the hearing before Hetisani J two witnesses testified, the
plaintiff and Ms Yolanda Taljaard, who at the relevant time
was a
director and compliance officer at Anglorand. The learned judge did
not express himself on the credibility or reliability
of either
witness, although his approach to the evidence on this aspect of the
case can be gleaned from the following extract from
his judgment:
‘
Regarding the 2
nd
Defendant’s second
special plea, which is based on alleged prescription of Plaintiff’s
claim, the evidence adduced by
the witness Yolanda Taljaard shows
clearly that Plaintiff was constantly telephoning and visiting 2
nd
Defendant kept the request for
his investments’ whereabouts alive and at one stage he was told
that his claim had been lodged
with an institution operating from
London and known as “Loss Adjustors”.’
But with respect to the learned judge he misconstrued Ms Taljaard’s
evidence, who testified:
‘
I never denied, I am sorry but
I never denied that Mr Mudau visited the office. He did visit the
office. We never said that we were
liable. Anglo Rand never told Mr
Mudau that we were going to pay him. He did visit, he did phone and
he always got the same answer.
We were not going to pay. We did not
lodge a claim.’
[11] Ms Taljaard’s evidence that right from the outset
Anglorand disputed liability to the plaintiff found support in the
correspondence adduced in evidence. On 11 June 2002 Ms Taljaard wrote
to the plaintiff:
‘
We refer to your visit to our
offices on the 5
th
June 2002, and your written
statement made on the same day.
According to our records, the deposit
slip which you submitted to the Bank on 4
th
December 2001 with your deposit of
R160 000.00 gave specific instructions that the moneys were to be
allocated to our Client Account
No.: 4230728.
We acted in accordance with that instruction, and
confirm that the holder of Account No.: 4230728 at the time was Mr
Rashama.
We cannot take the matter any further and suggest that
you take independent advice.’
And on 24 October 2002 Anglorand’s attorney wrote to the
plaintiff’s then attorney in response to the latter’s
letter of demand (Annexure B to Anglorand’s plea):
‘
We represent Anglorand
Securities Limited.
We have been instructed to respond to your letter dated
14
th
October 2002, as follows:
1. Our client has no knowledge, and cannot comment on
payments allegedly made by your client to Cahn Shapiro;
2. In respect of payments allegedly made to us, our
client has already responded, in writing, to your client’s
enquiries;
3. Our client’s attitude remains that it has no
liability to your client;
4. Our client is not prepared to debate the matter any
further in correspondence and its election not
to do so must not be construed as an admission of any of
the statements made in your letter’
But even prior to those letters on 12 January 2002 the plaintiff
wrote to the client services manager of the JSE Securities Exchange,
‘when we approached the company [Anglorand] they were not
willing to address this issue and I request the JSE Securities
Exchange to intervene in this matter’.
[12] On the view that I take of the matter it is not necessary to
subject the evidence of the two witnesses to closer scrutiny
or to
resolve or reconcile such factual disputes as may exist between them,
for, on the undisputed facts at the latest (and most
generous for the
plaintiff) by 25 October 2002 he knew, not just that payment would
not be forthcoming but that liability for his
claim was in fact being
disputed by Anglorand. It follows that prescription must be taken to
have commenced to run from that date.
[13] I now turn to consider the second issue, namely the plaintiff’s
contention that the running of prescription had been
interrupted. In
terms of s 14 (1) of the Prescription Act 68 of 1969 (the Act) the
running of prescription may be interrupted by
an express or tacit
acknowledgment of liability by the debtor. In support of the
contention that the running of prescription had
been interrupted
reliance was placed on a letter written to him by Gary Cahn of Cahn
Shapiro dated 6 June 2002, which reads:
‘
This serves to confirm that an
insurance claim has been lodged with regard to an alleged fraud
committed by Rudolph Rashama, a former
employee of Cahn Shapiro Inc.
The procedure is such that the loss adjustors will
assess the claim and then forward it to the underwriters in London.
Cahn Shapiro will keep you informed of all future
progress with regard to the matter.’
But as Ms Taljaard testified:
‘
MR PRETORIUS
:
I want to ask you to tell his lordship briefly what the relationship
is between Anglo Rand Securities Ltd and Cahn Shapiro, I
think it is
incorporated. --- Incorporated. Basically what happened was that
Anglo Rand Securities, at that stage it was (Pty)
Ltd, bought the
client base of Cahn Shapiro Inc. It was just a transaction that was
done between two companies. Cahn Shapiro at
this stage still exists
as a company, not as a broking member though and Anglo Rand literally
only bought the client base. We did
not take any of the liabilities
over.
HETISANI (J)
: What do you,
what would a layman like myself understand by buying the client base?
--- Well, in stock broking, the way it works,
every member firm has a
client base and when a broking member is going to cease to be a
member, it usually sells that client base.
It would move over to
another stock broking firm where the relationship with the client
would be taken over.
MR PRETORIUS
: And you said as
of today Cahn Shapiro is still a registered company, still in
existence? --- It is still in existence.
The directors of the two companies, were they the same?
--- Not all. Gary Cahn was the director at Cahn Shapiro Inc and at
Anglo
Rand at the time this transaction took place, it was myself,
David Lewis, we had Andriaan Kamper and Hugh Drummond. That was the
non-executive director.
Okay. And so it was not a transaction similar to a
buying of a going concern? --- No not at all.
It was not even that much, is that correct? --- That is
100% correct.
And did I understand you correctly that the liabilities
of Cahn Shapiro was specifically excluded in this transaction? ---
That
is correct.
What does it mean in layman’s terms? --- In
layman’s terms, what that would mean was that if there was any
claims that
was coming up for Cahn Shapiro, that Anglo Rand would not
be held liability for it.
There after, after the effective date, what was the
effective date? --- The effective date was 1 March 2001.
So any transactions after 1 March 2001 that may result
in a claim would then be against Anglo Rand? --- That is correct yes.
You were in court, you have listened to what was
suggested to Mr Mudau under cross-examination, as to a distinction
between the
amount of R300 000.00 and the amount of R160 000.00, can
you explain to the court why the court should draw such a
distinction,
should deal with it separately? --- Because it is two
separate companies it cannot be viewed together and that was
explained to
Mr Mudau in January 2002 as well, that it is two
separate companies. The claims had to be split.
The R300 000.00 related to events prior to 1 March 2001?
--- Prior to 1 March.
The R160 000.00 to events after 1 March 2006, is that
correct? --- Correct, that is correct.’
[14] Indeed that distinction between Anglorand on the one hand and
Cahn Shapiro on the other was recognised by the plaintiff who
testified:
'
CROSS-EXAMINATION BY MR
PRETORIUS
: When did you start investing with
Cahn Shapiro?
Yes. --- I think it was 2000.
2000? --- Uh.
And apart from the R160000.00, how much did you invest?
--- I invested R300000.00.
So in total it was R460000.00? --- Ja, in total it was
R460000.00.
R300000.00 with Cahn Shapiro and R160000.00 with
AngloRand, is that correct? --- Ja.
Did you get that R300000.00 back? --- I did not get it
all, I just got part of it because the claim, even that one of
R300000.00
was also defrauded by him.
The question is, did you get the R300000.00 back? ---
No, I did not get it, I just got part of it.
How much is still owed to you on the R300000.00? ---
They owe me, if, I am talking of the initial amount, which I injected
there,
they still owe me R75000.00.
. . .
HETISANI (J
): So they paid
you how much? --- They paid me R228000.00.
228? --- Ja, R228000.00, out of the R300000.00 I was
defrauded.
By Loss Adjusters? --- Yes, loss adjusters.
What is the name of that company? You said, how do you
pronounce it? --- Gab, G-A-B.
Oh, just GAB? --- Ja, GAB. It is called GAB
International Loss Adjusters.
Thank you.’
[15] An acknowledgement of liability for the purposes of s 14 of the
Act is a matter of fact not a matter of law (per Nienaber
JA in
Road
Accident Fund v Mothupi
2000 (4) SA 38
(SCA) para 37). What the
Act requires is ‘an acknowledgement of liability’ and not
merely ‘an acknowledgement
of indebtedness’ (
Benson &
another v Walters & others
1984 (1) SA 73
(A)). What we have
here falls far short of an acknowledgement of the existence of a debt
or of a present liability (
Markham v South African Finance &
Industrial Company Ltd
1962 (3) SA 669
(A) at 676F). For, the
admission, in short, must cover at least every element of the debt
and exclude any defence as to its existence
(
Mothupi
para 38).
Put another way, it must be an acknowledgment by the debtor that the
debt is in existence and that he or she is liable
therefor at the
time when the statement alleged to be an admission of liability is
made. And finally there is of course the point
made in
Cape Town
Municipality v Allie NO
1981 (2) SA 1
(C) at 7F-G:
‘
In the end . . . one must also
be able to say when the acknowledgment of liability was made, for
otherwise it would not be possible
to say from what day prescription
commenced to run afresh.’
(See
also
Benson
at 86E.)
[16] It was for the plaintiff to plead and prove that prescription
had been interrupted. I do not think that he has discharged
that onus
of proof on a balance of probability. It follows, in my view, that
the appeal must succeed and it is accordingly allowed
with costs. The
order of the court below is set aside to be replaced by:
‘
The second defendant’s special plea
of prescription is upheld and the plaintiff’s claim is
dismissed with costs.’
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For
Appellant: P J J de Wet
Instructed
by:
Tatham
Wilkes Inc
Pietermaritzburg
Naudes
Bloemfontein
For
Respondent: No appearance
1
The
Master v I L Back and Co Ltd
1983
(1) SA 986
(A) at 1004F.
2
See
Western Bank Ltd v S J J van Vuuren Transport (Pty) Ltd &
others
1980 (2) SA 348
(T) at 351 and
HMBMP Properties (Pty)
Ltd v King
1981 (1) SA 906
(N) at 909 and the cases there cited.
3
See
Evins v Shield Insurance Co
Ltd
1980 (2) SA 814
(A) at 838 and the cases there
cited by Corbett JA; see also
Truter
and another v Deysel
[2006] ZASCA 16
;
2006 (4) SA 168
(SCA) para 16, 18 and 19.
4
Mahomed
v Nagdee
1952 (1) SA 410
(A) at 418;
Marine and Trade
Insurance Co Ltd v Reddinger
1966 (2) SA 407
(A) at 413D;
Santam
Insurance Co Ltd v Vilakasi
1967 (1) SA 246
(A) at 253A-F.