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[2022] ZAECMKHC 34
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N.M (Q) v D.J.M (787/2020) [2022] ZAECMKHC 34 (7 June 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE DIVISION, MAKHANDA
CASE
NO. 787/2020
In
the matter between:
N[....]
M[....]1( Q[....])
Plaintiff
and
D[....]
J[....] M[....]2
Defendant
JUDGMENT
Bloem
J.
1.
The plaintiff instituted an action against the defendant wherein
she
claims an order that settlement agreements be set aside, that a
person be appointed as receiver and liquidator “
to the
erstwhile joint estate of the parties
” as it existed as at
the date of the divorce and that the defendant pay her costs of the
action.
2.
The parties were married to each other in community of property
until
28 February 2012 when the regional court issued a decree of
divorce and ordered “
(a) division of the joint estate;
(b)(i) that the primary care and residence of the minor children born
out of the marriage be awarded
to [the plaintiff]; (ii) that the
right to reasonable access to the minor children be awarded to [the
defendant]; and (iii) that
both parties retain full guardianship of
the minor children
”.
3.
On 13 March 2012 the parties signed a settlement agreement wherein
their agreement on immovable and moveable properties was recorded.
That agreement concluded with a clause to the effect that it
constituted the full and final settlement of all disputes between
them and that neither party shall have any further claim against
the
other. During May 2014 the parties signed an addendum to the
settlement agreement wherein their agreement on motor vehicles
and
the maintenance of the children (which has nothing to do with the
division of their joint estate) was recorded.
4.
The material terms of the agreement are that the plaintiff would
be
sole owner of an immovable property situated at [....] M[....]3
Street, the defendant would be the sole owner of immovable properties
situated at [....] E[....] and 37 Buxton Streets respectively. All
the immovable properties are situated in Queenstown. It was
also
agreed that the plaintiff would become the sole owner of two vehicles
(Ford Ranger and Mercedez Benz), with her to pay the
outstanding
balances on those two vehicles to the bank. They also agreed that the
defendant would become the sole owner of two
vehicles (BMW and
Mitsubishi Colt) and that the furniture and appliances will be
divided between them by agreement. In the addendum
the parties
recorded that the plaintiff had traded in the Mercedez Benz, the
defendant had purchased an Audi for the plaintiff
and that the
defendant would pay half of the amount outstanding on the purchase
price of the Audi to the bank.
5.
The plaintiff’s main claim is based on misrepresentation
and
her alternative claim is based on undue influence. Regarding the main
claim, the plaintiff alleged in her particulars of claim
that, when
the defendant presented the draft agreement to her for signature, he
represented to her that the assets in the joint
estate consisted only
of the above immovable properties and vehicles. She claimed that when
he made the intentional representation
to her, the defendant knew
that the joint estate included other assets but that he concealed
those assets from her when he caused
her to sign the agreement. As a
result of his conduct, the assets in the joint estate were
under-reported and not all the assets
of the joint estate were
included in the agreement. The above material representation induced
the plaintiff to sign the agreement,
unaware as to the true extent of
the assets of the joint estate. She claimed that, had she known the
true extent of the assets
in the joint estate, she would not have
entered into the settlement agreement.
6.
In the alternative, the plaintiff alleged that at the time of
entering into the agreement, she was unemployed and financially
dependent on the defendant who wielded influence over her. She
had no
independent legal advice and relied on the legal advice given to her
by the defendant. He reduced her resistance to entering
into the
agreement by advising her that the settlement agreement was in the
parties’ best interest, when, in fact, it was
only in his
interests. The plaintiff alleged that the defendant accordingly
abused his position as attorney and provider and therefore
abused a
position of trust to induce her to enter into the agreement that was
unfavourable to her. She entered into the agreement
to her detriment
because the assets in the joint estate were under-reported.
7.
The plaintiff alleged in her particulars of claim that the immovable
properties which should have been included in the agreement were 110
E[....]1 Street and a vacant plot in E[....]2; that the businesses
which should have been included in the agreement were the defendant’s
practice as an attorney, Mbambo Attorneys (the
firm or
practice), Sabaoth Bed and Breakfast and Ngegazi Construction;
and that the vehicles which should have been included
in the
agreement were an Audi, two mechanical horse and trailers, two 8-ton
water trucks and tanks and a truck with sewage tank
(the tanks).
8.
The plaintiff alleged that, because of the misrepresentation,
alternatively abuse of trust, she is entitled to an order that the
settlement agreement be set aside; and to the extent necessary,
tendered to the defendant, alternatively to a receiver, those assets
which she received as consideration for the assets distributed
to her
in terms of the agreement.
9.
In his first special plea
the defendant alleged that the plaintiff’s claim fell due on
the conclusion of the agreements, being
on 13 March 2012
alternatively during May 2014, that she issued summons only on 25
March 2020, more than three years after her
alleged claim arose, that
she had, or should have had, knowledge of the nature, extent and
value of the joint estate at the time
of concluding the agreements
and that her claim has accordingly became prescribed in terms of
section 11 of the Prescription Act.
[1]
10.
In his second special plea the defendant alleged that the agreements
have been
implemented by the parties, that the plaintiff’s
claim was not instituted within a reasonable time, that, by reason of
the
delay, she cannot effect restitution and that an order cancelling
the agreement and directing division of the joint estate by a
curator, receiver or liquidator would not be capable of practical
implementation.
11.
On the merits, the defendant denied that he misrepresented the
nature, extent
or value of the joint estate to the plaintiff, as
alleged, pleading that the settlement agreement and addendum thereto
(the agreement)
was the product of negotiation and agreement between
him and the plaintiff. He pleaded that at all times material to the
conclusion
of the agreement, the plaintiff was aware of the nature,
extent and value of the joint estate because of her management and/or
participation in the parties’ businesses and financial affairs
and her employment in the firm. The defendant pleaded that,
by reason
of the effluxion of time, the implementation of the agreements by the
parties and the impossibility of restitution, the
plaintiff was not
entitled to cancellation of the agreements or any other relief.
12.
The plaintiff did not deliver a replication to the defendant’s
special
pleas. The defendant accordingly did not know on what basis
the plaintiff would contend at the trial that prescription did not
commence to run from the conclusion of the agreement. Mr. Raqowa,
counsel for the plaintiff, relied on the plaintiff’s evidence
to the effect that she did not know until June 2019, when she
consulted her erstwhile attorney, that she had a claim, based on
misrepresentation, alternatively, undue influence against the
defendant.
13.
Chapter III of the Prescription Act, which includes sections 10 to
16, deals
with the prescription of debts. A debt is not defined in
the Prescription Act. However, “
creditor
” and
“
debtor
” are defined in section 1 thereof. In
terms of that section a creditor “
means a person by whom a
right is enforceable by action
” and a debtor “
means
a person against whom a right is enforceable by action
”. A
debt, for purposes of the Prescription Act, is accordingly a right
enforceable by action. On the assumption that it is
supported by
fact, the plaintiff’s claim is a debt.
14.
In terms of section 11(d) of the Prescription Act the period of
prescription
of the debt in this case is three years. It was not
disputed that the plaintiff’s claim was instituted after a
period of
three years had lapsed from the date on which the addendum
was signed during May 2014. What was disputed, when counsel made
submissions
at the conclusion of the hearing, was whether or not the
claim had become prescribed.
15.
Although Mr. Raqowa did not refer to it, he effectively relied on
section 12(3)
of the Prescription Act which provides as follows:
“
A
debt shall not be deemed to be due until the creditor has knowledge
of the identity of the debtor and of the facts from which
the debt
arises: Provided that a creditor shall be deemed to have such
knowledge if he could have acquired it by exercising reasonable
care.”
16.
In terms of section 12(3) a debt is not deemed to be due until a
debtor has
knowledge (i) of the identity of the debtor; and (ii) of
the facts from which the debt arises. There can be no doubt that at
all
material times the plaintiff knew the defendant’s identity.
The only issue to be determined is whether she had knowledge of
the
facts from which the debt arose.
17.
What is meant by
“
knowledge
… of the facts from which the debt arises
”
was examined in
Mtokonya
v Minister of Police
[2]
where the court was
required to determine whether a creditor must have
knowledge
that the debtor’s
conduct from which the debt arises is wrongful and actionable in law
before the debt may be said to be due
or before prescription can
start running. In other words, does the lack of knowledge on the part
of a creditor that a debtor’s
conduct is wrongful and
actionable prevent prescription from running. The court found that
knowledge that the debtor’s conduct
is wrongful and actionable
is knowledge of a legal conclusion and is not knowledge of a fact.
18.
After making reference to
a long line of cases, Zondo J (as he then was and writing the
majority judgment) declined the invitation
of counsel for the
creditor (Mr. Mtokonya) to hold that the meaning of the provision in
section 12(3) that a “
debt
shall not be deemed to be due until the creditor has knowledge …
of the facts from which the debt arises
”
includes that the
creditor must have knowledge of legal conclusions, ie that the
debtor’s conduct was wrongful and actionable.
Counsel urged the
court to hold that a lack of knowledge of a legal conclusion, just
like a lack of knowledge of facts from which
the debt arises,
prevents prescription from running. The court held firstly, that the
text of section 12(3) does not support that
contention, because it
specifically requires a creditor to have “
knowledge
… of the facts from which the debt arises
”
.
[3]
Secondly, the court held that to require a creditor to have knowledge
that the debtor’s conduct giving rise to the debt is
wrongful
and actionable in law “
would
render our law of prescription so ineffective that it may as well be
abolished
”
.
[4]
19.
In the circumstances, section 12(3) does not require a creditor to
have knowledge
of a right to sue the debtor nor does it require the
creditor to have knowledge of legal conclusions that might be drawn
from the
facts from which the debt arises.
20.
Mr. Raqowa conceded, correctly so, that the plaintiff did not make
out a case
for the relief sought in respect of any of the immovable
properties; the businesses, except for the firm; and the vehicles,
except
for the horse and trailers and the tanks. I shall accordingly
deal with the plaintiff’s evidence only insofar as it is
relevant
to the firm, the horse and trailers and the tanks. Before I
do so, I point out that, on a question during cross-examination as to
whether or not she had knowledge of all the assets in the joint
estate, the plaintiff reply was “
Yes, I did
” and
later “
I did know what the assets were
”. In other
words, her evidence was that she had knowledge of all the assets in
the joint estate. Her further evidence was
that, when she did not see
all the assets in the draft settlement agreement, she asked
questions.
21.
The plaintiff testified that she did not know that the firm formed
part of the
joint estate and that she was accordingly entitled to
“
the goodwill
” of the firm. Her evidence was
accordingly that she did not have knowledge of a right to sue the
defendant for the goodwill
of the firm. As was held in
Mtokonya
,
section 12(3) does not require a creditor to have knowledge of any
right to sue the debtor. The knowledge that section 12(3) requires
a
creditor to have is knowledge of the facts from which the debt
arises. That the plaintiff did not know that she had a claim against
the defendant based on misrepresentation, alternatively, undue
influence, is a lack of knowledge of a legal conclusion, and not
a
lack of facts from which the debt arose.
22.
But, even if I am wrong in that regard, the plaintiff’s own
evidence shows
that at all times material hereto she had knowledge of
the facts from which the debt arose. Her evidence was that she and
the defendant
started the firm. She was employed as an all-rounder.
She testified that she took statements from clients, took deposits
from them,
arranged for money to be banked, collected fees due to the
firm and “
did the accounts
” of the firm. She also
prepared payment of the firm’s debts. With the money generated
by the firm, the defendant maintained
her, their children and the
household. With that money the two of them also purchased immovable
property, vehicles and other movables.
There was no evidence to
suggest that the defendant concealed any income, generated by the
firm, from her. She basically knew everything
of the firm. Any
suggestion that she did not have knowledge of facts from which the
debt arose is accordingly untenable, on her
own evidence.
23.
The plaintiff’s evidence regarding the existence and ownership
of the
mechanical horse and trailers and water trucks with tanks was
unclear. She gave no evidence of a “
truck with sewage tank
”,
as alleged in her particulars of claim.
24.
During her cross-examination, it emerged that a MAN-truck owned by
the defendant
was deregistered on 1 July 2011 because it was
scrapped. The plaintiff accepted that Nqobenhle Construction, which
she and the
defendant owned, did not purchase the remaining truck
because the seller of the truck, Cradock Truck Repairs and Spares CC,
was
unable to furnish Nqobenhle Construction with the original
certificate of registration in respect thereof. The plaintiff
accepted
that the agreement of sale in respect of that truck was
cancelled on 21 February 2011, and that the truck was returned. That
was
about a year before the parties divorced on 28 February 2012.
25.
That leaves the two 8-ton water trucks and tanks. The plaintiff
testified that
Ngegazi Construction, which is a close corporation
registered as Ngegazi Construction and Projects CC (the CC),
bought two
old trucks. She was cross-examined on the CC’s
financial statements comprising its financial position as at 29
February 2012.
The financial statements show that the CC’s
assets as at that date consisted of furniture, fittings and computer
equipment
to the value of R5 844.00 and cash equivalent of R11
474.00. Those financial statements do not include any trucks as part
of the
CC’s assets, as the plaintiff testified. In any event,
those financial statements show that as at 29 February 2012 the CC
was in a sorry financial state. For the year under consideration, it
made a profit of R266 482.00, but its operating expenses amounted
to
R629 237.00 and it had an income tax expense of R19 863.00, leaving
the CC with a loss of R342 896.00 as at 29 February 2012.
The
plaintiff accepted that the CC was in that financial position as at
that date. It means that, as at the date of their divorce,
the CC did
not own the trucks, as the plaintiff testified.
26.
In all the circumstances, because the plaintiff’s own evidence
was that
she knew of all the assets of the joint estate as at May
2014, when the addendum was signed, and since more than three years
have
lapsed since then, her claim has become prescribed. It must
accordingly be dismissed.
27.
Even if it is found that her claim has not prescribed, the plaintiff
has failed
to show that, at the time when the agreement or addendum
thereto was signed, the defendant misrepresented the extent of the
assets
in the joint estate to her or that he unduly influenced her to
sign the agreement or addendum. Her claim must accordingly be
dismissed
on the merits.
28.
What turned out to be a matter which should have detained this court
for three
days, turned out to have been a trial running in excess
thereof. The hearing commenced on 25 January 2022. After the court
had
adjourned for lunch on the following day, it was reported that
the plaintiff had injured her ankle and was in severe pain. Later
that afternoon counsel agreed that, because of the pain that she was
experiencing, it was impossible for the plaintiff to testify
on that
day and requested the matter to stand down until the following day.
On 27 January 2022 the action was postponed to 13 and
14 April 2022
because, so it was reported, the plaintiff had fractured her ankle
and was unable to attend court. The costs occasioned
by the
postponement were reserved.
29.
The plaintiff’s attorneys of record withdrew on 2 March 2022.
On 8 April
2022 the registrar handed a letter of that same day to me.
It was written by the plaintiff’s present attorney, Zetu Kulu,
of KZ Attorneys, Johannesburg. A copy of that letter was emailed to
the defendant’s attorney. In that letter Ms. Kulu advised
of
the withdrawal of the plaintiff’s erstwhile attorney, that she
had been appointed to assist the plaintiff and that she
had informed
the defendant “
of a need to take comprehensive instructions
from [the plaintiff] and to prepare for trial with the result that
the plaintiff will
have to seek indulgence to postpone the trial
”.
In that letter she stated “
that on 13 April 2022 the
plaintiff intends to bring an application, to the extent necessary,
to postpone the matter for purposes
of providing instructions and for
the legal team to prepare for trial
”. That letter concludes
by expressing the hope that “
the court will grant the
indulgence and that there will be no need for a formal application
”.
On 11 April 2022 I received a letter from the defendant’s
attorney, copied to Ms. Kulu, wherein he raised his objection
to her
communication with me, albeit through the registrar. He requested Ms.
Kulu, should the plaintiff require a postponement,
to favour the
respondent with a substantive application for a postponement.
30.
When the matter was
called on the morning of 13 April 2022 the court was informed that
the defendant had been served with an application
for a postponement
at approximately 20h50 on the previous day and that the defendant
required time to finalise his answering affidavit.
That affidavit was
delivered later that day. During the address on whether or not the
application for a postponement should be
granted, the defendant’s
counsel informed the court that the plaintiff’s counsel
[5]
had informed him that the plaintiff was not in Makhanda. The
plaintiff’s counsel denied that he had made such a statement
to
his opponent and indicated that he had informed him that the
plaintiff was not in the court building. I then stood the matter
down
until 16h30. At approximately 16h15 counsel saw me in chambers and
confirmed that the plaintiff was not in Makhanda and had
not been in
Makhanda on that day. The action was postponed to 30 May 2022
primarily because the plaintiff, who was still under
cross-examination, was not at court. I furthermore ordered Ms. Kulu
to deliver affidavits explaining why she should not pay the
costs
occasioned by the postponement, inclusive of the application for a
postponement as well as the hearing on 13 and 14 April
2022, such
costs to be on the scale as between attorney and client. Ms. Kulu
complied with the order. The defendant also deposed
to an affidavit
to which Ms. Kulu replied. When the matter resumed on 30 May 2022,
the plaintiff testified that she was advised
by Ms. Kulu not to
attend court on 13 April 2022.
31.
A costs order is not
lightly given against a legal practitioner, whose duty it is to
protect his or her client’s interests
without fear. Such an
order is made only in exceptional circumstances
[6]
.
In my view, had Ms. Kulu contacted the plaintiff’s attorney
timeously after receiving instructions on 31 March 2022, the
need for
a formal application for a postponement and the unnecessary incurring
of costs on 13 April 2022 could have been avoided.
That is more
so the case in the light of the fact that on 4 April 2022 the
defendant’s attorney informed Ms. Kulu that there
would be an
assumption that the trial would proceed on 13 and 14 April 2022,
unless he heard from her to the contrary
and that in that event, the
defendant’s counsel would prepare for trial and “
fees
will be dramatically increased
”
.
On 5 April 2022 he requested to have a substantive application
in good time if the plaintiff intended seeking the indulgence
of a
postponement and on 7 April 2022, because there was no response to
his earlier letters from Ms. Kulu, the defendant’s
attorney
sent a letter to the plaintiff, copied to Ms. Kulu, wherein he
informed the plaintiff that she should appear in court
on 13 April
2022, with or without an attorney. I have already dealt with the
letters of 8 and 11 April 2022 from Ms. Kulu and the
defendant’s
attorney to me.
32.
In the light of the above facts, I have difficulties to order the
plaintiff
to pay the defendant’s costs occasioned by the
postponement on 13 April 2022. The above exceptional facts would, in
my view,
justify and order that Ms. Kulu pay those costs. Mr. Quinn
submitted that those costs should be on the scale as between attorney
and client. I do not agree. Although Ms. Kulu was remiss in the
performance of her duties regarding the application for a
postponement,
her conduct was not such that it should attract the
payment of costs on the suggested scale. Sight should also not be
lost of the
fact that Ms. Kulu was instructed by the plaintiff only
on 31 March 2022. Although she had precious little time to prepare,
she
should have approached the defendant’s attorney timeously
for a postponement, and if such postponement could not have been
agreed upon, instituted an application for a postponement. As pointed
out above she should accept liability for that failure. However,
the
plaintiff is not without blame. She should have instructed Ms. Kulu
earlier. Had she done so, Ms. Kulu might have prepared
for trial for
13 April 2022. In the circumstances I would order Ms. Kulu to pay the
costs occasioned by the postponement on 13
April 2022. In my view,
there is no reason for either Ms. Kulu or the plaintiff to pay the
costs which may have been incurred on
14 April 2022.
33.
In the result, it is ordered that:
1.
The plaintiff’s claim against the defendant has prescribed and
is accordingly dismissed.
2.
Zetu Kulu shall pay the defendant’s costs occasioned by the
postponement on 13 April 2022,
such costs to include the application
for a postponement.
3.
The plaintiff shall pay the defendant’s costs of the action,
such costs to include all costs
previously reserved.
G
H BLOEM
JUDGE
OF THE HIGH COURT
For
the plaintiff: Mr Z.
Raqowa, instructed by KZ Attorneys and Neville Borman & Botha
Attorneys, Grahamstown.
For
the defendant: Mr R Quinn SC, instructed by Mbambo Attorneys
Queenstown, and Zilwa
Attorneys, Grahamstown.
Dates
heard: 25, 26 and 27 January, 13 April and 30 and 31 May 2022.
Date
of delivery of judgement: 7 June
2022.
[1]
The Prescription Act, 1969 (Act 68 of 1969).
[2]
Mtokonya
v Minister of Police
2018
(5) SA 22 (CC).
[3]
Mtokonya
supra a
t
46C.
[4]
Mtokonya
supra
a
t
46D.
[5]
Mr.
Raqowa was not the plaintiff’s counsel on 13 April 2022.
[6]
Multi-Links
Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd; Telkom
SA Soc Limited and another v Blue Label Telecoms
Limited ad others
[2013] 4 All SA 346
(GNP) at par 34.