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[2016] ZAGPPHC 903
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Strydom Britz Mohulatsi Inc. v Mouton (64226/2011) [2016] ZAGPPHC 903 (11 October 2016)
REPUBLIC
OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE NO:
64226/2011
11/10/2016
Reportable:
No
Of
interest to other judges: No
Revised.
In the matter
between:
STRYDOM BRITZ
MOHULATSI
INC. PLAINTIFF
And
CHRllSTIAAN
JOHANNES
MOUTON DEFENDANT
JUDGMENT
BAM AJ
[1] The Plaintiff s
claim against the Defendant is for payment of fees for legal services
rendered to and on behalf of the Defendant
in a motor vehicle
accident claim against the Road Accident Fund ("The RAF case").
The Defendant is resisting the claim
by way of a counterclaim in
terms of which the Plaintiff's fees are to be set off against the
Defendant's damages arising from
an alleged failure by the Plaintiff
to carry out the RAF case mandate professionally.
[2]
The Plaintiffs claim on the one hand is supported by a taxed bill of
costs in the amount of R135 896.40; which bill was duly
served on the
Defendant. The Defendant's counterclaim in the amount of R149 527.67
on the other hand, is said to compromise of
R31 109.90 in wasted
costs and additional legal costs as well as R118 417.77 in lost
interest calculated from 31 July 2009 to 13
August 2010 on the amount
of R737 710.00 awarded to the Defendant in the RAF case on 13 August
2010, ("the final offer").
The difference between the
amounts of the claim and the counterclaim is R13 631.27, which the
Defendant now claims from the Plaintiff
with costs a
tempore morae
in the event that the counterclaim succeeds.
[3] It is common
cause that:
1. The Defendant instructed the Plaintiff to act as his attorneys to
institute a claim against the RAF in 2003 after being injured
in a
motor vehicle accident.
2. The parties entered into a contingency fee agreement.
3. The RAF made an offer of
R325 000.00
in full settlement of
the Defendant's claim, ("the initial offer'') in July 2009.
4. On 30 July 2009 Mr. Etsebeth, the Defendant and the Defendant's
attorney Mr Mohulatsi attended at the offices of Advocate Lopen
where
a discussion on the settlement ensued with the RAF legal
representative Ms Strydom. The defendant had asked Mr Etsebeth to
act
as a watching brief.
5. The trial of the matter which was set down for the following day,
31 July 2009, was subsequently postponed.
6. The Defendant thereafter terminated Plaintiff's mandate and the
Plaintiff was requested to hand over the contents of the RAF
case
file by Lockets Attorneys in September 2009.
7. On 22 January 2010, Mr Etsebeth wrote another letter requesting
the Plaintiff to submit a taxed bill of costs. In this letter,
the
contingency fee agreement between Plaintiff and Defendant was
acknowledged and furthermore an undertaking was made in the following
terms:
"Having regard to the termination of your mandate by Mr
Mouton, our instructions are to place on the record that our client
commits himself to payment of your taxed bill in respect of legal
services rendered on
conclusion of the matter."
8. The Defendant is now resisting the Plaintiff's claim for payment
of the same taxed bill of costs; and has instituted a counterclaim
as
indicated.
[4]
The Court has to decide on two issues. Firstly, it is whether the
Plaintiff failed to carry out the RAF mandate in a professional
and
diligent manner as would be expected of an attorney. Secondly; and in
the event of a finding in favour of the Defendant on
issue one;
whether the Defendant is entitled to claim damages in the form of
mora
interest for such breach. At the trial of this matter,
the parties agreed that the Defendant will begin and lead evidence on
his
defence and on the counterclaim. The Defendant called Mr.
Etsebeth as the only witness and the Plaintiff closed its case
without
leading any evidence.
[5]
What must be kept in mind is that the Plaintiff's bill of costs is
not being disputed. The Defendant is asking the court to
set off the
claim amounts against one another and grant him judgment on the
difference.
[6]
The evidence before court is that Mr. Etsebeth and the Defendant got
involved in discussions about the RAF case around June
2009. The
Defendant, who is a regular client of Lockets Attorneys indicated
that he was not happy with how the claim was being
handled. He was
particularly concerned about the loss of the use of one of his eyes.
With regard to the damages claim, Mr. Etsebeth
testified that the
reason why the initial offer was so. low was because the Plaintiff
had failed to secure documents pertaining
to the Defendant's business
activities, and thus proof in support his portion of the
quantum
(loss of income) was not presented to the RAF. Mr. Etsebeth said
that he on the other hand obtained the documents, supplemented the
already discovered documents and as such managed to secure a
satisfactory settlement amount of
R737 631.27
("the final
offer") which was more than double what was offered initially.
He added that the Plaintiff would not have
been able to lead evidence
on
quantum
on the trial date because they had not obtained the
necessary information timeously hence the postponement of the case.
[7] In
cross examination, counsel for the Plaintiff presented evidence
showing that the very same documents Mr.Etsebeth managed
to secure,
had been requested from the Defendant on a number of occasions
without success. He referred the court to requests for
documents made
to the Defendant on pages 94 and 97 vol. 1 of the bundle and a letter
dated 30 January 2008 from the Plaintiff to
the RAF attorneys, Dysons
Incorporated, on page 98 pointing out the Defendant's
nonco-operation in this regard. Ms Strydom
on behalf of the RAF
had indicated that they would object to the Defendant's bookkeeper
giving evidence of income before and after
the accident in the
absence of source documents.
[8] Mr
Etsebeth also admitted in cross-examination that expert reports were
already in place at the time the RAF made the initial
offer as
appears on pages 239-249 in volume 1 and pages 586,516,542 and 582 in
volume 2, He added that before the meeting of 30
July, the Defendant
told him that the offer was upsetting and wanted him, Etsebeth, to
protect his interests.
[9]
With regard to his watching brief, Mr Etsebeth admitted that he was
not present all the time during the meeting in advocate
Lopen's
Chambers, but had felt that the attorney and counsel supported the
initial settlement. This is because he did not hear
them say it was
not acceptable. Thus it was not because of any positive conduct on
their part but because he did not hear them
advise the Defendant
against accepting the offer.
THE COUNTERCLAIM
[10]
It is not clear how the amount of R31 109.90 in wasted and other
legal costs was arrived at. It is alleged that Ms Strydom
counsel for
the RAF had indicated that they would ask for costs occasioned by the
postponement of 31 July 2009 but they had not
discussed this with the
Plaintiff and had not yet submitted a taxed bill, so it was just an
estimate by the Defendant. I am satisfied
that both parties are in
agreement that this amount should be ignored. The other amount of
R118 714.44 made up of lost interest
is what I will concern myself
with going forward. My understanding of the Defendant's explanation
regarding this amount is that
had the Plaintiff not breached the
mandate as described, the RAF would have offered him the amount of
R737 711.00 on 31 July 2009
or the court would have awarded him that
same amount and since the matter was postponed and he only received
this amount on 13
August 2010, he is entitled to claim interest
thereon as damages.
[11] I
agree with counsel for the Plaintiff that the facts of this matter
fall squarely within the ambit of
Steyn v Ronald Bobroff
&
Partners
[2012] ZASCA 184.
In that case Mrs Steyn,
acting on behalf of her minor son, claimed damages against the
attorneys because they delayed in prosecuting
and finalising the
claim against the RAF. The damages were in the form of lost interest
on the amount that was finally awarded
by the RAF. The court had to
answer the question whether it was competent for Mrs Steyn to claim
mora
interest as damages in a matter involving a contract and
where the RAF and not the attorney was her debtor. Similarly in this
case,
the Defendant is requesting the court to award damages in the
form of
mora
interest which would have placed him in a better
position had the Plaintiff not breached the mandate of conducting his
RAF case
with diligence and skill expected of an attorney. The
Defendant thus accuses the Plaintiff of having breached a contractual
obligation
which breached led to the delay in finalising the claim.
[12]
The often cited authority on whether breach of a contract can attract
delictual liability is that of
Lillicrap, Wassenar and Partners
v Pilkington Brothers (SA) (PTY) LTD
1985 (1) SA 475
(A).
The
case was specifically concerned with whether the breach of a
contractual duty to perform professional work with due diligence
is
per se a wrongful act for purposes of delictual liability; with the
collary that if the breach were negligent, damages could
be claimed
ex delicto.
The court decided that, mainly for reasons of
policy, it was not desirable to extend the
Aquilian Actum
to
the duties subsisting between parties to a contract for professional
services. The Plaintiff had instituted action under delict
because
its contractual remedies had prescribed.
[13]
The essence of the
Lillicrap
decision and subsequent cases
such
as
Durr v ASSA Bank Ltd
1997
(3)
SA
448
(SCA)
is that a Plaintiff cannot rely on the breach of
contract alone as wrongful conduct for purposes of a delictual claim.
They go further
to acknowledge that there are instances where the
factual matrix can give rise to both contractual and delictual
actions, and this
is in instances where the facts pleaded before the
court clearly disclose a cause of action in delict. In
Principles
of Delict (Juta & CO, 1993)
J Burchell deals with the
distinguishing features of delictual and contractual liability and
describes a delict as
"
a
civil
wrong to an individual for which damages can be claimed
as compensation and for which redress is
not
usually dependent on
a
prior
contractual understanding to refrain from
causing harm
"
(page 9).
The
reluctance to extent delictual liability to the contractual sphere is
mainly due to the fact that a contract normally has adequate
remedies
and parties to a contract expect their reciprocal rights and
obligations to be regulated by their agreement.
[14]
Like the Plaintiff in
Lillicrap
and
Bobroff supra
the
Defendant in this case is asking that the contractual agreement
between him and the Plaintiff be circumvented by the application
of
the law of delict, without having established an independent cause of
action in delict. Given the facts of this case, I cannot
agree that
the Plaintiff acted unprofessionally and without due diligence in the
absence of further evidence as to how a reasonable
attorney dealing
with personal injury cases would have acted. Once the mandate had
been terminated, the new attorney (Mr Etsebeth)
had to come on
record, collect financial documents and work out the loss of income
portion of the claim and finally supplement
the discovery as well as
attend to the pre-trial conference. All these involve a process that
takes time. This is the same process
that the Plaintiff had to go
through in order to lodge and proof the claim. It is not clear how,
under the circumstances it can
be said that the Plaintiff did not
pursue the RAF claim with the requisite professionalism. By the time
the meeting was held at
advocate Lopen's chambers, all documents,
save for the loss of income evidence, were in the file.
[15] I
further take into account that with regard to the loss income portion
of the
quantum,
it was the Defendant himself who failed to
provide the required source documents to the Plaintiff. That Mr.
Etsebeth managed to
get hold of this information was probably because
after seeing the initial offer, the Defendant realised that he had to
furnish
that information as a matter of necessity. When the claim was
settled on the morning of the trial on 10 August 2010, again through
an improved offer of settlement which the Defendant this time around
accepted, the amount had increased because proof of loss of
income
had now been properly submitted. The source documents contained
factual evidence which did not need the bookkeeper to be
called as an
expert witness as the defence contended and the fact is the Defendant
failed to submit those to the Plaintiff despite
several requests. I
find under the circumstances that the Defendant has failed to prove a
breach of the mandate given to the Plaintiff
on the RAF case.
[16]
Turning to the issue of whether the Defendant would have been
entitled to
mora
interest, even though the counterclaim was
based on breach of contract, the court notes the following:
Firstly,
it can never be that the Plaintiff would have received R737 771.00
from the RAF on 31 July 2009 as there was already an
offer in place.
Secondly, the
initial offer was just that, a proposal that was subject to
acceptance and indeed it was rejected and thus fell off.
Thirdly
it must be remembered that when the initial offer was rejected by the
Defendant, there was still a further opportunity to
engage in
negotiations or go to trial. The court is aware that the actual claim
lodged against the RAF was for R1.3 million, and
the Defendant
eventually accepted the offer of R737 771.00. This is how RAF matters
normally play out. The letter of 22 January
2010 referred to in
paragraph [3] sub-8 above clearly states in paragraph 2 thereof that
the Plaintiff was to cease any negotiations
with the RAF on behalf of
the Defendant. This means that while the plaintiff still had the
mandate, the matter was still being
worked on and eventually would
have ended up with another offer or a court order.
[17]
Mora
interest is relevant in the law of damages in
inter
alia,
as a measure of damages which is sustained on account of
non-possession of money that is due to the creditor
(my
emphasis). In the case
Crookes Brothers V Regional Land Claims
Commissioner for the Province of Mpumalanga
[2012] ZASCA 128
,
the
court ruled in favour of the appellants that they were entitled to
mora
interest because the purchase price was paid later than
the agreed date. The court distinguished
mora
interest from
interest as a component in the calculation of damages by indicating
that in a claim for
mora
interest the claimant is not required
to prove any damages because money is already owing to him.
Mora
interest thus presupposes the existence of an underlying
principal debt.
[18]
Counsel for the Defendant argued that the Defendant's damages were
liquidated because they were ascertainable. Thus the amount
paid to
the Defendant in settlement of the RAF claim had assumed the
characteristic of a debt. It is not clear how an offer can
become a
debt owing to the offeree. The nature of an offer is that it needs to
be accepted, failing which it falls off, and also
it can be
conditional, thus entitling the offeror to withdraw it if certain
conditions are not met. That can hardly be said to
constitute a debt.
[19] A
further difficulty arises when asking the question as to whether the
Defendant's claim was with the RAF or the Plaintiff.
In the absence
of the offer by the RAF, or in the event of rejection of the offer,
the Defendant would ordinarily be expected to
obtain his remedy
against the RAF in court. The court would then determine how much he
should be paid and in addition how the interest
on the principal
amount should be dealt with. Until an order of court is issued, there
is no debt to speak of; hence there is no
mora
interest to
speak of. Brand JA summarises the position clearly in his
supplementary judgment of the
Bobroff
case
supra
at
paragraph (38) thus:
"By contrast, it is clear to me that in this matter interest
was not claimed as an accessory or an ancillary obligation to a
principal debt. The Road Accident Fund was the appellant's debtor for
the amount of the award. The respondent was not. There was
therefore
no principal debt owing by the respondent. The rate of interest
prescribed under the Prescribed Rate of Interest Act
therefore simply
did not apply. In consequence I agree with the respondent 's argument
that, absent any evidence that had the appellant
received the amount
of the award fourteen and a half months earlier, it would have been
invested at a certain rate of return, the
appellant had failed to
establish a quantified claim for damages. For this reason alone
-
and apart from all the other reasons that appear from the judgment
of Bosielo JA
-
I therefore believe the appeal should fail."
[20]
Mora
interest also suggests the presence of delay. The
creditor with a valid monetary debt is entitled to receive the
interest with effect
from the date the debt becomes due and payable.
In the present case
"the interest is not ancillary or
accessory to any principal monetary debt, but it is used
as a
component in the calculation of damages for alleged breach of
a
mandate"
-
paragraph 36
Bobroff
case
.
In the premises it
is my view that the Defendant even if he had proved a breach of the
RAF mandate, would not have been able to
recover any damages under
delict, certainly not
mora interest.
The claim cannot succeed
because it is based on an incorrect fusion of remedies under the law
of contract and of delict. Litigants
should heed the warning of Brand
J's opening remarks where he states in
paragraph
[32]:
".....
I should say something about the quantification of the
damages claimed by the appellant because it appears to proceed from
a
premise which is fundamentally flawed. Unless attention is called
to this fundamental flaw, it may perpetuate and snare future
litigants
in the same trap"
This
in my view is one such case.
[21] In light of the
above, I make the following Order:
[1] The counter-claim is dismissed.
[2] Judgment is granted in favour of the Plaintiff against the
Defendant for:
- Payment of the amount of R135 896-40.
- Interest on the above amount calculated from date of taxation (05
August 2011) to date of payment at the rate of 15.5% per annum.
[3] The Defendant to pay the costs of this action.
_________________________
BAM
AJ
ACTING
JUDGE OF THE HIGH COURT
Counsel
for the Applicants : Advocate Sheperd NT
Instructed
by : Strydom Britz Mohulatsi Incorporated
Counsel for
Respondent : Advocate West HP
Instructed by :
Locketts Attorneys C/O Kennie Boonzaaier Attorneys
Date of Hearing : 07
June 2016
Date of Judgment :
11 October 2016