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[2007] ZASCA 132
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Hack Stupel and Ross Attorneys v Kgang (560/06) [2007] ZASCA 132; [2007] SCA 132 (RSA) (28 September 2007)
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THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Not Reportable
Case No: 560/06
In
the matter between:
HACK
STUPEL AND ROSS ATTORNEYS
...........................
Appellant
and
LESLIE
KGANG
...........................
Respondent
_______________________________________________________
Coram
:
HARMS ADP, NAVSA JA, MTHIYANE JA,
HURT AJA and KGOMO AJA
Date
of hearing: 28 August 2007
Date
of delivery: 28 September 2007
Summary
:
The Respondent claimed damages by way of motion proceedings ─
no basis for damages appears from affidavits or how damages
were
computed.
Neutral citation:
This
judgment may be referred to as Hack Stupel & Ross v Kgang [2007]
SCA 132 (RSA).
_______________________________________________________
JUDGMENT
_______________________________________________________
KGOMO AJA:
[1] This is an appeal against a
judgment of the Pretoria High Court (Seriti J) in terms of which the
appellant, a firm of attorneys,
was ordered to pay the respondent an
amount of R63 000.00 and his costs. The court held that this amount
constituted the fair market
value of immovable property formerly
owned by the respondent and represented damages sustained by him as a
result of the property
being wrongfully sold at a judicial sale in
execution. The sale took place at the instance of the appellant,
acting on the instructions
of its client, Ms Joyce Vilakazi. The
appeal is before us with the leave of this Court.
The background
[2] The respondent’s troubles
began when, more than 13 years ago, he borrowed money from Ms
Vilakazi. In March 1994 he signed
a written acknowledgment of debt in
terms of which he acknowledged his indebtedness to her in an amount
of R31 160. He was unable
to meet his obligations in terms of the
acknowledgment of debt. On 19 September 1994 she issued summons
against him out of the magistrates’
court, Odi, in Garankuwa
and, on 14 October 1994, obtained default judgment against him for
payment of R31 160. There is a dispute
about whether the magistrate’s
court order included the payment of interest as provided for in the
acknowledgment of debt,
but for reasons that will become apparent
that issue need not detain us.
[3] The respondent made arrangements
to pay the amount owing in instalments. During 1994 and 1995 the
respondent made several payments
to attorneys then acting for Ms
Vilakazi. Subsequently the appellant became her attorneys.
[4] On 15 December 1995, after the
respondent had defaulted once again, the appellant caused a writ of
execution against property
to be issued. After it was served, the
respondent immediately made new arrangements to pay off his
indebtedness. The respondent defaulted
once again. During 1998 a new
writ of execution was issued by the appellant and served on the
respondent at his home situated at
361 Block 3, Mabopane (the
affected immovable property). An amount of money was paid by the
respondent and his movable property that
had been attached was
released. The matter dragged on.
[5] During December 2000 the appellant
caused the writ to be reissued for payment of an amount of R 32
156.68, but the Sheriff was
unable to effect service. By this time,
given the long and convoluted history of the matter, the respondent
had made a substantial
number of payments. On the appellant’s
version of events, the respondent had at that time already paid an
amount of R20 700.
On his version of events he had paid much
more.
[6] On 16 March 2001 acting on its
client’s instructions, the appellant applied, in terms of s
66(1) of the Magistrates’
Court Act 32 of 1944, to attach the
respondent’s immovable property. An order to that effect was
obtained and a warrant of
execution against immovable property was
subsequently issued on 28 August 2001. The appellant demanded an
amount of R5 000.00 from
the respondent in order for it not to
proceed with the warrant of execution. This was not forthcoming and
the appellant proceeded
to arrange a sale in execution. On the day of
the sale in execution the respondent paid an amount of R5 000.00.
Although this staved
off the sale in execution, the appellant was not
prepared to release the property from attachment because it
considered that the
respondent still owed an amount in excess of R30
000. 00.
[7] Because the respondent had not
made payment to the satisfaction of the appellant, a sale in
execution finally took place and the
property in question was sold to
Mr Willie Dreyer who purchased it as a nominee for a close
corporation which he controlled, namely,
Bestprop Construction.
[8] In the court below there were
several disputes. One of the disputes concerned the question whether
the appellant ought first to
have proceeded with a writ against the
respondent’s movable property. Another, whether the proceeds
from the sale of movable
property would have been sufficient to have
met the outstanding debt. On the respondent’s own version of
events he was aware
of the warrant against immovable property. In
light of the view I ultimately take of the matter it is also
unnecessary to deal with
these aspects other than in the limited
manner that appears later in this judgment.
[9] After the property had been sold
in execution, the respondent applied, in September 2002, to the
Pretoria High Court for an order
that the warrant of execution
against immovable property granted by the Magistrates’ Court,
Odi, be rescinded and that the
sale in execution be set aside. Ms
Vilakazi, the Sheriff, the appellant, Bestprop Construction and Mr
Dreyer were all cited as respondents.
The Registrar of Deeds was not
cited as an interested party.
[10] At the time of the application to
the Pretoria High Court the respondent had paid a total of at least
R41 250.00 towards settling
the debt. This was clearly a factor that
understandably evoked sympathy for the respondent in the court below.
[11] There is no explanation for the
considerable delay between the time that the application was first
brought in the court below
and the time that it was heard ─
apparently a period of at least three years. Judgment was delivered
on 9 May 2006, three years
and seven months after the application was
launched and close to twelve years from the time that the respondent
first defaulted in
his loan obligations.
[12] Probably because there had been
no service on the Registrar of Deeds and because of the considerable
delay before the matter
was finally set down for hearing, the
property in question has, since the litigation started in the
Pretoria High Court, been transferred
to subsequent purchasers. This
in turn, led the respondent, during 2005, to serve a notice of
amendment, claiming in the alternative
an order that he be paid the
market value of the property sold in execution.
[13] The court below found ─
despite a dispute in this regard, and even though this was raised for
the first time by the respondent
in reply ─ that the appellant
had undertaken not to sell the property in execution until it had
provided the respondent with
a detailed account, setting out the
amounts paid and providing a calculation of the amount outstanding.
This procedure was impermissible.
(
Director
of Hospital Services v Mistry
1979
(1) SA 626
(A)). It held further, that the warrant of execution had
not been properly served on the respondent. The court below found,
without
the benefit of oral evidence, that if the respondent’s
movable property had been attached and sold in execution, it would
have
yielded enough to satisfy the outstanding amount, if any. Thus,
it concluded that the sale in execution had not taken place in
accordance
with the provisions of s 66 (1)
(a)
of the Act.
1
Further, the court below stated the
following:
‘
One
disturbing feature of this case is that the various warrants of
execution issued against the applicant at different times had
almost
the same amount as the outstanding debt despite the fact that the
applicant had made several payments over a period of time.’
[14] Whilst the last-mentioned concern
was not wholly unjustified, it certainly did not justify the
conclusions that followed. Considering
the alternative relief claimed
by the respondent, the court below held that the Bestprop
Construction had subsequently sold the immovable
property in question
for an amount of R300 000.00. The court then went on to refer to the
decision in
Mkhwanazi v Van
der Merwe
1970 (1) SA 609
(A) at 631H, where it was stated that courts should endeavour on the
basis of available evidence to award a party who suffered damages
fair compensation. Seriti J found that Mr Dreyer had purchased the
property in question for an amount of R63 000.00 and stated that,
in
his view, it represented the fair market value of the property. He
consequently awarded that amount as the respondent’s
damages.
Conclusions
[15] The judgment of the high court is
in a number of respects fundamentally flawed. The claim for damages
was admittedly only presaged
by the belated alternative prayer
introduced many years after the launch of the proceedings.
[16] The first problem with the
judgment is that it granted judgment for damages in motion
proceedings contrary to the basic rule
that damages are not claimable
in motion proceedings. (
Room
Hire Co (Pty) Ltd V J
eppe
Street Mansions (Pty) Ltd
1949 (3) SA 1155
(T) at 1161;
Miller
v Roussot
1975 (3) SA 876
(R) at 876H – 877H). The second problem with the approach of
the court below is that nowhere in his affidavits did the respondent
allege that he had suffered any damages: he adduced no evidence at
all concerning the damages the court held he had sustained, nor
is
there any allegation in any of the affidavits filed concerning the
amount for which the property was sold at the sale in execution.
Even
more importantly, the basis of the appellant’s liability, as
distinct from its client’s liability, on any ground
at all, is
not foreshadowed in the affidavits.
[17] The court below appears to have
reached its conclusion on the amount for which the property was sold
in execution from correspondence,
not authenticated or confirmed by
affidavit. Apart from the fact that the relevant correspondence is
marked ‘without prejudice’
it did not emanate from the
appellant and was not evidence against it. What is more, the learned
judge quite inappropriately, after
he had reserved judgment and
without notice to the parties, made his own enquiries by writing to
Mr Dreyer’s attorney requesting
a copy of the agreement of
sale. He based his conclusions on the purchase price on the evidence
he had obtained in this irregular
manner. His actions were in this
regard irregular in two respects. First, he failed to have regard to
the rule that a judge is not
entitled in civil proceedings to obtain
evidence. Secondly, it was a breach of fundamental justice to go
behind the backs of litigants
and obtain information which was
potentially prejudicial to one of them. Importantly, it also does not
follow that the purchase price
automatically translates into damages
suffered by the respondent. We do not, for example, know whether
there was a mortgage bond
registered over the property. How does one
in these circumstances determine quantum?
[18] In
Mkhwanazi
(631E-F) the following dictum from
Hersman v Shapiro &
Company
1926 TPD 367
at 379
was quoted with approval:
‘
Monetary damage
having been suffered, it is necessary for the Court to assess the
amount and make the best use it can of the evidence
before it. There
are cases where the assessment by the Court is very little more than
an estimate; but even so, if it is certain
that pecuniary damage has
been suffered, the Court is bound to award damages.’
[19] Immediately thereafter, the court
in
Mkhwanazi
(631G)
stated
the following:
‘
In
soverre ek dit kon nagaan is hierdie sienswyse deur ons Howe
deurgaans onderhewig gestel aan die voorwaarde dat die eiser alle
beskikbare getuienis wat sou kon bydra tot die berekening van die
skade voor die hof gelê het.’
[20] In
Esso
Standard SA [Pty] Ltd v Katz
1981
(1) SA 964
(A) at 970 E-H, this Court stated the following:
‘
Whether
or not a plaintiff should be non-suited depends on whether he has
adduced all the evidence reasonably available to him at
the trial…The
critical question then is whether the plaintiff… has produced
all the evidence that he could reasonably
have produced to enable the
court to assess the
quantum
of damage.’
[21] In the present case, in respect
of damages, the respondent did not even get past first base. To sum
up: The court below arrived
at factual conclusions in motion
proceedings where the facts in question were seriously disputed. It
erred fundamentally in awarding
damages in motion proceedings
especially when no basis was provided for holding the appellant
liable and where no acceptable evidence
of damages was adduced. This
case illustrates how well-intentioned, but misplaced, sympathy for a
litigant by a court of first instance
translates into an even more
costly exercise for the same litigant.
[22] In the result the following order
is made:
1. The appeal is upheld with costs.
2. The order of the court below is set
aside and substituted as follows:
‘
The
application is dismissed with costs’.
________________________
F
D KGOMO
ACTING
JUDGE OF APPEAL
CONCUR
: ) HARMS ADP
)
NAVSA JA
)
MTHIYANE JA
)
HURT AJA
1
Section
66(1)
(a)
of
the Act provides:
‘
Whenever a court gives
judgment for the payment of money or makes an order for the payment
of money in instalments, such judgment,
in case of failure to pay
such money forthwith, or such order in case of failure to pay any
instalment at the time and in the manner
ordered by the court, shall
be enforceable by execution against the movable property and, if
there is not found sufficient movable
property to satisfy the
judgment or order, or the court on good cause shown, so orders, then
against the immovable property of
the party against whom such
judgment has been given or such order has been made.’