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[2019] ZAECELLC 28
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B.G.M v Bate Chubb and Dickson Inc (EL1221/17; ECD3221/17) [2019] ZAECELLC 28 (4 October 2019)
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IN
THE HIGH COURT OF SOUTH AFRICA
EAST
LONDON CIRCUIT LOCAL DIVISION
Case No: EL
1221/17
ECD
3221/17
In
the matter between:
B[…]
G[…]
M[…]
Plaintiff
and
BATE CHUBB AND DICKSON
INC
Defendant
JUDGMENT
MAKAULA
J:
A.
Introduction
:
[1]
The plaintiff married his ex-wife (the parties) on 12 December 1998
purportedly out
of community of property and by Antenuptial Contract
(ANC) with the application of the accrual system. I say
purportedly
because prior to their marriage, the plaintiff approached
the defendant in particular Mr N Schultz, to prepare an ANC which
provided
for no community of property between them and his ex-wife
and for the accrual system to be applicable. The ANC was to
exclude
the business assets of the plaintiff which were itemised as
follows:
1.1
Farm 656 Monte
Rosa
R 480 000.00
1.2
Elliot Brothers Loan Account
R
100 000.00
1.3
Elliot Brothers
Shares
R 100.00
1.4
Tomlinson & Wootton Loan Account
R 30 000.00
1.5
Tomlinson & Wootton Shares
R 5.00
1.6
Livestock and
Implements
R 160 000.00
1.7
Motor
Vehicle
R 40 000.00
Total:
R 810 105.00
The ANC was to record the
net commencement value of the plaintiff’s estate as nil and
that of his ex-wife as R20 000.00.
[2]
The defendant admits that during or about November 1998, an oral
agreement came into
existence in terms of which the defendant was to
draft an ANC for purposes of regulating the financial affairs of the
parties as
stated above.
[3]
The defendant prepared the ANC and it was executed on 12 December
1998. Pursuant
thereof, the marriage between them was
consummated on 12 December 1998.
[4]
It transpired during the divorce proceedings between the parties that
the ANC agreement
was contested. That led them to refer the
issue of the validity and enforceability of the ANC to trial as a
separated issue
from the divorce proceedings. A trial was held
before Plasket J on 27 and 28 July 2016. Placket J, declared
the ANC
to be void and in consequence thereof, found that the parties
were married in community of property. The plaintiff had to
pay
his ex-wife half the value of his nett estate which amounted to
R4 885 073.00. As a consequence, the plaintiff
issued
summons on 13 October 2017 suing the defendant for the said amount as
damages, taxed legal costs of his ex-wife’s
attorneys and costs
paid by the plaintiff to his attorneys for the determination of the
separated issue. The argument by
the plaintiff is that he had
given the defendant a clear mandate to draft the ANC in terms of his
instructions. The defendant
had breached that mandate.
[5]
The defendant raised several defences to the plaintiff’s
claim. The defendant
pleaded that the claim had prescribed
relying on sections 12 (1) and (3) of the Prescription Act, 68 of
1969 (the Act).
[6]
The defendant contended that the plaintiff relied on an agreement
that was entered
into in November 1998. The summons was issued
more than three years later. At that time, the claim had
already prescribed.
In the alternative, the defendant pleaded
that the plaintiff consulted with Kretzmann, a Director of the
defendant on or about
the 9
th
May 2014, wherein he was
informed that he had a potential claim against the defendant.
The plaintiff was further advised
by way of a letter dated the 12
th
May 2014 of the potential claim he had against the defendant.
The defendant pleaded as follows in this regard:
“
10.
As at the 9
th
May 2014, alternatively the 12
th
May 2014 or shortly thereafter the plaintiff was aware of all the
material facts upon which the purported claim against the defendant
could be formulated, however, failed to institute action within a
period of three years from the aforementioned dates as a consequence
of which the plaintiff’s claim in terms of
section 12(1)
of the
Prescription Act No 68 of 1969
this date had become prescribed.
(Sic)
11.
The plaintiff consequently had knowledge of the identity of the
debtor and the facts
from which the debt arises no later than the
12
th
May 2014”
[7]
As a second defence, the defendant pleaded that the plaintiff should
have mitigated
its damages by pursuing an appeal of the judgment of
Plasket J, to the Supreme Court of Appeals.
[8]
Lastly, the defendant further pleaded that the plaintiff failed to
plead a sustainable
case for the rectification of the agreement at
the time of divorce. Payment of half of the plaintiff’s
estate to his
ex-wife is a consequence of such failure to adequately
plead rectification.
[9]
The plea in this regard reads:
“
18.3
The defendant mentions that options open to the plaintiff included
pursuing an appeal against the
judgment
inter-alia
on the
basis that:
18.3.1 the
learned judge held that the plaintiff and his former wife had not
agreed about excluding his current business
assets when in fact the
evidence was to the contrary;
18.3.2 the
learned Judge failed to consider the late application to amend the
claim for rectification introduced by
the plaintiff’s counsel
during the course of argument, namely for deletion of the words ‘
or
to be acquired in the future
’ in the rectification
sought, or to rule thereon, notwithstanding there being no
objection thereto; and
18.3.3
the learned Judge failed to grant the rectification sought (including
as amended) notwithstanding
evidence which
established consensus between the plaintiff and his erstwhile wife
with regard to the terms of the ANC.
18.4
The defendant pleads further that the plaintiff failed to plead
timeously, alternatively at all,
a sustainable claim for
rectification, which claim on the evidence available would have been
sustained, alternatively failed to
testify honestly and coherently
with regard to the rectification sought”.
[10]
The defendant contended in paragraph 15 of its plea that the ANC as
presented, was in accordance
with the plaintiff’s wishes and
instructions. It further put the plaintiff to proof that had
the ANC been prepared
on the basis he contended, then the defendant
puts the plaintiff to proof that there would have been consensus
between the plaintiff
and his ex-wife and that the latter would have
signed the ANC reflecting such consensus.
[11]
In affirming that it did not breach its mandate, the defendant
pleaded that it executed the mandate
according to the standards of a
reasonable attorney of average ability. Defendant further
averred that at the time of drafting
the ANC it did not anticipate
nor could it reasonably have been anticipated by any attorney, that
the manner in which the ANC had
been drafted could or would result in
it being declared null and void some years into the future.
[12]
In replication, the plaintiff disputed that his claim against the
defendant had become prescribed.
The plaintiff disputed further
that he would have acquired knowledge that the debt was due to him by
the defendant at any time
before the judgment of Plasket J had been
handed down. Furthermore, the plaintiff pleaded, that in the
absence of any concession
by the defendant that there had been a
breach of the mandate given or that the defendant was liable to the
plaintiff for the consequences
of such a breach, he would not have
issued summons against the defendant. It was only after the
judgment pertinently pronounced
on the issue, that he commenced
action against the defendant.
[13]
The plaintiff denied that he instructed the defendant to draw up a
document that is void
ab initio.
In furtherance of his
denial, the plaintiff pleaded that Mr Schultz confirmed in the trial
on the separated issue, under oath that
the plaintiff’s oral
mandate given to the defendant was in terms contended for by the
plaintiff in its particulars of claim.
The plaintiff pleaded
that since the ANC was declared to be void
ab initio,
it was
not executed either in accordance with the standards of a reasonable
attorney, nor in accordance with the standards of average
ability.
[14]
The plaintiff averred that, Mr Schultz, confirmed under oath that he
had instructions to exclude
the plaintiff’s listed assets; that
there was consensus between the plaintiff and his ex-wife regarding
the basis upon which
the parties instructed Mr Schultz to draw up the
ANC. The plaintiff disputed that he failed to mitigate his
damages.
The order of Plasket J, that he was married in
community of property gave rise to an immutable obligation to pay
fifty percent
of his estate to his former wife which obligation was
not open to realistic commercial challenge on appeal, so argued the
plaintiff.
B.
The Antenuptial Contract
:
[15]
The clauses of the ANC, apart from the particulars of the parties,
read thus:
“
1.
That there shall be no community of property between them.
2.
That there shall be no community of profit or loss between them.
3.
That the marriage shall be subject to the accrual system in terms of
the provisions
of Chapter 1 of the Matrimonial Property Act, 1984
(Act No 88 of 1984).
4.
That for the purpose of proof of the net value of their respective
estates at
the commencement of the intended marriage the intended
spouses declared the net value of their respective estates to be as
follows:-
4.1
that of the said
B[…] G[…] M[…]
is
R810 105.00 consisting of:-
4.1.1
Farm 656 Monte Rosa
480 000.00
4.1.2
Elliot Brothers Loan Account
100 000.00
4.1.3
Elliot Brothers Shares
100.00
4.1.4
Tomlinson & Wootton Loan Account
30 000.00
4.1.5
Tomlin & Wootton
Shares
5.00
4.1.6
Livestock and Implements
160 000.00
4.1.7
Motor Vehicle
40 000.00
R810 105.00
4.2
that of the said Rosemary Lois Jannaway is R20 000.00 in respect
of cash on hand.
[16]
Plasket J heard and determined the issues before him and made the
following order:
“
(a)
The ante-nuptial contract signed by the plaintiff and the defendant
and dated 12 December
1998 is declared to be void and in consequence,
the parties were married in community of property.
(b)
The defendant’s counter-claim for the rectification of the
ante-nuptial contract
is dismissed.
(c)
The defendant is directed to pay to the plaintiff’s costs in
respect of the
determination of the separated issues”.
C.
The Trial
:
[17]
The plaintiff is the only witness who testified. The defendant
did not call witnesses.
[18]
The plaintiff is a farmer and a production manager at the East London
Abattoirs. He was
introduced to Mr Schultz, who at the time,
was a director of the defendant. At their first meeting, a
broad concept of the
ANC was discussed and Mr Schultz indicated what
the plaintiff needed to bring at their subsequent meeting. Mr
Schultz needed
the parties’ identity books, list of assets and
values. He also needed a list of the assets plaintiff wanted to
exclude.
He and his ex-wife agreed and furnished Mr Schultz
with the list as reflected on the ANC and paragraph 15 above.
[19]
On the appointed day, the parties met with Mr Schultz, at the office
of the defendant.
Mr Schultz explained the import of the new
Matrimonial Property Act, the
types of marriage agreements which they
could enter into. Mr Schultz suggested to them that an
“Antenuptial Contract
with accrual was the way to go”.
The parties agreed with the suggestion and elected to be married out
of community
of property with accrual. They furnished Mr
Schultz with the list of assets, in particular his business assets
which he wanted
to exclude and the R20 000.00 which his ex-wife
recorded as her cash on hand. The business assets and the
amount of
R20 000.00 were not going to form part of their marriage
regime, neither would they form part of the joint estate in future
especially
in the event of death or divorce, Mr Schultz explained to
them.
[20]
The parties were subsequently telephoned some days later to come and
sign the ANC. At the
offices of the defendant, they met with Mr
Kay, a Notary Public, and Mr Schultz. They all went through the ANC.
Mr Schultz
confirmed he had executed their mandate. He and his
ex-wife signed the ANC in the presence of Mr Kay. The plaintiff
at the time, was also satisfied that all his wishes were met.
[21]
The plaintiff testified that it became apparent to him eighteen years
later, when he was divorcing
his ex-wife that Mr Schultz did not
carry out his mandate. He learnt that, when the judgment of
Plasket J was delivered.
Neither Mr Schultz nor a member of the
defendant ever advised him that they made a mistake about the ANC and
that the plaintiff
had a claim for damages against them. In
fact, Mr Schultz denied before Plasket J, that he made a mistake in
drafting the
ANC.
[22]
Under cross-examination, the plaintiff testified that he was asked by
Mr Schultz to bring a list
of assets and not their values. The
evidence of his ex-wife, about her understanding of the instruction
to Mr Schultz, before
Plasket J was put to the plaintiff and he
accepted it. Before Plasket J, his ex-wife testified that her
understanding of
the agreement was that the business assets, as
listed in the ANC, would be excluded from their shared assets.
However, all
assets that were acquired after the consummation of
their marriage would form part of the “cake” i.e. “they
were
to share equally in the event of a divorce”. That
was the agreement according to his ex-wife.
[23]
The defendant, in an effort to establish that the plaintiff should
have appealed the judgment
of Plasket J, referred to various excerpts
of Plasket J’s judgment at which it was demonstrated that
Plasket J’s judgment
was based on incorrect facts. The
following are such instances. The plaintiff was referred to the
judgment where it was found
that the plaintiff was told by Mr Schultz
to bring amongst other things/documents a list of assets and their
values. The
plaintiff disputed this finding because it was not
based on the evidence tendered by Mr Schultz. The plaintiff
further disputed
the finding that the ANC was “drafted in more
or less standard form on the basis of fairly minimal instructions”
as
not correct because on the second consultation, he and his wife
had an extensive consultation with Mr Schultz.
[24]
Mr
Ford
, for the defendant, brought to the attention of the
plaintiff that Plasket J was incorrect in finding as follows:
“
It
is clear from the evidence of both parties that prior to the signing
of the ANC there had been no agreement as to its content
apart from
an acceptance that they were to marry in terms of the accrual
system. No further terms were agreed upon”.
The
plaintiff confirmed that.
[25]
The plaintiff accepted that the ensuing factual findings were not
based on his evidence and that
of his ex-wife before Plasket J.
“
To
the extent that Mr M[…] attempted to establish that he and Ms
M[…] had agreed about excluding his current business
assets,
his evidence is unconvincing and improbable. He never gave
evidence of this in chief and only sought to introduce
it in
cross-examination. Mr M[…]’s intention, it would appear
was to exclude his current business asset interests
from the
accrual. There was however no discussion in either of the
consultations with Mr Schultz of the exclusion of his
future business
interests”.
The
plaintiff denied that he instructed Mr Schultz to exclude all his
current and future assets as found by Plasket J. All
the
plaintiff sought was to exclude his business assets and all that
“permeated from one to the other”.
[26]
Mr
Ford
, in regard to the application for the rectification of
the ANC, informed the plaintiff that what was sought to be rectified
throughout
was the wording which excluded all current and future
business assets until the last day of argument before Pasket J.
He
put to the plaintiff that the rectification as it stood would
never have succeeded because that was never his intention. The
plaintiff could not give a proper answer as he seemingly did not
understand. The
answer proffered by the plaintiff was that he thought the terminology
used by the lawyers in that regard was premised on what he
intended.
[27]
Plasket J found as follows in his judgment:
“
No agreement was
reached at the first consultation about the exclusion of assets”
This,
the plaintiff disputed as being in conflict with his evidence and
that of his ex-wife. According to the plaintiff and
the record
of proceedings, Plasket J erred in the finding that:
“
Similarly no
agreement was reached at any time prior to the signing of the ANC”.
[28]
The plaintiff further agreed with the defendant that Plasket J erred
in finding that “(a)t
best for Mr M[…] the common
intention of the parties was no more than they would marry by ANC
with the accrual system because
there was an agreement between the
parties that the listed assets were to be excluded”. (
Sic)
[29]
Plaintiff testified that on 9 May 2014 that he was advised by the
defendant that there was a
problem with the manner in which the ANC
was drafted by Mr Schultz and Mr Kay. He was advised further
that the defendant
could not continue to represent him because there
was a conflict of interest and that he should get other attorneys to
represent
him. The meeting was followed by a registered letter
which confirmed the withdrawal of the defendant as his attorney.
The relevant portion relied upon by the defendant reads:
“
.
. . without any admission of liability or negligence we have informed
you that this may lead to a claim against our firm for which
you
should seek independent advice. I confirm that in the
circumstances we need to withdraw from representing you any further”.
[30]
The same sentiments, were conveyed to the plaintiff’s newly
appointed attorneys per letter
dated 12 May 2014 by the defendant
advising them of a potential claim he has against the defendant.
[31]
It was further raised with the plaintiff, by Mr Ford that the
defendant’s insurers instructed
the defendant to address a
letter to the plaintiff’s attorneys that any claim against the
defendant would be defended.
Furthermore, the insurers raised
the issue of whether the plaintiff had intentions of appealing
Plasket J’s judgment.
The defendant’s insurers
strongly felt that the judgment was incorrect and ought to have been
appealed against. It
was put to the plaintiff that, he, through
his legal representatives compromised the case against his ex-wife by
not appealing
the judgment of Plasket J.
[32]
It was further put to the plaintiff that had his lawyers researched
the law, they would have
found judgments which would have shown them
that they would not succeed in their application for rectification.
[33]
The defendant’s plea is that the breach relied upon by the
plaintiff occurred during 1998,
at the time the ANC was signed, a
period which is more than three years before the summons was issued.
Alternatively, the
cause of action arose in May 2014 when the
plaintiff was advised by Mr Krestzmann personally and subsequently
followed by correspondence
confirming that. Therefore, as at
that period the plaintiff became aware of all the material facts upon
which the purported
claim against the defendant could be formulated.
The plaintiff failed to take action within three years subsequent
thereto.
The defendant pleaded further, that as at 12 May 2014
the law on the issue was clear and the plaintiff could have acquired
knowledge
about the claim he had against the defendant by exercising
reasonable care. Therefore the claim against the defendant had
prescribed.
[34]
Mr Ford submitted that the contention by the plaintiff that the
defendant disputed that there was
a valid claim against it and that a
concession was required by the defendant before prescription could
run, and further that the
plaintiff only became aware of the material
facts upon the judgment of Plasket J, was misguided.
[35]
Mr Ford argued that the essential facts which the plaintiff knew or
ought to have known in order
to avoid prescription were, (a) the
identity of the debtor; (b) that the ANC had not been drafted in
accordance with his instructions
and mandate; (c) that the aforegoing
constituted a breach of contract; (d) that the ANC required
rectification; (e) that absence
rectification, the contract was void
ab initio
; and (f) that he suffered a loss in the aforegoing
circumstances.
[36]
The defendant initially submitted that the plaintiff did not require
any declaration by the court
that the ANC was unenforceable because
it was so from 1998 when it was signed. The submission goes
that the loss of exclusive
ownership in the assets by the plaintiff
was an immediate reality albeit not appreciated by him. The
fact that the plaintiff
did not know the extent of his damages and
their precise future quantification, does not alter the fact that
prescription started
to run from the date of the breach
[1]
.
I should mention upfront that this submission was abandoned by Mr
Ford
in argument.
[37]
Furthermore, the defendant submitted that the prescriptive period
started to run on 9 May 2014 when
the plaintiff had a meeting with Mr
Kretzmann at the defendant’s office alternatively shortly
thereafter and upon consultation
with his new attorneys of record
which was prior to 12 October 2014.
[38]
Mr
Cole
, for the plaintiff, argued that the plaintiff’s
cause of action arose only at the time the court declared the ANC to
be void
ab initio.
In furtherance thereof, he stated
that the plaintiff would not have known or anticipated that there was
a problem with the ANC until
such time that it was declared to be
such by Plasket J.
D.
Prescription
:
[39]
Mr
Cole
submitted that extinctive prescription commences to run when the debt
becomes due. It can only become due once the debtor
is under an
obligation to pay immediately and in order to claim recovery of the
debt, a creditor must have a complete cause of
action so he argued.
Relying on the matter of
Stockdale
and Another v Stockdale
[2]
,
he submitted that there is a vital difference between the coming into
existence of a debt and the recoverability thereof and the
purpose of
section 12(1) of the Act was to crystalise that difference. He
concluded by arguing that prescription starts to
run not necessarily
when the debt arises but only when it becomes due thus making the
point that a debt must be immediately enforceable
before it can be
claimed.
[40]
Mr
Cole
further referred to
Electricity
Supply Commission v Stewarts and Lloyds of SA (Pty) Ltd
[3]
in
submitting that a debt which arises from a breach of contract, does
not become recoverable until the loss or damage has been
suffered.
[41]
Mr
Cole
stated that the defendant conceded in its plea that
not even an attorney would have known that the ANC would be declared
null and
void in the future.
E.
Other defences raised by the defendant
:
[42]
In the event I do not uphold the plea of prescription, the defendant
raised issues which are
relevant to causation, alternatively a
failure by the plaintiff to mitigate his damages. In respect of
the issue of causation
the defendant avers that any damages which may
have been suffered by the plaintiff were occasioned by his own action
or inaction
and not caused by any alleged breach of mandate on the
part of the defendant, such including the following.
42.1
his failure to pursue an appeal against the judgment of Plasket J;
42.2
his failure to plead a sustainable rectification or rather to pursue
a claim for rectification which went
beyond the evidence available
and which was not sustainable; and
42.3
his failure to provide coherent and truthful evidence in the divorce
proceedings.
[43]
The defendant deferred to the evidence of the parties, and Mr Schultz
regarding what took place in the consultation
between them and the
general practise of the latter. In its reasoning the defendant
avers that the factual findings of Plasket
J, were not in accordance
with the uncontroverted evidence of the plaintiff and the latter’s
evidence was further supported
by the evidence of Mr Schultz as to
his general
modus operandi.
[44]
The defendant argued that the failure of the plaintiff to pursue an
appeal, alternatively, to plead and pursue
a sustainable
rectification, resulted in a break in the casual chain, resulting in
the damages occasioned by the defendant’s
conduct in drafting
the ANC in 1998 as being too remote. The probability is that
the judgment of Plasket J would have been
overturned on appeal.
I shall refer to the defendant’s heads of argument in this
regard which read as follows:
“
63.1.
In paragraph 25 of his judgment
[4]
Plasket J found as follows:
‘
I am of the view
that the probabilities favour the version of Mr M[…] that,
having been introduced to Mr Schultz, he and
Ms M[…] later
consulted with him, … and they returned to sign the document
at a later stage. It is improbable
that only one consultation
would have occurred and that the ANC was signed at that first and
only consultation. That version
is also at odds with Mr
Schultz’s evidence, which strikes me as probable and a rational
way of doing things, that as a matter
of course he consulted with
both parties to a proposed marriage prior to drafting the ANC and
arranging for them to sign it’.
[45]
The defendant submitted therefore that the plaintiff has failed to
show that the breach on the
part of the defendant was a
causa sine
quo non
of his loss and therefore the question whether there was
legal-causation does not arise.
[46]
The defendant pleaded that the plaintiff was the cause of his own
loss because he failed at the
divorce hearing to testify coherently
and truthfully.
[47]
The defendant argued that had the rectification claim succeeded, the
plaintiff would have mitigated
his damages in full and thus the
breach of the mandate on the part of the defendant would not have
been a
causa sine quo non
of his loss.
[48]
This, the defendant based on the general principle that when a
contract has been breached, the
innocent party is not entitled to sit
back and allow damages to multiply. He has a duty to mitigate
his damages.
[5]
The
defendant submitted that for the reasons highlighted in paragraph 43
above, a reasonable person in the position of the
plaintiff would
have considered and pursued an appeal against the judgment of Plasket
J. The defendant averred that the plaintiff
acted unreasonably
in this regard by not considering an appeal even after the
defendant’s insurer contended that an appeal
be undertaken.
The unreasonableness continued after the plaintiff compromised the
proprietary aspects of his divorce in concluding
a settlement on the
basis of a marriage in community of property in 2017, thus rendering
an appeal and condonation of its late
filing unavailable, so argued
the defendant.
[49]
The plaintiff, contrary to the defendant, argued that he has met the
standard of proving that
he acted reasonably in an effort to mitigate
his loss which resulted from the breach by the defendant of its
mandate (having committed
a breach of contract). The plaintiff
mitigated its loss by not embarking on expensive and uncertain
litigation of lodging
an appeal in an endeavour to reduce his loss.
[50]
Furthermore, the plaintiff submitted that the
Bath
case was
binding on Plasket J and the evidence of the parties which indicates
that they had a different appreciation of what “excluded
assets” meant as found by Plasket J, clearly indicates that an
appeal to the Supreme Court of Appeals would have been both
expensive
and doubtful litigation. A reasonable and careful businessman
in the position of the plaintiff would not have taken
this steps in
the normal course.
[51]
Relying on the letter received by the plaintiff’s attorneys on
19 October 2016, part of
which reads:
“
It would be
appreciated if you could telephone me upon receipt hereof, so that we
can discuss the way forward.
It appears that
this could well result in a claim against your Professional
Indemnity Insurers. We wish to minimise any
legal costs
relating to this. If you have already referred this
matter to your Professional Indemnity Insurers, could
you please
advise me of the contact details of the person that I can deal with?”
(
Sic
).
[52]
The plaintiff argued that the defendant did not react expeditiously
in requesting him to lodge
an application for leave to appeal, nor
did the defendant tender costs in respect of the legal proceedings.
Instead, the
defendant’s insurers suggested on 26 January 2017
after the expiry of the dates for an application for leave to appeal,
that
an appeal should have been launched. Neither the defendant
nor the insurer tendered legal costs for the application for leave
to
appeal, nor did they suggest that such failure would be raised as a
defence, in the event of an action like the present, so
argued the
plaintiff.
[53]
The plaintiff in response argued that Plasket J was correct in his
finding that there was no
common continuing intention between the
parties prior to signing the ANC and that there had been no agreement
as to their precise
intention apart from an acceptance that they were
to marry in terms of the accrual system. Mr
Cole
submitted that the alleged failure to have a continuing common
intention at the time of signing the ANC is shown by their different
understanding of what the meaning of “excluded assets”
implied. His ex-wife testified that she agreed and understood
that there would be no sharing of the business assets itemised under
4.1 of the ANC but that “whatever was built together
while they
were married was one cake”. On the other hand the
evidence of the plaintiff before Plasket J, was that the
business
assets that were excluded under 4.1 of the ANC would include any
further growth of those assets. Based on these
facts, Plasket J
had the difficulty of determining a common intention with the
evidence that was based before him. The plaintiff
therefore
concluded that the misunderstanding between them could never be
married to produce a common intention that the ANC was
signed and
therefore the application for rectification should fail. The
plaintiff concluded that, as the onus to provide
rectification rested
with the plaintiff, no appeal would have succeeded.
F.
Analysis
:
[54]
The plea of prescription raised by the defendant, if upheld disposes
of the matter. There
shall be no need to deal with the various
defences discussed briefly above.
[55]
Sections 12(1) and (3) of the Act provide:
“
12. When
prescriptions begins to run.
(1)
Subject to the provisions of subsection (2), (3), and (4),
prescription shall commence
to run as soon as the debt is due.
(2)
. . .
(3)
A debt shall not be deemed to be due until the creditor has knowledge
of the identity
of the debtor and 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”.
[56]
It is settled that prescription raises both questions of fact and
law
[6]
. In applying the
provisions of the Act, I have to have regard to the facts. The
principles of law applicable are common
cause. I have dealt
with the facts above and what is left for me to decide “is when
did the debt become due and payable”
to the plaintiff.
[57]
Prescription begins to run when the debt is immediately claimable by
the debtor or put differently
“that there has to be a debt in
respect of which the debtor is under an obligation to perform
immediately” . . . (i)t
follows that prescription cannot begin
to run against a creditor before his cause of action is fully
accrued, i.e. before he is
able to pursue his claim”.
[7]
There is a vital difference between the coming into existence of a
debt and the recoverability thereof. There can be
little doubt
that the purpose of the legislature in enacting section 12(1) of the
Act was to crystalise that difference.
Prescription begins to
run, not only necessarily when the debt arises, but when it becomes
due.
[8]
[58]
A debt is only due when the creditor’s, cause of action is
complete. This notion
involves two things, namely that the
creditor is in a position to claim payment forthwith, and that the
debtor does not have a
defence to the claim for immediate payment.
Corbett
JA
, in
Evins v
Shield Insurance Company Ltd
[9]
,
relying on other cases gave a detailed analysis of what a cause of
action is as follows:
“
The
meaning of the expression “cause of action”, as used in
various statutes defining the jurisdiction of courts or
providing for
the limitation of actions and in other contexts, has often been
considered by the Courts. In
McKenzie v Farmers’
Co-operative Meat Industries Ltd
1922 AD 16
this Court held that,
in relation to a statutory provision defining the geographical limits
of the jurisdiction of a magistrate’s
court, “cause of
action” meant -
“
.
. . every fact which it would be necessary for the plaintiff to
prove, if traversed, 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”.
(
Per
Maasdorp JA
at 23
.)
And in
Abrahamse & Sons v SA
Railways and Harbours
1933 CPD 626
, a case concerning the
prescription of a claim against the Railway Administration, which
turned on the question as to when the
plaintiff’s cause of
action arose, WATERMEYER J stated:
“
The
proper legal meaning of the expression ‘cause of action’
is the entire set of facts which gives 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.”
[59]
The requirements set out by section 12(3) of the Act have been dealt
with in many cases both
before the Supreme Court of Appeal and the
Constitutional Court
[10]
.
The onus in this matter is on the defendant to prove or establish
that the debt has become prescribed.
[60]
As pointed out the principles referred to by both parties regarding
prescription are what the
law requires. Mr Cole argued that a
debt which arises from a breach of contract, does not become
recoverable until the loss
or damage has been suffered. He
relied on his proposition on both
Eskom
v Stewarts and Lloyds
and
the learned authors Loubser (Loubser).
[11]
[61]
The learned Loubser states in his work that:
“
The debt to pay
damages generally becomes due when loss occurs as a result of the
breach of contract, provided that the plaintiff’s
choice of
remedy may determine the due date, as illustrated below, and provided
further that the plaintiff should have knowledge
of the facts from
which the debt arises and the identity of the debtor or should have
been able to acquire such knowledge by exercising
reasonable care.
It is not always a simple matter to determine the time when loss
occurs as a result of a breach of contract.
In
Eskom
v Stewarts and Lloyds SA (Pty) Ltd,
for example, a contractor installed defective piping in a power
plant, resulting in an explosion a few years later, and the question
was whether the loss was caused when the work was done or when the
work was handed over to the owner or at the end of the maintenance
period during which the contractor had to remedy defects or at the
time of the explosion. The court held that the loss was
handed
over to the owner
[12]
”.
[62]
After reviving a number of discussions, Loubser reasoned as follows:
“
The
decision in the
Burger
case is difficult to reconcile with the principles that prescription
in respect of a debt for damages arising from breach of contract
begins to run when the debt becomes due. Such a debt becomes
due when loss occurs as a result of the breach of contract.
Where the Act creates a potential of loss, but it is not yet possible
to determine the extent of the loss, or for that matter,
whether loss
will occur at all, the debt should not be considered due for the
purposes of prescription.
The
debt for damages should be considered due as soon as the loss has
manifested itself to a degree that is sufficient to enable
the argued
party to quantify his loss
”
[13]
[63]
It cannot be disputed that prior to the divorce proceedings, the
issue of the validity of the
ANC did not arise. It only came to
the fore during the divorce proceedings. Pursuant to that, the
plaintiff consulted
with Mr Kretzmann who advised him that as at that
time, the facts were that the mandate was not carried out properly
and that he
had a potential claim against the defendant. The
defendant as a result could not continue to represent him and that
was pursued
by a letter advising him as such on 12 May 2014, further
advising that he should get legal assistance from another firm of
attorneys.
With the bare fit of hindsight, the act of not
drafting the contract correctly (the act contracting the breach)
occurred in 1998
when the ANC was drafted. As at that time, it
was not yet possible to determine the extent of the loss or, for that
matter
whether the loss will occur at all. Therefore, the debt
could not be considered due for purposes of prescription. At
that stage, there was no divorce which would have necessitated that
the ANC be reviewed.
[64]
But in May 2014, it became apparent that there was a problem with the
ANC. Such problem
necessitated the defendant’s withdrawal
from representing the plaintiff. In the words of the defendant
a ‘potential
claim’ and conflict ‘of interest’
was looming. The plaintiff was alarmed by the events to reality
that
his assets were at stake as a consequence of the divorce and the
discovering of the reality that validity of the ANC was in question.
It became apparent that there was a conflict between clause 4.1 and
4.2 of the ANC hence there was an application for its rectification.
As at that stage it became manifest that the plaintiff was to a large
extent going to lose his assets as a consequence of the wrong
manner
in which the contract was drafted hence the application for
rectification was pursued.
[65]
The plaintiff in pursuing rectification did not know whether it would
succeed, or not.
But the law was clear at that stage that if
rectification failed, the consequence was that the marriage would be
considered to
be in community of property
[14]
.
[66]
The papers renewal, especially the consultation of 9 May 2014 and the
correspondence between
the plaintiff and defendant’s attorneys,
that a claim for damages was a strong possibility has the withdrawal,
the involvement
of the defendant’s insurers and the attempt to
rectify the ANC. Again in the words of Loubser, ‘(t)he
debt for
damages should be considered due as soon as the loss had
manifested itself to a degree that is sufficient to enable the
aggrieved
party to quantify his loss’, the plaintiff knew that
or ought to reasonably have known that because of the problem
regarding
the validity of the ANC, he was to lose half of his assets.
[67]
Based on the facts, the plaintiff’s cause of action was
complete in May 2014 except for
a pronouncement by Plasket J on the
validity of the ANC. Furthermore, pursuing his cause of action,
the plaintiff was not
dependant on Plasket J’s judgment.
I do not agree with the submission by Mr
Cole
in this regard
for the reasons discussed above. It might have been ‘one
piece of evidence which was lacking to prove’
his case.
[68]
I find therefore that prescription started to run from 12 May 2014
and a period of three years
expired without the plaintiff having
issued the summons. The claim has therefore prescribed.
[69]
As a consequence, I make the following order.
1. The special plea of
Prescription is upheld with costs.
_______________
M
MAKAULA
Judge
of the High Court
Counsel
for the Plaintiff: Adv SH Cole
Grahamstown
Instructed
by: Cooper
Conroy Bell
& Richards Inc
East
London
Counsel
for the Defendant: Adv EA Ford (SC) & J Adv Nepgen
Port
Elizabeth
Instructed
by: Joubert
Galphin & Searle
Date
Reserved:
12 March 2019
Date
Delivered:
04
October 2019
[1]
Which I assume the defendant in this context refers to 1998.
[2]
2003 (3) All SA 358
(C) at 362 A to C.
[3]
1981 (3) SA 340
AD at 344 F – G and Loubser: Extinctive
Prescription: Juta 1996 at page 78.
[4]
See: Exhibit “B” at page 51.
[5]
Victoria
Falls and Transvaal Power Co. Ltd v Consolidated Langlaagte Mines
Ltd
1915
AD 1
at 22;
Versfeld
v South African Citrus Farms Ltd
1930 AD 452
at 454.
[6]
Njongi
v MEC, Department of Welfare, Eastern Cape
[2008] ZACC 4
;
2008 (4) SA 237
(CC) at 254 A.
[7]
Deloitte
Haskins & Sells v Bowthorpe Hellerman Deutsch
[1990] ZASCA 136
;
1991
(1) SA 525
(A) at 532 H – I;
Njongi
v MEC, Department of Welfare, Eastern Cape, supra
at
257 A – B.
[8]
The Law of South Africa First Reissue: Vol 21 page 55 at paragraph
142 and the authorities cited therein.
[9]
1980 (2) SA 814
(A) at page 838 D – H.
[10]
Truter
and Another v Deyel
[2006] ZASCA 16
;
2006
(4) SA 168
SCA at paragraph16;
Fluxmans
Inc v Levenson
2017
(2) SA 520
(SCA) paragraph 9 and 10;
Links
v Department of Health, Northern Province
2016 (4) SA 414
(CC);
Loni
v Member of the Executive Council Department of Health, Eastern
Cape, Bhisho
2018
(3) SA 335
(CC).
[11]
See paragraph 40 above.
[12]
Page 77.
[13]
Loubser at page 78.
[14]
Bath v
Bath
[2014]
ZASCA (24 March 2014;
Bath
v Bath
[2014]
JOL
31724
(SCA)) and
JCK
v RK
(38878/200)
[2014] ZAGPPHC (7 March 2014).