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[2019] ZAKZPHC 63
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Salligram and Others v Salligram and Others (AR 292/2018, 13560/2014) [2019] ZAKZPHC 63 (20 September 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case No: AR 292/2018
KZNLD Case No: 13560/2014
In the
matter between:
HERAMONEY
SALLIGRAM
First Appellant
HERAMONRY
SALLIGRAM
N.O.
Second Appellant
RUBENDRA
ASKRAN BHAGWANDEEN N.O.
Third Appellant
NARENDRA
KASIEPRASAD PATTUNDEEN N.O.
Fourth Appellant
and
NALIN
SALLIGRAM
First Respondent
NALIN
SALLIGRAM
N.O.
Second Respondent
NIRVANA
SALLIGRAM
N.O.
Third Respondent
SHAZEL
INVESTMENTS
CC
Fourth Respondent
THE
COMMISSIONER: COMPANIES &
INTELLECTUAL
PROPERTY COMMISSION
Fifth Respondent
PRESHILLA
SINGH
Sixth Respondent
JUDGMENT
Vahed
J (Mnguni
et
Steyn JJ concurring):
[1]
The appellants, as plaintiffs, sued the
first to fourth and sixth respondents, as similarly numbered
defendants. The particulars
of claim describe five discrete claims
against the respondents. Originally the five claims were mounted
against the first respondent,
the second and third respondents in
their capacities as the trustees of the Shivriya Trust, and the
fourth respondent. Originally,
also, the sixth respondent was not
joined as a defendant and the N S Trust did not feature in the
litigation.
[2]
After the respondents raised a plea of
non-joinder to one of the claims the appellants joined the sixth
respondent and amended the
particulars of claim. The sixth respondent
was cited in her capacity as a trustee of the N S Trust and the
particulars of claim,
as amended, now cited the second and third
respondents additionally in their capacities as trustees of the N S
Trust.
[3]
This appeal concerns a further attempt to
amend the particulars of claim. The proposed amendment was opposed
and an application
for leave to amend was argued before Kruger J,
who, in large part, refused same with costs. The learned judge also
directed that
those costs be paid by the appellants and their
attorney, jointly and severally. He also refused leave to appeal.
This appeal,
confined only to a defined and circumscribed portion of
the Order made
a quo
,
serves before us with leave having been granted to the full court by
the Supreme Court of Appeal (“the SCA”).
[4]
As I mentioned earlier, five separate
claims were set out in the particulars of claim. This appeal relates
only to the refusal by
the learned judge
a
quo
to grant leave to amend claim two.
Claims four and five were irrelevant to the issues at hand, but
claims one and three had some
bearing on claim two.
[5]
In claim one the appellants pleaded an oral
agreement concluded during March 2007 between the first appellant and
the first respondent
wherein,
inter
alia
, it was agreed that the first
appellant would transfer to the first respondent what were referred
to as “the Jacobs properties”
upon certain terms and
conditions. In the particulars of claim this agreement was referred
to as “the first agreement”.
[6]
In claim two the appellants relied on
certain further aspects of the first agreement in terms of which it
was agreed that a certain
Discovery life policy would be ceded to the
first respondent who would hold same in trust for the H S Family
Trust and return the
benefits under that policy to the H S Family
Trust when called upon to do so.
[7]
In claim three the appellants pleaded that
a further oral agreement (referred to as “the second
agreement”) was concluded
between the first appellant and the
first respondent during May or June 2009. In terms thereof it was
agreed that certain properties
described as “the Harrismith
properties” would, through transfers of shares in companies or
members’ interests
in close corporations, be transferred to the
N S Trust.
[8]
In terms of a Notice of Intention to Amend
delivered on 26 September 2016 the appellants sought,
inter
alia
, to amend claim two by alleging
that the agreement to cede the policy was concluded during May or
June 2009. In the notice to amend
it was referred to as “the
cession agreement” but in the exchange of affidavits when leave
to amend was sought from
the court
a quo
it was made clear that the agreement to cede the policy formed part
and parcel of the second agreement, which was accordingly alleged
to
support both claims two and three.
[9]
The three claims relevant to this appeal
(claims one, two and three) essentially related to assets transferred
by the first appellant
to his son, the first respondent, who,
according to the appellants, was to hold same for certain defined
purposes and thereafter
re-transfer them to the first appellant
(either upon demand or when the defined purpose had been achieved).
The claims were for
the return of those assets. During argument this
was loosely referred to as a “warehousing arrangement”.
[10]
Concluding its judgment refusing leave to
amend the court below issued, inter alia, the following Order:
“
2.
(a) The [Appellants’] application for
leave to amend as set out in paragraphs
2, 8, 9, 10 and 12 of the
notice to amend is dismissed with costs.
(b)
Such costs are:
(i)
to include the costs of senior counsel.
(ii)
to be paid by the [Appellants] and the attorney Mr Chadwick, jointly
and severally, the one paying
the other to be absolved, on the
attorney and client scale.”
[11]
I pause to mention that paragraph 1 of that
Order related to the delivery of certain supplementary affidavits and
related costs
and is irrelevant for present purposes.
[12]
I pause additionally to observe that
paragraph 2 of the notice to amend concerned the proposed amendments
to claim two.
[13]
In the Notice of Appeal and in the heads of
argument delivered on behalf of the appellants it was suggested that
the Order for costs
as set out in paragraph 2(b) of the Order made by
the learned judge formed part of the subject matter of this appeal.
During argument
Mr
Pammenter
SC, who appeared for the appellants, sought to further advance that
case.
[14]
Before the court
a
quo
, the application for leave to
appeal addressed
only
paragraph 2 of the notice to amend and the Order for costs. That was
refused. The application to the SCA addressed
only
paragraph 2 of the notice to amend and was silent as to the Order for
costs. The Order sought from the SCA was in the following
terms:
“
The
[Appellants] are granted leave to appeal against paragraph 2(a) of
the Order contained in … the judgment of the Honourable
Mr
Justice Kruger delivered … on 8 September 2017
but
only insofar as it relates to paragraph 2
of the [Appellants’] notice of intention to amend …”.
(my emphasis)
[15]
The SCA granted “[l]eave to appeal …
as prayed to the Full Court…”, and directed that the
costs of both
applications for leave to appeal be costs in this
appeal.
[16]
That recount of the matter demonstrates
that the appellants, in the SCA, neither sought, nor were they
granted, leave to appeal
against the Order for costs made by the
court
a quo
on 8 September 2017. The issue is simply not before us.
[17]
Claim two, prior to the amendments sought,
was pleaded as follows:
“
SECOND
CLAIM
24.
The further material terms of
the first agreement concluded between the First [Appellant] and the
First [Respondent] in March 2007,
and which are referred to above,
were that:
24.1.
Discovery Life Policy No. 500006691 which the First [Appellant]
had
taken out on his life (for the sum of R15 million with profits) and
in respect of which the HS Family Trust was the nominated
beneficiary, would be ceded to the First [Respondent] who would hold
same in trust for the HS Family Trust and return the benefits
under
that policy to the HS Family Trust when called upon to do so;
24.2.
the First [Respondent] was to pay the premiums as and when they
fell
due under the policy from the proceeds of the Jacobs properties
referred to above.”
[18]
Paragraph 2 of the notice to amend proposed
that the preamble to paragraph 24 of the particulars of claim be
substituted with the
following:
“
In or
about May or June 2009 a further oral agreement (cession agreement)
was concluded between the First [Appellant] and the First
[Respondent] at Jacobs, Durban, in terms where of the First
[Appellant] and the First [Respondent] agreed that:”
[19]
Amongst others, that proposed amendment was
objected to by the respondents, was subsequently refused by the court
below, and is
the subject matter of this appeal.
[20]
In refusing paragraph 2 of the notice to
amend (ie. the proposed amendments to claim two) the learned judge
a
quo
, in summary, held that:
a.
an amendment to a pleading should not be
allowed if it is clear that the pleading, as amended, has prescribed.
For this finding
he relied upon the decision in
Evins
v Shield Insurance Company Ltd
1980 (2)
SA 814
(A) at 836 D;
b.
whether prescription was interrupted by
legal process, the rights sought to be enforced by means of the
amendment should be the
same or substantially the same right as
alleged in the original process. In this regard Kruger J relied upon
the decision
Neon Cathode Illuminations
(Pty) Ltd v Ephron
1978 (1) SA 463
at
463 A;
c.
claims
one and two as originally pleaded by the appellants were interrelated
because they were both underpinned by the first agreement
alleged to
have been concluded during March 2007;
d.
the
amendment sought to be introduced meant that claim two was based on a
different and separate agreement to the first agreement.
It was not
simply a confusion as to the date on which that agreement was
concluded. Therefore, a different debt was now sought
to be claimed;
e.
the
right of action in respect of the proposed amended claim two was not
recognisable as the same or substantially the same as the
right of
action disclosed in the unamended particulars of claim.
[21]
Essentially, the learned judge
a
quo
found that the claim sought to be
introduced by the proposed amendment had prescribed and that for that
reason the amendment ought
not to be allowed.
[22]
The issues, with regard to claim two, to be
determined in this appeal were crystallised in the appellants’
practice note as
follows:
a.
whether the appellants’ claim against
the respondents for the re-cession of the Discovery life policy
constitutes a
debt
for the purposes of the Prescription Act, 1969 (“the first
issue”);
b.
whether the claim which the appellants
sought to introduce by way of the proposed amendment to claim two was
substantially the same
claim as contained in the unamended
particulars of claim (“the second issue”);
c.
whether the court
a
quo
ought to have determined the issue
whether the proposed amended claim two had prescribed or whether it
ought to have left that
aspect of the matter to be determined at
trial (“the third issue”).
[23]
The first issue was not raised when the
application to amend was argued before the court
a
quo
but it was raised at the stage when
leave to appeal was sought.
[24]
The argument on this issue, at the stage
when leave to appeal was initially sought, was based on the decisions
in
Makate v Vodacom Ltd
2016 (4) SA 121
(CC) and
Offbeat Holiday
Clubs and Another v Sanbonani Holiday Spar Shareblock Ltd and Others
2017 (5) SA 9
(CC). Relying on those decisions it was contended that
although the word “
debt
”
was not defined in the
Prescription Act, 1969
it had to be
interpreted as meaning “…that which is owed or due,
anything (as money, goods or services) which one
person is under an
obligation to pay or render to another.” (See para 44 in
Offbeat Holiday Clubs
).
[25]
It was submitted that the transfer of
incorporeal rights attaching to an insurance policy do not amount to
“…money,
goods or services…”. On that basis
the submission was that the claim (ie. claim two) was not a debt for
the purposes
of the
Prescription Act, 1969
. An examination of the
claim demonstrates that the first respondent was to hold the policy
in trust for the H S Family Trust. In
other words, he was given a
mandate of trust. It was not pleaded that the first respondent was to
hold the policy as owner. The
call for the first respondent to return
the benefits under the policy was effectively a termination of that
trust mandate. It was
submitted that that was something different
from claiming “…money, goods or services…”.
[26]
The court
a
quo
was not persuaded by that argument.
[27]
During the argument when leave to appeal
was sought and in his heads of argument in this appeal, Mr
Singh
SC, who appeared for the respondents submitted that this new ground,
which he contended was an after-thought, resulted from a misconceived
reliance on
Makate
.
He suggested that the appellants had misconstrued
Makate
to mean that if a claim is not for the payment of money, the delivery
of goods or for services, then the claim is not a debt for
the
purposes of the
Prescription Act, 1969
. That understanding, he
contended, was flawed and submitted that
Offbeat
Holiday Clubs
made it clear that
Makate
was not to be narrowly construed and that a claim for something due
or owed, albeit incorporeal as in the present matter, was indeed
a
debt that could prescribe. In his heads of argument Mr
Singh
called into aid the decision in
eThekwini
Municipality v Mounthaven (Pty) Ltd
2018 (1) SA 384
(SCA) which held that a contractual claim for the
retransfer of land was a debt for the purposes of the
Prescription
Act, 1969
.
[28]
At the time the heads of argument were
exchanged in this appeal
Mounthaven
had been argued in an application for leave appeal before the
Constitutional Court and judgment in that application (and in the
appeal itself if granted) was awaited.
[29]
Both Mr
Pammenter
and Mr
Singh
argued (in their respective heads of argument) that the then
anticipated judgment ought not to stand in the way of a decision
either way.
The
Constitutional Court judgment in
Mounthaven
was delivered on 31 October. See
eThekwini
Municipality v Mounthaven (Pty) Ltd
2019
(4) SA 394
(CC). Leave to appeal was refused thus leaving undisturbed
the finding by the Supreme Court of Appeal that claims, such as
involved
here, are indeed debts capable of becoming prescribed.
[30]
The first issue thus fails.
[31]
The second issue relates to whether, pre
and post amendment, claim two was essentially the same. In my view it
must be remembered
that the claim remained a claim for the return of
the benefits under the Discovery policy and that character of it
being held in
trust for the H S Family Trust remained unaltered. What
changed was that instead of the two terms pleaded in sub-paragraphs
24.1
and 24.2 of the particulars of claim being contended as forming
part of a wider agreement concluded in March 2007, those very same
two terms were being contended as being the material terms of a
separate agreement concluded between the identical parties during
May
or June 2009.
[32]
In my view there is a real and distinct
difference between that which is being claimed (ie. the debt or the
claim) and those facts
and circumstances which are not materially
connected to that claim. In arriving at the conclusion that the
amendment sought to
introduce a different claim (ie. a claim for a
different debt) the learned judge agreed with a submission made on
behalf of the
respondents that “…[the matter went]
beyond …[the appellants’ attorney making] an error [of]
inserting
the incorrect date in the particulars of claim …
[and that instead] … that it was an error in pleading the
incorrect
agreement … and not merely an error in pleading the
incorrect date.”.
[33]
Claim two was originally pleaded as forming
part of the first agreement and that the premiums due (for the
Discovery policy) would
be derived from the Jacobs properties. As
part of the package of amendments (at the same time as the amendment
in issue) sought
by the appellants an amendment was sought to
paragraph 24.2 of the particulars of claim so as to insert the words
“…and/or
Harrismith…” between the words
“Jacobs” and “Properties”. That amendment was
not opposed by
the respondents. The effect thus was that the premiums
payable would be derived from the “…Jacobs and/or
Harrismith
properties…”. This rendered the intended
amendment to the preamble entirely consistent with an agreement
concluded
during 2009 but inconsistent with an agreement concluded
during March 2007 because the involvement of the Harrismith
properties
only occurred later (in 2009).
[34]
As an aside it is instructive to note that
the respondents’ then existing plea, which was delivered before
the amendments
were sought, contained an admission that the cession
of the Discovery policy occurred and a copy of the document of
cession was
put up as an annexure to that plea. That document was
signed by both the first appellant and the first respondent on 3 July
2009.
[35]
I am in respectful disagreement with the
learned judge
a quo
.
I propose quoting liberally from few of the leading authorities to
demonstrate why, in my view, the amendment relates to substantially
the same debt.
[36]
Mazibuko v Singer
1979
(3) SA 258
(W) concerned an action against an attorney for his
negligent failure to serve a claim form which was required to be
served before
the expiry of the prescriptive period. An earlier
process had been served before the expiry of the prescriptive period
and the
question was whether the same cause of action (ie. the same
debt) had been claimed. It was discussed and held as follows:
“
It
seems to me that in an inquiry of this kind the expression "cause
of action" can be misleading. Its most common use
is as a
technical term relating to pleading, and in that sense it carries a
connotation which is inapposite when one is looking
to see whether or
not the running of prescription has been interrupted. It is true that
TROLLIP J (as he then was) used the term
"cause of action"
when dealing with a question of prescription and its interruption
in
Schnellen
v Rondalia Assurance Corporation of SA Ltd
1969
(1) SA 517
(W). But, he was not, I think, using the expression in its
narrow technical sense; what he meant by it was, I think, something
of a broader nature which is sometimes referred to as a plaintiff's
"right of action" or as "the basis of his claim".
It may be correct to say that, in a sense, the claim in which
the plaintiff relies on a failure to serve form MVA 22 on the
Fund
embodies a different cause of action from the claim in which he
relies on a failure to serve form MVA 13 on an insurer. Similarly,
it
may be said, in an ordinary running-down case, that a claim based on
driving with defective brakes rests on a different cause
of action
(in one sense of that term) from a claim based on driving at an
excessive speed. But "cause of action" in that
sense cannot
be the criterion here.
That
the test in relation to an interruption of prescription cannot be
based on an identity between the cause of action (in the
narrow
sense) which was previously relied on by the plaintiff and the cause
of action which he now seeks to rely upon, is perhaps
best
illustrated by the cases in which it was held that a summons may
interrupt the running of prescription even if it discloses
no cause
of action. It was so held in
Trans-African
Insurance Co Ltd v Maluleka
1956
(2) SA 273
(A), in
Van
Vuuren v Boshoff
1964
(1) SA 395
(T) and in
Rooskrans
v Minister van Polisie
1973
(1) SA 273
(T).
The effect
of those cases, as I understand them, was that in deciding whether
prescription was interrupted, in relation to a particular
claim, by
prior process served during the prescriptive period, one looks to see
whether in the earlier process the same
claim
was
preferred, not whether the same cause of action (or any cause of
action) was made out in the earlier process. As pointed
out in one of
the cases, it is inaction, not legal ineptitude, which the
Prescription Act is
designed to penalise. But, as none of those cases
was decided under the current
Prescription Act 68 of 1969
, it will be
appropriate to see what that Act lays down in respect of
interruption. Section 15 (1) of the Act provides that:
"The
founding of prescription shall... be interrupted by the service on
the debtor of any process whereby the creditor
claims payment
of the debt"
.
(Words not
presently relevant omitted, and emphasis supplied by me).
The
question to be asked, therefore, is this one: "Did the
plaintiff, in the earlier process, claim payment of the same debt
as
now forms the subject-matter of the claim which is said to be
prescribed?" If the answer is in the affirmative, prescription
has been interrupted, even if one of the grounds upon which the claim
is now based differs from the ground or grounds relied on
at the
earlier stage.
That
approach is in conformity with the cases which I have cited. It is in
conformity, also, with the test for
res judicata
propounded
by Spencer-Bower and Turner
Res Judicata
2nd ed at
160 para 197. The concept of
res judicata
is, if
course, closely related to the concepts involved in the instant
problem.”
[37]
Cgu Insurance Ltd v Rumdel Construction
(Pty) Ltd
2004 (2) SA 622
(SCA) was
argued by counsel to be a case very similar to the one at hand. There
Rumdel Construction was engaged in engineering
works (building
bridges and roads) in Mozambique. CGU insured the works against storm
damage. Storm damage occurred and Rumdel
sued, contending that the
amounts due to it for two separate incidents of damage arose out of a
single contract of insurance identified
by a specific policy number
and annexed to the particulars of claim. A subsequent attempt to
amend to contend for two separate
contracts of insurance, one for
each incident. The court of first instance allowed the amendment and
on appeal by CGU it was contended
that the amendment introduced a new
cause of action, which by then had prescribed. The appeal was
dismissed, the appeal court holding,
inter
alia
, as follows (Footnotes omitted):
“
[6]
The
Prescription Act 68 of 1969
uses different wording from its
predecessor, the Prescription Act 18 of 1943. Section 3(1) of the
1943 Act provided that ‘extinctive
prescription is the
rendering unenforceable of a right by lapse of time’. Sections
10(1), 11(d) and 12(1) of the 1969 Act
provide that a debt shall be
extinguished by prescription after the lapse of a period of three
years from the date upon which the
debt is due. Section 15(1)
provides that the running of prescription shall be interrupted by the
service of any process whereby
the creditor claims payment of the
debt. The date upon which the debt in issue became due is 15 March
1996 when the storm damage
occurred (
Cape
Town Municipality and another
v
Allianz
Insurance Co Ltd
),
and the period of three years elapsed at midnight on 14 March 1999.
This date was extended by agreement between the parties to
15 March
2000. The plaintiff’s summons and particulars of claim were
issued and served before that date. In them the plaintiff
claimed
payment of a debt, to use the language of the new Act, or enforcement
of a right to payment in the language of the old
Act.
While
these concepts are ‘merely opposite poles of one and the same
obligation’ (
Cape
Town Municipality and another
v
Allianz
Insurance Co Ltd
),
it is important to bear in mind that the courts are now specifically
concerned with prescription of a ‘debt’ within
the
meaning of the 1969 Act. The Act does not define ‘debt’
and ‘there is . . . a discernible looseness of language’
in its use thereof with the result that ‘debt’ means
different things in different contexts. For this reason 'debt'
in the
context of section 15(1) must bear ‘a wide and general
meaning’. It does not have the technical meaning given
to the
phrase ‘cause of action’ when used in the context of
pleadings (
Standard
Bank of South Africa Ltd
v
Oneanate
Investments (in liquidation)
).
In
Evins
v
Shield
Insurance Co Ltd
Trollip JA made a point of the distinction between ‘debt’
and ‘cause of action”, and describes the latter
in the
following way:
‘ “
Cause
of action” is ordinarily used to describe the factual basis,
the set of material facts, that begets the plaintiff's
legal right of
action and, complementarily, the defendant's 'debt', the word used in
the Prescription Act.’
The debt is
not the set of material facts. It is that which is begotten by the
set of material facts. This court has, furthermore,
recently
considered the meaning of the word ‘debt’ in the
Prescription Act on a number of occasions. In
Drennan
Maud and Partners
v
Pennington
Town Board
Harms JA again emphasized that ‘debt’ does not mean
‘cause of action’, and indicated that the kind of
scrutiny to which a cause of action is subjected in an exception is
inappropriate when examining the alleged debt for purposes of
prescription. In
Provinsie
van die Vrystaat
v
Williams
NO
Olivier
JA warned against the danger of being misled by cases which fail to
distinguish properly between the debt and the cause
of action upon
which it is based. See also the
Sentrachem
Ltd
case
supra
and
Associated
Paint & Chemical Industries (Pty) Ltd
t/a
Albestra Paint and Lacquers
v
Smit
supra.
[7] When a court is called upon
to decide whether a summons interrupts prescription it is necessary
to compare the allegations and
relief claimed in the summons with the
allegations and the relief claimed in the amendment to see if the
debt is substantially
the same (
Wavecrest Sea Enterprises (Pty)
Ltd
v
Elliot
). In this case there is no amendment to the
relief claimed.
[8] I accept that the amendment
introduces a new insurance contract as the basis for the claim for
the loss which occurred in March
1996. But an objective comparison
between the original particulars of the claim and the particulars of
claim as amended leaves
me in no doubt that although part of the
cause of action is now a different contract, the debt is the same
debt in the broad sense
of the meaning of that word. The original
pleadings convey, in that broad sense, that the debt was payable by
reason of a contractual
undertaking to indemnify the plaintiff for
the loss which occurred in March 1996, a loss which is fully
particularized and of which
notice was allegedly given after the
occurrence as required by the policy. That is also how it is
described in the amendment. I
can find no grounds for concluding in
this case that a change in the contract relied upon means that a
different debt was claimed.
[9] The
defendant placed considerable reliance on the case of
Neon
and Cold Cathode Illuminations (Pty) Ltd
v
Ephron.
That case involved two contracts with two different parties, and the
plaintiff initially sued the wrong party on one of the contracts.
The
court held that the original summons did not operate to interrupt the
running of prescription on a subsequent claim based on
the second
contract. The defendant in this case argued, by parity of reasoning,
that the plaintiff did not interrupt the running
of prescription on a
claim based on contract CW
No
CW628025, which provided cover for an occurrence in March 1996, by
issuing summons on contract
No
CW654262, which did not. In my opinion this is an invalid argument
based upon superficial similarities between this case and
the
Ephron
case. It ignores points of distinction that go to the root of the
matter. The original summons in
Ephron
was for a claim by a landlord for the recovery of rent from his
tenant. The claim failed because the defendant was not the tenant.
He
was a surety for the obligations of the tenant. The plaintiff then
issued summons against him as surety under the suretyship
agreement,
and, in order to meet a
defence
of
prescription
,
he argued that the previous summons for payment of rent had
interrupted the running of prescription. The court held that it had
not. This was because the claim against the surety
was
not the same
as the claim against the tenant. The judgment lays emphasis on the
contractual relationship and the reciprocal rights
and obligations
flowing from a contract of lease which are
essentially
entirely
different from the relationship and the rights and obligations
flowing from a contract of suretyship.
This
enabled the court to conclude that in the first summons the plaintiff
sued to enforce a right which was non-existent because
the defendant
was not a tenant and could never be liable for payment of rent.
The
first summons would not interrupt the running of prescription on the
claim for rent against the real tenant, and did not interrupt
the
running of prescription on the claim against his surety. These points
of distinction are differences of principle. They do
not arise in the
present case, which must be decided in the light of its own facts and
circumstances. The contractual relationship
alleged in this summons
and this amendment was and remains one of insurer and insured, and
the debt was and remains the same debt
for the same loss,
notwithstanding that it became payable by reason of an earlier
contract of insurance and not the one originally
pleaded.”
[38]
The principles were restated in
Firstrand
Bank Ltd v Nedbank (Swaziland) Ltd
2004
(6) SA 317
(SCA). Nedbank, as cessionary of a debt due to Swazi
Timber, sued Firstrand. After prescription had elapsed Nedbank
effected amendments
removing from the particulars all references to
cession and to Swazi Timber. The effect of the amendment was that
Nedbank was no
longer suing as cessionary of a debt due to Swazi
Timber but instead on a debt alleged to be due to it in its own
right. A special
plea to the effect that the claim had prescribed
because the original summons did not interrupt prescription in
respect of the
amended claim was dismissed. This was reversed on
appeal. The appeal court had this to say:
“
[4]
Section 15(1)
of the
Prescription Act 68 of 1969
provides:
'The
running of prescription shall, subject to the provisions of ss (2),
be interrupted by the service on the debtor of any process
whereby
the creditor claims payment of the debt.'
As
observed by Corbett JA in
Evins
v Shield Insurance Co Ltd
1980
(2) SA 814
(A)
at
842E - F, 'it is clear that the ''debt'' is necessarily the
correlative of a right of action vested in the creditor, which
likewise
becomes extinguished simultaneously with the debt'. The
distinction between 'right of action' and 'cause of action' has been
repeatedly
emphasised by this Court. More recently in
CGU
Insurance Ltd v Rumdel Construction (Pty) Ltd
[2003]
2 All SA 597
(SCA), para [6], at 601
c
–
d
'debt' (and hence its correlative 'right of action') was noted to
bear 'a wide and general meaning'; and not the technical
meaning given to 'cause of action', being the phrase ordinarily used
to describe the set of material facts relied upon to establish
the
right of action. Even a summons which fails to disclose a cause of
action for want of one or other averment may therefore interrupt
the
running of prescription provided only that the right of action sought
to be enforced in the summons subsequent to its
amendment is
recognisable as the same or substantially the same right of action as
that disclosed in the original summons. (See
Sentrachem Ltd v
Prinsloo
1997 (2) SA 1
(A)
at
15H - 16B; Churchill v Standard General Insurance Co Ltd
1977
(1) SA 506
(A)
at
517B - C.)”
[39]
Rustenburg Platinum Mines v Industrial
Maintenance Painting Services
[2009] 1
All SA 275
(SCA) is also instructive and the following discussion
from the case bears repeating (Footnotes omitted):
“
[17]
Counsel for the plaintiff argued, however, that
CGU
Insurance
was
wrongly decided and relied for this proposition on another decision
of this Court in
Neon
and Cold Cathode Illuminations
(
Pty
)
Ltd
v Ephron
.
The respondent in that case, a director of a company which had a
lease agreement with the appellant, had stood surety for the
payment
of rent owing to the appellant by the company. When arrear rental
became owing the appellant sued the respondent for its
recovery. The
respondent was, however, sued not as surety but as lessee. The claim
was dismissed on the ground that the respondent
had been incorrectly
sued on the lease as the lessee. Thereafter, approximately four years
after the arrear rental had become due,
the appellant again sued the
respondent, this time as surety and co-principal debtor. The
respondent’s defence was that the
claim had become prescribed.
In upholding that defence this Court reasoned that the appellant
in
Neon
and Cold Cathode
(
supra
):
“
had
two separate different rights for payment of the [arrear rental] each
of which it could enforce by action: the one against respondent
as
surety and co-principal debtor.”
The
court said the following:
“
In
the previous action appellant chose to sue respondent on the lease as
the lessee. The two different rights were therefore completely
confused. The cause of action as pleaded was not merely defective, it
was non-existent, and consequently the process was completely
devoid
of legal effect
.
. .
That
is why the previous action was correctly dismissed.”
Trollip
JA suggested, however, that the previous action could possibly have
been amended “to substitute a cause of action
against
respondent based on the contract of suretyship, for the court has
wide powers to amend pleadings”.
[18]
To my mind, Trollip JA could have made this comment about a possible
amendment only because, although the cause of action would be
different,
viz
liability being based on the contract
of suretyship, the “claim” or “debt” or
“right of action”
would still have been the same: arrear
rental which had become due and payable. The significant distinction
between
Neon and Cold Cathode
, on the one hand, and
CGU
Insurance
and this case on the other, is that the plaintiff
in
Neon and Cold Cathode
had not sought to amend the
claim. The claim was dismissed. A new action was instituted against
the defendant as surety and co-principal
debtor. As Trollip JA
indicated, had the plaintiff attempted to amend its first claim
against the defendant as lessee, so as to
claim against the defendant
as surety, the amendment might have been allowed. I am accordingly
not persuaded that the decision
in
CGU Insurance
is
in conflict with that in
Neon and Cold Cathode
, nor that
it was wrongly decided.
[19]
At the risk of repetition, in
CGU Insurance
Jones
AJA said that in deciding whether a summons interrupts prescription,
it is necessary to compare the allegations and relief
claimed in the
summons with the allegations and the relief claimed in the amendment
to see if the debt is substantially the same
... When this test is
applied to the facts of the present matter, the result seems to me to
be that the plaintiff seeks throughout
to recover the same debt. The
relief claimed originally is payment of the sum of R392 160, being
the balance of the excess amount,
the defendant having repaid part of
it. The relief claimed in the amendment sought to be effected is for
payment of the sum of
R392 160 plus VAT, the capital amount being the
balance of the excess amount after the defendant had repaid part of
it. It is so,
as I have mentioned above, that the allegations or
“cause of action” upon which the relief claimed is based
in the
amendment differs from the allegations or “cause of
action” set out in the particulars of claim, but the relief
claimed,
ie the “debt” is, in my view, the same. It
follows that Willis J erred in upholding the defendant’s
objection,
based on prescription, to the proposed amendment.”
[40]
Against that line of authority Mr
Singh
has sought to argue that the case is not about the termination of the
trust relationship established between the parties and that
reliance
on these authorities is misplaced because they do not support the
appellants’ contention that there was a misdescription
or a
misnomer when the matter was originally pleaded. I pause here to
mention that the appellants’ attorney (who argued the
matter in
the court
a quo
)
contended on oath that the mistake was his, resulting in the error in
the original pleading. In refuting that proposition it was
argued
that there was nothing to suggest that claim two ought properly to
have referred to a 2009 agreement instead of a 2007 one.
I am unable
to grasp the import of that submission, particularly against the
backdrop of an admitted reference to the Harrismith
properties and to
the date of signature of the admitted cession document.
[41]
In his customary forthright approach to the
problem Mr
Singh
acknowledged that the matter presented significant complexities and
that ultimately the dividing line was a difficult one to draw.
In
deciding where to draw that dividing line, he suggested, with
reference to
Associated Paint &
Chemical Industries (Pty) Ltd v Smit
2000 (2) SA 789
(SCA), that one ought to question whether the manner
in which the debt was originally described was sufficient to
interrupt prescription.
[42]
In my view that answer to that question is
in the affirmative. It was the same debt. Given the appellants’
attorney’s
acceptance of responsibility for the error in
pleading, in the light of the facts of the matter, in the language of
Mazibuko’s case
,
this case is precisely about not using prescription to punish legal
ineptitude as opposed to inaction.
[43]
For those reasons the second issue falls to
be decided in the appellants’ favour.
[44]
As for the third issue Mr
Pammenter
fairly drew our attention to the very interesting discussion on the
commencement of and the running of prescription in
Trinity
Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd
2018 (1) SA 94
(CC). If I am wrong in my view of the second issue,
that decision may ultimately have some bearing on the matter. In my
view, and
for reasons related to the third issue, the questions
raised therein do not arise for present consideration.
[45]
Although he resisted the impact of the
third issue in his heads of argument, Mr
Singh
did not press the matter during argument. It, in any event, requires
brief consideration.
[46]
The discussion commences with what was said
in
Rand Staple-Machine Leasing (Pty) Ltd
v ICI SA Ltd
1977 (3) SA 199
(W) where
an application to amend was resisted because it attempted to
introduce a claim that was said to have prescribed. The
court said
(at 202 B–H):
“
In
spite of opposition an amendment will usually be granted where there
is no prejudice to the other side. Although the defendant
signified
the ground of its objection to the amendment to be that claims
for rental in excess of R8 040 are prescribed, the
plaintiff need
not, in my view, have dealt with the matter of prescription in the
affidavit filed in support of the application.
It need only have set
out facts showing that the defendant would not be prejudiced by the
amendment. The long delay between the
date of institution of the
action and the application for amendment might,
prima
facie
,
have prejudiced the defendant and, as it was obliged to do, the
plaintiff relied on an alleged arrangement between the parties
that
the matter would be held in abeyance and that the claims, impliedly,
to the extent it might have increased in the meantime,
would only be
proceeded with after the conclusion of the Optilon matter. It
obviously intended the possible prejudice occasioned
by the delay and
not the prescription to be the main issue. Prescription can
always be raised by way of plea. The introduction
of
prima
facie
prescribed
claim cannot, therefore, prejudice the defendant. It has not been
submitted that the delay itself caused prejudice.
By not confining
itself to this issue of prejudice or potential prejudice and
by raising the matter of prescription in this
application for
amendment, the defendant has done so improperly and irregularly.
It is
possible that the last word on the issue of prescription has been
said in these interlocutory proceedings and that the facts
which
emerged from the papers supplied the complete answer to plaintiff's
claim in the form of a bar to it based on prescription.
But it
remains an answer and not a fatal weakness present in the claim
itself at its inception, like a bad cause of action.
Herein
lies, in my view, the distinction between the matter of
Cross
v Ferreira,
[1950 (3) SA 443
(C)], and the present matter. The
main proceedings in this matter are trial proceedings. The proper way
to raise this issue of
prescription is to do so by way of a special
plea. Although this type of special plea is often referred to as a
peremptory exception
(see
The Civil Practice of the
Superior Courts in South Africa
, Herbstein and Van Winsen, 2nd
ed., p. 307E), this term was used in the Courts of Holland not in the
narrow sense applied to it
in South Africa, but as covering a number
of what would have been called special pleas. (
Western Assurance
Co
. v
Caldwell's Trustee
,
1918 AD 262
at p. 270.) By
raising the issue in the manner it did, the defendant has, in my
view, misconceived its remedy.”
[47]
That view was refined in
Union
Finance Holdings (Pty) Ltd v Bonugli and Another NNO
2013 (2) SA 449
(GSJ) thus:
“
[6]
The core issue raised by the plaintiffs is that the conditional
counterclaims have become prescribed. Before I deal with it
any
further, it is necessary to decide whether prescription can be raised
in these proceedings, being interlocutory in nature.
The defendant,
with reliance on the judgment of Viljoen J (as he then was)
in
Rand
Staple-Machine Leasing (Pty) Ltd v ICI (SA) Ltd
1977
(3) SA 199
(W), submitted that the defence of prescription can only
be raised by way of a special plea in the main action and therefore
not
in an interlocutory application as the plaintiffs have done.
In
Rand
Staple-Machine
the
learned judge, in dealing with an application for an amendment with
reference to the proceedings envisaged in s 17(2)
of the Prescription
Act 68 of 1969 (the
Prescription Act), held
that prescription could
only be raised in main proceedings, such as trial proceedings, and
not in intermediate or interlocutory
proceedings. The judgment has
not been referred to in subsequent cases dealing with this aspect.
The opposite view was expressed
by Foxcroft J in
Grindrod
(Pty) Ltd v Seaman
1998
(2) SA 347
(C), where in regard to an application for amendment the
learned judge held that prescription could be raised either if it
were
common cause or in situations where the claim or right to claim
were 'known to have prescribed'. The last-mentioned phrase is a
quotation from the judgment of Fleming DJP in
Stroud
v Steel Engineering Co Ltd and Another
1996
(4) SA 1139
(W) at 1142, where the leaned judge, in regard to an
application to amend by substituting the existing cause of action
with
a new cause of action, held that 'it would make no sense to
permit a claim which is known to have prescribed'. I prefer, and
agree
with, the approach adopted in
Grindrod
which,
as correctly pointed out by counsel for the plaintiffs, is in
line with the judgment of the Supreme Court of Appeal
in
Associated
Paint & Chemical Industries (Pty) Ltd t/a Albestra Paint and
Lacquers v Smit
2000
(2) SA 789
(SCA) para 9 where Grosskopf JA, in regard to an
opposed application for amendment, remarked:
'By
raising the question of prescription in his opposing affidavit the
defendant, in my view, complied with the provisions of
s 17(2)
of the
Prescription Act 68 of 1969
.'
The
judgment in
Rand Staple-Machine
therefore has been
overruled, at least by implication, and can no longer be considered
as binding authority. It follows
that the defendant's objection
cannot be sustained and that the issue of prescription was properly
raised in these proceedings.”
[48]
The reference to the passage in
Stroud
v Steel Engineering Co Ltd and Another
1996
(4) SA 1139
(W)
is relevant:
“
There
remains the contention that because the claim is prescribed, it
should not be allowed. I accept that the Court normally would
not
permit an allegation which has no possibility of advancing the
situation of a litigant and can at best serve as basis for the
need
to hear evidence which leads nowhere. Accordingly it would make no
sense to permit a claim which is known to have prescribed.
But
if the supervening of prescription is not common cause, the
application for amendment is normally not the proper place to attempt
to have that issue decided. Technically speaking, in fact,
prescription is not an issue until it has been pleaded. I say
'normally'
because there may be special cases, for example where only
legal interpretation makes the difference to facts which are
common
cause. However, except in such special situations, once
prescription is not common cause, the plaintiff should not be
deprived
of his chance to put his claim before the Court because of
apparent probabilities at the time when amendment is considered.
Considerations
of effectiveness and fairness confirm that propriety.
The present defendant ought to raise its proposed defence
(prescription)
in the same way that it would raise any other
defence which becomes appropriate after an amendment is granted.
In all the
circumstances the defendant should not have opposed the amendment.”
[49]
All of that suggests to me that, in the
circumstances of this case, the issue of prescription is best left to
the pleadings and
ultimate resolution at trial. It is, in my
respectful view, inappropriate to resolve such questions, in this
case, at the present
stage.
[50]
The third issue then also falls to be
decided in the appellants’ favour.
[51]
There remains the question of costs.
[52]
The appellants have achieved partial
success on appeal. They, however, persisted in the appeal as to costs
in circumstances where
it was abundantly clear that leave to appeal
in that regard had not been sought from or granted by the SCA.
[53]
In all the circumstances of the present
appeal it seems to me that it would be proper to declare that neither
side be entitled to
an award of the costs of the appeal and that each
side bear its own costs. Given that the SCA directed that the costs
of both applications
for leave to appeal (ie. before the court
a
quo
and before the SCA) were to be
costs in this appeal, nothing further need be said in those regards.
[54]
I make the following Order:
a.
The appeal is upheld.
b.
Paragraph 2(a) of the Order made by Kruger
J on 8 September 2017 is set aside and replaced with the following:
“
The Plaintiffs’ application for
leave to amend as set out in paragraph 2 of the notice to amend is
granted, and the application
for leave to amend as set out in
paragraphs 8, 9, 10 and 12 of the notice to amend is dismissed with
costs.”
c.
The appellants and the respondents shall
each bear his or her own costs of the appeal.
Vahed J
Mnguni J
Steyn J
Case
Information:
Date of
Hearing:
31 May 2019
Date of
Judgment:
20 September 2019
For
Appellants:
C J Pammenter SC
Instructed
By:
Ian Chadwick Attorney
Care of: Stowell &
Company
295 Pietermaritz Street
PIETERMARITZBURG
Ref: P L Firman/CHA365/0001/zs
Tel: 033 845 0500
For
Respondents:
N Singh SC
Instructed
By:
Larson Falconer Hassan Parsee Inc
Care of: B J Nicholsen
Attorney
21 Drummond Street
PIETERMARITZBURG
Ref: B J Nicholson
Tel: 071 480 6691